Document:

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                                                                    Exhibit 10.3

                              MILLIPORE CORPORATION

                       METROPOLITAN LIFE INSURANCE COMPANY

                                 AMENDMENT NO. 3
                                       TO
                      NOTE PURCHASE AND EXCHANGE AGREEMENT

      THIS AMENDMENT, dated October 4, 2001 to the Millipore Corporation Note
Purchase and Exchange Agreement, dated March 3, 1994, as heretofore amended
(including the Amendment Agreement No. 1, dated March 21, 1997, and the
Amendment Agreement No. 2, dated November 2, 1998) (collectively, the "Purchase
Agreement"), between Metropolitan Life Insurance Company (the "Noteholder") and
Millipore Corporation (the "Company").

      WHEREAS, Noteholder and the Company have entered into the Purchase
Agreement providing for the issue and sale (and subsequent exchange) of
$100,000,000 of the Company's 6.78% Senior Notes, due March 3, 2004 to the
Noteholder (the "Notes");

      WHEREAS, pursuant to ss. 10.2 of the Purchase Agreement, the Company and
Noteholder wish to modify the Purchase Agreement;

      WHEREAS, the Company wishes to prepay $25,000,000 in principal on the
Notes;

      NOW THEREFORE in consideration of the premises and the covenants and
agreements contained herein, the parties agree that:

      1. The effective date of this Amendment Agreement (the "Effective Date")
shall be the closing date of the Credit Agreement (the "Credit Agreement") among
Millipore Corporation, certain of its subsidiaries, the lenders named therein,
Bank of America, N.A., as administrative agent for the lenders, and ABN AMRO
Bank N.V., as syndication agent.

      2. For purposes of this Amendment Agreement, the following terms shall
have the meanings set forth in this ss. 2:

      "Acquisition", by any Person, means the purchase or acquisition by such
Person of any Capital Stock of another Person other than a Credit Party or all
or any substantial portion of the Property (other than Capital Stock) of another
Person other than a Credit Party, whether or not involving a merger or
consolidation with such other Person.

      "Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person or (ii) directly or indirectly owning or holding
five percent (5%) or more of the Capital Stock in such Person. For purposes of
this definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

      "Asset Disposition" shall mean and include (i) the sale, lease or other
disposition of any Property by any member of the Consolidated Group (including
the Capital Stock of a Subsidiary), but for purposes hereof shall not include,
in any event, (A) the sale of inventory in the ordinary course of business, (B)
the sale, lease or other disposition of machinery and equipment no longer used
or useful in the conduct of business and (C) a sale, lease, transfer or
disposition of Property to a Credit Party, and (ii) the receipt by
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any member of the Consolidated Group of any cash insurance proceeds or
condemnation award payable by reason of theft, loss, physical destruction or
damage, taking or similar event with respect to any of its Property.

      "Capital Lease" means, as applied to any Person, any lease of any Property
by that Person as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.

      "Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

      "Company" shall have the meaning provided in the heading hereof, together
with any successors and permitted assigns.

      "Consolidated EBITDA" means, for any period for the Consolidated Group,
the sum of (i) Consolidated Net Income plus (ii) to the extent deducted in
determining net income, (A) Consolidated Interest Expense, (B) taxes and (C)
depreciation and amortization, in each case on a consolidated basis determined
in accordance with GAAP; provided that, for purposes hereof, Consolidated EBITDA
shall exclude (x) the restructuring and other charges taken in the first fiscal
quarter of fiscal year 2001 in the amount of $17,962,000, (y) all non-cash
non-recurring charges otherwise deducted (other than non-cash charges arising
from the write-off of current assets, but including as a deduction to
Consolidated EBITDA all subsequent cash expenditures made in the applicable
period relating to non-cash non-recurring charges taken in a prior period) not
in excess of ten percent (10%) of Consolidated EBITDA as of the end of the most
recent fiscal quarter (excluding previous adjustments) and (z) any earnings (or
deficit) and expenses attributable to the Mykrolis Group. Except as otherwise
expressly provided, the applicable period shall be the four consecutive fiscal
quarters ending as of the date of determination.

      "Consolidated Group" means the Company and its Subsidiaries, as determined
in accordance with GAAP, but excluding any Person that is a member of the
Mykrolis Group.

      "Consolidated Interest Coverage Ratio" means, as of the last day of each
fiscal quarter, the ratio of Consolidated EBITDA for the period of four
consecutive fiscal quarters then ended to Consolidated Interest Expense for the
period of four consecutive fiscal quarters then ended.

      "Consolidated Interest Expense" means, for any period for the Consolidated
Group, all interest expense, including the amortization of debt discount and
premium, the interest component under Capital Leases and the implied interest
component under Securitization Transactions, in each case on a consolidated
basis determined in accordance with GAAP. Except as expressly provided
otherwise, the applicable period shall be the four consecutive fiscal quarters
ending as of the date of determination.

      "Consolidated Net Income" means, for any period for the Consolidated
Group, net income (or loss) determined on a consolidated basis in accordance
with GAAP, but excluding for purposes of determining the Consolidated Total
Leverage Ratio and the Consolidated Interest Coverage Ratio any Extraordinary
gains or losses and related tax effects thereon. Except as otherwise expressly
provided, the applicable period shall be the four consecutive fiscal quarters
ending as of the date of determination.
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      "Consolidated Total Funded Debt" means Funded Debt of the Consolidated
Group determined on a consolidated basis in accordance with GAAP.

      "Consolidated Total Leverage Ratio" means, as of the last day of each
fiscal quarter, the ratio of Consolidated Total Funded Debt on such day to
Consolidated EBITDA for the period of four consecutive fiscal quarters ending as
of such day.

      "Credit Party" means any of the Company and the Guarantors; and in no
event shall include any Person that is a member of the Mykrolis Group.

      "Domestic Subsidiary" means any Subsidiary that is incorporated or
organized under the laws of any state of the United States or the District of
Columbia.

      "Executive Officer" of any Person means any of the chief executive
officer, chief operating officer, president, chief financial officer, treasurer
or controller of such Person.

      "Extraordinary" means such term as interpreted in accordance with GAAP.

      "Funded Debt" means, with respect to any Person, without duplication, all
(i) obligations for borrowed money, (ii) obligations evidenced by bonds
debentures, notes or similar instruments or upon which interest payments are
customarily made, (iii) purchase money indebtedness (including, for purposes
hereof, indebtedness and obligations in respect of conditional sales and title
retention agreements relating to property purchased (other than customary
reservation or title retention arrangements under agreements entered into in the
ordinary course of business with suppliers), and the deferred purchase price of
property or services acquired (other than trade debt incurred in the ordinary
course of business and due within six months of the incurrence thereof) that
would constitute, and be accounted for as, a liability under GAAP, (iv) the
attributed principal amount of obligations owing under Capital Leases, (v) the
maximum amount available to be drawn under standby letters of credit and
bankers' acceptances issued or created for its account, (vi) the attributed
principal amount of Securitization Transactions, (vii) the attributed principal
amount of obligations owing under Synthetic Leases, (viii) the Funded Debt of
any partnership or joint venture or other similar entity in which such Person is
a general partner or joint venturer and, as such, has personal liability for
such obligations, but only to the extent there is recourse to such Person for
payment thereof, (ix) Support Obligations in respect of Funded Debt of another
Person, (x) Funded Debt of another Person secured by a Lien on any of its
Property, whether or not such Funded Debt has been assumed, provided, however,
for purposes hereof, the amount of such Funded Debt shall be limited to the
amount of Funded Debt as to which there is recourse or to the fair market value
of the property that is the subject of such lien, if less, and (xi) the maximum
amount of all contingent obligations (including, without limitation, obligations
to make earn-out payments in the future) incurred in connection with
Acquisitions.

      "GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis and subject to the following terms:

            Except as otherwise expressly provided hereunder, all accounting
      terms used herein shall be interpreted, and all financial statements and
      certificates and reports delivered to the Noteholder shall be prepared, in
      accordance with GAAP applied on a consistent basis. All calculations made
      for the purposes of determining compliance with ss. 6.9(a) hereunder shall
      (except as otherwise expressly provided herein) be made by application of
      GAAP applied on a basis consistent with the most recent annual or
      quarterly financial statements delivered to the Noteholder; provided,
      however, if (a) the Company shall object to determining such compliance on
      such basis at the time of delivery of such financial statements due to any
      change in GAAP or the rules promulgated with respect thereto or (b)
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      the Noteholder shall so object in writing within sixty days after delivery
      of such financial statements, then such calculations shall be made on a
      basis consistent with the most recent financial statements delivered to
      the Noteholder as to which no such objection shall have been made.

            Notwithstanding anything hereunder to the contrary, determination of
      compliance with the financial covenants under ss. 6.9(a) shall be made on
      a Pro Forma Basis, and all Pro Forma Compliance Certificates required to
      be delivered to the Noteholder shall be in form, substance and detail
      reasonably satisfactory to the Noteholder.

      "Governmental Authority" means any federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.

      "Guarantors" means each Person identified as a "Guarantor" on the
signature pages to the Credit Agreement and each other Person that may hereafter
become a Guarantor thereof by execution of a Joinder Agreement, together with
their successors and permitted assigns.

      "Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement.

      "Indebtedness" means, with respect to any Person, without duplication, all
(i) Funded Debt, (ii) obligations under take-or-pay or similar arrangements or
under commodities agreements, (iii) obligations under Hedging Agreements, (iv)
the maximum amount of contingent obligations (including earn-out and like
payments) owing in respect of Acquisitions or dispositions or divestitures, (v)
Indebtedness of any partnership or joint venture or other similar entity in
which such Person is a general partner or joint venturer and, as such, has
personal liability for such obligations, but only to the extent there is
recourse to such Person for payment thereof, (vi) Support Obligations in respect
of Indebtedness of another Person, and (vii) Indebtedness of another Person
secured by a Lien on any of its Property, whether or not such Indebtedness has
been assumed.

      "Joinder Agreement" means a joinder agreement executed and delivered by a
Subsidiary in accordance with the provisions of the Credit Agreement.

      "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or other similar recording
or notice statute, and any lease in the nature thereof).

      "Mykrolis Group" means Mykrolis Corporation, a Delaware corporation, and
its Subsidiaries.

      "Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any Property that is not a Capital Lease other than any such lease in which that
Person is the lessor.

      "Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.

      "Pro Forma Basis" means, for purposes of determining compliance with the
financial covenants hereunder, the subject transaction shall be deemed to have
occurred as of the first day of the period of four consecutive fiscal quarters
ending as of the end of the most recent fiscal quarter for which annual or
quarterly financial statements shall have been delivered in accordance with the
provisions hereof. In
<PAGE>

addition, for purposes of making calculations on a "Pro Forma Basis" hereunder,
(i) in the case of an Asset Disposition, (A) income statement items (whether
positive or negative) attributable to the property, entities or business units
that are the subject of the disposition shall be excluded to the extent relating
to any period prior to the date of subject transaction, and (B) Indebtedness
that is paid or retired in connection with the subject transaction shall be
deemed to have been paid and retired as of the first day of the applicable
period; and (ii) in the case of an Acquisition, (A) income statement items
(whether positive or negative) attributable to the property, entities or
business units that are the subject of such Acquisition shall be included to the
extent relating to any period prior to the date of subject transaction, and (B)
Indebtedness that is incurred in connection with the subject transaction shall
be deemed to have been incurred as of the first day of the applicable period
(provided that pro forma adjustments shall not be made for the imputed interest
expense attributable to such Indebtedness for the applicable period).

      "Pro Forma Compliance Certificate" means a certificate of an Executive
Officer of the Company delivered to the Noteholder.

      "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

      "Securitization Transaction" means any financing transaction or series of
financing transactions that have been or may be entered into by a member of the
Consolidated Group pursuant to which such member of the Consolidated Group may
sell, convey or otherwise transfer to (i) a Subsidiary or Affiliate (a
"Securitization Subsidiary"), or (ii) any other Person, or may grant a security
interest in, any accounts receivable, notes receivable, rights to future lease
payments or residuals or other similar rights to payment (the "Securitization
Receivables") (whether such Securitization Receivables are then existing or
arising in the future) of such member of the Consolidated Group, and any assets
related thereto, including, without limitation, all security interests in
merchandise or services financed thereby, the proceeds of such Securitization
Receivables, and other assets that are customarily sold or in respect of which
security interests are customarily granted in connection with securitization
transactions involving such assets.

      "Subsidiary" means, as to any Person at any time, (a) any corporation more
than fifty percent (50%) of whose Voting Stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at such time owned by such Person directly
or indirectly through Subsidiaries, and (b) any partnership, association, joint
venture or other entity of which such Person directly or indirectly through
Subsidiaries owns at such time more than fifty percent (50%) of the Voting
Stock; provided that notwithstanding anything herein to the contrary, for all
purposes hereof, members of the Mykrolis Group shall not be deemed Subsidiaries
for purposes hereof. Unless otherwise provided, "Subsidiary" shall refer to a
Subsidiary of the Company.

      "Support Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including, without limitation, any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any Property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person for the benefit of any holder of Indebtedness of such other Person,
(iii) to lease or purchase Property, securities or services primarily for the
purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure
or hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Support Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or
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maximum principal amount, if larger) of the Indebtedness in respect of which
such Support Obligation is made.

      "Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an Operating Lease under GAAP.

      "Voting Stock" means, with respect to any Person, Capital Stock issued by
such Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

      3. Section 6.9(a) is amended in its entirety to read as follows:

         "(a) Maintenance Test.

              (i) Consolidated Total Leverage Ratio. As of the end of each
         fiscal quarter, the Consolidated Total Leverage Ratio shall be not
         greater than 3.25:1.0.

              (ii) Consolidated Interest Coverage Ratio. As of the end of each
         fiscal quarter, the Consolidated Interest Coverage Ratio shall be not
         less than 3.50:1.0."

      4. Capitalized terms used in this ss. 4 but not otherwise defined in this
Agreement, shall have the meanings set forth in the Indenture dated as of May 3,
1995, relating to the issuance of the Notes (the "Indenture"). On the Effective
Date, the Company shall pay to the Noteholder and the Noteholder shall accept
payment of (1) the interest accrued but unpaid to the Effective Date, calculated
at a rate of 7.23% per annum pursuant to the terms of the second Amendment to
the Purchase Agreement dated as of November 2, 1998 (the "7.23 % Rate"), and (2)
the sum of the respective Payment Values of each prospective interest payment,
calculated at the 7.23% Rate, and the principal payment at maturity in respect
of the $25,000,000 of Securities being prepaid pursuant to Article 11of the
Indenture (the amount of each such payment being herein referred to as a
"Payment"). The Payment Value of each Payment shall be determined by discounting
such Payment at the Reinvestment Rate for the period from the scheduled date of
such Payment to the applicable date of prepayment. The Reinvestment Rate is the
sum of (a) 1.00% and (b) the yield which shall be imputed from the yields of
those actively traded "On The Run" United States Treasury securities, as
reported on the Cantor-Fitzgerald brokerage screen available on Telerate
Information Systems (page 500 mid-point of Bid/Ask price), having maturities as
close as practicable to the final maturity of the Securities so to be redeemed
or, if such yields shall not be reported as of such time or the yields reported
as of such time are not ascertainable in accordance with the preceding clause,
then the arithmetic mean of the rates, published for the 5 Business Days
preceding the applicable Calculation Date, in the weekly statistical release
designated H.15(519) (or any successor publication) of the Board of Governors of
the Federal Reserve System under the caption "U.S. Government
Securities--Treasury Constant Maturities" opposite the maturity corresponding to
the final maturity of the Notes, (rounded to the nearest month) so to be prepaid
or accelerated, as the case may be. If no maturity exactly corresponding to such
final maturity of the Securities shall appear therein, yields for the next
longer and the next shorter maturities shall be calculated pursuant to the
foregoing sentence and the Yield Maintenance Price shall be interpolated from
such yields on a straight-line basis (rounding in each of such relevant periods,
to the nearest month). The yields of such United States Treasury securities
(under both of the methods described above) shall be determined as of 10:00
a.m., New York time, on the Calculation Date.

      5. The Noteholder as holder of 100% of the principal amount of the Notes
hereby waives all notice requirements with respect to the prepayment of the
$25,000,000 of principal on the Notes.
<PAGE>

      6. Except as specifically provided herein, the Purchase Agreement shall
remain unchanged and in full force and effect.

IN WITNESS WHEREOF, this instrument has been executed on the date first above
written.

METROPOLITAN LIFE                                  MILLIPORE CORPORATION
    INSURANCE COMPANY

By:   /s/ [illegible]                              By:  /s/ Kathleen B. Allen
   --------------------------                         --------------------------

Date:  10/4/01                                     Date:  Oct. 4, 2001
     ------------------------                           ------------------------<PAGE>

                                                                    Exhibit 4.2

THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND NO
INTEREST THEREIN MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE EFFECTIVE UNDER
THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) SUCH SECURITIES ARE
TRANSFERRED PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT (OR ANY SUCCESSOR
RULE) OR (3) CURIS, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL FOR THE
HOLDER OF THIS CONVERTIBLE PROMISSORY NOTE SATISFACTORY TO CURIS, INC. THAT NO
VIOLATION OF THE ACT OR SIMILAR STATE SECURITIES LAWS WILL BE INVOLVED IN SUCH
TRANSFER. THE TRANSFER OF THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION HEREOF IS ALSO SUBJECT TO THE RIGHTS AND
OBLIGATIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF
JULY 18, 2001, BY AND AMONG CURIS, INC., ELAN INTERNATIONAL SERVICES, LTD. AND
ELAN PHARMA INTERNATIONAL LIMITED.

                                   CURIS, INC.

                           CONVERTIBLE PROMISSORY NOTE

U.S.$8,010,000 (excluding capitalized interest)                    July 18, 2001

The undersigned, Curis, Inc., a Delaware corporation with offices at 61 Moulton
Street, Cambridge, Massachusetts 02138-1118 (the "Company"), unconditionally
promises to pay to Elan Pharma International Limited, an Irish private limited
liability company ("EPIL"), or its permitted assigns, transferees and successors
as provided herein (collectively with EPIL, the "Holder"), on July 18, 2007 (the
"Maturity Date"), at such place as may be designated by the Holder to the
Company, the principal amount outstanding hereunder (not to exceed
U.S.$8,010,000 (excluding capitalized interest)), or such lesser amount as shall
then be payable pursuant to the terms of Section 3 hereof, together with
interest thereon accrued at a rate per annum set forth in Section 2 hereof from
and after the date of the initial disbursement of funds hereunder (the "Original
Issue Date"), compounded on a semi-annual basis, the initial such compounding to
commence on the date that is the 180th day from and after the Original Issue
Date and thereafter on each one-year anniversary of the Original Issue Date and
180 days thereafter (each such date, a "Compounding Date").
<PAGE>

                                      -2-

      SECTION 1. SECURITIES PURCHASE AGREEMENT.

            (a) This Note is issued pursuant to a Securities Purchase Agreement
dated as of the date hereof, by and among the Company, Elan International
Services, Ltd., a Bermuda exempted limited liability company and an affiliate of
EPIL ("EIS"), and EPIL (as amended at any time, the "Securities Purchase
Agreement"), and the Holder hereof is intended to be afforded the benefits
thereof, including the representations and warranties set forth therein. The
Company shall use the proceeds of the issuance and sale of this Note solely in
accordance with the provisions set forth therein and as required therein.
Capitalized terms used but not otherwise defined herein shall, unless otherwise
indicated, have the meanings given such terms in the Securities Purchase
Agreement.

            (b) Certain terms and conditions of the disbursements by EPIL to the
Company hereunder are set forth in Section 1(e) of the Securities Purchase
Agreement.

      SECTION 2. PAYMENTS OF PRINCIPAL AND INTEREST.

            (a) Unless earlier (i) converted in accordance with the terms of
Section 4 below, (ii) repaid in accordance with the terms hereof or (iii)
reduced pursuant to Section 3 below, the entire outstanding principal amount of
this Note (including capitalized interest, if any), together with any accrued
interest thereon (the "Outstanding Amount"), shall be due and payable on the
Maturity Date, at the option of the Company, in cash or, subject to applicable
regulatory approvals, by the issuance of such number of shares of Common Stock
equal to the Outstanding Amount divided by the Fair Market Value per share of
Common Stock.

            The "Fair Market Value" of one share of Common Stock shall be deemed
to be the average of the closing sale prices for the Common Stock over the 30
trading day period ending one trading day prior to the date of conversion or the
Maturity Date, as the case may be.

            (b) Accrued interest hereon shall not be paid in cash, but shall be
capitalized and added to the principal amount outstanding hereunder on each
Compounding Date. Accrued interest hereon shall be due and payable in arrears on
each Compounding Date. Interest shall accrue on this Note at a rate per annum of
(i) 8%, from and after the Original Issue Date through the fourth anniversary of
the Initial Closing Date, and (ii) 6%, thereafter.

      SECTION 3. REDUCTION OF AMOUNTS PAYABLE HEREUNDER.

            If EIS shall have exercised its Exchange Right (as such term is
defined in the Certificate of Designations relating to the Series A Preferred
Stock), then, (a) unless EIS, pursuant to Section 5(b) of the Securities
Purchase Agreement, shall have paid to the Company within 30 days of such
exercise an amount equal to: (x) 30.1% of the aggregate amount of the
<PAGE>

                                      -3-

Development Funding (but not including any capitalized or accrued and unpaid
interest on this Note) provided to Newco (by or on behalf of the Company and EIS
and their respective affiliates and subsidiaries), (y) plus such amount, if any,
of the Development Funding contributed to Newco by the Company as a result of a
failure by EIS to provide its pro rata share of the Development Funding and (z)
less such amount, if any, of the Development Funding contributed to Newco by EIS
as a result of a failure by the Company to provide its pro rata share of the
Development Funding (the sum of (x), (y) and (z) as a percentage of the
Development Funding contributed to Newco, the "Make-Whole Percentage"), in each
case, from and after the Initial Closing Date and immediately prior to such
exercise (the "Make-Whole Amount"), (b) the Holder shall surrender to the
Company for cancellation all or a portion of this Note and/or, as appropriate,
all or a portion of the shares of the Common Stock into which all or a portion
of this Note may have been converted, with an aggregate principal amount equal
to the Make-Whole Percentage of the aggregate amount of Development Funding (but
not including any capitalized or accrued and unpaid interest on this Note)
provided to Newco (by or on behalf of the Company and EIS and their respective
affiliates and subsidiaries) from and after the Initial Closing Date and
immediately prior to such exercise, less such amount, if any EIS shall have paid
to the Company pursuant to clause (a) above.

            If the payment of the Make-Whole Amount, or any portion of the
Make-Whole Amount, is effected or offset against this Note, such reduction shall
be evidenced in writing by an appropriate notation hereon or such other
documentation as shall be agreed to in writing by the Company and the holder
hereof, which agreement shall not be unreasonably withheld or delayed.

      SECTION 4. CONVERSION.

            (a) Conversion Right.

            (i) Until this Note is repaid in full, the Holder shall have the
right, at any time after the second anniversary of the Initial Closing Date, in
its sole discretion, to convert all or any portion of the Outstanding Amount
(the "Conversion Right") into such number of shares of Common Stock that shall
be obtained by dividing the Outstanding Amount by U.S.$8.63 per share (subject
to adjustment as provided below in this Section 4, the "Conversion Price").
Notwithstanding the above, in the event that there shall occur any
consolidation, merger or reorganization of the Company with or into any other
corporation or other entity or person, or any other corporate reorganization, in
which the holders of the outstanding voting securities of the Company
immediately prior to such consolidation, merger or reorganization, own 50% or
less of the outstanding voting securities of the survivor corporation (or the
parent company of the survivor corporation) or resulting entity immediately
after such consolidation, merger or reorganization, then the Outstanding Amount
shall, immediately prior to the consummation thereof, at the option of the
Holder and subject to applicable regulatory approvals, be converted into the
<PAGE>

                                      -4-

same number of shares of Common Stock into which such shares are convertible
pursuant to the immediately preceding sentence (a "Significant Transaction
Conversion").

           (ii) The Holder shall be entitled to exercise the Conversion Right
from time to time as to the unconverted portion of this Note upon at least 10
days' prior written notice to the Company, such notice to be in the form
attached hereto as Annex I. Within 10 days of the conversion date specified in
such notice, or within 10 days of the election by the Holder to compel a
Significant Transaction Conversion, the Company shall issue appropriate stock
certificates to the Holder (or such affiliate designated by the Holder)
representing the aggregate number of shares of Common Stock due to the Holder as
a result of such conversion. The Holder and the Company shall take all other
necessary or appropriate actions in connection with or to effect such
conversion.

            (b) Certain Adjustments.

            (i) Adjustment for Common Stock Dividends and Distributions. If, at
any time after the Initial Closing Date, the Company makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of Common Stock or
Common Stock Equivalents, in each such event the Conversion Price that is then
in effect shall be decreased as of the time of such issuance or, in the event
such record date is fixed, as of the close of business on such record date, by
multiplying the Conversion Price then in effect by a fraction (i) the numerator
of which is the total number of shares of Common Stock and Common Stock
Equivalents issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock and Common Stock
Equivalents issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock or Common Stock Equivalents issuable in payment of such dividend
or distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this Section 4(b)(i) to reflect the actual payment of
such dividend or distribution.

            A "Common Stock Equivalent" shall mean each share of Common Stock
into which securities or property or rights are convertible, exchangeable or
exercisable for or into shares of Common Stock, or otherwise entitle the holder
thereof to receive directly or indirectly, any of the foregoing.

            (ii) Adjustments for Stock Splits, Stock Subdivisions and
Combinations. If, at any time after the Initial Closing Date, the Company
subdivides or combines the Common Stock, (A) in the case of a subdivision
(including a stock split), the Conversion Price in effect immediately prior to
such event shall be proportionately decreased and the number of shares of Common
Stock purchasable thereunder shall be proportionately increased, and (B) in the
case of a combination (including a reverse stock split), the Conversion Price in
effect
<PAGE>

                                      -5-

immediately prior to such event shall be proportionately increased and the
number of shares of Common Stock purchasable thereunder shall be proportionately
decreased. Any adjustment under this Section 4(b)(ii) shall become effective at
the close of business on the date the subdivision or combination becomes
effective.

            (iii) Adjustments for Reclassification, Reorganization and
Consolidation. In case of (A) any reclassification, reorganization, change or
conversion of securities of the Common Stock (other than a change in par value,
or from par value to no par value) into other shares or securities of the
Company, or (B) any merger or consolidation of the Company with or into another
entity (other than a merger or consolidation with another entity in which the
Company is the acquiring and the surviving entity and that does not result in
any reclassification or change of the Common Stock), or (C) any sale of all or
substantially all the assets of the Company, the Holder shall have the right to
receive, in lieu of the shares of Common Stock into which this Note is
convertible, the kind and amount of shares of stock and other securities, money
and property receivable upon such reclassification, reorganization, change,
merger or consolidation upon conversion by the Holder of the maximum number of
shares of Common Stock into which this Note could have been converted
immediately prior to such reclassification, reorganization, change, merger or
consolidation, all subject to further adjustment as provided herein or with
respect to such other securities or property by the terms thereof. The
provisions of this clause (iii) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers or consolidations.

            (c) Other Distributions. In the event the Company provides the
holders of its Common Stock with consideration that is not otherwise addressed
in this Section 4 (including, without limitation, declaring a distribution
payable in securities, assets, cash or evidences of indebtedness issued by other
persons or the Company (excluding cash dividends declared and paid by the
Company out of retained earnings), then, in each such case, the Holder shall be
entitled to a pro rata share of any such distribution as though the Holder was a
holder of the number of shares of Common Stock of the Company as though this
Note had been converted in whole as of the record date fixed for the
determination of the holders of Common Stock of the Company entitled to receive
such distribution.

            (d) Recapitalizations. If at any time there occurs a
recapitalization of the Common Stock (other than a subdivision, combination, or
merger or sale of assets provided for in Section 4), the Holder shall be
entitled to receive upon conversion of this Note the number of shares of capital
stock or other securities or property of the Company or otherwise, to which a
holder of the Common Stock deliverable upon conversion would have been entitled
on such recapitalization. In any such case, appropriate adjustment shall be made
in the application of the
<PAGE>

                                      -6-

provisions of this Section 4 with respect to the rights of the Holder after the
recapitalization to the end that the provisions of this Section 4 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of this Note) shall be applicable after that event
as nearly equivalent as may be practicable.

            (e) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or bylaws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such actions as may be necessary or appropriate in order to protect the rights
of the Holder against impairment.

            (f) Notice of Adjustments. Whenever the consideration issuable upon
a conversion hereunder shall be changed pursuant to this Section 4, the Company
shall prepare a certificate setting forth, in reasonable detail, the event
requiring the change and the kind and amount of shares of stock and other
securities, money and property subsequently issuable upon a conversion hereof.
Such certificate shall be signed by its chief financial officer and shall be
delivered to the Holder or such other person as the Holder or any successor
notice recipient may designate.

            (g) Fractional Shares; Rounding. No fractional shares of Common
Stock will be issued in connection with any conversion hereunder. All shares of
Common Stock (including fractions thereof) issuable upon conversion of this Note
shall be aggregated for purposes of determining whether the conversion would
result in the issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a fraction of a
share of Common Stock, the Company shall, in lieu of issuing any fractional
share, pay the Holder otherwise entitled to such fraction a sum in cash equal to
the closing price of the Company's Common Stock on the Nasdaq National Market
(or any other national securities exchange on which the Common Stock is then
traded) on the day immediately preceding the conversion. All calculations under
this Section 4 shall be made to the nearest cent or to the nearest share, as the
case may be.

      SECTION 5. EVENTS OF DEFAULT.

            The occurrence of any of the following events shall constitute an
event of default (an "Event of Default"):

            (a) a default in the payment of the principal amount of this Note,
      when and as the same shall become due and payable;
<PAGE>

                                      -7-

            (b) a default in the payment of any accrued and unpaid interest on
      this Note, when and as the same shall become due and payable;

            (c) a breach by the Company of its obligations under any of the
      Transaction Documents, which breach remains uncured at the conclusion of
      the cure period specified within the relevant Transaction Documents
      (provided that, for the purposes of this clause (c), to the extent such
      relevant Transaction Document does not specify a cure period, the Company
      shall have a 45-day cure period), after written notice thereof by the
      Holder; provided that such breach has had or could reasonably be expected
      to have a material adverse effects on the rights of EIS or its affiliates
      or their respective transferees under the Transaction Documents; provided,
      further, that (i) if the Company has proposed a course of action to
      rectify the breach and (x) the Company is acting in good faith to rectify
      the breach by the end of the applicable cure period (or the 45-day period
      set forth above) and (y) the party whose rights were breached under the
      applicable Transaction Document has acknowledged its consent in writing to
      such proposed course of action, then such period shall be extended as is
      reasonably necessary to permit such breach to be rectified, and (ii) if
      such default involves a good faith dispute regarding the amount of any
      required payment, provided that any undisputed amount is paid and any
      disputed amount in excess of U.S.$1,000,000 is placed in an escrow account
      pending resolution of the determination of such disputed amount, such
      default shall be stayed for a reasonable period during which a good faith
      resolution of the amount owed is being pursued;

            (d) a distress, execution, sequestration or other process is levied
      or enforced upon the Company or sued out against, in each case, a material
      part of its property which is not discharged or challenged within 60 days;

            (e) the Company is unable to generally pay its debts and continue
      its day-to-day operations in the normal course of business;

            (f) the Company ceases wholly or substantially to carry on its
      business (other than (x) as a result of the merger or consolidation of the
      Company with another entity or (y) changes in the nature of its business
      to a related business), without the prior written consent of the Holder
      (such consent not to be unreasonably withheld);

            (g) the Company shall make a general assignment for the benefit of
      creditors, or admit in writing its general inability to pay or generally
      fail to pay its debts as they mature or become due and such failure
      continues or shall have been uncured for a period of 60 days, or shall
      petition or apply for the appointment of a trustee or other custodian,
      liquidator or receiver of the Company or of any substantial part of the
      assets of the Company or shall commence any case or other proceeding
      relating to the Company under any bankruptcy, reorganization, arrangement,
      insolvency, readjustment of debt, dissolution or
<PAGE>

                                      -8-

      liquidation or similar law of any jurisdiction, now or hereafter in
      effect, or shall take any action to authorize or in furtherance of any of
      the foregoing, or if any such petition or application shall be filed or
      any such case or other proceeding shall be commenced against the Company
      and any such person shall indicate in writing its approval thereof,
      consent thereto or acquiescence therein or such petition or application
      shall not have been dismissed or stayed within sixty (60) days following
      the filing thereof;

            (h) a decree or order is entered appointing any such trustee,
      custodian, liquidator or receiver or adjudicating the Company bankrupt or
      insolvent, or approving a petition in any such case or other proceeding,
      or a decree or order for relief is entered in respect of the Company in an
      involuntary case under federal bankruptcy laws as now or hereafter
      constituted;

            (i) there shall remain in force, undischarged, unsatisfied and
      unstayed, for more than sixty (60) days, whether or not consecutive, any
      final judgment against the Company that, with other outstanding final
      judgments, undischarged, against the Company exceeds in the aggregate
      U.S.$1,000,000;

            (j) the pledge of the Exchange Shares pursuant to Section 6 of the
      Securities Purchase Agreement shall not be in full force and effect; or

            (k) any other termination of the JDOA, other than a termination by
      the Company pursuant to Clause 19 of the JDOA.

      SECTION 6. REMEDIES IN THE EVENT OF DEFAULT.

            (a) In the case of any Event of Default by the Company, the Holder
may in its sole discretion demand that the Outstanding Amount shall, in addition
to all other rights and remedies of the Holder hereunder and under applicable
law, be and become immediately due and payable in cash upon written notice
delivered by the Holder to the Company; provided that, in the event of any Event
of Default specified in Section 5(g) or 5(h), all such amounts shall become
immediately due and payable automatically and without any requirement of demand
from or by the Holder. Notwithstanding the preceding sentence, the rights of the
Holder as set forth in Sections 4 and 5 hereunder shall survive any such
acceleration and payment.

            (b) The Company hereby waives demand and presentment for payment,
notice of nonpayment, protest and notice of protest, diligence, filing suit, and
all other notice and promises to pay the Holder its costs of collection of all
amounts due hereunder, including reasonable attorneys' fees.

            (c) In the case of any Event of Default under this Note by the
Company, this Note shall continue to bear interest after such default at the
interest rate otherwise in effect
<PAGE>

                                      -9-

hereunder plus 3% per annum (but in any event not in excess of the maximum rate
of interest permitted by applicable law).

      SECTION 7. VOTING RIGHTS.

            This Note shall not entitle the Holder to any voting rights or other
rights as a stockholder of the Company prior to its conversion.

      SECTION 8. COVENANTS OF THE COMPANY.

            (a) The Company shall not use the funds advanced by the Holder to
the Company as evidenced by this Note for any use other than the Development
Funding.

            (b) The Company shall not (i) incur any indebtedness for money
borrowed which shall rank senior to this Note as to priority of payment
(provided that the foregoing shall not restrict the Company's ability to incur
indebtedness for money borrowed which shall (x) rank pari passu or subordinated
to this Note as to priority of payment and/or (y) other than set forth in clause
(ii) below, be secured) or (ii) grant, or permit to occur without the prior
written consent of EIS, any security interest, lien or other encumbrance against
any of the Exchange Shares pledged to EIS pursuant to Section 6 of the
Securities Purchase Agreement so long as the Exchange Right shall remain in full
force and effect.

      SECTION 9. MISCELLANEOUS.

            (a) This Note and all of the provisions hereof shall be binding upon
and inure to the benefit of the Company, the Holder and their respective
successors and permitted assigns. All or any part of this Note may be assigned
or transferred by the Holder and its permitted assigns and transferees to their
respective affiliates and subsidiaries, as well as any special purpose financing
or similar vehicle established by the Holder or its affiliates. Other than as
set forth above, no party shall assign or transfer all or any part of this Note,
or any interest therein, without the prior written consent of the other party.

            (b) All notices, demands and requests of any kind to be delivered to
any party in connection with this Note shall be in writing and shall be deemed
to have been duly given if personally or hand delivered or if sent by an
internationally-recognized overnight delivery courier or by registered or
certified mail, return receipt requested and postage prepaid, or by facsimile
transmission, in each case, addressed as follows:
<PAGE>

                                      -10-

            (i)   if to the Company, to:

                  Curis, Inc.
                  61 Moulton Street
                  Cambridge, Massachusetts  02138-1118
                  Attention: Doros Platika, M.D., President and Chief
                  Executive Officer
                  Facsimile: (617) 503-6501

with a copy to:

                  Cooley Godward LLP
                  4635 Executive Drive
                  San Diego, California  92121
                  Attention: L. Kay Chandler, Esq.
                  Facsimile: (858) 453-3555

            (ii)  if to the Holder, to:

                  Elan Pharma International Limited
                  Wil House
                  Shannon Business Park
                  Shannon
                  Co. Clare, Ireland
                  Attention: Secretary
                  Facsimile: 011-353-61-362097

with a copy to:

                  Cahill Gordon & Reindel
                  80 Pine Street
                  New York, New York  10005
                  Attention: William M. Hartnett, Esq.
                  Facsimile: (212) 269-5420

or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 9. Any such notice or communication shall be deemed to have been
effectively given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery courier, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such
<PAGE>

                                      -11-

communication is posted and (iv) in the case of facsimile transmission, the date
of telephone confirmation of receipt.

            (c) This Note may not be modified or amended, or any of the
provisions hereof waived, except by written agreement of the Company and the
Holder dated after the date hereof.

            (d) This Note shall be governed by and construed in accordance with
the internal laws of the State of New York, without giving effect to principles
of conflicts of laws. Any dispute under this Note that is not settled by mutual
consent shall be finally adjudicated by any federal or state court sitting in
the City, County and State of New York, and the Company consents to the
exclusive jurisdiction of such courts (or any appellate court therefrom) over
any such dispute.

                            [Signature page follows]
<PAGE>

            IN WITNESS WHEREOF, the Company has executed and delivered this Note
on the date first above written.

                                    CURIS, INC.

                                    By:    /s/ Doros Platika, M.D.
                                         -----------------------------------
                                         Name:  Doros Platika, M.D.
                                         Title: President and Chief Executive
                                                Officer
<PAGE>

                                     ANNEX I

            FORM OF NOTICE OF ELECTION TO EXERCISE A CONVERSION RIGHT

Date:

To:            Curis, Inc.

From:

Re:            Exercise of a Conversion Right

--------------------------------------------------------------------------------

            Pursuant to the terms of the Convertible Promissory Note (the
"Note") issued by Curis, Inc. (the "Company") to Elan Pharma International
Limited, dated July 18, 2001, specifically Section 4 thereof, [ ], the holder of
the conversion rights under the Note (the "Holder"), hereby notifies the Company
of its intention to exercise a right of conversion.

            Pursuant to Section 4 of the Note, the Holder hereby elects to
convert U.S.$__________ in aggregate principal amount and all accrued and unpaid
interest thereon for shares of the Company's Common Stock, par value U.S.$0.01
per share, effective __________, 200_.

            We have instructed our attorneys to contact the Company to discuss
the timing and documentation of the conversion.

                                    Sincerely,

                                    [HOLDER]

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

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