Collateral Security Agreement

LEASE MANAGEMENT SERVICES, INC.


COLLATERAL SECURITY AGREEMENT


Agreement made and entered into as of this 16 day of December, 1997, by and between AURORA BIOSCIENCES CORPORATION, ("Lessee/Debtor") and LEASE MANAGEMENT SERVICES, INC. ("Lessor/Secured Party").


As security for the payment and performance by AURORA BIOSCIENCES CORPORATION, ("Lessee/Debtor") to LEASE MANAGEMENT SERVICES, INC. ("Lessor/Secured Party"); (a) under Master Lease Agreement Number 10494, Equipment Financing Agreement Number 10794, and all Schedules thereunder, between Lessee/Debtor and Lessor/Secured Party (hereinafter collectively referred to as the "Agreements"); (b) any and all obligations of Lessee/Debtor to Lessor/Secured Party hereunder and any and all indebtedness and obligations of Lessee/Debtor to Lessor/Secured Party, direct, indirect or contingent, joint or several, whether or not otherwise secured, and whether now existing or hereafter incurred; and (c) any and all amounts advanced or expended by Secured Party for the maintenance or preservation of the Collateral (as defined below); Lessee/Debtor hereby pledges, assigns and grants to Lessor/Secured Party, a first security interest in:


All equipment (except computer equipment) which was previously leased or financed or will be leased or financed under the Agreements, together with all accessories, parts, upgrades, renewals and replacements of, and repairs, improvements and accessions to the equipment assets and any insurance proceeds or revenue derived from the sale or other disposition of the equipment ("Collateral"). This first security interest will remain in full force and effect until all of Lessee/Debtor's obligations are fulfilled under the Agreements.


Lessee/Debtor hereby warrants that it is the sole owner in possession of all Collateral and that the Collateral is free and clear of all liens, encumbrances and adverse claims, with the exception of the security interest herein created and all other security interests previously granted to LESSOR/SECURED PARTY. Lessee/Debtor agrees to execute and deliver to Lessor/Secured Party at any time and from time to time such other security agreements or mortgages of chattel as Lessor/Secured Party may reasonably request, covering the COLLATERAL. Lessee/Debtor also agrees to appear in and defend any and all actions and proceedings, at its own expense, affecting title to the Collateral or any part thereof, or affecting the security interest of Lessor/Secured Party therein.


Lessee/Debtor also agrees to: do all acts which may be necessary to maintain, preserve and protect the Collateral and to keep the Collateral in good condition and repair; not to cause or permit any waste or unusual or unreasonable depreciation thereof or any act for which the Collateral might be confiscated; to pay before delinquency all taxes, assessments and liens now or hereafter imposed upon the Collateral; not to sell, lease, encumber or dispose of all or any part of the Collateral; at any time upon demand of Lessor/Secured Party to exhibit to and allow inspection by Lessor/Secured Party of the Collateral; not to remove or permit the removal of the Collateral from the premises where it is now located without the prior written consent of Lessor/Secured Party; to provide, maintain and deliver to Lessor/Secured Party policies insuring the Collateral against loss or damage by such risks and in such amounts, forms and companies as Lessor/Secured Party reasonably requires and with loss payable to Lessor/Secured Party. If Lessor/ ...