Document:

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                                                                  EXHIBIT 10.5.2

                                                                  EXECUTION COPY

                    LEASEHOLD MORTGAGE AND SECURITY AGREEMENT

                                                            Dated: June 29, 2006

     THIS LEASEHOLD MORTGAGE AND SECURITY AGREEMENT (together with all
amendments and supplements hereto, the "Mortgage"), by and between BIOVEX, INC.,
a Delaware corporation with a principal place of business and mailing address
presently of 245 First Street, Cambridge, Massachusetts 02142 (the "Borrower")
and MASSACHUSETTS DEVELOPMENT FINANCE AGENCY, a body politic and corporate
created by Chapter 289 of the Acts of 1998 and established under Massachusetts
General Laws Chapter 23G, as amended, with a principal place of business and
mailing address of 160 Federal Street, Boston, Massachusetts 02110 (the
"Lender").

                             PRELIMINARY STATEMENTS:

     WHEREAS, the Borrower holds a leasehold interest (the "Leasehold Estate")
in certain real property located at 34-A Commerce Way, Middlesex County, Woburn,
Massachusetts and more fully described in Exhibit A hereto (the "Land") pursuant
to that certain Commercial Lease dated December 2, 2005, including all addenda
and riders thereto (the "Lease") between Cummings Properties, LLC (the "Lessor")
and Borrower demising the "Leased Premises" defined in the Lease, notice of
which is recorded at the Middlesex South Registry of Deeds in Book 46685, Page
490;

     WHEREAS, the Borrower has executed a promissory note of even date herewith
with the Lender in the principal sum of Two Million Five Hundred Thousand and
NO/100 Dollars ($2,500,000.00) in lawful money of the United States, pursuant to
that certain Promissory Note as it may be extended, renewed, modified or amended
(the "Note"), which Note is guaranteed by that certain Guaranty (the "Guaranty")
of even date herewith given by BioVex Group, Inc. (the "Guarantor") (the Note,
together with this Mortgage, the Guaranty and other collateral or related loan
documents are hereinafter collectively referred to as the "Loan Documents");

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to secure: (i) the payment of all sums payable on the
Note; (ii) the Borrower's performance of every term, covenant, condition and
provision of this Mortgage and the Loan Documents and (iii) the Borrower's
payment and performance of any other indebtedness, liability or obligation of
the Borrower to the Lender now or hereafter arising under the terms hereof or
under any other instrument constituting additional security for the Loan
Documents (the obligations set forth in clauses (i), (ii) and (iii) above are
hereinafter collectively referred to as the "Obligations"), the Borrower hereby
grants a security interest in, and by these presents does also grant WITH
MORTGAGE COVENANTS as herein provided unto the Lender and its successors and
assigns forever, all of the Borrower's estate, right, title and interest in, to
and under any and all of the property described in the following granting
clause. The following-described realty and

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collateral within the Leased Premises, together with any and all improvements
now thereon, or from time to time thereon, and any additions thereto or
replacements thereof, are herein collectively referred to as the "Property",
subject only to matters of record as of the date of this Mortgage and other
encumbrances and liens permitted herein (collectively, the "Permitted Liens"),
unless otherwise indicated:

                                 GRANTING CLAUSE

     The entire estate, right, title and interest of the Borrower in and to the
Property, including, without limitation:

     (a) the entire right, title and interest of the Borrower in and to the
Lease including without limitation all of the rights, privileges and
prerogatives of tenant under said Lease to terminate, cancel, modify, change,
supplement, alter or amend said Lease and all extensions and renewals of the
term of the Lease, together with any and all other, further or additional title,
estates, interests or rights which may at any time be acquired by Borrower in or
to the premises demised by the Lease, and Borrower expressly agrees that if
Borrower shall, at any time prior to payment in full of all indebtedness secured
hereby, acquire fee title or any other greater estate to the premises demised by
said Lease, the lien of this Mortgage shall attach, extend to, cover and be a
lien upon such fee simple title or other greater estate;

     (b) the entire right, title and interest of the Borrower in and to the
alterations and improvements described in Section H of the Rider to the Lease
(the "Tenant Improvements") and Borrower's rights to possession and use thereof;

     (c) the entire right, title and interest of the Borrower in and to all the
tenements, hereditaments, easements, rights-of-way, rights, licenses, mineral
rights, privileges and appurtenances in and to the Leased Premises, including,
without limitation, the entire right, title and interest of the Borrower in, to
and under any streets, ways, alleys, vaults, gores or strips of land adjoining
the Leased Premises;

     (d) the entire right, title and interest of the Borrower in and to all
compensation, judgments, damages, settlements, rights of action, proceeds of any
award or claims, whether at law, in equity or otherwise, resulting from or in
connection with (i) any damage to, loss of, trespass on, interference with,
destruction of or failure to support the Property; (ii) any taking of the
Property, any part thereof or interest therein, or damage to or loss of the
Property, any part thereof or interest therein from any governmental action not
constituting a taking or (iii) any similar claim, demand, proceeding or action
of any sort for interference with the rights of the Borrower or the Lender to
and in the Property;

     (e) all right, title and interest of the Borrower in and to all fixtures,
fittings, furnishings in, or about the Leased Premises, Tenant Improvements,
including, without limitation, all gas and electric fixtures, radiators,
heaters, boilers, elevators and motors, plus all bathtubs, sinks, water closets,
basins, pipes, faucets and other air conditioning, plumbing, and heating
fixtures, together with any and all mirrors, mantles, refrigerating plant,
carpeting and appurtenances, and all building material supplies and equipment
now or hereafter delivered to

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the Leased Premises and intended to be installed as Tenant Improvements; all
other fixtures of whatever kind and nature at present contained in or hereafter
placed in, on or about the building standing on the Land, which shall be deemed
to be fixtures and an accession to the Leased Premises as part thereof, and all
persons claiming by, through or under them and shall be deemed to be a portion
of the security for the Obligations;

     (f) all right, title and interest of the Borrower in and to all insurance
proceeds or payments paid, to be paid or claimed in connection with the
Property, any damage to or destruction of the Property, any theft or taking of
the Property, any other loss of or diminution of the value of the Property or
any other interference with the rights of the Borrower or the Lender therein,
this Grant to include the right to make claim for, adjust, settle claims for,
bring suit for, collect, receive and give receipt for all such insurance
proceeds and payments;

     (g) all right, title and interest of the Borrower in and to all extensions,
improvements, betterments, renewals, replacements, restorations, repairs or
substitutions of the Property and all additions and appurtenances thereto,
including without limitation all parts, materials and labor used in connection
with the construction, assembling, placement, installation and making thereof;

     (h) all right, title and interest of the Borrower in and to all rents,
income, revenues, issues and profits from and in respect of the Property,
including without limitation all rents and other sums payable under any leases
or tenancies in which the Borrower is lessor now existing or hereafter created
of the Property, and the present and continuing right to make claim for,
collect, settle claims for, bring suit for, receive and give receipt for the
same, it being the intention of the parties hereto that, so far as may be
permitted by law, all of the Property which is now owned or is hereafter
acquired by the Borrower shall be and remain or become and constitute a portion
of the estate hereby granted and the security covered by and subject to the lien
of this Mortgage; and

     (i) all assets of Borrower, including, without limitation, the following,
and each item thereof, whether now owned or now due, or in which Borrower has an
interest, or hereafter, at any time in the future, acquired, arising, or to
become due, or in which Borrower obtains an interest, and all products,
proceeds, substitutions, and accessions of or to any of the following: (1) all
Accounts and Accounts Receivable; (2) all Inventory; (3) all Contract Rights;
(4) all General Intangibles; (5) all Equipment; (6) all Farm Products; (7) all
Goods; (8) all Chattel Paper; (9) all Fixtures; (10) all books, records, and
information relating to the Collateral and/or to the operation of Borrower's
business, and all rights of access to such books, records, and information, and
all property in which such books, records, and information are stored, recorded,
and maintained; (11) all Instruments, Documents of Title, Documents, policies
and certificates of insurance, Securities, deposits, deposit accounts, money,
cash, or other property; (12) all federal, state, and local tax refunds and/or
abatements to which Borrower is, or becomes entitled, no matter how or when
arising, including, but not limited to any loss carryback tax refunds; (13) all
insurance proceeds, refunds, and premium rebates, including, without limitation,
proceeds of fire and credit insurance, whether any of such proceeds, refunds,
and premium rebates, arise out of any of the foregoing (1 through 12), or
otherwise; (14) all liens, guaranties, rights, remedies, and

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privileges pertaining to any of the foregoing (1 through 13) including the right
of stoppage in transit. As used herein, the following terms have the following
meanings:

          (A) "Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts (the "UCC"), and all: accounts, accounts
receivable, notes, drafts, acceptances, and other forms of obligations and
receivables and rights to payment for credit extended and for goods sold or
leased, or services rendered, whether or not yet earned by performance; all
Inventory which gave rise thereto, and all rights associated with such
inventory, including the right of stoppage in transit; all reclaimed, returned,
rejected, or repossessed Inventory (if any) the sale of which gave rise to any
Account.

          (B) "Inventory" includes, without limitation, "inventory" as defined
in the UCC and all: goods, wares, merchandise, raw materials, work in process,
finished goods, and all packaging, advertising, shipping material and documents
related to any of the foregoing, and all labels, and other devices, names or
marks affixed or to be affixed thereto for identifying or selling the same, and
other personal property of every description held for sale or lease or furnished
or to be furnished under a contract or contracts of sale or service by the
Borrower, or used or consumed or to be used or consumed in the Borrower's
business, and all goods of said description which are in transit, and all
returned, repossessed and rejected goods of said description, and all such goods
of said description which are detained from or rejected for entry into the
United States, and all documents (whether or not negotiable) which represent any
of the foregoing.

          (C) "Contract Rights" includes, without limitation, "contract rights"
as now or formerly defined in the UCC and any right to payment under a contract
not yet earned by performance and not evidenced by an instrument or Chattel
Paper.

          (D) "General Intangibles" includes, without limitation, "general
intangibles" as defined in the UCC; and all: rights to payment for credit
extended; deposits; amounts due to the Borrower; credit memoranda in favor of
the Borrower; warranty claims; all means and vehicles of investment or hedging,
including, without limitation, options, warrants, and futures contracts;
records; customer lists; goodwill; causes of action; judgments; payments under
any settlement or other agreement; literary rights; rights to performance;
royalties; license fees; franchise fees; rights of admission; licenses;
franchises; permits, certificates of convenience and necessity, and similar
rights granted by any governmental authority; copyrights; developmental ideas
and concepts; proprietary processes not subject to existing patents or pending
patent applications; blueprints; drawings; designs; diagrams, plans, reports,
charts; catalogs; manuals; technical data; computer programs, computer records,
computer software, rights of access to computer record service bureaus, service
bureau computer contracts, and computer data; proposals; costs estimates, and
other reproductions on paper, or otherwise, of any and all concepts or ideas,
and any matter related to, or connection with, the design, development,
manufacture, sale, marketing, leasing, or use of any or all property produced,
sold, or leased, by the Borrower or credit extended or services performed by the
Borrower, whether intended for an individual customer or the general business of
the Borrower, or used or useful in connection with research by the Borrower.
"General Intangibles" shall not include copyrights; trademarks, tradenames,
service

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marks, patents, patent applications, patents pending, and other intellectual
property, developmental ideas and concepts, and proprietary processes.

          (E) "Equipment" includes, without limitation, "equipment" as defined
in the UCC, and all motor vehicles, rolling stock, machinery, office equipment,
plant equipment, tools, dies, molds, store fixtures, furniture, and other goods,
property, and assets which are used and/or were purchased for use in the
operation of furtherance of the Borrower's business.

          (F) "Farm Products", "Goods", "Chattel Paper", "Instruments",
"Documents of Title", "Documents", "Securities", "Fixtures", and "Account
Debtors" each has the same meaning respectively given that term in the UCC.

     Notwithstanding the foregoing or anything to the contrary herein:

     (i) This Mortgage and the security interest granted hereby shall exclude
all equipment, including any accessions, improvements thereto and proceeds
thereof, which is the subject of third party lender financing. (It is understood
that such borrowings and liens to secure such borrowings shall be considered
Permitted Encumbrances for purposes of this Mortgage and if requested by any
such third party lender, Lender agrees to enter into a commercially reasonable
writing evidencing such exclusion as set forth herein.); and

     (ii) This Mortgage and the security interest granted hereby shall exclude
Borrower's right, title and interest in or to any copyrights; trademarks,
tradenames, service marks, patents, patent applications, patents pending, and
other intellectual property, developmental ideas and concepts, and proprietary
processes and all products and proceeds thereof.

     TO HAVE AND TO HOLD the above granted Leased Premises and Property, with
all the privileges and appurtenances to the same belonging, to the said Lender,
its successors and assigns, to its and their use forever, but upon and subject
to the provisions of this Mortgage.

     This Mortgage is upon the STATUTORY CONDITION and upon the further
condition that all covenants and agreements of the Borrower will be observed and
performed, and upon any Event of Default the Lender shall, in addition to its
other rights and remedies hereunder, have the STATUTORY POWER OF SALE.

     This Mortgage is expressly made subject and subordinate to those
encumbrances set forth on the Lender's title insurance policy delivered by
Borrower to Lender and Permitted Liens (the "Permitted Encumbrances") except as
otherwise specifically provided therein or herein.

     PROVIDED, HOWEVER, that if the Borrower shall fully and finally pay or
cause to be fully and finally paid to the Lender the principal and interest and
charges, if any, to become due upon the Note at the time and as stipulated in
the Loan Documents, and shall fully and finally pay or cause to be fully and
finally paid all other sums payable hereunder and thereunder and all other
Obligations, then, in such case, the estate, right, title and interest of the
Lender in the Leased Premises and Property shall cease, determine and become
void, and upon payment of all fees, costs, charges, expenses and liabilities
chargeable or incurred or to be incurred by the

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Lender, upon the terms hereof of any other sums as herein provided, the Lender
shall deliver a release and discharge of this Mortgage to the Borrower.

                            THE BORROWER'S COVENANTS:

     The Borrower hereby represents, warrants, covenants and agrees as follows:

     1.01. Interest in the Leased Premises and other Property. (a) (1) The
Borrower has good and marketable title to the Property and the Leasehold Estate
free and clear of all liens save the Permitted Encumbrances; (2) the Leasehold
Estate is a valid and subsisting leasehold interest in the Leased Premises
subject to no liens save the Permitted Encumbrances; (3) the Borrower has a
leasehold interest in the Tenant Improvements subject to the Lease free and
clear of all liens except for Permitted Encumbrances; (4) the term of the Lease
has commenced, and the Lease is in full force and effect; (5) all rents,
additional rents, and other charges provided for in the Lease have been paid, to
the extent that they were payable prior to the date hereof; (6) there is no
existing default under the Lease in the performance of any of the covenants and
conditions in the Lease, and no event has occurred or is occurring which, with
notice or passage of time or both, will result in such a default; (7) no notice,
claim or demand from the Lessor has been received which has not been complied
with; and (8) the Lease has not been amended or modified.

     (b) The Borrower has and shall maintain its interest in the Property and
the Leased Premises under the Lease for the full term of the Note, free of all
liens, other than the Permitted Encumbrances, and other than the Lease, and has
good right to subject the Property and the Leased Premises to the security
interest created hereunder.

     (c) This Mortgage constitutes a valid lien on the Property and the Leased
Premises subject only to (i) the Permitted Encumbrances and (ii) the Lease.

     (d) The Borrower and its successors and assigns shall warrant and defend
the interest of the Lender and its successors and assigns in the Property and
the Leasehold Estate pursuant to this Mortgage and the priority of said interest
against the claims and demands of all persons claiming by, through or under
Borrower.

     1.02. Further Assurances. The Borrower shall, at the sole cost of the
Borrower, and without expense to the Lender, do, execute, acknowledge and
deliver all such further acts, deeds, conveyances, mortgages, assignments,
notices of assignments, transfers and assurances as the Lender shall from time
to time reasonably require, for the better assuring, conveying, assigning,
transferring and confirming unto the Lender the Property and rights hereby
conveyed or assigned or intended now or hereafter so to be conveyed, or which
the Borrower may be or may hereafter become bound to convey or assign to the
Lender, or for carrying out the intention of or facilitating the performance of
the terms of this Mortgage, or for filing, registering or recording this
Mortgage.

     No release or forbearance of any of Borrower's obligations under said
Lease, pursuant to said Lease or otherwise, shall release Borrower from any of
his obligations under this Mortgage.

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     1.03. Recording. The Borrower forthwith upon the execution and delivery of
this Mortgage and thereafter from time to time, shall cause this Mortgage, and
any security instrument creating a lien or evidencing the lien hereof upon the
Property and the Leased Premises, and each supplement and amendment to each of
such instruments, financing statements with respect thereto and each instrument
of further assurance to be filed, registered or recorded in such manner and in
such places as may be required by or useful under any present or future law in
order to publish notice of and fully to protect the lien hereof upon, and the
interest of the Lender in, the Property and the Leased Premises and as the
Lender may request.

     The Borrower shall pay all filing, registration or recording fees, and all
expenses incident to the preparation, execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Property and the Leased Premises, and any instrument of further
assurance, and all federal, state, county and municipal stamp taxes and other
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of the Loan Documents, this Mortgage, any
mortgage supplement hereto, any security instrument with respect to the Property
and the Leased Premises or any instrument of further assurance, but excluding
the Lender's income taxes.

     1.04. Performance of the Lease. The Borrower covenants that the Borrower:

     (a) will punctually pay when due all base rent, additional rent, and other
payments and charges required to be paid by the Borrower, as Tenant, under,
pursuant to and in compliance with the Lease within applicable grace periods;

     (b) will diligently perform and observe all of the terms, covenants and
conditions of the Lease required to be performed and observed by the Borrower as
the Tenant thereunder unless such performance or observance shall have been
waived by the Lessor in writing, with a copy of such waiver supplied to the
Lender, to the end that all things shall be done which are necessary to keep
unimpaired the Borrower's rights as Tenant under the Lease;

     (c) unless cured within three (3) days of notice thereof, immediately upon
the fourth day of the giving of notice thereof to the Lessor notify the Lender
in writing of any default by the Lessor in the performance or observance of any
terms, covenants or conditions of the Lease on the part of the Lessor to be
performed or observed;

     (d) unless cured within three (3) days of notice thereof, immediately upon
the fourth day of the receipt thereof advise the Lender in writing of the giving
of any notice by the Lessor to the Borrower of any default by the Borrower, as
the Tenant, in the performance or observance of any of the terms, covenants or
conditions of the Lease;

     (e) will immediately upon the execution and delivery of this Mortgage or of
any instrument or agreement supplemental hereto, notify the Lessor in writing of
the execution and delivery hereof or thereof and deliver to the Lessor a copy of
each such instrument or agreement as required under the Lease;

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     (f) will immediately notify the Lender in writing in the event of the
initiation of any legal proceeding, including any arbitration or mediation, in
respect to the Lease, it being expressly agreed that if, at the time any such
legal proceeding, arbitration or mediation shall be initiated, the Borrower
shall be in default in the performance or observance of any of the terms,
covenants, conditions, provisions or other requirements hereof continuing beyond
applicable grace periods, the Lender shall have, and is hereby granted, the sole
and exclusive right to designate and appoint counsel, arbitrator or mediator
that would otherwise be appointed by the Borrower in such proceeding;

     (g) will warrant and defend the Leasehold Estate against any person
claiming rights therein by, through or under the Borrower; and the Borrower will
do all things necessary to preserve and keep unimpaired the Borrower's right,
title and interest in the Lease;

     (h) will not commit or allow to exist any act or condition that constitutes
a Lessee default under the Lease as provided in Section 20 thereof;

     (i) will not, without the Lender's prior written consent cancel, terminate
or surrender the Lease; amend or modify the Lease; transfer the Lease; or allow,
or consent to, any of the foregoing; and

     (j) if Borrower shall fail to perform and observe all of the material
covenants and conditions of the Lease as aforesaid, Lender may (but shall not be
obligated to) take any action Lender deems necessary or desirable to cure any
default by Borrower in the performance of or compliance with any of Borrower's
covenants or obligations under the Lease. Upon receipt by Lender from the Lessor
of any written notice of default by the Tenant thereunder, Lender may rely
thereon and take any action as aforesaid to cure such default even though the
existence of such default or the nature thereof be questioned or denied by
Borrower or by any party on behalf of Borrower. Borrower hereby expressly grants
to Lender, and agrees that Lender shall have, the absolute and immediate right
to enter in and upon the Leased Premises or any part thereof to such extent and
as often as Lender, in its sole discretion, deems necessary or desirable in
order to cure any such default by Borrower. Lender may pay and expend such sums
of money as Lender in its reasonable discretion deems necessary for any such
purpose, and Borrower hereby agrees to pay to Lender, immediately upon demand,
all such sums so paid and expended by Lender, together with interest thereon
from the date of each such payment at the Default Rate of the Note. All sums so
paid and expended by Lender, and the interest thereon, shall be added to and be
secured by the lien of this Mortgage.

     1.05. The Property and the Leased Premises shall not be further encumbered
by the Borrower and the Borrower shall not create or suffer to be created,
directly or indirectly, any lien against the Property or the Leased Premises,
whether such lien is subordinated to that of Lender hereunder or not, unless (i)
such lien is a Permitted Encumbrance (in which case the Borrower shall provide
the Lender with prompt written notice of any Permitted Encumbrance in excess of
Fifty Thousand Dollars ($50,000), providing Lender with the name of the lender
and the nature and extent of the Permitted Encumbrance) or the Lease; (ii) such
encumbrance is a utility easement arising in the ordinary course of business of
the Borrower and ownership of the Property and does not, either individually or
in the aggregate with any other lien or encumbrance

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materially impair the value or use of the Property or the lien of the Mortgage;
or (iii) the Borrower secures the prior written approval of the Lender, which
approval may be withheld by the Lender in its sole, absolute discretion.

     1.06. After-Acquired Property. The Borrower covenants and agrees that, as
of the execution hereof and upon the subsequent acquisition of any Property,
including Tenant Improvements, the Borrower shall, at the election of Lender:

     (a)  provide the holder with a precise inventory of the same, as and when
          acquired;

     (b)  provide to the holder such other assurances as may be required by the
          holder to establish the holder's security interest in such Property
          subject only to the Permitted Encumbrances; and

     (c)  execute, deliver and cause to be recorded and filed from time to time,
          without notice or demand, and at the Borrower's sole cost and expense,
          continuances and such other instruments as will maintain the holder's
          security in such Property; and Borrower hereby authorizes Lender to
          file financing and continuation statements with respect to the
          Property without the signature of the Borrower whenever lawful.

     Borrower agrees that, without the prior written consent of Lender, Borrower
will not remove or permit to be removed from the Leased Premises, any of the
Property except in the ordinary course of business or ownership of the Property.
All replacements of and renewals to the Property shall become and be immediately
subject to the security interest of this Mortgage and be covered thereby.
Borrower warrants and represents that all Property now is, and that all
replacements thereof, substitutions therefor or additions thereto will be, free
and clear of liens, encumbrances or security interests of others, except for (i)
security interests junior in priority to the interest created by this Mortgage
and to which the Lender, at its option and in its sole and absolute discretion,
shall consent, and (ii) Permitted Encumbrances.

     The Borrower warrants and represents that the Borrower is a corporation,
duly established under the laws of the State of Delaware and qualified to
conduct business in the Commonwealth of Massachusetts, and that the execution of
this Mortgage and any other instruments executed in connection herewith
constitute representations by the Borrower, that such execution has received all
such authorization as may be necessary to permit such execution, and that this
Mortgage and said instruments are binding and in force against the Borrower.

     1.07. The Borrower also covenants:

          (1)  to pay before the same become delinquent (and to provide, by such
               time, evidence of such payment, satisfactory to the holder) all
               real estate taxes on the Property and/or Leased Premises as
               required by the Lease; and to pay before the same become
               delinquent (and to provide, by such time, evidence of such
               payment, satisfactory to the holder) all other taxes, charges,
               sewer use fees, water rates and assessments of every name and

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               nature, whether or not assessed against the Borrower, if
               applicable or related to the Property, or any interest therein,
               or the debt, obligation or any agreement secured hereby, or the
               disbursement or the application or the proceeds thereof in the
               case of each of the foregoing, unless they are being contested in
               good faith as provided in the next sentence. The Borrower shall
               have the right to contest the validity, applicability or amount
               of any asserted tax provided that, in the Lender's sole
               discretion exercised in good faith, such contest will not impair
               the validity or priority of the lien of this Mortgage and
               provided that the full amount of such tax is either paid to the
               taxing authority under protest or escrowed with the Lender;

          (2)  that if at any time any law or court decree prohibits the
               performance of any material obligation undertaken hereby by the
               Borrower which would materially impair the Property or the
               Lender's right to payment under the Note, or, at any time
               provides that any amount to be paid hereunder by the Borrower,
               other than a payment on account of the principal or of interest
               on the indebtedness secured hereby, must be credited against the
               Borrower's obligations under the Note, the holder shall have the
               right on thirty (30) days' prior notice to the Borrower, to
               require payment in full of the entire indebtedness secured hereby
               unless Borrower reverses such prohibition or otherwise satisfies
               the Lender within said thirty (30) day period;

          (3)  [reserved];

          (4)  to notify the holder promptly of any accidental damage to the
               Property in excess of Fifty Thousand Dollars ($50,000) (the
               "Damage Threshold"), provided, however that such Damage Threshold
               shall be increased to Two Hundred Fifty Thousand Dollars
               ($250,000) once Borrower has completed Phase I of the Tenant
               Improvements and commences the build-out for Phase II of the
               Tenant Improvements; to keep the Property in good order, repair
               and condition, damage from casualty or condemnation expressly
               excepted, and not to permit or commit waste on the Property nor
               remove or alter anything which constitutes a part of the
               Property, except in the ordinary course of business, without the
               consent of the holder, except as otherwise provided herein; and
               all construction on the Property shall comply with, and each and
               every part of the Property shall be maintained in accordance
               with, any lawful requirements or provisions, public or private,
               relating to the same or the use thereof;

          (5)  to carry with respect to the Property and its use such insurance
               as the holder may from time to time reasonably require and as may
               from time to time be required by any applicable Federal, State or
               local law or regulation including, without limitation, general
               liability insurance with limits of liability reasonably
               satisfactory to Lender and fire and extended coverage

                                       10

<PAGE>

               insurance against loss or damage to the Property by fire and any
               of the risks covered by insurance of the type now known as
               "special coverage", "differences in condition", "all risk", and
               "change in building code requirements" including without
               limitation earthquake, cost of demolition, vandalism, malicious
               mischief, lightning, windstorm, hail, explosion, riot, civil
               commotion, damage from aircraft and vehicles, smoke damage, and
               sprinkler damage for not less than full replacement cost of the
               Property from time to time during the period of time this
               Mortgage remains outstanding; and all insurance or certificates
               thereof (with evidence of payments of premiums thereon reasonably
               satisfactory to the holder) required by the holder to be
               maintained, together with any other insurance with respect to the
               Property maintained by the Borrower, shall be deposited with,
               and, the Lender shall be added and named as an insured first
               mortgagee and loss payee, and shall be first payable in case of
               loss to the holder; all renewals or replacements of such
               insurance from time to time in force, together with evidence of
               payment of premiums thereon reasonably satisfactory to the
               holder, shall be delivered to the holder ten (10) days at least
               before the expiration date of the then current insurance; all
               insurance required by the holder to be maintained with respect to
               the Property shall be written by such companies on such terms, in
               such form and for such periods and amounts as the holder shall
               from time to time reasonably approve (provided, that Borrower
               agrees to increase the limits of such insurance to such higher
               amounts as the holder may from time to time reasonably require)
               and shall contain a provision requiring at least thirty (30)
               days' advance written notice to the Lender before any such policy
               may be cancelled or modified; and no settlement on account of any
               loss to Property in excess of $100,000 covered by such insurance
               shall be effected without the consent of the holder;

          (6)  that all proceeds of casualty insurance policies maintained by
               Borrower in excess of $100,000 shall be paid to the Lender and,
               at the Lender's option, shall be released to the Borrower to pay
               for the costs of repair and restoration of the Property; and to
               the extent the Lender retains any funds not required for repair
               and restoration, those funds shall be, at the Lender's option,
               applied toward the indebtedness secured hereby; provided,
               however, that all proceeds of casualty insurance policies which
               are less than $100,000 and are paid directly to Borrower shall be
               used by Borrower to pay for the costs of repair, restoration or
               replacement of the Property; in the event that the Lease is
               terminated by either the Lessor or the Borrower as a result of
               any damage to the Leased Premises from casualty, any and all
               proceeds of casualty insurance policies maintained by Borrower
               shall be paid to the holder and applied towards the indebtedness
               secured hereby;

          (7)  that the awards of damages on account of any condemnation for
               public use of or injury to the Property shall be paid to the
               holder; and promptly upon

                                       11

<PAGE>

               obtaining knowledge of the institution of any proceedings on
               account of any condemnation for public use of or injury to the
               Property, or any portion thereof, the Borrower will notify the
               holder of the pendency of such proceedings, and no settlement
               respecting such awards shall be effected without the consent of
               the holder;

          (8)  not to lease the Property or any part thereof without obtaining
               the prior written consent of the Lender; otherwise faithfully to
               keep, observe and satisfy all obligations of the Borrower under
               all leases or other tenancy arrangements, licenses or permits
               from time to time affecting the Property or any part thereof, not
               to accept any prepaid rentals for more than the amount required
               of under such leases or other tenancy arrangements affecting the
               Property; and, at any time on notice from the holder, to execute
               and deliver to the holder such collateral assignments of leases
               and other tenancy arrangements of portions of the Property and
               rents payable thereunder, and not to cancel, accept a surrender
               of, reduce the rentals under, anticipate any rentals under, or
               modify any such leases or tenancy arrangements, or consent to any
               assignment or subletting thereof, in whole or in part; and
               nothing herein shall obligate the holder to perform the
               obligations of lessor under any of such leases or other tenancy
               arrangements which obligations the Borrower shall keep, observe
               and perform;

          (9)  that if this Mortgage, by its terms, is now, or at any time,
               subject or subordinate to a prior mortgage (other than a
               Permitted Encumbrance), the Borrower shall not, without the
               consent of the holder, agree to the modification, amendment or
               extension of the terms or conditions of such prior mortgage,
               which would diminish the value of the Property secured by this
               Mortgage; and to pay promptly when due, under any such prior
               mortgage and the note or obligations secured thereby, all
               installments on account of interest, principal or other charges,
               and to keep, perform, observe and comply with, or cause to be
               kept, performed, observed and complied with, all covenants and
               agreements and each and every obligation of the Borrower under
               the prior mortgage to the end that no default, and no event,
               happening or condition, which with the giving of notice or lapse
               of time or both would constitute a default, shall occur
               thereunder;

          (10) to pay when due all reasonable out-of-pocket fees and charges
               incurred by the Lender incident to the loan transaction evidenced
               by the Loan Documents, as well as any and all commitment fees due
               thereunder;

          (11) that, from time to time, on the request of the holder, the
               Borrower shall furnish a written statement, signed and if
               requested, acknowledged, setting forth the amount of the
               indebtedness which the Borrower acknowledges to be due on the
               Note and under this Mortgage, specifying any claims of

                                       12

<PAGE>

               off-set or defense which the Borrower asserts against the
               indebtedness secured hereby or any obligations to be paid or
               performed hereunder, and the then state of facts relative to the
               condition of the Property; and to deliver to the holder promptly
               copies of all junior mortgages, security agreements, assignments
               of leases and rents and similar instruments which the Borrower
               may create with respect to the Property, together with copies of
               any notices from any holder of such an instrument claiming that
               the Borrower is in default in the performance or observance of
               any of the terms thereof;

          (12) that whether or not for additional interest or other
               consideration paid or payable to the holder, no forbearance on
               the part of the holder or extension of the time for payment of
               the whole or any part of the obligations secured hereby, whether
               oral or in writing, or any other indulgence given by the holder
               to the Borrower or to any other party claiming any interest in or
               to the Property, shall operate except as provided by the
               forbearance or indulgence to release or in any manner affect the
               original liability of the Borrower, or impair any right of the
               holder, including, without limitation, the right to realize, upon
               the security or any part thereof, for the obligations secured
               hereby or any of them, notice of any such extension, forbearance
               or indulgence being waived by the Borrower and all those claiming
               by, through or under the Borrower; and no consent or waiver,
               express or implied, by the holder to or of any default by the
               Borrower shall be construed as a consent or waiver to or of any
               further default in the same or any other term, condition,
               covenant or provision of this Mortgage or of the obligations
               secured hereby; in case redemption is had by the Borrower after
               foreclosure proceedings have begun, the holder shall be entitled
               to collect all reasonable costs, charges and expenses incurred up
               to the time of redemption; and in case any one or more of the
               provisions of this Mortgage may be found to be invalid or
               unenforceable for any reason or in any respect, such invalidity
               shall not limit or impair enforcement of any other provision
               hereof;

          (13) that wherever notice, demand or a request may properly be given
               to the Borrower under this Mortgage, the same shall always be
               sufficient to serve as a notice, demand or request hereunder if
               in writing and delivered by hand delivery or by Federal Express
               or similar delivery service which shall provide a receipt of
               deliveries made, or posted in the United States Mail by
               Registered or Certified Mail, in each case with delivery charges
               or postage prepaid addressed to the Borrower at the address given
               in this Mortgage as the Borrower's address or the business
               address of the Borrower last known to the holder hereof; and any
               such notice, demand or request shall be treated as having been
               given upon such deposit with such delivery service or in the
               United States Mails, as the case may be; and a notice so
               addressed shall always be a sufficient notice, notwithstanding a
               change in the ownership of the equity of redemption of the
               Property,

                                       13

<PAGE>

               whether or not consented to by the holder; and where more than
               one person constitutes the Borrower, one notice sent to the
               address given in this Mortgage as the Borrower's address or the
               last known business address of any one of them shall constitute
               sufficient notice to all;

          (14) that the following are conditions of this Mortgage:

               (a)  the foregoing covenants shall not be breached;

               (b)  except for real estate taxes and assessments before any
                    delinquency therein (delinquency with reference to such
                    taxes and assessments being herein defined, for the purpose
                    of this Mortgage, as meaning the time when, on the
                    nonpayment thereof, interest or penalties commence to
                    accrue) not to create, permit or suffer to be created or
                    permitted to remain (and shall discharge or promptly cause
                    to be discharged or bonded over) any mechanics' or laborers'
                    lien of record, or any attachment, on the Property or any
                    part thereof or interest therein (except Permitted
                    Encumbrances), without the consent of the holder which may
                    be withheld in the Lender's sole and absolute discretion,
                    even if such encumbrance is inferior to this Mortgage;
                    without limitation, and except where the holder receives
                    independent security satisfactory to the holder during the
                    pendency of legal proceedings contesting the imposition of a
                    Governmental lien, the filing of a notice of Federal or
                    State tax lien with the holder or the office at which, by
                    law, such notice is to be filed to be effective against the
                    Property, whether or not such lien applies, in terms, to the
                    Property, shall be a breach of this condition if,
                    notwithstanding the Borrower's good faith attempt to contest
                    such Federal and State tax lien, the holder has a good faith
                    belief that a forbearance of the exercise of any of its
                    rights and remedies hereunder or under any Loan Documents
                    may materially and adversely effect its security;

               (c)  the Borrower shall not grant any junior or inferior
                    mortgage, security agreement, assignment of leases and rents
                    or similar instrument with respect to any Property (except
                    Permitted Encumbrances) without obtaining the Lender's prior
                    written consent which may be withheld in the Lender's sole
                    and absolute discretion, and in the event of such consent,
                    each such instrument shall contain a provision under which
                    the holder of such subordinate and inferior liens agrees to
                    notify the holder hereof in writing of any default on the
                    part of the Borrower under such instruments prior to the
                    commencement of any action based on such default; and the
                    Borrower will not permit any encumbrance or lien (except
                    Permitted Encumbrances) to be created which may be or become
                    superior to any lease of the Property;

                                       14

<PAGE>

               (d)  except as otherwise provided herein or transactions in the
                    ordinary course of business (or the disposition of obsolete
                    or worn-out assets), the Borrower shall not voluntarily
                    transfer, nor suffer or permit the transfer of, whether by
                    operation of law or otherwise, the legal or equitable
                    interest in the equity of redemption in the Property, or any
                    part thereof, and it shall not dissolve or permit its
                    dissolution;

               (e)  [intentionally deleted];

               (f)  [intentionally deleted];

               (g)  that prior to the date hereof it has never: disposed of,
                    transported, or arranged for the transport of any hazardous
                    material or oil without compliance with all applicable
                    statutes, regulations, ordinances, directives, and orders;
                    been legally responsible for any release or threat of
                    release of any hazardous material or oil that is reportable
                    under the Massachusetts Contingency Plan; received
                    notification of any potential or known release or threat of
                    release of any hazardous material or oil from any site or
                    vessel occupied or operated by the Borrower and/or of the
                    incurrence of any expense or loss in connection with the
                    assessment, containment, or removal of any release or threat
                    of release of any hazardous material or oil from any such
                    site or vessel;

               (h)  the Borrower shall not dispose of any hazardous material or
                    oil on the Land in violation of law; not store or transport
                    or arrange for the transport of any hazardous material or
                    oil on the property except if such storage or transport is
                    in the ordinary course of the Borrower's business and is in
                    compliance with all such statutes, regulations, ordinances,
                    directives and orders; if the Borrower obtains knowledge or
                    notice of any potential or known release or threat of
                    release of any hazardous material or oil, that is reportable
                    under the Massachusetts Contingency Plan, at or from any
                    site or vessel occupied or operated by the Borrower, and/or
                    upon the Borrower's obtaining knowledge of any incurrence of
                    any expense or loss by any governmental authority in
                    connection with the assessment, containment, or removal of
                    any hazardous material or oil for which expense or loss the
                    Borrower may be liable, then in either of such events,
                    Borrower shall take to the extent commercially reasonable
                    all such action, including without limitation the conducting
                    of engineering tests, to confirm whether or not a potential
                    or known release or threat of release of any hazardous
                    material or oil exists and to undertake all necessary

                                       15

<PAGE>

                    remediation required under Mass. Gen. Laws Ch. 21E and the
                    Massachusetts Contingency Plan; and

               (i)  that no default shall occur by the Borrower as Tenant under
                    the Lease, which shall remain, uncured beyond any applicable
                    grace period therein contained;

          (15) that if there shall be any breach of the conditions of Paragraphs
               14(d), (g), (h) or (i) of this Section 1.07 or the covenant in
               Paragraph (5) of this Section 1.07, in each case, which continues
               beyond the applicable grace or cure period (or, if no such grace
               or cure period is specified, then beyond thirty (30) days
               following the occurrence of any such breach), provided, however,
               that if such breach cannot be cured within the applicable grace
               or cure period, provided Borrower commences cure within thirty
               (30) days of such breach and continuously and diligently pursues
               such cure thereafter, such applicable grace or cure period shall
               be extended an additional sixty (60) days, or if any payment
               required under the Note or under this Mortgage shall not be made
               within five (5) days after written notice of the due date thereof
               (provided, however, that Lender shall not be required to provide
               such written notice more than twice in any twelve (12) month
               period), or if, in any respect other than the filing of a
               Governmental lien, there shall be any breach of the condition of
               Paragraph 14(c) of this Section 1.07 or if there shall be any
               breach of the other conditions or covenants of this Mortgage
               continuing for more than thirty (30) days after the giving of
               notice by the holder (except that where, for any of the
               foregoing, a period of grace is specifically otherwise provided
               or negated, such specific periods of time or negation shall
               govern in each case), or if there occurs any default, which
               remains uncured, under any prior or subordinate mortgage covering
               the Property, or under any note or other obligation secured
               thereby, in any event in an amount, individually or in the
               aggregate, of at least Two Hundred Fifty Thousand Dollars
               ($250,000.00), which default may result in the acceleration of
               the indebtedness secured thereby, or if there shall occur the
               commencement of foreclosure or other enforcement proceedings
               under any prior or subordinate mortgage covering the Property, or
               under any note or other obligation secured thereby, in any event
               in an amount, individually or in the aggregate, of at least Two
               Hundred Fifty Thousand Dollars ($250,000.00), or if the Lessor
               has given the Lender notice of Borrower's default under the Lease
               and the Borrower is not proceeding diligently to cure such
               default, or if the Borrower shall file a petition or any
               application for relief, extension, moratorium or reorganization
               under any bankruptcy, insolvency or debtor's relief law, or make
               an assignment for the benefit of creditors or enter into any
               trust mortgage arrangements, so-called, or consent to the
               appointment of a receiver of any of the Property of the Borrower,
               or if the Borrower shall permit any petition under any
               bankruptcy, insolvency or debtor's relief law to be filed against
               it, or

                                       16

<PAGE>

               permit the appointment of a receiver of any of the Property of
               the Borrower, then the holder hereof, in addition to, and not in
               limitation of, any and all other rights or remedies available to
               it by law or by any other provision of any of the instruments
               given to secure the Note, shall have the right, during the
               continuance of the default beyond any applicable grace period,
               and without notice:

               (a)  to enter upon and take possession of the Property, or any
                    part thereof; and to perform any acts the holder shall deem
                    necessary or proper to conserve the Property (including,
                    without limitation, the making of repairs, replacements and
                    alterations), to cure any default of the Borrower under the
                    Lease, and to manage and operate the Property, to collect
                    and receive all rents, revenues, income, issues and profits
                    from the Property, past-due and thereafter accruing, and to
                    exercise all other rights of the Borrower with respect to
                    the Property;

               (b)  to have a receiver appointed to enter and take possession of
                    the Property, or any part thereof, and to perform any acts
                    said receiver shall deem necessary or proper to conserve the
                    Property (including, without limitation, the making of
                    repairs, replacements and alterations), to maintain the
                    Lease in good standing without uncured defaults, to manage
                    and operate the Property, to collect and receive all rents,
                    revenues, income, issues and profits from the Property,
                    past-due and thereafter accruing, and to exercise all other
                    rights of the Borrower with respect to the Property;

               (c)  to declare the entire indebtedness of the Borrower under the
                    Note and this Mortgage forthwith due and payable;

               (d)  to sell the Property at public auction on such terms and
                    conditions as the holder shall determine, having first given
                    such notice, prior to the sale, of the time and place of
                    sale and terms and conditions of sale by publication in one
                    (1) or more newspapers having a general circulation in the
                    municipality in which the Property, or part thereof, is
                    located, all subject, however, to the requirements of this
                    Mortgage and applicable law; or to foreclose this Mortgage
                    in any other manner permitted by law; and

               (e)  to obtain judgment and execution for the indebtedness
                    secured by this Mortgage, to the extent not otherwise
                    satisfied;

          (16) that if there shall be any breach in any condition or covenant of
               this Mortgage beyond any applicable grace period, the holder
               shall have the right, but without any obligation so to do, to
               cure such default for the account of the Borrower, and, to the
               fullest extent permissible according to

                                       17

<PAGE>

               law, apply any funds credited by or due from the holder to the
               Borrower against the same (without any obligation first to
               enforce any other rights of the holder, including, without
               limitation, any rights under the Note or this Mortgage, or any
               guarantee thereof, and without prejudice to any such rights);
               without limiting the generality of the foregoing, the Borrower
               hereby authorizes the holder to pay all taxes, sewer use fees,
               water rates and assessments, with interest, costs and charges
               accrued thereon, which may at any time be a lien upon the
               Property, or any part thereof, not paid when due; to pay the
               premiums for any insurance required hereunder not paid when due;
               to incur and pay reasonable expenses in protecting its rights
               hereunder and the security hereby granted, including, again
               without limitation, all payments on account of principal,
               interest and such other charges as may become due to cure default
               under any prior mortgage or under any subordinate mortgage,
               including the notes or obligations secured thereby, affecting the
               Property; to pay any balance due under any security agreement on
               any articles, fixtures and equipment owed by the Borrower
               included as a part of the Property; to pay any monies necessary
               to maintain the Lease in good standing in accordance with the
               terms thereof, not paid when due; and the payment of all amounts
               so incurred shall be secured hereby as fully and effectually as
               any other obligation of the Borrower secured hereby; and, to the
               fullest extent permissible according to law, to apply to any of
               these purposes or to the repayment of any amounts so paid by the
               holder of any sums paid on the Note or this Mortgage by the
               Borrower as interest or otherwise;

          (17) that, at any foreclosure sale, any combination or all of the
               Property or security given to secure the indebtedness secured
               hereby, may be offered for sale for one total price, and the
               proceeds of such sale accounted for in one account without
               distinction between the items of security or without assigning to
               them any proportion of such proceeds, the Borrower hereby waiving
               the application of any doctrine of marshalling; and, in case the
               holder, in the exercise of the power of sale herein given, elects
               to sell in parts or parcels, said sales may be held from time to
               time, and the power shall not be fully executed until all of the
               Property not previously sold shall have been sold;

          (18) that, if the holder shall exercise the right described in either
               subdivision (a) or (b) of Paragraph 15 of this Section 1.07, the
               expenses (including, without limitation, reasonable receiver's
               fees and reasonable attorney's fees) incurred pursuant to the
               powers herein contained likewise shall be secured hereby, and
               holder shall apply such rents, income, issues and profits as
               shall be received by it first to the payment of all costs and
               expenses incurred and thereafter to the indebtedness secured
               hereby in such order of priority as the holder, in its sole
               discretion, shall determine; and the exercise of such rights and
               disposition of such funds shall not

                                       18

<PAGE>

               constitute a waiver of any foreclosure, once commenced, nor
               preclude the later commencement or foreclosure for breach hereof;

          (19) that, if the holder shall exercise the right described in
               subdivision (d) of Paragraph 15 of this Section 1.07, the holder
               may adjourn, from time to time, any sale by announcement of such
               adjournment at the time and place appointed for such sale or such
               adjourned sale; and, except as otherwise provided by law, the
               holder may, without further notice or publication, make such sale
               at the time and place to which the same shall be so adjourned.
               Upon completion of any sale, the holder shall execute and deliver
               an instrument conveying, assigning and transferring all right,
               title and interest in the Property, and rights sold, in the name
               of holder, or in the name of Borrower, and the same shall operate
               to divest all right, title and interest of the Borrower in any
               property or right so sold and shall be a perpetual bar, both at
               law and in equity, against Borrower and all persons claiming
               under Borrower unless the Lender acts with willful neglect, gross
               negligence or in bad faith;

          (20) that the rights and remedies of the holder for any default under
               any of the instruments given as security for the indebtedness
               secured hereby are not mutually exclusive, and may be exercised
               successively or concurrently and from time to time for as long as
               any default exists, and the failure of the holder to exercise any
               such rights in any one or more instances, or the acceptance by
               the holder of partial payments of amounts in default secured
               hereby, shall not constitute a waiver of such default, but such
               right shall remain continuously in force; and acceleration of
               maturity, once claimed hereby by the holder, may, at the holder's
               option, be rescinded by written acknowledgment to that effect
               without waiving the default or any rights, including the right to
               accelerate once again, with respect thereto; moreover, the tender
               and acceptance of partial payment of amounts in default after
               acceleration, or the commencement of any foreclosure action,
               shall not in any way affect, rescind or terminate such
               acceleration of maturity or such foreclosure action;

          (21) that, from time to time, on the request of the holder, the
               Borrower shall furnish to the holder a written statement, signed
               and, if requested, acknowledged, setting forth, as of the end of
               the month next preceding receipt by the Borrower of such request
               from the holder, the names of the lessees of the Property, if
               any, the term of their respective leases, the amount of such
               space occupied by each lessee and the rent and other charges paid
               by each lessee, such written statement to be furnished not later
               than thirty (30) days following such request from the holder;

          (22) that the Borrower, at Borrower's expense, shall furnish or cause
               to be furnished to Lender (a) within one hundred twenty (120)
               days of the end of Borrower's and Guarantor's fiscal year, a copy
               of the audited

                                       19

<PAGE>

               consolidated annual financial statements of the Guarantor and its
               subsidiaries (including the Borrower) prepared by an independent
               certified public accountant in accordance with GAAP, as and when
               prepared, for such fiscal year, certified as complete and true by
               the President or Chief Financial Officer of Borrower and the
               President or Chief Financial Officer of the Guarantor, (b) within
               ten (10) days of filing with the Internal revenue Service, a copy
               of the consolidated Federal Income Tax Returns of the Guarantor
               and its subsidiaries (including the Borrower), as and when filed,
               for each fiscal year, certified as complete and true by the
               President or Chief Financial Officer of Borrower and the
               President or Chief Financial Officer of the Guarantor, (c) within
               forty-five (45) days of the end of each fiscal quarter of
               Borrower and Guarantor, a copy of the consolidated
               company-prepared financial statements of the Guarantor and its
               subsidiaries (including the Borrower) consisting of a balance
               sheet and profit and loss statement, certified as complete and
               true by the President or Chief Financial Officer of Borrower and
               the President or Chief Financial Officer of the Guarantor and (d)
               any additional financial reporting documentation reasonably
               requested by the holder; to the extent that any of the foregoing
               financial documents or reports are publicly available through the
               United States Securities and Exchange Commission website,
               Borrower need not provide such financial statements to Lender;
               the holder shall have the right to inspect at its sole cost the
               books and records of Borrower for the purpose of verifying the
               accuracy of such reports (or, for the purpose of conducting its
               own audit at Borrower's cost of the records and books of account
               of Borrower if Borrower fails to furnish or cause to be furnished
               and delivered the aforesaid financial documents and reports);

          (23) that the Borrower shall cause the Guarantor and its subsidiaries
               to maintain consolidated cash and/or cash equivalents, including
               but not limited to marketable securities, demand or time
               deposits, money market accounts, or other cash investments, of at
               least Two Million Five Hundred Thousand Dollars ($2,500,000) (the
               "Required Cash Amount") during any period where there is
               outstanding any indebtedness of Borrower to Lender under the
               Note; provided, however, that at least fifty percent (50%) of the
               Required Cash Amount shall be maintained only by the assets of
               the Borrower; in the event of a default of this Section 1.07(23),
               the Borrower shall have thirty (30) days after notice from Lender
               to cure any breach of this covenant;

          (24) that the Lender may enter the Leased Premises at any reasonable
               time with advance notice to Borrower to inspect the Property and
               to determine whether the Borrower is in compliance with its
               obligations under this Mortgage;

          (25) that in the event the leasehold interest of the Borrower in the
               Leased Premises or any part thereof becomes vested in any other
               person than the

                                       20

<PAGE>

               Borrower, with or without consent, the holder may, without notice
               to the Borrower, deal with such successor or successors in
               interest with reference to this Mortgage and the indebtedness and
               other obligations secured hereby in the same manner as with the
               Borrower, without in any way affecting or discharging the
               Borrower's liability hereunder or the indebtedness or other
               obligations hereby secured; and no forbearance on the part of the
               holder and no extension of the time for the payment, the
               performance of any of the obligations of the Borrower as set
               forth herein or other indulgences shall operate to release,
               discharge, modify, change or affect the liability of the Borrower
               herein, either in whole or in part;

          (26) that in the event of foreclosure of this Mortgage, or other
               transfer of title to the Property covered hereby in
               extinguishment of the indebtedness secured hereby, all right,
               title and interest of the Borrower, in and to any insurance
               policies then in force, shall pass to the purchaser. In the event
               that prior to the extinguishment of the indebtedness, any claim
               under any hazard insurance policies has not been paid and
               distributed in accordance with the terms of this Mortgage, and
               any such claim shall be paid subsequent to the extinguishment of
               the indebtedness secured hereby, and the foreclosure of this
               Mortgage, or other transfer of title to the Property covered
               hereby shall have resulted in extinguishing the indebtedness
               secured hereby for an amount less than the total of the unpaid
               principal balance of the Note, together with accrued interest,
               plus costs and other charges at the time of the extinguishment of
               the indebtedness secured hereby, then, and in such event that
               portion of the payment in satisfaction of the claim which is
               equal to the difference between the total indebtedness secured
               hereby and the amount in extinguishment of the indebtedness
               secured hereby, shall be paid to the holder, and the Borrower
               hereby assigns, transfers and sets over to the holder all of the
               Borrower's right, title and interest in and to said sum. The
               balance, if any, shall belong to the Borrower;

          (27) that the principal amount of the Note does not constitute more
               than twenty-five percent (25%) of the overall project costs
               scheduled to be expended for Borrower's commencement of
               operations in the Leased Premises, including the installation of
               Tenant Improvements and other build-out expenses and the
               acquisition of equipment for use at the Leased Premises;

     The word "Borrower" as used herein shall mean the Borrower named herein at
the beginning of this instrument as the Borrower, whether one or more persons or
entities, and any subsequent owner or owners of the equity of redemption of the
Property. Where more than one (1) party constitutes the Borrower, or where, with
reference to bankruptcy, insolvency or similar debtor relief proceedings, or
decease, this Mortgage shall refer to parties or persons in addition to the
Borrower, then, in any such case, provisions in this Mortgage with reference to
bankruptcy or decease (in the case of individuals) shall refer to each of the
parties or persons to which the

                                       21

<PAGE>

provisions of this Mortgage are applicable, so that if, for example, but without
limitation, any party who is a Borrower or a guarantor of the Note, shall file a
petition in bankruptcy, such filing shall be treated as a breach of condition of
this Mortgage.

     The word "holder" as used herein shall mean the Lender named at the
beginning of this instrument, and any subsequent holder or holders of this
Mortgage.

     All the covenants and agreements of the Borrower herein contained shall
constitute covenants running with the land and shall be binding upon the
Borrower and the heirs, executors, administrators, successors and assigns of the
Borrower; and, where more than one party constitutes the Borrower, the liability
of such persons under this Mortgage for the obligations set forth herein shall
be joint and several.

     The Borrower acknowledges that all representations and warranties made to
the Lender by or on behalf of the Borrower are material and have been relied
upon by the Lender in granting the loan secured by this Mortgage.

     This Mortgage is upon the STATUTORY CONDITION and upon the further
condition that all covenants and agreements on the part of the Borrower herein
undertaken shall be kept and fully and seasonably performed and that no breach
of any other of the conditions specified herein shall be permitted, for any
breach of which conditions, or for any breach of any of the conditions contained
in any prior mortgage or subordinate mortgage, or under the note or obligations
secured thereby, the holder shall have the STATUTORY POWER OF SALE.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       22

<PAGE>

     EXECUTED as a Massachusetts sealed instrument as of the day and year first
above written.

                                        BIOVEX, INC.

                                        By: /s/ Philip Astley-Sparke
                                            ------------------------------------
                                            Philip Astley-Sparke,
                                            President

                          COMMONWEALTH OF MASSACHUSETTS

Middlesex, ss.                                                     June 29, 2006

     Then personally appeared the above-named Philip Astley-Sparke, President of
BioVex, Inc. who proved to me through satisfactory evidence of identification,
which was Mass. Driver's License, to be the person whose name is signed on the
preceding document, and acknowledged that s/he signed it voluntarily for its
stated purposes.

                                        /s/ Adam T. Kurth
                                        ----------------------------------------
                                        Notary Public
                                        My Commission expires:

                                       23

<PAGE>

                                    Exhibit A

                                LEGAL DESCRIPTION

                                       24
<PAGE>

                                                                  EXECUTION COPY

               RIDER TO LEASEHOLD MORTGAGE AND SECURITY AGREEMENT

     This LEASEHOLD MORTGAGE RIDER is made this 29th day of June, 2006, and is
incorporated into and shall be deemed to supplement the Leasehold Mortgage and
Security Agreement of even date herewith from the Borrower to the Lender to be
recorded with the Middlesex County Registry of Deeds (the "Mortgage"). This
Rider supplements and supersedes any provisions to the contrary contained in the
body of the Mortgage and any defined terms used herein and not defined shall
have the same meaning as given to them in the Mortgage. The Mortgage secures,
inter alia, Borrower's Promissory Note of even date in the original principal
amount of up to Two Million Five Hundred Thousand Dollars ($2,500,000.00) (the
"Note") to the Lender and covering the Leased Premises more particularly
described therein.

     The Borrower hereby covenants and agrees to the following conditions of the
Mortgage:

     (i)  The Borrower proposes and agrees to diligently complete Phase I and
          Phase II of the construction and build-out work with respect to
          certain Tenant Improvements located on the Leased Premises (the
          "Work") in accordance with (i) the construction budget delivered to
          and approved in advance by the Lender, (ii) Plans and Specifications
          reflecting the Work for both Phase I and Phase II of the project, as
          certified by the architect for the Work, (the "Plans") to be delivered
          to and approved in advance by the Lender and (iii) such building
          permits and all other governmental permits, licenses or approvals
          necessary or required for the Work. The Borrower shall be authorized
          to make any alterations to the Plans provided, however, that Borrower
          shall provide Lender with copies of all change order logs within ten
          (10) days of approval by Borrower. The Borrower agrees that the
          materials to be used in the Work shall be of good quality and as
          called for by the Plans and that the Work shall be completed in a good
          and workmanlike manner and that both shall be reasonably satisfactory
          to the Lender and its Work inspectors.

     (ii) Intentionally deleted.

     (iii) The Borrower agrees not to use in the Work any materials which are
          purchased upon lease or conditional bill of sale, nor any to which
          Borrower does not have an absolute title except for any Permitted
          Liens; provided, however, that Borrower may finance the acquisition of
          any equipment for use on the Leased Premises.

     (iv) The Lender agrees to advance to the Borrower the balance of the
          proceeds of the Note financing the Work remaining after any prior
          disbursements upon the following terms and conditions:

          (a)  Proceeds of the Note to cover "hard costs" and "soft costs" of
               the Work shall be disbursed to the Borrower based on a budget for
               the Work (collectively, the "Budget"), approved in advance by the
               Lender, and in accordance with this Rider, to pay (i) amounts
               owing to the Borrower's general contractor or subcontractors and
               (ii) amounts for the Work approved by Lender's inspecting
               engineer and in accordance with the Budget.

          (b)  If for any reason at any time the amount of undistributed
               proceeds from the Note shall be, or become, or in the reasonable
               judgment of Lender appear reasonably

<PAGE>

               likely to become, when added to the total funds to be expended
               for the Work but to be advanced by sources other than the Lender,
               as identified by Borrower in the Budget, insufficient for the
               completion of the Work in accordance with the Budget, then no
               advances shall be made until the Borrower has, at the Lender's
               option (i) advanced such amounts of its own funds toward the
               total cost of the Work as are, in the reasonable judgment of the
               Lender, sufficient to ensure completion of the Work or (ii)
               deposited in escrow with the Lender sums which, in the reasonable
               judgment of the Lender, are sufficient to ensure the completion
               of the Work, in accordance with the Plans and in a good and
               workmanlike manner. In addition, the Borrower's failure to make
               such advances or deposit such sums within forty-five (45) days
               following written notice from the Lender shall be an Event of
               Default under the Note and Mortgage.

          (c)  Lender shall make one or more advances, each not to be less than
               $500,000.00, to the Borrower of sums up to $2,500,000.00 (less
               any advances theretofore made under the Note for the purchase of
               Equipment) for Phase I of the Work, provided that such advances,
               in the aggregate, shall not exceed twenty-five percent (25%) of
               the overall project costs for Phase I, upon receipt by Lender, at
               least ten (10) business days before the date upon which an
               advance is requested, of (A) a requisition prepared on AIA Form
               G-702 and Form G-703 in form and substance acceptable to Lender,
               (B) a currently dated certificate executed by Borrower in the
               form of EXHIBIT A attached hereto and made a part hereof, (C)  a
               certificate executed by the general contractor certifying to
               Lender that the amount to be advanced per the requisition is the
               total amount claimed by the general contractor for the Phase I
               Work for which the advance is sought, the Borrower is not in
               default under any of its obligations to the general contractor,
               all obligations to subcontractors, workmen, suppliers and
               materialmen for and with respect to all labor and materials
               supplied for the Phase I Work for which the advance is sought
               have been paid in full and the general contractor has received
               partial lien waivers in the statutory form from the
               subcontractors to whom total payment in excess of $50,000.00 has
               been made pursuant to such requisition, and (D) a certificate
               executed by the Borrower's architect or engineer certifying to
               Lender that the Phase I Work for which the advance is sought has
               been completed in accordance with the Plans, and that such Work,
               as so completed, complies in all respects with all applicable
               federal, state and local laws, ordinances, rules and regulations
               pertaining thereto, which certificates shall be in form and
               substance acceptable to Lender. Lender reserves the right, prior
               to advancing any sums hereunder, to inspect the Phase I Work
               completed upon the Premises to ensure that all such Work has been
               completed thereon in a good and workmanlike manner. Borrower
               further agrees that Lender shall have no obligation to make
               disbursements related to any "hard cost" expenditures unless such
               "hard cost" expenditures are approved by the Lender or the
               Lender's inspecting engineer. No advances made under this
               subsection (c) for Phase I of the Work shall be used for the
               purchase of Equipment.

          (d)  Lender shall make one or more advances, each not to be less than
               $500,000.00, to the Borrower of sums up to $2,500,000.00 (less
               any advances theretofore made under the Note for the purchase of
               Equipment) for Phase II of the Work, provided that all advances
               made pursuant to this subsection (d) and subsection (c), above,
               in the aggregate, shall not exceed twenty-five percent (25%) of
               the

                                       2

<PAGE>

               overall project costs for Phase I and Phase II, upon receipt by
               Lender, at least ten (10) business days before the date upon
               which an advance is requested, of (A) a requisition prepared on
               AIA Form G-702 and Form G-703 in form and substance acceptable to
               Lender, (B) a currently dated certificate executed by Borrower in
               the form of EXHIBIT A attached hereto and made a part hereof, (C)
               a certificate executed by the general contractor certifying to
               Lender that the amount to be advanced per the requisition is the
               total amount claimed by the general contractor for the Phase II
               Work for which the advance is sought, the Borrower is not in
               default under any of its obligations to the general contractor,
               all obligations to subcontractors, workmen, suppliers and
               materialmen for and with respect to all labor and materials
               supplied for the Phase II Work for which the advance is sought
               have been paid in full and the general contractor has received
               partial lien waivers in the statutory form from the
               subcontractors to whom total payment in excess of $50,000.00 has
               been made pursuant to such requisition, and (D) a certificate
               executed by the Borrower's architect or engineer certifying to
               Lender that the Phase II Work for which the advance is sought has
               been completed in accordance with the Plans, and that such Work,
               as so completed, complies in all respects with all applicable
               federal, state and local laws, ordinances, rules and regulations
               pertaining thereto, which certificates shall be in form and
               substance acceptable to Lender. Lender reserves the right, prior
               to advancing any sums hereunder, to inspect the Phase II Work
               completed upon the Premises to ensure that all such Work has been
               completed thereon in a good and workmanlike manner. Borrower
               further agrees that Lender shall have no obligation to make
               disbursements related to any "hard cost" expenditures unless such
               "hard cost" expenditures are approved by the Lender or the
               Lender's inspecting engineer. No advances made under this
               subsection (d) for Phase II of the Work shall be used for the
               purchase of Equipment.

     (v)  Prior to the final disbursement pursuant to subsection (c) or (d)
          above, the Lender shall cause a so-called title rundown of the Leased
          Premises to be performed at the Borrower's expense. The Lender shall
          not be required to advance such final disbursement if the Borrower
          shall fail to discharge any encumbrances of record, other than
          Permitted Encumbrances, disclosed by such title rundown. The Lender
          shall not be required to advance any disbursements hereunder or under
          the Note if at any time the Borrower shall fail to pay sums due or
          claimed to be due for labor or materials furnished, nor if at any time
          there shall be any recorded statements of mechanics' liens or notices
          of contract or any other liens or attachments by any contractor or
          subcontractor or materialman on the Leased Premises, or any part
          thereof, nor if any restrictions on the Leased Premises shall be
          violated, nor if the applicable building laws shall not be complied
          with, nor if any attachment shall be made by trustee process or
          otherwise of the funds in the hands of the Lender, nor if any
          materials shall be used in the Work which shall be purchased on
          conditional sale or lease (except as authorized by Section (iii)
          hereof), whether the same be recorded or not, nor if there shall be a
          substantial, partial, or total loss or damage by fire to the
          building(s) on the Leased Premises (except as otherwise provided in
          this Mortgage), nor if Borrower is in default under the Mortgage or
          Note or any other loan document, or any other indebtedness, agreement
          or document between the Borrower and the Lender after any applicable
          grace periods, nor if there are any legal actions or other legal or
          administrative proceedings pending or threatened which could adversely
          affect Borrower, the Leased Premises, or the Work, nor if
          representations or warranties made by Borrower prior to any advance
          are determined by the Lender to be untrue or incorrect in

                                       3

<PAGE>

          any material respect, but in all other events, the Lender shall
          advance the payments upon the terms set forth in Section (iv) above
          and the Note. The Lender shall have the right to require reasonable
          changes in the Work as the same may be necessary for the proper
          completion thereof.

     (vi) The Borrower authorizes the Lender to pay and cause to be discharged
          any mechanics' liens that may at any time affect the Leased Premises,
          and also to pay and cause to be discharged any encumbrances of record,
          other than Permitted Encumbrances, and charge the same against such
          payment or payments as said Lender may deem appropriate.

     (vii) The Lender shall not be bound to make advances hereunder if the Work
          shall not be completed by the Amortization Commencement Date, as such
          term is defined in the Note. However, it is agreed that the Lender may
          advance payments for the completion of the Work, but shall not be
          bound to do so, after the Amortization Commencement Date, or
          notwithstanding a default under this Mortgage or the Note, and charge
          the same against the Note, the Note then being payable upon demand.

     (viii) The Work shall be performed in a manner satisfactory to the City of
          Woburn Building Department and to the Lender fit for use and occupancy
          in all respects. The Work shall fully comply with all laws, ordinances
          and regulations of state, municipal or other governmental agencies or
          authorities as may apply and shall not violate any restrictions on the
          Leased Premises.

     (ix) No payment under this Mortgage shall be conclusive evidence of the
          performance of its terms in whole or in part, and no advance made
          hereunder shall be construed as an acceptance of improper work or
          material.

     (x)  The fact that any of the payments herein mentioned shall have been
          suspended shall not qualify or affect the right of any of the
          conditions herein set forth.

     (xi) The Lender shall not be required to make any advances under this
          Mortgage, but may, at its option, declare any advances heretofore made
          or sums due under the terms of this Mortgage immediately due and
          payable if the Borrower shall fail to perform and comply with the
          terms and conditions set out in this Mortgage or the Note after the
          expiration of all applicable grace and cure periods.

     (xii) The Borrower shall collaterally assign to the Lender its contracts
          with the architect and the general contractor for the Work and shall
          require its architect and general contractor, respectively, to consent
          to such assignments.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       4

<PAGE>

     BY SIGNING BELOW, Borrower accepts and agrees to the terms and provisions
contained in this Rider.

     Executed and delivered as a sealed instrument this 29th day of June, 2006.

                                        BIOVEX, INC.

                                        By: /s/ Philip Astley-Sparke
                                            ------------------------------------
                                            Philip Astley-Sparke,
                                            President

                          COMMONWEALTH OF MASSACHUSETTS

Middlesex, ss.                                                     June 29, 2006

     Then personally appeared the above-named Philip Astley-Sparke, President of
BioVex, Inc. who proved to me through satisfactory evidence of identification,
which was Mass. Driver's License, to be the person whose name is signed on the
preceding document, and acknowledged that s/he signed it voluntarily for its
stated purposes.

                                        /s/ Adam T. Kurth
                                        ----------------------------------------
                                        Notary Public
                                        My Commission expires:

                                       5

<PAGE>

                                                                  EXECUTION COPY

                                    EXHIBIT A

                       Borrower's Requisition Certificate

BORROWER: BioVex, Inc.

PROJECT: Tenant Improvements at 34-A Commerce Way, Woburn, Massachusetts 01801

                                 REQUISITION NO.

TO: Massachusetts Development Finance Agency (the "Lender")

     The undersigned hereby certifies to the Lender that:

     A. No material changes have been made in the Plans and Specifications which
have not been previously approved by the Lender or which require the prior
approval of any governmental authority having jurisdiction over the Project;

     B. Construction of the Project has been performed in all material respects
in accordance with the Plans and Specifications (along with changes to such
Plans and Specifications previously approved by the Lender and the other parties
referred to in Paragraph A, above);

     C. The balance to be advanced under the Loan, along with the funds from
other sources identified by Borrower in the Budget approved by the Lender, shall
be sufficient for the payment of all related direct or indirect costs for the
completion of construction of the Project in accordance with all of the terms
and provisions of that certain Rider to Leasehold Mortgage and Security
Agreement executed by Borrower in favor of Lender and dated June ___, 2006 (the
"Rider").

     D. All funds requisitioned by the Borrower and disbursed by the Lender
under previously approved requisitions have been paid to all subcontractors,
vendors and suppliers or otherwise expended for the purpose for which they were
requisitioned;

     E. The representations and warranties made in the Rider or any other Loan
Document are true and correct in all material respects as of the date hereof
with the same effect as if made on this date;

     F. The Borrower represents and warrants that (i) it is not in default of
any of its obligations to the Lender in connection with the Project, including,
without limitation, the Borrower's obligations under the terms of the Loan
Documents, (ii) has not received notice from or been informed by any
governmental agency having jurisdiction over the Project, of any alleged
deficiencies (other than punch list items) in the work performed to date or any
deviation of such work from the Plans and Specifications or notice of any kind
of any assertion of a claim that the Project is not being constructed in
accordance with all applicable legal requirements, and (iii) asserts no failure
on the part of the Lender to perform its obligations under the Loan Documents;

     G. The Borrower represents and warrants that this Certificate is in
identical form to the certificate which is annexed to the Rider as Exhibit "A"
and that there have been no changes or modifications thereto; and

     H. All capitalized terms herein shall have the same meanings ascribed under
the aforesaid Rider.

<PAGE>

                                        BORROWER:

                                        BIOVEX, INC.

                                        By:
                                            ------------------------------------
                                            Philip Astley-Sparke,
                                            President

DATED:
       ------------------------------

                                       7<PAGE>

                                                                  EXHIBIT 10.5.3

                                                                  EXECUTION COPY

                                    GUARANTY

     GUARANTY, dated as of June 29, 2006, by BIOVEX GROUP, INC. (the
"Guarantor"), in favor of MASSACHUSETTS DEVELOPMENT FINANCE AGENCY, a body
politic and corporate created by Chapter 289 of The Acts of 1998 and established
under Massachusetts General Laws Chapter 23G as amended, with a principal office
at 160 Federal Street, Boston, Massachusetts 02110 (the "Lender"). In
consideration of the Lender's giving, in its discretion, time, credit, or
lending facilities or accommodations to BioVex, Inc., a Delaware corporation,
(the "Borrower"), the Guarantor agrees as follows:

     1. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor hereby guarantees to
the Lender the punctual payment when due (whether at maturity, by acceleration
or otherwise), and the performance, of all liabilities, agreements and other
obligations of the Borrower to the Lender, whether direct or indirect, absolute
or contingent, due or to become due, secured or unsecured, now existing or
hereafter arising or acquired (whether by way of discount, letter of credit,
line of credit, lease, loan, overdraft or otherwise) (the "Obligations"). This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of the Obligations and not of their
collectibility only, and is in no way conditioned upon any requirement that the
Lender first attempt to collect any of the Obligations from the Borrower or
resort to any security or other means of obtaining their payment. Should the
Borrower default in the payment for performance of any of the Obligations, the
obligations of the Guarantor hereunder shall become immediately due and payable
to the Lender, without demand or notice of any nature, all of which are
expressly waived by the Guarantor. Payments by the Guarantor hereunder may be
required by the Lender on any number of occasions.

     2. GUARANTOR'S AGREEMENT TO PAY. The Guarantor further agrees, as the
principal obligor and not as a guarantor only, to pay to the Lender, on demand,
all costs and expenses (including court costs and legal expenses) incurred or
expended by the Lender in connection with the Obligations, this Guaranty and the
enforcement thereof, together with, to the extent not paid by Borrower, interest
on amounts recoverable under this Guaranty from the time such amounts become due
until payment at the interest rate applicable on the date of such demand
pursuant to the terms of that certain Promissory Note of the Borrower of even
date herewith, plus five percent (5%); provided that if such interest exceeds
the maximum permitted to be paid under applicable law, then such interest shall
be reduced to such maximum permitted amount.

     3. WAIVERS BY GUARANTOR; LENDER'S FREEDOM TO ACT. The Guarantor agrees that
the Obligations will be paid and performed strictly in accordance with their
respective terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Lender with respect thereto. The Guarantor waives presentment, demand, protest,
notice of acceptance, notice of Obligations incurred and all other notices of
any kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of the Borrower, and all suretyship defenses
generally. Without limiting the generality of the foregoing, the Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with an Obligation and agrees that the obligations of the
Guarantor hereunder shall not be release or discharged, in whole or in part, or
otherwise affected by (i) the failure of the Lender to assert any claim or
demand or to enforce any right or remedy against the Borrower, (i) any
extensions or renewals of any Obligation; (iii) any rescissions, waivers,
amendments or modifications of any of the terms or provisions of any agreement
evidencing, securing or otherwise executed in connection with any Obligation;
(iv) the substitution or release of any entity primarily or secondarily liable
for any Obligation; (v) the adequacy of any rights the

<PAGE>

Lender may have against any collateral or other means of obtaining repayment of
the Obligations; (vi) the impairment of any collateral securing the Obligations,
including without limitation the failure to perfect or preserve any rights the
Lender might have in such collateral or the substitution, exchange, surrender,
release, loss or destruction or any such collateral; or (vii) any other act or
omission which might in any manner or to any extent vary the risk of the
Guarantor or otherwise operate as a release or discharge of the Guarantor, all
of which may be done without notice to the Guarantor.

     4. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER. If for any reason the
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
the Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless by binding on the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all such Obligations. In the
event that acceleration of any Obligation may not be made against the Borrower,
whether by operation of law or for any other reason, all such amounts otherwise
subject to acceleration under the terms of any agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by the Guarantor.

     5. SUBORDINATION; SUBROGATION WAIVER. The payment of any amounts due with
respect to any indebtedness of the Borrower now or hereafter held by the
Guarantor is hereby subordinated to the prior payment in full of the
Obligations. The Guarantor agrees that after the occurrence of any default in
the payment or performance of the Obligations and the expiration of all notice
and cure periods, the Guarantor will not demand, sue for or otherwise attempt to
collect any such indebtedness of the Borrower to the Guarantor until the
Obligations shall have been paid in full; provided, however, that, prior to such
default, the Guarantor shall be restricted from collecting any prepayments or
unscheduled payments of principal but shall not be restricted from collecting
regularly scheduled principal and interest payments thereon. If, notwithstanding
the foregoing sentence, the Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness while such default exists, such amounts
shall be collected, enforced and received by the Guarantor as trustee for the
Lender and be paid over the Lender on account of the Obligations without
affecting in any manner the liability of the Guarantor under the other
provisions of this Guarantor. To the maximum extent permitted by law, Guarantor
hereby postpones any right of subrogation Guarantor has or may have as against
Borrower with respect to the Obligations until the Obligations have been paid in
full. In addition, Guarantor hereby postpones until the Obligations have been
paid in full any right to proceed against Borrower, now or hereafter, for
contribution, indemnity, reimbursement, and any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which Guarantor may
now have or hereafter have as against the Borrower with respect to the
Obligations. Guarantor also hereby postpones any rights to recourse to or with
respect to any asset of Borrower until the Obligations have been paid in full;
provided, however, that if there is no default in the payment or performance of
the Obligations, the foregoing sentence shall not limit any payments made by
Borrower to Guarantor in the ordinary course or any regularly scheduled
principal and interest payments made by Borrower to Guarantor in connection with
any indebtedness of Borrower to Guarantor. Guarantor agrees that in light of the
immediately foregoing waivers, the execution of this Guaranty shall not be
deemed to make Guarantor a "creditor" of Borrower, and that for purposes of
Section 547 and 550 of the Bankruptcy Code Guarantor shall not be deemed a
"creditor" of Borrower.

     6. SECURITY; SET-OFF. The Guarantor grants to the Lender, as security for
the full and punctual payment and performance of the Guarantor's obligations
hereunder, a continuing lien on and security interest in all securities or other
property belonging to the Guarantor now or hereafter held by the Lender and in
all deposits (general or special, time or demand, provisional or final) and
other sums credited by or due from the Lender to the Guarantor or subject to
withdrawal by the Guarantor; and regardless of the adequacy of any collateral or
other means of obtaining repayment of the Obligations, the

                                        2

<PAGE>

Lender is hereby authorized at any time and from time to time, without notice to
the Guarantor (any such notice being expressly waived by the Guarantor) and to
the fullest extent permitted by law, to set off and apply such deposits and
other sums against the obligations of the Guarantor under this Guaranty, whether
or not the Lender shall have made any demand under this Guaranty and although
such obligations may be contingent or unmatured.

     7. INTENTIONALLY DELETED..

     8. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force and
effect until the Lender is given written notice of the Guarantor's intention to
discontinue this Guaranty, notwithstanding any intermediate or temporary payment
or settlement of the whole or any part of the Obligations. No such notice shall
be effective unless received and acknowledged by an officer of the Lender at its
head office. No such notice shall affect any rights of the Lender or of any
affiliate hereunder including, without limitation, the rights set forth in
Sections 3 and 5, with respect to Obligations incurred prior to the receipt of
such notice or Obligations incurred pursuant to any contract or commitment in
existence prior to such receipts, and all checks, drafts, notes, instruments
(negotiable or otherwise) and writings made by or for the account of the
Borrower and drawn on the Lender or any of its agents purporting to be dated on
or before the date of receipt of such notice, although presented to and paid or
accepted by the Lender after the date, shall form part of the Obligations. This
Guaranty shall continue to be effective or be reinstated, notwithstanding any
such notice, if at any time any payment made or value received with respect to
an Obligations is rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as
though such payment had not been made or value received.

     9. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor, Guarantor's successors and assigns, and shall inure to the benefit of
and be enforceable by the Lender and its successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, the Lender may assign
or otherwise transfer any agreement or any note held by it evidencing, securing
or otherwise executed in connection with the Obligations, or sell participations
in any interest therein, to any other person or entity, and such other person or
entity shall thereupon become vested, to the extent set forth in the agreement
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to the Lender herein.

     10. FINANCIAL STATEMENTS. The Guarantor, from time to time, will furnish
the Lender with such financial statements and other information and statements
as the Lender may reasonably request with respect to the financial condition,
income, properties or financial affairs of the Guarantor. Without limiting the
generality of the foregoing, the Guarantor will furnish or cause to be furnished
to the Lender (a) within one hundred twenty (120) days of the end of its fiscal
year, a copy of the audited consolidated annual financial statements of the
Guarantor and its subsidiaries (including the Borrower) prepared by an
independent certified public accountant in accordance with GAAP, as and when
prepared, for such fiscal year, certified as complete and true by the President
or Chief Financial Officer of Borrower and the President or Chief Financial
Officer of the Guarantor, (b) within ten (10) days of filing with the Internal
Revenue Service, a copy of the consolidated Federal Income Tax Returns of the
Guarantor and its subsidiaries (including the Borrower), as and when filed, for
each fiscal year, certified as complete and true by the President or Chief
Financial Officer of Borrower and the President or Chief Financial Officer of
the Guarantor, and (c) within forty-five (45) days of the end of each fiscal
quarter of the Borrower and the Guarantor, consolidated company-prepared
financial statements of the Guarantor and is subsidiaries (including the
Borrower) consisting of a balance sheet and profit and loss statement, certified
as complete and true by the President or Chief Financial Officer of Borrower and
the President or Chief Financial Officer of the Guarantor. To the extent that
any of the foregoing financial documents or reports are

                                        3

<PAGE>

publicly available through the United States Securities and Exchange Commission
website, Borrower need not provide such financial statements to Lender.

     11. REPRESENTATIONS AND WARRANTIES; RELATIONSHIP WITH BORROWER.

     (a) The Guarantor represents, warrants and certifies to Lender that (i) the
Guarantor has the absolute and unrestricted right, power and authority to enter
into and perform its obligations under this Guaranty, (ii) the execution,
delivery and performance of this Guaranty by the Guarantor has been duly
authorized by all necessary action on the part of the Guarantor, (iii) this
Guaranty constitutes a legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor, in accordance with its terms, and (iv) the
execution and delivery of this Guaranty by the Guarantor will not conflict with
or result in any breach of any provision of the organizational documents or
bylaws of Guarantor or any material agreement to which Guarantor is a party.

     (b) The Guarantor represents and warrants to the Lender that the Borrower
is affiliated (either by ownership, contractual relationship, employment or
other meaningful business relationship) with the Guarantor; that the lending of
money and other extensions of Obligations by the Lender to the Borrower will
enhance and benefit the business activities and interests of the Guarantor.

     12. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Lender. No
failure on the part of the Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.

     13. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class mail postage prepaid, addressed as follows: if to the Guarantor, at
the address set forth beneath Guarantor's signature hereto, and if to the
Lender, at 160 Federal Street, Boston, Massachusetts 02110, Attention: Senior
Vice President of Lending, with a copy to Gary M. Markoff, Esquire, Sherin and
Lodgen LLP, 101 Federal Street, Boston, Massachusetts 02110, or at such address
as either party may designate in writing.

     14. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
take effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts. The Guarantor
agrees that any suit for the enforcement of this Guaranty may be brought in the
courts of the Commonwealth of Massachusetts or any Federal Court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Guarantor by mail at the address
specified in Section 11 hereof. The Guarantor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such court or
that such suit was brought in an inconvenient court.

     15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of the Obligations. The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability
of its remaining provisions. Captions are for the ease of reference only and
shall not affect the meaning of the relevant provisions. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined, and references to either gender or the
neuter herein are for convenience

                                        4

<PAGE>

only, and shall not be deemed to be limiting to the gender named or to the
neuter, but to include all applicable persons, parties and entities.

     16. JURY TRIAL WAIVER. THE GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT, WHETHER ARISING OUT OF,
UNDER OR BY REASON OF THIS GUARANTY, ANY INSTRUMENT, DOCUMENT OR AGREEMENT
SECURING ANY OF THE OBLIGATIONS OR MADE IN CONNECTION HEREWITH, OR ANY MATTER OR
PROCEEDING RELATING HERETO OR THERETO.

                        (signatures appear on next page)

                                        5

<PAGE>

     IN WITNESS WHEREOF, the Guarantor has executed and delivered, or caused
this Guaranty to be executed and delivered by Guarantor's duly authorized
representative, under seal, as of the date appearing in the first paragraph on
page one hereof.

                                        BIOVEX GROUP, INC.

                                        By: /s/ Philip Astley-Sparke
                                            ------------------------------------
                                            Philip Astley-Sparke,
                                            President

                                        Address: 245 First Street Cambridge,
                                                 Massachusetts 02142

                                        6

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