SECURITY & GUARANTY AGREEMENT

Exhibit 10.2

SECURITY & GUARANTY AGREEMENT

SECURITY & GUARANTY AGREEMENT (this “Agreement”), dated as of January 11, 2007, by and between Alteon Inc., a Delaware corporation (“Company”), HaptoGuard, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“HaptoGuard” and together with the Company, each a “Debtor” and collectively the “Debtors”) and Baker Bros Advisors LLC as collateral agent for the Secured Parties (together with its successors and assigns in such capacity, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to a Convertible Note and Warrant Purchase Agreement, dated the date hereof, between Company and the Collateral Agent (the “Purchase Agreement”), Company has agreed to issue to the Lenders (as defined in the Purchase Agreement) and the Lenders have each agreed to purchase from Company certain of Company’s Convertible Secured Notes (the “Notes”), which are convertible into shares of Company’s Common Stock, $0.01 par value per share (the “Common Stock”). In connection therewith, Company shall also issue the Lenders certain warrants to purchase shares of Common Stock (the “Warrants”); and

WHEREAS, in order to induce the Lenders to purchase the Notes, the Debtors have agreed to execute and deliver to the Collateral Agent this Agreement for the benefit of the Collateral Agent and the Lenders and to grant to it a first priority security interest in certain property of the Debtors to secure the prompt payment and performance of all of the Obligations (as hereinafter defined).

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.   Certain Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are defined in Article 9 of the UCC shall have the respective meanings given such terms in Article 9 of the UCC.

(a)   “Collateral” means all right, title and interest in and to, whether now owned or hereafter acquired and wherever located:

(b)   “Copyright Licenses” means any and all agreements, licenses and covenants providing for the granting of any right in or to Copyrights or otherwise providing for a covenant not to sue (whether the Debtor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule C hereto.

(c)   “Copyrights” mean all United States and foreign copyrights (including, without limitation, Community designs), including but not limited to copyrights in software and all rights in and to databases, and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, moral rights, reversionary interests, termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications required to be listed in Schedule C hereto, (ii) all extensions and renewals thereof, (iii) all rights corresponding thereto throughout the world, (iv) all rights to sue for past, present and future infringements thereof, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages and proceeds of suit.

(d)   “Equipment” means goods (other than Inventory) whether now owned or hereafter acquired and wherever located including, without limitation, all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.

(e)   “General Intangibles” means all general intangibles as defined in the UCC, whether now owned or hereafter acquired, including, without limitation, all payment intangibles, and without limiting the generality of the foregoing all of the following whether or not constituting general intangibles as defined in the UCC: all choses in action, causes of action, corporate or other business records, inventions, designs, equipment formulations, manufacturing procedures, quality control procedures, service marks, trade secrets, goodwill, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held or granted to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables), all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).

(f)   “Inventory” means all now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such party’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.

(g)   “Intellectual Property” means all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.

(h)   “Investment Property” means all now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.

(i)   “Obligations” means all of the Company’s obligations under this Agreement, the Warrants and the Notes, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, as such obligations may be amended, supplemented, converted, extended or modified from time to time and all obligations of HaptoGuard hereunder.

(j)   “Patent Licenses” shall mean all agreements, licenses and covenants providing for the granting of any right in or to Patents or otherwise providing for a covenant not to sue (whether the Debtor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule C .

(k)   “Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, without limitation: (i) each patent and patent application referred to in Schedule C hereto, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

(l)   “Permitted Liens” means any and all of the following: (i) liens existing as of the date of this Agreement and listed on Schedule B ; (ii) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that the Company maintains adequate reserves therefor in accordance with GAAP; (iii) liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like persons arising in the ordinary course of the Company’s business and imposed without action of such parties; provided, that the payment thereof is not yet required; (iv) liens arising from judgments, decrees or attachments that do not exceed $250,000 and to the extent applicable are not covered by a policy of insurance; (v) the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (vi) purchase money security interests and liens in connection with financing leases on equipment, and (vii) liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by liens of the type described in clause (vi) above.

(m)   “Receivables” means (i) all Accounts (as defined in the UCC), (ii) such contract rights, instruments, documents, chattel paper (including, without limitation, electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing arising out of or in connection with the sale or lease of Inventory or the rendition of services, and (iii) all supporting obligations, guarantees and other security for any of the foregoing, whether secured or unsecured, now existing or hereafter created.

(n)   “Secured Parties” means from time to time each person or entity who is at any such time a Lender (as defined in the Purchase Agreement) or a holder of a Note or a Warrant.

(o)   “Trademark Licenses” shall mean any and all agreements, licenses and covenants providing for the granting of any right in or to Trademarks or otherwise providing for a covenant not to sue or permitting co-existence (whether the Debtor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule C .

(p)   “Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, without limitation: (i) the registrations and applications referred to in Schedule C , (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by the foregoing, (iv) the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

(q)   “UCC” means the Uniform Commercial Code, as currently in effect in the State of New York.

2.   Grant of Security Interest . To secure the payment and performance of all of the Obligations, the Debtors hereby grants to the Collateral Agent, a continuing security interest in all of the Debtor’s right, title and interest of whatsoever kind and nature in and to the Collateral (the “Security Interest”). Notwithstanding any provision of this Agreement to the contrary, Collateral shall not include (i) any property that is subject to a Permitted Lien pursuant to subsection (vi) of such definition to the extent that such Permitted Lien prohibits the security interest hereunder or (ii) any agreement with a third party existing on the date hereof that prohibits the grant of a lien on (but not merely the assignment of or of any interest in) such agreement or any of the Debtor’s rights thereunder without the consent of such party or under which a consent to such grant is otherwise required, which consent has not been obtained, except to the extent any such prohibition is made ineffective as a result of Section 9-406(d), 9-407, 9-408, or 9-409 of the UCC.

3.   Representations, Warranties, Covenants and Agreements of the Debtors . Each Debtor represents and warrants to, and covenants and agrees with, the Collateral Agent as follows:

(a)   Each Debtor has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this Agreement and the filings contemplated herein have been duly authorized by all necessary action on the part of the Debtor and no further action is required by the Debtor . This Agreement constitutes a legal, valid and binding obligation of the Debtor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor’s rights generally, and provided that (1) the conversion of all of the Notes may require approval of the Company’s stockholders under applicable rules of the American Stock Exchange, which approval has not been obtained, and (2) insofar as any foreclosure on the Collateral under this Agreement would constitute a sale of all or substantially all of the Debtor’s assets requiring stockholder approval, such approval has not been obtained.

(b)   Each Debtor represents and warrants that it has no place of business or offices where its respective books of account and records are kept (other than temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto.

(c)   The full legal name of each Debtor is as set forth on the signature pages hereof. Each Debtor has not done in the last five (5) years, and does not do, business under any other name (including, without limitation, any trade name or fictitious business name).

(d)   Without limiting any prohibitions or restrictions in the Note, a Debtor shall not change its name, identity, corporate structure ( e.g. , by merger, consolidation, change in corporate form or otherwise), sole place of business, chief executive office, type of organization or jurisdiction of organization or establish any trade names unless it shall have (a) notified the Collateral Agent in writing at least ten (10) days prior to any such change or establishment, identifying such new proposed name, identity, corporate structure, sole place of business, chief executive office, jurisdiction of organization or trade name and providing such other information in connection therewith as the Collateral Agent may reasonably request and (b) taken all actions reasonably necessary or advisable to maintain the continuous validity, perfection and the same priority of the Collateral Agent’s security interest in the Collateral intended to be granted and agreed to hereby.

(e)   Except for Permitted Liens, each Debtor is the sole owner of the Collateral (except for exclusive, semi-exclusive and non-exclusive licenses granted by a Debtor in the ordinary course of business which licenses existing as of the date hereof are identified on Schedule D hereto), free and clear of any liens, security interests, encumbrances, rights or claims, and is fully authorized to grant the Security Interest in and to pledge the Collateral.

(f)   This Agreement creates in favor of the Collateral Agent a valid security interest in the Collateral securing the payment and performance of the Obligations and, upon making the filings described in the immediately following sentence, a perfected first priority security interest in such Collateral. Except for the filing of financing statements on Form-1 under the UCC with the Secretary of State of the State of Delaware, no authorization or approval of or filing with or notice to any governmental authority or regulatory body is required either (i) for the grant by a Debtor of, or the effectiveness of, the Security Interest granted hereby or for the execution, delivery and performance of this Agreement by each Debtor or (ii) for the perfection of or exercise by the Collateral Agent of its rights and remedies hereunder.

(g)   Other than Permitted Liens and Permitted Transfers, the Debtors will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral without the prior written consent of the Collateral A