Document:

<PAGE>

                                                                    Exhibit 10.1

                                                               EXECUTION VERSION

                            NORTHWEST BIOTHERAPEUTICS

                 AMENDED AND RESTATED RECAPITALIZATION AGREEMENT

      This AMENDED AND RESTATED RECAPITALIZATION AGREEMENT (this "AGREEMENT") is
made by and between NORTHWEST BIOTHERAPEUTICS, INC., and its affiliates, if any
(collectively, the "COMPANY"), a Delaware corporation with offices at 22322 20th
Ave SE, Suite 150, Bothell, Washington, 98021, and TOUCAN CAPITAL FUND II, L.P.,
and its designees (collectively, the "INVESTOR"), a Delaware limited partnership
with offices at 7600 Wisconsin Avenue, Bethesda, MD 20814, effective as of July
30, 2004 (the "RESTATEMENT DATE").

      WHEREAS, the Company is in the business of developing cancer therapeutics,
the Company's products are still in clinical and pre-clinical development, the
Company does not yet have any revenue-generating products, and the Company needs
substantial amounts of additional funding to resume development of its potential
products;

      WHEREAS, the Company has sought to raise equity financing for nearly two
years, with assistance from two investment banks, but to date has not succeeded
in obtaining any binding commitment for, or closing on, any such funding;

      WHEREAS, the Company has taken all reasonable steps to reduce its
expenditures during this period, including terminating clinical trials, reducing
staff, ceasing GMP manufacturing, exiting from its GMP facility, moving the
Company to smaller and less expensive offices and lab space, and other such
steps;

      WHEREAS, the Company has also taken all reasonable actions during this
period to try to raise funds through any means other than equity financing,
including selling off certain future royalty rights, selling certain
non-essential equipment, obtaining bridge funding from management, and other
such steps;

      WHEREAS, the Company also needs substantial funds in order to fulfill
regulatory requirements for FDA approval to re-start its prostate cancer
clinical trial, to persuade trial sites and other necessary parties to
participate in a re-start of the prostate trial, and to resume any clinical
and/or pre-clinical development of other products beyond the prostate cancer
vaccine;

      WHEREAS, in January 2004, the Company was within one week of having to
cease operations and commence liquidation, the Company had no investors ready to
close on any funding, and no investors who had made material progress into due
diligence. Although the Company was still vigorously pursuing all other funding
possibilities, there were no alternative sources of funding available to the
Company, either, at that time or soon enough for the Company to avoid ceasing
operations and commencing liquidation;

      WHEREAS, Investor was interested in commencing due diligence on the
Company, to determine whether an investment in the Company would be viable.
However, as of that time, the necessary due diligence materials had not been
pulled together into organized, comprehensive binders or investor packages that
could be readily reviewed by prospective investors. It was

                                       1.
<PAGE>

                                                               EXECUTION VERSION

necessary for Investor to work jointly with the Company to assemble these
necessary materials, and develop the necessary analyses, to enable a due
diligence assessment to be made;

      WHEREAS, since the Company did not have any operating funds to enable it
to continue operating during a due diligence process, such a process was only
feasible if Investor provided operating funds for the Company for this period;

      WHEREAS, Investor provided such operating funds to the Company in two
bridge notes of $50,000 each, covering the period from late January through the
date of this Agreement. Such bridge (debt) financing was extremely high risk;

      WHEREAS, the Company's situation and prospects were highly complex, and a
large volume of information was required to be gathered and analyzed to make a
due diligence assessment. For Investor, it took a team of two partners, four
associates, and numerous outside advisors (e.g., legal, regulatory, IP) a period
of two months to pull together and evaluate most of the necessary information;

      WHEREAS, the due diligence to date has made clear that, in order for
recapitalization and restart of the Company to be viable, a number of critical
steps must occur first, for both of the Company's two lead programs and overall;

      WHEREAS, a further (third) bridge period is necessary in order to try to
accomplish as many as possible of the key steps that must occur before a
recapitalization and restart may be viable, and this bridge period may take up
to one hundred eighty (180) days and the Company believes that an additional
bridge and recapitalization will create more value for its stockholders and
creditors than could be achieved through a liquidation of the Company at this
time;

      WHEREAS, at this time there can be no assurance as to whether the key
steps required to make recapitalization and restart of the Company viable can be
achieved, nor what amount of time and expense will be required to achieve them
if they are achievable, nor whether prospective co-investors will then be
willing to close on sufficient funding to enable the Company to continue in
business;

      WHEREAS, the Company does not have adequate funds for operations, nor for
additional expenses related to corporate governance, regulatory filings, or
preparations for recapitalization and restart of the Company, during this
further bridge period, and the Company has requested that Investor provide such
bridge funding;

      WHEREAS, the amount of funds the Company will need in order to continue
operations during the additional bridge period of up to one hundred eighty (180)
days will be much larger than the Company has needed for the two bridge periods
to date, and will be as much as $500,000 for the first thirty (30) days alone;

      WHEREAS, Investor has already undertaken extensive risk and work during
the first two bridge periods, Investor will undertake substantially greater risk
with substantially more capital and perform further work during the further
(third) bridge period contemplated under this Agreement, and Investor is willing
to provide the necessary funds for operations and certain other expenses of the
Company during a further bridge period, but only as part of a

                                       2.
<PAGE>

                                                               EXECUTION VERSION

comprehensive recapitalization agreement, with binding agreement between the
parties, prior to such further bridge funding, as to all material terms of the
comprehensive recapitalization, as set forth herein, all parts of which
constitute essential terms and conditions;

      WHEREAS, Investor, the Company and its Board of Directors have undertaken
extensive discussions and negotiations over a number of weeks about the terms,
conditions and structure of an overall recapitalization of the Company, and have
explored numerous approaches to fit the circumstances and meet the needs of both
the Company and Investor;

      WHEREAS, on April 26, 2004 the parties hereto entered into that certain
Recapitalization Agreement (the "PRIOR AGREEMENT"), effective as of April 26,
2004 (the "EFFECTIVE DATE"), by and between the Company and Investor, whereby
among other things Investor loaned $500,000 to the Company (in addition to the
issuance of additional convertible promissory notes to Investor in the aggregate
principal amount of $100,000 in return for the cancellation of notes held by
Investor having the same principal amounts);

      WHEREAS, on June 11, 2004 Investor loaned an additional $500,000 to the
Company pursuant to the terms of the Prior Agreement;

      WHEREAS, Investor desires to make a further loan to the Company in the
amount of $2,000,000, and the Company desires to receive such further loan from
Investor pursuant to this Agreement, and to amend the Prior Agreement in such
other respects as set forth herein;

      WHEREAS, Section 4.13(f) of the Prior Agreement provides that the Prior
Agreement may be amended pursuant to a written agreement signed by Investor and
the Company; and

      WHEREAS, the parties hereto wish to amend and restate in its entirety the
Prior Agreement as set forth herein.

      NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

SECTION 1: RECAPITALIZATION PLAN

      1.1 Recapitalization Plan: The Company is being recapitalized in two
stages (the "RECAPITALIZATION PLAN"), consisting of (i) a bridge period (the
"BRIDGE PERIOD") which began on February 1, 2004 and shall end one hundred
eighty (180) days after the Effective Date, unless earlier terminated or further
extended as provided in Section 2.6 of this Agreement, and (ii) an anticipated
equity financing of the Company, through the issuance of Convertible Preferred
Stock (as defined in the Convertible Preferred Stock Term Sheet attached hereto
as Exhibit B) in accordance with this Agreement (the "ANTICIPATED EQUITY
FINANCING"). Investor shall serve as the lead in the Bridge Funding and Bridge
Period Activities, as defined herein. Investor has also elected to serve as the
lead investor in the Anticipated Equity Financing as provided herein.

      1.2 Recapitalization Documents and Agreements: The terms and conditions of
the Recapitalization Plan are set forth in this Agreement, and shall be further
set forth in the following other documents and agreements (collectively, the
"RELATED RECAPITALIZATION DOCUMENTS"): (a) (i) the three Loan Agreement,
Security Agreement and 10% Convertible,

                                       3.
<PAGE>

                                                               EXECUTION VERSION

Secured Promissory Notes dated April 26, 2004 attached hereto as Exhibits A-1,
A-2 and A-3, (ii) the Loan Agreement, Security Agreement and 10% Convertible,
Secured Promissory Note dated June 11, 2004 attached hereto as Exhibit A-4 and
(iii) the Loan Agreement, Security Agreement and 10% Convertible, Secured
Promissory Note dated July 30, 2004 attached hereto as Exhibit A-5 (each a
"NOTE," and collectively, the "Notes"), (b) the binding Convertible Preferred
Stock Term Sheet, attached hereto as Exhibit B, (c) warrants in the form
attached hereto as Exhibit C and Exhibit C-1 (each an "INITIAL BRIDGE WARRANT"
and collectively, the "INITIAL BRIDGE WARRANTS"); (d) a Preferred Stock Warrant
in the form attached hereto as Exhibit D, (e) a Convertible Stock Purchase
Agreement, Investor Rights Agreement, Certificate of Designation (or Amended and
Restated Certificate of Incorporation, as appropriate), and Voting Agreement,
all of which shall be drafted, executed and filed, as necessary, in accordance
with this Agreement and the binding Convertible Stock Term Sheet attached hereto
as Exhibit B, as promptly as practicable after the Effective Date, (f) a
Subsequent Bridge Warrant (as defined below) in the form attached hereto as
Exhibit J (and collectively with the Initial Bridge Warrants, the "BRIDGE
WARRANTS"), and (g) such other documents and agreements as may be necessary or
desirable, in Investor's sole discretion, to effectuate the transactions
contemplated in this Agreement and designated by Investor as a "Related
Recapitalization Document." All such Related Recapitalization Documents are and
shall be incorporated into this Agreement by reference.

      1.3 Integrated Plan; All Terms and Conditions Essential: The
Recapitalization Plan comprises a single integrated plan. All terms and
conditions set forth in this Agreement and the Related Recapitalization
Documents are an essential part of the transaction. The Company acknowledges and
agrees that Investor is only willing to undertake the Recapitalization Plan and
this Agreement, and the consideration to Investor for undertaking the
Recapitalization Plan and this Agreement is only adequate, if the entire
Recapitalization Plan and this Agreement are implemented on an integrated basis,
including all terms and conditions thereof. The Company also acknowledges and
agrees that, in view of the resources needed to restart its business and to
maintain and build that business on a sustainable basis, it is in the best
interests of the Company for the entire Recapitalization Plan to be implemented
on an integrated basis. Notwithstanding anything in this Section 1.3 or anything
in the remainder of this Agreement or any Related Recapitalization Document to
the contrary, any Note, Bridge Warrant, Preferred Stock Warrant or other equity
or debt security issued hereunder or under the terms of any Related
Recapitalization Document shall continue to be outstanding regardless of whether
the Recapitalization Plan is ever fully implemented, and the failure of the
Company to fully implement the Recapitalization Plan shall not in any way limit
any rights of the Investor under the terms of this Agreement, any Related
Capitalization Document or any such security.

      1.4 Notwithstanding anything in Section 1.3 or the remainder of this
Agreement or any Related Recapitalization Document to the contrary, and for the
purposes of clarity, other than the Initial Bridge Funding and the Subsequent
Bridge Funding (each as defined below), Investor shall not be obligated to
provide any financing to the Company on the terms described herein or therein,
or on any other terms, and each decision, if any, by Investor to provide any
such additional financing shall be at Investor's sole discretion and shall not
be deemed to create any obligation on the part of Investor to provide any future
financing to the Company.

SECTION 2: BRIDGE PERIOD AND FUNDING

                                       4.
<PAGE>

                                                               EXECUTION VERSION

      2.1 Activities During Bridge Period: During the Bridge Period, the parties
shall cooperate and use best efforts to complete certain material actions
(collectively, the "BRIDGE PERIOD ACTIVITIES") necessary or desirable for the
recapitalization of the Company, restart of the Company's development programs,
and the Anticipated Equity Financing. Investor shall lead these Bridge Period
Activities, after consultation with the Company. Such Bridge Period Activities
shall include, without limitation:

            (a) Negotiation and execution of contract manufacturing arrangements
for GMP sourcing and handling of dendritic cells.

            (b) Analysis of the intellectual property of the Company.

            (c) Identification and pursuit of additional antigens to establish a
product pipeline for the Company, through negotiation and execution of binding
letter(s) of intent or agreement(s) for one or more licensing and/or M&A
transactions.

            (d) Evaluation of the antigen for the Company's prostate cancer
clinical trial and related production and regulatory issues.

            (e) Clarification and analysis of licensing terms and costs for
license of IL-4, in case it is not feasible or not desirable (e.g., because
regulatory requirements are too lengthy and/or costly) to change the dendritic
cell production method to use the Tangential Flow Filtration ("TFF") devices in
the prostate cancer clinical trial re-start.

            (f) Preparation of an updated business plan, budgets, regulatory
plan (including plans for pre-IND animal and in vitro studies for FDA
re-approval of the prostate cancer clinical trial), Gantt charts, manufacturing
plans, intellectual property analyses, and the like.

            (g) Preparation of an investor package and due diligence binders, to
facilitate review and due diligence by prospective equity investors.

            (h) Evaluation of potential structures for the Anticipated Equity
Financing and preparations for implementation of the transaction selected,
including, without limitation, Investor consent and regulatory filings.

            (i) Analysis and determination, satisfactory to Investor, of what
reverse stock split should be undertaken by the Company (including terms,
conditions and timing), and preparations for implementation of the transaction
decided upon, including, without limitation, Investor consent and regulatory
filings.

            (j) Planning for syndication of the Anticipated Equity Financing,
and determination of the amounts and timing of such financing.

      2.2 Form, Seniority and Security of Bridge Funding:

            (a) Funding provided by Investor for the Bridge Period shall be
provided in the form of senior secured convertible debt (the "BRIDGE FUNDING")
in one or more tranches, in

                                       5.
<PAGE>

                                                               EXECUTION VERSION

Investor's sole discretion. The Bridge Funding shall be evidenced by execution
of the Notes in the forms attached hereto as Exhibits A-1 through A-5.

            (b) As more fully provided in the forms of Note evidencing each
tranche of Bridge Funding, and except as otherwise expressly provided in the
Notes or herein, the Bridge Funding: (i) shall be senior in all respects to all
other indebtedness or obligations of the Company of any kind, direct or
indirect, contingent or otherwise, other than obligations of the Company owed
directly to the state or federal government, obligations to those creditors
listed on Schedule 2.2 hereto (and only to the amounts set forth on such
schedule), and other than any other obligations of the Company to Investor; and
(ii) shall not be made subordinate or subject in right of payment to the prior
payment of any other indebtedness or obligation of any kind, direct or indirect,
contingent or otherwise, other than obligations of the Company owed directly to
the state or federal government, obligations to those creditors listed on
Schedule 2.2 hereto (and only to the amounts set forth on such schedule), and
other than any other obligations of the Company to Investor.

            (c) As more fully provided in the forms of Note evidencing the
Bridge Funding and except as otherwise expressly set forth in the Notes or
herein, the Company's obligations under each such Note shall be secured by a
first priority senior security interest in all of the Company's right, title and
interest in, to and under all of the Company's tangible and intangible property,
whether now owned, licensed or held or hereafter acquired, licensed, developed,
held or arising, (the "COLLATERAL"). The rights and remedies of Investor with
respect to the senior security interest are in addition to all other rights,
powers and remedies that may be available to as a matter of law or equity, and
shall be cumulative and concurrent. The exercise by Investor of any one or more
of the rights, powers and/or remedies provided for in the Notes, or now or
hereafter existing at law or in equity, shall not preclude the simultaneous or
later exercise by any person, including a grantee, of any or all rights, powers
and/or remedies.

            (d) Notwithstanding anything to the contrary in this Agreement or
any other agreement or document, in the event that the Company is unable to pay
and discharge any Note in full on the applicable Maturity Date, subject to
compliance with any applicable requirements of the Delaware Uniform Commercial
Code, nothing herein or in any Related Recapitalization Document shall be deemed
to preclude, limit or restrict Investor from requiring the delivery of some or
all of the Collateral in full or partial satisfaction of the Company's
obligations under the Notes. Alternatively, Investor may, in its sole
discretion, elect to cause some or all of the Collateral to be sold, and the
sale proceeds to be used to pay and discharge the Note in full.

      2.3 Amount and Timing of Bridge Funding:

            (a) The initial amounts of Bridge Funding provided by Investor
include (i) $100,000 already provided by Investor prior to the Effective Date,
for which the applicable notes have been cancelled and re-issued in the forms as
attached hereto as Exhibits A-1 and A-2, (ii) $500,000 provided by Investor on
the Effective Date, for which a Note in the form of Exhibit A-3 was issued to
Investor, (iii) $500,000 provided by Investor on June 11, 2004, for which a Note
in the form of Exhibit A-4 was issued to Investor (collectively, the "INITIAL
BRIDGE FUNDING"). The Initial Bridge Funding was to cover general operating
expenses and certain other expenses

                                       6.
<PAGE>

                                                               EXECUTION VERSION

of the Company from the commencement of the Bridge Period through the Amendment
Date, as more fully provided herein and in the Notes evidencing the Initial
Bridge Funding.

            (b) On the Restatement Date, Investor is providing an additional
$2,000,000 of Bridge Funding (the "SUBSEQUENT BRIDGE FUNDING") to cover general
operating expenses and certain other expenses of the Company agreed in advance
by Investor during the remaining Bridge Period following the period covered by
the Initial Bridge Funding. The Subsequent Bridge Funding shall be evidenced by
a Note in the form attached hereto as Exhibit A-5 and shall be provided on the
terms and conditions set forth herein. The Subsequent Bridge Funding shall be
used only for the purposes and in the amounts set forth in the budget included
in the Schedule of Exceptions. As provided under Section 2.5 hereof in regard to
all Notes, any expenditures of Subsequent Bridge Note funds, and/or any action,
promise, undertaking or commitment which would result in the Company incurring
or accumulating payables and/or other financial obligations of any kind, whether
current or deferred, direct or indirect, for purposes other than as set forth in
budgets expressly agreed to by Investor, and/or in any amounts in excess of the
amounts set forth in such agreed budgets, which equal or exceed $10,000 in
aggregate, and which have not been approved in writing in advance by Investor,
shall constitute an Event of Default under the Notes.

            (c) The amounts and timing of any further Bridge Funding after the
Subsequent Bridge Funding, if any, shall be determined by mutual agreement
between the Company and Investor. Investor's agreement to any such further
Bridge Funding shall be in its sole discretion.

      2.4 Conditions to Bridge Funding and Recapitalization Plan:
Notwithstanding anything to the contrary, and, in each case, unless expressly
waived in writing in advance by Investor (any such waiver by Investor shall be
applicable only as to such closing and shall not be deemed a waiver of such
condition as to future closings, if any), and only to the extent expressly
waived, at the first closing of Bridge Funding following the Effective Date and,
independently, at any subsequent closing of Bridge Funding, Investor's provision
of Bridge Funding and/or any other element of the Recapitalization Plan shall be
conditional upon and subject to the satisfaction or waiver of each of the
following conditions precedent, with each such satisfaction or waiver to be
determined by Investor in its sole discretion (including, without limitation,
the acceptability to Investor of any exception set forth in a disclosure
schedule), on or before the applicable closing date. Investor shall make all
such determinations in its sole discretion. The conditions precedent to all
closings of Bridge Funding and/or any other element of the Recapitalization Plan
shall include the following, unless waived by Investor in its sole discretion:

            (a) the Company to execute this Agreement and all Related
Recapitalization Documents, and all such documents and agreements to be in form
and in substance satisfactory to Investor;

            (b) the Company to be in compliance with all terms and conditions of
this Agreement and all Related Recapitalization Documents that are being or have
been executed as of such closing (whether originally executed in connection with
such closing or a prior closing), including, without limitation, the
confidentiality and exclusivity requirements set forth in Sections 4.1 and 4.12
hereof;

                                       7.
<PAGE>

                                                               EXECUTION VERSION

            (c) the Company to re-issue the two prior bridge notes evidencing
the $100,000 provided by Investor to date, to conform to the forms of Note
attached hereto as Exhibits A-1 and A-2;

            (d) all conditions set forth in the Notes to continue, including
without limitation, the covenants;

            (e) the Company to have permitted, and to continue to permit,
Investor to serve as the lead in regard to the Bridge Funding and Bridge Period
Activities, and in regard to the Anticipated Equity Financing;

            (f) the Company's board of directors to have resolved that a reverse
split of its outstanding stock is needed, and that the terms, conditions and
timing shall be determined during the Bridge Period as part of the Bridge Period
Activities, and shall be reasonably satisfactory to Investor;

            (g) the Company to obtain all necessary creditor and stockholder
consents, and any additional consents requested by Investor, and the Company to
make all necessary regulatory filings related to this Agreement and the Related
Recapitalization Documents and the transactions contemplated thereby, in each
case as rapidly as reasonably possible during the Bridge Period;

            (h) all secured creditors of the Company to have executed a
subordination agreement, in the form attached hereto as Exhibit E, except for
the equipment lessors and holders of statutory liens or landlord liens set forth
on Schedule 2.2 hereto;

            (i) each holder of secured convertible promissory notes issued on
November 13, 2003 (each a "MANAGEMENT Note" and, collectively the "MANAGEMENT
NOTES") shall have executed the notice, consent and waiver in the form attached
hereto as Exhibit F;

            (j) each holder of a Management Note shall have executed and
delivered the First Amendment to Convertible Secured Promissory Note in the form
attached hereto as Exhibit G;

            (k) each holder of a warrant to purchase common shares issued in
connection with the Management Notes shall have executed the First Amendment to
Warrants to Purchase Common Shares in the form attached hereto as Exhibit H;

            (l) all fees, costs and expenses incurred and/or undertaken by
Investor to be satisfied by the Company as provided in Section 4.11 hereof;

            (m) progress toward and/or in the Bridge Period Activities to be
satisfactory to Investor;

            (n) the Company to have satisfied all applicable general conditions
to closing, as set forth in Section 4.9;

                                       8.
<PAGE>

                                                               EXECUTION VERSION

            (o) the Company to deliver to Investor at each closing of Bridge
Funding and each closing of any other element of the Recapitalization Plan an
officer's certificate, executed by an authorized and responsible officer of the
Company, and certifying that the foregoing conditions have been fulfilled;

            (p) the Company to be in compliance with all conditions, covenants
and other provisions contained in the Notes;

            (q) with respect to the Subsequent Bridge Funding only, the Company
to have agreed with Investor to extend the Bridge period through the date that
is ninety (90) days from and after July 25, 2004 (such ninety (90) days, the
"EXTENDED BRIDGE PERIOD"), in contemplation of the Subsequent Bridge Funding;

            (r) with respect to the Subsequent Bridge Funding only, the Company
having completed the negotiation of, and executed, one or more contract services
agreements, acceptable to Investor, providing for all services necessary for
rapid restart of the Company's Phase III prostate cancer trial and Phase II
brain cancer trial, including, without limitation, regulatory advisory services
and good manufacturing practice (GMP) manufacturing; and

            (s) the Company to have implemented new measures, acceptable to
Investor, to ensure that all pre-and post-closing conditions and covenants
provided for herein and in the Related Recapitalization Documents are fully
satisfied, including, without limitation, to ensure that during the Extended
Bridge Period the covenants required by Sections 2.5(c), (d), (e), (g), (h) and
(i) are satisfied.

      2.5 Covenants Related to Bridge Funding and Equity Financing Period: As
more fully set forth in the forms of the Notes evidencing the Bridge Funding,
during the Bridge Period and for so long as any Bridge Funding remains
outstanding, the Company shall comply with certain affirmative and negative
covenants including, without limitation, covenants relating to financial
matters, handling of intellectual property, issuance of any equity or debt
securities, handling of TFF devices, confidentiality and exclusivity, and other
material matters. Without limiting the foregoing, during the Bridge Period and
the Equity Financing Period, the Company shall:

            (a) coordinate with Investor on the preparation and filing with the
SEC of any Exchange Act filings and confidential treatment requests covering any
commercially sensitive terms (as determined jointly by the Company and Investor)
of this Agreement and any Related Recapitalization Document required to be filed
with the SEC under applicable SEC regulations, and the Company shall use its
best efforts to obtain confidential treatment of such information from the SEC;

            (b) take all steps reasonably necessary to implement the structure
provided in Section 3.3 hereof;

            (c) not hire, engage, retain, or agree to hire, engage or retain,
any full or part-time, permanent or temporary employee, consultant, adviser,
independent contractor, collaborator, intern or other personnel of any kind
(collectively, "PERSONNEL"), except with Investor's express prior written
approval, on a case by case basis;

                                       9.
<PAGE>

                                                               EXECUTION VERSION

            (d) not enter into, increase, expand, extend, renew or reinstate any
severance, separation, retention, change of control or similar agreement with
any Personnel (or agree, promise, commit or undertake to do so), except with
Investor's prior written approval, on a case by case basis;

            (e) not purchase, lease, hire, rent or otherwise acquire directly or
indirectly any rights in or to any asset or facility outside of the ordinary
course of business in an amount in excess of $10,000, in aggregate, or agree,
promise or commit to do so, except in accordance with the Company's budget that
has been approved by the Company's board of directors and the Investor;

            (f) take all steps reasonably necessary to procure the execution and
delivery by Dan Wilds of the First Amendment to Warrants to Purchase Common
Shares during the thirty (30) day Funded Bridge Period of the Initial Bridge
Note;

            (g) make no expenditures in excess of $10,000 in aggregate other
than in accordance with a budget pre-approved by Investor;

            (h) report the Company's cash position and all expenditures and
agreements, commitments or undertakings for expenditures to Investor on a
bi-weekly basis; and

            (i) not deviate, during the period covered by such budget, more than
$10,000 in aggregate from the budget included in the Schedule of Exceptions in
connection with the Subsequent Bridge Note, nor take any action or make any
promise, undertaking or commitment that would result in the Company incurring or
accumulating payables and/or other financial obligations of any kind, whether
current or deferred, direct or indirect, for purposes other than as set forth in
budgets expressly agreed to by Investor, and/or in any amounts in excess of the
amounts set forth in such agreed budgets, which equal or exceed $10,000 in
aggregate, and which have not been approved in writing in advance by Investor.

      2.6 Modification of Bridge Period:

            (a) Early Termination of Bridge Period: The Bridge Period shall
continue until one hundred eighty (180) days after the Effective Date. The
Bridge Period may only terminate prior to one hundred eighty (180) days after
the Effective Date upon the mutual agreement of the parties.

            (b) Extension of Bridge Period: The Bridge Period may be extended
beyond the period of one hundred eighty (180) days after the Effective Date upon
the occurrence of one of the following events:

                  (i) mutual agreement of the parties; or

                  (ii) Investor reasonably determines, in its discretion, that
further time is needed to complete the Bridge Period Activities, and Investor is
willing to provide reasonable additional Bridge Funding for the period of such
extension.

      2.7 Conversion of Bridge Funding:

                                      10.
<PAGE>

                                                               EXECUTION VERSION

            (a) Automatic Conversion: The Bridge Funding shall automatically
convert into Convertible Preferred Stock, upon the terms and conditions set
forth herein, in the Notes and in the Convertible Preferred Stock Term Sheet,
only in the event, and upon the closing of, the purchase in cash (and not by
conversion of debt, exercise of warrants or options, or conversion or exercise
of other securities or instruments), on the terms and conditions set forth in
the Convertible Preferred Stock Term Sheet, by Other Investors, as defined in
the Convertible Preferred Stock Term Sheet, of a minimum of $15 million of
Convertible Preferred Stock.

            (b) Discretionary Conversion: Until, and/or in the absence of, the
closing of purchases for cash of a minimum of $15 million of Convertible
Preferred Stock, by Other Investors, on the terms and conditions set forth
herein and in the Convertible Preferred Stock Term Sheet, the determination as
to whether to convert any or all of the Bridge Funding into equity shall be made
by Investor in its sole discretion. Investor may make such determinations from
time to time with regard to any Note and at any time before such Note has been
discharged in full, and, as applicable, at any time on or before the expiration
of the thirty (30) day notice period required under each Note in the event the
Company wishes to prepay such Note. Investor may, in its sole discretion, elect
to convert any or all of the principal and/or interest due under each Note into
any Equity Security and/or Debt Security (each as defined below) and/or any
combination thereof, in each case that Investor shall designate in Investor's
sole discretion (the securities so elected being the "INVESTOR DESIGNATED
SECURITIES"). For purposes hereof, (i) the term "EQUITY SECURITY" means any
class or series of equity security, or any combination of classes and/or series
of equity securities, of the Company that have been authorized under the
Company's certificate of incorporation, as amended and/or restated, including by
any certificate of designation (the "CHARTER"), or any new class or series of
equity security, or any combination of new and/or existing classes and/or series
of equity securities, of the Company for which the Company has undertaken any
agreement, obligation, promise, commitment or letter of intent to obtain such
authorization and (ii) the term "DEBT SECURITY" means any evidence of
indebtedness of the Company that the Company has authorized, created or
incurred, or that the Company has undertaken any agreement, obligation, promise,
commitment or letter of intent to authorize, create or incur.

            (c) Information for Investor's Election. The Company shall provide
to Investor, within two (2) business days after notice of each request by
Investor, all information reasonably requested by Investor in connection with
any Equity Securities and/or Debt Securities, to enable Investor to make
decisions regarding one or more conversions. In the event that the Company seeks
to prepay a Note evidencing Bridge Funding, the Company shall deliver to
Investor, simultaneously and together with the notice required under such Note
of the Company's interest in prepaying the Note, a summary of all material
information, terms and conditions relating to all Equity Securities and Debt
Securities (including any "side" letters or agreements or separate agreements).

            (d) Conversion. The conversion price for any conversion pursuant to
Section 2.7(a) shall be the lowest nominal or effective price per share paid by
the Other Investors who acquire such Convertible Preferred Stock (with the
exception of shares issuable upon exercise of the Initial Bridge Warrants). The
conversion price for any conversion into any Equity Security or Debt Security
pursuant to Section 2.7(b) shall be the lowest of (i) the lowest nominal or
effective price per share paid by any investor at any time on or after the date
one year prior to the

                                      11.
<PAGE>

                                                               EXECUTION VERSION

Effective Date (with the exception of (x) purchases of up to 35,000 shares of
the Company's Common Stock, $0.001 par value ("COMMON STOCK") pursuant to
certain options to purchase, at a purchase price of $0.0001, that were
outstanding on the Effective Date and held by members of the Board of Directors,
as set forth in Schedule 2.7(d), and (y) shares issuable upon the exercise of
the Initial Bridge Warrants, each of which shall be excluded from consideration
under this section), (ii) the lowest nominal or effective price at which any
investor is entitled to acquire shares (including, without limitation, through
purchase, exchange, conversion or exercise) pursuant to any other security,
instrument, or promise, undertaking, commitment, agreement or letter of intent
of the Company outstanding on or after the Effective Date or granted, issued,
extended or otherwise made available by the Company at any time on or after the
date one year prior to the Effective Date (regardless of whether currently
exercisable or convertible) (with the exception of (x) certain options to
purchase up to 35,000 shares of Common Stock at a purchase price of $0.0001 that
were outstanding on the Effective Date and held by members of the Board of
Directors as set forth in Schedule 2.7(d), and (y) the Initial Bridge Warrants,
each of which shall be excluded from consideration under this section); and
(iii) the lesser of $0.10 per share or 35% discount to the average closing price
per share of the Common Stock during any twenty consecutive trading days
(beginning with the twenty consecutive trading days prior to the Effective
Date); provided, however, that in no event shall the price per share calculated
pursuant to this clause (iii) be less than $0.04 per share. The calculation
required by clause (ii) hereof shall initially be based upon Schedule 2.7(d)
hereto. All other rights, preferences, privileges, terms and conditions received
by Investor in connection with any conversion and/or any securities issued by
the Company to Investor upon conversion, shall be no less favorable to Investor
than the rights, preferences, privileges, terms and conditions any other
investor in the Company has received or is entitled to receive with respect to
the security into which Investor is converting pursuant to any other security,
instrument, promise, undertaking, commitment, agreement or letter of intent of
the Company, whether or not such rights, preferences, privileges, terms and
conditions for any other investor are incorporated into the agreements or
documents relating to any conversion or any issuance of the security or other
instrument to that investor or are provided separately, at any time on or after
one year prior to the Effective Date. In regard to each conversion hereunder,
the Company hereby agrees to take and/or arrange for all necessary corporate and
related action to enable the execution of each such conversion elected by
Investor. Except as set forth on Schedule 2.7(d) hereto, no subscription,
warrant, option, convertible security, or other right (direct or indirect,
contingent or otherwise) to purchase or otherwise acquire any equity securities
of the Company are outstanding or authorized. At each closing of the Bridge
Funding and the Anticipated Equity Financing, if any, the Company shall provide
Investor with an updated Schedule 2.7(d).

            (e) No Impairment. The Company shall not, by amendment of its
Charter or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
omission, or agreement, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by the Company under and/or in
connection with any Note evidencing Bridge Funding, but shall at all times in
good faith use best efforts to assist in carrying out of all the provisions of
and/or relating to such Note and in taking all such action as may be necessary
or appropriate to protect Investor's rights, preferences and privileges under
and/or in connection with the Note against impairment. The Investor's rights,
preferences and privileges granted under and/or in connection with any Note
and/or Investor Designated Securities may not be amended, modified or waived
without the

                                      12.
<PAGE>

                                                               EXECUTION VERSION

Investor's prior written consent, and the documentation providing for such
rights, preferences and privileges will specifically provide as such.

            (f) Right of First Refusal: In the event that the Company proposes
to authorize or issue any Equity Security and/or Debt Security, Investor shall
have a right of first refusal to purchase any or all of such Equity Security
and/or Debt Security, through the conversion of any or all of the Notes and the
exercise of any or all of the Bridge Warrants for such securities; provided,
however, that in the event of automatic conversion of Bridge Funding pursuant to
Section 2.7(a) hereof, Investor's right of first refusal shall relate solely to
the purchase of Convertible Preferred Stock. Any such conversion of Notes by
Investor would be at the conversion price provided in Section 2.7(d) and any
such exercise of the Bridge Warrants would be at the exercise price provided in
the applicable Bridge Warrant, in each case irrespective of the purchase price
proposed to be paid by any other investor for such securities. This right of
first refusal shall apply at each closing of the issuance of any such Equity
Security and/or Debt Security, so long as any Notes or Bridge Warrants are
outstanding. Such right of first refusal shall apply regardless of whether or
not Investor leads or otherwise participates in any such financing. Prior to
issuing any Equity Security or Debt Security, the Company shall provide Investor
with at least sixty days advance written notice of its intention to issue such
securities, which notice shall describe in sufficient detail (to the extent then
known) the securities proposed to be issued, the parties to whom the Company
proposes to issue such securities and the price at which the securities are
proposed to be issued (collectively the "FINANCING TERMS"). The Company shall
update Investor with respect to the Financing Terms to the extent that the
Financing Terms change or become known to the Company. Once the Financing Terms
are fixed, the Company shall provide Investor with a final notice ("FINAL
NOTICE") containing all Financing Terms and Investor shall have a period of
thirty days to exercise its right of first refusal following delivery of such
Final Notice to Investor by the Company. All rights of first refusal provided by
this Section 2.7(f) are in addition to, and shall in no way be deemed to limit,
offset or supersede, Investor's right of first refusal contained in Section
3.4(d) of this Agreement.

      2.8 Initial Bridge Warrants:

            (a) Issuance of Initial Bridge Warrants. At each closing of Initial
Bridge Funding, Investor received a warrant with coverage equal to three hundred
percent (300%) of the principal amount due under each Note evidencing the Bridge
Funding provided in connection with such closing (collectively, the "INITIAL
BRIDGE WARRANTS"). The Company therefore issued $3,300,000 in warrant coverage
on the $1,100,000 of Initial Bridge Funding provided prior to the Restatement
Date. The number of shares subject to such Initial Bridge Warrants so issued was
determined on the basis of $0.05 per share (subject to adjustment for stock
splits, stock dividends and the like). The number of shares for which Investor
shall initially be able to exercise the Initial Bridge Warrants Investor
received for the Initial Bridge Funding shall therefore be 66,000,000 shares.

            (b) Exercise of Initial Bridge Warrants: The Initial Bridge Warrants
shall become exercisable on the Restatement Date and continue to be exercisable,
in whole or in part, until the dates seven years after issuance, respectively,
of such Initial Bridge Warrants. The exercise price of the Initial Bridge
Warrants shall be $0.01 per share (subject to adjustment for stock dividends,
stock splits, certain dilutive issuances and similar transactions, as provided
more

                                      13.
<PAGE>

                                                               EXECUTION VERSION

fully in the Initial Bridge Warrants). In the event the Convertible Preferred
Stock is approved and authorized, and the terms and conditions are the same as
set forth herein and in the Convertible Preferred Stock Term Sheet, and Other
Investors have purchased in cash (and not by conversion of debt, exercise of
warrants or options, or conversion or exercise of other securities or
instruments) a minimum of $15 million of such Convertible Preferred Stock, on
the terms and conditions set forth herein and in the Convertible Preferred Stock
Term Sheet, then the Initial Bridge Warrants shall be exercisable solely for
such Convertible Preferred Stock (subject to Section 5 thereof). However, if,
for any reason, such Convertible Preferred Stock is not approved or authorized,
and/or is approved or authorized on any terms different than any terms set forth
herein and in the Convertible Preferred Stock Term Sheet, and/or if Other
Investors have not purchased in cash (and not by conversion of debt, exercise of
warrants or options, or conversion or exercise of other securities or
instruments) a minimum of $15 million of such Convertible Preferred Stock, on
the terms and conditions set forth herein and in the Convertible Preferred Stock
Term Sheet, the Initial Bridge Warrants shall be exercisable for any Equity
Security and/or Debt Security (each as defined in Section 2.7 hereof) and/or any
combination thereof, in each case that Investor shall designate in Investor's
sole discretion (the securities so elected being the "INVESTOR DESIGNATED
SECURITIES").

            (c) No Impairment. The Company shall not, by amendment of its
Charter or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
omission, or agreement, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by the Company under and/or in
connection with the Initial Bridge Warrants, but shall at all times in good
faith use best efforts to assist in carrying out of all the provisions of and/or
relating to such Initial Bridge Warrants and in taking all such action as may be
necessary or appropriate to protect Investor's rights, preferences and
privileges under and/or in connection with the Initial Bridge Warrants against
impairment. The Investor's rights, preferences and privileges granted under
and/or in connection with the Initial Bridge Warrants may not be amended,
modified or waived without the Investor's prior written consent, and the
documentation providing for such rights, preferences and privileges will
specifically provide as such.

            (d) Tax Treatment of Initial Bridge Warrants and Notes. The Company
and Investor, as a result of arm's length bargaining, agree that the aggregate
fair market value of the Notes issued in connection with the Initial Bridge
Funding, if issued apart from the Initial Bridge Warrants, is $1,045,000 for
such Notes, and the aggregate fair market value of the Initial Bridge Warrants,
if issued apart from such Notes, is $55,000. The Company and Investor further
agree that all tax filings and records relating to or including this Agreement,
the Notes and/or the Initial Bridge Warrants shall be prepared on the basis of,
and consistently reflect, the agreed fair market values set forth in this
Section 2.8(d), and the Company shall instruct its accountants and other
tax-preparation professionals to prepare all tax filings and returns on the
basis of the foregoing.

      2.9 Subsequent Bridge Warrant:

            (a) Issuance of Subsequent Bridge Warrant. On the Restatement Date,
Investor shall receive a warrant with coverage equal to one hundred percent
(100%) of the principal amount due under the Note evidencing the Subsequent
Bridge Funding (the "SUBSEQUENT BRIDGE WARRANT" and, collectively with the
Initial Bridge Warrants and the

                                      14.
<PAGE>

                                                               EXECUTION VERSION

Preferred Stock Warrants (as defined herein), the "WARRANTS"). The Company
shall, therefore, issue $2,000,000 in warrant coverage on the $2,000,000 of
Subsequent Bridge Funding provided on the Restatement Date. The number of shares
subject to such Subsequent Bridge Warrant to be so issued shall be determined on
the basis of $0.10 per share (subject to adjustment for stock splits, stock
dividends and the like). The total number of shares for which Investor shall
initially be able to exercise the Subsequent Bridge Warrant shall therefore be
20,000,000 shares as of the Restatement Date.

      (b) Exercise of Subsequent Bridge Warrant: The Subsequent Bridge Warrant
shall be immediately exercisable upon issuance and continue to be exercisable
for a period of seven (7) years after its issuance date. The exercise price of
the Subsequent Bridge Warrant shall be the lesser of $0.10 per share (subject to
adjustment for stock splits, stock dividends and the like, as provided more
fully in the Subsequent Bridge Warrant) and a 35% discount to the average
closing price during the twenty trading days prior to the first closing of the
sale of Convertible Preferred Stock; provided, however that in no event will the
exercise price be less than $0.04 per share (subject to adjustment for stock
splits, stock dividends and the like, as provided more fully in the Subsequent
Bridge Warrant). In the event the Convertible Preferred Stock is approved and
authorized, and the terms and conditions are the same as set forth herein and in
the Convertible Preferred Stock Term Sheet, and Other Investors have purchased
in cash (and not by conversion of debt, exercise of warrants or options, or
conversion or exercise of other securities or instruments) a minimum of $15
million of such Convertible Preferred Stock, on the terms and conditions set
forth herein and in the Convertible Preferred Stock Term Sheet, then the
Subsequent Bridge Warrant shall be exercisable solely for such Convertible
Preferred Stock (subject to Section 5 thereof). However, if, for any reason,
such Convertible Preferred Stock is not approved or authorized, and/or is
approved or authorized on any terms different than any terms set forth herein
and in the Convertible Preferred Stock Term Sheet, and/or if Other Investors
have not purchased in cash (and not by conversion of debt, exercise of warrants
or options, or conversion or exercise of other securities or instruments) a
minimum of $15 million of such Convertible Preferred Stock, on the terms and
conditions set forth herein and in the Convertible Preferred Stock Term Sheet,
the Subsequent Bridge Warrant shall be exercisable for any Equity Security
and/or Debt Security (each as defined in Section 2.7 hereof) and/or any
combination thereof, in each case that Investor shall designate in Investor's
sole discretion (the securities so elected being the "INVESTOR DESIGNATED
SECURITIES").

      (c) No Impairment. The Company shall not, by amendment of its Charter or
through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
omission, or agreement, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by the Company under and/or in
connection with the Subsequent Bridge Warrant, but shall at all times in good
faith use best efforts to assist in carrying out of all the provisions of and/or
relating to such Subsequent Bridge Warrant and in taking all such action as may
be necessary or appropriate to protect Investor's rights, preferences and
privileges under and/or in connection with the Subsequent Bridge Warrant against
impairment. The Investor's rights, preferences and privileges granted under
and/or in connection with the Subsequent Bridge Warrant may not be amended,
modified or waived without the Investor's prior written consent, and the
documentation providing for such rights, preferences and privileges will
specifically provide as such.

                                      15.
<PAGE>

                                                               EXECUTION VERSION

      (d) Tax Treatment of Subsequent Bridge Warrant and Note. The Company and
Investor, as a result of arm's length bargaining, agree that the fair market
value of the Note to be issued in connection with the Subsequent Bridge Funding,
if issued apart from the Subsequent Bridge Warrant, is $1,980,000, and the fair
market value of the Subsequent Bridge Warrant, if issued apart from such Note,
is $20,000. The Company and Investor further agree that all tax filings and
records relating to or including this Agreement, the Note to be issued in
connection with the Subsequent Bridge Funding and/or the Subsequent Bridge
Warrant shall be prepared on the basis of, and consistently reflect, the agreed
fair market values set forth in this Section 2.9(d), and the Company shall
instruct its accountants and other tax-preparation professionals to prepare all
tax filings and returns on the basis of the foregoing.

      2.10 Post-Closing Matters: Following the closing of the Subsequent Bridge
Funding, the parties agree to take all steps necessary to amend any Related
Recapitalization Document to (i) replace all Notes representing the Initial
Bridge Funding with a Note in the form of Exhibit A-5; and (ii) conform any
language therein to the language provided herein within ten (10) business days
of the Restatement Date. To the extent that any provisions of this Agreement are
inconsistent with or in addition to the provisions contained in any Related
Recapitalization Document, the provisions hereof shall be controlling.

SECTION 3: ANTICIPATED EQUITY FINANCING

      3.1 Essential Part of Recapitalization Plan: As provided in Section 1.1,
hereof, the Company is being recapitalized in two stages under the
Recapitalization Plan: first, through Bridge Funding, and thereafter through an
Anticipated Equity Financing. The Recapitalization Plan comprises a single
integrated plan, and all terms and conditions set forth in this Agreement and
the Related Recapitalization Documents - including, without limitation, the
Anticipated Equity Financing - are an essential part of the transaction. This
integrated structure, with binding agreement between the parties in regard to
the Anticipated Equity Financing as well as the Bridge Funding, is necessary to
provide adequate consideration to Investor, and is also both necessary and
desirable for the Company, in order to provide the resources needed to restart
the Company's business, and enable the Company to maintain and build that
business on a sustainable basis. The Company shall fully disclose and present
the Recapitalization Plan as a single integrated plan in all regulatory filings
and all documents relating to shareholder notice and consent in connection with
the Recapitalization Plan.

      3.2 Fiduciary Exception: Notwithstanding the binding agreement set forth
herein in regard to the Anticipated Equity Financing, that agreement, and the
Company's obligations thereunder, shall be subject to a limited fiduciary
exception, pursuant to which the Company may respond to or accept a proposal for
equity financing or merger, consolidation, business combination or sale of all
or substantially all of the Company's assets from another party or parties (each
of the foregoing constituting an "ALTERNATIVE EQUITY FINANCING Proposal"), but
(a) only as and to the extent required by applicable law; (b) only in regard to
an Alternative Equity Financing Proposal that has not been directly or
indirectly solicited by the Company or any of its officers, directors or
employees, Soma Partners LLC ("SOMA"), or any advisors, agents or consultants of
the Company during the Standstill Period provided in Section 4.1 hereof or
during the standstill period provisions described in the Notes and Section 13 of
each of the 10% Convertible, Secured Promissory Notes issued by the Company to
the Investor, dated as of

                                      16.
<PAGE>

                                                               EXECUTION VERSION

February 2, 2004 and March 1, 2004, respectively (an "UNSOLICITED PROPOSAL"),
and (c) only if the Board of Directors of the Company provides written
certification to Investor that the Alternative Equity Financing Proposal is an
Unsolicited Proposal. The Company shall notify Investor of its receipt of any
Unsolicited Proposal immediately upon receipt thereof, and shall provide to
Investor a copy of such Unsolicited Proposal or a description of all material
terms thereof, including the party or parties involved. If the Company's board
of directors determines that acceptance of any Unsolicited Proposal is required
in order to fulfill its fiduciary obligations, prior to accepting such
Unsolicited Proposal, the Company shall notify Investor of its intent to accept
such Unsolicited Proposal. Investor shall have twenty-one (21) days from the
date it receives such notice from the Company to present a revised proposal of
its own to the Company (although Investor shall under no circumstances be
obligated to do so), which the Company's board of directors shall fully consider
in good faith. In the event that, following the consideration of any revised
proposal from Investor or, in the absence of any such revised proposal,
following the expiration of twenty-one (21) days, the Company's board of
directors determines that acceptance of the Unsolicited Proposal is required in
order to fulfill its fiduciary obligations pursuant to this Section 3.2 and the
Company has complied with all aspects of this Section 3.2, then the Company
shall be under no obligation to proceed with the Anticipated Equity Financing;
provided, however, that all other terms and conditions of this Agreement and the
Related Recapitalization Documents, including, without limitation, the terms and
conditions of any Notes and Warrants issued pursuant to this Agreement, shall
remain in full force and effect (with the exception of Sections 2.1, 2.5(b),
2.5(c), 4.6(b), 4.6(d), 4.6(e) and 4.6(h) of this Agreement which shall
terminate and be of no further effect). Upon the later of (i) the termination,
if applicable, of the Company's obligation to proceed with the Anticipated
Equity Financing as described in this Section 3.2, and (ii) the date that no
Notes are outstanding, the covenants contained in Section 4.6(f) of this
Agreement shall terminate and be of no further effect.

      3.3 Structure: It is the preference of the Company to raise the
Anticipated Equity Financing in the form of a private investment in public
entity ("PIPE") transaction, with the Company remaining a publicly traded
entity. However, the Company acknowledges and agrees that there can be no
assurance that it will be reasonably feasible to do so. The Company, with
assistance from two investment banks, has tried for two years without success to
raise financing through a secondary equity offering or PIPE while remaining a
publicly traded entity. In order to raise the necessary follow-on financing to
the Bridge Funding, it may be necessary for the Company to do so in connection
with, or following, the deregistration of the Common Stock under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"). In order to accommodate
the Company's preference for a PIPE transaction, while also providing for the
possibility of effecting the follow-on financing in connection with or following
deregistration of the Common Stock under the Exchange Act if the latter
transaction is either necessary or desirable, the parties agree to the plan set
forth below. The parties further agree that the securities to be sold for the
Anticipated Equity Financing will be the same Convertible Preferred Stock, on
the same terms and conditions as set forth herein, regardless of whether the
structure of the Anticipated Equity Financing is (i) a PIPE transaction, (ii) in
connection with, or following, the deregistration of the Common Stock under the
Exchange Act, or (iii) a combination thereof.

            (a) Initial PIPE: The Company will first seek to sell at least $8
million of the Convertible Preferred Stock through a PIPE transaction. The
Company's Board of Directors is

                                      17.
<PAGE>

                                                               EXECUTION VERSION

requested not to change until the earlier of: (x) approval by the Company's
stockholders of the transactions contemplated by this Agreement and/or the
Related Recapitalization Documents; or (y) the expiration of the Bridge Period.
In the event such sale through a PIPE transaction is not achieved, and if it
reasonably appears that such sale can be achieved in connection with or
following the deregistration of the Company's Common Stock under the Exchange
Act, the Company will then review the Anticipated Equity Financing with a view
to proceeding with such financing in connection with or following the
deregistration of the Company's Common Stock under the Exchange Act.

            (b) Regulatory Approval and Shareholder Consent: The Company will
fully disclose, in all applicable regulatory filings and all documents relating
to shareholder notice and consent, the full Recapitalization Plan.

      3.4 Terms and Conditions: The terms and conditions of the Anticipated
Equity Financing shall be as set forth herein and in the Convertible Preferred
Stock Term Sheet, which is attached hereto as Exhibit B and incorporated herein
by reference. Such terms and conditions include, without limitation, the
following:

            (a) Securities To Be Issued: The Anticipated Equity Financing shall
consist of the issuance and sale of up to $40 million of Convertible Preferred
Stock (including any shares issuable upon conversion of Bridge Funding, but not
including any shares issuable upon exercise of warrants, options, and similar
instruments or obligations, which shares shall be issued in addition to the
issuance and sale of up to $40 million) (the "MAXIMUM ISSUANCE"), in one or more
closings over a period of 12 months commencing at the first closing of
Convertible Preferred Stock (the "EQUITY FINANCING PERIOD"), so long as the
aggregate amount issued and sold (excluding the amounts to be issued upon
exercise of warrants, options and similar instruments or obligations) does not
exceed the Maximum Issuance. The price per share for such issuance and sale
shall be the lesser of $0.10 per share (as adjusted for stock splits, stock
dividends and the like) or a 35% discount to the average closing price during
the twenty trading days prior to closing; provided, however, that in no event
shall the price per share be less than $0.04 per share (as adjusted for stock
splits, stock dividends and the like).

            (b) Preferred Warrants: The Company shall issue $8 million in
warrant coverage on the first $8 million of Convertible Preferred Stock
purchased for cash (the "PREFERRED STOCK WARRANTS"). Preferred Stock Warrants
shall not be issued upon conversion of notes, exercise of warrants, or other
conversion or exercise. The number of shares issuable upon exercise of warrants
to be so issued shall be determined on the basis of $0.10 per share (subject to
adjustment for stock splits, stock dividends and the like), and the aggregate
number of shares for which the holders of Preferred Stock Warrants shall be able
to exercise such Warrants shall therefore be 80,000,000 shares. The exercise
price of such Preferred Stock Warrants shall be the lesser of $0.10 per share
(subject to adjustment for stock splits, stock dividends and the like) and a 35%
discount to the average closing price during the twenty trading days prior to
the first closing of the sale of Convertible Preferred Stock; provided, however
that in no event will the exercise price be less than $0.04 per share (subject
to adjustment for stock splits, stock dividends and the like). The exercise
period shall commence upon issuance of the Preferred Stock Warrants, and shall
continue for a period of seven (7) years after their respective issuance dates.

                                      18.
<PAGE>

                                                               EXECUTION VERSION

            (c) Investor Election to Lead: Investor has elected to serve as the
lead to identify and organize Other Investors during the Bridge Period and the
Equity Financing Period, and prepare for one or more closings of the Anticipated
Equity Financing during the Equity Financing Period.

            (d) Right of First Refusal: Investor shall have a right of first
refusal to purchase up to $15 million of the Convertible Preferred Stock. This
right of first refusal shall apply at each closing during the Equity Financing
Period, until the $15 million amount is reached. Such purchases shall be
determined in addition to, and shall not be deemed to include, any purchases of
Convertible Preferred Stock by Investor (including its designees) through
conversion of Bridge Funding, or exercise of any warrants or similar
instruments. Such right of first refusal shall apply regardless of whether or
not Investor leads the financing during any part of the Equity Financing Period.

SECTION 4: GENERAL PROVISIONS

      4.1 Standstill and Exclusivity: During the Bridge Period and the Equity
Financing Period, as defined herein and in the Convertible Preferred Stock Term
Sheet, but excluding the periods from February 18, 2004 through February 29,
2004 and March 16, 2004 through the Effective Date (collectively the "STANDSTILL
PERIOD"), the parties shall have worked together, and shall continue to work
together, in good faith with best efforts to implement the terms of this
Agreement. Except as provided in the fiduciary exception set forth in Section
3.2 hereof, during the Standstill Period the Company and its officers,
directors, employees, agents, advisers, consultants, partners and collaborators
shall work only with Investor and its agents, advisers and consultants, and
shall have had, and shall continue to have, no discussions, negotiations and/or
communications of any kind with any other parties, regardless of which party
initiates or attempts to initiate any such contact or communication, in regard
to any potential equity or debt financing of the Company, and/or any joint
venture, license, co-development or other business arrangement, or merger,
consolidation, business combination or sale of all or substantially all of the
Company's assets, by or with parties other than Investor.

      4.2 Cross-Default: The Company acknowledges that the financing
contemplated by this Agreement is part of an integrated Recapitalization Plan,
as set forth in this Agreement and the Related Recapitalization Documents. The
Company further acknowledges and agrees that this Agreement is subject to all
terms and conditions set forth in the Related Recapitalization Documents, and
that the Related Recapitalization Documents are subject to all of the terms and
conditions of this Agreement. The Company agrees that any default by the Company
under any provision of this Agreement or any of the Related Recapitalization
Documents will constitute a default under each other Related Recapitalization
Document and this Agreement.

      4.3 Termination of Soma Partners: Prior to any closing hereunder,
including without limitation the closing of the Initial Bridge Funding
hereunder, the Company shall terminate all existing agreements, understandings,
commitments and obligations with Soma (other than an existing obligation of
$3,000 and obligations under the tail period following termination of the letter
agreement between the Company and Soma dated October 15, 2003). Following such
termination, the Company shall be permitted (but not required) to negotiate and
enter into a new agreement with Soma, provided that the terms and conditions of
any such agreement are in

                                      19.
<PAGE>

                                                               EXECUTION VERSION

accordance with prevailing market terms, and provided further that the Company
obtains the prior written approval of Investor for any such new agreement.

      4.4 Indemnification: The Company will indemnify, defend and hold Investor
and each person controlling Investor harmless, to the fullest extent allowed
under applicable law, from and against all liabilities, losses, and damages,
together with all reasonable costs and expenses related thereto (including,
without limitation, reasonable legal and accounting fees and expenses), other
than consequential losses or damages, which would not have been incurred if (a)
all of the representations and warranties of the Company herein had been true,
correct and complete as of each closing, and (b) all of the covenants and
agreements of the Company herein had been fully and timely complied with and
performed. The Company will pay as incurred to Investor and to each person
controlling Investor, all legal and other expenses reasonably incurred in
connection with investigating, defending against, and/or settling any such
liability, loss or damage.

      4.5 Injunctive Relief: The Company agrees that its breach of this
Agreement will cause irreparable harm to the Investor and that monetary damages
would not be a sufficient remedy in the event of a breach of the Agreement by
the Company. The Company agrees that Investor shall be entitled to seek and
obtain injunctive relief and/or specific performance under this Agreement in the
event of any such breach. Such remedies shall not be deemed to be exclusive
remedies for a breach of this Agreement but shall be in addition to all other
remedies available to Investor at law or in equity.

      4.6 Additional Covenants:

            (a) The Company will make, in a timely manner, all filings required
by applicable regulatory agencies (whether state or federal), exchanges, markets
or other bodies, at the Company's expense, in connection with the transactions
contemplated by this Agreement and the Related Recapitalization Documents.

            (b) As soon as practicable after the Effective Date, the Company
will use its best efforts to obtain all necessary consents and, if applicable,
shareholder votes from its shareholders to implement the transactions
contemplated by this Agreement and the Related Recapitalization Documents.

            (c) The Company shall not hire, engage, retain or agree to hire,
engage or retain any Personnel, except with Investor's express prior written
approval, on a case by case basis;

            (d) The Company shall not enter into, increase, expand, extend,
renew or reinstate any severance, retention, separation, change of control or
similar agreement with any Personnel, or agree, promise, commit or undertake to
do so, without the prior written approval of Investor;

            (e) The Company shall make no expenditures in excess of $10,000 in
aggregate other than in accordance with a budget pre-approved by Investor;

                                      20.
<PAGE>

                                                               EXECUTION VERSION

            (f) The Company shall report the Company's cash position and all
expenditures and commitments for expenditures to Investor on a bi-weekly basis;

            (g) The Company shall not deviate, during the period covered by such
budget, more than $10,000 in aggregate from the budget included in the Schedule
of Exceptions in connection with the Subsequent Bridge Note, nor take any action
or make any promise, undertaking or commitment that would result in the Company
incurring or accumulating payables and/or other financial obligations of any
kind, whether current or deferred, direct or indirect, for purposes other than
as set forth in budgets expressly agreed to by Investor, and/or in any amounts
in excess of the amounts set forth in such agreed budgets, which equal or exceed
$10,000 in aggregate, and which have not been approved in writing in advance by
Investor;

            (h) The Company shall not purchase, lease, hire, rent or otherwise
acquire directly or indirectly any rights in or to any asset or facility outside
of the ordinary course of business in an amount in excess of $10,000, in
aggregate, or agree, promise or commit to do so, except in accordance with the
Company's budget that has been approved by the Company's board of directors and
the Investor;

            (i) The Company shall comply in all respects with all covenants
listed in Section 10 of the Notes. The covenants listed in Section 10 of the
Notes are hereby incorporated by reference into this Section 4.6 of this
Agreement;

            (j) The Company shall comply in all respects with all covenants
listed in Section 3 of the Initial Bridge Warrants. The covenants listed in
Section 3 of the Initial Bridge Warrants are incorporated by reference into this
Section 4.6 of this Agreement;

            (k) The Company shall use its best efforts to obtain, within 30 days
of the Effective Date, the written agreement, in a form acceptable to Investor,
of each of those stockholders of the Company listed on Schedule 4.6 hereto (the
"KEY STOCKHOLDERS") to vote in favor of the approval of this Agreement, the
Related Recapitalization Documents and all transactions contemplated hereunder
and thereunder, including, without limitation, the approval of an amendment to
the Company's Charter in order to authorize sufficient capital stock to permit
the Anticipated Equity Financing. Such written agreement of the Key Stockholders
shall, without limitation, include a provision whereby each Key Stockholder
agrees that it will not take any action in opposition to the transactions
contemplated hereby or attempt to frustrate the purposes hereof; and

            (l) The Company shall comply in all respects with all covenants
listed in Section 3 of the Subsequent Bridge Warrant. The covenants listed in
Section 3 of the Subsequent Bridge Warrant are incorporated by reference into
this Section 4.6 of this Agreement.

      4.7 Representations and Warranties: Except as expressly set forth (with
reference to a section in this Agreement) in the Schedule of Exceptions (as
updated as of each closing contemplated by this Agreement and the Related
Recapitalization Documents) attached hereto as Exhibit I (the "SCHEDULE OF
EXCEPTIONS"), and only to the extent such exceptions are acceptable to Investor,
in its sole discretion, as of the Effective Date, and independently as of the
date upon

                                      21.
<PAGE>

                                                               EXECUTION VERSION

which each Note is issued to Investor, and as of the date of each closing, if
any, of the Anticipated Equity Financing, the Company represents and warrants to
the following:

            4.7.1 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 requisite corporate power and
authority to carry on its business. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business, properties,
operations, prospects or condition (financial or otherwise).

            4.7.2 Authorization of Agreement, Etc. The execution, delivery and
performance by the Company of this Agreement, including the Related
Recapitalization Documents, has been duly authorized by all requisite corporate
action by the Company in accordance with Delaware law. This Agreement and the
Related Recapitalization Documents that are being or have been executed as of
such closing are valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other laws of
general application effecting enforcements of creditors' rights or general
principles of equity.

            4.7.3 No Conflicts. The execution, delivery, performance, issuance,
sale and delivery of this Agreement and the Related Recapitalization Documents,
and compliance with the provisions hereof by the Company, will not (a) to the
knowledge of the Company, violate any provision of any law, statute, rule or
regulation applicable to the Company or any ruling, writ, injunction, order,
judgment or decree of any court, arbitrator, administrative agency or other
governmental body applicable to the Company or any of its properties or assets
or (b) conflict with or result in any material breach of any of the terms,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a material default (or give rise to any right of termination, cancellation
or acceleration) under, or result in the creation of, any encumbrance upon any
of the material assets of the Company under, the Charter or Bylaws of the
Company (as they may be amended to date) or any agreement or instrument to which
the Company is a party. As used herein, "encumbrance" shall mean any liens,
charges, encumbrances, equities, claims, options, proxies, pledges, security
interests, licenses or other similar rights of any nature.

            4.7.4 Compliance with Other Instruments. The Company is not in
violation of any term of the Company's Charter, as amended, including any
certificate of designation filed therewith, and/or the Company's Bylaws. The
Company is not, in any material respect, in violation of any term of any
mortgage, indenture, contract, agreement, instrument, judgment, decree, order,
statute, rule or regulation to which the Company or any of such Collateral is
subject. To the best of the Company's knowledge, no event has occurred which,
with the passage of time or the giving of notice, or both, would constitute a
breach or violation, in any material respect, under any applicable judgments,
orders, writs, decrees, federal, state and/or local laws, rules or regulations
which would have a material adverse affect on the condition, financial or
otherwise, or operations of the Company (as it is currently conducted and as it
is proposed to be conducted) or on any material assets or any Intellectual
Property owned, controlled, licensed, possessed, and/or used by the Company. To
the best of its knowledge, the Company has avoided every condition, and has not
performed any act, the occurrence of which

                                      22.
<PAGE>

                                                               EXECUTION VERSION

would result in the Company's loss of any right granted under any license,
distribution agreement or other agreement or Intellectual Property.

            4.7.5 Approvals. The Company has obtained all necessary permits,
authorizations, waivers, consents and approvals of or by, and made all necessary
notifications of and/or filings with, all applicable persons (governmental and
private), in connection with the execution, delivery, performance, issuance,
sale and/or delivery of this Agreement and the Related Recapitalization
Documents, and consummation by the Company of the transactions contemplated
hereby and thereby, except as listed in Schedule 4.7.5.

            4.7.6 Capitalization. The authorized capital stock of the Company
consists of 125,000,000 shares of Common Stock, par value $0.001 per share and
15,000,000 shares of Preferred Stock, par value of $0.001 per share. As of the
date hereof, 19,028,779 shares of Common Stock and no shares of preferred stock
of any kind are issued and outstanding. No other shares of any class or series
of the Company's capital stock are authorized and/or issued and outstanding. All
issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued, and are fully paid and non-assessable, and have
been offered, sold and delivered by the Company in compliance with all
applicable federal and state securities laws. Except as set forth in Schedule
4.7.6, no subscription, warrant, option, convertible security, or other right
(direct or indirect, contingent or otherwise) to purchase or otherwise acquire
any equity securities of the Company is authorized or outstanding, and there is
no agreement, promise, commitment, undertaking or letter of intent of any kind
(direct or indirect, contingent or otherwise) by the Company to issue any
shares, subscriptions, warrants, options, convertible securities, or other such
rights, or to distribute to holders of any of its equity securities any evidence
of indebtedness or asset. Except as set forth in Schedule 4.7.6, the Company has
no obligation of any kind (direct or indirect, contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. Schedule 4.7.6 includes a true, accurate and complete statement
describing the total number of shares of the Company outstanding as of the date
of this Agreement (on a fully diluted basis, including, without limitation, all
warrants and options outstanding (whether or not currently exercisable), all
convertible instruments of any kind (whether or not currently convertible),
shares of all classes of stock, and any agreements, promises, commitments,
undertakings or letters of intent to issue any of the foregoing.

            4.7.7 Authorization of the Shares. The Company has, or before the
first closing of the Anticipated Equity Financing hereunder will have,
authorized the issuance and sale of a sufficient number of shares of Convertible
Preferred Stock, par value $0.001 per share, and Common Stock of the Company to
fully implement the Recapitalization Plan, while maintaining such additional
authorized but unissued shares as reasonably determined by Holder to be
appropriate. Of such authorized shares, a sufficient number of shares shall be
reserved for issuance upon any exercise of the Bridge Warrants and/or Preferred
Stock Warrants. If at any time the number of authorized but unissued shares of
Convertible Preferred Stock and/or of Common Stock is not sufficient to effect
the conversion of all then outstanding convertible Notes and other instruments,
and the exercise of all then outstanding warrants, options and similar
instruments, then, in addition to such other remedies as may be available to
Investor, including, without limitation, the exercise of Investor's right of
first refusal set forth in Section 2.7(f)

                                      23.
<PAGE>

                                                               EXECUTION VERSION

hereof, the Company shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Convertible Preferred Stock
and/or Common Stock to such number of shares as will be sufficient for such
purposes. Such corporate action shall include, without limitation, obtaining all
requisite regulatory approvals and any requisite shareholder approval of any
necessary amendment to the Company's Charter.

            4.7.8 Litigation. Except as set forth in Schedule 4.7.8 of the
Disclosure Schedule, there is no action, suit, proceeding or investigation
pending or, to the knowledge of the Company, currently threatened against the
Company, or its officers, directors, advisors, agents, properties, assets or
business, in each case relating to the Company. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.

            4.7.9 No Liens. Except for liens for the benefit of Investor,
created by this Agreement and/or any of the Related Recapitalization Documents,
and except as set forth in Schedule 4.7.9 of the Disclosure Schedule, none of
the material assets of the Company, including the Collateral, are subject to any
existing lien, pledge, security interest or other encumbrance of any kind,
direct or indirect, contingent or otherwise.

            4.7.10 Full Disclosure. Notwithstanding any other provision of this
Agreement or any Related Recapitalization Document, neither this Agreement, any
of the Related Recapitalization Documents nor any exhibit hereto or thereto, nor
any written report, certificate, instrument or other information furnished to
Investor in connection with the transactions contemplated under and/or in
connection with this Agreement and the Related Recapitalization Documents
contain any material misstatement (including, without limitation, any material
omission), or is misleading in any material respect.

            4.7.11 No Other Security Interests or Other Encumbrances. Except as
set forth in Schedule 4.7.11 (and only to the amounts set forth on such
schedule), there are no existing security interests, pledges, liens or other
encumbrances of any kind, direct or indirect, contingent or otherwise (including
without limitation any licensing or partnering arrangements or agreements), in
or relating to any assets of the Company, including, without limitation, any
Intellectual Property (as defined in the Note) or other Collateral. All existing
security interests, pledges, liens or other encumbrances of any kind, other than
those set forth in Schedule 4.7.11 hereto (and only to the amounts set forth on
such schedule), are subordinate to the security interest established pursuant to
the Notes, in accordance with Section 11 thereof, all necessary consents,
subordination agreements and waivers, if any, have been obtained, and all
amended filings and/or re-filings shall be made immediately upon the Effective
Date.

            4.7.12 "Small Business".

            (a) Small Business Status. The Company together with its
"affiliates" (as that term is defined in Section 121.103 of Title 13 of Code of
Federal Regulations (the "FEDERAL REGULATIONS")) is a "small business concern"
within the meaning of the Small Business Investment Act of 1958, as amended (the
"SMALL BUSINESS ACT" or "SBIA"), and the regulations promulgated thereunder,
including Section 121.301(c) of Title 13, Code of Federal Regulations.

                                      24.
<PAGE>

                                                               EXECUTION VERSION

            (b) Information for SBA Reports. The Company has delivered and/or
will deliver to Investor certain information, set forth by and regarding the
Company and its affiliates in connection with this Agreement, on SBA Forms 480,
652 and Part A and B of Form 1031. This information delivered was true,
accurate, complete and correct, and any information yet to be delivered will be
true, accurate, complete and correct, and in form and substance acceptable to
Investor.

            (c) Eligibility. The Company is eligible for financing by any SBIC
Investor pursuant to Section 107.720 of Title 13 of the Federal Regulations.

            4.7.13 Intellectual Property.

            (a) Definitions. "INTELLECTUAL PROPERTY" means all foreign and
domestic intangible property and rights, owned, licensed, sub-licensed or
otherwise obtained by the Company, including, without limitation, (i)
inventions, discoveries and ideas, whether patentable or not, and all patents,
registrations and applications therefor, including divisions, continuations,
continuations-in-part, requests for continued examination, and renewal
applications, and including renewals, extensions and reissues, including without
limitation those items referenced on Appendix 2 to Exhibit A of the Note
(collectively, "PATENTS"); (ii) confidential and proprietary information, trade
secrets and know-how, including without limitation processes, schematics,
formulae, drawings, prototypes, models, designs and customer lists
(collectively, "TRADE SECRETS"); (iii) all data, slides, observations, and
laboratory results, produced by, for or on behalf of the Company, or which the
Company has rights to obtain (collectively, "DATA"); (iv) all FDA applications,
registrations, filings and other rights (collectively, "FDA RIGHTS") and all
data and documentation supporting or relating thereto; (iv) published and
unpublished works of authorship, whether copyrightable or not (including,
without limitation, databases and other compilations of information), copyrights
therein and thereto, and registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof (collectively,
"COPYRIGHTS"); (v) trademarks, service marks, brand names, certification marks,
collective marks, d/b/a's, Internet domain names, logos, symbols, data, trade
dress, assumed names, fictitious names, trade names, and other indicia of
origin, all applications and registrations for the foregoing, and all goodwill
associated therewith and symbolized thereby, including all extensions,
modifications and renewals of same, including without limitation those items
referenced on Appendix 1 to Exhibit A of the Note (collectively, "TRADEMARKS");
(vi) all other intellectual property or proprietary rights, including, without
limitation, all claims or causes of action arising out of or related to any
infringement, misappropriation or other violation of any of the foregoing,
including rights to recover for past, present and future violations thereof
(collectively, "OTHER PROPRIETARY RIGHTS").

      "INTELLECTUAL PROPERTY CONTRACTS" means all agreements involving, relating
to or affecting the Intellectual Property, including, without limitation,
agreements granting rights to use the Licensed or Sub-Licensed Intellectual
Property, agreements granting rights to use Owned Intellectual Property,
confidentiality agreements, Trademark coexistence agreements, Trademark consent
agreements and non-assertion agreements.

                                      25.
<PAGE>

                                                               EXECUTION VERSION

      "LICENSED OR SUB-LICENSED INTELLECTUAL PROPERTY" means the Intellectual
Property that the Company is licensed, sub-licensed or otherwise permitted by
other persons or entities to use.

      "OWNED INTELLECTUAL PROPERTY" means the Intellectual Property owned by the
Company.

      "REGISTERED" means issued, registered, renewed or the subject of a pending
application.

            (b) Schedule 4.7.13 ("INTELLECTUAL PROPERTY") sets forth a true and
complete list and summary description of (A) all Registered or material Owned
Intellectual Property (each identified as a Patent, Trademark, Trade Secret,
Copyright or Other Proprietary Right, as the case may be); (B) all Licensed or
Sub-Licensed Intellectual Property and (C) all Intellectual Property Contracts.

            (c) All Intellectual Property is valid, subsisting and enforceable.
No Owned Intellectual Property has been canceled, suspended, adjudicated
invalid, not maintained, expired or lapsed, or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting or
reflecting the Company's rights thereto. No Licensed or Sub-Licensed
Intellectual Property has been canceled, suspended, not renewed or extended,
adjudicated invalid, not maintained, expired or lapsed, or is subject to any
outstanding order, judgment or decree restricting its use or adversely affecting
or reflecting the Company's rights thereto.

            (d) The Owned Intellectual Property is owned exclusively by the
Company and has been used with all patent, trademark, copyright, confidential,
proprietary and other Intellectual Property notices and legends prescribed by
law or otherwise permitted.

            (e) No suit, action, reissue, reexamination, public protest,
interference, opposition, cancellation or other proceeding (collectively,
"SUIT") is pending or threatened concerning any claim or position:

                  (i) that the Company, or another person or entity, has
violated any Intellectual Property rights. To the Company's best knowledge, the
Company is not violating and has not violated any intellectual property rights
of any other party.

                  (ii) that the Company, or another person or entity, has
breached any Intellectual Property Contract. There exists no event, condition or
occurrence which, with the giving of notice or lapse of time, or both, would
constitute a breach or default by the Company, or a breach or default by another
person or entity, under any Intellectual Property Contract. No party to any
Intellectual Property Contract has given the Company notice of its intention to
cancel, terminate or fail to renew any Intellectual Property Contract.

                  (iii) that the Intellectual Property has been violated or is
invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned or
not owned exclusively by the Company. No such claim has been threatened or
asserted. To the Company's best knowledge, no valid basis for any such Suits or
claims exists.

                                      26.
<PAGE>

                                                               EXECUTION VERSION

            (f) To the Company's best knowledge, no other person or entity is
violating, infringing upon or claiming rights incompatible with the Company's
rights to any Intellectual Property. The Company has provided to Investor and
all Other Investors copies of all information reasonably available to it
relevant to intellectual property rights claimed by third parties and possible
infringement thereof including, without limitation, any freedom to practice or
freedom to operate opinions.

            (g) The Company owns or otherwise holds valid rights to use all
Intellectual Property used in its business.

            (h) The Company has timely made all filings and payments with the
appropriate foreign and domestic agencies and other parties required to maintain
in full force and effect all Intellectual Property. Except as set forth on
Schedule 4.7.13, no due dates for filings or payments concerning the
Intellectual Property (including, without limitation, office action responses,
affidavits of use, affidavits of continuing use, renewals, requests for
extension of time, maintenance fees, application fees and foreign convention
priority filings) fall due within ninety (90) days prior to or after the
closing, whether or not such due dates are extendable. The Company is in
compliance with all applicable rules and regulations of such agencies and other
parties with respect to the Intellectual Property. All documentation necessary
to confirm and effect the Intellectual Property, if acquired from other persons
or entities, has been recorded in the United States Patent and Trademark Office,
the United States Copyright Office and other official offices.

            (i) The Company has undertaken and consistently implemented best
efforts to protect the secrecy, confidentiality and value of all non-public
Intellectual Property used in its business (including, without limitation,
entering into appropriate confidentiality agreements with all officers,
directors, employees and other persons or entities with access to such
non-public Intellectual Property). Company management has not disclosed any such
non-public Intellectual Property to any persons or entities other than (i)
Company employees or Company contractors who had a need to know and use such
non-public Intellectual Property in the ordinary course of employment or
contract performance, or (ii) prospective customers, and in each case who
executed appropriate confidentiality agreements.

            (j) The Company has taken all reasonable measures to confirm that no
current or former Company employee is or was a party to any confidentiality
agreement or agreement not to compete that restricts or forbids, or restricted
or forbade at any time during such employee's employment by the Company, such
employee's performance of the Company's business, or any other activity that
such employee was hired to perform or otherwise performed on behalf of or in
connection with such employee's employment by the Company.

            4.7.14 SEC Filings; Financial Statements.

            (a) The Company has delivered or made available to Investor accurate
and complete copies of all registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed by the Company
with the SEC since January 1, 2003, and all amendments thereto (the "COMPANY SEC
DOCUMENTS"). Except as set forth on Schedule 4.7.14, all statements, reports,
schedules, forms and other documents required to have

                                      27.
<PAGE>

                                                               EXECUTION VERSION

been filed by the Company with the SEC have been so filed on a timely basis. As
of the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Company SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Company SEC Documents 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.

            (b) The financial statements (including any related notes) contained
in the Company SEC Documents: (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments that will not, individually or in the aggregate,
be material in amount), and (iii) fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods covered thereby.

            4.7.15 Liabilities. The Company has no accrued, contingent and/or
other liabilities of any nature, either mature or immature, as of the
Restatement Date other than (i) tax liabilities to the State of Washington in
the maximum amount of $492,000, (ii) amounts payable to Cognate and (iii) future
lease payments to Benaroya Capital Co. LLC for the Company's premises lease not
yet due, in the aggregate in excess of $450,000, of which $325,000 are currently
due payables, $69,000 are the aggregate balances of capital leases payable in
monthly installments in the amounts set forth in the budget included in the
Schedule of Exceptions through the first calendar quarter of 2006, decreasing
thereafter, the last of which is fully amortized in May 2007, and $55,000 are
accrued vacation and sick pay.

            4.7.16 Compliance with All Standstill Provisions. The Company has
complied in all respects with all standstill, exclusivity and confidentiality
provisions of (a) this Agreement, the Notes and the Related Recapitalization
Documents, (b) Section 13 of that certain 10% Convertible, Secured Promissory
Note by and between the Company and Investor dated as of February 2, 2004 and
(c) Section 13 of that certain 10% Convertible, Secured Promissory Note by and
between the Company and Investor dated as of March 1, 2004.

      4.8 Representations and Warranties of Investor: Investor hereby represents
and warrants to the Company, as of the Effective Date and, independently as of
the date upon which each Note is issued to Investor that subject to, and based
in part on, the Company's representation and warranty in Section 4.7.10 hereof,

            (a) Investor has conducted its own due diligence review of the
Company and received copies or originals of all documents it has requested from
the Company; Notwithstanding the foregoing, this representation shall not in any
way be deemed to prohibit, limit, restrict or otherwise impact Investor's rights
to indemnification, and/or to any other rights

                                      28.
<PAGE>

                                                               EXECUTION VERSION

or remedies available at law or equity, from the Company and its affiliates in
the event of a breach by the Company of any representation, warranty, covenant
or other term hereof or of any Related Recapitalization Document; and

            (b) Investor is aware of the Company's financial prospects and
acknowledges that the sources of repayment of the Notes and the payment of
Investor's fees, costs and expenses pursuant to Section 4.11 are limited to
additional capital raised in bridge or other debt financing, the Anticipated
Equity Financing or other future financing transaction or foreclosure of the
Collateral.

      4.9 Conditions to Closing: Notwithstanding anything to the contrary, and,
in each case, unless expressly waived in writing in advance by Investor (any
such waiver by Investor shall be applicable only as to such closing and shall
not be deemed a waiver of such condition as to future closings, if any), and
only to the extent expressly waived, all closings contemplated under this
Agreement and the Related Recapitalization Documents shall be conditional upon
and subject to the satisfaction or waiver of each of the following conditions
precedent, with each such satisfaction or waiver to be determined by Investor in
its sole discretion (including, without limitation, the acceptability to
Investor of any exception set forth in a disclosure schedule), on or before the
applicable closing date. Investor shall make all such determinations in its sole
discretion. These conditions are in addition to the conditions set forth in
Section 2.4. The conditions precedent to each closing under this Agreement and
the Related Recapitalization Documents shall include the following, unless
waived by Investor in its sole discretion:

            (a) Performance of Obligations. The Company has in all material
respects performed all obligations and agreements and complied with all
covenants and other items contained in the Agreement and the Related
Recapitalization Documents required to be performed or fulfilled on or before
the applicable closing date.

            (b) Representations True and Complete. All of the representations
and warranties made by the Company in the Agreement and the Related
Recapitalization Documents true, correct and complete, with no material
inaccuracies or omissions, as of the applicable closing date.

            (c) No Material Adverse Change. There has been no change that has
had or could reasonably be expected to have a material adverse effect on the
business, affairs, prospects, operations, properties, assets, liabilities,
structure or condition, financial or otherwise, of the Company (as such business
is presently conducted and/or as it is proposed to be conducted) (a "MATERIAL
ADVERSE EFFECT") since December 31, 2003.

            (d) Proceedings. All corporate and other proceedings, and all
documents applicable to the transactions involved in the purchase and sale of
any securities issued or to be issued under this Agreement or the Related
Recapitalization Documents, are satisfactory in substance and form to Investor
and, if applicable Other Investors), and Investor and its counsel and Other
Investors (as applicable) and their respective counsel have received all such
counterpart originals or certified or other copies of such documents as they may
have requested including, without limitation, the following:

                                      29.
<PAGE>

                                                               EXECUTION VERSION

                  (i) The Company's Charter (including any amendments,
restatements and certificates of designation thereto) filed with and certified
by the Delaware Secretary of State;

                  (ii) A certificate, as of the most recent practicable date
prior to or on the applicable closing date, as to the corporate good standing of
the Company, issued by the Delaware Secretary of State and any other applicable
state tax department;

                  (iii) The Bylaws of the Company, certified by the Secretary of
the Company as of the applicable closing date;

                  (iv) The resolutions of the Board of Directors of the Company
authorizing and approving all matters in connection with this Agreement and the
Related Recapitalization Documents and the transactions contemplated hereby and
thereby, certified by the Secretary of the Company as of the applicable closing
date.

                  (v) As applicable, the resolutions of the Company's
stockholders or stockholder vote, certified by the Secretary of the Company, of
the stockholders approving any matter in connection with this Agreement and/or
the Related Recapitalization Documents upon which the stockholders are required
to vote under applicable law as of any applicable closing date whereby such
stockholder approval would be necessary to issue securities due at such closing
date or otherwise effectuate such closing.

            (e) Executed Agreements. The Company will have executed, delivered
and maintained in force this Agreement and the Related Recapitalization
Documents.

            (f) Due Diligence. The Company will have provided prior to the
applicable closing date all due diligence information requested by Investor or
any Other Investor, and/or necessary to enable such investor to complete a
thorough due diligence review and obtain a complete and accurate understanding
of the business, operations, prospects, assets, liabilities, structure, legal
aspects and condition, financial or otherwise, of the Company.

            (g) No Severance Agreements. The Company will not have entered into,
increased, expanded, extended, or renewed any severance, separation, retention,
change of control or similar agreement with any employee, or agreed, promised or
committed to do so, within the six month period prior to any closing hereunder,
without the prior written approval of Investor.

            (h) Termination of Soma Partners. The Company shall deliver to
Investor written evidence satisfactory to Investor that all existing agreements
with Soma have been terminated, and that the Company has notified Soma that
Investor was not introduced to the Company by Soma and that in accordance with
Section 7 of the letter agreement by and between Soma and the Company, dated as
of October 15, 2003, Soma is not entitled to any compensation (cash or
securities) from the Company by virtue of any investment by Investor in the
Company (other than an existing obligation of $3,000).

            (i) Board Certification of Shares Outstanding. The Board of
Directors of the Company shall deliver to the Investor a certified statement
detailing, to the best of the board's

                                      30.
<PAGE>

                                                               EXECUTION VERSION

knowledge, the total number of shares of the Company outstanding as of the date
of each closing (on a fully-diluted basis, including, without limitation, all
shares of stock of all series and classes, all options, warrants, convertible
instruments of any kind (whether or not exercised or converted as the case may
be), and any promises, commitments, agreements, undertakings or letters of
intent to issue any of the foregoing).

            (j) Bridge Funding Conditions. The Company has complied with all of
the Closing Conditions of Bridge Funding as listed in Section 2.4 hereof.

            (k) Officer's Certificate. The Chief Executive Officer of the
Company, or other officer of the Company acceptable to Investor in Investor's
sole discretion, will deliver to Investor at each closing a certificate
certifying that the conditions specified in this Section 4.9 (other than actions
to be taken by parties other than the Company or existing shareholders) have
been fulfilled. For each subsequent closing, there shall have been no material
inaccuracy or omission in any certificate delivered to Investor pursuant to this
Section 4.9(k) on the Effective Date or at any closing occurring after the
Effective Date.

            (l) The Board of Directors of the Company shall have amended the
Stockholder Rights Agreement (the "RIGHTS AGREEMENT") dated as of February 26,
2002 between the Company and Mellon Investor Services LLC, as Rights Agent such
that (i) Investor, Other Investors, and their respective affiliates shall be
excluded from the definition of the "ACQUIRING PERSON" thereunder (and any
additional, conforming changes that are deemed necessary to prevent the
transactions contemplated hereby from triggering the occurrence of a
"DISTRIBUTION DATE" thereunder) and (ii) the Rights Agreement may not be further
amended without the consent of Investor except in the event that the Company's
obligation to effect the Anticipated Equity Financing is terminated pursuant to
Section 3.2 hereof.

            (m) The Company shall have obtained the written agreement, in a form
acceptable to Investor, of each Key Stockholder (as listed in Schedule 4.6
hereto) to vote in favor of the approval of this Agreement, the Related
Recapitalization Documents and all transactions contemplated hereunder and
thereunder, including, without limitation, the approval of an amendment to the
Company's Charter in order to authorize sufficient capital stock to permit the
Anticipated Equity Financing. Such written agreement of the Key Stockholders
shall, without limitation, include a provision whereby each Key Stockholder
agrees that it will not take any action in opposition to the transactions
contemplated hereby or attempt to frustrate the purposes hereof.

      4.10 SBA Matters. The Company acknowledges that Investor has informed the
Company that it is a Federal licensee or sub-licensee under the Small Business
Investment Act ("SBIA") and a participant in the Small Business Investment
Company ("SBIC") program of the United States Small Business Administration
("SBA") and, as such, in its business and investment activities is required to
comply with the SBIA and all regulations, advice, direction and guidance
applicable to SBIC's. In addition, such laws and regulations also require
certain practices on the part of the companies in which Investor makes
investments, including but not limited to those requirements specifically
enumerated in this Agreement. So long as Investor holds any securities of the
Company:

                                      31.
<PAGE>

                                                               EXECUTION VERSION

            (a) The Company will not change the nature of its business activity
in a manner that would cause a violation of Sections 107.720 and/or 107.760(b)
of Title 13 of the Code of Federal Regulations (including, without limitation,
by undertaking real estate, film production or oil and gas exploration
activities). In the event that the Company changes the nature of its business
activity such that such change would render the Company ineligible for financing
pursuant to applicable SBA rules and regulations, the Company agrees to use its
best efforts to facilitate a transfer or redemption of any securities then held
by Investor.

            (b) The Company will at all times comply with the non-discrimination
requirements of Parts 112, 113 and 117 of Title 13 of the Code of Federal
Regulations.

            (c) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), and at such other times as Investor may
reasonably request, the Company will deliver to Investor a written assessment,
in form and substance satisfactory to Investor, of the economic impact of
Investor's financing hereunder, specifying the full-time equivalent jobs created
or retained in connection with such investment, and the impact of the financing
on the Company's business in terms of revenues and profits and on taxes paid by
the Company and its employees.

            (d) The Company will provide to Investor and any Other Investor that
is a participant in a SBIC (each, an "SBIC INVESTOR") all financial information
required by such SBIC Investor, on a timely basis, including without limitation,
its quarterly and annual balance sheets and income statement. Such financial
information will be certified by a member of management of the Company at least
annually. Financial information required will also include such information as
is necessary for such SBIC Investor to file Form 468 with the SBA. The Company
will also provide on a timely basis any other information reasonably requested
or required by any governmental agency asserting jurisdiction over Investor. The
Company agrees to allow SBA examiners access to the Company's books and records,
as reasonably required by such examiners, in connection with their annual audits
of Investor or for any other legitimate purposes reasonably related to the
investment of the SBA in Investor. The Company will also provide, in good faith
and in a timely manner, all other assistance and cooperation reasonably required
to enable any SBIC or SBIC Investor to make all necessary filings and comply
with all applicable SBA and SBIC-related requirements.

            (e) The proceeds from the sale of securities (including, without
limitation, the Notes, Bridge Warrants, Preferred Stock Warrants and/or shares
of Convertible Preferred Stock) to any SBIC Investor (the "PROCEEDS"), shall be
used by the Company for its growth, modernization and/or expansion and/or for
general corporate purposes as permitted by applicable SBA rules and regulations.

      4.11 Fees; Expenses The Company shall pay, reimburse or otherwise satisfy,
upon demand of Investor, all fees, costs and expenses incurred and/or
undertaken, and to be incurred and/or undertaken, by Investor relating to the
preparation for, development of and implementation of the Recapitalization Plan
set forth in this Agreement, including, without limitation, all due diligence
expenses and all expenses relating to the Bridge Funding, the Anticipated Equity
Financing and the transactions contemplated hereby and the documentation of all
of the foregoing (including, without limitation all legal fees and expenses and
costs

                                      32.
<PAGE>

                                                               EXECUTION VERSION

incurred and to be incurred in connection with any SBA filings), which shall be
satisfied by the Company upon Investor's demand, including but without
limitation upon each closing of the Bridge Funding or Anticipated Equity
Financing. This obligation shall apply regardless of whether or not all of the
transactions contemplated in this Agreement close. At each closing of Bridge
Funding or Anticipated Equity Financing, at Investor's sole discretion, and with
respect to any or all of such fees, costs and expenses accrued through such
closing, the Company shall (a) pay Investor in cash concurrently with such
closing (or at Investor's sole discretion, Investor may withhold such amount
from the wire of investment proceeds), (b) issue a Note in the form of Exhibit
A-5 in principal amount equal to such fees, costs and expenses (which at
Investor's option may instead be evidenced as an increase in the principal
amount of any Note issued in connection with such closing); or (c) treat such
fees, costs and expenses as an unsecured payable. At any time following such
closing, Investor may require any amounts that it elected to have the Company
treat as unsecured amounts payable to be paid in cash or satisfied by issuance
of a Note in the principal amount of some or all of such unsecured obligation.

      4.12 Confidentiality. Notwithstanding the fiduciary exception set forth in
Section 3.2 hereof, during the Standstill Period the Company and its officers,
directors, employees, agents, advisers, consultants, partners and collaborators
shall maintain confidentiality, and shall not provide copies, excerpts,
summaries or descriptions, or communicate in any way with any third parties,
either directly or indirectly, as to any aspects of the recapitalization of the
Company and/or any financing by Investor, including, without limitation, the
identity of the parties involved, any terms of this Agreement and/or the Related
Recapitalization Documents, the Convertible Preferred Stock or any other matter
relating to the recapitalization of the Company or the progress or status of any
activities or processes relating to the recapitalization of the Company;
provided, however, nothing herein shall prohibit the Company from filing this
Agreement and any Related Recapitalization Document with the Securities and
Exchange Commission (the "SEC"), if required by the regulations of the SEC
(subject to the covenant in Section 2.5(a) hereof).

      4.13 Miscellaneous:

            (a) Counterparts. This Agreement may be executed in counterparts,
each of which when so executed and delivered will constitute a complete and
original instrument but all of which together will constitute one and the same
agreement, and it will not be necessary when making proof of this Agreement or
any counterpart thereof to account for any counterpart other than the
counterpart of the party against whom enforcement is sought.

            (b) Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, without regard to
principles of conflicts of law. Each party to this Agreement hereby irrevocably
and unconditionally agrees that any legal action, suit or proceeding arising out
of or relating to this Agreement or any agreements or transactions contemplated
hereby will be brought in any federal or state court located in Delaware, and
hereby irrevocably and unconditionally expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and hereby
irrevocably and unconditionally waives any claim (by way of motion, as a defense
or otherwise) of improper venue, that it is not subject personally to the
jurisdiction of such court, that such courts are an inconvenient forum or that
this Agreement or the subject matter may not be enforced in or by

                                      33.
<PAGE>

                                                               EXECUTION VERSION

such courts. Each party hereby irrevocably and unconditionally consents to the
service of process of any of the aforementioned courts in any such action, suit
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth or provided for in Section 4.13(c) of
this Agreement, such service to become effective upon delivery, in accordance
with Section 4.13(c) below. Nothing herein contained will be deemed to affect
the right of any party to serve process in any manner permitted by law or
commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction to enforce judgments obtained in any action, suit or
proceeding brought pursuant to this Section.

            (c) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to be effective upon delivery when delivered (a)
personally; (b) by facsimile, provided a copy is mailed on the same day by
overnight delivery with a nationally recognized overnight delivery service; (c)
by overnight delivery with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications will be, in the case of Investor;

                                    Linda F. Powers
                                    Managing Director
                                    Toucan Capital Corp.
                                    7600 Wisconsin Ave, 7th floor
                                    Bethesda, MD 20814
                                    Tel: 240-497-4060
                                    Fax: 240-497-4065
                                    lpowers@toucancapital.com

                                    And in the case of the Company:

                                    Northwest Biotherapeutics, Inc.
                                    Attention:  Alton Boynton
                                    22322 20th Avenue, SE, Suite 150
                                    Bothell, Washington 98021
                                    Fax: 425-608-3009

or at such other address and facsimile number as the receiving party will have
furnished to the sending party in writing. Each party will provide five (5)
business days' prior written notice to the other parties of any change in
address or facsimile number.

            (d) Survivability. The representations, warranties, covenants and
agreements made herein will survive any investigation made by or on behalf of
the Investor or the Company, and will survive for two years after the applicable
closing date.

            (e) Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof will inure to the benefit of, and be binding upon,
the respective successors, assigns, heirs, executors and administrators of the
parties hereto. Notwithstanding anything to the contrary in this Agreement or
the Related Recapitalization Documents, Investor may transfer or assign all or
any portion of its rights under this Agreement and the other Related

                                      34.
<PAGE>

                                                               EXECUTION VERSION

Recapitalization Documents to any person or entity, or designate another party
to exercise all or any portion of Investor's rights under this Agreement and the
other Related Recapitalization Documents, so long as such transfer or assignment
is permissible under applicable federal and state securities laws. Without
limiting the generality of the foregoing, all representations, warranties,
covenants and agreements benefiting Investor will inure to the benefit of any
and all subsequent holders from time to time of the Notes, the Bridge Warrants,
Preferred Stock Warrants, the shares of Convertible Preferred Stock contemplated
by this Agreement, and any Debt Securities and/or Equity Securities issued or
issuable upon exercise or conversion of any of the foregoing.

            (f) Entire Agreement; Amendments. This Agreement (including the
Schedules and Exhibits hereto, which are an integral part of this Agreement) and
the Related Recapitalization Documents constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Except as otherwise expressly provided herein, neither this
Agreement, the Related Recapitalization Documents nor any term hereof or thereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by the Company and Investor. Notwithstanding anything to the contrary, no
provision that applies to any person or entity specifically designated by name
will be amended, waived, discharged or terminated without the express written
consent of such named person or entity. Also notwithstanding anything to the
contrary, this Agreement and/or the other Related Recapitalization Documents
will be amended as and to the extent necessary to comply with the Small Business
Investment Act and all regulations, advice, direction and guidance applicable to
SBICs.

            (g) Interpretation. All pronouns and any variations thereof will be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or persons or entity or entities may require. All
references to "$" or dollars herein will be construed to refer to United States
dollars. The titles of the Sections and subsections of this Agreement are for
convenience or reference only and are not to be considered in construing this
Agreement.

            (h) Rights, Separability. In case any provision of this Agreement or
the Related Recapitalization Documents will be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

                            [SIGNATURE PAGE FOLLOWS]

                                      35.
<PAGE>

                                                               EXECUTION VERSION

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Restatement Date.

                                                 NORTHWEST BIOTHERAPEUTICS, INC.

                                                 By: /s/ Alton Boynton
                                                     --------------------------
                                                 Name: Alton Boynton

                                                 Title: President

                                                 TOUCAN CAPITAL FUND II, LP

                                                 By: /s/ Linda F. Powers
                                                     --------------------------
                                                 Name:  Linda F. Powers
                                                 Title:  Managing Director

<PAGE>

                                                               EXECUTION VERSION

                                   EXHIBIT A-1
                                     FORM OF
     $50,000 LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE, SECURED
                      PROMISSORY NOTE DATED APRIL 26, 2004

[Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on
Form 10-K filed on May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION

                                   EXHIBIT A-2
                                     FORM OF
     $50,000 LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE, SECURED
                      PROMISSORY NOTE DATED APRIL 26, 2004

[Incorporated by reference to Exhibit 10.7 to the Company's Annual Report on
Form 10-K filed on May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION
                                   EXHIBIT A-3
                                     FORM OF
    $500,000 LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE, SECURED
                      PROMISSORY NOTE DATED APRIL 26, 2004

[Incorporated by reference to the Exhibit 10.8 to the Company's Annual Report on
Form 10-K filed on May 14, 2004.]

<PAGE>

                                                               EXECUTION VERSION

                                   EXHIBIT A-4
                                     FORM OF
    $500,000 LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE, SECURED
                      PROMISSORY NOTE DATED JUNE 11, 2004

[Incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on June 22, 2004.]

<PAGE>

                                                               EXECUTION VERSION

                                   EXHIBIT A-5
                                     FORM OF
       $2,000,000 LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE,
                  SECURED PROMISSORY NOTE DATED JULY 30, 2004

                       [Filed herewith as Exhibit 10.2.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT B
                     CONVERTIBLE PREFERRED STOCK TERM SHEET

[Incorporated by reference to Exhibit 10.5 to Company's Annual Report on Form
10-K filed on May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT C
                   INITIAL BRIDGE WARRANT DATED APRIL 26, 2004

                       [Filed herewith as Exhibit 10.9.]
<PAGE>

                                                               EXECUTION VERSION

                                   EXHIBIT C-1
                   INITIAL BRIDGE WARRANT DATED JUNE 11, 2004

                       [Filed herewith as Exhibit 10.8.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT D
                         FORM OF PREFERRED STOCK WARRANT

[Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K filed on May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT E
                             SUBORDINATION AGREEMENT

[Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on
Form 10-K filed on May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT F
                           NOTICE, CONSENT AND WAIVER

[Incorporated by reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K filed May 14, 2004.]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT G
             FIRST AMENDMENT TO CONVERTIBLE SECURED PROMISSORY NOTE

[Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on
Form 10-K filed May 12, 2004.]

<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT H
              FIRST AMENDMENT TO WARRANTS TO PURCHASE COMMON SHARES

[Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-K filed May 12, 2004]
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT I
                             SCHEDULE OF EXCEPTIONS

<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT J
                            SUBSEQUENT BRIDGE WARRANT

                       [Filed herewith as Exhibit 10.7.]<PAGE>

                                                                    EXHIBIT 10.2

                                                               EXECUTION VERSION

                         NORTHWEST BIOTHERAPEUTICS, INC.
                     LOAN AGREEMENT, SECURITY AGREEMENT AND
                    10% CONVERTIBLE, SECURED PROMISSORY NOTE

$2,000,000.00                                                     JULY 30, 2004

SECTION 1. GENERAL.

For value received, NORTHWEST BIOTHERAPEUTICS, INC., a Delaware corporation (the
"Maker" or the "Company"), hereby promises to pay to the order of Toucan Capital
Fund II, L.P. or its assigns (collectively, the "Holder"), the principal amount
of Two Million Dollars ($2,000,000) upon written demand by Holder made at any
time on or after the first anniversary of execution of this Loan Agreement,
Security Agreement and 10% Convertible, Secured Promissory Note (this "Note" or
this "Agreement"), or such earlier date as may be applicable under Sections 3
and 4 hereof (the "Maturity Date"). Maker shall pay interest on the unpaid
principal amount of this Note, accruing from and after the date hereof at the
rate of ten percent (10%) per annum, compounding annually (computed on the basis
of a 365-day year and the actual number of days elapsed) (the "Interest Rate").
Accrued interest shall be payable upon the payment of the principal of this
Note. The principal of, and interest on, this Note shall be payable in lawful
currency of the United States of America by wire transfer in immediately
available funds to the account of Holder, as provided in writing to Maker by
Holder. All payments shall be applied first to fees, costs and charges relating
to this Note (including, without limitation, any costs of collection), then to
accrued and unpaid interest, and thereafter to principal. This loan is made by
Holder to Maker in anticipation of an equity financing. Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Recapitalization Agreement.

SECTION 2. PRE-PAYMENT.

This Note may be pre-paid in whole or in part prior to the Maturity Date;
provided Maker provides Holder with 30 days prior written notice thereof, and
provided further that Holder shall have the option to convert this note in
accordance with Section 12 hereof by notifying Maker of Holder's election on or
before the expiration of such thirty (30) day notice period. In the event of
prepayment, Maker shall pay a penalty in the amount of 1% of the principal and
accrued interest then outstanding under this Note, unless a greater or lesser
penalty is established or approved by the U.S. Small Business Administration
("SBA"). Conversion of this Note shall not be deemed a prepayment.

SECTION 3. DEFAULT INTEREST.

Upon the occurrence of an Event of Default (as hereinafter defined), the unpaid
principal amount and accrued and unpaid interest shall bear interest payable on
demand at the lesser of (i) fourteen percent (14%) per annum, (ii) the maximum
rate permitted under applicable rules and regulations of the SBA, or (iii) the
maximum rate allowed by law (the "Default Interest"). Such interest shall
accrue, commencing upon the occurrence of an Event of Default and continuing
until such Event of Default is cured or waived.

                                       1
<PAGE>

                                                               EXECUTION VERSION

SECTION 4. DEFAULTS.

      4.1 Definitions. Each occurrence of any of the following events shall
constitute an "Event of Default":

            (a) if a default occurs in the payment of any principal of, interest
on, or other obligation with respect to, this Note, whether at the due date
thereof or upon acceleration thereof, and such default remains uncured for five
(5) business days after written notice thereof from Holder;

            (b) if any representation or warranty of Maker made herein shall
have been false or misleading in any material respect, or shall have contained
any material omission, as of the date hereof;

            (c) if a default occurs in the due observance or performance of any
covenant or agreement on the part of Maker to be observed or performed pursuant
to the terms of this Note and such default remains uncured for five (5) business
days after written notice thereof from Holder;

            (d) if a default occurs in Maker's performance of any of the terms
and conditions of that certain Amended and Restated Recapitalization Agreement,
dated as of July 30, 2004 (the "Recapitalization Agreement") or any Related
Recapitalization Document;

            (e) if Maker shall (i) discontinue its business, (ii) apply for or
consent to the appointment of a receiver, trustee, custodian or liquidator of
Maker or any of its property, (iii) make a general assignment for the benefit of
creditors, or (iv) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors, or take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation laws or statutes, or file an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, provided, however, that insolvency of Maker shall not constitute a
default, or the basis for a default, during the Bridge Period;

            (f) if there shall be filed against Maker an involuntary petition
seeking reorganization of Maker or the appointment of a receiver, trustee,
custodian or liquidator of Maker or a substantial part of its assets, or an
involuntary petition under any bankruptcy, reorganization or insolvency law of
any jurisdiction, whether now or hereafter in effect (any of the foregoing
petitions being hereinafter referred to as an "Involuntary Petition") and such
Involuntary Petition shall not have been dismissed within ninety (90) days after
it was filed, provided, however, that insolvency of Maker shall not constitute a
default, or the basis for a default, during the Bridge Period;

            (g) if final judgment(s) for the payment of money in excess of an
aggregate of $25,000 (excluding any portion thereof that an insurance company of
nationally recognized standing and creditworthiness has agreed to pay) shall be
rendered against Maker and the same shall remain undischarged for a period of
thirty (30) days;

                                       2
<PAGE>

                                                               EXECUTION VERSION

            (h) if there occurs any event that may have a material adverse
effect on the business, affairs, prospects, operations, properties, assets,
liabilities, structure or condition, financial or otherwise, of the Company (as
such business is presently currently conducted and/or as it is proposed to be
conducted), or on any material assets or any Intellectual Property or other
Collateral developed, owned, controlled, licensed, possessed, or used by Maker,
or to which Maker has any right, option, entitlement or claim, provided,
however, that ongoing weakening of Maker's financial condition due to ongoing
expenditures and Maker's failure to obtain equity financing shall not constitute
a default, or the basis for a default, during the Bridge Period; or

            (i) if Maker deviates, during the period covered by such budget,
more than $10,000 in aggregate from the budget included in the Disclosure
Schedule (as defined herein), or takes any action or makes any promise,
undertaking or commitment that would result in Maker incurring or accumulating
payables and/or other financial obligations of any kind, whether current or
deferred, direct or indirect, for purposes other than as set forth in budgets
expressly agreed to by Holder, and/or in any amounts in excess of the amounts
set forth in such agreed budgets, which equal or exceed $10,000 in aggregate,
and which have not been approved in writing in advance by Holder.

         4.2 Cross-Default: Maker acknowledges that the financing contemplated
by this Note is part of an integrated Recapitalization Plan, as set forth in the
Recapitalization Agreement and the Related Recapitalization Documents. Maker
further acknowledges and agrees that this Note is subject to all terms and
conditions set forth in the Recapitalization Agreement and the Related
Recapitalization Documents, and that the Recapitalization Agreement and the
Related Recapitalization Documents are subject to all of the terms and
conditions of this Note. Maker agrees that any default by Maker under any
provision of this Note, the Recapitalization Agreement or any of the Related
Recapitalization Documents will constitute a default under each other Related
Recapitalization Document and the Recapitalization Agreement.

      4.3 Remedies on Default.

            (a) Upon each and every such Event of Default and at any time
thereafter during the continuance of such Event of Default: (i) any and all
indebtedness of Maker to Holder under this Note or otherwise shall immediately
become due and payable, both as to principal and interest (including any
deferred interest and any accrued and unpaid interest and any Default Interest);
and (ii) Holder may exercise all the rights of a creditor under applicable state
and/or federal law.

            (b) In case any one or more Events of Default shall occur and be
continuing, and acceleration of this Note or any other indebtedness of Maker to
Holder shall have occurred, Holder may, inter alia, proceed to protect and
enforce its rights by an action at law, suit in equity and/or other appropriate
proceeding, whether for the specific performance of any agreement contained in
this Note, or for an injunction against a violation of any of the terms hereof
or thereof or in furtherance of the exercise of any power granted hereby or
thereby or by law. No right conferred upon Holder by this Note shall be
exclusive of any other right referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.

                                       3
<PAGE>

                                                               EXECUTION VERSION

SECTION 5. DEFENSES.

      5.1 No Offsets. The obligations of Maker under this Note shall not be
subject to reduction, limitation, impairment, termination, defense, set-off,
counterclaim or recoupment for any reason.

      5.2 Usury Limitations. It is the intention of the parties hereto to comply
with all applicable usury laws; accordingly, it is agreed that notwithstanding
any provisions to the contrary in this Note or any other agreements or
instruments between them, in no event shall such agreements or instruments
require the payment or permit the collection of interest (which term, for
purposes hereof, shall include any amount which, under applicable law, is deemed
to be interest, whether or not such amount is characterized by the parties as
interest) in excess of the maximum amount permitted by such laws. If any excess
of interest is unintentionally contracted for, charged or received under the
Note or under the terms of any other agreement or instrument between the
parties, the effective rate of interest shall be automatically reduced to the
maximum lawful rate of interest allowed under the applicable usury laws as now
or hereafter construed by the courts having jurisdiction thereof.

SECTION 6. REPLACEMENT OF NOTE.

      Upon receipt by Maker of reasonable evidence of the loss, theft,
destruction, or mutilation of this Note, Maker will deliver a new Note
containing the same terms and conditions in lieu of this Note. Any Note
delivered in accordance with the provisions of this Section 6 shall be dated as
of the date of this Note.

SECTION 7. EXTENSION OF MATURITY.

      Should the principal of or interest on this Note become due and payable on
other than a business day, the due date thereof shall be extended to the next
succeeding business day, and, in the case of principal, interest shall be
payable thereon at the rate per annum herein specified during such extension.
For the purposes of the preceding sentence, a business day shall be any day that
is not a Saturday, Sunday, or legal holiday in the State of Delaware.

SECTION 8. ATTORNEYS' FEES AND COLLECTION FEES.

      Should the indebtedness evidenced by this Note or any part hereof be
collected at law or in equity or in bankruptcy, receivership or other court
proceedings, arbitration or mediation, or any settlement of any of the
foregoing, Maker agrees to pay, in addition to principal and interest due and
payable hereon, all costs of collection, including, without limitation,
reasonable attorneys' fees and expenses, incurred by Holder in collecting or
enforcing this Note.

                                       4
<PAGE>

                                                               EXECUTION VERSION

SECTION 9. WAIVERS; CONSENT TO JURISDICTION.

      9.1 Waivers by Maker. Maker hereby waives presentment, demand for payment,
notice of dishonor, notice of protest and all other notices or demands in
connection with the delivery, acceptance, performance or default of this Note.

      9.2 Actions of Holder not a Waiver. No delay by Holder in exercising any
power or right hereunder shall operate as a waiver of any power or right, nor
shall any single or partial exercise of any power or right preclude other or
further exercise thereof, or the exercise of any other power or right hereunder
or otherwise; and no waiver or modification of the terms hereof shall be valid
unless set forth in writing by Holder and then only to the extent set forth
therein.

      9.3 Consent to Jurisdiction. Maker hereby irrevocably submits to the
jurisdiction of any state or federal court sitting in the State of Delaware over
any suit, action, or proceeding arising out of or relating to this Note or any
other agreements or instruments with respect to Holder. Maker hereby irrevocably
waives, to the fullest extent permitted by law, any objection that Maker may now
or hereafter have to the laying of venue of any such suit, action, or proceeding
brought in any such court and any claim that any such suit, action, or
proceeding brought in any such court has been brought in an inconvenient forum.
Final judgment in any such suit, action, or proceeding brought in any such court
shall be conclusive and binding upon Maker and may be enforced in any court in
which Maker is subject to jurisdiction by a suit upon such judgment, provided
that service of process is effected upon Maker as provided in this Note or as
otherwise permitted by applicable law.

      9.4 Waiver of Jury Trial. MAKER WAIVES ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN
MAKER AND HOLDER RELATING TO THE SUBJECT MATTER OF THIS NOTE. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS NOTE,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY
OTHER DOCUMENT OR AGREEMENT RELATING TO THE LOAN.

      9.5 Service of Process. Maker hereby consents to process being served in
any suit, action, or proceeding instituted in connection with this Note by
delivery of a copy thereof by certified mail, postage prepaid, return receipt
requested, to Maker, and/or by delivery of a copy thereof to a registered agent
of Maker. Refusal to accept delivery, and/or avoidance of delivery, shall be
deemed to constitute delivery. Maker irrevocably agrees that service in
accordance with this Section 9.5 shall be deemed in every respect effective
service of process upon Maker in any such suit, action or proceeding, and shall,
to the fullest extent permitted by law, be taken and held to be valid personal
service upon Maker. Nothing in this Section 9.5 shall affect the right of

                                       5
<PAGE>

                                                               EXECUTION VERSION

Holder to serve process in any manner otherwise permitted by law or limit the
right of Holder otherwise to bring proceedings against Maker in the courts of
any jurisdiction or jurisdictions.

SECTION 10. COVENANTS.

      10.1 Affirmative Covenants. So long as this Note shall remain outstanding:

            (a) Office. Maker shall maintain its principal office, and the
majority of its employees, assets and operations, in the United States.

            (b) Use of Proceeds. Maker will use the proceeds from this Note only
for the following purposes:

      (i) General operating expenses, expenses for the development and
      protection of its intellectual property, and other usual and customary
      commercial and business expenses incurred in pursuing its business plan
      and strategy, on and after the effective date hereof; (ii) Audit expenses
      and regular and special SEC filing expenses, for audits and filings
      occurring on or after the effective date hereof, including, without
      limitation, SEC filings relating to solicitation of any shareholder
      consents to the recapitalization of Maker; and (iii) Expenses of
      accountants, attorneys, consultants and other professionals (including,
      without limitation, the expenses of Investor described in Section 4.11 of
      the Recapitalization Agreement) relating to the recapitalization of Maker,

in each case only to the extent that both the nature and the amount of such
expenses are in conformity with the budget approved in advance in writing by
Holder and included in the Disclosure Schedule. Maker will not use the proceeds
from this Note for any other purpose. Without limiting the generality of the
foregoing, none of the proceeds will be used, without prior written agreement by
the Holder, (i) to purchase or carry (or refinance any borrowing, the proceeds
of which were used to purchase or carry) any "security" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), (ii) to repay any
indebtedness or discharge any obligation to an person or entity, other than
trade payables incurred in the ordinary course of business on or after the
effective date hereof, and consistent with Maker's operating plans and budgets
fully disclosed to the Holder prior to the Closing, or (iii) to engage in
business activities which would cause a violation of 13 CFR 107.720. This latter
limitation prohibits, without limitation, the use of proceeds: (i) directly or
indirectly, for providing funds to others; (ii) for the purchase or discounting
of debt obligations; (iii) for factoring or long-term leasing of equipment with
no provision for maintenance or repair; (iv) for engaging in real estate
transactions such that Maker could reasonably be classified under Major Group 65
(Real Estate) of the SIC Manual; (v) for business activities wherein the assets
of the business of Maker (the "Business") will be reduced or consumed, generally
without replacement, as the life of the Business progresses, and the nature of
the Business does not require that a stream of cash payments be made to the
financing sources of the Business, on a basis associated with the continuing
sale of assets (examples of such businesses would include real estate
development projects, the financing and production of motion pictures, and oil
and gas well exploration, development and production); (vi) for a foreign
operation; (vii) to provide capital to a

                                       6
<PAGE>

                                                               EXECUTION VERSION

corporation licensed or sub-licensed under the Small Business Investment Act,
(viii) to acquire farm land, (ix) to fund production of a single item or defined
limited number of items generally over a defined production period, such
production to constitute the majority, of the activities of Maker (examples
include electric generating plants), or (x) for any purpose contrary to the
public interest (including, but not limited to, activities which are in
violation of law) or inconsistent with free competitive enterprise, in each
case, within the meaning of Section 107.720 of Title 13 of the Code of Federal
Regulations.

            (c) Seniority. Except as otherwise expressly provided, and except
for security interests and liens described in items 2, 3 and 4 of Schedule 14.11
of the Disclosure Schedule attached hereto as Exhibit B (the "Disclosure
Schedule"), the indebtedness evidenced by this Note: (i) shall be senior in all
respects to all other indebtedness or obligations of Maker of any kind, direct
or indirect, contingent or otherwise, other than obligations of Maker owed
directly to the state or federal government, and other than any other
indebtedness or obligations of Maker to Holder; (ii) shall not be made
subordinate or subject in right of payment to the prior payment of any other
indebtedness or obligation of any kind, direct or indirect, contingent or
otherwise, other than obligations of Maker owed directly to the state or federal
government, and other than any other indebtedness or obligations of Maker to
Holder.

            (d) No Conflicting Agreements. Maker shall not enter into any
agreement that would materially impair, interfere or conflict with Maker's
obligations hereunder. Without Holder's prior written consent, Maker shall not
permit the inclusion in any material contract to which it becomes a party of any
provisions that could or might in any way result in the creation of a security
interest in any assets of Maker, including without limitation any Collateral (as
defined in Exhibit A hereto).

            (e) Disclosure of Material Adverse Events. Within three (3) business
days of Maker obtaining knowledge thereof, Maker will notify Holder in writing
of any event that may have a material adverse effect on the business, affairs,
prospects, operations, properties, assets, liabilities, structure or condition,
financial or otherwise, of the Company (as such business is presently conducted
and/or as it is proposed to be conducted), or on any material assets or any
Intellectual Property or other Collateral developed, owned, controlled,
licensed, possessed, or used by Maker, or to which Maker has any right, option,
entitlement or claim. Operating expenditures in the ordinary course of business
and in accordance with operating budgets approved by Maker's Board of Directors
and fully disclosed to Holder prior to the effective date hereof shall not be
deemed to be material adverse events solely because they weaken Maker's
financial condition in the absence of new equity financing of Maker.

            (f) Financial Information. So long as any principal and/or interest
under this Note shall remain outstanding:

                  (i) Promptly after the end of each fiscal year (but in any
      event prior to February 28 of each year) and at such other times as Holder
      may reasonably request, Maker shall deliver to Holder a written
      assessment, in form and substance satisfactory to Holder, of the economic
      impact of such Holder's financing hereunder, specifying the full-time
      equivalent jobs created or retained in connection with such investment,and
      the

                                       7
<PAGE>

                                                               EXECUTION VERSION

      impact of the financing on Maker's business in terms of revenues and
      profits and on taxes paid by Maker and its employees.

                  (ii) Maker shall provide on a timely basis to Holder all
      financial information requested from time to time by Holder, including
      without limitation its quarterly and annual balance sheet and income
      statement. Such financial information shall be certified by a member of
      Maker's senior management. Financial information required shall also
      include such information as is necessary for Holder to file form 468 with
      the SBA.

                  (iii) In addition to the information specified in Section
      10.1(f)(i) and (ii) above, upon request, Maker agrees promptly to provide
      Holder with sufficient additional information to permit Holder to comply
      with (i) its obligations under the Small Business Investment Act of 1958,
      as amended, and the regulations promulgated thereunder and related thereto
      and (ii) provide any other information reasonably requested or required by
      any governmental agency asserting jurisdiction over Holder.

                  (iv) Maker shall report its cash position and all expenditures
      and agreements, commitments or undertakings for expenditures to Holder on
      a bi-weekly basis.

            (g) Access. So long as any principal and/or interest under this Note
shall remain outstanding, Maker shall permit Holder and its agents or
representatives to visit and inspect Maker's properties, to examine its books of
account and records and to discuss Maker's affairs, finances and accounts with
its officers, all at such times during normal business hours as reasonably may
be requested by Holder. Maker shall allow SBA Examiners access to its books and
records, as reasonably required by such Examiners in connection with their
annual audits of Holder or for any other legitimate purposes.

            (h) SBA Compliance. Maker acknowledges that Holder is a licensed
Small Business Investment Corporation and thereby a participant in the SBIC
program of the U. S. Small Business Administration ("SBA"), and as such is
subject to the rules, regulations, guidance and direction of the SBA on matters
affecting its business and investment practices, and that such rules and
regulations affect the business activities and practices of the companies in
which Holder makes investments. Maker shall promptly and fully cooperate with
Holder to facilitate both Maker's and Holder's compliance with all such SBA
rules, regulations, guidance and direction.

            (i) Business Activity. As long as this Note shall remain
outstanding, Maker shall make no change in its business activity that would make
it or any of its business activities non-compliant with SBA regulations and
guidelines.

      10.2 Negative Covenants. So long as this Note shall remain outstanding:

                                       8
<PAGE>

                                                               EXECUTION VERSION

            (a) Indebtedness. Maker shall not incur additional indebtedness,
beyond the indebtedness already existing as of the date hereof, for borrowed
money in excess of $10,000, in aggregate.

            (b) Liens. Maker shall not grant to any person or entity a security
interest, lien, license, or other encumbrance of any kind, direct or indirect,
contingent or otherwise, in, to or upon any assets of Maker, including, without
limitation, any intellectual property of any kind, as defined in Exhibit A
hereto (respectively, the "Intellectual Property" and the "Collateral").

            (c) Sale or License of Assets. Maker shall not sell, lease,
transfer, assign or otherwise dispose of or encumber (including, without
limitation through licensing or partnering arrangements) or abandon, conceal,
injure or destroy any material assets (whether tangible or intangible) of Maker
(including, without limitation, any Collateral (as defined in Section 11), other
than with the prior written approval of Holder and in the ordinary course of
business.

            (d) Issuance of Capital Stock. Except for (a) any transaction
pursuant to an Unsolicited Proposal that Maker accepts in accordance with the
fiduciary exception provided in Section 3.2 of the Recapitalization Agreement or
(b) shares of capital stock issuable upon exercise or conversion of warrants or
convertible securities outstanding prior to February 1, 2004, Maker shall not
without Holder's prior written approval: (i) issue any shares of capital stock
or other securities, or any instruments exercisable for or convertible into
capital stock or other securities, or (ii) make any promises, commitments,
undertakings, agreements or letters of intent for any of the issuances described
in (i) hereof.

            (e) Distributions and Redemptions. Maker shall not declare or pay
any dividends or make any distributions of cash, property or securities of Maker
with respect to any shares of its common stock, preferred stock or any other
class or series of its stock, or, directly or indirectly (except for repurchases
of common stock by Maker in accordance with the terms of employee benefit plans
or written agreement between Maker and any of its employees approved by the
Board of Directors of Maker prior to February 1, 2004), redeem, purchase, or
otherwise acquire for any consideration any shares of its common stock or any
other class of its stock.

            (f) Hiring. Maker shall not hire, engage, retain, or agree to hire,
engage or retain, any Personnel, except with Holder's express prior written
approval, on a case by case basis.

            (g) Severance. Maker shall not enter into, increase, expand, extend,
renew or reinstate any severance, separation, retention, change of control or
similar agreement with any Personnel, or agree, promise, commit or undertake to
do so, except with Holder's prior written approval, on a case by case basis.

            (h) Facilities. Maker shall not purchase, lease, hire, rent or
otherwise acquire directly or indirectly any rights in or to any asset or
facility outside of the ordinary course of business in an amount in excess of
$10,000, in aggregate, or agree, promise or commit to do so, except in
accordance with the Maker's budget that has been approved by the Maker's board
of directors and the Investor.

                                       9
<PAGE>

                                                               EXECUTION VERSION

                        (i) Expenses. Maker shall make no expenditures in excess
of $10,000 in aggregate other than in accordance with a budget pre-approved by
Holder. Maker shall not deviate, during the period covered by such budget, more
than $10,000 in aggregate from the budget included in the Disclosure Schedule,
nor take any action or make any promise, undertaking or commitment that would
result in Maker incurring or accumulating payables and/or other financial
obligations of any kind, whether current or deferred, direct or indirect, for
purposes other than as set forth in budgets expressly agreed to by Holder,
and/or in any amounts in excess of the amounts set forth in such agreed budgets,
which equal or exceed $10,000 in aggregate, and which have not been approved in
writing in advance by Holder.

            (j) Other Limitations.

                        (i) Maker shall not change the nature of its business
activity in a manner that would cause a violation of 13 C.F.R. Section 107.720
and/or Section 107.760(b) (including, without limitation, by undertaking real
estate, film production or oil and gas exploration activities). In the event
that Maker changes the nature of its business activity such that such change
would render Maker ineligible for financing pursuant to applicable SBA rules and
regulations, Maker agrees to use its best efforts to facilitate a transfer or
redemption of any securities then held by Holder.

                        (ii) Maker will at all times comply with the
non-discrimination requirements of 13 C.F.R. Parts 112, 113 and 117.

                        (iii) For a period of at least one year after the date
of this Note, Maker will locate no more than 49 percent of the employees or
tangible assets of Maker outside the United States.

      10.3 Additional Covenant. Immediately after the effective date of this
Note, Maker shall recall all units of Maker's Tangential Flow Filtration ("TFF")
devices, and all specifications, diagrams, description or other information
relating to such TFF devices, or any similar device, from all third parties who
may currently have any of the foregoing. Maker will take all necessary steps to
ensure that such recall is effective as quickly as possible, and in no event
later than fifteen (15) days after the effective date hereof. Until the later of
the expiration of the Standstill Period (as defined in Section 13 below) or the
date on which this Note has been discharged in full, Maker shall not sell,
license, loan or otherwise in any way transfer or distribute Maker's Tangential
Flow Filtration ("TFF") devices or any similar device, or any specifications,
diagrams, description or other information about the TFF devices, to any third
party, or commit or promise or enter into any understanding of any kind, direct
or indirect, contingent or otherwise, to do any of the foregoing in regard to
Maker's TFF devices or any similar device, without the prior written consent of
Holder in each case.

                                       10
<PAGE>

                                                               EXECUTION VERSION

SECTION 11. SECURITY INTEREST.

      11.1 First Priority in All Collateral. To secure its obligations under
this Note whether at stated maturity, by acceleration or otherwise, Maker hereby
grants and pledges to Holder a first priority senior security interest in all of
Maker's right, title and interest in, to and under all of Maker's tangible and
intangible property, whether now owned, licensed or held or hereafter acquired,
licensed, developed, held or arising, as described in Exhibit A hereto (the
"Collateral"), and all proceeds of any kind from any disposition of any such
Collateral. Such security interest shall be senior to any security interest in
the Collateral granted the holders of the Management Notes pursuant to any
subordination agreement between Holder, the holders of the Management Notes and
Maker, and shall be senior to any other security interest of any kind, direct or
indirect, contingent or otherwise, in the Collateral except for the security
interests and liens described in items 2, 3 and 4 of Schedule 14.11 of the
Disclosure Schedule (only to the amounts set forth on such schedule) and any
other indebtedness or obligations of Maker to Holder. If certificates of title
are now, or hereafter become, issued or outstanding with respect to any of the
Collateral, Maker promptly shall cause the senior security interest of Holder to
be properly noted thereon. Maker agrees that the security interest herein
granted has attached and shall continue until Maker's obligations under this
Note have been paid, performed and indefeasibly discharged in full.

      11.2 Rights Cumulative. The rights and remedies of Holder with respect to
the senior security interest granted hereby are in addition to those which are
now or may hereafter be available to Holder as a matter of law or equity. Each
right, power and remedy of Holder provided for herein, or now or hereafter
existing at law or in equity, shall be cumulative and concurrent and shall be in
addition to every right, power and remedy provided for herein, and the exercise
by Holder of any one or more of the rights, powers and/or remedies provided for
in this Note, or now or hereafter existing at law or in equity, shall not
preclude the simultaneous or later exercise by any person, including a grantee,
of any or all other rights, powers and/or remedies.

      11.3 Documentation of Security Interest. Maker shall execute, deliver,
file, amend, and re-file any financing statements, instruments (including
without limitation stock certificates), continuation statements, assignments, or
other security agreements that Holder may require from time to time to confirm
the liens arising out of this Note with respect to the Collateral. Maker agrees
to pay all reasonable costs associated with filing and/or re-filing of any
financing statements, continuation statements or other security agreements
required to perfect and to continue perfection of Holder's security interest in
the Collateral and all reasonable costs required to evidence the first priority
of the security interest, including, without limitation, reasonable attorneys'
fees. Maker authorizes Holder to file financing statements under the UCC with
respect to the security interest granted hereby and agrees, upon request of
Holder, to promptly and duly execute and deliver any and all such further
instruments and documents, and to take such further action, as Holder may
reasonably deem necessary or desirable to obtain the full benefits of this grant
of security interest.

      11.4 No Conflicting Agreements. Maker shall not enter into any agreement
on or after the effective date of this Note that would materially impair or
conflict with Maker's obligations hereunder without Holder's prior written
consent. Without Holder's prior written consent, Maker

                                       11
<PAGE>

                                                               EXECUTION VERSION

shall not permit the inclusion in any material contract to which it becomes a
party on or after the effective date of this Note, of any provisions that could
or might in any way prevent the creation, perfection and maintenance of a first
priority security interest in Maker's rights and interest in any property
included within the definition of the Collateral acquired under such contracts.
Maker represents and warrants that, as of the effective date of this Note, there
are no existing agreements or undertakings that would materially impair or
conflict with Maker's obligations hereunder or that could or might in any way
prevent the creation, perfection and maintenance of a first priority security
interest in Maker's rights and interest in any property included within the
definition of the Collateral acquired under such contracts; except for existing
equipment leases described in item 2 of Schedule 14.11 and the statutory liens
described in items 3 and 4 of the Disclosure Schedule.

      11.5 Notification Requirements. Within two (2) business days of any
officer, director or employee of Maker obtaining knowledge thereof, Maker will
promptly notify Holder in writing of any event that materially adversely affects
the value of any material Collateral, the ability of Maker to dispose of any
material Collateral, or the rights and remedies of Holder in relation thereto,
including the levy of any legal process against any of the Collateral.

      11.6 Foreclosure Remedy. Notwithstanding anything to the contrary herein
or in the Recapitalization Agreement or any other agreement or document, in the
event that Maker is unable to pay and discharge this Note in full on the
Maturity Date, subject to the compliance with the requirements of the Delaware
Uniform Commercial Code, nothing herein or in the Recapitalization Agreement or
any other agreement or document shall be deemed to preclude, limit or restrict
Holder from requiring the delivery of some or all of the Collateral in full or
partial satisfaction of Maker's obligation under the Note. Alternatively, Holder
may, in its sole discretion, elect to cause some or all of the Collateral to be
sold, and the sale proceeds to be used to pay and discharge the Note in full.

SECTION 12. CONVERSION.

      12.1 Holder's Election. Notwithstanding any other provision of this Note
or any applicable agreement or document, until, and/or in the absence of,
purchases for cash of a minimum of $15 million of Convertible Preferred Stock,
by Other Investors (as defined in the Recapitalization Agreement), on the terms
and conditions set forth in the Recapitalization Agreement and the Convertible
Preferred Stock Term Sheet, Holder may, in its sole discretion, elect to convert
any or all of the principal and/or interest due under the Note into any Equity
Security and/or Debt Security (each as defined below) and/or any combination
thereof, in each case that Holder shall designate in Holder's sole discretion
(the securities so elected being the "Holder Designated Securities"). Holder may
make such determinations from time to time and at any time before this Note has
been discharged in full, and, as applicable, at any time on or before the
expiration of the thirty (30) day notice period required under this Note in the
event the Maker wishes to prepay this Note. For purposes hereof, (i) the term
"Equity Security" means any class or series of equity security, or any
combination of classes and/or series of equity securities, of the Maker that
have been authorized under the Maker's certificate of incorporation, as amended
and/or restated, including by any certificate of designation (the "Charter"), or
any

                                       12
<PAGE>

                                                               EXECUTION VERSION

new class or series of equity security, or any combination of new and/or
existing classes and/or series of equity securities, of the Maker for which the
Maker has undertaken any agreement, obligation, promise, commitment or letter of
intent to obtain such authorization and (ii) the term "Debt Security" means any
evidence of indebtedness of the Maker that the Maker has authorized, created or
incurred, or that the Maker has undertaken any agreement, obligation, promise,
commitment or letter of intent to authorize, create or incur.

      12.2 Automatic Conversion. The principal amount of, and accrued and unpaid
interest on, this Note shall automatically convert into Convertible Preferred
Stock, upon the terms and conditions set forth herein and in the
Recapitalization Agreement, only in the event, and upon the closing of, the
purchase in cash (and not by conversion of debt, exercise of warrants or
options, or conversion or exercise of other securities or instruments), on the
terms and conditions set forth in the Convertible Preferred Stock Term Sheet, by
Other Investors, as defined in the Convertible Preferred Stock Term Sheet, of a
minimum of $15 million of Convertible Preferred Stock.

      12.3 Information for Holder's Election. Maker shall provide to Holder,
within two (2) business days after notice of each request by Holder, all
information reasonably requested by Holder in connection with any Equity
Securities and/or Debt Securities, to enable Holder to make decisions regarding
one or more conversions. In the event that Maker seeks to prepay this Note,
Maker shall deliver to Holder, simultaneously and together with the notice
required under Section 2 of this Note of Maker's interest in prepaying the Note,
a summary of all material information, terms and conditions relating to all
Equity Securities and Debt Securities (including any "side" letters or
agreements or separate agreements).

      12.4 Conversion Price. The conversion price for any conversion pursuant to
Section 12.2 shall be the lowest nominal or effective price per share paid by
the Other Investors who acquire such Convertible Preferred Stock (with the
exception of shares issuable upon exercise of the Initial Bridge Warrants). The
conversion price for any conversion into any equity or debt security pursuant to
Section 12.1 shall be the lowest of (i) the lowest nominal or effective price
per share paid by any investor at any time on or after the date one year prior
to the Effective Date (with the exception of (x) purchases of up to 35,000
shares of Common Stock pursuant to certain options to purchase, at a purchase
price of $0.0001, that were outstanding on the Effective Date and held by
members of the Board of Directors, as set forth in Schedule 2.7(d) to the
Recapitalization Agreement, and (y) shares issuable upon the exercise of the
Initial Bridge Warrants, each of which shall be excluded from consideration
under this section), (ii) the lowest nominal or effective price at which any
investor is entitled to acquire shares (including, without limitation, through
purchase, exchange, conversion or exercise) pursuant to any other security,
instrument, or promise, undertaking, commitment, agreement or letter of intent
of the Maker outstanding on or after the Effective Date or granted, issued,
extended or otherwise made available by the Maker at any time on or after the
date one year prior to the Effective Date (regardless of whether currently
exercisable or convertible) (with the exception of (x) certain options to
purchase up to 35,000 shares of Common Stock at a purchase price of $0.0001 that
were outstanding on the Effective Date and held by members of the Board of
Directors as set forth in Schedule 2.7(d) to the Recapitalization Agreement, and
(y) the Initial Bridge Warrants, each of which shall be excluded from
consideration under this section); and (iii) the lesser of $0.10 per share or
35% discount to the average closing price per share of the Common Stock

                                       13
<PAGE>

                                                               EXECUTION VERSION

during any twenty consecutive trading days (beginning with the twenty
consecutive trading days prior to the Effective Date); provided, however, that
in no event shall the price per share calculated pursuant to this clause (iii)
be less than $.04 per share. The calculation required by clause (ii) hereof
shall initially be based upon Schedule 2.7(d) to the Recapitalization Agreement.
All other rights, preferences, privileges, terms and conditions received by
Holder in connection with any conversion and/or any securities issued by the
Maker to Holder upon conversion, shall be no less favorable to Holder than the
rights, preferences, privileges, terms and conditions any other investor in the
Maker has received or is entitled to receive with respect to the security into
which Holder is converting pursuant to any other security, instrument, promise,
undertaking, commitment, agreement or letter of intent of the Maker, whether or
not such rights, preferences, privileges, terms and conditions for any other
investor are incorporated into the agreements or documents relating to any
conversion or any issuance of the security or other instrument to that investor
or are provided separately, at any time on or after one year prior to the
Effective Date. In regard to each conversion hereunder, the Maker hereby agrees
to take and/or arrange for all necessary corporate and related action to enable
the execution of each such conversion elected by Holder.

      12.5 No Impairment. Maker shall not, by amendment of its Charter or
through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
omission or agreement, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by Maker under and/or in connection
with this Note, but shall at all times in good faith use best efforts to assist
in carrying out of all the provisions of and/or relating to this Note and in
taking all such action as may be necessary or appropriate to protect Holder's
rights, preferences and privileges under and/or in connection with the Note
against impairment. Holder's rights, preferences and privileges granted under
and/or in connection with any Holder Designated Securities may not be amended,
modified or waived without the Holder's prior written consent, and the
documentation providing for such rights, preferences and privileges will
specifically provide as such.

SECTION 13. STANDSTILL, EXCLUSIVITY AND CONFIDENTIALITY.

During the Bridge Period and the Equity Financing Period, as defined in the
Recapitalization Agreement and in the Convertible Preferred Stock Term Sheet,
but excluding the periods from February 18, 2004 through February 29, 2004 and
from March 16, 2004 through the Effective Date (collectively the "STANDSTILL
PERIOD") the parties shall have worked together, and shall continue to work
together, in good faith with best efforts to implement the terms of the
Recapitalization Agreement, upon which the parties shall have reached binding
agreement and which the parties shall have executed as a condition precedent to
the execution and funding of this Note. Except as provided in the fiduciary
exception set forth in Section 3.2 of the Recapitalization Agreement, during the
Standstill Period, the Maker and its officers, directors, employees, agents,
advisers, consultants, partners and collaborators shall work only with Holder
and its agents, advisers and consultants, and shall have had, and shall continue
to have, no discussions, negotiations and/or communications of any kind with any
other parties, regardless of which party initiates or attempts to initiate any
such contact or communication, in regard to any potential equity or debt
financing of the Maker by parties other than Holder, and/or any joint venture,
license, co-development or other business arrangement by or with parties other
than

                                       14
<PAGE>

                                                               EXECUTION VERSION

Holder. Notwithstanding the fiduciary exception set forth in Section 3.2 of the
Recapitalization Agreement, during the Standstill Period, the Maker and its
officers, directors, employees, agents, advisers, consultants, partners and
collaborators shall maintain confidentiality, and shall not have, and shall
continue not to provide copies, excerpts, summaries, descriptions, or
communicate in any way with any third parties, either directly or indirectly, as
to any aspects of the recapitalization of Maker and/or any financing by Holder,
including, without limitation, the identity of the parties involved, any terms
of the Recapitalization Agreement, this Note, the Related Recapitalization
Documents, the Convertible Preferred Stock or any other matter relating to the
recapitalization of Maker, or the progress or status of any activities or
processes relating to the recapitalization of Maker; provided, however, nothing
herein shall prohibit the Maker from filing this Note, the Recapitalization
Agreement and any Related Recapitalization Document with the Securities and
Exchange Commission (the "SEC"), if required by the regulations of the SEC
(subject to the covenant in Section 2.5(a) of the Recapitalization Agreement).
During the Standstill Period, the Maker shall not make any sales of equipment or
other assets of any kind, including, without limitation, any non-essential
laboratory equipment, and the Maker shall comply with Section 10.3 in regard to
the TFF devices.

SECTION 14. REPRESENTATIONS AND WARRANTIES.

Except as expressly set forth (with reference to a section in this Note) in the
Disclosure Schedule attached hereto as Exhibit B (as updated as of each closing
contemplated by the Recapitalization Agreement and the Related Recapitalization
Documents), and only to the extent such exceptions are acceptable to Holder in
its sole discretion as of the date of this Note, and independently as of the
date upon which each additional Note is issued to Holder, and as of the date of
each closing, if any, of the Anticipated Equity Financing, Maker represents and
warrants to the following:

      14.1 Organization, Good Standing and Qualification. Maker is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business. Maker is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business, properties, operations, prospects or
condition (financial or otherwise).

      14.2 Authorization of Note, Etc. The execution, delivery and performance
by Maker of this Note has been duly authorized by all requisite corporate action
by Maker in accordance with Delaware law. This Note is a valid and binding
obligation of Maker, enforceable against Maker in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application effecting enforcements of
creditors' rights or general principles of equity.

      14.3 No Conflicts. The execution, delivery, performance, issuance, sale
and delivery of this Note and the Related Recapitalization Documents, and
compliance with the provisions hereof by Maker, will not (a) to the knowledge of
Maker, violate any provision of any law, statute, rule or regulation applicable
to Maker or any ruling, writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency or other governmental body applicable
to Maker or any of its properties or assets or (b) conflict with or result in
any material breach of any

                                       15
<PAGE>

                                                               EXECUTION VERSION

of the terms, conditions or provisions of, or constitute (with notice or lapse
of time or both) a material default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of, any
encumbrance upon any of the material assets of Maker under, the Charter or
Bylaws of Maker (as they may be amended to date) or any agreement or instrument
to which Maker is a party. As used herein, "encumbrance" shall mean any liens,
charges, encumbrances, equities, claims, options, proxies, pledges, security
interests, licenses or other similar rights of any nature.

      14.4 Compliance with Other Instruments. Maker is not in violation of any
term of Maker's Charter, as amended, including any certificate of designation
filed therewith, and/or Maker's Bylaws. Maker is not, in any material respect,
in violation of any term of any mortgage, indenture, contract, agreement,
instrument, judgment, decree, order, statute, rule or regulation to which Maker
or any of such Collateral is subject. To the best of Maker's knowledge, no event
has occurred which, with the passage of time or the giving of notice, or both,
would constitute a breach or violation, in any material respect, under any
applicable judgments, orders, writs, decrees, federal, state and/or local laws,
rules or regulations which would have a material adverse affect on the
condition, financial or otherwise, or operations of Maker (as it is currently
conducted and as it is proposed to be conducted) or on any material assets or
any Intellectual Property or other Collateral owned, controlled, licensed,
possessed, and/or used by Maker. To the best of its knowledge, Maker has avoided
every condition, and has not performed any act, the occurrence of which would
result in Maker's loss of any right granted under any license, distribution
agreement or other agreement or Maker's loss of any rights in or to any
Collateral.

      14.5 Approvals. Maker has obtained all necessary permits, authorizations,
waivers, consents and approvals of or by, and made all necessary notifications
of and/or filings with, all applicable persons (governmental and private), in
connection with the execution, delivery, performance, issuance, sale and/or
delivery of this Note, the Recapitalization Agreement and the Related
Recapitalization Documents, and consummation by Maker of the transactions
contemplated hereby and thereby, except as listed in Schedule 14.5

      14.6 Capitalization. The authorized capital stock of Maker consists of
125,000,000 shares of Common Stock, par value $0.001 per share and 15,000,000
shares of Preferred Stock, par value of $0.001 per share. As of the date hereof,
19,028,779 shares of Common Stock are issued and outstanding and no shares of
preferred stock of any kind are issued and outstanding. No other shares of any
class or series of Maker's capital stock are authorized and/or issued and
outstanding. All issued and outstanding shares of capital stock of Maker have
been duly authorized and validly issued, and are fully paid and non-assessable,
and have been offered, sold and delivered by Maker in compliance with all
applicable federal and state securities laws. Except as set forth in Schedule
14.6, no subscription, warrant, option, convertible security, or other right
(direct or indirect, contingent or otherwise) to purchase or otherwise acquire
any equity securities of Maker is authorized or outstanding, and there is no
agreement, promise, commitment, undertaking or letter of intent of any kind
(direct or indirect, contingent or otherwise) by Maker to issue any shares,
subscriptions, warrants, options, convertible securities, or other such rights,
or to distribute to holders of any of its equity securities any evidence of
indebtedness or asset. Except as set forth in Schedule 14.6, Maker has no
obligation of any kind (direct or indirect, contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in

                                       16
<PAGE>

                                                               EXECUTION VERSION

respect thereof. Schedule 14.6 includes a true, accurate and complete statement
describing the total number of shares of Maker outstanding as of the date of
this Note (on a fully diluted basis, including, without limitation, all warrants
and options outstanding (whether or not currently exercisable), all convertible
instruments of any kind (whether or not currently convertible), shares of all
classes of stock, and any agreements, promises, commitments, undertakings or
letters of intent to issue any of the foregoing.

      14.7 Authorization of the Shares. Maker has, or before the first closing
of the Anticipated Equity Financing hereunder will have, authorized the issuance
and sale of a sufficient number of shares of Convertible Preferred Stock, par
value $0.001 per share, and Common Stock of the Maker to fully implement the
Recapitalization Plan, while maintaining such additional authorized but unissued
shares as reasonably determined by Holder to be appropriate. Of such authorized
shares, a sufficient number of shares shall be reserved for issuance upon any
exercise of the Bridge Warrants and/or Preferred Stock Warrants. If at any time
the number of authorized but unissued shares of Convertible Preferred Stock
and/or of Common Stock is not sufficient to effect the conversion of all then
outstanding convertible Notes and other instruments, and the exercise of all
then outstanding warrants, options and similar instruments, then, in addition to
such other remedies as may be available to Holder, including, without
limitation, the exercise of Holder's right of first refusal set forth in Section
2.7(f) of the Recapitalization Agreement, Maker shall take such corporate action
as may be necessary to increase its authorized but unissued shares of
Convertible Preferred Stock and/or Common Stock to such number of shares as will
be sufficient for such purposes. Such corporate action shall include, without
limitation, obtaining all requisite regulatory approvals and any requisite
shareholder approval of any necessary amendment to Maker's Charter.

      14.8 Litigation. Except as set forth in Schedule 14.8 of the Disclosure
Schedule, there is no action, suit, proceeding or investigation pending or, to
the knowledge of Maker, currently threatened against Maker, and/or its
directors, officers, advisers, agents, properties, assets or business, in each
case relating to Maker and/or its business, assets, operations or properties.
Maker is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by Maker
currently pending or which Maker intends to initiate.

      14.9 No Liens. Except for liens for the benefit of Holder, created by this
Note, the Recapitalization Agreement and/or any of the Related Recapitalization
Documents, and except as set forth in Schedule 14.9 of the Disclosure Schedule,
none of the material assets of Maker, including the Collateral, are subject to
any existing lien, pledge, security interest or other encumbrance of any kind,
direct or indirect, contingent or otherwise.

      14.10 Full Disclosure. Notwithstanding any other provision of this Note,
neither this Note, nor any exhibit hereto, nor any written report, certificate,
instrument or other information furnished to Holder in connection with the
transactions contemplated under and/or in connection with Note contain any
material misstatement (including, without limitation, any material omission), or
is misleading in any material respect.

      14.11 No Other Security Interests or Other Encumbrances. Except as set
forth in Schedule 14.11 (and only to the amounts set forth on such schedule),
there are no existing

                                       17
<PAGE>

                                                               EXECUTION VERSION

security interests, pledges, liens or other encumbrances of any kind, direct or
indirect, contingent or otherwise (including without limitation any licensing or
partnering arrangements or agreements), in or relating to any assets of Maker,
including, without limitation, any Intellectual Property (as defined herein) or
other Collateral. All existing security interests, pledges, liens or other
encumbrances of any kind, other than those set forth in Schedule 14.11 hereto
(and only to the amounts set forth on such schedule), are subordinate to the
security interest established pursuant to Section 11 hereof, all necessary
consents, subordination agreements and waivers, if any, have been obtained, and
all amended filings and/or re-filings shall be made immediately upon execution
of this Note.

14.12 "Small Business".

            (a) Small Business Status. Maker together with its "affiliates" (as
that term is defined in Section 121.103 of Title 13 of Code of Federal
Regulations (the "FEDERAL REGULATIONS")) is a "small business concern" within
the meaning of the Small Business Investment Act of 1958, as amended (the "SMALL
BUSINESS ACT" or "SBIA"), and the regulations promulgated thereunder, including
Section 121.301(c) of Title 13, Code of Federal Regulations.

            (b) Information for SBA Reports. Maker has delivered and/or will
deliver to Holder certain information, set forth by and regarding the Maker and
its affiliates in connection with this Note, on SBA Forms 480, 652 and Part A
and B of Form 1031. This information delivered was true, accurate, complete and
correct, and any information yet to be delivered will be true, accurate,
complete and correct, and in form and substance acceptable to Holder.

            (c) Eligibility. Maker is eligible for financing by any Holder
pursuant to Section 107.720 of Title 13 of the Federal Regulations and any other
SBA regulations.

14.13 Intellectual Property.

            (d) Definitions. "Intellectual Property" means all foreign and
domestic intangible property and rights, owned, licensed, sub-licensed or
otherwise obtained by Maker, including, without limitation, (i) inventions,
discoveries and ideas, whether patentable or not, and all patents, registrations
and applications therefor, including divisions, continuations,
continuations-in-part, requests for continued examination, and renewal
applications, and including renewals, extensions and reissues (collectively,
"Patents"); (ii) confidential and proprietary information, trade secrets and
know-how, including without limitation processes, schematics, formulae,
drawings, prototypes, models, designs and customer lists (collectively, "Trade
Secrets"); (iii) all data, slides, observations, and laboratory results,
produced by, for or on behalf of Maker, or which Maker has rights to obtain
(collectively, "Data"); (iv) all FDA applications, registrations, filings and
other rights (collectively, "FDA Rights") and all data and documentation
supporting or relating thereto; (iv) published and unpublished works of
authorship, whether copyrightable or not (including, without limitation,
databases and other compilations of information), copyrights therein and
thereto, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof (collectively, "Copyrights");
(v) trademarks, service marks, brand names, certification marks, collective
marks, d/b/a's, Internet domain names, logos, symbols, data, trade dress,
assumed names,

                                       18
<PAGE>

                                                               EXECUTION VERSION

fictitious names, trade names, and other indicia of origin, all applications and
registrations for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all extensions, modifications and renewals of same
(collectively, "Trademarks"); (vi) all other intellectual property or
proprietary rights, including, without limitation, all claims or causes of
action arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including rights to recover for past, present
and future violations thereof (collectively, "Other Proprietary Rights").

      "Intellectual Property Contracts" means all agreements involving, relating
to or affecting the Intellectual Property, including, without limitation,
agreements granting rights to use the Licensed or Sub-Licensed Intellectual
Property, agreements granting rights to use Owned Intellectual Property,
confidentiality agreements, Trademark coexistence agreements, Trademark consent
agreements and non-assertion agreements.

      "Licensed or Sub-Licensed Intellectual Property" means the Intellectual
Property that Maker is licensed, sub-licensed or otherwise permitted by other
persons or entities to use.

      "Owned Intellectual Property" means the Intellectual Property owned by
Maker.

      "Registered" means issued, registered, renewed or the subject of a pending
application.

            (e) Schedule 14.13 ("Intellectual Property") sets forth a true and
complete list and summary description of (A) all Registered or material Owned
Intellectual Property (each identified as a Patent, Trademark, Trade Secret,
Copyright or Other Proprietary Right, as the case may be); (B) all Licensed or
Sub Licensed Intellectual Property and (C) all Intellectual Property Contracts.

            (f) All Intellectual Property is valid, subsisting and enforceable.
No Owned Intellectual Property has been canceled, suspended, adjudicated
invalid, not maintained, expired or lapsed, or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting or
reflecting Maker's rights thereto. No Licensed or Sub-Licensed Intellectual
Property has been canceled, suspended, not renewed or extended, adjudicated
invalid, not maintained, expired or lapsed, or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting or
reflecting Maker's rights thereto.

            (g) The Owned Intellectual Property is owned exclusively by Maker
and has been used with all patent, trademark, copyright, confidential,
proprietary and other Intellectual Property notices and legends prescribed by
law or otherwise permitted.

            (h) No suit, action, reissue, reexamination, public protest,
interference, opposition, cancellation or other proceeding (collectively,
"Suit") is pending or threatened concerning any claim or position:

                  (i) that Maker, or another person or entity, has violated any
Intellectual Property rights. To Maker's best knowledge, Maker is not violating
and has not violated any intellectual property rights of any other party.

                                       19
<PAGE>

                                                               EXECUTION VERSION

                  (ii) that Maker, or another person or entity, has breached any
Intellectual Property Contract. There exists no event, condition or occurrence
which, with the giving of notice or lapse of time, or both, would constitute a
breach or default by Maker, or a breach or default by another person or entity,
under any Intellectual Property Contract. No party to any Intellectual Property
Contract has given Maker notice of its intention to cancel, terminate or fail to
renew any Intellectual Property Contract.

                  (iii) that the Intellectual Property has been violated or is
invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned or
not owned exclusively by Maker. No such claim has been threatened or asserted.
To Maker's best knowledge, no valid basis for any such Suits or claims exists.

            (i) To Maker's best knowledge, no other person or entity is
violating, infringing upon or claiming rights incompatible with Maker's rights
to any Intellectual Property. Maker has provided to Holder copies of all
information reasonably available to it relevant to intellectual property rights
claimed by third parties and possible infringement thereof including, without
limitation, any freedom to practice or freedom to operate opinions.

            (j) Except as set forth on Schedule 14.13(j), Maker owns or
otherwise holds valid rights to use all Intellectual Property used in its
business.

            (k) Maker has timely made all filings and payments with the
appropriate foreign and domestic agencies and other parties required to maintain
in full force and effect all Intellectual Property. Except as set forth on
Schedule 14.13, no due dates for filings or payments concerning the Intellectual
Property (including, without limitation, office action responses, affidavits of
use, affidavits of continuing use, renewals, requests for extension of time,
maintenance fees, application fees and foreign convention priority filings) fall
due within ninety (90) days prior to or after the closing, whether or not such
due dates are extendable. Maker is in compliance with all applicable rules and
regulations of such agencies and other parties with respect to the Intellectual
Property. All documentation necessary to confirm and effect the Intellectual
Property, if acquired from other persons or entities, has been recorded in the
United States Patent and Trademark Office, the United States Copyright Office
and other official offices.

            (l) Maker has undertaken and consistently implemented best efforts
to protect the secrecy, confidentiality and value of all non-public Intellectual
Property used in its business (including, without limitation, entering into
appropriate confidentiality agreements with all officers, directors, employees
and other persons or entities with access to such non-public Intellectual
Property). Maker management has not disclosed any such non-public Intellectual
Property to any persons or entities other than (i) Maker employees or Maker
contractors who had a need to know and use such non-public Intellectual Property
in the ordinary course of employment or contract performance, or (ii)
prospective customers, and in each case who executed appropriate confidentiality
agreements.

                                       20
<PAGE>

                                                               EXECUTION VERSION

            (m) Maker has taken all reasonable measures to confirm that no
current or former Maker employee is or was a party to any confidentiality
agreement or agreement not to compete that restricts or forbids, or restricted
or forbade at any time during such employee's employment by Maker, such
employee's performance of Maker's business, or any other activity that such
employee was hired to perform or otherwise performed on behalf of or in
connection with such employee's employment by Maker.

      14.14 SEC Filings; Financial Statements.

      (a) Maker has delivered or made available to Holder accurate and complete
copies of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by the Maker with the SEC
since January 1, 2003, and all amendments thereto (the "Maker SEC Documents").
Except as set forth on Schedule 14.14(a), all statements, reports, schedules,
forms and other documents required to have been filed by Maker with the SEC have
been so filed on a timely basis. As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Note, then on the
date of such filing): (i) each of the Maker SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Maker SEC Documents
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.

      (b) The financial statements (including any related notes) contained in
the Maker SEC Documents: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end adjustments that will not, individually or in the aggregate, be
material in amount), and (iii) fairly present the consolidated financial
position of Maker and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of Maker and
its consolidated subsidiaries for the periods covered thereby.

      14.15 Liabilities. Maker has no accrued, contingent and/or other
liabilities of any nature, either mature or immature, as of the Restatement Date
other than (i) tax liabilities to the State of Washington in the maximum amount
of $492,000, (ii) amounts payable to Cognate and (iii) future lease payments to
Benaroya Capital Co. LLC for Maker's premises lease not yet due, in the
aggregate in excess of $450,000, of which $325,000 are currently due payables,
$69,000 are the aggregate balances of capital leases payable in monthly
installments in the amounts set forth in the budget included in the Disclosure
Schedule through the first calendar quarter of 2006, decreasing thereafter, the
last of which is fully amortized in May 2007, and $55,000 are accrued vacation
and sick pay.

                                       21
<PAGE>

                                                               EXECUTION VERSION

      14.16 Compliance with All Standstill Provisions. Maker has complied in all
respects with all standstill, exclusivity and confidentiality provisions of (a)
this Note, the Recapitalization Agreement and the Related Recapitalization
Documents, (b) Section 13 of that certain 10% Convertible, Secured Promissory
Note by and between Maker and Holder dated as of February 2, 2004 and (c)
Section 13 of that certain 10% Convertible, Secured Promissory Note by and
between Maker and Holder dated as of March 1, 2004.

SECTION 15. INDEMNIFICATION

      15.1 Indemnification Agreement.

            (a) In addition to all rights and remedies available to Holder at
law or in equity, Maker shall indemnify Holder and each subsequent holder of
this Note, and their respective affiliates, stockholders, limited partners,
general partners, officers, directors, managers, employees, agents,
representatives, successors and assigns (collectively, the "Indemnified
Persons") and save and hold each of them harmless against and pay on behalf of
or reimburse such party as and when incurred for any loss, liability, demand,
claim, action, cause of action, cost, damage, deficiency, tax, penalty, fine or
expense (other than any demand, claim, action or cause of action instituted by
Maker), including interest, penalties, reasonable attorneys' fees and expenses,
and all amounts paid in investigation, defense or settlement of any of the
foregoing (collectively, "Losses) which any such party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental to
or by virtue of:

                  (i) any material misrepresentation in, or material omission
from, or breach of any of the representations, warranties, statements, schedules
and/or exhibits hereto, certificates or other instruments or documents furnished
to Holder by Maker in connection with this Note; or

                  (ii) any material nonfulfillment or material breach of any
covenant or agreement on the part of Maker under this Note.

            (b) Notwithstanding the foregoing, Maker shall not be liable for any
portion of Losses resulting from the gross negligence or willful misconduct of
Holder or a subsequent holder of this Note.

            (c) Within twenty (20) days after receipt of notice of commencement
of any action or the assertion of any claim by a third party, Holder shall give
Maker written notice thereof together with a copy of such claim, process or
other legal pleading of such claim. Maker shall have the right to assist in the
defense thereof by representation of its own choosing.

      15.2 Survival. All indemnification rights hereunder shall survive the
execution and delivery of this Note and the consummation of the transactions
contemplated hereby (i) for a period of two years with respect to
representations and warranties made by Maker, and (ii) until fully performed
with respect to covenants and agreements made by Maker, regardless of any
investigation, inquiry or examination made for or on behalf of, or any knowledge
of Holder and/or any of the Indemnified Persons, or the acceptance by Holder of
any certificate or opinion.

                                       22
<PAGE>

                                                               EXECUTION VERSION

      15.3 Payment. Any indemnification of Holder or any other Indemnified
Person by Maker pursuant to this Section 15 shall be effected by wire transfer
of immediately available funds from Maker to an account designated by Holder or
such other Indemnified Person within fifteen (15) days after the determination
thereof.

SECTION 16. INTEGRATION WITH RECAPITALIZATION PLAN

Maker acknowledges and agrees that the funding provided by Holder pursuant to
this Note is only being provided as part of an integrated Recapitalization Plan,
as set forth in the Recapitalization Agreement. Maker further acknowledges and
agrees that this Note is subject to all terms and conditions set forth in the
Recapitalization Agreement.

SECTION 17. MISCELLANEOUS.

      17.1 Notices. All notices, demands and requests of any kind to be
delivered to any party in connection with this Note shall be in writing and
shall be deemed to be effective upon delivery if (i) personally delivered, (ii)
sent by confirmed facsimile with a copy sent by nationally recognized overnight
courier, (iii) sent by nationally recognized overnight courier, or (iv) sent by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

         if to Maker:      Northwest Biotherapeutics, Inc.
                           22322 20th Ave SE, Suite 150
                           Bothell, WA  98021
                           Fax: (425) 608 3146
                           Attn: Alton Boynton

         if to Holder:     Toucan Capital Fund II, LP
                           7600 Wisconsin Avenue
                           Suite 700
                           Bethesda, MD 20814
                           Fax: (240) 497-4060
                           Attention: Linda F. Powers

or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance with the
provisions of this Section.

      17.2 Parties In Interest. This Note shall bind and inure to the benefit of
Holder, Maker and their respective successors and permitted assigns. Maker shall
not transfer or assign this Note without the prior written consent of Holder.
Holder may transfer and assign this note without the prior consent of Maker.

      17.3 Entire Agreement. This Note together with the Disclosure Schedule and
the Recapitalization Agreement contains the entire understanding of the parties
with respect to the

                                       23
<PAGE>

                                                               EXECUTION VERSION

subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect thereto.

      17.4 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware (without giving effect to
principles of conflicts of laws of the State of Delaware or any other state).

      17.5 Headings. The section and paragraph headings contained in this Note
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Note.

      17.6 Amendments. No provision of this Note may be amended or waived
without the express written consent of both Maker and Holder, provided, however,
that Holder may waive any provision hereof that inures to the benefit of Holder
without the prior written consent of Maker. Also notwithstanding anything to the
contrary, this Note shall be amended as and to the extent necessary to comply
with the Small Business Investment Act and all regulations, advice, direction
and guidance applicable to SBIC's.

      17.7 Nature of Obligation. This Note is being made for business and
investment purposes, and not for household or other purposes.

      17.8 Expenses. Maker shall pay, reimburse or otherwise satisfy, upon
demand of Holder, all fees, costs and expenses incurred and/or undertaken, and
to be incurred and/or undertaken, by Holder relating to the preparation for,
development of and implementation of the Recapitalization Plan set forth in the
Recapitalization Agreement, including, without limitation, all due diligence
expenses and all expenses relating to the Bridge Funding, the Anticipated Equity
Financing and the transactions contemplated thereby and the documentation of the
foregoing (including, without limitation all legal fees and expenses and costs
incurred and to be incurred in connection with any SBA filings), which shall be
satisfied by Maker upon Holder's demand, including but without limitation upon
each closing of the Bridge Funding or Anticipated Equity Financing. This
obligation shall apply regardless of whether or not all of the transactions
contemplated in the Recapitalization Agreement close. At each closing of Bridge
Funding and/or Anticipated Equity Financing, at Holder's sole discretion, and
with respect to any or all of such fees, costs and expenses accrued through such
closing, Maker shall (a) pay Holder in cash concurrently with such closing (or
at Holder's sole discretion, Investor may withhold such amount from the wire of
investment proceeds), (b) issue a Note in the form hereof in principal amount
equal to such fees, costs and expenses (which at Holder's option may instead be
evidenced as an increase in the principal amount of any Note issued in
connection with such closing); or (c) treat such fees, costs and expenses as an
unsecured payable. At any time following such closing, Holder may require any
amounts that it elected to have Maker treat as unsecured amounts payable to be
paid in cash or satisfied by issuance of a Note in the principal amount of some
or all of such unsecured obligation.

                                       24
<PAGE>

                                                               EXECUTION VERSION

      IN WITNESS WHEREOF, Maker has caused this Note to be duly executed by its
duly authorized person(s) as of the date first written above.

                                                NORTHWEST BIOTHERAPEUTICS, INC.

                                                 By: /s/ Alton Boynton
                                                     ___________________________

                                                 Name: Alton Boynton

                                                 Title: President

                              CONSENT AND AGREEMENT

      Toucan Capital Fund II, L.P. consents to the loan and security interest
granted by Maker in the foregoing Note.

                                                  TOUCAN CAPITAL FUND II, L.P.

                                                  By: /s/ Linda Powers
                                                      _________________________

                                                  Name:  Linda Powers

                                                  Title: Managing Director

                                       25
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT A

                            DESCRIPTION OF COLLATERAL

      The "Collateral" consists of all of Maker's right, title and interest (in
each case, whether now owned or hereafter acquired) in and to the following:

      (a) All intellectual property of any kind, whether owned, licensed or
otherwise permitted to be used, and whether now held or hereafter acquired or
developed (the "Intellectual Property"). Such Intellectual Property shall
include, without limitation, all foreign and domestic intangible property and
rights, owned, licensed or otherwise obtained by Maker, including, without
limitation, (i) trademarks, service marks, brand names, certification marks,
collective marks, d/b/a's, Internet domain names, logos, symbols, trade dress,
assumed names, fictitious names, trade names, and other indicia of origin, all
applications and registration for the foregoing, and all goodwill associated
therewith and symbolized thereby, including all extensions, modifications and
renewals of same, including without limitation those items reference on Appendix
1 hereto (collectively, "Trademarks"); (ii) inventions, discoveries and ideas,
whether patentable or not, and all patents, registrations and applications
therefor, including divisions, continuations, continuations-in-part, requests
for continued examination, and renewal applications, and including renewals,
extensions and reissues, including without limitation those items reference on
Appendix 2 hereto (collectively, "Patents"); (iii) confidential and proprietary
information, trade secrets and know-how, including, without limitation,
processes, schematics, formulae, drawings, prototypes, models, designs and
customer lists (collectively, "Trade Secrets"); (iv) published and unpublished
works of authorship, whether copyrightable or not (including, without
limitation, databases and other compilations of information), copyrights therein
and thereto, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof (collectively, "Copyrights");
(v) all FDA applications, registrations, filings and other rights (collectively,
"FDA Rights and Materials"); (vi) all results, information and data arising
from, or obtained in connection with, research, development, pre-clinical work
and/or clinical trials (collectively, "Data"); and (vii) all other intellectual
property or proprietary rights and claims or causes of action arising out of or
related to any infringement, misappropriation or other violation of any of the
foregoing, including rights to recover for past, present and future violations
thereof (collectively, "Other Proprietary Rights").

      (b) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located.

      (c) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Maker's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing an any documents of title representing any of the above.

                                       26
<PAGE>

                                                               EXECUTION VERSION

         (d) All contract rights, general intangibles and intellectual property,
now owned or hereafter acquired, including, without limitation, goodwill,
trademarks, service marks, trade styles, trade names, patents, patent
applications, leases, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, computer code, copyrights,
literature, reports, catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kind.

      (e) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Maker
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Maker, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefore, as well as
all merchandise returned to or reclaimed by Maker.

      (f) All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Maker's books relating to the foregoing.

      (g) Each item of equipment, or personal property whether now owned or
hereafter acquired, together with all substitutions, renewals or replacements of
and additions, improvements, and accessions to any and all of the foregoing, and
all proceeds from sales, renewals, releases or other dispositions thereof.

      (h) All Maker's books relating to the foregoing and any and all claims,
rights and interests in any of the above, whether now owned or hereafter
acquired, and all substitutions for, additions and accessions to and proceeds
thereof.

Notwithstanding the foregoing, to the extent any of Maker's licensed
Intellectual Property prohibits the transfer or encumbrance of such licensed
Intellectual Property (the "Restricted Intellectual Property") without prior
consent of the owner or licensor thereof, such Restricted Intellectual Property
is hereby conditionally included within the definition of Collateral, subject to
receipt, by or on behalf of Maker, of any required consents. If requested by
Holder, Maker shall use its best efforts to obtain the required consents under
any Restricted Intellectual Property within thirty (30) days of such request.

                                       27
<PAGE>

                                                               EXECUTION VERSION

                                   APPENDIX 1
                                   TRADEMARKS

                                       28
<PAGE>

                                                               EXECUTION VERSION

                                   APPENDIX 2
                                     PATENTS

                                       29
<PAGE>

                                                               EXECUTION VERSION

                                    EXHIBIT B
                               DISCLOSURE SCHEDULE

                                       30

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]