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      LOAN
        AND SECURITY AGREEMENT

       

      THIS
        LOAN AND SECURITY
        AGREEMENT (this “Agreement”) dated as
        of
        February 20, 2008 (the "Effective Date") between SILICON
        VALLEY BANK, a
        California corporation and with a loan production office located at One Newton
        Executive Park, Suite 200, 2221 Washington Street, Newton,
        Massachusetts  02462 ("SVB"), as collateral
        agent
        (the "Collateral
        Agent"), and the Lenders listed on Schedule 1.1 thereof and party hereto,
        including without limitation, SVB and OXFORD FINANCE CORPORATION
        ("OXFORD") and DYNOGEN
        PHARMACEUTICALS, INC.
        a Delaware corporation (“Borrower”), provides the
        terms
        on which Lenders shall lend to Borrower and Borrower shall repay
        Lenders.  The parties agree as follows:

       

      1           ACCOUNTING
        AND OTHER
        TERMS

       

      Accounting
        terms not defined in this Agreement shall be construed following
        GAAP.  Calculations and determinations must be made following
        GAAP.  Capitalized terms not otherwise defined in this Agreement shall
        have the meanings set forth in Section 13.  All other terms
        contained in this Agreement, unless otherwise indicated, shall have the meaning
        provided by the Code to the extent such terms are defined therein.

       

      2           LOAN
        AND TERMS OF
        PAYMENT

       

      2.1           Promise
        to
        Pay.  Borrower hereby unconditionally promises to pay Lenders
        the outstanding principal amount of all Credit Extensions and accrued and
        unpaid
        interest thereon as and when due in accordance with this Agreement.

       

      2.1.1           Term
        Loan.

       

      (a)           Availability.  Subject
        to the terms and conditions of this Agreement, during the First Draw Period,
        Lenders agree, severally and not jointly, to make one (1) Term Loan (the
        "First Term Loan") available to
        Borrower in an amount up to Five Million Dollars ($5,000,000.00), according
        to
        each Lender's pro-rata share of the Term Loan based upon the respective
        Commitment Percentage of each Lender.  During the Second Draw Period,
        Lenders agree, severally and not jointly, to make one (1) Term Loan (the
        "Second Term Loan") available
        to Borrower in an amount up to Five Million Dollars ($5,000,000.00), according
        to each Lender’s pro rata share of the Term Loan based upon the respective
        Commitment Percentage of each Lender.  The First Term Loan and Second
        Term Loan are hereinafter referred to, singly or collectively, “Term Loan.” After repayment,
        no Term Loan may be re-borrowed.

       

       

      (b)           Interest
        Payments.   Commencing on the first Payment Date of the
        month following the month in which the Funding Date occurs, Borrower shall
        make
        monthly payments of interest, in arrears, at the rate set forth in Section
        2.2(a).

       

      (c)           Repayment.  Commencing
        on the Amortization Date and continuing on the Payment Date of each month
        thereafter, for each Term Loan, Borrower shall make (1) consecutive equal
        monthly payments of principal, calculated by the Collateral Agent based upon:
        (a) the amount of the Term Loan multiplied by each Lender's Commitment
        Percentage, and (b) a repayment schedule equal to thirty (30) months (less
        the
        number of months for which a principal payment is required under Section
        2.1.1(d)), plus (2) monthly payments of accrued and unpaid interest at the
        effective rate of interest as set forth in Section 2.2(a).  All unpaid
        principal and accrued interest with respect to each Term Loan is due and
        payable
        in full on the Term Loan Maturity Date with respect to such Term
        Loan.  Payments received after 12:00 noon Eastern time are considered
        received at the opening of business on the next Business Day.  A Term
        Loan may only be prepaid in accordance with Sections 2.1.1(e) and
        2.1.1(f).

       

      (d)           Principal
        Repayment.   In the event that the Acquisition Event does
        not occur on or prior to September 30, 2008, then in addition to the scheduled
        payments of principal and interest, as set forth in Section 2.1.1(c) hereof,
        Borrower shall pay to each Lender, on the Amortization Date, as an additional
        principal payment toward each Term Loan, in an amount equal to the principal
        payments that would have been collected based on an amortization schedule
        of
        thirty (30) months, assuming a principal payment would have been made on
        each
        Payment Date following the Funding Date through the Amortization Date (7
        months
        for the First Term Loan).

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      (e)           Mandatory
        Prepayment Upon an
        Acceleration.  If a Term Loan is accelerated following the
        occurrence of an Event of Default, Borrower shall immediately pay to Lenders
        an
        amount equal to the sum of: (i) all outstanding principal plus accrued and
        unpaid interest, (ii) the Prepayment Fee, (iii) the Final Payment, plus (iv)
        all
        other sums, that shall have become due and payable, including interest at
        the
        Default Rate with respect to any past due amounts.

       

      (f)           Permitted
        Prepayment of
        Loans.   Borrower may not make any prepayments of
        principal hereunder at any time prior to the date which is six (6) months
        after
        the Effective Date ("Prepayment
        Date").   After the Prepayment Date, Borrower shall have
        the option to prepay all, but not less than all, of the Term Loans advanced
        by
        Lenders under this Agreement, provided Borrower (i) provides written notice
        to Collateral Agent of its election to prepay the Term Loans at least ten
        (10)
        days prior to such prepayment, and (ii) pays, on the date of such
        prepayment (A) all outstanding  principal plus accrued and unpaid
        interest, (B) the Prepayment Fee, (C) the Final Payment, plus (D) all other
        sums, that shall have become due and payable, including interest at the Default
        Rate with respect to any past due amounts.

       

      2.2           Payment
        of Interest on the Credit
        Extensions.

       

      (a)           Interest
        Rate.   Subject to Section 2.2(b), the principal amount
        outstanding under the Term Loan shall accrue interest at a fixed per annum
        rate
        equal to the greater of: (i) ten percent (10.0%), and (ii) the LIBOR Rate
        plus
        the LIBOR Rate Margin, determined by Collateral Agent as of the applicable
        Funding Date, which interest shall be payable monthly in accordance with
        Section
        2.2.(e).

       

      (b)           Default
        Rate.
        Immediately upon the occurrence and during the continuance of an Event of
        Default, Obligations shall bear interest at a rate per annum which is five
        percentage points above the rate effective immediately before the Event of
        Default (the “Default
        Rate”).  Payment or acceptance of the increased interest rate
        provided in this Section 2.2(b) is not a permitted alternative to timely
        payment and shall not constitute a waiver of any Event of Default or otherwise
        prejudice or limit any rights or remedies of Collateral Agent.

       

      (c)           360-Day
        Year.  Interest shall be computed on the basis of a 360-day
        year for the actual number of days elapsed.

       

      (d)           Debit
        of
        Accounts.  Collateral Agent may debit any of Borrower’s deposit
        accounts, including the Designated Deposit Account, for principal and interest
        payments or any other amounts Borrower owes Lenders under the Loan Documents
        when due.  These debits shall not constitute a set-off.

       

      (e)           Payments.  Unless
        otherwise provided, interest is payable monthly on the Payment Date of each
        month.  Payments of principal and/or interest received after 12:00
        noon Eastern time are considered received at the opening of business on the
        next
        Business Day.  When a payment is due on a day that is not a Business
        Day, the payment is due the next Business Day and additional fees or interest,
        as applicable, shall continue to accrue.

       

      2.3           Secured
        Promissory
        Notes.  Each Term Loan shall be evidenced by a Secured
        Promissory Note in the form attached as Exhibit
        D hereto (each a “Secured Promissory
        Note”), and
        shall be repayable as set forth herein.  The Borrower irrevocably
        authorizes each Lender to make or cause to be made, on or about the Funding
        Date
        of any Term Loan or at the time of receipt of any payment of principal on
        such
        Lender’s Secured Promissory Note, an appropriate notation on such Lender’s
        Secured Promissory Note Record reflecting the making of such Term Loan or
        (as
        the case may be) the receipt of such payment.  The outstanding amount
        of each Term Loan set forth on such Lender’s Secured Promissory Note Record
        shall be prima facie evidence of the principal amount thereof owing and unpaid
        to such Lender, but the failure to record, or any error in so recording,
        any
        such amount on such Lender’s Secured Promissory Note Record shall not limit or
        otherwise affect the obligations of the Borrower hereunder or under any Secured
        Promissory Note to make payments of principal of or interest on any Secured
        Promissory Note when due.  Upon receipt of an affidavit of an officer
        of a Lender as to the loss, theft, destruction, or mutilation of its Secured
        Promissory Note, Borrower shall issue, in lieu thereof, a replacement Secured
        Promissory Note in the same principal amount thereof and of like
        tenor.

       

      2.4           Fees.  Borrower
        shall pay to Collateral Agent:

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      (a)           Commitment
        Fee.  A fully earned, non-refundable commitment fee of Fifty
        Thousand Dollars ($50,000) (of which Borrower has paid Collateral Agent
        Twenty-Five Thousand Dollars ($25,000) prior to the Effective Date) to be
        shared
        between the Lenders pursuant to their respective Commitment
        Percentages;

       

      (b)           Prepayment
        Fee.  The Prepayment Fee, when and if due
        hereunder;

       

      (c)           Final
        Payment.  The Final Payment, when due hereunder;
        and

       

      (c)           Lenders'
        Expenses.  All Lenders' Expenses (including reasonable
        attorneys’ fees and expenses, plus expenses, for documentation and negotiation
        of this Agreement) incurred through and after the Effective Date, when
        due.

       

      2.5           Additional
        Costs.  If any new law or regulation increases Lender’s costs
        or reduces its income for any loan, Borrower shall pay the increase in cost
        or
        reduction in income or additional expense; provided, however, that Borrower
        shall not be liable for any amount attributable to any period before 180
        days
        prior to the date Collateral Agent notifies Borrower of such increased
        costs.  Each Lender agrees that it shall allocate any increased costs
        among its customers similarly affected in good faith and in a manner consistent
        with such Lender’s customary practice.

       

      3           CONDITIONS
        OF
        LOANS

       

      3.1           Conditions
        Precedent to Initial
        Credit Extension.  Each Lender’s obligation to make the initial
        Credit Extension is subject to the condition precedent that Collateral Agent
        shall have received, in form and substance satisfactory to Lenders, such
        documents, and completion of such other matters, as Lenders may reasonably
        deem
        necessary or appropriate, including, without limitation:

       

      (a)           duly
        executed original signatures to the Loan Documents to which Borrower is a
        party;

       

      (b)           duly
        executed original signatures to the Control Agreement[s];

       

      (c)           duly
        executed original Secured Promissory Notes in favor of each Lender according
        to
        its Commitment Percentage in amounts not to exceed the Term Loans;

       

      (d)           Operating
        Documents and a good standing certificate of Borrower certified by the Secretary
        of State of the State of Delaware as of a date no earlier than thirty (30)
        days
        prior to the Effective Date;

       

      (e)           duly
        executed original signatures to the completed Borrowing Resolutions for
        Borrower;

       

      (f)       
            Collateral Agent shall have received certified copies,
        dated as of a recent date, of financing statement searches, as Collateral
        Agent
        shall request, accompanied by written evidence (including any Code termination
        statements) that the Liens indicated in any such financing statements either
        constitute Permitted Liens or have been or, in connection with the initial
        Credit Extension, will be terminated or released;

       

      (g)          
        a legal opinion of Borrower’s counsel dated as of the Effective Date together
        with the duly executed original signatures thereto;

       

      (h)          
        evidence satisfactory to Collateral Agent that the insurance policies required
        by Section 6.5 hereof are in full force and effect, together with appropriate
        evidence showing loss payable and/or additional insured clauses or endorsements
        in favor of Collateral Agent, for the ratable benefit of the
        Lenders;

       

      (i)      
              Investor Commitment Letter; and

       

      (j)          
          payment of the fees and Lenders' Expenses then due as specified in
        Section 2.4 hereof.

       

      3.2           Conditions
        Precedent to all Credit
        Extensions.  The obligation of each Lender to make each Credit
        Extension, including the initial Credit Extension, is subject to the
        following:

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      (a)           except
        as otherwise provided in Section 3.4, timely receipt of an executed
        Payment/Advance Form;

       

      (b)           the
        representations and warranties in Section 5 shall be true, accurate and complete
        in all material respects on the date of the Payment/Advance Form and on the
        Funding Date of each Credit Extension; provided, however, that such materiality
        qualifier shall not be applicable to any representations and warranties that
        already are qualified or modified by materiality in the text thereof; and
        provided, further that those representations and warranties expressly referring
        to a specific date shall be true, accurate and complete in all material respects
        as of such date, and no Default or Event of Default shall have occurred and
        be
        continuing or result from the Credit Extension.  Each Credit Extension
        is Borrower’s representation and warranty on that date that the representations
        and warranties in Section 5 remain true in all material respects; provided,
        however, that such materiality qualifier shall not be applicable to any
        representations and warranties that already are qualified or modified by
        materiality in the text thereof; and provided, further that those
        representations and warranties expressly referring to a specific date shall
        be
        true, accurate and complete in all material respects as of such date;
        and

       

      (c)           in
        such Lender’s reasonable discretion, there has not been any material impairment
        in the general affairs, management, results of operation, financial condition
        or
        the prospect of repayment of the Obligations, nor has there been any material
        adverse deviation by Borrower from the most recent business plan of Borrower
        presented to and accepted by Collateral Agent.

       

      3.3           Covenant
        to Deliver. Borrower
        agrees to deliver to Collateral Agent each item required to be delivered
        to
        Collateral Agent under this Agreement as a condition to any Credit
        Extension.  Borrower expressly agrees that the extension of a Credit
        Extension prior to the receipt by Collateral Agent of any such item shall
        not
        constitute a waiver by Lenders of Borrower’s obligation to deliver such item,
        and any such extension in the absence of a required item shall be in Collateral
        Agent’s sole discretion.

       

      3.4           Procedures
        for
        Borrowing.  Subject to the prior satisfaction of all other
        applicable conditions to the making of a Term Loan set forth in this Agreement,
        to obtain a Term Loan, Borrower shall notify Collateral Agent (which notice
        shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00
        noon
        Eastern time at least one (1) Business Day prior to the initial Funding Date
        and
        at least five (5) Business Days prior any additional Funding Dates. Together
        with any such electronic or facsimile notification, Borrower shall deliver
        to
        Collateral Agent by electronic mail or facsimile a completed Payment/Advance
        Form executed by a Responsible Officer or his or her designee.  Upon
        receipt of a Payment/Advance Form, Collateral Agent shall promptly provide
        a
        copy of the same to each Lender.  Collateral Agent may rely on any
        telephone notice given by a person whom Collateral Agent believes is a
        Responsible Officer or designee.  On the Funding Date, each Lender
        shall credit and/or transfer (as applicable) to Borrower's Designated Deposit
        Account, an amount equal to its Commitment Percentage multiplied by the amount
        of the Term Loan.

       

      4           CREATION
        OF SECURITY INTEREST

       

      4.1           Grant
        of Security
        Interest.  Borrower hereby grants Collateral Agent, for the
        ratable benefit of the Lenders, and to each Lender, to secure the payment
        and
        performance in full of all of the Obligations, a continuing security interest
        in, and pledges to Collateral Agent, for the ratable benefit of the Lenders,
        and
        to each Lender, the Collateral, wherever located, whether now owned or hereafter
        acquired or arising, and all proceeds and products thereof.  Borrower
        represents, warrants, and covenants that the security interest granted herein
        is
        and shall at all times continue to be a first priority perfected security
        interest in the Collateral (subject only to Permitted Liens that may have
        superior priority under this Agreement).  If Borrower shall acquire a
        commercial tort claim (as defined in the Code), Borrower shall promptly notify
        Collateral Agent in a writing signed by Borrower of the general details
        thereof  (and further details as may be required by Collateral Agent)
        and grant to Collateral Agent, for the ratable benefit of the Lenders, and
        to
        each  Lender in such writing a security interest therein and in the
        proceeds thereof, all upon the terms of this Agreement, with such writing
        to be
        in form and substance reasonably satisfactory to Collateral Agent.

       

      If
        this
        Agreement is terminated, Collateral Agent’s and each Lender's Lien in the
        Collateral shall continue until the Obligations are repaid in full in
        cash.  Upon payment in full in cash of the Obligations and at such
        time as the Lenders' obligation to make Credit Extensions has terminated,
        the
        Collateral Agent, and if appropriate, each

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      Lender
        shall, at Borrower’s sole cost and expense, release its Liens in the Collateral
        and all rights therein shall revert to Borrower.

       

      4.2           Authorization
        to File Financing
        Statements.  Borrower hereby authorizes Collateral Agent to
        file financing statements, without notice to Borrower, with all appropriate
        jurisdictions to perfect or protect Collateral Agent’s  and each
        Lender's interest or rights hereunder, including a notice that any disposition
        of the Collateral, by either Borrower or any other Person, shall be deemed
        to
        violate the rights of the Collateral Agent and the Lenders under the
        Code.

       

      5           REPRESENTATIONS
        AND
        WARRANTIES

       

      Borrower
        represents and warrants as follows:

       

      5.1           Due
        Organization, Authorization:
        Power and Authority.  Borrower and each of its Subsidiaries (as
        of the Effective Date, Borrower has no Subsidiaries), if any, are duly existing
        and in good standing, as Registered Organizations in their respective
        jurisdictions of formation and are qualified and licensed to do business
        and are
        in good standing in any jurisdiction in which the conduct of their business
        or
        their ownership of property requires that they be qualified except where
        the
        failure to do so could not reasonably be expected to have a material adverse
        effect on Borrower’s business.  In connection with this Agreement,
        Borrower has delivered to Collateral Agent a completed perfection
        certificate signed
        by Borrower (the “Perfection
        Certificate”).  Borrower represents and warrants that (a)
        Borrower’s exact legal name is that indicated on the Perfection Certificate and
        on the signature page hereof; (b) Borrower is an organization of the type
        and is organized in the jurisdiction set forth in the Perfection Certificate;
        (c) the Perfection Certificate accurately sets forth Borrower’s organizational
        identification number or accurately states that Borrower has none; (d) the
        Perfection Certificate accurately sets forth Borrower’s place of business, or,
        if more than one, its chief executive office as well as Borrower’s mailing
        address (if different than its chief executive office); (e) Borrower (and
        each of its predecessors) has not, in the past five (5) years, changed its
        jurisdiction of formation, organizational structure or type, or any
        organizational number assigned by its jurisdiction; and (f) all other
        information set forth on the Perfection Certificate pertaining to Borrower
        and
        each of its Subsidiaries is accurate and complete.  If Borrower is not
        now a Registered Organization but later becomes one, Borrower shall promptly
        notify Collateral Agent of such occurrence and provide Collateral Agent with
        Borrower’s organizational identification number.

       

      Except
        for the required approvals under Borrower’s organizational documents for
        authorization of shares of capital stock to be issued upon exercise of the
        Warrants, if the same become exercisable for Borrower’s capital stock, the
        execution, delivery and performance by Borrower of the Loan Documents to
        which
        it is a party have been duly authorized, and do not (i) conflict with any
        of
        Borrower’s organizational documents, (ii) contravene, conflict with, constitute
        a default under or violate any material Requirement of Law, (iii) contravene,
        conflict or violate any applicable order, writ, judgment, injunction, decree,
        determination or award of any Governmental Authority by which Borrower or
        any of
        its Subsidiaries or any of their property or assets is bound, (iv) require
        any
        action by, filing, registration, or qualification with, or Governmental Approval
        from, any Governmental Authority (except such Governmental Approvals which
        have
        already been obtained and are in full force and effect) or are being obtained
        pursuant to Section 6.1(b), or (v) constitute an event of default under any
        material agreement by which Borrower is bound.  Borrower is not in
        default under any agreement to which it is a party or by which it is bound
        in
        which the default could reasonably be expected to have a material
        adverse
        effect on Borrower’s business.

       

      5.2           Collateral.  Borrower
        has good title to, has rights in, and the power to transfer each item of
        the
        Collateral upon which it purports to grant a Lien hereunder, free and clear
        of
        any and all Liens except Permitted Liens.  Borrower has no deposit
        accounts other than the deposit accounts with Collateral Agent, the deposit
        accounts, if any, described in the Perfection Certificate, or of which Borrower
        has given Collateral Agent notice and taken such actions as are necessary
        to
        give Collateral Agent a perfected security interest therein.

       

      The
        Collateral is not in the possession
        of any third party bailee (such as a warehouse) except as otherwise provided
        in
        the Perfection Certificate.  None of the components of the Collateral
        shall be maintained at locations other than as provided in the Perfection
        Certificate or as Borrower has given Collateral Agent notice pursuant to
        Section
        7.2.  In the event that Borrower, after the date hereof, intends to
        store or otherwise deliver any portion of the Collateral to a bailee, then
        Borrower will first receive the written consent of Collateral Agent and such
        bailee must execute and deliver a bailee agreement in form and substance
        satisfactory to Collateral Agent.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      All
        Inventory is in all material
        respects of good and marketable quality, free from material
        defects.

       

       Except
        as noted on the
        Perfection Certificate, Borrower is not a party to, nor is bound by, any
        material license or other agreement with respect to which Borrower is a licensee
        that (a) prohibits or otherwise restricts Borrower from granting a security
        interest in Borrower’s interest in such license or agreement or the Collateral,
        or (b) for which a default under or termination of could interfere with
        Collateral Agent's right to sell any Collateral.  Borrower shall
        provide written notice to Collateral Agent within ten (10) days of entering
        or
        becoming bound by any such license or agreement which is reasonably likely
        to
        have a material impact on Borrower’s business or financial condition (other than
        over-the-counter software that is commercially available to the
        public).  Borrower shall take such steps as Collateral Agent requests
        to obtain the consent of, or waiver by, any person whose consent or waiver
        is
        necessary for (x) all such licenses or agreements to be deemed “Collateral” and
        for Collateral Agent and each Lender to have a security interest in it that
        might otherwise be restricted or prohibited by law or by the terms of any
        such
        license or, whether now existing or entered into in the future, and (y)
        Collateral Agent shall have the ability in the event of a liquidation of
        any
        Collateral to dispose of such Collateral in accordance with Collateral Agent's
        rights and remedies under this Agreement and the other Loan
        Documents.

       

      5.3           Litigation.  There
        are no actions or proceedings pending or, to the knowledge of the Responsible
        Officers, threatened in writing by or against Borrower or any of its
        Subsidiaries involving more than One Hundred Thousand Dollars
        ($100,000.00).

       

      5.4           No
        Material Deviation in Financial
        Statements.  All consolidated financial statements for Borrower
        and any of its Subsidiaries delivered to Collateral Agent fairly present,
        in
        conformity with GAAP (except for interim financial statements subject to
        normal
        year-end adjustments and footnotes), in all material respects Borrower’s
        consolidated financial condition and Borrower’s consolidated results of
        operations.  There has not been any material deterioration in
        Borrower’s consolidated financial condition since the date of the most recent
        financial statements submitted to Collateral Agent.

       

      5.5           Solvency.  The
        fair
        salable value of Borrower’s assets (including goodwill minus disposition costs)
        exceeds the fair value of its liabilities and Borrower is able to pay its
        debts
        (including trade debts) as they mature.

       

      5.6           Regulatory
        Compliance.  Borrower is not an “investment company” or a
        company “controlled” by an “investment company” or a "subsidiary" of an
        "investment company" under the Investment Company Act of
        1940.  Borrower is not engaged in extending credit for margin stock
        (under Regulations T and U of the Federal Reserve Board of
        Governors).  Borrower has complied in all material respects with the
        Federal Fair Labor Standards Act.  Neither Borrower nor any of its
        Subsidiaries is a "holding company" or an "affiliate" of a "holding company"
        or
        a "subsidiary company" of a "holding company" as each term is defined and
        used
        in the Public Utility Holding Company Act of 2005.  Borrower has not
        violated any laws, ordinances or rules, the violation of which could reasonably
        be expected to have a material adverse effect on its business.  None
        of Borrower’s or any of its Subsidiaries’ properties or assets has been used by
        Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
        Persons, in disposing, producing, storing, treating, or transporting any
        hazardous substance other than legally.  Borrower and each of its
        Subsidiaries have obtained all consents, approvals and authorizations of,
        made
        all declarations or filings with, and given all notices to, all Governmental
        Authorities that are necessary to continue their respective businesses as
        currently conducted.

       

      5.7           Subsidiaries;
        Investments.  Borrower does not own any stock, partnership
        interest or other equity securities except for Permitted
        Investments.

       

      5.8           Tax
        Returns and Payments; Pension
        Contributions.  Borrower has timely filed all required tax
        returns and reports, and Borrower and its Subsidiaries have timely paid all
        foreign, federal, state and local taxes, assessments, deposits and contributions
        owed by Borrower.  Borrower may defer payment of any contested taxes,
        provided that Borrower (a) in good faith contests its obligation to pay the
        taxes by appropriate proceedings promptly and diligently instituted and
        conducted, (b) notifies Collateral Agent in writing of the commencement of,
        and
        any material development in, the proceedings, (c) posts bonds or takes any
        other
        steps required to prevent the governmental authority levying such contested
        taxes from obtaining a Lien upon any of the Collateral that is other than
        a
“Permitted Lien”.  Borrower is unaware of any claims or adjustments
        proposed for any of Borrower's prior tax years which could result in additional
        taxes becoming due and payable by Borrower.  Borrower has paid
        all

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      amounts
        necessary to fund all present pension, profit sharing and deferred compensation
        plans in accordance with their terms, and Borrower has not withdrawn from
        participation in, and has not permitted partial or complete termination of,
        or
        permitted the occurrence of any other event with respect to, any such plan
        which
        could reasonably be expected to result in any liability of Borrower, including
        any liability to the Pension Benefit Guaranty Corporation or its successors
        or
        any other governmental agency.

       

      5.9           Use
        of
        Proceeds.  Borrower shall use the proceeds of the Credit
        Extensions solely as working capital and to fund its general business
        requirements and not for personal, family, household or agricultural
        purposes.

       

      5.10           Full
        Disclosure.  No
        written representation, warranty or other statement of Borrower in any
        certificate or written statement given to Collateral Agent or any Lender,
        as of
        the date such representation, warranty, or other statement was made, taken
        together with all such written certificates and written statements given
        to
        Collateral Agent or any Lender, contains any untrue statement of a material
        fact
        or omits to state a material fact necessary to make the statements contained
        in
        the certificates or statements not misleading (it being recognized that the
        projections and forecasts provided by Borrower in good faith and based upon
        reasonable assumptions are not viewed as facts and that actual results during
        the period or periods covered by such projections and forecasts may differ
        from
        the projected or forecasted results).

       

      6           AFFIRMATIVE
        COVENANTS

       

      Borrower
        shall do all of the following:

       

      6.1           Government
        Compliance.

       

      (a)           Maintain
        its and all its Subsidiaries’ legal existence and good standing in their
        respective jurisdictions of formation and maintain qualification in each
        jurisdiction in which the failure to so qualify would reasonably be expected
        to
        have a material adverse effect on Borrower’s business or
        operations.  Borrower shall comply, and have each Subsidiary comply,
        with all laws, ordinances and regulations to which it is subject, the
        noncompliance with which could have a material adverse effect on Borrower’s
        business.

       

      (b)           Obtain
        all of the Governmental Approvals necessary for the performance by Borrower
        of
        its obligations under the Loan Documents to which it is a party and the grant
        of
        a security interest to Collateral Agent for the ratable benefit of the Lenders,
        in all of its property.  Borrower shall promptly provide copies of any
        such obtained Governmental Approvals to Collateral Agent.

       

      6.2           Financial
        Statements, Reports,
        Certificates.

       

      (a)           Deliver
        to Collateral Agent: (i) as soon as available, but no later than forty-five
        (45)
        days after the last day of each month, a company prepared consolidated balance
        sheet and income statement covering Borrower’s consolidated operations for such
        month certified by a Responsible Officer and in a form acceptable to Collateral
        Agent; (ii) as soon as available, but no later than ninety (90) days after
        the last day of Borrower’s fiscal year, audited consolidated financial
        statements prepared under GAAP, consistently applied, together with an
        unqualified opinion on the financial statements from an independent certified
        public accounting firm acceptable to Collateral Agent in its reasonable
        discretion; (iii) within five (5) days of delivery, copies of all statements,
        reports and notices made available to all of Borrower’s security holders or to
        any holders of Subordinated Debt; (iv) in the event that Borrower becomes
        subject to the reporting requirements under the Securities Exchange Act of
        1934,
        as amended, within five (5) days of filing, all reports on Form 10-K, 10-Q
        and
        8-K filed with the Securities and Exchange Commission or a link thereto on
        Borrower’s or another website on the Internet; (v) a prompt report of any legal
        actions pending or threatened against Borrower or any of its Subsidiaries
        that
        could result in damages or costs to Borrower or any of its Subsidiaries of
        One
        Hundred Thousand Dollars ($100,000) or more; and (vi) other financial
        information reasonably requested by Collateral Agent.

       

      (b)           Within
        forty-five (45) days after the last day of each month, deliver to Collateral
        Agent with the monthly financial statements,
        a
        duly completed Compliance Certificate signed by a Responsible
        Officer.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      6.3           Inventory;
        Returns.  Keep all Inventory in good and marketable condition,
        free from material defects.  Returns and allowances between Borrower
        and its Account Debtors shall follow Borrower’s customary practices as they
        exist at the Effective Date.  Borrower must promptly notify Collateral
        Agent of all returns, recoveries, disputes and claims that involve more than
        One
        Hundred Thousand Dollars ($100,000).

       

      6.4           Taxes;
        Pensions.  Make, and cause each of its Subsidiaries to make,
        timely payment of all foreign, federal, state, and local taxes or assessments
        (other than taxes and assessments which Borrower is contesting pursuant to
        the
        terms of Section 5.8 hereof) and shall deliver to Collateral Agent, on demand,
        appropriate certificates attesting to such payments, and pay all amounts
        necessary to fund all present pension, profit sharing and deferred compensation
        plans in accordance with their terms.

       

      6.5           Insurance.  Keep
        its
        business and the Collateral insured for risks and in amounts standard for
        companies in Borrower’s industry and location and as Collateral Agent may
        reasonably request.  Insurance policies shall be in a form, with
        companies, and in amounts that are satisfactory to Collateral
        Agent.  All property policies shall have a lender’s loss payable
        endorsement showing Collateral Agent as lender loss payee and waive subrogation
        against Collateral Agent, and all liability policies shall show, or have
        endorsements showing, the Collateral Agent, as an additional
        insured.  All policies (or the loss payable and additional insured
        endorsements) shall provide that the insurer must give Collateral Agent at
        least
        twenty (20) days notice before canceling, amending, or declining to renew
        its
        policy, except in the event of non-payment of premium whereby ten (10) days
        advance notice will be provided. At Collateral Agent’s request, Borrower shall
        deliver certified copies of policies and evidence of all premium
        payments.  Proceeds payable under any policy shall, at Collateral
        Agent’s option, be payable to Collateral Agent  on behalf of the
        Lenders on account of the Obligations.  Notwithstanding the foregoing,
        (a) so long as no Event of Default has occurred and is continuing, Borrower
        shall have the option of applying the proceeds of any casualty policy up
        to
        $100,000 with respect to any loss, but not exceeding $200,000, in the aggregate
        for all losses under all casualty policies in any one year, toward the
        replacement or repair of destroyed or damaged property; provided that any
        such
        replaced or repaired property (i) shall be of equal or like value as the
        replaced or repaired Collateral and (ii) shall be deemed Collateral in
        which Collateral Agent and Lenders have been granted a first priority security
        interest, and (b) after the occurrence and during the continuance of an Event
        of
        Default, all proceeds payable under such casualty policy shall, at the option
        of
        Collateral Agent, be payable to Collateral Agent, for the ratable benefit
        of the
        Lenders, on account of the Obligations.  If Borrower fails to obtain
        insurance as required under this Section 6.5 or to pay any amount or
        furnish any required proof of payment to third persons and Collateral Agent,
        Collateral Agent may make all or part of such payment or obtain such insurance
        policies required in this Section 6.5, and take any action under the policies
        Collateral Agent deems prudent.

       

      6.6           Operating
        Accounts.

       

      (a)           Maintain
        operating accounts with Collateral Agent.  In addition, a portion of
        its cash or securities in excess of that amount used for Borrower’s operations
        shall be maintained with Collateral Agent or an Affiliate of Collateral Agent,
        which account shall be in amount equal to at least the aggregate outstanding
        Obligations of Borrower to Lenders (provided that Borrower has sufficient
        cash
        or securities to satisfy this requirement).

       

      (b)           Provide
        Collateral Agent five (5) days prior written notice before establishing any
        Collateral Account at or with any bank or financial institution other than
        Collateral Agent or its Affiliates.  In addition, for each Collateral
        Account that Borrower at any time maintains, Borrower shall cause the applicable
        bank or financial institution (other than Collateral Agent) at or with which
        any
        Collateral Account is maintained to execute and deliver a Control Agreement
        or
        other appropriate instrument with respect to such Collateral Account to perfect
        Collateral Agent's Lien in such Collateral Account in accordance with the
        terms
        hereunder, which Control Agreement may not be terminated without prior written
        consent of Collateral Agent.  The provisions of the previous sentence
        shall not apply to deposit accounts exclusively used for payroll, payroll
        taxes
        and other employee wage and benefit payments to or for the benefit of Borrower’s
        employees and identified to Collateral Agent by Borrower as such.

       

      6.7           Protection
        of Intellectual Property
        Rights.  Borrower shall  use commercially reasonable
        efforts to protect, defend and maintain the validity and enforceability of
        its
        intellectual property; provided, however, nothing herein shall prohibit Borrower
        from abandoning, selling or transferring any intellectual property
        that

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      becomes
        obsolete or not useful to Borrower based on developments in its evolving
        business strategy and/or the biotech industry.

       

      6.8           Litigation
        Cooperation.  From the date hereof and continuing through the
        termination of this Agreement, make available to Collateral Agent, without
        expense to Collateral Agent, Borrower and its officers, employees and agents
        and
        Borrower's books and records, to the extent that Collateral Agent may deem
        them
        reasonably necessary to prosecute or defend any third-party suit or proceeding
        instituted by or against Collateral Agent with respect to any Collateral
        or
        relating to Borrower.

       

      6.9           
        Further
        Assurances.  Execute any further instruments and take further
        action as Collateral Agent reasonably requests to perfect or continue Collateral
        Agent’s and Lenders' Lien in the Collateral or to effect the purposes of this
        Agreement.  Deliver to Collateral Agent, within five (5) days after
        the same are sent or received, copies of all correspondence, reports, documents
        and other filings with any Governmental Authority regarding compliance with
        or
        maintenance of Governmental Approvals or Requirements of Law or that could
        reasonably be expected to have a material effect on any of the Governmental
        Approvals or otherwise on the operations of Borrower or any of its
        Subsidiaries.

       

      6.10           Notices
        of Litigation and
        Default.  Borrower will give prompt written notice to
        Collateral Agent of any litigation or governmental proceedings pending or
        threatened (in writing) against Borrower which would reasonably be expected
        to
        have a material adverse effect with respect to Borrower and in any event,
        involving amounts in excess of One Hundred Thousand Dollars ($100,000), in
        the
        aggregate. Without limiting or contradicting any other more specific provision
        of this Agreement, promptly (and in any event within five (5) Business Days)
        upon Borrower becoming aware of the existence of any Event of Default or
        event
        which, with the giving of notice or passage of time, or both, would constitute
        an Event of Default, Borrower shall give written notice to Collateral Agent
        of
        such occurrence, which such notice shall include a reasonably detailed
        description of such Event of Default or event which, with the giving of notice
        or passage of time, or both, would constitute an Event of Default.

       

      6.11           Creation/Acquisition
        of
        Subsidiaries.  In the event Borrower or any Subsidiary creates or
        acquires any Subsidiary, Borrower and such Subsidiary shall promptly notify
        Collateral Agent of the creation or acquisition of such new Subsidiary and
        take
        all such action as may be reasonably required by Collateral Agent to cause
        each
        such domestic Subsidiary to guarantee the Obligations of Borrower under the
        Loan
        Documents and grant a continuing pledge and security interest in and to the
        assets of such Subsidiary (substantially as described on Exhibit A hereto);
        and Borrower shall grant and pledge to Collateral Agent, for the ratable
        benefit
        of Lenders a perfected security interest in the stock, units or other evidence
        of ownership of each  Subsidiary (in the case of a foreign Subsidiary, such
        pledge shall not exceed 65% of such stock units or other evidence of
        ownership).

       

      6.12           Co-Borrower.
        Within thirty
        (30) days after the occurrence of the Acquisition Event, Borrower shall cause
        Apex Bioventures Acquisition Corporation, a Delaware corporation (“Apex”) to become a co-borrower
        under this Agreement, pursuant to documentation acceptable to Collateral
        Agent
        in its sole discretion. In connection therewith, Borrower shall provide Bank
        with authority documents acceptable to Collateral Agent, including, without
        limitation, an authority/enforceability opinion from Apex’s counsel, a
        certificate from the Delaware Secretary of State certifying that Apex is
        a
        validly existing Delaware corporation, and is in good standing in the State
        of
        Delaware.

       

      7           NEGATIVE
        COVENANTS

       

      Borrower
        shall not do any of the following without Collateral Agent’s prior written
        consent:

       

      7.1           Dispositions.  Convey,
        sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any
        of
        its Subsidiaries to Transfer, all or any part of its business or property,
        except for Transfers (a) of Inventory in the ordinary course of business;
        (b) of worn-out or obsolete Equipment; and (c) in connection with Permitted
        Liens and Permitted Investments; and (d) of non-exclusive and exclusive
        licenses, partnership or joint ventures for the use of the property of Borrower
        or its Subsidiaries in the ordinary course of business with any third party,
        which arrangements are approved by the Board.   For the avoidance
        of doubt, Lenders acknowledge and agree that Borrower shall be permitted
        to
        license its intellectual property to third parties consistent with Borrower's
        current business model and existing practice in the biotech
        industry.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      7.2           Changes
        in Business, Management,
        Ownership, or Business Locations.  (a) Engage in or permit
        any of its Subsidiaries to engage in any business other than the businesses
        currently engaged in by Borrower and such Subsidiary, as applicable, or
        reasonably related thereto; (b) liquidate or dissolve; or (c) (i) have
        a material change in management or (ii) enter into any transaction or series
        of
        related transactions in which the stockholders of Borrower immediately prior
        to
        the first such transaction own less than 60% of the voting stock of Borrower
        immediately after giving effect to such transaction or related series of
        such
        transactions (other than by the sale of Borrower’s equity securities in a public
        offering or to venture capital investors so long as Borrower identifies to
        Collateral Agent the venture capital investors prior to the closing of the
        transaction).  Borrower shall not, without at least thirty (30) days
        prior written notice to Collateral Agent: (1) add any new offices or
        business locations, including warehouses (unless such new offices or business
        locations contain less than Ten Thousand Dollars ($10,000) in Borrower’s assets
        or property), (2) change its jurisdiction of organization, (3) change its
        organizational structure or type, (4) change its legal name, or (5) change
        any organizational number (if any) assigned by its jurisdiction of
        organization.

       

      7.3           Mergers
        or
        Acquisitions.  Merge or consolidate, or permit any of its
        Subsidiaries to merge or consolidate, with any other Person, or acquire,
        or
        permit any of its Subsidiaries to acquire, all or substantially all of the
        capital stock or property of another Person, except for the Acquisition Event.
        A
        Subsidiary may merge or consolidate into another Subsidiary or into
        Borrower.

       

      7.4           Indebtedness.  Create,
        incur, assume, or be liable for any Indebtedness, or permit any Subsidiary
        to do
        so, other than Permitted Indebtedness.

       

      7.5           Encumbrance.  Create,
        incur, allow, or suffer any Lien on any of its property, or assign or convey
        any
        right to receive income, including the sale of any Accounts, or permit any
        of
        its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral
        not to be subject to the first priority security interest granted herein,
        or
        enter into any agreement, document, instrument or other arrangement (except
        with
        or in favor of Collateral Agent) with any Person which directly or indirectly
        prohibits or has the effect of prohibiting Borrower or any Subsidiary from
        assigning, mortgaging, pledging, granting a security interest in or upon,
        or
        encumbering any of Borrower’s or any Subsidiary’s intellectual property, except
        as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted
        Liens” herein.

       

      7.6           Maintenance
        of Collateral
        Accounts.  Maintain any Collateral Account except pursuant to
        the terms of Section 6.6(b) hereof.

       

      7.7           Distributions;
        Investments.
        (a) Pay any dividends or make any distribution or payment or redeem, retire
        or
        purchase any capital stock, or (b) directly or indirectly make any Investment
        other than Permitted Investments, or permit any of its Subsidiaries to do
        so.

       

      7.8           Transactions
        with
        Affiliates.  Directly or indirectly enter into or permit to
        exist any material transaction with any Affiliate of Borrower, except for
        transactions that are in the ordinary course of Borrower’s business, upon fair
        and reasonable terms that are no less favorable to Borrower than would be
        obtained in an arm’s length transaction with a non-affiliated
        Person.

       

      7.9           Subordinated
        Debt.  (a) Make or permit any payment on any Subordinated Debt,
        except under the terms of the subordination, intercreditor, or other similar
        agreement to which such Subordinated Debt is subject, or (b) amend any
        provision in any document relating to the Subordinated Debt which would increase
        the amount thereof or adversely affect the subordination thereof to Obligations
        owed to the Lenders.

       

      7.10           Compliance.  Become
        an “investment company” or a company controlled by an “investment company”,
        under the Investment Company Act of 1940 or undertake as one of its important
        activities extending credit to purchase or carry margin stock (as defined
        in
        Regulation U of the Board of Governors of the Federal Reserve System), or
        use
        the proceeds of any Credit Extension for that purpose; fail to meet the minimum
        funding requirements of ERISA, permit a Reportable Event or Prohibited
        Transaction, as defined in ERISA, to occur; fail to comply with the Federal
        Fair
        Labor Standards Act or violate any other law or regulation, if the violation
        could reasonably be expected to have a material adverse effect on Borrower’s
        business, or permit any of its Subsidiaries to do so; withdraw or permit
        any
        Subsidiary to withdraw from participation in, permit partial or complete
        termination of, or permit the occurrence of any other event with respect
        to, any
        present pension, profit sharing and deferred

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      compensation
        plan which could reasonably be expected to result in any liability of Borrower,
        including any liability to the Pension Benefit Guaranty Corporation or its
        successors or any other governmental agency.

       

      7.11           Amendment
        to Arachnova Security
        Agreement and Secured Obligations. Amend any
        of the
        provisions of the Arachnova Security Agreement or any of the documents
        evidencing the “Secured Obligations” (as defined in the Arachnova Security
        Agreement) in any manner which negatively or adversely affects the rights
        of
        Lenders under this Agreement.

       

      8           EVENTS
        OF
        DEFAULT

       

      Any
        one
        of the following shall constitute an event of default (an “Event of Default”) under this
        Agreement:

       

      8.1           Payment
        Default.  Borrower fails to (a) make any payment of
        principal or interest on any Credit Extension on its due date, or (b) pay
        any other Obligations within three (3) Business Days after such Obligations
        are
        due and payable (which three (3) Business Day grace period shall not apply
        to
        payments due on the Maturity Date).  During the cure period, the
        failure to cure the payment default is not an Event of Default (but no Credit
        Extension will be made during the cure period);

       

      8.2           Covenant
        Default.

       

      (a)
        Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4,
        6.5,
        6.6, or violates any covenant in Section 7; or

       

      (b)
        Borrower fails or neglects to perform, keep, or observe any other term,
        provision, condition, covenant or agreement contained in this Agreement or
        any
        Loan Documents, and as to any default (other than those specified in this
        Section 8) under such other term, provision, condition, covenant or agreement
        that can be cured, has failed to cure the default within ten (10) days after
        the
        occurrence thereof; provided, however, that if the default cannot by its
        nature
        be cured within the ten (10) day period or cannot after diligent attempts
        by
        Borrower be cured within such ten (10) day period, and such default is likely
        to
        be cured within a reasonable time, then Borrower shall have an additional
        period
        (which shall not in any case exceed thirty (30) days) to attempt to cure
        such
        default, and within such reasonable time period the failure to cure the default
        shall not be deemed an Event of Default (but no Credit Extensions shall be
        made
        during such cure period).  Grace periods provided under this Section
        shall not apply, among other things, to financial covenants or any other
        covenants set forth in subsection (a) above;

       

      8.3           Material
        Adverse
        Change.  A Material Adverse Change occurs;

       

      8.4           Attachment.  (a)
        Any
        material portion of Borrower’s assets is attached, seized, levied on, or comes
        into possession of a trustee or receiver and the attachment, seizure or levy
        is
        not removed in ten (10) days; (b) the service of process seeking to attach,
        by trustee or similar process, any funds of Borrower, or of any entity under
        control of Borrower (including a Subsidiary), on deposit with the Lenders
        and/or
        Collateral Agent or an Affiliate; (c) Borrower is enjoined, restrained, or
        prevented by court order from conducting a material part of its business;
        (d) a
        judgment or other claim in excess of One Hundred Thousand Dollars ($100,000.00)
        becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy, or
        assessment is filed against any of Borrower’s assets by any Governmental
        Authority and not paid within ten (10) days after Borrower receives
        notice.  These are not Events of Default if stayed or if a bond is
        posted pending contest by Borrower (but no Credit Extensions shall be made
        during the cure period);

       

      8.5           Insolvency
        (a) Borrower is
        unable to pay its debts (including trade debts) as they become due or otherwise
        becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an
        Insolvency Proceeding is begun against Borrower and not dismissed or stayed
        within forty-five (45) days (but no Credit Extensions shall be made while
        of any
        of the conditions described in clause (a) exist and/or until any Insolvency
        Proceeding is dismissed);

       

      8.6           Other
        Agreements.  There is a default in any agreement to which
        Borrower is a party with a third party or parties resulting in a right by
        such
        third party or parties, whether or not exercised, to accelerate the
        maturity

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      of
        any
        Indebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000)
        or that could have a material adverse effect on Borrower’s
        business.

       

      8.7           Judgments.  A
        judgment or judgments for the payment of money in an amount, individually
        or in
        the aggregate, of at least One Hundred Thousand Dollars ($100,000) (not covered
        by independent third-party insurance) shall be rendered against Borrower
        and
        shall remain unsatisfied, or unstayed for a period of ten (10) days after
        the
        entry thereof (provided that no Credit Extensions will be made prior to the
        satisfaction, or stay of such judgment, order, or decree);

       

      8.8           Misrepresentations.  Borrower
        or any Person acting for Borrower makes any representation, warranty, or
        other
        statement now or later in this Agreement, any Loan Document or in any writing
        delivered to Collateral Agent and/or Lenders or to induce Collateral Agent
        and/or Lenders to enter this Agreement or any Loan Document, and such
        representation, warranty, or other statement is incorrect in any material
        respect when made; or

       

      8.9           Subordinated
        Debt.  A default or breach occurs under any agreement between
        Borrower and any creditor of Borrower that signed a subordination,
        intercreditor, or other similar agreement with Collateral Agent or Lenders,
        or
        any creditor that has signed such an agreement with Collateral Agent or Lenders
        breaches any terms of such agreement.

       

      8.10           Governmental
        Approvals.  Any Governmental Approval shall have been
        (a) revoked, rescinded, suspended, modified in an adverse manner or not
        renewed in the ordinary course for a full term or (b) subject to any
        decision by a Governmental Authority that designates a hearing with respect
        to
        any applications for renewal of any of such Governmental Approval or that
        could
        result in the Governmental Authority taking any of the actions described
        in
        clause (a) above, and such decision or such revocation, rescission, suspension,
        modification or non-renewal (i) has, or could reasonably be expected to result
        in a Material Adverse Change, or (ii) adversely affects the legal
        qualifications of Borrower or any of its Subsidiaries to hold such Governmental
        Approval in any applicable jurisdiction and such revocation, rescission,
        suspension, modification or non-renewal could reasonably be expected to affect
        the status of or legal qualifications of Borrower or any of its Subsidiaries
        to
        hold any Governmental Approval in any other jurisdiction.

       

      8.11           Financing
        Event.   A Financing Event does not occur, or Borrower
        fails to provide evidence of same to Collateral Agent, on or before September
        30, 2008. For the avoidance of doubt, at any time prior to September 30,
        2008,
        the failure of the Acquisition Event to occur will not, by itself, constitute
        an
        Event of Default under Section 8.3 above.

       

      9           RIGHTS
        AND
        REMEDIES

       

      9.1           Rights
        and
        Remedies.  While an Event of Default occurs and continues
        Collateral Agent may, without notice or demand, do any or all of the
        following:

       

      (a)           declare
        all Obligations immediately due and payable (but if an Event of Default
        described in Section 8.5 occurs all Obligations are immediately due and payable
        without any action by Collateral Agent or Lenders);

       

      (b)           stop
        advancing money or extending credit for Borrower’s benefit under this Agreement
        or under any other agreement between Borrower and Collateral Agent and/or
        Lenders;

       

      (c)           settle
        or adjust disputes and claims directly with Account Debtors for amounts on
        terms
        and in any order that Collateral Agent considers advisable, notify any Person
        owing Borrower money of Collateral Agent’s and Lenders' security interest in
        such funds, and verify the amount of such account;

       

      (d)           make
        any payments and do any acts it considers necessary or reasonable to protect
        the
        Collateral and/or its security interest in the Collateral.  Borrower
        shall assemble the Collateral if Collateral Agent requests and make it available
        as Collateral Agent designates.  Collateral Agent may enter premises
        where the Collateral is located, take and maintain possession of any part
        of the
        Collateral, and pay, purchase, contest, or compromise any Lien which appears
        to
        be prior or superior to its security interest and pay all expenses
        incurred.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      Borrower
        grants Collateral Agent a license to enter and occupy any of its premises,
        without charge, to exercise any of Collateral Agent’s rights or
        remedies;

       

      (e)           apply
        to the Obligations any (i) balances and deposits of Borrower it holds, or
        (ii)
        any amount held by Collateral Agent or Lenders owing to or for the credit
        or the
        account of Borrower;

       

      (f)           ship,
        reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
        for sale, and sell the Collateral.  Collateral Agent is hereby granted
        a non-exclusive, royalty-free license or other right to use, without charge,
        Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
        trade secrets, trade names, trademarks, service marks, and advertising matter,
        or any similar property as it pertains to the Collateral, in completing
        production of, advertising for sale, and selling any Collateral and, in
        connection with Collateral Agent’s exercise of its rights under this Section,
        Borrower’s rights under all licenses and all franchise agreements inure to
        Collateral Agent for the  benefit of the Lenders;

       

      (g)           place
        a “hold” on any account maintained with Collateral Agent or Lenders and/or
        deliver a notice of exclusive control, any entitlement order, or other
        directions or instructions pursuant to any Control Agreement or similar
        agreements providing control of any Collateral;

       

      (h)           demand
        and receive possession of Borrower’s Books; and

       

      (i)           exercise
        all rights and remedies available to Collateral Agent under the Loan Documents
        or at law or equity, including all remedies provided under the Code (including
        disposal of the Collateral pursuant to the terms thereof).

       

      9.2           Power
        of
        Attorney.  Borrower hereby irrevocably appoints Collateral
        Agent as its lawful attorney-in-fact, exercisable only upon the occurrence
        and
        during the continuance of an Event of Default, to:  (a) endorse
        Borrower’s name on any checks or other forms of payment or security; (b) sign
        Borrower’s name on any invoice or bill of lading for any Account or drafts
        against Account Debtors; (c) settle and adjust disputes and claims about
        the
        Accounts directly with Account Debtors, for amounts and on terms Collateral
        Agent determines reasonable; (d) make, settle, and adjust all claims under
        Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
        encumbrance, security interest, and adverse claim in or to the Collateral,
        or
        any judgment based thereon, or otherwise take any action to terminate or
        discharge the same; and (f) transfer the Collateral into the name of Collateral
        Agent or a third party as the Code permits.  Borrower hereby appoints
        Collateral Agent as its lawful attorney-in-fact to sign Borrower’s name on any
        documents necessary to perfect or continue the perfection of Collateral Agent’s
        and Lenders' security interest in the Collateral regardless of whether an
        Event
        of Default has occurred until all Obligations have been satisfied in full
        and
        Collateral Agent and Lenders are under no further obligation to make Credit
        Extensions hereunder.  Collateral Agent’s foregoing appointment as
        Borrower’s attorney in fact, and all of Collateral Agent’s rights and powers,
        coupled with an interest, are irrevocable until all Obligations have been
        fully
        repaid and performed and Collateral Agent’s and Lenders' obligation to provide
        Credit Extensions terminates.

       

      9.3           Protective
        Payments.  If Borrower fails to obtain the insurance called for
        by Section 6.5 or fails to pay any premium thereon or fails to pay any other
        amount which Borrower is obligated to pay under this Agreement or any other
        Loan
        Document, Collateral Agent may obtain such insurance or make such payment,
        and
        all amounts so paid by Collateral Agent are Lenders' Expenses and immediately
        due and payable, bearing interest at the then highest applicable rate, and
        secured by the Collateral.  Collateral Agent will make reasonable
        efforts to provide Borrower with notice of Collateral Agent obtaining such
        insurance at the time it is obtained or within a reasonable time
        thereafter.  No payments by Collateral Agent are deemed an agreement
        to make similar payments in the future or Collateral Agent’s waiver of any Event
        of Default.

       

      9.4           Application
        of Payments and
        Proceeds.  Borrower shall have no right to specify the order or
        the accounts to which Collateral Agent shall allocate or apply any payments
        required to be made by Borrower to Collateral Agent or otherwise received
        by
        Collateral Agent under this Agreement when any such allocation or application
        is
        not specified elsewhere in this Agreement.  If an Event of Default has
        occurred and is continuing, Collateral Agent and/or each Lender may apply
        any
        funds in its possession, whether from Borrower account balances, payments,
        proceeds realized as the result of any collection of Accounts or other
        disposition of the Collateral, or otherwise, to the Obligations in such order
        as
        the Lenders shall determine in their sole
        discretion.  Any

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      surplus
        shall be paid to Borrower or other Persons legally entitled thereto; Borrower
        shall remain liable to Lenders for any deficiency.  If Collateral
        Agent, in its good faith business judgment, directly or indirectly enters
        into a
        deferred payment or other credit transaction with any purchaser at any sale
        of
        Collateral, Collateral Agent shall have the option, exercisable at any time,
        of
        either reducing the Obligations by the principal amount of the purchase price
        or
        deferring the reduction of the Obligations until the actual receipt by
        Collateral Agent of cash therefor.

       

      9.5           Liability
        for
        Collateral.  So long as the Collateral Agent and Lenders comply
        with reasonable banking practices regarding the safekeeping of the Collateral
        in
        the possession or under the control of the Collateral Agent and Lenders,
        the
        Collateral Agent and Lenders shall not be liable or responsible for: (a)
        the
        safekeeping of the Collateral; (b) any loss or damage to the Collateral;
        (c) any
        diminution in the value of the Collateral; or (d) any act or default of any
        carrier, warehouseman, bailee, or other Person.  Borrower bears all
        risk of loss, damage or destruction of the Collateral.

       

      9.6           No
        Waiver; Remedies
        Cumulative.  Collateral Agent’s failure, at any time or times,
        to require strict performance by Borrower of any provision of this Agreement
        or
        any other Loan Document shall not waive, affect, or diminish any right of
        Collateral Agent thereafter to demand strict performance and compliance herewith
        or therewith.  No waiver hereunder shall be effective unless signed by
        Collateral Agent and then is only effective for the specific instance and
        purpose for which it is given.  Collateral Agent’s rights and remedies
        under this Agreement and the other Loan Documents are
        cumulative.  Collateral Agent has all rights and remedies provided
        under the Code, by law, or in equity.  Collateral Agent’s exercise of
        one right or remedy is not an election, and Collateral Agent’s waiver of any
        Event of Default is not a continuing waiver.  Collateral Agent’s delay
        in exercising any remedy is not a waiver, election, or
        acquiescence.

       

      9.7           Demand
        Waiver.  Borrower waives demand, notice of default or dishonor,
        notice of payment and nonpayment, notice of any default, nonpayment at maturity,
        release, compromise, settlement, extension, or renewal of accounts, documents,
        instruments, chattel paper, and guarantees held by Collateral Agent on which
        Borrower is liable.

       

      10           NOTICES

       

      All
        notices, consents, requests, approvals, demands, or other communication
        (collectively, “Communication”) by any party
        to this Agreement or any other Loan Document must be in writing and shall
        be
        deemed to have been validly served, given, or delivered: (a) upon the earlier
        of
        actual receipt and three (3) Business Days after deposit in the U.S. mail,
        first
        class, registered or certified mail return receipt requested, with proper
        postage prepaid; (b) upon transmission, when sent by electronic mail (if
        an
        email address is specified herein) or facsimile transmission; (c) one (1)
        Business Day after deposit with a reputable overnight courier with all charges
        prepaid; or (d) when delivered, if hand-delivered by messenger, all of which
        shall be addressed to the party to be notified and sent to the address,
        facsimile number, or email address indicated below.  Either Collateral
        Agent, Lender or Borrower may change its address or facsimile number by giving
        the other party written notice thereof in accordance with the terms of this
        Section 10.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      If
        to
        Borrower:

      Dynogen
        Pharmaceuticals, Inc.

      52
        Second
        Avenue

      Waltham,
        Massachusetts 02451

      Attn:  Robert
        C. Lorette, Chief Business Officer

      Fax:  (781)
        839-5200

      Email:  blorette@dynogen.com

       

      If
        to
        Collateral Agent:

      Silicon
        Valley Bank

      One
        Newton Executive Park, Suite 200

      2221
        Washington Street

      Newton,
        Massachusetts  02462

      Attn:  Mr.
        Tom Davies

      Fax:    (617)
        969-5973

      Email:
        TDavies@svb.com

       

      with
        a
        copy to:

      Riemer
        & Braunstein LLP

      Three
        Center Plaza

      Boston,
        Massachusetts 02108

      Attn:
        David A. Ephraim, Esquire

      Fax:
        (617) 880-3456

      Email:
        DEphraim@riemerlaw.com

       

      If
        to
        Oxford:

      Oxford
        Finance Corporation

      133
        North
        Fairfax Street

      Alexandria,
        Virginia 22314

      Attention:
        General Counsel

      Fax:
        (703) 519-5225

       

      11           CHOICE
        OF LAW, VENUE AND
        JURY TRIAL WAIVER

       

      Massachusetts
        law governs the Loan Documents without regard to principles of conflicts
        of
        law.  Borrower and Lenders, and Collateral Agent each submit to the
        exclusive jurisdiction of the State and Federal courts in the Commonwealth
        of
        Massachusetts.  Notwithstanding the foregoing, nothing in this
        Agreement shall be deemed to operate to preclude Collateral Agent from bringing
        suit or taking other legal action in any other jurisdiction to realize on
        the
        Collateral or any other security for the Obligations, or to enforce a judgment
        or other court order in favor of Collateral Agent and
        Lenders.  Borrower expressly submits and consents in advance to such
        jurisdiction in any action or suit commenced in any such court, and Borrower
        hereby waives any objection that it may have based upon lack of personal
        jurisdiction, improper venue, or forum non conveniens and hereby consents
        to the
        granting of such legal or equitable relief as is deemed appropriate by such
        court.  Borrower hereby waives personal service of the summons,
        complaints, and other process issued in such action or suit and agrees that
        service of such summons, complaints, and other process may be made by registered
        or certified mail addressed to Borrower at the address set forth in Section
        10
        of this Agreement and that service so made shall be deemed completed upon
        the
        earlier to occur of Borrower’s actual receipt thereof or three (3) days after
        deposit in the U.S. mails, proper postage prepaid.

       

      TO
        THE FULLEST EXTENT PERMITTED BY
        APPLICABLE LAW, BORROWER, LENDER AND COLLATERAL AGENT EACH WAIVE THEIR RIGHT
        TO
        A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON
        THIS
        AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING
        CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL
        INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY
        HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

       

      12           GENERAL
        PROVISIONS

       

      12.1           Successors
        and
        Assigns.  This Agreement binds and is for the benefit of the
        successors and permitted assigns of each party.  Borrower may not
        assign this Agreement or any rights or obligations under it

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      without
        Collateral Agent’s prior written consent (which may be granted or withheld in
        Collateral Agent’s discretion).   Lenders have the right, without
        the consent of, but with written notice to Borrower, to sell, transfer, assign,
        negotiate, or grant participation in all or any part of, or any interest
        in,
        Lenders’ obligations, rights, and benefits under this Agreement and the other
        Loan Documents.

       

      12.2           Indemnification/Expenses.  Borrower
        agrees to indemnify, defend and hold Collateral Agent and the Lenders and
        their
        respective directors, officers, employees, agents, attorneys, or any other
        Person affiliated with or representing Collateral Agent or the Lenders harmless
        against:  (a) all obligations, demands, claims, and liabilities
        (collectively, “Claims”)
        asserted by any other party in connection with the transactions contemplated
        by
        the Loan Documents; and (b) all losses or Lenders' Expenses incurred, or
        paid by
        Lenders and/or Collateral Agent from, following, or arising from transactions
        between Collateral Agent, and/or Lenders and Borrower (including reasonable
        attorneys’ fees and expenses), except for Claims and/or losses directly caused
        by Collateral Agent’s or Lenders' gross negligence or willful
        misconduct.

       

      12.3           Time
        of
        Essence.  Time is of the essence for the performance of all
        Obligations in this Agreement.

       

      12.4           Severability
        of
        Provisions.  Each provision of this Agreement is severable from
        every other provision in determining the enforceability of any
        provision.

       

      12.5           Amendments
        in Writing;
        Integration.  All amendments to this Agreement must be in
        writing signed by Collateral Agent, Lenders and Borrower.  This
        Agreement and the Loan Documents represent the entire agreement about this
        subject matter and supersede prior negotiations or agreements.  All
        prior agreements, understandings, representations, warranties, and negotiations
        between the parties about the subject matter of this Agreement and the Loan
        Documents merge into this Agreement and the Loan Documents.

       

      12.6           Counterparts.  This
        Agreement may be executed in any number of counterparts and by different
        parties
        on separate counterparts, each of which, when executed and delivered, are
        an
        original, and all taken together, constitute one Agreement.

       

      12.7           Survival.  All
        covenants, representations and warranties made in this Agreement continue
        in
        full force until this Agreement has terminated pursuant to its terms and
        all
        Obligations (other than inchoate indemnity obligations and any other obligations
        which, by their terms, are to survive the termination of this Agreement
        including) have been satisfied.  The obligation of Borrower in Section
        12.2 to indemnify each Lender and Collateral Agent shall survive until the
        statute of limitations with respect to such claim or cause of action shall
        have
        run.

       

      12.8           Confidentiality.  In
        handling any confidential information, Lenders and Collateral Agent shall
        exercise the same degree of care that it exercises for its own proprietary
        information, but disclosure of information may be made: (a) to Lenders' and
        Collateral Agent’s Subsidiaries or Affiliates; (b) to prospective transferees or
        purchasers of any interest in the Credit Extensions (provided, however, Lenders
        and Collateral Agent shall use commercially reasonable efforts to obtain
        such
        prospective transferee’s or purchaser’s agreement to the terms of this
        provision); (c) as required by law, regulation, subpoena, or other order;
        (d) to regulators or as otherwise required in connection with an
        examination or audit; and (e) as Collateral Agent considers appropriate in
        exercising remedies under this Agreement.  Confidential information
        does not include information that either: (i) is in the public domain or
        in
        Lenders' and/or Collateral Agent’s possession when disclosed to Lenders and/or
        Collateral Agent, or becomes part of the public domain after disclosure to
        Lenders and/or Collateral Agent; or (ii) is disclosed to Lenders and/or
        Collateral Agent by a third party, if Lenders and/or Collateral Agent does
        not
        know that the third party is prohibited from disclosing the
        information.

       

      12.9           Right
        of Set
        Off.   Borrower hereby grants to Collateral Agent and to
        each Lender, a lien, security interest and right of set off as security for
        all
        Obligations to Collateral Agent and each Lender hereunder, whether now existing
        or hereafter arising upon and against all deposits, credits, collateral and
        property, now or hereafter in the possession, custody, safekeeping or control
        of
        Collateral Agent or Lenders or any entity under the control of Collateral
        Agent
        or Lenders (including an Collateral Agent affiliate) or in transit to any
        of
        them.  At any time after the occurrence and during the continuance of
        an Event of Default, without demand or notice, Collateral Agent or Lenders
        may
        set off the same or any part thereof and apply the same to any liability
        or
        obligation of Borrower even though unmatured and regardless of the adequacy
        of
        any other collateral securing the Obligations.  ANY AND
        ALL

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      RIGHTS
        TO
        REQUIRE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
        TO ANY
        OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT
        OF
        SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER
        ARE
        HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

       

      13           DEFINITIONS

       

      13.1           Definitions.  As
        used in this Agreement, the following terms have the following
        meanings:

       

      “Account”
is
        any “account” as
        defined in the Code with such additions to such term as may hereafter be
        made,
        and includes, without limitation, all accounts receivable and other sums
        owing
        to Borrower.

       

      “Account
        Debtor” is any
“account debtor” as defined in the Code with such additions to such term as may
        hereafter be made.

       

      “Acquisition
        Agreement” means
        the Agreement and Plan of Merger by and among Borrower, Apex Bioventures
        Acquisition Corporation, Apex Acquisition Sub, Inc. and the other parties
        thereto dated February 5, 2008, as the same may be amended from time to
        time.

       

      "Acquisition
        Event" means, the
        consummation of the proposed merger agreement by and between Borrower and
        Apex
        Bioventures Acquisition Corporation and Apex Acquisition Sub, Inc. on terms
        and
        conditions as set forth in the Acquisition Agreement.

       

      “Affiliate”
of
        any Person is a
        Person that owns or controls directly or indirectly the Person, any Person
        that
        controls or is controlled by or is under common control with the Person,
        and
        each of that Person’s senior executive officers, directors, partners and, for
        any Person that is a limited liability company, that Person’s managers and
        members.

       

      “Agreement”
is
        defined in the
        preamble hereof.

       

      “Amortization
        Date” is October
        1, 2008.

       

      “Apex”
is
        defined in Section
        6.12.

       

      “Arachnova
        Collateral” is the
        collateral as described in that certain UCC Financing Statement in favor
        of
        Arachnova Therapeutics Limited and filed at the Secretary of State’s Office of
        Delaware on January 3, 2008 as filing number 20080028280 (exclusive of any
        amendments).

       

      “Arachnova
        Security Agreement”
is that certain Security Agreement by and between Borrower and Arachnova
        Therapeutics Limited dated as of December 10, 2007 (not including any
        amendments).

       

      "Board"
        means Borrower's board
        of directors.

       

      “Borrower”
is
        defined in the
        preamble hereof.

       

      “Borrower’s
        Books” are all
        Borrower’s books and records including ledgers, federal and state tax returns,
        records regarding Borrower’s assets or liabilities, the Collateral, business
        operations or financial condition, and all computer programs or storage or
        any
        equipment containing such information.

       

       “Borrowing
        Resolutions” are,
        with respect to any Person, those resolutions adopted by such Person’s Board of
        Directors and delivered by such Person to Collateral Agent approving the
        Loan
        Documents to which such Person is a party and the transactions contemplated
        thereby, together with a certificate executed by its secretary on behalf
        of such
        Person certifying that (a) such Person has the authority to execute,
        deliver, and perform its obligations under each of the Loan Documents to
        which
        it is a party, (b) that attached as Exhibit A to such certificate is a
        true, correct, and complete copy of the resolutions then in full force and
        effect authorizing and ratifying the execution, delivery, and performance
        by
        such Person of the Loan Documents to which it is a party, (c) the name(s)
        of
        the

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      Person(s)
        authorized to execute the Loan Documents on behalf of such Person, together
        with
        a sample of the true signature(s) of such Person(s), and (d) that
        Collateral Agent may conclusively rely on such certificate unless and until
        such
        Person shall have delivered to Collateral Agent a further certificate canceling
        or amending such prior certificate.

       

      “Bridge
        Financing” means an
        unsecured, non-interest bearing convertible equity financing of Borrower,
        closing after February 5, 2008 but prior to the Acquisition Event in an
        aggregate amount of up to Five Million Dollars ($5,000,000) as set forth
        in the
        Investor Commitment Letter.

       

       “Business
        Day” is any day that
        is not a Saturday, Sunday or a day on which Collateral Agent is
        closed.

       

       “Cash
        Equivalents” are
        (a) marketable direct obligations issued or unconditionally guaranteed by
        the United States or any agency or any State thereof having maturities of
        not
        more than one (1) year from the date of acquisition; (b) commercial paper
        maturing no more than one (1) year after its creation and having the highest
        rating from either Standard & Poor’s Ratings Group or Moody’s Investors
        Service, Inc., and (c) SVB’s certificates of deposit issued maturing no more
        than one (1) year after issue.

       

       “Claims”
are
        defined in Section
        12.2.

       

      “Code”
is
        the Uniform
        Commercial Code, as the same may, from time to time, be enacted and in effect
        in
        the Commonwealth of Massachusetts provided, that, to the extent that the
        Code is
        used to define any term herein or in any Loan Document and such term is defined
        differently in different Articles or Divisions of the Code, the definition
        of
        such term contained in Article or Division 9 shall govern; provided further,
        that in the event that, by reason of mandatory provisions of law, any or
        all of
        the attachment, perfection, or priority of, or remedies with respect to,
        Collateral Agent’s and Lenders' Lien on any Collateral is governed by the
        Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth
        of Massachusetts, the term “Code” shall mean the Uniform
        Commercial Code as enacted and in effect in such other jurisdiction solely
        for
        purposes on the provisions thereof relating to such attachment, perfection,
        priority, or remedies and for purposes of definitions relating to such
        provisions.

       

      “Collateral”
is
        any and all
        properties, rights and assets of Borrower described on Exhibit
        A.

       

      “Collateral
        Account” is any
        Deposit Account, Securities Account, or Commodity Account.

       

      "Collateral
        Agent" means, SVB,
        not in its individual capacity, but solely in its capacity as agent on behalf
        of
        and for the benefit of the Lenders.

       

      "Commitment
        Percentage" is set
        forth in Schedule 1.1, as amended from time to time.

       

       “Commodity
        Account” is any
“commodity account” as defined in the Code with such additions to such term as
        may hereafter be made.

       

      “Communication”
is
        defined in
        Section 10.

       

      “Compliance
        Certificate” is
        that certain certificate in the form attached hereto as Exhibit
        C.

       

       “Contingent
        Obligation” is, for
        any Person, any direct or indirect liability, contingent or not, of that
        Person
        for (a) any indebtedness, lease, dividend, letter of credit or other obligation
        of another such as an obligation directly or indirectly guaranteed, endorsed,
        co-made, discounted or sold with recourse by that Person, or for which that
        Person is directly or indirectly liable; (b) any obligations for undrawn
        letters
        of credit for the account of that Person; and (c) all obligations from any
        interest rate, currency or commodity swap agreement, interest rate cap or
        collar
        agreement, or other agreement or arrangement designated to protect a Person
        against fluctuation in interest rates, currency exchange rates or commodity
        prices; but “Contingent Obligation” does not include endorsements in the
        ordinary course of business.  The amount of a Contingent Obligation is
        the stated or determined amount of the primary obligation for which the
        Contingent Obligation is made or, if not determinable, the maximum reasonably
        anticipated liability for it determined by the Person in good faith; but
        the
        amount may not exceed the maximum of the obligations under any guarantee
        or
        other support arrangement.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

       “Control
        Agreement” is any
        control agreement entered into among the depository institution at which
        Borrower maintains a Deposit Account or the securities intermediary or commodity
        intermediary at which Borrower maintains a Securities Account or a Commodity
        Account, Borrower, and Collateral Agent pursuant to which Collateral Agent
        obtains control (within the meaning of the Code) for the benefit of the Lenders
        over such Deposit Account, Securities Account, or Commodity
        Account.

       

      “Credit
        Extension” is any Term
        Loan or any other extension of credit by Collateral Agent or Lenders for
        Borrower’s benefit.

       

       “Default”
is
        any event which
        with notice or passage of time or both, would constitute an Event of
        Default.

       

      "Default
        Rate" is defined in
        Section 2.2(b).

       

       “Deposit
        Account” is any
“deposit account” as defined in the Code with such additions to such term as may
        hereafter be made.

       

      “Designated
        Deposit Account” is
        Borrower’s deposit account, account number _____________, maintained with
        SVB.

       

      “Dollars,” “dollars”
and
“$”
each
        mean lawful money of
        the United States.

       

       “Effective
        Date” is defined in
        the preamble of this Agreement.

       

       “Equipment”
is
        all “equipment”
as defined in the Code with such additions to such term as may hereafter
        be
        made, and includes without limitation all machinery, fixtures, goods, vehicles
        (including motor vehicles and trailers), and any interest in any of the
        foregoing.

       

      "Equity
        Event" shall mean
        receipt of unrestricted gross cash proceeds (net of reasonable expenses)
        by the
        Borrower, after the Effective Date, from one or more closings of an equity
        round
        of financing (including the Bridge Financing and any Subordinated Debt) with
        existing investors, and other investors reasonably acceptable to the Lenders,
        in
        the amount of at least Thirty Million Dollars ($30,000,000).

       

      “ERISA”
is
        the Employee
        Retirement Income Security Act of 1974, and its regulations.

       

      “Event
        of Default” is defined
        in Section 8.

       

      “Final
        Payment” is a payment
        (in addition to and not a substitution for the regular monthly payments of
        principal plus accrued interest) equal to the amount of the Term Loan multiplied
        by the Final Payment Percentage and due on the earliest to occur of (a) the
        final Payment Date for such Term Loan, (b) the acceleration of such Term
        Loan pursuant to Section 2.1.1(e) hereof, and (c) prepayment of the Term
        Loan
        pursuant to Section 2.1.1(f) hereof.

       

      “Final
        Payment Percentage” is,
        for each Term Loan, one percent (1.0%).

       

      "Financing
        Event" shall means
        the earlier to occur of: (i) an Equity Event, or (ii) Acquisition
        Event.

       

      “First
        Draw Period” is the
        period of time from the Effective Date through the earliest to occur of (a)
        February 21, 2008, and (b) an Event of Default.

       

      "First
        Term Loan" is defined in
        Section 2.1.1.

       

      “Funding
        Date” is any date on
        which a Credit Extension is made to or on account of Borrower which shall
        be a
        Business Day.

       

      “GAAP”
is
        generally accepted
        accounting principles set forth in the opinions and pronouncements of the
        Accounting Principles Board of the American Institute of Certified Public
        Accountants and statements and pronouncements of the Financial Accounting
        Standards Board or in such other statements by such other Person as

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      may
        be
        approved by a significant segment of the accounting profession, which are
        applicable to the circumstances as of the date of determination.

       

      “General
        Intangibles” is all
“general intangibles” as defined in the Code in effect on the date hereof with
        such additions to such term as may hereafter be made, and includes without
        limitation, all copyright rights, copyright applications, copyright
        registrations and like protections in each work of authorship and derivative
        work, whether published or unpublished, any patents, trademarks, service
        marks
        and, to the extent permitted under applicable law, any applications therefor,
        whether registered or not, any trade secret rights, including any rights
        to
        unpatented inventions, payment intangibles, royalties, contract rights,
        goodwill, franchise agreements, purchase orders, customer lists, route lists,
        telephone numbers, domain names, claims, income and other tax refunds, security
        and other deposits, options to purchase or sell real or personal property,
        rights in all litigation presently or hereafter pending (whether in contract,
        tort or otherwise), insurance policies (including without limitation key
        man,
        property damage, and business interruption insurance), payments of insurance
        and
        rights to payment of any kind.

       

       “Governmental
        Approval” is any
        consent, authorization, approval, order, license, franchise, permit,
        certificate, accreditation, registration, filing or notice, of, issued by,
        from
        or to, or other act by or in respect of, any Governmental
        Authority.

      

      “Governmental
        Authority” is any
        nation or government, any state or other political subdivision thereof, any
        agency, authority, instrumentality, regulatory body, court, central bank
        or
        other entity exercising executive, legislative, judicial, taxing, regulatory
        or
        administrative functions of or pertaining to government, any securities exchange
        and any self-regulatory organization.

       

      “Indebtedness”
is
        (a)
        indebtedness for borrowed money or the deferred price of property or services,
        such as reimbursement and other obligations for surety bonds and letters
        of
        credit, (b) obligations evidenced by notes, bonds, debentures or similar
        instruments, (c) capital lease obligations, and (d) Contingent
        Obligations.

       

       “Insolvency
        Proceeding” is any
        proceeding by or against any Person under the United States Bankruptcy Code,
        or
        any other bankruptcy or insolvency law, including assignments for the benefit
        of
        creditors, compositions, extensions generally with its creditors, or proceedings
        seeking reorganization, arrangement, or other relief.

       

      “Inventory”
is
        all “inventory”
as defined in the Code in effect on the date hereof with such additions to
        such
        term as may hereafter be made, and includes without limitation all merchandise,
        raw materials, parts, supplies, packing and shipping materials, work in process
        and finished products, including without limitation such inventory as is
        temporarily out of Borrower’s custody or possession or in transit and including
        any returned goods and any documents of title representing any of the
        above.

       

      “Investment”
is
        any beneficial
        ownership interest in any Person (including stock, partnership interest or
        other
        securities), and any loan, advance or capital contribution to any
        Person.

       

      “Investor
        Commitment Letter”
means the commitment letter to the Lenders from the lead existing
        investors of
        the Borrower dated February 20, 2008 with regard to the Bridge
        Financing.

       

      "Lender"
        is any one of the
        Lenders.

       

      "Lenders"
        shall mean the
        Persons identified on Schedule 1.1 hereto and each assignee that becomes
        a party
        to this Agreement pursuant to Section 12.1.

       

      “Lenders'
        Expenses” are all
        audit fees and expenses, costs, and expenses (including reasonable attorneys’
fees and expenses) of Lenders for preparing, amending, negotiating, defending
        and enforcing the Loan Documents (including, without limitation, those incurred
        in connection with appeals or Insolvency Proceedings).

       

      “LIBOR
        Rate” means the rate of
        interest per annum determined by Collateral Agent to be the per annum rate
        of
        interest at which deposits in United States Dollars are offered to Collateral
        Agent in the London interbank market (rounded upward, if necessary, to the
        nearest 1/100th of one percent (0.01%)) in which Collateral Agent customarily
        participates for a period of time equal to thirty (30) days and published
        in The
        Wall Street Journal one (1) Business Day prior to the Funding Date and in
        an
        amount approximately equal to the amount of such Term Loan.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

       “LIBOR
        Rate Margin” is six
        percentage points (6.0%) per annum.

       

      “Lien”
is
        a claim, mortgage,
        deed of trust, levy, charge, pledge, security interest or other encumbrance
        of
        any kind, whether voluntarily incurred or arising by operation of law or
        otherwise against any property.

       

       “Loan
        Documents” are,
        collectively, this Agreement, the Warrant, the Perfection Certificate, any
        note,
        or notes or guaranties executed by Borrower, and any other present or future
        agreement between Borrower and/or for the benefit of Lenders and Collateral
        Agent in connection with this Agreement, all as amended, restated, or otherwise
        modified.

       

       “Material
        Adverse
        Change” is (a) a material impairment in the perfection or priority of
        Lenders' Lien in the Collateral or in the value of such Collateral; (b) a
        material adverse change in the business, operations, or condition (financial
        or
        otherwise) of Borrower; or (c) a material impairment of the prospect of
        repayment of any portion of the Obligations.

       

      "Maturity
        Date" is the Term
        Loan Maturity Date.

       

      “Obligations”
are
        Borrower’s
        obligation to pay when due any debts, principal, interest, Lenders' Expenses,
        Prepayment Fee, Final Payment, and other amounts Borrower owes Lenders now
        or
        later, whether under this Agreement, the Loan Documents, or otherwise,
        including, without limitation, all obligations relating to letters of credit
        (including reimbursement obligations for drawn and undrawn letters of credit),
        cash management services, and foreign exchange contracts, if any, and including
        interest accruing after Insolvency Proceedings begin (whether or not allowed)
        and debts, liabilities, or obligations of Borrower assigned to Lenders and/or
        Collateral Agent, and the performance of Borrower’s duties under the Loan
        Documents.

       

      “Operating
        Documents” are, for
        any Person, such Person’s formation documents, as certified with the Secretary
        of State of such Person’s state of formation on a date that is no earlier than
        30 days prior to the Effective Date, and (a) if such Person is a corporation,
        its bylaws in current form, (b) if such Person is a limited liability company,
        its limited liability company agreement (or similar agreement), and (c) if
        such
        Person is a partnership, its partnership agreement (or similar agreement),
        each
        of the foregoing with all current amendments or modifications
        thereto.

       

       “Payment/Advance
        Form” is that
        certain form attached hereto as Exhibit
        B.

       

      “Payment
        Date” is the first
        Business Day of each calendar month.

       

      “Perfection
        Certificate” is
        defined in Section 5.1.

       

      “Permitted
        Indebtedness”
is:

       

      (a)           Borrower’s
        Indebtedness to Lenders and Collateral Agent under this Agreement and the
        other
        Loan Documents;

       

      (b)           Indebtedness
        existing on the Effective Date and shown on the Perfection
        Certificate;

       

      (c)           the
        Bridge Financing provided it constitutes Subordinated Debt;

       

      (d)           Subordinated
        Debt;

       

      (e)           unsecured
        Indebtedness to trade creditors incurred in the ordinary course of
        business;

       

      (f)           Indebtedness
        secured by Permitted Liens; and

       

      (g)           extensions,
        refinancings, modifications, amendments and restatements of any items of
        Permitted Indebtedness (a) through (f) above, provided that the principal
        amount
        thereof is not increased or the terms thereof are not modified to impose
        more
        burdensome terms upon Borrower or its Subsidiary, as the case may
        be.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      “Permitted
        Investments” are:

       

      (a)           Investments
        shown on the Perfection Certificate and existing on the Effective Date;
        and

       

      (b)           Cash
        Equivalents.

       

      “Permitted
        Liens”
are:

       

      (a)           Liens
        existing on the Effective Date and shown on the Perfection Certificate or
        arising under this Agreement and the other Loan Documents;

       

      (b)           Liens
        for taxes, fees, assessments or other government charges or levies, either
        not
        delinquent or being contested in good faith and for which Borrower maintains
        adequate reserves on its Books, if they have no priority over any of Lender's
        Liens;

       

      (c)           purchase
        money Liens (i) on Equipment acquired or held by Borrower incurred for financing
        the acquisition of the Equipment securing no more than One Hundred Thousand
        Dollars ($100,000) in the aggregate amount outstanding, or (ii) existing
        on
        Equipment when acquired, if the Lien
        is
        confined to the property and improvements and the proceeds of the
        Equipment;

       

      (d)           Liens
        incurred in the extension, renewal or refinancing of the indebtedness secured
        by
        Liens described in (a) through (c), but any extension,
        renewal or replacement Lien must be limited to the property encumbered by
        the
        existing Lien and the principal amount of the indebtedness may not
        increase;

       

      (e)           leases
        or subleases of real property granted in the ordinary course of business,
        and
        leases, subleases, non-exclusive licenses or sublicenses of property (other
        than
        real property or intellectual property) granted in the ordinary course of
        Borrower’s business, if the leases,
        subleases, licenses and sublicenses do not prohibit granting Collateral Agent
        a
        security interest; and

       

      (f)           non-exclusive
        and exclusive licenses, partnership or joint ventures for the use of the
        property of Borrower or its Subsidiaries in the ordinary course of business
        with
        any third party, which arrangements are approved by the
        Board.   For the avoidance of doubt, Lenders acknowledge and
        agree that Borrower shall be permitted to license its intellectual property
        to
        third parties consistent with Borrower's current business model and existing
        practice in the biotech industry; and

       

      (g)           judgment
        liens not constituting an Event of Default under Section 8.4 or 8.7
        hereof.

       

      “Person”
is
        any individual,
        sole proprietorship, partnership, limited liability company, joint venture,
        company, trust, unincorporated organization, association, corporation,
        institution, public benefit corporation, firm, joint stock company, estate,
        entity or government agency.

       

      "Prepayment
        Date" is defined in
        Section 2.1.1(f).

       

      "Prepayment
        Fee" shall be an
        additional fee payable to the Lenders in amount equal to:

       

      (i)           for
        a prepayment made after the Prepayment Date, and on or prior to February
        20,
        2009,four  percent (4.0%) of the principal amount of the Term Loans
        prepaid; or

       

      (ii)           for
        a prepayment made after February 20, 2009, and on or prior to February 20,
        2010,two percent (2.0%) of the principal amount of the Term Loans prepaid;
        and

       

      (iii)           for
        a prepayment made after February 20, 2010, and on or prior to the Term
        LoanMaturity Date, one percent (1.0%) of the principal amount of the Term
        Loans
        prepaid.

       

       “Registered
        Organization” is
        any “registered organization” as defined in the Code with such additions to such
        term as may hereafter be made

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      "Requirement
        of Law” is as to
        any Person, the organizational or governing documents of such Person, and
        any
        law (statutory or common), 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.

       

      “Responsible
        Officer” is any of
        the Chief Executive Officer, President, Chief Financial Officer and Controller
        of Borrower.

       

      “Second
        Draw Period” is the
        period of time commencing on the Effective Date through the earliest to occur
        of
        (x) April 30, 2008, and (y) an Event of Default.

       

      "Second
        Term Loan" is defined
        in Section 2.1.1.

       

      "Secured
        Promissory Note" is
        defined in Section 2.3.

       

      "Secured
        Promissory Note
        Record"  A record maintained by each Lender with respect to the
        outstanding Obligations and credits made thereto.

       

       “Securities
        Account” is any
“securities account” as defined in the Code with such additions to such term as
        may hereafter be made.

       

       “Subordinated
        Debt” is
        indebtedness incurred by Borrower subordinated to all of Borrower’s now or
        hereafter indebtedness to Lenders (pursuant to a subordination, intercreditor,
        or other similar agreement in form and substance satisfactory to Collateral
        Agent and Lenders entered into between Collateral Agent, the Borrower and
        the
        other creditor), on terms acceptable to Collateral Agent and
        Lenders.

       

       “Subsidiary”
means,
        with
        respect to any Person, any Person of which more than 50.0% of the voting
        stock
        or other equity interests (in the case of Persons other than corporations)
        is
        owned or controlled, directly or indirectly, by such Person or one or more
        of
        Affiliates of such Person.

       

      “Term
        Loan” is defined in
        Section 2.1.1 hereof.

       

      “Term
        Loan Maturity Date” is
        the last Payment Date for each Term Loan.

       

       “Transfer”
is
        defined in
        Section 7.1.

       

       “Warrants”
are
        the Warrants to
        Purchase Stock dated as of the Effective Date executed by Borrower in favor
        of
        each Lender.

       

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      

       

      IN
        WITNESS WHEREOF, the
        parties hereto have caused this Agreement to be executed as a sealed instrument
        under the laws of the Commonwealth of Massachusetts as of the Effective
        Date.

       

      BORROWER:

       

      By_________________________________________

      Name:______________________________________

      Title:_______________________________________

       

      LENDERS:

       

      SILICON
        VALLEY BANK, as Collateral Agent and as a Lender

       

      By_________________________________________

      Name:______________________________________

      Title:_______________________________________

       

      

       

      OXFORD
        FINANCE CORPORATION, as a Lender

       

      By_________________________________________

      Name:______________________________________

      Title:_______________________________________

       

      
 

      
        
           
            

        

        
           
            

          
            

          

        

        
           
            

        

      

      SCHEDULE
        1.1

      

      LENDERS
        AND
        COMMITMENTS

      

      
        	
                Lender

              	
                Commitment

              	
                Commitment
                  Percentage

              
	
                Oxford
                  Finance Corporation

              	
                $5,000,000

              	
                50.0%

              
	
                Silicon
                  Valley Bank

              	
                $5,000,000

              	
                50.0%

              
	
                TOTAL

              	
                $10,000,000

              	
                100.00%

              

      

      
        
           
            

        

        
          -
            1
            -

          
            

          

        

        
           
            

        

      

      EXHIBIT
        A

      

      The
        Collateral consists of all of Borrower’s right, title and interest in and to the
        following personal property:

       

      All
        goods, Accounts (including health-care receivables), Equipment, Inventory,
        contract rights or rights to payment of money, leases, license agreements,
        franchise agreements, General Intangibles (except as provided below), commercial
        tort claims, documents, instruments (including any promissory notes), chattel
        paper (whether tangible or electronic), cash, deposit accounts, all certificates
        of deposit, fixtures, letters of credit rights (whether or not the letter
        of
        credit is evidenced by a writing), securities, and all other investment
        property, supporting obligations, and financial assets, whether now owned
        or
        hereafter acquired, wherever located; and

       

      all
        Borrower’s Books relating to the foregoing, and any and all claims, rights and
        interests in any of the above and all substitutions for, additions, attachments,
        accessories, accessions and improvements to and replacements, products, proceeds
        and insurance proceeds of any or all of the foregoing.

       

      Notwithstanding
        the foregoing, the Collateral does not include any of the following, whether
        now
        owned or hereafter acquired any copyright rights, copyright applications,
        copyright registrations and like protections in each work of authorship and
        derivative work, whether published or unpublished, any patents, patent
        applications and like protections, including improvements, divisions,
        continuations, renewals, reissues, extensions, and continuations-in-part
        of the
        same, trademarks, service marks and, to the extent permitted under applicable
        law, any applications therefor, whether registered or not, and the goodwill
        of
        the business of Borrower connected with and symbolized thereby, know-how,
        operating manuals, trade secret rights, rights to unpatented inventions,
        and any
        claims for damage by way of any past, present, or future infringement of
        any of
        the foregoing; provided, however, the Collateral shall include all Accounts,
        license and royalty fees and other revenues, proceeds, or income arising
        out of
        or relating to any of the foregoing. Notwithstanding the foregoing, the Lender’s
        Lien with respect to any of the Archanova Collateral is expressly subordinate
        to
        Arachnova Therapeutics Limited’s Lien on the Arachnova Collateral.

       

      Pursuant
        to the terms of a certain negative pledge arrangement with Collateral Agent
        and
        Lenders, except for Permitted Liens, Borrower has agreed not to encumber
        any of
        its copyright rights, copyright applications, copyright registrations and
        like
        protections in each work of authorship and derivative work, whether published
        or
        unpublished, any patents, patent applications and like protections, including
        improvements, divisions, continuations, renewals, reissues, extensions, and
        continuations-in-part of the same, trademarks, service marks and, to the
        extent
        permitted under applicable law, any applications therefor, whether registered
        or
        not, and the goodwill of the business of Borrower connected with and symbolized
        thereby, know-how, operating manuals, trade secret rights, rights to unpatented
        inventions, and any claims for damage by way of any past, present, or future
        infringement of any of the foregoing, without Collateral Agent’s prior written
        consent.  Notwithstanding the foregoing, Borrower may enter into
        non-exclusive and exclusive licenses, partnership or joint ventures for the
        use
        of the property of Borrower or its Subsidiaries in the ordinary course of
        business with any third party, which arrangements are approved by the
        Board.   For the avoidance of doubt, Lenders acknowledge and
        agree that Borrower shall be permitted to license its intellectual property
        to
        third parties consistent with Borrower's current business model and existing
        practice in the biotech industry.

       

      
        
           
            

        

        
          -
            2
            -

          
            

          

        

        
           
            

        

      

      EXHIBIT
        B

      

      Loan
        Payment/Advance Request
        Form

      

      DYNOGEN
        PHARMACEUTICAL,
        INC.

      

      Deadline
        is Noon E.S.T.*

      

      Fax
        To:

      Date:
        _____________________

       

      
        LOAN
          PAYMENT:

         

        
          
            
              
                	
                      	
                        From
                          Account #___________________________________

                      	
                        To
                          Account #_____________________________________

                      
	 	(Deposit
                        Account #) 	(Loan
                        Account #)
	 	 	 
	 	Principal
                        $_________________________________________	and/or
                        Interest $___________________________________
	 	 	 
	 	Authorized
                        Signature:_______________________________ 	Phone
                        Number: ___________________________________
	 	 	 
	 	Print
                        Name/Title:____________________________________ 	 

              

               

            

          

        

      

       

      
        
          
            
              Loan
                Advance:

               

              
                Complete
                  Outgoing
                  Wire Request section below if all or a portion of the funds from this
                  loan advance are for an outgoing wire.

              

               

            

            
              
                
                  
                    	
                          	
                            From
                              Account #___________________________________

                          	
                            To
                              Account #_____________________________________

                          
	 	(Loan
                            Account #) 	(Deposit
                            Account #)
	 	 	 
	 	Amount
                            of Advance $_______________________________	and/or
                            Interest $___________________________________
	 	 	 

                  

                  All
                    Borrower’s representations and warranties in the Loan and Security Agreement
                    are
                    true, correct and complete in all material respects on the date
                    of the request
                    for an advance; provided, however, that such materiality qualifier
                    shall not be
                    applicable to any representations and warranties that already
                    are qualified or
                    modified by materiality in the text thereof; and provided, further
                    that those
                    representations and warranties expressly referring to a specific
                    date shall be
                    true, accurate and complete in all material respects as of such
                    date:

                   

                  
                    	 	Authorized
                            Signature:_______________________________ 	Phone
                            Number: ___________________________________
	 	 	 
	 	Print
                            Name/Title:____________________________________ 	 

                  

                   

                

              

            

          

        

         

      

      
        
          
            
              Outgoing
                Wire
                Request:

              
                Complete
                  only if all or a portion of funds from the loan advance above is
                  to be
                  wired.

                
                  Deadline
                    for same day processing is noon, E.S.T.

                   

                

              

            

            
              
                
                  
                    	
                          	
                            Beneficiary
                              Name: ___________________________________

                          	
                            Amount
                              of Wire: $_____________________________________

                          
	 	Beneficiary
                            Lender: __________________________________	Account
                            Number: _____________________________________
	 	City
                            and State: ______________________________________	 
	 	 	 

                  

                  
                    	 	Beneficiary
                            Lender Transit (ABA)
                            #:______________________ 	Beneficiary
                            Lender Code (Swift, Sort, Chip, etc.): ______________
	 	 	           
                            (For International
                            Wire
                            Only) 
	 	 	 
	 	Intermediary
                            Lender: __________________________________ 	Transit
                            (ABA)
                            #:______________________________________ 

 For
                    Further Credit to:
                    _________________________________________________________________________________________________

                   

                   Special Instructions: 
_________________________________________________________________________________________________

                   

                   

                  By
                    signing below, I (we) acknowledge and agree that my (our) funds
                    transfer request
                    shall be processed in accordance with and subject to the terms
                    and conditions
                    set forth in the agreements(s) covering funds transfer service(s),
                    which
                    agreements(s) were previously received and executed by me (us).

                   

                  
                    	 	Authorized
                            Signature: _________________________________	2nd
                            Signature (if required): ______________________________
	 	Print
                            Name/Title: _____________________________________	Print
                            Name/Title: ______________________________________
	 	Telephone
                            #: ________________________________________ 	Telephone
                            #:
                            _________________________________________

                  

                

              

            

          

          

        

      

      
        	
              	
                *

              	
                Unless
                  otherwise provided for an
                  Advance bearing interest at
                  LIBOR.

              

      

      
        
           
            

        

        
          -
            1 -

          
            

          

        

        
           
            

        

      

       

      EXHIBIT
        C

       

      COMPLIANCE
        CERTIFICATE

      

      TO:           SILICON
        VALLEY BANK, as Collateral
        Agent                                                                                                                          Date:

      FROM:                 DYNOGEN
        PHARMACEUTICALS, INC.

      

      The
        undersigned authorized officer of Dynogen Pharmaceuticals, Inc. (“Borrower”)
        certifies that under the terms and conditions of the Loan and Security Agreement
        between Borrower, Collateral Agent and the Lenders (the “Agreement”), (1)
        Borrower is in complete compliance for the period ending _______________
        with
        all required covenants except as noted below, (2) there are no Events of
        Default, (3) all representations and warranties in the Agreement are true
        and correct in all material respects on this date except as noted below;
        provided, however, that such materiality qualifier shall not be applicable
        to
        any representations and warranties that already are qualified or modified
        by
        materiality in the text thereof; and provided, further that those
        representations and warranties expressly referring to a specific date shall
        be
        true, accurate and complete in all material respects as of such date, (4)
        Borrower, and each of its Subsidiaries, has timely filed all required tax
        returns and reports, and Borrower has timely paid all foreign, federal, state
        and local taxes, assessments, deposits and contributions owed by Borrower
        except
        as otherwise permitted pursuant to the terms of Section 5.8 of the Agreement,
        and (5) no Liens have been levied or claims made against Borrower or any
        of its
        Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
        has not previously provided written notification to Collateral
        Agent.  Attached are the required documents supporting the
        certification.  The undersigned certifies, in the capacity as an
        officer of the Borrower, that these are prepared in accordance with GAAP
        consistently applied from one period to the next except as explained in an
        accompanying letter or footnotes.  The undersigned acknowledges, in
        the capacity as an officer of the Borrower, that no borrowings may be requested
        at any time or date of determination that Borrower is not in compliance with
        any
        of the terms of the Agreement, and that compliance is determined not just
        at the
        date this certificate is delivered.  Capitalized terms used but not
        otherwise defined herein shall have the meanings given them in the
        Agreement.

       

      
        	
                Please
                  indicate compliance status by circling Yes/No under “Complies”
                  column.

              
	 
                
	
                Reporting
                  Covenant

              	
                Required

              	
                Complies

              
	 
                	 
                	 
                
	
                Monthly
                  Financial Statements

                Compliance
                  Certificate

              	
                Monthly
                  within 45 days

              	
                Yes   No

              
	
                Audited
                  Financial Statements

              	
                Annually
                  within 90 days after FYE

              	
                Yes   No

              
	 
                

      

      

      The
        following are the exceptions with
        respect to the certification above:  (If no exceptions exist, state
“No exceptions to note.”)

       
        
          

        

      

       
        
          

        

      

       
        
          

        

      

       

      

      
        	
                 

                DYNOGEN
                  PHARMACEUTICALS, INC.

                 

                By:                                                       

                Name:                                                       

                Title:                                                       

                 

              	
                COLLATERAL
                  AGENT USE ONLY

                 

                Received
                  by:   _____________________

                authorized
                  signer

                Date:      
                  _________________________

                 

                Verified:  ________________________

                authorized
                  signer

                Date:      
                  _________________________

                 

                Compliance
                  Status:     
                  Yes     No

              

      

      

       

      
        
          
          

        

        
          -
            1
            -

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        D

      SECURED
        PROMISSORY NOTE

      $____________________ Dated:  ____________,2008

      

      FOR
        VALUE RECEIVED, the undersigned,
        DYNOGEN PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), HEREBY
        PROMISES TO PAY to the order of [SVB / OXFORD]  (“Lender”) the
        principal amount of ____________ Dollars ($__________) or such lesser amount
        as
        shall equal the outstanding principal balance of the Term Loan made to Borrower
        by Lender, plus interest on the aggregate unpaid principal amount of Term
        Loan,
        at the rates and in accordance with the terms of the Loan and Security Agreement
        by and between Borrower and Silicon Valley Bank, as Collateral Agent, and
        the
        Lenders, including without limitation, Oxford Finance Corporation, and SVB
        (as
        amended, restated, supplemented or otherwise modified from time to time,
        the
“Loan Agreement”).   If not sooner paid, the entire principal
        amount and all accrued interest hereunder and under the Loan Agreement shall
        be
        due and payable on Term Loan Maturity Date as set forth in the Loan
        Agreement.

      

      Borrower
        agrees to pay any initial partial month interest payment from the date of
        this
        Note to the first Payment Date ("Interim Interest") on the first Payment
        Date.

      

      Principal,
        interest and all other amounts due with respect to the Term Loan, are payable
        in
        lawful money of the United States of America to Lender as set forth in the
        Loan
        Agreement and this Secured Promissory Note.  The principal amount of
        this Note and the interest rate applicable thereto, and all payments made
        with
        respect thereto, shall be recorded by Lender and, prior to any transfer hereof,
        endorsed on the grid attached hereto which is part of this Note.

      

      The
        Loan
        Agreement, among other things, (a) provides for the making of a secured Term
        Loan to Borrower, and (b) contains provisions for acceleration of the maturity
        hereof upon the happening of certain stated events.

      

      This
        Note
        may not be prepaid except as set forth in Section 2.1.1(e)
        and Section
        2.1.1(f) of the Loan Agreement.

      

      This
        Note
        and the obligation of Borrower to repay the unpaid principal amount of the
        Term
        Loan, interest on the Term Loan and all other amounts due Lender under the
        Loan
        Agreement is secured under the Loan Agreement.

      

      Presentment
        for payment, demand, notice of protest and all other demands and notices
        of any
        kind in connection with the execution, delivery, performance and enforcement
        of
        this Note are hereby waived.

      

      Borrower
        shall pay all reasonable fees and expenses, including, without limitation,
        reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or
        attempt to enforce any of Borrower’s obligations hereunder not performed when
        due.  This Note shall be governed by, and construed and interpreted in
        accordance with, the laws of the Commonwealth of Massachusetts.

      

      Note
        Register; Ownership of
        Note.  The ownership of an interest in this Note shall be
        registered on a record of ownership maintained by Lender or its
        agent.  Notwithstanding anything else in this Note to the contrary,
        the right to the principal of, and stated interest on, this Note may be
        transferred only if the transfer is registered on such record of ownership
        and
        the transferee is identified as the owner of an interest in the
        obligation.  Borrower shall be entitled to treat the registered holder
        of this Note (as recorded on such record of ownership) as the owner in fact
        thereof for all purposes and shall not be bound to recognize any equitable
        or
        other claim to or interest in this Note on the part of any other person or
        entity.

      

      
        
           
            

        

        
          -
            1
            -

          
            

          

        

        
           
            

        

      

      

       

      IN
        WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one
        of its
        officers thereunto duly authorized on the date hereof.

       

      BORROWER:

      

      DYNOGEN
        PHARMACEUTICALS, INC.

      

      By:

       

      Name:

       

      Title:

      

      

      

      

      
        
           
            

        

        -
          2
          -Exhibit 10.4

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), dated
February 25, 2008 (the "Effective Date"), is entered into by and between
Wellington Denahan-Norris (the "Executive") and Annaly Capital Management, Inc.,
a Maryland corporation (the "Company").

         WHEREAS, the Company and the Executive entered into an employment
agreement, dated January 27, 1997 (the "Employment Agreement") and amended and
restated on December 31, 2003; and

         WHEREAS, the Company desires to establish its right to the continued
services of the Executive upon the Effective Date, in the capacity described
below, on the terms and conditions and subject to the rights of termination
hereinafter set forth, and the Executive is willing to accept such employment on
such terms and conditions.

         NOW, THEREFORE, in consideration of the mutual promises and agreements
herein made and intending to be legally bound hereby, the parties agree to the
Employment Agreement in its entirety to read as follows:

         In consideration of the mutual agreements hereinafter set forth, the
Executive and the Company have agreed and do hereby agree as follows:

         Definitions. Capitalized terms used in this Agreement shall have the
respective meanings assigned to them below:

         1.1 "Book Value" of the Company shall be equal to the aggregate amounts
reported as Stockholders Equity on the Company's balance sheet as of the end of
each fiscal year determined in accordance with generally accepted accounting
principles (GAAP) but without taking into account any valuation reserves (i.e.,
changes in the value of the Company's portfolio of investments as a result of
mark-to-market valuation changes, referred to in the financial statements as
"Accumulated Other Comprehensive Gain or Loss").

         1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended.

         1.3 "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors of the Company.

         1.4 "Good Reason" shall mean the occurrence of one or more of the
following without the Executive's written consent: (i) a material breach of this
Agreement by the Company, or (ii) a materially significant change in the
Executive's duties, authorities or responsibilities, or (iii) the relocation of
the Executive's principal place of employment more than 60 miles from New York,
New York, or (iv) the failure of the Company to obtain the assumption in writing
of its obligations to perform this Agreement by any successor to all or
substantially all of the assets or business of the Company within fifteen (15)
days upon a merger, consolidation, sale or similar transaction, provided however
that none of the events specified in (i), (ii) or (iii) shall constitute Good
Reason unless the Executive shall have notified the Company in writing
describing the events which constitute Good Reason and the Company shall have
failed to cure such event within a reasonable period, not to exceed thirty (30)
days, after the Company's actual receipt of such written notice.

             Employment as Chief Investment Officer and Chief Operating
Officer of the Company. The Company hereby employs and engages the Executive as
Chief Investment Officer and Chief Operating Officer of the Company, and the
Executive does hereby accept and agree to such employment and engagement. The
Executive's duties as Chief Investment Officer and Chief Operating Officer shall
be such duties typically required of a Chief Investment Officer and Chief
Operating Officer, and as shall from time to time be agreed upon by the
Executive and the Board of Directors of the Company. The Executive shall report
solely and directly to the Company's Chief Executive Officer. The Executive's
services shall be performed in the Company's offices in New York, New York or
such other location as the Company and Executive shall agree. Except for periods
of Disability (as defined below), during the Term, the Executive shall devote
substantially all of her business time, attention and energies to the
performance of her duties under this Agreement; provided, however, that the
Executive shall be allowed, to the extent such activities do not substantially
interfere with the performance by the Executive of her duties and
responsibilities hereunder, (a) to manage the Executive's personal, financial
and legal affairs, and (b) serve on civic or charitable boards or committees.
Furthermore, the Executive shall exercise due diligence and care in the
performance of her duties to the Company under this Agreement.
<PAGE>
             Term of Agreement.

             Effective Date. The term ("Term") of this Agreement shall commence
as of the Effective Date and shall continue through the first anniversary of the
Effective Date. From and after such first anniversary and upon each anniversary
thereafter, the Term of the Agreement shall automatically be extended for
successive one-year periods unless, not later than three months prior to such
first anniversary or any subsequent anniversary, as applicable, either party
shall have given written notice to the other that it does not wish to extend the
Term of the Agreement.

             Compensation.

             Base Salary. The Company shall pay the Executive, and the Executive
agrees to accept from the Company, in payment for her services to the Company, a
base salary equal to a per annum amount of $2,430,000, ("Base Salary"), payable
in equal biweekly installments or at such other time or times as the Executive
and the Company shall agree. The Base Salary can be increased (but not
decreased) at any time by the Compensation Committee or the Board of Directors
of the Company, as the case may be. The Executive's salary as increased shall be
deemed to be the Base Salary for all purposes under this Agreement.

             Performance Bonus. With respect to each fiscal year, the Executive
shall be eligible to receive an amount equal to the sum of: (A) the excess, if
any, of (i) 0.250% of the Book Value of the Company for such fiscal year over
(ii) the Executive's Base Salary as of the last day of such fiscal year;
provided, however, that the Compensation Committee must approve such amount,
plus (B) additional amounts as may be recommended by management and approved by
the Compensation Committee (such sum being the "Performance Bonus").

             Annual Review. The Board of Directors shall, at least annually,
review the Executive's entire compensation package to determine if it should be
increased (but not decreased) in order for it to continue to meet the Company's
compensation objectives.

             Fringe Benefits. The Executive shall be entitled to participate in
any benefit programs adopted from time to time by the Company for the benefit of
its senior executive employees, and the Executive shall be entitled to receive
such other fringe benefits as may be granted to her from time to time by the
Compensation Committee or the Board of Directors of the Company, as the case may
be.

             Benefit Plans. The Executive shall be entitled to participate in
any benefit plans relating to stock options, stock purchases, awards, pension,
thrift, profit sharing, life insurance, medical coverage, education, or other
retirement or employee benefits available to other senior executive employees of
the Company, subject to any restrictions (including waiting periods) specified
in such plans.

             Vacation. The Executive shall be entitled to such number of weeks
of paid vacation per calendar year as determined by the Board of Directors of
the Company after review of industry standards, but shall in no event be
entitled to fewer than five weeks of paid vacation per calendar year.

             Business Expenses. The Company shall reimburse the Executive for
any and all necessary, customary and usual expenses, properly receipted in
accordance with Company policies, incurred by Executive on behalf of the
Company.

             Termination of Executive's Employment.

             Death. If the Executive dies while employed by the Company, her
employment shall immediately terminate. The Company's obligation to pay the
Executive's Base Salary shall cease as of the date of Executive's death, except
that any earned, but unpaid Base Salary and Performance Bonus shall be paid to
the Executive's beneficiaries as soon as practicable after her death. In
addition, the Executive's beneficiaries shall receive the pro rata portion of
the Performance Bonus for the year of the Executive's death, which shall be
equal to the Performance Bonus (as determined at the end of the year of the
Executive's death) multiplied by a ratio equal to (A) the number of days the
Executive was employed in the year of her death, divided by (B) 365. The
Performance Bonus shall be paid to the Executive's beneficiaries at the same
time and in the same manner as such Performance Bonus would have been paid to
the Executive had the Executive not died or been terminated. Thereafter,
Executive's beneficiaries or her estate shall receive benefits in accordance
with the Company's retirement, insurance and other applicable programs and plans
then in effect.
<PAGE>

             Disability. If, as a result of the Executive's incapacity due to
physical or mental illness ("Disability"), Executive shall have been absent from
the full-time performance of her duties with the Company for six (6) consecutive
months, and, within thirty (30) days after written notice is provided to her by
the Company, the Executive shall not have returned to the full-time performance
of her duties, the Executive's employment under this Agreement may be terminated
by the Company for Disability. With respect to the period during which begins
when the Executive is first absent from the full-time performance of her duties
with the Company due to Disability and ends upon the later of (i) the date she
is terminated from employment in accordance with the foregoing sentence, or,
(ii) the date she begins receiving long-term disability payments under the
Company's long term disability plan for senior executives ("Salary Continuation
Period"), the Company shall continue to pay the Executive her Base Salary at the
rate in effect at the commencement of such period of Disability. In addition,
the Executive shall receive the pro rata portion of the Performance Bonus for
the year of the Executive's termination due to Disability, which shall be equal
to the Performance Bonus (as determined at the end of the year in which the
Executive is terminated by reason of Disability) multiplied by a ratio equal to
(A) the number of days the Executive was employed in the year of her termination
for Disability, divided by (B) 365. The Performance Bonus shall be paid to the
Executive at the same time and in the same manner as such Performance Bonus
would have been paid had the Executive not been terminated by reason of
Disability. Upon the end of the Salary Continuation Period, the Executive's
benefits shall be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs

             Termination by the Company for Cause. The Company may terminate the
Executive's employment under this Agreement for "Cause," at any time prior to
expiration of the Term of the Agreement, only in the event of (i) the
Executive's failure to substantially perform the duties described in this
Agreement, (ii) acts or omissions constituting recklessness or willful
misconduct on the part of the Executive in respect of her fiduciary obligations
to the Company which is materially and demonstrably injurious to the Company, or
(iii) the Executive's conviction for fraud, misappropriation or embezzlement in
connection with the assets of the Company. In the case of clause (i) only, it
shall also be a condition precedent to the Company's right to terminate the
Executive's employment for Cause that (1) the Company shall first have given the
Executive written notice stating with specificity the reason for the termination
("breach") at least 60 days before the meeting of the Board of Directors called
to make such determination and the Executive and her counsel are given the
opportunity to answer such grounds for termination in person, at a hearing or in
writing delivered to the Chairman of the Board, in the Executive's discretion,
before a vote by the Board of Directors on the existence of Cause; and (2) if
such breach is susceptible to cure or remedy, a period of 60 days from and after
the giving of the notice described in (1) shall have elapsed without the
Executive having effectively cured or remedied such breach during such 30-day
period, unless such breach cannot be cured or remedied within 60 days, in which
case the period for remedy or cure shall be extended for a reasonable time (not
to exceed an additional 30 days), provided the Executive has made and continues
to make a diligent effort to effect such remedy or cure. In the case of clause
(iii) above, the Executive's employment under this Agreement may be terminated
immediately without any advance written notice. Upon a determination that
grounds exist for a termination for Cause by the Board of Directors and that the
breach cannot be cured, or immediately in the case of clause (iii) above, the
Company's obligation to pay the Executive's Base Salary, any Performance Bonus
and benefits shall immediately cease, except to the extent any Base Salary or
Performance Bonus has been earned but has not yet been paid.

             Termination by the Executive. The Executive may at any time during
the Term of this Agreement terminate her employment hereunder for any reason or
no reason by giving the Company notice in writing not less 90 days in advance of
such termination. The Executive shall have no further obligations to the Company
after the effective date of her termination, as set forth in the notice. In the
event of a termination by the Executive under this Section, the Company will pay
only the portion of Base Salary or previously awarded Performance Bonus unpaid
as of the termination date. Benefits which have accrued and/or vested on the
termination date will continue in effect according to their terms, but no
additional accrual or vesting will take place. Notwithstanding the foregoing, if
the Executive terminates her employment for Good Reason, the notice period
provided in Section 7.2 above shall not apply and the Executive will be entitled
to the severance detailed in Section 8.

             Compensation Upon Termination by the Company Other Than for Cause
or Upon Termination by the Executive for Good Reason. If the Executive's
employment shall be terminated by the Company other than for Cause or by the
Executive for Good Reason, the Executive shall be entitled to the following
benefits:

             Payment of Unpaid Base Salary. The Company shall immediately pay
the Executive any portion of the Executive's Base Salary or previously awarded
Performance Bonus not paid prior to the termination date.
<PAGE>

             Severance Payment. The Company shall pay the Executive an amount
(the "Severance Amount") equal to three (3) times the greater of (i) the
Executive's combined Base Salary and actual Performance Bonus for the preceding
fiscal year or (ii) the average for the three preceding years of the Executive's
combined actual Base Salary and Performance Bonus. Fifty percent of the
Severance Amount shall be paid within five (5) days after the date the Executive
terminates for Good Reason or is terminated by the Company for any reason other
than Cause, and the remaining 50% of the Severance Amount shall be paid in three
equal monthly installments beginning on the first business day of the month
following the month of such termination.

             Immediate Vesting of Stock Options. The Company shall take all
appropriate action to ensure that all stock options on the Company's stock owned
by the Executive as of her termination date, and which have not been exercised
prior to the termination date become immediately exercisable by the Executive,
whether or not the right to exercise such stock options would otherwise then be
vested in the Executive, provided, however, an option that is an incentive stock
option within the meaning of Code Section 422(b) ("ISO") shall not be
exercisable for the first time in a calendar year to the extent that the
aggregate fair market value of stock (as determined under Code Section
422(b)(3)) with respect to which ISO's are exercisable by the Executive during
such calendar year exceeds $100,000. The provisions of this Section 7(c) shall
constitute an amendment to any existing stock option agreements (including award
certificates) of the Company as of the termination date.

             Maximization of Payment in the Event of a Change in Control. The
Company shall make the payments and provide the benefits to be paid and provided
under this Agreement; provided, however, that if all or any portion of the
payments and benefits provided under this Agreement, either alone or together
with other payments and benefits which the Executive receives or is then
entitled to receive from the Company or otherwise, would constitute a "parachute
payment" within the meaning of Section 280G of the Code (or a similar or
successor provision), the Company shall reduce such payments hereunder and such
other payments to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code (or a similar or
successor provision); but only if, by reason of such reduction, the net
after-tax benefit to the Executive shall exceed the net after-tax benefit if
such reduction were not made. The payments or benefits shall be reduced in the
manner and order determined by the Executive, subject to the consent of the
Company, which consent shall not be unreasonably withheld. The determination of
whether the payments shall be reduced as provided in this Section 8(d) and the
amount of such reduction shall be made at the Company's expense by a public
accounting firm retained by the Company at the time the calculation is to be
performed, or one selected by the Company from among the four (4) largest public
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide its determination, together with detailed supporting
calculations and documentation to the Company and the Executive within twenty
(20) business days of the payment of the initial installment of the Severance
Amount. The Executive may review these calculations for a period of twenty days
and may retain another accounting firm (at her own expense) for such review and
submit objections during such twenty-day review period.

             No Other Entitlement to Benefits Under Agreement. Except as set
forth in Section 7 or Section 8 of this Agreement, following a termination
governed by Section 7 or Section 8, the Executive shall not be entitled to any
other compensation or benefits, except as may be separately negotiated by the
parties and approved by the Board of Directors of the Company in writing in
conjunction with the termination of Executive's employment.

             Noncompetition Provisions.

             Noncompetition. The Executive agrees that during the Term of
employment under this Agreement prior to any termination of her employment
hereunder and, in the event of termination of the Executive's employment by the
Company for Cause or voluntary termination of employment by the Executive (other
than for Good Reason), for a period of one year following such termination, the
Executive will not, directly or indirectly, without the prior written consent of
the Company, manage, operate, join, control, participate in, or be connected as
a stockholder (other than as a holder of shares publicly traded on a stock
exchange or the NASDAQ National Market System), partner, or other equity holder
with, or as an officer, director or employee of, any private or public
investment firm, broker dealer or real estate investment trust whose business
strategy is based on or who engages in the trading, sales or management of
mortgage-backed securities (the "Business") in any geographical region in which
the Company engages in the Business (a "Competitor"). It is further expressly
agreed that the Company will or would suffer irreparable injury of the Company
in violation of the preceding sentence of this Agreement and that the Company
would by reason of such competition be entitled to injunctive relief in a court
of appropriate jurisdiction, and the Executive further consents and stipulates
to the entry of such injunctive relief in such a court prohibiting the Executive
from competing with the Company or any subsidiary or affiliate of the Company,
in the areas of business set forth above, in violation of this Agreement.
<PAGE>

             Right to Company Materials. The Executive agrees that all styles,
designs, lists, materials, books, files, reports, correspondence, records, and
other documents ("Company Materials") used, prepared, or made available to the
Executive in connection with her employment by the Company shall be and shall
remain the property of the Company. Upon the termination of employment or the
expiration of the Term of employment under this Agreement, all Company Materials
shall be returned immediately to the Company, and the Executive shall not make
or retain any copies thereof.

             Soliciting Executives. The Executive promises and agrees that she
will not directly or indirectly solicit any of the Company Executives to work
for any Competitor during the one-year period following her termination of
employment unless such termination is by the Company for reasons other than
Cause or by the Executive for Good Reason.

             Corporate Opportunities. The Executive agrees, in accordance with
Maryland law, to first offer to the Company corporate opportunities learned of
solely as a result of her service as an officer of the Company.

             Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by fax or first class mail, certified or
registered with return receipt requested, and shall be deemed to have been duly
given three (3) days after mailing or twenty-four (24) hours after transmission
of a fax to the respective persons named below:

               If to the Company:          Michael A. J. Farrell

                                           Chairman and Chief Executive Officer

                                           Annaly Capital Management, Inc.

                                           1211 Avenue of the Americas

                                           Suite 2902

                                           New York, NY 10036

                                           Phone: (212) 696-0100

                                           Fax:  (212) 696-9809

               If to the Executive:        Wellington Denahan-Norris

                                           180 West 58, PH-A

                                           New York, NY  10019

                                           Phone: (212) 212-307-8053

         Either party may change such party's address for notices by notice duly
given pursuant hereto.

             Attorneys' Fees. In the event judicial determination or arbitration
(as provided in Section 22) is necessary for any dispute arising as to the
parties' rights and obligations hereunder, the Company shall pay to the
Executive her costs incurred (including attorney's fees) in deciding such
dispute provided that she has substantially prevailed.

             No Mitigation or Offset. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
earned by the Executive in other employment after termination of employment with
the Company, or any amounts which might have been earned by the Executive in
other employment had such other employment been sought.
<PAGE>

             Termination of Prior Agreements. This Agreement terminates and
supersedes any and all prior agreements and understandings between the parties
with respect to employment or with respect to the compensation of the Executive
by the Company.

             Assignment; Successors. This Agreement is personal in its nature
and neither of the parties hereto shall, without the consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that, in the event of the merger, consolidation, transfer, or sale of
all or substantially all of the assets of the Company with or to any other
individual or entity, this Agreement shall, subject to the provisions hereof, be
binding upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder.

             Governing Law. This Agreement and the legal relations thus created
between the parties hereto shall be governed by and construed under and in
accordance with the laws of the State of New York.

             Entire Agreement; Headings. This Agreement embodies the entire
agreement of the parties respecting the matters within its scope and may be
modified only in writing. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.

             Waiver; Modification. Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be deemed a waiver
of such term, covenant, or condition, nor shall any waiver or relinquishment of,
or failure to insist upon strict compliance with, any right or power hereunder
at any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times. This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.

             Severability. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, only the portions of this Agreement that violate such statute or
public policy shall be stricken. All portions of this Agreement that do not
violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.

             Indemnification; Directors and Officers Insurance. The Company
shall indemnify and hold Executive harmless to the maximum extent permitted by
Section 2-418 of the Maryland General Corporations Law or its successor statute.
During the Term and for six years following the date of the Executive's
termination as an officer of the Company, the Company (or any successor thereto)
shall provide comprehensive coverage under the Company's officers and directors
insurance policy (or policies) on substantially the same terms and levels that
it provides to its senior executive officers, at the Company's sole cost.

             Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

             Successor Sections. References herein to sections, rules or
regulations of the Code or other applicable law shall be deemed to include any
successor sections, rules or regulations.

             Arbitration. Any dispute, claim or controversy arising out of or in
relation to this Agreement, which the Executive and the Company are unable to
resolve shall be determined by the decision of a board of arbitration consisting
of three (3) members (the "Board of Arbitration") selected by the American
Arbitration Association upon application made to it for such purpose by either
the Company or the Executive. The arbitration proceedings shall take place in
New York, New York or such other place as shall be agreed to by the parties. The
Board of Arbitration shall reach and render a decision in writing. In connection
with rendering its decision, the Board of Arbitration shall adopt and follow
such rules and procedures as a majority of the members of the Board of
Arbitration deems necessary or appropriate. Any award shall be rendered on the
basis of the substantive law governing this Agreement and shall be concurred in
by a majority of the arbitrators. To the extent practical, decisions of the
arbitrators shall be rendered no more than thirty (30) calendar days following
commencement of the arbitration proceedings with respect thereto.

             Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the Executive and the Company and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Company shall bear all of the costs of arbitration,
except for the attorneys' fees incurred by the Executive, which fees shall be
subject to Section 11 hereof.

             [REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK]

<PAGE>

             IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has hereunto signed
this Agreement, as of the date first above written.

         ANNALY CAPITAL MANAGEMENT, INC.

         By: /s/ Michael A.J. Farrell
            -------------------------
              Michael A.J. Farrell

         By: /s/ Wellington Denahan-Norris
            ------------------------------
            Wellington Denahan-Norris

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]