THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE

SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A

VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES

MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND

QUALIFICATION WITHOUT, EXCEPT AS OTHERWISE AGREED BY BORROWER, AN OPINION OF

COUNSEL REASONABLY SATISFACTORY TO BORROWER THAT SUCH REGISTRATION AND

QUALIFICATION ARE NOT REQUIRED.



                       CONVERTIBLE SECURED PROMISSORY NOTE



$_________                                                        March __, 2003



                  FOR VALUE RECEIVED, Advancis Pharmaceutical Corporation, a

Delaware corporation with offices at 656 Quince Orchard Road, Suite 220,

Gaithersburg, Maryland 20878 (herein, "BORROWER") promises to pay to the order

of ______________, at its office at ______________, or its designee ("LENDER"),

or at such other place as Lender may designate from time to time in writing, the

principal amount of $__________ (_______) Dollars in lawful money of the United

States of America, together with such interest as is payable, as hereinafter

provided. This Convertible Secured Promissory Note (this "Note") is one of a

series of convertible secured promissory notes issued by Borrower as set forth

in more detail in that certain Note Issuance Agreement dated March __, 2003 (the

"NOTE ISSUANCE AGREEMENT") among Borrower, Lender and the other Lenders (as

defined in the Note Issuance Agreement). Such promissory notes are collectively

referred to as "NOTES" and the holders of the Notes are collectively referred to

as "LENDERS."



                  1.       Advance; Payments.



                           (a) Advance. All principal amounts borrowed under

this Note (each, an "ADVANCE") shall be advanced and delivered to Borrower on

the date of issuance of this Note.



                           (b) Payments. Subject to Sections 6 and 13 below, the

principal balance outstanding hereunder, together with any remaining unpaid

principal and any and all costs, fees, expenses and accrued interest then

outstanding, shall be due and payable on the Maturity Date. The "MATURITY DATE"

shall be the date of the earliest to occur of: (i) the date ninety (90) days

after the date of issuance of this Note; (ii) the consummation of a financing in

which Borrower receives gross proceeds in excess of Fifteen Million Dollars

($15,000,000) exclusive of any amounts converted under the Notes (a "QUALIFIED

FINANCING"); and (iii) the consummation of the sale of all or substantially all

of Borrower's assets or any other transaction (other than an equity investment

in Borrower led by institutional investors, venture capital investors and/or

strategic investors), the result of which is that the holders of Borrower's

issued and outstanding voting capital stock immediately prior to such

transaction own less than a majority of the voting power of the surviving

corporation in such transaction (a "SALE TRANSACTION").



{PAGE}



                  2.       Interest. Interest shall accrue on all amounts

outstanding from time to time hereunder until the Maturity Date at a rate equal

to seven percent (7%) per annum compounding monthly. Following the date on which

any amount is due under this Note, all such amounts outstanding shall thereafter

bear interest until such amounts are paid, at a rate equal to twelve percent

(12%) per annum compounding monthly. The annual interest rate shall be

calculated for the actual days elapsed on the basis of a 360-day year.



                  3.       Transaction Premium. In the event Borrower enters

into a definitive agreement to consummate a Sale Transaction while any amounts

are owed under this Note, in addition to the amounts due under Section 1, upon

consummation of such Sale Transaction, Borrower shall pay to Lender an amount

equal to the maximum amount of principal and interest owed under this Note at

any time from the time immediately prior to the execution of such definitive

agreement through the consummation of the Sale Transaction.



                  4.       Security.



                           (a) Grant of Security Interest. As collateral

security for the prompt and complete payment and performance of all of

Borrower's obligations and liabilities to Lenders under the Notes (the

"LIABILITIES"), Borrower hereby pledges to, mortgages, assigns, transfers, sets

over and grants to the Collateral Agent, as that term is defined in the Note

Issuance Agreement, a continuing general lien on and security interest in all of

Borrower's right, title and interest in and to all tangible and intangible

property of Borrower, whether now owned or hereafter acquired, including, but

not limited to, Borrower's interest now and in the future in the following types

or items of property (collectively being referred to herein as the

"COLLATERAL"):



                                    (i)      ACCOUNTS - All presently owned and

hereafter acquired accounts, accounts receivable, contract rights, bills,

acceptances, and other forms of obligations arising out of the sale, lease or

consignment of goods or the rendition of services by Borrower; together with any

property evidencing or relating to the Accounts (such as guaranties, credit

insurance, Letters of Credit), any security for the Accounts, all Books and

Records (as hereinafter defined) relating thereto, and all Proceeds (as

hereinafter defined) of any of the foregoing, including returned or reclaimed

inventory.



                                    (ii)     INVENTORY - All presently owned and

hereafter acquired inventory of every nature, kind, and description, wherever

located, including, without limitation, raw materials, goods, work in process,

finished goods, parts or supplies; all goods and property held for sale or lease

or to be furnished under contracts of service; and all goods and inventory

returned, reclaimed or repossessed, together with all Proceeds of any of the

foregoing.



                                    (iii)    EQUIPMENT - All presently owned and

hereafter acquired equipment, whether or not affixed to realty, including,

without limitation, trucks, trailers, motors, tools, dies, parts, jigs, goods,

accessories, handling and delivery equipment, fixtures, improvements, office

machines and furniture, together with all Proceeds of any of the foregoing, and

all accessions, accessories, replacements and the rights of Borrower under any

manufacturer's warranties relating to the foregoing.



                                      -2-

{PAGE}



                                    (iv)     CHATTEL PAPER - All presently owned

and hereafter acquired chattel paper, including, but not limited to, any writing

or writings which evidence both a monetary obligation and a security interest in

or a lease of specific goods, together with all Proceeds of any of the

foregoing.



                                    (v)      GENERAL INTANGIBLES AND

INTELLECTUAL PROPERTY - All presently owned and hereafter acquired intellectual

property and other general intangibles, including, without limitation, any

personal property, choses in action, causes of action, designs, plans, goodwill,

tax refunds, licenses, franchises, trademarks, trademark applications, trade

names, service marks, copyrights, copyright applications, customer lists,

patents, patent applications and specifically including Borrower's software, in

both object code and source code form, and all rights under license agreements

for use of the same, except to the extent that certain agreements may prohibit

the transfer or assignment of the rights thereunder to a third party without the

licensor's or the other party's consent, in which case such rights shall not be

deemed Collateral hereunder, together with all Proceeds of any of the foregoing.



                                    (vi)     INSTRUMENTS - All presently owned

and hereafter acquired instruments, including, without limitation, bills of

exchange, notes, and all negotiable instruments, all certificated securities,

all certificates of deposit and any other writing which evidences a right to the

payment of money and is not itself a security agreement or lease and is of a

type which is in the ordinary course of business transferred by delivery with

any necessary endorsement or assignment, together with all Proceeds of any of

the foregoing.

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC