10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2008
Or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from            to              ..

Commission File No. 000-24537

DYAX CORP.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	04-3053198
(State of Incorporation)	(I.R.S. Employer Identification Number)

300 TECHNOLOGY SQUARE, CAMBRIDGE, MA 02139

(Address of Principal Executive Offices)

(617) 225-2500

(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES        x                           NO         o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   o Accelerated filer      x Non-accelerated filer  o Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES        o                           NO         x

Number of shares outstanding of Dyax Corp.’s Common Stock, par value $0.01, as of October 22, 2008: 62,945,175

DYAX CORP.

TABLE OF CONTENTS

			Page
PART I		FINANCIAL INFORMATION	3
Item 1	-	Financial Statements	3
		Consolidated Balance Sheets (Unaudited) as of September 30, 2008 and December 31, 2007	3
		Consolidated Statements of Operations and Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2008 and 2007	4
		Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2008 and 2007	5
		Notes to Consolidated Financial Statements (Unaudited)	6
Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4	-	Controls and Procedures	28
PART II	-	OTHER INFORMATION	28
Item 1a		Risk Factors	28
Item 5		Other Information	41
Item 6		Exhibits	42
Signatures			43
Exhibit Index			44

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PART I – FINANCIAL INFORMATION

Item 1 – FINANCIAL STATEMENTS

Dyax Corp. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	September 30, 2008			December 31, 2007
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	44,762		$	29,356
Short-term investments	29,768			34,055
Accounts receivable, net of allowances for doubtful accounts of $162 at September 30, 2008 and $55 at December 31, 2007	3,709			4,118
Prepaid research and development	758			1,271
Other current assets	1,796			1,292
Total current assets	80,793			70,092
Fixed assets, net	6,794			7,884
Intangibles, net	554			931
Restricted cash	2,888			4,483
Other assets	—			225
Total assets	$	91,029		$	83,615
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	13,626		$	10,537
Current portion of deferred revenue	31,353			3,832
Current portion of long-term obligations	1,226			1,482
Accrued restructuring	683			—
Other current liabilities	1,248			1,126
Total current liabilities	48,136			16,977
Deferred revenue	19,131			5,675
Note payable	48,772			—
Long-term obligations	1,809			30,016
Deferred rent	955			1,257
Other long-term liabilities	194			194
Total liabilities	118,997			54,119
Commitments and Contingencies (Notes 6, 7, 9 and 11)
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value; 1,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2008 and December 31, 2007	—			—
Common stock, $0.01 par value; 125,000,000 shares authorized; 62,918,925 and 60,427,178 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively	629			604
Additional paid-in capital	332,683			317,296
Accumulated deficit	(361,818		)	(288,932		)
Accumulated other comprehensive income	538			528
Total stockholders’ equity (deficit)	(27,968		)	29,496
Total liabilities and stockholders’ equity (deficit)	$	91,029		$	83,615

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Dyax Corp. and Subsidiaries Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(In thousands, except share and per share data)
Product development and license fee revenue	$	5,490		$	2,648		$	11,964		$	7,925
Research and development:
Research and development expenses	16,502			12,799			51,641			48,635
Less research and development expenses reimbursed by joint venture (Dyax–Genzyme LLC)	—			—			—			(7,000		)
Net research and development expenses	16,502			12,799			51,641			41,635
General and administrative expenses	4,878			3,799			15,645			11,376
Equity loss in joint venture (Dyax-Genzyme LLC)	—			—			—			3,831
Restructuring costs	876			—			4,631			—
Impairment of fixed assets	—			—			352			—
Total operating expenses	22,256			16,598			72,269			56,842
Loss from operations	(16,766		)	(13,950		)	(60,305		)	(48,917		)
Other income (expense):
Interest income	368			945			1,317			2,508
Interest expense	(1,977		)	(2,307		)	(5,634		)	(6,831		)
Loss on extinguishment of debt	(8,264		)	—			(8,264		)	—
Total other expense	(9,873		)	(1,362		)	(12,581		)	(4,323		)
Net loss	(26,639		)	(15,312		)	(72,886		)	(53,240		)
Other comprehensive income (loss):
Foreign currency translation adjustments	132			30			43			(9		)
Unrealized gain (loss) on investments	104			65			(33		)	59
Comprehensive loss	$	(26,403	)	$	(15,217	)	$	(72,876	)	$	(53,190	)
Basic and diluted net loss per share	$	(0.43	)	$	(0.26	)	$	(1.19	)	$	(1.05	)
Shares used in computing basic and diluted net loss per share	62,439,236			57,887,861			61,173,457			50,598,022

The accompanying notes are an integral part of the unaudited consolidated financial statements.

4

Dyax Corp. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30,
	2008			2007
	(In thousands)
Cash flows from operating activities:
Net loss	$	(72,886	)	$	(53,240	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of purchased premium/discount	12			(751		)
Depreciation and amortization of fixed assets	2,129			2,314
Amortization of intangibles and other assets	390			394
Amortization of deferred rent	(302		)	(274		)
Impairment of fixed assets	352			—
Non-cash interest expense	5,347			6,038
Compensation expense associated with stock-based compensation plans	3,346			2,081
Equity loss in joint venture (Dyax-Genzyme LLC)	—			3,831
Extinguishment of debt	8,264			—
Provision for doubtful accounts	107			(25		)
Gain on disposal of fixed assets	(87		)	—
Other	—			285
Changes in operating assets and liabilities:
Accounts receivable	302			1,394
Net amount due from joint venture (Dyax-Genzyme LLC)	—			461
Prepaid research and development, and other current assets	1			(1,374		)
Accounts payable and accrued expenses	3,153			2,504
Accrued restructuring	683			—
Deferred revenue	40,977			(1,542		)
Other long-term liabilities	123			34
Net cash used in operating activities	(8,089		)	(37,870		)
Cash flows from investing activities:
Purchase of fixed assets	(1,410		)	(800		)
Purchase of investments	(38,749		)	(53,098		)
Proceeds from maturity of investments	42,990			70,320
Cash received in purchase of joint venture (Dyax-Genzyme LLC)	—			17,000
Proceeds from sale of fixed assets	90			—
Restricted cash	1,595			7,206
Investment in joint venture (Dyax-Genzyme LLC)	—			(3,837		)
Net cash provided by investing activities	4,516			36,791
Cash flows from financing activities:
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options	1,213			502
Proceeds from common stock issuance	10,000			41,339
Net proceeds from note payable	49,600			—
Proceeds from long-term obligations	1,103			402
Repayment of Paul Royalty on extinguishment of debt	(35,080		)	—
Repayment of other long-term obligations	(7,906		)	(11,647		)
Net cash provided by financing activities	18,930			30,596
Effect of foreign currency translation on cash balances	49			13
Net increase in cash and cash equivalents	15,406			29,530
Cash and cash equivalents at beginning of the period	29,356			11,295
Cash and cash equivalents at end of the period	$	44,762		$	40,825
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property and equipment under long-term obligations	$	30		$	395
Shares issued to purchase joint venture assets (Dyax-Genzyme LLC)	$	—		$	17,442
Warrant issued in connection with note payable	$	853		$	—

The accompanying notes are an integral part of the unaudited consolidated financial statements.

5

DYAX CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

  Dyax Corp. (Dyax or the Company) is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel biotherapeutics for unmet medical needs, with an emphasis on oncology and inflammatory indications.  Dyax uses its proprietary drug discovery technology, known as phage display, to identify antibody, small protein and peptide compounds for clinical development. This phage display technology fuels Dyax’s internal pipeline of promising drug candidates, attracts numerous licensees and collaborators, and has the potential to generate important revenues in the future.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, risks of preclinical and clinical trials, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with the United States Food and Drug Administration (FDA) and other governmental regulations and approval requirements.

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Quarterly Report on Form 10-Q.  It is management’s opinion that the accompanying unaudited interim consolidated financial statements reflect all adjustments (which are normal and recurring) necessary for a fair statement of the results for the interim periods. The financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.  The accompanying December 31, 2007 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the dates of the financial statements and (iii) the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.  The results of operations for the three and nine months ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

2. ACCOUNTING POLICIES

 Basis of Consolidation:    The accompanying consolidated financial statements include the accounts of the Company, Dyax-Genzyme LLC and the Company’s European research subsidiaries Dyax S.A. and Dyax BV (formerly known as TargetQuest BV). All inter-company accounts and transactions have been eliminated.

Use of Estimates:    The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain

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estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The significant estimates and assumptions in these financial statements include revenue recognition, receivable collectibility, useful lives with respect to long lived assets, valuation of stock options, accrued expenses and tax valuation reserves. Actual results could differ from those estimates.

Concentration of Credit Risk:    Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and trade accounts receivable. At September 30, 2008 and December 31, 2007, approximately 97% and 84% of the Company’s cash, cash equivalents and short-term-investments were invested in money market funds backed by U.S. Treasury obligations, U.S. Treasury notes and bills, and obligations of U.S. government agencies held by one financial institution. The Company maintains balances in various operating accounts in excess of federally insured limits.

The Company provides most of its services and licenses its technology to pharmaceutical and biomedical companies worldwide. Concentrations of credit risk with respect to trade receivable balances are usually limited due to the diverse number of customers comprising the Company’s customer base. Receivable write offs in 2008 and 2007 were nominal. As of September 30, 2008, four customers accounted for 46%, 26%, 8% and 7% of the accounts receivable balance. One customer accounted for approximately 77% of the Company’s accounts receivable balance and three other customers accounted for 6%, 6% and 4% of the accounts receivable balance as of December 31, 2007.

Cash and Cash Equivalents:    All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. Cash and cash equivalents consist principally of cash and U.S. Treasury funds.

 Investments:    Short-term investments consist of investments with original maturities greater than ninety days to maturity and less than one year to maturity when purchased. Long-term investments consist of investments with maturities of greater than one year. The Company considers its investment portfolio of investments available-for-sale as defined by Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Accordingly, these investments are recorded at fair value, which is based on quoted market prices.

As of September 30, 2008, the Company’s short-term investments consisted of U.S. Treasury notes and bills with an amortized cost of $29.7 million and an estimated fair value of $29.8 million and had an unrealized gain of $74,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheets. All short-term investments mature in one year or less.

As of December 31, 2007, the Company’s short-term investments consisted of U.S. Treasury notes and bills with an amortized cost of $33.9 million and an estimated fair value of $34.1 million and had an unrealized gain of $107,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheets. All short-term investments mature in one year or less.

As of September 30, 2008 and December 31, 2007, the Company had no long-term investments.

Fixed Assets:    Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Laboratory and production equipment, and furniture and office equipment are depreciated over a three to seven year period. Leasehold improvements are stated at cost and are amortized over the lesser of the non-cancelable term of the related lease or their estimated useful lives. Leased equipment is amortized over the lesser of the life of the lease or their estimated useful lives. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation and amortization are eliminated from the balance sheet and any resulting gains or losses are included in operations in the period of disposal.

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 Intangibles:    Intangibles are recorded at cost and amortized over the estimated useful lives.

 Impairment of Long-Lived Assets:    The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flow to the recorded value of the asset. If an impairment is indicated, the asset is written down to its estimated fair value on a discounted cash flow basis.

 Revenue Recognition:    The Company’s revenue recognition policies are in accordance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by SEC Staff Accounting Bulletin No. 104, Revenue Recognition, and Emerging Issues Task Force Issue No. 00-21, Revenue Arrangements with Multiple Deliverables.

The Company enters into biopharmaceutical product development agreements with collaborative partners for the research and development of therapeutic, diagnostic and separations products. The terms of the agreements may include non-refundable signing and licensing fees, funding for research and development, milestone payments and royalties on any product sales derived from collaborations.

Non-refundable signing and licensing fees are recognized as services are performed over the expected term of the collaboration. Funding for research and development, where the amounts recorded are non-refundable is recognized as revenue as the related expenses are incurred. Milestones that are based on designated achievements points and that are considered at risk and substantive at the inception of the collaboration are recognized as earned when the corresponding payment is considered reasonably assured. The Company evaluates whether milestones are at risk and substantive based on the contingent nature of the milestone, specifically reviewing factors such as the technological and commercial risk that must be overcome and the level of the investment required. Milestones that are not considered at risk and substantive are recognized, when achieved, in proportion to the percentage of the collaboration completed through the date of achievement. The remainder is recognized as services are performed over the remaining term of the collaboration. Royalties are recognized when earned. Costs of revenues related to product development and license fees are classified as research and development in the consolidated statements of operations and comprehensive loss. The Company evaluates all collaborative agreements on a quarterly basis to determine the appropriate revenue recognition for that period. The evaluation includes all of the potential revenue components from each specific collaborative agreement.

The Company generally licenses its patent rights covering phage display as well as its proprietary phage display libraries on a non-exclusive basis to third parties for use in connection with the research and development of therapeutic, diagnostic, and other products. Standard terms of the license patent rights agreements, for which the Company has no future obligations, generally include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and royalties on product sales. Signing fees and maintenance fees are recognized ratably over the period to which the payment applies. Perpetual patent licenses are recognized immediately if the Company has no future obligations. Standard terms of the proprietary phage display libraries agreements generally include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and royalties on product sales. Signing fees and maintenance fees are recognized ratably over the period to which the payment applies. Upon the achievement of a milestone under non-exclusive phage display patent licenses or phage display libraries a portion of the milestone payment equal to the percentage of the license period that has elapsed is recognized as revenue. The remainder is recognized over the remaining term of the license agreement. Milestone payments under these license arrangements are recognized when the milestone is achieved if the Company has no future obligations under the license. Royalties are recognized when they are earned.

Payments received that have not met the appropriate criteria for revenue recognition are recorded as deferred revenue.

Guarantees:  The Company generally does not provide indemnification with respect to the license of its phage display technology. The Company does generally provide indemnifications for claims of third

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parties that arise out of activities that the Company performs under its collaboration, product development and cross-licensing activities. The maximum potential amount of future payments the Company could be required to make under the indemnification provisions in some instances may be unlimited. The Company has not incurred any costs to defend lawsuits or settle claims related to any indemnification obligations under its license agreements. As a result, the Company believes the estimated fair value of these obligations is minimal. The Company has no liabilities recorded for any of its indemnification obligations recorded as of September 30, 2008 or December 31, 2007.

Research and Development:    Research and development costs include all direct costs, including salaries and benefits for research and development personnel, outside consultants, costs of clinical trials, sponsored research, clinical trials insurance, other outside costs, depreciation and facility costs related to the development of drug candidates. These costs have been charged to research and development expense as incurred. Prepaid research and development on the consolidated balance sheets represents external drug manufacturing costs, and research and development service costs that have been paid for in absence of the related product being received or the services being performed.

Income Taxes:    The Company utilizes the asset and liability method of accounting for income taxes as set forth in SFAS No. 109, Accounting for Income Taxes  (SFAS 109). Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using the current statutory tax rates.

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109 (“SFAS 109”), on January 1, 2007.  As a result of the implementation of FIN 48, no adjustment was required for unrecognized income tax benefits.  At the January 1, 2007 adoption date of FIN 48, and also at December 31, 2007 and September 30, 2008, there were no unrecognized tax benefits.

Translation of Foreign Currencies:    Assets and liabilities of the Company’s foreign subsidiaries are translated at period end exchange rates. Amounts included in the statements of operations are translated at the average exchange rate for the period. The resulting currency translation adjustments are made directly to a separate component of stockholders’ equity in the consolidated balance sheets. For the three and nine months ended September 30, 2008 and for the three months ended September 30, 2007, gains from transactions in foreign currencies were $132,000, $43,000 and $30,000, respectively, and for the nine months ended September 30, 2007 losses from transactions in foreign currencies were $9,000, all of which are included in the consolidated statements of operations and comprehensive loss.

Share-Based Compensation:    Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123 (Revised 2004) “Share-Based Payments” (SFAS 123R) which required it to recognize the expense related to the fair value of stock-based compensation awards in the consolidated statement of operations. The Company elected to follow the modified prospective transition method allowed by SFAS 123R, and therefore, only applied the provisions of SFAS 123R to awards modified or granted after January 1, 2006. In addition, for awards which were unvested as of January 1, 2006, it is recognizing compensation expense in the consolidated statement of operations over the remaining vesting period. Prior to January 1, 2006, the Company accounted for stock-based compensation using the intrinsic value method prescribed in APB No. 25, “Accounting for Stock Issued to Employees.” The Company has elected to adopt the alternative transition method provided in FASB issued Staff Position No. FAS 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards”. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of stock-based compensation, and for determining the impact on the APIC pool and consolidated statements of cash flows of the tax effects of stock-based compensation that were outstanding upon adoption of FAS 123R.

Net Loss Per Share:    Net loss per share is computed under SFAS No. 128, Earnings per Share (SFAS 128). Under SFAS 128, the Company is required to present two EPS amounts, basic and diluted. Basic net loss per share is computed using the weighted average number of shares of common stock

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outstanding. Diluted net loss per share does not differ from basic net loss per share since potential common shares from the exercise of stock options are anti-dilutive for all periods presented and, therefore, are excluded from the calculation of diluted net loss per share. Stock options, which are potentially dilutive, totaling 8,617,419 and 6,886,427, were outstanding at September 30, 2008 and 2007, respectively.

Comprehensive Income (Loss):    The Company accounts for comprehensive income (loss) under SFAS No. 130, Reporting Comprehensive Income, which established standards for reporting and displaying comprehensive income and its components in a full set of general purpose financial statements. The statement required that all components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements.

Business Segments:    The Company discloses business segments under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information  (SFAS No. 131). The statement established standards for reporting information about operating segments in annual financial statements of public enterprises and in interim financial reports issued to shareholders. It also established standards for related disclosures about products and services, geographic areas and major customers. The Company has evaluated its business activities that are regularly reviewed by the Chief Executive Officer and that have discrete financial information available. As a result of this evaluation, and prior to the closure of the Company’s Liege-based research facility, the Company determined that it has one segment with operations in two geographic locations.  As of September 30, 2008 and December 31, 2007, the Company had approximately  $159,000 and $738,000, respectively, of long-lived assets located in Europe, with the remainder held in the United States.  For the three and nine months ended September 30, 2008 and 2007, the Company did not have any external revenue outside of the United States.

Recent Accounting Pronouncements:    On May 5, 2008, SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, was issued. This Standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the U.S. The Company is evaluating the impact, if any, this Standard will have on its financial statements.

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3. FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company implemented SFAS No. 157, “Fair Value Measurement” (SFAS 157), for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.  In accordance with the provisions of FASB Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No. 157, the Company elected to defer implementation of SFAS 157 as it relates to its non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis until January 1, 2009. The Company is evaluating the impact, if any, this Standard will have on its non-financial assets and liabilities.

The adoption of SFAS 157 with respect to financial assets and liabilities and non-financial assets and liabilities that are re-measured and reported at fair value at least annually did not have an impact on the financial results of the Company.  The Company will continue to evaluate the impact, if any, that the implementation of this standard will have on its financial statements as it relates to its non-financial assets and liabilities.

The following table presents information about the Company’s financial assets that have been measured at fair value as of September 30, 2008 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value.  In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities.  Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices, for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.  Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability (in millions):

Description	September 30, 2008		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	42.5	$	42.5	$	—	$	—
Marketable debt securities	29.8		29.8		—		—
Total	$	72.3	$	72.3	$	—	$	—

     As of September 30, 2008, the Company’s short-term investments consisted of U.S. Treasury notes and bills which are categorized as Level 1 in accordance with SFAS 157.  The fair values of our cash equivalents and marketable debt securities are determined through market, observable and corroborated sources.  The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities.

4. STRATEGIC COLLABORATIONS

sanofi-aventis

In February 2008, the Company entered into an exclusive worldwide license with sanofi-aventis for the development and commercialization of the fully human monoclonal antibody DX-2240 as a therapeutic product, as well as a non-exclusive license to the Company’s proprietary antibody phage display technology.  Under these licenses, the Company is eligible to receive royalties based on commercial sales of DX-2240 and other antibodies developed by sanofi-aventis.  As an exclusive licensee, sanofi-aventis will be responsible for the ongoing development, commercialization and consolidation of sales of DX-2240.  For certain other future antibody product candidates discovered by sanofi-aventis, the Company

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will retain co-development and profit sharing rights, while sanofi-aventis will maintain ultimate responsibility for development and commercialization, and will book sales worldwide.

As a result of these agreements, the Company received approximately $24.7 million of cash, net of taxes, in 2008.  Approximately $5.0 million was for the upfront DX-2240 license fee, $1.5 million was for a license fee for Dyax’s proprietary antibody phage display technology, approximately $10.0 million is a transfer fee for DX-2240 inventory and know-how, and an additional $8.5 million was paid upon the transfer of additional specified deliverables.  The Company applied the provisions of Emerging Issues Task Force (EITF) Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables” (EITF 00-21) to determine whether the performance obligations under these agreements could be accounted for as a single unit or multiple units of accounting. The Company determined that these performance obligations represented a single unit of accounting.  As the Company has established fair value in relation to the antibody phage display technology license the Company will be recognizing the revenue over the performance period.  The revenue associated with the DX-2240 exclusive license, as well as for inventory and specified reports, has been deferred and will be recorded when all revenue recognition criteria have been met.  As of September 30, 2008 the Company has recorded $23.2 million of deferred revenue associated with the DX-2240 exclusive license agreement which is reflected on the accompanying consolidated balance sheet.  The Company recognized revenue of $104,000 and $426,000 for the three and nine months ended September 30, 2008, respectively, related to the sanofi-aventis library license.

Cubist Pharmaceuticals, Inc.

In April 2008, Dyax entered into an exclusive license and collaboration agreement with Cubist Pharmaceuticals, Inc. (Cubist), for the development and commercialization in North America and Europe of the intravenous formulation of DX-88 for the prevention of blood loss during surgery.  Under this agreement, Cubist has assumed responsibility for all further development and costs associated with DX-88 in the licensed indications in the Cubist territory.  The Company will be eligible to receive additional clinical, regulatory and sales-based milestone payments. The Company is also entitled to receive tiered, double-digit royalties based on sales of DX-88 by Cubist. The agreement also provides an option for the Company to retain certain US co-promotion rights. The Company applied the provisions of EITF 00-21 to determine whether the performance obligations under this agreement, including development, participation in steering committees, and manufacturing services should be accounted for as a single unit or multiple units of accounting.

As a result of this agreement, the Company received a $15.0 million license fee in the second quarter of 2008.  Additionally, the Company billed Cubist $551,000 and $1.2 million for reimbursement of costs related to the Phase 2 Kalahari 1 trial incurred during the third quarter and second quarter of 2008, respectively.  These amounts, and any future reimbursements and milestones, are being recorded as revenue over the remaining development period of DX-88 in the Cubist territory, which is currently estimated at five years.  The Company will continue to reassess the length of the estimated development period based upon the completed effort.  As of September 30, 2008, the Company had $14.6 million in deferred revenue related to this agreement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.  The Company recognized revenue of $786,000 and $1.6 million for the three and nine months ended September 30, 2008, respectively, related to this agreement.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following (in thousands):

	September 30, 2008		December 31, 2007
Accounts payable	$	1,876	$	3,288
Accrued employee compensation and related taxes	4,426		3,892
Accrued external research and development and contract manufacturing	3,363		1,815
Accrued license fee expense	2,159		545
Other accrued liabilities	1,802		997
	$	13,626	$	10,537

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6. NOTE PAYABLE

In August 2008, the Company entered into a $50.0 million loan agreement with Cowen Healthcare Royalty Partners, LP (“Cowen Healthcare”) secured by the Company’s phage display Licensing and Funded Research Program (LFRP).  The Company used $35.1 million from the proceeds of this loan to pay off the debt to Paul Royalty (see note 7).

The loan, which matures in August 2016, bears interest at an annual rate of 16%, payable quarterly.  The loan may be prepaid without penalty, in whole or in part, beginning on the third anniversary of the closing date.  In connection with this loan, the Company has entered into a security agreement granting Cowen Healthcare a security interest in the intellectual property related to the LFRP, and the revenues generated by Dyax through the license of such intellectual property related to the LFRP.  The loan agreement does not apply to the Company’s internal drug development or to any of the Company’s co-development programs. Upon repayment of the loan, all rights to the LFRP revenues will revert to the Company. In connection with the loan, the Company issued to Cowen Healthcare a warrant to purchase 250,000 shares of the Company’s common stock at a 50% premium over the 30-day average closing price. The warrant has an eight-year term and is exercisable beginning on the one-year anniversary of the closing date.  The Company has estimated the relative fair value of the warrant to be $853,000, using the Black-Scholes valuation model, assuming a volatility factor of 83.64%, risk-free interest rate of 4.07%, an 8 year expected term and an expected dividend yield of zero.  The relative fair value of the warrant is recorded in additional paid-in capital on the Company’s consolidated balance sheet.

Under the terms of the agreement, the Company is required to repay the loan by assigning to Cowen Healthcare a portion of the annual net LFRP receipts.  The portion assigned to Cowen Healthcare is tiered as follows:  75% of the first $10 million in annual included LFRP receipts, 50% of the next $5 million and 0% of annual included LFRP receipts over $15 million until June 30, 2013.  After June 30, 2013, and until the maturity date or the complete amortization of the loan, Cowen Healthcare will receive 75% of all included LFRP receipts.  If the Cowen Healthcare portion of LFRP revenues for any quarter exceeds the interest for that quarter, then the principal balance will be reduced.  Any unpaid principal will be due upon the maturity of the loan.  If the Cowen Healthcare portion of LFRP revenues for any quarterly period is insufficient to cover the cash interest due for that period, the deficiency may be added to the outstanding principal or paid in cash by the Company.  After five years, the Company must repay to Cowen Healthcare all additional accumulated principal above the original $50.0 million loan amount.

The upfront cash payment of $50.0 million was recorded as a note payable on the Company’s consolidated balance sheet.  The Company recorded and paid $1.3 million in interest expense related to this note for the three and nine months ended September 30, 2008.  The note payable balance is offset by the $853,000 for the warrant, and $400,000 recorded as a discount against the note for a payment made to Cowen Healthcare for investor fees in conjunction with signing the agreement.  Each of these is being accreted over the life of the note.  The Company recorded $25,000 of accretion associated with the debt discount and the warrants in the three and nine months ended September 30, 2008.

7. LONG-TERM OBLIGATIONS

In August 2006, the Company entered into a Royalty Interest Assignment Agreement with Paul Royalty Fund Holdings II, LP, an affiliate of Paul Capital Partners, under which it received an upfront payment of $30 million.  In exchange for this payment, the Company assigned Paul Royalty a portion of milestones, royalties and other license fees to be received by it under the LFRP through 2017.  This

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agreement was extinguished in August 2008 using proceeds from the Cowen Healthcare note payable, at which time all Paul Royalty rights to LFRP receipts were terminated (see note 6).

Under the terms of the agreement, Paul Royalty was assigned a portion of the annual net LFRP receipts.  The portion assigned to Paul Royalty was tiered as follows:  70% of the first $15 million in annual receipts, 20% of the next $5 million, and 1% of any receipts above $20 million.  The agreement also provided for annual guaranteed minimum payments to Paul Royalty, which start at $1.75 million through 2007 and increased to $3.5 million in 2008.  Paul Royalty’s rights to receive a portion of LFRP receipts were to have continued for up to 12 years, depending upon the performance of the LFRP.

The upfront cash payment of $30.0 million, less the $500,000 in cost reimbursements paid to Paul Royalty was recorded as a debt instrument in long-term obligations on the Company’s consolidated balance sheet.  Based upon estimated future payments expected under this agreement, the Company determined the interest expense by using the effective interest method.  The best estimate of future payments was based upon returning to Paul Royalty an internal rate of return of 25% through net LFRP receipts, which approximates $82.1 million in total payments to Paul Royalty.  Due to the application of the effective interest method and the total expected payments, the Company recorded interest expense of $4.1 million and $6.0 million for the nine months ended September 30, 2008 and 2007, respectively.  During the nine months ended September 30, 2008 and 2007, the Company made payments totaling $40.2 million and $3.3 million, respectively, related to this obligation to Paul Royalty including the 2008 pay-off amounts.

On August 5, 2008, the Company paid off this loan with a $35.1 million cash payment of which $27.0 million was allocated to the principal amount, and $8.1 million was recorded as loss on extinguishment of debt on the Company’s consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2008.  As of September 30, 2008, there was no outstanding debt balance under this agreement.  The debt balance was $28.1 million at December 31, 2007 and is included in long-term obligations on the Company’s consolidated balance sheet.

The Company capitalized $257,000 of debt issuance costs related to this agreement which, prior to August 5, 2008, was being amortized over the term of the related debt using the effective interest method.  In August 2008, the unamortized debt issuance costs were fully amortized, and $212,000 of expense is included in loss on extinguishment of debt.

8. STOCKHOLDER’S EQUITY AND STOCK-BASED COMPENSATION

On July 15, 2008, the Company received $10.0 million from the sale of 2,008,032 shares of its common stock in a private equity placement at $4.98 per share.

Equity Incentive Plan

The Company’s 1995 Equity Incentive Plan as amended to date (the “Plan”) is an equity plan that is intended to attract and retain employees, provide an incentive for them to assist the Company to achieve long-range performance goals and enable them to participate in the long-term growth of the Company.  The Plan provides that equity awards, including awards of restricted stock and incentive and nonqualified stock options to purchase shares of common stock, may be granted to employees, directors and consultants of the Company by action of the Compensation Committee of the Board of Directors.  The Plan provides that options may only be granted at the current fair market value on the date of grant. The Compensation Committee generally grants options that vest ratably over a 48 month period, and expire within ten years from date of grant unless terminated earlier by death, retirement or other termination.  At September 30, 2008, a total of 1,862,669 shares were reserved and available for issuance under the Plan.

Employee Stock Purchase Plan

The Company’s 1998 Employee Stock Purchase Plan as amended to date (the “Purchase Plan”) allows employees to purchase shares of the Company’s common stock at a discount from fair market value.

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Under this plan, eligible employees may purchase shares during six-month offering periods commencing on January 1 and July 1 of each year at a price per share of 85% of the lower of the fair market value price per share on the first or last day of each six-month offering period. Participating employees may elect to have up to 10% of their base pay withheld and applied toward the purchase of such shares. The rights of participating employees under this plan terminate upon voluntary withdrawal from the plan at any time or upon termination of employment. There were 49,970 and 49,967 shares purchased under the employee stock purchase plan during the three months ended September 30, 2008 and 2007, respectively, and 99,941 and 99,938 shares purchased under the employee stock purchase plan during the nine months ended September 30, 2008 and 2007, respectively.  At September 30, 2008, a total of 163,951 shares were reserved and available for issuance under this plan.

Stock-Based Compensation Expense

The following table reflects stock compensation expense recorded during the three and nine months ended September 30, 2008 and 2007 in accordance with SFAS 123R (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Compensation expense related to:
Equity incentive plan	$	1,147	$	767	$	3,259	$	1,998
Employee stock purchase plan	43		30		87		83
	$	1,190	$	797	$	3,346	$	2,081
Stock-based compensation expense charged to:
Research and development expenses	$	609	$	445	$	1,888	$	1,122
General and administrative expenses	$	581	$	352	$	1,458	$	959

9. RESTRUCTURING CHARGES AND IMPAIRMENT OF FIXED ASSETS

During 2008, a charge of approximately $4.6 million was recorded in connection with the closure of the Company’s Liege-based research facility.  The following table reflects restructuring charges through September 30, 2008 (in thousands):

	Employee Termination Costs			Contract Termination Costs			Other Exit Costs			Total
Accrued restructuring balance as of January 1, 2008	$	—		$	—		$	—		$	—
Provision for the six months ended June 30, 2008	2,828			670			257			3,755
Utilization	—			—			(112		)	(112		)
Accrued restructuring balance as of June 30, 2008	$	2,828		$	670		$	145		$	3,643
Provision for the quarter ended September 30, 2008	753			18			105			876
Utilization	(2,976		)	(563		)	(54		)	$	(3,593	)
Changes in foreign exchange	(207		)	(36		)	—			(243		)
Accrued restructuring balance as of September 30, 2008	$	398		$	89		$	196		$	683

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During the second quarter of 2008, a charge of approximately $352,000 was recorded for the impairment of fixed assets in connection with the closure of the Company’s Liege-based research facility.  The expected proceeds from the sale of the Company’s Liege assets with a remaining net book value were estimated in order to determine the impairment charge recorded in the nine months ending September 30, 2008.

The Company has received an €825,000 grant from the Walloon region of Belgium, which is included in short-term liabilities on the consolidated balance sheet. This amount translates to approximately $1.2 million as of September 30, 2008. This grant includes specific criteria regarding employment and investment levels that need to be met. The employment criteria requirement was met in 2006. The investment criteria have not been met as of September 30, 2008. Pursuant to the closure of the Liege facility the Company is working with the Wallon region to determine what portion of the amounts received will need to be refunded.

10. INVESTMENT IN JOINT VENTURE (DYAX-GENZYME LLC) AND OTHER RELATED PARTY TRANSACTIONS

Prior to February 20, 2007, the Company had a collaboration agreement with Genzyme for the development and commercialization of DX-88 for hereditary angioedema (HAE). Under this collaboration, the Company and Genzyme formed a joint venture, known as Dyax–Genzyme LLC, through which they jointly owned the rights to DX-88 for the treatment of HAE. Dyax and Genzyme were each responsible for approximately 50% of ongoing costs incurred in connection with the development and commercialization of DX-88 for HAE and each was entitled to receive approximately 50% of any profits realized during the term of the collaboration. In addition, the Company was entitled to receive potential milestone payments from Genzyme in connection with the development of DX-88.

On February 20, 2007, the Company and Genzyme reached a mutual agreement to terminate this collaboration.  Pursuant to the termination agreement, Genzyme made a $17.0 million cash payment to the Dyax-Genzyme LLC. Furthermore, Genzyme assigned to Dyax all of its interests in the LLC, thereby transferring all the rights to the LLC’s assets to Dyax, including the $17.0 million cash payment.  In exchange, Dyax issued 4.4 million shares of its common stock to Genzyme.  As a result of the termination, the rights to DX-88, previously held by the joint venture, were returned to Dyax. Dyax’s acquisition of Genzyme’s 49.99% portion of the LLC was accounted for as a purchase of assets in exchange for 4.4 million shares of the Company’s common stock.  Genzyme also provided transition services to Dyax for a period following the termination of our agreements.  For the nine months ended September 30, 2007 the transitional service fee totaled $1.1 million.  The LLC has been dissolved and no further transitional service fees are expected to be incurred in 2008 or in the future.

Before termination of the collaboration, HAE research and development expenses incurred by each party were billed to and reimbursed by Dyax–Genzyme LLC. The Company and Genzyme were each then required to fund 50% of the monthly expenses of Dyax–Genzyme LLC. The Company accounted for its interest in Dyax–Genzyme LLC using the equity method of accounting. Under this method, the reimbursement of expenses to Dyax was recorded as a reduction to research and development expenses because it included funding that the Company provided to Dyax–Genzyme LLC. Dyax’s 50.01% share of Dyax–Genzyme LLC loss was recorded as an Equity Loss in Joint Venture (Dyax–Genzyme LLC) in the consolidated statements of operations and comprehensive loss.

The Company’s Chairman, President and Chief Executive Officer was an outside director of Genzyme Corporation until May 2007 and was a consultant to Genzyme until 2001. Two of the Company’s other directors are former directors of Genzyme and another was an officer of Genzyme and then senior advisor to Genzyme’s Chief Executive Officer.

At September 30, 2008 and December 31, 2007, Genzyme owned approximately 7.9% and 8.2%, respectively, of the Company’s common stock outstanding.

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11. INCOME TAXES

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  As of December 31, 2007 and September 30, 2008, the Company had no accrued interest or penalties related to uncertain tax positions.  The tax years 1989 through 2007 remain open to examination by the major taxing jurisdictions to which the Company is subject.

At December 31, 2007, the Company had federal and state net operating loss (NOL) carryforwards of $212.7 million and $140.3 million, respectively, expiring at various dates through 2027, and federal and state research and experimentation credit carryforwards (“tax credits”) of $26.8 million and $4.4 million, respectively, expiring at various dates through 2027. Utilization of the NOL and tax credit carryforwards may be subject to a substantial annual limitation pursuant to Section 382 of the Internal Revenue Code of 1986, as well as similar state and foreign provisions, due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. Since the Company’s formation, the Company has raised capital through the issuance of capital stock on several occasions which, combined with the purchasing shareholders’ subsequent disposition of those shares, may have resulted in a change of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition. The Company will need to perform a study to assess whether a change of control has occurred or whether there have been multiple changes of control since the Company’s formation.  Due to the significant complexity and cost associated with such a study and the potential for additional changes in control in the future, the Company has not currently completed any such study. If we have experienced a change of control at any time since Company formation, utilization of our NOL or tax credit carryforwards would be subject to an annual limitation under Section 382. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position under FIN 48.

In addition to uncertainties surrounding the use of NOL carryforwards in a change of control, the Company has identified orphan drug and research and development credits as material components of our deferred tax asset.  The uncertainties in these components arise from judgments in the allocation of costs utilized to calculate these credits.  The Company has not conducted a study to analyze these credits to substantiate the amounts due to the significant complexity and cost associated with such study.  Any limitation may result in expiration of a portion of the NOL or tax credits before utilization. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position under FIN 48.

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Item 2 - - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion in this item and elsewhere in this report contains forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.  These risks and uncertainties include those described under “Important Factors That May Affect Future Operations and Results” below.

OVERVIEW

We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel biotherapeutics for unmet medical needs, with an emphasis on oncology and inflammatory indications.  We use our proprietary drug discovery technology, known as phage display, to identify antibody, small protein and peptide compounds for clinical development.  This phage display technology fuels our internal pipeline of promising drug candidates, attracts numerous licensees and collaborators, and has the potential to generate important revenues in the future.

Our lead product candidate, DX-88 (ecallantide), is a recombinant highly specific inhibitor of human plasma kallikrein.  We are currently developing DX-88 through collaborations with other biotechnology and pharmaceutical companies in two separate indications.

The most advanced indication for DX-88 is in the treatment of hereditary angioedema (HAE), a potentially life-threatening inflammatory condition.  On September 23, 2008, we submitted a Biologics License Application (BLA) with the FDA for the use of DX-88 for the treatment of HAE.  If our application is accepted, we except to receive our Prescription Drug User Free Act (PDUFA) date within 74 days of our BLA submission.  In this indication, we have completed three Phase 2 trials and two Phase 3 trials of DX-88 for subcutaneous administration.  The second Phase 3 trial, known as EDEMA4, was conducted under a Special Protocol Assessment (SPA).  DX-88 has orphan drug designation in the United States and European Union, as well as Fast Track designation in the United States for the treatment of acute attacks of HAE.

If the BLA is approved, we intend to independently market and sell DX-88 in the United States.  We are currently negotiating with potential partners for a European license to DX-88 in angioedema indications.

Outside of HAE and other angioedemas, DX-88 is also being developed in an additional indication that involves the use of DX-88 for the prevention of blood loss during surgery.  In this indication, we have completed a Phase 1/2 trial of DX-88 for the prevention of blood loss during on-pump coronary artery bypass graft (CABG) procedures.  On April 23, 2008, we entered into an exclusive license and collaboration agreement with Cubist, for the development and commercialization in North America and Europe of the intravenous formulation of DX-88 for the prevention of blood loss during surgery.  Under this agreement, Cubist has assumed responsibility for all further development and costs associated with DX-88 in the licensed indications in the Cubist territory.

In addition to DX-88, we have identified two product candidates for preclinical development, DX-2240 and DX-2400, two fully human monoclonal antibodies with unique mechanisms of action in attacking cancerous tumors. In February 2008, we entered into an exclusive license agreement with sanofi-aventis under which sanofi-aventis will be responsible for the continued development of DX-2240.

All of the compounds in our pipeline were discovered using our proprietary phage display technology, which allows us to rapidly identify product candidates that bind with high affinity and specificity to therapeutic targets. Although we use this technology primarily to advance our own internal development activities, we also leverage it through licenses and collaborations designed to generate

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revenues and provide us access to co-develop and/or co-promote drug candidates identified by other biopharmaceutical and pharmaceutical companies. Through this program, which we refer to as our LFRP, we have agreements with more than 70 licensees and collaborators, which have resulted in 13 product candidates that licensed third parties have advanced into clinical trials and one product with market approval from the FDA. A portion of the current and future revenues generated through the LFRP will be used to repay the loan we received from Cowen Healthcare in August 2008.

We have incurred net losses since our inception, including net losses of $26.6 million and $72.9 million for the three and nine months, respectively, ended September 30, 2008.  We expect to incur significant additional net losses over at least the next several years as our research, development, preclinical testing, clinical trial and commercial activities increase, particularly with respect to our current lead product candidate, DX-88.  Our revenues and operating results have fluctuated on a quarter to quarter basis and we expect these fluctuations to continue in the future.

Clinical Development Programs

DX-88 for HAE.    We are developing DX-88 as a treatment for HAE.

The clinical development of DX-88 for HAE completed to date is summarized as follows:

·In March 2003, we completed a 9-patient, multi-center, open-label, single dose, dose-escalating Phase 2 study, known as EDEMA0.

·In May 2004, we completed a 48-patient, multi-center, placebo-controlled, single dose, dose-escalating Phase 2 study, known as EDEMA1.

·In January 2006, we completed a 240 attack (77-patient), multi-center, open-label, repeat dosing Phase 2 study, known as EDEMA2.

·In November 2006, we completed a 72-patient, multi-center, Phase 3 study, known as EDEMA3, which was conducted at 34 sites in the United States, Europe, Canada and Israel. The primary objective of the EDEMA3 trial was to determine the efficacy and safety of our fixed 30 mg subcutaneous dose of DX-88 for patients suffering from moderate to severe acute HAE attacks. The EDEMA3 trial was comprised of two phases: a double-blind, placebo-controlled phase and a repeat dosing phase. In the first phase, HAE patients received either a single dose of DX-88 or placebo. After patients received one treatment in the placebo-controlled portion of the study, they were eligible for the second phase where they received repeat dosing with DX-88 for any subsequent acute attacks.  Primary and secondary endpoints for the EDEMA3 trial were met with statistical significance.

·In June 2008 we completed a second Phase 3 study, known as EDEMA4. The trial was a 96-patient, multi-center study conducted at 42 sites in the United States and Canada. The trial was conducted as a double-blind, placebo-controlled study in which HAE patients received a single 30 mg subcutaneous dose of DX-88 or placebo. This trial, conducted under an S.P.A., was intended to further support the validity of the patient reported outcome methodology used in the EDEMA3 trial and to further assess the efficacy and safety of DX-88.  Primary and secondary endpoints for the EDEMA4 trial were met with statistical significance.

·An on-going, open-label continuation study is also being conducted to augment our clinical data with respect to DX-88.

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Based on the positive safety and efficacy results from our EDEMA4 and EDEMA3 trials, we submitted our BLA to the FDA on September 23, 2008.  If our application is accepted, we except to receive our PDUFA date within 74 days of our BLA submission.

Given our familiarity with the HAE market and its relatively small number of treating allergists, we believe the optimal commercialization strategy for the HAE indication is to build an internal sales team to promote DX-88 in the United States and to establish regional partnerships for distribution in other major markets.  However, because regulatory approvals for new pharmaceutical products can be and often are significantly delayed or refused for numerous reasons, including those described in Part II, Item 1a “Risk Factors”, DX-88 may not be approved on the timeline we expect, or at all.

During the three months ended September 30, 2008 (the “2008 Quarter”), the research and development expenses on the HAE program totaled $8.3 million compared with $5.9 million in the three months ended September 30, 2007 (the “2007 Quarter”). During the nine months ended September 30, 2008 (the “2008 Period”), the research and development expenses on this program totaled $25.4 million compared with $22.3 million in the nine months ended September 30, 2007 (the “2007 Period”).  Net of reimbursements under the Dyax-Genzyme joint venture of $7.0 million and charges for our equity loss in the joint venture of $3.8 million, HAE program costs in the 2007 Period were $19.1 million.  The increase in spending from 2007 to 2008 is attributable to increased clinical costs for our EDEMA4 Phase 3 study as well as an increase in personnel expenses required to support the advancement of the HAE program, which was partially offset by a decrease in manufacturing costs related to the process validation campaign completed in 2007 and a decrease in preclinical study costs. We estimate the total costs to approval of DX-88 for HAE in the United States after September 30, 2008 to be in the range of $25 million to $35 million, including pre-approval manufacturing and commerical launch preparation.

Through February 20, 2007, all development activities related to DX-88 for HAE were conducted in collaboration with Genzyme Corporation and managed through Dyax—Genzyme LLC, a jointly owned limited liability company. On February 20, 2007, we reached a mutual agreement with Genzyme to terminate our collaboration.  See Part 1, Item 1, Notes to Unaudited Consolidated Financial Statements, Note 9 “Investment in Joint Venture (Dyax-Genzyme LLC) and Other Related Party Transactions” for additional information regarding this agreement.  Dyax—Genzyme LLC was responsible for the reimbursement of all development expenses related to the HAE program in the first quarter of 2007 until the termination of the collaboration.  This reimbursement was recorded as research and development expenses reimbursed by joint venture (Dyax—Genzyme LLC) in our consolidated statements of operations and comprehensive loss.  In the nine months ended September 30, 2007, Dyax—Genzyme LLC reimbursed us $7.0 million for our expenses relating to the program.  Our portion of the LLC losses were separately classified as equity loss in joint venture on our consolidated statements of operations and comprehensive loss and were proportional to our 50.01% financial interest in the program.  Our portion of the losses was $3.8 million for the nine months ended September 30, 2007.

Under the terms of the termination agreement, we received all of the assets of Dyax-Genzyme LLC, including fixed assets, the rights to DX-88 worldwide, and a $17.0 million cash payment made by Genzyme to the LLC in connection with the termination, which has been used to fund the development of DX-88 for HAE.

DX-88 for on-pump CTS.

The development of DX-88 as an alternate treatment for the prevention of blood loss in patients undergoing on-pump cardiothoracic surgery (on-pump CTS), specifically CABG and heart valve replacement or repair procedures has been ongoing.

On April 23, 2008, Dyax entered into an exclusive license and collaboration agreement with Cubist Pharmaceuticals, Inc. (Cubist), for the development and commercialization in North America and Europe of the intravenous formulation of DX-88 for the prevention of blood loss during surgery.  Under this agreement, Cubist has assumed responsibility for all further development and costs associated with DX-88 in the licensed indications in the Cubist territory.

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Having determined that the existing experience from the Phase 2 Kalahari 1 trial is sufficient to help with the design of a subsequent dose-ranging trial, Cubist closed the study at the end of June.  Based on the top-line results from the Kalahari 1 trial, Cubist is now focusing on initiating a dose ranging Phase 2 trial in primary CABG patients before year end, followed shortly by the start of a second Phase 2 trial in high risk patients.  Using the clinical experiences from both Phase 2 studies, Cubist anticipates a mid-2010 meeting with the FDA regarding Phase 3 trial design.

During the 2008 Quarter, research and development expenses for the CTS program totaled $760,000 compared to $745,000 for the 2007 Quarter.  Dyax has billed Cubist $551,000 for reimbursement of services related to the Phase 2 Kalahari 1 trial incurred during the third quarter of 2008.

Goals for DX-88 Clinical Development Program.  Our goal for our ongoing clinical development program for DX-88 is to obtain marketing approval from the FDA and analogous international regulatory agencies for the HAE indication. Material cash inflows from this program, other than upfront and milestone payments from any collaboration we may enter into, will not commence until after marketing approvals are obtained, and then only if the product candidate finds acceptance in the marketplace as a treatment for HAE. Because of the many risks and uncertainties related to the receipt of marketing approvals and acceptance in the marketplace, as well as uncertainties related to clinical trials for other indications, we cannot predict when material cash inflows from the DX-88 program will commence, if ever.

Other Biopharmaceutical Discovery and Development Programs.

 In addition to our drug candidates in clinical trials, our phage display technology and expertise has allowed us to develop a substantial pipeline of drug candidates. Our goal is to maintain over ten ongoing therapeutic programs in our pipeline at all times. Of our existing pipeline candidates, the furthest developed are DX-2240 and DX-2400, two fully human monoclonal antibodies with therapeutic potential in oncology indications.

Our DX-2240 antibody has a novel mechanism of action that targets the Tie-1 receptor on tumor blood vessels. In preclinical animal models, DX-2240 has demonstrated activity against a broad range of solid tumor types. Data also indicates increased activity when combined with other antiangiogenic therapies, such as Genentech’s Avastin® and Bayer’s Nexavar®, and other chemotherapeutic agents. In February 2008, we entered into a license agreement with sanofi-aventis, under which we granted sanofi-aventis exclusive worldwide rights to develop and commercialize DX-2240 as a therapeutic product. As a result of this agreement, we received approximately $15 million of cash in the first quarter of 2008.  Of this $15 million, approximately $5 million is for the upfront product license fee and approximately $10 million is a transfer fee for DX-2240 inventory and know-how.  We received an additional $8.5 million in the second quarter of 2008 for delivery of additional specified deliverables.  Under the terms of this agreement we are eligible to receive up to $233 million in milestone payments, as well as tiered royalties based on sales of DX-2240 by sanofi-aventis.  We do not expect to incur any further costs in the development of DX-2240.

Our DX-2400 antibody is a novel protease inhibitor that specifically inhibits matrix metalloproteinase 14 (MMP-14) on tumor cells and tumor blood vessels. DX-2400 offers a potential treatment for a broad range of solid tumors. It has been shown to significantly inhibit tumor growth, metastasis and angiogenesis in multiple preclinical models in a dose-responsive manner.

In total, these programs represented approximately $7.5 million of our research and development expenses during the 2008 Quarter.

Given the uncertainties of the research and development process, it is not possible to predict with confidence if we will be able to enter into additional partnerships or otherwise internally develop any of these other preclinical drug candidates into marketable pharmaceutical products. We monitor the results of our discovery research and our nonclinical and clinical trials and frequently evaluate our pre-clinical pipeline in light of new data and scientific, business and commercial insights with the objective of balancing risk and potential. This process can result in relatively abrupt changes in focus and priority as

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new information becomes available and we gain additional insights into ongoing programs and potential new programs.

Our Business Strategy

Our business strategy is to build a broad portfolio of biotherapeutic products identified using our proprietary phage display technology. We intend to accomplish this through the following activities:

·Focus our efforts on obtaining approval and commercializing DX-88 for the treatment of HAE;

·Continue to optimize the value of the DX-88 franchise through additional strategic collaborations;

·Position ourselves to advance additional product candidates into the clinic;

·Continue to use our technology and expertise to discover, develop and commercialize new therapeutic product candidates either alone or in collaboration with partners; and

·Continue to license our technology broadly under the LFRP.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

Revenue.   Substantially all our revenue has come from licensing, funded research and development activities, including milestone payments from our licensees and collaborators. This revenue fluctuates from quarter-to-quarter due to the timing of the clinical activities of our collaborators and licensees. Revenue increased to $5.5 million in the 2008 Quarter from $2.6 million in the 2007 Quarter, an increase of $2.9 million. This increase primarily relates to a $1.6 million of revenue related to library license milestones in the 2008 Quarter and $786,000 in revenue from our agreement with Cubist.  Additionally, funded research increased $964,000 due primarily to a milestone payment in the 2008 Quarter, which is partially offset by a decrease in other patent and library licensing revenue totaling $552,000.

Research and Development.   Our research and development expenses for the 2008 and 2007 Quarters were $16.5 million and $12.8 million, respectively.

Our research and development expenses arise primarily from compensation and other related costs for our personnel dedicated to research and development activities and for the fees paid and costs reimbursed to outside parties to conduct research and clinical trials and to manufacture drug material prior to FDA approval.

Research and development expense increased by $3.7 million compared to the 2007 Quarter.  The increase is primarily due to higher costs for our DX-88 for HAE program of $2.5 million and pass-through license fees related to our LFRP revenue of $1.8 million.  These increases are partially offset by a decrease in preclinical expenses for DX-88 of $640,000.

General and Administrative.  Our general and administrative expenses consist primarily of the costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees, market research and promotion activities and the reporting requirements of a public company. General and administrative expenses were $4.9 million for the 2008 Quarter compared to $3.8 million for the 2007 Quarter.  The

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higher costs in the 2008 Quarter were primarily due to increased infrastructure to support the planned commercialization of DX-88 for HAE.

Interest Expense. Interest expense decreased $330,000 from $2.3 million in the 2007 Quarter to $2.0 million in the 2008 Quarter.  This decrease is due to a decrease in non-cash interest from our revenue assignment agreements.

Restructuring and Impairment.  In the 2008 Quarter we incurred restructuring fees of $876,000 related to the closing of our Liege based research facility.  There was no impairment of fixed assets in the 2008 Quarter.

Loss on Extinguishment of Debt.  In the 2008 Quarter we incurred a one-time loss on extinguishment of debt of $8.3 million related to fully paying off our debt with Paul Royalty.

NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

Revenue.   Substantially all our revenue has come from licensing, funded research and development activities, including milestone payments from our licensees and collaborators. This revenue fluctuates from period-to-period due to the timing of the clinical activities of our collaborators and licensees. Revenue increased to $12.0 million in the 2008 Period from $7.9 million in the 2007 Period, an increase of $4.1 million. This increase primarily relates to an increase of $2.1 million in library license revenue due to milestone and product license revenue under the LFRP.  We also recognized $1.6 million in revenue from our agreement with Cubist.

Research and Development.   Our research and development expenses for the 2008 and 2007 Periods are summarized as follows:

	Nine Months Ended September 30,
	2008		2007
	(In thousands)
Research and development expenses per consolidated statements of operations and comprehensive loss	$	51,641	$	48,635
Less research and development expenses reimbursed by joint venture (Dyax-Genzyme LLC)	—		(7,000		)
Net research and development expenses	51,641		41,635
Equity loss in joint venture (Dyax-Genzyme LLC) separately classified within the consolidated statements of operations and comprehensive loss	—		3,831
Research and development expenses adjusted to include equity loss in joint venture	$	51,641	$	45,466

Our research and development expenses arise primarily from compensation and other related costs for our personnel dedicated to research and development activities and for the fees paid and costs reimbursed to outside parties to conduct research and clinical trials and to manufacture drug material prior to FDA approval. In the 2008 Period, all expenses incurred on the DX-88 program for HAE are included in our overall research and development expenses.  In the 2007 Period, a portion of expenses incurred on the program were reimbursed by Dyax—Genzyme LLC joint venture and excluded from net research and development expenses. However, we jointly funded the losses of that program with Genzyme, so our line item for equity loss in joint venture represents our share of all expenses for the development of DX-88 for HAE through February 20, 2007, including any incurred by Genzyme. Since termination of the collaboration in the 2007 Quarter, there has been and will be no further reimbursement from the joint venture with Genzyme or equity loss in the joint venture.

Research and development expense increased by $3.0 million compared to the 2007 Period.  This increase is due to a net increase in development spending of $6.0 million and an increase of $4.9 million in license fees partially offset by a savings of $6.2 million from the completion of DX-88 manufacturing activities in 2007 and $1.3 million from the closure of our Liege operations.

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Included in the net $6.0 million increase of development spending for the 2008 Period was a $6.6 million increase primarily for clinical trial costs and internal expenses to support the advancement of DX-88 for HAE and a $1.6 million increase in clinical trial costs for DX-88 for on-pump CTS. These increases were partially offset by a decrease of $2.1 million in development spending on DX-2240. The $4.9 million increase in license fees included a one-time fee of $2.0 million for the license of DX-2240 to sanofi-aventis as well as an increase of $2.9 million in pass-through license fees related to our LFRP revenue.

Combining our net research and development expenses and our equity loss in joint venture to show our total expenses for research and development, our adjusted net research and development expenses increased $6.2 million from 2007 to 2008 due primarily to the termination of the collaboration with Genzyme, which caused a decrease in reimbursement by the Dyax-Genzyme LLC joint venture, and an offsetting decrease in our equity loss in joint venture.

Our management believes that the above presentation of adjusted net research and development expenses, although a non-GAAP measure, provides investors a better understanding of how total research and development efforts affect our consolidated statements of operations and comprehensive loss in prior periods. Our presentation of this measure, however, may not be comparable to similarly titled measures used by other companies.

General and Administrative.   Our general and administrative expenses consist primarily of the costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees, market research and promotion activities and the reporting requirements of a public company. General and administrative expenses were $15.6 million for the 2008 Period compared to $11.4 million for the 2007 Period.  The higher costs in 2008 were primarily due to increased infrastructure to support the planned commercialization of DX-88 for HAE.

Interest Expense.Interest expense decreased $1.2 million from $6.8 million in the 2007 Period to $5.6 million in the 2008 Period.  This decrease is due to a decrease in interest expense from the loan with Genzyme that was fully paid in the third quarter of 2007, and a decrease in non-cash interest from our revenue assignment agreements.

Restructuring and Impairment.  In the 2008 Period we incurred restructuring fees of $4.6 million, and recorded an impairment charge related to fixed assets of $352,000 related to the closing of our Liege based research facility.

Loss on Extinguishment of Debt.  In the 2008 Period we incurred a one-time loss on extinguishment of debt of $8.3 million related to fully paying off our debt with Paul Royalty.

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LIQUIDITY AND CAPITAL RESOURCES

	September 30, 2008		December 31,2007
Cash, cash equivalents and short-term investments (in thousands)	$	74,530	$	63,411

Condensed Consolidated Statements of Cash Flows (in thousands):

	Nine Months Ended September 30,
	2008			2007
Net loss	$	(72,886	)	$	(53,240	)
Depreciation and amortization	2,731			2,708
Non-cash interest expense	5,347			6,038
Compensation expenses associated with stock-based compensation plans	3,346			2,081
Extinguishment of debt	8,264			—
Equity loss in joint venture (Dyax-Genzyme LLC)	—			3,831
Other changes in operating activities	(130		)	(765		)
Changes in operating assets and liabilities	45,239			1,477
Net cash used in operating activities	(8,089		)	(37,870		)
Change in marketable securities	4,241			17,222
Cash received in purchase of joint venture (Dyax-Genzyme LLC)	—			17,000
Other changes in investing activities	275			2,569
Net cash provided by investing activities	4,516			36,791
Proceeds from note payable	49,600			402
Repayment of Paul Royalty on extinguishment of debt	(35,080		)	(11,647		)
Repayment of other long-term obligations	(7,906		)	—
Other changes in financing activities	12,316			41,841
Net cash provided by financing activities	18,930			30,596
Effect of foreign currency translation on cash balances	49			13
Net increase in cash and cash equivalents	15,406			$	29,530

We require cash to fund our operating expenses, to make capital expenditures and acquisitions and to pay debt service. Through September 30, 2008, we have funded our operations principally through the sale of equity securities, which have provided aggregate net cash proceeds since inception of approximately $296 million, including proceeds of $10.0 million from our sale of stock in July 2008, and through debt proceeds. We also generate funds from biopharmaceutical product development and license fee revenue and long-term obligations.  Our excess funds are currently invested in short-term investments primarily consisting of U.S. Treasury notes and bills and money market funds backed by U.S. Treasury obligations.

Our operating activities used cash of $8.1 million in the 2008 Period compared with $37.9 million in the 2007 Period.  Our cash used in operating activities for the 2008 Quarter consisted primarily of our net loss of $72.9 million, offset by changes in operating assets and liabilities of $45.2 million, extinguishment of debt of $8.3 million, non-cash interest expense related to our royalty assignment agreements of $5.3 million and depreciation and amortization of fixed assets and intangibles totaling $2.7 million.  The change in operating assets and liabilities includes an increase in deferred revenue of $41.0 million, primarily due to the license agreements with sanofi-aventis and Cubist, and an increase in accounts payable and accrued expenses of $3.2 million.  Our cash used in operating activities for the 2007 Period

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consisted primarily of our net loss of $53.2 million offset by adjustments for non-cash items, including equity loss in joint venture (Dyax-Genzyme LLC) of $3.8 million, interest expense related to the Paul Royalty agreement of $6.0 million, depreciation and amortization of fixed assets and intangibles totaling $2.7 million, compensation expense associated with stock-based compensation plans totaling $2.1 million and a $1.5 million change in operating assets and liabilities.  The change in operating assets and liabilities included an increase in accounts payable and accrued expenses of $2.5 million, a decrease in accounts receivable of $1.4 million, a decrease in amount due from the joint venture (Dyax-Genzyme LLC) totaling $1.4 million, and a decrease in amount due to the joint venture (Dyax-Genzyme LLC) totaling $967,000.

Our investing activities provided cash of $4.5 million in the 2008 Period, compared with $36.8 million in the 2007 Period.  Our investing activities for the 2008 Period are primarily due to a $1.6 million decrease in restricted cash from a contractual reduction of our letter of credit that serves as our security deposit for the lease of our facility in Cambridge, Massachusetts and the timing of the maturity of our investments.  This is offset by $1.4 million purchase of fixed assets.  Our investing activities for the 2007 Period included $17.0 million received in the purchase of the joint venture (Dyax-Genzyme LLC), contributions to Dyax-Genzyme LLC of $3.8 million and the timing of the maturity of our short-term investments.

 Our financing activities provided cash of $18.9 million in the 2008 Period, compared with $30.6 million in the 2007 Period.  Our financing activities for the 2008 Period primarily consisted of net proceeds of $49.6 million from our note payable to Cowen Healthcare, a $10.0 million sale of common stock, proceeds from long-term obligations of $1.1 million and proceeds from the issuance of common stock under the employee stock purchase plan and the exercise of stock options.  These are partially offset by repayment of the Paul Royalty loan on extinguishment of debt of $35.1 million and repayment of other long-term obligations of $7.9 million.  Our financing activities for the 2007 Period primarily consist of the net proceeds of $41.3 from our July underwritten public offering, offset by the repayment of long-term obligations of $11.6 million, which includes $7.2 million to pay off the Genzyme note, and payments to Paul Royalty.

We have financed fixed asset acquisitions through capital leases. These obligations are collateralized by the assets under lease.

We believe that our net 2008 cash consumption would be less than $20.0 million.  Currently, we believe we have sufficient cash reserves to fund current operations well into 2009.  For the foreseeable future, we expect to continue to fund any deficit from our operations through the sale of additional equity or debt securities and new collaborations. The sale of any equity or debt securities may result in additional dilution to our stockholders, and we cannot be certain that additional financing will be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain any additional collaborations or any required additional financing, we may be required to significantly curtail our planned research, development and commercialization activities, which could harm our business prospects.

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements with the exception of operating leases.

COMMITMENTS AND CONTINGENCIES

In our Annual Report on Form 10-K for the year ended December 31, 2007 under the heading “Contractual Obligations,” we described our commitments and contingencies. In August 2008, we entered into a $50.0 million loan agreement with Cowen Healthcare secured by our phage display LFRP. We used $35.1 million from the proceeds of this loan to pay off the debt to Paul Royalty. There were no other material changes in our commitments and contingencies in the quarter ended September 30, 2008.

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CRITICAL ACCOUNTING ESTIMATES

In our Annual Report on Form 10-K for the year ended December 31, 2007, our critical accounting policies and estimates were identified as those relating to revenue recognition, allowance for doubtful accounts, royalty interest obligation, share-based compensation and valuation of long-lived and intangible assets. We reviewed our policies and determined that those policies remain our most critical accounting policies for the quarter ended September 30, 2008.

Royalty Interest Obligation.  Prior to August 2008, under our Royalty Interest Assignment Agreement with Paul Royalty, we had recorded the upfront cash payment of $30.0 million, less the $500,000 in cost reimbursements paid to Paul Royalty as a debt instrument. Based upon our best estimate of future royalty interest obligation payments, interest expense was calculated using the effective interest method. Out best estimate of future royalty interest obligation payments was based upon returning to Paul Royalty an internal rate of return of 25% through future net LFRP receipts. As of August 2008, we have paid off this loan and no longer estimate interest on this agreement. In August 2008 we signed a royalty interest obligation with Cowen Healthcare. We do not need to estimate interest on that loan, as it is fixed at 16%.

There have been no other changes to our critical accounting in the third quarter of 2008.

IMPORTANT FACTORS THAT MAY AFFECT FUTURE OPERATIONS AND RESULTS

This Quarterly Report on Form 10-Q contains forward-looking statements, including statements regarding our results of operations, financial resources, research and development programs, pre-clinical studies, clinical trials and collaborations.  Statements that are not historical facts are based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the industry and markets in which we compete.  The statements contained in this report are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements.  Important factors which may affect future operating results, research and development programs, pre-clinical studies, clinical trials, and collaborations include, without limitation, those set forth in Part II, Item 1A entitled “Risk Factors”.  You should carefully review the risks described herein and in other documents we file from time to time with the Securities and Exchange Commission.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk consists primarily of our cash and cash equivalents and short-term and long-term investments. We place our investments in high-quality financial instruments, primarily U.S. Treasury notes and bills, and obligations of U.S. government agencies, which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. As of September 30, 2008, we had cash, cash equivalents, and short-term investments of approximately $74.5 million.  Our short-term investments will decline by an immaterial amount if market interest rates increase, and therefore, our exposure to interest rate changes is immaterial. Declines of interest rates over time will, however, reduce our interest income from our investments.

As of September 30, 2008, we had $51.8 million outstanding under long-term obligations and note payable.  Interest rates on all of these obligations are fixed and therefore are not subject to interest rate fluctuations. The assumed interest rate under our terminated Royalty Interest Assignment Agreement with Paul Royalty was calculated using the effective interest method based upon estimated future royalty interest obligation payments and therefore was not subject to interest rate fluctuations.  Therefore our exposure to interest rate changes is immaterial.

Most of our transactions are conducted in U.S. dollars. We have collaboration and technology license agreements with parties located outside of the United States. Through September 30, 2008 we also have a research facility located in Europe.  Transactions under certain agreements between us and parties located outside of the United States, as well as transactions conducted by our foreign facility, are conducted in local foreign currencies. If exchange rates undergo a change of up to 10%, we do not believe that it would have a material impact on our results of operations or cash flows.

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Item 4 - CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934). Based on this evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our fiscal quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II –OTHER INFORMATION

Item 1a –RISK FACTORS

Forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements, including statements about our growth and future operating results, discovery and development of products, strategic alliances and intellectual property. Any statement that is not a statement of historical fact should be considered a forward-looking statement. We often use the words or phrases of expectation or uncertainty like “believe,” “anticipate,” “plan,” “expect,” “intend,” “project,” “future,” “may,” “will,” “could,” “would” and similar words to help identify forward-looking statements.

Statements that are not historical facts are based on our current expectations and beliefs including our assumptions, estimates, forecasts and projections for our business and the industry and markets in which we compete. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. We cannot assure investors that our expectations and beliefs will prove to have been correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements. Factors that could cause or contribute to such differences include the factors discussed below. We caution you not to place undue reliance on these forward looking statements, which speak only as of the date on which they are made. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Risks Related To Our Business

We have a history of net losses, expect to incur significant additional net losses and may never achieve or sustain profitability.

We have incurred net losses since our inception in 1989. We incurred net losses of $72.9 million for the nine months ended September 30, 2008 and $56.3 million, $50.3 million and $30.9 million for the years ended December 31, 2007, 2006 and 2005, respectively. As of September 30, 2008, we had an accumulated deficit of approximately $361.8 million. We expect to incur substantial additional net losses over the next several years as our research, development, preclinical testing, clinical trial and commercial activities increase, particularly with respect to our current lead product candidate, DX-88.

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We have not generated any revenue from product sales to date, and it is possible that we will never have significant, if any, product sales revenue. Currently, we generate revenue from collaborators through research and development funding and through license and maintenance fees that we receive in connection with the licensing of our phage display technology. To become profitable, we, either alone or with our collaborators, must successfully develop, manufacture and market our current product candidates, including DX-88, and other products and continue to leverage our phage display technology to generate research funding and licensing revenue. It is possible that we will never have significant product sales revenue or receive significant royalties on our licensed product candidates or licensed technology in order to achieve or sustain future profitability.

We will need substantial additional capital in the future and may be unable to raise the capital that we will need to sustain our operations.

We require significant capital to fund our operations and develop and commercialize our product candidates.  Our future capital requirements will depend on many factors, including:

· the progress of our drug discovery and development programs;

· the timing and cost to develop, obtain regulatory approvals for and commercialize our product candidates, including the cost of developing sales and marketing capabilities prior to receipt of any regulatory approval of our product candidates;

· maintaining or expanding our existing collaborative and license arrangements and entering into additional arrangements on terms that are favorable to us;

· the amount and timing of milestone and royalty payments from our collaborators and licensees related to their progress in developing and commercializing products;

· our decision to manufacture materials used in our product candidates;

· competing technological and market developments;

· the costs of prosecuting, maintaining, defending and enforcing our patents and other intellectual property rights;

· the amount and timing of additional capital equipment purchases; and

· the overall condition of the financial markets.

We expect that existing cash, cash equivalents, and short-term investments plus anticipated cash flow from product development, collaborations and license fees will be sufficient to support our current operations well into 2009. We may, however, need or choose to raise additional funds before then. We will need additional funds if our cash requirements exceed our current expectations or if we generate less revenue than we expect.

We may seek additional funding through collaborative arrangements and public or private financings. We may not be able to obtain financing on acceptable terms or at all, and we may not be able to enter into additional collaborative arrangements. Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies, product candidates or products. The terms of any financing may adversely affect the holdings or the rights of our stockholders and if we are unable to obtain funding on a timely basis, we may be required to significantly curtail our research, development or commercialization programs which could adversely affect our business prospects.

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Our biopharmaceutical product candidates must undergo rigorous clinical trials and regulatory approvals, which could substantially delay or prevent their development or marketing.

Before we can commercialize any biopharmaceutical product, we must engage in a rigorous clinical trial and regulatory approval process mandated by the FDA and analogous foreign regulatory agencies. This process is lengthy and expensive, and approval is never certain. Positive results from preclinical studies and early clinical trials do not ensure positive results in late stage clinical trials designed to permit application for regulatory approval. We cannot accurately predict when planned clinical trials will begin or be completed. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, alternative therapies, competing clinical trials and new drugs approved for the conditions that we are investigating. For example, four other companies are conducting clinical trials of treatments for HAE and have announced plans for trials that are seeking or likely to seek patients with HAE. As a result of all of these factors, our trials may take longer to enroll patients than we anticipate. Such delays may increase our costs and slow down our product development and the regulatory approval process. Our product development costs will also increase if we need to perform more or larger clinical trials than planned. The occurrence of any of these events will delay our ability to commercialize products, generate revenue from product sales and impair our ability to become profitable, which may cause us to have insufficient capital resources to support our operations.

Although we have estimated elsewhere in this Quarterly Report on Form 10-Q when we might obtain regulatory approval of DX-88 for HAE, because of the risks and uncertainties in biopharmaceutical development, products that we or our collaborators develop could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. If we or our collaborators do not receive these necessary approvals, we will not be able to generate substantial product or royalty revenues and may not become profitable. We and our collaborators may encounter significant delays or excessive costs in our efforts to secure regulatory approvals. Factors that raise uncertainty in obtaining these regulatory approvals include the following:

· we must demonstrate through clinical trials that the proposed product is safe and effective for its intended use;

· we have limited experience in conducting the clinical trials necessary to obtain regulatory approval; and

· data obtained from preclinical and clinical activities are susceptible to varying interpretations, which could delay, limit or prevent regulatory approvals.

Regulatory authorities may delay, suspend or terminate clinical trials at any time if they believe that the patients participating in trials are being exposed to unacceptable health risks or if they find deficiencies in the clinical trial procedures. Our Investigational New Drug Applications for our recombinant protein DX-88, for example, were placed on clinical hold by the FDA in May 2004, following the FDA’s evaluation of certain animal test data submitted by us. Although that study was allowed to continue, we were required by the FDA to conduct additional testing at additional expense. There is no guarantee that we will be able to resolve similar issues in the future, either quickly, or at all. In addition, our or our collaborators’ failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties and other actions that could impair our ability to conduct our business.

We developed the protocol for our EDEMA4 clinical trial utilizing the FDA’s Special Protocol Assessment, or SPA, process. This process is designed to provide a reasonable level of certainty to sponsors of investigational drugs that the FDA will not question the adequacy of a pivotal clinical trial once the related protocol has been reviewed and cleared by the FDA. However, the SPA process does not preclude the FDA from raising new concerns at any time during the review process, and applicable FDA regulation further provides that FDA can require trial design changes if there arises a substantial scientific issue essential to determining the safety or effectiveness of the drug. Consequently, the FDA may ultimately not accept our EDEMA4 trial design as adequate to support regulatory approval, regardless of the clinical results obtained.

We lack experience in and/or capacity for conducting clinical trials, handling regulatory processes, and conducting sales and marketing activities. This lack of experience and/or capacity may adversely affect our ability to commercialize any biopharmaceuticals that we may develop.

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We have hired experienced clinical development and regulatory staff to develop and supervise our clinical trials and regulatory processes. However, we will remain dependent upon third party contract research organizations to carry out some of our clinical and preclinical research studies for the foreseeable future. As a result, we have had and will continue to have less control over the conduct of the clinical trials, the timing and completion of the trials, the required reporting of adverse events and the management of data developed through the trials than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may have staffing difficulties, may undergo changes in priorities or may become financially distressed, adversely affecting their willingness or ability to conduct our trials. We may also experience unexpected cost increases that are beyond our control.

Problems with the timeliness or quality of the work of a contract research organization may lead us to seek to terminate the relationship and use an alternative service provider. However, changing our service provider may be costly and may delay our trials, and contractual restrictions may make such a change difficult or impossible. Additionally, it may be impossible to find a replacement organization that can conduct our trials in an acceptable manner and at an acceptable cost.

Similarly, we may be unable to enter into third party arrangements for the marketing and sale of biopharmaceuticals on acceptable terms. For certain products, we may incur substantial expenses to develop our own marketing and sales force in order to commercialize our biopharmaceuticals and our efforts may not be successful or the product may not be approved.

        As a result we may experience delays in the commercialization of our biopharmaceuticals and we may be unable to compete effectively which would adversely impact our business, operating results and financial condition.

Because we currently lack the resources, capability and experience necessary to manufacture biopharmaceuticals, we will depend on third parties to perform this function, which may adversely affect our ability to commercialize any biopharmaceuticals we may develop.

We do not currently operate manufacturing facilities for the clinical or commercial production of biopharmaceuticals and do not plan to have that capacity for the foreseeable future. We also lack the resources, capability and experience necessary to manufacture biopharmaceuticals. As a result, we will depend on collaborators, partners, licensees and other third parties to manufacture clinical and commercial scale quantities of our biopharmaceutical candidates in a timely and effective manner and in accordance with government regulations. If these types of third party arrangements are not successful, it would adversely affect our ability to develop, obtain regulatory approval for or market our product candidates.

We have identified only a few facilities that are capable of producing material for preclinical and clinical studies and we cannot assure you that they will be able to supply sufficient clinical materials during the clinical development of our biopharmaceutical candidates. There is no assurance that contractors will have the capacity to manufacture or test our products at the required scale and within the required time frame or that the supply of clinical materials can be maintained during the clinical development of our biopharmaceutical candidates.

We will also be dependent on a contract manufacturer to produce DX-88 for HAE, if it is approved for sale.  They will be subject to ongoing periodic inspection by the FDA and corresponding foreign agencies to ensure strict compliance with current good manufacturing practices and other governmental regulations and standards. We have limited control over our contract manufacturer maintaining adequate quality control, quality assurance and qualified personnel. Failure by our contract manufacturer to comply with or maintain any of these standards could adversely affect our ability to further develop, obtain regulatory approval for or market DX-88 and would adversely impact our business.

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Even if we obtain regulatory approval, our biopharmaceutical products will continue to be subject to governmental review. If we, or our suppliers, fail to comply with FDA or other government regulations, our business, financial condition, and results of operations would be adversely affected.

Even if regulatory approval is obtained, our biopharmaceutical products will continue to be subject to extensive and rigorous regulation by the FDA and comparable foreign authorities. These regulations govern, among other things, the manufacturing, labeling, storage, advertising, promotion, sale, and distribution of our products.

Previously unidentified adverse events or an increased frequency of adverse events that may occur post-approval could result in labeling modifications of approved products, which could adversely affect future marketing. Approvals may be withdrawn if compliance with regulatory standards is not maintained or if problems occur following initial marketing. Later discovery of previously unknown problems with a product, manufacturer or facility may result in the FDA and/or other regulatory agencies requiring further clinical research or restrictions on the product or the manufacturer, including withdrawal of the drug product from the market.

In addition, the facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the FDA’s strict regulatory requirements, they will not be able to secure FDA approval for the manufacturing facilities. Our contract manufacturers will be subject to ongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with current Good Manufacturing Practices, or cGMPs, and similar regulatory requirements. Failure by any of our contract manufacturers to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure to grant approval to market our product candidates, delays, suspensions or withdrawals of approvals, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our business.

The restriction, suspension, or revocation of regulatory approvals or any other failure to comply with regulatory requirements could have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to find a distribution partner for our DX-88 product candidate outside the United States, we may be unable to generate significant revenues from, or recoup our investments in, DX-88.

We are familiar with the HAE patient community and its relatively small number of treating allergists, and we believe the optimal commercialization strategy for the HAE indication is to build an internal sales team to promote DX-88 in the United States and to establish regional collaborations for distribution in other major market countries. If we are not able to find a suitable collaborator or collaborators, or we are unable to negotiate acceptable terms for a collaboration, we may not be able to fully develop and commercialize DX-88, which would adversely affect our business prospects and the value of our common stock.

Failure To Meet Our Cowen Healthcare Debt Service Obligations Could Adversely Affect Our Financial Condition And Our Loan Agreement Obligations Could Impair Our Operating Flexibility.

We entered into a Loan Agreement with Cowen Healthcare providing us with approximately $50 million.  The loan bears interest at a rate of 16% per annum payable quarterly and matures in August 2016. In connection with this loan, we have entered into a security agreement granting Cowen Healthcare a security interest in substantially all of the assets related to the LFRP. We are required to repay the loan based on a percentage of our LFRP related revenues, including royalties, milestones, and license fees received by us under the LFRP.  If the LFRP revenues for any quarterly period are insufficient to cover the cash interest due for that period, the deficiency may be added to the outstanding principal or paid in cash by us. We may prepay the loan in whole or in part at any time after August 2011.  In the event of certain changes of control or mergers or sales of all or substantially all of our assets, any or all of the loan may become due and payable at Cowen Healthcare’s option, including a prepayment premium prior to August 

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2011. We must comply with certain loan covenants which if not observed could make all loan principal, interest and all other amounts payable under the loan immediately due and payable.

Our obligations under the Cowen Healthcare agreement require that we dedicate a substantial portion of cash flow from our LFRP revenues to service the loan, which will reduce the amount of cash flow available for other purposes. We cannot guarantee that the upfront payment that we received from Cowen Healthcare for these LFRP revenues will be sufficient to meet our loan obligations over the term of the agreement. If the LFRP fails to generate sufficient revenue to fund the quarterly principal and interest payments to Cowen, we will be required to fund such obligations from cash on hand or from other sources, further decreasing the funds available to operate our business. In the event that amounts due under the loan were accelerated, payment would significantly reduce our cash, cash equivalents and short-term investments and we may not have sufficient funds to pay the debt if any of it is accelerated.

As a result of the security interest granted to Cowen Healthcare, we may not sell our rights to part or all of those assets, or take certain other actions, without first obtaining the permission of Cowen. This requirement could delay, hinder or condition our ability to enter into corporate partnerships or strategic alliances with respect to these assets.

The obligations and restrictions under the Cowen Healthcare agreement may limit our operating flexibility, make it difficult to pursue our business strategy and make us more vulnerable to economic downturns and adverse developments in our business.

Product liability and other claims against us may reduce demand for our product candidates or result in substantial damages.

We face an inherent risk of product liability exposure related to testing our product candidates in human clinical trials and will face even greater risks if we sell our product candidates commercially.

An individual may bring a product liability claim against us if one of our product candidates causes, or merely appears to have caused, an injury. Moreover, in some of our clinical trials, we test our product candidates in indications where the onset of certain symptoms or “attacks” could be fatal. Although the protocols for these trials include emergency treatments in the event a patient appears to be suffering a potentially fatal incident, patient deaths may nonetheless occur. As a result, we may face additional liability if we are found or alleged to be responsible for any such deaths.

These types of product liability claims may result in:

· decreased demand for our product candidates;

· injury to our reputation;

· withdrawal of clinical trial volunteers;

· related litigation costs; and

· substantial monetary awards to plaintiffs.

Although we currently maintain product liability insurance, we may not have sufficient insurance coverage, and we may not be able to obtain sufficient coverage at a reasonable cost. Our inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of any products that we or our collaborators develop. If we are sued for any injury caused by our products or processes, then our liability could exceed our product liability insurance coverage and our total assets.

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If we fail to establish and maintain strategic license, research and collaborative relationships, or if our collaborators are not able to successfully develop and commercialize product candidates, our ability to generate revenues could be adversely affected.

Our business strategy includes leveraging some of our product candidates, as well as our proprietary phage display technology, through collaborations and licenses that are structured to generate revenues through license fees, technical and clinical milestone payments, and royalties. We have entered into, and anticipate continuing to enter into, collaborative and other similar types of arrangements with third parties to develop, manufacture and market drug candidates and drug products.

In addition, for us to continue to receive any significant payments from our LFRP related licenses and collaborations and generate sufficient revenues to meet the required payments under our agreement with Cowen Healthcare, the relevant product candidates must advance through clinical trials, establish safety and efficacy, and achieve regulatory approvals and market acceptance.

Reliance on license and collaboration agreements involves a number of risks as our licensees and collaborators:

· are not obligated to develop or market product candidates discovered using our phage display technology;

· may not perform their obligations as expected, or may pursue alternative technologies or develop competing products;

· control many of the decisions with respect to research, clinical trials and commercialization of product candidates we discover or develop with them or have licensed to them;

· may terminate their collaborative arrangements with us under specified circumstances, including, for example, a change of control, with short notice; and

· may disagree with us as to whether a milestone or royalty payment is due or as to the amount that is due under the terms of our collaborative arrangements.

We cannot assure you that we will be able to maintain our current licensing and collaborative efforts, nor can we assure the success of any current or future licensing and collaborative relationships. An inability to establish new relationships on terms favorable to us, work successfully with current licensees and collaborators, or failure of any significant portion of our LFRP related licensing and collaborative efforts would result in a material adverse impact on our business, operating results and financial condition .

We and our collaborators may not be able to gain market acceptance of our biopharmaceutical product candidates, which could adversely affect our revenues.

We cannot be certain that any of our biopharmaceutical product candidates, even if successfully approved by the regulatory authorities, will gain market acceptance among physicians, patients, healthcare payors, pharmaceutical manufacturers or others. We may not achieve market acceptance even if clinical trials demonstrate safety and efficacy of our biopharmaceutical candidates and the necessary regulatory and reimbursement approvals are obtained. The degree of market acceptance of our biopharmaceutical candidates will depend on a number of factors, including:

· their clinical efficacy and safety;

· their cost-effectiveness;

· their potential advantage over alternative treatment methods;

· their marketing and distribution support;

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· reimbursement policies of government and third-party payors; and

· market penetration and pricing strategies of competing and future products.

If our products do not achieve significant market acceptance, our revenues could be adversely affected which would have a material adverse effect on our business, financial condition, and results of operations.

Competition and technological change may make our potential products and technologies less attractive or obsolete.

We compete in industries characterized by intense competition and rapid technological change. New developments occur and are expected to continue to occur at a rapid pace. Discoveries or commercial developments by our competitors may render some or all of our technologies, products or potential products obsolete or non-competitive.

Our principal focus is on the development of therapeutic products. We plan to conduct research and development programs to develop and test product candidates and demonstrate to appropriate regulatory agencies that these products are safe and effective for therapeutic use in particular indications. Therefore our principal competition going forward, as further described below, will be companies who either are already marketing products in those indications or are developing new products for those indications. Many of our competitors have greater financial resources and experience than we do.

For DX-88 as a treatment for HAE, our principal competitors include:

· Lev Pharmaceuticals, Inc. – On October 10, 2008, Lev received FDA approval for its plasma-derived C1-esterase inhibitor, known as Cinryze™, which is administered intravenously. Cinryze approval, which is for prophylaxis only against angioedema attacks in adolescent and adult patients with HAE, has orphan drug designation from the FDA.  Cinryze is expected to be commercially available only for prophylaxis against HAE later in the year.

· Jerini AG. – Jerini (acquired by Shire International) has filed for market approval from the FDA and EMEA for its bradykinin receptor antagonist, known as Firazyr®, which is delivered by subcutaneous injection. On July 15, 2008, the European Commission approved Jerini’s Marketing Authorization Application (MAA) for Firazyr®.  In June 2008, Jerini received a Not Approvable letter from the FDA. Firazyr® has orphan drug designations from both the FDA and EMEA.

· CSL Behring – CSL Behring currently markets Berinert®, a plasma-derived C1 esterase inhibitor that is approved for the treatment of HAE in several European countries. CSL Behring received an orphan drug designation from the FDA for its plasma-derived C1-esterase inhibitor and in March 2008, filed for market approval with the FDA.

· Pharming Group N.V. – Pharming filed for market approval from the EMEA for its recombinant C1-esterase inhibitor, known as Rhucin®, which is delivered intravenously. In December 2007 and March 2008, Pharming received negative opinions from the EMEA. In June 2008, Pharming announced Phase 3 clinical trial results and is expected to file a regulatory submission to FDA and EMEA later in 2008. Rhucin® has orphan drug designations from both the FDA and EMEA.

Other competitors include companies that market or are developing corticosteroid drugs or other anti-inflammatory compounds.

For DX-88 as a treatment for reducing blood loss in cardiothoracic surgery procedures, our strategic partner Cubist’s principal competitor is Xanodyne Pharmaceuticals, Inc., which currently markets Amicar® (aminocaproic acid), for the reduction of blood loss during CTS procedures. A number of other organizations, including Novo Nordisk A/S and Vanderbilt University, are developing other products for this indication.

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For our potential oncology product candidates, our potential competitors include numerous pharmaceutical and biotechnology companies.

In addition, most large pharmaceutical companies seek to develop orally available small molecule compounds against many of the targets for which others and we are seeking to develop antibody, peptide and/or small protein products.

Our phage display technology is one of several technologies available to generate libraries of compounds that can be used to discover and develop new antibody, peptide and/or small protein products. The primary competing technology platforms that pharmaceutical, diagnostics and biotechnology companies use to identify antibodies that bind to a desired target are transgenic mouse technology and the humanization of murine antibodies derived from hybridomas. Medarex Inc., Genmab A/S, and Protein Design Labs, Inc. are leaders in these technologies. Further, other companies such as BioInvent International AB and XOMA Ireland Limited have access to phage display technology and compete with us by offering licenses and research services to larger pharmaceutical and biotechnology companies.

In addition, we may experience competition from companies that have acquired or may acquire technology from universities and other research institutions. As these companies develop their technologies, they may develop proprietary positions that may prevent us from successfully commercializing our products.

Our success depends significantly upon our ability to obtain and maintain intellectual property protection for our products and technologies and upon third parties not having or obtaining patents that would prevent us from commercializing any of our products.

We face risks and uncertainties related to our intellectual property rights. For example:

· we may be unable to obtain or maintain patent or other intellectual property protection for any products or processes that we may develop or have developed;

· third parties may obtain patents covering the manufacture, use or sale of these products or processes, which may prevent us from commercializing any of our products under development globally or in certain regions; or

· our patents or any future patents that we may obtain may not prevent other companies from competing with us by designing their products or conducting their activities so as to avoid the coverage of our patents.

Our patent rights relating to our phage display technology are central to our LFRP. As part of the LFRP, we generally seek to negotiate license agreements with parties practicing technology covered by our patents. In countries where we do not have and/or have not applied for phage display patent rights, we will be unable to prevent others from using phage display or developing or selling products or technologies derived using phage display. In addition, in jurisdictions where we have phage display patent rights, we may be unable to prevent others from selling or importing products or technologies derived elsewhere using phage display. Any inability to protect and enforce such phage display patent rights, whether by any inability to license or any invalidity of our patents or otherwise, could negatively affect future licensing opportunities and revenues from existing agreements under the LFRP.

In all of our activities, we also rely substantially upon proprietary materials, information, trade secrets and know-how to conduct our research and development activities and to attract and retain collaborators, licensees and customers. Although we take steps to protect our proprietary rights and information, including the use of confidentiality and other agreements with our employees and consultants and in our academic and commercial relationships, these steps may be inadequate, these agreements may be violated, or there may be no adequate remedy available for a violation. Also, our trade secrets or similar technology may otherwise become known to, or be independently developed or duplicated by, our competitors.

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Before we and our collaborators can market some of our processes or products, we and our collaborators may need to obtain licenses from other parties who have patent or other intellectual property rights covering those processes or products. Third parties have patent rights related to phage display, particularly in the area of antibodies. While we have gained access to key patents in the antibody area through the cross licenses with Affimed Therapeutics AG, Affitech AS, Biosite Incorporated, Cambridge Antibody Technology Limited (now known as MedImmune Limited), Domantis Limited, Genentech, Inc. and XOMA Ireland Limited, other third party patent owners may contend that we need a license or other rights under their patents in order for us to commercialize a process or product. In addition, we may choose to license patent rights from other third parties. In order for us to commercialize a process or product, we may need to license the patent or other rights of other parties. If a third party does not offer us a needed license or offers us a license only on terms that are unacceptable, we may be unable to commercialize one or more of our products. If a third party does not offer a needed license to our collaborators and as a result our collaborators stop work under their agreement with us, we might lose future milestone payments and royalties, which would adversely affect us and our ability to meet our obligations to Paul Royalty. If we decide not to seek a license, or if licenses are not available on reasonable terms, we may become subject to infringement claims or other legal proceedings, which could result in substantial legal expenses. If we are unsuccessful in these actions, adverse decisions may prevent us from commercializing the affected process or products and could require us to pay substantial monetary damages.

We seek affirmative rights of license or ownership under existing patent rights relating to phage display technology of others. For example, through our patent licensing program, we have secured a limited freedom to practice some of these patent rights pursuant to our standard license agreement, which contains a covenant by the licensee that it will not sue us under certain of the licensee’s phage display improvement patents. We cannot guarantee, however, that we will be successful in enforcing any agreements from our licensees, including agreements not to sue under their phage display improvement patents, or in acquiring similar agreements in the future, or that we will be able to obtain commercially satisfactory licenses to the technology and patents of others. If we cannot obtain and maintain these licenses and enforce these agreements, this could have a material adverse impact on our business.

Proceedings to obtain, enforce or defend patents and to defend against charges of infringement are time consuming and expensive activities. Unfavorable outcomes in these proceedings could limit our patent rights and our activities, which could materially affect our business.

Obtaining, protecting and defending against patent and proprietary rights can be expensive. For example, if a competitor files a patent application claiming technology also invented by us, we may have to participate in an expensive and time-consuming interference proceeding before the United States Patent and Trademark Office to address who was first to invent the subject matter of the claim and whether that subject matter was patentable. Moreover, an unfavorable outcome in an interference proceeding could require us to cease using the technology or to attempt to license rights to it from the prevailing party. Our business would be harmed if a prevailing third party does not offer us a license on terms that are acceptable to us.

In patent offices outside the United States, we may be forced to respond to third party challenges to our patents. For example, our first phage display patent in Europe, European Patent No. 436,597, known as the 597 Patent, was ultimately revoked in 2002 in proceedings in the European Patent Office. We have one divisional patent application of the 597 Patent pending in the European Patent Office. We cannot be assured that we will prevail in the prosecution of this patent application. We will not be able to prevent other parties from using our phage display technology in Europe if the European Patent Office does not grant us another phage display patent.

The issues relating to the validity, enforceability and possible infringement of our patents present complex factual and legal issues that we periodically reevaluate. Third parties have patent rights related to phage display, particularly in the area of antibodies. While we have gained access to key patents in the antibody area through our cross-licensing agreements with Affimed, Affitech, Biosite, Domantis, Genentech, XOMA and Cambridge Antibody Technology Limited (now known as MedImmune Limited),

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other third party patent owners may contend that we need a license or other rights under their patents in order for us to commercialize a process or product. In addition, we may choose to license patent rights from third parties. While we believe that we will be able to obtain any needed licenses, we cannot assure you that these licenses, or licenses to other patent rights that we identify as necessary in the future, will be available on reasonable terms, if at all. If we decide not to seek a license, or if licenses are not available on reasonable terms, we may become subject to infringement claims or other legal proceedings, which could result in substantial legal expenses. If we are unsuccessful in these actions, adverse decisions may prevent us from commercializing the affected process or products. Moreover, if we are unable to maintain the covenants with regard to phage display improvements that we obtain from our licensees through our patent licensing program and the licenses that we have obtained to third party phage display patent rights it could have a material adverse effect on our business.

We would expect to incur substantial costs in connection with any litigation or patent proceeding. In addition, our management’s efforts would be diverted, regardless of the results of the litigation or proceeding. An unfavorable result could subject us to significant liabilities to third parties, require us to cease manufacturing or selling the affected products or using the affected processes, require us to license the disputed rights from third parties or result in awards of substantial damages against us. Our business will be harmed if we cannot obtain a license, can obtain a license only on terms we consider to be unacceptable or if we are unable to redesign our products or processes to avoid infringement.

In all of our activities, we substantially rely on proprietary materials and information, trade secrets and know-how to conduct research and development activities and to attract and retain collaborative partners, licensees and customers. Although we take steps to protect these materials and information, including the use of confidentiality and other agreements with our employees and consultants in both academic commercial relationships, we cannot assure you that these steps will be adequate, that these agreements will not be violated, or that there will be an available or sufficient remedy for any such violation, or that others will not also develop the same or similar proprietary information.

Our revenues and operating results have fluctuated significantly in the past, and we expect this to continue in the future.

Our revenues and operating results have fluctuated significantly on a quarter to quarter basis. We expect these fluctuations to continue in the future. Fluctuations in revenues and operating results will depend on:

· the cost of our increased research and development, manufacturing and commercialization expenses;

· the establishment of new collaborative and licensing arrangements;

· the timing and results of clinical trials, including a failure to receive the required regulatory approvals to commercialize our product candidates;

·  the timing, receipt and amount of payments, if any, from current and prospective collaborators, including the completion of certain milestones; and

· revenue recognition policies.

Our revenues and costs in any period are not reliable indicators of our future operating results. If the revenues we receive are less than the revenues we expect for a given fiscal period, then we may be unable to reduce our expenses quickly enough to compensate for the shortfall. In addition, our fluctuating operating results may fail to meet the expectations of securities analysts or investors which may cause the price of our common stock to decline.

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If we lose or are unable to hire and retain qualified personnel, then we may not be able to develop our products or processes.

We are highly dependent on qualified scientific and management personnel, and we face intense competition from other companies and research and academic institutions for qualified personnel. If we lose an executive officer, a manager of one of our principal business units or research programs, or a significant number of any of our staff or are unable to hire and retain qualified personnel, then our ability to develop and commercialize our products and processes may be delayed which would have an adverse effect on our business, financial condition, and results of operations.

We use and generate hazardous materials in our business, and any claims relating to the improper handling, storage, release or disposal of these materials could be time-consuming and expensive.

Our phage display research and development involves the controlled storage, use and disposal of chemicals and solvents, as well as biological and radioactive materials. We are subject to foreign, federal, state and local laws and regulations governing the use, manufacture and storage and the handling and disposal of materials and waste products. Although we believe that our safety procedures for handling and disposing of these hazardous materials comply with the standards prescribed by laws and regulations, we cannot completely eliminate the risk of contamination or injury from hazardous materials. If an accident occurs, an injured party could seek to hold us liable for any damages that result and any liability could exceed the limits or fall outside the coverage of our insurance. We may not be able to maintain insurance on acceptable terms, or at all. We may incur significant costs to comply with current or future environmental laws and regulations.

Our business is subject to risks associated with international operations and collaborations.

We receive product development and license fees from international collaborations. We recognized revenue of approximately $12.0 million and $26.1 million for the nine months ended September 30, 2008 and the year ended December 31, 2007, respectively, from companies based outside of the United States. All of our revenue contracts are paid in United States dollars. We expect that international product development and license fees will continue to account for a significant percentage of our revenues for the foreseeable future. In addition, we have direct investments in subsidiaries located in the European Union. Our operations could be limited or disrupted, and the value of our direct investments may be diminished, by any of the following:

· fluctuations in currency exchange rates;

· the imposition of governmental controls;

· less favorable intellectual property or other applicable laws;

· the inability to obtain any necessary foreign regulatory approvals of products in a timely manner;

· import and export license requirements;

· political instability;

· terrorist activities; and

· difficulties in staffing and managing international operations.

A portion of our business is conducted in currencies other than our reporting currency, the United States dollar. We recognize foreign currency gains or losses arising from our operations in the period in which we incur those gains or losses. As a result, currency fluctuations among the United States dollar and the currencies in which we do business have caused foreign currency transaction gains and losses in the past and will likely do so in the future. Because of the variability of currency exposures and the potential volatility of currency exchange rates, we may suffer significant foreign currency transaction losses in the future due to the effect of exchange rate fluctuations on our future operating results.

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Compliance with changing regulations relating to corporate governance and public disclosure may result in additional expenses.

Keeping abreast of, and in compliance with, changing laws, regulations, and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, and NASDAQ Global Market rules, have required an increased amount of management attention and external resources. We intend to invest all reasonably necessary resources to comply with evolving corporate governance and public disclosure standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

We may not succeed in acquiring technology and integrating complementary businesses.

We may acquire additional technology and complementary businesses in the future. Acquisitions involve many risks, any one of which could materially harm our business, including:

· the diversion of management’s attention from core business concerns;

· the failure to exploit effectively acquired technologies or integrate successfully the acquired businesses;

· the loss of key employees from either our current business or any acquired businesses; and

· the assumption of significant liabilities of acquired businesses.

We may be unable to make any future acquisitions in an effective manner. In addition, the ownership represented by the shares of our common stock held by our existing stockholders will be diluted if we issue equity securities in connection with any acquisition. If we make any significant acquisitions using cash consideration, we may be required to use a substantial portion of our available cash. If we issue debt securities to finance acquisitions, then the debt holders would have rights senior to the holders of shares of our common stock to make claims on our assets and the terms of any debt could restrict our operations, including our ability to pay dividends on our shares of common stock. Acquisition financing may not be available on acceptable terms, or at all. In addition, we may be required to amortize significant amounts of intangible assets in connection with future acquisitions. We might also have to recognize significant amounts of goodwill that will have to be tested periodically for impairment. These amounts could be significant, which could harm our operating results.

Risks Related To Our Common Stock

Our common stock may continue to have a volatile public trading price and low trading volume.

The market price of our common stock has been highly volatile. Since our initial public offering in August 2000 through October 27, 2008, the price of our common stock on the NASDAQ Global Market has ranged between $54.12 and $1.05. The market has experienced significant price and volume fluctuations for many reasons, some of which may be unrelated to our operating performance.

Many factors may have an effect on the market price of our common stock, including:

· public announcements by us, our competitors or others;

· developments concerning proprietary rights, including patents and litigation matters;

· publicity regarding actual or potential results with respect to products or compounds we or our collaborators are developing;

· regulatory decisions in both the United States and abroad;

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· public concern about the safety or efficacy of new technologies;

· issuance of new debt or equity securities;

·general market conditions and comments by securities analysts; and

·quarterly fluctuations in our revenues and financial results.

While we cannot predict the individual effect that these factors may have on the price of our common stock, these factors, either individually or in the aggregate, could result in significant variations in price during any given period of time.

Anti-takeover provisions in our governing documents and under Delaware law and our shareholder rights plan may make an acquisition of us more difficult.

We are incorporated in Delaware. We are subject to various legal and contractual provisions that may make a change in control of us more difficult. Our board of directors has the flexibility to adopt additional anti-takeover measures.

Our charter authorizes our board of directors to issue up to 1,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders. If the board of directors exercises this power to issue preferred stock, it could be more difficult for a third party to acquire a majority of our outstanding voting stock. Our charter also provides staggered terms for the members of our board of directors. This may prevent stockholders from replacing the entire board in a single proxy contest, making it more difficult for a third party to acquire control of us without the consent of our board of directors. Our equity incentive plans generally permit our board of directors to provide for acceleration of vesting of options granted under these plans in the event of certain transactions that result in a change of control. If our board of directors used its authority to accelerate vesting of options, then this action could make an acquisition more costly, and it could prevent an acquisition from going forward. Our shareholder rights plan could result in the significant dilution of the proportionate ownership of any person that engages in an unsolicited attempt to take over our company and, accordingly, could discourage potential acquirers.

Section 203 of the Delaware General Corporation Law prohibits a person from engaging in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. This provision could have the effect of delaying or preventing a change of control of Dyax, whether or not it is desired by or beneficial to our stockholders.

The provisions described above, as well as other provisions in our charter and bylaws and under the Delaware General Corporation Law, may make it more difficult for a third party to acquire our company, even if the acquisition attempt was at a premium over the market value of our common stock at that time.

Item 5 - OTHER INFORMATION

On July 16, 2008, Stephen S. Galliker retired from his position as Chief Financial Officer, principal financial officer and principal accounting officer of Dyax.  As a result, upon the recommendation of the Audit Committee, on July 22, 2008, the Board of Directors designated Gustav Christensen to act as the interim principal financial officer and Amy Dellorco to act as the interim principal accounting officer for purposes of filing this quarterly report.  Mr. Christensen and Ms. Dellorco functioned in those roles until the appointment of George Migausky as our new Chief Financial Officer on August 7, 2008.

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Item 6 – EXHIBITS

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company (as corrected).  Filed herewith.
3.2	Amended and Restated By-laws of the Company. Filed herewith.
10.1	Employment Letter Agreement between the Company and George Migausky dated as of July 8, 2008. Filed herewith.
10.2	Securities Sale Agreement between the Company and Dompé Farmaceutici S.p.A. dated as of July 14, 2008. Filed herewith.
10.3	Retirement Agreement and General Release between the Company and Stephen S. Galliker dated as of July 16, 2008. Field herewith.
10.4†	Loan Agreement between Cowen Healthcare Royalty Partners, L.P. and the Company dated as of August 5, 2008. Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Certification pursuant to 18 U.S.C. Section 1350. Filed herewith.

† This Exhibit has been filed separately with the Commission pursuant to an application for confidential treatment.  The confidential portions of this Exhibit have been omitted and are marked by an asterisk.

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DYAX CORP.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DYAX CORP.
Date:   October 29, 2008
	/s/ George Migausky
	Executive Vice President, Chief
	Financial Officer (Principal Financial and
	Accounting Officer)

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DYAX CORP.

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company (as corrected).  Filed herewith.
3.2	Amended and Restated By-laws of the Company. Filed herewith.
10.1	Employment Letter Agreement between the Company and George Migausky dated as of July 8, 2008. Filed herewith.
10.2	Securities Sale Agreement between the Company and Dompé Farmaceutici S.p.A. dated as of July 14, 2008. Filed herewith.
10.3	Retirement Agreement and General Release between the Company and Stephen S. Galliker dated as of July 16, 2008. Filed herewith.
10.4†	Loan Agreement between Cowen Healthcare Royalty Partners, L.P. and the Company dated as of August 5, 2008. Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Amended and Restated By-laws of the Company. Filed herewith.

† This Exhibit has been filed separately with the Commission pursuant to an application for confidential treatment.  The confidential portions of this Exhibit have been omitted and are marked by an asterisk.

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EX-3.1

Exhibit 3.1

CORRECTED AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

DYAX CORP.

We, the undersigned, for the purpose of correcting the Amended and Restated Certificate of Incorporation of Dyax Corp. (the “Corporation”) under the laws of the State of Delaware, hereby certify as follows:

A.The Corporation was incorporated under the name Biotage, Inc. pursuant to an original Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 26, 1989.

B.An Amended and Restated Certificate of Incorporation of the Corporation (the “Restated Certificate”) was filed with the Secretary of State of Delaware on May 20, 2004 in connection with an amendment to reflect an increase in the authorized shares of Common Stock, par value $0.01 per share, of the Corporation; and the Restated Certificate requires correction as permitted by Section 103(f) of the DGCL.

C.The inaccuracy or defect in the Restated Certificate is that it failed to include the provisions of the Certificate of Incorporation that theretofore had been approved by the Board of Directors of the Corporation in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware for the designation of the Series A Junior Participating Preferred Stock of the Corporation, which designation had been set forth in the Corporation’s Certificate of Designation filed with the Secretary of State of Delaware on June 28, 2001.

D.  Accordingly, the Amended and Restated Certificate of Incorporation of the Corporation, as previously amended and restated, is hereby corrected and restated to read as follows:

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

DYAX CORP.

We, the undersigned, for the purpose of amending and restating the Restated Certificate of Incorporation of Dyax Corp. (the “Corporation”) under the laws of the State of Delaware, hereby certify as follows:

A.The Corporation was incorporated under the name Biotage, Inc. pursuant to an original Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 26, 1989.

B.The amendments to the Restated Certificate of Incorporation of the Corporation herein certified have been approved by the Board of Directors of the Corporation and duly adopted by the stockholders of the Corporation, and the restatement of the Restated Certificate of Incorporation of the Corporation herein certified has been authorized by the Board of Directors of the Corporation, in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.

C.The Restated Certificate of Incorporation of the Corporation, as previously amended and restated, is hereby restated and further amended to read as follows:

FIRST:  The name of the Corporation is DYAX CORP.

SECOND:  The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, City of Wilmington, County of Newcastle.  The name of its registered agent at such address is Corporation Service Company.

THIRD:   The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH:  The Corporation shall be authorized to issue One Hundred Twenty-Six Million (126,000,000) shares of capital stock, which shall be divided into One Hundred Twenty-Five Million (125,000,000) shares of Common Stock, par value $0.01 per share, and One Million (1,000,000) shares of Preferred Stock, par value $0.01 per share.

The following is a statement of the designations, preferences, voting powers, qualifications, special or relative rights and privileges in respect of the authorized capital stock of the Corporation.

Preferred Stock

The Board of Directors is authorized, subject to limitations prescribed by law and the provisions of this Article FOURTH, to provide by resolution for the issuance of the shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

The authority of the Board with respect to each series shall include, but shall not be limited to, determination of the following:

(a)The number of shares constituting that series and the distinctive designation of that series;

(bThe dividend rate, if any, on the shares of that series, whether dividends shall be cumulative, and if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of the series;

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(c)Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

(d)Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;

(e)Whether or not the shares of that series shall be redeemable, and if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(f)Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and if so, the terms and amount of such sinking fund;

(g)The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series;

(h)Any other relative rights, preferences and limitations of that series.

Designation of Series A Junior Participating Preferred Stock

A series of Preferred Stock of the Corporation has been created by the Board of Directors pursuant to the foregoing authority, and the designations, powers, preferences and rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:

1.Authorized Amount and Designation.  The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Junior Preferred Stock”).  The number of shares constituting such series shall be 50,000 shares and the par value shall be $.01 per share.  To the extent legally permitted, such number of shares may be increased or decreased by vote of the Board of Directors, provided that no decrease shall reduce the number of shares of Junior Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Junior Preferred Stock.

2.Dividends and Distributions.

a.Subject to the prior and superior rights of the holders of any shares of any series of preferred stock (collectively, the “Preferred Stock”) ranking prior and superior to the Junior Preferred Stock with respect to dividends, the holders of shares of Junior Preferred Stock, in preference to the holders of all shares of common stock of the Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of

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Junior Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend on the Common Stock payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Junior Preferred Stock.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

b.The Corporation shall declare a dividend or distribution on the Junior Preferred Stock as provided in paragraph a. of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock), provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

c.Dividends shall begin to accrue and be cumulative on outstanding shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Junior Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Junior Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of shares of Junior Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than sixty (60) days prior to the date fixed for the payment thereof.

3.Voting Rights.  The holders of shares of Junior Preferred Stock shall have the following voting rights:

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a.Subject to the provision for adjustment hereinafter set forth, each share of Junior Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

b.Except as otherwise provided herein, in the Corporation’s Certificate of Incorporation, in any other vote of the Board of Directors of the Corporation creating a series of Preferred Stock, or by law, the holders of shares of Junior Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

c.Except as set forth herein or as otherwise provided by law, holders of Junior Preferred Stock shall have no voting rights.

4.Liquidation, Dissolution or Winding Up.  Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Junior Preferred Stock unless, prior thereto, the holders of shares of Junior Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Junior Preferred Stock shall be entitled to receive, to the extent greater than the foregoing, an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Junior Preferred Stock, except distributions made ratably on the Junior Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

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5.Consolidation, Merger, etc.  In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Junior Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.  In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Junior Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

6.Certain Restrictions.

a.Whenever quarterly dividends or other dividends or distributions payable on the Junior Preferred Stock are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Junior Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Junior Preferred Stock;

(ii)declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Junior Preferred Stock, except dividends paid ratably on the Junior Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii)redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Junior Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Junior Preferred Stock; or

(iv)redeem, purchase or otherwise acquire for consideration any shares of Junior Preferred Stock, or any shares of stock ranking on a parity with the Junior Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights

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and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

b.The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph a. of this Section 6 purchase or otherwise acquire such shares at such time and in such manner.

7.Reacquired Shares.  Any shares of Junior Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as shares of Junior Preferred Stock or as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth herein, in the Corporation’s Certificate of Incorporation, in any other vote of the Board of Directors of the Corporation creating a series of Preferred Stock, or as otherwise required by law.

8.Redemption.  The shares of Junior Preferred Stock shall not be redeemable.

9.Rank.  The Junior Preferred Stock shall rank equally with respect to the payment of dividends and the distribution of assets together with any other series of the Corporation’s Preferred Stock that specifically provide that they shall rank equally with Junior Preferred Stock.  The Junior Preferred Stock shall rank junior with respect to the payment of dividends and the distribution of assets to all series of the Corporation’s Preferred Stock that specifically provide that they shall rank prior to the Junior Preferred Stock.  Nothing herein shall preclude the Board from creating any series of Preferred Stock ranking on a parity with or prior to the Junior Preferred Stock as to the payment of dividends or the distribution of assets.

10.Amendment.  The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the holders of Junior Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding Junior Preferred Stock, voting together as a single series.

11.Fractional Shares.  The Junior Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of the Junior Preferred Stock.

Common Stock

The Common Stock is subject to the rights and preferences of the Preferred Stock as hereinbefore set forth or authorized.

Subject to the provisions of any applicable law or of the by-laws of the Corporation, as from time to time amended, with respect to the fixing of a record date for the determination of stockholders entitled to vote, and except as otherwise provided herein or by law or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have exclusive voting rights for the election of

7

directors and for all other purposes, each holder of record of shares of Common Stock being entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation.

Subject to the rights of any one or more series of Preferred Stock, the holders of Common Stock shall be entitled to receive such dividends from time to time as may be declared by the Board of Directors out of any funds of the Corporation legally available for the payment of such dividends.

In the event of the liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, after payment shall have been made to the holders of the Preferred Stock of the full amount to which they are entitled, the holders of Common Stock shall be entitled to share ratably according to the number of shares of Common Stock held by them in all remaining assets of the Corporation available for distribution to its stockholders.

Issuance

Subject to the provisions of this Certificate of Incorporation and except as otherwise provided by law, the shares of stock of the Corporation, regardless of class, may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine.

FIFTH:  The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation:

1.Any vote or votes authorizing liquidation of the Corporation or proceedings for its dissolution may provide, subject to the rights of creditors and the rights expressly provided for particular classes or series of stock, for the distribution among the stockholders of the Corporation of the assets of the Corporation as provided herein, wholly or in part or in kind, whether such assets be in cash or other property, and may authorize the Board of Directors of the Corporation to determine the valuation of the different assets of the Corporation for the purpose of such liquidation and may divide or authorize the Board of Directors to divide such assets or any part thereof among the stockholders of the Corporation, in such manner that every stockholder will receive a proportionate amount in value (determined as provided herein) of cash or property of the Corporation upon such liquidation or dissolution even though each stockholder may not receive a strictly proportionate part of each such asset.

2.The directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the entire Board permits, with the term of office of one class expiring each year.  The initial Class I directors elected by the stockholders of the Corporation shall hold office for a term expiring at the 2001 annual meeting of stockholders; the initial Class II directors elected by the stockholders of the Corporation shall hold office for a term expiring at the 2002 annual meeting of stockholders; and the initial Class III directors elected by the stockholders of the Corporation shall hold office for a term expiring at the 2003 annual meeting of stockholders.  At each such annual meeting of stockholders and at each annual meeting thereafter, successors to the class of directors whose term expires at that meeting shall be elected for a term expiring at the third annual meeting following their election and until their

8

successors shall be elected and qualified, subject to prior death, resignation, retirement or removal.  If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no event will a decrease in the number of directors shorten the term of any incumbent director.  Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the election, terms of office and  other features of such directorships shall be governed by the terms of the vote establishing such series, and such directors so elected shall not be divided into classes pursuant to this Article FIFTH unless expressly provided by such terms.

3.Each director chosen to fill a vacancy in the Board of Directors shall be elected to complete the term of office of the director who is being succeeded.  In the case of any election of a new director to fill a directorship created by an enlargement of the Board, the Board shall in such election assign the class of directors to which such additional director is being elected, and each director so elected shall hold office for the same term as the other members of the class to which the director is assigned.

4.Except as otherwise determined by the Board of Directors in establishing a series of Preferred Stock as to directors elected by holders of such series, at any special meeting of the stockholders called at least in part for the purpose, any director or directors may, by the affirmative vote of the holders of at least a majority of the stock entitled to vote for the election of directors, by removed from office for cause.  The provisions of this subsection shall be the exclusive method for the removal of directors.

5.Elections of directors need not be by ballot.

6.The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the by-laws of the Corporation.

7.A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.  If the Delaware General Corporation Law is amended after approval by the stockholders of this Article FIFTH to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended from time to time.

Any repeal or modification of this Article FIFTH shall not increase the personal liability of any director of this Corporation for any act or occurrence taking place before such repeal or modification, nor otherwise adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

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8.Meetings of stockholders may be held anywhere within or without the State of Delaware.  The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the Corporation.

SIXTH:  Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for the Corporation under the provisions of §291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provision of §279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs.  If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation, as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

SEVENTH:  No action required to be taken or that may be taken at any annual or special meeting of stockholders of the Corporation may be taken by written consent without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.

This Article Seventh may not be amended, revised or revoked, in whole or in part, except by the affirmative vote of the holders of 66 2/3% of the shares of all classes of stock of the Corporation entitled to vote for the election of directors, considered for the purposes of this Article Seventh as one class of stock.

EIGHTH:  The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders are granted subject to this reservation.

NINTH:  1. Except as set forth in Section 2 of this Article Ninth, the affirmative vote of the holders of 66 2/3% of the shares of all classes of stock of the Corporation entitled to vote for the election of directors, considered for the purposes of this Article Ninth as one class, shall be required:

(a) for the adoption of any agreement for the merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into any Other Corporation (as hereinafter defined);

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(b) to authorize any sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the assets of the Corporation or any Subsidiary to any Other Corporation;

(c) to authorize the issuance or transfer by the Corporation of any Substantial Amount (as hereinafter defined) of securities of the Corporation in exchange for the securities or assets of any Other Corporation;  or

(d) to engage in any other transaction the effect of which is to combine the assets and business of the Corporation or any Subsidiary with any Other Corporation.

Such affirmative vote shall be in addition to the vote of the holders of the stock of the Corporation otherwise required by law, elsewhere in this Restated Certificate of Incorporation or any agreement or contract to which the Corporation is a party.

2. The provisions of Section 1 of this Article Ninth shall not be applicable to any transaction described therein if such transaction is approved by a resolution of the Board of Directors of the Corporation, provided that the directors voting in favor of such resolution include a majority of the Independent Board Members (as defined below).  In considering such transaction, the Board of Directors shall give due consideration to all relevant factors, including without limitation the social and economic effects on the employees, customers, suppliers and other constituents of the Corporation and it Subsidiaries and on the communities in which the Corporation and its Subsidiaries operate or are located.

3.  The Board of Directors of the Corporation shall have the power and duty to determine for the purposes of this Article Ninth, on the basis of information known to such Board, if and when any person, firm, corporation or other entity, other than a Subsidiary of the Corporation, is an Other Corporation (as defined below).  In determining whether a person, firm, corporation or other entity is an Other Corporation, such person, firm, corporation or other entity shall be deemed to be the “Beneficial Owner” of shares of stock of the Corporation entitled to vote in the election of directors if he, she or it or any “affiliate” or “associate” of such person, firm, corporation or other entity (as those terms are defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended from time to time), directly or indirectly, controls the voting of such stock or has any options, warrants, conversion or other rights to acquire such stock.  Any such determination, if made in good faith, shall be conclusive and binding for all purposes under this Article Ninth, until the ownership interest of such person, firm, corporation or other entity increases.

4.  As used in this Article Ninth, the following terms shall have the meanings indicated:

“Independent Board Members” shall be those persons then in office (but not less than 1) who were duly elected and acting members of the Board of Directors as of the last election of directors prior to the date on which the Other Corporation involved in the proposed transaction first became an Other Corporation, as determined by the Board of Directors in accordance with Section 3 above.

“Other Corporation” means any person, firm, corporation or other entity, other than a Subsidiary of the Corporation, which is the Beneficial Owner of 5% or more of the shares

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of stock of the Corporation entitled to vote in the election of directors, as determined in accordance with Section 3 above.

“Subsidiary” means any corporation in which the Corporation owns, directly or indirectly, more than 50% of the voting securities.

“Substantial Amount” means any securities of the Corporation having a then fair market value of more than $500,000.

5.The Corporation elects to be governed by Section 203 of the Delaware General Corporation Law.

6.This Article Ninth may not be amended, revised or revoked, in whole or in part, except by the affirmative vote of the holders of 66 2/3% of the shares of all classes of stock of the Corporation entitled to vote for the election of directors, considered for the purposes of this Article Ninth as one class of stock.

Signed and attested this 30^th day of  September, 2008.

	/s/ Henry E. Blair
	Henry E. Blair, President
Attest:
/s/  Nathaniel S. Gardiner
Nathaniel S. Gardiner, Secretary

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

DYAX CORP.

ARTICLE I

STOCKHOLDERS

SECTION 1.      Place of Meetings.  All meetings of stockholders shall be held at the principal office of the corporation or at such other place as may be named in the notice.

SECTION 2.      Annual Meeting.  The annual meeting of stockholders for the election of directors and the transaction of such other business as may properly come before the meeting shall be held on such date and at such hour and place as the directors or an officer designated by the directors may determine.  If the annual meeting is not held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient.

SECTION 3.      Special Meetings.  Special meetings of the stockholders may be called at any time by the President, the Chairman of the Board, if any, or the Board of Directors.

SECTION 4.      Notice of Meetings.  Except where some other notice is required by law, written notice of each meeting of stockholders, stating the place, date and hour thereof and the purposes for which the meeting is called, shall be given by the Secretary under the direction of the Board of Directors, the President or the Chairman of the Board, if any, not less than ten nor more than sixty days before the date fixed for such meeting, to each stockholder of record entitled to vote at such meeting.  Notice shall be given personally to each stockholder or left at his or her residence or usual place of business or mailed postage prepaid and addressed to the stockholder at his or her address as it appears upon the records of the corporation.  In case of the death, absence, incapacity or refusal of the Secretary, such notice may be given by a person designated either by the Secretary or by the person or persons calling the meeting or by the Board of Directors.  A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice.  Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of

notice.  Except as required by statute, notice of any adjourned meeting of the stockholders shall not be required.

SECTION 5.      Record Date.  The Board of Directors may fix in advance a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action.  Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days before any other action to which such record date relates.  If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held, and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 6.      Nomination of Directors.  Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors at any annual or special meeting of stockholders.  Nominations of persons for election as directors may be made only by or at the direction of the Board of Directors, or by any stockholder entitled to vote for the election of directors at the meeting in compliance with the notice procedures set forth in this Section 6.  Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Chairman of the Board, if any, the President or the Secretary.  To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than 45 days nor more than 60 days before the meeting; provided, however, that if less than 60 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.  Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice, (i) the name and record address of such stockholder and (ii) the class and number of shares of capital stock of the corporation that are beneficially owned by such stockholder.

The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

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SECTION 7.      Advance Notice of Business at Annual Meetings.  At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting.  To be brought properly before an annual meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the President or the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board, or (c) properly brought before the meeting by a stockholder.  In addition to any other applicable requirements, for business to be brought properly before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Chairman of the Board, if any, the President or the Secretary.  To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 45 days nor more than 60 days before the meeting; provided, however, that if less than 60 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made.  A stockholder’s notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the corporation that are beneficially owned by the stockholder and (iv) any material interest of the stockholder in such business.

Notwithstanding anything in these by-laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 7, provided, however, that nothing in this Section 7 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedure.

The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

SECTION 8.      Voting List.  The officer who has charge of the stock ledger of the corporation shall make or have made, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days before the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.  The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders.

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SECTION 9.      Quorum of Stockholders.  At any meeting of the stockholders, the holders of a majority in interest of all stock issued and outstanding and entitled to vote upon a question to be considered at the meeting, present in person or represented by proxy, shall constitute a quorum for the consideration of such question, but in the absence of a quorum a smaller group may adjourn any meeting from time to time.  When a quorum is present at any meeting, a majority of the stock represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation or by these by-laws, decide any question brought before such meeting.  Any election by stockholders shall be determined by a plurality of the vote cast by the stockholders entitled to vote at the election.

SECTION 10.    Proxies and Voting.  Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock held of record by such stockholder, but no proxy shall be voted or acted upon after three years from its date, unless said proxy provides for a longer period.  Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote unless in the transfer by the pledgor on the books of the corporation the pledgee shall have been expressly empowered to vote thereon, in which case only the pledgee or the pledgee’s proxy may represent said stock and vote thereon.  Shares of the capital stock of the corporation belonging to the corporation or to another corporation, a majority of whose shares entitled to vote in the election of directors is owned by the corporation, shall neither be entitled to vote nor be counted for quorum purposes.

SECTION 11.    Conduct of Meeting.  Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting:  the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, a Vice President, or, if none of the foregoing is in office and present and acting, a chairman to be chosen by the stockholders.  The Secretary of the corporation, if present, or an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the chairman of the meeting shall appoint a secretary of the meeting.

ARTICLE II

DIRECTORS

SECTION 1.      General Powers.  The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation that are not by law required to be exercised by the stockholders.  In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

SECTION 2.      Number; Election; Tenure and Qualification.  Subject to any restrictions contained in the Certificate of Incorporation, the number of directors that shall constitute the whole Board shall be fixed by resolution of the Board of Directors but in no event shall be less than one. The directors shall be elected in the manner provided in the Certificate of Incorporation, by such stockholders as have the right to vote thereon.  The number of directors

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may be increased or decreased by action of the Board of Directors.  Directors need not be stockholders of the corporation.

SECTION 3.      Enlargement of the Board.  Subject to any restrictions contained in the Certificate of Incorporation, the number of the Board of Directors may be increased at any time, such increase to be effective immediately unless otherwise specified in the resolution, by vote of a majority of the directors then in office.

SECTION 4.      Vacancies.  Unless and until filled by the stockholders and except as otherwise determined by the Board of Directors in establishing a series of Preferred Stock as to directors elected by the holders of such series, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board and an unfilled vacancy resulting from the removal of any director, may be filled by vote of a majority of the directors then in office although less than a quorum, or by the sole remaining director.  Each director so chosen to fill a vacancy shall serve for a term determined in the manner provided in the Certificate of Incorporation.  When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.  If at any time there are no directors in office, then an election of directors may be held in accordance with the General Corporation Law of the State of Delaware.

SECTION 5.      Resignation.  Any director may resign at any time upon written notice to the corporation.  Such resignation shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the President or Secretary.

SECTION 6.      Removal.  Directors may be removed from office only as provided in the Certificate of Incorporation.  The vacancy or vacancies created by the removal of a director may be filled by the stockholders at the meeting held for the purpose of removal or, if not so filled, by the directors in the manner provided in Section 4 of this Article II.

SECTION 7.      Committees.  The Board of Directors may designate one or more committees, each committee to consist of one or more directors of the corporation.  The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee.  In the absence or disqualification of any member of any such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member.  The Board of Directors shall have the power to change the members of any such committee at any time, to fill vacancies therein and to discharge any such committee, either with or without cause, at any time.

Any such committee, unless otherwise provided in the resolution of the Board of Directors, or in these by-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation in accordance with Section 141(c)(2) of the General Corporation Law of the State of Delaware and

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may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority denied it by such Section 141.

A majority of all the members of any such committee may fix its rules of procedure, determine its action and fix the time and place, whether within or without the State of Delaware, of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise by resolution provide.  Each committee shall keep regular minutes of its meetings and make such reports as the Board of Directors may from time to time request.

SECTION 8.      Meetings of the Board of Directors. Regular meetings of the Board of Directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the Board may by vote from time to time determine.  A regular meeting of the Board of Directors may be held without call or formal notice immediately after and at the same place as the annual meeting of the stockholders, or any special meeting of the stockholders at which a Board of Directors is elected.

Special meetings of the Board of Directors may be held at any place either within or without the State of Delaware at any time when called by the Chairman of the Board of Directors, the President, Treasurer, Secretary, or two or more directors.  Reasonable notice of the time and place of a special meeting shall be given to each director unless such notice is waived by attendance or by written waiver in the manner provided in these by-laws for waiver of notice by stockholders.  Notice may be given by, or by a person designated by, the Secretary, the person or persons calling the meeting, or the Board of Directors.  No notice of any adjourned meeting of the Board of Directors shall be required.  In any case it shall be deemed sufficient notice to a director to send notice by mail at least seventy-two hours, or by electronic mail or telephonic facsimile transmission at least forty-eight hours, before the meeting, addressed to such director at his or her usual or last known business or home address.

Directors or members of any committee may participate in a meeting of the Board of Directors or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting.

SECTION 9.      Quorum and Voting.  A majority of the total number of directors shall constitute a quorum, except that when a vacancy or vacancies exist in the Board, a majority of the directors then in office (but not less than one-third of the total number of the directors) shall constitute a quorum.  A majority of the directors present, whether or not a quorum is present, may adjourn any meeting from time to time.  The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except where a different vote is required or permitted by law, by the Certificate of Incorporation or by these by-laws.

SECTION 10.    Compensation.  The Board of Directors may fix fees for their services and for their membership on committees, and expenses of attendance may be allowed for attendance at each meeting.  Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity, as an officer, agent or otherwise, and receiving compensation therefor.

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SECTION 11.    Action Without Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting and without notice if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee.

ARTICLE III

OFFICERS

SECTION 1.      Titles.  The officers of the corporation shall consist of a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, who may include without limitation a Chairman of the Board, a Vice Chairman of the Board and one or more Vice Presidents, Assistant Treasurers or Assistant Secretaries.

SECTION 2.      Election and Term of Office.  The officers of the corporation shall be elected annually by the Board of Directors at its first meeting following the annual meeting of the stockholders. Each officer shall hold office until his or her successor is elected and qualified, unless a different term is specified in the vote electing such officer, or until his or her earlier death, resignation or removal.

SECTION 3.      Qualification.  Unless otherwise provided by resolution of the Board of Directors, no officer, other than the Chairman or Vice Chairman of the Board, need be a director.  No officer need be a stockholder.  Any number of offices may be held by the same person, as the directors shall determine.

SECTION 4.      Removal.  Any officer may be removed, with or without cause, at any time, by resolution adopted by the Board of Directors.

SECTION 5.      Resignation.  Any officer may resign by delivering a written resignation to the corporation at its principal office or to the Chairman of the Board, if any, the President, or the Secretary.  Such resignation shall be effective upon receipt or at such later time as may be specified therein.

SECTION 6.      Vacancies.  The Board of Directors may at any time fill any vacancy occurring in any office for the unexpired portion of the term and may leave unfilled for such period as it may determine any office other than those of President, Treasurer and Secretary.

SECTION 7.      Powers and Duties.  The officers of the corporation shall have such powers and perform such duties as are specified herein and as may be conferred upon or assigned to them by the Board of Directors and shall have such additional powers and duties as are incident to their office except to the extent that resolutions of the Board of Directors are inconsistent therewith.

SECTION 8.      President and Vice Presidents.  Except to the extent that such duties are assigned by the Board of Directors to the Chairman of the Board, or in the absence of

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the Chairman of the Board or in the event of his or her inability or refusal to act, the President shall be the chief executive officer of the corporation and shall have general and active management of the business of the corporation and general supervision of its officers, agents and employees, and shall see that all orders and resolutions of the Board of Directors are carried into effect.  The President shall preside at each meeting of the stockholders and the Board of Directors unless a Chairman or Vice Chairman of the Board is elected by the Board and is present at such meeting.

The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.  In the absence of the President or in the event of his or her inability or refusal to act, the duties of the President shall be performed by the Executive Vice President, if any, Senior Vice President, if any, or Vice President, if any, in that order (and, in the event there be more than one person in any such office, in the order of their election), and when so acting, such officer shall have all the powers of and be subject to all the restrictions upon the President.

SECTION 9.      Secretary and Assistant Secretaries.  The Secretary shall attend all meetings of the Board of Directors and of the stockholders and record all the proceedings of such meetings in a book to be kept for that purpose, shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, shall maintain a stock ledger and prepare lists of stockholders and their addresses as required and shall have custody of the corporate seal, which the Secretary or any Assistant Secretary shall have authority to affix to any instrument requiring it and attest by any of their signatures.  The Board of Directors may give general authority to any other officer to affix and attest the seal of the corporation.

Any Assistant Secretary may, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary.

SECTION 10.    Treasurer and Assistant Treasurers.  The Treasurer shall have the custody of the corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by or pursuant to resolution of the Board of Directors.  The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, the Chairman of the Board, if any, or the President, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board, the President, and the Board of Directors, at its regular meetings or whenever they may require it, an account of all transactions and of the financial condition of the corporation.

Any Assistant Treasurer may, in the absence of the Treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Treasurer.

SECTION 11.    Bonded Officers.  The Board of Directors may require any officer to give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors upon such terms and conditions as the Board of Directors

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may specify, including without limitation a bond for the faithful performance of the duties of such officer and for the restoration to the corporation of all property in his or her possession or control belonging to the corporation.

SECTION 12.    Salaries.  Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors or any committee thereof appointed for the purpose.

ARTICLE IV

STOCK

SECTION 1.      Certificated and Uncertificated Shares of Stock.  Shares of stock of the corporation may be represented by certificates or uncertificated, as determined by the Board of Directors in its discretion.

The stock certificates of any shares of stock of the corporation represented by certificates shall be signed by (1) the Chairman or Vice Chairman of the Board of Directors or the President or a Vice-President and (2) the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary.  Any or all signatures on any such certificate may be facsimiles.  In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature shall have been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person or entity were such officer, transfer agent or registrar at the date of issue.

Each certificated or uncertificated share of stock that is subject to any restriction on transfer pursuant to the Certificate of Incorporation, these by-laws, applicable securities laws, or any agreement among any number of stockholders or among such holders and the corporation shall have notice of such restriction conspicuously noted on the face or back of the certificate therefor or in the uncertificated share registration records.

SECTION 2.      Transfers of Shares of Stock.  Subject to the restrictions, if any, noted with respect to any shares of stock of the corporation, such shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require, or, if such shares are uncertificated, by notification to the corporation or its transfer agent of the transfer of such shares, accompanied by written authorization properly executed.  The corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to that stock, regardless of any transfer, pledge or other disposition of that stock, until the shares have been transferred on the books of the corporation in accordance with the requirements of these by-laws.

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SECTION 3.      Lost Certificates.  The directors may direct that (1) a new stock certificate or (2) uncertificated shares in place of any certificate previously issued by the corporation, be issued in the place of any certificate theretofore issued by the corporation and alleged to have been lost, stolen or destroyed, upon such terms in conformity with law as the directors shall prescribe.  The directors may, in their discretion, require the owner of the lost, stolen or destroyed certificate, or the owner’s legal representatives, to give the corporation a bond, in such sum as they may direct, to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate, or the issuance of any such new certificate or uncertificated shares.

SECTION 4.      Fractional Share Interests.  The corporation may, but shall not be required to, issue fractions of a share.  If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered or bearer form, which shall entitle the holder to receive a full share represented by a certificate or an uncertificated share, as the case may be, upon the surrender of such scrip or warrants aggregating a full share.  A certificated or uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation.  The Board of Directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for full certificated or uncertificated shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions that the Board of Directors may impose.

SECTION 5.      Dividends.  Subject to the provisions of the Certificate of Incorporation, the directors may, out of funds legally available therefor, declare and pay dividends upon the Common Stock of the corporation as and when they deem expedient.

ARTICLE V

INSURANCE AND INDEMNIFICATION

SECTION 1.      Insurance.  The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the General Corporation Law of the State of Delaware.

SECTION 2.      Indemnification.  The Corporation shall, to the fullest extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any

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threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom.

Indemnification shall include payment by the Corporation of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such payment if it is ultimately determined that such person is not entitled to indemnification under this Article, which undertaking shall be accepted without reference to the financial ability of such person to make such repayments.

The Corporation shall not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved or ratified by the Board of Directors of the Corporation.

The indemnification rights provided in this Article (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons.  The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article.

Any person seeking indemnification under this Article shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established.

Any amendment or repeal of the provisions of this Article shall not adversely affect any right or protection of a director or officer of this Corporation with respect to any act or omission of such director or officer occurring before such amendment or repeal.

ARTICLE VI

GENERAL PROVISIONS

SECTION 1.      Fiscal Year.  Except as otherwise designated from time to time by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January and end on the last day of December.

SECTION 2.      Corporate Seal.  The corporate seal shall be in such form as shall be approved by the Board of Directors.  The Secretary shall be the custodian of the seal, and a duplicate seal may be kept and used by each Assistant Secretary and by any other officer the Board of Directors may authorize.

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SECTION 3.      Certificate of Incorporation.  All references in these by-laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as in effect from time to time.

SECTION 4.      Execution of Instruments.  The Chairman and Vice Chairman of the Board of Directors, if any, the President, and the Treasurer shall have power to execute and deliver on behalf and in the name of the corporation any instrument requiring the signature of an officer of the corporation, including deeds, contracts, mortgages, bonds, notes, debentures, checks, drafts and other orders for the payment of money. In addition, the Board of Directors, the Chairman and Vice Chairman of the Board of Directors, if any, the President, and the Treasurer may expressly delegate such powers to any other officer or agent of the corporation.

SECTION 5.      Voting of Securities.  The Chairman and Vice Chairman of the Board of Directors, if any, the President, the Treasurer, and each other person authorized by the directors, each acting singly, may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at any meeting of stockholders or shareholders of any other corporation or organization the securities of which may be held by this corporation.  In addition, the Board of Directors, the Chairman and Vice Chairman of the Board of Directors, if any, the President, and the Treasurer may expressly delegate such powers to any other officer or agent of the corporation.

SECTION 6.      Evidence of Authority.  A certificate by the Secretary, an Assistant Secretary or a temporary secretary as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall, as to all persons who rely on the certificate in good faith, be conclusive evidence of that action.

SECTION 7.      Transactions with Interested Parties.  No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association or other organization in which one or more of the directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for that reason or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors that authorizes the contract or transaction or solely because the vote of any such director is counted for such purpose, if:

(1)  The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or such committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

(2)  The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

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(3)           The contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee of the Board of Directors or the stockholders.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.

SECTION 8.      Books and Records.  The books and records of the corporation shall be kept at such places within or without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE VII

AMENDMENTS

SECTION 1.      By the Board of Directors.  These bylaws may be altered, amended or repealed or new bylaws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present.

SECTION 2.      By the Stockholders.  These bylaws may be altered, amended or repealed or new bylaws may be adopted by the affirmative vote of the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, amendment, repeal or adoption of new bylaws shall have been stated in the notice of such special meeting.

As adopted on December 3, 2007

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EX-10.1

Exhibit 10.1

Dyax Corp.

300 Technology Square

Cambridge, MA 02139

CONFIDENTIAL DOCUMENT

July 8, 2008

George Migausky

4 Westgate Road

Winchester, MA  01890

Dear George,

It is my pleasure to extend to you an offer of employment with Dyax Corp.  With your skills, qualifications and enthusiasm, we are excited about the prospect of your joining the Dyax team.  The terms of our offer are as follows:

Title: Executive Vice President and Chief Financial Officer

Supervision and Starting Date:

You will be reporting directly to Henry Blair, Chairman and Chief Executive Officer.  Your start date will be no later than Monday August 11, 2008.

Responsibilities:

As EVP and CFO, you will be responsible for (i) supervising and managing the strategic operation of the Finance and Purchasing departments and (ii) such other duties as the Company’s CEO shall designate. All such duties will be performed and discharged, faithfully, diligently and to the best of your ability and in compliance with all applicable laws and regulations.  In performing these duties, you agree to devote substantially all of your working time and efforts to the business and affairs of Dyax and its affiliates.

Salary and Bonus:

As an exempt employee you will receive an annual salary of $325,000 to be paid in accordance with Dyax’s standard payroll practice.  Currently, our payroll is paid on a bi-weekly basis.

In addition to your base salary, you will be eligible for an annual bonus targeted at thirty-seven and half percent (37.5%) of your base salary.  Bonus eligibility and amounts will be subject to (i) the attainment of specific departmental objectives (1/2 weight) and corporate objectives (1/2 weight).  For exceptional performance beyond specified goals, target bonuses can be adjusted upwards in any category (departmental and/or corporate) at the discretion of the Compensation Committee of the Board of Directors.  Please note however, that you must be an employee at the time of the scheduled bonus payment to receive the bonus.  For the calendar year ending December 31, 2008 your determination of eligibility and amounts for this bonus will be based on your annual salary of your $325,000 and will not be prorated.  The actual bonus payout for each year is subject to the approval of the Compensation Committee of the Board of Directors.

Stock Options:

Pending the approval of the Compensation Committee of the Board of Directors, effective as of the first day of your employment, Dyax will grant you an Incentive Stock Option to purchase 100,000 shares of Dyax common stock at a purchase price equal to the closing price of Dyax’s common stock on the first day of your employment.  The option will be subject to the provisions of Dyax’s 1995 Equity Incentive Plan (the “Plan”) and the Stock Option Award Agreement to be entered into by you and Dyax following the grant, which in relevant part will require that such option (i) vests in equal monthly installments over four years; (ii) expires 10 years from the grant date; and (iii) may be exercised (as to the vested portion) for ninety (90) days following the termination of your employment.

Benefits:

You will eligible to participate in Dyax’s employee benefits in the same manner provided generally to Dyax’s exempt employees, including health and dental insurance, 401(k) savings plan, disability insurance and life insurance.  A package describing these benefits is enclosed.

Vacation:

Over the first year of your employment, you will accrue twenty (20) days of vacation.  Thereafter, you will continue to accrue according to the Dyax vacation policy, up to a maximum of thirty (30) days of vacation per year.  All vacation is to be taken in accordance with Dyax’s vacation policy.  In addition, should you become ill, you will be allowed up to five (5) paid sick days, provided that any unused sick days will not to be carried over from year to year and will not to be cashed out upon termination.  Additionally, Dyax offers employees ten paid holidays per year according to the company calendar.

Termination:

All employees at Dyax are employed at will.  “Employment at will” refers to the traditional relationship between employer and employee, allowing either party to unilaterally terminate the employment relationship.  While we ask that all employees provide at least three (3) weeks prior notice; you will be free to resign at any time.  Similarly, Dyax reserves the right to terminating your employment at any time, with or without cause and with or without prior notice.

However, in the event you are terminated by the Company without “cause,” Dyax agrees to continue paying you your monthly base salary for six (6) months as severance.  All accrued vacation time will be paid upon termination.  Medical and dental benefits will continue during the period when you are receiving severance and all accrued vacation time will be paid upon termination.  Medical and dental benefits shall continue during the period you are receiving severance.  Other than these benefits and your rights under COBRA, all other benefits and vesting of your stock options will terminate as of your date of termination.  The timing of any severance payments made to you by the Company pursuant to this Agreement will be subject to and made in accordance with Section 409A of the Internal Revenue Code of 1986, as amended, which may include a six month delay in when your severance may begin to be paid.

If your employment is terminated for “cause” by the Company or is terminated by you for any reason, your compensation, benefits, and stock option vesting will cease as of the termination date.  For purposes of this offer, “cause” will mean:

(i)the willful and continued failure by you to perform your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness), as determined by the Company’s CEO or your direct supervisor; or

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(ii)any act of material misconduct (including insubordination) or the commission of any act of dishonesty or moral turpitude in connection with your employment, as determined by the Company’s CEO or direct supervisor; or

(iii)the conviction of a felony or a crime involving moral turpitude.

Change of Control Agreement:

Additionally, the company has agreed to provide you with additional benefits in the event your employment within the company is terminated after a “change in control” on the same terms as has previously been offered to other senior executives of the company.  A copy of the letter containing such terms (the “Change of Control Agreement”) is enclosed for your review.

Confidentiality Agreement:

You will be required to sign Dyax’s Standard Employee Confidentiality Agreement on or before your first day of work.  A copy is enclosed for your review.  The Confidentiality Agreement obligates you not to disclose confidential information you may learn during your employment with Dyax, to assign to Dyax rights in inventions or other intellectual property developed in the course of your employment and not to solicit employees or business away from, or engage in competition against, Dyax for a period of one year following any termination of your employment.

Additional Documents:

You will also be required to sign a Certificate of Acknowledgment under which you acknowledge that you have read and agree to comply with Dyax’ s Corporate Communications, Disclosure and Insider Trading / Reporting Policy, Dyax’ s Code of Ethics and the Audit Committee Procedures for Handling Complaints.  A copy of each of these documents is also enclosed.

If this offer letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to Dyax the enclosed copy of this letter, along with the Confidentiality Agreement referenced above.  Such documents will then constitute the complete agreement with respect to your employment by Dyax.  We are excited to have you join the Dyax team.

This offer is valid through Monday July 14, 2008.

Sincerely,

/s/ Henry E. Blair

Henry E. Blair

Chairman and Chief Executive Officer

I acknowledge receipt and agree with the foregoing terms and conditions.

  /s/ George Migausky

George Migausky

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EX-10.2

Exhibit 10.2

SECURITIES SALE AGREEMENT

This SECURITIES SALE AGREEMENT (this “Agreement”) is made and entered into as of July 14, 2008, by and between DYAX CORP., a Delaware corporation (the “Company”), and DOMPÉ INTERNATIONAL, S.A. (the “Purchaser”).

RECITALS

WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to acquire from the Company, 2,008,032 shares (the “Shares”) of Common Stock, par value $0.01 per share, of the Company (the “Common Stock”), at a price of $4.98 per share for an aggregate purchase price of $9,999,999.36 (the “Purchase Price), on the terms and conditions set forth in this Agreement;

WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in reliance upon an exemption from securities registration under the Securities Act of 1933, as amended (the “Securities Act”).

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

1.AGREEMENT TO PURCHASE AND SELL STOCK.

(a)Authorization.  The Company’s Board of Directors has authorized the issuance and sale of the Shares (the “Purchased Securities”), pursuant to the terms and conditions of this Agreement.

(b)Agreement to Purchase and Sell Securities.  Subject to the terms and conditions of this Agreement, the Purchaser agrees to purchase, and the Company agrees to sell and issue to the Purchaser, the Shares.  The aggregate purchase price for the Shares shall be $9,999,999.36, or $4.98 per share.

2.CLOSING.

The purchase and sale of the Purchased Securities shall take place at the offices of the Company, 300 Technology Square, Cambridge, Massachusetts 02139, at 10:00 a.m. Boston time, on July 17, 2008, or at such other time and place as the Company and the Purchaser mutually agree upon (which time and place are referred to in this Agreement as the “Closing”).  At the Closing, the Company shall provide an irrevocable instruction to its transfer agent to issue to the Purchaser, against delivery by the Purchaser of the Purchase Price in immediately available funds by wire transfer, a stock certificate (the “Certificate”) registered in the name of the Purchaser (or in such nominee name as designated by the Purchaser), representing the Shares.  Closing documents may be delivered by facsimile with original signature pages sent by overnight courier.  The date of the Closing is referred to herein as the Closing Date.

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser that:

(a)Organization Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  and has all corporate power and authority required to (i) carry on its business as presently conducted and (ii) enter into this Agreement and the other agreements, instruments and documents contemplated hereby, and to consummate the transactions contemplated hereby and thereby.  The Company is qualified to do business and is in good standing in the Commonwealth of Massachusetts.

(b)Capitalization.  The authorized capital stock of the Company consists of 125,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”).  At March 31, 2008, the issued and outstanding capital stock of the Company consisted of (A) 60,522,258 shares of Common Stock and (B) no shares of Preferred Stock.  No shares of capital stock have been issued by the Company March 31, 2008 to the date hereof except for additional shares of Common Stock issued upon exercise of stock options that were outstanding on March 31, 2008.

(c)Due Authorization.  All corporate actions on the part of the Company necessary for the authorization, execution, delivery of, and the performance of the obligations of the Company under this Agreement and the authorization, issuance, reservation for issuance and delivery of the Purchased Securities have been taken, no further consent or authorization of the Company or the Board of Directors or its stockholders is required, and this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

(d)Valid Issuance of Purchased Securities.

(i)Purchased Securities.  The Purchased Securities will be, upon payment therefor by the Purchaser in accordance with this Agreement, duly authorized, validly issued, fully paid and non-assessable, and free from all liens, charges and preemptive rights or other similar rights of stockholders of the Company.

(ii)Compliance with Securities Laws.  Subject to the accuracy of the representations made by the Purchaser in Section 4 hereof, the Purchased Securities will be issued to the Purchaser in compliance with applicable exemptions from the registration and prospectus delivery requirements of the Securities Act.

(e)Non-Contravention.  The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby (including issuance of the Purchased Securities), do not (i) contravene or conflict with the Certificate of Incorporation or Bylaws of the Company; (ii) conflict with or constitute a violation in any material respect of any provision of any federal, state, local or foreign law, rule, regulation, order or decree applicable to the Company or by which any property or asset of the Company is bound or affected; or (iii) conflict with or

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constitute a default (or an event that with notice or lapse of time or both would become a default), or result in the creation or imposition of any lien, claim or encumbrance on any assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both), under any contract to which the Company is a party or any permit, license or similar right relating to the Company or by which the Company or its property or assets may be bound or affected, in the case of this clause (iii) which would reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations.

(f)Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person or entity in connection with the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby.

(g)SEC Documents.  The Company has timely filed all reports, schedules, forms, statements, exhibits and other documents required to be filed by it with the Securities and Exchange Commission (the “SEC” ) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”) for the twelve (12) months preceding the date hereof (all of the foregoing filed prior to or on the date hereof, and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being referred to in this Agreement collectively as the “SEC Documents” and individually as a “SEC Document”).  Each of the SEC Documents, as it may have been subsequently amended by filings made by the Company with the SEC prior to the date hereof, complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Document as of the date of filing.  None of the SEC Documents, as of the date of filing and as it may have been subsequently amended by filings made by the Company with the SEC prior to the date hereof, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements included in the SEC Documents have been prepared in accordance with accounting principles generally accepted in the United States, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes, may be condensed or summary statements or may conform to the SEC’s rules and instructions for Reports on Form 10-Q) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments).  All material agreements that were required to be filed as exhibits to the SEC Documents under Item 601 of Regulation S-K (collectively, the “Material Agreements”) to which the Company is a party, or the

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property or assets of the Company or are subject, have been filed as exhibits to the SEC Documents.  All Material Agreements are valid and enforceable against the Company in accordance with their respective terms.  The Company is not in breach of or default under any of the Material Agreements, and to the Company’s knowledge, no other party to a Material Agreement is in breach of or default under such Material Agreement, except in each case, for such breaches or defaults as would not reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations.  The Company has not received a notice of termination of any of the Material Agreements.

(h)Litigation.  As of the date hereof, there is no action, suit, proceeding or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the Company’s knowledge, threatened against the Company that if determined adversely to the Company would reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations ..  There has not been, and to the knowledge of the Company, there is not pending, any investigation by the SEC involving the Company or any current or former director or officer of the Company.  The Company has not received any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act and, to the Company’s knowledge, the SEC has not issued any such order.

4.REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser hereby represents and warrants to the Company that:

(a)Organization Good Standing and Qualification.  The Purchaser has the requisite corporate power and authority required to enter into this Agreement and to consummate the transactions contemplated hereby.

(b)Authorization.  The execution of this Agreement has been duly authorized by all necessary corporate action on the part of the Purchaser.  This Agreement constitutes the Purchaser’s legal, valid and binding obligation, enforceable in accordance with its terms.

(c)Purchase for own Account.  The Purchased Securities are being acquired for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the Securities Act.  The Purchaser represents that it has not been formed for the specific purpose of acquiring the Purchased Securities.

(d)Investment Experience.  The Purchaser has experience as an investor in securities of companies and acknowledges that it can bear the economic risk of its investment in the Purchased Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of this investment in the Purchased Securities.

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(e)Accredited Investor Status.  The Purchaser is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.

(f)Receipt of Information.  The Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the issuance and sale of the Purchased Securities and the business, properties, and financial condition of the Company.  The Purchaser is aware that the Company is currently engaged in various clinical development programs, the most advanced of which is developing DX-88 for the treatment of hereditary angioedema (“HAE”) and that the Company estimates that it will be announcing results of its current clinical trial of DX-88 for HAE in the quarter ending June 30, 2008.  In purchasing the Purchased Securities under this Agreement, the Purchaser has not relied upon any statement or other information from the Company with respect to the prospects for the results of such clinical trial, nor has the Purchaser been informed of any such results.  Although the Company has estimated that if the results are positive it expects to obtain regulatory approval of DX-88 for HAE in the United States at the end of 2008 (followed by approval in the European Union), the Purchaser acknowledges that there is no guarantee that any such approval will occur in accordance with those expectations and that such approvals may never be obtained for DX-88 for HAE or for any other indication.

5.COVENANTS OF THE PURCHASER.

(a)Restricted Securities. The Purchaser understands that the Purchased Securities have not been registered under the Securities Act and Purchaser agrees that, in addition to the restrictions set forth in Section 5(c) below, it will not sell, assign, or transfer any of the Purchased Securities unless (i) pursuant to an effective registration statement under the Securities Act, (ii) the Purchaser provides the Company with evidence reasonably satisfactory to the Company (which may include an opinion of counsel in form and substance reasonably satisfactory to the Company) to the effect that a sale, assignment or transfer of the Purchased Securities may be made without registration under the Securities Act and the transferee agrees to be bound by the terms and conditions of this Agreement, or (iii) pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”).

(b)Legends.  The Purchaser agrees that the Certificate for the Purchased Securities shall bear the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS

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EVIDENCED BY EVIDENCE REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT.”

The Purchaser may request that the Company remove, and the Company agrees to authorize the removal of any legend from the Purchased Securities (i) following any sale of the Purchased Securities pursuant to an effective registration statement or Rule 144, or (ii) in connection with a proposed sale of any of the Purchased Securities that would be eligible for sale under Rule 144.  Following the time a legend is no longer required for the Purchased Securities hereunder, the Company will, no later than thirty (30) business days following the delivery by the Purchaser to the Company or the Company’s transfer agent of a legended certificate representing such Purchased Shares, deliver or cause to be delivered to such Purchaser a certificate representing such Purchased Shares that is free from all restrictive and other legends. If unlegended certificates are not delivered to such Purchaser within such thirty (30) business day period, the Company shall pay such Purchaser liquidated damages in an amount equal to 1.0% of the aggregate Purchase Price of the Purchased Shares evidenced by such certificate for each 30-day period (or portion thereof) beyond such thirty (30) business days that the unlegended certificates have not been so delivered.

(c)Lockup Agreement.  The Purchaser agrees that for a period beginning on the date hereof and ending on the date that is six (6) months after the Closing Date, the Purchaser will not (except, subject to the restrictions on transfer described in Section 5(a), to an affiliate of the Purchaser who agrees in writing to be bound by the terms of this Agreement) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the SEC promulgated thereunder with respect to, any shares of capital stock or the Company or any securities convertible into or exercisable or exchangeable for such capital stock, or publicly announce an intention to effect any such transaction.

(d)Material Non-Public Information.  The Purchaser acknowledges that (i) the federal and state securities laws of the United States of America prohibit any person who has material, non-public information about a company from purchasing or selling securities of such a company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities and (ii) Purchaser has received material non-public information about the Company pursuant to a confidentiality agreement between the Company and the Purchaser.

6.MISCELLANEOUS.

(a)Successors and Assigns.  The terms and conditions of this Agreement will inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.  The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser.  The Purchaser may assign its rights under this Agreement to any person to whom the Purchaser assigns or transfers any Purchased Securities, provided that such transferee agrees in writing to be bound by

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the terms and provisions of this Agreement, and such transfer is in compliance with the terms and provisions of this Agreement and permitted by federal and state securities laws of the United States of America.

(b)Governing Law.  This Agreement will be governed by and construed and enforced under the internal laws of the State of Delaware, without reference to principles of conflict of laws or choice of laws.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(c)Survival.  The representations, warranties and covenants of the Company and the Purchaser contained in Sections 3 and 4 of this Agreement shall survive the Closing.

(d)Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

(e)Headings.  The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(f)Amendments and Waivers.  This Agreement may be amended and the observance of any term of this Agreement may be waived only with the written consent of the Company and the Purchaser.

(g)Severability.  If any provision of this Agreement is held to be unenforceable under applicable law, such provision will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.

[Remainder of page intentionally left blank.]

* * *

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IN WITNESS WHEREOF, the parties hereto have executed this Securities Sale Agreement as of the date and year first above written.

DYAX CORP.
By:	/s/ Ivana Magovcevic-Liebisch
Name:		Ivana Magovcevic-Liebisch, Ph.D., JD
Title:		Executive Vice President of Administration and
		General Counsel

DOMPÉ INTERNATIONAL, S.A.
By:	/s/ Eugenio Aringhieri
	Name:	Eugenio Aringhieri
	Title:	Chief Executive Officer

EX-10.3

Exhibit 10.3

RETIREMENT AGREEMENT AND GENERAL RELEASE

This RETIREMENT AGREEMENT AND GENERAL RELEASE (“Agreement”), dated as of July 16, 2008, is entered into by and between Dyax Corp., a Delaware corporation with offices at 300 Technology Square, Cambridge, Massachusetts 02139, U.S.A. (the “Company”), and Stephen S. Galliker (“Employee”).

RECITALS

A.Employee has previously notified the Company of his intention to retire from the Company on the date hereof.

B.In recognition of his service to the Company and in accordance with his intention to retire from full time employment, the Company has agreed to confer on Employee certain additional benefits, subject to the terms and conditions of this Agreement.

In consideration of the foregoing and mutual covenants contained herein, the parties agree as follows:

1.Retirement Date.

Employee’s retirement shall be effective as of July 16, 2008 (the “Retirement Date”) and his employment with the Company shall terminate as of that date.  Employee hereby confirms his resignation from all offices he holds in the Company and from all other offices he holds in any of the Company’s direct and indirect subsidiaries and any affiliates thereof, including without limitation any employee benefit plans, and agrees to deliver such further instruments confirming such resignations as the Company may reasonably request from time to time.

2.Retirement Pay.

The Company will pay Employee a lump sum amount (the “Retirement Payment”) of $150,628, less legally required and voluntarily authorized deductions.  Such payment will be made within five business days after the 7-day revocation period in Section 12 has expired.

3.Insurance and other Benefits.

(a)Group Health and Dental Coverage.  Employee’s group health and dental insurance shall terminate as of the Retirement Date.  Thereafter, Employee may continue receiving group health and dental coverage at Employee’s own expense as provided by federal COBRA law.  Eligibility to continue this insurance stops upon the termination of any period allowed by law.

(b)Retirement Plans.  Employee shall be entitled to his vested benefit in the Company’s 401(k) Plan, but Employee’s ongoing participation in the Company’s 401(k) plan will cease as of the Retirement Date.  Employee will not be able to make contributions out of any severance pay and Employee’s service credit will cease as of the Retirement Date.

(c)Vacation Pay.  Employee confirms and agrees that he has no accrued and unused paid time off as of the Retirement Date.

(d)Stock Options. Subject to applicable laws and regulations, the portion of each stock option granted to Employee pursuant to the Company’s Amended and Restated 1995 Equity Incentive Plan that is currently exercisable (“vested”) as of the Retirement Date may be exercised by Employee (or his estate or his personal representative in the case of his death or incapacity, respectively) at any time during the period (the option’s “Option Exercise Period”) beginning on the date hereof until the earlier of (i) the original expiration date of the option, which is the tenth anniversary of the date of grant of such option, or (ii) the first anniversary of the Retirement Date.  Each unexercised stock option will lapse upon expiration of its respective Option Exercise Period.  The portion of Employee’s stock options that are not vested as of the Retirement Date will terminate as of the Retirement Date.

(e)Cessation of Benefits.  Unless otherwise provided for expressly in this Agreement, all other benefits shall cease as of Retirement Date, including without limitation, the accrual of paid time off.

4.General Release.

In consideration of the payment of continued salary and other benefits set forth in this Agreement, Employee, on his/her own behalf and on behalf of his/her executors, heirs, administrators, assigns, and anyone else claiming by, through or under Employee, irrevocably and unconditionally, releases, and forever discharges the Company from, and with respect to, any and all debts, demands, actions, causes of action, suits, covenants, contracts, wages, bonuses, damages and any and all claims, demands, liabilities, and expenses (including attorneys’ fees and costs) whatsoever of any name or nature both in law and in equity, whether known or unknown (“Claim”) which Employee now has, ever had or may in the future have against the Company by reason of any matter, cause or thing which has happened, developed or occurred before the signing of this Agreement, including, but not limited to, (i) any and all claims, asserted or unasserted, arising from employee’s employment with or separation from the Company, and specifically including any claims employee may have under any federal, state or local labor, employment, discrimination, human rights, civil rights, wage/hour, pension, or tort law, statute, order, rule, regulation or public policy, including but not limited to, those arising under the [Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the] National Labor Relations Act, the Fair Labor Standards Act, the Occupational Safety and Health Act of 1970, the Americans With Disabilities Act of 1990, the Civil Rights Acts of 1964 and 1991, the Civil Rights Act of 1866, the Employee Retirement Income Security Act of 1974, the Rehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the Equal Pay Act of 1963, the Massachusetts Fair Employment Practices Act, the Massachusetts Payment of Wages Statute, and Chapters 149 through 154 of the Massachusetts General Laws, (ii) those arising under common law, including but not limited to claims or suits for intentional interference with contractual relations, breach of the implied covenant of good faith and fair dealing, breach of contract, wrongful termination, negligent supervision, negligence, intentional and negligent infliction of emotional distress, defamation, false imprisonment, libel, and slander, and (iii) any other action or grievance against the other party based upon any conduct whatsoever, which has happened, developed, or occurred before the signing of this Agreement; provided, however, that excepted from the foregoing are Employee’s rights to vested employee benefits, any rights to liability insurance coverage for claims relating to actions undertaken during the term of Employee’s employment by the Company, and any rights to indemnification in accordance with the Company’s Articles of Organization and by-laws.

It is expressly agreed and understood that the releases contained here are GENERAL RELEASES.  In the event that either party to this Agreement institutes any action hereby released or to which he or it has agreed not to sue, the claim shall be dismissed immediately upon presentation of this Agreement.

2

5.Exclusion.

In the event that a charge or complaint is filed with any administrative agency or in the event of an authorized investigation, charge or lawsuit filed by any administrative agency, Employee expressly waives and shall not accept any award or damages therefrom.

6.Nonadmissions Clause.

It is understood and agreed that this Agreement does not constitute any admission by the Company that any action taken with respect to Employee was unlawful or wrongful, or that such action constituted a breach of contract or violated any federal or state law, policy, rule or regulation.

7.Nondisparagement.

In consideration for the payments and benefits offered to Employee hereunder, Employee agrees that he/she shall not make any false, disparaging or derogatory statements in public or private regarding the Company or any of its directors, officers, employees, agents, or representatives or of the Company’s business affairs and financial condition.  The Company agrees that the officers and directors of the Company shall not disparage or make negative statements about Employee.

8.Confidentiality Agreement.

Employee acknowledges and agrees that he/she continues to be bound by any and all agreements between him/her and the Company relating to confidential and proprietary information and non-solicitation as set forth in the Employee Confidentiality Agreement executed between the Employee and the Company.

9.Non-competition.

In further consideration for the benefits provided hereunder, Executive agrees that for a period of twelve (12) months after the Retirement Date (a) Executive shall not directly or indirectly, whether as an employee, officer, director, consultant, lender or investor (other than any investment representing less than 1% of the equity in any publicly traded company), participate in any business enterprise engaged in researching, developing, marketing, selling or attempting to sell any products which are competitive with those that have been in development or are currently being developed by the Company or any of its subsidiaries, and (b) Executive shall not directly or indirectly recruit, solicit or otherwise induce or attempt to induce any employee of the Company to leave the employment of the Company.

10.Settlement of Accounts and Return of Company Property.

In accordance with customary practice, Employee must leave intact all electronic Company documents including those which he developed or helped develop during Employee’s employment.  Furthermore, Employee must settle expense accounts, etc. with the Company and return all Company property in Employee’s possession, including credit, identification and entry cards, equipment, and all documents and other materials and copies which include, or relate to, confidential information of the Company.  In the event that Employee is in possession of any such property belonging to the Company, Employee must return it to the Company’s Human Resources Director no later than August 1, 2008.

3

11.Breach.

Employee agrees that the compensation and benefits contained in this Agreement and which flow to Employee from the Company are subject to termination, reduction or cancellation in the event that Employee takes any action or engages in any conduct in material violation of this Agreement. In the event that Employee institutes legal proceedings to enforce this Agreement, Employee agrees that the sole remedy available to Employee shall be enforcement of the terms of this Agreement and/or a claim for damages resulting from the breach of this Agreement, but that under no circumstances shall Employee be entitled to receive or collect any damages for claims that Employee has released under this Agreement in accordance with the General Release contained in Section 4 of this Agreement.

12.Time To Consider Agreement.

Employee has a period of twenty-one (21) days to decide whether to sign this Agreement.  He may sign this Agreement prior to the expiration of the 21-day period, provided that he does so knowingly and voluntarily.

Employee acknowledges that he has been advised to consult with an attorney and has had ample opportunity to consult with and review this Agreement with an attorney of Employee’s choice.   Since this is a legally binding document, Employee should consider it carefully before signing and should consult with legal counsel if he wishes to do so.

13.Revocation.

It is agreed and understood that for a period of seven (7) calendar days following the execution of this Agreement, which period shall end at 5:00 p.m. on the seventh day following the date of execution, Employee may revoke this Agreement.  This Agreement will not become effective until this revocation period has expired.   This seven (7) day revocation period cannot be shortened by agreement of the parties or by any other means.

Any revocation must be made in writing to Ivana Magovcevic-Liebisch, Executive Vice President, and delivered to her, or mailed and postmarked, within such period of seven (7) calendar days.  This Agreement shall not become effective or enforceable until such revocation period has expired without Employee having revoked his acceptance.  Employee understands and agrees that his right to any of the benefits afforded Employee under the terms of this Agreement, as distinguished from those to which he is otherwise entitled, is expressly contingent upon expiration of the seven-day revocation period set forth therein.

14.Representations.

Employee acknowledges that in exchange for entering into this Agreement Employee has received good and valuable consideration in excess of that to which Employee would otherwise have been entitled in the absence of this Agreement.  This consideration includes, but is not limited to, the Retirement Payment provided in Section 2 and the benefits as described in Section 3.  Employee further acknowledges the sufficiency of that consideration.  Employee acknowledges that no other promises or agreements of any kind have been made to or with Employee by any person or entity whatsoever to cause him to sign this Agreement.  Employee further acknowledges that he has had sufficient opportunity to review this Agreement, consult an attorney, and fully understands the meaning and intent of this Agreement.

4

15.Severability.

If any of the terms of this Agreement shall be held to be invalid and unenforceable, the remaining terms of this Agreement are severable and shall not be affected thereby.  However, should the general release provisions of this Agreement be declared or determined by any tribunal, administrative agency or court of competent jurisdiction to be illegal or invalid, and should Employee thereupon seek to institute any claims that would have been within the scope of the general release, the Company shall be entitled to immediate repayment of, and Employee shall immediately return, amounts paid to Employee and he shall reimburse the Company for any additional benefits received by Employee hereunder.

16.Governing Law.

This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, and is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.

17.Entire Agreement.

This Agreement constitutes the entire agreement between the parties about or relating to Employee’s retirement and termination of employment from the Company, or the Company’s obligations to Employee with respect to Employee’s retirement, and fully supersedes any and all prior agreements or understanding between the parties with respect to such retirement and termination.  The terms of this Agreement are contractual in nature and not a mere recital, and they shall take effect as a sealed document.  This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, and may not be changed orally, but only by agreement in writing signed by both parties.  The parties’ attest that no other representations were made regarding this Agreement other than those contained herein.

*******

5

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement as a sealed instrument effective as of the date first written above.

DYAX CORP.
By:	/s/ Ivana Magovcevic-Liebisch
	Name:	Ivana Magovcevic-Liesbisch
	Title:	General Counsel

I HAVE BEEN ADVISED TO DISCUSS ALL ASPECTS OF THIS AGREEMENT WITH AN ATTORNEY OR ADVISOR OF MY CHOICE. I HAVE CAREFULLY READ AND FULLY UNDERSTAND ALL THE PROVISIONS OF THIS AGREEMENT AND I VOLUNTARILY AGREE TO IT.

EMPLOYEE:

/s/ Stephen S. Galliker

Stephen S. Galliker, individually

6

EX-10.4

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

		Page
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01.	Definitions
SECTION 1.02.	Interpretation; Headings	15
ARTICLE II
COMMITMENT; DISBURSEMENT; FEES
SECTION 2.01.	Commitment to Lend	15
SECTION 2.02.	Notice of Borrowing	16
SECTION 2.03.	Disbursement	16
SECTION 2.04.	Commitment Not Revolving	16
ARTICLE III
REPAYMENT
SECTION 3.01.	Amortization	16
SECTION 3.02.	Optional Prepayment; Mandatory Prepayment	16
SECTION 3.03.	Illegality	17
ARTICLE IV
INTEREST; EXPENSES
SECTION 4.01.	Interest Rate	17
SECTION 4.02.	Lockbox Account	18
SECTION 4.03.	Interest on Late Payments	21
SECTION 4.04.	Initial Expenses	21
SECTION 4.05.	Administration and Enforcement Expenses	22
ARTICLE V
TAXES
SECTION 5.01.	Taxes	22
SECTION 5.02.	Receipt of Payment	23
SECTION 5.03.	Other Taxes	23
SECTION 5.04.	Indemnification	23
SECTION 5.05.	Loans Treated As Indebtedness	24
SECTION 5.06.	Allocation of Issue Price	24
SECTION 5.07.	Registered Obligation	24

i

		Page
ARTICLE VI
PAYMENTS; COMPUTATIONS
SECTION 6.01.	Making of Payments	25
SECTION 6.02.	Setoff or Counterclaim	25
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01.	Conditions Precedent to the Loan	25
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01.	Representations and Warranties of Borrower	28
SECTION 8.02.	Survival of Representations and Warranties	36
ARTICLE IX
AFFIRMATIVE COVENANTS
SECTION 9.01.	Maintenance of Existence	36
SECTION 9.02.	Use of Proceeds	36
SECTION 9.03.	Financial Statements and Information	36
SECTION 9.04.	Books and Records	37
SECTION 9.05.	Inspection Rights; Access	37
SECTION 9.06.	Maintenance of Insurance and Properties	38
SECTION 9.07.	Governmental Authorizations	38
SECTION 9.08.	Compliance with Laws and Contracts	38
SECTION 9.09.	Plan Assets	38
SECTION 9.10.	Notices	38
SECTION 9.11.	Payment of Taxes	39
SECTION 9.12.	Waiver of Stay, Extension or Usury Laws	39
SECTION 9.13.	Additional Covenants of Borrower	39
SECTION 9.14.	Existing Licenses	40
SECTION 9.15.	Further Assurances	40
ARTICLE X
NEGATIVE COVENANTS
SECTION 10.01.	Activities of Borrower	40
SECTION 10.02.	Merger; Sale of Assets	40
SECTION 10.03.	Liens	41
SECTION 10.04.	Investment Company Act	42
SECTION 10.05.	Limitation on Additional Indebtedness	43
SECTION 10.06.	Limitation on Transactions with Controlled Affiliates	43

ii

		Page
SECTION 10.07.	ERISA	43
SECTION 10.08.	Restricted Payments	44
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.01.	Events of Default	44
SECTION 11.02.	Default Remedies	47
SECTION 11.03.	Right of Set-off; Sharing of Set-off	47
SECTION 11.04.	Rights Not Exclusive	48
ARTICLE XII
INDEMNIFICATION
SECTION 12.01.	Funding Losses	48
SECTION 12.02.	Increased Costs	48
SECTION 12.03.	Other Losses	49
SECTION 12.04.	Assumption of Defense; Settlements	49
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01.	Assignments	50
SECTION 13.02.	Participations	51
SECTION 13.03.	Successors and Assigns	51
SECTION 13.04.	Notices	51
SECTION 13.05.	Entire Agreement	53
SECTION 13.06.	Modification	53
SECTION 13.07.	No Delay; Waivers; etc.	53
SECTION 13.08.	Severability	53
SECTION 13.09.	Determinations	54
SECTION 13.10.	Replacement of Note	54
SECTION 13.11.	Governing Law	54
SECTION 13.12.	Jurisdiction	54
SECTION 13.13.	Waiver of Jury Trial	54
SECTION 13.14.	Waiver of Immunity	54
SECTION 13.15.	Counterparts	54
SECTION 13.16.	Limitation on Rights of Others	55
SECTION 13.17.	No Partnership	55
SECTION 13.18.	Survival	55
SECTION 13.19.	Patriot Act Notification	55

iii

Exhibits
Exhibit A	Business Report Format
Exhibit B	Co-Development Agreements
Exhibit C	Excluded Agreements and Excluded Products
Exhibit D	LFRP Know-How
Exhibit E	LFRP Libraries
Exhibit F	Form of Lockbox Agreement
Exhibit G	Form of Promissory Note
Exhibit H	Quarterly Report Format
Exhibit I	Form of Security Agreement
Exhibit J	Form of Notice of Borrowing
Exhibit K	Lockbox Instructions
Exhibit L	Form of Certificate of Borrower
Exhibit M	Form of Edwards Angell Palmer & Dodge LLP Opinion
Exhibit N	Form of Wolf Greenfield Opinion
Exhibit O	Form of Lowrie, Lando & Anastasi, LLP Opinion
Exhibit P	Warrant Agreement
Exhibit Q	Existing Liens and Related Indebtedness
Exhibit R	Form of Assignment and Acceptance

Schedules
Schedule 8.01(l)	Indebtedness
Schedule 8.01(n)	Subsidiaries
Schedule 8.01(s)(i)	[*****]
Schedule 8.01(s)(ii)	[*****]
Schedule 8.01(u)	Borrower’s Principal Place of Business
Schedule 8.01(v)(ii)	[*****]
Schedule 8.01(v)(iii)	[*****]
Schedule 8.01(v)(iv)	[*****]
Schedule 8.01(v)(vii)	[*****]
Schedule 8.01(v)(viii)	[*****]
Schedule 8.01(v)(ix)	[*****]
Schedule 8.01(v)(x)	[*****]
Schedule 8.01(w)(i)	[*****]
Schedule 8.01(w)(iii)	[*****]
Schedule 8.01(w)(v)	[*****]
Schedule 8.01(w)(vi)	[*****]
Schedule 8.01(w)(vii)	[*****]
Schedule 8.01(w)(viii)	[*****]
Schedule 8.01(w)(x)	[*****]
Schedule 8.01(x)	[*****]

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

iv

This LOAN AGREEMENT is dated as of August 5, 2008, by and between COWEN 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, Cowen 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.

2

(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.

3

“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.

4

“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.

5

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 Cowen Healthcare Royalty Partners, L.P.’s account at JP Morgan 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 sue, 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 JP Morgan 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.

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

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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.

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

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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

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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.

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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).

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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:

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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 Edwards Angell Palmer & 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 Wolf Greenfield, 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 Lowrie, Lando & 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.

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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 Paul 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 Paul Royalty Funds Holdings II, Borrower and JP Morgan Chase Bank, and (B) the escrow arrangement with respect to duplicate libraries for the benefit of Paul Royalty Funds Holdings II.

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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

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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.

29

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.

30

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.

36

(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.

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

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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 sue 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

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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.
300 Technology Square
Cambridge, MA  02139
Attention:  Chief Financial Officer
Facsimile:  (617) 225-7708
E-mail:  gmigauski@dyax.com

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

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  General Counsel
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

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

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Associate General Counsel
Facsimile:  (617) 225-7708
E-mail:  aashe@dyax.com

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

Edwards Angell Palmer & Dodge LLP
111 Huntington Avenue
Boston, MA  02199
Attention:  Stacie S. Aarestad
Facsimile:  (617) 227-4420
E-mail:  saarestad@eapdlaw.com

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

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(b)                             If to a Lender:

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.
Facsimile:  (646) 562-1293
Email:  greg.brown@cowen.com

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

Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY  10005
Attn:  Christopher T. Cox
Facsimile:  (212) 396-0136
E-mail:  ccox@cahill.com

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.

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

53

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.

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

54

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.

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

55

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

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,
as Lender
By:	Cowen Healthcare Royalty GP, LLC,
	its General Partner
By:	/s/ George B. Brown
	Name:	George B. Brown, M.D.
	Title:	Managing Director
DYAX CORP.,
as Borrower
By:	/s/ Ivana Magovcevic-Liebisch
	Name:	Ivana Magovcevic-Liebisch, PhD, JD
	Title:	Executive Vice President, Admin.
		and General Counsel

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”), Cowen 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, Cowen 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

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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

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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 Cowen 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, Title 11, United States 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 THE STATE, COUNTY AND CITY OF NEW YORK.  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]

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

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.

FINANCIAL INSTITUTION:	JPMORGAN CHASE BANK, N.A.
	By:
		Name: Rola Tseng
		Title: Vice President
COMPANY:	DYAX CORP.
	By:
		Name:
		Title:
LENDER:	COWEN HEALTHCARE ROYALTY PART- NERS, L.P.,
	By:	Cowen Healthcare Royalty GP, LLC,
		its General Partner
	By:
		Name:
		Title:
LOCKBOX ESCROW AGENT:	JPMORGAN CHASE BANK, N.A.
	By:
		Name: Rola Tseng
		Title: Vice President

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

INITIAL LOCKBOX	DYAX CORP.
CALCULATION AGENT:
	By:
		Name:
		Title:

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

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:          04-3053198

Lender’s  TIN is:                   26-1484093

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

Dyax Corporation
300 Technology Square
Cambridge, MA  02139
Main:      (617) 225-2500

Cowen Healthcare Royalty Partners
177 Broad Street, Suite 1101
Stamford, CT  06901
Main:      (646) 562-1100

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

SCHEDULE 2

to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF COMPANY

Henry E. Blair
Name:	Henry E. Blair
Title:	Chairman and Chief Executive Officer
	Dyax Corp.
Gustav Christensen
Name:	Gustav Christensen
Title:	Executive Vice President, Chief Business Officer
	Dyax Corp.
Ivana Magovcevic-Liebisch, PhD, JD
Name:	Ivana Magovcevic-Liebisch, PhD, JD
Title:	Executive Vice President, Admin.
	and General Counsel
	Dyax Corp.
Amy Dellorco
Name:	Amy Dellorco
Title:	Vice President, Finance and Controller
	Dyax Corp.
Andrew D. Ashe, Esq.
Name:	Andrew D. Ashe, Esq.
Title:	Vice President and Associate General Counsel
	Dyax Corp.

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

SCHEDULE 3
to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF LENDER

Gregory B. Brown
Name:	Gregory B. Brown, M.D.
Title:	Managing Director
	Cowen Healthcare Royalty Partners, L.P.
Clarke B. Futch
Name:	Clarke B. Futch
Title:	Managing Director
	Cowen Healthcare Royalty Partners, L.P.
Alyson Goldfarb
Name:	Alyson Goldfarb
Title:	CFO
	Cowen Healthcare Royalty Partners, L.P.

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

SCHEDULE 4

to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF LOCKBOX CALCULATION AGENT

Henry E. Blair
Name:	Henry E. Blair
Title:	Chairman and Chief Executive Officer
	Dyax Corp.
Gustav Christensen
Name:	Gustav Christensen
Title:	Executive Vice President, Chief Business Officer
	Dyax Corp.
Ivana Magovcevic-Liebisch, PhD, JD
Name:	Ivana Magovcevic-Liebisch, PhD, JD
Title:	Executive Vice President, Admin.
	and General Counsel
	Dyax Corp.
Amy Dellorco
Name:	Amy Dellorco
Title:	Vice President, Finance and Controller
	Dyax Corp.
Andrew D. Ashe, Esq.
Name:	Andrew D. Ashe, Esq.
Title:	Vice President and Associate General Counsel
	Dyax Corp.

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

SCHEDULE 5

to Agreement

CALCULATION OF ALLOCATIONS

Lockbox Account Payment Procedures

During each calendar quarter, all Gross Payments deposited into the Lockbox Account shall be treated in the following priority with sweeps to occur not less frequently than monthly:

I.Any amounts shall be swept into the Company Concentration Account until Company shall have received an amount equal to any [*****] Payments due to MedImmune Limited as a result of, or in connection with, such Gross Payments.

II.Any remaining amounts shall be swept into the Company Concentration Account for the payment of any Reimbursement Payments in the amounts received from Contract Parties.

III.Any remaining amounts shall be swept as follows:

A.The remaining amounts shall be swept into the Assignee Concentration Account until Assignee shall have received an amount equal to Applicable Included Receipts(1); and

B.The remainder of the remaining amounts shall be swept into the Company Concentration Account.

For the avoidance of doubt, on the first day of any calendar quarter, that process above shall be reset and repeated.

(1)As provided in the Loan Agreement, “Applicable Included Receipts” shall exclude FTE Payments so long as the principal amount of the Loan prepaid pursuant to Section 3.01(a) of the Loan Agreement exceeds any principal amount added to the Loans pursuant to Section 4.01(a)(ii) of the Loan Agreement (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).

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

SCHEDULE 6
to Agreement

ELIGIBLE LOCKBOX  CALCULATION AGENTS

Any accounting firm with a national reputation in the United States.

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

Exhibit G

Form of Promissory Note

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273, AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS NOTE, THE ISSUE PRICE IS $991.365, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,288.635, THE ISSUE DATE IS AUGUST 5, 2008, AND THE YIELD TO MATURITY IS 16.194% PER ANNUM.

US $50,000,000	New York, New York
	August 5, 2008

FOR VALUE RECEIVED, DYAX CORP., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of Cowen Healthcare Royalty Partners, L.P. or its registered assigns (the “Lender”), in lawful money of the United States of America, in same day funds on the Maturity Date the principal sum of (x) fifty million dollars (US $50,000,000) and (y) any principal added to the Loan pursuant to Section 4.01 of the Loan Agreement, less any payments of principal made prior to the Maturity Date as provided in the Loan Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof in like money, from the date hereof until such unpaid principal is paid in full, at the rates, at the times and in the manner provided in the Loan Agreement referred to below.

This Note is the Note referred to in the Loan Agreement, dated as of August 5, 2008, between the Borrower and the Lender (as amended from time to time, the “Loan Agreement”) and is entitled to the benefits thereof and of the other Loan Documents.  This Note is secured as provided in the Loan Documents.  This Note is subject to optional prepayment, in whole or in part, prior to the Maturity Date as provided in the Loan Agreement.

This Note is secured as provided in the Security Agreement and other Loan Documents.  Reference is hereby made to the Security Agreement for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security, the terms and conditions upon which the security interest was granted and the rights of the holder of this Note in respect thereof.

If an Event of Default shall occur and be continuing, the principal of and accrued interest on this Note may become or be declared to be due and payable in the manner and with the effect provided in the Loan Agreement.

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.

Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement.

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

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW 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).

DYAX CORP.
By:
	Name:
	Title:

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

Exhibit H

Quarterly Report Format

[*****]

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

Exhibit I

FORM OF SECURITY AGREEMENT

Dated as of August 5, 2008

between

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.

and

DYAX CORP.

(in favor of Cowen Healthcare Royalty Partners, L.P.)

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

TABLE OF CONTENTS

		Page
ARTICLE 1.	DEFINED TERMS	1
SECTION 1.1.	Definitions	1
SECTION 1.2.	Other Definitions	3
SECTION 1.3.	Terms Generally	3
ARTICLE 2.	WARRANT CERTIFICATES	3
SECTION 2.1.	Issuance and Dating	3
SECTION 2.2.	Execution and Countersignature	4
SECTION 2.3.	Certificate Register	4
SECTION 2.4.	Transfer and Exchange	4
SECTION 2.5.	Legends	5
SECTION 2.6.	Replacement Certificates	6
SECTION 2.7.	Cancellation	6
ARTICLE 3.	INITIAL ISSUANCE AND EXERCISE TERMS	7
SECTION 3.1.	Initial Issuance of Warrants	7
SECTION 3.2.	Exercise Price	7
SECTION 3.3.	Exercise Period	7
SECTION 3.4.	Expiration	7
SECTION 3.5.	Manner of Exercise	7
SECTION 3.6.	Issuance of Warrant Shares	8
SECTION 3.7.	Fractional Warrant Shares	8
SECTION 3.8.	Reservation of Warrant Shares	8
SECTION 3.9.	Listing on Securities Exchange	9
ARTICLE 4.	ANTIDILUTION PROVISIONS	9
SECTION 4.1.	Changes in Common Stock	9
SECTION 4.2.	Dividends and Other Distributions	9
SECTION 4.3.	Combination	10
SECTION 4.4.	Current Market Value	10
SECTION 4.5.	Certain Actions	11
SECTION 4.6.	Notice of Adjustment	11
SECTION 4.7.	Common Stock	12
SECTION 4.8.	Notice of Certain Transactions	12
SECTION 4.9.	Adjustment to Warrant Certificate	12
SECTION 4.10.	Adjustments or Issuances Deferred/Adjustments Not Required	13

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

ARTICLE 5.		REPRESENTATIONS AND AGREEMENT OF THE COMPANY		13
ARTICLE 6.		MISCELLANEOUS		14
SECTION 6.1.		Persons Benefiting		14
SECTION 6.2.		Rights of Holders		14
SECTION 6.3.		Amendment		15
SECTION 6.4.		Notices		15
SECTION 6.5.		GOVERNING LAW		17
SECTION 6.6.		JURISDICTION; WAIVER OF TRIAL BY JURY		17
SECTION 6.7.		Successors		18
SECTION 6.8.		Counterparts		18
SECTION 6.9.		Table of Contents		18
SECTION 6.10.		Severability		18
SECTION 6.11.		Remedies		18
Schedules
Schedule 1			Definitions
Schedule 2(b)(i)			LFRP Patents
Schedule 2(b)(ii)			LFRP Know-How
Schedule 2(c)			License Agreements
Schedule 2(e)			In Licenses
Schedule 2(j)(i) and (ii)			Pledged Deposit Accounts
Schedule 11(b)			Filing Jurisdictions
Schedule 11(c)(i)			Excluded Agreements
Schedule 11(c)(ii)			Perfection Certificate
Exhibits
Exhibit A	Special Power of Attorney
Exhibit B	Copyright Security Agreement
Exhibit C	Patent Security Agreement
Exhibit D	Letter Agreement with Fisher Clinical Services

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

SECURITY AGREEMENT

This SECURITY AGREEMENT (the “Agreement”) is made and entered into as of August 5, 2008 (the “Effective Date”) by and between Dyax Corp., a Delaware corporation (including its permitted successors and assigns, “Borrower”), and Cowen Healthcare Royalty Partners, L.P., a Delaware limited partnership (including its successors and assigns, “Investor”).

W I T N E S S E T H:

WHEREAS, Borrower and Investor are parties to that certain Loan Agreement dated of even date herewith (as amended, supplemented and otherwise modified from time to time, the “Loan Agreement”);

WHEREAS, Borrower has agreed pursuant to the terms of the Loan Agreement to enter into this Agreement, under which Borrower grants to Investor a security interest in and to the Collateral as general and continuing security for the due performance and payment of all of Borrower’s obligations to Investor under the Transaction Documents;

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.  Definitions.   For purposes of this Agreement, capitalized terms and certain other terms used herein shall have the meanings set forth in Schedule 1 hereto.  Capitalized terms used herein and not otherwise defined herein or in Schedule 1 shall have the meanings given such terms in the Loan Agreement.  Terms used herein and defined in the UCC shall have the meaning ascribed to such terms in the UCC unless the context clearly requires otherwise.

Section 2.  Grant of Security.  Borrower hereby grants Investor, for the benefit of the Lenders, a security interest in all of the Borrower’s right, title and interest in and to the following personal property, whether now or hereafter existing, and wherever the same may be located (all such property, collectively, the “Collateral”):

(a)           the Gross Payments and Included Receipts;

(b)           the LFRP Patents, including those set forth on Schedule 2(b)(i) and LFRP Know-How, including that described in Schedule 2(b)(ii), and all other know-how, materials, trademarks, service marks, trade names and goodwill associated therewith, trade secrets, data, formulations, processes, franchises, inventions, software, copyrights, and all intellectual property (including biological materials), and all registrations of any of the foregoing, or applications therefor, that are (i) owned by, controlled by, issued to, licensed to, or licensed by Borrower and (ii) used in the performance of the LFRP as presently conducted by Borrower or as conducted by Borrower as of the Closing Date or during the term of the Loan (but specifically excluding the biological material comprising the Company Physical Libraries, it being the intent of the parties that while intellectual property covering or embodied in the LFRP Libraries be within the scope

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

of the Collateral, all biological material comprising the LFRP Libraries except for the Duplicate Libraries is excluded from the Collateral);

(c)           the License Agreements, including those set forth on Schedule 2(c);

(d)           [Reserved];

(e)           the In Licenses including those set forth on Schedule 2(e);

(f)            books, records, data bases, and information related to the LFRP;

(g)           all general intangibles, including all payment intangibles and all documents (notwithstanding any other provisions herein, as that term is defined in the UCC), instruments (including promissory notes), accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, in each case related to the Gross Payments and Included Receipts;

(h)           any other general intangibles necessary to the performance of or forming part of the LFRP;

(i)            [Reserved];

(j)            (i) the Borrower’s interests in the Lockbox Account, details of which are provided on Schedule 2(j)(i), and any successor account, (ii) the Company Concentration Account, details of which are provided on Schedule 2(j)(ii), and any successor account, and (iii) any other deposit account or securities account containing proceeds of Collateral and into which a party to a License Agreement has remitted Royalties (the accounts referred to in clauses (i), (ii) and (iii) collectively, the “Pledged Deposit Accounts”), all funds on deposit in each such account, all investments arising out of such funds, all claims thereunder or in connection therewith and special purpose subaccounts maintained therein, and all monies and credit balances from time to time held in the Pledged Deposit Accounts or such subaccounts; all notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by Borrower in substitution for or in addition to any or all of the then existing items described in this subsection (j); and all interest, dividends, cash, securities, rights, instruments and other property at any time and from time to time received, receivable or otherwise distributed in respect of such accounts, such funds, or such investments or received in exchange for any or all of the items described in this subsection;

(k)           all money now or at any time in the possession or under the control of, or in transit to, the Lockbox Bank, or the Borrower relating to any of the foregoing in this Section 2;

(l)            quantities of biological material comprising a complete copy of each of the LFRP Libraries that are sufficient to be used to create a reproducible supply of the LFRP Libraries (the “Duplicate Libraries”); and

(m)          all Proceeds.

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

Section 3.  Security for Obligations.  This Agreement secures, and the Collateral pledged by Borrower is collateral security for, the due and punctual payment or performance in full (including the payment of amounts that would become due but for the operation of the automatic stay under Subsection 362(a) of the United States Bankruptcy Code) of all Secured Obligations of Borrower.

Section 4.  Borrower to Remain Liable.  Notwithstanding anything to the contrary contained herein, (a) Borrower shall remain liable to perform all of its duties and other obligations under the Loan Agreement to the same extent as if this Agreement had not been executed, and (b) the exercise by Investor of any of its rights hereunder shall not release Borrower from any of its duties or other obligations under the Loan Agreement.

Section 5.  Promissory Notes and Tangible Chattel Paper.  If Borrower at any time shall hold or acquire any promissory notes or tangible chattel paper constituting Collateral having a face value greater than twenty-five thousand dollars ($25,000), Borrower shall forthwith endorse, assign and deliver the same to Investor, accompanied by such instruments of transfer or assignment duly executed in blank as Investor may from time to time specify.

Section 6.  Pledged Deposit Accounts.  Borrower shall follow the procedures and payment mechanisms relating to the Pledged Deposit Accounts set forth in Section 4.02 of the Loan Agreement.

Section 7.  Investment Property.  If Borrower shall at any time hold or acquire any certificated securities constituting Collateral, Borrower shall forthwith endorse, assign and deliver the same to Investor, accompanied by such instruments of transfer or assignment duly executed in blank as Investor may from time to time specify.  If any securities constituting Collateral now or hereafter acquired by Borrower are uncertificated and are issued to Borrower or its nominee directly by the issuer thereof, Borrower shall promptly notify Investor thereof and, at Investor’s request, pursuant to an agreement in form and substance satisfactory to Investor in its discretion reasonably exercised, cause the issuer of such securities to agree to comply with instructions from Investor as to such securities, without further consent of Borrower or such nominee.  If any securities constituting Collateral, whether certificated or uncertificated, or other investment property now or hereafter acquired by Borrower are held by Borrower or its nominee through a securities intermediary or commodity intermediary, Borrower shall promptly notify Investor thereof and, at Investor’s request, pursuant to an agreement in form and substance satisfactory to Investor in its discretion reasonably exercised, cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from Investor to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by Investor to such commodity intermediary, in each case without further consent of Borrower or such nominee.

Section 8.  Collateral in the Possession of a Bailee.  If any property constituting Collateral is at any time in the possession of a bailee, Borrower shall promptly notify Investor thereof and, if requested by Investor, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to Investor in its discretion reasonably exercised, that the bailee holds

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

such Collateral for the benefit of Investor and shall act upon the instructions of Investor, without the further consent of Borrower.

Section 9.  Electronic Chattel Paper and Transferable Records.  If Borrower at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in § 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, constituting Collateral, Borrower shall promptly notify Investor thereof and, at the request of Investor, shall take such action as Investor may reasonably request to vest in Investor control under UCC § 9-105 of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, § 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.

Section 10.  Letter-of-credit Rights.  If Borrower is at any time a beneficiary under a letter of credit now or hereafter issued in favor of Borrower constituting Collateral, Borrower shall promptly notify Investor thereof and, at the request of Investor, Borrower shall, pursuant to an agreement in form and substance satisfactory to Investor in its discretion reasonably exercised, arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to Investor of the proceeds of any drawing under the letter of credit.

Section 11.  Representations and Warranties.

(a)Borrower represents and warrants to Investor as of the date hereof, Borrower (or any predecessor by merger or otherwise) has not, within the five (5) year period preceding the date hereof, had a different name from the name listed on the signature pages hereof.

(b)Borrower represents and warrants to Investor as of the date hereof, and represents and warrants to Investor in all material respects on each date it acquires rights in Collateral in which a security interest is purported to be granted hereunder, as follows:

(i)            Ownership of Collateral.  Borrower has the power to grant a lien and security interest in each item of Collateral upon which it purports to grant a lien or security interest hereunder and the grant of such security interest shall not constitute or result in (A) the abandonment, invalidation or unenforceability of any right, title or interest of Borrower under any lease, license or contract to which it is a party or (B) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC).  Other than such as may have been filed in favor of Investor relating to this Agreement or as contemplated by the Loan Agreement, no effective UCC financing statement or other instrument similar in effect covering all or any part of the Collateral or the LFRP Patents is on file in any filing or recording office.

(ii)           Validity.  This Agreement creates a valid security interest in the Collateral, and upon the filing of the appropriate UCC financing statements naming Investor as secured party and describing the Collateral in the applicable filing office(s) in the

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

jurisdiction(s) listed in Schedule 11(b), such security interest will be perfected in all Collateral in which a security interest can be perfected by the filing of a UCC-1 Uniform Commercial Code financing statement.  Other than Permitted Liens which have priority under law, the security interest in the Collateral granted herein is prior to any and all other Liens.  As of the date hereof there are no Liens other than Permitted Liens on or with respect to the Collateral.

(iii)          Authorization, Approval.  No authorization, approval, or other action by, and no notice to or filing with, any government or agency of any government or other Person is required either (A) for the assignment, pledge and grant by Borrower of the security interest granted hereby or for the execution, delivery and performance of this Agreement by Borrower; or (B) for the perfection of, the pledge, assignment and grant of the security interest created hereby or the exercise by Investor of its rights and remedies hereunder (provided, however, that the exercise by Investor of certain rights and remedies relating to certain licenses or leases of the Borrower may require the consent of the other parties to such licenses or leases), other than (X) the filing of financing statements in the appropriate office(s) located in the jurisdiction(s) listed on Schedule 11(b) and (Y) the filing of the Patent Security Agreement with the United States Patent and Trademark Office and the filing of the Copyright Security Agreement in the United States Copyright Office and any supplements or amendments thereto.

(iv)          Enforceability.  This Agreement is the legally valid and binding obligation of Borrower, enforceable against Borrower 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.

(c)Other Representations and Warranties.  As of the Closing Date and as of the earlier of the date on which the Business Report is delivered or the date on which such Business Report is due in each fiscal year:

(i)            Schedules.  (i) (A) Schedule 2(b)(i) shall set forth all of the LFRP Patents, (B) Schedule 2(b)(ii) shall set forth a description of the LFRP Know-How; (C) Schedule 11(c)(i) shall set forth all of the Excluded Agreements; (D) Schedule 2(c) shall set forth all of the License Agreements; (E) [Reserved]; (F) Schedule 2(e) shall set forth all of the In Licenses; (G) [Reserved]; and (H) Schedule 2(j)(i) and (ii) shall set forth details of the Pledged Deposit Accounts; and

(ii)           Perfection Certificate.  (A) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page thereof; (B) Borrower is an organization of the type and organized in the jurisdiction set forth in the Perfection Certificate; (C) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (D) the Perfection Certificate accurately sets forth each place of Borrower’s business or, if more than one, its chief executive office as well as its mailing address (if different) and where Collateral is located; (E) Borrower’s FEIN is accurately set forth in the Perfection Certificate; and, (F) all other information set forth on the Perfection Certificate is accurate and complete in all material respects.

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

Section 12.  Further Assurances.  Borrower agrees that, from time to time, at its cost and expense, Borrower will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or desirable, or that Investor may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Investor to exercise and enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, Borrower will:  (a) (i) execute and file such financing or continuation statements, or amendments thereto, as well as documents for filing in the Unites States Patent Office and United States Copyright Office (ii) execute and deliver, and cause to be executed and delivered, agreements establishing that Investor has control of specified items of Collateral, including the Lockbox Agreement, and (iii) deliver such other instruments or notices, in each case, as may be necessary or desirable, or as Investor may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (b) furnish to Investor from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Investor may reasonably request, all in reasonable detail; (c) at Investor’s reasonable request, appear in and defend any action or proceeding that may affect Borrower’s title to or Investor’s security interest in all or any part of the Collateral, including any proceeding in which the issue is whether any property in which Borrower has rights constitutes Collateral; and (d) use commercially reasonable efforts to obtain any necessary consents of third parties to the assignment and perfection of a security interest to Investor with respect to any Collateral.  Borrower hereby authorizes Investor to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Borrower.  Borrower agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement signed by Borrower shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions.  Notwithstanding the foregoing, so long as there exists no Event of Default, the Borrower shall not be required to obtain the consent of the other parties to the existing License Agreements and In Licenses.

Section 13.  Certain Covenants of Borrower.  Borrower shall:

(a)           not use or permit any Collateral to be used unlawfully or in violation of any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral to the extent the same could reasonably be expected to have a Material Adverse Effect;

(b)           at its own cost and expense, with respect to each property that it leases on which any Collateral is located, obtain, at Investor’s request, an agreement satisfactory to Investor with the landlord of such leased property, (i) subordinating such landlord’s lien in any Collateral to the security interest purported to be granted hereunder and (ii) granting access to such leased property;

(c)           maintain insurance as provided in Section 9.06 the Loan Agreement;

(d)           notify Investor of any change in its name, identity or corporate structure at least fifteen (15) days prior to such change;

(e)           give Investor thirty (30) days’ prior written notice of any change in its chief place of business, chief executive office or residence or the office where Borrower keeps its records

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

regarding the Collateral or a reincorporation, reorganization or other action that results in a change of the jurisdiction of organization of Borrower;

(f)            pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Collateral, except to the extent the validity thereof is being contested in good faith; provided, however, that Borrower shall in any event pay such taxes, assessments, charges, levies or claims not later than five (5) days prior to the date of any proposed sale under any judgment, writ or warrant of attachment entered or filed against Borrower or any of the Collateral as a result of the failure to make such payment;

(g)           except for licenses of LFRP Intellectual Property and In Licenses in effect on the date hereof, not suffer to exist any license, lease, contract or agreement to which it is a party forming part of or used in the LFRP that contains any provision that purports to prohibit Borrower from granting to Investor a security interest in any item of Collateral including any such license, lease, contract or agreement itself;

(h)           comply with all of its obligations with respect to any personal property owned or leased by it and used in the LFRP, including capital leases, operating leases and purchase money indebtedness except to the extent non-compliance could not reasonably be expected to have a Material Adverse Effect;

(i)            from and after the date that the Duplicate Libraries are delivered to the location specified in Section 14(f), in the event that there are any updates or improvements to the LFRP Libraries, or other libraries as set forth in the definition of LFRP Libraries, promptly deliver sufficient quantities of such updated, improved or other LFRP Libraries as necessary to maintain the Duplicate Libraries as a duplicate reproducible supply of the LFRP Libraries at such location; and

(j)            not transfer, sell, convey, assign, dispose of or license the Company Physical Libraries, except (x) in the ordinary course of business of the LFRP consistent with past practices, or (y) outside the scope of the LFRP the non-exclusive licensing of the Company Physical Libraries but limited to a scope or for a use so as to not compete with the LFRP, provided, that non-exclusive licensing of the Company Physical Libraries under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Company Physical Libraries in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(k)           concurrently with Borrower’s delivery of a Business Report pursuant to Section 9.03(e) of the Loan Agreement, confirm the attachment of the security interest in the registered intellectual property of Borrower created by this Agreement by execution of Copyright Security Agreement or a Patent Security Agreement, as applicable, with respect to any such registered intellectual property not subject at such time to a Patent Security Agreement or a Copyright Security Agreement, as applicable, and the filing of such agreement with the patent office or any other Governmental Authority as shall be necessary to create, preserve, protect or perfect Investor’s security interest in such intellectual property as may be reasonably requested by Investor.

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

Section 14.  Special Covenants With Respect to the Collateral.

(a)Borrower shall:

(i)            diligently keep records in reasonable detail respecting the Collateral at its chief executive office or principal place of business;

(ii)           not locate any Collateral in any location other than (1) those owned by Borrower or for which it has delivered an agreement described in Section 13(b) hereof, (2) the deposit accounts as contemplated by the Lockbox Agreement, or (3) in the locations as contemplated in Section 14(f), and shall not relocate any collateral from its location as of the Effective Date to another such location without first notifying Investor in writing of such relocation;

(iii)          give thirty (30) days’ prior written notice to Investor of its intent to establish any additional place of business;

(iv)          other than items deposited for collection in the Lockbox Account, forthwith turn over (with any required endorsement and assignment requested by Investor), any instrument or cash constituting Collateral;

(v)           not create, incur, assume or suffer to exist any Lien with respect to Collateral, other than Permitted Liens;

(vi)          not Transfer the Collateral, other than the Proceeds the Borrower is permitted to receive in accordance with the Lockbox Agreement, except (x) with respect to the LFRP, licensing out in the ordinary course of business of the LFRP consistent with past practices, or (y) outside the scope of the LFRP, non-exclusive licensing out of LFRP Intellectual Property (including the provision of LFRP Libraries or other biological material) but limited to a scope or for a use so as not to compete with the LFRP; provided, that non-exclusive licensing of LFRP Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the LFRP Intellectual Property (including the provision of LFRP Libraries or other biological material) in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(vii)         in the event that Borrower has rights to a commercial tort claim constituting Collateral, notify Investor and provide a detailed description of the claim and shall grant Investor a security interest therein in a manner specified by Investor; and

(viii)        in the event that Borrower shall have a security interest in any property securing any Collateral, promptly execute an assignment of such security interest to Investor.

(b)Borrower shall, at Borrower’s sole cost and expense, (A) take any and all actions and make all payments, which are necessary and desirable to diligently maintain the LFRP Patents owned by it; (B) defend such LFRP Patents against any claims of invalidity or unenforceability;

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

and (C) take commercially reasonable measures to protect the proprietary nature of each item of LFRP Intellectual Property and to maintain in confidence all confidential information compromising a part thereof; provided, that in no event shall Borrower be required to take any action under subsection (B) or (C) if: (i) the failure to take action could not reasonably be expected to result in a Material Adverse Effect, (ii) the reasonably estimated cost to Borrower associated with pursuing such action would outweigh the reasonably estimated extent by which the Included Receipts and the interest in the Royalties retained by the Borrower would benefit as a result of successfully pursuing such action, or (iii) Borrower obtains the Required Lender’s written consent, which shall not be unreasonably withheld (as in the case, for example, where pursuing such action would jeopardize the LFRP Intellectual Property or adversely effect the LFRP as a whole). Consent hereunder shall be provided or denied within ten (10) Business Days after notice and provision of such information as may be reasonably requested by the Lender from the Borrower. Borrower shall immediately notify Lender of such claim. The parties shall consult as to strategy regarding any response to such claim. Borrower shall not abandon, or fail to take any action necessary or desirable to prevent the disclaimer or abandonment of material LFRP Patents owned by it.

(c)           Unless there shall occur and be continuing any Event of Default and the Investor has accelerated the Obligations under the Loan Agreement, Borrower shall have the right to commence and prosecute in its own name, as the party in interest, for its own benefit and at the sole cost and expense of the Borrower, such applications for protection of the LFRP Intellectual Property and suits, proceedings or other actions to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value or other damage as are necessary to protect the LFRP Intellectual Property.  Upon the occurrence and during the continuance of any Event of Default, the Investor shall have the right but shall in no way be obligated to file applications for protection of the LFRP Intellectual Property and/or bring suit in the name of the Borrower or Investor to enforce the LFRP Intellectual Property and any license thereunder.  In the event of such suit, the Borrower shall, at the reasonable request of the Investor, do any and all lawful acts and execute any and all documents requested by the Investor in aid of such enforcement and the Borrower shall promptly reimburse and indemnify the Investor for all costs and expenses incurred by the Investor in the exercise of its rights under this Section 14(c) in accordance with the Loan Agreement.  In the event that the Investor shall elect not to bring suit to enforce the LFRP Intellectual Property, the Borrower agrees, at the reasonable request of the Investor, to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the LFRP Intellectual Property by any person.

(d)           Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Investor five (5) originals of a Special Power of Attorney in the form of Exhibit A annexed hereto for execution of an assignment of the Collateral to Investor, or the implementation of the sale or other disposition of the Collateral pursuant to Investor’s good faith exercise of the rights and remedies granted hereunder; provided, however, Investor agrees that it will not exercise its rights under such Special Power of Attorney unless an Event of Default has occurred and is continuing.

(e)           Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Investor the Patent Security Agreement, the Copyright Security Agreement

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

and all other documents, instruments and other items as may be necessary for Investor to file such agreements with the United States Patent and Trademark Office and United States Copyright Office and any similar domestic or foreign office, department or agency.  Borrower shall upon and after the occurrence of an Event of Default, use its commercially reasonable efforts to obtain any consents, waivers and agreements requested by Investor that are necessary to enable Investor to exercise its remedies with respect to the Collateral.

(f)Certain Rights upon an Event of Default before and following a Foreclosure.

(i)Upon the occurrence and during the continuance of an Event of Default and upon notice by Investor (the “Notice Event”):

(1)           Borrower hereby agrees to grant and hereby grants to Investor effective upon the Notice Event an exclusive worldwide royalty-free license, with the right to sublicense, under the Shared Intellectual Property (the “Marks”)) to the extent permitted under the In Licenses solely to carry out the LFRP program (including through a designee other than a phage-display company that competes with Borrower) in the same general manner as carried out by Borrower immediately prior to any such Event of Default; provided that such license shall be subject to any licenses granted by Borrower to third parties (not in violation of the Loan Agreement) prior to the date of the grant to Investor hereunder;

(2)           Borrower hereby agrees to grant and hereby grants to Investor effective upon the Notice Event an exclusive royalty-free limited license to use and display the Marks, solely in association with any product or service used or provided in connection with the LFRP in the same general manner and at least as high a level of quality as carried out by Borrower immediately prior to any such Event of Default; provided, that (I) Borrower shall have the right to monitor any such product or service for the purpose of protecting and maintaining the level of quality established by Borrower prior to any such Event of Default; (II) Investor acknowledges that the goodwill and other benefits associated with such Marks shall inure to the benefit of Borrower; and (III) Investor shall not use or omit use of the Marks in any manner which would injure or destroy their value or diminish Borrower’s property rights; and provided, further, that, in the event Borrower advises Investor of any discrepancy in the level of quality of such products or services, Borrower shall have the right to terminate the use and display of the Marks by Investor (but not the other rights licensed hereunder) until such time as the discrepancy is corrected; and

(3)           For the avoidance of doubt, the Parties agree and acknowledge that (A) Investor shall not practice the licenses set forth in this Section 14(e)(i) unless and until the occurrence of an Event of Default and only for so long as such Event of Default continues; provided that such licenses shall immediately terminate on the date that the security interest granted under this Agreement is terminated in accordance with Section 20 hereof, and (B) subject to the grant of the security interest under and the other provisions of this Agreement and the Loan Agreement, Borrower shall retain ownership of its rights under the Shared Intellectual Property

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

(including the Marks) and shall be free to practice, exploit and license the Shared Intellectual Property on a non-exclusive basis outside the scope of the LFRP but limited to a scope or for a use so as to not compete with the LFRP; provided that non-exclusive licensing of Shared Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Shared Intellectual Property in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(ii)Upon the occurrence and during the continuance of an Event of Default, following or in connection with Investor’s exercise of the foreclosure remedies hereunder:

(1)           Investor hereby agrees to grant and hereby grants to Borrower a non-exclusive, perpetual, royalty-free worldwide license, with the right to sublicense, under the Shared Intellectual Property (other than the Marks) to the extent permitted under the In Licenses, for any purpose outside the LFRP on a non-exclusive basis, but limited to a scope or for a use so as to not compete with the LFRP; provided that non-exclusive licensing of Shared Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Shared Intellectual Property in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(2)           Investor hereby agrees to grant and hereby grants to Borrower a non-exclusive, perpetual, royalty-free limited license to use and display the Marks in association with any product or service used or provided in connection with the Borrower’s business outside of the LFRP, within the scope permitted under Section 14(e)(ii)(1), above, in the same general manner and at least as high a level of quality as carried out by Borrower immediately prior to any such foreclosure; provided, that (I) Investor shall have the right to monitor any such product or service for the purpose of protecting and maintaining the level of quality established by Borrower prior to any such foreclosure; (II) Borrower acknowledges that the goodwill and other benefits associated with such Marks shall inure to the benefit of Investor; and (III) Borrower shall not use or omit use of the Marks in any manner which would injure or destroy their value or diminish Investor’s property rights; and provided, further, that, in the event Investor advises Borrower of any discrepancy in the level of quality of such products or services, Investor shall have the right to terminate the use and display of the Marks (but not the other rights licensed hereunder) by Borrower until such time as the discrepancy is corrected; and

(3)           Investor hereby agrees, at Borrower’s sole cost and expense, to make, or to permit Borrower to make, copies of all books, records, data bases, and information (including the handbooks, manuals and sequence information) related

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

to the LFRP and to use all Shared Intellectual Property solely for the purpose of the conduct of the business of Borrower outside the LFRP within the scope permitted under Section 14(e)(ii)(1), above.  For avoidance of doubt, the licenses granted to the Borrower in Section 14(e)(ii) shall survive the termination of this Agreement.  The parties acknowledge that such licenses are licenses of “intellectual property” for the purposes of Section 365 (n) of the Bankruptcy Code.

(g)Borrower shall, within thirty (30) days after the date hereof, prepare the Duplicate Libraries and shall thereafter promptly deliver the Duplicate Libraries to Fisher Clinical Services, 631 Lofstrand Lane, Rockville, MD 20850 (phone:  (301) 315-2238) or such other secure location or locations as are reasonably acceptable to Borrower and Investor, clearly identified as the Duplicate Libraries prepared for the benefit of Investor, and segregated from property of Borrower.  The Duplicate Libraries shall be subject to storage and access on conditions substantially similar to those set forth in Exhibit E.

(h)Borrower shall:  (i) maintain copies of all source and object codes for all Software at one or more safe and secure locations reasonably acceptable to Investor, (ii) keep Investor fully informed of each such location, and (iii) maintain the currency of all such Software stored thereat.

(i)Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Investor the Perfection Certificate.

(j)Borrower agrees that a breach of any of the covenants contained in this Agreement will cause irreparable injury to Investor, that Investor has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against Borrower, and Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

(k)The Borrower shall:  (a) notify in reasonable detail Investor promptly, but in no event later than quarterly (on the earlier of the date on which the Business Report is delivered by the Borrower or the date on which such Business Report is due in each fiscal quarter) after the acquisition, execution or filing thereof, of any (i) License Agreements, LFRP Patents, Co-Development Agreements, payments under which form part of the Collateral, and In Licenses, and (b) on the last day of each quarter provide, in reasonable detail, updates to Schedules 2(b)(i), 2(b)(ii) 2(c), 2(e), 2(j)(i) and 2(j)(ii), which would make the representations and warranties contained in Section 11(c)(i) true, correct and complete as of such date of the delivery of such Business Report.  Upon the delivery and acceptance of such updated schedules by Investor, such schedules will be automatically deemed to amend and restate Schedules 2(b)(i), 2(b)(ii), 2(c), 2(e), 2(j)(i) and 2(j)(ii) hereto.

Section 15.  Investor Appointed Attorney-in-Fact.  Borrower hereby irrevocably appoints Investor, or any person or agent as Investor may designate as such, Borrower’s attorney-in-fact, with full authority in the place and stead of Borrower and in the name of Borrower, Investor or otherwise, from time to time in Investor’s discretion to take any action and to execute any instrument that Investor may in its good faith sole discretion deem necessary or advisable to accomplish the following:

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

(a)           upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for monies due and to become due under or in respect of any of the Collateral, and to manage the LFRP, including taking actions under the License Agreements and In Licenses;

(b)           upon the occurrence and during the continuance of an Event of Default, to receive, direct payment of, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above;

(c)           upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Investor may in its good faith sole discretion deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Investor with respect to any of the Collateral;

(d)           upon the occurrence and during the continuance of an Event of Default, to pay or discharge taxes or liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Investor in its sole discretion, any such payments made by Investor to become obligations of Borrower to Investor, due and payable immediately without demand;

(e)           upon the occurrence and during the continuance of an Event of Default, to sign and endorse any invoices, drafts against debtors, assignments, verifications, notices and other documents relating to the Collateral; and

(f)            upon the occurrence and during the continuance of an Event of Default, to perform any obligations of the Borrower under the Transaction Documents with the Borrower which the Borrower has not performed.

(g)           upon and at any time after the occurrence and during the continuance of an Event of Default, to prepare, file and sign Borrower’s name on an assignment document in such form as Investor may in its sole discretion deem necessary or desirable to transfer ownership of the Collateral to Investor or an assignee or transferee of Investor, which transfer expressly shall be subject to the rights of the Borrower in such Collateral set forth in Section 14(e) hereof.

Section 16.  Standard of Care.  The powers conferred on Investor hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the exercise of good faith and of reasonable care in the accounting for monies actually received by Investor hereunder, Investor shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.  Investor shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Investor accords its own property.  The Investor shall act as agent hereunder for any other Lenders that become a party to the Loan Agreement after the date hereof and the security interest granted hereunder to the Investor is also granted to the Investor for the benefit of other Lenders.  Except as provided in the Loan Agreement, the Investor shall have no duty to any Lender hereunder and its sole responsibility shall be limited to (i) being named as a secured party hereunder and in any UCC financing statement, intellectual property

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

filing, Lockbox Agreement, any escrow agreement or other documents, instrument or agreement entered into or filed pursuant hereto and (ii) holding any possessory Collateral delivered to it by the Company pursuant hereto, in each case for the benefit of all Lenders.  The Investor is entitled to, but has no obligation to exercise any rights or remedies hereunder or under applicable law.

Section 17.  Remedies Upon Event of Default.

(a)If, and only if, any Event of Default shall have occurred and be continuing, Investor may exercise in respect of the Collateral (i) all rights and remedies provided for herein, under the Loan Agreement or otherwise available to it, (ii) all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the Collateral), in all relevant jurisdictions, and (iii) the rights to:

(i)            require Borrower to, and Borrower hereby agrees that it will at its cost and expense and upon request of Investor forthwith, assemble all or part of the Collateral as directed by Investor and make it available to Investor at a place to be designated by Investor that is reasonably convenient to both parties;

(ii)           personally or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from Borrower or any other person who has possession of any part thereof, with or without notice or process of law, and for that purpose may enter upon Borrower’s premises where any of the Collateral is located and remove same;

(iii)          foreclose or otherwise enforce Investor’s security interest in any manner permitted by law or provided for in this Agreement;

(iv)          without notice except as may be required by applicable law and that cannot be waived, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any place or places for cash, on credit, or for future delivery, and upon such other terms as Investor may deem commercially reasonable; and

(v)           without notice, exercise any right to set-off or offset provided by law.

(b)Until an Event of Default has occurred and is continuing, Borrower shall, subject to the provisions of the Loan Agreement and the Lockbox Agreement, continue to collect, at its own cost and expense, all amounts due or to become due Borrower in respect of the Collateral; it being understood and agreed that any and all such collections shall be held in trust for, and be for the benefit of, Investor.  In connection with such collections; provided, no Event of Default shall have occurred and be continuing, Borrower may, subject to the provisions of the Loan Agreement, take such action as Borrower reasonably may deem necessary or advisable to enforce collection of the Collateral.  At any time after an Event of Default has occurred and is continuing, Investor shall have the right to notify the account debtors or obligors under any Collateral of the security interest of Investor in such Collateral and to direct such account debtors or obligors to make payment to Investor (or its designee) of any amounts due or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or adjust, settle or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidence thereby.  If an Event of Default has occurred and is continuing, upon the request of Investor, Borrower

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

shall, at its own cost and expense, notify any parties obligated on any of the Collateral to make payment to Investor (or its designee) of any amounts due or to become due thereunder, and in such event, Investor is authorized to endorse, in the name of Borrower, any item representing any payment on or other proceeds of any of the Collateral.  Borrower irrevocably directs and requires all licensees and account debtors to honor Investor’s request for direct payment and comply with any such request, notwithstanding any directions or instructions to the contrary that may be given by Borrower and agrees that the compliance by such licensee or account debtor with the provisions of this Section shall not be deemed a violation of such party’s contractual agreements with Borrower.

(c)           After delivery to Borrower by Investor of a notice that an Event of Default has occurred and so long as such Event of Default is continuing: (i) all amounts and proceeds (including instruments) received by Borrower in respect of any Collateral shall be received in trust for the benefit of Investor hereunder, shall be segregated from other funds of Borrower, and shall be forthwith paid over to Investor in the same form as so received (with any necessary endorsements) to be held as cash collateral and applied as provided by this Security Agreement; and (ii) Borrower shall not adjust, settle, or compromise the amount or payment of any Collateral, or release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon.

(d)           After the occurrence and during the continuation of an Event of Default, (i) Investor may in its own name or in the name of others communicate with account debtors (including Contract Parties to License Agreements and In License Agreements) in order to verify with them to Investor’s reasonable satisfaction the existence, amount and terms of any Collateral and (ii) Investor shall have the right, at Borrower’s cost and expense, to make test verifications of the Collateral in any reasonable manner and through any medium that it considers advisable, and Borrower agrees to furnish all such assistance as Investor may reasonably require in connection therewith.

(e)           Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, Investor shall have the right (but not the obligation) to bring suit, in the name of Borrower, Investor or otherwise, to enforce any Collateral, in which event Borrower shall, at the request of Investor, do any and all lawful acts and execute any and all documents required by Investor in aid of such enforcement and Borrower shall promptly, upon demand, reimburse and indemnify Investor as provided in the Loan Agreement and Section 19 hereof, as applicable, in connection with the exercise of its rights under this Section 17.

Section 18.  Application of Proceeds.  Except as expressly provided elsewhere in this Agreement, all proceeds received by Investor in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in good faith to satisfy (to the extent of the net cash proceeds received by Investor) such item or part of the Secured Obligations as Investor may designate (with the right to reapply such proceeds to such other items or part of the Secured Obligations as Investor may see fit).

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

Section 19.  Expenses.

(a)           Borrower agrees to pay to Investor upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Investor may incur in connection with (i) the custody, preservation, management, enforcement, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of Investor hereunder, or (iii) the failure by Borrower to perform or observe any of the provisions hereof.  Any costs and expenses payable hereunder shall be deemed to be Secured Obligations and entitled to the security interest hereunder.

(b)           The obligations of Borrower in this Section 19 shall survive the termination of this Agreement and the discharge of Borrower’s other obligations under this Agreement and the Loan Agreement.

Section 20.  Continuing Security Interest; Termination and Release.

(a)           This Agreement shall (i) create a continuing security interest in the Collateral, (ii) remain in full force and effect until the later of the indefeasible payment and performance in full of the Secured Obligations and the expiration or termination of the Loan Agreement (other than indemnification obligations that are unasserted at the time of expiration or termination of Loan Agreement and other contingent obligations that, by their terms, survive the termination hereof and thereof), (iii) be binding upon Borrower and its respective successors and assigns, and (iv) inure, together with the rights and remedies of Investor hereunder, to the benefit of Investor and its successors, transferees and assigns.  The Borrower agrees that its obligations hereunder and the security interest created hereunder shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of all or any part of the Secured Obligations is rescinded or must otherwise be restored by the Investor upon the bankruptcy or reorganization of the Borrower or otherwise.

(b)           Upon the payment and performance in full of all Secured Obligations (other than indemnification obligations that are unasserted as of the expiration or termination of the Loan Agreement and other contingent obligations not then due and payable that, by their terms, survive the termination hereof), the security interest granted hereby shall terminate and all rights to the Collateral shall revert to Borrower.  Upon such termination or any release of Collateral or any part thereof in accordance with the provisions of Section 10.02(b) of the Loan Agreement, the Investor shall, upon the request and at the sole cost and expense of the Borrower, assign, transfer and deliver to Borrower, against receipt and without recourse to or warranty by the Investor except as to the fact that the Investor has not encumbered the released assets, such of the Collateral or any part thereof to be released (in the case of a release) as may be in possession of the Investor and as shall not have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Collateral, proper documents and instruments (including UCC 3 termination financing statements or releases) acknowledging the termination hereof and the security interest granted hereby or the release of such Collateral, as the case may be.

Section 21.  Miscellaneous.

(a)           Notices.  All notices, consents, waivers and communications hereunder given by any party to any other party shall be given pursuant to Section 13.04 of the Loan Agreement.

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

(b)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.

(c)Amendments; No Waivers.

(i)            This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto and subject to any consent required under the Loan Agreement; provided, that Investor may amend this agreement without the consent of the Borrower in order to add mechanics related to syndication of the Loan to one or more additional Lenders so long as such amendments do not in any way alter Borrower’s rights or obligations hereunder. Investor may take any action that is permitted under the Loan Agreement or hereunder.  No waiver of any right hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced.  To the extent Borrower transfers any of the Collateral to any of its Subsidiaries, then such Subsidiaries shall execute a joinder to this Agreement or a new agreement substantially similar to this Agreement and any other applicable Loan Documents, in each case in form and substance reasonably satisfactory to the Investor, to confirm the continued security interest of the Investor in such Collateral.

(ii)           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.

(d)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.  Borrower shall not be entitled to assign any of its obligations and rights hereunder or any other Transaction Documents without the prior written consent of Investor.  Investor may assign this Agreement and any of its rights hereunder without restriction.

(e)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.

(f)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

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

“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.

(g)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.

(h)Governing Law; Jurisdiction.

(i)            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.

(ii)           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 THE STATE, COUNTY AND CITY OF NEW YORK.  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.

(iii)          EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (ii) ABOVE OF THIS SECTION 21(h) 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.

(i)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,

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

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 BORROWER’S OBLIGATION TO INDEMNIFY INVESTOR FOR ANY THIRD PARTY CLAIM 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.

(j)            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]

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

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.

BORROWER:	DYAX CORP.
	By:
		Name:
		Title:
INVESTOR:	COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,
	as Lender
	By:	Cowen Healthcare Royalty GP, LLC,
		its General Partner
	By:
		Name:
		Title:

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

SCHEDULE 1
TO
SECURITY AGREEMENT

Definitions

Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings; provided, however, that the term “instrument” shall be such term as defined in Article 9 of the UCC rather than Article 3 of the UCC.

“Collateral” has the meaning set forth in Section 2 of this Agreement.

“Company Physical Libraries” shall mean the biological material, individually or collectively, comprising each of the LFRP Libraries in the possession of the Borrower.

“Copyright Security Agreement” means an agreement substantially in the form set forth in Exhibit B and suitable for filing with the United States Copyright Office.

“Patent Security Agreement” means an agreement substantially in the form set forth in Exhibit C and suitable for filing with the United States Patent and Trademark Office.

“Perfection Certificate” means a document in the form set forth on Exhibit 11(c)(ii) hereto.

“Permitted Liens” means tax liens or assessments and other governmental levies that are not yet due and payable or similar non-consensual liens for amounts not yet due and payable, which also qualify as “Permitted Liens” as defined in the Loan Agreement.

“Proceeds” or “proceeds” includes whatever is receivable or received when Collateral is sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

“Secured Obligations” means any and all Obligations of Borrower under the Transaction Documents including all amounts owing under the Loan Agreement, including the payment to Investor of the amounts of the Included Receipts with respect to any Royalties or other payments received by the Borrower, damages, interest (including interest that, but for the filing of a petition in bankruptcy with respect to Borrower, would accrue on such obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy proceeding), reimbursement of fees, costs, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such liabilities and other obligations that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Investor as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Borrower now or hereafter existing under this Agreement.

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

“Shared Intellectual Property” means, collectively, those items identified in Sections 2(b), 2(e), 2(f) and 2(h) hereof.

“Transfer” means any sale, conveyance, assignment, disposition or license either to a third party or to an Affiliate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or Delaware, as applicable.

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

SCHEDULE 2(b)(i)
TO
SECURITY AGREEMENT

LFRP Patents

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

SCHEDULE 2(b)(ii)
TO
SECURITY AGREEMENT

LFRP Know-How

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

SCHEDULE 2(c)
TO
SECURITY AGREEMENT

License Agreements

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

SCHEDULE 2(e)
TO
SECURITY AGREEMENT

In Licenses

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

SCHEDULE 2(j)(i) and (ii)
TO
SECURITY AGREEMENT

Pledged Deposit Accounts

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

SCHEDULE 11(b)
TO
SECURITY AGREEMENT

Filing Jurisdictions

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

SCHEDULE 11(c)(i)
TO
SECURITY AGREEMENT

Excluded Agreements

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

SCHEDULE 11(c)(ii)
TO
SECURITY AGREEMENT

Perfection Certificate

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

Exhibit A

Special Power of Attorney

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

Exhibit B

Copyright Security Agreement

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

Exhibit C

Patent Security Agreement

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

Exhibit D

Letter Agreement with Fisher Clinical Services

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

Exhibit J

Form of Notice of Borrowing

Dyax Corp.
300 Technology Square
Cambridge, MA 02139

August 5, 2008

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.

Ladies and Gentlemen:

The undersigned (the “Borrower”) refers to the Loan Agreement, dated as of August 5, 2008 (as amended from time to time, the “Loan Agreement”), between the Borrower and Cowen Healthcare Royalty Partners, L.P. (the “Lender”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement.

The Borrower hereby gives you irrevocable notice, pursuant to Section 2.02 of the Loan Agreement, that it hereby requests to borrow an amount equal to $50,000,000 (the “Borrowing”), on August 5, 2008 (the “Closing Date”), in accordance with the terms of the Loan Agreement.

The bank and account to which the proceeds payable to the Borrower pursuant to Section 2.03 of the Loan Agreement should be sent are:

Beneficiary Bank ABA #	[                 ]
Beneficiary Bank Name	[                 ]
	[                 ]
	[                 ]
Contact Name	[                 ]
	[                 ]
Beneficiary Name	[                 ]
Beneficiary Account #	[                 ]

Very truly yours,
DYAX CORP.
By:
	Name:
	Title:

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

Exhibit K

Lockbox Account Payment Procedures

During each calendar quarter, all Gross Payments deposited into the Lockbox Account shall be treated in the following priority with sweeps to occur not less frequently than monthly:

Any amounts shall be swept into the Company Concentration Account until Company shall have received an amount equal to any [*****] Payments due to MedImmune Limited as a result of, or in connection with, such Gross Payments.

Any remaining amounts shall be swept into the Company Concentration Account for the payment of any Reimbursement Payments in the amounts received from Contract Parties;

Any remaining amounts shall be swept as follows:

A.The remaining amounts shall be swept into the Assignee Concentration Account until Assignee shall have received an amount equal to Applicable Included Receipts(2); and

B.The remainder of the remaining amounts shall be swept into the Company Concentration Account.

For the avoidance of doubt, on the first day of any calendar quarter, that process above shall be reset and repeated.

(2)As provided in the Loan Agreement, “Applicable Included Receipts” shall exclude FTE Payments so long as the principal amount of the Loan prepaid pursuant to Section 3.01(a) of the Loan Agreement exceeds any principal amount added to the Loans pursuant to Section 4.01(a)(ii) of the Loan Agreement (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).

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

Exhibit L

Form of Certificate of the Borrower

The undersigned authorized officer of DYAX CORP., a corporation organized and existing under the laws of the State of Delaware (the “Borrower”), does hereby certify on behalf of the Borrower that:

1.             This certificate is furnished pursuant to Section 7.01(b)(i) of the Loan Agreement, dated as of August 5, 2008, between the Borrower and Cowen Healthcare Royalty Partners, L.P. (such Loan Agreement as in effect on the date of this Certificate, the “Loan Agreement”).  Capitalized terms used but not defined in this certificate shall have the meanings given in the Loan Agreement.

2.             No event has occurred and is continuing that constitutes a Default or an Event of Default and no such event will occur or will have occurred by reason of the Loan.

3.             The representations and warranties made by the Borrower in Article VIII of the Loan Agreement and in the other Transaction Documents are true and correct and will be true after giving effect to the Loan.

4.             All of the conditions set forth in Section 7.01(a), (c), (e) through (l),  and (o) of the Loan Agreement have been satisfied.  All documents specified in Section 7.01(b) and all documents and information  requested by the Lender pursuant to Section 7.01(d), (m) and (n) have been delivered to Lender.

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

IN WITNESS WHEREOF, I have hereunto set my hand this fifth day of August, 2008.

DYAX CORP.
By:
	Name:
	Title:

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

Exhibit M

Form of Edwards Angell Palmer & Dodge LLP Opinion

[*****]

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

Exhibit N

Form of  Wolf Greenfield Opinion

[*****]

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

Exhibit O

Form of Lowrie, Lando & Anastasi, LLP Opinion

[*****]

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

Exhibit P

FORM OF WARRANT AGREEMENT

Dated as of

August 5, 2008

between

DYAX CORP.

and

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.

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

TABLE OF CONTENTS

		Page
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01.	DEFINITIONS	6
SECTION 1.02.	INTERPRETATION; HEADINGS	19
ARTICLE II
COMMITMENT; DISBURSEMENT; FEES
SECTION 2.01.	COMMITMENT TO LEND	20
SECTION 2.02.	NOTICE OF BORROWING	20
SECTION 2.03.	DISBURSEMENT	20
SECTION 2.04.	COMMITMENT NOT REVOLVING	20
ARTICLE III
REPAYMENT
SECTION 3.01.	AMORTIZATION	20
SECTION 3.02.	OPTIONAL PREPAYMENT; MANDATORY PREPAYMENT	21
SECTION 3.03.	ILLEGALITY	21
ARTICLE IV
INTEREST; EXPENSES
SECTION 4.01.	INTEREST RATE	22
SECTION 4.02.	LOCKBOX ACCOUNT	23
SECTION 4.03.	INTEREST ON LATE PAYMENTS	25
SECTION 4.04.	INITIAL EXPENSES	25
SECTION 4.05.	ADMINISTRATION AND ENFORCEMENT EXPENSES	26
ARTICLE V
TAXES
SECTION 5.01.	TAXES	26
SECTION 5.02.	RECEIPT OF PAYMENT	27
SECTION 5.03.	OTHER TAXES	27
SECTION 5.04.	INDEMNIFICATION	27
SECTION 5.05.	LOANS TREATED AS INDEBTEDNESS	28
SECTION 5.06.	ALLOCATION OF ISSUE PRICE	28
SECTION 5.07.	REGISTERED OBLIGATION	28

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

ARTICLE VI
PAYMENTS; COMPUTATIONS
SECTION 6.01.	MAKING OF PAYMENTS	28
SECTION 6.02.	SETOFF OR COUNTERCLAIM	29
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01.	CONDITIONS PRECEDENT TO THE LOAN	29
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01.	REPRESENTATIONS AND WARRANTIES OF BORROWER	31
SECTION 8.02.	SURVIVAL OF REPRESENTATIONS AND WARRANTIES	39
ARTICLE IX
AFFIRMATIVE COVENANTS
SECTION 9.01.	MAINTENANCE OF EXISTENCE	39
SECTION 9.02.	USE OF PROCEEDS	39
SECTION 9.03.	FINANCIAL STATEMENTS AND INFORMATION	40
SECTION 9.04.	BOOKS AND RECORDS	41
SECTION 9.05.	INSPECTION RIGHTS; ACCESS	41
SECTION 9.06.	MAINTENANCE OF INSURANCE AND PROPERTIES	41
SECTION 9.07.	GOVERNMENTAL AUTHORIZATIONS	41
SECTION 9.08.	COMPLIANCE WITH LAWS AND CONTRACTS	41
SECTION 9.09.	PLAN ASSETS	41
SECTION 9.10.	NOTICES	42
SECTION 9.11.	PAYMENT OF TAXES	42
SECTION 9.12.	WAIVER OF STAY, EXTENSION OR USURY LAWS	42
SECTION 9.13.	ADDITIONAL COVENANTS OF BORROWER	43
SECTION 9.14.	[*****]	43
SECTION 9.15.	FURTHER ASSURANCES	43
ARTICLE X
NEGATIVE COVENANTS
SECTION 10.01.	ACTIVITIES OF BORROWER	43
SECTION 10.02.	MERGER; SALE OF ASSETS	44
SECTION 10.03.	LIENS	44
SECTION 10.04.	INVESTMENT COMPANY ACT	45
SECTION 10.05.	LIMITATION ON ADDITIONAL INDEBTEDNESS	46
SECTION 10.06.	LIMITATION ON TRANSACTIONS WITH CONTROLLED AFFILIATES	46
SECTION 10.07.	ERISA	46
SECTION 10.08.	RESTRICTED PAYMENTS	47

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

ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.01.	EVENTS OF DEFAULT	47
SECTION 11.02.	DEFAULT REMEDIES	49
SECTION 11.03.	RIGHT OF SET-OFF; SHARING OF SET-OFF	50
SECTION 11.04.	RIGHTS NOT EXCLUSIVE	51
ARTICLE XII
INDEMNIFICATION
SECTION 12.01.	FUNDING LOSSES	51
SECTION 12.02.	INCREASED COSTS	51
SECTION 12.03.	OTHER LOSSES	51
SECTION 12.04.	ASSUMPTION OF DEFENSE; SETTLEMENTS	52
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01.	ASSIGNMENTS	53
SECTION 13.02.	PARTICIPATIONS	53
SECTION 13.03.	SUCCESSORS AND ASSIGNS	54
SECTION 13.04.	NOTICES	54
SECTION 13.05.	ENTIRE AGREEMENT	56
SECTION 13.06.	MODIFICATION	56
SECTION 13.07.	NO DELAY; WAIVERS; ETC.	56
SECTION 13.08.	SEVERABILITY	56
SECTION 13.09.	DETERMINATIONS	56
SECTION 13.10.	REPLACEMENT OF NOTE	56
SECTION 13.11.	GOVERNING LAW	56
SECTION 13.12.	JURISDICTION	56
SECTION 13.13.	WAIVER OF JURY TRIAL	57
SECTION 13.14.	WAIVER OF IMMUNITY	57
SECTION 13.15.	COUNTERPARTS	57
SECTION 13.16.	LIMITATION ON RIGHTS OF OTHERS	57
SECTION 13.17.	NO PARTNERSHIP	57
SECTION 13.18.	SURVIVAL	57
SECTION 13.19.	PATRIOT ACT NOTIFICATION	57

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

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

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	65
(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	65
(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 INTERESTS.  THE LOCKBOX ESCROW AGENT SHALL ADMINISTER THE LOCKBOX ACCOUNT IN ACCORDANCE WITH THE TERMS HEREOF	65
(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:	66
(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	66
(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

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

JURISDICTION FOR PURPOSES OF THE DEPOSIT ACCOUNTS UNDER THE UCC SHALL BE NEW YORK	66
(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	66
(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	66
(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.  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)	66
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	67
(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

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

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	67
(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	67
(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	67
(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 ESCROW AGENT SHALL DISTRIBUTE SUCH SUMS IN ACCORDANCE WITH THE REVISED LOCKBOX CALCULATION REPORT; IF NOT, THEN THE LOCKBOX ESCROW AGENT WILL MAKE

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

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)	67
(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	67
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)	68
(B)(1) ONLY LENDER SHALL BE ENTITLED TO GIVE ACCOUNT INSTRUCTIONS DIRECTING THE DISPOSITION, TRANSFER, WITHDRAWAL,

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

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	68
(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 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)	68
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, COWEN 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	69
(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	69

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

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	69
(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 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	69
(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.	69
(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

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

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	70
(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	70
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	70
(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	70
(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	70

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

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	71
(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

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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 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	71
(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)	71
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

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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 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	72
(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	72
(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

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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	73
(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	73
(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	73
(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

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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	73
(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)	73
(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	74
(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

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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)	74
(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 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	74
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	74
(B)THE FINANCIAL INSTITUTION HEREBY CONFIRMS THAT:	75
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

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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:	76
(B)REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOCKBOX ESCROW AGENT.  THE LOCKBOX ESCROW AGENT HEREBY REPRESENTS, WARRANTS AND COVENANTS TO COMPANY AND LENDER THAT:	76
(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:	76
(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:	77
(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:	77
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)	78

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(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	78
(C)COMPANY MAY NOT TERMINATE THIS AGREEMENT FOR ANY REASON WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER	78
(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 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	78
(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	78
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.
(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

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SECTION 15. INDEMNITY.
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	79
(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 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	79
(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	79
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	79

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

(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)	80
(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	80
(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 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	80

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

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

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

CONSENT OF THE PARTIES HERETO; PROVIDED, THAT THE PARTIES HERETO AGREE THAT THEY WILL COOPERATE WITH COWEN 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 EFFECTIVE UNLESS SUCH WAIVER IS SIGNED IN WRITING BY THE PARTY AGAINST WHOM SUCH WAIVER IS SOUGHT TO BE ENFORCED	81
(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	81
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, TITLE 11, UNITED STATES 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;	82

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(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.	82
(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.	82
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.
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.	82
(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 THE STATE, COUNTY AND CITY OF NEW YORK. 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.	82
(C)EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN

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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.	83
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 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.
SECTION 1. DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT, CAPITALIZED TERMS AND CERTAIN OTHER TERMS USED HEREIN SHALL HAVE THE MEANINGS SET FORTH IN SCHEDULE 1 HERETO. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HEREIN OR IN SCHEDULE 1 SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE LOAN AGREEMENT. TERMS USED HEREIN AND DEFINED IN THE UCC SHALL HAVE THE MEANING ASCRIBED TO SUCH TERMS IN THE UCC UNLESS THE CONTEXT CLEARLY REQUIRES OTHERWISE.
SECTION 2. GRANT OF SECURITY. BORROWER HEREBY GRANTS INVESTOR, FOR THE BENEFIT OF THE LENDERS, A SECURITY INTEREST IN ALL OF THE BORROWER’S RIGHT, TITLE AND INTEREST IN AND TO THE FOLLOWING PERSONAL PROPERTY, WHETHER NOW OR HEREAFTER EXISTING, AND WHEREVER THE SAME MAY BE LOCATED (ALL SUCH PROPERTY, COLLECTIVELY, THE “COLLATERAL”):
(A)THE GROSS PAYMENTS AND INCLUDED RECEIPTS;	100
(B)THE LFRP PATENTS, INCLUDING THOSE SET FORTH ON SCHEDULE 2(B)(I) AND LFRP KNOW-HOW, INCLUDING THAT DESCRIBED IN SCHEDULE 2(B)(II), AND ALL OTHER KNOW-HOW, MATERIALS, TRADEMARKS, SERVICE MARKS, TRADE NAMES AND GOODWILL ASSOCIATED THEREWITH, TRADE SECRETS, DATA, FORMULATIONS, PROCESSES, FRANCHISES, INVENTIONS, SOFTWARE, COPYRIGHTS, AND ALL INTELLECTUAL PROPERTY (INCLUDING BIOLOGICAL MATERIALS), AND ALL REGISTRATIONS OF ANY OF THE FOREGOING, OR APPLICATIONS THEREFOR, THAT ARE (I) OWNED BY, CONTROLLED BY, ISSUED TO, LICENSED TO, OR LICENSED BY BORROWER AND (II) USED IN THE PERFORMANCE OF THE LFRP AS PRESENTLY CONDUCTED BY BORROWER OR AS CONDUCTED BY BORROWER AS OF THE CLOSING DATE OR DURING THE TERM OF THE LOAN (BUT SPECIFICALLY EXCLUDING THE BIOLOGICAL MATERIAL COMPRISING THE COMPANY PHYSICAL LIBRARIES, IT BEING THE INTENT OF THE PARTIES THAT WHILE INTELLECTUAL PROPERTY COVERING OR EMBODIED IN THE LFRP LIBRARIES BE WITHIN THE SCOPE OF THE COLLATERAL, ALL BIOLOGICAL MATERIAL COMPRISING THE LFRP LIBRARIES EXCEPT FOR THE DUPLICATE LIBRARIES IS EXCLUDED FROM THE COLLATERAL);	100
(C)THE LICENSE AGREEMENTS, INCLUDING THOSE SET FORTH ON SCHEDULE 2(C);	101
(D)[RESERVED];	101
(E)THE IN LICENSES INCLUDING THOSE SET FORTH ON SCHEDULE 2(E);	101
(F)BOOKS, RECORDS, DATA BASES, AND INFORMATION RELATED TO THE LFRP;	101
(G)ALL GENERAL INTANGIBLES, INCLUDING ALL PAYMENT INTANGIBLES AND ALL DOCUMENTS (NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, AS THAT TERM IS DEFINED IN THE UCC), INSTRUMENTS (INCLUDING PROMISSORY NOTES), ACCOUNTS, LETTER-OF-CREDIT RIGHTS (WHETHER OR NOT THE LETTER OF CREDIT IS EVIDENCED BY A WRITING), COMMERCIAL TORT CLAIMS, SECURITIES AND ALL OTHER INVESTMENT PROPERTY, SUPPORTING OBLIGATIONS, ANY OTHER CONTRACT RIGHTS OR RIGHTS TO THE PAYMENT OF MONEY, INSURANCE CLAIMS AND PROCEEDS, IN EACH CASE RELATED TO THE GROSS PAYMENTS AND INCLUDED RECEIPTS;	101
(H)ANY OTHER GENERAL INTANGIBLES NECESSARY TO THE PERFORMANCE OF OR FORMING PART OF THE LFRP;	101
(I)[RESERVED];	101
(J)(I) THE BORROWER’S INTERESTS IN THE LOCKBOX ACCOUNT, DETAILS OF WHICH ARE PROVIDED ON SCHEDULE 2(J)(I), AND ANY SUCCESSOR

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ACCOUNT, (II) THE COMPANY CONCENTRATION ACCOUNT, DETAILS OF WHICH ARE PROVIDED ON SCHEDULE 2(J)(II), AND ANY SUCCESSOR ACCOUNT, AND (III) ANY OTHER DEPOSIT ACCOUNT OR SECURITIES ACCOUNT CONTAINING PROCEEDS OF COLLATERAL AND INTO WHICH A PARTY TO A LICENSE AGREEMENT HAS REMITTED ROYALTIES (THE ACCOUNTS REFERRED TO IN CLAUSES (I), (II) AND (III) COLLECTIVELY, THE “PLEDGED DEPOSIT ACCOUNTS”), ALL FUNDS ON DEPOSIT IN EACH SUCH ACCOUNT, ALL INVESTMENTS ARISING OUT OF SUCH FUNDS, ALL CLAIMS THEREUNDER OR IN CONNECTION THEREWITH AND SPECIAL PURPOSE SUBACCOUNTS MAINTAINED THEREIN, AND ALL MONIES AND CREDIT BALANCES FROM TIME TO TIME HELD IN THE PLEDGED DEPOSIT ACCOUNTS OR SUCH SUBACCOUNTS; ALL NOTES, CERTIFICATES OF DEPOSIT, DEPOSIT ACCOUNTS, CHECKS AND OTHER INSTRUMENTS FROM TIME TO TIME HEREAFTER DELIVERED TO OR OTHERWISE POSSESSED BY BORROWER IN SUBSTITUTION FOR OR IN ADDITION TO ANY OR ALL OF THE THEN EXISTING ITEMS DESCRIBED IN THIS SUBSECTION (J); AND ALL INTEREST, DIVIDENDS, CASH, SECURITIES, RIGHTS, INSTRUMENTS AND OTHER PROPERTY AT ANY TIME AND FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OF SUCH ACCOUNTS, SUCH FUNDS, OR SUCH INVESTMENTS OR RECEIVED IN EXCHANGE FOR ANY OR ALL OF THE ITEMS DESCRIBED IN THIS SUBSECTION;	101
(K)ALL MONEY NOW OR AT ANY TIME IN THE POSSESSION OR UNDER THE CONTROL OF, OR IN TRANSIT TO, THE LOCKBOX BANK, OR THE BORROWER RELATING TO ANY OF THE FOREGOING IN THIS SECTION 2;	101
(L)QUANTITIES OF BIOLOGICAL MATERIAL COMPRISING A COMPLETE COPY OF EACH OF THE LFRP LIBRARIES THAT ARE SUFFICIENT TO BE USED TO CREATE A REPRODUCIBLE SUPPLY OF THE LFRP LIBRARIES (THE “DUPLICATE LIBRARIES”); AND	101
(M)ALL PROCEEDS	101
SECTION 3. SECURITY FOR OBLIGATIONS. THIS AGREEMENT SECURES, AND THE COLLATERAL PLEDGED BY BORROWER IS COLLATERAL SECURITY FOR, THE DUE AND PUNCTUAL PAYMENT OR PERFORMANCE IN FULL (INCLUDING THE PAYMENT OF AMOUNTS THAT WOULD BECOME DUE BUT FOR THE OPERATION OF THE AUTOMATIC STAY UNDER SUBSECTION 362(A) OF THE UNITED STATES BANKRUPTCY CODE) OF ALL SECURED OBLIGATIONS OF BORROWER.
SECTION 4. BORROWER TO REMAIN LIABLE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, (A) BORROWER SHALL REMAIN LIABLE TO PERFORM ALL OF ITS DUTIES AND OTHER OBLIGATIONS UNDER THE LOAN AGREEMENT TO THE SAME EXTENT AS IF THIS AGREEMENT HAD NOT BEEN EXECUTED, AND (B) THE EXERCISE BY INVESTOR OF ANY OF ITS RIGHTS HEREUNDER SHALL NOT RELEASE BORROWER FROM ANY OF ITS DUTIES OR OTHER OBLIGATIONS UNDER THE LOAN AGREEMENT.
SECTION 5. PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. IF BORROWER AT ANY TIME SHALL HOLD OR ACQUIRE ANY PROMISSORY NOTES OR TANGIBLE CHATTEL PAPER CONSTITUTING COLLATERAL HAVING A FACE VALUE GREATER

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THAN TWENTY-FIVE THOUSAND DOLLARS ($25,000), BORROWER SHALL FORTHWITH ENDORSE, ASSIGN AND DELIVER THE SAME TO INVESTOR, ACCOMPANIED BY SUCH INSTRUMENTS OF TRANSFER OR ASSIGNMENT DULY EXECUTED IN BLANK AS INVESTOR MAY FROM TIME TO TIME SPECIFY.

SECTION 6. PLEDGED DEPOSIT ACCOUNTS. BORROWER SHALL FOLLOW THE PROCEDURES AND PAYMENT MECHANISMS RELATING TO THE PLEDGED DEPOSIT ACCOUNTS SET FORTH IN SECTION 4.02 OF THE LOAN AGREEMENT.

SECTION 7. INVESTMENT PROPERTY. IF BORROWER SHALL AT ANY TIME HOLD OR ACQUIRE ANY CERTIFICATED SECURITIES CONSTITUTING COLLATERAL, BORROWER SHALL FORTHWITH ENDORSE, ASSIGN AND DELIVER THE SAME TO INVESTOR, ACCOMPANIED BY SUCH INSTRUMENTS OF TRANSFER OR ASSIGNMENT DULY EXECUTED IN BLANK AS INVESTOR MAY FROM TIME TO TIME SPECIFY. IF ANY SECURITIES CONSTITUTING COLLATERAL NOW OR HEREAFTER ACQUIRED BY BORROWER ARE UNCERTIFICATED AND ARE ISSUED TO BORROWER OR ITS NOMINEE DIRECTLY BY THE ISSUER THEREOF, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT INVESTOR’S REQUEST, PURSUANT TO AN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, CAUSE THE ISSUER OF SUCH SECURITIES TO AGREE TO COMPLY WITH INSTRUCTIONS FROM INVESTOR AS TO SUCH SECURITIES, WITHOUT FURTHER CONSENT OF BORROWER OR SUCH NOMINEE. IF ANY SECURITIES CONSTITUTING COLLATERAL, WHETHER CERTIFICATED OR UNCERTIFICATED, OR OTHER INVESTMENT PROPERTY NOW OR HEREAFTER ACQUIRED BY BORROWER ARE HELD BY BORROWER OR ITS NOMINEE THROUGH A SECURITIES INTERMEDIARY OR COMMODITY INTERMEDIARY, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT INVESTOR’S REQUEST, PURSUANT TO AN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, CAUSE SUCH SECURITIES INTERMEDIARY OR (AS THE CASE MAY BE) COMMODITY INTERMEDIARY TO AGREE TO COMPLY WITH ENTITLEMENT ORDERS OR OTHER INSTRUCTIONS FROM INVESTOR TO SUCH SECURITIES INTERMEDIARY AS TO SUCH SECURITIES OR OTHER INVESTMENT PROPERTY, OR (AS THE CASE MAY BE) TO APPLY ANY VALUE DISTRIBUTED ON ACCOUNT OF ANY COMMODITY CONTRACT AS DIRECTED BY INVESTOR TO SUCH COMMODITY INTERMEDIARY, IN EACH CASE WITHOUT FURTHER CONSENT OF BORROWER OR SUCH NOMINEE.

SECTION 8. COLLATERAL IN THE POSSESSION OF A BAILEE. IF ANY PROPERTY CONSTITUTING COLLATERAL IS AT ANY TIME IN THE POSSESSION OF A BAILEE, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, IF REQUESTED BY INVESTOR, SHALL PROMPTLY OBTAIN AN ACKNOWLEDGEMENT FROM THE BAILEE, IN FORM AND SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, THAT THE BAILEE HOLDS SUCH COLLATERAL FOR THE BENEFIT OF INVESTOR AND SHALL ACT UPON THE INSTRUCTIONS OF INVESTOR, WITHOUT THE FURTHER CONSENT OF BORROWER.

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SECTION 9. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. IF BORROWER AT ANY TIME HOLDS OR ACQUIRES AN INTEREST IN ANY ELECTRONIC CHATTEL PAPER OR ANY “TRANSFERABLE RECORD,” AS THAT TERM IS DEFINED IN SECTION 201 OF THE FEDERAL ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT, OR IN § 16 OF THE UNIFORM ELECTRONIC TRANSACTIONS ACT AS IN EFFECT IN ANY RELEVANT JURISDICTION, CONSTITUTING COLLATERAL, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT THE REQUEST OF INVESTOR, SHALL TAKE SUCH ACTION AS INVESTOR MAY REASONABLY REQUEST TO VEST IN INVESTOR CONTROL UNDER UCC § 9-105 OF SUCH ELECTRONIC CHATTEL PAPER OR CONTROL UNDER SECTION 201 OF THE FEDERAL ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT OR, AS THE CASE MAY BE, § 16 OF THE UNIFORM ELECTRONIC TRANSACTIONS ACT, AS SO IN EFFECT IN SUCH JURISDICTION, OF SUCH TRANSFERABLE RECORD.
SECTION 10. LETTER-OF-CREDIT RIGHTS. IF BORROWER IS AT ANY TIME A BENEFICIARY UNDER A LETTER OF CREDIT NOW OR HEREAFTER ISSUED IN FAVOR OF BORROWER CONSTITUTING COLLATERAL, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT THE REQUEST OF INVESTOR, BORROWER SHALL, PURSUANT TO AN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, ARRANGE FOR THE ISSUER AND ANY CONFIRMER OF SUCH LETTER OF CREDIT TO CONSENT TO AN ASSIGNMENT TO INVESTOR OF THE PROCEEDS OF ANY DRAWING UNDER THE LETTER OF CREDIT.
SECTION 11. REPRESENTATIONS AND WARRANTIES.
(A)BORROWER REPRESENTS AND WARRANTS TO INVESTOR AS OF THE DATE HEREOF, BORROWER (OR ANY PREDECESSOR BY MERGER OR OTHERWISE) HAS NOT, WITHIN THE FIVE (5) YEAR PERIOD PRECEDING THE DATE HEREOF, HAD A DIFFERENT NAME FROM THE NAME LISTED ON THE SIGNATURE PAGES HEREOF	103
(B)BORROWER REPRESENTS AND WARRANTS TO INVESTOR AS OF THE DATE HEREOF, AND REPRESENTS AND WARRANTS TO INVESTOR IN ALL MATERIAL RESPECTS ON EACH DATE IT ACQUIRES RIGHTS IN COLLATERAL IN WHICH A SECURITY INTEREST IS PURPORTED TO BE GRANTED HEREUNDER, AS FOLLOWS:	103
(C)OTHER REPRESENTATIONS AND WARRANTIES. AS OF THE CLOSING DATE AND AS OF THE EARLIER OF THE DATE ON WHICH THE BUSINESS REPORT IS DELIVERED OR THE DATE ON WHICH SUCH BUSINESS REPORT IS DUE IN EACH FISCAL YEAR:	104
SECTION 12. FURTHER ASSURANCES. BORROWER AGREES THAT, FROM TIME TO TIME, AT ITS COST AND EXPENSE, BORROWER WILL PROMPTLY EXECUTE AND DELIVER ALL FURTHER INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER ACTION THAT MAY BE NECESSARY OR DESIRABLE, OR THAT INVESTOR MAY REASONABLY REQUEST, IN ORDER TO PERFECT AND PROTECT

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ANY SECURITY INTEREST GRANTED OR PURPORTED TO BE GRANTED HEREBY OR TO ENABLE INVESTOR TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER WITH RESPECT TO ANY COLLATERAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BORROWER WILL: (A) (I) EXECUTE AND FILE SUCH FINANCING OR CONTINUATION STATEMENTS, OR AMENDMENTS THERETO, AS WELL AS DOCUMENTS FOR FILING IN THE UNITES STATES PATENT OFFICE AND UNITED STATES COPYRIGHT OFFICE (II) EXECUTE AND DELIVER, AND CAUSE TO BE EXECUTED AND DELIVERED, AGREEMENTS ESTABLISHING THAT INVESTOR HAS CONTROL OF SPECIFIED ITEMS OF COLLATERAL, INCLUDING THE LOCKBOX AGREEMENT, AND (III) DELIVER SUCH OTHER INSTRUMENTS OR NOTICES, IN EACH CASE, AS MAY BE NECESSARY OR DESIRABLE, OR AS INVESTOR MAY REASONABLY REQUEST, IN ORDER TO PERFECT AND PRESERVE THE SECURITY INTERESTS GRANTED OR PURPORTED TO BE GRANTED HEREBY; (B) FURNISH TO INVESTOR FROM TIME TO TIME STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND DESCRIBING THE COLLATERAL AND SUCH OTHER REPORTS IN CONNECTION WITH THE COLLATERAL AS INVESTOR MAY REASONABLY REQUEST, ALL IN REASONABLE DETAIL; (C) AT INVESTOR’S REASONABLE REQUEST, APPEAR IN AND DEFEND ANY ACTION OR PROCEEDING THAT MAY AFFECT BORROWER’S TITLE TO OR INVESTOR’S SECURITY INTEREST IN ALL OR ANY PART OF THE COLLATERAL, INCLUDING ANY PROCEEDING IN WHICH THE ISSUE IS WHETHER ANY PROPERTY IN WHICH BORROWER HAS RIGHTS CONSTITUTES COLLATERAL; AND (D) USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN ANY NECESSARY CONSENTS OF THIRD PARTIES TO THE ASSIGNMENT AND PERFECTION OF A SECURITY INTEREST TO INVESTOR WITH RESPECT TO ANY COLLATERAL. BORROWER HEREBY AUTHORIZES INVESTOR TO FILE ONE OR MORE FINANCING OR CONTINUATION STATEMENTS, AND AMENDMENTS THERETO, RELATIVE TO ALL OR ANY PART OF THE COLLATERAL WITHOUT THE SIGNATURE OF BORROWER. BORROWER AGREES THAT A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS AGREEMENT OR OF A FINANCING STATEMENT SIGNED BY BORROWER SHALL BE SUFFICIENT AS A FINANCING STATEMENT AND MAY BE FILED AS A FINANCING STATEMENT IN ANY AND ALL JURISDICTIONS. NOTWITHSTANDING THE FOREGOING, SO LONG AS THERE EXISTS NO EVENT OF DEFAULT, THE BORROWER SHALL NOT BE REQUIRED TO OBTAIN THE CONSENT OF THE OTHER PARTIES TO THE EXISTING LICENSE AGREEMENTS AND IN LICENSES.
SECTION 13. CERTAIN COVENANTS OF BORROWER. BORROWER SHALL:
(A)NOT USE OR PERMIT ANY COLLATERAL TO BE USED UNLAWFULLY OR IN VIOLATION OF ANY APPLICABLE STATUTE, REGULATION OR ORDINANCE OR ANY POLICY OF INSURANCE COVERING THE COLLATERAL TO THE EXTENT THE SAME COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;	105
(B)AT ITS OWN COST AND EXPENSE, WITH RESPECT TO EACH PROPERTY THAT IT LEASES ON WHICH ANY COLLATERAL IS LOCATED, OBTAIN, AT INVESTOR’S REQUEST, AN AGREEMENT SATISFACTORY TO

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INVESTOR WITH THE LANDLORD OF SUCH LEASED PROPERTY, (I) SUBORDINATING SUCH LANDLORD’S LIEN IN ANY COLLATERAL TO THE SECURITY INTEREST PURPORTED TO BE GRANTED HEREUNDER AND (II) GRANTING ACCESS TO SUCH LEASED PROPERTY;	105
(C)MAINTAIN INSURANCE AS PROVIDED IN SECTION 9.06 THE LOAN AGREEMENT;	105
(D)NOTIFY INVESTOR OF ANY CHANGE IN ITS NAME, IDENTITY OR CORPORATE STRUCTURE AT LEAST FIFTEEN (15) DAYS PRIOR TO SUCH CHANGE;	105
(E)GIVE INVESTOR THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE OF ANY CHANGE IN ITS CHIEF PLACE OF BUSINESS, CHIEF EXECUTIVE OFFICE OR RESIDENCE OR THE OFFICE WHERE BORROWER KEEPS ITS RECORDS REGARDING THE COLLATERAL OR A REINCORPORATION, REORGANIZATION OR OTHER ACTION THAT RESULTS IN A CHANGE OF THE JURISDICTION OF ORGANIZATION OF BORROWER;	105
(F)PAY PROMPTLY WHEN DUE ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES OR LEVIES IMPOSED UPON, AND ALL CLAIMS AGAINST, THE COLLATERAL, EXCEPT TO THE EXTENT THE VALIDITY THEREOF IS BEING CONTESTED IN GOOD FAITH; PROVIDED, HOWEVER, THAT BORROWER SHALL IN ANY EVENT PAY SUCH TAXES, ASSESSMENTS, CHARGES, LEVIES OR CLAIMS NOT LATER THAN FIVE (5) DAYS PRIOR TO THE DATE OF ANY PROPOSED SALE UNDER ANY JUDGMENT, WRIT OR WARRANT OF ATTACHMENT ENTERED OR FILED AGAINST BORROWER OR ANY OF THE COLLATERAL AS A RESULT OF THE FAILURE TO MAKE SUCH PAYMENT;	106
(G)EXCEPT FOR LICENSES OF LFRP INTELLECTUAL PROPERTY AND IN LICENSES IN EFFECT ON THE DATE HEREOF, NOT SUFFER TO EXIST ANY LICENSE, LEASE, CONTRACT OR AGREEMENT TO WHICH IT IS A PARTY FORMING PART OF OR USED IN THE LFRP THAT CONTAINS ANY PROVISION THAT PURPORTS TO PROHIBIT BORROWER FROM GRANTING TO INVESTOR A SECURITY INTEREST IN ANY ITEM OF COLLATERAL INCLUDING ANY SUCH LICENSE, LEASE, CONTRACT OR AGREEMENT ITSELF;	106
(H)COMPLY WITH ALL OF ITS OBLIGATIONS WITH RESPECT TO ANY PERSONAL PROPERTY OWNED OR LEASED BY IT AND USED IN THE LFRP, INCLUDING CAPITAL LEASES, OPERATING LEASES AND PURCHASE MONEY INDEBTEDNESS EXCEPT TO THE EXTENT NON-COMPLIANCE COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;	106
(I)FROM AND AFTER THE DATE THAT THE DUPLICATE LIBRARIES ARE DELIVERED TO THE LOCATION SPECIFIED IN SECTION 14(F), IN THE EVENT THAT THERE ARE ANY UPDATES OR IMPROVEMENTS TO THE LFRP LIBRARIES, OR OTHER LIBRARIES AS SET FORTH IN THE DEFINITION OF LFRP LIBRARIES, PROMPTLY DELIVER SUFFICIENT QUANTITIES OF SUCH UPDATED, IMPROVED OR OTHER LFRP LIBRARIES AS NECESSARY TO MAINTAIN THE DUPLICATE LIBRARIES AS A DUPLICATE REPRODUCIBLE SUPPLY OF THE LFRP LIBRARIES AT SUCH LOCATION; AND	106
(J)NOT TRANSFER, SELL, CONVEY, ASSIGN, DISPOSE OF OR LICENSE THE COMPANY PHYSICAL LIBRARIES, EXCEPT (X) IN THE ORDINARY

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COURSE OF BUSINESS OF THE LFRP CONSISTENT WITH PAST PRACTICES, OR (Y) OUTSIDE THE SCOPE OF THE LFRP THE NON-EXCLUSIVE LICENSING OF THE COMPANY PHYSICAL LIBRARIES BUT LIMITED TO A SCOPE OR FOR A USE SO AS TO NOT COMPETE WITH THE LFRP, PROVIDED, THAT NON-EXCLUSIVE LICENSING OF THE COMPANY PHYSICAL LIBRARIES UNDER INTERNALLY DEVELOPED PRODUCT AGREEMENTS OR UNDER CO-DEVELOPMENT AGREEMENTS SHALL NOT BE CONSIDERED IN BREACH HEREOF, SO LONG AS IN NO EVENT SHALL ANY THIRD PARTY OR AFFILIATE BE GRANTED A LICENSE OR OTHER RIGHTS UNDER THE COMPANY PHYSICAL LIBRARIES IN A WAY THAT WOULD ALLOW SUCH THIRD PARTY OR AFFILIATE TO OPERATE A FUNDED RESEARCH OR LICENSING PROGRAM THAT WOULD COMPETE WITH THE LFRP	106
(K)CONCURRENTLY WITH BORROWER’S DELIVERY OF A BUSINESS REPORT PURSUANT TO SECTION 9.03(E) OF THE LOAN AGREEMENT, CONFIRM THE ATTACHMENT OF THE SECURITY INTEREST IN THE REGISTERED INTELLECTUAL PROPERTY OF BORROWER CREATED BY THIS AGREEMENT BY EXECUTION OF COPYRIGHT SECURITY AGREEMENT OR A PATENT SECURITY AGREEMENT, AS APPLICABLE, WITH RESPECT TO ANY SUCH REGISTERED INTELLECTUAL PROPERTY NOT SUBJECT AT SUCH TIME TO A PATENT SECURITY AGREEMENT OR A COPYRIGHT SECURITY AGREEMENT, AS APPLICABLE, AND THE FILING OF SUCH AGREEMENT WITH THE PATENT OFFICE OR ANY OTHER GOVERNMENTAL AUTHORITY AS SHALL BE NECESSARY TO CREATE, PRESERVE, PROTECT OR PERFECT INVESTOR’S SECURITY INTEREST IN SUCH INTELLECTUAL PROPERTY AS MAY BE REASONABLY REQUESTED BY INVESTOR	106
SECTION 14. SPECIAL COVENANTS WITH RESPECT TO THE COLLATERAL.
(A)BORROWER SHALL:	107
(B)BORROWER SHALL, AT BORROWER’S SOLE COST AND EXPENSE, (A) TAKE ANY AND ALL ACTIONS AND MAKE ALL PAYMENTS, WHICH ARE NECESSARY AND DESIRABLE TO DILIGENTLY MAINTAIN THE LFRP PATENTS OWNED BY IT; (B) DEFEND SUCH LFRP PATENTS AGAINST ANY CLAIMS OF INVALIDITY OR UNENFORCEABILITY; AND (C) TAKE COMMERCIALLY REASONABLE MEASURES TO PROTECT THE PROPRIETARY NATURE OF EACH ITEM OF LFRP INTELLECTUAL PROPERTY AND TO MAINTAIN IN CONFIDENCE ALL CONFIDENTIAL INFORMATION COMPROMISING A PART THEREOF; PROVIDED, THAT IN NO EVENT SHALL BORROWER BE REQUIRED TO TAKE ANY ACTION UNDER SUBSECTION (B) OR (C) IF: (I) THE FAILURE TO TAKE ACTION COULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, (II) THE REASONABLY ESTIMATED COST TO BORROWER ASSOCIATED WITH PURSUING SUCH ACTION WOULD OUTWEIGH THE REASONABLY ESTIMATED EXTENT BY WHICH THE INCLUDED RECEIPTS AND THE INTEREST IN THE ROYALTIES RETAINED BY THE BORROWER WOULD BENEFIT AS A RESULT OF SUCCESSFULLY PURSUING SUCH ACTION, OR (III) BORROWER OBTAINS THE REQUIRED LENDER’S WRITTEN CONSENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD (AS IN THE CASE, FOR EXAMPLE, WHERE

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PURSUING SUCH ACTION WOULD JEOPARDIZE THE LFRP INTELLECTUAL PROPERTY OR ADVERSELY EFFECT THE LFRP AS A WHOLE). CONSENT HEREUNDER SHALL BE PROVIDED OR DENIED WITHIN TEN (10) BUSINESS DAYS AFTER NOTICE AND PROVISION OF SUCH INFORMATION AS MAY BE REASONABLY REQUESTED BY THE LENDER FROM THE BORROWER. BORROWER SHALL IMMEDIATELY NOTIFY LENDER OF SUCH CLAIM. THE PARTIES SHALL CONSULT AS TO STRATEGY REGARDING ANY RESPONSE TO SUCH CLAIM. BORROWER SHALL NOT ABANDON, OR FAIL TO TAKE ANY ACTION NECESSARY OR DESIRABLE TO PREVENT THE DISCLAIMER OR ABANDONMENT OF MATERIAL LFRP PATENTS OWNED BY IT	107
(C)UNLESS THERE SHALL OCCUR AND BE CONTINUING ANY EVENT OF DEFAULT AND THE INVESTOR HAS ACCELERATED THE OBLIGATIONS UNDER THE LOAN AGREEMENT, BORROWER SHALL HAVE THE RIGHT TO COMMENCE AND PROSECUTE IN ITS OWN NAME, AS THE PARTY IN INTEREST, FOR ITS OWN BENEFIT AND AT THE SOLE COST AND EXPENSE OF THE BORROWER, SUCH APPLICATIONS FOR PROTECTION OF THE LFRP INTELLECTUAL PROPERTY AND SUITS, PROCEEDINGS OR OTHER ACTIONS TO PREVENT THE INFRINGEMENT, COUNTERFEITING, UNFAIR COMPETITION, DILUTION, DIMINUTION IN VALUE OR OTHER DAMAGE AS ARE NECESSARY TO PROTECT THE LFRP INTELLECTUAL PROPERTY. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT, THE INVESTOR SHALL HAVE THE RIGHT BUT SHALL IN NO WAY BE OBLIGATED TO FILE APPLICATIONS FOR PROTECTION OF THE LFRP INTELLECTUAL PROPERTY AND/OR BRING SUIT IN THE NAME OF THE BORROWER OR INVESTOR TO ENFORCE THE LFRP INTELLECTUAL PROPERTY AND ANY LICENSE THEREUNDER. IN THE EVENT OF SUCH SUIT, THE BORROWER SHALL, AT THE REASONABLE REQUEST OF THE INVESTOR, DO ANY AND ALL LAWFUL ACTS AND EXECUTE ANY AND ALL DOCUMENTS REQUESTED BY THE INVESTOR IN AID OF SUCH ENFORCEMENT AND THE BORROWER SHALL PROMPTLY REIMBURSE AND INDEMNIFY THE INVESTOR FOR ALL COSTS AND EXPENSES INCURRED BY THE INVESTOR IN THE EXERCISE OF ITS RIGHTS UNDER THIS SECTION 14(C) IN ACCORDANCE WITH THE LOAN AGREEMENT. IN THE EVENT THAT THE INVESTOR SHALL ELECT NOT TO BRING SUIT TO ENFORCE THE LFRP INTELLECTUAL PROPERTY, THE BORROWER AGREES, AT THE REASONABLE REQUEST OF THE INVESTOR, TO TAKE ALL COMMERCIALLY REASONABLE ACTIONS NECESSARY, WHETHER BY SUIT, PROCEEDING OR OTHER ACTION, TO PREVENT THE INFRINGEMENT, COUNTERFEITING, UNFAIR COMPETITION, DILUTION, DIMINUTION IN VALUE OF OR OTHER DAMAGE TO ANY OF THE LFRP INTELLECTUAL PROPERTY BY ANY PERSON	108
(D)BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXECUTE AND DELIVER TO INVESTOR FIVE (5) ORIGINALS OF A SPECIAL POWER OF ATTORNEY IN THE FORM OF EXHIBIT A ANNEXED HERETO FOR EXECUTION OF AN ASSIGNMENT OF THE COLLATERAL TO INVESTOR, OR THE IMPLEMENTATION OF THE SALE OR OTHER DISPOSITION OF THE COLLATERAL PURSUANT TO INVESTOR’S GOOD FAITH EXERCISE OF THE RIGHTS AND REMEDIES GRANTED HEREUNDER;

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PROVIDED, HOWEVER, INVESTOR AGREES THAT IT WILL NOT EXERCISE ITS RIGHTS UNDER SUCH SPECIAL POWER OF ATTORNEY UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING	108
(E)BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXECUTE AND DELIVER TO INVESTOR THE PATENT SECURITY AGREEMENT, THE COPYRIGHT SECURITY AGREEMENT AND ALL OTHER DOCUMENTS, INSTRUMENTS AND OTHER ITEMS AS MAY BE NECESSARY FOR INVESTOR TO FILE SUCH AGREEMENTS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE AND UNITED STATES COPYRIGHT OFFICE AND ANY SIMILAR DOMESTIC OR FOREIGN OFFICE, DEPARTMENT OR AGENCY. BORROWER SHALL UPON AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, USE ITS COMMERCIALLY REASONABLE EFFORTS TO OBTAIN ANY CONSENTS, WAIVERS AND AGREEMENTS REQUESTED BY INVESTOR THAT ARE NECESSARY TO ENABLE INVESTOR TO EXERCISE ITS REMEDIES WITH RESPECT TO THE COLLATERAL	108
(F)CERTAIN RIGHTS UPON AN EVENT OF DEFAULT BEFORE AND FOLLOWING A FORECLOSURE	109
(G)BORROWER SHALL, WITHIN THIRTY (30) DAYS AFTER THE DATE HEREOF, PREPARE THE DUPLICATE LIBRARIES AND SHALL THEREAFTER PROMPTLY DELIVER THE DUPLICATE LIBRARIES TO FISHER CLINICAL SERVICES, 631 LOFSTRAND LANE, ROCKVILLE, MD 20850 (PHONE: (301) 315-2238) OR SUCH OTHER SECURE LOCATION OR LOCATIONS AS ARE REASONABLY ACCEPTABLE TO BORROWER AND INVESTOR, CLEARLY IDENTIFIED AS THE DUPLICATE LIBRARIES PREPARED FOR THE BENEFIT OF INVESTOR, AND SEGREGATED FROM PROPERTY OF BORROWER. THE DUPLICATE LIBRARIES SHALL BE SUBJECT TO STORAGE AND ACCESS ON CONDITIONS SUBSTANTIALLY SIMILAR TO THOSE SET FORTH IN EXHIBIT E	111
(H) SHALL: (I) MAINTAIN COPIES OF ALL SOURCE AND OBJECT CODES FOR ALL SOFTWARE AT ONE OR MORE SAFE AND SECURE LOCATIONS REASONABLY ACCEPTABLE TO INVESTOR, (II) KEEP INVESTOR FULLY INFORMED OF EACH SUCH LOCATION, AND (III) MAINTAIN THE CURRENCY OF ALL SUCH SOFTWARE STORED THEREAT	111
(I)BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXECUTE AND DELIVER TO INVESTOR THE PERFECTION CERTIFICATE	111
(J)BORROWER AGREES THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS AGREEMENT WILL CAUSE IRREPARABLE INJURY TO INVESTOR, THAT INVESTOR HAS NO ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACH AND, AS A CONSEQUENCE, THAT EACH AND EVERY COVENANT CONTAINED HEREIN SHALL BE SPECIFICALLY ENFORCEABLE AGAINST BORROWER, AND BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT ANY DEFENSES AGAINST AN ACTION FOR SPECIFIC PERFORMANCE OF SUCH COVENANTS	111
(K)THE BORROWER SHALL: (A) NOTIFY IN REASONABLE DETAIL INVESTOR PROMPTLY, BUT IN NO EVENT LATER THAN QUARTERLY (ON THE EARLIER OF THE DATE ON WHICH THE BUSINESS REPORT IS DELIVERED BY

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THE BORROWER OR THE DATE ON WHICH SUCH BUSINESS REPORT IS DUE IN EACH FISCAL QUARTER) AFTER THE ACQUISITION, EXECUTION OR FILING THEREOF, OF ANY (I) LICENSE AGREEMENTS, LFRP PATENTS, CO-DEVELOPMENT AGREEMENTS, PAYMENTS UNDER WHICH FORM PART OF THE COLLATERAL, AND IN LICENSES, AND (B) ON THE LAST DAY OF EACH QUARTER PROVIDE, IN REASONABLE DETAIL, UPDATES TO SCHEDULES 2(B)(I), 2(B)(II) 2(C), 2(E), 2(J)(I) AND 2(J)(II), WHICH WOULD MAKE THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 11(C)(I) TRUE, CORRECT AND COMPLETE AS OF SUCH DATE OF THE DELIVERY OF SUCH BUSINESS REPORT. UPON THE DELIVERY AND ACCEPTANCE OF SUCH UPDATED SCHEDULES BY INVESTOR, SUCH SCHEDULES WILL BE AUTOMATICALLY DEEMED TO AMEND AND RESTATE SCHEDULES 2(B)(I), 2(B)(II), 2(C), 2(E), 2(J)(I) AND 2(J)(II) HERETO	111
SECTION 15. INVESTOR APPOINTED ATTORNEY-IN-FACT. BORROWER HEREBY IRREVOCABLY APPOINTS INVESTOR, OR ANY PERSON OR AGENT AS INVESTOR MAY DESIGNATE AS SUCH, BORROWER’S ATTORNEY-IN-FACT, WITH FULL AUTHORITY IN THE PLACE AND STEAD OF BORROWER AND IN THE NAME OF BORROWER, INVESTOR OR OTHERWISE, FROM TIME TO TIME IN INVESTOR’S DISCRETION TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT THAT INVESTOR MAY IN ITS GOOD FAITH SOLE DISCRETION DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE FOLLOWING:
(A)UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO ASK FOR, DEMAND, COLLECT, SUE FOR, RECOVER, COMPOUND, RECEIVE AND GIVE ACQUITTANCE AND RECEIPTS FOR MONIES DUE AND TO BECOME DUE UNDER OR IN RESPECT OF ANY OF THE COLLATERAL, AND TO MANAGE THE LFRP, INCLUDING TAKING ACTIONS UNDER THE LICENSE AGREEMENTS AND IN LICENSES;	112
(B)UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO RECEIVE, DIRECT PAYMENT OF, ENDORSE AND COLLECT ANY DRAFTS OR OTHER INSTRUMENTS, DOCUMENTS AND CHATTEL PAPER IN CONNECTION WITH CLAUSE (A) ABOVE;	112
(C)UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO FILE ANY CLAIMS OR TAKE ANY ACTION OR INSTITUTE ANY PROCEEDINGS THAT INVESTOR MAY IN ITS GOOD FAITH SOLE DISCRETION DEEM NECESSARY OR DESIRABLE FOR THE COLLECTION OF ANY OF THE COLLATERAL OR OTHERWISE TO ENFORCE THE RIGHTS OF INVESTOR WITH RESPECT TO ANY OF THE COLLATERAL;	112
(D)UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO PAY OR DISCHARGE TAXES OR LIENS LEVIED OR PLACED UPON OR THREATENED AGAINST THE COLLATERAL, THE LEGALITY OR VALIDITY THEREOF AND THE AMOUNTS NECESSARY TO DISCHARGE THE SAME TO BE DETERMINED BY INVESTOR IN ITS SOLE DISCRETION, ANY SUCH PAYMENTS MADE BY INVESTOR TO BECOME OBLIGATIONS OF BORROWER TO INVESTOR, DUE AND PAYABLE IMMEDIATELY WITHOUT DEMAND;	112

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(E)                               UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO SIGN AND ENDORSE ANY INVOICES, DRAFTS AGAINST DEBTORS, ASSIGNMENTS, VERIFICATIONS, NOTICES AND OTHER DOCUMENTS RELATING TO THE COLLATERAL; AND	112
(F)                               UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO PERFORM ANY OBLIGATIONS OF THE BORROWER UNDER THE TRANSACTION DOCUMENTS WITH THE BORROWER WHICH THE BORROWER HAS NOT PERFORMED.	112
(G)                               UPON AND AT ANY TIME AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO PREPARE, FILE AND SIGN BORROWER’S NAME ON AN ASSIGNMENT DOCUMENT IN SUCH FORM AS INVESTOR MAY IN ITS SOLE DISCRETION DEEM NECESSARY OR DESIRABLE TO TRANSFER OWNERSHIP OF THE COLLATERAL TO INVESTOR OR AN ASSIGNEE OR TRANSFEREE OF INVESTOR, WHICH TRANSFER EXPRESSLY SHALL BE SUBJECT TO THE RIGHTS OF THE BORROWER IN SUCH COLLATERAL SET FORTH IN SECTION 14(E) HEREOF.	112

SECTION 16. STANDARD OF CARE.  THE POWERS CONFERRED ON INVESTOR HEREUNDER ARE SOLELY TO PROTECT ITS INTEREST IN THE COLLATERAL AND SHALL NOT IMPOSE ANY DUTY UPON IT TO EXERCISE ANY SUCH POWERS.  EXCEPT FOR THE EXERCISE OF GOOD FAITH AND OF REASONABLE CARE IN THE ACCOUNTING FOR MONIES ACTUALLY RECEIVED BY INVESTOR HEREUNDER, INVESTOR SHALL HAVE NO DUTY AS TO ANY COLLATERAL OR AS TO THE TAKING OF ANY NECESSARY STEPS TO PRESERVE RIGHTS AGAINST PRIOR PARTIES OR ANY OTHER RIGHTS PERTAINING TO ANY COLLATERAL.  INVESTOR SHALL BE DEEMED TO HAVE EXERCISED REASONABLE CARE IN THE CUSTODY AND PRESERVATION OF COLLATERAL IN ITS POSSESSION IF SUCH COLLATERAL IS ACCORDED TREATMENT SUBSTANTIALLY EQUAL TO THAT WHICH INVESTOR ACCORDS ITS OWN PROPERTY.  THE INVESTOR SHALL ACT AS AGENT HEREUNDER FOR ANY OTHER LENDERS THAT BECOME A PARTY TO THE LOAN AGREEMENT AFTER THE DATE HEREOF AND THE SECURITY INTEREST GRANTED HEREUNDER TO THE INVESTOR IS ALSO GRANTED TO THE INVESTOR FOR THE BENEFIT OF OTHER LENDERS.  EXCEPT AS PROVIDED IN THE LOAN AGREEMENT, THE INVESTOR SHALL HAVE NO DUTY TO ANY LENDER HEREUNDER AND ITS SOLE RESPONSIBILITY SHALL BE LIMITED TO (I) BEING NAMED AS A SECURED PARTY HEREUNDER AND IN ANY UCC FINANCING STATEMENT, INTELLECTUAL PROPERTY FILING, LOCKBOX AGREEMENT, ANY ESCROW AGREEMENT OR OTHER DOCUMENTS, INSTRUMENT OR AGREEMENT ENTERED INTO OR FILED PURSUANT HERETO AND (II) HOLDING ANY POSSESSORY COLLATERAL DELIVERED TO IT BY THE COMPANY PURSUANT HERETO, IN EACH CASE FOR THE BENEFIT OF ALL LENDERS.  THE INVESTOR IS ENTITLED TO, BUT HAS NO OBLIGATION TO EXERCISE ANY RIGHTS OR REMEDIES HEREUNDER OR UNDER APPLICABLE LAW.

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SECTION 17. REMEDIES UPON EVENT OF DEFAULT.

(A)                              IF, AND ONLY IF, ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING,  INVESTOR MAY EXERCISE IN RESPECT OF THE COLLATERAL (I) ALL RIGHTS AND REMEDIES PROVIDED FOR HEREIN, UNDER THE LOAN AGREEMENT OR OTHERWISE AVAILABLE TO IT, (II) ALL THE RIGHTS AND REMEDIES OF A SECURED PARTY ON DEFAULT UNDER THE UCC (WHETHER OR NOT THE UCC APPLIES TO THE COLLATERAL), IN ALL RELEVANT JURISDICTIONS, AND (III) THE RIGHTS TO:	113
(B)                               UNTIL AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BORROWER SHALL, SUBJECT  TO THE PROVISIONS OF THE LOAN AGREEMENT AND THE LOCKBOX AGREEMENT, CONTINUE TO COLLECT, AT ITS OWN COST AND EXPENSE, ALL AMOUNTS DUE OR TO BECOME DUE BORROWER IN RESPECT OF THE COLLATERAL; IT BEING UNDERSTOOD AND AGREED THAT ANY AND ALL SUCH COLLECTIONS SHALL BE HELD IN TRUST FOR, AND BE FOR THE BENEFIT OF, INVESTOR. IN CONNECTION WITH SUCH COLLECTIONS; PROVIDED, NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, BORROWER MAY, SUBJECT TO THE PROVISIONS OF THE LOAN AGREEMENT, TAKE SUCH ACTION AS BORROWER REASONABLY MAY DEEM NECESSARY OR ADVISABLE TO ENFORCE COLLECTION OF THE COLLATERAL. AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, INVESTOR SHALL HAVE THE RIGHT TO NOTIFY THE ACCOUNT DEBTORS OR OBLIGORS UNDER ANY COLLATERAL OF THE SECURITY INTEREST OF INVESTOR IN SUCH COLLATERAL AND TO DIRECT SUCH ACCOUNT DEBTORS OR OBLIGORS TO MAKE PAYMENT TO INVESTOR (OR ITS DESIGNEE) OF ANY AMOUNTS DUE OR TO BECOME DUE THEREUNDER AND ENFORCE COLLECTION OF ANY OF THE COLLATERAL BY SUIT OR OTHERWISE AND SURRENDER, RELEASE OR EXCHANGE ALL OR ANY PART THEREOF, OR ADJUST, SETTLE OR COMPROMISE OR EXTEND OR RENEW FOR ANY PERIOD (WHETHER OR NOT LONGER THAN THE ORIGINAL PERIOD) ANY INDEBTEDNESS THEREUNDER OR EVIDENCE THEREBY. IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, UPON THE REQUEST OF INVESTOR, BORROWER SHALL, AT ITS OWN COST AND EXPENSE, NOTIFY ANY PARTIES OBLIGATED ON ANY OF THE COLLATERAL TO MAKE PAYMENT TO INVESTOR (OR ITS DESIGNEE) OF ANY AMOUNTS DUE OR TO BECOME DUE THEREUNDER, AND IN SUCH EVENT, INVESTOR IS AUTHORIZED TO ENDORSE, IN THE NAME OF BORROWER, ANY ITEM REPRESENTING ANY PAYMENT ON OR OTHER PROCEEDS OF ANY OF THE COLLATERAL. BORROWER IRREVOCABLY DIRECTS AND REQUIRES ALL LICENSEES AND ACCOUNT DEBTORS TO HONOR INVESTOR’S REQUEST FOR DIRECT PAYMENT AND COMPLY WITH ANY SUCH REQUEST, NOTWITHSTANDING ANY DIRECTIONS OR INSTRUCTIONS TO THE CONTRARY THAT MAY BE GIVEN BY BORROWER AND AGREES THAT THE COMPLIANCE BY SUCH LICENSEE OR ACCOUNT DEBTOR WITH THE PROVISIONS OF THIS SECTION SHALL NOT BE DEEMED A VIOLATION OF SUCH PARTY’S CONTRACTUAL AGREEMENTS WITH BORROWER.	113
(C)                               AFTER DELIVERY TO BORROWER BY INVESTOR OF A NOTICE THAT AN EVENT OF DEFAULT HAS OCCURRED AND SO LONG AS SUCH EVENT OF DEFAULT IS CONTINUING: (I) ALL AMOUNTS AND PROCEEDS (INCLUDING

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INSTRUMENTS) RECEIVED BY BORROWER IN RESPECT OF ANY COLLATERAL SHALL BE RECEIVED IN TRUST FOR THE BENEFIT OF INVESTOR HEREUNDER, SHALL BE SEGREGATED FROM OTHER FUNDS OF BORROWER, AND SHALL BE FORTHWITH PAID OVER TO INVESTOR IN THE SAME FORM AS SO RECEIVED (WITH ANY NECESSARY ENDORSEMENTS) TO BE HELD AS CASH COLLATERAL AND APPLIED AS PROVIDED BY THIS SECURITY AGREEMENT; AND (II) BORROWER SHALL NOT ADJUST, SETTLE, OR COMPROMISE THE AMOUNT OR PAYMENT OF ANY COLLATERAL, OR RELEASE WHOLLY OR PARTLY ANY ACCOUNT DEBTOR OR OBLIGOR THEREOF, OR ALLOW ANY CREDIT OR DISCOUNT THEREON.	114
(D)                               AFTER THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT, (I) INVESTOR MAY IN ITS OWN NAME OR IN THE NAME OF OTHERS COMMUNICATE WITH ACCOUNT DEBTORS (INCLUDING CONTRACT PARTIES TO LICENSE AGREEMENTS AND IN LICENSE AGREEMENTS) IN ORDER TO VERIFY WITH THEM TO INVESTOR’S REASONABLE SATISFACTION THE EXISTENCE, AMOUNT AND TERMS OF ANY COLLATERAL AND (II) INVESTOR SHALL HAVE THE RIGHT, AT BORROWER’S COST AND EXPENSE, TO MAKE TEST VERIFICATIONS OF THE COLLATERAL IN ANY REASONABLE MANNER AND THROUGH ANY MEDIUM THAT IT CONSIDERS ADVISABLE, AND BORROWER AGREES TO FURNISH ALL SUCH ASSISTANCE AS INVESTOR MAY REASONABLY REQUIRE IN CONNECTION THEREWITH.	114
(E)                               ANYTHING CONTAINED HEREIN TO THE CONTRARY NOTWITHSTANDING, UPON THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT, INVESTOR SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) TO BRING SUIT, IN THE NAME OF BORROWER, INVESTOR OR OTHERWISE, TO ENFORCE ANY COLLATERAL, IN WHICH EVENT BORROWER SHALL, AT THE REQUEST OF INVESTOR, DO ANY AND ALL LAWFUL ACTS AND EXECUTE ANY AND ALL DOCUMENTS REQUIRED BY INVESTOR IN AID OF SUCH ENFORCEMENT AND BORROWER SHALL PROMPTLY, UPON DEMAND, REIMBURSE AND INDEMNIFY INVESTOR AS PROVIDED IN THE LOAN AGREEMENT AND SECTION 19 HEREOF, AS APPLICABLE, IN CONNECTION WITH THE EXERCISE OF ITS RIGHTS UNDER THIS SECTION 17.	114

SECTION 18. APPLICATION OF PROCEEDS.  EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN THIS AGREEMENT, ALL PROCEEDS RECEIVED BY INVESTOR IN RESPECT OF ANY SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON ALL OR ANY PART OF THE COLLATERAL SHALL BE APPLIED IN GOOD FAITH TO SATISFY (TO THE EXTENT OF THE NET CASH PROCEEDS RECEIVED BY INVESTOR) SUCH ITEM OR PART OF THE SECURED OBLIGATIONS AS INVESTOR MAY DESIGNATE (WITH THE RIGHT TO REAPPLY SUCH PROCEEDS TO SUCH OTHER ITEMS OR PART OF THE SECURED OBLIGATIONS AS INVESTOR MAY SEE FIT).

SECTION 19. EXPENSES.

(A)                              BORROWER AGREES TO PAY TO INVESTOR UPON DEMAND THE AMOUNT OF ANY AND ALL COSTS AND EXPENSES, INCLUDING THE

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REASONABLE FEES AND EXPENSES OF ITS COUNSEL AND OF ANY EXPERTS AND AGENTS, THAT INVESTOR MAY INCUR IN CONNECTION WITH (I) THE CUSTODY, PRESERVATION, MANAGEMENT, ENFORCEMENT, USE OR OPERATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY OF THE COLLATERAL, (II) THE EXERCISE OR ENFORCEMENT OF ANY OF THE RIGHTS OF INVESTOR HEREUNDER, OR (III) THE FAILURE BY BORROWER TO PERFORM OR OBSERVE ANY OF THE PROVISIONS HEREOF. ANY COSTS AND EXPENSES PAYABLE HEREUNDER SHALL BE DEEMED TO BE SECURED OBLIGATIONS AND ENTITLED TO THE SECURITY INTEREST HEREUNDER.

115

(B)                               THE OBLIGATIONS OF BORROWER IN THIS SECTION 19 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE DISCHARGE OF BORROWER’S OTHER OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN AGREEMENT.

115

SECTION 20. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE.

(A)                              THIS AGREEMENT SHALL (I) CREATE A CONTINUING SECURITY INTEREST IN THE COLLATERAL, (II) REMAIN IN FULL FORCE AND EFFECT UNTIL THE LATER OF THE INDEFEASIBLE PAYMENT AND PERFORMANCE IN FULL OF THE SECURED OBLIGATIONS AND THE EXPIRATION OR TERMINATION OF THE LOAN AGREEMENT (OTHER THAN INDEMNIFICATION OBLIGATIONS THAT ARE UNASSERTED AT THE TIME OF EXPIRATION OR TERMINATION OF LOAN AGREEMENT AND OTHER CONTINGENT OBLIGATIONS THAT, BY THEIR TERMS, SURVIVE THE TERMINATION HEREOF AND THEREOF), (III) BE BINDING UPON BORROWER AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS, AND (IV) INURE, TOGETHER WITH THE RIGHTS AND REMEDIES OF INVESTOR HEREUNDER, TO THE BENEFIT OF INVESTOR AND ITS SUCCESSORS, TRANSFEREES AND ASSIGNS. THE BORROWER AGREES THAT ITS OBLIGATIONS HEREUNDER AND THE SECURITY INTEREST CREATED HEREUNDER SHALL CONTINUE TO BE EFFECTIVE OR BE REINSTATED, AS APPLICABLE, IF AT ANY TIME PAYMENT, OR ANY PART THEREOF, OF ALL OR ANY PART OF THE SECURED OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED BY THE INVESTOR UPON THE BANKRUPTCY OR REORGANIZATION OF THE BORROWER OR OTHERWISE.

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(B)                               UPON THE PAYMENT AND PERFORMANCE IN FULL OF ALL SECURED OBLIGATIONS (OTHER THAN INDEMNIFICATION OBLIGATIONS THAT ARE UNASSERTED AS OF THE EXPIRATION OR TERMINATION OF THE LOAN AGREEMENT AND OTHER CONTINGENT OBLIGATIONS NOT THEN DUE AND PAYABLE THAT, BY THEIR TERMS, SURVIVE THE TERMINATION HEREOF), THE SECURITY INTEREST GRANTED HEREBY SHALL TERMINATE AND ALL RIGHTS TO THE COLLATERAL SHALL REVERT TO BORROWER. UPON SUCH TERMINATION OR ANY RELEASE OF COLLATERAL OR ANY PART THEREOF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 10.02(B) OF THE LOAN AGREEMENT, THE INVESTOR SHALL, UPON THE REQUEST AND AT THE SOLE COST AND EXPENSE OF THE BORROWER, ASSIGN, TRANSFER AND DELIVER TO BORROWER, AGAINST RECEIPT AND WITHOUT RECOURSE TO OR WARRANTY

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BY THE INVESTOR EXCEPT AS TO THE FACT THAT THE INVESTOR HAS NOT ENCUMBERED THE RELEASED ASSETS, SUCH OF THE COLLATERAL OR ANY PART THEREOF TO BE RELEASED (IN THE CASE OF A RELEASE) AS MAY BE IN POSSESSION OF THE INVESTOR AND AS SHALL NOT HAVE BEEN SOLD OR OTHERWISE APPLIED PURSUANT TO THE TERMS HEREOF, AND, WITH RESPECT TO ANY OTHER COLLATERAL, PROPER DOCUMENTS AND INSTRUMENTS (INCLUDING UCC 3 TERMINATION FINANCING STATEMENTS OR RELEASES) ACKNOWLEDGING THE TERMINATION HEREOF AND THE SECURITY INTEREST GRANTED HEREBY OR THE RELEASE OF SUCH COLLATERAL, AS THE CASE MAY BE. 115

SECTION 21. MISCELLANEOUS.

(A)                              NOTICES. ALL NOTICES, CONSENTS, WAIVERS AND COMMUNICATIONS HEREUNDER GIVEN BY ANY PARTY TO ANY OTHER PARTY SHALL BE GIVEN PURSUANT TO SECTION 13.04 OF THE LOAN AGREEMENT.	115
(B)                               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.	116
(C)                               AMENDMENTS; NO WAIVERS.	116
(D)                               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. BORROWER SHALL NOT BE ENTITLED TO ASSIGN ANY OF ITS OBLIGATIONS AND RIGHTS HEREUNDER OR ANY OTHER TRANSACTION DOCUMENTS WITHOUT THE PRIOR WRITTEN CONSENT OF INVESTOR. INVESTOR MAY ASSIGN THIS AGREEMENT AND ANY OF ITS RIGHTS HEREUNDER WITHOUT RESTRICTION.	116
(E)                               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.	116
(F)                               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

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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.	116
(G)                               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.	117
(H)                               GOVERNING LAW; JURISDICTION.	117
(I)                                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 BORROWER’S OBLIGATION TO INDEMNIFY INVESTOR FOR ANY THIRD PARTY CLAIM 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.	117
(J)                                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.	118
ARTICLE 1.
DEFINED TERMS
SECTION 1.1. DEFINITIONS.	194
SECTION 1.2. OTHER DEFINITIONS.	196
SECTION 1.3. TERMS GENERALLY. THE DEFINITIONS OF TERMS HEREIN SHALL APPLY EQUALLY TO THE SINGULAR AND PLURAL FORMS OF THE TERMS DEFINED. WHENEVER THE CONTEXT MAY REQUIRE, ANY PRONOUN SHALL INCLUDE THE CORRESPONDING MASCULINE, FEMININE AND NEUTER FORMS. THE WORDS “INCLUDE,” “INCLUDES” AND “INCLUDING” SHALL BE DEEMED TO BE FOLLOWED BY THE PHRASE “WITHOUT LIMITATION.” THE WORD “WILL” SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AS THE WORD “SHALL.” UNLESS THE CONTEXT REQUIRES OTHERWISE, (A) ANY DEFINITION OF OR REFERENCE TO THE LOAN AGREEMENT OR ANY OTHER AGREEMENT, INSTRUMENT OR OTHER DOCUMENT HEREIN SHALL BE

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CONSTRUED AS REFERRING TO SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT AS FROM TIME TO TIME AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED (SUBJECT TO ANY RESTRICTIONS ON SUCH AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS SET FORTH HEREIN), (B) ANY REFERENCE HEREIN TO ANY PERSON SHALL BE CONSTRUED TO INCLUDE SUCH PERSON’S SUCCESSORS AND ASSIGNS, (C) THE WORDS “HEREIN,” “HEREOF” AND “HEREUNDER,” AND WORDS OF SIMILAR IMPORT, SHALL BE CONSTRUED TO REFER TO THIS AGREEMENT IN ITS ENTIRETY AND NOT TO ANY PARTICULAR PROVISION HEREOF, (D) ALL REFERENCES HEREIN TO ARTICLES, SECTIONS AND EXHIBITS SHALL BE CONSTRUED TO REFER TO ARTICLES AND SECTIONS OF, AND EXHIBITS TO, THIS AGREEMENT, (E) ANY REFERENCE TO ANY LAW OR REGULATION HEREIN SHALL REFER TO SUCH LAW OR REGULATION AS AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME AND (F) THE WORDS “ASSET” AND “PROPERTY” SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AND TO REFER TO ANY AND ALL TANGIBLE AND INTANGIBLE ASSETS AND PROPERTIES, INCLUDING CASH, SECURITIES, ACCOUNTS AND CONTRACT RIGHTS.	196
ARTICLE 2.
WARRANT CERTIFICATES
SECTION 2.1. ISSUANCE AND DATING. THE WARRANT CERTIFICATES WILL BE ISSUED IN REGISTERED FORM AS DEFINITIVE WARRANT CERTIFICATES, SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO (SUBJECT TO SECTION 4.9 HEREOF), WHICH IS HEREBY INCORPORATED IN AND EXPRESSLY MADE A PART OF THIS AGREEMENT. EXCEPT FOR WARRANT CERTIFICATES DELIVERED PURSUANT TO SECTION 2.4(B)(IV) HEREOF, THE WARRANT CERTIFICATES SHALL BEAR THE LEGEND REQUIRED BY SECTION 2.5 HEREOF. EACH WARRANT SHALL BE DATED THE DATE OF ITS EXECUTION BY THE COMPANY. THE TERMS OF THE WARRANTS SET FORTH IN EXHIBIT A ARE PART OF THE TERMS OF THIS AGREEMENT.	196
SECTION 2.2. EXECUTION AND COUNTERSIGNATURE. THE WARRANTS TO BE ISSUED PURSUANT TO THIS AGREEMENT SHALL BE EXECUTED ON BEHALF OF THE COMPANY BY MANUAL SIGNATURE BY ONE OFFICER. THE WARRANT CERTIFICATES SHALL BE DELIVERED IN ACCORDANCE WITH SECTION 2.1 HEREOF.	197
SECTION 2.3. CERTIFICATE REGISTER. THE COMPANY SHALL KEEP A REGISTER (THE “CERTIFICATE REGISTER”) OF THE WARRANT CERTIFICATES AND OF THEIR TRANSFER AND EXCHANGE. THE CERTIFICATE REGISTER SHALL SHOW THE NAMES AND ADDRESSES OF THE RESPECTIVE HOLDERS AND THE DATE AND NUMBER OF WARRANTS EVIDENCED ON THE FACE OF EACH OF THE WARRANT CERTIFICATES. THE COMPANY MAY DEEM AND TREAT THE PERSON IN WHOSE NAME A WARRANT CERTIFICATE IS REGISTERED AS THE ABSOLUTE OWNER OF SUCH WARRANT CERTIFICATE FOR ALL PURPOSES WHATSOEVER AND THE COMPANY SHALL NOT BE AFFECTED BY NOTICE TO THE CONTRARY.	197

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SECTION 2.4. TRANSFER AND EXCHANGE.	197
SECTION 2.5. LEGENDS.	198
SECTION 2.6. REPLACEMENT CERTIFICATES. IF A MUTILATED WARRANT CERTIFICATE IS SURRENDERED TO THE WARRANT AGENT OR IF THE HOLDER OF A WARRANT CERTIFICATE CLAIMS THAT THE WARRANT CERTIFICATE HAS BEEN LOST, DESTROYED OR WRONGFULLY TAKEN, THE COMPANY SHALL ISSUE A REPLACEMENT WARRANT CERTIFICATE. IF REQUIRED BY THE COMPANY, SUCH HOLDER SHALL FURNISH AN INDEMNITY BOND (OR, IN THE CASE OF THE INITIAL HOLDER, AN UNSECURED INDEMNITY) SUFFICIENT IN THE REASONABLE JUDGMENT OF THE COMPANY TO PROTECT THE COMPANY FROM ANY LOSS WHICH IT MAY SUFFER IF A WARRANT CERTIFICATE IS REPLACED. THE COMPANY MAY CHARGE THE HOLDER FOR ITS REASONABLE EXPENSES IN REPLACING A WARRANT CERTIFICATE. EVERY REPLACEMENT WARRANT CERTIFICATE IS AN ADDITIONAL OBLIGATION OF THE COMPANY.	199
SECTION 2.7. CANCELLATION.	199
ARTICLE 3.
INITIAL ISSUANCE AND EXERCISE TERMS
SECTION 3.1. INITIAL ISSUANCE OF WARRANTS. ON THE CLOSING DATE, (I) CONTEMPORANEOUS WITH, AND AS A CONDITION TO, THE FUNDING BY THE INITIAL HOLDER OF THE LOAN AND (II) SUBJECT TO RECEIPT BY THE COMPANY OF A CERTIFICATE FROM THE INITIAL HOLDER, SUBSTANTIALLY IN THE FORM OF EXHIBIT C HERETO, THE COMPANY SHALL EXECUTE AND DELIVER TO THE INITIAL HOLDER A WARRANT CERTIFICATE REPRESENTING 250,000 WARRANTS REGISTERED IN THE NAME OF THE INITIAL HOLDER.	200
SECTION 3.2. EXERCISE PRICE. EACH WARRANT SHALL ENTITLE THE HOLDER THEREOF TO PURCHASE ONE SHARE OF COMMON STOCK (AS THE SAME MAY BE ADJUSTED PURSUANT TO ARTICLE 4) FOR A PER SHARE EXERCISE PRICE OF $5.50 (AS THE SAME MAY BE ADJUSTED PURSUANT TO ARTICLE 4, THE “EXERCISE PRICE”).	200
SECTION 3.3. EXERCISE PERIOD.	200
SECTION 3.4. EXPIRATION. A WARRANT SHALL TERMINATE AND BECOME VOID AS OF THE EARLIER OF (A) 6:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE AND (B) THE TIME AND DATE SUCH WARRANT IS EXERCISED. THE WARRANTS SHALL TERMINATE AND BECOME VOID AFTER THE EXPIRATION DATE.	200
SECTION 3.5. MANNER OF EXERCISE. SUBJECT TO SECTION 3.3 HEREOF, WARRANTS MAY BE EXERCISED UPON (A) SURRENDER TO THE COMPANY OF THE WARRANT CERTIFICATE(S) REPRESENTING SUCH WARRANTS, TOGETHER WITH THE FORM OF ELECTION TO PURCHASE WARRANT SHARES ON THE REVERSE THEREOF DULY COMPLETED AND EXECUTED BY THE HOLDER THEREOF AND (B) PAYMENT TO THE COMPANY OF THE EXERCISE PRICE FOR THE NUMBER OF WARRANT SHARES IN RESPECT OF WHICH SUCH WARRANT IS THEN EXERCISED (EACH DATE ON WHICH SUCH EXERCISE OCCURS, AN “EXERCISE DATE”). SUCH PAYMENT OF THE EXERCISE PRICE SHALL BE MADE

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(I) IN CASH OR BY CERTIFIED OR OFFICIAL BANK CHECK PAYABLE TO THE ORDER OF THE COMPANY OR BY WIRE TRANSFER OF FUNDS TO AN ACCOUNT DESIGNATED BY THE COMPANY FOR SUCH PURPOSE OR (II) BY THE SURRENDER (WHICH SURRENDER SHALL BE EVIDENCED BY CANCELLATION OF THE NUMBER OF WARRANTS REPRESENTED BY ANY WARRANT CERTIFICATE PRESENTED IN CONNECTION WITH A CASHLESS EXERCISE) OF A WARRANT OR WARRANTS (REPRESENTED BY ONE OR MORE RELEVANT WARRANT CERTIFICATES), AND WITHOUT THE PAYMENT OF THE EXERCISE PRICE IN CASH, IN EXCHANGE FOR THE ISSUANCE OF SUCH NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE PRODUCT OF (1) THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH SUCH WARRANT WOULD OTHERWISE BE NOMINALLY EXERCISABLE IMMEDIATELY PRIOR TO SUCH EXERCISE IF PAYMENT OF THE EXERCISE PRICE WERE BEING MADE IN CASH PURSUANT TO CLAUSE (I) OF THIS SECTION 3.5 AND (2) THE CASHLESS EXERCISE RATIO. AN EXERCISE OF A WARRANT IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE IS HEREIN CALLED A “CASHLESS EXERCISE”. FOR U.S. TAX PURPOSES, THE COMPANY AND THE INITIAL HOLDER AGREE TO TREAT AN EXERCISE OF WARRANTS PURSUANT TO A CASHLESS EXERCISE AS A “RECAPITALIZATION” WITHIN THE MEANING OF SECTION 368(A)(1)(E) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. ALL PROVISIONS OF THIS AGREEMENT SHALL BE APPLICABLE WITH RESPECT TO AN EXERCISE OF WARRANTS PURSUANT TO A CASHLESS EXERCISE FOR LESS THAN THE FULL NUMBER OF WARRANTS REPRESENTED THEREBY. THE RIGHTS REPRESENTED BY THE WARRANTS SHALL BE EXERCISABLE AT THE ELECTION OF THE HOLDERS THEREOF EITHER IN FULL AT ANY TIME OR IN PART FROM TIME TO TIME DURING THE PERIOD COMMENCING ON THE EXERCISE COMMENCEMENT DATE AND ENDING AT 6:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE AND IN THE EVENT THAT A WARRANT CERTIFICATE IS SURRENDERED FOR EXERCISE IN RESPECT OF LESS THAN ALL THE WARRANTS REPRESENTED BY SUCH WARRANT CERTIFICATE AT ANY TIME PRIOR TO THE EXPIRATION DATE A NEW WARRANT CERTIFICATE EXERCISABLE FOR THE REMAINING WARRANTS WILL BE DULY EXECUTED AND PROMPTLY ISSUED BY THE COMPANY IN ACCORDANCE WITH THIS AGREEMENT.

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SECTION 3.6. ISSUANCE OF WARRANT SHARES. UPON THE SURRENDER OF WARRANT CERTIFICATES AND PAYMENT OF THE PER SHARE EXERCISE PRICE (EITHER IN CASH OR BY CASHLESS EXERCISE), AS SET FORTH IN SECTION 3.5 HEREOF, THE COMPANY SHALL WITHIN THREE BUSINESS DAYS ISSUE AND CAUSE THE TRANSFER AGENT FOR THE COMMON STOCK (“TRANSFER AGENT”) TO COUNTERSIGN AND DELIVER TO OR UPON THE WRITTEN ORDER OF THE HOLDER AND IN SUCH NAME OR NAMES AS THE HOLDER MAY DESIGNATE, A CERTIFICATE OR CERTIFICATES FOR THE NUMBER OF FULL WARRANT SHARES SO PURCHASED UPON THE EXERCISE OF SUCH WARRANTS OR OTHER SECURITIES OR PROPERTY TO WHICH IT IS ENTITLED, REGISTERED OR OTHERWISE TO THE PERSON OR PERSONS ENTITLED TO RECEIVE THE SAME, TOGETHER WITH CASH AS PROVIDED IN SECTION 3.7 HEREOF IN RESPECT OF ANY FRACTIONAL WARRANT SHARES OTHERWISE ISSUABLE UPON SUCH

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EXERCISE. SUCH CERTIFICATE OR CERTIFICATES SHALL BE DEEMED TO HAVE BEEN ISSUED AND ANY PERSON SO DESIGNATED TO BE NAMED THEREIN SHALL BE DEEMED TO HAVE BECOME A HOLDER OF RECORD OF SUCH WARRANT SHARES AS OF THE DATE OF THE SURRENDER OF SUCH WARRANT CERTIFICATES AND PAYMENT OF THE PER SHARE EXERCISE PRICE (EITHER IN CASH OR BY CASHLESS EXERCISE).	201
SECTION 3.7. FRACTIONAL WARRANT SHARES. NO FRACTIONAL WARRANT SHARES SHALL BE ISSUED ON EXERCISE OF WARRANTS. IF MORE THAN ONE WARRANT SHALL BE EXERCISED AT THE SAME TIME BY THE SAME HOLDER, THE NUMBER OF FULL WARRANT SHARES WHICH SHALL BE ISSUABLE UPON SUCH EXERCISE SHALL BE COMPUTED ON THE BASIS OF THE AGGREGATE NUMBER OF WARRANT SHARES PURCHASABLE ON EXERCISE OF THE WARRANTS SO EXERCISED. IF ANY FRACTION OF A WARRANT SHARE WOULD, EXCEPT FOR THE PROVISIONS OF THIS SECTION 3.7, BE ISSUABLE ON THE EXERCISE OF ANY WARRANT (OR SPECIFIED PORTION THEREOF), THE COMPANY SHALL NOTIFY THE HOLDER EXERCISING THE WARRANT IN WRITING OF THE AMOUNT TO BE PAID IN LIEU OF THE FRACTION OF A WARRANT SHARE AND CONCURRENTLY SHALL PAY TO SUCH HOLDER AN AMOUNT IN CASH EQUAL TO THE CURRENT MARKET VALUE FOR ONE WARRANT SHARE ON THE DATE THE WARRANT IS EXERCISED, MULTIPLIED BY SUCH FRACTION, ROUNDED UP TO THE NEAREST WHOLE CENT.	201
SECTION 3.8. RESERVATION OF WARRANT SHARES. THE COMPANY SHALL AT ALL TIMES KEEP RESERVED OUT OF ITS AUTHORIZED SHARES OF COMMON STOCK A NUMBER OF SHARES OF COMMON STOCK SUFFICIENT TO PROVIDE FOR THE EXERCISE OF ALL OUTSTANDING WARRANTS AT ALL TIMES UNTIL THE EXPIRATION DATE, OR THE TIME AT WHICH ALL WARRANTS HAVE BEEN EXERCISED OR CANCELLED. ALL WARRANT SHARES THAT MAY BE ISSUED UPON EXERCISE OF WARRANTS SHALL, UPON ISSUE, BE FULLY PAID, NONASSESSABLE, FREE OF PREEMPTIVE RIGHTS AND FREE FROM ALL TAXES, LIENS, CHARGES AND SECURITY INTERESTS WITH RESPECT TO THE ISSUE THEREOF. THE COMPANY WILL PROVIDE OR OTHERWISE MAKE AVAILABLE TO THE TRANSFER AGENT ANY CASH WHICH MAY BE PAYABLE AS PROVIDED IN SECTION 3.6 HEREOF. THE COMPANY WILL FURNISH TO THE TRANSFER AGENT A COPY OF ALL NOTICES OF ADJUSTMENTS AND CERTIFICATES RELATED THERETO TRANSMITTED TO EACH HOLDER.	201
SECTION 3.9. LISTING ON SECURITIES EXCHANGE. THE COMPANY WILL USE COMMERCIALLY REASONABLE EFFORTS TO PROCURE, AT ITS SOLE COST AND EXPENSE, THE LISTING OF ALL WARRANT SHARES (SUBJECT TO ISSUANCE OR NOTICE OF ISSUANCE) ON ALL STOCK EXCHANGES ON WHICH THE COMMON STOCK THEN LISTED AND TO MAINTAIN SUCH LISTING OF ALL WARRANT SHARES AFTER ISSUANCE.	202

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ARTICLE 4.

ANTIDILUTION PROVISIONS

SECTION 4.1. CHANGES IN COMMON STOCK. IN THE EVENT THAT, AT ANY TIME OR FROM TIME TO TIME AFTER THE DATE OF THIS AGREEMENT, THE COMPANY SHALL (A) PAY A DIVIDEND OR MAKE A DISTRIBUTION ON ITS COMMON STOCK EXCLUSIVELY IN SHARES OF ITS COMMON STOCK, (B) SUBDIVIDE ITS OUTSTANDING SHARES OF COMMON STOCK INTO A GREATER NUMBER OF SHARES OF COMMON STOCK OR (C) COMBINE ITS OUTSTANDING SHARES OF COMMON STOCK INTO A SMALLER NUMBER OF SHARES OF COMMON STOCK, THEN, IN EACH CASE THE NUMBER OF SHARES OF COMMON STOCK PURCHASABLE UPON EXERCISE OF EACH WARRANT (THE “EXERCISE RATE”) AND THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ACTION WILL BE PROPORTIONATELY ADJUSTED UPON THE HAPPENING OF SUCH EVENT SO THAT, AFTER GIVING EFFECT TO SUCH ADJUSTMENT, THE HOLDER OF EACH WARRANT SHALL BE ENTITLED TO RECEIVE, UPON PAYMENT OF THE SAME AGGREGATE EXERCISE PRICE, THE NUMBER OF SHARES OF COMMON STOCK UPON EXERCISE THAT SUCH HOLDER WOULD HAVE OWNED OR HAVE BEEN ENTITLED TO RECEIVE HAD SUCH WARRANT BEEN EXERCISED IMMEDIATELY PRIOR TO THE HAPPENING OF ANY OF THE EVENTS DESCRIBED IN CLAUSES (A), (B) OR (C) OF THIS SECTION 4.1 (OR, IN THE CASE OF A DIVIDEND OR DISTRIBUTION OF COMMON STOCK, IMMEDIATELY PRIOR TO THE RECORD DATE THEREFOR). AN ADJUSTMENT MADE PURSUANT TO THIS SECTION 4.1 SHALL BECOME EFFECTIVE AT THE OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING THE RECORD DATE FIXED FOR DETERMINING THE STOCKHOLDERS ENTITLED TO RECEIVE SUCH DIVIDEND OR DISTRIBUTION, IN THE CASE OF A DIVIDEND OR DISTRIBUTION IN SHARES OF COMMON STOCK, AND SHALL BECOME EFFECTIVE AT THE OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING THE EFFECTIVE DATE OF SUCH SUBDIVISION OR COMBINATION.

202

SECTION 4.2. DIVIDENDS AND OTHER DISTRIBUTIONS. IN THE EVENT THAT, AT ANY TIME OR FROM TIME TO TIME AFTER THE DATE OF THIS AGREEMENT, THE COMPANY SHALL MAKE OR ISSUE, OR FIX A RECORD DATE FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE, A DIVIDEND OR OTHER DISTRIBUTION PAYABLE IN SECURITIES (OTHER THAN SHARES OF COMMON STOCK) OR IN CASH OR OTHER PROPERTY (OTHER THAN REGULAR CASH DIVIDENDS PAID OUT OF EARNINGS OR EARNED SURPLUS, DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES), THEN AND IN EACH SUCH EVENT, LAWFUL AND ADEQUATE PROVISION SHALL BE MADE SO THAT, AFTER GIVING EFFECT TO THE MAKING OF SUCH PROVISION, THE HOLDER OF EACH WARRANT, UPON EXERCISE OF SUCH WARRANT, SHALL BE ENTITLED TO RECEIVE, AND SUCH WARRANT SHALL REPRESENT THE RIGHT TO RECEIVE, IN ADDITION TO THE NUMBER OF WARRANT SHARES ISSUABLE THEREUNDER, THE KIND AND AMOUNT OF SECURITIES, CASH OR OTHER PROPERTY TO WHICH SUCH HOLDER WOULD HAVE BEEN ENTITLED IF SUCH HOLDER HAD EXERCISED SUCH WARRANT IMMEDIATELY PRIOR TO THE HAPPENING OF SUCH EVENT (OR, IN THE CASE OF A DIVIDEND OR OTHER DISTRIBUTION IN RESPECT OF WHICH A RECORD DATE IS FIXED, IMMEDIATELY PRIOR TO THE RECORD DATE THEREFOR) AND SUCH

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

HOLDER HAD, DURING THE PERIOD FROM AND INCLUDING THE EFFECTIVE DATE OF SUCH PROVISION TO AND INCLUDING THE EXERCISE DATE, RETAINED ANY SUCH SECURITIES RECEIVABLE DURING SUCH PERIOD, GIVING APPLICATION TO ALL ADJUSTMENTS PROVIDED FOR IN THIS ARTICLE 4 DURING SUCH PERIOD. A PROVISION MADE PURSUANT TO THIS SECTION 4.2 SHALL BECOME EFFECTIVE AT THE OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING THE HAPPENING OF SUCH EVENT OR, IN THE CASE OF A DIVIDEND OR OTHER DISTRIBUTION IN RESPECT OF WHICH A RECORD DATE IS FIXED, AT THE OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING SUCH RECORD DATE THEREFOR. THE FOREGOING PROVISIONS OF THIS SECTION 4.2 SHALL SIMILARLY APPLY TO SUCCESSIVE DIVIDENDS OR OTHER DISTRIBUTIONS.

202

SECTION 4.3. COMBINATION. IN CASE, AT ANY TIME, THE COMPANY SHALL (I) MERGE OR CONSOLIDATE WITH OR INTO ANY OTHER PERSON (OTHER THAN A MERGER OR CONSOLIDATION IN WHICH THE STOCKHOLDERS OF THE COMPANY AS OF IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE MERGER OR CONSOLIDATION OWN, IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION, LESS THAN A MAJORITY OF THE OUTSTANDING CAPITAL STOCK ENTITLED TO VOTE UNDER ORDINARY CIRCUMSTANCES IN THE ELECTION OF MEMBERS OF THE BOARD OF THE SURVIVING ENTITY, (II) SELL ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS, (III) COMPLETE ANY TENDER OFFER OR EXCHANGE OFFER (WHETHER BY THE COMPANY OR ANOTHER PERSON) PURSUANT TO WHICH HOLDERS OF COMMON STOCK ARE PERMITTED TO TENDER OR EXCHANGE THEIR SHARES OF COMMON STOCK FOR OTHER SECURITIES, CASH OR OTHER PROPERTY OR (IV) THE COMPANY EFFECTS ANY RECLASSIFICATION OF THE COMMON STOCK OR ANY COMPULSORY SHARE EXCHANGE PURSUANT TO WHICH THE COMMON STOCK IS EFFECTIVELY CONVERTED INTO OR EXCHANGED FOR OTHER SECURITIES, CASH OR OTHER PROPERTY (OTHER THAN AS A RESULT OF A SUBDIVISION OR COMBINATION OF SHARES OF COMMON STOCK COVERED BY SECTION 4.1 HEREOF) AND, IN EACH CASE THE PREVIOUSLY OUTSTANDING COMMON STOCK SHALL BE CONVERTED OR CHANGED INTO OR EXCHANGED FOR DIFFERENT SECURITIES, INTERESTS, OR OTHER PROPERTY OR ASSETS (INCLUDING CASH), OR ANY COMBINATION OF THE FOREGOING (EACH SUCH TRANSACTION BEING HEREIN CALLED A “COMBINATION”), THEN, AS A CONDITION TO THE CONSUMMATION OF SUCH COMBINATION, LAWFUL AND ADEQUATE PROVISION SHALL BE MADE SO THAT EACH HOLDER OF A WARRANT, UPON THE EXERCISE OF SUCH WARRANT AT ANY TIME AT OR AFTER THE CONSUMMATION OF SUCH COMBINATION, SHALL BE ENTITLED TO RECEIVE, AND SUCH WARRANT SHALL THEREAFTER REPRESENT THE RIGHT TO RECEIVE, IN LIEU OF THE COMMON STOCK ISSUABLE UPON SUCH EXERCISE PRIOR TO SUCH CONSUMMATION, THE SECURITIES, CASH OR OTHER PROPERTY TO WHICH SUCH HOLDER WOULD HAVE BEEN ENTITLED UPON CONSUMMATION OF THE COMBINATION IF SUCH HOLDER HAD EXERCISED SUCH WARRANT IMMEDIATELY PRIOR THERETO (SUBJECT TO ADJUSTMENTS FROM AND AFTER THE CONSUMMATION DATE AS NEARLY EQUIVALENT AS

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

POSSIBLE TO THE ADJUSTMENTS PROVIDED FOR IN THIS ARTICLE 4 AND ASSUMING SUCH HOLDER FAILED TO EXERCISE ANY RIGHTS OF ELECTION AND RECEIVED PER SHARE THE KIND AND AMOUNT OF CONSIDERATION RECEIVABLE PER SHARE BY A PLURALITY OF NON-ELECTING SHARES).  THE FOREGOING PROVISIONS OF THIS SECTION 4.3 SHALL SIMILARLY APPLY TO SUCCESSIVE COMBINATIONS.

203

SECTION 4.4. CURRENT MARKET VALUE. FOR PURPOSES OF ANY COMPUTATION UNDER SECTIONS 3.5 AND 3.7 HEREOF OR THIS ARTICLE 4, THE CURRENT MARKET VALUE PER SHARE OF COMMON STOCK (THE “CURRENT MARKET VALUE”) AT ANY DATE SHALL BE (A) FOR PURPOSES OF SECTIONS 3.5 AND 3.7 HEREOF, THE CLOSING PRICE OF THE COMMON STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING THE DATE OF EXERCISE OF THE APPLICABLE WARRANT PURSUANT TO SECTION 3 AND (B) FOR PURPOSES OF THIS ARTICLE 4, THE ARITHMETIC AVERAGE OF THE DAILY CLOSING PRICES OF SUCH COMMON STOCK FOR THE SHORTER OF (I) THE TWENTY (20) CONSECUTIVE TRADING DAYS ENDING ON THE LAST FULL TRADING DAY PRIOR TO THE TIME OF DETERMINATION (AS DEFINED BELOW) AND (II) THE CONSECUTIVE TRADING DAYS COMMENCING ON THE DATE NEXT SUCCEEDING THE FIRST PUBLIC ANNOUNCEMENT OF THE EVENT GIVING RISE TO THE ADJUSTMENT REQUIRED BY THIS ARTICLE 4 AND ENDING ON THE TRADING DAY IMMEDIATELY PRIOR TO THE TIME OF DETERMINATION. THE TERM “TIME OF DETERMINATION” AS USED HEREIN SHALL BE THE EARLIER TO OCCUR OF (A) THE DATE AS OF WHICH THE CURRENT MARKET VALUE IS TO BE COMPUTED AND (B) IF APPLICABLE, THE DATE OF COMMENCEMENT OF “EX-DIVIDEND” TRADING IN THE COMMON STOCK RELATING TO THE EVENT GIVING RISE TO THE ADJUSTMENT REQUIRED BY THIS ARTICLE 4. THE “CLOSING PRICE” OF THE COMMON STOCK FOR ANY TRADING DAY SHALL BE THE LAST REPORTED SALE PRICE, REGULAR WAY, OF THE COMMON STOCK ON SUCH TRADING DAY OR, IN CASE NO SUCH REPORTED SALE TAKES PLACE ON SUCH TRADING DAY, THE ARITHMETIC AVERAGE OF THE CLOSING BID AND CLOSING ASKED PRICES OF THE COMMON STOCK FOR SUCH TRADING DAY, IN EACH CASE ON THE PRINCIPAL TRADING MARKET ON WHICH THE COMMON STOCK IS THEN LISTED OR INCLUDED. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THAT THE COMMON STOCK IS NOT THEN LISTED OR INCLUDED ON A TRADING MARKET OR IF, FOR ANY OTHER REASON, THE CURRENT MARKET VALUE PER SHARE CANNOT BE DETERMINED PURSUANT TO THE FOREGOING PROVISIONS OF THIS SECTION 4.4, THE CURRENT MARKET VALUE PER SHARE OF COMMON STOCK SHALL BE THE FAIR MARKET VALUE THEREOF AND SHALL BE DETERMINED IN GOOD FAITH BY THE BOARD, WITH THE UNANIMOUS APPROVAL OF THE INDEPENDENT DIRECTORS OF THE BOARD, NOT LATER THAN FIVE (5) BUSINESS DAYS FOLLOWING THE TIME OF DETERMINATION. THE COMPANY SHALL, PROMPTLY AFTER SUCH DETERMINATION BY THE BOARD, DELIVER TO EACH HOLDER WRITTEN NOTICE OF THE CURRENT MARKET VALUE PER SHARE OF COMMON STOCK, AS SO DETERMINED BY THE BOARD, TOGETHER WITH A RESOLUTION OF THE BOARD EVIDENCING SUCH DETERMINATION.

203

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SECTION 4.5. CERTAIN ACTIONS.	204
SECTION 4.6. NOTICE OF ADJUSTMENT.  UPON ANY ADJUSTMENT OF THE EXERCISE RATE AND/OR THE EXERCISE PRICE PURSUANT TO THIS ARTICLE 4, THE COMPANY SHALL PROMPTLY DELIVER TO EACH HOLDER A CERTIFICATE SIGNED BY AN OFFICER OF THE COMPANY SETTING FORTH, IN REASONABLE DETAIL, THE EVENT REQUIRING SUCH ADJUSTMENT AND THE METHOD BY WHICH SUCH ADJUSTMENT WAS CALCULATED (INCLUDING, IF APPLICABLE, A DESCRIPTION OF THE BASIS ON WHICH THE BOARD DETERMINED THE FAIR MARKET VALUE OF ANY EVIDENCES OF INDEBTEDNESS, SECURITIES OR OTHER PROPERTY OR ASSETS, AND ATTACHING A BOARD RESOLUTION EVIDENCING SUCH DETERMINATION), AND SPECIFYING THE NUMBER OF SHARES OF COMMON STOCK PURCHASABLE UPON EXERCISE OF WARRANTS AFTER GIVING EFFECT TO SUCH ADJUSTMENT.	204
SECTION 4.7. COMMON STOCK.  FOR PURPOSES OF THIS ARTICLE 4, THE TERM “COMMON STOCK” INCLUDES ANY STOCK OF ANY CLASS OF THE COMPANY WHICH HAS NO PREFERENCE IN RESPECT OF DIVIDENDS OR OF AMOUNTS PAYABLE IN THE EVENT OF ANY VOLUNTARY OR INVOLUNTARY LIQUIDATION, DISSOLUTION OR WINDING-UP OF THE COMPANY AND WHICH IS NOT SUBJECT TO REDEMPTION BY THE COMPANY.  HOWEVER, SUBJECT TO SECTION 4.9 HEREOF, SHARES ISSUABLE UPON EXERCISE OF THE WARRANTS SHALL INCLUDE ONLY SHARES OF THE CLASS DESIGNATED AS COMMON STOCK ON THE DATE OF THIS AGREEMENT OR SHARES OF ANY OTHER CLASS OR CLASSES RESULTING FROM ANY RECLASSIFICATION OR CHANGE OF SUCH COMMON STOCK AND WHICH HAVE NO PREFERENCE IN RESPECT OF DIVIDENDS OR OF AMOUNTS PAYABLE IN THE EVENT OF ANY VOLUNTARY OR INVOLUNTARY LIQUIDATION, DISSOLUTION OR WINDING-UP OF THE COMPANY AND WHICH ARE NOT SUBJECT TO REDEMPTION BY THE COMPANY; PROVIDED THAT, IF AT ANY TIME THERE SHALL BE MORE THAN ONE SUCH RESULTING CLASS, THE SHARES OF EACH SUCH CLASS THEN SO ISSUABLE UPON EXERCISE OF THE WARRANTS SHALL BE SUBSTANTIALLY IN THE PROPORTION WHICH THE TOTAL NUMBER OF SHARES OF SUCH CLASS RESULTING FROM SUCH RECLASSIFICATION OR CHANGE BEARS TO THE TOTAL NUMBER OF SHARES OF ALL SUCH CLASSES RESULTING FROM SUCH RECLASSIFICATIONS OR CHANGES.	205
SECTION 4.8. NOTICE OF CERTAIN TRANSACTIONS.  IN THE EVENT THAT THE COMPANY SHALL PROPOSE TO (A) PAY ANY DIVIDEND OR MAKE ANY OTHER DISTRIBUTION ON THE COMMON STOCK, WHETHER IN CASH, COMMON STOCK, OTHER CAPITAL STOCK OR SECURITIES, INCLUDING, WITHOUT LIMITATION, RIGHTS, OPTIONS, WARRANTS OR CONVERTIBLE OR EXCHANGEABLE SECURITIES, EVIDENCES OF INDEBTEDNESS OR OTHER PROPERTY OR ASSETS, (B) EFFECT ANY SUBDIVISION, COMBINATION, RECLASSIFICATION OR OTHER CHANGE OF ITS COMMON STOCK, (C) EFFECT ANY TENDER OFFER, EXCHANGE OFFER OR OPEN MARKET REPURCHASE PROGRAM, IN ANY CASE INVOLVING MORE THAN TWO PERCENT (2%) OF ITS OUTSTANDING COMMON STOCK, (D) EFFECT ANY COMBINATION OR (E) EFFECT THE VOLUNTARY OR INVOLUNTARY DISSOLUTION, LIQUIDATION OR WINDING-UP OF THE

COMPANY, THE COMPANY SHALL DELIVER WRITTEN NOTICE THEREOF TO EACH HOLDER, AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE APPLICABLE RECORD DATE HEREINAFTER SPECIFIED, OR, IN THE CASE OF EVENTS FOR WHICH THERE IS NO RECORD DATE, AT LEAST TEN (10) BUSINESS DAYS PRIOR TO THE EFFECTIVE DATE OF SUCH EVENT OR THE COMMENCEMENT OF SUCH TENDER OFFER, EXCHANGE OFFER, OR REPURCHASE PROGRAM.  ANY WRITTEN NOTICE PROVIDED PURSUANT TO THIS SECTION 4.8 SHALL STATE (I) THE DATE AS OF WHICH THE HOLDERS OF RECORD OF THE COMMON STOCK ARE ENTITLED TO RECEIVE ANY SUCH COMMON STOCK, OTHER CAPITAL STOCK OR SECURITIES, RIGHTS, OPTIONS, WARRANTS OR CONVERTIBLE OR EXCHANGEABLE SECURITIES, EVIDENCES OF INDEBTEDNESS OR OTHER PROPERTY OR ASSETS, (II) THE COMMENCEMENT DATE OF ANY TENDER OFFER, EXCHANGE OFFER OR REPURCHASE PROGRAM FOR THE COMMON STOCK OR (III) THE DATE ON WHICH ANY SUCH COMBINATION, DISSOLUTION, LIQUIDATION OR WINDING-UP IS EXPECTED TO BECOME EFFECTIVE OR CONSUMMATED, AND THE DATE AS OF WHICH IT IS EXPECTED THAT HOLDERS OF RECORD OF COMMON STOCK SHALL BE ENTITLED TO EXCHANGE SUCH SHARES FOR SECURITIES OR OTHER PROPERTY, IF ANY, DELIVERABLE UPON SUCH COMBINATION, DISSOLUTION, LIQUIDATION OR WINDING-UP.  THE FAILURE TO GIVE THE NOTICE REQUIRED BY THIS SECTION 4.8 OR ANY DEFECT THEREIN SHALL NOT AFFECT THE LEGALITY OR VALIDITY OF ANY DIVIDEND, DISTRIBUTION, ISSUANCE, RIGHT, OPTION, WARRANT, SECURITY, TENDER OFFER, EXCHANGE OFFER, REPURCHASE PROGRAM, COMBINATION, RECLASSIFICATION, DISSOLUTION, LIQUIDATION OR WINDING-UP, OR THE VOTE UPON ANY ACTION.		205
SECTION 4.9. ADJUSTMENT TO WARRANT CERTIFICATE. THE FORM OF WARRANT CERTIFICATE NEED NOT BE CHANGED BECAUSE OF ANY ADJUSTMENT MADE PURSUANT TO THIS ARTICLE 4, AND WARRANT CERTIFICATES ISSUED AFTER SUCH ADJUSTMENT MAY STATE THE SAME NUMBER OF SHARES OF COMMON STOCK AS ARE STATED IN ANY WARRANT CERTIFICATES ISSUED PRIOR TO THE ADJUSTMENT. THE COMPANY, HOWEVER, MAY AT ANY TIME IN ITS SOLE DISCRETION MAKE ANY CHANGE IN THE FORM OF WARRANT CERTIFICATE THAT IT MAY DEEM APPROPRIATE TO GIVE EFFECT TO SUCH ADJUSTMENTS AND THAT DOES NOT OTHERWISE AFFECT THE SUBSTANCE OF THE WARRANT CERTIFICATE, AND ANY WARRANT CERTIFICATE THEREAFTER ISSUED, WHETHER IN EXCHANGE OR SUBSTITUTION FOR AN OUTSTANDING WARRANT CERTIFICATE OR OTHERWISE, MAY BE IN THE FORM AS SO CHANGED.	205
SECTION 4.10. ADJUSTMENTS OR ISSUANCES DEFERRED/ADJUSTMENTS NOT REQUIRED.	206

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

ARTICLE 5.
REPRESENTATIONS AND AGREEMENT OF THE COMPANY
ARTICLE 6.
MISCELLANEOUS
SECTION 6.1. PERSONS BENEFITING. NOTHING IN THIS AGREEMENT IS INTENDED OR SHALL BE CONSTRUED TO CONFER UPON ANY PERSON OTHER THAN THE COMPANY AND THE HOLDERS ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR BY REASON OF THIS AGREEMENT OR ANY PART HEREOF, AND THIS AGREEMENT SHALL BE FOR THE SOLE AND EXCLUSIVE BENEFIT OF THE COMPANY AND THE HOLDERS.	207
SECTION 6.2. RIGHTS OF HOLDERS.  EXCEPT AS OTHERWISE SPECIFICALLY REQUIRED HEREIN, HOLDERS OF UNEXERCISED WARRANTS ARE NOT ENTITLED TO (A) RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS FROM THE COMPANY, (B) RECEIVE NOTICE OF OR VOTE AT ANY MEETING OF THE STOCKHOLDERS OF THE COMPANY, (C) CONSENT TO ANY ACTION OF THE STOCKHOLDERS OF THE COMPANY, (D) RECEIVE NOTICE OF ANY OTHER PROCEEDINGS OF THE COMPANY OR (E) EXERCISE ANY OTHER RIGHTS AS STOCKHOLDERS OF THE COMPANY.	207
SECTION 6.3. AMENDMENT.  THIS AGREEMENT MAY BE AMENDED BY THE COMPANY AND THE INITIAL HOLDER WITHOUT THE CONSENT OF ANY OTHER HOLDER FOR THE PURPOSE OF CURING ANY AMBIGUITY, OR CURING, CORRECTING OR SUPPLEMENTING ANY DEFECTIVE PROVISION CONTAINED HEREIN OR MAKING ANY OTHER PROVISIONS WITH RESPECT TO MATTERS OR QUESTIONS ARISING UNDER THIS AGREEMENT AS THE COMPANY AND THE INITIAL HOLDER MAY DEEM NECESSARY OR DESIRABLE; PROVIDED, HOWEVER, THAT SUCH ACTION SHALL NOT AFFECT ADVERSELY THE RIGHTS OF ANY OTHER HOLDER.  ANY AMENDMENT OR SUPPLEMENT TO THIS AGREEMENT (INCLUDING ANY EXHIBIT HERETO) THAT HAS OR WOULD HAVE AN ADVERSE EFFECT ON THE INTERESTS OF THE HOLDERS SHALL REQUIRE THE WRITTEN CONSENT OF THE REQUISITE HOLDERS.  THE CONSENT OF EACH HOLDER AFFECTED SHALL BE REQUIRED FOR ANY AMENDMENT PURSUANT TO WHICH THE EXERCISE PRICE WOULD BE INCREASED OR THE EXERCISE RATE WOULD BE DECREASED (OTHER THAN PURSUANT TO ADJUSTMENTS PROVIDED HEREIN).  IN DETERMINING WHETHER THE HOLDERS OF THE REQUIRED NUMBER OF WARRANTS HAVE CONCURRED IN ANY DIRECTION, WAIVER OR CONSENT, WARRANTS OWNED BY THE COMPANY OR ANY OF ITS AFFILIATES SHALL BE DISREGARDED AND DEEMED NOT TO BE OUTSTANDING.	208
SECTION 6.4. NOTICES.  ALL NOTICES, CONSENTS, APPROVALS, REPORTS, DESIGNATIONS, REQUESTS, WAIVERS, ELECTIONS AND OTHER COMMUNICATIONS AUTHORIZED OR REQUIRED TO BE GIVEN PURSUANT TO THIS AGREEMENT SHALL BE GIVEN IN WRITING AND EITHER PERSONALLY 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

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

DESCRIBED HEREIN, ADDRESSED TO THE PARTY AT ITS ADDRESS LISTED BELOW:	208
SECTION 6.5. GOVERNING LAW.  THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).	210
SECTION 6.6. JURISDICTION; WAIVER OF TRIAL BY JURY.  IN CONNECTION WITH THE ADJUDICATION OF ANY DISPUTES RELATING TO THIS AGREEMENT OR THE WARRANTS, EACH PARTY HEREBY IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT EACH PARTY SUBMITS TO THE JURISDICTION OF ANY OTHER COURT IN WHICH A CLAIM RELATING TO THIS AGREEMENT OR THE WARRANTS IS BROUGHT BY ANY THIRD PARTY AGAINST THE OTHER PARTY; (B) WAIVES, AND AGREES NOT TO ASSERT, (1) ANY CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH PROCEEDING HAS BEEN COMMENCED IN AN IMPROPER OR INCONVENIENT FORUM AND (2) ANY RIGHT IT MAY HAVE TO TRIAL BY JURY; AND (C) AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S ADDRESS AS PROVIDED HEREIN SHALL BE EFFECTIVE FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER FOR WHICH IT HAS SUBMITTED TO JURISDICTION HEREBY.  A JUDGMENT IN ANY SUCH PROCEEDING MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION THE APPLICABLE PARTY MAY BE SUBJECT.  EACH PARTY (X) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER OF A RIGHT TO A JURY TRIAL AND (Y) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS IN THIS SECTION.	210
SECTION 6.7. SUCCESSORS.  ALL REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT AND THE WARRANT CERTIFICATE BY OR FOR THE BENEFIT OF THE COMPANY AND THE HOLDERS SHALL INURE TO THE BENEFIT OF, AND SHALL BIND, THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.	211
SECTION 6.8. COUNTERPARTS .  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS AND EACH OF SUCH COUNTERPARTS SHALL FOR ALL PURPOSES BE DEEMED TO BE AN ORIGINAL, AND ALL SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.	211
SECTION 6.9. TABLE OF CONTENTS.  THE TABLE OF CONTENTS AND HEADINGS OF THE ARTICLES AND SECTIONS OF THIS AGREEMENT HAVE BEEN INSERTED FOR CONVENIENCE OF REFERENCE ONLY, ARE NOT INTENDED TO BE

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

CONSIDERED A PART HEREOF AND SHALL NOT MODIFY OR RESTRICT ANY OF THE TERMS OR PROVISIONS HEREOF.	211
SECTION 6.10. SEVERABILITY.  THE PROVISIONS OF THIS AGREEMENT ARE SEVERABLE, AND IF ANY CLAUSE OR PROVISION SHALL BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN WHOLE OR IN PART IN ANY JURISDICTION, THEN SUCH INVALIDITY OR UNENFORCEABILITY SHALL AFFECT IN THAT JURISDICTION ONLY SUCH CLAUSE OR PROVISION, OR PART THEREOF, AND SHALL NOT IN ANY MANNER AFFECT SUCH CLAUSE OR PROVISION IN ANY OTHER JURISDICTION OR ANY OTHER CLAUSE OR PROVISION OF THIS AGREEMENT IN ANY JURISDICTION.	211
SECTION 6.11. REMEDIES.  THE RIGHTS AND REMEDIES PROVIDED HEREIN SHALL BE CUMULATIVE AND NOT EXCLUSIVE OF ANY OTHER RIGHTS OR REMEDIES AVAILABLE.  THE COMPANY AND THE INITIAL HOLDER ACKNOWLEDGE AND AGREE THAT THE REMEDY AT LAW FOR ANY BREACH OR THREATENED BREACH BY THE OTHER PARTY IN THE PERFORMANCE OR COMPLIANCE WITH ANY OF THE TERMS OF THIS AGREEMENT OR THE WARRANTS IS NOT AND WOULD NOT BE ADEQUATE AND THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, SUCH TERMS MAY BE SPECIFICALLY ENFORCED BY A DECREE FOR SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF OR OTHER EQUITABLE REMEDIES OR BY AN INJUNCTION AGAINST VIOLATION OF ANY SUCH TERMS OR OTHERWISE AND EACH OF THE COMPANY AND THE INITIAL HOLDER AGREES NOT TO ALLEGE, AND HEREBY WAIVES THE DEFENSE, THAT AN ADEQUATE REMEDY EXISTS AT LAW.	211

EXHIBIT A	-	Form of Warrant Certificate
EXHIBIT B	-	Form of Transfer Certificate
EXHIBIT C	-	Form of Certification

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

WARRANT AGREEMENT, dated as of August 5, 2008 (this “Agreement”), between DYAX CORP., a Delaware corporation (the “Company”), and COWEN HEALTHCARE ROYALTY PARTNERS, L.P., a Delaware limited partnership (the “Initial Holder”).

RECITALS

WHEREAS, it is a condition to the obligations of the Initial Holder under the Loan Agreement, dated as of August 5, 2008, between the Company and the Initial Holder (the “Loan Agreement”), that the Company execute and deliver this Warrant Agreement and issue to the Initial Holder the Warrants (as defined below); and

WHEREAS, the Company and the Initial Holder desire to enter into this Agreement in order to set forth the terms and conditions of the Warrants.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:

ARTICLE 1.

DEFINED TERMS

SECTION 1.1.  Definitions.

All terms defined in the Loan Agreement shall have such defined meanings when used herein or in any Exhibit hereto unless otherwise defined herein or therein.  As used in this Agreement, the following terms shall have the following meanings:

“Board” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board of Directors.

“Cashless Exercise Ratio” means a fraction, (a) the numerator of which is the excess of (i) the Current Market Value per share of Common Stock on the date of exercise over (ii) the Exercise Price per share on the date of exercise and (b) the denominator of which is the Current Market Value per share of the Common Stock on the date of exercise.

“Common Stock” means the common stock, $.01 par value per share, of the Company.

“Expiration Date” means August 5, 2016.

“Fair Market Value” means, as of any date of determination, the price that a willing buyer would pay to a willing seller for the Common Stock, in an arm’s-length transaction, with neither party being under any immediate obligation or need to consummate the transaction, it being understood that the buyer and seller, in arriving at such price, would each consider, among other factors customarily considered by valuation professionals, the past and prospective earnings of the Company, comparable stock market valuations, and the absence or existence of liquidity for the Common Stock.

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

“Holder” means the duly registered holder of a Warrant under the terms of this Warrant Agreement.

“Issuance Date” means, as to any Warrant, the date on which such Warrant is issued in accordance with Section 3.1 hereof.

“Officer” means the Chief Executive Officer, the Chief Financial Officer, any Executive Vice President or the Treasurer of the Company.

“Rule 144” means Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation hereinafter adopted by the SEC.

“SEC” means the Securities and Exchange Commission (or any successor thereto).

“Securities Act” means the Securities Act of 1933, as amended.

“Trading Day” means any day on which trading in equity securities is generally conducted on the principal Trading Market on which the Common Stock is then listed or included.

“Trading Market” means the American Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market, The New York Stock Exchange, Inc. and the OTC Bulletin Board.

“Transfer Restricted Securities” means the Warrants and the Warrant Shares which may be issued to Holders upon exercise of the Warrants, whether or not such exercise has been effected.  Each such security shall cease to be a Transfer Restricted Security when the legend set forth in Section 2.5 hereof is, or may be, removed pursuant to Section 2.4(b)(iv) hereof.

“Warrant” means a warrant to purchase one share of Common Stock.  The Warrants to be issued on each Issuance Date shall be evidenced by Warrant Certificates.

“Warrant Certificates” means the certificates evidencing the Warrants to be delivered pursuant to this Agreement, substantially in the form of Exhibit A hereto.

“Warrant Shares” means the shares of Common Stock to be issued and received, or issued and received, as the case may be, upon exercise of the Warrants.

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

SECTION 1.2.  Other Definitions.

Term	Defined in Section
“Agreement”	Preamble
“Cashless Exercise”	3.5
“Certificate Register”	2.3
“Combination”	4.3
“Company”	Preamble
“Current Market Value”	4.4
“Exercise Commencement Date”	3.3(a)
“Exercise Date”	3.5
“Exercise Price”	3.2
“Exercise Rate”	4.1
“Independent Financial Expert	5.1(a)
“Initial Holder”	Preamble
“Loan Agreement”	Recitals
“Time of Determination”	4.4
“Transfer Agent”	3.6

SECTION 1.3.  Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (a) any definition of or reference to the Loan Agreement or any other agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, (e) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

ARTICLE 2.

WARRANT CERTIFICATES

SECTION 2.1.  Issuance and Dating.  The Warrant Certificates will be issued in registered form as definitive Warrant Certificates, substantially in the form of Exhibit A hereto (subject to Section 4.9 hereof), which is hereby incorporated in and expressly made a part of this

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

Agreement.  Except for Warrant Certificates delivered pursuant to Section 2.4(b)(iv) hereof, the Warrant Certificates shall bear the legend required by Section 2.5 hereof.  Each Warrant shall be dated the date of its execution by the Company.  The terms of the Warrants set forth in Exhibit A are part of the terms of this Agreement.

SECTION 2.2.  Execution and Countersignature.  The Warrants to be issued pursuant to this Agreement shall be executed on behalf of the Company by manual signature by one Officer.  The Warrant Certificates shall be delivered in accordance with Section 2.1 hereof.

SECTION 2.3.  Certificate Register.  The Company shall keep a register (the “Certificate Register”) of the Warrant Certificates and of their transfer and exchange.  The Certificate Register shall show the names and addresses of the respective Holders and the date and number of Warrants evidenced on the face of each of the Warrant Certificates.  The Company may deem and treat the Person in whose name a Warrant Certificate is registered as the absolute owner of such Warrant Certificate for all purposes whatsoever and the Company shall not be affected by notice to the contrary.

SECTION 2.4.  Transfer and Exchange.

(a)When Warrants are presented to the Company with a request to register the transfer of such Warrants or to exchange such Warrants for an equal number of Warrants of other authorized denominations, the Company shall register the transfer or make the exchange; provided, however, that the Warrant Certificates representing such Warrants surrendered for transfer or exchange:

(i)shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the Holder thereof; and

(ii)in the case of Warrants that are Transfer Restricted Securities, shall be accompanied by the following additional information and documents:

(A)a certificate from such Holder in substantially the form of Exhibit B hereto certifying that:

(1)such securities are being delivered for registration in the name of such Holder without transfer;

(2)such securities are being transferred to the Company;

(3)such securities are being transferred pursuant to an effective registration statement under the Securities Act; or

(4)such securities are being transferred (w) to a “qualified institutional buyer”, as defined in Rule 144A under the Securities Act pursuant to such Rule 144A, (x) in an offshore transaction in accordance with Rule 904 under the Securities Act, (y) in a transaction meeting the requirements of Rule 144 under the Securities Act or (z) pursuant to another

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

available exemption from the registration requirements of the Securities Act; and

(B)provided, however, that in the case of any transfer described under clause (a)(ii)(A)(4) of this Section 2.4, the certificate will be accompanied by an opinion of counsel reasonably acceptable to the Company that the transfer is exempt from the registration requirements of the Securities Act.

(b)(i)To permit registrations of transfers and exchanges, the Company shall execute Warrant Certificates as required pursuant to the provisions of this Section 2.4.

(ii)All Warrant Certificates issued upon any registration of transfer or exchange of Warrants shall be the valid obligations of the Company, entitled to the same benefits under this Agreement as the Warrant Certificates surrendered upon such registration of transfer or exchange.

(iii)No service charge shall be made by the Company to any Holder for any registration of transfer or exchange upon surrender of any Warrant Certificate at the principal office of the Company.  The Company will pay all documentary stamp taxes attributable to the issuance of the Warrants and the Warrant Shares upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant Certificates or any certificates for Warrant Shares in a name other than the Holder of such Warrant Certificate.

(iv)Upon any sale or transfer of Warrants pursuant to an effective registration statement under the Securities Act, in accordance with Rule 144 under the Securities Act or pursuant to an opinion of counsel reasonably satisfactory to the Company that no legend is required, the Company shall permit the Holder thereof to exchange such Warrants for Warrants represented by Warrant Certificates that do not bear the legend set forth in Section 2.5(a) hereof and rescind any restriction on the transfer of such Warrants; provided, however, that the Warrant Certificate shall continue to bear a legend with respect to restrictions on the transfer of the Warrant Shares.

SECTION 2.5.  Legends.

(a)Except for Warrant Certificates delivered pursuant to Section 2.4(b)(iv) hereof, each Warrant Certificate evidencing the Warrants (and all Warrant Certificates issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form:

“THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,

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

OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

(b)Each certificate representing the Warrant Shares (unless such Warrant Shares are not Transfer Restricted Securities) shall bear a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

SECTION 2.6.  Replacement Certificates.  If a mutilated Warrant Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate claims that the Warrant Certificate has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Warrant Certificate.  If required by the Company, such Holder shall furnish an indemnity bond (or, in the case of the Initial Holder, an unsecured indemnity) sufficient in the reasonable judgment of the Company to protect the Company from any loss which it may suffer if a Warrant Certificate is replaced.  The Company may charge the Holder for its reasonable expenses in replacing a Warrant Certificate.  Every replacement Warrant Certificate is an additional obligation of the Company.

SECTION 2.7.  Cancellation.

(a)In the event the Company shall purchase or otherwise acquire Warrants, the Warrant Certificates representing such Warrants shall thereupon be cancelled.

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

(b)The Company shall cancel and destroy all Warrant Certificates surrendered for transfer, exchange, replacement, exercise or cancellation.  The Company may not issue new Warrant Certificates to replace Warrant Certificates to the extent they evidence Warrants which have been exercised or Warrants which the Company has purchased or otherwise acquired.

ARTICLE 3.

INITIAL ISSUANCE AND EXERCISE TERMS

SECTION 3.1.  Initial Issuance of Warrants.  On the Closing Date, (i) contemporaneous with, and as a condition to, the funding by the Initial Holder of the Loan and (ii) subject to receipt by the Company of a Certificate from the Initial Holder, substantially in the form of Exhibit C hereto, the Company shall execute and deliver to the Initial Holder a Warrant Certificate representing 250,000 Warrants registered in the name of the Initial Holder.

SECTION 3.2.  Exercise Price.  Each Warrant shall entitle the Holder thereof to purchase one share of Common Stock (as the same may be adjusted pursuant to Article 4) for a per share exercise price of $5.50 (as the same may be adjusted pursuant to Article 4, the “Exercise Price”).

SECTION 3.3.  Exercise Period.

(a)Subject to the terms and conditions set forth herein, each Warrant shall be exercisable at any time or from time to time on or after the earlier to occur of (i) August 5, 2009 and (ii) the date on which the Company delivers or is required to deliver to the Holders written notice of a Combination pursuant to clause (d) of Section 4.8 hereof (such date, the “Exercise Commencement Date”).

(b)No Warrant shall be exercisable after 6:00 p.m., New York time, on the Expiration Date.

SECTION 3.4.  Expiration.  A Warrant shall terminate and become void as of the earlier of (a) 6:00 p.m., New York time, on the Expiration Date and (b) the time and date such Warrant is exercised.  The Warrants shall terminate and become void after the Expiration Date.

SECTION 3.5.  Manner of Exercise.  Subject to Section 3.3 hereof, Warrants may be exercised upon (a) surrender to the Company of the Warrant Certificate(s) representing such Warrants, together with the form of election to purchase Warrant Shares on the reverse thereof duly completed and executed by the Holder thereof and (b) payment to the Company of the Exercise Price for the number of Warrant Shares in respect of which such Warrant is then exercised (each date on which such exercise occurs, an “Exercise Date”).  Such payment of the Exercise Price shall be made (i) in cash or by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose or (ii) by the surrender (which surrender shall be evidenced by cancellation of the number of Warrants represented by any Warrant Certificate presented in connection with a Cashless Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant Certificates), and without the payment of the Exercise Price in cash, in exchange for the issuance of such number of shares of Common Stock equal to the product of (1) the number of shares of Common Stock for which such Warrant would otherwise be nominally exercisable immediately prior to such exercise

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if payment of the Exercise Price were being made in cash pursuant to clause (i) of this Section 3.5 and (2) the Cashless Exercise Ratio.  An exercise of a Warrant in accordance with the immediately preceding sentence is herein called a “Cashless Exercise”.  For U.S. tax purposes, the Company and the Initial Holder agree to treat an exercise of Warrants pursuant to a Cashless Exercise as a “recapitalization” within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended.  All provisions of this Agreement shall be applicable with respect to an exercise of Warrants pursuant to a Cashless Exercise for less than the full number of Warrants represented thereby.  The rights represented by the Warrants shall be exercisable at the election of the Holders thereof either in full at any time or in part from time to time during the period commencing on the Exercise Commencement Date and ending at 6:00 p.m., New York time, on the Expiration Date and in the event that a Warrant Certificate is surrendered for exercise in respect of less than all the Warrants represented by such Warrant Certificate at any time prior to the Expiration Date a new Warrant Certificate exercisable for the remaining Warrants will be duly executed and promptly issued by the Company in accordance with this Agreement.

SECTION 3.6.  Issuance of Warrant Shares.  Upon the surrender of Warrant Certificates and payment of the per share Exercise Price (either in cash or by Cashless Exercise), as set forth in Section 3.5 hereof, the Company shall within three Business Days issue and cause the transfer agent for the Common Stock (“Transfer Agent”) to countersign and deliver to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of such Warrants or other securities or property to which it is entitled, registered or otherwise to the Person or Persons entitled to receive the same, together with cash as provided in Section 3.7 hereof in respect of any fractional Warrant Shares otherwise issuable upon such exercise.  Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the per share Exercise Price (either in cash or by Cashless Exercise).

SECTION 3.7.  Fractional Warrant Shares.  No fractional Warrant Shares shall be issued on exercise of Warrants.  If more than one Warrant shall be exercised at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so exercised.  If any fraction of a Warrant Share would, except for the provisions of this Section 3.7, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall notify the Holder exercising the Warrant in writing of the amount to be paid in lieu of the fraction of a Warrant Share and concurrently shall pay to such Holder an amount in cash equal to the Current Market Value for one Warrant Share on the date the Warrant is exercised, multiplied by such fraction, rounded up to the nearest whole cent.

SECTION 3.8.  Reservation of Warrant Shares.  The Company shall at all times keep reserved out of its authorized shares of Common Stock a number of shares of Common Stock sufficient to provide for the exercise of all outstanding Warrants at all times until the Expiration Date, or the time at which all Warrants have been exercised or cancelled.  All Warrant Shares that may be issued upon exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof.  The Company will provide or otherwise make available to the Transfer Agent

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

any cash which may be payable as provided in Section 3.6 hereof.  The Company will furnish to the Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to each Holder.

SECTION 3.9.  Listing on Securities Exchange.  The Company will use commercially reasonable efforts to procure, at its sole cost and expense, the listing of all Warrant Shares (subject to issuance or notice of issuance) on all stock exchanges on which the Common Stock then listed and to maintain such listing of all Warrant Shares after issuance.

ARTICLE 4.

ANTIDILUTION PROVISIONS

SECTION 4.1.  Changes in Common Stock.  In the event that, at any time or from time to time after the date of this Agreement, the Company shall (a) pay a dividend or make a distribution on its Common Stock exclusively in shares of its Common Stock, (b) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, in each case the number of shares of Common Stock purchasable upon exercise of each Warrant (the “Exercise Rate”) and the Exercise Price in effect immediately prior to such action will be proportionately adjusted upon the happening of such event so that, after giving effect to such adjustment, the Holder of each Warrant shall be entitled to receive, upon payment of the same aggregate Exercise Price, the number of shares of Common Stock upon exercise that such Holder would have owned or have been entitled to receive had such Warrant been exercised immediately prior to the happening of any of the events described in clauses (a), (b) or (c) of this Section 4.1 (or, in the case of a dividend or distribution of Common Stock, immediately prior to the record date therefor).  An adjustment made pursuant to this Section 4.1 shall become effective at the opening of business on the day immediately following the record date fixed for determining the stockholders entitled to receive such dividend or distribution, in the case of a dividend or distribution in shares of Common Stock, and shall become effective at the opening of business on the day immediately following the effective date of such subdivision or combination.

SECTION 4.2.  Dividends and Other Distributions.  In the event that, at any time or from time to time after the date of this Agreement, the Company shall make or issue, or fix a record date for the determination of stockholders entitled to receive, a dividend or other distribution payable in securities (other than shares of Common Stock) or in cash or other property (other than regular cash dividends paid out of earnings or earned surplus, determined in accordance with generally accepted accounting principles), then and in each such event, lawful and adequate provision shall be made so that, after giving effect to the making of such provision, the Holder of each Warrant, upon exercise of such Warrant, shall be entitled to receive, and such Warrant shall represent the right to receive, in addition to the number of Warrant Shares issuable thereunder, the kind and amount of securities, cash or other property to which such Holder would have been entitled if such Holder had exercised such Warrant immediately prior to the happening of such event (or, in the case of a dividend or other distribution in respect of which a record date is fixed, immediately prior to the record date therefor) and such Holder had, during the period from and including the effective date of such provision to and including the Exercise Date, retained any such securities receivable during such period, giving application to all adjustments provided for

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

in this Article 4 during such period.  A provision made pursuant to this Section 4.2 shall become effective at the opening of business on the day immediately following the happening of such event or, in the case of a dividend or other distribution in respect of which a record date is fixed, at the opening of business on the day immediately following such record date therefor.  The foregoing provisions of this Section 4.2 shall similarly apply to successive dividends or other distributions.

SECTION 4.3.  Combination.  In case, at any time, the Company shall (i) merge or consolidate with or into any other Person (other than a merger or consolidation in which the stockholders of the Company as of immediately prior to the consummation of the merger or consolidation own, immediately after such merger or consolidation, less than a majority of the outstanding Capital Stock entitled to vote under ordinary circumstances in the election of members of the Board of the surviving entity, (ii) sell all or substantially all of the Company’s assets, (iii) complete any tender offer or exchange offer (whether by the Company or another Person) pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or other property or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or other property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 4.1 hereof) and, in each case the previously outstanding Common Stock shall be converted or changed into or exchanged for different securities, interests, or other property or assets (including cash), or any combination of the foregoing (each such transaction being herein called a “Combination”), then, as a condition to the consummation of such Combination, lawful and adequate provision shall be made so that each Holder of a Warrant, upon the exercise of such Warrant at any time at or after the consummation of such Combination, shall be entitled to receive, and such Warrant shall thereafter represent the right to receive, in lieu of the Common Stock issuable upon such exercise prior to such consummation, the securities, cash or other property to which such Holder would have been entitled upon consummation of the Combination if such Holder had exercised such Warrant immediately prior thereto (subject to adjustments from and after the consummation date as nearly equivalent as possible to the adjustments provided for in this Article 4 and assuming such Holder failed to exercise any rights of election and received per share the kind and amount of consideration receivable per share by a plurality of non-electing shares).  The foregoing provisions of this Section 4.3 shall similarly apply to successive Combinations.

SECTION 4.4.  Current Market Value.  For purposes of any computation under Sections 3.5 and 3.7 hereof or this Article 4, the Current Market Value per share of Common Stock (the “Current Market Value”) at any date shall be (a) for purposes of Sections 3.5 and 3.7 hereof, the closing price of the Common Stock on the Trading Day immediately preceding the date of exercise of the applicable Warrant pursuant to Section 3 and (b) for purposes of this Article 4, the arithmetic average of the daily closing prices of such Common Stock for the shorter of (i) the twenty (20) consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination (as defined below) and (ii) the consecutive Trading Days commencing on the date next succeeding the first public announcement of the event giving rise to the adjustment required by this Article 4 and ending on the Trading Day immediately prior to the Time of Determination.  The term “Time of Determination” as used herein shall be the earlier to occur of (A) the date as of which the Current Market Value is to be computed and (B) if applicable, the date of commencement

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of “ex-dividend” trading in the Common Stock relating to the event giving rise to the adjustment required by this Article 4.  The “closing price” of the Common Stock for any Trading Day shall be the last reported sale price, regular way, of the Common Stock on such Trading Day or, in case no such reported sale takes place on such Trading Day, the arithmetic average of the closing bid and closing asked prices of the Common Stock for such Trading Day, in each case on the principal Trading Market on which the Common Stock is then listed or included.  Notwithstanding the foregoing, in the event that the Common Stock is not then listed or included on a Trading Market or if, for any other reason, the Current Market Value per share cannot be determined pursuant to the foregoing provisions of this Section 4.4, the Current Market Value per share of Common Stock shall be the Fair Market Value thereof and shall be determined in good faith by the Board, with the unanimous approval of the independent directors of the Board, not later than five (5) Business Days following the Time of Determination.  The Company shall, promptly after such determination by the Board, deliver to each Holder written notice of the Current Market Value per share of Common Stock, as so determined by the Board, together with a resolution of the Board evidencing such determination.

SECTION 4.5.  Certain Actions.

(a)The Company shall not, directly or indirectly, by any action, including, without limitation, reincorporation in a jurisdiction other than Delaware, amending its certificate of incorporation or through any consolidation, merger, reorganization, reclassification, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement or the Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders against dilution or other impairment.  Without limiting the generality of the foregoing, the Company shall (i) take, at its sole cost and expense, all such action as may be necessary or appropriate in order that the Company may validly and legally issue Common Stock on the exercise of the Warrants from time to time outstanding and (ii) not take any action which results in any adjustment of the number of Warrant Shares if the total number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized by the Company’s certificate of incorporation and available for the purposes of issuance upon such exercise.

(b)The Company shall not, directly or indirectly, (i) make any adjustment pursuant to this Article 4 to the extent that it would result in reducing the Exercise Price below the then par value of the Common Stock or (ii) increase the par value of the Common Stock above its current $.01 per share.

SECTION 4.6.  Notice of Adjustment.  Upon any adjustment of the Exercise Rate and/or the Exercise Price pursuant to this Article 4, the Company shall promptly deliver to each Holder a certificate signed by an Officer of the Company setting forth, in reasonable detail, the event requiring such adjustment and the method by which such adjustment was calculated (including, if applicable, a description of the basis on which the Board determined the Fair Market Value of any evidences of indebtedness, securities or other property or assets, and attaching a Board resolution evidencing such determination), and specifying the number of shares of Common Stock purchasable upon exercise of Warrants after giving effect to such adjustment.

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

SECTION 4.7.  Common Stock.  For purposes of this Article 4, the term “Common Stock” includes any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which is not subject to redemption by the Company.  However, subject to Section 4.9 hereof, shares issuable upon exercise of the Warrants shall include only shares of the class designated as Common Stock on the date of this Agreement or shares of any other class or classes resulting from any reclassification or change of such Common Stock and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided that, if at any time there shall be more than one such resulting class, the shares of each such class then so issuable upon exercise of the Warrants shall be substantially in the proportion which the total number of shares of such class resulting from such reclassification or change bears to the total number of shares of all such classes resulting from such reclassifications or changes.

SECTION 4.8.  Notice of Certain Transactions.  In the event that the Company shall propose to (a) pay any dividend or make any other distribution on the Common Stock, whether in cash, Common Stock, other Capital Stock or securities, including, without limitation, rights, options, warrants or convertible or exchangeable securities, evidences of indebtedness or other property or assets, (b) effect any subdivision, combination, reclassification or other change of its Common Stock, (c) effect any tender offer, exchange offer or open market repurchase program, in any case involving more than two percent (2%) of its outstanding Common Stock, (d) effect any Combination or (e) effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall deliver written notice thereof to each Holder, at least ten (10) Business Days prior to the applicable record date hereinafter specified, or, in the case of events for which there is no record date, at least ten (10) Business Days prior to the effective date of such event or the commencement of such tender offer, exchange offer, or repurchase program.  Any written notice provided pursuant to this Section 4.8 shall state (i) the date as of which the holders of record of the Common Stock are entitled to receive any such Common Stock, other Capital Stock or securities, rights, options, warrants or convertible or exchangeable securities, evidences of indebtedness or other property or assets, (ii) the commencement date of any tender offer, exchange offer or repurchase program for the Common Stock or (iii) the date on which any such Combination, dissolution, liquidation or winding-up is expected to become effective or consummated, and the date as of which it is expected that holders of record of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such Combination, dissolution, liquidation or winding-up.  The failure to give the notice required by this Section 4.8 or any defect therein shall not affect the legality or validity of any dividend, distribution, issuance, right, option, warrant, security, tender offer, exchange offer, repurchase program, Combination, reclassification, dissolution, liquidation or winding-up, or the vote upon any action.

SECTION 4.9.  Adjustment to Warrant Certificate.  The form of Warrant Certificate need not be changed because of any adjustment made pursuant to this Article 4, and Warrant Certificates issued after such adjustment may state the same number of shares of Common Stock as are stated in any Warrant Certificates issued prior to the adjustment.  The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not otherwise affect the substance

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

of the Warrant Certificate, and any Warrant Certificate thereafter issued, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as so changed.

SECTION 4.10.  Adjustments or Issuances Deferred/Adjustments Not Required.

(a)All calculations under this Article 4 shall be made to the nearest 1/1,000th of one cent or to the nearest 1/1,000th of one share, as the case may be.

(b)In any case in which this Article 4 shall require an adjustment in the Exercise Rate or the making of a provision effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event (i) issuing to the Holder of any Warrant exercised after such record date the Warrant Shares and other equity of the Company, if any, issuable upon such exercise over and above the Warrant Shares and other equity of the Company, if any, issuable upon such exercise on the basis of the Exercise Rate and (ii) paying to such Holder any amount in cash in lieu of a fractional share pursuant to Section 3.7 hereof; provided, however, that the Company shall deliver to such Holder, upon request, a due bill or other appropriate instrument evidencing such Holder’s right to receive such additional Warrant Shares, other equity and cash upon the occurrence of the event requiring such adjustment.

(c)Notwithstanding anything to the contrary contained in this Article 4, no adjustment in the Exercise Rate and the Exercise Price shall be required under clause (a) of Section 4.1 hereof if the Company issues or distributes to each Holder, at or before the time such issuance or distribution is made to the stockholders of the Company, the Common Stock referred to therein which would have been distributed to such Holders had the Warrants held by such Holder been exercised immediately prior to happening of such event or the record date with respect thereto, as applicable.

ARTICLE 5.

REPRESENTATIONS AND AGREEMENT OF THE COMPANY

The Company represents and warrants to and agrees with the Initial Holder, as of the date hereof, as follows:

(a)The Warrants and the Warrant Shares are duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions (except for restrictions imposed generally by applicable securities laws).  The Company has reserved from its authorized but unissued Common Stock a number of shares of Common Stock that is at least equal to the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants (at the Exercise Rate in effect on the Closing Date).

(b)Assuming the accuracy of the Initial Holder’s representations and warranties set forth in the certificate attached as Exhibit C hereto and delivered by the Initial Holder pursuant to Section 3.1 hereof, no registration under the Securities Act is required for the offer, sale, issuance and delivery of the Warrants and the Warrant Shares by the Company to the Initial Holder

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

as contemplated hereby.  The issuance and sale of the Warrants and the Warrant Shares do not contravene the rules and regulations of the Nasdaq Global Market.

(c)Assuming that the closing price of the Company’s Common Stock on the date hereof is equal to or less than $5.00 per share, the Warrants are eligible for resale pursuant to Rule 144A of the Securities Act and will not, as of the initial Issuance Date to the Initial Holder, be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted on a U.S. automated inter-dealer quotation system.

(d)The Company hereby agrees that, for so long as any Warrants or Warrant Shares remain outstanding and during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to any Holder or beneficial owner of Warrants or Warrant Shares in connection with any sale thereof and any prospective purchaser thereof from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales pursuant to Rule 144A.

(e)None of the Company, its Affiliates or any Person acting on any of their behalf (other than the Holders and their Affiliates, as to whom the Company makes no representation or warranty) has, directly or indirectly, offered, issued, sold or solicited any offer to buy any security of a type which would be integrated with the sale of the Warrants in any manner that would require the Warrants to be registered under the Securities Act.  None of the Company, its Affiliates or any Person acting on any of their behalf (other than the Holders and their Affiliates, as to whom the Company makes no representation or warranty) has engaged in any form of general solicitation or general advertising within the meaning of Rule 502 in connection with the offering of the Warrants.

(f)The Holders will have no obligation with respect to any brokerage or finder’s fees or commissions payable by the Company or any of its Affiliates to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

ARTICLE 6.

MISCELLANEOUS

SECTION 6.1.  Persons Benefiting.  Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the Company and the Holders any legal or equitable right, remedy or claim under or by reason of this Agreement or any part hereof, and this Agreement shall be for the sole and exclusive benefit of the Company and the Holders.

SECTION 6.2.  Rights of Holders.  Except as otherwise specifically required herein, holders of unexercised Warrants are not entitled to (a) receive dividends or other distributions from the Company, (b) receive notice of or vote at any meeting of the stockholders of the Company, (c) consent to any action of the stockholders of the Company, (d) receive notice of any other proceedings of the Company or (e) exercise any other rights as stockholders of the Company.

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

SECTION 6.3.  Amendment.  This Agreement may be amended by the Company and the Initial Holder without the consent of any other Holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Initial Holder may deem necessary or desirable; provided, however, that such action shall not affect adversely the rights of any other Holder.  Any amendment or supplement to this Agreement (including any Exhibit hereto) that has or would have an adverse effect on the interests of the Holders shall require the written consent of the Requisite Holders.  The consent of each Holder affected shall be required for any amendment pursuant to which the Exercise Price would be increased or the Exercise Rate would be decreased (other than pursuant to adjustments provided herein).  In determining whether the Holders of the required number of Warrants have concurred in any direction, waiver or consent, Warrants owned by the Company or any of its Affiliates shall be disregarded and deemed not to be outstanding.

SECTION 6.4.  Notices.  All notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be given in writing and either personally 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:

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

(a)If to the Company:

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Chief Financial Officer
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

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

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  General Counsel
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

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

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Associate General Counsel
Facsimile:  (617) 225-7708
E-mail:  aashe@dyax.com

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

Edwards Angell Palmer & Dodge LLP
111 Huntington Avenue
Boston, MA  02199
Attention: Stacie S. Aarestad
Facsimile:  (617) 227-4420
E-mail:  saarestad@eapdlaw.com

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

(b)If to the Initial Holder:

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.
Facsimile:  (646) 562-1293
Email:  greg.brown@cowen.com

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

Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY  10005
Attn:  Christopher T. Cox
Facsimile:  (212) 396-0136
E-mail:  ccox@cahill.com

(c)If to any other Holder, to the address set forth on the Certificate Register.

The Company and the Initial Holder, by written notice to the other, may designate additional or different addresses for subsequent notices or communications.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

SECTION 6.5.  GOVERNING LAW.  THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

SECTION 6.6.  JURISDICTION; WAIVER OF TRIAL BY JURY.  IN CONNECTION WITH THE ADJUDICATION OF ANY DISPUTES RELATING TO THIS AGREEMENT OR THE WARRANTS, EACH PARTY HEREBY IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT EACH PARTY SUBMITS TO THE JURISDICTION OF ANY OTHER COURT IN WHICH A CLAIM RELATING TO THIS AGREEMENT OR THE WARRANTS IS BROUGHT BY ANY THIRD PARTY AGAINST THE OTHER PARTY; (B) WAIVES, AND AGREES NOT TO ASSERT, (1) ANY CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH PROCEEDING HAS BEEN COMMENCED IN AN IMPROPER OR INCONVENIENT FORUM AND (2) ANY RIGHT IT MAY HAVE TO TRIAL BY JURY; AND (C) AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S ADDRESS AS PROVIDED HEREIN SHALL BE EFFECTIVE FOR ANY ACTION, SUIT OR PROCEEDING

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

WITH RESPECT TO ANY MATTER FOR WHICH IT HAS SUBMITTED TO JURISDICTION HEREBY.  A JUDGMENT IN ANY SUCH PROCEEDING MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION THE APPLICABLE PARTY MAY BE SUBJECT.  EACH PARTY (X) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER OF A RIGHT TO A JURY TRIAL AND (Y) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS IN THIS SECTION.

SECTION 6.7.  Successors.  All representations, warranties, covenants and agreements contained in this Agreement and the Warrant Certificate by or for the benefit of the Company and the Holders shall inure to the benefit of, and shall bind, their respective successors and assigns.

SECTION 6.8.  Counterparts .  This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

SECTION 6.9.  Table of Contents.  The table of contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 6.10.  Severability.  The provisions of this Agreement are severable, and if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction.

SECTION 6.11.  Remedies.  The rights and remedies provided herein shall be cumulative and not exclusive of any other rights or remedies available.  The Company and the Initial Holder acknowledge and agree that the remedy at law for any breach or threatened breach by the other party in the performance or compliance with any of the terms of this Agreement or the Warrants is not and would not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for specific performance, injunctive relief or other equitable remedies or by an injunction against violation of any such terms or otherwise and each of the Company and the Initial Holder agrees not to allege, and hereby waives the defense, that an adequate remedy exists at law.

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

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

DYAX CORP.
By:
	Name:
	Title:
COWEN HEALTHCARE ROYALTY PARTNERS, L.P.
By:	Cowen Healthcare Royalty GP, LLC,
	its General Partner
By:
	Name:
	Title:

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

EXHIBIT A

TO WARRANT AGREEMENT

[FORM WARRANT CERTIFICATE]

[Face]

THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

No.  1 Number of Warrants: 250,000

WARRANTS TO PURCHASE COMMON STOCK OF

DYAX CORP.

THIS CERTIFIES THAT COWEN HEALTHCARE ROYALTY PARTNERS, L.P., a Delaware limited partnership, or its registered assigns, is the registered holder of the number of Warrants set forth above (the “Warrants”).  Each Warrant entitles the holder thereof (the “Holder”), at its option and subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from DYAX CORP., a Delaware corporation (the “Company”), one share of Common Stock, $.01 par value per share, of the Company (the “Common Stock”) at the exercise price of $5.50 (the “Exercise Price”) or by Cashless Exercise, as referred to below.

This Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of August 5, 2008, between the Company and the Initial Holder

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

thereunder (the “Warrant Agreement”), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof.  The Warrant Agreement is hereby incorporated herein by reference and made a part hereof.  Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Company and the Holders of the Warrants.  Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement.  A copy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written request to the Company at Dyax Corp., 300 Technology Square, Cambridge, MA 02139, Attention:  Ivana Magovcevic-Liebisch.

Subject to the terms and conditions set forth in this Warrant Certificate and the Warrant Agreement, each Warrant represented hereby shall be exercisable at any time or from time to time on or after the earlier of (i) August 5, 2009 and (ii) the date on which the Company delivers or is required to deliver to the Holders written notice of a Combination pursuant to clause (d) of Section 4.8 of the Warrant Agreement (the “Exercise Commencement Date”).  This Warrant Certificate shall terminate and become void as of 6:00 p.m., New York time, on August 5, 2016 (the “Expiration Date”) or upon the exercise hereof as to all Warrants represented thereby.  The number of Warrant Shares and the kind of securities, cash and other property purchasable upon exercise of the Warrants and the Exercise Price shall be subject to adjustment from time to time as set forth in the Warrant Agreement.

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof, which provisions shall for all purposes have the same effect as though fully set forth at this place.

THIS WARRANT CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

IN WITNESS WHEREOF, Dyax Corp. has caused this Warrant Certificate to be executed by its duly authorized officer as of the date first written above.

DYAX CORP.
By:
	Name:
	Title:

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

[FORM OF REVERSE OF WARRANT CERTIFICATE]

[Reverse]

Subject to the terms of this Warrant Certificate and the Warrant Agreement, the Warrants represented by this Warrant Certificate may be exercised in whole or in part upon (a) surrender to the Company of this Warrant Certificate, together with the form of election to purchase Warrant Shares below duly completed and executed by the Holder hereof and (b) payment to the Company of the Exercise Price for the number of Warrant Shares in respect of which the Warrants are exercised.  Such payment of the Exercise Price shall be made (i) in cash or by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose or (ii) by Cashless Exercise by the surrender (which surrender shall be evidenced by cancellation of the number of Warrants represented by this Warrant Certificate presented in connection with a Cashless Exercise) of the Warrants represented by this Warrant Certificates, and without the payment of the Exercise Price in cash, in exchange for the issuance of such number of shares of Common Stock equal to the product of (1) the number of shares of Common Stock for which the Warrants would otherwise be nominally exercisable immediately prior to such exercise if payment of the Exercise Price were being made in cash and (2) the Cashless Exercise Ratio (as defined in the Warrant Agreement).  All Warrant Shares issued upon exercise of Warrants will be fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof.

The Warrants represented by this Warrant Certificate shall be exercisable at the election of the Holders hereof either in full at any time or in part from time to time during the period commencing on the Exercise Commencement Date and ending at 6:00 p.m., New York time, on the Expiration Date and in the event that this Warrant Certificate is surrendered for exercise in respect of less than all the Warrants represented hereby at any time prior to the Expiration Date a new Warrant Certificate representing the remaining Warrants will be duly executed and promptly issued by the Company in accordance with the Warrant Agreement.

No fractional Warrant Shares will be issued on exercise of Warrants.  If more than one Warrant shall be exercised at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so exercised.  If any fraction of a Warrant Share would be issuable on the exercise of any Warrant (or specified portion thereof), the Company will notify the Holder exercising the Warrant in writing of the amount to be paid in lieu of the fraction of a Warrant Share and concurrently will pay to such Holder an amount in cash equal to the Current Market Value for one Warrant Share on the date the Warrant is exercised, multiplied by such fraction, rounded up to the nearest whole cent.

When Warrants are presented to the Company with a request to register the transfer of such Warrants or to exchange such Warrants for an equal number of Warrants of other authorized denominations, the Company will register the transfer or make the exchange in the manner and subject to the limitations set forth in the Warrant Agreement.

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

No service charge will be made by the Company to any Holder for any registration of transfer or exchange upon surrender of this Warrant Certificate at the principal office of the Company.  The Company will pay all documentary stamp taxes attributable to the issuance of the Warrants and the Warrant Shares upon the exercise of Warrants; provided, however, that the Company will not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant Certificates or any certificates for Warrant Shares in a name other than the Holder of such Warrant Certificate.

Except as otherwise specifically required in the Warrant Agreement, Holders of unexercised Warrants are not entitled to (a) receive dividends or other distributions from the Company, (b) receive notice of or vote at any meeting of the stockholders of the Company, (c) consent to any action of the stockholders of the Company, (d) receive notice of any other proceedings of the Company or (e) exercise any other rights as stockholders of the Company.  All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

The holder in whose name this Warrant Certificate is registered may be deemed and treated by the Company as the absolute owner of the Warrant Certificate for all purposes whatsoever and the Company shall not be affected by notice to the contrary.

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

FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)

DYAX CORP.

The undersigned hereby irrevocably elects to exercise                      Warrants to purchase Warrant Shares, on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to and herewith (choose one by marking “X” in the space provided):

oTenders payment of the aggregate Exercise Price for such Warrant Shares to the order of Dyax Corp. in the amount $             in accordance with the terms of the Warrant Agreement.

oDirects that such exercise be a Cashless Exercise in accordance with the terms of the Warrant Agreement.

The undersigned directs that the Warrant Shares and the other securities, if any, deliverable upon the exercise of such Warrants be registered in the name and at the address specified below and delivered thereto.

Date:                              , 20       

(3)

(Signature of Holder)

(Street Address)

(City)      (State)      (Zip Code)

(Social Security or Tax Identification No.)

(3)The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever.

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

Warrant Shares and any other securities, cash and other property, and/or payment in lieu of fractional Warrant Shares to be issued and delivered to:

	(Name)
	(Street Address)
	(City)      (State)      (Zip Code)
	(Social Security or Tax Identification No.)
A Warrant Certificate representing any unexercised Warrants evidenced by the within Warrant Certificate to be issued to:
	(Name)
	(Street Address)
	(City)      (State)      (Zip Code)
	(Social Security or Tax Identification No.)

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

EXHIBIT B

TO WARRANT AGREEMENT

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS

Re:Warrants to Purchase Common Stock (the “Warrants”) of DYAX CORP. (the “Company”)

This Certificate relates to                      Warrants held in definitive form by                                (the “Transferor”).

The Transferor has requested the Company to exchange or register the transfer of a Warrant or Warrants.  In connection with such request and in respect of each such Warrant, the Transferor does hereby certify that the Transferor is familiar with the Warrant Agreement relating to the above captioned Warrants and that the transfer of this Warrant does not require registration under the Securities Act of 1933, as amended (the “Securities Act”), because(4):

oSuch Warrant is being acquired for the Transferor’s own account without transfer.

oSuch Warrant is being transferred to the Company.

oSuch Warrant is being transferred in a transaction meeting the requirements of Rule 144 under the Securities Act.

oSuch Warrant is being transferred to a qualified institutional buyer (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A.

oSuch Warrant is being transferred pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act.

oSuch warrant is being transferred pursuant to another available exemption from the registration requirements under the Securities Act.

The Company is entitled to rely upon this Certificate.

	[INSERT NAME OF TRANSFEROR]
	By:
Date:

(4)Please check applicable box.

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

EXHIBIT C

TO

WARRANT AGREEMENT

FORM OF CERTIFICATION

The undersigned hereby acknowledges receipt of 250,000 Warrants at an exercise price per Warrant (subject to adjustment) of $5.50 to acquire shares of Common Stock of DYAX CORP., on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement therein referred (a “Holder”).

Each Holder, severally and not jointly, represents and warrants to DYAX CORP. (the “Company”) as of the date hereof as follows:

(a)         Such Holder is acquiring the Warrants and (if and when it exercises the Warrants) will acquire the Warrant Shares for its own account, for investment purposes only and not with a view to any distribution thereof within the meaning of the Securities Act.

(b)        Such Holder has received such information as it deems necessary in order to make an investment decision with respect to the Warrants and has had the opportunity to ask questions of and receive answers from the Company and its officers and directors and to obtain such additional information which the Company possesses or could acquire without unreasonable effort or expense as such Holder deems necessary to verify the accuracy of the information furnished to such Holder and has asked questions, received such answers and obtained such information as it deems necessary to verify the such accuracy of the information furnished to such Holder.

(c)         Such Holder is an “accredited investor” within the meaning of Rule 501 of the Securities Act.

(d)        Such Holder understands that the Warrants have not been and will not be registered under the Securities Act or any state or other securities law, that the Warrants are being issued by the Company in transactions exempt from the registration requirements of the Securities Act and that the Warrants may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration under the Securities Act is available.

(e)         Such Holder further understands that the exemption from registration afforded by Rule 144 of the Securities Act depends on the satisfaction of various conditions, and that, if applicable, Rule 144 of the Securities Act may afford the basis for sales only in limited amounts.

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

(f)         Such Holder did not employ any broker or finder in connection with the transaction contemplated the Warrant Agreement and no fees or commissions are payable to the Holders except as otherwise provided for in the Warrant Agreement.

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

			COWEN HEALTHCARE ROYALTY PARTNERS, L.P.
			By:	Cowen Healthcare Royalty GP, LLC,
				its General Partner
By:
	Name:	Gregory B. Brown, M.D.
	Title:	Managing Director
	DATED: August 5, 2008

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

Exhibit Q

Existing Liens and Related Indebtedness

[*****]

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

Exhibit R

Form of Assignment and Acceptance

[date]

[Lender]
[              ]

[              ]

Attention:	[          ]
Facsimile:	[          ]

Dyax Corp.

300 Technology Square

Cambridge, MA 02139

Attention:	[          ]
Facsimile:	[          ]

Ladies and Gentlemen:

Re: Assignment Pursuant to the Loan Agreement

We refer to the Loan Agreement dated as of August 5, 2008 (as amended from time to time, the “Agreement”), providing for a loan to DYAX CORP. in an aggregate principal amount of up to $50,000,000.                  (the “Seller”) and                (the “Buyer”) are delivering this instrument to you in connection with an assignment by the Seller of its rights and obligations under the Agreement pursuant to Section 13.01 thereof. Capitalized terms used and not otherwise defined herein have the meanings given to them in the Agreement.

1.        The Seller and the Buyer hereby advise you (a) that the Seller will assign to the Buyer the Seller’s right, title and interest in respect of the Agreement described below as the “Assigned Rights” and the Buyer will accept that assignment and assume the Seller’s related obligations described below as the “Assumed Obligations,” and (b) that as between the Seller and the Buyer that assignment and assumption will be effective as of the date identified below as the “Effective Date.”

2.        In connection with the assignment referred to herein, the Buyer hereby confirms to you that (a) the Buyer is a financial institution, institutional investor or commercial paper conduit and (b) the Buyer agrees to be bound as a Lender by the terms of the Agreement to the extent of the assignment and assumption referred to herein.

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

3.        The Buyer (a) represents and warrants that (i) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Rights and Assumed Obligations and either it, or the Person exercising discretion in making its decision to acquire the Assigned Rights and Assumed Obligations, is experienced in acquiring assets of such type, (ii) it has received a copy of the Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Sections 9.03 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Rights and Assumed Obligations on the basis of which it has made such analysis and decision independently and without reliance on the Seller or any other Lender; and (b) agrees that (i) it will, independently and without reliance on the Seller or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Loan Documents are required to be performed by it as a Lender.

4.        Buyer hereby appoints Cowen Healthcare Royalty Partners, L.P. to act as its agent under the Security Agreement which grant a security interest on terms specified in Section 16 of the Security Agreement, including for the purpose of filings related to the security interest granted under the Security Agreement and other Loan Documents which grant a security interest.

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

Terms Relating to the Assignment and Acceptance

Effective Date:

Assigned Rights:

A       % undivided interest in (i) the Loan of the Seller outstanding on the Effective Date, (ii) all related rights of the Seller to interest accruing on such portion of the Loan from and after the Effective Date, and (iii) all related rights of the Seller under the Agreement and the Note delivered to the Seller thereunder from and after the Effective Date.

Assumed Obligations:

All obligations of the Seller relating to the Assigned Rights that arise under the Agreement on or after the Effective Date

Loan of the Seller:

Before the Effective Date: $           

After giving effect to the assignment referred to herein: $           

Loan of the Buyer:

Before the Effective Date:  $           

After giving effect to the assignment referred to herein: $           

For these purposes, the Buyer hereby informs you that the address for notices and account for payments in connection with the Agreement are as set forth below.

[LENDER]
By:	By:
Name:	Name:
Title:	Title:
	[Include Notice and account information for Buyer.]

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

By:

Name:

Title:

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

Schedule 8.01(1)
Indebtedness

Dyax Corp.
Indebtedness
as of June 30, 2008

		Balance		YTD Activity			Balance
G/L #	Description	Per G/L @ 12/31/2007		Additions	Principal Payments		Per G/L @ 6/30/2008
2705	MIT Loan - Tenant Improvements	1,601,197.02		—	(149,317.19	)	1,451,879.83
2725	GE Capital Leases	1,922,941.89		1,103,437.56	(454,092.36	)	2,572,287.09
2730	De Lage Landen Capital Lease	103,769.02		—	(56,601.30	)	47,167.72
2735	Paul Capital	28,076,748.68		3,470,836.66	(4,236,671.46	)	27,310,913.88
		$	31,704,656.61	4,574,274.22	(4,896,682.31	)	31,382,248.52

1) GE Capital addition is 1 new capital lease (schedule 22) signed in June

2) Paul additions are the amount of non-cash interest recorded in the period

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

Schedule 8.01(n)
Subsidiaries

Dyax Holding B.V.	100% owned directly by Dyax Corp.
Dyax B.V.	100% owned directly by Dyax Holding B.V.
Dyax S.A. (B)	99.6% owned directly by Dyax Holding B.V.; 0.4% owned directly by Dyax Corp.

Dyax SA
Building 22
Boulevard du Rectorat 27B
Sart Tilman
B-4000 Liege 1
Belgium

Dyax B.V. and Dyax Holding B.V.
Voorstaat 4
3633 BA VREELAND

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

Schedule 8.01(s)(i)

[******]

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

Schedule 8.01(s)(ii)

[******]

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

Schedule 8.01(u)
Borrower’s Principal Place of Business

Borrower’s principal place of business and chief executive office are located at:

300 Technology Square, Cambridge, MA 02139, USA

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

Schedule 8.01(v)(ii)

[******]

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

Schedule 8.01(v)(iii)

[*****]

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

Schedule 8.01(v)(iv)

[*****]

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

Schedule 8.01(v)(vii)

[*****]

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

Schedule 8.01(v) (viii)

[*****]

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

Schedule 8.01(v)(ix)

[*****]

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

Schedule 8.01(v)(x)

[*****]

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

Schedule 8.01(w)(i)

[*****]

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

Schedule 8.01(w)(iii)

[*****]

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

Schedule 8.01(w)(v)

[*****]

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

Schedule 8.01(w)(vi)

[*****]

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

Schedule 8.01(w)(vii)

[*****]

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

Schedule 8.01(w)(viii)

[*****]

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

Schedule 8.01(w)(x)

[*****]

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

Schedule 8.01(x)

[*****]

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

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 240.13a-14 or 240.15d-14
of the Securities Exchange Act of 1934, as amended

I, Henry E. Blair, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 29, 2008
		/s/ Henry E. Blair
		Henry E. Blair
		Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 240.13a-14 or 240.15d-14
of the Securities Exchange Act of 1934, as amended

I, George Migausky, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 29, 2008
		/s/ George Migausky
		George Migausky
		Chief Financial Officer

EX-32

Exhibit 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Each of the undersigned officers of Dyax Corp. (the “Company”) certifies, under the standards set forth in and solely for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2008 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	October 29, 2008	/s/ Henry E. Blair
		Henry E. Blair
		Chief Executive Officer
Dated:	October 29, 2008	/s/ George Migausky
		George Migausky
		Chief Financial Officer