Exhibit 10.4

EXECUTION COPY

U.S. $50,000,000

LOAN AGREEMENT

Dated as of August 5, 2008

between

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,

as Lender,

and

DYAX CORP.,

as Borrower

TABLE OF CONTENTS

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Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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This LOAN AGREEMENT is dated as of August 5, 2008, by and between ▇▇▇▇▇ HEALTHCARE ROYALTY PARTNERS, L.P., a Delaware limited partnership (the “Lender”), as Lender and DYAX CORP., a Delaware corporation, as Borrower.  The Lender and Borrower are hereinafter referred to collectively as the “Parties” or individually as a “Party.”

W I T N E S S E T H:

WHEREAS, Borrower is the owner of the LFRP Intellectual Property (as hereinafter defined) with respect to the LFRP (as hereinafter defined);

WHEREAS, Borrower has the right to payments under the License Agreements (as hereinafter defined);

WHEREAS, Borrower proposes to borrow from the Lender, and the Lender proposes to lend to Borrower, an aggregate principal amount of $50,000,000;

WHEREAS, in order to induce the Lender to enter into this Agreement and to extend credit hereunder, Borrower has agreed to grant Lender a security interest in the LFRP Intellectual Property (as hereinafter defined);

NOW, THEREFORE, in consideration of the mutual promises of the Parties, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by the Parties as follows:

ARTICLE I
CERTAIN DEFINITIONS

SECTION 1.01.                                              Definitions.  As used herein:

“Affiliate” shall mean any Person that controls, is controlled by, or is under common control with another Person.  For purposes of this definition, “control” shall mean (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (ii) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.

“Agent” means, (i) if only one Lender is party to this Agreement, such Lender or (ii) otherwise, ▇▇▇▇▇ Healthcare Royalty Partners, L.P. or another Lender reasonably acceptable to Borrower.

“Agreement” means this Loan Agreement.

“Applicable Included Receipts” means (i) prior to June 30, 2013, the sum of (a) 75.0% of the first $10.0 million in annual Included Receipts, (b) 50.0% of annual Included Receipts greater than $10.0 million and up to and including $15.0 million, and (c) 0.0% of annual Included Receipts greater than $15.0 million and (ii) after June 30, 2013, 75.0% of all Included Receipts until the earlier of the Maturity Date or the complete amortization of the Loan under Section 3.01(b).  “Applicable Included Receipts” shall exclude FTE Payments so long as the

principal amount of the Loan prepaid pursuant to Section 3.01(a) exceeds any principal amount added to the Loans pursuant to Section 4.01(a)(ii) (as calculated on an annual basis for each calendar year) which shall be determined at the end of any applicable calendar year and shall be applied to amortization in accordance with Section 3.01(a); provided that Borrower may, at its option, include such costs in Applicable Included Receipts on a quarterly basis to pay scheduled amortization in accordance with Section 3.01(a).

“Assignment and Acceptance” has the meaning specified in Section 13.01(c).

“Borrower” means Dyax Corp.

“Borrower Documents” means the certificate of incorporation of Borrower certified by the Delaware Secretary of State and the by-laws of Borrower (and any similar documentation of any Subsidiary of Borrower which becomes party to the Loan Documents).

“Business Day” means any day, except a Saturday, Sunday or other day on which commercial banks in New York are required or authorized by law to close.

“Business Report” shall mean a report in a form agreed upon between the parties and based on Exhibit A, providing information on current activities relating to the licensing of the LFRP Intellectual Property as part of the LFRP.

“Capital Stock” of any Person means any and all shares, interests, ownership interest units, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.

[*****]

[*****]

[*****]

“Change of Control” means:

(i)                                     the acquisition by any Person or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (other than any trustee or other fiduciary holding securities under an employee benefit plan of Borrower or any entity controlled, directly or indirectly, by Borrower) of beneficial ownership of any capital stock of Borrower, if after such acquisition, such Person or group would be the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Borrower representing more than fifty percent (50%) of the combined voting power of Borrower then outstanding securities entitled to vote generally in the election of directors; or

(ii)                                  any transaction permitted under Section 10.02(a); or

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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(iii)                               during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Borrower (together with any new directors (other than a director designated by a Person who has entered into an agreement with Borrower to effect a transaction described in clause (i) or (ii) of this definition of “Change of Control”), whose election by such Board of Directors or nomination for election by Borrower’s shareholders, as applicable, was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Borrower then in office.

“Closing Date” means the date upon which the conditions precedent under Article VII have been satisfied to the satisfaction of the Lender.

“Code” means the Internal Revenue Code of 1986, as amended.

“Co-Development Agreement” shall mean any agreement between Borrower and/or any of its Subsidiaries and one or more third parties relating to the discovery, research, development, manufacturing or commercialization of a product or compound (whether or not derived from phage display) (i) which would be commonly viewed in the industry as being a co-development agreement, (ii) under which Borrower and/or any of its Subsidiaries takes a substantially different commercial role than under an agreement forming part of the LFRP and (iii) which has two or more of the following aspects:  (A) shared ownership of product-related intellectual property or sole ownership of product-related intellectual property by one party with an exclusive license to the product-related intellectual property to the other party, (B) shared management control over product development, (C) shared financial obligations, and/or (D) shared commercialization rights to the product.  Exhibit B sets forth a complete list of Co-Development Agreements in existence as of the date hereof.

 “Co-Developed Product” shall mean any product or compound (whether or not derived from phage display) which is the subject of a Co-Development Agreement and in relation to which Borrower has committed on a contingent or non-contingent basis its own financial resources and/or has committed non-reimbursed human resources to discover, research, develop, manufacture or commercialize such product or compound.

“Collateral” has the meaning specified in the Security Agreement.

“Commitment” means $50,000,000.

“Company Concentration Account” means a segregated account established and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement.  The Company Concentration Account shall be the account into which funds in the Lockbox Account which are payable to Borrower pursuant to this Agreement are swept in accordance with the terms of this Agreement.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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“Company LFRP Methods and Libraries” shall have the meaning set forth in Section 8.01(v)(iii).

“Contract” has the meaning specified in Section 8.01(e).

“Contract Party” means any party to a License Agreement or In License.

“Controlled Affiliate” with respect to any Person means any Person directly or indirectly controlling, controlled by or under common control with, such Person.  For the purposes of this Agreement, “control” (including, with correlative meaning, the terms “controlling” and “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

 “Default” means any condition or event which constitutes an Event of Default or which, with the giving of notice or the lapse of time or both would, unless cured or waived, become an Event of Default.

“Default Rate” means, for any period for which an amount is overdue, a rate per annum equal for each day in such period to the lesser of (i) 2% plus the rate otherwise applicable to the Loans as provided the Section 4.01 and (ii) the maximum rate of interest permitted under applicable Law.

“Dispute” has the meaning specified in Section 8.01(v)(viii).

“Disqualified Capital Stock” of any Person means any class of Capital Stock of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Loan; provided, however, that any class of Capital Stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Capital Stock that are not Disqualified Capital Stock, and that is not convertible, puttable or exchangeable for Disqualified Capital Stock or Indebtedness, will not be deemed to be Disqualified Capital Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of Capital Stock that are not Disqualified Capital Stock.

“Dollars” or “$” means lawful money of the United States of America.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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“ERISA Affiliate” at any time means each trade or business (whether or not incorporated) that would, at any time, be treated, together with Borrower or any of their respective Subsidiaries, as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.

“Event of Default” has the meaning specified in Section 11.01.

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations promulgated thereunder.

“Excluded Agreements” means Co-Development Agreements, Internally Developed Product Agreements and Licensed Product Agreements.  Exhibit C sets forth a complete list of all Excluded Agreements as of the date hereof.

“Excluded Payments” means (i) payments under any Excluded Agreement or (ii) payments relating to or arising out of any activities relating to the research, development, manufacturing or commercialization of any Excluded Product.

“Excluded Product” shall mean any product or compound (whether or not derived from phage display) which, at any point, was, is or becomes included in Borrower’s “pipeline” as an internal product candidate.  An Excluded Product is either an Internally Developed Product, an In-Licensed Product or a Co-Developed Product.  Exhibit C sets forth a complete list of all Excluded Products identified as of the date hereof.  Notwithstanding the foregoing, Borrower acknowledges and agrees that under the terms of certain License Agreements, Contract Parties and their sublicensees may develop products that are the same as or similar to Excluded Products and that such same or similar products shall be not be considered Excluded Products under this Agreement.

“Excluded Taxes” means (i) any Taxes imposed on (or measured by) net income (including branch profits Taxes) of the Lender, or any franchise or similar Taxes imposed in lieu thereof, by any Governmental Authority or taxing authority by the jurisdiction under the laws of which the Lender is organized or any jurisdiction in which the Lender is a resident, has an office, conducts business or has another connection and (ii) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender (a) under law in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new Lending Office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from Borrower with respect to such withholding tax pursuant to Section 5.01(a) or (b) that is attributable to such Foreign Lender’s failure to comply with Section 5.01(b).

“FDA” means the United States Food and Drug Administration.

“Financial Statements” means the consolidated balance sheets of Borrower and its Subsidiaries, audited at December 31, 2005, December 31, 2006 and December 31, 2007 and the related consolidated statements of operations and comprehensive loss, cash flows and changes in

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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stockholders’ equity of Borrower and its Subsidiaries audited for the years ended December 31, 2005, December 31, 2006 and December 31, 2007, and the accompanying footnotes thereto, as filed with the SEC, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained therein.

“Foreign Lender” has the meaning specified in Section 5.01(c).

“FTE” means a full-time equivalent included in FTE Payment costs.

“FTE Payments” means all amounts received from a Contract Party under any License Agreement in payment for services relating specifically to Borrower’s and/or any of its Subsidiaries’ costs (or estimated costs) for the discovery, research and/or development of peptides, proteins and antibodies as reasonably calculated based on the subsidization of the full cost of personnel measured in full time equivalents, other comparable cost-based measures or any combination of the foregoing.  For the avoidance of doubt, FTE Payments shall not include any technical milestones that relate specifically to the completion of services, or other related events.

“Funded Research Agreements” has the meaning specified in the definition of License Agreement.

“Future Licenses” means any License Agreement entered into by Borrower and/or any of its Subsidiaries after the date hereof with any other Person, as the same may be amended, supplemented or otherwise modified from time to time.

“GAAP” means the generally accepted accounting principles in the United States of America in effect from time to time.

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

“Gross Payments” means all Royalties arising under or payable with respect to any License Agreement or In License and any collections, recoveries, payments or other compensation made in lieu thereof and any amounts paid or payable to Borrower and/or any of its Subsidiaries in respect of any License Agreement or In License pursuant to Section 365(n) of the United States Bankruptcy Code.  For the avoidance of doubt, the parties acknowledge and agree that Gross Payments shall specifically exclude all Excluded Payments.

“Guarantee” means, as to any Person:  (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part); or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person.

“In-Licensed Product” shall mean any product or compound (whether or not derived from phage display) in relation to which Borrower expends a substantial amount of the financial resources to used to discover, research, and develop or commercialize such product or compound, and to which Borrower acquired rights to discover, research, develop, manufacture or commercialize such product or compound (i) under a Licensed Product Agreement or (ii) under an option or similar provision expressly included within any License Agreement where the economic terms applicable to such provision are consistent with Borrower’s past practices and would be recognized in the industry as being a bona fide payment for rights.

“In Licenses” means any existing or future agreement pursuant to which Borrower and/or any of its Subsidiaries obtains rights to LFRP Intellectual Property or other rights used in the LFRP.

“Included Receipts” means (a) the Gross Payments less (b) [*****] Payments and Reimbursement Payments, from the first day of the fiscal quarter of Borrower in which the Closing Date occurs; provided that for the first fiscal quarter after the Closing Date the “Included Receipts” shall be prorated by dividing such Included Receipts by 90 and multiplying by the number of days from and including the Closing Date through the end of such quarter.

“Indebtedness” with respect to any Person means any amount (absolute or contingent) payable by such Person as debtor, borrower, issuer, guarantor or otherwise (i) pursuant to an agreement or instrument involving or evidencing money borrowed, the advance of credit, a conditional sale or a transfer with recourse or with an obligation to repurchase, (ii) pursuant to a lease with substantially the same economic effect as any such agreement or instrument, (iii) pursuant to any equity interest with a mandatory obligation to repurchase, (iv) pursuant to indebtedness of a third party secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on assets owned or acquired by such Person, whether or not the indebtedness secured thereby has been assumed, (v) pursuant to an interest rate protection agreement, foreign currency exchange agreement or other hedging arrangement, (vi) pursuant to a letter of credit issued for the account of such Person, or (vii) all Guarantees with respect to Indebtedness of the types specified in clauses (i) through (vi) above of another Person.  For the avoidance of doubt, the Indebtedness of any Person shall include the Indebtedness of any other entity to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages, penalties, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses actually incurred by Indemnitees in enforcing the indemnity provided herein), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations), on common law or equitable cause or on contract or otherwise, imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral (as defined in the Security Agreement)).

“Indemnified Taxes” has the meaning specified in Section 5.01(a).

“Indemnitee” has the meaning specified in Section 12.03.

“Interest Payment Date” means quarterly on [*****], or if any such day is not a Business Day, on the next succeeding Business Day, beginning on [*****].

“Interest Rate” means 16.00% per annum.

“Internally Developed Product” shall mean any product or compound or molecule which was independently identified by Borrower using its own financial and/or human resources, the intellectual property to which product or compound is owned by Borrower and/or any of its Subsidiaries.

“Internally Developed Product Agreement” shall mean any agreement between Borrower and/or any of its Subsidiaries and one or more third parties pursuant to which Borrower and/or any of its Subsidiaries grants a third party(ies) a license, or an option to obtain a license, to research, develop and/or commercialize one or more Internally Developed Products, with or without its phage display technology and/or library.

“Knowledge” means, with respect to Borrower, as applicable, the knowledge of an officer or senior manager or other person with similar responsibility, regardless of title, of Borrower and/or any of its Subsidiaries relating to a particular matter; provided, however, that a person charged with responsibility for the aspect of the business relevant or related to the matter at issue shall be deemed to have knowledge of a particular matter if, in the prudent exercise of his or her duties and responsibilities in the ordinary course of business, such person should have known of such matter.

“Law” means any federal, state, local or foreign law, including common law, and any regulation, rule, requirement, policy, judgment, order, writ, decree, ruling, award, approval,

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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authorization, consent, license, waiver, variance, guideline or permit of, or any agreement with, any Governmental Authority.

“Lender” means the Lender (as defined in the first paragraph hereof) and any assignee under Section 13.01(b).

“Lender Bank Account” means ▇▇▇▇▇ Healthcare Royalty Partners, L.P.’s account at ▇▇ ▇▇▇▇▇▇ Chase Bank, N.A.

“Lender Concentration Account” shall mean a segregated account established for the benefit of the Lender and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement.  The Lender Concentration Account shall be the account into which the funds held in the Lockbox Account which are payable to the Lender pursuant to this Agreement are swept in accordance with the terms of this Agreement and the Lockbox Agreement.

“Lending Office” means, with respect to the Lender, its Stamford, Connecticut office, and with respect to any other Lender, the office of such Lender designated as its “Lending Office” in an Assignment and Acceptance, or such other office as may be otherwise designated in writing from time to time by such Lender to Borrower.

“LFRP” means the program under which Borrower and any of its Subsidiaries enters into License Agreements pursuant to which third parties are granted rights to the LFRP Patents, alone or in combination with LFRP Technology where the purpose is to generate revenue for Borrower and/or any of its Subsidiaries by (i) licensing to a third party rights to use the LFRP Patents and/or the LFRP Technology to identify, isolate, research and/or develop antibodies, peptides and/or proteins, or (ii) performing research on behalf of third parties to identify, isolate, research and/or develop antibodies, peptides and/or proteins.

“LFRP Intellectual Property” means:

(i)                                     the LFRP Patents and LFRP Technology; and

(ii)                                  all know-how, materials, trademarks, service marks, trade names and goodwill associated therewith, trade secrets, data, formulations, processes, franchises, inventions, software, copyrights, and all other technology and intellectual property (including biological materials), and all registrations of any of the foregoing, or applications therefor, that are (a) owned by, controlled by, issued to, licensed to, licensed by Borrower and any of its Subsidiaries and (b) necessary to the performance of the LFRP as presently conducted by Borrower and any of its Subsidiaries or as conducted by Borrower and any of its Subsidiaries as of the Closing Date or during the term of the Loan.

“LFRP Know-How” means any biological material, know-how, data, technical or other information related to the LFRP Patents and/or LFRP Libraries that is owned or controlled by Borrower and any of its Subsidiaries as described in Exhibit D hereto, together with all updates

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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and improvements provided under any Library License Agreements as of the Closing Date or during the term of the Loan.

“LFRP Libraries” means Borrower’s and/or any of its Subsidiaries’ [*****] libraries, Borrower’s and/or any of its Subsidiaries’ [*****] and Borrower’s and any of its Subsidiaries’ [*****] libraries, all of which are described in Exhibit E hereto, together with all updates and improvements thereto and any other [*****] that are developed or obtained by Borrower and any of its Subsidiaries and are transferred under any Library License Agreement as of the Closing Date or during the term of the Loan.

“LFRP Patents” means the patents and patent applications identified on Schedule 8.01(v)(ii) and any other patent application and patent that is:  (i) owned by, controlled by, issued to, licensed to or licensed by Borrower and any of its Subsidiaries, or for which Borrower and any of its Subsidiaries has obtained the benefit of a covenant not to ▇▇▇, as of the Closing Date or during the term of the Loan necessary to the practice of antibody or peptide phage display; or (ii) licensed under the LFRP; and any patents issuing from such applications, together with any reissues, reexaminations, renewals, and extensions thereof, and all continuations, continuations-in-part and divisionals of the applications, in each case throughout the world.

“LFRP Product” means any product owned by one or more third parties that incorporates an antibody, protein or peptide that was identified through the use of LFRP Technology and with respect to which Borrower or any of its Subsidiaries is entitled, under the terms of a License Agreement or In License, to receive Royalties.

“LFRP Technology” means the LFRP Know-How and LFRP Libraries.

“Library License Agreements” has the meaning specified in the definition of License Agreement.

“License Agreement” means any existing or future agreement under which:  (i) Borrower and/or any of its Subsidiaries licenses to a third party rights to use the technology claimed in the LFRP Patents to identify, isolate, research and develop antibodies, peptides and/or proteins (“Patent License Agreements”); (ii) Borrower and/or any of its Subsidiaries licenses to a third party rights to use the LFRP Patents and the LFRP Technology to identify, isolate, research and develop antibodies, peptides and/or proteins (“Library License Agreements”); and/or (iii) Borrower and/or any of its Subsidiaries performs funded research services for third parties using the LFRP Patents and the LFRP Technology to identify, isolate, research and develop antibodies, peptides and/or proteins on behalf of such third parties (“Funded Research Agreements”); in each case as they may be amended, supplemented or otherwise modified from time to time.  License Agreements shall specifically exclude Excluded Agreements and In Licenses.

“Licensed Product Agreements” means any product agreement (but excluding phage or phagemid or protein display technology and/or library licenses) between Borrower and/or any of its Subsidiaries and one or more third parties in which Borrower and/or any of its

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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Subsidiaries acquires the right to develop and commercialize a product or compound (whether or not derived from phage display).

“Lien” means any mortgage or deed of trust, pledge, hypothecation, lien, charge, attachment, set-off, encumbrance or other security interest in the nature thereof (including any conditional sale agreement, equipment trust agreement or other title retention agreement, a lease with substantially the same economic effect as any such agreement or a transfer or other restriction) or other encumbrance of any nature whatsoever.

“Loan” at any time means the aggregate principal amount advanced to Borrower hereunder then outstanding.

“Loan Documents” means this Agreement, the Note, the Security Agreement and, from and after the date upon which it is executed, the Lockbox Agreement.

“Lockbox Account” shall mean, collectively, any lockbox and segregated lockbox account established and maintained at the Lockbox Bank pursuant to a Lockbox Agreement and this Agreement.  The Lockbox Account shall be the account into which all payments made in respect of the sale of the LFRP Products are to be remitted and shall be an escrow account.

“Lockbox Agreement” shall mean any agreement entered into by a Lockbox Bank, Borrower and Lender substantially in the form attached hereto as Exhibit F, pursuant to which, among other things, the Lockbox Account, the Lender Concentration Account and the Company Concentration Account shall be established and maintained.

“Lockbox Bank” shall mean ▇▇ ▇▇▇▇▇▇ Chase Bank or such other bank or financial institution approved by each of Lender and Borrower.

“Material Adverse Effect” means (i) a material adverse effect on the business, results of operations, assets or financial condition of Borrower and its Subsidiaries, taken as a whole, (ii) a material reduction or other material impairment of the value of the [*****] or (iv) an impairment of the ability of Borrower and/or any of its Subsidiaries to perform its obligations under, or affecting the validity or enforceability of, any Loan Document, Borrower Document or the Warrant Agreement.

“Material Licenses” shall mean those License Agreements set forth on Schedule 8.01(w)(x).

“Maturity Date” means the earlier of (i) the eighth anniversary of the Closing Date and (ii) the date of any prepayment in full of the Loan.

“Note” means a promissory note, substantially in the form set forth in Exhibit G, in the amount of the Loan, evidencing such Loan.

“Notice of Borrowing” has the meaning specified in Section 2.02.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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“Notices” has the meaning specified in Section 13.04.

“Obligations” means, without duplication, the Loan and all present and future Indebtedness, taxes, liabilities, obligations, covenants, duties, and debts, owing by Borrower to the Lender, arising under or pursuant to the Loan Documents, including all principal, interest, charges, expenses, fees and any other sums chargeable to Borrower hereunder and under the other Loan Documents (and including any interest, fees and other charges that would accrue but for the filing of a bankruptcy action with respect to Borrower, whether or not such claim is allowed in such bankruptcy action).

“Participant” has the meaning specified in Section 13.02.

“Party” and “Parties” have the meanings specified in the first paragraph hereof.

“Patent License Agreements” has the meaning specified in the definition of License Agreement.

“Patent Office” means the respective patent office (foreign or domestic) for any patent.

“Permitted Collateralization” means any asset securitization, sale, transfer or other disposition by Borrower or any of its Subsidiaries, individually or when taken together with other Permitted Collateralizations, generating cash proceeds of $25.0 million or less which involves in whole or in part Collateral to the extent simultaneously with the release of the Collateral in accordance with the Security Agreement Borrower or any of its Subsidiaries receives cash proceeds no less than the fair market value thereof which determination shall be made in good faith by Borrower’s board of directors.  Proceeds of “Permitted Collateralizations” (whether received on the release thereof or subsequent thereto) shall be applied in accordance with Section 3.02(c).

“Permitted Liens” has the meaning specified in Section 10.03.

“Person” means an individual, corporation, association, limited liability company, limited liability partnership, partnership, estate, trust, unincorporated organization or a government or any agency or political subdivision thereof.

“Plan” has the meaning specified in Section 10.07(a).

“Plan Assets” means assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code or (iii) entity whose underlying assets include assets of any such employee benefit plan or plan by reason of the investment by an employee benefit plan or other plan in such entity.

“Prepayment Premium” means with respect to any Loan on any date the Loan (or any portion thereof) is required to be prepaid pursuant to the proviso at the end of Section

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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3.02(b) or any payment made to amortization within three years of the Closing Date pursuant to Section 3.02(c), the aggregate amount of all required interest payments due on the Loan (or the applicable portion) through the three year anniversary of the Closing Date less all interest payments paid in cash through the date of prepayment.

“Proceeding” has the meaning specified in Section 13.12.

“Product” means the products that are the subject of the License Agreements.

“Qualified Capital Stock” of any Person means Capital Stock of such Person other than Disqualified Capital Stock; provided that such Capital Stock shall not be deemed Qualified Capital Stock to the extent sold or owed to a Subsidiary of such Person or financed, directly or indirectly, using funds (i) borrowed from such Person or any Subsidiary of such Person until and to the extent such borrowing is repaid or (ii) contributed, extended, guaranteed or advanced by such Person or any Subsidiary of such Person (including, without limitation, in respect of any employee stock ownership or benefit plan).  Unless otherwise specified, Qualified Capital Stock refer to Qualified Capital Stock of Borrower.

“Quarterly Report” means, with respect to the relevant calendar quarter of Borrower:  (i) a report in a form agreed by the parties and based on Exhibit H showing all payments made by Borrower and/or any of its Subsidiaries and any Contract Party to the Lender under this Agreement during such quarter, such report showing in detail the basis for the calculation of such payments and exclusions; (ii) a reconciliation of such report referred to in clause (i) above to all information and data deliverable to Borrower and/or any of its Subsidiaries by the Contract Parties to any License Agreements, together with relevant supporting documentation, as well as a reconciliation with the consolidated total revenues of Borrower prepared in accordance with GAAP; and, (iii) such additional information as the Lender may reasonably request.

“Regulatory Agency” means a Governmental Authority with responsibility for the regulation of the research, development, marketing or sale of drugs or pharmaceuticals in any jurisdiction, including the FDA, the U.S. National Institutes of Health and the EMEA.

“Reimbursement Payments” means all amounts received from a Contract Party under any Funded Research Agreements in reimbursement on a pure pass-through basis for out-of-pocket costs incurred and invoiced by Borrower and/or any of its Subsidiaries (other than FTE Payments) in connection with the provision of services relating to the identifying, isolating, and researching antibodies, peptides and or proteins.

 “Restricted Payment” means any of the following:

(i)                                     the declaration or payment of any dividend or any other distribution on Capital Stock of Borrower or any Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Capital Stock of Borrower or any Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving Borrower but excluding (a) dividends or distributions payable solely in

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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Qualified Capital Stock or through accretion or accumulation of such dividends on such Capital Stock and (b) in the case of Subsidiaries, dividends or distributions payable to Borrower or to a Subsidiary and pro rata dividends or distributions payable to minority stockholders of any Subsidiary; or

(ii)                                  the redemption of any Capital Stock of Borrower or any Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving Borrower but excluding any such Capital Stock held by Borrower or any Subsidiary.

“Royalties” means the gross amount of all royalties, minimum royalty payments, profit payments, license fees, settlement payments, judgments, payments, securities, consideration or any other remuneration of any kind payable or received under any License Agreement or any In License (but in the case of an In License only to the extent such royalties, payments and fees relate to the LFRP) and all accounts (as such term is defined in the New York Uniform Commercial Code) evidencing or giving rise to any of the foregoing.

“SEC” has the meaning set forth in Section 8.01(d).

“Security Agreement” means the Security Agreement, dated the Closing Date, substantially in the form of Exhibit I hereto, between the Lender and Borrower securing the Obligations of Borrower hereunder as supplemented by any amendments or joinders thereto.

“Significant Subsidiary” means any Subsidiary of Borrower which would constitute a “significant subsidiary” as defined in Rule 1.02 of Regulation S-X under the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended.

“Subsidiary” means, with respect to any Person, at any time, any entity of which more than fifty percent (50%) of the outstanding Voting Stock or other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) is at the time beneficially owned or controlled directly or indirectly by such Person, by one or more such entities or by such Person and one or more such entities.

“Surviving Person” means, with respect to any Person involved in or that makes any disposition, the Person formed by or surviving such disposition or the Person to which such disposition is made.

“Taxes” has the meaning specified in Section 5.01(a).

“Transaction Documents” means the Loan Documents, the Warrant Agreement, the License Agreements and the Borrower Documents.

“U.S.” means the United States of America.

“Voting Stock” means Capital Stock issued by a company, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such contingency.

“Warrant” has the meaning specified in the Warrant Agreement.

“Warrant Agreement” means the Warrant Agreement between Borrower and Lender substantially in the form attached hereto as Exhibit P,

“Webphage^® Software” means Borrower’s analysis and data storage software for [*****] library screening as embodied in the United States copyright registration No. TX 5989121 issued May 14, 2004, and any updates, improvements or modifications thereto (in human readable, source code and object code forms).

“Wholly Owned Subsidiary” means, as to any person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time.

SECTION 1.02.                                              Interpretation; Headings.  Each term used in any Exhibit to this Agreement and defined in this Agreement but not defined therein shall have the meaning set forth in this Agreement.  Unless the context otherwise requires, (a) “including” means “including, without limitation” and (b) words in the singular include the plural and words in the plural include the singular.  A reference to any party to this Agreement, any other Transaction Document or any other agreement or document shall include such party’s successors and permitted assigns.  A reference to any agreement or order shall include any amendment of such agreement or order from time to time in accordance with the terms herewith and therewith.  A reference to any legislation, to any provision of any legislation or to any regulation issued thereunder shall include any amendment thereto, any modification or re-enactment thereof, any legislative provision or regulation substituted therefore and all regulations and statutory instruments issued thereunder or pursuant thereto.  The headings contained in this Agreement are for convenience and reference only and do not form a part of this Agreement.  Section, Article and Exhibit references in this Agreement refer to sections or articles of, or exhibits to, this Agreement unless otherwise specified.  Borrower acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

ARTICLE II
COMMITMENT; DISBURSEMENT; FEES

SECTION 2.01.                                              Commitment to Lend.  On the terms and subject to the conditions set forth herein, the Lender shall, on the Closing Date, make a loan hereunder to Borrower in a principal amount equal to the Commitment.

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SECTION 2.02.                                              Notice of Borrowing.  Subject to Section 2.01, Borrower shall, on or before the Business Day prior to the Closing Date, give the Lender notice, substantially in the form set forth in Exhibit J (the “Notice of Borrowing”) of the date Borrower wishes to borrow hereunder.  The Commitment shall automatically terminate upon funding of the Loan on the Closing Date.

SECTION 2.03.                                              Disbursement.  Subject to the conditions set forth herein, the Lender shall, on the Closing Date, credit, in same day funds, an amount equal to the amount specified in the Notice of Borrowing to the account of Borrower which Borrower shall have designated for such purpose in the Notice of Borrowing less the initial expenses referred to in Section 4.05 for which invoices have been received by Borrower.

SECTION 2.04.                                              Commitment Not Revolving.  The Lender’s commitment to lend hereunder is not revolving in nature, and any amount of the Loan repaid or prepaid may not be reborrowed.

ARTICLE III
REPAYMENT

SECTION 3.01.                                              Amortization.

(a)                                  On each Interest Payment Date (except as otherwise expressly provided herein), Borrower shall repay the portion of the outstanding principal amount of the Loan at par which is equal to the (A) Applicable Included Receipts for the prior fiscal quarter less (B) any portion of such Applicable Included Receipts used to pay cash interest on the Loan pursuant to Section 4.01(a).

(b)                                 The balance of the outstanding principal amount of the Loan, together with any accrued and unpaid interest, shall be due and payable in cash on the Maturity Date.

SECTION 3.02.                                              Optional Prepayment; Mandatory Prepayment.

(a)                                  Borrower may, subject to Section 12.01, prepay the Loan in whole or in part, together with accrued and unpaid interest on the amount prepaid at any time after the three year anniversary of Closing Date; provided that the outstanding principal balance of the Loan after giving effect to a voluntary partial prepayment shall be not less than [*****]; and provided, further, that each prepayment shall be in an amount that is an integral multiple of [*****] and not less than [*****] or, if less, the outstanding principal amount of the Loan.  If Borrower wishes to make such a prepayment, it shall give the Lender Notice to that effect not later than the 30th day before the date of the prepayment, specifying the date on which the prepayment is to be made and the amount to be prepaid.  Such Notice shall constitute Borrower’s irrevocable commitment to prepay that amount on that date, together with interest accrued on the amount prepaid to but excluding the prepayment date.

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(b)                                 If a Change of Control or any transaction permitted by Section 10.02(a) hereof occurs then, at the option of the Lender, any or all of the Loan as requested by the Lender to be prepaid (including all accrued and unpaid interest) shall be due and payable hereunder, to the extent permitted by law, and shall be deemed part of the amounts due and payable hereunder subject to acceleration (either declared or immediate as provided in Section 11.02); provided that if the Change of Control or any transaction permitted by Section 10.02(a) hereof occurs prior to [*****], then such prepayment shall be accompanied by the Prepayment Premium with respect to that portion of the Loan requested by the Lender to be so prepaid.

(c)                                  With respect to Permitted Collateralizations, Borrower shall apply (or cause to be applied): (A) [*****] of all proceeds of Permitted Collateralizations to amortize principal on the Loan by making a cash payment to the Lender which cash payment shall also include an additional Prepayment Premium in respect of such amortized amount if such Permitted Collateralization is consummated within three years of the Closing Date (which Prepayment Premium shall not affect the principal or interest on the Loan) and (B) [*****] of the cash proceeds shall be paid to the Lenders (without affecting the principal or interest payable on the Loan).

SECTION 3.03.                                              Illegality.  If the Lender determines at any time that any Law or treaty or any change therein or in the interpretation or application thereof makes or will make it unlawful for the Lender to fulfill its commitment in accordance with Section 2.01, to maintain the Loan (including additional amounts pursuant to Section 4.01(a)) or to claim or receive any amount payable to it hereunder, the Lender shall give Notice of that determination to Borrower, whereupon the obligations of the Lender hereunder shall terminate.  If any such Notice is given after the disbursement of the Loan, Borrower shall prepay the Loan in full on the Interest Payment Date following the date the Notice is given; provided, however, that if the Lender certifies to Borrower that earlier prepayment is necessary in order to enable the Lender to comply with the relevant Law, treaty or change and specifies an earlier date for the prepayment, Borrower shall make the prepayment on the date so specified.  Prepayment pursuant to this Section 3.03 shall be made together with interest accrued and unpaid on the Loan to the date of prepayment and all other amounts then payable to the Lender hereunder.  Each Notice delivered pursuant to this Section 3.03 shall be effective when sent.

ARTICLE IV
INTEREST; EXPENSES

SECTION 4.01.                                              Interest Rate.

(a)                                  Except as otherwise expressly provided in Section 4.04(i) the Loans shall bear interest at a rate per annum equal to 16.00% and shall be paid in cash as provided in Section 4.01(c); provided that Borrower shall be required to pay interest in cash only to the extent of the Applicable Included Receipts for the immediately preceding fiscal quarter; further provided that if Borrower is unable to pay the cash interest payment required under this clause (i) out of Applicable Included Receipts or otherwise

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pursuant to the last sentence of this Section 4.01(a) because the then Applicable Included Receipts are less than 16.00% per annum, paid quarterly, of the principal amount of the Loans (such deficiency, the “Deficiency Amount”), then (ii) any Deficiency Amount shall be paid in kind, on a quarterly basis, and on each such date, the Lender shall be deemed to have made an additional term loan in a principal amount equal to the aggregate amount of interest so paid on its outstanding Loan.  Each such Loan shall (A) be deemed to be a Loan for all purposes under this Agreement and (B) accrue interest in accordance with this Section 4.01.  Borrower shall deliver to each Lender all original issue discount information relating to the Loans as may be required by applicable law.  Notwithstanding any other provision herein, Borrower may, at its option, pay all or any portion of any Deficiency Amount when due out of other funds held by Borrower.

(b)                                 All interest hereunder shall be computed on the basis of a 360-day year of twelve 30-day months.

(c)                                  Accrued interest on each Loan shall be payable to the Lender at the Lockbox Account or as otherwise notified to Borrower in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 4.04 shall be payable on demand, in the same form as interest payable on the next Interest Payment Date, and (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

(d)                                 On each Interest Payment Date commencing with the first Interest Payment Date following the fifth (5th) anniversary of the Closing Date, if the aggregate amount that would be includible in income with respect to the Note for periods ending on or before such Interest Payment Date (within the meaning of Section 163(i) of the Code) (the “Aggregate Accrual”) would exceed an amount equal to the sum of (i) the aggregate amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Note on or before such Interest Payment Date (determined without regard to the amounts payable on such Interest Payment Date under this Section 4.01(d)), and (ii) the product of (A) the issue price (as defined in Sections 1273(b) and 1274(a) of the Code) of the Note and (B) the yield to maturity (interpreted in accordance with Section 163(i) of the Code) of the Note (such sum, the “Maximum Accrual”), then Borrower shall pay to the Lender in cash an amount equal to the excess, if any, of the Aggregate Accrual over the Maximum Accrual, and the amount of such payment shall be treated for any period ending after such Interest Payment Date as an amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Note.

SECTION 4.02.                                              Lockbox Account.

(a)                                  On the Closing Date, the parties hereto shall enter into a Lockbox Agreement substantially in the form attached hereto as Exhibit F, which Lockbox Agreement will provide for, among other things, the establishment and maintenance of a

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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Lockbox Account, a Company Concentration Account and a Lender Concentration Account in accordance with the terms herein and therein.

(b)                                 The Lender Concentration Account shall be held solely for the benefit of the Lender, subject to the terms and conditions of this Agreement.  The Lender shall have immediate and full access to any funds held in the Lender Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever.  The Company Concentration Account shall be held solely for the benefit of Borrower, subject to the terms and conditions of this Agreement, the Security Agreement and the other Transaction Documents.  Subject to the terms and conditions of this Agreement, the Security Agreement and the other Transaction Documents, Borrower shall have immediate and full access to any funds held in the Company Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever other than those of the Lockbox Bank; provided, however, that nothing herein shall (i) affect or reduce Borrower’s obligations to pay in full all amounts due to the Lender under this Agreement, or (ii) in any manner limit the recourse of the Lender to the assets of Borrower to satisfy Borrower’s obligations.

(c)                                  Sweeps from the Lockbox Account shall be made pursuant to Exhibit K.

(d)                                 Borrower shall pay for all fees, expenses and charges of the Lockbox Bank by debiting the Company Concentration Account.

(e)                                  With respect to any License Agreement, In License or invoice entered into or issued by Borrower in relation thereto, Borrower shall immediately upon the execution of the Lockbox Agreement (A) notify the applicable Contract Party to remit to the Lockbox Account when due all Royalties that are due and payable to Borrower in respect of or derived from such License Agreement, In License or invoice and (B) in each case, provide to the Lender a copy of each such notification.

(f)                                    Borrower shall have no right to terminate the Lockbox Account without Borrower’s prior written consent.  Any such consent, which the Lender may grant or withhold in its discretion, shall be subject to the satisfaction of each of the following conditions to the satisfaction of the Lender:

(i)                  the successor Lockbox Bank shall be acceptable to the Lender;

(ii)               Lender, Borrower and the successor Lockbox Bank shall have entered into a lockbox agreement substantially in the form of the Lockbox Agreement initially entered into;

(iii)            all funds and items in the accounts subject to the Lockbox Agreement to be terminated shall be transferred to the new accounts held at the successor Lockbox Bank prior to the termination of the then existing Lockbox Bank; and

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(iv)           Borrower shall have received evidence that all of the applicable parties paying Royalties have been instructed to remit all future payments to the new accounts held at the successor Lockbox Bank.

(g)                                 Prior to the date on which the Lockbox Agreement is executed by all parties thereto, Borrower shall cause any payments that would be swept into the Lender Concentration Account pursuant to Exhibit K but are received by Borrower and/or any of its Subsidiaries to be paid directly to the Lender, by wire transfer to Lender Bank Account, on Wednesday of every other week for the period ending on the Friday of the immediately prior two weeks.

(h)                                 Following the date on which the Lockbox Agreement is executed, all Gross Payments shall be paid into the Lockbox Account or to any other account(s) designated in writing by the Lender(s) to Borrower, and amounts deposited therein shall be treated as described in Exhibit K.

(i)                                     Borrower shall pay voluntary prepayments made at the election of Borrower in accordance with Section 3.02(a) or any payment made in accordance with the last sentence of Section 4.01(a) to the Lockbox Account.

(j)                                     In the event at any time following the execution of the Lockbox Agreement by all parties thereto, any party to a License Agreement including any party to a Future License remits any Royalties directly to Borrower or otherwise except to the Lockbox Account, Borrower shall immediately (i) remit any such Royalties to the Lockbox Account (or, if for some reason such account is no longer in effect or payment cannot be made into such account, Borrower shall remit such Royalties by wire transfer of immediately available funds directly to Lender Bank Account), (ii) notify such party to remit any future Royalties to the Lockbox Account and (iii) provide to Lender a copy of such notice.

(k)                                  Amounts payable pursuant to this Section 4.02 shall be in addition to any amounts payable under Section 4.02(d) of this Agreement.

(l)                                     Any payments, other than from funds paid to Lender from the Lender Concentration Account, to be made by Borrower to Lender hereunder or under any other Transaction Document shall be made by wire transfer of immediately available funds to Lender Bank Account.

(m)                               Within [*****] following delivery to Lender by Borrower of the Quarterly Report for the fourth fiscal quarter of each calendar year during the term of the Loan, to the extent that either Lender or Borrower has determined that there is a discrepancy as to the amounts paid to Lender hereunder for such calendar year, then the Person who has made such determination may notify the other in writing of such discrepancy indicating in reasonable detail its reasons for such determination (the “Discrepancy Notice”).  In the event that either Agent or Borrower delivers to the other party a Discrepancy

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Notice, Lenders and Borrower shall meet in person or by telephone conference as specified by Lender within [*****] Days (or such other time as mutually agreed by the parties) after the receiving party has received a Discrepancy Notice to resolve in good faith such discrepancy.

If the discrepancy has been resolved and, as a result thereof, it is determined that a payment is owing by Lender to Borrower or by Borrower to Lender, then the Party owing such payment shall promptly pay such payment to the other Party.  If, within [*****] days after receipt of the Discrepancy Notice, Borrower and Lender cannot resolve any such discrepancies, then Lender and Borrower shall promptly instruct their respective firms of independent certified public accountants to select, within [*****] Days thereafter, a third internationally recognized accounting firm (the “Independent Accountants”).  After offering Borrower and its representatives and Lender and their representatives the opportunity to present their positions as to the disputed items, which opportunity shall not extend for more than [*****] days after the Independent Accountants have been selected, the Independent Accountants shall review the disputed matters and the materials submitted by Borrower and Lender and, as promptly as practicable, deliver to Borrower and Lender a statement in writing setting forth its determination of the proper treatment of the discrepancies as to which there was disagreement, and that determination will be final and binding upon the parties hereto without any further right of appeal.  If Borrower has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Borrower will bear all the charges of the Independent Accountants.  If Agent has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Lenders will bear all the charges of the Independent Accountants unless the Independent Accountants determine that the amounts paid to Lender for the applicable calendar year underpaid Lender by an amount equal or in excess of [*****] of the amounts determined to be due to Lender for such calendar year, in which event Borrower shall bear all of the charges of the Independent Accountants.

SECTION 4.03.                                              Interest on Late Payments.  If any amount payable by Borrower to the Lender hereunder is not paid when due (whether at stated maturity, by acceleration or otherwise), interest shall accrue on any such unpaid amounts, both before and after judgment during the period from and including the applicable due date, to but excluding the day the overdue amount is paid in full, at a rate per annum equal to the Default Rate.  Interest accruing under this Section 4.04 shall be payable from time to time on demand of the Lender.

SECTION 4.04.                                              Initial Expenses.  Borrower shall reimburse the Lender, on the Closing Date as provided in Section 2.03, for all (a) actual, documented out-of-pocket fees and expenses incurred by the Lender (including all fees and expenses of outside counsel to the Lender), supported by reasonable documentation, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Transaction Documents including any amendment or waiver with respect thereto and (b) reasonable fees and expenses, supported by reasonable documentation, of due diligence conducted by the Lender or other parties (including outside counsel to the Lender) at the request of the Lender; provided that Borrower shall not

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be required to reimburse any amounts pursuant to this Section 4.04 in excess of [*****] in the aggregate.

SECTION 4.05.                                              Administration and Enforcement Expenses.  Borrower shall promptly reimburse the Lender on demand for all reasonable costs and expenses incurred by the Lender (including the reasonable fees and expenses of one outside counsel to the Lenders) as a consequence of or in connection with any Default or Event of Default.

ARTICLE V
TAXES

SECTION 5.01.                                              Taxes.

(a)                                  Except as otherwise required by Law, any and all payments by Borrower under this Agreement or the Note (including payments with respect to the Loan) shall be made free and clear of and without deduction for any and all present and future taxes, levies, duties, imposts, deductions, charges, fees or withholdings, and all interest, penalties and other liabilities with respect thereto (collectively, “Taxes”) imposed by any Governmental Authority or taxing authority in any jurisdiction.  If any Taxes other than Excluded Taxes (“Indemnified Taxes”) shall be required by Law to be deducted from or in respect of any sum payable under this Agreement or the Note to a Lender, (i) the sum payable by Borrower shall be increased as may be necessary so that after making all required deductions of Indemnified Taxes the Lender shall receive an amount equal to the sum it would have received had no such deductions been made and (ii) Borrower shall make such deductions and pay the full amount deducted to the relevant Governmental Authority or taxing authority in accordance with applicable Law.

(b)                                 Any Lender claiming additional amounts payable pursuant to Section 5.01(a) shall use its reasonable efforts (consistent with its internal policies and applicable Law) to change the jurisdiction of its lending office if such a change would reduce any such additional amounts (or any similar amount that may thereafter accrue) and would not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender.

(c)                                  If a Lender is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”), then such Foreign Lender shall provide to Borrower (i) in the case of a Foreign Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” (x) two accurate and complete original signed copies of IRS Form W-8BEN (or a successor form) properly completed and duly executed by such Foreign Lender and (y) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, (ii) if the payments receivable by the Foreign Lender are effectively connected with the conduct

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of a trade or business in the United States, two accurate and complete original signed copies of IRS Form W-8ECI (or a successor form), (iii) in the case of a Foreign Lender that is entitled to benefits under an income tax treaty to which the United States is a party that reduces the rate of withholding tax on payments of interest, two accurate and complete original signed copies of IRS Form W-8BEN (or a successor form) indicating that such Foreign Lender is entitled to receive payments under this Agreement and the Note with reduced or no deduction of any United States federal income withholding tax or (iv) in the case of a Foreign Lender acting as an intermediary, two accurate and complete original signed copies of IRS Form W-8IMY (or a successor form).  Such forms shall be delivered by such Foreign Lender on or prior to the date that it becomes a Lender under this Agreement, at any time thereafter when a change in the Foreign Lender’s circumstances renders an existing form obsolete or invalid or requires a new form to be provided, and within fifteen Business Days after a reasonable written request of Borrower from time to time thereafter.  Notwithstanding any other provision of this Section 5.01(c), no Foreign Lender shall be required to deliver any form pursuant to this Section 5.01(c) that such Foreign Lender is not legally able to deliver.

(d)                                 Each Lender that is not a Foreign Lender shall provide two properly completed and duly executed copies of Form W-9 (or successor form) at the times specified for delivery of forms under Section 5.01(c).

(e)                                  Each Lender having assigned its rights and obligations hereunder in whole or in part or having granted a participating interest in its Loan shall collect from such assignee or participant the documents described in Sections 5.01(c) and (d) as applicable.

SECTION 5.02.                                              Receipt of Payment.  Within thirty days after the date of any payment of Taxes withheld by Borrower in respect of any payment to the Lender, Borrower shall furnish to the Lender the original or a certified copy of a receipt evidencing payment thereof or other evidence reasonably satisfactory to the Lender.

SECTION 5.03.                                              Other Taxes.  Borrower shall promptly pay any registration or transfer taxes, stamp duties or similar levies, and any penalties or interest that may be due with respect thereto, that may be imposed in connection with the execution, delivery, registration or enforcement of this Agreement, the Note issued hereunder or any other Transaction Document or the filing, registration, recording or perfecting of any security interest contemplated by this Agreement.

SECTION 5.04.                                              Indemnification.  If the Lender pays any Taxes that Borrower is required to pay pursuant to this Article V, Borrower shall indemnify the Lender on demand in full in the currency in which such Taxes are paid, whether or not such Taxes were correctly or legally asserted, together with interest thereon from and including the date of payment to, but excluding, the date of reimbursement at the Default Rate.  The Lender shall promptly notify Borrower if any claim is made against the Lender for any Taxes for which Borrower would be responsible to indemnify the Lender pursuant to this Section 5.04.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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SECTION 5.05.                                              Loans Treated As Indebtedness.  The Parties agree to treat the Loan as indebtedness for borrowed money of Borrower for all tax purposes.  The Parties agree not to take any position that is inconsistent with the provisions of this Section 5.05 on any tax return or in any audit or other administrative or judicial proceeding unless (i) the other Party has consented to such actions, or (ii) the Party that contemplates taking such an inconsistent position has been advised by nationally recognized tax counsel in writing that it is more likely than not that (x) there is no “reasonable basis” (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) for the position specified in this Section 5.05 or (y) taking such a position would otherwise subject the Party to penalties under the Code.

SECTION 5.06.                                              Allocation of Issue Price.  The Note and the Warrant, taken together, constitute an “investment unit” for purposes of Section 1273(c)(2) of the Code.  In accordance with Sections 1273(c)(2)(A) and 1273(b)(2) of the Code, the issue price of the investment unit is the purchase price of the Note, with $431,761 thereof representing the fair market value of the Warrant.  Unless otherwise required by Law, the Parties shall not take any position inconsistent with that allocation on any tax return or for any other tax purpose.

SECTION 5.07.                                              Registered Obligation.

(a)                                  Borrower shall establish and maintain at its address referred to in Section 13.04 (A) a record of ownership (the “Register”) in which Borrower agrees to register by book entry the interests (including any rights to receive payment hereunder) of each Lender in the Loan, each of their obligations under this Agreement to participate in the Loan, and any assignment of any such interest, obligation or right, and (B) accounts in the Register in accordance with its usual practice in which it shall record (1) the names and addresses of the Lender(s) (and each change thereto pursuant to Section 13.02), (2) the Commitment of each Lender, (3) the amount of the Loan and each funding of any participation described in clause (A) above, (4) the amount of any principal or interest due and payable or paid, and (5) any other payment received and its application to the Loan.

(b)                                 Notwithstanding anything to the contrary contained in this Agreement, the Loan (including any Note evidencing such Loan) is a registered obligation, the right, title and interest of the Lender and its assignees in and to such Loan shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein.  This Section 5.07 and Section 13.02 shall be construed so that the Loan is at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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ARTICLE VI
PAYMENTS; COMPUTATIONS

SECTION 6.01.                                              Making of Payments.

(a)                                  To the extent (i) that Applicable Included Receipts received into the Lockbox Account during any fiscal quarter are less than the total amount of Applicable Included Receipts required for purposes of calculating the interest that Borrower is required to pay to Lender under Section 4.01(a) on any Interest Payment Date or (ii) Borrower exercises its option to pay any Deficiency Amount out of other funds of Borrower and/or any of its Subsidiaries as described in the last sentence of Section 4.01(a), then such deficiency shall be made in Dollars, by deposit in same day funds by 3:00 p.m. New York time on the date the interest payment is due, to the Lockbox Account, for the account of the applicable Lending Office(s), or to any other account designated by the Lenders by Notice to Borrower.

(b)                                 Notwithstanding anything to the contrary contained herein, any payment stated to be due hereunder or under the Note on a given day in a specified month shall be made or shall end (as the case may be), (i) if there is no such given day or corresponding day, on the last Business Day of such month or (ii) if such given day or corresponding day is not a Business Day, on the next succeeding Business Day, unless such next succeeding Business Day falls in a different calendar month, in which case such payment shall be made on the next preceding Business Day.

SECTION 6.02.                                              Setoff or Counterclaim.  Each payment by Borrower under this Agreement or under the Note shall be made without setoff or counterclaim.  Lenders shall have the right to setoff any and all amounts owed by Borrower and/or any of its Subsidiaries under this Agreement as provided in Section 11.03.

ARTICLE VII
CONDITIONS PRECEDENT

SECTION 7.01.                                              Conditions Precedent to the Loan.  The obligation of the Lender to make the Loan on the Closing Date is subject to the fulfillment, to the satisfaction of the Lender, of all of the following conditions precedent in addition to the conditions specified in Article II:

(a)                                                                                        Borrower shall have executed and delivered to the Lender the Note, dated the Closing Date.

(b)                                                                                       Lender shall have received on or before the Closing Date an executed copy of:

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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(i)                  a certificate of Borrower, dated the Closing Date, substantially in the form set forth in Exhibit L hereto together with the attachments specified therein;

(ii)               an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Dodge LLP, counsel to Borrower, dated the Closing Date, substantially in the form of Exhibit M hereto and otherwise in form and substance satisfactory to the Lender;

(iii)            an opinion of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, counsel of Borrower , dated the Closing Date, substantially in the form of Exhibit N hereto and otherwise in form and substance satisfactory to the Lender.

(iv)           an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & Anasasi, LLP, counsel of Borrower, dated the Closing Date, substantially in the form of Exhibit O hereto and in form and substance satisfactory to the Lender.

(c)                                                                                        Borrower shall have delivered to the Lender a certificate, dated the Closing Date, of a Senior Officer of Borrower (the statements made in which shall be true and correct on and as of the Closing Date):  (i) attaching copies, certified by such officer as true and complete, of Borrower’s certificate of incorporation or other organizational documents (together with any and all amendments thereto) certified by the appropriate Governmental Authority as being true, correct and complete copies; (ii) attaching copies, certified by such officer as true and complete, of resolutions of the Board of Directors of Borrower authorizing and approving the execution, delivery and performance by Borrower of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of Borrower who have executed and delivered this Agreement and the other Transaction Documents including therein a signature specimen of each such officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Governmental Authority of the jurisdiction of formation, stating that Borrower is in good standing under the laws of such jurisdiction.

(d)                                                                                       Borrower shall have executed and delivered to the Lender the Loan Documents and such other documents as the Lender may reasonably request, in each case, in form and substance satisfactory to the Lender.

(e)                                                                                        Borrower shall have executed and delivered to the Lender the Warrant Agreement.

(f)                                                                                          The Transaction Documents shall be in full force and effect.

(g)                                                                                       The Lender shall have received all fees and expenses due and payable to the Lender on the Closing Date under this Agreement and the other Transaction Documents.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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(h)                                                                                       No event shall have occurred and be continuing that constitutes a Default or an Event of Default under this Agreement or a similar event under the other Transaction Documents and no such event will occur or will have occurred by reason of the Loan.

(i)                                                                                           The representations and warranties made by Borrower in Article VIII hereof and in the other Transaction Documents shall be true and correct as of the Closing Date, before and after giving effect to the Loan.

(j)                                                                                           Borrower shall have delivered to the Lender true copies of the License Agreements certified by an officer of Borrower, including all amendments, supplements or other modifications thereto, and each License Agreement and amendment, supplement or other modification thereto shall be in full force and effect.

(k)                                                                                        All filings, recordings and other actions that are necessary or reasonably requested by the Lender in order to establish, protect, preserve and perfect the security interest in the assets of Borrower as provided in the Security Agreement as a valid and perfected first priority security interest with respect to such assets shall have been duly effected.

(l)                                                                                           All necessary governmental and third-party approvals, consents and filings, including in connection with the Loan, the Security Agreement and the Warrant Agreement shall have been obtained or made and be in full force and effect.

(m)                                                                                     The Lender shall have conducted a background check of the officers of Borrower and the results shall be to the satisfaction of the Lender.  The Lender shall have received all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act, including, without limitation, the information described in Section 13.19.

(n)                                                                                       The Lender shall have received from Borrower (i) an executed copy of the Release of Security Agreement between Borrower and ▇▇▇▇ Royalty Funds Holdings II, (ii) evidence to the satisfaction of the Lender that such release(s) in form and substance satisfactory to the Lender will be filed with the U.S. Patent and Trademark Office and the U.S. Copyright Office on the Closing Date, (iii) evidence to the satisfaction of the Lender that a UCC-3 termination statement will be filed with the office of the Secretary of State of the State of Delaware on the Closing Date, and (iv) evidence to the satisfaction of the Lender of agreements to terminate (A) the lockbox agreement among ▇▇▇▇ Royalty Funds Holdings II, Borrower and ▇▇ ▇▇▇▇▇▇ Chase Bank, and (B) the escrow arrangement with respect to duplicate libraries for the benefit of ▇▇▇▇ Royalty Funds Holdings II.

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

SECTION 8.01.               Representations and Warranties of Borrower.  Borrower makes the representations and warranties set forth below to the Lender.  Except as otherwise noted, Borrower makes the representations and warranties set forth below as of the Closing Date:

(a)                             Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation and, where legally applicable, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and has the power and authority (including any required license, permit or other approval from any Governmental Authority) to own its assets, to carry on its business as currently conducted and to consummate the transactions contemplated in, and to perform its obligations under, this Agreement and the other Transaction Documents to which it is party or by which it is bound.

(b)                             Borrower has taken all necessary action to authorize its execution and delivery of this Agreement and the other Transaction Documents to which it is party, the performance of its obligations under this Agreement and the other Transaction Documents to which it is party or by which it is bound and the consummation of the transactions contemplated hereby and thereby.

(c)                             This Agreement and each other Transaction Document to which Borrower is party has been duly executed and delivered by Borrower, and each constitutes a valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights generally, and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(d)                             No authorization or action of any kind by any Governmental Authority is necessary to authorize the transactions contemplated by this Agreement and each other Transaction Document or required for the validity or enforceability against Borrower of this Agreement and each other Transaction Document, except any filings with a Governmental Authority required to perfect the Lender’s security interest under the Security Agreement and any filings with the United States Securities and Exchange Commission (“SEC”).

(e)                             No consent or approval of, or notice to, any Person is required by the terms of any agreement, contract, lease, commitment, license and other arrangement (each a “Contract”) for the execution or delivery of, or the performance of the obligations of Borrower under, this Agreement and the other Transaction Documents to which Borrower is party or the consummation of the transactions contemplated hereby or thereby, and such execution, delivery, performance and consummation will not result in any

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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breach or violation of, or constitute a default under Borrower Documents or any material Contract, instrument or Law applicable to Borrower, any of its Subsidiaries or any of its assets.

(f)                              There are no actions, proceedings or claims pending or, to the actual knowledge of Borrower, threatened the adverse determination of which could reasonably be expected to have a Material Adverse Effect.

(g)                             No Default or Event of Default has occurred and is continuing, and no such event will occur upon the making of the Loan.

(h)                             [Intentionally Omitted]

(i)                              With respect to each Contract that is material to the conduct of the LFRP, (i) each such Contract is a valid and binding agreement and each such Contract is in full force and effect, and (ii) Borrower and/or any of its Subsidiaries is in compliance with each such Contract and has no actual knowledge of any default under any such Contract which default has not been cured or waived.

(j)                              All written information heretofore, herein or hereafter supplied to the Lender by or on behalf of Borrower in connection with the Loan and the other transactions contemplated hereby has been, is and will be accurate and complete in all material respects.  All representations and warranties made by Borrower in any of the other Transaction Documents to which it is party are true and correct in all material respects.

(k)                             The Financial Statements are complete and accurate in all material respects, were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and present fairly in all material respects, in accordance with applicable requirements of GAAP, the consolidated financial position and the consolidated financial results of the operations of Borrower and its Subsidiaries as of the dates and for the periods covered thereby and the consolidated statements of cash flows of Borrower and its Subsidiaries for the periods presented therein.  Except as disclosed in Borrower’s SEC filings, there have been no Material Adverse Effects since December 31, 2007.

(l)                              Borrower and its Subsidiaries have no Indebtedness other than (i) identified in the Financial Statements or (ii) incurred by Borrower or its Subsidiaries in the ordinary course of business since December 31, 2007 or (c) otherwise listed and described on Schedule 8.01(l).

(m)                            As of the date hereof and after giving effect to the Loan:

(i)      The aggregate value of the assets of Borrower, at fair value and present fair salable value, exceeds (i) its total liabilities and (ii) the amount required

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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to pay such liabilities as they become absolute and matured in the normal course of business;

(ii)     Borrower has the ability to pay its debts and liabilities as they become absolute and matured in the normal course of business; and

(iii)    Borrower does not have an unreasonably small amount of capital with which to conduct its business.

(n)                             Borrower’s Subsidiaries are set forth on Schedule 8.01(n).

(o)                             (i)  Borrower and its Subsidiaries are in compliance with all applicable Laws except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No prospective change in any applicable laws, rules, ordinances or regulations has been proposed or adopted which, when made effective, could individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(ii)           Borrower possesses all material certificates, authorizations and permits issued or required by the appropriate federal, state, local or foreign regulatory authorities, including any effective investigational new drug application or its equivalent, necessary to conduct the LFRP, including all such certificates, authorizations and permits required by the FDA or any other federal, state, local or foreign agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous substances or materials except where the failure to possess such certificates, authorizations and permits, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  Borrower has not received any notice of proceedings relating to, and to the Knowledge of Borrower there are no facts or circumstances that could reasonably be expected to lead to, the revocation, suspension, termination or modification of any such certificate, authorization or permit.

(iii)          To the actual knowledge of Borrower, there has been no indication that the FDA or any other Regulatory Agency has any material concerns with any Product or may not approve any Product, nor has any Product, to the actual knowledge of Borrower, suffered any material adverse events in any clinical trial.

(p)                             Borrower is not an investment company subject to regulation under the Investment Company Act of 1940.

(q)                             Borrower has timely filed all tax returns required to be filed by it and has paid all taxes due reported on such returns or pursuant to any assessment received by Borrower, except for failures to file tax returns or pay taxes that, individually, and in the aggregate, are not reasonably expected to result in a Material Adverse Effect.  Any charges, accruals or reserves on the books of Borrower in respect of taxes are adequate except for inadequacies that, individually, and in the aggregate, are not reasonably

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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expected to result in a Material Adverse Effect.  Borrower has had no material liability for any taxes imposed on or with respect to its net income (except for state or local income or franchise taxes).  Borrower has fulfilled all its obligations with respect to withholding taxes except for failures that, individually, and in the aggregate, are not reasonably expected to result in a Material Adverse Effect.  No deduction or withholding for or on account of any tax has been made, or was required under applicable Law to be made, from any payment to Borrower under the License Agreements in effect on the date hereof.

(r)                              Neither Borrower nor any ERISA Affiliate has ever incurred any unsatisfied liability or expects to incur any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or any similar non-U.S. law or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code or any non-U.S. law.  The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or substantially similar provisions under any foreign or U.S. federal, state or local laws, rules or regulations.  Neither Borrower nor any of its Subsidiaries has incurred any material liability with respect to any obligation to provide benefits, including death or medical benefits, with respect to any person beyond their retirement or the termination of service other than coverage mandated by law.

(s)                             (i)  Except as set forth on Schedule 8.01(s)(i), all of the LFRP Intellectual Property owned by Borrower is solely (and not jointly) owned by Borrower and is free and clear of any and all Liens, except those Liens created in favor of Lender pursuant to the Transaction Documents. The Included Receipts and all of the rights of Borrower under the In Licenses and License Agreements and all other rights in and to the LFRP are free and clear of any and all Liens, except those Liens created in favor of Lender pursuant to the Transaction Documents.

(ii)           Borrower owns, and is the sole holder of, all the Included Receipts.  Borrower owns, and is the sole holder of, and/or has and holds a valid, enforceable and subsisting license to, all assets (including LFRP Intellectual Property) that are required to produce or receive any payments from any Contract Party or payor under and pursuant to, and subject to the terms of any License Agreements.  Borrower has not transferred, sold, or otherwise disposed of, or agreed to transfer, sell, or otherwise dispose of any portion of its respective rights to receive payment of Royalties.  Except as set forth on Schedule 8.01(s)(ii), no Person other than Borrower has any right to receive the payments payable under any License Agreement in existence on the date hereof from and after the Closing Date, other than, in respect of the Included Receipts, Lender.

(t)                              The claims and rights of the Lender created by this Agreement and any other Transaction Document in and to the Collateral is senior to any Indebtedness or other obligation of Borrower, with respect to such Collateral.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(u)                             Borrower’s principal place of business and chief executive office are set forth on Schedule 8.01(u).

(v)                             (i)  Borrower has provided Lender all material information in its possession, or otherwise known to it with respect to the LFRP Patents.

(ii)           Schedule 8.01(v)(ii) sets forth an accurate and complete list of all LFRP Patents (including all LFRP Patents not owned by Borrower).  For each item of the LFRP Patents listed on Schedule 8.01(v)(ii), Borrower has indicated (A) the countries in each case in which such item is patented, registered or in which an application for patent or registration is pending, (B) the application numbers, (C) the registration or patent numbers, (D) the scheduled expiration date of the issued patents, and (E) the owner of such item of LFRP Patents.

(iii)          The issued LFRP Patents owned by Borrower are valid, enforceable and subsisting.  To the Knowledge of Borrower, each individual associated with the filing and prosecution of the LFRP Patents owned by Borrower, including the named inventors of such LFRP Patents, has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known to be material to the patentability of each of such LFRP Patents, in those jurisdictions where such duties exist.  [*****].

(iv)          Schedule 8.01(v)(iv) sets forth an accurate and complete list of all LFRP Patents owned by Borrower that have issued with at least one claim covering the Company LFRP Methods and Libraries.

(v)           Borrower has not sold or otherwise transferred any patents or patent applications that have issued or may issue with at least one claim covering the Company LFRP Methods and Libraries or falling within the scope of the patents licensed under the Patent License Agreements.

(vi)          There are no unpaid maintenance or renewal fees payable by Borrower to any third party that are currently overdue for any of the LFRP Patents or other LFRP Intellectual Property owned by Borrower.  To the Knowledge of Borrower no material applications for LFRP Patents owned by Borrower in whole or in part have lapsed or been abandoned, cancelled or expired.

(vii)         Borrower has not undertaken and, to the Knowledge of Borrower, no licensee has undertaken or omitted to undertake any acts, and no conduct, circumstances or grounds exist that would void, invalidate or eliminate, in whole or in part, the enforceability of any of the LFRP Intellectual Property. [*****]  Except as set forth on Schedule 8.01(v)(vii) and Schedule 8.01(v)(viii), Borrower has not received or otherwise been the beneficiary of any written opinions of counsel with respect to infringement, non-infringement or invalidity of third party intellectual property with respect to the Company LFRP Methods and Libraries that are not the subject of an In License.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(viii)        Except as set forth on Schedule 8.01(v)(viii), to the Knowledge of Borrower there is, and has been, no pending, decided or settled opposition, interference, reexamination, injunction, claim, lawsuit, proceeding, hearing, investigation, complaint, arbitration, mediation, demand, International Trade Commission investigation, decree, or any other dispute, disagreement, or claim (collectively referred to hereinafter as “Disputes”), nor, to the Knowledge of Borrower, has any such Dispute been threatened, challenging the scope, legality, validity, enforceability or ownership of any LFRP Intellectual Property or which would give rise to a credit against the payments due to Borrower from the applicable License Agreements for the use of the related licensed LFRP Intellectual Property, and no such scheduled Dispute is (or would be if adversely determined) material to the LFRP.

(ix)           To the Knowledge of Borrower, there are no Disputes by any third party against Borrower, any licensor under an In License or any licensee under a License Agreement relating to the LFRP.  Borrower has not received or given, and to the Knowledge of Borrower, no such licensee or licensor has received or given any notice of any such Dispute and, to the Knowledge of Borrower, there exist no circumstances or grounds upon which any such claim could be asserted.  Except as set forth on Schedule 8.01(v)(ix), the LFRP Intellectual Property owned by Borrower is not subject to any outstanding injunction, judgment or other decree, ruling, charge, settlement or other disposition of any Dispute.

(x)            There is no pending or, to the Knowledge of Borrower, threatened action, suit, or proceeding, or any investigation or claim by any Governmental Authority to which Borrower or, to the Knowledge of Borrower, to which any licensee under any License Agreement or any party to a In License is a party (i) that would be the subject of a claim for indemnification, if any, by or against Borrower or (ii) that the Company LFRP Methods and Libraries do or will infringe on any patent or other intellectual property rights of any other Person.  Except as set forth on Schedule 8.01(v)(x), to the Knowledge of Borrower, there are no pending published U.S., international or foreign patent applications owned by any other Person, which, if issued, would limit or prohibit, in any material respect the practice of the Company LFRP Methods and Libraries.

(w)                            (i)  Schedule 8.01(w)(i) sets forth an accurate and complete list of all agreements relating to LFRP in the following categories whether oral or written (provided such oral agreements are to the Knowledge of Borrower):  manufacturing and supply agreements, In Licenses and License Agreements, options (not part of License Agreements or In Licenses), agreements not to enforce (not part of License Agreements or In Licenses), consents, settlements, assignments, security interests, liens and other encumbrances or mortgages, and any amendment(s), renewal(s), novation(s) and termination(s) pertaining thereto, true and correct copies of which have been provided to Lender.  For each agreement specified on Schedule 8.01(w)(i), Borrower has indicated (A) whether such agreement relates to inbound licenses of LFRP Intellectual Property to Borrower or outbound licenses of LFRP Intellectual Property by Borrower and (B) the specific

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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LFRP Intellectual Property relating to such agreement.  Each agreement specified on Schedule 8.01(w)(i), whether or not terminated prior to the date hereof, constitutes a valid and binding obligation, enforceable in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or general equitable principles.  Borrower is not in breach of such agreements and, to the Knowledge of Borrower, no circumstances or grounds exist that would give rise to a claim of breach or right of rescission, termination (other than existing rights under any License Agreement for a party to terminate for convenience), revision, or amendment of any of the agreements specified on Schedule 8.01(w)(i), including the signing of this Agreement.  None of the Excluded Agreements fall within the scope of an In License or License Agreement as each is defined; provided that the intellectual property or technology which is the subject of an In License may be assigned in connection with an Excluded Agreement.  None of the Excluded Agreements was used in the calculation of the revenue forecasts provided by Borrower to Lender on June 13, 2008

(ii)           With respect to the License Agreements and In Licenses, there has been no correspondence or other written or, to the Knowledge of Borrower, oral communication sent by or on behalf of Borrower to, or received by or on behalf of Borrower from, any Contract Party, the subject matter of which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(iii)          Except as set forth on Schedule 8.01(w)(iii), each such License Agreement or In License is in full force and effect and has not been impaired, waived, altered or modified in any respect, whether by consent or otherwise, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(iv)          The Contract Party under each such License Agreement or In License has not been released, in whole or in part, from any of its obligations under such License Agreement.

(v)           Borrower has not received (A) any notice or other written or, to the Knowledge of Borrower, oral communication of any Contract Party’s intention to terminate such License Agreement or In License in whole or in part, or consideration of any such termination, or (B) except as set forth on Schedule 8.01(w)(v), any notice or other written or, to the Knowledge of Borrower, oral communication requesting any amendment, alteration or modification of such License Agreement or In License or any sublicense or assignment thereunder, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(vi)          To the Knowledge of Borrower, nothing has occurred and no condition exists that would adversely impact the right of Borrower to receive any payments payable under any License Agreement except where such occurrence or condition could not reasonably be expected to result in a Material Adverse Effect.  Other than as set forth on

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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Schedule 8.01(w)(vi), Borrower, or, to the Knowledge of Borrower, any Contract Party has not taken any action or omitted to take any action, that would adversely impact the right of Lender to take a security interest in the LFRP Technology, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(vii)         [*****]

(viii)        Except as set forth on Schedule 8.01(w)(viii), no License Agreement has been satisfied in full, discharged, canceled, terminated, subordinated or rescinded, in whole or in part.  Each License Agreement is the entire agreement between the parties thereto relating to the subject matter thereof, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(ix)           The execution, delivery and performance of each License Agreement and In License was and is within the corporate powers or other organizational power of Borrower and, to the Knowledge of Borrower, the Contract Party thereto.  Each License Agreement and In License was duly authorized by all necessary action on the part of, and validly executed and delivered by, Borrower and, to the Knowledge of Borrower, the Contract Party thereto.  There is no breach or default, or event which upon notice or the passage of time, or both, could give rise to any breach or default, in the performance of such License Agreement or In License by Borrower or, to the Knowledge of Borrower, the Contract Party thereto.

(x)            The representations and warranties made in each existing Material License and In License by Borrower were as of the date made true and correct in all material respects except where the failure to be true and correct could not reasonably be expected to have a Material Adverse Effect.

(xi)           The royalty rates and the duration of such royalty rates in each country under each existing License Agreement are as set forth on Schedule 8.01(w)(xi).  There are no royalties due to Contract Parties under In Licenses with respect to Royalties under the License Agreements except to [*****].

(xii)          [*****]

(xiii)         No software is necessary for use in the LFRP other than commercially available software.

(xiv)        Exhibit D sets forth all the biological material, know-how, data, technical and other information other than the LFRP Libraries described in Exhibit E, that is provided to Contract Parties under Library License Agreements, other than in oral form.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(xv)         The LFRP Libraries described in Exhibit E are all the libraries used in the LFRP within the past twelve (12) months with the exception of affinity maturation libraries.

(x)                              Borrower and Borrower’s Subsidiaries have the insurance policies with the coverages and limits set forth on Schedule 8.01(x), carried with the insurance companies also set forth therein.

SECTION 8.02.               Survival of Representations and Warranties.  All representations and warranties of Borrower contained in this Agreement shall survive the execution, delivery and acceptance thereof by the Parties and the closing of the transactions described in this Agreement.

ARTICLE IX
AFFIRMATIVE COVENANTS

SECTION 9.01.               Maintenance of Existence.  Borrower and/or any of its Subsidiaries party to the Loan Documents shall at all times (a) preserve, renew and maintain in full force and effect its legal existence and good standing as a corporation under the Laws of the jurisdiction of its organization; (b) not change its name or its chief executive office as set forth herein without having given the Lender simultaneous notice thereof; (c) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (d) preserve or renew all LFRP Intellectual Property, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

SECTION 9.02.               Use of Proceeds.  Borrower shall use the net proceeds of the Loan received by it (i) for general corporate purposes, (ii) to repay existing indebtedness and/or (iii) to pay all fees and expenses payable by Borrower pursuant to the Transaction Documents.

SECTION 9.03.               Financial Statements and Information.

(a)           In the event that any such information need not to be filed with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Exchange Act, Borrower shall furnish to the Lender, on or before the forty-fifth day after the close of each quarter of each fiscal year, the unaudited consolidated balance sheet of Borrower as at the close of such quarter and unaudited consolidated statement of operations and comprehensive loss and cash flows of Borrower for such quarter, duly certified by the chief financial officer of Borrower as having been prepared in accordance with GAAP.  Concurrently with the delivery or filing of the documents described in the preceding sentence, Borrower shall furnish to the Lender a certificate of the chief financial officer, chief accounting officer or treasurer of Borrower, which certificate shall include a statement that such officer has no knowledge, except as specifically stated, of any condition, event or act which constitutes a Default or Event of Default.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(b)           In the event that any such information need not be filed with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Exchange Act, Borrower shall furnish to the Lender, on or before the sixtieth day after the close of each fiscal year, Borrower’s audited financial statements as at the close of such fiscal year, including the consolidated balance sheet as at the end of such fiscal year and consolidated statement of operations and cash flows of Borrower for such fiscal year, in each case accompanied by the report thereon of independent registered public accountant of nationally recognized standing.  Concurrently with the delivery or filing of the documents described in the preceding sentence, Borrower shall furnish to the Lender a certificate of the chief financial officer, chief accounting officer or treasurer of Borrower, which certificate shall include a statement that such officer has no knowledge, except as specifically stated, of any condition, event or act which constitutes a Default or Event of Default.

(c)           Borrower shall, promptly upon receipt thereof, forward or cause to be forwarded to the Lender copies of all notices, reports, updates and other information regarding the License Agreements and Included Receipts received from the Contract Parties which could reasonably be expected to have a Material Adverse Effect.

(d)           Borrower shall furnish or cause to be furnished to the Lender from time to time such other information regarding the financial position, assets or business of Borrower or any other Subsidiary or its compliance with any Transaction Document to which it is a party or the LFRP as the Lender may from time to time reasonably request.

(e)           Borrower shall, promptly after the end of each fiscal quarter of Borrower (but in no event later than [****] days following the end of such quarter), produce and deliver to the Lender a Quarterly Report and Business Report for such quarter, together with a certificate of a senior officer of Borrower, certifying that to the Knowledge of Borrower that such Quarterly Report and Business Report are true, correct and accurate in all material respects.  Following receipt of any Business Report, the Lenders shall have the right to require a meeting in person or by phone with management of Borrower to discuss matters related to the LFRP.  With each Quarterly Report, Borrower shall provide a copy to the Lenders of each new executed License Agreement, In License and a copy of any amendment or other action (and notification of any action not in writing) as described in Section 9.16.

SECTION 9.04.               Books and Records.  Borrower shall keep proper books, records and accounts in which entries in conformity with sound business practices and all requirements of Law applicable to it shall be made of all dealings and transactions in relation to its business, assets and activities and as shall permit the preparation of the consolidated financial statements of Borrower in accordance with GAAP.

SECTION 9.05.               Inspection Rights; Access.  Borrower shall, on [*****], or, at any time during which a Default or Event of Default shall have occurred and be continuing, permit representatives of the Lender to examine its or its Subsidiaries’ assets, books and records

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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upon reasonable Notice during normal business hours.  Borrower shall allow the Lender reasonable access to its managers and/or officers.  To the extent any License Agreement contains provisions requiring confidential treatment of any information, including financial information, that would prohibit Borrower from providing such information to the Lender, in connection with any audit permitted hereunder, Borrower shall have its independent certified public accountants provide a summary of the relevant information and certify that such information is true and correct in all respects.

SECTION 9.06.               Maintenance of Insurance and Properties.  Borrower and its Subsidiaries shall maintain and preserve all of its properties that are used and useful in the conduct of the LFRP in good working order and condition, ordinary wear and tear excepted.  Borrower shall maintain insurance policies with the same or better coverages and limits as those set forth on Schedule 8.01(x) with the insurance companies set forth therein (the “Insurance Providers”) or with insurance companies rated at least as high as the Insurance Providers as of the date hereof (according to A.M. Best Company, Inc.).  Borrower shall furnish to the Lender from time to time upon written request full information as to the insurance carried.

SECTION 9.07.               Governmental Authorizations.  Borrower shall obtain, make and keep in full force and effect all authorizations from and registrations with Governmental Authorities that may be required for the validity or enforceability against Borrower of this Agreement and the other Transaction Documents to which it is a party.

SECTION 9.08.               Compliance with Laws and Contracts.

(a)           Borrower and any its Subsidiaries shall comply with all applicable Laws and perform its obligations under all Contracts relative to the conduct of its business, including the Transaction Documents to which it is party in all material respects.

(b)           Borrower shall at all times comply with the margin requirements set forth in Section 7 of the Exchange Act and any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.

SECTION 9.09.               Plan Assets.  Borrower shall not take any action that causes its assets to be deemed to be Plan Assets at any time.

SECTION 9.10.               Notices.

(a)           Borrower shall promptly give written Notice to the Lender of each Default or Event of Default and each other event that has or could reasonably be expected to have a Material Adverse Effect; provided that in any situation where Borrower knows a press release or other public disclosure is to be made, Borrower shall use all commercially reasonable efforts to provide such information to the Lender as early as possible but in no event later than simultaneously with such release or other public disclosure.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(b)           Borrower shall promptly give written Notice to the Lender upon receiving notice, or otherwise becoming aware, of any default or event of default under the License Agreements.

(c)           Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any litigation or proceedings to which Borrower or any of its Subsidiaries is a party or which could reasonably be expected to have a Material Adverse Effect.

(d)           Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any litigation or proceedings challenging the validity of the License Agreements, the LFRP Intellectual Property or any of the transactions contemplated therein.

(e)           Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any representation or warranty made or deemed made by Borrower in any of the Transaction Documents or in any certificate delivered to the Lender pursuant hereto shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made or deemed made.

SECTION 9.11.               Payment of Taxes.  Borrower shall pay all material taxes of any kind imposed on or in respect of its income or assets before any penalty or interest accrues on the amount payable and before any Lien on any of its assets exists as a result of nonpayment except as provided in Section 10.03 hereof and except for taxes contested in good faith by appropriate proceedings and for which adequate reserves are maintained in accordance with GAAP.

SECTION 9.12.               Waiver of Stay, Extension or Usury Laws.  Borrower will not at any time, to the extent that it may lawfully not do so, insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive Borrower from paying all or any portion of the principal of or premium, if any, or interest on the Loan as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Agreement; and, to the extent that it may lawfully do so, Borrower hereby expressly waives all benefit or advantage of any such law and expressly agrees that it will not hinder, delay or impede the execution of any power herein granted to the Lender, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 9.13.               Additional Covenants of Borrower.

(a)           [*****]

(b)           [*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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SECTION 9.14.               [*****].

SECTION 9.15.               Further Assurances.  Borrower shall promptly, at its sole cost and expense, execute and deliver to the Lender such further instruments and documents, and take such further action, as the Lender may, at any time and from time to time, reasonably request in order to carry out the intent and purpose of this Agreement and the other Transaction Documents to which it is a party and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of the Lender hereby and thereby.    [*****]  In the event that any of the Collateral is, directly or indirectly, sold, leased, licensed, transferred or otherwise disposed of to a Subsidiary of Borrower (other than in connection with a Permitted Collateralization), Borrower shall cause such Subsidiary to execute a joinder to the Security Agreement confirming that the Collateral continues to be subject to the Lien granted to the Lender thereunder and such other documentation that the Agent shall reasonably request.  Within [*****] of the Closing Date, Borrower shall cause the Lockbox Agreement to have been duly executed and delivered by all the parties thereto and shall be in the form of Exhibit F hereto (it being understood that any opinions set forth in Exhibit M relating to such Lockbox Agreement shall be delivered to Lender concurrently with the execution of the underlying Lockbox Agreement and notwithstanding any other provision hereof or in any other Loan Document, all actions and representations relating to the Lockbox Agreement shall become effective upon execution of the Lockbox Agreement).

ARTICLE X
NEGATIVE COVENANTS

SECTION 10.01.             Activities of Borrower.

(a)           Neither Borrower nor any of its Subsidiaries shall amend, modify or waive or terminate any provision of, or permit or agree to the amendment, modification, waiver or termination of any provision of, any of the Loan Documents, License Agreements or any material Contract related to the LFRP that could reasonably be expected to have a Material Adverse Effect without the prior written consent of the Agent.

(b)           Neither Borrower nor any of its Subsidiaries shall use any current or future protein, peptide or antibody selection technology to establish a business or business unit competing with the LFRP or enable a third party to use for funded research or license out any such technology in a way that would compete with the LFRP.

SECTION 10.02.             Merger; Sale of Assets.

(a)           Borrower shall not merge or consolidate with or into (whether or not Borrower is the Surviving Person) any other Person and Borrower will not, and will not cause or permit any Subsidiary to, sell, convey, assign, transfer, lease or otherwise

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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dispose of all or substantially all of Borrower’s and its Subsidiaries assets (determined on a consolidated basis for Borrower and its Subsidiaries) to any Person in a single transaction or series of related transactions, unless (1) either (A) Borrower will be the Surviving Person or (B) the Surviving Person (if other than Borrower) will be an entity organized and validly existing under the laws of Delaware, and will, in any such case, expressly assume the due and punctual payment of the principal of, premium, if any, and interest on the Loan and the performance and observance of every covenant of the Loan Documents to be performed or observed on the part of Borrower and shall use its commercially reasonable efforts to actively market and promote the LFRP and to seek out and exploit opportunities for entering into Future Licenses; and (2) immediately thereafter, on a pro forma basis after giving effect to such transaction (and treating any Indebtedness not previously an obligation of Borrower or any Subsidiary of Borrower in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default will have occurred and be continuing.

(b)           Neither Borrower nor any of its Subsidiaries shall directly or indirectly sell, lease, license, transfer or otherwise dispose of all or any part of its assets consisting of or used in the LFRP Technology or the LFRP, except (i) licenses of intellectual property rights of Borrower or any of its Subsidiaries in connection with services provided by Borrower or such Subsidiary for fair value in an arm’s-length transaction in the ordinary course of its business; (ii) sales of equipment not needed for Borrower’s business to one or more third parties for fair value in an arm’s-length transaction; provided any assets received in return from such transaction are subject to the Lien created by the Security Agreement; (iii) sales of equipment to one or more third parties for fair value in an arm’s-length transaction, the proceeds of which are used to purchase replacement or other assets useful in Borrower’s LFRP business within [*****] of such sale; (iv) other sales, leases, licenses, transfers or other dispositions in an aggregate amount not to exceed [*****] during the term of this Agreement and (v) Permitted Collateralizations; provided the proceeds resulting therefrom are applied in accordance with Section 3.02(c) and that any assets received in return from such transaction are subject to the Lien created by the Security Agreement.

SECTION 10.03.             Liens.  Neither Borrower nor any of its Subsidiaries shall create or suffer to exist any Lien on or with respect to the Collateral other than pursuant to this Agreement or the Security Agreement or to the extent permitted under the Security Agreement.  Borrower shall not create or suffer to exist any Lien on or with respect to any of its assets that are not Collateral, whether now owned or hereafter acquired, other than the following (collectively, “Permitted Liens”):

(a)                             Liens existing on the date hereof set forth in Exhibit Q to the extent and in the manner such Liens are in effect on the date hereof;

(b)                             any Lien granted to collaboration or development partners of Borrower or its Affiliates in connection with funded research, development and commercialization activities (other than on or with respect to the LFRP Intellectual Property or the

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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Included Receipts); provided that any such Lien is limited to Borrower’s and/or any applicable Subsidiaries’ interest in products developed in such collaboration;

(c)                             any Lien on any asset securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset; provided that such Lien attaches to such asset concurrently with or within [*****] after the acquisition thereof;

(d)                             any Lien existing on any asset prior to the acquisition thereof by Borrower or any Subsidiary of Borrower and not created in contemplation of such acquisition;

(e)                             any Lien created after the Closing Date in connection with capitalized lease obligations, but only to the extent that such Lien encumbers property financed by such capital lease obligation and the principal component of such capitalized lease obligation is not increased;

(f)                              Liens arising in the ordinary course of its business (other than on or with respect to the LFRP Intellectual Property or the Included Receipts) which (i) do not secure Indebtedness and (ii) do not in the aggregate materially impair the operation of the business of Borrower or impair the value of the Included Receipts;

(g)                             easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering with the ordinary conduct of the business of Borrower;

(h)                             any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing clauses of this Section 10.03; provided that such Indebtedness is not increased and is not secured by any additional assets; and

(i)                              Liens securing taxes, assessments, fees or other governmental charges or levies, Liens securing the claims of materialmen, mechanics, carriers’ landlords, warehousemen and similar Persons, Liens in the ordinary course of business in connection with workmen’s compensation, unemployment insurance and other similar Laws, Liens to secure surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money, and attachment, judgment and other similar Liens arising in connection with court proceedings so long as the enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings.

SECTION 10.04.             Investment Company Act.  Neither Borrower nor any of its Subsidiaries shall be or become an investment company subject to registration under the Investment Company Act of 1940.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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SECTION 10.05.             Limitation on Additional Indebtedness.  Neither Borrower nor any of its Subsidiaries shall, directly or indirectly, incur or suffer to exist any Indebtedness; provided that Borrower and it Subsidiaries may incur:

(a)                             Indebtedness under this Agreement;

(b)                             Indebtedness secured by Liens permitted under Section 10.03 other than Section 10.03(b) (but, in the case of Liens permitted under Section 10.03(a), only to the extent of the Indebtedness related thereto);

(c)                             any other Indebtedness of Borrower, which by its terms (or by the terms of any agreement governing such Indebtedness) is fully subordinated in right of payment to the Loans;

(d)                             capital leases and leasehold improvements consistent with past practices; or

(e)                             other unsecured Indebtedness of Borrower not to exceed [*****].

SECTION 10.06.             Limitation on Transactions with Controlled Affiliates.  Neither Borrower nor any of its Subsidiaries shall, directly or indirectly, enter into any transaction or series of related transactions or participate in any arrangement (including any purchase, sale, lease or exchange of assets or the rendering of any service) with, or for the benefit of, any Controlled Affiliate other than the Transaction Documents or in the ordinary course of business of Borrower upon fair and reasonable terms no less favorable to Borrower than it would obtain in a comparable arm’s-length transaction with a non-Controlled Affiliate; provided that Borrower and its Subsidiaries may engage in the following transactions:

(a)                             reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements, in each case approved in good faith by the Board of Directors of Borrower;

(b)                             transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case in the ordinary course of business and otherwise not prohibited by the Loan Documents;

(c)                             dividends permitted by Section 10.08;

(d)                             transactions among Borrower and its Wholly Owned Subsidiaries.

SECTION 10.07.             ERISA.

(a)           Neither Borrower nor any of its Subsidiaries shall maintain or contribute to, or agree to maintain or contribute to or otherwise incur any liability with respect to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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Title IV or Section 302 of ERISA or Section 412 of the Code or any similar plan under non-U.S. law (a “Plan”) that could reasonably be expected to have a Material Adverse Effect.

(b)           Neither Borrower nor any of its Subsidiaries shall engage in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or substantially similar provisions under foreign or U.S. federal, state or local laws, rules or regulations or in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by the Lender of any of its rights under the Note, this Agreement or the Security Agreement) to be a non-exempt prohibited transaction under such provisions.

(c)           Neither Borrower nor any of its Subsidiaries will incur any material liability with respect to any obligation to provide medical benefits with respect to any person beyond their retirement or other termination of service other than coverage mandated by law.

SECTION 10.08.             Restricted Payments.  Borrower will not, and will not permit any Subsidiary to, directly or indirectly, make any Restricted Payment other than pursuant to clauses (a) through (b) below; provided that Borrower and its Subsidiaries may not make any Restricted Payments while an Event of Default has not occurred and is continuing:

(a)                             Restricted Payments not to exceed [*****] in the aggregate while the Loan is outstanding; and

(b)                             the redemption of any Capital Stock of Borrower or any Subsidiary in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Capital Stock.

ARTICLE XI
EVENTS OF DEFAULT

SECTION 11.01.             Events of Default.  If one or more of the following events of default (each, an “Event of Default”) occurs and is continuing, the Lender shall be entitled to the remedies set forth in Section 11.02:

(a)                             Borrower fails to pay any principal of the Loan when due, whether at the Maturity Date or otherwise.

(b)                             Except as permitted by Section 4.01, Borrower fails to pay any interest on the Loan or make payment of any other amounts payable under this Agreement within three Business Days after the same becomes due and payable.

(c)                             Any representation or warranty of Borrower or any of its Subsidiaries in any Loan Document to which it is party or in any certificate, financial statement

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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or other document delivered by Borrower or such Subsidiary in connection with this Agreement proves to have not been true and correct at the time it was made or repeated and the failure of such statement to be true and correct, individually or in the aggregate, results in a Material Adverse Effect or could reasonably be expected to have a Material Adverse Effect (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects).

(d)                             Borrower fails to perform or observe any covenant or agreement contained in Sections 9.01 (a), (c) or (d) or Section 9.10 of this Agreement.

(e)                             Borrower or any of its Subsidiaries party to the Loan Documents fails to perform or observe any other covenant or agreement contained in this Agreement, the Note or the Security Agreement (other than those referred to in the preceding clauses of this Section 11.01) if (i) such failure is not remedied on or before the thirtieth day after Notice thereof from the Lender and (ii) the failure to perform or observe any such covenant or agreement, individually or in the aggregate, results in a Material Adverse Effect or could reasonably be expected to have a Material Adverse Effect.

(f)                              Borrower or any of its Subsidiaries (i) fails to pay when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) any Indebtedness (other than the Obligations hereunder) having an aggregate principal amount in excess of [*****] or (ii) fails to perform or observe any covenant or agreement to be performed or observed by it contained in any agreement or in any instrument evidencing any of its Indebtedness having an aggregate principal amount in excess of [*****] and, as a result of such failure, any other party to that agreement or instrument is entitled to exercise the right to accelerate the maturity of any Indebtedness thereunder and such Indebtedness is accelerated; provided, however, that a failure under items (i) or (ii) shall not constitute an Event of Default under this clause (f) if (x) the obligation to pay the overdue amounts has not resulted from acceleration and (z) the failure is remedied on or before the greater of (I) the thirtieth day after it occurs, or (II) any grace period applicable to such overdue amounts.

(g)                             Borrower and/or any of its Subsidiaries shall sell, assign, lease, license, transfer or otherwise dispose of the LFRP Intellectual Property, any Included Receipts, or Borrower and/or any of its Subsidiaries takes any action which could reasonably be expected to impair Lender’s security interest in any of the foregoing, except to the extent permitted under Section 10.02(b).

(h)                             Any uninsured judgment, decree or order in excess of [*****] shall be rendered against Borrower and any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced upon such judgment, decree or order or (ii) such judgment, decree or order shall not have been vacated or discharged within thirty days from entry.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(i)                              Borrower or any Significant Subsidiary (i) is dissolved or commences proceedings for dissolution, (ii) fails or is unable to pay its debts generally as they become due, (iii) commences a voluntary case in bankruptcy or any other action or proceeding for any other relief under any law affecting creditors’ rights that is similar to a bankruptcy law or (iv) consents by answer or otherwise to the commencement against it of an involuntary case in bankruptcy or any other such action or proceeding; or a court enters an order for relief or a decree in an involuntary case in bankruptcy or any other such action or proceeding in respect of any such Person or any of the assets of any such Person if such order or decree is not dismissed or withdrawn on or before the sixtieth day after the entry thereof or if any such dismissal or withdrawal ceases to remain in effect.

(j)                              Any of the Transaction Documents (other than any License Agreement) shall cease to be in full force and effect or its validity or enforceability is disaffirmed or challenged in writing by any Person other than the Lender, or the Security Agreement shall cease to give the Lender the rights purported to be created thereby (including a first priority perfected Lien on the assets of Borrower or any of its Subsidiaries party to the Loan Documents) other than as a direct result of any action by a Lender or failure of a Lender to perform an obligation.

(k)                             Borrower and/or any of its Subsidiaries fails to perform or observe any covenant or agreement contained in any License Agreement or Borrower Documents, as applicable, and such failure is not cured or waived within any applicable grace period except where such failure could not reasonably be expected to have a Material Adverse Effect.

(l)                              In connection with a challenge to the validity of the Included Receipts or any LFRP Intellectual Property or any transaction contemplated under the License Agreements, any judgment, decree or order is issued that (i) halts or suspends the payment by any Contract Party of any amount payable in respect of the Included Receipts, or (ii) otherwise determines that the Included Receipts have not been duly authorized or validly issued or that the Included Receipts are not enforceable in accordance with the terms of the applicable License Agreement, and such judgment, decree or order shall not have been vacated or discharged within 10 days from entry.

(m)                            Any security interest purported to be created by the Security Agreement shall cease to be in full force and effect, or shall cease to give the rights, powers and privileges purported to be created and granted under such Security Agreement (including a perfected first priority security interest in and Lien on all of the Collateral thereunder (except as otherwise expressly provided in such Security Agreement)) in favor of the party secured on behalf of the Lenders pursuant to the Security Agreement, or shall be asserted by Borrower and/or any of its Subsidiaries not to be a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Agreement) security interest in the Collateral covered thereby.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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SECTION 11.02.             Default Remedies.  If any Event of Default shall occur, the Lender may, by Notice to Borrower, (a) exercise all rights and remedies available to the Lender hereunder and under the Security Agreement, including enforcement of the security interests created thereby, (b) declare the Loan, all interest thereon and all other amounts payable hereunder and under the Note by Borrower to be immediately due and payable, whereupon all such amounts shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or further notice of any kind, which are expressly waived by Borrower and (c) declare the obligations of the Lender hereunder to be terminated, whereupon such obligations shall terminate; provided, however, that if any event of any kind referred to in Section 11.01(i) occurs, the obligations of the Lender hereunder shall immediately terminate, all amounts payable hereunder by Borrower shall become immediately due and payable and the Lender shall be entitled to exercise rights and remedies under the Security Agreement without diligence, presentment, demand of payment, protest or notice of any kind, all of which are hereby expressly waived by Borrower.  Each Notice delivered pursuant to this Section 11.02 shall be effective when sent.

SECTION 11.03.             Right of Set-off; Sharing of Set-off.

(a)           If any amount payable hereunder is not paid as and when due, Borrower irrevocably authorizes the Lender and each Affiliate of the Lender (i) to proceed, to the fullest extent permitted by applicable Law, without prior notice, by right of set-off, bankers’ lien, counterclaim or otherwise, against any assets of Borrower in any currency that may at any time be in the possession of the Lender or such Affiliate, to the full extent of all amounts payable to the Lender hereunder or (ii) to charge to Borrower’s account with Lender the full extent of all amounts payable by Borrower to the Lender hereunder; provided, however, that the Lender shall notify Borrower of the exercise of such right promptly following such exercise.

(b)           If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations owed to such Lender resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other obligations owed to such Lender greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the other Lenders of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(i)      if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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(ii)     the provisions of this paragraph shall not be construed to apply to (x) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant.

Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.  If under applicable bankruptcy, insolvency or any similar law any Lender receives a secured claim in lieu of a setoff or counterclaim to which this Section 11.03 applies, such Lender shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Lender is entitled under this Section 11.03 to share in the benefits of the recovery of such secured claim.

SECTION 11.04.             Rights Not Exclusive.  The rights provided for herein are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by Law.

ARTICLE XII
INDEMNIFICATION

SECTION 12.01.             Funding Losses.  If Borrower fails to borrow any amount on the Closing Date after Notice of Borrowing has been given to the Lender in accordance with Section 2.02, Borrower shall reimburse the Lender within three Business Days after demand for any resulting loss or expense incurred by the Lender including any loss incurred in obtaining, liquidating or redeploying deposits from third parties; provided that the Lender shall have delivered to Borrower a certificate as to the amount of such loss or expense.

SECTION 12.02.             Increased Costs.  Except as to Taxes (it being understood that Borrower’s liability for Taxes will be exclusively determined under Article V), Borrower shall reimburse the Lender on demand for all increases in costs incurred by the Lender and all reductions in amounts received or receivable by the Lender or in the rate of return on the Lender’s capital, as reasonably determined by the Lender, that are attributable to the Loan or the performance by the Lender of its obligations under this Agreement and that occur by reason of the promulgation after the date hereof of any Law or treaty or any change after the date hereof in any Law or treaty or in the interpretation thereof or by reason of compliance by the Lender with any direction, requirement or request (whether or not having the force of Law) of any Governmental Authority, including any such cost or reduction resulting from the imposition or amendment of any capital adequacy requirement or any reserve, special deposit or similar requirement against assets of, liabilities of, deposits with or for the account of, or loans by, the Lender; provided that the Lender shall not be entitled to be reimbursed for such increased costs or reductions in amount receivable or the rate of return incurred more than 180 days prior to the date on which it gives notice to Borrower of such increased costs or reduction in amount receivable or rate of return.

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SECTION 12.03.             Other Losses.

(a)           Borrower agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, the Lender and its Affiliates and their respective officers, partners, directors, trustees, employees and agents (each, an “Indemnitee”), from and against any and all Indemnified Liabilities, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of such Indemnitee; provided Borrower shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of such Indemnitee.  To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 12.03 may be unenforceable in whole or in part because they are violative of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(b)           To the extent permitted by applicable law, no Party shall assert, and each Party hereby waives, any claim against each other Party and such Party’s Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, the Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Party hereby waives, releases and agrees not to ▇▇▇ upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

SECTION 12.04.             Assumption of Defense; Settlements.  If the Lender is entitled to indemnification under this Article XII with respect to any action or proceeding brought by a third party that is also brought against Borrower, Borrower shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to the Lender.  Upon assumption by Borrower of the defense of any such action or proceeding, Borrower shall have the right to participate in such action or proceeding and to retain its own counsel but Borrower shall not be liable for any legal expenses of other counsel subsequently incurred by the Lender in connection with the defense thereof unless (i) Borrower has otherwise agreed to pay such fees and expenses, (ii) Borrower shall have failed to employ counsel reasonably satisfactory to the Lender in a timely manner or (iii) the Lender shall have been advised by counsel that there are actual or potential conflicting interests between Borrower and the Lender, including situations in which there are one or more legal defenses available to the Lender that are different from or additional to those available to Borrower; provided, however, that Borrower shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

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than one separate firm of attorneys at any time for the Lender, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding.  Borrower shall not consent to the terms of any compromise or settlement of any action defended by Borrower in accordance with the foregoing without the prior written consent of the Lender unless such compromise or settlement (x) includes an unconditional release of the Lender from all liability arising out of such action and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the Lender.  Borrower shall not be required to indemnify the Lender for any amount paid or payable by the Lender in the settlement of any action, proceeding or investigation without the written consent of Borrower, which consent shall not be unreasonably withheld.

ARTICLE XIII
MISCELLANEOUS

SECTION 13.01.             Assignments.

(a)           Borrower shall not be permitted to assign this Agreement without the prior written consent of the Lender and any purported assignment in violation of this Section 13.01(a) shall be null and void.

(b)           Lender may at any time assign all its rights and obligations hereunder in whole or in part (each an “Assignee”); provided, however, that to the extent rights and obligations hereunder are assigned to more than one Assignee, Agent shall be designated as the agent of all Assignees and any and all obligations of Borrower under this Agreement shall thereafter be coordinated through such agent so that Borrower shall not be required to perform its obligations hereunder for, or on behalf of, multiple Assignees.

(c)           The parties to each assignment shall execute and deliver to Borrower a written instrument of assignment in the form set forth in Exhibit R, containing the agreement of the assignee to be bound by the terms of this Agreement (an “Assignment and Acceptance”).  Upon the effectiveness of a permitted assignment hereunder, (i) each reference in this Agreement to “Lender” shall be deemed to be a reference to the assignor and the assignee to the extent of their respective interests, (ii) such assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender and (iii) the assignor shall be released from its obligations hereunder to a corresponding extent of the assignment, and no further consent or action by any party shall be required.

(d)           In the event there are multiple Lenders, all payments of principal, interest, fees and any other amounts payable pursuant to the Loan Documents shall be allocated on a pro rata basis among the Lenders according to their proportionate interests in the Loan.

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(e)           Borrower shall, from time to time at the request of the Lender, execute and deliver any documents that are necessary to give full force and effect to an assignment permitted hereunder, including a new Note in exchange for the Note held by the Lender.

(f)            Except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Loan, the amount of the Loan of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Borrower) shall not be less than [*****] unless Borrower otherwise consents, provided that no such consent of Borrower shall be required if a Default has occurred and is continuing.

SECTION 13.02.             Participations.  Lender may at any time grant (each a “Participant”) participating interests in its Loan.  In the event of any such grant by the Lender of a participating interest to a Participant, whether or not upon notice to Borrower, such Lender shall remain responsible for the performance of its obligations hereunder, and Borrower shall continue to deal solely and directly with the Lender in connection with the Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which the Lender may grant such a participating interest shall provide that the Lender shall retain the sole right and responsibility to enforce the obligations of Borrower hereunder including the right to approve any amendment, modification or waiver of any provision of this Agreement.  Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article V and Article XII with respect to its participating interest, as though it were a Lender.  No Participant shall have any rights as a Lender hereunder, including any right to make any demand hereunder or right to approve any amendment or waiver of any provision of this Agreement, or any consent to any departure by Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Loan or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Loan or any fees or other amounts payable hereunder or release, reduce or amend this Section 13.02 in any manner adverse to such Participant, in each case, to the extent subject to such participation.  Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Articles V and XII with respect to its participating interest, as though it were a Lender; provided, however, a Participant shall not be entitled to receive any greater payment under Articles V and XII than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower’s written consent (not to be unreasonably withheld).

SECTION 13.03.             Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

SECTION 13.04.             Notices.  All notices, consents, approvals, reports, designations, requests, waivers, elections and other communications (collectively, “Notices”) authorized or required to be given pursuant to this Agreement shall be given in writing and either personally

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delivered to the Party to whom it is given or delivered by an established delivery service by which receipts are given or mailed by registered or certified mail, postage prepaid, or sent by facsimile or electronic mail with a copy sent on the following Business Day by one of the other methods of giving notice described herein, addressed to the Party at its address listed below:

(a)                             If to Borrower:

Dyax Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Attention:  Chief Financial Officer
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:  ▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇

with a copy (which shall not constitute notice) to:

Dyax Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Attention:  General Counsel
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:  ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇

with a copy (which shall not constitute notice) to:

Dyax Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Attention:  Associate General Counsel
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:  ▇▇▇▇▇@▇▇▇▇.▇▇▇

with a copy (which shall not constitute notice) to:

▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Attention:  ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:  ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

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(b)                             If to a Lender:

▇▇▇▇▇ Healthcare Royalty Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Attention:  ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
Email:  ▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇.▇▇▇

with a copy (which shall not constitute notice) to:

▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇  ▇▇▇▇▇
Attn:  ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇
Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:  ▇▇▇▇@▇▇▇▇▇▇.▇▇▇

Any Party may change its address for the receipt of Notices at any time by giving Notice thereof to the other Parties.  Except as otherwise provided herein, any Notice authorized or required to be given by this Agreement shall be effective when received.

SECTION 13.05.             Entire Agreement.  This Agreement and the other Transaction Documents contain the entire agreement between the Parties relating to the subject matter hereof and supersede all oral statements and prior writings with respect thereto.

SECTION 13.06.             Modification.  No Loan Document or provision thereof may be waived, amended or modified except, in the case of this Agreement, by an agreement or agreements in writing executed by Borrower and the Agent or, in the case of any other Loan Document, by an agreement or agreements in writing entered into by the parties thereto with the consent of the Agent.

SECTION 13.07.             No Delay; Waivers; etc.  No delay on the part of the Lender in exercising any power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right.  The Lender shall not be deemed to have waived any rights hereunder unless such waiver shall be in writing and signed by the Lender.

SECTION 13.08.             Severability.  If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, then, to the fullest extent permitted by law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

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SECTION 13.09.             Determinations.  Each determination or calculation by the Lender hereunder shall, in the absence of manifest error, be conclusive and binding on the Parties.

SECTION 13.10.             Replacement of Note.  Upon the loss, theft, destruction, or mutilation of the Note and (a) in the case of loss, theft or destruction, upon receipt by Borrower of indemnity or security reasonably satisfactory to it (except that if the holder of the Note is the Lender or any other financial institution of recognized responsibility, the holder’s own agreement of indemnity shall be deemed to be satisfactory) or (b) in the case of mutilation, upon surrender to Borrower of the mutilated Note, Borrower shall execute and deliver in lieu thereof a new Note, dated the Closing Date, in the same principal amount.

SECTION 13.11.             Governing Law.  THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

SECTION 13.12.             Jurisdiction.  Borrower irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States sitting in the State of New York, and of the courts of its own corporate domicile with respect to actions or proceedings brought against it as a defendant, for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby (a “Proceeding”).  Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any Proceeding and any claim that any Proceeding has been brought in an inconvenient forum.  Any process or summons for purposes of any Proceeding may be served on Borrower by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, addressed to it at its address as provided for Notices hereunder.

SECTION 13.13.             Waiver of Jury Trial.  BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 13.14.             Waiver of Immunity.  To the extent that Borrower has or hereafter may be entitled to claim or may acquire, for itself or any of its assets, any immunity from suit, jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or any of its property, Borrower hereby irrevocably waives such immunity in respect of its obligations hereunder and under the Note to the fullest extent permitted by law.

SECTION 13.15.             Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

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SECTION 13.16.             Limitation on Rights of Others.  Except for the Indemnitees referred to in Section 12.03 or as provided in Section 13.02, no Person other than a Party shall have any legal or equitable right, remedy or claim under or in respect of this Agreement.

SECTION 13.17.             No Partnership.  Nothing in this Agreement or any other Transaction Document shall be read to create any agency, partnership or joint venture of the Lender (or any of its Affiliates) and Borrower (or any of its Affiliates).

SECTION 13.18.             Survival.  The obligations of Borrower contained in Sections 4.04, 4.05, Article V and Article XII shall survive the repayment of the Loan and the cancellation of the Note and the termination of the other obligations of Borrower hereunder.

SECTION 13.19.             Patriot Act Notification.  Lender hereby notifies Borrower that, consistent with the USA Patriot Act, Public Law No. 107-56 (the “Patriot Act”), regulations promulgated thereunder and under other applicable Law, the Lender’s procedures and customer due diligence standards require it to obtain, verify and record information that identifies Borrower, including among other things name, address, information regarding persons with authority or control over Borrower, and other information regarding Borrower, its operations and transactions with the Lender.  Borrower agrees to provide such information and take such actions as are reasonably requested by the Lender in order to assist the Lender in maintaining compliance with its procedures, the Patriot Act and any other applicable Laws.

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first above written.

Exhibit A

Business Report Format

[*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Exhibit B

Co-Development Agreements

[*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Exhibit C

Excluded Agreements and Excluded Products

[*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Exhibit D

LFRP Know-How

[*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Exhibit E

LFRP Libraries

[*****]

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Exhibit F

FORM OF LOCKBOX AGREEMENT

This LOCKBOX AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of August 5, 2008 and entered into by and among Dyax Corp., a Delaware corporation, both in its individual capacity (as such, “Company”) and as initial calculation agent hereunder (as such, the “Lockbox Calculation Agent”), ▇▇▇▇▇ Healthcare Royalty Partners, L.P., a Delaware limited partnership (“Lender”) and JPMorgan Chase Bank, N.A., both in its capacity as a depositary bank and in its capacity as a “bank” (as defined in Section 9-102(a)(8) of the UCC) (in such capacities, the “Financial Institution”), and in its capacity as escrow agent hereunder (the “Lockbox Escrow Agent”).

RECITALS

WHEREAS, Company and Lender are parties to that certain Loan Agreement, dated as of August 5, 2008 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Company has agreed, inter alia, to make certain payments to Lender, and to provide Lender with certain collateral to secure Company’s payment and performance obligations under the Loan Agreement and related documents;

WHEREAS, the Loan Agreement provides that Lender shall receive a certain amount of cash in respect of the Included Receipts, the calculation of which is set forth in the Loan Agreement;

WHEREAS, Company and Lender wish to (i) appoint the Lockbox Escrow Agent to serve as escrow agent hereunder and, in such capacity, to administer the Lockbox Account in accordance with the terms hereof; (ii) authorize the Lockbox Escrow Agent to appoint Company to serve as the initial calculation agent hereunder and, in such capacity, to calculate the portions of amounts deposited in the Lockbox Account to be paid into the Company Concentration Account and the Lender Concentration Account in accordance with the terms of this Agreement, and to provide the Lockbox Escrow Agent with the information necessary for the Lockbox Escrow Agent to make such transfers in accordance with the terms of this Agreement; and (iii) provide for the establishment with the Financial Institution of each of the Lockbox Account, the Company Concentration Account and the Lender Concentration Account;

WHEREAS, all Gross Payments are to be distributed from the Lockbox Account by the Lockbox Escrow Agent to the Company Concentration Account and the Lender Concentration Account in accordance with the terms hereof;

WHEREAS, Company and Lender are parties to the Security Agreement, dated as of August 5, 2008 (as amended, supplemented or otherwise modified from time to time, the “Security Agreement”), pursuant to which, inter alia, Company granted in favor of Lender a security interest in an undivided interest in the Company Concentration Account and all Deposit Funds

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

held therein or credited thereto from time to time, and Company’s interest in the Lockbox Account;

WHEREAS, each of the Financial Institution and the Lockbox Escrow Agent acknowledges the grant by Company in favor of Lender of the above described security interests; and

WHEREAS, since Lender is a secured party and holds a security interest in certain property of Company pursuant to the Security Agreement, the Company and Lender intend to enter into this Agreement in order (i) to perfect Lender’s security interest in the Company Concentration Account by “control” pursuant to Section 9-104 and Section 8-106 of the UCC, and (ii) to set forth their respective rights and obligations with respect to the Deposit Accounts;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1.  Certain Terms.  Capitalized terms when used in this Agreement, including its preamble, recitals and schedules, shall have the meanings set forth in Annex A attached hereto.  Other capitalized terms have the meanings set forth in the Loan Agreement.

Section 2.  Appointment of Agents; Establishment of Accounts.

(a)           Each of Company and Lender hereby appoints the Lockbox Escrow Agent to act as escrow agent hereunder in accordance with the terms hereof, to establish the Lockbox Account in the name of the Lockbox Escrow Agent, as escrow agent for Lender and Company, and under the sole dominion and control of the Lockbox Escrow Agent, to receive, hold, invest and disburse funds on deposit therein from time to time pursuant to the terms hereof and to otherwise perform the duties assumed by the Lockbox Escrow Agent hereunder.  The Lockbox Escrow Agent hereby accepts such appointment and agrees to be bound by the terms and conditions of this Agreement.

(b)           Each of Company and Lender hereby authorizes the Lockbox Escrow Agent to appoint, and the Lockbox Escrow Agent hereby appoints, the Lockbox Calculation Agent as the sub-agent of the Lockbox Escrow Agent, to provide calculations in relation to amounts on deposit in the Lockbox Account from time to time pursuant to the terms hereof and to otherwise perform the duties assumed by the Lockbox Calculation Agent hereunder.  The Lockbox Calculation Agent hereby accepts such appointment and agrees to be bound by the terms and conditions of this Agreement.

(c)           The Lockbox Escrow Agent hereby confirms that it will establish by the Effective Date a special escrow account in its name as Escrow Agent, designated as the “Lockbox Account”, and bearing account number 777133448 (the “Lockbox Account”), which account shall be non interest-bearing.  The Lockbox Escrow Agent shall keep the Lockbox Account separate and apart from all other funds and moneys held by it, and shall hold all funds on deposit therein from time to time for the benefit of Company and Lender, in accordance with their respective

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

interests.  The Lockbox Escrow Agent shall administer the Lockbox Account in accordance with the terms hereof.

(d)           Company and Lender will cause the Financial Institution to establish, and the Financial Institution hereby confirms that the Financial Institution will establish by the Effective Date, the following deposit accounts at the Financial Institution (collectively, the “Concentration Accounts”; each a “Concentration Account”; and together with the Lockbox Account, the “Deposit Accounts” and each, a “Deposit Account”) designated as indicated below:

(i)            the account in the name of Company, bearing account number 777133455 (the “Company Concentration Account”), which account shall be interest-bearing; and

(ii)           the account in the name of Lender, bearing account number 777133463 (the “Lender Concentration Account”), which account shall be interest-bearing.

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent shall change the name or account number of any Deposit Account without the prior written consent of (x) Company and Lender, in the case of the Lockbox Account, (y) Company and Lender, in the case of the Company Concentration Account, and (z) Lender, in the case of the Lender Concentration Account.

(f)            The parties hereto acknowledge and agree that each Deposit Account is a “deposit account” within the meaning of Section 9-102(a)(29) of the UCC and that the Financial Institution’s jurisdiction for purposes of the Deposit Accounts under the UCC shall be New York.

(g)           Lockbox Escrow Agent shall furnish to Company and Lender periodic reports, which account for all such investments and interest and income earned thereon.  Such reports shall be furnished monthly or, more frequently, upon the request of Company and Lender.

(h)           Each of Company and Lender acknowledges and agrees that (i) the Lockbox Account is being established for the benefit of Company and Lender, (ii) the Lockbox Account and all Deposit Funds relating thereto are the property of the Lockbox Escrow Agent, for the benefit of the Company and Lender in accordance with their respective interests and (iii) it shall, at its own cost and expense, defend the Lockbox Account (and all Deposit Funds relating thereto) against any and all claims of its creditors, whether threatened or actual.

(i)            The Deposit Funds in each Concentration Account shall be invested by Financial Institution in Permitted Investments.  All Permitted Investments shall be registered in the name of Financial Institution for the benefit of Lender or Company, as applicable, and held by Financial Institution as part of such Concentration Account.  Financial Institution may make investments through its investment division or short-term investment department.  Financial Institution shall sell and reduce to cash a sufficient amount of Permitted Investments whenever the cash balance of the Concentration Accounts is insufficient to pay the amounts required to be paid therefrom.  Financial Institution shall, without further direction from any person, sell such investments as and when required to make any payments from the Concentration Accounts. 

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Financial Institution shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by Financial Institution in accordance with this Section 2(i).

Section 3.  Operation of and Disbursements from the Lockbox Account.

(a)           The parties acknowledge and agree that the Gross Payments (as defined in the Loan Agreement) shall be paid into the Lockbox Account.

(b)           The Lockbox Escrow Agent will provide the Lockbox Calculation Agent with a daily report showing each payment received in the Lockbox Account on the previous Business Day via online access.  From time to time, at a period to be defined by Company but in any event no less frequently than once per month, the Lockbox Calculation Agent shall submit a report to the Lockbox Escrow Agent and the Financial Institution (with a copy to Company) in respect of the amounts on deposit in the Lockbox Account as of the end of the relevant calculation period (each, a “Lockbox Calculation Report”), which Lockbox Calculation Report shall specify the portion thereof which is allocable to Lender and Company, respectively, by way of allocations between the Lender Concentration Account and the Company Concentration Account.  Such allocations shall be calculated by the Lockbox Calculation Agent as set forth on Schedule 5.  Company shall provide immediately to Lockbox Calculation Agent, on request, any data or information requested by Lockbox Calculation Agent to prepare the Lockbox Calculation Report.  The Lockbox Calculation Agent shall be responsible for preparing the Lockbox Calculation Report in good faith and in a consistent and reasonable manner in accordance with the terms of the Loan Agreement.

(c)           At the time the Lockbox Calculation Agent submits any Lockbox Calculation Report in relation to the Lockbox Account, the Lockbox Calculation Agent shall also provide the Lockbox Escrow Agent with supporting calculations and other back-up information in reasonable detail, certified by a senior financial officer of the Lockbox Calculation Agent.

(d)           Following receipt of a Lockbox Calculation Report, the Lockbox Escrow Agent shall, within one (1) Business Day thereof, (i) allocate among the applicable Concentration Accounts the amounts received in the Lockbox Account that are covered by such Lockbox Calculation Report and (ii) make corresponding wire transfers of such amounts from the Lockbox Account in accordance with the terms hereof.  Only the Lockbox Escrow Agent will have the authority to make transfers from the Lockbox Account and only in accordance with the terms of this Agreement.  Within five (5) days of the close of any calendar quarter, the Lockbox Escrow Agent will provide Lender copies of each Lockbox Calculation Report and any other information or certificates received from the Lockbox Calculation Agent during the preceding quarter.

(e)           In the event the Lockbox Calculation Agent determines that a Lockbox Calculation Report contains any incorrect calculations, the Lockbox Calculation Agent shall promptly notify the Lockbox Escrow Agent, and provide a revised Lockbox Calculation Report to the Lockbox Escrow Agent together with information of the type specified in Section 3(c) above.  If the revised Lockbox Calculation Report is received by the Lockbox Escrow Agent prior to its distribution of the sums covered thereby, then the Lockbox

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Escrow Agent shall distribute such sums in accordance with the revised Lockbox Calculation Report; if not, then the Lockbox Escrow Agent will make appropriate offsets/credits with respect to future distributions from the Lockbox Account, based on information provided to it by the Lockbox Calculation Agent (which the Lockbox Calculation Agent undertakes to do on a prompt basis).

(f)            The Lockbox Escrow Agent shall rely on the information contained in any Lockbox Calculation Report provided to it from time to time by the Lockbox Calculation Agent, and shall, on the next Business Day after receipt thereof, transfer amounts on deposit in the Lockbox Account in accordance with the information contained in any such Lockbox Calculation Report, without any duty to investigate.  The Lockbox Escrow Agent shall have no liability to any party hereto on account of disbursing funds in the Lockbox Account on the basis of information contained in any such Lockbox Calculation Report.

Section 4.  Control of the Concentration Accounts.

(a)           In order to perfect Lender’s security interest in the Company Concentration Account (and any and all Deposit Funds held therein or credited thereto from time to time) by “control” pursuant to Section 9-104 of the UCC, Company, Lender and the Financial Institution agree as follows: So long as no Event of Default or Termination Event shall have occurred and be continuing, Company shall be entitled to give Account Instructions to the Financial Institution directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to the Company Concentration Account, and the Financial Institution shall comply with such Account Instructions from Company (without any consent being required from Lender).  Upon receiving notice from Lender, however (which, for the avoidance of doubt, may be given by Lender upon the occurrence and during the continuance of an Event of Default or a Termination Event), the Financial Institution shall cease complying with any and all Account Instructions from Company pertaining to or concerning the Company Concentration Account or any Deposit Funds therein or credited thereto.  At such time, only Lender shall be entitled to give Account Instructions to the Financial Institution directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to the Company Concentration Account until such time as Lender otherwise advises in writing (which, for the avoidance of doubt, shall be given promptly following the cure or waiver of such Event of Default or Termination Event).

(b)           (1) Only Lender shall be entitled to give Account Instructions directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to the Lender Concentration Account, and the Financial Institution shall comply with such Account Instructions from Lender from time to time.  The parties acknowledge that the Lender Concentration Account is the unencumbered property of the Lender.

(2)           Only Company shall be entitled to give Account Instructions directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to the Company Concentration Account prior to an Event of Default and the Financial Institution shall comply with such Account Instructions from Company from time to time.

(c)           The Financial Institution shall not, and shall not agree with any Third Party to, comply with any Account Instructions or other instructions, orders or directions from a Third Party pertaining to or concerning any Concentration Account or any Deposit Funds therein or

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

credited thereto, without the prior written consent of Lender and Company (in the case of the Company Concentration Account, prior to the earlier of an Event of Default or a Termination Event) and Lender (in the case of the Lender Concentration Account and, from and after the earlier of an Event of Default or a Termination Event that has not been cured or waived, the Company Concentration Account).

Section 5.  Financial Institution’s Obligations with respect to the Deposit Accounts.

(a)           The Financial Institution agrees to maintain each Deposit Account separately, in accordance with the terms of this Agreement and agrees not to commingle the Deposit Funds in or credited to, or designated for deposit in, any Deposit Account with any other Deposit Funds held on behalf of Company, Lender or any other person or entity.  The Financial Institution shall not apply any Deposit Funds received in the Deposit Accounts and not to make disbursements from or debits to the Deposit Accounts other than in accordance with this Agreement.  In the event there are multiple Lenders, ▇▇▇▇▇ Healthcare Royalty Partners, L.P. shall be designated as the agent of all such Lenders (the “Lender Agent”), and the Financial Institution shall distribute Deposit Funds in the Lender Concentration Account in accordance with the written instructions of the Lender Agent (the intent being that such distributions shall be made on a pro rata basis to the Lenders according to their proportionate interests in the Loan as required by Section 13.01(d) of the Loan Agreement).  Prior to making any distributions to a new Lender, the Financial Institution will require such Lender to deliver to the Lockbox Escrow Agent and Financial Institution a W-8 or W-9 Internal Revenue Service form or any other similar form issued by the relevant taxing authority duly executed by it.

(b)           The Financial Institution acknowledges that the Company Concentration Account and the Company’s interest in the Lockbox Account, and any Deposit Funds therein or credited thereto, are subject to the security interest of Lender therein.  Each of the Lockbox Escrow Agent and the Financial Institution acknowledges that the Company has granted Lender a security interest over the Company Concentration Account and Company’s interest in the Lockbox Account.

(c)           The parties hereto acknowledge and agree that items deposited in any Deposit Account shall be deemed to bear the valid and legally binding endorsement of the payee and to comply with all of the Financial Institution’s requirements for the supplying of missing endorsements, now or hereafter in effect.  Any deposit made into any Deposit Account shall be deemed deposited therein when the funds in respect of such deposit shall become cleared funds.

(d)           The Financial Institution shall redeposit with advice any item returned for any reason.  If any item is returned a second time, the Financial Institution will charge the amount of such item against the Lockbox Account if the same contains sufficient funds to pay the amount of the returned item.  If the balance in the Lockbox Account is not sufficient to pay the amount of the returned item, the Financial Institution shall notify Company and Lender.  Company agrees to reimburse the Financial Institution for the same promptly after such notification.  The Financial Institution shall also notify Company and Lender of its current standard charges for returned items and Company agrees to pay the Financial Institution such charges promptly after such notification.  The Financial Institution shall return the item along with the debit advice to

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Company, with a copy to Lender.  The Financial Institution is granted the further right to debit from any Deposit Account any amounts deposited therein in error or as necessary to correct processing errors.

(e)           Each week that the Financial Institution receives any Deposit Funds in any Deposit Account, the Financial Institution shall notify Company and Lender in writing that it has received such Deposit Funds into such account or accounts, and the Financial Institution shall set forth in such writing (i) the names of the accounts into which such Deposit Funds were received, if such payments have been received, (ii) the date of receipt of such Deposit Funds, (iii) the amount of such receipt and (iv) the name of the payor.

(f)            The Financial Institution shall at all times provide the parties hereto with online computer access, in a format or formats reasonably acceptable to Company and Lender, to account balances, collection and remittance information relative to the Deposit Accounts and within five (5) Business Days following the end of each month, shall cause to be made available to Company and Lender by means of online computer access, and within ten (10) Business Days following the end of each month shall send or cause to be sent a statement for such month to Company and Lender in each case outlining a list of (i) the amounts, if any, transferred into or from any Deposit Account during the preceding month, the dates of each such transfer and the accounts into which such transfers were made, (ii) the balance, if any, in each Deposit Account as of the end of such month, and (iii) any other debits or credits made during the month to each Deposit Account together with a description thereof.

(g)           Any transfer of funds from the Lockbox Account to the Company Concentration Account shall be made by wire transfer or similar method of transfer of immediately available funds, unless otherwise agreed to in writing by Company.  Any transfer of funds from the Lockbox Account to the Lender Concentration Account shall be made by wire transfer or similar method of transfer of immediately available funds, unless otherwise agreed to in writing by Lender.

Section 6.  Resignation and Replacement of Lockbox Escrow Agent.

(a)           The Lockbox Escrow Agent shall have the right at any time, by giving written notice to the Financial Institution, Company and Lender, to resign and be discharged of the responsibilities hereby created, such resignation to become effective upon (i) the appointment of a successor Lockbox Escrow Agent by Company and Lender and (ii) the acceptance of such appointment by such successor Lockbox Escrow Agent.  If no successor Lockbox Escrow Agent shall be appointed and shall have accepted such appointment within ninety (90) days after the date the Lockbox Escrow Agent gives the aforesaid notice of resignation, the Lockbox Escrow Agent may apply to any court of competent jurisdiction to appoint a successor Lockbox Escrow Agent to act until such time, if any, as a successor Lockbox Escrow Agent shall have been appointed as provided in this Section.  Any successor so appointed by such court shall immediately and without further act be superseded by any successor Lockbox Escrow Agent appointed by Company and Lender.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

(b)           The Company and Lender shall have the right, upon mutual agreement, at any time, to remove the Lockbox Escrow Agent and appoint a successor Lockbox Escrow Agent, such removal to be effective upon the acceptance of such appointment by the successor Lockbox Escrow Agent.

(c)           Any resigning or removed Lockbox Escrow Agent shall be entitled to the fees and indemnities set forth herein to the extent incurred or arising, or relating to events occurring, before such resignation or removal.

Section 7.  Resignation and Replacement of Lockbox Calculation Agent.

(a)           The Lockbox Calculation Agent shall have the right, at any time, by giving written notice to the Financial Institution, Company and Lender, to resign and be discharged of the responsibilities hereby created, such resignation to become effective upon (i) the appointment of a successor Lockbox Calculation Agent by Lender and Company, and (ii) the acceptance of such appointment by such successor Lockbox Calculation Agent.  If no successor Lockbox Calculation Agent shall be appointed and shall have accepted such appointment within ninety (90) days after the date the Lockbox Calculation Agent gives the aforesaid notice of resignation, the Lockbox Calculation Agent or Lender may apply to any court of competent jurisdiction to appoint a successor Lockbox Calculation Agent to act until such time, if any, as a successor Lockbox Calculation Agent shall have been appointed as provided in this Section.  Any successor so appointed by such court shall immediately and without further act be superseded by any successor Lockbox Calculation Agent appointed by Lender and Company.

(b)           Upon the determination by Lender or, if the Lockbox Calculation Agent at such time is not Company or an Affiliate thereof, Company (in each case, whether Lender or Company, acting reasonably and in good faith), that a Termination Event has occurred (or, where Company is acting as Lockbox Calculation Agent, an Event of Default has occurred), Lender or Company, as the case may be, shall have the right to remove the Lockbox Calculation Agent by providing written notice of such determination to the other parties hereto; provided that, at Lender’s option, the Lockbox Calculation Agent may immediately be suspended pending the resolution of any dispute regarding the provision of such a notice as described in this Section 7(b).  In the event such a determination is made, Lender or Company, as the case may be, may dispute such determination by providing written notice to the other party within ten (10) Business Days of receipt of the removal notice.  If no such dispute notice is so provided, the Lockbox Calculation Agent shall be removed and a successor Lockbox Calculation Agent shall be selected in accordance with Section 7(c).  If such a dispute notice is timely provided, then the relevant parties shall first attempt to reach an amicable settlement through mutual consultations and negotiations.  If the parties are unable to reach an amicable settlement within ten (10) Business Days from the date on which the dispute was first notified in writing, then any party shall be entitled to submit the dispute to litigation proceedings in accordance with the terms hereof.  Pending the resolution of any such dispute, (unless the Lockbox Calculation Agent has been suspended as described above) the party then serving as Lockbox Calculation Agent may continue to serve in such role, provided that, during the pendency of any such dispute, it delivers Lockbox Calculation Reports no less frequently than once per week to each of the Lockbox Escrow Agent, Company and Lender.  If, following the commencement of any dispute regarding the existence

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

of a Termination Event, Company and Lender agree to remove the Lockbox Calculation Agent or it is finally determined by a court of competent jurisdiction that a Termination Event has in fact occurred, then the Lockbox Calculation Agent shall be removed and a replacement selected in accordance with Section 7(c).  In all events, removal of the Lockbox Calculation Agent shall only become effective upon the acceptance by the successor Lockbox Calculation Agent of its appointment.  Any resigning or removed Lockbox Calculation Agent shall be entitled to the fees and indemnities set forth herein to the extent incurred or arising, or relating to events occurring, before such resignation or removal.

(c)           In connection with removal of the Lockbox Calculation Agent pursuant to Section 7(b), a successor Lockbox Calculation Agent shall be selected by Lender and Company, unless the removed Lockbox Calculation Agent shall be Company or an Affiliate thereof, in which event such Agent shall be chosen by Lender; provided, however, that such successor shall be chosen from the list on Schedule 6 to this Agreement or be a similar entity with a national reputation in the United States.  When required to mutually agree, in the event that Company and Lender do not agree upon a successor within thirty (30) days of the date on which a party notified the others of its decision to remove the Lockbox Calculation Agent (or, if such removal is disputed in accordance with Section 7(b) hereof, within thirty (30) days of the resolution of such dispute), Company, using its reasonable discretion, shall promptly appoint a successor Lockbox Calculation Agent from among those persons listed on Schedule 6 or a similar entity with a national reputation in the United States (excluding, for those purposes, any Person previously removed as Lockbox Calculation Agent or any Person that is the subject of a pending dispute).

Section 8.  Subordination of Lien; Waiver of Set-Off.  In the event that the Financial Institution has obtained or subsequently obtains by agreement, by operation of law or otherwise a security interest in, lien on, or encumbrance, claim or (except as provided in the next sentence) right of set-off against, any Deposit Account or any security entitlement or any Deposit Funds therein or credited thereto, the Financial Institution hereby agrees that such security interest, lien, encumbrance, claim, and right of set-off shall be subordinate to any security interest or other interest of Lender therein and the security entitlement or any Deposit Funds therein or credited thereto.  The Financial Institution agrees not to exercise any present or future right of recoupment or set-off against any Deposit Account or to assert against any Deposit Account any present or future security interest, banker’s lien or any other lien or claim (including claim for penalties) that the Financial Institution may at any time have against or in any Deposit Account or any security entitlement or any Deposit Funds therein or credited thereto; provided, however, that, the Financial Institution may set-off against the Lockbox Account the face amount of any checks which have been credited to any Deposit Account but are subsequently returned unpaid because of uncollected or insufficient funds in accordance with Section 5(d).

Section 9.  Certain Matters Affecting the Financial Institution, Lockbox Escrow Agent and Lockbox Calculation Agent.

(a)           Each of the Financial Institution, the Lockbox Escrow Agent and the Lockbox Calculation Agent (in its capacity as such) shall perform only such duties and obligations as are expressly set forth herein with respect to it and no implied duties or obligations shall be read into this Agreement (it being understood that the foregoing shall not otherwise limit any duty or obligation

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

of Company in its individual capacity).  None of the Financial Institution, the Lockbox Escrow Agent or the Lockbox Calculation Agent (in its capacity as such) shall have any liability under any agreement other than this Agreement, nor shall the Financial Institution or the Lockbox Calculation Agent have any duty to inquire as to the provisions of any agreement other than this Agreement.

(b)           Each of the Financial Institution and the Lockbox Escrow Agent may rely upon, and shall not be liable for acting in accordance with this Agreement upon, any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties, or for refraining from acting if and to the extent that such written notice, instruction or request requires it to refrain from acting.  Neither the Financial Institution nor the Lockbox Escrow Agent shall be under a duty to inquire into or investigate the validity, accuracy or content of any such document.

(c)           In the event any Account Instruction, Lockbox Calculation Report or other notice is given to the Lockbox Escrow Agent or Financial Institution by Company or Lender, whether in writing, by facsimile or telecopier, or otherwise, each of the Lockbox Escrow Agent and Financial Institution is authorized to seek confirmation thereof by telephone call-back to, as applicable, from one or more of such Person’s Authorized Representatives, and each of the Financial Institution and Lockbox Escrow Agent may rely upon the confirmation of anyone purporting to be the Authorized Representative so designated.  The Authorized Representatives and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Financial Institution and the Lockbox Escrow Agent.  The parties to this Agreement acknowledge and agree that such security procedures are commercially reasonable.

(d)           Company and Lender acknowledge that repetitive funds transfer instructions may be given to the Lockbox Escrow Agent or Financial Institution for one or more beneficiaries where only the date of the requested transfer, the amount of funds to be transferred, and/or the description of the payment shall change within the repetitive instructions (“Standing Settlement Instructions”).  According, Company and Lender shall deliver to Lockbox Escrow Agent or Financial Institution such specific Standing Settlement Instructions only for each respective beneficiary as set forth in Exhibit A to this Escrow Agreement, by facsimile or other written instructions.  Lockbox Escrow Agent or Financial Institution may rely solely upon such Standing Settlement Instructions and all identifying information set forth therein for each beneficiary.  Lockbox Escrow Agent or Financial Institution and Company or Lender agree that such Standing Settlement Instructions shall be effective as the funds transfer instructions of Company or Lender, without requiring a verifying callback, whether or not authorized, if such Standing Settlement Instructions are consistent with previously authenticated Standing Settlement Instructions for that beneficiary.  The parties acknowledge that such Standing Settlement Instructions are a security procedure and are commercially reasonable.

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent shall be liable for any action taken or omitted by it except to the extent that a court of competent jurisdiction determines that the Financial Institution’s or the Lockbox Escrow Agent’s (as applicable) gross negligence or willful misconduct was the cause of any loss, expense, cost, damage or liability to either or both of Company or Lender.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

(f)            Each of the Financial Institution and the Lockbox Escrow Agent (i) shall have the right to execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (which, in the case of the Lockbox Escrow Agent, may be in addition to the Lockbox Calculation Agent), the appointment of which will be approved in writing by Company and Lender (and the Financial Institution or Lockbox Escrow Agent (as applicable) shall be liable only for its gross negligence or willful misconduct (as finally adjudicated in a court of competent jurisdiction) in the selection of any such agent or attorney) and (ii) shall have the right to consult with counsel, accountants and other skilled persons to be selected and retained by it.

(g)           Any legal entity into which the Financial Institution or the Lockbox Escrow Agent, in each case in its individual capacity, may be merged or converted or with which it may be consolidated, or any legal entity resulting from any merger, conversion or consolidation to which the Financial Institution or the Lockbox Escrow Agent, in each case in its individual capacity, shall be a party, or any legal entity to which substantially all the corporate trust business of the Financial Institution or the Lockbox Escrow Agent may be transferred, shall be the Financial Institution or Lockbox Escrow Agent, as applicable, under this Agreement without further act or notice, other than that the Financial Institution or Lockbox Escrow Agent, as applicable, shall endeavor to give prompt notice thereof to the other parties hereto (it being understood that it shall not have any liability for failure to do so).

(h)           In the event that the Financial Institution or the Lockbox Escrow Agent is unable to perform its obligations under the terms of this Agreement (x) because of acts of God, strikes, electrical outages, equipment or transmission failure or damage reasonably beyond its control, or any other cause reasonably beyond its control, or (y) because, upon advice of its counsel, performance would violate any applicable guideline, rule or regulation of any governmental authority having jurisdiction over it, then, in each case with respect to the foregoing clauses (x) and (y) in this subsection (g), the Financial Institution or the Lockbox Escrow Agent, as applicable, shall promptly notify Company and Lender thereof in writing and shall not be liable for damages to the other parties for any unforeseeable damages resulting from such failure to perform or otherwise from such causes.  Performance under this Agreement by the Financial Institution shall resume when it is able to perform substantially its duties hereunder.

(i)            Anything in this Agreement to the contrary notwithstanding, in no event shall any of the Financial Institution, Lockbox Escrow Agent or Lockbox Calculation Agent (other than the Company or its Affiliates) (in its capacity as such) be liable for any special, indirect, exemplary or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if it has been advised of the likelihood of such loss or damage and regardless of the form of action (it being understood that the foregoing shall not otherwise limit any duty or obligation of Company in its individual capacity).

(j)            If Company and Lender shall be in a disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Lockbox Escrow Agent hereunder, the Lockbox Escrow Agent may, but shall not be required to, file an appropriate civil action to resolve the disagreement.  The Lockbox Escrow Agent shall be indemnified, jointly and severally, by Company and Lender for all costs, including, reasonable attorneys’ fees, in connection with such civil action, and shall continue, and be fully protected

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

in continuing, to perform its responsibilities under this Agreement until a final judgment, without any further right of appeal, is received or the Lockbox Escrow Agent is replaced pursuant to Section 6 of this Agreement; provided, that Lender’s liability under this Section 9(j) shall be limited to costs and/or fees incurred solely as a result of Lockbox Escrow Agent’s action or inaction taken pursuant to Lender’s instructions.  If there is any disagreement as to the propriety of any action of the Lockbox Escrow Agent, the Company and Lender shall meet promptly to discuss and, if so agreed, to initiate the procedure to replace the Lockbox Escrow Agent in accordance with Section 6 of this Agreement.

Section 10.  Conflict with Other Agreements; Adverse Claims.

(a)           In the event of any conflict between this Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail; provided, that Company and Lender confirm to each other that nothing herein is intended to expand, modify or limit the rights and/or obligations of Company and Lender under the Loan Agreement and/or the Security Agreement; and provided, further, that in the event of any inconsistency between this Agreement and the terms of the Loan Agreement and/or the Security Agreement, the terms and provisions of the Loan Agreement and/or the Security Agreement, as applicable, shall control as between Company and Lender, with the Loan Agreement taking priority over the Security Agreement.

(b)           The Financial Institution hereby confirms that:

(i)            there are no agreements entered into between the Financial Institution and any other person or entity with respect to any Deposit Account except for this Agreement;

(ii)           it has not entered into, and until the termination of this Agreement will not enter into, any agreement with any person or entity (other than Lockbox Escrow Agent, Company and Lender) relating to the Deposit Accounts and/or any Deposit Funds therein or credited thereto pursuant to which it has agreed to comply with any “entitlement orders” (as defined in Section 8-102(a)(8) of the UCC), orders, directions or any instructions of such person or entity concerning any of the Deposit Accounts or the disposition, withdrawal or disbursement of any Deposit Funds therein or credited thereto; and

(iii)          except for the claims and interests of Lockbox Escrow Agent, Company and Lender in the Deposit Accounts and the Deposit Funds therein or credited thereto, the Financial Institution does not know of any security interest in, lien on, claim to, or interest in any Deposit Account or in any “financial asset” (as defined in Section 8-102(a)(9) of the UCC), funds, monies, checks or other items in or credited to the Deposit Accounts.  If any person or entity asserts any security interest, lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against any of the Deposit Accounts or any Deposit Funds therein or credited thereto, other than the security interest of Lender therein, the Financial Institution will promptly notify Lockbox Escrow Agent, Company and Lender thereof in writing.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Section 11.  Authorized Representatives.  Each individual designated as an authorized representative of Company or of Lender, respectively (an “Authorized Representative”), is authorized to give and receive notices, requests and instructions and to deliver certificates and documents in connection with this Agreement on behalf of Company or Lender, as the case may be.  The specimen signature for each Authorized Representative of Company initially authorized hereunder is set forth on Schedule 2.  The specimen signature for each Authorized Representative of Lender initially authorized hereunder is set forth on Schedule 3.  The specimen signature for each Authorized Representative of the Lockbox Calculation Agent initially authorized hereunder is set forth on Schedule 4.  From time to time, Company, Lender or the Lockbox Calculation Agent may, by delivering to each other, the Lockbox Escrow Agent and the Financial Institution a revised Schedule 2 or 3 or 4 (as applicable), change the information previously given pursuant to this Section 11, but each of the parties hereto shall be entitled to rely conclusively on the then current Schedule until receipt of a superseding Schedule.

Section 12.  Representations, Warranties and Covenants.

(a)           Representations, Warranties and Covenants of the Financial Institution.  The Financial Institution hereby represents, warrants and covenants to Company and Lender that:

(i)            the Deposit Accounts have each been established as set forth in Section 2, and the Financial Institution covenants that the Deposit Accounts will be maintained in the manner set forth herein until termination of this Agreement;

(ii)           it has not assigned, pledged or granted a security interest in any of the Deposit Accounts or any Deposit Funds in or credited in such Deposit Accounts; and

(iii)          this Agreement constitutes the legal, valid and binding obligation of the Financial Institution, enforceable against the Financial Institution in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

(b)           Representations, Warranties and Covenants of the Lockbox Escrow Agent.  The Lockbox Escrow Agent hereby represents, warrants and covenants to Company and Lender that:

(i)            the Lockbox Account has been established as set forth in Section 2, and the Lockbox Escrow Agent covenants that the Lockbox Account will be maintained in the manner set forth herein until termination of this Agreement;

(ii)           it has not assigned, pledged or granted a security interest in the Lockbox Account or any Deposit Funds therein or credited thereto; and

(iii)          this Agreement constitutes the legal, valid and binding obligation of the Lockbox Escrow Agent, enforceable against the Lockbox Escrow Agent in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency,

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

(c)           Representations, Warranties and Covenants of the Lockbox Calculation Agent.  The Lockbox Calculation Agent hereby represents, warrants and covenants to Lockbox Escrow Agent, Company and Lender that:

(i)            solely in its capacity as Lockbox Calculation Agent hereunder, it does not have, hereby waives, and shall not assert, any ownership interest or other right or interest in and to the Lockbox Account or Deposit Amounts relating thereto;

(ii)           this Agreement constitutes the legal, valid and binding obligation of the Lockbox Calculation Agent, enforceable against the Lockbox Calculation Agent in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

(iii)          the execution, delivery and performance by Lockbox Calculation Agent of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Lockbox Calculation Agent’s organizational documents, or (B) the provisions of any material contract to which Lockbox Calculation Agent is a party or by which Lockbox Calculation Agent is bound; and

(iv)          all approvals and authorizations required to permit the execution, delivery and performance by Lockbox Calculation Agent of this Agreement have been obtained.

(d)           Representations, Warranties and Covenants of Company.  Company hereby represents, warrants and covenants to the Financial Institution, Lockbox Escrow Agent, Lockbox Calculation Agent and Lender that:

(i)            the execution, delivery and performance by Company of this Agreement have been duly authorized by all necessary action;

(ii)           this Agreement has been duly executed and delivered by Company;

(iii)          this Agreement constitutes the legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law);

(iv)          the execution, delivery and performance by Company of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Company’s organizational documents, or (B) the provisions of any material contract to which

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Company is a party or by which Company is bound (other than any such provisions that have been waived by the other parties thereto); and

(v)           all approvals and authorizations required to permit the execution, delivery and performance by Company of this Agreement have been obtained.

(e)           Representations, Warranties and Covenants of Lender.  Lender hereby represents, warrants and covenants to the Financial Institution, Lockbox Escrow Agent, Lockbox Calculation Agent and Company that:

(i)            the execution, delivery and performance by Lender of this Agreement have been duly authorized by all necessary action;

(ii)           this Agreement has been duly executed and delivered by Lender;

(iii)          this Agreement constitutes the legal, valid and binding obligation of Lender, enforceable against Lender in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law);

(iv)          the execution, delivery and performance by Lender of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Lender’s partnership agreement or other organizational documents, or (B) the provisions of any material contract to which Lender is a party or by which Lender is bound; and

(v)           all approvals and authorizations required to permit the execution, delivery and performance by Lender of this Agreement have been obtained.

Section 13.  Termination of this Agreement.

(a)           Except as otherwise provided in this Section 13, this Agreement shall continue in effect until Lender confirms in writing that all amounts payable under the Loan Agreement and all of the other Transaction Documents (as defined in the Loan Agreement) have been indefeasibly paid in full (other than indemnification obligations and other contingent obligations that, by their terms, survive the termination of this Agreement).

(b)           Lender may terminate this Agreement at any time upon its delivery of written notice of such termination to the Financial Institution, the Lockbox Escrow Agent and Company.

(c)           Company may not terminate this Agreement for any reason without the prior written consent of Lender.

(d)           Prior to any termination of this Agreement, the Financial Institution hereby agrees that it shall promptly take, at the expense of Company, all reasonable actions necessary to facilitate the transfer of any Deposit Funds in or credited to the Deposit Accounts as follows: (i) in the

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

case of a termination of this Agreement under Section 13(a), to the depository institution designated in writing by Company; and (ii) in all other cases, to the depository institution designated in writing by Lender, which depository institution will (in all cases) be so designated prior to termination hereof.

(e)           No termination of this Agreement shall impair the rights of any party hereto with respect to checks processed prior to the effective date of termination.

Section 14.  Fees and Expenses.  Any Lockbox Calculation Agent, other than Company or its Affiliate, will receive a monthly fee for its services hereunder, which shall be paid by Company and charged, on a pro rata basis, against amounts on deposit in the Lockbox Account which would otherwise be transferred to the Company Concentration Account.  Each of the Lockbox Escrow Agent, Lockbox Calculation Agent and Financial Institution agrees to look solely to Company Concentration Account (or to Company or amounts which are otherwise payable to or for the benefit of Company or to Company Concentration Account) for payment of its applicable fee referred to below and any other fees in connection with its services hereunder, and Company agrees to pay such fees on demand therefor; provided, however, that the fees which such parties may charge Company shall not exceed the fees and charges customarily charged by them for comparable services, and will be adjusted upon replacement of any such party hereunder.  Company acknowledges and agrees that it solely shall be, and at all times remain, liable to the Lockbox Escrow Agent, Lockbox Calculation Agent and Financial Institution in connection with its payment of such amounts.  The fees of the Lockbox Escrow Agent are five thousand dollars ($5,000) per annum without pro-ration for partial years.

Section 15.  Indemnity.

(a)           Each of Company and Lender agrees that it shall be jointly and severally liable to indemnify and hold harmless each of the Lockbox Escrow Agent and the Financial Institution and its respective successors, assigns, directors, officers, managers, attorneys, accountants, experts, agents and employees (collectively, the “Indemnitees”) from and against any and all Liabilities incurred by any Indemnitee arising out of or in connection with (i) this Agreement or (ii) the Financial Institution or Lockbox Escrow Agent’s performance of its obligations and services under this Agreement, including, without limitation, the compliance with any Account Instruction, Lockbox Calculation Report or other instructions, orders, directions or notices given hereunder, other than those Liabilities that are due to or caused by the gross negligence or willful misconduct of any Indemnitee;  provided, that Lender’s liability under this Section 15(a) shall be limited to Liabilities incurred solely as a result of any Indemnitee’s action or inaction taken pursuant to Lender’s instructions.

(b)           Company and Lender each agrees that it shall be jointly and severally liable to indemnify and hold harmless any Lockbox Calculation Agent from and against any and all Liabilities incurred by the Lockbox Calculation Agent arising out of or in connection with (i) this Agreement or (ii) the Lockbox Calculation Agent’s performance of its obligations and services under this Agreement, other than those Liabilities that are due to or caused by the Lockbox Calculation Agent’s gross negligence or willful misconduct; provided, however, that Lender shall not have any obligation under this subsection with respect to any Lockbox Calculation Agent

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

which is the same Person as, or which is an Affiliate of, Company; and, provided, further, that Lender’s liability under this Section 15(b) shall be limited to Liabilities incurred solely as a result of Lockbox Calculation Agent’s action or inaction taken pursuant to Lender’s instructions.

(c)           The parties hereto acknowledge and agree that the foregoing indemnities shall survive the resignation, replacement or removal of the Financial Institution or any agent hereunder and the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 16.  TINs and Patriot Act Disclosure.

(a)           Company and Lender each represent to the Lockbox Escrow Agent and Financial Institution and to each other that its respective correct taxpayer identification number (“TIN”) assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1.  Upon execution of this Agreement, each of Company and Lender shall deliver to the Lockbox Escrow Agent and Financial Institution a W-8 or W-9 Internal Revenue Service form or any other similar form issued by the relevant taxing authority duly executed by it.

(b)           All interest or other income earned in the Lockbox Account (i) shall be allocated and/or paid in accordance with the allocations made in accordance with this Agreement and (ii) shall be reported to the Internal Revenue Service or any other applicable taxing authority by Lockbox Escrow Agent.  Notwithstanding such written directions, the Financial Institution shall report and, if required, withhold any taxes as it reasonably determines may be required by any law or regulation in effect at the time of the distribution.  In the event that any earnings in the Lockbox Account remain undistributed at the end of any calendar year, the Financial Institution shall report to the Internal Revenue Service or such other taxing authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by Lender.  In addition, the Financial Institution shall withhold from the Lockbox Account any taxes required by law to be withheld and shall remit such taxes to the appropriate authorities.  Any taxes withheld by the Financial Institution shall be included in the statement required by Section 5(f).

(c)           All items of income, gain, expense and loss recognized in the Company Concentration Account shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and TIN of Company.  All items of income, gain, expense and loss recognized in the Lender Concentration Account allocable to each Lender shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and TIN of such Lender.

(d)           Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Lockbox Escrow Agent and Financial Institution to implement reasonable procedures to verify the identity of any person that opens a new account with it.  Accordingly, the parties acknowledge that Section 326 of the USA PATRIOT Act and the Lockbox Escrow Agent’s and Financial Institution’s identity verification procedures require the Lockbox Escrow Agent and Financial Institution to obtain information which may be used to confirm the parties identity including

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

without limitation name, address and organizational documents (“identifying information”). The parties agree to provide the Lockbox Escrow Agent and Financial Institution with and consent to the Lockbox Escrow Agent and Financial Institution obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Lockbox Escrow Agent and Financial Institution.

Section 17.  Specific Performance.  Each of the parties hereto acknowledges that the other party will have no adequate remedy at law if it fails to perform any of its obligations under this Agreement or any of the other Transaction Documents.  In such event, each of the parties agrees that the other party shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Agreement.

Section 18.  Notices.  All notices, consents, waivers and communications hereunder given by any party to any other party shall be in writing (including facsimile transmission) and delivered personally, by telegraph, telecopy, telex or facsimile, by a recognized overnight courier, or by dispatching the same by certified or registered mail, return receipt requested, with postage prepaid, in each case addressed to the appropriate notice address set forth on Schedule 1 or to such other address or addresses as the parties may from time to time designate by notice as provided herein, except that notices of changes of address shall be effective only upon receipt.  All such notices, consents, waivers and communications shall: (a) when posted by certified or registered mail, postage prepaid, return receipt requested, be effective three (3) Business Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be effective upon receipt by the transmitting party of confirmation of complete transmission, (c) when delivered by a recognized overnight courier or in person, be effective upon receipt when hand delivered or when delivery is confirmed by such courier’s tracking system or (d) when sent by e-mail, upon receipt of a confirmatory return e-mail from the recipient.

Section 19.  Entire Agreement.  This Agreement, together with the other Transaction Documents and the Annexes and Schedules hereto and thereto (which are incorporated herein by reference), constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, among the parties with respect to the subject matter of this Agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Annexes or Schedules hereto) has been made or relied upon by any party hereto.  None of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 20.  Amendments; No Waivers.

(a)           This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto; provided, that the parties hereto agree that they will cooperate with ▇▇▇▇▇ Healthcare Royalty Partners, L.P. to amend this agreement in order to add mechanics related to syndication of the Loan to one or more additional Lenders under the Loan Agreement.  Lender may take any action that is permitted under the Loan Agreement at the direction of Required Lenders.  No waiver of any right hereunder shall be

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced.

(b)           No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 21.  Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and any reference herein to a party shall be deemed a reference to such party’s successors and assigns, if any.  Company, Financial Institution and Lockbox Escrow Agent shall not be entitled to assign any of their obligations and rights hereunder or any other Transaction Documents without the prior written consent of Lender.  Lender may assign this Agreement and any of its rights hereunder without restriction.

Section 22.  Severability.  If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nevertheless be given full force and effect.

Section 23.  Recharacterization.  The parties intend that this Agreement (in so far as it relates to the Lockbox Account) constitute an escrow agreement for all purposes, including, without limitation, for purposes of Sections 541 and 544 of the United States Bankruptcy Code, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the “Bankruptcy Code”).  To the extent that a court shall, notwithstanding such intent, construe this Agreement (insofar as it relates to the Lockbox Account) as constituting a security arrangement, the following provisions shall be deemed to apply:

(a)           The Company hereby grants to Lender a security interest in the Lockbox Account and all funds, monies, checks and other items from time to time credited thereto or on deposit therein, to secure the Secured Obligations as defined in the Security Agreement;

(b)           The Lockbox Escrow Agent shall hold funds in the Lockbox Account as bailee for Lender for purposes of perfecting such security interest by control of such accounts.

(c)           Financial Institution shall comply with all Account Instructions originated by the Lender with respect to the Lockbox Account without further consent by the Company.

Section 24.  Interpretation.  When a reference is made in this Agreement to Sections, subsections, Annexes or Schedules, such reference shall be to a Section, subsection, Annex or Schedule to this Agreement unless otherwise indicated.  The terms “Agreement”, “herein”, “hereto”, “hereof” and words of similar import shall, unless the context otherwise requires, mean this Agreement, as amended, supplemented or otherwise modified from time to time.  The words “include”, “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”.  No party hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against any other party.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

Section 25.  Headings and Captions.  The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

Section 26.  Governing Law; Jurisdiction.

(a)           THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD REQUIRE THE APPLICATION OF LAWS OTHER THAN THOSE OF THE STATE OF NEW YORK.

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇.  BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.  EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

(c)           EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (b) ABOVE OF THIS SECTION 26 IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW.

Section 27.  Waiver of Jury Trial; Exclusion of Punitive Damages.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN ADDITION, WITHOUT LIMITING COMPANY’S OBLIGATION TO INDEMNIFY LENDER FOR ANY THIRD PARTY CLAIM

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN THE PARTIES HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES FROM THE OTHER PARTY.

Section 28.  Waiver of Immunity.  To the extent that the Company has or hereafter may be entitled to claim or may acquire, for itself or any of its assets, any immunity from suit, jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or any of its property, the Company hereby irrevocably waives such immunity in respect of its obligations hereunder to the fullest extent permitted by law.

Section 29.  Counterparts; Effectiveness.  This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

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ANNEX A

to Agreement

DEFINITIONS

“Account Instruction” shall mean, with respect to any Deposit Account, any entitlement order, order, direction or instruction concerning or directing the disposition, transfer, withdrawal, disbursement or redemption of any Deposit Funds in or credited to such Deposit Account, or otherwise relating to any matters pertaining to or concerning such Deposit Account, and/or any Deposit Funds therein or credited thereto.

“Agreement” shall have the meaning set forth in the preamble (first paragraph) of this Agreement.

“Authorized Representative” shall have the meaning set forth in Section 11.

“Business Day” shall mean any day other than (a) a Saturday (b) a Sunday or (c) any other day on which the Financial Institution located at the address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

“Company Concentration Account” shall have the meaning set forth in Section 2(d).

“Concentration Accounts” shall have the meaning set forth in Section 2(d).

“Deposit Account” and “Deposit Accounts” shall have the meaning set forth in Section 2.

“Deposit Funds” shall mean any and all financial assets, funds, monies, checks or other items, including all Permitted Investments.

“Effective Date” shall mean August 8, 2008.

“Event of Default” shall have the meaning set forth in the Loan Agreement.

“Financial Institution” shall have the meaning set forth in the preamble (first paragraph) of this Agreement.

“Fiscal Year” shall mean the calendar year.

“Indemnitees” shall have the meaning set forth in Section 15.

“Lender Concentration Account” shall have the meaning set forth in Section 2(d).

“Liabilities” shall mean any and all losses, liabilities, damages, claims, penalties, judgments, settlements, litigation, investigations, suits, actions, costs or expenses (including the reasonable fees and expenses of in-house counsel and of outside counsel and their staff and all expense of document location, duplication and shipment) (each a “Liability”).

 “Loan Agreement” shall have the meaning set forth in the Recitals to this Agreement.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

“Lockbox Calculation Agent” shall have the meaning set forth in the preamble to this Agreement.

“Lockbox Calculation Report” shall have the meaning set forth in Section 3(b).

“Lockbox Escrow Agent” shall have the meaning set forth in the preamble to this Agreement.

“Lockbox Account” shall have the meaning set forth in Section 2(c).

“Permitted Investments” shall mean either (i) the investments in the Cash Compensation Account with the JPMorgan Chase Bank, N.A. or (ii) subject to Section 2 of this Agreement, such other investments as Company or Lender, as applicable, may select from time to time, in each case together with all interest and other earnings thereon.  Cash Compensation Accounts have rates of compensation that may vary from time to time based upon market conditions.

 “Person” shall have the meaning set forth in the Loan Agreement.

“Security Agreement” shall have the meaning set forth in the Recitals to this Agreement.

“Termination Event” shall mean the occurrence or existence of any of the following events: (a) the Lockbox Calculation Agent’s material failure to comply with its agreements and duties under this Agreement in accordance with the terms hereof and such failure continues for more than thirty (30) Business Days after written notice from Lender to the Lockbox Calculation Agent or (b) such a material failure occurs in any four (4) calendar quarters regardless of the duration for which such failure continues.

“Third Party” shall mean any person or entity other than Company or Lender.

“TIN” shall have the meaning set forth in Section 16.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

Confidential materials omitted and filed separately with the Secutities and Exchange Commission.  Asterisks denote such omission.

SCHEDULE 1

to Agreement

TAXPAYER IDENTIFICATION NUMBERS

Company’s TIN is:          ▇▇-▇▇▇▇▇▇▇

Lender’s  TIN is:                   ▇▇-▇▇▇▇▇▇▇

The following contact information can be used to contact all representatives on schedules that list representatives:

Dyax Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Main:      (▇▇▇) ▇▇▇-▇▇▇▇

▇▇▇▇▇ Healthcare Royalty Partners
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
Main:      (▇▇▇) ▇▇▇-▇▇▇▇

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SCHEDULE 2

to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF COMPANY

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SCHEDULE 3
to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF LENDER