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                                                                    EXHIBIT 10.4

                               EPICEPT CORPORATION
                        2005 EMPLOYEE STOCK PURCHASE PLAN

                              EFFECTIVE __________

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                               EPICEPT CORPORATION
                        2005 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I PURPOSE AND DEFINITIONS

1.01. Purpose. The EpiCept Corporation 2005 Employee Stock Purchase Plan, as
amended from time to time ("PLAN"), provides a convenient method of acquiring
shares of stock of EpiCept Corporation ("COMPANY"), if you are eligible to
participate. The Plan is intended to qualify as an employee stock purchase plan
under section 423 of the Internal Revenue Code of 1986, as amended ("CODE"), but
is not intended to be subject to section 401(a) of the Code or the Employee
Retirement Income Security Act of 1974, as amended.

1.02. Definitions. A term defined in the Plan shall have the meaning ascribed to
it wherever it is used herein unless the context indicates otherwise.

ARTICLE II PARTICIPATION

2.01. Adoption by Subsidiaries. The Company's Board of Directors may authorize
the adoption of the Plan by one or more subsidiary corporations of the Company
("PARTICIPATING SUBSIDIARIES").

2.02. Eligibility to Participate. You are eligible to participate in an Offering
(as defined in Paragraph 4.02) under the Plan if, as of the first day of such
Offering: (i) you are an employee of the Company or a Participating Subsidiary,
and (ii) you are scheduled to work more than five (5) months per year and at
least twenty (20) hours per week for the Company and its Participating
Subsidiaries (as determined by reference to the Company's employment records)
and (iii) you have been employed by the Company or a Participating Subsidiary
for a required period (not exceeding two years) as the Committee (as defined in
Paragraph 7.01) may determine, in its absolute discretion.

2.03. Participation Agreement. Participation in the Plan is voluntary with
respect to each Offering. To participate in an Offering, you must be eligible
and complete a written enrollment form provided by the Company ("PARTICIPATION
AGREEMENT") authorizing payroll deductions from your paycheck. Your
Participation Agreement will remain in effect through each consecutive Offering
unless you choose to revise or revoke it, or you become ineligible to
participate in the Plan.

2.04. Termination of Your Participation. You may withdraw at any time from any
Offering by written notice to the Committee in such form as it may require. Your
participation will also end upon your termination of employment with the Company
and its parent and subsidiary corporations or when you become

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ineligible to participate (including by reason of the Company or any
Participating Subsidiary terminating its participation in the Plan).

2.05. Designation of Beneficiary. You shall, by written notice to the Committee,
designate a person or persons to receive the value of your Account in the event
of your death. You may, by written notice to the Committee during employment,
alter or revoke such designation, subject always to any applicable law governing
the designation of beneficiaries. Such written notice shall be in such form and
shall be executed in such manner as the Committee may determine. If upon your
death you have not designated a beneficiary under the Plan or such beneficiary
does not survive you, the value of your Account shall be paid to your estate.

ARTICLE III CONTRIBUTIONS

3.01. Payroll Deductions. You may accumulate savings to purchase Shares in an
Offering by authorizing payroll deductions pursuant to a Participation
Agreement, subject to such minimum and maximum limits (expressed in dollars or
as a percentage of wages) as the Committee may impose. Such savings shall be
credited to your Account with respect to the Offering to which they relate.
Payroll deductions for an Offering shall commence with the first paycheck you
receive during such Offering and shall end with the last paycheck you receive
during such Offering. Paychecks will be treated as having been received when
they are sent out or otherwise distributed.

3.02. Change in Rate of Contributions. You may reduce (but not increase) your
rate of payroll deduction during an Offering by written notice to the Committee
in such form and manner as it requires. Such reduction shall be effective as of
the first pay period thereafter by which the Company is able to process the
change.

3.03. Possession of Contributions. All payroll deductions made pursuant to the
Plan shall be held for your benefit and on your behalf by the Company or any
custodian selected by the Committee. Such payroll deductions shall constitute
your property notwithstanding that they may be commingled with the general
assets of the Company or such custodian.

ARTICLE IV OPTIONS TO ACQUIRE SHARES

4.01. Maximum Number of Shares. The number of shares of common stock of the
Company ("SHARES") available for issuance under the Plan shall be 500,000 Shares
with respect to the ten years following the adoption of the Plan. Any Shares
that are not actually purchased under the Plan for any reason shall remain
available for purchase hereunder.

4.02. Offerings. The Company will offer Shares for purchase under the Plan
("OFFERING") for six-month periods beginning on January 1 and July 1 of each
calendar year, commencing on January 1, 2006 or such other date as the

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Committee may determine in its absolute discretion (the "OFFERING COMMENCEMENT
DATE"). The Company may make additional Offerings for different periods,
provided that no Offering shall extend for more than 27 months.

4.03. Options. Each Offering shall constitute an option to purchase whole Shares
at a price per Share equal to 85% of the lesser of (i) the fair market value of
a Share on the first day of such Offering or (ii) the fair market value of a
Share on the last day of such Offering. The fair market value of a Share on any
date shall be its closing price reported by the principal stock exchange on
which Shares are traded for such date or for the next earliest date on which
Shares were traded.

4.04. Individual Limit on Options. No Participant shall be granted or otherwise
permitted to have one or more options to purchase, during any calendar year,
shares of stock of the Company or any of its parent or subsidiary corporations
under the Plan or other plans qualifying under Section 423 of the Code having a
fair market value (as of the applicable date of grant) of more than $25,000 in
the aggregate for all such options.

4.05. Purchase of Shares. Unless you have withdrawn or become ineligible prior
to the end of an Offering, your accumulated savings shall be automatically
applied on the last day of the Offering to purchase whole Shares to the extent
feasible in accordance with the Offering. Such purchase shall be treated as the
exercise of an option represented by the Offering. Any amount remaining in your
Account after such purchase shall be applied to the next Offering. You are not
entitled or permitted to make cash payments in lieu of payroll deductions to
acquire Shares in an Offering. In no event shall any Shares be purchased
pursuant to an Offering more than 27 months after the commencement of the
Offering.

4.06. Source of Shares. Shares may be purchased directly from the Company or by
the Broker pursuant to directions from the Committee. If the Broker acquires
Shares pursuant to an open market transaction, such purchase shall be made at
the market price prevailing on the applicable exchange.

4.07. Restriction on 5% Owners. No employee shall be permitted to purchase
Shares under the Plan if, immediately after such purchase, such employee would
possess stock having 5% or more of the total combined voting power of all
classes of stock of the Company or any of its parent or subsidiary corporations,
determined by applying the stock ownership rules of section 424(d) of the Code.

4.08. Prohibition Against Assignment. Your right to purchase Shares under the
Plan are exercisable only by you and may not be sold, pledged, assigned,
surrendered or transferred in any manner other than by will or the laws of
descent and distribution. Any attempt to sell, pledge, assign, surrender or
transfer such rights shall be void and shall automatically cause any purchase
rights held by you to be terminated. In such event, the Committee may refund in
cash, without interest, all contributions credited to your Account.

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ARTICLE V ACCOUNTS

5.01. Establishment of Accounts. The Committee shall cause to be maintained a
separate account for each participant ("ACCOUNT") to record the amount of
payroll deductions with respect to each Offering, and the purchase price for and
the number of Shares, credited to such participant. No interest or other
earnings shall be credited to any contributions under the Plan.

5.02. Custody of Shares. The Committee shall select a broker ("BROKER") which
shall hold and act as custodian of Shares purchased pursuant to the Plan. Absent
instructions to the contrary from a Participant, certificates for Shares
purchased will not be issued by the Broker to a participant.

5.03. Voting of Shares. You shall direct the Broker as to how to vote the full
Shares credited to your Account.

ARTICLE VI DISBURSEMENTS FROM ACCOUNT

6.01. Withdrawal of Contributions. Upon your withdrawal from any Offering, all
or any designated portion of the contributions credited to your Account with
respect to such Offering shall be disbursed, without interest, to you.

6.02. Withdrawal of Shares. You may at any time withdraw all or any number of
whole Shares credited to your Account under the Plan by directing the Broker to
cause your Shares (subject to the charges described in Paragraph 7.03 of the
Plan) to be: (i) issued as certificates in your name, (ii) sold and the net
proceeds distributed to you in cash or (iii) transferred to another brokerage
account of yours.

6.03. Distribution Upon Termination. Upon termination of your participation in
the Plan as a whole prior to the expiration of all Offerings thereunder, all
contributions and Shares credited to your Account shall be disbursed to and as
directed by you in accordance with the Plan. All contributions credited to your
Account that have not been applied to the purchase of Shares shall be returned
to you without interest, unless such termination coincides with the expiration
of an Offering and Shares are purchased accordingly. Shares credited to your
Account shall, in accordance with instructions to the Broker from you and at
your expense, be distributed in the same manner as permitted upon any
withdrawal.

6.04. Failure to Provide Directions. If within ninety (90) days after you have
withdrawn from the Plan you have not notified the Broker of your instructions as
set forth herein, the Committee shall direct the Broker to issue Shares in your
name and deliver the same to you at your last known address.

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6.05. Sale of Shares. If you elect to receive the proceeds from the sale of your
Shares, the amount payable shall be determined by the Broker based upon the
proceeds of the sale of your Shares at the market price prevailing on the New
York Stock Exchange, less any applicable commissions, fees and charges. The
Broker, acting on your behalf, shall take such action as soon as practicable,
but in no event later than five (5) business days after receipt of notification
from you. The Company assumes no responsibility in connection with such
transactions, and all commissions, fees or other charges arising in connection
therewith shall be borne directly by you. The amount thus determined shall be
paid in a lump sum to you.

6.06. Unpaid Leave of Absence. Unless you withdraw from the Plan, Shares will be
purchased with contributions to your Account on the last day of the Offering
following the commencement of an unpaid leave of absence, unless your employment
terminates prior to that time. The number of Shares purchased will be determined
by applying the amount of your contributions prior to such leave of absence.
Upon your return to work following an unpaid leave of absence, payroll
deductions shall resume at the rate in effect at the commencement of the leave
of absence.

ARTICLE VII ADMINISTRATION AND EXPENSES

7.01. The Plan shall be administered by a Committee, which shall consist of such
members as determined by the Company ("COMMITTEE"). The Committee shall
interpret and apply the provisions of the Plan in its good faith discretion, and
the Committee's decision is final and binding. The Committee may establish rules
for the administration of the Plan.

7.02. Expenses for Purchase of Shares. The Company shall pay brokerage
commissions, fees and other charges, if any, incurred for purchases of Shares
with payroll deductions made under the Plan.

7.03. Expenses to Sell or Transfer Shares. All brokerage commissions, fees or
other charges in connection with any sale or other transfer of your Shares shall
be paid by you. In addition, any charges by the Broker in connection with your
request to have certificates representing Shares registered in your name shall
be paid by you.

7.04. Post-Termination Expenses. Upon your termination of employment or your
withdrawal from the Plan for any other reason, all commissions, fees and other
charges thereafter relating to your Account will be your responsibility.

ARTICLE VIII MERGERS AND OTHER SHARE ADJUSTMENTS

8.01. Mergers or Other Consolidations. In the event that the Company is a party
to a merger or consolidation, outstanding options under the Plan shall be
subject to the agreement of merger or consolidation. Such agreement, without the
consent of any Participant, may provide for:

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      (a)   the continuation of such outstanding options by the Company (if the
            Company is the surviving corporation);

      (b)   the assumption of the Plan and such outstanding options by the
            surviving corporation or its parent;

      (c)   the substitution by the surviving corporation or its parent of
            options with substantially the same terms for such outstanding
            options, including the substitution of shares of common stock of the
            surviving corporation with such appropriate adjustments so as not to
            enlarge or diminish the rights of Participants; or

      (d)   the cancellation of such outstanding Options without payment of any
            consideration other than the return of contributions credited to
            Participants' Accounts, without interest.

8.02. Adjustments to Shares or Options. In the event of a subdivision of the
outstanding common stock, a declaration of a dividend payable in Shares, a
declaration of an extraordinary dividend payable in a form other than Shares in
an amount that has a material effect on the fair market value of the Shares, a
combination or consolidation of the outstanding Shares into a lesser number of
Shares, a recapitalization, a spin-off, a reclassification or a similar
occurrence, the Board of Directors shall make appropriate adjustments so as not
to enlarge or diminish the rights of Participants, in one or more of: (i) the
number of Shares available for purchase under the Plan, (ii) the number of
Shares subject to purchase under outstanding options or (iii) the purchase price
per Share under each outstanding option.

ARTICLE IX AMENDMENT AND TERMINATION

9.01. Authority. The Board of Directors of the Company may at any time terminate
or amend the Plan in any respect, including, but not limited to, terminating the
Plan prior to the end of an Offering Period or reducing the term of an Offering
Period; provided, however, that the number of Shares subject to purchase under
the Plan shall not be increased without approval from the Company's
shareholders.

9.02. Termination of the Plan. The Plan and all rights of Participants to
purchase any Shares hereunder shall terminate at the earlier of the conclusion
of the last Offering Period authorized herein, or as otherwise determined by and
at the discretion of the Company.

9.03. Distributions on Plan Termination. Upon termination of the Plan at the end
of an Offering Period, Shares shall be issued to Participants, and cash, if any,
remaining in the Accounts of the Participants, shall be refunded to them, as if
the Plan were terminated at the end of an Offering Period. Upon termination of
the Plan prior to the end of an Offering Period, all amounts not previously
applied to the purchase of Shares shall be distributed to you.

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9.04. Effect on Broker. No amendments to the Plan which affect the
responsibilities or duties of the Broker shall be effective without the
agreement and approval of the Broker.

ARTICLE X MISCELLANEOUS

10.01. Foreign Laws. The Committee may grant awards to individual participants
who are subject to the tax laws of nations other than the United States, which
awards may have terms and conditions as determined by the Committee as necessary
to comply with applicable foreign laws. The Committee may take any action which
it deems advisable to obtain approval of such awards by the appropriate foreign
governmental entity; provided, however, that no such awards may be granted
pursuant to this Section 10.01 and no action may be taken which would result in
a violation of the Securities Exchange Act of 1934, as amended, the Code or any
other applicable law.

10.02. Effective Date of Plan. The Plan shall become effective as determined by
the Committee, but no Shares shall be purchased under an Offering unless and
until the Plan has been approved by the shareholders of the Company within 12
months before or after the date the Plan is adopted by the Company's Board of
Directors.

10.03. Joint Ownership. Shares may be registered in the name of the Participant,
or, if he or she so designates, in his or her name jointly with his or her
spouse, with a right of survivorship.

10.04. No Employment Rights. The Plan shall not be deemed to constitute a
contract of employment between the Company and you, nor shall it interfere with
the right of the Company to terminate you and treat you without regard to the
effect which such treatment might have upon you under the Plan.

10.05. Tax Withholding. The Company shall withhold from amounts to be paid to
you as wages, any applicable Federal, state or local withholding or other taxes
which it is from time to time required by law to withhold.

10.06. Compliance with Laws. The Company may direct the Broker to delay the
issuance of any certificate in the name of any person or the delivery of Shares
to any person if it determines that listing, registration or qualification of
such Shares upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of Shares under the Plan, until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Company.

10.07. Governing Law. The Plan shall be governed by, and construed in accordance
with, the laws of the State of Delaware and without regard to the conflict of
laws principles of such state.

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                                     EpiCept Corporation

                                     By: __________________________
                                         Name:
                                         Title:<PAGE>

                                                                   EXHIBIT 10.17

                                LIMITED GUARANTY

THIS GUARANTY is executed as of April 27, 1998 by American Pharmed Labs, Inc., a
Delaware corporation ("Guarantor"), for the benefit of IKB Nachrangkapital GmbH,
a company with limited liability organized under the laws of Germany ("Lender"),
with reference to the following facts:

      A. Lender has agreed to lend up to Ten Million Deutsche Marks (DM
10,000,000) in two tranches (collectively, the "Loan") to Pharmed Labs GmbH, a
German company with limited liability, which is wholly owned by the Guarantor
("Borrower"). The Loan is evidenced by a letter of acceptance dated April 13,
1998 relating to Lender's letter dated March 31, 1998 offering to make the Loan
and setting forth the terms thereof (such two letters being, collectively, the
"Letter Agreement").

      B. As a condition to the making of disbursements under the Loan, Lender
has required that Guarantor guarantee the obligations of Borrower in accordance
with the terms of this Guaranty.

      NOW, THEREFORE, in consideration of Lender's agreement to make the Loan
and as an inducement to Lender to advance funds under the Letter Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Guarantor covenants and agrees with Lender, for the
benefit of Lender, as follows:

                             ARTICLE 1 - AGREEMENTS

      1.1 Guaranty. Guarantor hereby unconditionally and irrevocably guarantees
(a) the punctual payment when due of all amounts due or to become due (whether
at scheduled maturity or upon acceleration or demand or otherwise) under or with
respect to the Loan and the Letter Agreement (and all renewals, extensions,
modifications and rearrangements thereof); and (b) the full and faithful
performance of all of the terms, covenants, conditions and agreements contained
in the Letter Agreement (and all renewals, extensions, modifications and
rearrangements thereof) (collectively, the "Guaranteed Obligations"); provided,
however, that the total amount of Guaranteed Obligations recoverable under this
Guaranty shall be limited to Ten Million Deutsche Marks (DM 10,000,000) with
respect to the principal amount of the Loan, plus any and all amounts related to
unpaid interest and fees on or with respect to the Loan, and, as set forth more
fully in Section 3.1 below, any and all costs and expenses arising out of the
enforcement of the Loan, the Letter Agreement and this Guaranty. This is a
guaranty of payment and performance and not of collection only and the
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances. Lender need not inquire into the power of Borrower or the
authority of its officers, directors, representatives or agents acting or
purporting to act on its behalf.

      1.2 Obligations Absolute. The obligations of Guarantor hereunder shall
remain in full force and effect without regard to, and shall not be affected or
impaired by

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the following any of which may be taken without the consent of, or notice to,
Guarantor, nor shall any of the following give Guarantor any recourse or right
of action against Lender:

            (a) Any express or implied amendment, modification, renewal,
addition, supplement, extension, rearrangement or acceleration of or to, or any
consent to departure from, the Loan or the Letter Agreement (including, without
limitation, extensions beyond the original term or any change in time, place or
manner of payment, or any increase in the amount of the loan);

            (b) Any exercise or non-exercise by Lender of any right or privilege
under this Guaranty, the Loan or the Letter Agreement;

            (c) Any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Guarantor or Borrower, or any guarantor (which term shall include any other
party at any time directly or contingently liable for any of the Borrower's
obligations under the Loan or the Letter Agreement) or any affiliate of
Borrower, or any action taken with respect to this Guaranty by any trustee,
conservator, custodian, Konkursvenwalter, or receiver, or by any court, in any
such proceeding, whether or not Guarantor shall have had notice or knowledge of
any of the foregoing;

            (d) Any release or discharge of Borrower from its liability under
the Loan or the Letter Agreement or any release or discharge of any endorser or
guarantor or of any other party at any time directly or contingently liable for
the Guaranteed Obligations or any other obligations of the Borrower to the
Lender;

            (e) Any assignment or other transfer of this Guaranty, the Loan or
the Letter Agreement in whole or in part;

            (f) Any change in the ownership of Borrower or in the legal form in
which it is organized, and any change in or restructuring or termination of the
structure or existence of the Borrower;

            (g) Any acceptance of partial performance of the Guaranteed
Obligations;

            (h) Any taking, exchange, release or non-perfection of any
collateral for all or any of the Guaranteed Obligations or any other obligations
of the Borrower to the Lender;

            (i) any manner of application of collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations or any other obligations of the
Borrower to the Lender, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other obligations
of the Borrower to the Lender or any other assets of the Borrower; or

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            (j) Any other circumstance (including without limitation, the
existence of or reliance on any representation by the Lender) which might
otherwise constitute a defense available to, or a discharge of, the Borrower or
a guarantor.

Without limiting the terms of clause (c) above and Section 1.6 below, and any
other provision of this Guaranty to the contrary notwithstanding, Guarantor
acknowledges and agrees that, subject to the limit set forth in Section 1.1,
Guarantor is obligated under this Guaranty to pay amounts that have not been
repaid to Lender under the Loan and the Letter Agreement even if (i) an
insolvency or bankruptcy proceeding has been initiated with respect to Borrower
and its assets and (ii) Borrower is not required to pay Lender some or all of
the amounts not repaid because Borrower's obligations to Lender under the Loan
and the Letter Agreement are subordinated pursuant to the Letter Agreement to
Borrower's obligations to other creditors.

      1.3 Waivers. Guarantor unconditionally waives any defense to the
enforcement of this Guaranty, including, without limitation:

            (a) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Guaranty;

            (b) Any right to require Lender to proceed against Borrower or any
guarantor at any time, or to proceed against or exhaust any security held by
Lender at any time, or to pursue any other remedy whatsoever at any time;

            (c) The defense of any statute of limitations affecting the
liability of Guarantor hereunder, the liability of Borrower or any guarantor
under the Loan or the Letter Agreement, or the enforcement hereof, to the extent
permitted by law;

            (d) Any defense arising by reason of any provisions of law that
conflict with the terms of the Loan or the Letter Agreement, or any invalidity
or unenforceability of the Loan or the Letter Agreement or any provision
thereof, or any disability of Borrower or any guarantor or of any manner in
which Lender has exercised its rights and remedies under the Loan or the Letter
Agreement, or by any cessation from any cause whatsoever of the liability of
Borrower or any guarantor;

            (e) Any defense based upon exhaustion of or an election of remedies
by Lender which destroys or otherwise impairs the subrogation rights of
Guarantor or the rights of Guarantor to proceed against Borrower or any
guarantor for reimbursement, or both;

            (f) Any duty of Lender to advise Guarantor of any facts or
information known to Lender regarding the financial condition of Borrower and
all other facts and circumstances in any way affecting Borrower's ability to
perform its obligations to Lender, it being agreed that Guarantor assumes the
responsibility for being and keeping informed regarding such condition or any
such facts or circumstances; and

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            (g) Any rights of subrogation, reimbursement, exoneration,
contribution and indemnity, and any rights or claims of any kind or nature
against Borrower which arise out of or are caused by this Guaranty, and any
rights to enforce any remedy which Lender now has or may hereafter have against
Borrower, and any benefit of, and any right to participate in, any security now
or hereafter held by Lender.

      1.4 Subrorration. Guarantor understands and acknowledges that the exercise
by Lender of certain rights and remedies may affect or eliminate Guarantor's
right of subrogation against Borrower or any guarantor and that Guarantor may
therefore incur partially or totally nonreimbursable liability hereunder.
Nevertheless, Guarantor hereby authorizes and empowers Lender, its successors,
endorsees and/or assigns, to exercise in its or their sole discretion, any
rights and remedies, or any combination thereof, which may then be available, it
being the purpose and intent of Guarantor that the obligations hereunder shall
be absolute, continuing, independent and unconditional under any and all
circumstances. Notwithstanding any other provision of this Guaranty to the
contrary, Guarantor hereby waives any claim or other rights which Guarantor may
now have or hereafter acquire against Borrower or any other guarantor of all or
any of the obligations of Guarantor hereunder that arise from the existence or
performance of Guarantors obligations under this Guaranty, the Loan or the
Letter Agreement, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification, any right to
participate in any claim or remedy of Lender against Borrower or any collateral
which Lender hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract, statute, regulation, common law or other
generally accepted source of law, by any payment made hereunder or otherwise,
including, without limitation, the right to take or receive from Borrower,
directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights.

      1.5 Independent and Separate Obligations. The obligation of Guarantor
hereunder is independent of the obligation of Borrower or of any other guarantor
and, in the event of any default hereunder, a separate action or actions may be
brought and prosecuted against Guarantor whether or not Guarantor is the alter
ego of Borrower or against any other guarantor, and whether or not Borrower or
of any other guarantor is joined therein or a separate action or actions are
brought against Borrower or of any other guarantor. Lender's rights hereunder
shall not be exhausted until all of the Guaranteed Obligations, as limited in
amount by Section 1.1 hereof, have been fully paid and performed.

      1.6 Bankruptcy No Discharge; Repayments. So long as any of the obligations
guaranteed hereunder shall be owing to Lender, Guarantor shall not, without the
prior written consent of Lender, commence or join with any other party in
commencing any bankruptcy, insolvency, reorganization or liquidation proceedings
of or against Borrower. Guarantor understands and acknowledges that by virtue of
this Guaranty, Guarantor has specifically assumed any and all risks of a
bankruptcy, reorganization, insolvency or liquidation case or proceeding with
respect to Borrower. As an example and not in any way of limitation, a
subsequent modification of the Loan, the Letter Agreement or the

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<PAGE>

Guaranteed Obligations in any bankruptcy, reorganization, insolvency,
liquidation or similar case or proceeding concerning Borrower shall not affect
the obligation of Guarantor to pay and perform the Guaranteed Obligations in
accordance with their respective original terms. If a claim is ever made upon
Lender for repayment of any amount or amounts received by Lender in payment of
the obligations under the Loan or the Letter Agreement or hereunder (whether or
not all or any part of such payment is subsequently invalidated, declared to be
fraudulent or preferential, set aside, or required to be repaid by Lender) and
Lender repays all or any part of said amount, then, notwithstanding any
revocation or termination of this Guaranty or the cancellation of the Loan or
the Letter Agreement, Guarantor shall be and remain liable to Lender for the
amount so repaid to the same extent as if such amount had never originally been
received by Lender.

      1.7 Setoff. Lender shall have a right of setoff against, and Guarantor
hereby grants a security interest in, all moneys, securities and other property
of Guarantor now or hereafter in the possession of, or on deposit with Lender,
whether held in a general or special account or deposit, or for safekeeping or
otherwise. Such right is in addition to any right of setoff Lender may have by
law. All rights of setoff may be exercised without notice or demand to
Guarantor. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender, or by any neglect to exercise such right of
setoff, or by any delay in doing so. Every right of setoff shall continue in
full force and effect until specifically waived or released by an instrument in
writing executed by Lender.

      1.8 Subordination. In the event any default or event which, upon the
giving of notice or the lapse of time or both, could become a default, shall
exist in the performance under the Loan or the Letter Agreement, any
indebtedness of Borrower now or hereafter held by Guarantor is hereby
subordinated to the obligations of Borrower under the Guaranteed Obligations. If
requested by Lender, such indebtedness shall be collected, enforced and received
by Guarantor as trustee for Lender and paid over to Lender on account of the
Loan and the Letter Agreement. However, no such payment shall reduce or affect
in any manner the absolute, unconditional and independent liability of Guarantor
hereunder, except to the extent such payment is applied against the Loan.

      1.9 Payments. It is understood that the obligations of Borrower to Lender
may at any time and from time to time exceed the aggregate liability of
Guarantor hereunder without impairing this Guaranty. Guarantor shall not be
credited for payment of any of the Guaranteed Obligations hereunder unless such
payment is received by Lender in immediately available funds and is made by
Guarantor after a demand made by Lender pursuant to this Guaranty. Guarantor
agrees that whenever Guarantor shall make any payment to Lender hereunder on
account of the liability hereunder, Guarantor will deliver such payment to
Lender at the address provided in Paragraph 3.7 below and notify Lender in
writing that such payment is made under this Guaranty for such purpose. It is
understood that Lender, without impairing this Guaranty, may apply payments from
Borrower to the Guaranteed Obligations or to such other obligations owed by
Borrower to Lender, in such amounts and in such order as Lender in its complete
discretion

                                       5
<PAGE>

determines. No payment made hereunder by Guarantor to Lender shall constitute
Guarantor as a creditor of Lender.

      1.10 Payments Free and Clear of Taxes, Etc. (a) Any and all payments made
by Guarantor hereunder shall be made free and clear of and without deduction for
any present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on net income and all income and franchise taxes of Germany and any political
subdivisions thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Paragraph 1.10) Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Guarantor shall make such deductions, and (iii) Guarantor shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

            (b) In addition, Guarantor agrees to pay any present or future stamp
or documentary taxes, or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Guaranty
(hereinafter referred to as "Other Taxes').

            (c) Guarantor will indemnify Lender for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Paragraph 1.10) paid by Lender
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the
date Lender makes written demand therefor.

            (d) Within 30 days after the date of any payment of Taxes, Guarantor
will furnish to Lender, at its address referred to in Paragraph 3.7, the
original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment, Guarantor will furnish to Lender a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to Lender, in either case stating that such payment is exempt from or
not subject to Taxes.

      1.11 Judgement. (a) If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder in Deutsche Marks into
another currency, the parties hereto agree, to the fullest extent permitted by
law, that the rate of exchange used shall be that at which in accordance with
normal banking procedures Lender could purchase Deutsche Marks with such other
currency on the business day preceding that on which final judgment is given.

                                       6
<PAGE>

            (b) The obligation of Guarantor in respect of any sum due from it to
the Lender hereunder shall, notwithstanding any judgment in a currency other
than Deutsche Marks, be discharged only to the extent that on the business day
following receipt by Lender of any sum adjudged to be so due in such other
currency Lender may in accordance with normal banking procedures purchase
Deutsche Marks with such other currency; if the Deutsche Marks so purchased are
less than the sum originally due to Lender in Deutsche Marks, Guarantor agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify
Lender against such loss, and if the Deutsche Marks so purchased exceed the sum
originally due to Lender in Deutsche Marks, Lender agrees to remit to Guarantor
such excess.

                   ARTICLE 2 - REPRESENTATIONS AND WARRANTIES

            Guarantor makes the following representations and warranties to
Lender, which shall be continuing representations and warranties until this
Guaranty expires in accordance with Paragraph 3.6 of this Guaranty:

      2.1 Status of Guarantor. Guarantor is a corporation duly organized,
existing and in good standing under the laws of the State of Delaware authorized
to carry on the business being conducted by it, with the requisite corporate
power to own and operate its properties and assets.

      2.2 Guaranty Authorized and Binding. The execution, delivery and
performance of this Guaranty are duly authorized and do not require the consent
or approval of any third party or any governmental body or other regulatory
authority and are not in contravention of, or in conflict with, any law or
regulation. This Guaranty is a valid and legally binding obligation of Guarantor
enforceable in accordance with its terms.

      2.3 No Conflict. The execution and delivery of this Guaranty are not, and
the performance of this Guaranty will not be, in contravention of, or in
conflict with, the Guarantor's articles of incorporation or by-laws, or any
agreement, indenture or undertaking to which Guarantor is a party or by which
Guarantor is or may be bound or affected.

      2.4 Litigation. There is no litigation or other proceeding pending or
threatened against, or affecting, Guarantor which, if determined adversely
against Guarantor, would have a materially adverse effect on the financial
condition, properties, businesses or operations of Guarantor, or which prevents
or interferes with (or would prevent or interfere with) or adversely affects (or
would adversely affect) Guarantor's entering into this Guaranty or the validity
of this Guaranty or the carrying out of the terms hereof Guarantor is not in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority.

                                       7
<PAGE>

                            ARTICLE 3 - MISCELLANEOUS

      3.1 Expenses. Guarantor agrees to pay all costs and expenses, including
reasonable attorneys' fees, which Lender is entitled to receive and collect from
Borrower under the Loan or the Letter Agreement and/or which may be incurred by
Lender in any effort to collect or enforce the Loan or the Letter Agreement or
the obligations of Guarantor hereunder, whether or not any lawsuit is filed,
including, without limitation, all expenses, costs and attorneys' fees incurred
by Lender in any bankruptcy, insolvency, reorganization, liquidation or similar
proceeding including, without limitation, any action for relief from the
automatic stay of any bankruptcy proceeding. Such amounts shall bear interest
until paid at the rate often percent (10%) per annum.

      3.2 Amendments; Successors. Neither this Guaranty nor any term hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. All of the terms of this Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The term "Borrower" shall mean both the named Borrower
and any other person or entity at any time assuming or otherwise becoming
primarily liable for all or any part of the obligations set forth in the Loan or
the Letter Agreement. No delay or failure by Lender to exercise any remedy
against Borrower or Guarantor will be construed as a waiver of that right or
remedy. All remedies of Lender are cumulative. In the event that the provisions
of this Guaranty are claimed or held to be inconsistent with any other
instrument evidencing or securing the Loan or the obligations of Guarantor, the
terms of this Guaranty shall remain fully valid and effective. When the context
in which the words are used in this Guaranty indicates that such is the intent,
words in the singular number shall include the plural and vice versa. In the
event any term or provision of this Guaranty shall, for any reason, be held to
any extent to be invalid, void, illegal or unenforceable in any respect by a
court of competent jurisdiction, or in the event that the application of any
term or provision of this Guaranty to any person or circumstance shall, for any
reason, be held to any extent to be invalid, illegal, void or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality,
voidability or unenforceability shall not affect any other terms or provisions
of this Guaranty, and this Guaranty shall be construed and enforced as if such
invalid, void, illegal or unenforceable terms or provisions had never been a
part of this Guaranty. Guarantor shall not have the right to assign any of
Guarantor's rights or obligations under this Guaranty.

      3.3 Governing Law. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New Jersey.

      3.4 Assignability by Lender. Lender may at any time and from time to time,
without notice to or consent of Guarantor, assign, conditionally or otherwise,
all or any of the rights of Lender under the Loan, the Letter Agreement and this
Guaranty to any affiliate of the Lender or of IKB Deutsche Industriebank,
whereupon such assignee shall succeed to all rights of lender hereunder to the
extent that such rights may be assigned to it. Lender, or each successor
assignee of Lender's rights may give written notice to

                                       8
<PAGE>

Guarantor of any such assignment, but any failure to give, or delay in giving
such notice shall not affect the validity or enforceability of any such
assignment. In addition, Lender may, with the consent of Guarantor, which
consent shall not be unreasonably withheld, transfer its rights under the Loan,
the Letter Agreement and this Guaranty to any other person or entity.

      3.5 Demands. Any demand by Lender for performance or payment hereunder, if
made, shall be in writing and shall be made in the manner set forth in Paragraph
3.7 below. A dated statement signed by an officer of Lender setting forth the
amount of indebtedness at the time owing to Lender by Borrower under the Loan or
the Letter Agreement shall be conclusive evidence thereof as between Guarantor
and Lender in any legal proceedings against Guarantor in connection with this
Guaranty. Lender shall give Guarantor a thirty (30) day notice in the manner set
forth in Paragraph 3.7 below before Lender commences any action or proceeding
against Guarantor to enforce any of Lender's rights wider this Guaranty.

      3.6 Term. The obligations of Guarantor under this Guaranty shall continue
in full force and effect until the earlier of: (a) the obligations under the
Loan or the Letter Agreement shall have been fully paid and performed, Lender is
under no further obligation to make funds available to Borrower, and the period
of time has expired during which any payment by Borrower or Guarantor to Lender
may be deemed to be a preferential payment under the United States Bankruptcy
Code or other similar applicable laws, whether foreign or domestic, or (b)
Guarantor has paid the maximum amount of the Guaranteed Obligations and other
amounts payable hereunder in accordance with the terms of this Guaranty and the
period of time has expired during which any payment made by Borrower or
Guarantor may be determined to be a preferential payment under the United States
Bankruptcy Code or other similar applicable laws whether foreign or domestic.

      3.7 Notices. Al notices hereunder to the parties hereto shall be in
writing and sent (i) by certified or registered mail, return receipt requested,
postage prepaid, (ii) by air mail, postage prepaid, (iii) by DHL, Federal
Express, or other recognized international courier or express delivery services,
or (iv) by telegram or telecopier, addressed to the respective parties at the
following addresses:

      To Guarantor:     American Pharmed Labs, Inc.
                        270 Sylvan Avenue
                        Englewood Cliffs, New Jersey
                        Attention: Dr. Rainer K. Liedtke

                        Telecopier:

                                       9
<PAGE>

      With a copy to:   Scott R. Yagoda, esq.
                        Parker Plaza
                        400 Kelby Street, Suite 1500
                        Fort Lee, New Jersey 07024

                        Telecopier: 201-224-9811

      To Lender:        IKB Nachrangkapital GmbH
                        Wilhelm-Botzkes-Straae 1
                        40474 Dusseldorf
                        Germany
                        Attention: Waiter Zickenrott

                        or

                        Postfach 101118
                        40002 Dusseldorf
                        Germany
                        Attention: Waiter Zickenrott

                        Telecopier: 49-211-8221-2785

      With a copy to:   IKB Deutsche Industriebank
                        P.O. Box 101118
                        40002 Dusseldorf
                        Germany
                        Attention: Michael Birkenfeld

                        Telecopier: 49-211-8221-2407

      With a copy to:   George M. Williams, jr.
                        LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                        125 West 55th Street
                        New York, New York 10019

                        Telecopier: (212) 424-8500

Any party, by written notice complying with the requirements of this Paragraph
3.7, may specify another or a different person or address for the purpose of
notification hereunder. All notices hereunder shall be deemed to have been given
and received on the next day following the sending of such telegram or telecopy,
on the second business day following or the sending of such notice via DHL,
Federal Express or other permitted courier or express delivery service, and, if
mailed, on the seventh business day following such mailing.

                                       10
<PAGE>

      3.8 Complete Agreement. This Guaranty supersedes any prior negotiations,
discussions or communications between Guarantor and Lender with respect to the
Guaranteed Obligations and constitutes the entire agreement between Lender and
Guarantor with respect to the Guaranteed Obligations.

      3.9 Counterparts. This Guaranty may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.

      3.10 Waiver; Jurisdiction. Guarantor hereby waives any right to trial by
jury. Guarantor hereby waives any right to make a counterclaim against Lender
except for any matter which constitutes an affirmative defense. The parties
hereto consent to the jurisdiction of the courts of the State of New Jersey and
to any federal courts located therein.

            IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of
the date first above written.

                                   AMERICAN PHARMED LABS, INC.
                                   a Delaware corporation

                                   By: /s/ Rainer K. Liedtke
                                       ------------------------
                                       Dr. Rainer K. Liedtke
                                       Chairman

                                       /s/ Peter Golikov
                                       ------------------------
                                       Peter Golikov
                                       EVP, Operations

                                       /s/ Teresa Munk
                                       ------------------------
                                       Teresa Munk
                                       EVP, Administration

                                       11
<PAGE>

                            GENERAL CONDITIONS OF THE
                            IKB NACHRANGKAPITAL GMBH

1.    The latest trade register excerpts for the recipient must be submitted to
      the IKB Nachrangkapital GmbH (NA).

2.    The recipient, of his own accord, must inform the INA of all facts
      significant to the business relationship. In particular, he is obliged to
      indicate changes of his name, his control and his address immediately and
      in writing, to continuously submit his annual balance sheet with profit
      and loss statement together with information regarding annual sales, to
      give the required information and explanations, to make available all
      documents required, upon request to allow access to the books and
      inspection of the operation, with book review and inspection also possibly
      being performed by a third party (expert or trustee). If preparation of
      the closing of accounts is delayed, the recipient will initially submit
      his preliminary figures to the INA In addition, he must supply the INA
      with information deemed significant by the INA for the evaluation of the
      current business, the actual economic situation and the future development
      of the recipient until the total repayment of the participation.

3.    Payments received will be offset against the claims due according to INA's
      stipulations; Sections 366 and 367 BGB are not applicable.

4.    The INA can demand participations back effective immediately for important
      reasons, particularly

      (1)   if the recipient does not satisfactorily prove to the INA the proper
            utilization of the funds or if mistakes are found in his information
            or the documents submitted by him, on which the granting of the
            participation is based;

      (2)   if the operation of the recipient is being disposed of, leased,
            liquidated or shut down as a whole or to a large extent or if the
            recipient eliminates parts of his company, particularly through the
            establishment of new companies;

      (3)   if the existing property, participation, or partner situation has
            changed for the recipient or one of the co-recipients;

      (4)   if the recipient is in arrears, completely or in part for longer
            than 1 month with a payment due;

                                       12
<PAGE>

      (5)   if the recipient does not fulfill one of his obligations from Item 2
            or other obligations resulting from the participation agreement or
            an additional participation agreement after request by the INA
            within a suitable time period.

5.    Satisfaction of the INA through deposit is excluded. Claims against the
      INA can only be offset by the recipient with liabilities in the same
      currency and only insofar as his claims are uncontested or legally
      determined.

6.    For the business relationship between the recipient and the INA German law
      is applicable. If the recipient is a full trader, not belonging to minor
      traders, and if the disputed business relationship is attributed to the
      operation of his trade, the INA can sue this recipient at a court in the
      jurisdiction of the INA or another authorized court; the same applies for
      a legal entity of public law and for public separate property. The INA can
      only be sued by this loan recipient at the court in its jurisdiction.

7.    The above stipulations apply as supplement of separately reached
      agreements.

--------------------------------------------------------------------------------
This document represents a true translation of the German original additions or
modification.

Monika Johnson

Translator - ATA No.211346    /s/ Monika Johnson
--------------------------------------------------------------------------------

                                       13
<PAGE>

                                         EXCERPT OF THE "GENERAL REGULATIONS FOR
                                         THE ACCEPTANCE OF GUARANTEES FOR
                                         PARTICIPATION THROUGH THE KREDITANSTALT
                                         FUR WIEDERAUFBAU"

1.    UTILIZATION OF FUNDS

The funds maybe used only for the financing of the project for which the
participation was approved. The grantor must be immediately informed if the
investment project or its financing changes.

The recipient of the participation, of his own accord and immediately after the
finalization of the investments, must furnish proof to the grantor regarding the
utilization of the participation funds as well as the fulfillment of possible
conditions.

2.    RESERVATION TO REDUCTION

The grantor is entitled to reduce the participation amount proportionately if
the extent of the overall expenditures estimated in the investment plan are
reduced. If the reduction concerns amounts already paid, the reduction amounts
must be immediately repaid to the grantor by the recipient.

3.    SECURITY

In addition to the guarantee by KfW, The grantor, with the approval of KfW, is
entitled to request guarantees or comparable security furnished by the partners
of the recipient or his family members, for the correction of asset shifts or
limitation of liability from the company structure of the recipient.

4.    INFORMATION DUTY

The recipient will immediately inform the KfW via the grantor of all significant
events in his company, particularly changes concerning

- the partner and participation situation as well as

- significant worsening of the economic situation.

The same applies for the acceptance of and disposal of participation to other
companies as well as for finalization, termination and modifications of partner
agreements, for the disposal of the recipient as a whole or of parts thereof.

5.    RIGHT TO AUDIT

The KfW and the grantor reserve the right to audit business documents and books
of the recipient related to the participation and to be informed of the
financial situation of the

                                       14
<PAGE>

recipient. The KfW and the grantor are entitled to authorize a CPA to perform
their audit on the recipient at the expense of the recipient.

6.    TERMINATION FOR IMPORTANT REASONS

The participation can be terminated for important reasons at any time for
immediate repayment, particularly if

(1)   the recipient grossly violates his obligations resulting from the
      participation agreement;

(2)   the guarantee of KfW was obtained fraudulently;

(3)   the conditions for the guarantee acceptance or granting of the
      participation were not given or the funds from the participation were not
      used for their intended purpose;

(4)   the conditions of the guarantee acceptance resp. granting of the
      participation have changed or are no longer applicable (e.g. through
      disposal of the operation or a portion thereof of the recipient, change of
      property or participation situation or the management of the recipient, so
      that a continued operation of the business according to proper commercial
      or technical principles no longer appears to be assured).

As far as the participation funds have not been paid or not yet been paid in
full, the grantor is released from his obligation to pay.

7.    INFORMATION

The grantor is entitled to give unrestricted information to KfW and to grant
access to his documents.

                                       15

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