Document:

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                                                                    Exhibit 10.7

                             SHAREHOLDERS AGREEMENT

                               Date: 5 April 1994

                           BIOTRANSPLANT INCORPORATED
                                      (BTI)

                            CASTELLA RESEARCH PTY LTD
                                 ACN 006 125 364
                                   (Castella)

                             SECURE SCIENCES PTY LTD
                                 ACN 064 139 948
                                    (Secure)

                           STEM CELL SCIENCES PTY LTD
                                 ACN 063 293 130
                                  (the Company)

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                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                                               <C>
1.       DEFINITIONS AND INTERPRETATION.....................................................2

         1.1      Definitions...............................................................2
         1.2      Delegation................................................................6
         1.3      Interpretation............................................................6
         1.4      Headings..................................................................7

2.       STRUCTURE OF THE COMPANY...........................................................7

         2.1      Conditions Precedent......................................................7
         2.2      Authorised capital........................................................7
         2.3      Articles of Association...................................................7
         2.4      Issue of Capital in the Company...........................................7
         2.5      Options...................................................................8
         2.6      First Directors...........................................................9
         2.7      Secretary and public officer..............................................9
         2.8      Registered office.........................................................9
         2.9      Banking...................................................................9
         2.10     Auditors..................................................................9
         2.11     Financial year............................................................9

3.       BUSINESS OF THE COMPANY............................................................9

         3.1      Nature of business........................................................9

4.       THE BOARD OF DIRECTORS............................................................10

         4.1      Board....................................................................10
         4.2      Chairman.................................................................10
         4.3      No Casting Vote..........................................................10

5.       BOARD POWERS AND MEETINGS.........................................................10

         5.1      Meetings.................................................................10
         5.2      Powers...................................................................10
         5.3      Unanimous Board Approval.................................................11
         5.4      Qualification of Clause 5.3..............................................12
         5.5      Status Quo for Deadlock..................................................13
         5.6      Business plans...........................................................13
         5.7      Director's Expenses......................................................13
         5.8      Directors' Fees..........................................................13

6.       SHAREHOLDERS TO FOSTER DEVELOPMENT IN COMPANY.....................................13

         6.1      Shareholders to use best endeavours......................................13

7.       ADDITIONAL FUNDING OF THE COMPANY.................................................14

         7.1      Additional Funding.......................................................14

8.       GENERAL MANAGER...................................................................14

         8.1      Appointment by the Board.................................................14
         8.2      Powers and Duties........................................................14

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9.       FINANCIAL REPORTS; DIVIDEND AND BORROWING POLICIES; AND SECONDMENTS...............14

         9.1      Financial reports........................................................14
         9.2      Declaration of dividends.................................................15
         9.3      Performance Bonds and Guarantees.........................................15
         9.4      Secondments..............................................................16

10.      CONFIDENTIALITY OF THE COMPANY'S TECHNOLOGY AND KNOW-HOW..........................16

         10.1     Covenants................................................................16
         10.2     Exclusions...............................................................16

11.      DEADLOCK IN MANAGEMENT............................................................17

         11.1     Deadlock in Management...................................................17
         11.2     Procedures to Resolve Deadlock or Disputes...............................17

12.      DEADLOCK-BREAKING MECHANISM.......................................................18

         12.1     Transfer of Shares to resolve deadlock...................................18

13.      DEFAULT...........................................................................18

         13.1     Events of Default........................................................18
         13.2     Remedies for Events of Default...........................................19
         13.3     Invoking of Pre-emption Rights...........................................20
         13.4     Valuation of Shares on Breach............................................20
         13.5     Winding up...............................................................22
         13.6     Consequences of Winding Up...............................................22

14.      STATEMENT ON SHARE CERTIFICATES...................................................22

         14.1     Share certificates to refer to restrictions on transfer..................22

15.      ARBITRATION.......................................................................23

         15.1     Neutral Venue............................................................23

16.      EFFECT OF SHARE TRANSFER..........................................................23

         16.1     Conditions of Transfer...................................................23

17.      RELATIONSEIP OF THE SHAREHOLDERS..................................................24

         17.1     No partnership or agency.................................................24
         17.2     Rights and obligations are several.......................................24

18.      MISCELLANEOUS.....................................................................24

         18.1     Period of Agreement......................................................24
         18.2     Further assurance........................................................25
         18.3     Paramountcy of this Agreement............................................25
         18.4     Entire Agreement.........................................................25
         18.5     Modification.............................................................25
         18.6     Service of notices.......................................................25

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         18.7     Reading down; severance..................................................27
         18.8     Waiver does not excuse later breach......................................27
         18.9     Assignment...............................................................27
         18.10    Each Shareholder bears its own expenses..................................28
         18.11    Governing law............................................................28
         18.12    Public announcements.....................................................28
         18.13    Counterparts.............................................................28
         18.14    English Language.........................................................28
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AGREEMENT made at Melbourne on 5 April 1994

BETWEEN           BIOTRANSPLANT INCORPORATED a corporation organized and
                  existing under the laws of the State of Delaware and having
                  its principal office at, 13th Street, Building 96, Charlestown
                  Navy Yard, Charlestown, MA, United States of America

AND               CASTELLA RESEARCH PTY LTD CAN 006 125 364 a company
                  incorporated in the State of Victoria and having its
                  registered office in that State at the offices of Adrian
                  Davis & Co Ptv Ltd, at 587 Whitehorse Road Mont Albert in
                  its own capacity and as trustee of the M.R. Brandon Family
                  Trust

AND               SECURE SCIENCES PTY LTD ACN 064 139 948 a company incorporated
                  in the State of Victoria and having its registered office in
                  that State at the offices of R.D. Larsson & Co, Level 10, 420
                  St Kilda Road, Melbourne in its own capacity and as trustee of
                  the Secure Sciences Unit Trust

AND               STEM CELL SCIENCES PTY LTD ACN 063 293 130 a company
                  incorporated in the State of Victoria and having its
                  registered office in that State at Level 10, 420 St Kilda
                  Road, Melbourne (the "Company")

RECITALS

A.   BTI has agreed to provide equity capital to the Company in return for
     ownership, licenses, and rights to direct part of the research of the
     Company.

B.   BTI and the Company have agreed to enter into a research and license
     agreement which governs the interests of those parties in research and
     intellectual property rights.

C.   The Company is a development-stage venture established in Australia for the
     purpose of advancing and exploiting several proprietary stem cell-related
     technologies.

D.   The present issued capital of the Company is 2 ordinary shares of $1.00
     each, with one ordinary share fully paid being held by each of Castella and
     Secure.

E.   The Shareholders intend to own the issued capital of the Company in the
     following proportions:

             BTI:        30%
             Castella:   15%
             Secure:     55%

F.   The Shareholders wish by this Agreement to record their agreement as to how
     the Company will be owned, controlled and funded by them.

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THE PARTIES AGREE:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement unless the contrary intention appears:

         "ARTICLES OF ASSOCIATION" means the articles of association of the
         Company as they will be once clause 2 of this Agreement has been
         implemented and as amended from time to time and a reference to an
         "ARTICLE" is a reference to the specified provision of the Articles of
         Association.

         a reference to a person who is an "ASSOCIATE" of another person is a
         reference to a person who is an associate of that other person within
         the meaning of all of the provisions of Division 2, Part 1.2 of the
         Corporations Law.

         "AUDITORS" means the Company's auditors.

         "BOARD" means the board of directors of the Company from time to time.

         "BRANDON CONSULTANCY AGREEMENT" means the consultancy agreement between
         Castella, the Company and Dr. Brandon, in the form of the draft annexed
         hereto and marked "C".

         "BRANDON COVENANT" means the deed of confidentiality and
         non-competition between Dr. Brandon the Company and BTI in the form of
         the draft annexed hereto and annexed "D".

         "BTI" means BioTransplant Incorporated or where the context requires,
         any body corporate in the BTI group which acts on behalf of BTI.

         "BTI OPTIONS" means the options to be issued to BTI by the, Company on
         the Effective Date pursuant to clause 2.5.

         "BTI RESEARCH AND LICENSE AGREEMENT" means the Research and License
         Agreement between BTI and the Company in the form of the draft annexed
         hereto and marked "B".

         "BUSINESS" means the business of the Company as described in clause
         3.1.

         "CASTELLA" means Castella Research Pty Ltd ACN 006 125 364 in its own
         capacity and s trustee of the M. R. Brandon Family Trust or where the
         context requires, any body corporate in the Castella group which acts
         on behalf of Castella Research Pty Ltd ACN 006 125 364.

         "CASTELLA OPTIONS" means the options to be issued to Castella by the
         Company on the Effective Date pursuant to clause 2.5.

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         "CHANGE IN CONTROL" means:

         (a)      in the case of a Shareholder which is a corporation, where a
                  person that did not (directly or indirectly) effectively
                  control such corporation at the date when such corporation
                  first acquired Shares in the Company, acquires (directly or
                  indirectly, and whether alone or with others) effective
                  control of the majority of the issued voting shares of such
                  corporation, without the prior written consent of the other
                  Shareholders;

         (b)      in the case of a natural person, where that natural person
                  does not continue to control the exercise of the right to vote
                  and the power to transfer all of the Shares in the Company
                  held by that natural person; and

         (c)      in respect of a Trustee Shareholder, where effective control
                  of a Trustee Shareholder, a Trust or all or any Trust Assets
                  changes from that subsisting at the date hereof without the
                  prior written consent of the other Shareholders;

         where:

         (d)      in paragraph (a), in determining whether a person (whether
                  alone or with others) is in a position (directly or
                  indirectly) to effectively control a Shareholder regard will
                  be had to voting rights, rights to receive income, rights to
                  appoint directors and any other matter which reasonably
                  relates to control;

         (e)      in paragraph (c) "effective control":

                  (i)    in respect of a Trustee Shareholder means control
                         within the meaning of paragraph (a) (in the case of a
                         body corporate) or paragraph (b) (in the case of an
                         individual);

                  (ii)   in respect of the Trust or Trust Assets means:

                         (1)  control of the ability to replace the Trustee
                              Shareholder as trustee of the Trust and/or appoint
                              a new trustee of that Trust;

                         (2)  control of the ability to direct or authorise the
                              Trustee Shareholder, in its capacity as Trustee of
                              the Trust, to do, or not do, anything; or

                         (3)  control of the ability to appoint or select
                              beneficiaries under the Trust or to direct or
                              authorise any person so to do; and

         (f)      in paragraphs (c) and (e):

                  (i)    "Trustee Shareholder" means each of Castella and
                         Secure;

                  (ii)   "Trust" in relation to Castella, means the M.R. Brandon
                         Family Trust established by a Deed of Settlement dated
                         2 March 1983 and in relation to Secure, means either or
                         both of the Secure Sciences Unit Trust established

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                         by a Deed dated 30 March 1994 and the Mountford
                         Investment Trust established by a Deed dated 30 March
                         1994; and

                  (iii)  "TRUST ASSETS" means each of the assets of the said M.
                         R. Brandon Family Trust, the said Secure Sciences Unit
                         Trust and the said Mountford Investment Trust
                         respectively, as the case requires.

         "CONDITIONS PRECEDENT" means:

          (a)  the execution and exchange of the Original License Agreement by
               and between the University of Edinburgh operating through its
               Centre for Genome Research and the Company;

          (b)  the execution and exchange of the BTI Research and License
               Agreement by and between BTI and the Company;

          (c)  the execution and exchange of the Brandon Consultancy Agreement
               by and between Castella the Company and Dr. Brandon;

          (d)  the execution and exchange of the Mountford Consultancy Agreement
               by and between Secure, the Company and Dr. Mountford;

          (e)  the execution and exchange of the Brandon Covenant by and
               between, Dr. Brandon, the Company and BTI; and

          (f)  the execution and exchange of the Mountford Covenant by and
               between Dr. Mountford, the Company and BTI.

          "DIRECTORS" means the directors of the Company from time to time.

          "DR. BRANDON" means Malcolm Roy Brandon of 14 Castella Street Ivanhoe
          East in the State of Victoria.

          "DR. MOUNTFORD" means Peter Scott Mountford of 2 Hope Street East
          Brighton in the State of Victoria.

          a reference to a person "ENTITLED TO" shares in a company is a
          reference to a person entitled to those shares within the meaning of
          section 609 of the Corporations Law.

          "EFFECTIVE DATE" means Tuesday 5 April 1994 or such other date as the
          Shareholders may agree, as at immediately following the shareholders
          meeting to be convened on that day pursuant to clause 2.3.

          "GENERAL MANAGER" means the general manager or president appointed
          pursuant to clause 8.

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         "GROUP" means, (in relation to BTI) BTI and its related bodies
         corporate, (in relation to Castella) Castella and its related bodies
         corporate, and (in relation to, Secure). Secure and its related bodies
         corporate.

         "HOLDING COMPANY" means a body corporate which owns or controls
         (directly or indirectly) a majority of the voting shares of a
         Shareholder.

         "INSOLVENCY EVENT", in relation to a Shareholder, means the occurrence
         of any of the following events in relation to the Shareholder:

         (a)   the Shareholder becomes an externally administered body corporate
               as defined by the Corporations Law;

         (b)   a resolution is passed by creditors or members of the Shareholder
               that the Shareholder become an externally administered body
               corporate as defined by the Corporations Law (other than for the
               purposes of any reconstruction or amalgamation of the Shareholder
               group);

         (c)   a controller as defined by the Corporations Law is appointed to
               the Shareholder or to any of its assets; or

         (d)   the Shareholder becomes insolvent as defined by the Corporations
               Law.

         "MANAGEMENT SHAREHOLDERS" means Castella and Secure.

         "MOUNTFORD CONSULTANCY AGREEMENT" means the consultancy agreement
         between Secure, the Company and Dr. Mountford in the form of the draft
         annexed hereto and marked "E".

         "MOUNTFORD COVENANT" means the deed of confidentiality and
         non-competition between Dr. Mountford, the Company and BTI in the form
         of the draft annexed hereto and marked "F".

         "OPTION TERMS" means the terms and conditions which will attach to the
         BTI Options, the Castella Options and the Secure Options, as set out in
         Schedule 1.

         "ORIGINAL LICENSE AGREEMENT" means the License Agreement between the
         University of Edinburgh operating through its Centre for Genome
         Research and the Company in form of the draft annexed hereto and marked
         "G".

         "RELATED BODY CORPORATE" has the meaning given in the Corporations Law.

         "SECURE" means Secure Sciences Pty Ltd ACN 064 139 948 in its own
         capacity and as trustee of the Secure Sciences Unit Trust or where the
         context requires, any body corporate in the Secure group which acts on
         behalf of Secure Sciences Pty Ltd ACN 064 139 948,

         "SECURE OPTIONS" means the options to be issued to Secure by the
         Company on the Effective Date pursuant to clause 2.5.

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          "SHARES" means the issued shares in the Company from time to time,
          being "A" shares and/or "B" shares.

          "SHAREHOLDERS" means BTI, Castella and Secure including their
          respective nominees, successors and permitted assigns and
          "SHAREHOLDER" means any one of the Shareholders.

          "TRANSFER NOTICE" has the meaning given in Article 7.4 of the Articles
          of Association.

          "TRUST EVENT" means:

          (a)  any Trustee Shareholder ceasing for any reason or at any time to
               be the sole trustee of a Trust;

          (b)  any Trust being determined or for any reason ceasing to exist;

          (c)  any distribution of the capital of a Trust being made by a
               trustee of a Trust;

          (d)  a Trustee Shareholder exercising in its own favour personally any
               right of indemnification, reimbursement, recoupment, lien or
               charge to which it might be entitled personally against the Trust
               or in respect of any Trust Assets other than in the ordinary
               course of business of the Trust; or

          (e)  any beneficiary of a Trust, or the beneficiaries of a Trust
               together, becoming absolutely entitled to the Trust Assets as
               against the trustee of the Trust,

          without the prior written consent of BTI (such consent not to be
          unreasonably withheld). In this definition the phrases "Trustee
          Shareholder", "Trust" and "Trust Assets" bear the same meaning as in
          paragraph (f) of the definition of "Change in Control".

          "VOTING SHARE" has the meaning given in the Corporations Law.

1.2       DELEGATION

          From time to time a Shareholder may procure a member of its group to
          comply with that Shareholder's obligations in relation to the Company
          and its Business, on behalf of the Shareholder. Each Shareholder shall
          always remain liable for the acts and omissions of its group members.

1.3       INTERPRETATION

          In this Agreement unless the contrary intention appears:

          (a)  words importing the plural number include the singular number and
               vice versa;

          (b)  words importing persons include corporations;

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          (c)  words importing a gender include the other genders;

          (d)  all references to currency are to Australian currency.

1.4       HEADINGS

          The headings in this Agreement are not part of it and shall not affect
          its meaning.

2.        STRUCTURE OF THE COMPANY

2.1       CONDITIONS PRECEDENT

          (a)  Notwithstanding any other provision of this Agreement, this
               Agreement shall not take effect unless and until the Conditions
               Precedent are satisfied;

          (b)  The Shareholders and the Company must do everything which is
               reasonable and within their respective powers in a prompt and
               efficient manner to ensure satisfaction of the Conditions
               Precedent on or before the Effective Date; and

          (c)  If the Conditions Precedent are not satisfied on or before the
               Effective Date despite paragraph (b), then any Shareholder may
               terminate this Agreement by notice in writing to the other
               Shareholders. Termination will not affect the right of any
               Shareholder to bring an action against any other party for a
               breach of paragraph (b) occurring before such termination,

2.2       AUTHORISED CAPITAL

          On the Effective Date:

          (a)  the 2 ordinary shares of $1.00 each presently on issue, as
               referred to in Recital D, shall be re-classified as "B" Shares;
               and

          (b)  the authorised capital of the Company shall be increased to
               $2,000,000 divided into 2,000,000 ordinary shares of $ 1. 00 each
               comprising 1,000,000 "A" Shares and 1,000,000 "B" Shares.

2.3       ARTICLES OF ASSOCIATION

          On the Effective Date by a meeting of shareholders, the Articles of
          Association of the Company shall be converted to the form of the draft
          annexed hereto and marked "A".

2.4       ISSUE OF CAPITAL IN THE COMPANY

          On the Effective Date:

          (a)  BTI shall subscribe for, fully pay-up and be issued with 300 "A"
               shares in the capital of the Company issued at a price of,
               4,685.00 per share (being $1.00 par and $4,684.00 premium per
               share) for a total consideration of $1,405,500.00.

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          (b)  Castella shall subscribe for, fully pay-up the par value of and
               be issued with 149 "B" shares in the capital of the Company
               issued at par of $1.00 for a total consideration of $149.00; and

          (c)  Secure shall subscribe for, fully pay-up the par value of and be
               issued with 549 "B" shares in the capital of the Company issued
               at par of $1.00 for a total consideration of $549.00.

          so that immediately thereafter, BTI will hold 300 "A" shares, Castella
          will hold 150 "B" shares and Secure will hold 550 "B" shares.

2.5       OPTIONS

          (a)  On the Effective Date the Company shall issue the following
               options (with the Option Terms attaching) to the Shareholders to
               subscribe for further shares:

               (i)  to BTI, an option to subscribe for, fully pay-up and be
                    issued with a further 300 "A" shares in the capital of the
                    Company issued at a price of $4,685.00 per share (being
                    $1.00 par and $4,684.00 premium per share) for a total
                    consideration of $1,405,500.00 at any time on or before the
                    first anniversary of the Effective Date (the "FIRST BTI
                    OPTION");

               (ii) to BTI, an option to subscribe for, fully pay-up and be
                    issued with a further 600 "A" shares in the capital of the
                    Company issued at a price of $4,685.00 per share (being
                    $1.00 par and $4,684.00 premium per share) for a total
                    consideration of $2,811,000. 00 at any time on or before the
                    second anniversary of the Effective Date (the "SECOND BTI
                    OPTION");

              (iii) to Castella an option to subscribe for, fully pay-up the
                    par value of and be issued with a further 150 "B" shares in
                    the capital of the Company issued at par of $1.00 for a
                    total consideration of $150.00 on the first anniversary of
                    the Effective Date;

               (iv) to Castella, an option to subscribe for, fully pay-up the
                    par value of and be issued with a further 300 "B" shares in
                    the capital of the Company issued at par of $1.00 for a
                    total consideration of $300.00 on the second anniversary of
                    the Effective Date;

               (v)  to Secure an option to subscribe for, fully pay-up the par
                    value of and be issued with a further 550 "B" shares in the
                    capital of the Company issued at par of $1.00 for a total
                    consideration of $550.00 on the first anniversary of the
                    Effective Date; and

               (vi) to Secure, an option to subscribe for, fully pay-up the par
                    value of and be issued with a further 1100 "B" shares in the
                    capital of the Company issued at par of $1.00 for a total
                    consideration of $1100.00 on the second anniversary of the
                    Effective Date.

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          (b)  if the First BTI Option is not exercised on or before the first
               anniversary of the Effective Date, then the Second BTI Option
               will lapse.

2.6       FIRST DIRECTORS

          From the Effective Date the first Directors shall be Dr. Brandon (the
          first Chairman who, for the purposes of this Agreement, shall be
          regarded as having been appointed by Castel1a). Dr. Mountford (who,
          for the purposes of this Agreement, shall be regarded as having been
          appointed by Secure) and Mr. Elliot Lebowitz, President and Chief
          Executive Officer of BTI, (who, for the purposes of this Agreement,
          shall be regarded as having been appointed by BTI).

2.7       SECRETARY AND PUBLIC OFFICER

          From the Effective Date the first secretary of the Company and its
          first public officer shall be Dr. Brandon

2.8       REGISTERED OFFICE

          The registered office of the Company shall be at Level 10, 420 St
          Kilda Road, Melbourne, Victoria.

2.9       BANKING

          The Company's banker shall be Australia and New Zealand Banking Group
          Limited (420 St. Kilda Road branch) and the first signatories to the
          Company's bank account shall be determined by the Board on the
          Effective Date.

2.10     AUDITORS

          The Auditors shall be KPMG Peat Marwick of 161 Collins Street,
          Melbourne.

2.11      FINANCIAL YEAR

          The financial year of the Company shall be based on a calendar year.

3.        BUSINESS OF THE COMPANY

3.1       NATURE OF BUSINESS

          From the Effective Date the business of the Company shall be:

          (a)  to develop, research, manufacture, sell, license and otherwise
               exploit products, processes, technologies and techniques in stem
               cell and cell biology;

          (b)  in particular, the Company will undertake to implement the
               RESEARCH Plan in Appendix A of the BTI Research and License
               Agreement and other RESEARCH plans prepared pursuant to the BTI
               Research and License Agreement from time to time, which describe
               the application of the Company's technology to the porcine

                                       9

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               system and BTI's mini-swine for the purposes of developing a
               universal donor pig useful in xenotransplantation; and

          (c)  such other business or businesses as all of the Shareholders may
               hereafter agree.

4.        THE BOARD OF DIRECTORS

4.1       BOARD

          The Company shall, until otherwise agreed by all of by the
          Shareholders, have a Board consisting of 3 Directors, of which:

          (a)  1 Director may be appointed, removed and replaced by BTI;

          (b)  1 Director may be appointed, removed and replaced by Castella;
               and

          (c)  1 Director may be appointed, removed and replaced by Secure.

          A quorum of all Board meetings shall, subject to this Agreement, be an
          even number, consisting of a minimum of 2 Directors, one of which must
          represent BTI and one of which must represent either of the Management
          Shareholders.

4.2       CHAIRMAN

          The Board shall elect a Chairman from amongst its members subject to
          the following rules:

          (a)  for the period of 2 years from the Effective Date the Chairman
               shall be Dr. Brandon and for the next 2 years thereafter the
               Chairman shall be Dr. Mountford: and

          (b)  thereafter the Chairman from year to year is to be such person as
               the Board may decide pursuant to the Articles of Association.

4.3       NO CASTING VOTE

          The Chairman of Directors shall not have nor purport to exercise any
          power of a casting vote.

5.        BOARD POWERS AND MEETINGS

5.1       MEETINGS

          The Board shall meet on a quarterly basis and at such other times as
          may be required.

5.2       POWERS

          The Board shall have responsibility for matters concerning policy and
          direction of the Company.

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5.3       UNANIMOUS BOARD APPROVAL

          Subject to clause 5.4, unanimous approval of all of the members of the
          Board shall be required for adoption and implementation of:

          (a)  annual business plans and budgets arising under the BTI Research
               and License Agreement;

          (b)  requests to the Shareholders for additional funds, whether by way
               of subscription for additional equity or loans;

          (c)  the appointment or termination of the General Manager or other
               executive officers and the resolution of any issues arising from
               the Brandon Consultancy Agreement or the Mountford Consultancy
               Agreement;

          (d)  any change to the location of the Company's operations or
               offices;

          (e)  the acquisition, grant, surrender, sale, disposal or termination
               of or change to any material rights, agreements or arrangements
               in which BTI has an actual, prospective or contingent interest
               under the BTI Research and Licence Agreement;

          (f)  the acquisition, grant, surrender, sale, disposal or termination
               of or change to any technology or rights to intellectual property
               of any description in relation to the Business (or of or to any
               material licences relating thereto) in which BTI has an actual,
               prospective or contingent interest under the BTI Research and
               Licence Agreement and also for the resolution of any issues
               arising from the Original License Agreement and the BTI Research
               and License Agreement;

          (g)  the sale or purchase of any material fixed assets of the Company;

          (h)  the creation of any encumbrance over any asset of the Company;

          (i)  the Company entering into any arrangement or incurring any
               liability which is not in the ordinary course of the Business;

          (j)  the Company entering into any arrangement or incurring any
               liability which is not on arms length terms;

          (k)  granting an employee of the Company a total salary package
               exceeding $100,000 per annum;

          (l)  the creation of any committees of the Board or the delegation of
               any power of the Board;

          (m)  the appointment or removal of the Auditor;

          (n)  the recommendation or declaration of any interim or final
               dividend;

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          (o)  any material deviation from any annual business plans or budgets
               approved by the Board under paragraph (a) of this clause;

          (p)  any material alteration in the Business, the merger of the
               Business with any other business, the acquisition of any business
               or the entering into of any new business;

          (q)  disposal of the Business or any substantial part of it or the
               disposal of any subsidiaries;

          (r)  the appointment of a liquidator to the Company or any proposal to
               wind up the Company;

          (s)  the acquisition of any equity or security convertible into
               equity;

          (t)  the issue of shares, debentures, convertible notes, options or
               other equity or debt securities of the Company other than under
               clause 2.4 or clause 2.5;

          (u)  any change in bank account signatories;

          (v)  the formation or acquisition of any subsidiaries;

          (w)  capital expenditure exceeding $50,000 other than in accordance
               with the BTI Research and License Agreement;

          (x)  any borrowing causing the Company's total borrowings to exceed $
               100,000;

          (y)  any proposed amendment to the Company's memorandum or articles of
               association; and

          (z)  any proposed variation of rights attaching to Shares.

5.4       QUALIFICATION OF CLAUSE 5.3

          (a)  All paragraphs of clause 5.3 except paragraphs (e), (f), (p) and
               (v) shall cease to operate on the first to occur of the
               following:

               (i)  midnight (Melbourne time) on the first anniversary of the
                    Effective Date, if the First BTI Option has not been
                    exercised on or before that time; or

               (ii) midnight (Melbourne time) on the second anniversary of the
                    Effective Date, if the Second BTI Option has not been
                    exercised on or before that time; or

              (iii) midnight on the third anniversary of the Effective Date.

          (b)  Paragraphs (e), (f), (p) and (v) of clause 5.3 shall only cease
               to operate at the end of the RESEARCH TERM (as defined in the BTI
               Research and License Agreement).

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          (c)  Apart from the matters mentioned in clause 5.3, decisions of the
               Board shall be by majority vote.

5.5       STATUS QUO FOR DEADLOCK

          In the event of deadlock (as defined in Clause 11.1) at Board level in
          relation to a matter referred to in clause 5.3, the provisions of
          clauses 11 and 12 shall apply.

          Pending the resolution of any such deadlock, the status quo in respect
          of that matter and the conduct of the Business shall continue.

5.6       BUSINESS PLANS

          The Shareholders will cause the Board to prepare in relation to each
          financial year of the Company a business plan and annual budget in the
          format approved by the Board and will cause the Board to see that
          during the relevant financial year the Company's Business is managed
          in accordance with that business plan and annual budget.

5.7       DIRECTOR'S EXPENSES

          The Company shall meet the reasonable travelling and accommodation
          expenses of Directors necessarily incurred in relation to attending
          meetings of the Board or otherwise for the Business.

5.8       DIRECTORS' FEES

          The Directors shall not be entitled to be paid directors' fees or
          remuneration merely as directors by the Company unless and until
          otherwise unanimously resolved by all Shareholders.

6.        SHAREHOLDERS TO FOSTER DEVELOPMENT IN COMPANY

6.1       SHAREHOLDERS TO USE BEST ENDEAVOURS

          Each Shareholder shall use its best endeavours (consistently with due
          prudence and the other provisions of this Agreement) to:

          (a)  foster the development and profitable operation of the Business
               and each Shareholder will provide such assistance as may from
               time to time reasonably be requested of it by the Company or
               which all of the Shareholders agree would assist in the
               development of the Business; and

          (b)  safeguard the long term interest, stability and growth of the
               Company.

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7.       ADDITIONAL FUNDING OF THE COMPANY

7.1      ADDITIONAL FUNDING

         To the maximum extent practicable the Company shall be managed and run
         on a self funding basis. It is intended that, if the Board determines
         that the Company requires additional funding or financial
         accommodation, the first source of such funding shall in all cases be
         through additional venture capital from professional equity investors
         or corporations.

8.       GENERAL MANAGER

8.1      APPOINTMENT BY THE BOARD

         The Company shall have either a general manager or president, and such
         other managers with such powers and duties, as the Board may authorise.

8.2      POWERS AND DUTIES

         The powers, duties and responsibilities of the General Manager shall
         include (but not be limited to) the following:

         (a)  to prepare reports and recommendations for presentation to the
              Board;

         (b)  to prepare all budgets of the Company for presentation to the
               Board;

         (c)  to hire and fire employees, execute contracts with suppliers or
              subcontractors or other contracts with third parties, as
              authorised by Board resolution;

         (d)  to execute and carry out the resolutions of the Board; and

         (e)  to conduct the Company's daily business operations in accordance
              with the powers that may from time to time be delegated to the
              General Manager by the Board.

9.       FINANCIAL REPORTS; DIVIDEND AND BORROWING POLICIES; AND SECONDMENTS

9.1      FINANCIAL REPORTS

         The Shareholders shall ensure that the Company:

         (a)  adopts appropriate management information systems and management
              reporting formats;

         (b)  causes its financial affairs to be audited by the Auditors in
              accordance with statutory requirements at the end of each
              financial year, and at the request and cost of the requesting
              Shareholder at such other times as such Shareholder may request;

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<PAGE>

          (c)  provides to each of the Directors and to each of the Shareholders
               as soon as available, and in any event within 90 days after the
               end of each financial year of the Company, a copy of the audited
               balance sheet of the Company as at the end of that financial
               year, a copy of the audited profit and loss account of the
               Company and a copy of the cash flow statement for that financial
               year in all reasonable detail and subject to any contrary
               determination by the Board prepared in conformity with generally
               accepted Australian accounting principles and practices at the
               relevant time (including the Australian Accounting Standards and
               the Approved Accounting Standards) consistently applied;

          (d)  provides to each of the Directors as soon as available, and in
               any event not later than 30 days after the end of each quarter, a
               copy of the balance sheet of the Company and a copy of the cash
               flow statement as at the end of that quarter;

          (e)  provides such figures and confirmations to each Shareholder as
               may be reasonably required by that Shareholder for inclusion in
               or for the preparation of its own accounts and reports within 30
               days after the end of each quarter and each financial year of
               that Shareholder or within such other period as may be agreed
               upon by the Shareholders;

          (f)  provides to each of the Directors and to each Shareholder within
               21 days after the end of the relevant accounting month all
               monthly reports and as soon as available other financial accounts
               projections budgets and reports that may be prepared on behalf of
               the Company from time to time as well as any other information as
               may be required by the Board from time to time; and

          (g)  provides to each of the Directors and to each Shareholder within
               7 days of the end of each accounting month a monthly sales and
               orders analysis for the Company.

9.2       DECLARATION OF DIVIDENDS

          The dividend policy shall be determined by the Board from time to time
          in accordance with this Agreement and sound business practice PROVIDED
          always that the long term interest, stability and growth of the
          Company shall be safeguarded.

9.3       PERFORMANCE BONDS AND GUARANTEES

          To the maximum extent possible the Company will obtain any necessary
          bank guarantees, performance bonds and the like required for the
          ordinary course of its business, supported by the security of its
          assets, without the need for guarantor or other support from the
          Shareholders. Subject to the foregoing, and if required by a unanimous
          resolution of the Board, the Shareholders shall join in supporting the
          Company in procuring adequate performance bonds, bank guarantees
          (other than guarantees of the Company's borrowings), and the like from
          reputable trading banks as required by the Company's customers, and
          shall share in the liabilities, costs and expenses of such support as
          follows:

                 -     as to 30% of liabilities, costs and expenses - BTI;

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<PAGE>

                 -     as to 15% of liabilities, costs and expenses - Castella;
                 -     as to 55% of liabilities, costs and expenses - Secure.

9.4       SECONDMENTS

          From time to time, as determined by unanimous resolution of the Board,
          each Shareholder will second necessary staff to the Company on a cost
          recovery basis, and for a period, to be approved by the Board.

10.       CONFIDENTIALITY OF THE COMPANY'S TECHNOLOGY AND KNOW-HOW

10.1      COVENANTS

          It is contemplated that each party hereto will disclose to the others
          proprietary and confidential technology, inventions, technical
          information, materials and the like provided in any form, including,
          but not limited to, drafts, copies, excerpts, notes and summaries
          thereof which are owned or controlled by them or which they are
          obliged to maintain in confidence ("Confidential Information"). Each
          party hereto agrees to maintain such Confidential Information in
          confidence and not to disclose any such Confidential Information to a
          third party without the prior written consent of the others and to use
          such Confidential Information only for the purposes of this Agreement.

10.2      EXCLUSIONS

          A party (the "RECIPIENT") may reveal Confidential Information of
          another party (the "PROVIDER") which the recipient establishes:

          (a)  is required by law to be revealed, provided that the recipient
               immediately notifies the provider of the requirement and takes
               lawful steps and permits the provider the opportunity to oppose
               or restrict such disclosure to preserve as far as possible the
               confidentiality of the Confidential Information;

          (b)  is in or enters the public domain other than through a breach of
               this Agreement;

          (c)  is revealed to an AFFILIATE, a SUBLICENSEE under a sub-licence or
               a third party in accordance with the provisions of BTI Research
               and License Agreement;

          (d)  was known to the recipient before its disclosure by the provider
               other than by way of a breach of Clause 10.1; or

          (e)  is furnished to the recipient by a third party legally entitled
               to furnish such information and not under an obligation of
               confidentiality to the provider.

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<PAGE>

11.       DEADLOCK IN MANAGEMENT

11.1      DEADLOCK IN MANAGEMENT

          (a)  If a disagreement occurs as between BTI on the one hand, and
               either of the Management Shareholders on the other hand, in
               relation to any matter considered by the Shareholders in a
               meeting, in relation to the Company or by the Board in a meeting
               in the discharge of its proper functions, including but not
               limited to the future of the Company or the conduct of the
               Business; or

          (b)  if a failure occurs of a Shareholder or its representative to
               attend a duly convened Board meeting or Shareholders' meeting and
               two adjournments thereof (after such meetings have been adjourned
               for 14 days on each occasion and due notice thereof given to all
               parties),

          and such disagreement or failure is one which in the reasonable
          opinion of any Shareholder prejudices or may prejudice the proper and
          efficient operation of the Company or the conduct of the Business
          (hereafter referred to as the "deadlock") and further the deadlock is
          not resolved within 30 days of it arising, the matter shall, at the
          request of that Shareholder or any Director nominated by Shareholder,
          be referred to and/or discussed by the Shareholders or their nominees
          ("MEETING OF SHAREHOLDERS"). The Shareholders shall forthwith consult
          in good faith for a period of not more than 30 days with a view to
          achieving a mutually acceptable decision.

11.2      PROCEDURES TO RESOLVE DEADLOCK OR DISPUTES

          (a)  If the Meeting of Shareholders fails to resolve the deadlock
               within the aforesaid period of 30 days, then clause 12.1 shall be
               invoked unless it is agreed at the Meeting of Shareholders that
               the chief executive of BTI and a representative nominated by the
               Management Shareholders shall meet ("MEETING OF RESPECTIVE
               DIRECTORS") at such place and time to discuss and endeavour to
               resolve the deadlock in a manner acceptable to all Shareholders.

          (b)  If it is agreed at the Meeting of Shareholders that the Meeting
               of Respective Directors shall take place, then the following
               conditions shall apply:

               (i)  the Meeting of Respective Directors shall take place within
                    30 days of the agreement to hold such meeting at such place
                    and time agreed at the Meeting of Shareholders; and

               (ii) if the deadlock is not settled or withdrawn within 30 days
                    of holding the Meeting of Respective Directors (or such
                    shorter or longer period agreed in writing by the respective
                    directors), then clause 12.1 shall be invoked.

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<PAGE>

12.       DEADLOCK-BREAKING MECHANISM

12.1      TRANSFER OF SHARES TO RESOLVE DEADLOCK

          (a)  If the deadlock remains unresolved notwithstanding clause 11,
               then any of the Shareholders may give a written notice to the
               others (the Shareholder giving the notice hereinafter referred to
               as the "OFFEROR") signifying its intention to sell all the issued
               shares (the "TRANSFER SHARES") in the Company held by the
               Offeror.

          (b)  If, in any respect of any one deadlock, more than one Shareholder
               has given a notice under clause 12.1(a), the notice given by the
               Shareholder which made the request under clause 11.1 shall be
               treated as the operative notice and all other notices under
               clause 12.1(a) shall be disregarded.

          (c)  If an agreement is reached between the Offeror and the other
               Shareholders under which the Offeror will sell the Transfer
               Shares to one or both of the other Shareholders within 30 days of
               the giving of the notice by the Offeror, then the Transfer Shares
               shall be sold by the Offeror at the price and in the manner as
               agreed by the parties. If the parties cannot agree on the price
               and/or the manner of selling the Transfer Shares within 30 days
               of giving the notice hereunder by the Offeror, then Article 7
               shall apply as if the notice given hereunder was a Transfer
               Notice given pursuant to Article 7.4.

13.       DEFAULT

13.1      EVENTS OF DEFAULT

          If any of the following events ("EVENT OF DEFAULT") occur:

          (a)   (i) a Shareholder is in breach of any of its material
                    obligations under this Agreement or the Articles of
                    Association; or

               (ii) Castella is in breach of any of its material obligations
                    under the Brandon Consultancy Agreement; or

              (iii) the Engagement under the Brandon Consultancy Agreement is
                    terminated pursuant to Clause 12 thereof; or

               (iv) Dr. Brandon is in breach of any of his covenants or
                    obligations under the Brandon Covenant: or

               (v)  Secure is in breach of any of its material obligations under
                    the Mountford Consultancy Agreement: or

               (vi) the Engagement under the Mountford Consultancy Agreement is
                    terminated pursuant to Clause 12 thereof; or

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<PAGE>

              (vii) Dr. Mountford is in breach of any of his covenants or
                    obligations under the Mountford Covenant.

               and, in the case of a breach, if it is a breach which is capable
               of being remedied, the breach is not remedied to the reasonable
               satisfaction of a Shareholder who requires the breach to be
               remedied within 30 days after written notice requiring the breach
               to be remedied is given by that Shareholder to:

             (viii) the Shareholder in breach; or

               (ix) Castella, in the case of any breach by Castella or Dr.
                    Brandon; or

               (x)  Secure, in the case of any breach by Secure or Dr.
                    Mountford,

               as the case requires;

          (b)  an Insolvency Event in relation to either Castella or Secure or
               in relation to the ultimate holding company of either Castella or
               Secure;

          (c)  a Change in Control in respect of either Castella or Secure, and
               BTI does not give its consent thereto (such consent not to be
               unreasonably withheld);

          (d)  a deadlock occurs for the purposes of clause 11, which has not,
               despite clause 12 and the Articles of Association, been resolved
               within 12 months from when the deadlock first arose;

          (e)  a period of 4 months has elapsed after the determination of the
               "Fair Price" pursuant to Article 7.9 and no sale of Shares has
               resulted pursuant to the operation of Article 7, (in
               circumstances where Article 7.4 was triggered, without any
               deadlock); or

          (f)  a Trust Event in relation to either Castella or Secure,

          then the provisions of clause 13.2 shall apply.

13.2      REMEDIES FOR EVENTS OF DEFAULT

          (a)  If an Event of Default occurs under clause 13.1(a), not involving
               a breach by BTI, then BTI may elect to invoke either clause 13.4
               or clause 13.5.

          (b)  If any Event of Default concerning Castella or Secure occurs
               under clause (b) or (c) or (f), BTI may elect to invoke either
               clause 13.4 or clause 13.5.

          (c)  If BTI commits an Event of Default under clause 13.1(a), either
               of the Management Shareholders may elect to invoke either clause
               13.3 or clause 13.4 (and upon either of the Management
               Shareholders electing to invoke either clause 13.3(a) or clause
               13.4, the right of the other to do so shall thereupon cease);

          (d)  If an Event of Default under Clause 13.1(d) occurs:

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<PAGE>

               (i)  provided that BTI has not failed to exercise either the
                    First BTI Option or the Second BTI Option before they lapse;
                    then BTI and BTI alone may elect to invoke either Clause
                    13.4 or Clause 13.5; or

               (ii) if either the First BTI Option or the Second BTI Option has
                    lapsed because of a failure to exercise them by BTI before
                    expiry, then any Shareholder may elect to invoke Clause 13.4
                    or Clause 13.5 (and upon any Shareholder making any such
                    election the right of the other Shareholders to do so shall
                    thereupon cease);

          (e)  If an Event of Default under Clause 13.1(e) occurs, BTI may sell
               its Shares (or any of them) to any third party at any price and
               on any terms and conditions without complying with Article 7;

          (f)  If any Event of Default occurs involving a breach by:

               (i)  either Castella or Dr. Brandon, then those of the Castella
                    Options which have not been exercised by the time the Event
                    of Default first occurs will thereupon lapse; or

               (ii) either Secure or Dr. Mountford, then those of the Secure
                    Options which have not been exercised by the time the Event
                    of Default first occurs will thereupon lapse.

13.3      INVOKING OF PRE-EMPTION RIGHTS

          A Shareholder entitled to invoke this clause 13.3 may, without
          limiting its rights or remedies by notice in writing:

          (a)  elect, as a buyer of Shares, to invoke the operation of the
               Pre-emption Rights in Article 7 of the Articles of Association,
               and on service of such notice the other Shareholders will be
               deemed to have served on the Company a Transfer Notice in respect
               of all of the Shares held by that Shareholder with the Shares
               being valued in accordance with Article 7.9; or

          (b)  elect, as a seller of Shares, to invoke the operation of the
               Pre-emption Rights in Article 7 of the Articles of Association,
               and on service of such notice that Shareholder will be deemed to
               have served on the Company a Transfer Notice in respect of all of
               the Shares held by that Shareholder with the Shares being valued
               in accordance with Article 7.9.

13.4      VALUATION OF SHARES ON BREACH

          (a)  Where paragraph (b) does not apply, a Shareholder entitled to
               invoke this clause 13.4 may request ("REQUEST") the Company to
               activate Article 7.9 in order to determine the Fair Price of each
               Share as at the date of the Request. The Company shall thereupon
               proceed to implement Article 7.9, which will then apply mutatis
               mutandis. Once the Fair Price has been determined and advised to
               all

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<PAGE>

               Shareholders, the Shareholder who made the Request may within
               60 days, and subject to obtaining any necessary FATA consent in
               terms of Article 7.13, acquire all the Shares:

               (i)  held by BTI, when this Clause 13.4 is invoked as a result of
                    a breach by BTI; or

               (ii) held by Castella, when this Clause 13.4 is invoked as a
                    result of a breach by either Castella or Dr. Brandon or as a
                    result of termination of the Engagement under the Brandon
                    Consultancy Agreement: or

              (iii) held by Secure, when this Clause 13.4 is invoked as a
                    result of a breach by either Secure or Dr. Mountford or as a
                    result of termination of the Engagement under the Mountford
                    Consultancy Agreement; or

               (iv) held by all other Shareholders, when this clause 13.4 is
                    invoked under Clause 13.2(d);

               (each a "transferring Shareholder") and upon tender of payment in
               cash or bank cheque of the Fair Price for each of those Shares
               then each transferring Shareholder shall be bound to transfer all
               the Shares it holds (at the office of the Company, during
               business hours, upon 7 days' notice of settlement). Article 7.11
               will apply mutatis mutandis.

          (b)  Where BTI is entitled to invoke this Clause 13.4 because of the
               operation of Clause 12.1(b) of the Brandon Consultancy Agreement
               or the Mountford Consultancy Agreement, then BTI may require
               ("Requirement") the Auditors to determine and certify to the
               Shareholders within one month of the making of such Requirement
               the sum per Share considered by the Auditors to be the net asset
               value on a consistent basis with the Company's annual accounts
               (prepared or audited by the Auditors) of each of the Shares as at
               the date of the Requirement (the "NET ASSET PRICE"). To determine
               the Net Asset Price the Auditors shall determine the amount which
               they consider to be the value, as at the date of the Requirement,
               of the entire net assets of the Company and shall divide that
               amount by the number of Shares issued in the capital of the
               Company. The Auditors shall be allowed unrestricted access to all
               papers and records of the Company which they may require in order
               to determine the Net Asset Price and the Directors and the
               Shareholders shall co-operate fully to allow the Net Asset Price
               to be determined by the Auditors. The Auditors shall act at the
               cost and expense of the Shareholders pro-rata their
               shareholdings, and shall act as experts not as arbitrators. Once
               the Net Asset Price has been certified in writing and delivered
               to all Shareholders, BTI may within 60 days, and subject to
               obtaining any necessary FATA consent in terms of Article 7.13,
               acquire all the Shares held by Castella (when this Clause 13.4 is
               invoked because of the operation of Clause 12.1(b) of the Brandon
               Consultancy Agreement) or by Secure (where this clause 13.4 is
               invoked because of the operation of Clause 12.1(b) of the
               Mountford Consultancy Agreement) upon tender of payment in cash
               or bank

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<PAGE>

               cheque of the Net Asset Price for each of those Shares
               and Castella or Secure (as the case requires) shall be bound to
               transfer all the Shares it holds (at the office of the Company,
               during business hours, upon 7 days' notice of settlement).
               Article 7.11 will apply mutatis mutandis.

13.5      WINDING UP

          A Shareholder entitled to invoke this clause 13.5 shall be entitled to
          request and procure that the Company shall be wound up voluntarily.
          All the Shareholders must join in taking all necessary action to
          procure such winding up within 30 days of being requested to do so. In
          default of a Shareholder so acting within 30 days, the Shareholder
          entitled to invoke this clause 13.5 shall be deemed to be irrevocably
          empowered to vote all of the Shares held by all Shareholders in the
          Company and to pass all necessary Board resolutions as are necessary
          to effect the winding up of the Company and appointment of a
          liquidator to the Company (notwithstanding the quorum or other
          requirements for all such Board and Shareholders' meetings).

13.6      CONSEQUENCES OF WINDING UP

          (a)  In the event of the winding up of the Company, the Company's
               assets shall be distributed according to law, with any surplus
               being distributed between the Shareholders according to their
               shareholding in the Company.

          (b)  To the extent that any of the Shareholders does not receive
               satisfaction in full in the winding up of the Company of all sums
               due or to fall due to it, the aggregate shortfall between all
               sums due or to fall due to the Shareholders and all amounts
               actually recovered by the Shareholders from the Company or its
               liquidator (whether by direct payment or the exercise of any
               right of set-off or otherwise) shall be calculated and
               apportioned between the Shareholders in proportion to their
               shareholdings in the Company and payment shall be made by and
               between the Shareholders to ensure that each Shareholder bears
               its respective share of the aggregate amount of such shortfall
               pro rata to its shareholding.

14.       STATEMENT ON SHARE CERTIFICATES

14.1      SHARE CERTIFICATES TO REFER TO RESTRICTIONS ON TRANSFER

          The Shareholders shall cause the Company to endorse on each of the
          Company's share certificates the following legend:

               "The shares to which this certificate relates are subject to and
               transferable only in accordance with the provisions of Article 7
               of the Company's Articles of Association and the Shareholders
               Agreement dated 5 April 1994 between BioTransplant Incorporated,
               Castella Research Pty Ltd., Secure Sciences Pty Ltd. and the
               Company."

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<PAGE>

15.       ARBITRATION

15.1      NEUTRAL VENUE

          Any matter or disagreement under this Agreement or relating to the
          Company (other than those referred to in clauses 11.1 and 12 or
          arising out of clause 13) shall be submitted to an arbitrator to so
          decide any such matter or disagreement. The arbitrator shall conduct
          the arbitration in accordance with the Rules of the International
          Chamber of Commerce unless the parties agree otherwise. If the parties
          are unable to mutually select an arbitrator, the arbitrator shall be
          selected in accordance with the procedures of the International
          Chamber of Commerce. The decision and award rendered by the arbitrator
          shall be final and binding. Judgment upon the award may be entered in
          any court having jurisdiction thereof. Any arbitration pursuant to
          this Clause shall be held in London, England, in the English language
          or such other place as may be mutually agreed upon in writing by the
          parties.

16.       EFFECT OF SHARE TRANSFER

16.1      CONDITIONS OF TRANSFER

          Upon one Shareholder transferring all of its Shares to another
          Shareholder or Shareholders ("ACQUIRING SHARES") (for any reason), the
          following provisions shall apply and shall be given effect to as a
          condition of completion of the Acquiring Share transfer:

          (a)  the Shareholder or Shareholders transferring its or their Shares
               ("TRANSFEROR") to the acquiring Shareholder ("TRANSFEREE") shall
               be entitled to receive:

               (i)  payment of all outstanding loans owing to the Transferor by
                    the Company less the Transferor's Contribution (if
                    applicable);

               (ii) a release and/or satisfactory indemnity in respect of all
                    guarantees, performance bonds, letters of credit, insurance
                    policies and the like given by the Transferor to support the
                    Company's obligations subject to the Transferor adequately
                    securing to the reasonable satisfaction of the Transferee
                    any and all liability of the Transferee with respect to the
                    Transferor's Contribution (if applicable); and

              (iii) payment of the price for its Shares (subject only to
                    set-off (if applicable) for any liquidated amount which at
                    that time has been finally determined as payable to the
                    Transferee (whether by way of damages for breach of contract
                    or otherwise).

               In this clause 16.1(a), the "Transferor's Contribution" means
               where the net assets of the Company (as determined by the
               Auditors of the Company acting as independent experts) on the
               date of the transfer of the Acquiring Shares is a negative amount
               (the "Negative Amount") the amount determined by multiplying the
               percentage that the number of Acquiring Shares bears to the total
               issued Shares of the Company with the Negative Amount. For the
               purpose of calculating the net assets of the Company, it shall be
               deemed that the net present value of all contingent liabilities
               including bank guarantees, performance bonds and leases and
               letters of credit have been called for payment;

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<PAGE>

          (b)  the Transferor must tender the written resignation of any
               Director then appointed by it or them to the Board;

          (c)  completion must occur within 30 days of the price of the
               Acquiring Shares being agreed or determined by valuation, in
               Melbourne, in business hours at the office of the Company or its
               solicitors;

          (d)  unless then already terminated, the BTI Research and License
               Agreement shall remain in full force and effect in accordance
               with its terms;

          (e)  if Castella ceases to be a Shareholder, the Brandon Consultancy
               Agreement shall be deemed to terminate contemporaneously with
               that cessation, without prejudice to the continued operation of
               its provisions which are expressed to have continuing effect
               after such termination; and

          (f)  If Secure ceases to be a Shareholder, the Mountford Consultancy
               Agreement shall be deemed to terminate contemporaneously with
               that cessation, without prejudice to the continued operation of
               its provisions which are expressed to have continuing effect
               after such termination.

17.       RELATIONSHIP OF THE SHAREHOLDERS

17.1      NO PARTNERSHIP OR AGENCY

          Nothing in this Agreement shall create or constitute or be deemed to
          create or constitute a partnership between the Shareholders for the
          purposes of any Partnership Act, the Income Tax Assessment Act or any
          other law of any jurisdiction and except as specifically provided
          herein no Shareholder shall act or represent or hold itself out as
          having authority to act as agent of or in any way bind or commit
          another Shareholder to any obligation.

17.2      RIGHTS AND OBLIGATIONS ARE SEVERAL

          The rights, duties, obligations and liabilities of the Shareholders
          shall be several and not joint or collective and nothing herein
          contained shall be construed as creating a partnership of any kind or
          an association or a trust, each Shareholder being individually
          responsible for only its own obligations as set out in this Agreement.

18.       MISCELLANEOUS

18.1      PERIOD OF AGREEMENT

          This Agreement shall terminate automatically if:

                                       24

<PAGE>

          (a)  one Shareholder acquires all of the Shares held by the other
               Shareholders; or

          (b)  the Company is placed into liquidation,

          but without prejudice to the rights of any party in respect of any
          breach of this Agreement by another party occurring prior to
          termination.

18.2      FURTHER ASSURANCE

          The parties covenant and agree that each will do all acts and things
          and execute all deeds and documents and other writings as are from
          time to time reasonably required for the purposes of or to give effect
          to this Agreement.

18.3      PARAMOUNTCY OF THIS AGREEMENT

          (a)  If there is any inconsistency between the provisions of this
               Agreement and the Articles of Association, the former shall,
               unless the contrary intention appears, prevail to the extent of
               the inconsistency.

          (b)  If there is any inconsistency between the provisions of this
               Agreement and the BTI Research and License Agreement, the latter
               shall, unless the contrary intention appears, prevail to the
               extent of the inconsistency.

18.4      ENTIRE AGREEMENT

          This document, together with the Articles of Association, the Original
          License Agreement, the BTI Research and License Agreement, the Brandon
          Consultancy Agreement, the Mountford Consultancy Agreement, the
          Brandon Covenant and the Mountford Covenant incorporates the entire
          agreement of the Shareholders and their associates and the Company in
          relation to the Company and matters connected with the Company and
          supersedes all previous agreements, arrangements and understandings,
          written and oral, between the Shareholders in relation to the same.

18.5      MODIFICATION

          This Agreement may not be modified, amended, added to or otherwise
          varied except by a document in writing signed by each of the parties
          or signed on behalf of each party by a director under hand.

18.6      SERVICE OF NOTICES

          All notices, requests, consents and other documents authorised or
          required to be given by or pursuant to this Agreement shall be given
          in writing and either personally served or sent by certified or
          registered mail addressed or sent by facsimile transmission as
          follows:

                                       25

<PAGE>

          BTI
          To:            BioTransplant Inc.
          Address:       13th Street, Building 96
                         Charlestown Navy Yard
                         Charlestown MA 02129
                         United States of America
                         Attention: CEO
                         Facsimile: 617 241 8780

                         with a copy to:

                         Elliot M Olstein, Esq
                         Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart
                            & Olstein
                         6 Becker Farm Road
                         Roseland NJ 07068
                         United States of America
                         Facsimile: 201 994 1744

          Castella, Secure or the
          Company
          To:            Mr. Bob Mead
          Address:       R.D. Larsson & Co.
                         Level 10
                         420 St Kilda Road
                         Melbourne Victoria
                         Facsimile: (03) 867-7226

                         with a copy to:

                         Mr. Chris Lovell
                         Holding Redlich
                         350 William Street
                         Melbourne Victoria
                         Facsimile: (03) 321-9900

          Notices, requests, consents and other documents ("NOTICES") shall be
          deemed served or given:

          (a)  if personally served by being left at the address of the party to
               whom the Notice is given between the hours of 9:00 am and 5:00 pm
               on any Business Day, then in such case at the time the Notice is
               so delivered;

          (b)  if sent by registered or certified mail, at the certified date of
               delivery;

          (c)  if sent by facsimile transmission, on receipt by the sender of
               confirmation of successful transmission.

                                       26

<PAGE>

         Any party may change its address for receipt of Notices at any time by
         giving notice of such change to the other party. Any Notice given under
         this Agreement may be signed on behalf of any party by the duly
         authorised representative of that party and shall be sent to all other
         parties to this Agreement.

18.7     READING DOWN; SEVERANCE

         The covenants, undertakings and conditions and each and every part
         thereof contained in this Agreement shall be severable and shall be so
         construed as not to infringe the law of Australia or the law of any
         Australian State or of any other relevant jurisdiction. If any such
         covenant, undertaking or condition on its true interpretation is found
         to infringe any such law, that covenant, undertaking or condition shall
         be read down to such extent as may be necessary to ensure that it does
         not so infringe any such law and as may be reasonable in all the
         circumstances so as to give it a valid operation of a partial
         character. In the event that the infringing covenant, undertaking or
         condition cannot be so read down, it shall be deemed void and severable
         and shall be deemed deleted from this Agreement to the same extent and
         effect as if never incorporated herein and the Shareholders shall
         negotiate with each other for the purpose of substituting an
         appropriate clause so far as is practicable in lieu of such deleted
         covenant, undertaking or condition.

18.8     WAIVER DOES NOT EXCUSE LATER BREACH

         The waiver by a Shareholder of any breach of any term of this Agreement
         shall not prevent the subsequent enforcement of that term in respect of
         and shall not be deemed a waiver of any subsequent breach of that term.

18.9     ASSIGNMENT

         (a)   This Agreement shall not be assigned by any of the parties
               without the prior written consent of the other parties (which
               consent shall not be unreasonably withheld or delayed), except
               that BTI without the consent of the other parties may assign this
               Agreement to an AFFILIATE (as defined in the BTI Research and
               License Agreement) or to a successor in interest or to a
               permitted transferee of BTI's Shares or in the case of a sale or
               transfer of all or substantially all of the portion of the
               business to which the BTI Research and License Agreement relates
               provided that such assignee shall agree to be bound by the terms
               and conditions of this Agreement and to acquire all Shares held
               by BTI provided further that in the foregoing circumstances, BTI
               shall promptly provide the Company with a copy of such executed
               assignment.

         (b)   Subject to the limitations on assignment herein, this Agreement
               shall be binding upon and inure to the benefit of the successors
               in interest and assigns of the parties hereto. Any such successor
               or assignee of a party's interest shall expressly assume in
               writing the performance of all the terms and conditions of this
               Agreement to be performed by said party.

                                       27

<PAGE>

18.10    EACH SHAREHOLDER BEARS ITS OWN EXPENSES

         Each of the Shareholders shall bear its own expenses of and incidental
         to the preparation and execution of this Agreement but any stamp duty
         payable on or in respect of this Agreement shall be borne by the
         Shareholders equally.

18.11    GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
         the law from time to time of the State of Victoria and the parties
         agree to submit to the non-exclusive jurisdiction of the courts and
         arbitration processes in that State.

18.12    PUBLIC ANNOUNCEMENTS

         Each of the parties shall procure that neither it nor any of its
         related bodies corporate shall make any public announcement or
         disclosure to any person in relation to this Agreement or information
         of which it has become aware in connection with this Agreement unless
         it first consults with and obtains the agreement in writing of the
         other parties, which agreement shall not be unreasonably withheld,
         provided that:

         (a)   following such consultation no party shall be entitled to
               withhold agreement in the case of a public announcement or
               notification where and to the extent that the same is required by
               law or the listing rules of any applicable stock exchange;

         (b)   a party shall be entitled to make such disclosures to the
               directors, secretary, professional advisers and bankers of that
               party and its related bodies corporate so long as the party uses
               all reasonable endeavours to ensure that the matters disclosed
               are kept confidential.

18.13    COUNTERPARTS

         This Agreement may be signed in any number of counterparts and all such
         counterparts taken together shall be deemed to constitute one and the
         same document.

18.14    ENGLISH LANGUAGE

         This Agreement is written in English in two counterparts, each of which
is deemed to be an original.

                                       28

<PAGE>

SIGNED as an agreement.

SIGNED SEALED AND DELIVERED by               )   [SIGNED BY RODERICK L J LYLE]
BIOTRANSPLANT INCORPORATED by                )   ---------------------------
its duly appointed attorney pursuant to      )   (Signature)
Power of Attorney dated 28 March 1994 in     )
the presence of:                             )

[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

THE COMMON SEAL of                           )
CASTELLA RESEARCH PTY LTD ACN                )
006 125 364 was affixed by the authority of  )
the Board of Directors in the presence of:   )
[SIGNED BY MALCOLM ROY BRANDON]                  [SIGNED BY SUSAN BRANDON]

--------------------------------------------     ---------------------------
(Signature of Director)                          (Signature of Director)

[MALCOLM ROY BRANDON]                            [SUSAN BRANDON]

--------------------------------------------     ---------------------------
(Name of Director in Full)                       (Name of Director in Full)

THE COMMON SEAL of                           )
SECURE SCIENCES PTY LTD ACN 064              )
139 948 was affixed by the authority of the  )
Board of Directors in the presence of:       )
[SIGNED BY PETER SCOTT MOUNTFORD]                [SIGNED BY CHRISTOPHER JOHN
                                                 MOUNTFORD]

--------------------------------------------     ---------------------------
(Signature of Secretary/Director)                (Signature of Director)

[PETER SCOTT MOUNTFORD]                          [CHRISTOPHER JOHN MOUNTFORD]

--------------------------------------------     ---------------------------
(Name of Secretary/Director in Full)             (Name of Director in Full)

                                       29

<PAGE>

THE COMMON SEAL of STEM CELL                 )
SCIENCES PTY LIMITED ACN 063 293             )
130 was affixed by the authority of the      )
Board of Directors in the presence of:       )

[SIGNED BY PETER SCOTT MOUNTFORD]                [SIGNED BY MALCOLM ROY BRANDON]

--------------------------------------------     ---------------------------
(Signature of Secretary/Director)                (Signature of Director)

[PETER SCOTT MOUNTFORD]                          [MALCOLM ROY BRANDON]

--------------------------------------------     ---------------------------
(Name of Secretary/Director in Full)             (Name of Director in Full)

                                       30

<PAGE>

                                   SCHEDULE 1

                                  OPTION TERMS

1.       DEFINITIONS

         In these terms unless the contrary intention appears:

         "OPTION HOLDERS" means BTI, Castella and Secure;

         "OPTIONS" means the options conferred on the Option Holders by this
         Agreement;

         "NOTICE OF EXERCISE OF OPTION" means a notice of exercise of option in
         the form set out in the Schedule to these Option Terms;

2.       EXERCISE OF OPTIONS

          (a)  Options may only be exercised in full. No partial exercise of
               Options is permitted.

          (b)  An option is exercisable by the holder by delivering to the
               Company a Notice of Exercise of Option together with the exercise
               price for each option exercised and the option certificate in
               respect of the options. Remittances must be payable by bank
               cheque or other immediately available funds to Stem Cell Sciences
               Pty Ltd and (in the case of a bank cheque) should be crossed "not
               negotiable".

          (c)  In the event that an Option Holder complies with the provisions
               of paragraph (b) the Company will allot and issue the shares the
               subject of the Option Holder's Option to the Option Holder prior
               to 5:00 pm on that date which is 7 days after the date of
               delivery of the Notice of Exercise of Option by the Option
               Holder.

3.       AUTHORISED CAPITAL

         The Company shall at all relevant times keep set aside out of its
         authorised capital such number of ordinary shares as would be necessary
         to satisfy the right to exercise options conferred under the Agreement
         on BTI, Castella and Secure. The Company shall not cause, procure or
         permit to be done anything would have the effect of reducing the number
         of ordinary shares so set aside below the number necessary for the said
         purpose.

4.       RECONSTRUCTION OF CAPITAL

          (a)  In the event of any reconstruction of the issued capital of the
               Company, the number or nominal value of the options to which BTI,
               Castella and Secure are each entitled under the Agreement shall
               be reconstructed in the same proportion as the issued capital of
               the Company is reconstructed (subject to the same provisions with
               respect to rounding of entitlements as sanctioned by the meeting
               of shareholders approving the reconstruction of capital) but in
               all respects the terms for the exercise of options shall remain
               unchanged.

                                       31

<PAGE>

          (b)  In the event of any reconstruction (including consolidation,
               sub-division, reduction or return) of the issued capital of the
               Company, the number of options or the exercise price of options
               or both will be reconstructed (as appropriate) in a manner which
               will not result in any benefits being conferred on Option Holders
               which are not conferred on shareholders and (subject to the
               provisions with respect to rounding of entitlements as sanctioned
               by the meeting of shareholders approving the reconstruction of
               capital) in all other respects the terms of the exercise of
               Options will remain unchanged.

5.       NO TRANSFER OF OPTIONS PERMITTED

         The options:

          (a)  are personal to the Option Holder;

          (b)  may not be transferred or assigned to or encumbered or mortgaged
               in favour of any other person; and

          (c)  may not be exercised by or on behalf of any person except the
               Option Holder.

6.       NOTICES

         Notices to Option Holders may be given by the Company in the manner
         prescribed by the Articles of Association of the Company for the giving
         of notices to members of the Company and the relevant provisions of the
         Articles of Association apply with all necessary modifications
         applicable to the Option Holder.

                                       32

<PAGE>

                                    SCHEDULE

                          NOTICE OF EXERCISE OF OPTION

NOTICE IS HEREBY GIVEN BY [INSERT NAME OF RELEVANT OPTION HOLDER] (the "Option
Holder") to the Company that the Option Holder hereby irrevocably exercises the
option hereafter described and granted to the Option Holder by the Company by
the Shareholders Agreement dated 5 April 1994.

                                     OPTION

                 [INSERT DESCRIPTION OF OPTION BEING EXERCISED]

Dated this        day of                    199__.
           -------       -------------------
THE COMMON SEAL of [INSERT NAME OF                )
RELEVANT OPTION HOLDER]                           )
was affixed by the authority of the Board of      )
Directors in the presence of:                     )
                                                  )

(Signature of Secretary/Director)                 (Signature of Director)

--------------------------------------------      ---------------------------
(Name of Secretary/Director in Full)              (Name of Director in Full)

                          [or other binding attestion]

                                       33

<PAGE>

                                  ANNEXURE "A"

<PAGE>

                                Corporations Law

                           A Company Limited by Shares

                             ARTICLES OF ASSOCIATION

                                       of

                         STEM CELL SCIENCES PTY LIMITED
                                 ACN 063 293 130

<PAGE>

                                Corporations Law

                           A Company Limited by Shares

                             ARTICLES OF ASSOCIATTON

                                       OF

                         STEM CELL SCIENCES PTY LIMITED
                                 ACN 063 293 130

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In these Articles, unless the contrary intention appears:

         "ALTERNATE DIRECTOR" means a person for the time being holding office
         as an alternate director under Article 21.

         "BOARD" means the board of directors of the Company.

         "BTI" means BioTransplant Incorporated a corporation organised and
         existing under the laws of the State of Delaware and having its
         principal office at 13th Street, Building 96, Charlestown Navy Yard,
         Charlestown, MA, United States of America.

         "BTI RESEARCH AND LICENSE AGREEMENT" means the Research and License
         Agreement between BTI and the Company.

         "BUSINESS DAY" means any day on which all banks are generally open for
         business in Melbourne.

         "CASTELLA" means Castella Research Pty Ltd ACN 006 125 364.

         "COMPANY" means Stem Cell Sciences Pty Limited ACN 063 293 130.

         "CORPORATION" means any body corporate, whether formed or incorporated
         within or outside the State.

         "DIRECTOR" means a Director for the time being of the Company.

         "MANAGEMENT SHAREHOLDERS" means Castella and Secure.

         "OFFICE" means the registered office for the time being of the Company.

         "PAID UP" includes credited as paid up.

         "REGISTER" means the register of shareholders to be kept to comply with
         the Corporations Law.

<PAGE>

         "RELATED BODY CORPORATE" means a corporation that is deemed to be
         related to the Company by virtue of section 50 of the Corporations Law.

         "REPRESENTATIVE" means a person appointed under Article 15.1 read with
         section 249(3) of the Corporations Law but not limited to specified
         meetings as required by section 249(3).

         "SEAL" means the common seal of the Company.

         "SECRETARY" means the secretary for the time being of the Company, and
         if there are joint secretaries, any one or more of such joint
         secretaries.

         "SECURE" means Secure Sciences Pty Ltd ACN 064 139 948.

         "SHAREHOLDERS" means BTI, Castella and Secure.

         "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement between BTI,
         Castella, Secure and the Company as of the date BTI first acquired
         Shares in the Company.

         "SPECIALLY RELATED BODY CORPORATE" means in relation to a given
         corporation the Special Subsidiaries of that corporation, any holding
         company of which that corporation is a Special Subsidiary and the
         Special Subsidiaries of every such holding company.

         "SPECIAL SUBSIDIARY" means a corporation which is a subsidiary within
         the meaning of all of the sub-paragraphs of section 46(a) of the
         Corporations Law as in force on 1 March 1994.

         "STATE" means the State of Victoria.

1.2      INTERPRETATION: MEANING OF CERTAIN WORDS

         In these Articles unless the contrary intention appears:

          (a)  words importing the singular number include the plural number and
               vice versa;

          (b)  words importing the masculine gender include the feminine gender
               and vice versa;

          (c)  words importing persons include Corporations;

          (d)  an expression used in a particular Part or Division of the
               Corporations Law that is given by that Part or Division a special
               meaning for the purposes of that Part or Division has in any of
               these Articles that deals with a matter dealt with by that Part
               or Division unless the contrary intention appears the same
               meaning as in that Part or Division.

                                       2

<PAGE>

1.3      INTERPRETATION: APPLICATION OF THE CORPORATIONS LAW

         Section 110B of the Corporations Law applies in relation to these
         Articles as if they were an instrument made, granted or issued under
         the Corporations Law as amended from time to time.

1.4      INTERPRETATION: HEADINGS

         The headings to these Articles are not part of these Articles and shall
         not affect their meaning.

1.5      APPLICATION OF TABLE A

         The Regulations contained in Table A of Schedule 1 to the Corporations
         Law shall not apply to the Company.

2.       PROPRIETARY COMPANY

         The Company is a proprietary company and accordingly:

          (a)  the right to transfer the shares of the Company is restricted in
               the manner and to the extent hereinafter appearing;

          (b)  the number of shareholders of the Company (counting joint holders
               of shares as one person and not counting any person in the
               employment of the Company or of any subsidiary of the Company or
               any person who while previously in the employment of the Company
               or of any subsidiary of the Company was and thereafter has
               continued to be a shareholder of the Company) shall not be more
               than 50 (or any lower number stipulated in these Articles);

          (c)  the Company shall not issue any invitation to the public to
               subscribe for or make any offer to the public to accept
               subscriptions for any shares in or debentures of the Company; and

          (d)  the Company shall not issue any invitation to the public to
               deposit money with or make any offer to the public to accept
               deposits of money with the Company for fixed periods or payable
               at call whether bearing or not bearing interest.

3.       SHARE CAPITAL

3.1      AUTHORISED CAPITAL DIVIDED INTO "A" SHARES AND "B" SHARES

          (a)  The authorised capital of the Company is $2,000,000 divided into
               2,000,000 ordinary shares of $1.00 each comprising 1,000,000 "A"
               Shares and 1,000,000 "B" Shares. The "A" Shares and the "B"
               Shares shall in all respects rank pari passu.

                                       3

<PAGE>

          (b)  "A" Shares may be held only by BTI, or a permitted transferee
               from BTI. "B" Shares may be held only by the Management
               Shareholders or a permitted transferee from them.

4.       SHARE ISSUES

4.1      BOARD CONTROL

         Subject to Article 3, shares in the Company's capital shall be issued
         subject to a resolution of the Board.

5.       REGISTERED HOLDER ABSOLUTE OWNER

5.1      NO EQUITABLE INTERESTS RECOGNISED

         Except as required by law or otherwise provided in the Articles, the
         Company shall be entitled to treat the registered holder of any share
         as the absolute owner thereof, and accordingly shall not, except as
         ordered by a court of competent jurisdiction or as required by statute,
         be bound to recognise any equitable or other claim to or interest in
         such share on the part of any other person whether or not it has notice
         of same.

6.       SHARE CERTIFICATES

6.1      SHARE CERTIFICATES TO BE ISSUED UNDER SEAL

         Certificates in respect of shares shall be issued under the Seal or,
         subject to the Corporations Law, in such other manner as the Board may
         determine.

6.2      SHAREHOLDERS' ENTITLEMENT TO SHARE CERTIFICATES

         Unless the conditions of the allotment of the shares provide otherwise,
         every Shareholder shall be entitled to one certificate, without
         payment, in respect of the shares registered in his name, or to several
         certificates in reasonable denominations.

6.3      DUPLICATE CERTIFICATE IF ORIGINAL DAMAGED OR DEFACED

         If any share certificate, letter of allotment, transfer, receipt or any
         other document of title to shares is worn out or defaced, then upon
         production thereof to the Board the Board may order the same to be
         cancelled and may issue a duplicate in lieu thereof.

6.4      DUPLICATE CERTIFICATE IF ORIGINAL LOST OR DESTROYED

         If any share certificate, letter of allotment, transfer, receipt or any
         other document of title to shares is lost or destroyed, a duplicate
         thereof may be issued upon the conditions set out in the Corporations
         Law and upon payment of such fee (not exceeding that prescribed
         pursuant to the Corporations Law) as the Board may from time to time
         determine.

                                       4

<PAGE>

7.       TRANSFER OF SHARES

7.1      INSTRUMENT OF TRANSFER COMPULSORY

         No transfer of shares shall be registered unless a proper instrument of
         transfer has been delivered to the Company. Except as provided by the
         Corporations Law or by these Articles, the instrument of transfer of
         any shares shall be signed by the transferor and, if required by the
         Company, by the transferee.

7.2      DIRECTORS MUST REGISTER TRANSFER MADE IN OBSERVANCE OF PRE-EMPTIVE
         RIGHTS BUT MAY REFUSE TO REGISTER OTHER TRANSFERS

         The Directors shall be bound to approve and register a transfer of
         shares executed in compliance with Article 7 or with the Shareholders
         Agreement but may decline to approve and register any other transfer of
         shares without being bound to give any reason for such refusal.

7.3      NO TRANSFER UNLESS PRE-EMPTIVE RIGHTS OBSERVED

         A Shareholder shall not sell, assign or transfer all or any of its
         shares in the capital of the Company or any interest therein except as
         provided in this Article 7 or as provided in the Shareholders
         Agreement, and any such transfer shall only be proposed for all of the
         shares in the Company held by that Shareholder.

7.4      SELLER MUST GIVE TRANSFER NOTICE

         Any Shareholder (the "PROPOSING TRANSFEROR") may give a notice in
         writing (a "TRANSFER NOTICE") to the other shareholders (the "OTHER
         SHAREHOLDERS") and the Company stating that it desires to sell assign
         and transfer all (and not some only) of its shares in the capital of
         the Company (the "SALE SHARES") to the Other Shareholders (or any one
         or more of them).

7.5      RIGHT TO PURCHASE ALL SALE SHARES

         The Other Shareholders shall have an exclusive right and option for a
         period of 60 days from receipt of a Transfer Notice pursuant to Article
         7.4 (the "Option Period") to purchase all (and not some only) of the
         Sale Shares.

7.6      ACCEPTING SHAREHOLDERS TO SERVE NOTICE

         If any Other Shareholder (an "Accepting Shareholder") wishes to
         purchase any or all of the Sale Shares, it shall before the end of the
         Option Period serve a notice on the Company (an "Acceptance Notice")
         stating its intention to purchase and the number of Sale Shares it
         wishes to purchase. The Company shall within 7 days of the end of the
         Option Period forward to the Proposing Transferor copies of all
         Acceptance Notices received. The Transfer Notice will be deemed
         withdrawn at the end of the Option Period if by then the Company has
         not received Acceptance Notices for all the Sale Shares and thereupon
         the Proposing Transferor will be deemed to have made a request under
         Article 7.8(a)(ii).

                                       5

<PAGE>

7.7      ACCEPTANCE NOTICES EXCEEDING SALE SHARES

         If more than one Accepting Shareholder serves an Acceptance Notice and
         the sum of the number of shares specified in the Acceptance Notices is
         greater than the number of the Sale Shares, then in default of
         agreement to the contrary between the Accepting Shareholders, the Sale
         Shares may only be transferred to each of the Accepting Shareholders
         pro-rata to their respective holdings of shares in the Company at that
         time, provided that none of the Accepting Shareholders can be required
         to purchase a greater number of the Sale Shares than stated in its
         Acceptance Notice.

7.8      SALE PRICE

          (a)  If:

               (i)  the Proposing Transferor and the Accepting Shareholders have
                    not agreed on the price of the Sale Shares before the end of
                    the Option Period;

               (ii) the Proposing Transferor or any Accepting Shareholder gives
                    notice to the others of them before the end of the first
                    business day after the end of the Option Period requesting
                    that the price of the Sales Shares be determined in
                    accordance with Article 7.9; or

               (iii) clause 12.1(c) of the Shareholders Agreement applies,

               then the Proposing Transferor shall be deemed to have made an
               offer to sell the Sale Shares to the Other Shareholders under
               Article 7.10 at the Fair Price determined pursuant to Article
               7.9.

7.9      IF NO AGREED PRICE ACCOUNTANTS ARE APPOINTED TO VALUE SHARES

          (a)  Where this Article applies, the Company shall within 14 days of
               it becoming applicable, request the office in the capital city of
               the State of two leading international firms of accountants (not
               being the auditors of any Shareholder) appointed by the President
               for the time being of the Branch in the State of the Institute of
               Chartered Accountants in Australia (the "ACCOUNTANTS"), to
               severally determine and certify to the Company within 30 days
               after the making of such request the sum per share considered by
               the Accountants to be the fair market value, having due regard
               to:

               (i)  maintainable earnings and future cash flow projections;

               (ii) market prices for businesses similar to that carried on by
                    the Company;

                                       6

<PAGE>

               (iii) the value of the Company as a going concern to a vendor not
                    unwilling but not anxious to sell and other factors which
                    the Accountants deem to be relevant; and

               (iv) the value of the Company's assets determined on both a
                    historic cost and replacement cost basis,

               of each of the Sale Shares as at the date of the Transfer Notice.
               The average of the value of each Sale Share determined by the
               Accountants shall be the sale price of each Sale Share (the "FAIR
               PRICE").

          (b)  To determine the Fair Price the Accountants shall determine the
               amount which they consider to be the fair market value as at the
               date of the Transfer Notice of the entire issued share capital of
               the Company and shall divide that amount by the number of shares
               issued in the capital of the Company.

          (c)  The Accountants shall be allowed unrestricted access to all
               papers and records of the Company which they may require in order
               to determine the Fair Price and the Directors and the
               Shareholders shall co-operate fully to allow the Fair Price to be
               ascertained by the Accountants.

          (d)  The Accountants shall act at the cost and expense of the
               Proposing Transferor and shall act as experts and not as
               arbitrators.

7.10     NEW TRANSFER NOTICE

          (a)  Upon determination of the Fair Price, the Proposing Transferor
               will be deemed to have thereupon issued a new Transfer Notice
               under Article 7.4, but with the sale price of each Sale Share
               being specified as the Fair Price. Articles 7.5 to 7.7
               (inclusive) will apply (mutatis mutandis) to such Transfer
               Notice;

          (b)  If within 60 days after the determination of the Fair Price, the
               Company has not received Acceptance Notices for all of the Sale
               Shares, then the Proposing Transferor shall be entitled (but not
               obliged) to acquire from the Other Shareholders all of the shares
               held by the Other Shareholders for a price equal to the Fair
               Price of each share, payable in cash within 30 days and subject
               to clause 16.1 of the Shareholders Agreement.

7.11     REMEDY FOR FAILURE TO TRANSFER SHARES

         If the Shareholder or Shareholders which pursuant to this Article 7 has
         or have become bound to transfer the shares held by it or them to the
         other Shareholders (or any one or more of them) (the firstmentioned
         Shareholder(s) being herein referred to as the "TRANSFEROR" and the
         other Shareholder(s) being hereinafter referred to as the "TRANSFEREE")
         defaults in doing so, one of the Transferee's directors duly nominated
         for that purpose by resolution of the Transferee's directors shall,
         forthwith upon delivery to the Transferor of a bank cheque for the
         purchase price calculated in accordance with these Articles and clause
         16 of the Shareholders Agreement, be deemed to be the duly

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<PAGE>

         appointed attorney of the Transferor with full power to execute,
         complete and deliver in the name and on behalf of the Transferor
         transfers to the Transferee of those of the shares held by the
         Transferor and the Transferee shall thereupon be entitled to
         possession of the scrip for the same and to be registered as
         beneficial holder of the shares and to exercise all votes attaching to
         such shares.

7.12     CIRCUMSTANCES IN WHICH PREVIOUS PROVISIONS OF THIS ARTICLE DO NOT APPLY

         Notwithstanding any of the provisions of this Article 7:

          (a)  a Shareholder may at any time transfer its shares where all
               Shareholders have previously consented in writing to the proposed
               transfer;

          (b)  BTI may transfer its shares without the consent of the other
               Shareholders to an AFFILIATE (as defined in the BTI Research and
               License Agreement) or to a successor in interest or in the case
               of a sale or transfer of all or substantially all of the portion
               of the business to which the BTI Research and License Agreement
               relates; and

          (c)  BTI may transfer its shares (or any of them) pursuant to clause
               13.2(e) of the Shareholders Agreement.

7.13     FOREIGN ACQUISITIONS AND TAKEOVERS ACT

          (a)  The obligation of any Shareholder to purchase or sell any Sale
               Shares under this Article 7 is subject, if applicable, to the
               grant or issue of any consent which may be required to such sale
               or purchase from the Treasurer of the Commonwealth of Australia
               under the Foreign Acquisitions and Takeovers Act ("FATA"), which
               consent (the "FATA CONSENT") will be deemed to have been given
               if:

               (i)  a notice is issued under Part II of the FATA stating either
                    that the Commonwealth Government or the Treasurer does not
                    object to the proposed transfer either unconditionally or
                    with conditions reasonably satisfactory to the other
                    Shareholders; or

               (ii) a notice of the proposed transfer is given to the Treasurer
                    under Section 26 or 26A of the FATA and the Treasurer ceases
                    to be empowered by reason of the lapse of time to make any
                    order under Part II of the FATA in relation to the proposed
                    transfer.

          (b)  Where any offer to purchase the Sale Shares under this Article 7
               or the Shareholders Agreement is not capable of unconditional
               acceptance by any Shareholder to whom it is made (the "PURCHASING
               SHAREHOLDER") without the issue of a FATA Consent, then, subject
               to Article 7.13 (c), if the Purchasing Shareholder wishes to
               accept the offer, it will give prompt written notice to the
               Company and the other Shareholders that a FATA Consent is
               required by the Purchasing Shareholder, whereupon:

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<PAGE>

               (i)  any acceptance given or deemed to have been given by the
                    Purchasing Shareholder will not be binding until the FATA
                    Consent has been obtained;

               (ii) if the relevant offer of the Sale Shares to the Purchasing
                    Shareholder under Article 7 or under the Shareholders
                    Agreement limited or was deemed to have limited the period
                    in which the offer could be accepted to a period of less
                    than 40 days, the offer will be deemed to be open instead
                    for a period of 40 days; and

              (iii) the Purchasing Shareholder will use its best endeavours to
                    obtain the required FATA Consent.

          (c)  If a FATA Consent is required but is not obtained by the
               Purchasing Shareholder wishing to accept an offer to purchase
               Sale Shares within the acceptance period for that offer (if
               applicable, as extended by Article 7.13(b)), the offer made to
               that Shareholder will be deemed to have been rejected. In that
               event, the Shareholders shall enter into negotiations in good
               faith with a view to determining satisfactory avenues available
               to each of the Shareholders following the rejection of a FATA
               consent and if no satisfactory determination is made by the
               Shareholders within three months from the date the parties were
               notified that FATA consent was rejected, then the Company will be
               wound up.

          (d)  The Purchasing Shareholder must give prompt written notice to the
               Company and the Transferor of the issue or refusal of a FATA
               Consent in relation to a proposed purchase by the Purchasing
               Shareholder of Sale Shares under this Article 7.13.

8.       NO ENCUMBRANCES; FURTHER TRANSFER PROVISIONS

8.1      SHAREHOLDERS MUST NOT MORTGAGE SHARES

         A Shareholder shall not create or permit to subsist over all or any of
         its shares in the capital of the Company (or any interest therein) any
         option mortgage charge or other encumbrance.

8.2      TRANSFEROR IS HOLDER UNTIL TRANSFER REGISTERED

         The transferor shall be deemed to remain the holder of a share until
         the name of the transferee is entered in the Register in respect
         thereof.

8.3      FORM OF SHARE TRANSFERS

         Share transfers shall be in any usual form or in any other-form
         approved by the Board.

8.4      DELIVERY OF TRANSFERS AND SHARE CERTIFICATES TO COMPANY'S OFFICE

         Every instrument of transfer shall be left at the Office or in the
         place where a share register is kept, accompanied by the certificate in
         respect of the shares to be transferred

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<PAGE>

         and such other evidence as the Board may require to prove the title of
         the transferor or his right to transfer the shares. All instruments of
         transfer which are registered shall be retained by the Company but
         (except in the case of fraud) any instrument of transfer which the
         Board declines or refuses to register shall on demand be returned to
         the transferee.

8.5      CLOSURE OF TRANSFER BOOKS AND REGISTER

         The transfer books and register of Shareholders and debenture holders
         may be closed during such time or times as the Board thinks fit,
         provided that no such book or register shall be closed for more than 30
         days in the aggregate in any calendar year.

9.       ALTERATION OF CAPITAL

9.1      ORDINARY RESOLUTION TO ALTER CAPITAL

         The Company may by ordinary resolution passed at a general meeting
         alter the provisions of its Memorandum or Articles of Association in
         any one or more of the following ways:

          (a)  (CREATE NEW SHARES): by increasing its authorised share capital
               by the creation of new shares of such amount as it thinks
               expedient;

          (b)  (CONSOLIDATE SHARES): by consolidating and dividing all or any of
               its authorised share capital into shares of larger amount than
               its existing shares;

          (c)  (SUBDIVIDE SHARES): by subdividing its shares or any of them into
               shares of smaller amount than is fixed by the Articles but so
               that in the subdivision the proportion between the amount paid
               and the amount (if any) unpaid on each share of a smaller amount
               shall be the same as it was in the case of the share from which
               the share of a smaller amount is derived; or

          (d)  (CANCEL SHARES): by cancelling shares that, at the date of the
               passing of the resolution to that effect, have not been taken or
               agreed to be taken by any person or that have been forfeited, and
               by reducing the amount of the Company's authorised share capital
               by the amount of the shares so cancelled.

9.2      HOW NEW SHARES TO BE DEALT WITH

         A general meeting may determine that before the issue of any new shares
         the same or any of them shall be offered in the first instance at par
         to all Shareholders in proportion to the amount of the capital held by
         them.

10.      REDUCTION OF CAPITAL

10.1     SPECIAL RESOLUTION TO REDUCE CAPITAL

         Subject to the Corporations Law, the Company may by special resolution
         reduce its share capital or any capital redemption reserve fund.

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<PAGE>

11.      BORROWING POWERS

11.1     BOARD MAY EXERCISE COMPANY'S POWER TO BORROW

         The Board may from time to time at its discretion exercise all the
         powers of the Company to borrow or raise or secure the payment of money
         and to guarantee or to become liable for the payment of money or for
         the performance of any obligations by any company or person.

11.2     BOARD MAY EXERCISE POWER TO GIVE SECURITY

         The Board may exercise the powers conferred by Article 11.1 in such
         manner and upon such terms and conditions in all respects as it in its
         absolute discretion thinks fit, and in particular by the issue of
         perpetual and redeemable debentures or any charge, bill of sale or
         other security on the whole or any part of the property of the Company
         both present and future.

11.3     SECURITY FROM COMPANY TO INDEMNIFY DIRECTORS

         If the Board or any of them or any other person shall become or be
         about to become personally liable for the payment of any sum due from
         the Company, the Board may execute or cause to be executed any
         mortgage, charge, bill of sale or security over or affecting the whole
         or any part of the assets of the Company by way of indemnity to secure
         the Directors or persons so becoming liable as aforesaid from any loss
         in respect of such liability.

12.      GENERAL MEETINGS

12.1     CONVENING OF GENERAL MEETING

         Any Director may convene a general meeting whenever he thinks fit, and
         the Board shall convene a general meeting on a requisition of
         Shareholders as provided by the Corporations Law.

12.2     ANNUAL GENERAL MEETING

         Annual general meetings shall be held in compliance with the
         Corporations Law.

12.3     NOTICE PERIOD

         Subject to the provisions of the Corporations Law relating to
         agreements for shorter notice, where it is proposed to pass a special
         resolution, not less than 21 days' notice and in other cases not less
         than 14 days' notice of a general meeting shall be given to the
         Shareholders.

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<PAGE>

12.4     CONTENTS OF NOTICE

         A notice of a general meeting shall specify the place, day and hour of
         meeting, and in the case of special business, the general nature of
         that business and in the case of an election of Directors, the names of
         the candidates for election.

12.5     FAILURE TO GIVE NOTICE

         The accidental omission to give notice of any general meeting to or the
         non-receipt of any such notice by any of the Shareholders shall not
         invalidate any resolution passed at any such meeting provided that a
         quorum was present at such meeting as required by Article 13.3.

12.6     NOTICE OF ADJOURNMENT MEETING IN CERTAIN CIRCUMSTANCES ONLY

         Whenever a general meeting is adjourned for 21 days or more, at least 3
         days' notice of the place and hour of such adjourned meeting shall be
         given.

13.      PROCEEDINGS AT GENERAL MEETINGS

13.1     BUSINESS OF ANNUAL GENERAL MEETING

         The business of an annual general meeting shall be to receive and
         consider the profit and loss account, the balance sheet, and such other
         accounts reports and statements as are required to be laid before the
         meeting; to elect Directors in the place of those retiring; to declare
         dividends and to transact any other business which under these Articles
         or by the provisions of the Corporations Law ought to be or may be
         transacted at an annual general meeting.

13.2     SPECIAL BUSINESS

         All other business transacted at an annual general meeting and all
         business transacted at any other general meeting shall be deemed
         special.

13.3     QUORUM FOR GENERAL MEETING

         A quorum for a general meeting shall be 2 persons, one being a
         Shareholder holding "A" shares or a Representative of such a
         Shareholder and the other being a Shareholder holding "B" shares or a
         Representative of such a Shareholder. No business shall be transacted
         at any general meeting unless the requisite quorum be present at the
         commencement of the meeting.

13.4     CHAIRMAN OF GENERAL MEETING

         The chairman of the Board or in his absence the deputy chairman shall
         preside as chairman at every general meeting of the Company, or, if
         there is no such chairman or deputy chairman, or if at any general
         meeting neither the chairman nor the deputy chairman are present at the
         time appointed for holding the meeting or willing to act, the

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<PAGE>

         Director or Directors present may choose a Director (other than the
         chairman or the deputy chairman) as chairman. If no Director is
         present or if all Directors present decline to take the chair, the
         Shareholders present shall choose one of their number to be chairman.

13.5     IF QUORUM ABSENT

         If at the expiration of half an hour from the time appointed for a
         general meeting a quorum is not present, the meeting if convened by the
         Board upon a requisition of Shareholders or by such requisitionists as
         is provided by the Corporations Law shall be dissolved; but in any
         other case it shall stand adjourned to such other day, time and place
         as the Board may by notice to the Shareholders appoint (being a date
         not earlier than 14 days thereafter), but failing such appointment then
         to the same day in the next week at the same time and place as the
         meeting adjourned.

13.6     CHAIRMAN HAS NO CASTING VOTE

         In the case of an equality of votes at any general meeting the chairman
         of the meeting shall neither on a show of hands nor on a poll have a
         casting vote.

13.7     VOTING: SHOW OF HANDS OR POLL

         At any general meeting a resolution put to the vote of the meeting
         shall be decided on a show of hands unless (before or on the
         declaration of the result of the show of hands) a poll is demanded:

          (a)  by the chairman; or

          (b)  by a Shareholder present in person or by a Representative, having
               the right to vote at the meeting.

13.8     QUESTIONS DECIDED BY MAJORITY

         Subject to the requirements of the Corporations Law in relation to
         special resolutions, a resolution shall be taken to be carried if the
         proportion that the number of votes in favour of the resolution bears
         to the total number of votes on the resolution exceeds one-half.

13.9     DECLARATION BY CHAIRMAN THAT RESOLUTION CARRIED

         A declaration by the chairman that a resolution has on a show of hands
         been carried or carried by a particular majority or lost or not carried
         by a particular majority and an entry to that effect in the book of
         proceedings of the Company shall be conclusive evidence of the fact
         without proof of the number or proportion of the votes recorded in
         favour of or against such resolution.

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<PAGE>

13.10    CONDUCT OF POLL

         If a poll has been demanded under this Article 13, it shall be taken in
         such manner and at such time and place as the chairman of the general
         meeting directs, and either at once or after an interval or adjournment
         or otherwise. The result of the poll shall be deemed to be the
         resolution of the general meeting at which the poll was demanded. A
         poll demanded on the election of a chairman of a general meeting or on
         the question of the adjournment of a general meeting shall be taken
         forthwith. The demand for a poll may be withdrawn.

13.11    CONTINUATION OF MEETING NOTWITHSTANDING POLL

         The demand for a poll shall not prevent the continuance of the meeting
         or the transaction of any business other than the question on which a
         poll has been demanded.

13.12    ADJOURNMENT OF GENERAL MEETING

         The chairman of a general meeting may with the consent of the meeting
         and shall if so directed by the meeting adjourn the same from time to
         time and from place to place but no business shall be transacted at any
         adjourned meeting other than the business left unfinished at the
         meeting from which the adjournment took place.

14.      VOTES OF SHAREHOLDERS

14.1     ONE COLLECTIVE VOTE FOR EACH SIDE

         Subject always to clause 5.4 of the Shareholders Agreement on a show of
         hands and on a poll in relation to any matter referred to in clause 5.3
         of the Shareholders Agreement:

          (a)  the Shareholder or Shareholders holding "A" Shares present in
               person or by proxy or by a Representative shall have one
               collective vote;

          (b)  the Shareholder or Shareholders holding "B" Shares present in
               person or by proxy or by a Representative shall have one
               collective vote; and

          (c)  no resolution shall be deemed to have been carried unless
               supported by the collective vote of the Shareholder or
               Shareholders holding "A" Shares and the collective vote of the
               Shareholder or Shareholders holding "B" Shares.

15.      REPRESENTATIVES

15.1     APPOINTMENT OF REPRESENTATIVE BY CORPORATION

         Any Corporation which is a Shareholder of the Company may by a document
         in writing signed or sealed on its behalf authorise such person as it
         thinks fit ("REPRESENTATIVE") to act as its representative at all or
         any meetings to be held during the continuance of the authority. The
         person so authorised is, in accordance with his authority and until it
         is revoked by such Corporation, entitled to exercise the same powers on
         behalf of the

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<PAGE>

         Corporation which he represents as that Corporation could exercise if
         it were a natural person who was a Shareholder of the Company.

15.2     PROOF OF APPOINTMENT OR REVOCATION OF APPOINTMENT OF REPRESENTATIVE

         A certificate under the seal of the Corporation or hand of a Director
         appointed at the request of a Shareholder or such other document as the
         chairman of the meeting in his sole discretion considers sufficient
         shall be prima facie evidence of the appointment or of the revocation
         of the appointment (as the case may be) of a Representative under this
         Article 15, and notwithstanding anything hereinbefore contained the
         certificate or such other document evidencing the appointment of a
         Representative shall be deposited at or sent by post or facsimile to
         the Office before the time scheduled for the commencement of the
         meeting at which the Representative purports to exercise any powers
         pursuant to it.

16.      DIRECTORS

16.1     NUMBER OF DIRECTORS

         The number of Directors shall be 3 or such other number being a
         multiple of 3 (not being less than 3 or more than 6) as the
         Shareholders may from time to time determine at a general meeting.

16.2     "A" SHAREHOLDERS APPOINT ONE-THIRD THE NUMBER OF DIRECTORS

         The holder or holders of all of the "A" Shares issued in the Company
         shall have the right to appoint up to one-third of the Directors and
         the Directors so appointed are hereinafter referred to as Directors
         appointed by the "A" Shareholders.

16.3     "B" SHAREHOLDERS APPOINT TWO-THIRDS THE NUMBER OF DIRECTORS

         The holder or holders of all of the "B" Shares issued in the capital of
         the Company shall have the right to appoint up to two-thirds of the
         Directors and the Directors so appointed are hereinafter referred to as
         Directors appointed by the "B" Shareholders.

16.4     DIRECTORS REMOVABLE ONLY BY THEIR APPOINTORS

         Subject to the Corporations Law a Director appointed by the "A"
         Shareholders may only be removed from office by the holder or holders
         of a majority of the "A" Shares issued in the Company (by notice signed
         by or on behalf of the "A" Shareholders to the Company) and a Director
         appointed by the "B" Shareholders may only be removed from office by
         the holder or holders of a majority of the "B" Shares issued in the
         Company (by notice signed by or on behalf of the "B" Shareholders to
         the Company).

16.5     WHEN NOTICE REMOVING DIRECTOR TAKES EFFECT

         Every notice under Article 16.4 shall be left at or sent by post to the
         Office. Subject to any provisions to the contrary in the notice, from
         the time any such notice removing a Director is left at the Office (or
         from the time 48 hours after any such notice removing a

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<PAGE>

         Director is posted to the Office) the office of the Director so
         removed shall be vacated and any Director appointed by the notice to
         replace the Director so removed shall be entitled to act.

16.6     RESIGNATION OF DIRECTORS

         A Director may resign from his office upon giving notice in writing to
         the Company of his intention so to do.

16.7     NO REMUNERATION OF DIRECTORS

         Unless and until the Board resolves to the contrary the Directors shall
         not be paid out of the funds of the Company remuneration for their
         services.

16.8     LIMITED ABILITY OF DIRECTORS TO ACT DURING VACANCIES

         The continuing Directors may act notwithstanding any vacancy in their
         body; but for so long as the number of Directors is below the minimum
         of 3 fixed by these Articles, the Directors shall not act except for
         the purpose of convening a general meeting of the Company.

16.9     VACATION OF OFFICE OF DIRECTOR: AUTOMATIC

         The office of a Director shall ipso facto be vacated if he:

          (a)  becomes of unsound mind or a person whose person or estate is
               liable to be dealt with in any way under the law relating to
               mental health;

          (b)  is absent without the consent of the Directors from meetings of
               the Directors held during a period of 3 months;

          (c)  is removed under the provisions of Article 16.4;

          (d)  resigns his office in accordance with Article 16.6; or

          (e)  otherwise ceases to be a Director by virtue of the Corporations
               Law.

17.      DIRECTORS' CONTRACTS WITH COMPANY

17.1     DIRECTOR MAY HOLD OTHER OFFICE OF PROFIT

         A Director may hold any other office or place of profit under the
         Company except that of auditor in conjunction with the office of
         Director, on such terms as the Board may arrange.

17.2     CONTRACT NOT AVOIDED WHEN DIRECTOR INTERESTED

         No Director shall be disqualified by his office from holding any office
         or place of profit under any company in which the Company shall be a
         shareholder or otherwise interested

                                       16

<PAGE>

         or from contracting with the Company either as vendor purchaser or
         otherwise; nor shall any such contract or any contract or arrangement
         entered into by or on behalf of the Company in which any Director
         shall be in any way interested be avoided; nor shall any Director be
         liable to account to the Company for any profit arising from any such
         office or place of profit or realised by any such contract or
         arrangement by reason only of such Director holding that office or of
         the fiduciary relations thereby established; but the nature of his
         interest must be disclosed by him in the manner required by the
         Corporations Law and approved by the Board.

17.3     DIRECTOR MAY VOTE WHEN INTERESTED

         A Director may vote in respect of any contract or arrangement in which
         he is interested provided that he discloses his interest in advance to
         the Board.

17.4     INTERESTED DIRECTOR MAY AFFIX SEAL NOTWITHSTANDING INTEREST

         A Director may be appointed as the Director in whose presence the Seal
         of the Company is to be affixed to any instrument notwithstanding that
         he is interested in the contract or arrangement to which the instrument
         relates.

17.5     RECORD OF DISCLOSURES BY DIRECTORS

         It shall be the duty of the Secretary to record in the minutes any
         disclosure given by a Director under this Article 17.

18.      RESOLUTIONS BY BOARD

18.1     WRITTEN RESOLUTION APPROVED BY ALL DIRECTORS SAME AS MAJORITY VOTE AT
         MEETING

         A resolution in writing approved by all the Directors entitled to
         receive notice of a meeting of the Board being not less than the number
         of Directors required to constitute a quorum shall be as valid and
         effectual as if it had been passed at a meeting of Directors duly
         convened and held. Such approval may be in writing or may be by telex
         or by facsimile to the Office.

18.2     FURTHER PROVISIONS REGARDING WRITTEN RESOLUTIONS

         Without limiting the generality of Article 18.1:

          (a)  if all the Directors have signed a document or have all severally
               signed facsimile copies thereof, containing a statement that they
               are in favour of a resolution of the Board in terms set out in
               the document, a resolution in those terms shall be deemed to have
               been passed at a meeting of the Board held on the day on which
               the document or facsimile copies were signed and at the time at
               which the document or copies were last signed by a Director or,
               if the Directors signed the document or copies on different days,
               on the day on which, and at the time at which, the document or
               copies were last signed by a Director;

                                       17

<PAGE>

          (b)  for the purposes of Article 18.2(a), 2 or more separate documents
               containing statements in identical terms each of which is signed
               by one or more Directors shall together be deemed to constitute
               one document containing a statement in those terms signed by
               those Directors on the respective days on which they signed the
               separate documents;

          (c)  a reference in Article 18.2(a) to all the Directors does not
               include a reference to a Director who, at a meeting of the Board,
               would not be entitled to vote on the resolution.

19.      MANAGING DIRECTOR

19.1     NO MANAGING DIRECTOR

         Unless and until it is unanimously otherwise resolved by the
         Shareholders, a managing director shall not be appointed to the
         Company.

19.2     RETIREMENT OF MANAGING DIRECTOR

         Notwithstanding anything hereinbefore contained, a managing director,
         if appointed, shall subject to the provisions of any contract between
         him and the Company be subject to the same provisions as to resignation
         and removal as the other Directors and he shall ipso facto and
         immediately cease to be a managing director if he ceases to hold the
         office of Director for any cause whatsoever.

19.3     REMUNERATION OF MANAGING DIRECTOR

         The remuneration of any managing director and that of any other full
         time executive Director shall be fixed by the Board, and may be by way
         of fixed salary or commission on or percentage of profits of the
         Company or of any other company in which the Company is interested or
         partly in one way and partly in another or others, but shall not be by
         way of commission on or percentage of operating revenue.

19.4     POWERS OF MANAGING DIRECTOR

         If a managing director is appointed, the Board may from time to time
         entrust to and confer upon a managing director for the time being such
         of the powers exercisable under these Articles by the Board as it may
         in its absolute discretion think fit, and may confer such powers for
         such time and to be exercised for such objects and purposes and upon
         such terms and conditions and with such restrictions as it deems
         expedient. The Board may confer such powers either collaterally with or
         to the exclusion of and in substitution for all or any of the powers of
         the Board in that behalf and may from time to time revoke, withdraw,
         alter or vary all or any of such powers.

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<PAGE>

20.      PROCEEDINGS OF BOARD

20.1     MEETINGS OF BOARD AND QUORUM FOR SAME

          (a)  The Board may meet together for the despatch of business, adjourn
               and otherwise regulate its meetings as it in its absolute
               discretion thinks fit. The quorum necessary for the transaction
               of business shall be 2 persons consisting of one Director
               appointed by the "A" Shareholders and one Director appointed by
               the "B" Shareholders. A Director interested in a contract or
               arrangement within the meaning of Article 17 shall be counted in
               a quorum notwithstanding his interest.

          (b)  Without limiting the discretion of the Board to regulate its
               meetings under Articles 20.1(a) or 18.1 or 18.2, the Board may if
               it thinks fit confer by radio telephone closed circuit television
               or other electronic means of audio or audio-visual communication,
               and a resolution passed by such a conference shall,
               notwithstanding the Directors are not present together in one
               place at the time of the conference, be deemed to have been
               passed at a meeting of the Board held on the day on which and at
               the time at which the conference was held provided that all
               Directors vote or approve the relevant resolutions. The
               provisions of these Articles relating to proceedings of the Board
               apply so far as they are capable of application and mutatis
               mutandis to such conferences.

20.2     NOTICE OF BOARD MEETINGS

         A Director may at any time, and the Secretary upon the request of a
         Director shall, convene a meeting of the Board. Notice of every Board
         meeting shall be given to each Director. Except in cases of unforeseen
         and necessary urgency, ten clear business days notice shall be given of
         all meetings of Board.

20.3     VOTES AT BOARD MEETINGS

         Questions arising at any Board meeting shall be decided by a majority
         of votes and each Director shall have one vote.

20.4     NO CASTING VOTE FOR CHAIRMAN OF BOARD

         In case of an equality of votes the chairman of the meeting shall not
         have a second or casting vote.

20.5     DIRECTOR APPOINTED BY TRANSFEROR OF SHARES

         For the purposes of these Articles a Director appointed by a
         Shareholder who later transfers its Shares to another Shareholder shall
         be deemed to be a Director appointed by the latter Shareholder.

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<PAGE>

20.6     CHAIRMAN AND DEPUTY CHAIRMAN OF DIRECTORS

         The Board may elect a chairman of the Board. The Board may also elect a
         deputy chairman who in the absence of the chairman at a meeting of the
         Board may exercise all the powers and authorities of the chairman. If
         no chairman or deputy chairman is elected or if at any meeting the
         chairman or deputy chairman is not present within half an hour of the
         time appointed for holding the same, the Directors present shall choose
         one of their number to be chairman of such meeting. The chairman and
         the deputy chairman shall hold office until otherwise determined by the
         Board or until they cease to be Directors.

20.7     QUORUM EMPOWERED TO EXERCISE POWERS OF BOARD

         A meeting of the Board at which a quorum is present shall be competent
         to exercise all or any of the authorities powers and discretions by or
         under these Articles for the time being vested in or exercisable by the
         Board generally.

20.8     COMMITTEE OF DIRECTORS

         The Board may delegate any of its powers to committees (including a
         scientific advisory committee) consisting of such member or members of
         its body as it thinks fit and may from time to time revoke such
         delegation. Any committee so formed shall in the exercise of the powers
         so delegated conform to any regulations that may from time to time be
         imposed upon it by the Board. The meetings and proceedings of any such
         committee consisting of 2 or more members shall be governed mutatis
         mutandis by the provisions herein contained for regulating the meetings
         and proceedings of the Directors so far as the same are not
         inconsistent with any regulations made by the Board under this clause.
         Where a committee consists of 2 or more members, a quorum shall be any
         2 members or such larger number as the committee itself determines.

20.9     DEFECTS IN APPOINTMENT OR QUALIFICATIONS OF DIRECTOR

         All acts done at any meeting of the Directors or of a committee of
         Directors or by any person acting as a Director shall notwithstanding
         that it shall afterwards be discovered that there was some defect in
         the appointment of a Director or of the committee or of the person
         acting as aforesaid be as valid as if every such person or committee
         had been duly appointed.

21.      ALTERNATE DIRECTORS

21.1     APPOINTMENT AND REMOVAL OF ALTERNATE DIRECTORS

         Each Director shall have power from time to time to appoint any person
         (not being an auditor or a partner or employer or employee of an
         auditor of the Company) to be an Alternate Director in his place during
         such times and from time to time as he shall appoint and shall have
         power at his discretion to remove such Alternate Director.

                                       20

<PAGE>

21.2     NOTICE OF APPOINTMENT OR REMOVAL OF ALTERNATE DIRECTORS

         Any appointment or removal as aforesaid shall be effected by telegram,
         telex, cable, facsimile or other notice in writing to the Company.

21.3     RIGHTS AND POWERS OF ALTERNATE DIRECTORS

         An Alternate Director may act in the place of the Director who
         appointed him and shall be entitled to attend and vote at any meeting
         of the Directors except while the Director who appointed him is
         present, and shall have all the rights and powers other than those
         conferred by this Article 21.3, and be subject to the duties of the
         Director he represents, and shall be subject in all respects to the
         conditions existing with reference to the other Directors except that
         he shall not be entitled to be remunerated otherwise than out of the
         remuneration of the Director who appointed him.

21.4     REMUNERATION OF ALTERNATE DIRECTORS

         In respect of such remuneration (if any) the rights of the Alternate
         Director shall be against the Director who appointed him only and not
         against the Company.

21.5     ALTERNATE DIRECTOR IS OFFICER OF COMPANY

         An Alternate Director shall be an officer of the Company and shall not
         be deemed to be the agent of the Director appointing him.

21.6     VOTING RIGHTS OF ALTERNATE DIRECTORS

         If the appointee is already a Director of the Company he shall be
         entitled to vote at Board meetings on behalf of the Director appointing
         him as well as on his own behalf, but for the purpose of determining
         whether a quorum is present shall be counted only once.

21.7     ALTERNATE GOES WHEN DIRECTOR GOES

         If any Director, who has for the time being an Alternate Director,
         shall cease to be a Director, the Alternate Director shall thereupon
         cease to be an Alternate Director provided however that when a Director
         retires at an annual general meeting pursuant to these Articles and is
         re-appointed as a Director at such meeting his Alternate Director (if
         any) shall not ipso facto cease to be an Alternate Director unless the
         instrument appointing him as an Alternate Director otherwise provides.
         An Alternate Director need not be a shareholder of the Company.

21.8     FORM ON APPOINTMENT OF ALTERNATE DIRECTOR

         Any instrument appointing an Alternate Director shall as nearly as
         circumstances will admit be in the following form or to the effect of
         the following:

                  "[                                 ]

                                       21

<PAGE>

                  I, the undersigned being a Director of the above named Company
                  in pursuance of the power in that behalf contained in the
                  Articles of Association of the Company DO HEREBY NOMINATE AND
                  APPOINT of to act as Alternate Director in my place and to
                  exercise and discharge all my duties as a Director.

                  Signed this           day of                19  .",

         or in such other form as the Directors may in particular cases accept.

22.      OBLIGATION OF SECRECY

         Every Director, managing director, manager, Secretary, auditor,
         trustee, member of a committee, agent, accountant or other officer of
         the Company shall be bound to observe secrecy with respect to all
         transactions of the Company with its customers and the state of the
         account of any individual and all matters relating thereto; and, if
         required by the Directors, shall prior to entering upon his duties or
         employment or at any time afterwards, sign and make a declaration in a
         book to be kept for that purpose that he will not reveal or make known
         any of the matters, affairs or concerns which may come to his knowledge
         as such Director, managing director, manager, Secretary, auditor,
         trustee, member of a committee, agent, accountant or other officer
         whether relating to transactions of the Company with its customers or
         the state of the account of any individual or to anything else, to any
         person or persons except in the course and in the performance of his
         duties, or under compulsion or obligation of law, or when officially
         required to do so by the Board or by the auditors for the time being or
         by any general meeting of Shareholders.

23.      MINUTES

23.1     MINUTES OF ALL PROCEEDINGS TO BE KEPT

         The Directors shall cause minutes of all proceedings of general
         meetings and of the Board (including committees) to be duly entered in
         books kept for such purpose in accordance with the requirements of the
         Corporations Law.

23.2     INSPECTION OF MINUTES OF GENERAL MEETINGS

         Books containing the minutes of proceedings of general meetings shall
         be open for inspection by any Shareholder without charge.

24.      POWERS AND DUTIES OF DIRECTORS

24.1     DIRECTORS HAVE POWERS OF THE COMPANY

         Subject to the Corporations Law and to these Articles, the management
         of the business of the Company shall be vested in the Board and the
         Board may exercise all such powers and do all such acts and things as
         the Company is authorised or permitted to exercise and do and as are
         not hereby or by statute directed or required to be exercised or done
         by the Company in general meeting.

                                       22

<PAGE>

24.2     BOARD MAY EXERCISE COMPANY'S POWER TO BORROW

         Without limiting the generality of Article 24.1 hereof, the Board may
         exercise all the powers of the Company to borrow money to charge any
         property or business of the Company or all or any of its uncalled
         capital and to issue debentures or give any other security for a debt
         liability or obligation of the Company or of any other person and may
         exercise all the powers of the Company in relation to any official seal
         for use outside the State and in relation to branch registers.

24.3     BOARD MAY APPOINT ATTORNEY OR AGENT

         The Board may, by resolution, power of attorney under seal or other
         written instrument, appoint any person or persons to be attorney or
         agent of the Company for such purposes, with such powers, authorities
         and discretions being powers, authorities and discretions vested in or
         exercisable by the Board for such period and subject to such conditions
         as it in its absolute discretion thinks fit. Any such appointment may
         be on such terms for the protection and convenience of persons dealing
         with the attorney or agent as the Board thinks fit and may also
         authorise the attorney or agent to delegate all or any of the powers,
         authorities and discretions vested in him.

25.      SECRETARY

25.1     APPOINTMENT AND REMOVAL OF SECRETARY

         A Secretary or Secretaries shall in accordance with the Corporations
         Law be appointed by the Board for such term, and upon such conditions
         as they may think fit, and any Secretary so appointed may be removed by
         the Board.

25.2     ACTING SECRETARY

         The Board may also at any time appoint a person as an acting Secretary
         or as a temporary substitute for a Secretary who shall for the purpose
         of these Articles be deemed to be a "Secretary".

26.      THE SEALS

26.1     CUSTODY AND USE OF SEAL

         The Board shall provide a Seal for the Company and shall provide for
         the safe custody of that Seal, which shall only be used by the
         authority of the Board or of a committee of the Board authorised by the
         Board in that behalf. Every instrument to which the Seal shall be
         affixed shall subject to any provisions contained in this Article be
         signed by a Director and shall be countersigned by the Secretary or by
         another Director or by some other person appointed by the Board for the
         purpose.

                                       23

<PAGE>

26.2     EFFECT OF SEALING

         Any instrument bearing the Seal or an official seal shall if issued for
         valuable consideration be binding on the Company notwithstanding any
         irregularity touching the authority of the Directors to issue the same
         or the circumstances of its issue.

27.      RESERVE FUND AND DIVIDENDS

27.1     ESTABLISHMENT AND PURPOSE OF RESERVE FUNDS

         Subject always to the Corporations Law, the Board may before
         recommending any dividend, set aside out of the profits of the Company
         such sum as it thinks proper as a reserve fund to be applied at the
         absolute discretion of the Board for any purpose for which the profits
         of the Company may be properly applied including, but not limited to
         the following: to meet contingencies or for equalising dividends or for
         special dividends or for repairing, improving and maintaining any
         property of the Company or for such other purposes as the Board shall
         in its absolute discretion deem conducive to the interests of the
         Company.

27.2     POWER TO INVEST RESERVE FUND

         The Board may invest the several sums so set aside upon such
         investments as it may in its absolute discretion think fit and from
         time to time deal with and vary such investments and dispose of all or
         any part thereof for the benefit of the Company. The Board may divide
         the reserve fund into such special funds as it in its absolute
         discretion thinks fit and employ the reserve fund or any part thereof
         in the business of the Company without being bound to keep the same
         separate from the other assets. Pending any such application the
         reserves may at the absolute discretion of the Board be used in the
         business of the Company or be invested in such investments as the Board
         thinks fit.

27.3     PROFITS MAY BE CARRIED FORWARD WITHOUT GOING TO RESERVE

         The Board may carry forward so much of the profits remaining as it
         considers ought not to be distributed as dividends without transferring
         those profits to reserve.

27.4     PROFITS TO BE DISTRIBUTED AMONG SHAREHOLDERS IN PROPORTION TO NOMINAL
         CAPITAL PAID UP ON THEIR SHARES

         Subject to any special rights or restrictions for the time being
         attaching to any shares, and subject to Article 28.1, the profits of
         the Company shall be divisible among the Shareholders in proportion to
         the amount of the nominal share capital paid up on the shares held by
         them respectively at the time as at which entitlements thereto are
         determined. Subject as aforesaid, any nominal share capital paid up on
         a share during the period in respect of which a dividend is declared
         shall unless the terms of issue thereof otherwise provide only entitle
         the holder of such share to an apportioned amount of such dividend as
         from the date of payment. A declaration by the Board as to the amount
         of profits available for dividend shall be conclusive.

                                       24

<PAGE>

27.5     DECLARATION OF DIVIDENDS

         A general meeting or the Board without the sanction of a general
         meeting may declare a dividend whether interim or final to be paid to
         the Shareholders according to their rights and interests in the profits
         at the time of entitlement to dividend and may fix the times for
         determining entitlements to and for the payment of the dividend. No
         larger dividend shall be declared by a general meeting than is
         recommended by the Board and the Board may in its absolute discretion
         declare and pay or recommend such dividends as in its opinion the
         position of the Company justifies.

27.6     NO INTEREST ON DIVIDENDS

         No dividend shall carry interest as against the Company.

27.7     PAYMENT OF DIVIDENDS WITH ASSETS, SHARES OR DEBENTURES

         The Board or a general meeting on the recommendation of the Board may
         resolve when declaring a dividend that such dividend be paid wholly or
         in part by the distribution of specific assets, including paid up
         shares in of the Company or of any other Corporation, and the Board
         shall give effect to that resolution. Where any dispute arises in
         regard to such a distribution the Board may settle the matter as it in
         its absolute discretion considers expedient, fix the value for
         distribution of the specific assets or any part of those assets, and
         may determine that cash payments will be made to any Shareholders on
         the basis of the value so fixed in order to adjust the rights of all
         parties, and may vest any such specific assets in trustees as the Board
         in its absolute discretion considers expedient.

27.8     METHOD OF PAYMENT OF DIVIDENDS

         Unless otherwise directed any dividend may be paid by cheque sent
         through the post to the registered address of the Shareholder and every
         cheque so sent shall be made payable to the person to whom it is sent
         and shall be at his risk. Moneys earned by the Company on the amount of
         a dividend pending clearance of such a cheque or other collection
         thereof by a Shareholder shall be for the benefit of the Company.

27.9     POWER OF RETAIN DIVIDENDS ON WHICH THERE IS A LIEN

         The Board may retain any dividends on which the Company has a lien and
         may apply the same in or towards satisfaction of the debts liabilities
         or engagements in respect of which the lien exists.

27.10    EFFECT ON DIVIDENDS OF TRANSFERS OF SHARES

         A transfer of shares shall not pass the right to any dividend declared
         thereon and the entitlement to which has accrued before the
         registration of the transfer.

                                       25

<PAGE>

28.      CAPITALISATION OF PROFITS

28.1     PROFITS AND PREMIUMS MAY BE CAPITALISED

         The Board or, upon the recommendation of the Board, any general meeting
         may from time to time resolve that any moneys, investments or other
         assets forming part of the undivided profits of the Company, standing
         to the credit of the reserve fund or in the hands of the Company and
         available for dividend or any amount representing premiums received on
         the issue of shares and standing to the credit of the share premium
         account be capitalised and distributed amongst Shareholders.

28.2     PROPORTIONATE DISTRIBUTION OF AMOUNTS CAPITALISED

         Such distribution shall be made to such Shareholders as would be
         entitled to receive the same if distributed by way of dividend and in
         the same proportions on the footing that they become entitled thereto
         as capital and that all or any part of such capitalised fund be applied
         on behalf of such Shareholders:

          (a)  in paying up in full either at par or at such premium as the
               resolution may provide any unissued shares or debentures of the
               Company which shall be distributed accordingly; or

          (b)  in or towards payment of the uncalled liability on any issued
               shares or debentures of the Company, and that such distribution
               or payment shall be accepted by such Shareholders in full
               satisfaction of their interest in the said capitalised sum.

28.3     DETERMINATION OF ENTITLEMENT TO DISTRIBUTION

         The resolution may fix the time as at which entitlements to such
         distribution are determined.

28.4     SETTLEMENT OF DISPUTES ABOUT DISTRIBUTION

         For the purpose of giving effect to any resolution under Article 28.3,
         the Board may settle any dispute which may arise in regard to the
         distribution as it thinks expedient and in particular may:

          (a)  in cases where shares become issuable in fractions, issue
               fractional certificates, make cash payments or declare that
               fractions be ignored; and

          (b)  authorise any person to make on behalf of all the Shareholders
               entitled to any further shares upon the capitalisation an
               agreement with the Company, providing for the issue to them,
               credited as fully paid up, of any such further shares or
               debentures or for the payment up by the Company on their behalf
               of the amounts or any part of the amounts remaining unpaid on
               their existing shares by the application of their respective
               proportions of the sum resolved to be capitalised and any
               agreement made under such authority shall be effective and
               binding on all members concerned.

                                       26

<PAGE>

29.      ACCOUNTS

29.1     COMPANY TO KEEP

         The Company shall cause to be kept such accounting and other records as
         will correctly record and explain the transactions and financial
         position of the Company and shall keep such records in such manner as
         will enable the preparation from time to time of true and fair accounts
         of the Company and as will enable such accounts to be conveniently and
         properly audited.

29.2     ANNUAL ACCOUNTS TO BE LAID BEFORE ANNUAL GENERAL MEETING

         At the annual general meeting in every year the Board shall lay before
         the Company a profit and loss account and balance sheet for the last
         financial year of the Company together with such other accounts reports
         and statements as are required by the Corporations Law.

29.3     COPY OF ACCOUNTS TO BE SENT

         A copy of every document which is by Article 29.2 required to be laid
         before each annual general meeting shall be sent to all persons
         entitled to receive notices of general meetings with the notice of
         meeting but in any event not later than 4 months after the end of the
         financial year.

30.      AUDITORS: APPOINTMENT AND REMOVAL

         Auditors of the Company shall be appointed and may be removed as
         provided in the Corporations Law and they shall perform such duties and
         have such rights and powers as may be provided in the Corporations Law.

31.      INSPECTION OF RECORDS

         The Board shall determine whether and to what extent and at what time
         and places and under what conditions the accounting records and other
         documents of the Company will be open to the inspection of Shareholders
         other than Directors, and a Shareholder not being a Director does not
         (except as provided by law or authorised by the Board) have the right
         to inspect or to require or receive any information or to require
         discovery of any record or document of the Company or any information
         respecting any detail of the Company's trading or business including
         any matter which is or may be in the nature of a trade secret or secret
         process relating to the conduct of the business of the Company.

32.      NOTICES

32.1     METHOD OF SERVICE OF NOTICES

         All notices must be in the English language. A notice may be served by
         the Company upon any Shareholder either personally or by certified or
         registered mail addressed to such Shareholder at its registered place
         of address. At the time of giving any notice a

                                       27

<PAGE>

         Shareholder shall send a courtesy copy by facsimile to the other
         parties but such facsimiles will not be treated as formal notice.
         Notices shall be deemed validly received at the certificate date of
         delivery or when left personally. Any Shareholder may at any time
         change its address by notifying the Company and the other Shareholders
         of such change.

32.2     AIR-MAIL POSTAGE TO OVERSEAS SHAREHOLDERS WITHOUT AUSTRALIAN ADDRESS

         As regards those Shareholders who have no registered place of address
         in the Commonwealth of Australia, all notices by mail shall be posted
         by air-mail.

32.3     NOTICE BY ADVERTISEMENT

         Any notice by a court of law or otherwise required or allowed to be
         given by the Company to the Shareholders or any of them by
         advertisement shall unless otherwise stipulated be sufficiently
         advertised if advertised once in 2 daily newspapers circulating in the
         State provided that such notice is promptly given to all the
         Shareholders.

32.4     UNREGISTERED TRANSFEREES BOUND BY NOTICES

         Every person who by operation of law, transfer or other means
         whatsoever becomes entitled to any share shall be bound by every notice
         in respect of such share which prior to his name and address being
         entered on the Register was given to the person from whom he derived
         his title to such share and to every previous holder thereof.

32.5     SIGNATURES ON NOTICE
         The signature to any notice to be given by the Company shall be
         original.

33.      WINDING UP

33.1     DISTRIBUTION OF PROPERTY IN SPECIE

         If the Company is wound up the liquidator may with the sanction of a
         special resolution divide among the Shareholders in kind the whole or
         any part of the property of the Company and may for that purpose set
         such value as he considers fair upon any property to be so divided and
         may determine how the division is to be carried out as between the
         Shareholders or different classes of Shareholders.

33.2     DISTRIBUTION TO BE IN PROPORTION TO NOMINAL SHARE CAPITAL PAID UP

         The property of the Company shall be divided amongst the Shareholders
         in proportion to the nominal share capital paid up on their shares and
         this shall be so whether or not the liquidator exercises the power
         given to him by Article 33.1.

                                       28

<PAGE>

33.3     SPECIAL RIGHTS PREVAIL

         Articles 33.1 and 33.2 are without prejudice to the rights of holders
         of shares issued upon special terms and conditions.

33.4     VESTING OF PROPERTY IN TRUSTEES FOR CONTRIBUTORIES

         The liquidator may, with the sanction of a special resolution, vest the
         whole or any part of such property in trustees upon such trusts for the
         benefit of the contributories or any of them as the liquidator thinks
         fit.

33.5     ENCUMBERED PROPERTY:  SHAREHOLDER NOT COMPELLED TO ACCEPT

         No Shareholder shall be compelled to accept any property in respect of
         which there is any liability under the provisions of this Article 33.

34.      INDEMNITY

         Subject to the provisions of section 241 of the Corporations Law (or of
         any provisions enacted in place of that provision):

          (a)  every officer or auditor of the Company shall be indemnified out
               of the property of the Company against any liability incurred by
               him in his capacity as officer or auditor in defending any
               proceedings whether civil or criminal in which judgment is given
               in his favour or in which he is acquitted or in connection with
               any application in relation to any such proceedings in which
               relief is under the Corporations Law granted to him by the Court;

          (b)  every officer or auditor of the Company shall be indemnified out
               of the property of the Company against all costs losses and
               expenses including travelling expenses incurred by him in his
               capacity as an officer or auditor by reason of any contract
               entered into or other act or thing properly done by him as an
               officer or auditor or in any way in the discharge of his duties
               unless the same arise from his own negligence default breach of
               duty or breach of trust and it shall be the duty of the Board to
               pay the same out of the funds of the Company; and

          (c)  no Director or other officer of the Company shall be liable for
               the acts, receipts, neglects or defaults of any other Director or
               officer or for joining in any receipt or other act for
               conformity, or for any loss or expense happening to the Company
               through the insufficiency or deficiency of title to any property
               acquired by order of the Board for or on behalf of the Company,
               or for the insufficiency or deficiency of any security in or upon
               which any of the moneys of the Company shall be invested, or for
               any loss or damage arising from the bankruptcy, insolvency or
               tortious act of any person with whom any moneys, securities or
               effects are deposited, or for any loss occasioned by any error of
               judgment or oversight on his part, or for any other loss, damage
               or misfortune which occurs in the execution of the duties of his
               office or in relation thereto, unless the same arises through his
               own negligence, default, breach of duty or breach of trust.

                                       29

<PAGE>

                                  ANNEXURE "B"

                            (Filed as Exhibit 10.11)

<PAGE>

                                  ANNEXURE "C"

<PAGE>

                              CONSULTANCY AGREEMENT

                               Date: 5 April 1994

                           STEM CELL SCIENCES PTY LTD
                                 ACN 063 293 130

                                     Company

                            CASTELLA RESEARCH PTY LTD
                                 ACN 006 125 364

                                   Consultant

                             DR. MALCOLM ROY BRANDON

                               Nominated Executive

<PAGE>

                               TABLE OF CONTENT'S

<TABLE>
<S>      <C>                                                                      <C>
1.       DEFINITIONS AND INTERPRETATION............................................1

         1.1      Definitions......................................................1
         1.2      Interpretation...................................................2

2.       ENGAGEMENT................................................................2

         2.1      Engagement.......................................................2
         2.2      Non-exclusivity..................................................2

3.       TERM......................................................................3

4.       CONSULTANT'S DUTIES.......................................................3

         4.1      Specific duties..................................................3
         4.2      General duties...................................................3

5.       COMPANY'S OBLIGATIONS.....................................................4

6.       FEES......................................................................4

         6.1      Consultant's retainer............................................4

7.       EXPENSES..................................................................4

         7.1      No reimbursement of unauthorised expenses........................4
         7.2      Consultant responsible for payment of Executives, etc............4
         7.3      Initial Expenses.................................................5

8.       CONSULTANT'S ACKNOWLEDGEMENTS.............................................5

         8.1      Confidential Information.........................................5
         8.2      Undertakings.....................................................5

9.       CONFIDENTIALITY...........................................................6

10.      DISCOVERIES...............................................................6

         10.1     Information......................................................6
         10.2     Inventions.......................................................6

11.      NON-COMPETITION...........................................................7

         11.1     During the Engagement............................................7
         11.2     After the Engagement.............................................7
         11.3     No representations after Engagement terminated...................7

12.      TERMINATION...............................................................8

         12.1     Immediate termination by the Company.............................8
         12.2     Not to prejudice rights..........................................8

13.      RETURN OF MATERIALS.......................................................8

         13.1     Consultant to return materials...................................8
         13.2     Materials to be property of the Company..........................9

                                       i

<PAGE>

14.      RELATIONSHIP..............................................................9

         14.1     Parties' relationships...........................................9
         14.2     Consultant indemnifies Company in certain respects...............9

15.      FURTHER ACTS..............................................................9

16.      NOTICES..................................................................10

         16.1     Service of notice...............................................10

17.      ASSIGNMENT...............................................................10

         17.1     By the Company..................................................10
         17.2     By the Consultant...............................................10

18.      NO WAIVER................................................................11

19.      SEVERABILITY.............................................................11

20.      VARIATION................................................................11

21.      GOVERNING LAW............................................................11
</TABLE>

                                       ii

<PAGE>

                                       12

CONSULTANCY AGREEMENT made on 5 April 1994.

BETWEEN           STEM CELL SCIENCES PTY LTD ACN 063 293 130 a company
                  incorporated in Victoria  and having its registered office in
                  that State at Level 10, 420 St. Kilda Road, Melbourne
                 ("COMPANY")

AND               CASTELLA RESEARCH PTY LTD ACN 006 125 364 a company
                  incorporated  in the State of Victoria and having its
                  registered office in that State at the offices of Adrian Davis
                  & Co Pty Ltd at 587 Whitehorse Road, Mont Albert in its own
                  capacity and as trustee of the M.R. Brandon Family Trust
                 ("CONSULTANT")

AND               DR. MALCOLM ROY BRANDON of 14 Castella Street, East Ivanhoe in
                  the State of Victoria ("NOMINATED EXECUTIVE")

RECITALS

A.       The Company carries on the Business (as defined in the Shareholders
         Agreement).

B.       The Consultant carries on the business of providing consulting,
         management and administrative services to other organisations.

C.       The Company wishes to avail itself of the expertise of the Consultant
         and its employees in the Company's areas of business.

IT IS AGREED:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         "BUSINESS DAY" means a day on which banks are open for business in the
         State.

         "CONFIDENTIAL INFORMATION" has the meaning given in clause 8.

         "DOCUMENTS" includes software (including source code and object code
         versions) manuals, diagrams, graphs, charts, projections,
         specifications, estimates, records, concepts, documents, accounts,
         plans, formulae, designs, methods, techniques, processes, supplier
         lists, price lists, customer lists, market research information,
         correspondence, letters and papers of every description including all
         copies of and extracts from the same.

         "ENGAGEMENT" means the engagement of the Consultant under this
         Agreement.

         "EXECUTIVES" means the Nominated Executive and such other persons
         employed by the Consultant who are skilled, qualified and experienced
         in the Business.

<PAGE>

         "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of even date
         herewith between BioTransplant Incorporated, the Consultant, Secure
         Sciences Pty Ltd ACN 064 139 948 and the Company.

         "STATE" means the State of Victoria.

1.2      INTERPRETATION

         In this Agreement:

          (a)  clause headings are inserted for convenience only and do not
               affect interpretation;

         and unless the context otherwise requires:

          (b)  references to a clause will be construed as references to a
               clause of this Agreement;

          (c)  references to "this Agreement" or to any specified provision of
               this Agreement or to any other agreement or document will be
               construed as references to this Agreement or the specified
               provision of this Agreement or that other agreement or document
               as amended or substituted with the agreement of the relevant
               parties and in force at any relevant time;

          (d)  references to any statute, ordinance or other law include all
               regulations and other enactments thereunder and all
               consolidations, amendments, re-enactments or replacements
               thereof;

          (e)  words importing the singular include the plural and vice versa,
               words importing a gender include other genders and references to
               a person will be construed as including an individual, the estate
               of an individual, firm, body corporate, association (whether
               incorporated or not), government and governmental,
               semi-governmental and local authority or agency; and

          (f)  words and phrases given a particular meaning in the Shareholders
               Agreement, have the same meaning when used in this Agreement.

2.       ENGAGEMENT

2.1      ENGAGEMENT

         The Company engages the Consultant on the terms of this Agreement and
         the Consultant accepts that engagement.

2.2      NON-EXCLUSIVITY

         Subject to the provisions of this Agreement including Clause 11, the
         Consultant and the Executives may provide their respective services in
         relation to matters outside the FIELD (as defined in the BTI Research
         and License Agreement) to any other person during the Engagement, but
         the Company at all times has first priority over the services of the
         Consultant and the Executives.

                                       2

<PAGE>

3.       TERM

         The Engagement commences on 5 April, 1994, and subject to the
         provisions for termination of the Engagement contained in this
         Agreement, the Engagement will be for a term of 4 years from
         commencement ("TERM").

4.       CONSULTANT'S DUTIES

4.1      SPECIFIC DUTIES

         During the Engagement the Consultant will advise the Company in
         relation to such aspects of the Business as the Board from time to time
         requires and in particular will be responsible to the Company for
         implementation of the RESEARCH plan in Appendix A of the BTI Research
         and License Agreement and of all other RESEARCH plans prepared pursuant
         to the BTI Research and License Agreement from time to time.

4.2      GENERAL DUTIES

         In the discharge of the specific duties the Consultant will:

          (a)  act with professional skill as consultant to the Company with a
               view to promoting, advancing and improving the Business;

          (b)  comply with all policies, directions and resolutions of the Board
               and any nominee of the Board;

          (c)  subject only to the policies, directions and resolutions of the
               Board, act on its own responsibility and initiative and exercise
               all powers as may be granted to it by the Board or any nominee of
               the Board from time to time;

          (d)  make regular reports at any intervals or on any occasions as the
               Board or any nominee of the Board stipulates, and on any matters
               as the Board or any nominee of the Board requires;

          (e)  at all times provide the Nominated Executive and such number of
               other Executives as the parties from time to time agree, and
               procure that the Nominated Executive and those Executives devote
               all of their time and attention to the Business to ensure its
               promotion to the best of their and the Consultant's ability,
               subject only to the obligations of the Nominated Executive to the
               University of Melbourne as at the date hereof;

          (f)  cause the Executives to comply with clauses 4.2(a)-(d) in their
               performance of the Consultant's duties and cause the Consultant
               to perform all duties and exercise any powers as the Board may
               from time to time assign to it;

                                       3

<PAGE>

          (g)  permit the Executives to be appointed and act as directors of the
               Company or of any related body corporate of the Company if the
               Board so requires;

          (h)  not change, replace or substitute any of the Executives without
               the consent in writing of the Company;

          (i)  perform any services for any related body corporate of the
               Company as the Board may from time to time reasonably require;
               and

          (j)  itself, and will ensure that the Executives, refer to the Company
               for first refusal any project which comes before the Consultant
               or the Executives which is similar to projects handled by the
               Company in its ordinary course of business.

5.       COMPANY'S OBLIGATIONS

         During the Engagement the Company will give the Consultant and the
         Executives access to all information in relation to the Business and to
         all facilities as they reasonably require to enable them to carry out
         the Consultant's duties under this Agreement.

6.       FEES

6.1      CONSULTANT'S RETAINER

         During the Engagement, the Company will pay to the Consultant a
         retainer at the rate of $5,000.00 per month (or other rate as may from
         time to time be agreed between the parties), which will be deemed to
         accrue rateably from day to day, and be payable in arrears on the last
         day of each month.

7.       EXPENSES

7.1      NO REIMBURSEMENT OF UNAUTHORISED EXPENSES

         The Consultant will perform its obligations under this Agreement at its
         own cost, and unless expressly authorised in writing by the Board,
         neither the Consultant nor any of the Executives will be entitled to be
         reimbursed for any out of pocket expenses incurred in connection with
         the performance of the Consultant's duties under this Agreement.

7.2      CONSULTANT RESPONSIBLE FOR PAYMENT OF EXECUTIVES, ETC.

         The Consultant will be solely responsible for and solely bear:

          (a)  the payment of remuneration to the Executives and all its other
               servants, agents and contractors, including salaries and wages,
               annual leave, sick leave, long service leave and all other
               benefits to which any of them may be entitled under any contract
               of service with the Consultant or under any award, statute or
               common law;

          (b)  the payment of all taxes and duties in respect of that
               remuneration and benefits;

                                       4

<PAGE>

          (c)  maintenance of, and the costs in respect of the maintenance of,
               adequate insurance in respect of workers' compensation and all
               other risks appropriate to the duties of the Executives,
               servants, agents and contractors; and

          (d)  compliance with, and all costs of compliance with, all other
               statutory, award or other legal or contractual requirements with
               respect to the Executives, servants, agents and contractors.

7.3      INITIAL EXPENSES

         The Company will reimburse the Consultant $25,000.00 within 7 days of
         the date of this Agreement for expenses incurred by the Consultant
         prior to the date hereof in relation to the Business.

8.       CONSULTANT'S ACKNOWLEDGEMENTS

8.1      CONFIDENTIAL INFORMATION

         The Consultant acknowledges that:

          (a)  the property of the Company and its related bodies corporate
               includes and will include all knowhow, technology, research,
               employee skills, trade and business secrets and other
               confidential information and Documents relating to the Business
               or other affairs of the Company and its related bodies corporate
               or any person with whom the Consultant or any of the Executives
               comes into contact as a result of this Agreement, or which come
               into the Consultant's or any of the Executives' possession in the
               course and by reason of the Engagement, whether or not the same
               were originally supplied by the Company or its related bodies
               corporate ("CONFIDENTIAL INFORMATION");

          (b)  the Confidential Information has been and will be acquired by the
               Company or its related bodies corporate at the Company's or the
               related body corporate's initiative and expense; and

          (c)  the Company and its related bodies corporate have expended and
               will expend effort and money in establishing and maintaining the
               Confidential Information.

         Accordingly, it is reasonable that the Consultant should enter into the
         representations and warranties contained in this Agreement and, if the
         Engagement is terminated, the Consultant should continue to be subject
         to the restrictions set out in clauses 9, 10 and 11.

8.2      UNDERTAKINGS

         At the Company's request, the Consultant will cause the Executives and
         any other servant, agent or contractor of the Consultant to execute
         confidentiality and non-competition undertakings in favour of the
         Company in a form as may be reasonably required by the Company relating
         to the matters in this clause 8 and in clauses 9, 10 and 11.

                                       5

<PAGE>

9.       CONFIDENTIALITY

         The Consultant represents and warrants that it will not, and will
         procure that the Executives will not (subject only to the contrary
         obligations of the Nominated Executive owed to the University of
         Melbourne as at the date hereof which remain in existence at the
         relevant time), either during the Engagement or at any time thereafter
         except in the proper course of the Consultant's duties under this
         Agreement or as required by law or by the Company, use or disclose to
         any person any Confidential Information, and the Consultant will use
         its best endeavours to prevent the unauthorised use or disclosure of
         that information by third parties.

10.      DISCOVERIES

10.1     INFORMATION

         The Consultant represents and warrants that:

          (a)  it will immediately inform the Company of any matter which may
               come to its notice or to the notice of any of the Executives
               during the Engagement which may be of interest or of any
               importance or use to the Company or its related bodies corporate;
               and

          (b)  it will immediately communicate to the Company any proposals or
               suggestions occurring to it or any of the Executives during the
               Engagement which may be of service for the furtherance of the
               business of the Company or its related bodies corporate.

10.2     INVENTIONS

         The Consultant represents and warrants that:

          (a)  it will immediately communicate to the Company any and all
               processes, inventions, improvements, innovations, modifications
               and discoveries which it or any of the Executives make, either
               alone or in conjunction with others, in connection with or
               arising out of the Engagement and in any way connected with any
               of the matters in which the Company has been or is now or
               hereafter interested during the Engagement ("INVENTIONS"),
               whether or not the Inventions are capable of being protected by
               copyright, letters patent, registered design or other protection
               ("PROTECTION"), and the Inventions will be the exclusive property
               of the Company; and

          (b)  it will immediately deliver to the Company full particulars
               concerning the Inventions, and at the expense of the Company,
               execute all documents and do and execute all such acts, matters
               and things as may be necessary or reasonable to obtain Protection
               for the Inventions, and to assign to the Company all rights which
               may be acquired by it or any of the Executives in relation to
               them and to vest tide in them in the Company absolutely.

                                       6

<PAGE>

11.      NON-COMPETITION

11.1     DURING THE ENGAGEMENT

         The Consultant represents and warrants that it will not, and that it
         will procure that the Executives will not (subject only to the contrary
         obligations of the Nominated Executive owed to the University of
         Melbourne as at the date hereof which remain in existence at the
         relevant time), during the Engagement either directly or indirectly in
         any capacity (including without limitation as principal, agent,
         partner, employee, shareholder, unitholder, joint venturer, director,
         trustee, beneficiary, manager, consultant or adviser) carry on, advise,
         provide services to or be engaged, concerned or interested in or
         associated with any business or activity which is competitive with any
         business carried on by the Company or any of its related bodies
         corporate, or be engaged or interested in any public or private work or
         duties which in the reasonable opinion of the Board may hinder or
         otherwise interfere with the performance of the Consultant of its
         duties under this Agreement.

11.2     AFTER THE ENGAGEMENT

         The Consultant represents and warrants that it will not, and that it
         will procure that the Executives will not, during the period of 24
         months after termination of the Engagement, however that termination
         occurs:

          (a)  anywhere within Australia, the United Kingdom or the United
               States of America, directly or indirectly in any capacity
               (whether as principal, agent, partner, employee, shareholder,
               unitholder, joint venturer, director, trustee, beneficiary,
               manager, consultant or adviser) carry on, advise, provide
               services to or be engaged, concerned or interested in or
               associated with any business or activity which is competitive
               with any business carried on by the Company or any of its related
               bodies corporate at the date of termination of the Engagement;

          (b)  canvass, solicit or endeavour to entice away from the Company any
               person who or which at any time during the Term or at the date of
               termination of the Engagement was or is a client or customer of
               or supplier to the Company or any related body corporate of the
               Company or in the habit of dealing with the Company or any such
               related body corporate;

          (c)  solicit, interfere with or endeavour to entice away any employee
               of the Company or any of its related bodies corporate; or

          (d)  counsel, procure or otherwise assist any person to do any of the
               acts referred to in clauses 11.2(b) and (c).

11.3     NO REPRESENTATIONS AFTER ENGAGEMENT TERMINATED

         The Consultant will not represent itself, and will procure that no
         Executive will represent himself or herself, as being in any way
         connected with the business of the Company or any of its related bodies
         corporate at any time after the termination of the Engagement.

                                       7

<PAGE>

12.      TERMINATION

12.1     IMMEDIATE TERMINATION BY THE COMPANY

         The Company may at its sole discretion terminate the Engagement by
         giving notice effective immediately if at any time:

          (a)  the Consultant or any of the Executives is or becomes in breach
               of any of the material terms of this Agreement and if it is a
               breach which is capable of being remedied and it is the first
               occasion on which such type of breach has occurred, the breach is
               not remedied to the reasonable satisfaction of the Company within
               30 days after written notice is given to the Consultant by the
               Company requiring the breach to be remedied; or

          (b)  the Consultant or any of the Executives is or becomes charged
               with any criminal offence involving criminal intent, fraud,
               dishonesty or moral turpitude which in the reasonable opinion of
               the Board brings the Consultant or any of the Executives or the
               Company or any of its related bodies corporate into disrepute; or

          (c)  the Consultant or any of the Executives is or becomes bankrupt,
               or goes into liquidation, or makes a composition or arrangement
               with creditors generally, or takes advantage of any statute for
               the relief of insolvent debtors; or

          (d)  any of the Executives is or becomes of unsound mind or a person
               whose person or estate is liable to be dealt with under any law
               relating to mental health; or

          (e)  the Consultant is or becomes incompetent in the performance of
               its duties under this Agreement; or

          (f)  the Consultant is or becomes continually or significantly absent
               or neglectful of its duties under this Agreement;

          (g)  the Nominated Executive dies; or

          (h)  the Consultant ceases to be a shareholder in the Company.

12.2     NOT TO PREJUDICE RIGHTS

         Termination of the Engagement will not prejudice any rights or remedies
         already accrued to any party under, or in respect of any breach of,
         this Agreement.

13.      RETURN OF MATERIALS

13.1     CONSULTANT TO RETURN MATERIALS

         The Consultant will return or cause the return of all Documents and
         other materials relating to or concerning any Confidential Information,
         and all materials supplied to the

                                       8

<PAGE>

         Consultant or the Executives or otherwise in their possession or
         within their control and containing or pertaining to any Confidential
         Information, including all copies of those Documents and materials
         then in existence:

          (a)  immediately on demand; or

          (b)  without demand as soon as such Documents and other materials or
               any of them are no longer required by the Consultant for the
               performance of its duties; or

          (c)  on the termination of the Engagement.

13.2     MATERIALS TO BE PROPERTY OF THE COMPANY

         All notes and memoranda of information concerning any Confidential
         Information made or received by the Consultant or any of the Executives
         during the course of the Engagement are the property of the Company,
         and will be surrendered by the Consultant at the same time as the
         Documents and other materials referred to in clause 13.1 are due to be
         returned to the Company.

14.      RELATIONSHIP

14.1     PARTIES' RELATIONSHIPS

         The relationship between the Company and the Consultant is that of
         principal and contractor. Nothing in this Agreement will be taken as
         constituting the Consultant, the Executives or any other servant, agent
         or contractor of the Consultant an employee or servant of the Company
         or any of its related bodies corporate.

14.2     CONSULTANT INDEMNIFIES COMPANY IN CERTAIN RESPECTS

         The Consultant agrees to indemnify the Company and each of its related
         bodies corporate against any action, suit, claim, demand, cost or
         expense arising out of or referable to:

          (a)  any damage, injury or loss caused by or resulting from any wilful
               or negligent act or omission or misfeasance of the Consultant,
               the Executives or any other servant, agent or contractor of the
               Consultant; and

          (b)  all injury, loss or damage sustained by any of the Executives or
               any officer, servant, agent or contractor of the Consultant
               incurred while attending to performance of the Consultant's
               duties under, or incidental or preparatory to this Agreement,
               unless the injury, loss or damage was caused by any wilful or
               negligent act or omission of the Company or any officer, servant
               or agent of the Company.

15.      FURTHER ACTS

         Each party will promptly do and perform all further acts, and execute
         and deliver all further instruments required by law or reasonably
         requested by any other party to

                                       9

<PAGE>

         establish, maintain and protect the respective rights and remedies
         of the parties and to carry out and effect the intent and purpose of
         this Agreement.

16.      NOTICES

16.1     SERVICE OF NOTICE

         All notices, requests, consents and other documents authorised or
         required to be given by or pursuant to this Agreement shall be given in
         writing and either personally served or sent by certified or registered
         mail addressed or sent by facsimile transmission as follows:

         The Company or the Consultant or the Nominated Executive:

         To:                            Mr Bob Mead
                                        R.D. Larsson & Co.
         Address:                       Level 10
                                        420 St Kilda Road
                                        Melbourne Victoria
                                        Facsimile: (03) 867-7226

         Notices, requests, consents and other documents ("NOTICES") shall be
deemed served or given:

          (a)  if personally served by being left at the address of the party to
               whom the Notice is given between the hours of 9:00 am and 5:00 pm
               on any Business Day, then in such case at the time the Notice is
               so delivered;

          (b)  if sent by registered or certified mail, at the certified date of
               delivery;

          (c)  if sent by facsimile transmission, on receipt by the sender of
               confirmation of successful transmission.

         Any, party may change its address for receipt of Notices at any time by
         giving notice of such change to the other party. Any Notice given under
         this Agreement may be signed on behalf of any party by the duly
         authorised representative of that party and shall be sent to all other
         parties to this Agreement.

17.      ASSIGNMENT

17.1     BY THE COMPANY

         The Company may assign the benefit of this Agreement to any related
         body corporate of the Company.

17.2     BY THE CONSULTANT

         The Consultant may not assign this Agreement without the prior written
         consent of the Company.

                                       10

<PAGE>

18.      NO WAIVER

         Failure or omission by the Company at any time to enforce or require
         strict or timely compliance with any provision of this Agreement will
         not affect or impair that provision, or the right of the Company to
         avail itself of the remedies it may have in respect of any breach of a
         provision, in any way.

19.      SEVERABILITY

         Any provision of this Agreement which is or becomes illegal, void or
         unenforceable will be ineffective to the extent only of such
         illegality, voidness or unenforceability and will not invalidate the
         remaining provisions.

20.      VARIATION

         This Agreement may not be changed or modified in any way after it has
         been signed except in writing signed by or on behalf of all the
         parties.

21.      GOVERNING LAW

         This Agreement is governed by, takes effect and will be construed in
         accordance with the laws of the State, and the parties irrevocably and
         unconditionally submit to the exclusive jurisdiction of the courts of
         the State and courts entitled to hear appeals therefrom.

                                       11

<PAGE>

SIGNED as an agreement.

THE COMMON SEAL of STEM CELL                 )
SCIENCES PTY LTD ACN 063 293 130             )
was affixed by the authority of the          )
Board of Directors in the presence of:       )

[SIGNED BY MALCOLM ROY BRANDON]                  [SIGNED BY PETER SCOTT
                                                  MOUNTFORD]

--------------------------------------------     ---------------------------
(Signature of Secretary/Director)                (Signature of Director)

[MALCOLM ROY BRANDON]                            [PETER SCOTT MOUNTFORD]

--------------------------------------------     ---------------------------
(Name of Secretary/Director in Full)             (Name of Director in Full)

THE COMMON SEAL of                           )
CASTELLA RESEARCH PTY LTD ACN                )
006 125 364 was affixed by the authority of  )
the Board of Directors in the presence of:   )

[SIGNED BY MALCOLM ROY BRANDON]                  [SIGNED BY SUSAN BRANDON]

--------------------------------------------     ---------------------------
(Signature of Director)                          (Signature of Director)

[MALCOLM ROY BRANDON]                            [SUSAN BRANDON]

--------------------------------------------     ---------------------------
(Name of Director in Full)                       (Name of Director in Full)

SIGNED by DR. MALCOLM ROY                    )   [SIGNED BY MALCOLM ROY BRANDON]
BRANDON in the presence of:                  )
                                                 ---------------------------
                                                 (Signature)
[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

                                       12
<PAGE>

                                  ANNEXURE "D"

<PAGE>

                           DEED OF CONFIDENTIALITY AND
                                 NON-COMPETITION

                               Date: 5 April 1994

                           STEM CELL SCIENCES PTY LTD
                                 ACN 063 293 130
                                     Company

                             DR. MALCOLM ROY BRANDON
                                    Executive

                           BIOTRANSPLANT INCORPORATED
                                       BTI

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                      <C>
1.       INTERPRETATION...................................................1

2.       CONFIDENTIALITY..................................................2

3.       DISCOVERIES......................................................2

         3.1      Information.............................................2
         3.2      Inventions..............................................3

4.       NON-COMPETITION..................................................3

         4.1      During the Engagement...................................3
         4.2      After the Engagement....................................3

5.       EXECUTIVE'S GUARANTEE AND INDEMNITY..............................4

         5.1      Guarantee and Indemnity.................................4
         5.2      Absolute Liability......................................4
         5.3      Liability not to be Affected............................4
         5.4      Continuing Security.....................................5

6.       SEVERABILITY.....................................................5

7.       VARIATION........................................................5

8.       NO WAIVER........................................................5

9.       NOTICES..........................................................5

         9.1      Service of notice.......................................5

10.      GOVERNING LAW....................................................7
</TABLE>

                                       i

<PAGE>

                   DEED OF CONFIDENTIALITY AND NON-COMPETITION

DEED made on 5 April 1994

BETWEEN           STEM CELL SCIENCES PTY LTD ACN 063 293 130 a company
                  incorporated in Victoria and having its registered office in
                  that State at Level 10, 420 St Kilda Road Melbourne
                  ("COMPANY")

AND               DR. MALCOLM ROY BRANDON of 14 Castella Street, East Ivanhoe
                  in the State of Victoria ("EXECUTIVE")

AND               BIOTRANSPLANT INCORPORATED a corporation organised and
                  existing under the laws of the State of Delaware and having
                  its principal office at 13th Street, Building 96, Charlestown
                  Navy Yard, Charlestown MA, United States of America ("BTI")

IT IS AGREED:

RECITALS

A.       By a consultancy agreement of even date between the Company, the
         Executive and Castella Research Pty Ltd ACN 006 125 364 (the
         "CONSULTANT") entered into by the Company at the request of the
         Executive (the "CONSULTANCY AGREEMENT") the Consultant has agreed to
         provide certain services to the Company.

B.       The Executive acknowledges that it is reasonable for the Company (and
         BTI as a major shareholder in the Company) to protect the goodwill of
         the Business by securing from the Executive covenants restricting the
         Executive from engaging in certain activities in competition with the
         Company and other covenants as set out in this Deed.

C.       The Executive acknowledges further that he will have access to
         Confidential Information which represents a valuable asset of the
         Company, and accordingly it is reasonable for the Company (and BTI as a
         major shareholder in the Company) to further protect the goodwill of
         the Business by securing from the Executive a covenant to treat the
         Confidential Information as confidential.

D.       In consideration of the Company at the request of the Executive
         agreeing to execute the Consultancy Agreement, the Executive has agreed
         to guarantee the performance of the Consultant under the Consultancy
         Agreement.

THIS DEED WITNESSES:

1.       INTERPRETATION

         In this Deed:

          (a)  clause headings are for convenience only and do not affect
               interpretation;

<PAGE>

         and unless the context otherwise requires:

          (b)  references to a clause are references to a clause of this Deed;

          (c)  references to "this Deed" or to any specified provision of this
               Deed or to any other agreement or document will be construed as
               references to this Deed or the specified provision of this Deed
               or that other agreement or document as amended or substituted
               with the agreement of the relevant parties and in force at any
               relevant time;

          (d)  references to any statute, ordinance or other law include all
               regulations and other enactments thereunder and all
               consolidations, amendments, re-enactments or replacements
               thereof;

          (e)  words importing the singular include the plural and vice versa,
               words importing a gender include other genders and references to
               a person will be construed as including an individual, the estate
               of an individual, firm, body corporate, association (whether
               incorporated or not), government and governmental,
               semi-governmental and local authority or agency; and

          (f)  words and phrases given a particular meaning in the Consultancy
               Agreement have the same meaning when used in this Deed.

2.       CONFIDENTIALITY

         Subject always to the contrary obligations of the Executive owed to the
         University of Melbourne as at the date hereof which remain in existence
         at the relevant time, the Executive covenants, represents and warrants
         to the Company and to BTI (each severally and both jointly) that he
         will not either during the Engagement or at any time thereafter, except
         as required by law or by the Company, use or disclose to any person any
         Confidential Information, and will use his best endeavours to prevent
         the unauthorised use or disclosure of any Confidential Information by
         third parties.

3.       DISCOVERIES

3.1      INFORMATION

         The Executive covenants, represents and warrants to the Company and to
         BTI (each severally and both jointly) that:

          (a)  he will immediately inform the Company of any matter which may
               come to his notice during the Engagement which may be of interest
               or of any importance or use to the Company or its related bodies
               corporate; and

          (b)  he will immediately communicate to the Company any proposals or
               suggestions occurring to him during the Engagement which may be
               of service for the furtherance of the Business of the Company or
               its related bodies corporate.

                                       2

<PAGE>

3.2      INVENTIONS

         Subject always to contrary obligations of the Executive owed to the
         University of Melbourne as at the date hereof which remain in existence
         at the relevant time, the Executive covenants, represents and warrants
         to the Company and to BTI (each severally and both jointly) that:

          (a)  he immediately communicate to the Company any and all processes,
               inventions, improvements, innovations, modifications and
               discoveries which he may make either alone or in conjunction with
               others in connection with or arising out of the Engagement or in
               any way connected with any of the matters in which the Company
               has been or is now or hereafter interested during the Engagement
               ("INVENTIONS"), whether or not the Inventions are capable of
               being protected by copyright, letters patent, registered design
               or other protection ("PROTECTION"), and the Inventions will be
               the sole and exclusive property of the Company; and

          (b)  he will immediately deliver to the Company full particulars
               concerning the Inventions, and will at the expense of the Company
               execute all documents and do and execute all such acts, matters
               and things as may be necessary or reasonable to obtain Protection
               for the Inventions, and to assign to the Company all rights which
               may be acquired by it in relation to them and to vest title in
               them in the Company absolutely.

4.       NON-COMPETITION

4.1      DURING THE ENGAGEMENT

         The Executive covenants, represents and warrants to the Company and to
         BTI (each severally and both jointly) that he will not without the
         prior written consent of the Company during the Engagement either
         directly or indirectly in any capacity (including without limitation as
         principal, agent, partner, employee, shareholder, unitholder, joint
         venturer, director, trustee, beneficiary, manager, consultant or
         adviser) carry on, advise, provide services to or be engaged, concerned
         or interested in or associated with any business or activity which is
         competitive with any business carried on by the Company or any of its
         subsidiaries or be engaged or interested in any public or private work
         or duties which in the reasonable opinion of the Board may hinder or
         otherwise interfere with the performance by the Consultant of its
         duties and obligations under the Consultancy Agreement.

4.2      AFTER THE ENGAGEMENT

         The Executive covenants, represents and warrants to the Company and BTI
         (each severally and both jointly) that he will not during the period of
         24 months after termination of the Engagement, however that termination
         occurs:

          (a)  anywhere within Australia, the United Kingdom or the United
               States of America, directly or indirectly in any capacity
               (whether as principal, agent, partner, employee, shareholder,
               unitholder, joint venturer, director, trustee, beneficiary,

                                       3

<PAGE>

               manager, consultant or adviser) actually carry on, advise,
               provide services to or be engaged, concerned or interested in or
               associated with any business or activity which is competitive
               with any business carried on by the Company or any of its
               subsidiaries at the date of termination of the Engagement;

          (b)  canvass, solicit or endeavour to entice away from the Company any
               person who or which at any time during the Term or at the date of
               termination of the Engagement was or is a client or customer of
               or supplier to the Company or any related body corporate of the
               Company or in the habit of dealing with the Company or any such
               related body corporate;

          (c)  solicit, interfere with or endeavour to entice away any employee
               of the Company or any of its related bodies corporate; or

          (d)  counsel, procure or otherwise assist any person to do any of the
               acts referred to in clauses 4.2(b) and (c).

5.       EXECUTIVE'S GUARANTEE AND INDEMNITY

5.1      GUARANTEE AND INDEMNITY

         The Executive unconditionally and irrevocably guarantees for the
         benefit of the Company and BTI (each severally and both jointly) the
         Consultant's performance of its obligations under the Consultancy
         Agreement and indemnifies the Company and BTI (each severally and both
         jointly) against all loss, liability and expense which they may suffer
         or incur in consequence of any breach or default by the Consultant of
         or in performance of the Consultant's obligations. The Executive
         declares that the Company and BTI are entitled to enforce their rights
         against him immediately on any breach or default by the Consultant. The
         Company or BTI will not be required to enforce or exhaust all or any of
         its rights against the Consultant before enforcing any of its rights
         against the Consultant.

5.2      ABSOLUTE LIABILITY

         The liability of the Executive hereunder shall be absolute and shall
         not be subject to the execution of any other instrument or document by
         any person and shall not be subject to the performance of any condition
         precedent or subsequent whatsoever between or amongst any person or
         persons whatsoever.

5.3      LIABILITY NOT TO BE AFFECTED

         The liability of the Executive hereunder shall not be affected by any
         act, omission, matter or thing whatsoever that would otherwise operate
         in law or in equity to reduce or release the Executive from such
         liability and without limiting the generality of the foregoing such
         liability shall not be affected by the granting by BTI or the Company
         to the Consultant of time, waiver, indulgence or concession or the
         making of any composition or compromise with the Consultant; BTI or the
         Company forbearing or neglecting to exercise any right for the
         enforcement of its rights against the Consultant; any laches,
         acquiescence or other act, neglect, default, omission or mistake by BTI
         or the Company;

                                       4

<PAGE>

         any variation in the terms of this Deed or the Consultancy Agreement
         made either with or without the knowledge of the Executive; this Deed
         or any obligation owed by the Consultant to BTI or the Company in
         relation to the Consultancy Agreement being void, voidable or
         otherwise unenforceable by BTI or the Company; the amendment of any
         constituent document of the Consultant; or any failure by BTI or the
         Company to disclose to the Executive any fact, circumstance or event
         relating to the Consultant at any time prior to or during the currency
         of this Deed.

5.4      CONTINUING SECURITY

         This Deed shall be a continuing security notwithstanding any
         termination by the Executive, settlement of account, intervening
         payment, express or implied revocation or any other matter or thing
         whatsoever and shall continue to secure to BTI and the Company the due
         and punctual performance of all of the obligations of the Consultant
         under the Consultancy Agreement until the expiration or termination of
         that agreement.

6.       SEVERABILITY

         Any provision of this Deed which is or becomes illegal, void or
         unenforceable will be ineffective to the extent only of such
         illegality, voidness or unenforceability and will not invalidate the
         remaining provisions.

7.       VARIATION

         This Deed will not be changed or modified in any way after it has been
         signed except in writing signed on behalf of each of the parties.

8.       NO WAIVER

         Failure or omission by the Company or BTI at any time to enforce or
         require strict or timely compliance with any provision of this Deed
         will not affect or impair that provision in any way, or the right of
         the Company or BTI to avail itself of the remedies it may have in
         respect of any breach of a provision.

9.       NOTICES

9.1      SERVICE OF NOTICE

         All notices, requests, consents and other documents authorised or
         required to be given by or pursuant to this Deed shall be given in
         writing and either personally served or sent by certified or registered
         mail addressed or sent by facsimile transmission as follows:

                                       5

<PAGE>

         The Company:
         To:                   Mr Bob Mead
                               R.D. Larsson & Co
         Address:              Level 10
                               420 St Kilda Road
                               Melbourne Victoria
                               Facsimile: (03) 867-7226
         BTI
         To:                   BioTransplant Inc.
         Address:              13th Street, Building 96
                               Charlestown Navy Yard
                               Charlestown MA 02129
                               United States of America
                               Attention: CEO
                               Facsimile: 617 241 8780

                               with a copy to:

                               Elliot M Olstein, Esq
                               Carella, Byrne, Bain, Gilfillan, Cecchi,
                                  Stewart & Olstein
                               6 Becker Farm Road
                               Roseland NJ 07068
                               United States of America
                               Facsimile: 201 994 1744

         The Executive
         To:                   Mr Bob Mead
                               R.D. Larsson & Co
         Address:              Level 10
                               420 St Kilda Road
                               Melbourne Victoria
                               Facsimile: (03) 867-7226

         Notices, requests, consents and other documents ("NOTICES") shall be
         deemed served or given:

          (a)  if personally served by being left at the address of the party to
               whom the Notice is given between the hours of 9:00 am and 5:00 pm
               on any Business Day, then in such case at the time the Notice is
               so delivered;

          (b)  if sent by registered or certified mail, at the certified date of
               delivery;

          (c)  if sent by facsimile transmission, on receipt by the sender of
               confirmation of successful transmission.

                                       6

<PAGE>

         Any party may change its address for receipt of Notices at any time by
         giving notice of such change to the other party. Any Notice given under
         this Deed may be signed on behalf of any party by the duly authorised
         representative of that party and shall be sent to all other parties to
         this Deed.

10.      GOVERNING LAW

         This Deed is governed by, takes effect and will be construed in
         accordance with the laws of Victoria, and the parties irrevocably and
         unconditionally submit to the exclusive jurisdiction of the courts of
         Victoria and courts entitled to hear appeals therefrom.

                                       7

<PAGE>

IN WITNESS the parties have executed and delivered this Deed.

THE COMMON SEAL of STEM CELL                )
SCIENCES PTY LIMITED ACN 063 293            )
130 was affixed by the authority of the     )
Board of Directors in the presence of:      )

[SIGNED BY MALCOLM ROY BRANDON]                [SIGNED BY PETER SCOTT MOUNTFORD]

--------------------------------------------   ---------------------------
(Signature of Secretary/Director)              (Signature of Director)

[MALCOLM ROY BRANDON]                          [PETER SCOTT MOUNTFORD]

--------------------------------------------   ---------------------------
(Name of Secretary/Director in Full)           (Name of Director in Full)

SIGNED, SEALED AND DELIVERED by             )  [SIGNED BY MALCOLM ROY BRANDON]
DR. MALCOLM ROY BRANDON in the presence of:
                                               ---------------------------
                                            )  (Signature)
[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

SIGNED SEALED AND DELIVERED by              )  [SIGNED BY RODERICK L J LYLE]
BIOTRANSPLANT INCORPORATED by               )
its duly appointed attorney pursuant to     )  ---------------------------
Power of Attorney dated 28 March 1994 in    )  (Signature)
the presence of:                            )

[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

                                       8

<PAGE>

                                  ANNEXURE "E"

<PAGE>

                           DEED OF CONFIDENTIALITY AND
                                 NON-COMPETITION

                               Date: 5 April 1994

                           STEM CELL SCIENCES PTY LTD
                                 ACN 063 293 130
                                     Company

                            DR. PETER SCOTT MOUNTFORD
                                    Executive

                           BIOTRANSPLANT INCORPORATED
                                       BTI

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                              <C>
1.       INTERPRETATION....................................................1

2.       CONFIDENTIALITY...................................................2

3.       DISCOVERIES.......................................................2

         3.1      Information..............................................2
         3.2      Inventions...............................................3

4.       NON-COMPETITION...................................................3

         4.1      During the Engagement....................................3
         4.2      After the Engagement.....................................3

5.       EXECUTIVE'S GUARANTEE AND INDEMNITY...............................4

         5.1      Guarantee and Indemnity..................................4
         5.2      Absolute Liability.......................................4
         5.3      Liability not to be Affected.............................4
         5.4      Continuing Security......................................5

6.       SEVERABILITY......................................................5

7.       VARIATION.........................................................5

8.       NO WAIVER.........................................................5

9.       NOTICES...........................................................5

         9.1      Service of notice........................................5

10.      GOVERNING LAW.....................................................7
</TABLE>

                                       i

<PAGE>

                   DEED OF CONFIDENTIALITY AND NON-COMPETITION

DEED made on 5 April 1994

BETWEEN           STEM CELL SCIENCES PTY LTD ACN 063 293 130 a company
                  incorporated in Victoria and having its registered office in
                  that State at Level 10, 420 St Kilda Road Melbourne
                  ("COMPANY")

AND               DR. PETER SCOTT MOUNTFORD of 2 Hope Street, East Brighton in
                  the State of Victoria ("EXECUTIVE")

AND               BIOTRANSPLANT INCORPORATED a corporation organised and
                  existing under the laws of the State of Delaware and having
                  its principal office at 13th Street, Building 96, Charlestown
                  Navy Yard, Charlestown MA, United States of America ("BTI")

IT IS AGREED:

RECITALS

A.       By a consultancy agreement of even date between the Company, the
         Executive and Secure Sciences Pty Ltd ACN 064 139 948 (the
         "CONSULTANT") entered into by the Company at the request of the
         Executive (the "CONSULTANCY AGREEMENT") the Consultant has agreed to
         provide certain services to the Company.

B.       The Executive acknowledges that it is reasonable for the Company (and
         BTI as a major shareholder in the Company) to protect the goodwill of
         the Business by securing from the Executive covenants restricting the
         Executive from engaging in certain activities in competition with the
         Company and other covenants as set out in this Deed.

C.       The Executive acknowledges further that he will have access to
         Confidential Information which represents a valuable asset of the
         Company, and accordingly it is reasonable for the Company (and BTI as a
         major shareholder in the Company) to further protect the goodwill of
         the Business by securing from the Executive a covenant to treat the
         Confidential Information as confidential.

D.       In consideration of the Company at the request of the Executive
         agreeing to execute the Consultancy Agreement, the Executive has agreed
         to guarantee the performance of the Consultant under the Consultancy
         Agreement.

THIS DEED WITNESSES:

1.       INTERPRETATION

         In this Deed:

          (a)  clause headings are for convenience only and do not affect
               interpretation;

<PAGE>

         and unless the context otherwise requires:

          (b)  references to a clause are references to a clause of this Deed;

          (c)  references to "this Deed" or to any specified provision of this
               Deed or to any other agreement or document will be construed as
               references to this Deed or the specified provision of this Deed
               or that other agreement or document as amended or substituted
               with the agreement of the relevant parties and in force at any
               relevant time;

          (d)  references to any statute, ordinance or other law include all
               regulations and other enactments thereunder and all
               consolidations, amendments, re-enactments or replacements
               thereof;

          (e)  words importing the singular include the plural and vice versa,
               words importing a gender include other genders and references to
               a person will be construed as including an individual, the estate
               of an individual, firm, body corporate, association (whether
               incorporated or not), government and governmental,
               semi-governmental and local authority or agency; and

          (f)  words and phrases given a particular meaning in the Consultancy
               Agreement have the same meaning when used in this Deed.

2.       CONFIDENTIALITY

         Subject always to the contrary obligations of the Executive owed to the
         University of Melbourne as at the date hereof which remain in existence
         at the relevant time, the Executive covenants, represents and warrants
         to the Company and to BTI (each severally and both jointly) that he
         will not either during the Engagement or at any time thereafter, except
         as required by law or by the Company, use or disclose to any person any
         Confidential Information, and will use his best endeavours to prevent
         the unauthorised use or disclosure of any Confidential Information by
         third parties.

3.       DISCOVERIES

3.1      INFORMATION

         The Executive covenants, represents and warrants to the Company and to
         BTI (each severally and both jointly) that:

          (a)  he will immediately inform the Company of any matter which may
               come to his notice during the Engagement which may be of interest
               or of any importance or use to the Company or its related bodies
               corporate; and

          (b)  he will immediately communicate to the Company any proposals or
               suggestions occurring to him during the Engagement which may be
               of service for the furtherance of the Business of the Company or
               its related bodies corporate.

                                       2

<PAGE>

3.2      INVENTIONS

         Subject always to contrary obligations of the Executive owed to the
         University of Melbourne as at the date hereof which remain in existence
         at the relevant time, the Executive covenants, represents and warrants
         to the Company and to BTI (each severally and both jointly) that:

          (a)  he will immediately communicate to the Company any and all
               processes, inventions, improvements, innovations, modifications
               and discoveries which he may make either alone or in conjunction
               with others in connection with or arising out of the Engagement
               or in any way connected with any of the matters in which the
               Company has been or is now or hereafter interested during the
               Engagement ("INVENTIONS"), whether or not the Inventions are
               capable of being protected by copyright, letters patent,
               registered design or other protection ("PROTECTION"), and the
               Inventions will be the sole and exclusive property of the
               Company; and

          (b)  he will immediately deliver to the Company full particulars
               concerning the Inventions, and will at the expense of the Company
               execute all documents and do and execute all such acts, matters
               and things as may be necessary or reasonable to obtain Protection
               for the Inventions, and to assign to the Company all rights which
               may be acquired by it in relation to them and to vest title in
               them in the Company absolutely.

4.       NON-COMPETITION

4.1      DURING THE ENGAGEMENT

         The Executive covenants, represents and warrants to the Company and to
         BTI (each severally and both jointly) that he will not without the
         prior written consent of the Company during the Engagement either
         directly or indirectly in any capacity (including without limitation as
         principal, agent, partner, employee, shareholder, unitholder, joint
         venturer, director, trustee, beneficiary, manager, consultant or
         adviser) carry on, advise, provide services to or be engaged, concerned
         or interested in or associated with any business or activity which is
         competitive with any business carried on by the Company or any of its
         subsidiaries or be engaged or interested in any public or private work
         or duties which in the reasonable opinion of the Board may hinder or
         otherwise interfere with the performance by the Consultant of its
         duties and obligations under the Consultancy Agreement.

4.2      AFTER THE ENGAGEMENT

         The Executive covenants, represents and warrants to the Company and BTI
         (each severally and both jointly) that he will not during the period of
         24 months after termination of the Engagement, however that termination
         occurs:

          (a)  anywhere within Australia, the United Kingdom or the United
               States of America, directly or indirectly in any capacity
               (whether as principal, agent, partner, employee, shareholder,
               unitholder, joint venturer, director, trustee, beneficiary,

                                       3

<PAGE>

               manager, consultant or adviser) actually carry on, advise,
               provide services to or be engaged, concerned or interested in or
               associated with any business or activity which is competitive
               with any business carried on by the Company or any of its
               subsidiaries at the date of termination of the Engagement;

          (b)  canvass, solicit or endeavour to entice away from the Company any
               person who or which at any time during the Term or at the date of
               termination of the Engagement was or is a client or customer of
               or supplier to the Company or any related body corporate of the
               Company or in the habit of dealing with the Company or any such
               related body corporate;

          (c)  solicit, interfere with or endeavour to entice away any employee
               of the Company or any of its related bodies corporate; or

          (d)  counsel, procure or otherwise assist any person to do any of the
               acts referred to in clauses 4.2(b) and (c).

5.       EXECUTIVE'S GUARANTEE AND INDEMNITY

5.1      GUARANTEE AND INDEMNITY

         The Executive unconditionally and irrevocably guarantees for the
         benefit of the Company and BTI (each severally and both jointly) the
         Consultant's performance of its obligations under the Consultancy
         Agreement and indemnifies the Company and BTI (each severally and both
         jointly) against all loss, liability and expense which they may suffer
         or incur in consequence of any breach or default by the Consultant of
         or in performance of the Consultant's obligations. The Executive
         declares that the Company and BTI are entitled to enforce their rights
         against him immediately on any breach or default by the Consultant. The
         Company or BTI will not be required to enforce or exhaust all or any of
         its rights against the Consultant before enforcing any of its rights
         against the Consultant.

5.2      ABSOLUTE LIABILITY

         The liability of the Executive hereunder shall be absolute and shall
         not be subject to the execution of any other instrument or document by
         any person and shall not be subject to the performance of any condition
         precedent or subsequent whatsoever between or amongst any person or
         persons whatsoever.

5.3      LIABILITY NOT TO BE AFFECTED

         The liability of the Executive hereunder shall not be affected by any
         act, omission, matter or thing whatsoever that would otherwise operate
         in law or in equity to reduce or release the Executive from such
         liability and without limiting the generality of the foregoing such
         liability shall not be affected by the granting by BTI or the Company
         to the Consultant of time, waiver, indulgence or concession or the
         making of any composition or compromise with the Consultant; BTI or the
         Company forbearing or neglecting to exercise any right for the
         enforcement of its rights against the Consultant; any laches,
         acquiescence or other act, neglect, default, omission or mistake by BTI
         or the Company;

                                       4

<PAGE>

         any variation in the terms of this Deed or the Consultancy Agreement
         made either with or without the knowledge of the Executive; this Deed
         or any obligation owed by the Consultant to BTI or the Company in
         relation to the Consultancy Agreement being void, voidable or
         otherwise unenforceable by BTI or the Company; the amendment of any
         constituent document of the Consultant; or any failure by BTI or the
         Company to disclose to the Executive any fact, circumstance or event
         relating to the Consultant at any time prior to or during the currency
         of this Deed.

5.4      CONTINUING SECURITY

         This Deed shall be a continuing security notwithstanding any
         termination by the Executive, settlement of account, intervening
         payment, express or implied revocation or any other matter or thing
         whatsoever and shall continue to secure to BTI and the Company the due
         and punctual performance of all of the obligations of the Consultant
         under the Consultancy Agreement until the expiration or termination of
         that agreement.

6.       SEVERABILITY

         Any provision of this Deed which is or becomes illegal, void or
         unenforceable will be ineffective to the extent only of such
         illegality, voidness or unenforceability and will not invalidate the
         remaining provisions.

7.       VARIATION

         This Deed will not be changed or modified in any way after it has been
         signed except in writing signed on behalf of each of the parties.
8.       NO WAIVER

         Failure or omission by the Company or BTI at any time to enforce or
         require strict or timely compliance with any provision of this Deed
         will not affect or impair that provision in any way, or the right of
         the Company or BTI to avail itself of the remedies it may have in
         respect of any breach of a provision.

9.       NOTICES

9.1      SERVICE OF NOTICE

         All notices, requests, consents and other documents authorised or
         required to be given by or pursuant to this Deed shall be given in
         writing and either personally served or sent by certified or registered
         mail addressed or sent by facsimile transmission as follows:

                                       5

<PAGE>

         The Company:
         To:                   Mr Bob Mead
                               R.D. Larsson & Co
         Address:              Level 10
                               420 St Kilda Road
                               Melbourne Victoria
                               Facsimile: (03) 867-7226
         BTI
         To:                   BioTransplant Inc.
         Address:              13th Street, Building 96
                               Charlestown Navy Yard
                               Charlestown MA 02129
                               United States of America
                               Attention: CEO
                               Facsimile: 617 241 8780

                               with a copy to:

                               Elliot M Olstein, Esq
                               Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart
                                    & Olstein
                               6 Becker Farm Road
                               Roseland NJ 07068
                               United States of America
                               Facsimile: 201 994 1744

         The Executive
         To:                   Mr Bob Mead
                               R.D. Larsson & Co
         Address               Level 10
                               420 St Kilda Road
                               Melbourne Victoria
                               Facsimile: (03) 867-7226

         Notices, requests, consents and other documents ("NOTICES") shall be
         deemed served or given:

          (a)  if personally served by being left at the address of the party to
               whom the Notice is given between the hours of 9:00 am and 5:00 pm
               on any Business Day, then in such case at the time the Notice is
               so delivered;

          (b)  if sent by registered or certified mail, at the certified date of
               delivery;

          (c)  if sent by facsimile transmission, on receipt by the sender of
               confirmation of successful transmission.

                                       6

<PAGE>

         Any party may change its address for receipt of Notices at any time by
         giving notice of such change to the other party. Any Notice given under
         this Deed may be signed on behalf of any party by the duly authorised
         representative of that party and shall be sent to all other parties to
         this Deed.

10.      GOVERNING LAW

         This Deed is governed by, takes effect and will be construed in
         accordance with the laws of Victoria, and the parties irrevocably and
         unconditionally submit to the exclusive jurisdiction of the courts of
         Victoria and courts entitled to hear appeals therefrom.

                                       7

<PAGE>

IN WITNESS the parties have executed and delivered this Deed.

THE COMMON SEAL OF STEM CELL                 )
SCIENCES PTY LIMITED ACN 063 293             )
130 was affixed by the authority of the      )
Board of Directors in the presence of:       )

[SIGNED BY MALCOLM ROY BRANDON]                [SIGNED BY PETER SCOTT MOUNTFORD]

--------------------------------------------   ---------------------------
(Signature of Secretary/Director)              (Signature of Director)

[MALCOLM ROY BRANDON]                          [PETER SCOTT MOUNTFORD]

--------------------------------------------   ---------------------------
(Name of Secretary/Director in Full)           (Name of Director in Full)

SIGNED, SEALED AND DELIVERED by              ) [SIGNED BY PETER SCOTT MOUNTFORD]
DR. PETER SCOTT MOUNTFORD in the presence of:)
                                               ---------------------------
                                             ) (Signature)
[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

SIGNED SEALED AND DELIVERED by               ) [SIGNED BY RODERICK L J LYLE]
BIOTRANSPLANT INCORPORATED by                ) ---------------------------
its duly appointed attorney pursuant to      ) (Signature)
Power of Attorney dated 28 March 1994 in     )
the presence of:                             )

[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

                                       8

<PAGE>

                                  ANNEXURE "F"

<PAGE>

                              CONSULTANCY AGREEMENT

                               Date: 5 April 1994

                           STEM CELL SCIENCES PTY LTD
                                 ACN 063 293 130

                                     Company

                             SECURE SCIENCES PTY LTD
                                 ACN 064 139 948

                                   Consultant

                               DR. PETER MOUNTFORD

                               Nominated Executive

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>      <C>                                                                      <C>
1.       DEFINITIONS AND INTERPRETATION............................................1

         1.1      Definitions......................................................1
         1.2      Interpretation...................................................2

2.       ENGAGEMENT................................................................2

         2.1      Engagement.......................................................2
         2.2      Non-exclusivity..................................................2

3.       TERM......................................................................3

4.       CONSULTANT'S DUTIES.......................................................3

         4.1      Specific duties..................................................3
         4.2      General duties...................................................3

5.       COMPANY'S OBLIGATIONS.....................................................4

6.       FEES......................................................................4

         6.1      Consultant's retainer............................................4

7.       EXPENSES..................................................................4

         7.1      No reimbursement of unauthorised expenses........................4
         7.2      Consultant responsible for payment of Executives, etc............4
         7.3      Initial Expenses.................................................5

8.       CONSULTANT'S ACKNOWLEDGEMENTS.............................................5

         8.1      Confidential Information.........................................5
         8.2      Undertakings.....................................................5

9.       CONFIDENTIALITY...........................................................6

10.      DISCOVERIES...............................................................6

         10.1     Information......................................................6
         10.2     Inventions.......................................................6

11.      NON-COMPETITION...........................................................7

         11.1     During the Engagement............................................7
         11.2     After the Engagement.............................................7
         11.3     No representations after Engagement terminated...................7

12.      TERMINATION...............................................................8

         12.1     Immediate termination by the Company.............................8
         12.2     Not to prejudice rights..........................................8

13.      RETURN OF MATERIALS.......................................................8

         13.1     Consultant to return materials...................................8
         13.2     Materials to be property of the Company..........................9

                                       i

<PAGE>

14.      RELATIONSHIP..............................................................9

         14.1     Parties' relationships...........................................9
         14.2     Consultant indemnifies Company in certain respects...............9

15.      FURTHER ACTS..............................................................9

16.      NOTICES..................................................................10

         16.1     Service of notice...............................................10

17.      ASSIGNMENT...............................................................10

         17.1     By the Company..................................................10
         17.2     By the Consultant...............................................10

18.      NO WAIVER................................................................11

19.      SEVERABILITY.............................................................11

20.      VARIATION................................................................11

21.      GOVERNING LAW............................................................11
</TABLE>

                                       ii

<PAGE>

CONSULTANCY AGREEMENT made on 5 April 1994.

BETWEEN           STEM CELL SCIENCES PTY LTD ACN 063 293 130 a company
                  incorporated in Victoria and having its registered office in
                  that State at Level 10, 420 St. Kilda Road, Melbourne
                 ("Company")

AND               SECURE SCIENCES PTY LTD ACN 064 139 948, a company
                  incorporated in the State of Victoria and having its
                  registered office in that State at the offices of R.D.).
                  Larsson & Co., Level 10, 420 St Kilda Road, Melbourne in its
                  own capacity and as trustee of the Mountford Investment
                  Trust ("CONSULTANT")

AND               DR. PETER SCOTT MOUNTFORD of 2 Hope Street, East Brighton in
                  the State of Victoria  ("NOMINATED EXECUTIVE")

RECITALS

A.       The Company carries on the Business (as defined in the Shareholders
         Agreement).

B.       The Consultant carries on the business of providing consulting,
         management and administrative services to other organisations.

C.       The Company wishes to avail itself of the expertise of the Consultant
         and its employees in the Company's areas of business.

IT IS AGREED:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         "BUSINESS DAY" means a day on which banks are open for business in the
         State.

         "CONFIDENTIAL INFORMATION" has the meaning given in clause 8.

         "DOCUMENTS" includes software (including source code and object code
         versions) manuals, diagrams, graphs, charts, projections,
         specifications, estimates, records, concepts, documents, accounts,
         plans, formulae, designs, methods, techniques, processes, supplier
         lists, price lists, customer lists, market research information,
         correspondence, letters and papers of every description including all
         copies of and extracts from the same.

         "ENGAGEMENT" means the engagement of the Consultant under this
         Agreement.

         "EXECUTIVES" means the Nominated Executive and such other persons
         employed by the Consultant who are skilled, qualified and experienced
         in the Business.

         "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of even date
         herewith between BioTransplant Incorporated, the Consultant (in its own
         capacity and as trustee of the Secure Sciences Unit Trust), Castella
         Research Pty Ltd ACN 006 125 364 and the Company.

<PAGE>

         "STATE" means the State of Victoria.

1.2      INTERPRETATION

         In this Agreement:

          (a)  clause headings are inserted for convenience only and do not
               affect interpretation;

         and unless the context otherwise requires:

          (b)  references to a clause will be construed as references to a
               clause of this Agreement;

          (c)  references to "this Agreement" or to any specified provision of
               this Agreement or to any other agreement or document will be
               construed as references to this Agreement or the specified
               provision of this Agreement or that other agreement or document
               as amended or substituted with the agreement of the relevant
               parties and in force at any relevant time;

          (d)  references to any statute, ordinance or other law include all
               regulations and other enactments thereunder and all
               consolidations, amendments, re-enactments or replacements
               thereof;

          (e)  words importing the singular include the plural and vice versa,
               words importing a gender include other genders and references to
               a person will be construed as including an individual, the estate
               of an individual, firm, body corporate, association (whether
               incorporated or not), government and governmental,
               semi-governmental and local authority or agency; and

          (f)  words and phrases given a particular meaning in the Shareholders
               Agreement, have the same meaning when used in this Agreement.

2.       ENGAGEMENT

2.1      ENGAGEMENT

         The Company engages the Consultant on the terms of this Agreement and
         the Consultant accepts that engagement.

2.2      NON-EXCLUSIVITY

         Subject to the provisions of this Agreement including Clause 11, the
         Consultant and the Executives may provide their respective services in
         relation to matters outside the FIELD (as defined in the BTI Research
         and License Agreement) to any other person during the Engagement, but
         the Company at all times has first priority over the services of the
         Consultant and the Executives.

                                       2

<PAGE>

3.       TERM

         The Engagement commences on 5 April, 1994, and subject to the
         provisions for termination of the Engagement contained in this
         Agreement, the Engagement will be for a term of 4 years from
         commencement ("TERM").

4.       CONSULTANT'S DUTIES

4.1      SPECIFIC DUTIES

         During the Engagement the Consultant will advise the Company in
         relation to such aspects of the Business as the Board from time to time
         requires and in particular will be responsible to the Company for
         implementation of the RESEARCH plan in Appendix A of the BTI Research
         and License Agreement and of all other RESEARCH plans prepared pursuant
         to the BTI Research and License Agreement from time to time.

4.2      GENERAL DUTIES

         In the discharge of the specific duties the Consultant will:

          (a)  act with professional skill as consultant to the Company with a
               view to promoting, advancing and improving the Business;

          (b)  comply with all policies, directions and resolutions of the Board
               and any nominee of the Board;

          (c)  subject only to the policies, directions and resolutions of the
               Board, act on its own responsibility and initiative and exercise
               all powers as may be granted to it by the Board or any nominee of
               the Board from time to time;

          (d)  make regular reports at any intervals or on any occasions as the
               Board or any nominee of the Board stipulates, and on any matters
               as the Board or any nominee of the Board requires;

          (e)  at all times provide the Nominated Executive and such number of
               other Executives as the parties from time to time agree, and
               procure that the Nominated Executive and those Executives devote
               all of their time and attention to the Business to ensure its
               promotion to the best of their and the Consultant's ability,
               subject only to the obligations of the Nominated Executive to the
               University of Melbourne as at the date hereof;

          (f)  cause the Executives to comply with clauses 4.2(a)-(d) in their
               performance of the Consultant's duties and cause the Consultant
               to perform all duties and exercise any powers as the Board may
               from time to time assign to it;

                                       3

<PAGE>

          (g)  permit the Executives to be appointed and act as directors of the
               Company or of any related body corporate of the Company if the
               Board so requires;

          (h)  not change, replace or substitute any of the Executives without
               the consent in writing of the Company;

          (i)  perform any services for any related body corporate of the
               Company as the Board may from time to time reasonably require;
               and

          (j)  itself, and will ensure that the Executives, refer to the Company
               for first refusal any project which comes before the Consultant
               or the Executives which is similar to projects handled by the
               Company in its ordinary course of business.

5.       COMPANY'S OBLIGATIONS

         During the Engagement the Company will give the Consultant and the
         Executives access to all information in relation to the Business and to
         all facilities as they reasonably require to enable them to carry out
         the Consultant's duties under this Agreement.

6.       FEES

6.1      CONSULTANT'S RETAINER

         During the Engagement, the Company will pay to the Consultant a
         retainer at the rate of $5,000.00 per month (or other rate as may from
         time to time be agreed between the parties), which will be deemed to
         accrue rateably from day to day, and be payable in arrears on the last
         day of each month.

7.       EXPENSES

7.1      NO REIMBURSEMENT OF UNAUTHORISED EXPENSES

         The Consultant will perform its obligations under this Agreement at its
         own cost, and unless expressly authorised in writing by the Board,
         neither the Consultant nor any of the Executives will be entitled to be
         reimbursed for any out of pocket expenses incurred in connection with
         the performance of the Consultant's duties under this Agreement.

7.2      CONSULTANT RESPONSIBLE FOR PAYMENT OF EXECUTIVES, ETC.

         The Consultant will be solely responsible for and solely bear:

          (a)  the payment of remuneration to the Executives and all its other
               servants, agents and contractors, including salaries and wages,
               annual leave, sick leave, long service leave and all other
               benefits to which any of them may be entitled under any contract
               of service with the Consultant or under any award, statute or
               common law;

          (b)  the payment of all taxes and duties in respect of that
               remuneration and benefits;

                                       4

<PAGE>

          (c)  maintenance of, and the costs in respect of the maintenance of,
               adequate insurance in respect of workers' compensation and all
               other risks appropriate to the duties of the Executives,
               servants, agents and contractors; and

          (d)  compliance with, and all costs of compliance with, all other
               statutory, award or other legal or contractual requirements with
               respect to the Executives, servants, agents and contractors.

7.3      INITIAL EXPENSES

         The Company will reimburse the Consultant $25,000.00 within 7 days of
         the date of this Agreement for expenses incurred by the Consultant
         prior to the date hereof in relation to the Business.

8.       CONSULTANT'S ACKNOWLEDGEMENTS

8.1      CONFIDENTIAL INFORMATION

         The Consultant acknowledges that:

          (a)  the property of the Company and its related bodies corporate
               includes and will include all knowhow, technology, research,
               employee skills, trade and business secrets and other
               confidential information and Documents relating to the Business
               or other affairs of the Company and its related bodies corporate
               or any person with whom the Consultant or any of the Executives
               comes into contact as a result of this Agreement, or which come
               into the Consultant's or any of the Executives' possession in the
               course and by reason of the Engagement, whether or not the same
               were originally supplied by the Company or its related bodies
               corporate ("CONFIDENTIAL INFORMATION");

          (b)  the Confidential Information has been and will be acquired by the
               Company or its related bodies corporate at the Company's or the
               related body corporate's initiative and expense; and

          (c)  the Company and its related bodies corporate have expended and
               will expend effort and money in establishing and maintaining the
               Confidential Information.

         Accordingly, it is reasonable that the Consultant should enter into the
         representations and warranties contained in this Agreement and, if the
         Engagement is terminated, the Consultant should continue to be subject
         to the restrictions set out in clauses 9, 10 and 11.

8.2      UNDERTAKINGS

         At the Company's request, the Consultant will cause the Executives and
         any other servant, agent or contractor of the Consultant to execute
         confidentiality and non-competition undertakings in favour of the
         Company in a form as may be reasonably required by the Company relating
         to the matters in this clause 8 and in clauses 9, 10 and 11.

                                       5

<PAGE>

9.       CONFIDENTIALITY

         The Consultant represents and warrants that it will not, and will
         procure that the Executives will not (subject only to the contrary
         obligations of the Nominated Executive owed to the University of
         Melbourne as at the date hereof which remain in existence at the
         relevant time), either during the Engagement or at any time thereafter
         except in the proper course of the Consultant's duties under this
         Agreement or as required by law or by the Company, use or disclose to
         any person any Confidential Information, and the Consultant will use
         its best endeavours to prevent the unauthorised use or disclosure of
         that information by third parties.

10.      DISCOVERIES

10.1     INFORMATION

         The Consultant represents and warrants that:

          (a)  it will immediately inform the Company of any matter which may
               come to its notice or to the notice of any of the Executives
               during the Engagement which may be of interest or of any
               importance or use to the Company or its related bodies corporate;
               and

          (b)  it will immediately communicate to the Company any proposals or
               suggestions occurring to it or any of the Executives during the
               Engagement which may be of service for the furtherance of the
               business of the Company or its related bodies corporate.

10.2     INVENTIONS

         The Consultant represents and warrants that:

          (a)  it will immediately communicate to the Company any and all
               processes, inventions, improvements, innovations, modifications
               and discoveries which it or any of the Executives make, either
               alone or in conjunction with others, in connection with or
               arising out of the Engagement and in any way connected with any
               of the matters in which the Company has been or is now or
               hereafter interested during the Engagement ("INVENTIONS"),
               whether or not the Inventions are capable of being protected by
               copyright, letters patent, registered design or other protection
               ("PROTECTION"), and the Inventions will be the exclusive property
               of the Company; and

          (b)  it will immediately deliver to the Company full particulars
               concerning the Inventions, and at the expense of the Company,
               execute all documents and do and execute all such acts, matters
               and things as may be necessary or reasonable to obtain Protection
               for the Inventions, and to assign to the Company all rights which
               may be acquired by it or any of the Executives in relation to
               them and to vest title in them in the Company absolutely.

                                       6

<PAGE>

11.      NON-CONPETITION

11.1     DURING THE ENGAGEMENT

         The Consultant represents and warrants that it will not, and that it
         will procure that the Executives will not (subject only to the contrary
         obligations of the Nominated Executive owed to the University of
         Melbourne as at the date hereof which remain in existence at the
         relevant time), during the Engagement either directly or indirectly in
         any capacity (including without limitation as principal, agent,
         partner, employee, shareholder, unitholder, joint venturer, director,
         trustee, beneficiary, manager, consultant or adviser) carry on, advise,
         provide services to or be engaged, concerned or interested in or
         associated with any business or activity which is competitive with any
         business carried on by the Company or any of its related bodies
         corporate, or be engaged or interested in any public or private work or
         duties which in the reasonable opinion of the Board may hinder or
         otherwise interfere with the performance of the Consultant of its
         duties under this Agreement.

11.2     AFTER THE ENGAGEMENT

         The Consultant represents and warrants that it will not, and that it
         will procure that the Executives will not, during the period of 24
         months after termination of the Engagement, however that termination
         occurs:

          (a)  anywhere within Australia, the United Kingdom or the United
               States of America, directly or indirectly in any capacity
               (whether as principal, agent, partner, employee, shareholder,
               unitholder, joint venturer, director, trustee, beneficiary,
               manager, consultant or adviser) carry on, advise, provide
               services to or be engaged, concerned or interested in or
               associated with any business or activity which is competitive
               with any business carried on by the Company or any of its related
               bodies corporate at the date of termination of the Engagement;

          (b)  canvass, solicit or endeavour to entice away from the Company any
               person who or which at any time during the Term or at the date of
               termination of the Engagement was or is a client or customer of
               or supplier to the Company or any related body corporate of the
               Company or in the habit of dealing with the Company or any such
               related body corporate;

          (c)  solicit, interfere with or endeavour to entice away any employee
               of the Company or any of its related bodies corporate; or

          (d)  counsel, procure or otherwise assist any person to do any of the
               acts referred to in clauses 11.2(b) and (c).

11.3     NO REPRESENTATIONS AFTER ENGAGEMENT TERMINATED

         The Consultant will not represent itself, and will procure that no
         Executive will represent himself or herself, as being in any way
         connected with the business of the Company or any of its related bodies
         corporate at any time after the termination of the Engagement.

                                       7

<PAGE>

12.      TERMINATION

12.1     IMMEDIATE TERMINATION BY THE COMPANY

         The Company may at its sole discretion terminate the Engagement by
         giving notice effective immediately if at any time:

          (a)  the Consultant or any of the Executives is or becomes in breach
               of any of the material terms of this Agreement and if it is a
               breach which is capable of being remedied and it is the first
               occasion on which such type of breach has occurred, the breach is
               not remedied to the reasonable satisfaction of the Company within
               30 days after written notice is given to the Consultant by the
               Company requiring the breach to be remedied; or

          (b)  the Consultant or any of the Executives is or becomes charged
               with any criminal offence involving criminal intent, fraud,
               dishonesty or moral turpitude which in the reasonable opinion of
               the Board brings the Consultant or any of the Executives or the
               Company or any of its related bodies corporate into disrepute; or

          (c)  the Consultant or any of the Executives is or becomes bankrupt,
               or goes into liquidation, or makes a composition or arrangement
               with creditors generally, or takes advantage of any statute for
               the relief of insolvent debtors; or

          (d)  any of the Executives is or becomes of unsound mind or a person
               whose person or estate is liable to be dealt with under any law
               relating to mental health; or

          (e)  the Consultant is or becomes incompetent in the performance of
               its duties under this Agreement; or

          (f)  the Consultant is or becomes continually or significantly absent
               or neglectful of its duties under this Agreement;

          (g)  the Nominated Executive dies; or

          (h)  the Consultant ceases to be a shareholder in the Company.

12.2     NOT TO PREJUDICE RIGHTS

         Termination of the Engagement will not prejudice any rights or remedies
         already accrued to any party under, or in respect of any breach of,
         this Agreement.

13.      RETURN OF MATERIALS

13.1     CONSULTANT TO RETURN MATERIALS

         The Consultant will return or cause the return of all Documents and
         other materials relating to or concerning any Confidential Information,
         and all materials supplied to the

                                       8

<PAGE>

         Consultant or the Executives or otherwise in their possession or
         within their control and containing or pertaining to any Confidential
         Information, including all copies of those Documents and materials
         then in existence:

          (a)  immediately on demand; or

          (b)  without demand as soon as such Documents and other materials or
               any of them are no longer required by the Consultant for the
               performance of its duties; or

          (c)  on the termination of the Engagement.

13.2     MATERIALS TO BE PROPERTY OF THE COMPANY

         All notes and memoranda of information concerning any Confidential
         Information made or received by the Consultant or any of the Executives
         during the course of the Engagement are the property of the Company,
         and will be surrendered by the Consultant at the same time as the
         Documents and other materials referred to in clause 13.1 are due to be
         returned to the Company.

14.      RELATIONSHIP

14.1     PARTIES' RELATIONSHIPS

         The relationship between the Company and the Consultant is that of
         principal and contractor. Nothing in this Agreement will be taken as
         constituting the Consultant, the Executives or any other servant, agent
         or contractor of the Consultant an employee or servant of the Company
         or any of its related bodies corporate.

14.2     CONSULTANT INDEMNIFIES COMPANY IN CERTAIN RESPECTS

         The Consultant agrees to indemnify the Company and each of its related
         bodies corporate against any action, suit, claim, demand, cost or
         expense arising out of or referable to:

          (a)  any damage, injury or loss caused by or resulting from any wilful
               or negligent act or omission or misfeasance of the Consultant,
               the Executives or any other servant, agent or contractor of the
               Consultant; and

          (b)  all injury, loss or damage sustained by any of the Executives or
               any officer, servant, agent or contractor of the Consultant
               incurred while attending to performance of the Consultant's
               duties under, or incidental or preparatory to this Agreement,
               unless the injury, loss or damage was caused by any wilful or
               negligent act or omission of the Company or any officer, servant
               or agent of the Company.

15.      FURTHER ACTS

         Each party will promptly do and perform all further acts, and execute
         and deliver all further instruments required by law or reasonably
         requested by any other party to

                                       9

<PAGE>

         establish, maintain and protect the respective rights and remedies of
         the parties and to carry out and effect the intent and purpose of this
         Agreement.

16.      NOTICES

16.1     SERVICE OF NOTICE

         All notices, requests, consents and other documents authorised or
         required to be given by or pursuant to this Agreement shall be given in
         writing and either personally served or sent by certified or registered
         mail addressed or sent by facsimile transmission as follows:

         The Company or the Consultant or the Nominated Executive:

         To:                Mr Bob Mead
                            R.D. Larsson & Co
         Address:           Level 10
                            420 St Kilda Road
                            Melbourne Victoria
                            Facsimile: (03) 867-7226

         Notices, requests, consents and other documents ("NOTICES") shall be
         deemed served or given:

          (a)  if personally served by being left at the address of the party to
               whom the Notice is given between the hours of 9:00 am and 5:00 pm
               on any Business Day, then in such case at the time the Notice is
               so delivered;

          (b)  if sent by registered or certified mail, at the certified date of
               delivery;

          (c)  if sent by facsimile transmission, on receipt by the sender of
               confirmation of successful transmission.

         Any party may change its address for receipt of Notices at any time by
         giving notice of such change to the other party. Any Notice given under
         this Agreement may be signed on behalf of any party by the duly
         authorised representative of that party and shall be sent to all other
         parties to this Agreement.

17.      ASSIGNMENT

17.1     BY THE COMPANY

         The Company may assign the benefit of this Agreement to any related
         body corporate of the Company.

17.2     BY THE CONSULTANT

         The Consultant may not assign this Agreement without the prior written
         consent of the Company.

                                       10

<PAGE>

18.      NO WAIVER

         Failure or omission by the Company at any time to enforce or require
         strict or timely compliance with any provision of this Agreement will
         not affect or impair that provision, or the right of the Company to
         avail itself of the remedies it may have in respect of any breach of a
         provision, in any way.

19.      SEVERABILITY

         Any provision of this Agreement which is or becomes illegal, void or
         unenforceable will be ineffective to the extent only of such
         illegality, voidness or unenforceability and will not invalidate the
         remaining provisions.

20.      VARIATION

         This Agreement may not be changed or modified in any way after it has
         been signed except in writing signed by or on behalf of all the
         parties.

21.      GOVERNING LAW

         This Agreement is governed by, takes effect and will be construed in
         accordance with the laws of the State, and the parties irrevocably and
         unconditionally submit to the exclusive jurisdiction of the courts of
         the State and courts entitled to hear appeals therefrom.

                                       11

<PAGE>

SIGNED as an agreement.

THE COMMON SEAL of STEM CELL                  )
SCIENCES PTY LTD ACN 063 293 130              )
was affixed by the authority of the           )
Board of Directors in the presence of:        )

[SIGNED BY MALCOLM ROY BRANDON]                   [SIGNED BY PETER SCOTT
                                                   MOUNTFORD]

--------------------------------------------      ---------------------------
(Signature of Secretary/Director)                 (Signature of Director)

[MALCOLM ROY BRANDON]                             [PETER SCOTT MOUNTFORD]

--------------------------------------------      ---------------------------
(Name of Secretary/Director in Full)              (Name of Director in Full)

THE COMMON SEAL OF                            )
SECURE SCIENCES PTY LTD ACN                   )
064 139 948 was affixed by the authority of   )
the Board of Directors in the presence of:    )

[SIGNED BY PETER SCOTT MOUNTFORD]                 [SIGNED BY CHRISTOPHER JOHN
                                                   MOUNTFORD]

--------------------------------------------      ---------------------------
(Signature of Secretary/Director)                 (Signature of Director)

[PETER SCOTT MOUNTFORD]                           [CHRISTOPHER JOHN MOUNTFORD]

--------------------------------------------      ---------------------------
(Name of Secretary/Director in Full)              (Name of Director in Full)

SIGNED by DR. PETER SCOTT                     )   [SIGNED BY PETER SCOTT
MOUNTFORD in the presence of:                 )     MOUNTFORD]

                                                  ---------------------------
                                                  (Signature)
[SIGNED BY CHRIS LOVELL]

---------------------------
(Signature of Witness)

[CHRIS LOVELL]

---------------------------
(Name of Witness in Full)

                                       12

<PAGE>

                     DATED this           day of       , 1996

                                    BETWEEN:

                               BIOTRANSPLANT INC.
                                     ("BTI")

                                      -and-

                            CASTELLA RESEARCH PTY LTD
                                  ("Castella")

                                      -and-

                             SECURE SCIENCES PTY LTD
                                   ("Secure")

                                      -and-

                           STEM CELL SCIENCES PTY LTD
                                     ("SCS")

--------------------------------------------------------------------------------

                    AGREEMENT TO VARY SHAREHOLDERS' AGREEMENT

--------------------------------------------------------------------------------

                                 HOLDING REDLICH

                    ---------------------------------------

                             LAWYERS AND CONSULTANTS

    350 William Street                                  Level 12, Chifley Tower
    MELBOURNE VIC 3000                                      2 Chifley Square
                                                            SYDNEY NSW 2000
   Phone: (03) 9321 9999                                  Phone: (02) 234 4444
    Fax: (03) 9321 9900                                    Fax: (02) 234 4400

<PAGE>

                                    CONTENTS

<TABLE>
<S>      <C>                                                                           <C>
1.       DEFINITIONS AND INTERPRETATION................................................2

         1.1      Definitions..........................................................2
         1.2      Interpretation.......................................................2
         1.3      Recitals.............................................................2

2.       ISSUE OF SHARES AND OPTION TO BTI.............................................3

         2.1      Issue of Shares......................................................3
         2.2      Payment for Shares...................................................3
         2.3      Effect of Shares Being Partly Paid Until Payment Made in Full........3
         2.4      Issue of Option......................................................3

3.       VARIATION OF SHAREHOLDERS' AGREEMENT..........................................4

         3.1      Variation............................................................4
         3.2      Confirmation of Shareholders' Agreement..............................4
         3.3      Acknowledgment.......................................................4
</TABLE>

                                       i

<PAGE>

VARIATION dated the           day of            , 1996

BETWEEN:

                  BIOTRANSPLANT INCORPORATED a corporation organised and
                  existing under the laws of the State of Delaware and having
                  its principal office at 13 Pipp Street, Building 96, Navy
                  Yard, Charlestown, MA, United States of America

                                                                         ("BTI")

AND:              CASTELLA RESEARCH  PTY LTD (ACN 006 125 364) of 587 Whitehorse
                  Road, Mont Albert, Victoria, Australia in its own capacity and
                  as trustee of the M.R. Brandon Family Trust

                                                                    ("CASTELLA")

AND:              SECURE SCIENCES PTY LTD (ACN 064 139 948) of Level 10, 420 St.
                  Kilda Road, Melbourne, Victoria, Australia in its own capacity
                  and as trustee of the Secure Sciences Unit Trust

                                                                      ("SECURE")

AND:              STEM CELL SCIENCES PTY LTD (ACN 063 293 130) of Level 10, 420
                  St. Kilda Road, Melbourne, Victoria, Australia

                                                                 ("THE COMPANY")

RECITALS

A.       By a Shareholders' Agreement dated 5 April, 1994 between BTI, Castella,
         Secure and the Company (the "SHAREHOLDERS' AGREEMENT") the Shareholders
         recorded their agreement as to how the Company would be owned,
         controlled and funded by them.

B.       Pursuant to Clause 2.5 of the Shareholders' Agreement the Company
         issued to BTI the First BTI Option and the Second BTI Option.

C.       The First BTI Option was to be exercised on or before the first
         anniversary of the Effective Date.

D.       Pursuant to Clause 2.5(b) of the Shareholders' Agreement if the First
         BTI Option was not exercised on or before the first anniversary of the
         Effective Date, the Second BTI Option would lapse.

E.       BTI did not exercise the First BTI Option on or before the first
         anniversary of the Effective Date (that anniversary occurring on 5
         April, 1995) and accordingly, the Second BTI Option has lapsed.

F.       Each of Castella and Secure exercised the options granted to them
         pursuant to Clause 2.5(a)(iii) and (v), respectively, prior to the
         first anniversary of the Effective Date.

<PAGE>

G.       As a result of the exercise of the option by Castella and Secure and
         the failure by BTI to exercise the First BTI Option, the issued capital
         of the Company is owned in the following proportions:

         BTI:              17.65%

         CASTELLA:         17.65%

         SECURE:           64.70%

H.       BTI has agreed to provide an amount of equity capital to the Company
         prior to 30 June, 1996.

I.       The Shareholders have agreed to cause the Company to allot to BTI the
         number of shares necessary for BTI to own 30% of the issued capital of
         the Company.

J.       The Shareholders and the Company have also agreed that the Company will
         allot to BTI a fresh option on terms and conditions identical to those
         attaching to the Second BTI Option except that the fresh option must be
         exercised on or before 1 July, 1996.

K.       Clause 18.5 of the Shareholders' Agreement provides that the
         Shareholders' Agreement may not be modified, amended, added to or
         otherwise varied except by a document in writing signed by each of the
         parties or signed on behalf of each party by a director under hand.

L.       The parties wish by this Agreement to record the matters set out in
         Recitals H to J and to vary the Shareholders' Agreement to the extent
         necessary to take account of those matters.

IT IS AGREED

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement (including in the Recitals), unless the contrary
         intention appears, each defined word and expression has the meaning
         assigned to that word or expression in the Shareholders' Agreement.

1.2      INTERPRETATION

         Clauses 1.3 and 1.4 of the Shareholders' Agreement are incorporated in
         and form part of this Agreement as if each reference to "THIS
         AGREEMENT" in those clauses were a reference to this Agreement to vary
         the Shareholders' Agreements.

1.3      RECITALS

         The parties acknowledge and agree that the Recitals are true and
         correct and accurately reflect the circumstances in which this
         Agreement was entered into.

                                       2

<PAGE>

2.       ISSUE OF SHARES AND OPTION TO BTI

2.1      ISSUE OF SHARES

         On the date of this Agreement BTI must subscribe for, and be issued
         with 300 "A" Shares in the capital of the Company issued at a price of
         $2,193.00 per share (being $1.00 par and $2,192.00 premium per share)
         for a total consideration of $657,900.00 payable in accordance with
         Clause 2.2.

2.2      PAYMENT FOR SHARES

         BTI must pay for the Shares referred to in Clause 2.1 in four equal
         instalments of $164,475.00 each payable to the Company by electronic
         transfer of funds into the Company's bank account on the following
         dates:

         first and second instalments     on the date on which this Agreement is
                                          executed by all parties

         third instalment                 31 March 1996

         fourth instalment                30 May 1996.

2.3      EFFECT OF SHARES BEING PARTLY PAID UNTIL PAYMENT MADE IN FULL

         Notwithstanding anything in the Company's Articles of Association, each
         Share issued to BTI pursuant to Clause 2.1 will in respect of and for
         the purposes of voting rights, entitlement to dividends and entitlement
         to distribution of capital on winding up (collectively the "Share
         Rights"), carry with it:

          (a)  unless and until the third instalment referred to in Clause 2.2
               has been paid by BTI to the Company, 50% of the Share Rights
               attaching to a fully paid up "A" Share in the Company; and

          (b)  unless and until the fourth instalment referred to in Clause 2.2
               has been paid by BTI to the Company, 75% of the Share Rights
               attaching to a fully paid up "A" Share in the Company.

2.4      ISSUE OF OPTION

         On the date of this Agreement, the Company must issue to BTI an option
         (with the Option Terms attaching) to subscribe for, fully pay up and be
         issued with a further 600 "A" Shares in the capital of the Company
         issued at a price of $4,685.00 per share (being $1.00 par and $4,684.00
         premium per share) for a total consideration of $2,811,000.00 at any
         time on or before 1 July, 1996.

                                       3

<PAGE>

3.       VARIATION OF SHAREHOLDERS' AGREEMENT

3.1      VARIATION

         In consideration of the mutual agreements made by each party under this
         Agreement, the parties agree, pursuant to clause 18.5 of the
         Shareholders' Agreement, to vary clause 2.5 of the Shareholders'
         Agreement to the extent necessary to give effect to the provisions of
         Clause 2 of this Agreement.

3.2      CONFIRMATION OF SHAREHOLDERS' AGREEMENT

         The parties confirm that the terms and conditions of the Shareholders'
         Agreement (as varied by this Agreement) remain in full force and
         effect.

3.3      ACKNOWLEDGMENT

         Without limiting Clause 3.2 but for the removal of doubt, the parties
         acknowledge that:

          (a)  pursuant to clause 5.4(a)(i) of the Shareholders' Agreement, all
               paragraphs of clause 5.3 of the Shareholders' Agreement except
               paragraphs (e), (f), (p) and (v) ceased to operate on the first
               anniversary of the Effective Date and nothing in this Agreement
               will operate to or be construed as bring back into effect those
               paragraphs of clause 5.3 of the Shareholders' Agreement which
               have ceased to operate; and

          (b)  BTI did not exercise the First BTI Option and nothing in this
               Agreement will be interpreted to mean that BTI did exercise the
               First BTI Option and the Shareholders' Agreement will be
               construed and operate accordingly.

                                       4

<PAGE>

SIGNED AS AN AGREEMENT on the date first appearing

SIGNED by BIOTRANSPLANT, INC.                 )
                                              )
by its director   Elliot Lebowitz             )      /s/ Elliot Lebowitz
                -----------------------       )      ---------------------------
in the presence of:                           )

/s/ Carol A. Burke
----------------------------------
(Witness)

SIGNED by CASTELLA RESEARCH                   )
                                              )
PTY LTD by its director MAL BRANDON           )      /s/ Mal Brandon
                                              )      ---------------------------
in the presence of:                           )

[ILLEGIBLE]
---------------------------
(Witness)

SIGNED by SECURE SCIENCES PTY                 )
                                              )
LTD by its director PETER                     )     ---------------------------
                                              )
MOUNTFORD in the presence of:                 )
                  .........
---------------------------
(Witness)

SIGNED by STEM CELL SCIENCES                  )
                                              )
PTY LTD by its director Mal Brandon           )      /s/ Mal Brandon
                        ------------          )      ---------------------------
in the presence of:                           )

[ILLEGIBLE]
---------------------------
(Witness)

                                       5<PAGE>

                                                                    Exhibit 10.8

                         RESEARCH AND LICENSE AGREEMENT

         This Agreement is effective April 5, 1994 ("the EFFECTIVE DATE") by and
between Stem Cell Sciences Pty Ltd (ACN 063 293 130), 420 St. Kilda Road,
Melbourne, 3004, Victoria, Australia ("SCS"), and Biotransplant, Inc., a
Delaware corporation having its offices at 13th Street, Building 96, Charlestown
Navy Yard, Charlestown, MA 02129 ("BTI").

         WHEREAS, the parties desire to enter into a relationship whereby BTI
will have access to technology presently available to SCS and which is
subsequently developed in research performed by SCS, including, but not limited
to, certain stem cell related technology developed at SCS; and

         WHEREAS, BTI intends to support a portion of such research through an
equity investment in SCS and through other funding of research; and

         WHEREAS, SCS in return for the support of such research is willing to
grant the exclusive rights and licenses desired by BTI. NOW THEREFORE in
consideration of the mutual promises and other good and valuable consideration,
the parties agree as follows:

         SECTION 1 - DEFINITIONS.

         The terms used in this Agreement have the following meaning:

         1.1 The term "AFFILIATE" as applied to either party shall mean any
company or other legal entity other than BTI or SCS as the case may be in
whatever country organized, controlling, controlled by or under common control
with a party. The term "control" means possession, direct and indirect of the
power to direct or cause the direction of the management and policies whether
through the ownership of voting securities, by contract or otherwise.

<PAGE>

         1.2 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on the EFFECTIVE DATE, and each subsequent twelve (12) month period
thereafter.

         1.3 The term "BTI SWINE" shall mean partially in-bred or in-bred
haplotype specific miniswine provided by or on behalf of BTI.

         1.4 The term "CONFIDENTIAL INFORMATION" shall mean all information,
materials including MATERIALS and BTI Swine and technology provided in any form
by either party to the other under this Agreement and includes all drafts,
copies, excerpts, notes and summaries thereof.

         1.5 The term "FIELD" shall mean products and processes useful in
xenotransplantation in humans, including but not limited to transplantation of
cells, organs and tissues and/or products and processes useful for researching,
developing, manufacturing, using or selling of products and processes for
xenotransplantation in humans.

         1.6 The term "INFORMATION" shall mean any data, formulas, process
information or other information in the FIELD known to SCS on the EFFECTIVE DATE
or developed thereafter during the RESEARCH TERM.

         1.7 The term "INVENTION" shall mean any process, use, article of
manufacture, composition of matter in the FIELD or improvement thereof conceived
or reduced to practice by SCS or any of its employees or any person or entity
funded by SCS (alone or with others) prior to the EFFECTIVE DATE or during the
RESEARCH TERM.

         1.8 The term "LICENSED RIGHTS" shall mean all rights in the PATENT
RIGHTS, INVENTIONS, MATERIAL and INFORMATION owned by SCS or that SCS is or
becomes entitled to license or sub-license for the purpose of this Agreement,
including, but not limited to,

                                       2
<PAGE>

the rights granted to SCS under the ORIGINAL LICENSE to the extent such rights
relate to the FIELD.

         1.9 The term "MATERIAL" shall mean any material or substance in the
FIELD in the possession of SCS on the EFFECTIVE DATE or which comes into the
possession of SCS during the RESEARCH TERM, including but not limited to (i) any
natural progeny of BTI SWINE or (ii) progeny developed from BTI SWINE by SCS
using any techniques of genetic engineering, including but not limited to
transgenic technology, nuclear transfer, gene knockout and transfer of inner
cell mass and (iii) any products derived from BTI SWINE, including but not
limited to proteins, cell lines, oocyte, spermatozoa, embryo or fetus thereof.

         1.10 "NET SALES PRICE" shall mean the total gross receipts received by
BTI, its AFFILIATES, or its SUBLICENSEES from an arms length sale of PRODUCT,
less transportation charges and insurance, sales taxes, use taxes, excise taxes,
value added taxes, customs duties or other imposts, normal and customary
quantity and cash discounts, rebates, disallowed reimbursements, and allowances
and credit on account of rejection or return of PRODUCT.

         PRODUCT shall be considered "sold" when billed out or invoiced and all
sales shall be made or will be deemed to be made at arm's length prices.

         1.11 The term "NON-XENOTRANSPLANTATION FIELD" shall mean products and
processes useful in transplantation of all kinds other than xenotransplantation
including but not limited to transplantation of cells, organs and tissues and/or
products and processes useful for researching, developing, manufacturing or
selling of products and processes for transplantation of all kinds other than
xenotransplantation. The NON-XENOTRANSPLANTATION FIELD does not include gene
therapy except the NON-XENOTRANSPLANTATION FIELD does

                                       3
<PAGE>

include gene therapy where the gene therapy is for the purpose of inducing
tolerance to and/or engraftment of a transplanted cell, organ or tissue.

         1.12 "ORIGINAL LICENSE" shall mean the license granted to SCS by The
University of Edinburgh by a License Agreement to be entered into between SCS
and The University of Edinburgh relative to the stem cell technology licensed
hereunder.

         1.13 The term "PATENT RIGHT(s)" shall mean any United States patent
application, including any division, continuation, or continuation-in-part
thereof and any foreign patent application or equivalent corresponding thereto
and any Letters Patent or the equivalent thereof issuing thereon or reissue or
extension thereof, insofar as it contains one or more claims to an INVENTION,
INFORMATION, or MATERIAL. PATENT RIGHTS include, but are not limited to, those
tabulated in Appendix B.

         1.14 The term "PRODUCT" shall mean any article, composition, apparatus,
substance, chemical, material, method, process or service used in or
manufactured or to be manufactured for commercial sale or exploitation and which
is, incorporates or utilizes an INVENTION, MATERIAL, INFORMATION, or the
manufacture, import, sale or use of which is wholly or partly covered by PATENT
RIGHTS.

         1.15 The term "RESEARCH" shall mean research to be performed by SCS in
the FIELD in accordance with a written description of that research. The
description of that RESEARCH for the first AGREEMENT YEAR is attached as
Appendix A and descriptions prepared in respect of future AGREEMENT YEARS will
be included in and form part of this Agreement.

                                       4
<PAGE>

         1.16 The term "RESEARCH TERM" shall mean the period beginning on the
EFFECTIVE DATE and ending when RESEARCH is terminated as provided in Section 2.4
and Section 2.6 herein.

         1.17 The term "SCS INVENTION" shall mean an INVENTION referred to in
Section 5.1(a) or 5.1(b)(i).

         1.18 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by BTI to make, have made, import, use or sell any PRODUCT under
LICENSED RIGHTS.

         1.19 The term "TECHNOLOGY" shall mean any data, formulas, process
information or other information, material, substance or any process, use,
article of manufacture, composition of matter or improvement thereof in the
NON-XENOTRANSPLANTATION FIELD.

         1.20 The term "VALID CLAIM" shall mean a claim of an issued patent
which has not lapsed or become abandoned or been declared invalid or
unenforceable by a court of competent jurisdiction or an administrative agency
from which no appeal can be or has been taken within the time allowed for that
appeal.

         1.21 The use herein of the plural shall include the singular, and VICE
VERSA and the use of the masculine shall include the feminine.

         SECTION 2 - WORK OF SCS

         2.1 In accordance with Section 8.2 herein, it is understood that prior
to the EFFECTIVE DATE, SCS has disclosed to BTI all INVENTIONS, INFORMATION,
MATERIALS and PATENT RIGHT(S) which are known to SCS prior to the EFFECTIVE
DATE.

                                       5
<PAGE>

         2.2 Beginning on the EFFECTIVE DATE and thereafter unless sooner
terminated, SCS shall:

         (a)      use reasonable efforts to conduct the RESEARCH;

         (b)      promptly and systematically disclose and provide to BTI,
                  INFORMATION, INVENTIONS and MATERIAL which are of potential
                  use in the FIELD; and

         (c)      permit duly authorized employees of or representatives of BTI
                  to visit the facilities where RESEARCH is conducted at
                  reasonable times and with reasonable notice.

         2.3 SCS shall advise BTI of the results of the RESEARCH and at least
once every three (3) months provide BTI with written progress reports concerning
the RESEARCH. A written report setting forth in detail the results achieved
under and pursuant to the RESEARCH shall be submitted by SCS to BTI annually.
Such report shall include: (i) a complete summary of the RESEARCH carried out;
and (ii) a scientific assessment by SCS of the RESEARCH.

         2.4 RESEARCH shall be conducted by SCS for a period of three (3) years.
Such RESEARCH may be extended for an additional two (2) year period at the
option of BTI provided BTI funds such RESEARCH during the extended period in an
amount at least comparable to the average per annum spending for RESEARCH during
the initial three (3) years.

         2.5 During the Initial three (3) year period, RESEARCH shall be
conducted at the cost and expense of SCS. The budget for the RESEARCH for each
of the first two AGREEMENT YEARS shall be Five Hundred Thousand United States
Dollars (U.S. $500,000); the budget for the third AGREEMENT YEAR shall be One
Million United States Dollars (U.S. $1,000,000).

         2.6 All of the obligations of SCS under Sections 2.2, 2.3, 2.4 and 2.5
are subject always to BTI making the equity investments in the manner and at the
time set forth in the equity

                                       6
<PAGE>

investment agreement between the parties hereto of even date herewith. (the
"Shareholders Agreement").

         SECTION 3 - GRANTS.

         3.1 (a) SCS hereby grants to BTI and BTI hereby accepts from SCS a
world-wide sole and exclusive royalty bearing right and license (including the
right to sub-license third parties) of the LICENSED RIGHTS to make, have made,
use and sell or have sold on its behalf PRODUCT. It is understood that SCS can
only grant a license of rights owned by SCS or in respect of which SCS has the
right to grant a license.

             (b) BTI shall have the right to extend such license to its
AFFILIATES on the same terms and conditions sot forth herein. The license
granted under this Section 3.1 is limited to the FIELD.

             (c) BTI shall have an exclusive option to negotiate an exclusive
worldwide, royalty bearing, sublicensable license to cover any TECHNOLOGY in the
NON-XENOTRANSPLANTATION FIELD owned by SCS or, if not owned by SCS, which SCS is
entitled to license or sub-license to any person and not presently covered
hereunder. SCS will keep BTI regularly informed of advances in all TECHNOLOGY
developed by SCS the NON-XENOTRANSPLANTATION FIELD and of any determination it
makes to license its TECHNOLOGY in the NON-XENOTRANSPLANTATION FIELD. To
facilitate SCS operations, BTI shall provide SCS with an initial expression of
interest within seven (7) days of notification by SCS concerning any significant
advance in TECHNOLOGY in the NON-XENOTRANSPLANTATION FIELD. Thereafter BTI shall
advise SCS within thirty (30) days of whether it intends to exercise its option
hereunder. BTI may obtain an additional thirty (30) days to consider its
position with the consent of SCS, which consent shall not be unreasonably

                                       7
<PAGE>

withheld. This option may be exercised by BTI at any time during the RESEARCH
TERM as set forth above. In the event BTI exercises its option under this
paragraph or in the event SCS notifies BTI that it intends to license any of its
TECHNOLOGY in the NON-XENOTRANSPLANTATION FIELD and BTI advises SCS that it
wishes to license such TECHNOLOGY, then the parties will negotiate to determine
the terms of such license for a period of sixty (60) days. In the event an
agreement cannot be reached SCS shall not offer to or license a third party on
terms more favorable than those offered to BTI.

         3.2 (a) Taking into account the complexity, and stage of development of
the PRODUCTS and the science related thereto, BTI shall use reasonable efforts
under the circumstances to research, develop and then commercialize a PRODUCT in
the FIELD and shall keep SCS regularly informed of its efforts in this respect.
The efforts of a SUBLICENSEE and/or an AFFILIATE and the RESEARCH shall be
considered as efforts of BTI. Notwithstanding the foregoing and for the removal
of doubt, BTI shall not be entitled to nor be required to conduct the RESEARCH.

             (b) In the event that SCS reasonably believes that BTI is not
making reasonable efforts under the circumstances to research, develop and then
commercialize a PRODUCT in the FIELD pursuant to Paragraph 3.2(a) then SCS shall
provide written notice to BTI which specifies SCS's basis for such belief and
what additional efforts SCS believes should be made by BTI. Upon receipt of such
written notice, SCS and BTI shall enter into good faith negotiations in order to
reach mutual agreement as to what efforts by BTI shall satisfy the requirements
of this Paragraph 3.2, and if such mutual agreement is not reached within ninety
(90) days after receipt of such written notice, then the parties agree to submit
to arbitration pursuant to this Agreement to determine the efforts which should
be exerted by BTI. In such

                                       8
<PAGE>

arbitration, in determining the efforts which should be exerted, the arbitrator
shall consider INTER ALIA the potential market for PRODUCT and regulatory and
technical problems with respect to PRODUCT. Thereafter, BTI shall exert the
efforts determined by the parties or in such arbitration.

             (c) If BTI fails to exert the efforts determined by the parties or
in such arbitration, SCS' sole and exclusive remedy for BTI's failure to meet
such efforts is for the licenses and rights granted hereunder for the PRODUCT to
be converted from an exclusive right and license to a non-exclusive right and
license to take effect sixty (60) days after prior written notice unless BTI
cures such failure within that sixty (60) day period.

         3.3 BTI agrees to forward to SCS a copy of any and all fully executed
sublicense agreements within thirty (30) days of execution of such agreements.
Any such sublicense agreements shall expressly include the provisions of
Sections 4 and 9 and Paragraphs 6.3, 6.4 and 11.5 and 11.8 for the benefit of
SCS.

         3.4 Subject to Section 3.2, BTI shall have sole discretion for making
all decisions relating to the commercialization and marketing of PRODUCT in the
FIELD.

         SECTION 4 - CONFIDENTIALITY.

         4.1 Subject to Section, 4.2, each party hereto agrees to maintain in
confidence all CONFIDENTIAL INFORMATION received from the other party and to
ensure that its employees, agents, contractors, subcontractors, solicitors and
other advisors keep such CONFIDENTIAL INFORMATION confidential and use such
CONFIDENTIAL INFORMATION only for the purposes of this Agreement.

                                       9
<PAGE>

         4.2 A party (the "recipient") may reveal CONFIDENTIAL INFORMATION of
the other party (the "provider") which the recipient establishes:

             (a) is required by law to be revealed, provided that the recipient
immediately notifies the provider of the requirement and takes lawful steps and
permits the provider the opportunity to oppose or restrict such disclosure to
preserve as far as possible the confidentiality of the CONFIDENTIAL INFORMATION;

             (b) is in or enters the public domain other than through a breach
of this Agreement;

             (c) is revealed to a SUBLICENSEE under a sub-license granted in
accordance with the provisions of this Agreement including, without limitation
the provisions of Section 3.3;

             (d) was known to the recipient before its disclosure by the
provider; or

             (e) is furnished to the recipient by a third party legally
entitled to furnish such information and not under an obligation of
confidentiality to the provider.

         4.3 Notwithstanding the foregoing, BTI shall have the right to disclose
CONFIDENTIAL INFORMATION of SCS to a third party to evaluate the distribution or
other commercialization of PRODUCT so long as such third party undertakes an
obligation of confidentiality, which, so far as is relevant, is on the same
terms as Sections 4.1 and 4.2 with respect to such information.

         SECTION 5 - PATENTS.

         5.1 (a) SCS shall ensure that each employee of SCS who shall make an
INVENTION ("Inventor") shall promptly report such INVENTION to SCS and that each
Inventor shall assign all of his rights, title and interest in such INVENTION
and PATENT RIGHTS relating thereto to SCS.

                                       10
<PAGE>

             (b) SCS shall ensure that any person (other than an employee of
SCS) who shall make an INVENTION using or as a result of funding provided by SCS
during the RESEARCH TERM shall promptly report such INVENTION to SCS and either:

                 (i) assign all of that person's right, title and interest in
such INVENTION and PATENT RIGHTs relating thereto to SCS; or

                 (ii) grant to SCS a world-wide, sole and exclusive license
under such INVENTION and PATENT RIGHTS to:

                      A. use such INVENTION and PATENT RIGHTS in the RESEARCH;

                      B. make, have made, use and sell or have sold on its
behalf PRODUCTS;

                      C. sub-license the rights referred to in paragraphs (A)
and (B) to third parties

         on such terms as SCS may secure with respect to the circumstances set
forth in 5(b)(i) and 5(b)(ii); provided that such terms will not increase the
obligations of BTI under this Agreement; and in the case of an exclusive license
referred to in Section 5.1(b)(ii) will always include:

                           (1)      a term that if that exclusive license is
                                    terminated for any reason, any sub-license
                                    granted under that license will (provided
                                    the sub-license is not in breach of the
                                    sub-license) remain in full force and effect
                                    as if, in all respects, that sub-license was
                                    it direct exclusive license from the
                                    licensor to the sub-licensee; and

                                       11
<PAGE>

                           (2)      a further term that either the Licensor or
                                    SCS may file, prosecute and maintain PATENT
                                    RIGHTS in such INVENTION and that, if the
                                    Licensor files for PATENT RIGHTS, it will,
                                    if required to do so by SCS, take all steps
                                    necessary to register the interest of SCS in
                                    the PATENT RIGHTS in the relevant patent
                                    office.

         5.2 (a) Each employee of BTI who makes an INVENTION jointly with an
employee of SCS, shall report such INVENTION to BTI and shall assign all his
rights, title and interest in such INVENTION and PATENT RIGHTS relating thereto
to BTI.

             (b) INVENTIONS made jointly shall be jointly owned by SCS and BTI.

             (c) SCS and BTI agree that for each PATENT RIGHT jointly owned by
SCS and BTI, BTI and SCS each own a one-half undivided interest in such PATENT
RIGHTS in each country in which it is filed and SCS's interest therein shall be
licensed exclusively to BTI under this Agreement.

         5.3 (a) SCS shall promptly advise BTI in writing of each SCS INVENTION
disclosed to SCS. Representatives of SCS and BTI shall then discuss whether a
patent application or applications pertaining to such SCS INVENTION should be
filed and in which countries. The titles, serial numbers and other identifying
data of patent applications claiming an SCS INVENTION filed after the EFFECTIVE
DATE by mutual agreement of SCS and BTI shall be listed in Appendix B and shall
be included in PATENT RIGHTS.

                                       12
<PAGE>

             (b) BTI shall file, prosecute and maintain at its cost and expense
PATENT RIGHTS in SCS INVENTIONS licensed to BTI in the United States, Canada,
European Patent Office, Australia and Japan with Patent Counsel selected by BTI
and acceptable to SCS and shall consult with and keep SCS advised with respect
thereto. SCS or its licensor shall file, prosecute and maintain at its cost and
expense PATENT RIGHTS licensed to SCS and sublicensed hereunder to BTI.

         5.4 In the event BTI is not interested in having PATENT RIGHTS with
respect to a particular SCS INVENTION filed in a particular country other than
those set forth in Section 5.3(b), BTI shall advise SCS of such fact within
ninety (90) days from the date on which the SCS INVENTION was disclosed to BTI
by SCS. SCS, at its own expense, may then file and prosecute such patent
application in the country where BTI elects not to file but such patent
applications and patents issuing therefrom shall be included within the rights
licensed to BTI pursuant to this Agreement.

         5.5 SCS shall:

             (a) promptly advise BTI of each INVENTION licensed to SCS in
accordance with Section 5.1(b)(ii) (an "other INVENTION"); and

             (b) SCS shall ensure that the licensor of each other INVENTION or
SCS file, prosecute and maintain at the expense of SCS or the licensor PATENT
RIGHTS in that other INVENTION and keep BTI fully advised with respect thereto
and all such rights shall be included within the rights granted to BTI herein.

         5.6 All intellectual property rights in PRODUCT will vest in and be the
property of BTI but will be subject to any dominant intellectual property rights
of SCS or its licensor under Section 5.1 (b)(ii).

                                       13
<PAGE>

         SECTION 6 - ROYALTIES.

         6.1 (a) For each PRODUCT sold by BTI or its AFFILIATES or SUBLICENSEES,
BTI shall pay SCS one of the following royalties or the royalty set out in
Section 6.1(b):

                 (1) four percent (4%) of the NET SALES PRICE of PRODUCTS sold
by BTI or its AFFILIATES so long as the PRODUCT, where sold would, but for this
Agreement, infringe a VALID CLAIM of any PATENT RIGHT which is licensed
exclusively to BTI in such country, or

                 (2) two percent (2%) of the NET SALES PRICE of PRODUCTS sold
by BTI or its AFFILIATES which do not infringe a VALID CLAIM of a PATENT RIGHT
exclusively licensed to BTI in such country but incorporate INVENTIONS or
MATERIALS or utilize to a substantial degree INFORMATION. Such royalty shall be
paid for (i) ten (10) years from first commercial sale of a PRODUCT on a
country-by-country basis, where sales of PRODUCT amount to eighty percent (80%)
or more of total sales of products (including sales of PRODUCT) employing
similar technology in such country, or (ii) seven (7) years from first
commercial sale of a PRODUCT on a country-by-country basis where sales of
PRODUCT amount to less than eighty percent (80%) of total sales of products
(including sales of PRODUCT) employing similar technology, in such country, or

                 (3) twenty-five percent (25%) of the royalties received from
SUBLICENSEE based on the sale or distribution by the SUBLICENSEE

                                       14
<PAGE>

of a PRODUCT, for which, if sold by BTI, royalties would be due to SCS under
Section 6.1(a)(1), 6.1(a)(2) or 6.1(b),

             (b) In the case of a pending patent application, royalties shall be
paid at the royalty rate set forth in Section 6.1(a)(1) for four (4) years from
first commercial sale of PRODUCT or until the patent has issued, whichever
occurs earlier. If the patent does not issue within four (4) years from first
commercial sale of PRODUCT, royalties shall be payable at the royalty rate set
forth in Section 6.1(a)(2) for the remainder of the applicable period set forth
therein or until the patent issues, whichever occurs earlier. If the patent does
not issue before the end of the applicable period in Section 6.1(a)(2), then
royalties shall cease at that time and will only be required thereafter if the
patent issues prior to the expiration of this Agreement in which case royalties
will be payable at the rate set forth in Section 6.1(a)(1).

             (c) Notwithstanding anything in this Agreement to the contrary,
royalties shall not be payable for a patent licensed hereunder beyond the life
of such patent.

             (d) In the event that a PRODUCT includes both component(s) licensed
hereunder ("Licensed Component(s)") and active component(s) not licensed
hereunder ("Unlicensed Component(s)") (such PRODUCT being a "Combined Product"),
then NET SALES PRICE shall be the mount which is normally received by BTI, its
AFFILIATES or SUBLICENSEES from a sale of the Licensed Component(s) in an arm's
length transaction with an unaffiliated third party. If the Licensed
Component(s) are not sold separately, then NET SALES PRICE upon which a royalty
is paid shall be the NET SALES PRICE of the Combined Product multiplied by a
fraction, the numerator of which is the number of Licensed Components and the
denominator of which is the total number of components in the Combined Product
provided that the fraction shall, in no case be less than three tenths (3/10).

                                       15
<PAGE>

         6.2 In the event that royalties are to be paid by BTI to a party who is
not an AFFILIATE of BTI for PRODUCT for which royalties are also due to SCS
pursuant to Paragraph 6.1 ("Other Royalties"), then the royalties to be paid to
SCS by BTI pursuant to Paragraph 6.1 shall be reduced by one-half of the amount
of such Other Royalties, but in no event shall any royalties under Paragraph
6.1(a)(3) be reduced by more than fifty percent (50%) and in no event shall any
royalties under Paragraph 6.1(a)(1) or 6.1(a)(2) be reduced to less than two
percent (2 %) of NET SALES PRICE.

         6.3 BTI shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to SCS. Such books of account shall be kept at their principal place of
business with all necessary supporting data for the seven (7) years next
following the end of the calendar year to which each shall pertain and shall be
open for inspection by an Independent Chartered Accountant, to whom BTI has no
reasonable objection, upon reasonable notice, during normal business hours, at
SCS's expense, for the sole purpose of verifying royalty statements or
compliance with this Agreement, but in no event more than once in each calendar
year. Documents verifying royalty payments may be copied but shall be
CONFIDENTIAL INFORMATION hereunder. In the event that such inspection shall
indicate in any calendar year that the royalties which should have been paid by
BTI are at least five percent (5%) greater than those which were actually paid
by BTI, then BTI shall pay the cost of such inspection. All information and data
offered shall be used only for the purpose of verifying royalties and shall be
treated as BTI Confidential Information subject to the obligations of this
Agreement.

                                       16
<PAGE>

         6.4 With each quarterly payment, BTI shall deliver to SCS a full and
accurate accounting to include at least the following information:

             (a) Quantity of each PRODUCT subject to royalty sold (by country)
by BTI, its AFFILIATES or SUBLICENSEES and NET SALES PRICE for such PRODUCT; and
the manner in which NET SALES PRICE is calculated;

             (b) Total receipts for each PRODUCT subject to royalty (by
country);

             (c) Total royalties payable to SCS;

         6.5 In each year the amount of royalty due shall be calculated
quarterly as of March 31, June 30, September 30 and December 31 (each as being
the last day of an "ACCOUNTING PERIOD") and shall be paid quarterly within the
sixty (60) days next following such date, every such payment shall be supported
by the accounting prescribed in Paragraphs 6.3 and 6.4 and shall be made in
United States currency. Whenever for the purpose of calculating royalties
conversion from any foreign currency shall be required, such conversion shall be
at the rate of exchange thereafter published in the Wall Street Journal for the
last business day of the applicable ACCOUNTING PERIOD, as the case may be.

         6.6 If the transfer of or the conversion into United States Dollar
Equivalent of any remittance due hereunder is not lawful or possible in any
country, such remittance shall be made by the deposit thereof in the currency of
the country to the credit and account of SCS or its nominee in any commercial
bank or trust company located in that country, prompt notice of which shall be
given to SCS. SCS shall be advised in writing in advance by BTI and provide to
BTI a nominee, if so desired.

         6.7 Any withholding tax required to be withheld by BTI on royalty
payments under the laws of any foreign country for the account of SCS, shall be
promptly paid by BTI for and on

                                       17
<PAGE>

behalf of SCS to the appropriate governmental authority, and BTI shall furnish
SCS with proof of payment of such tax. Any such tax actually paid on SCS' behalf
shall be deducted from royalty payments due SCS.

         6.8 Only one royalty shall be due and payable to SCS for the
manufacture, use and sale of a PRODUCT irrespective of the number of patents or
claims thereof which cover the manufacture, use and sale of such PRODUCT.

         SECTION 7 - INFRINGEMENT AND NONASSERTION.

         7.1 (a) If any of the PATENT RIGHTS under which BTI is the licensee
is infringed by a third party, BTI shall have the right and option but not
the obligation to bring an action for infringement, at its expense, against
such third party in the name of SCS and/or in the name of BTI, BTI shall
promptly notify SCS of any such infringement and shall keep SCS informed as
to the prosecution of any action for such infringement. No settlement,
consent judgment or other voluntary final disposition of the suit which
adversely affects PATENT RIGHTS may be entered into without the consent of
SCS, which consent shall not unreasonably be withheld or delayed.

             (b) Notwithstanding the foregoing, in the event the PATENT RIGHTS
licensed to BTI and infringed have been licensed to SCS and under such license
SCS cannot assign to BTI the right to bring an infringement action, SCS shall
bring such action, if requested to do so by BTI.

             (c) In the event that BTI shall undertake the enforcement and/or
defense of the PATENT RIGHTS by litigation, BTI may withhold up to fifty percent
(50%) of the royalties otherwise thereafter due SCS hereunder and apply the same
toward reimbursement of fifty percent (50%) of BTI's expenses, including
reasonable attorneys' fees, in connection therewith.

                                       18
<PAGE>

Any recovery of damages by BTI for any such suit shall be applied first in
satisfaction of any unreimbursed expenses and legal fees of BTI relating to the
suit, and next toward reimbursement of SCS for any royalties withheld and
applied pursuant to this Section 7. The balance remaining from any such recovery
shall be divided between BTI and SCS, as follows (i) for that portion, if any,
based on lost profits, SCS shall recover the royalty SCS would have received
under this Agreement if such sales had been made by BTI; and (ii) for any other
recovery, SCS shall receive twenty-five percent (25 %) of the remaining amount
of such recovery.

         7.2 In the event that BTI elects not to pursue an action for
infringement, upon written notice to SCS by BTI that an unlicensed third party
is an infringer of a VALID CLAIM of PATENT RIGHTS licensed to BTI, SCS shall
have the right and option, but not the obligation at its cost and expense to
initiate infringement litigation and to retain any recovered damages. BTI shall
have the right to join such litigation brought by SCS at BTI's cost and expense
and with counsel selected by BTI. In such event any and all recoveries shall be
shared by the parties in proportion to the share of expense paid by each party.

         7.3 In the event that litigation against BTI is initiated by a
third-party charging BTI with infringement of a patent of the third party as a
result of the manufacture, use or sale by BTI of is PRODUCT covered by PATENT
RIGHTS, and such infringement relates solely to the exercise of PATENT RIGHTS,
BTI shall promptly notify SCS in writing thereof. BTI's costs as to any such
defense shall be creditable against any and all payments due and payable to SCS
under Paragraph 6.1 of this Agreement but no royalty payment after taking into
consideration any such credit under this Paragraph 7.3 shall be reduced by more
than fifty percent (50%).

         7.4 In the event of a judgment in any suit in which a court of
competent jurisdiction rules that the manufacture, use or sale by BTI of PRODUCT
covered by a PATENT RIGHT has

                                       19
<PAGE>

infringed, solely as a result of the exercise of PATENT RIGHTS, on a
third-party's patent requiring BTI to pay damages or a royalty to said third
party, or in the event of a settlement of such suit requiring damages or royalty
payments to be made, payments due to SCS under Paragraph 5.1 of this Agreement
arising from the applicable PRODUCT shall be correspondingly reduced by one-half
of the amounts due under the requirement of such judgment or under the terms of
such settlement. In no case, however, shall the royalty payment after taking
into consideration any such reduction under this Paragraph 7.4 be reduced by
more than fifty percent (50%).

         7.5 In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate in all respects and, to the
extent possible, have its employees testify when requested and make available
relevant records, papers, information, samples, specimen, and the like. All
reasonable out-of-pocket costs of SCS or BTI incurred in connection with
rendering cooperation requested shall be paid by the requesting party.

         SECTION 8 - WARRANTIES.

         8.1 Each of SCS and BTI warrants and represents to the other that it
has the full right and authority to enter into this Agreement, and that it is
not aware of any impediment which would inhibit its ability to perform the terms
and conditions imposed on it by this Agreement.

         8.2 SCS warrants and represents that it is entitled to grant the
exclusive right granted to BTI pursuant to Section 3.1; it owns or, in the case
of rights arising on or after the EFFECTIVE DATE, will own all right, title and
interest in and to SCS INVENTIONS and PATENT RIGHTS attaching thereto; that all
employees of SCS will be obligated to assign SCS INVENTIONS and corresponding
PATENT RIGHTS to SCS; that it has the right to grant the

                                       20
<PAGE>

rights granted hereunder; that, as at the EFFECTIVE DATE, the granting of such
rights does not require the consent of any third party; that, as of the
EFFECTIVE DATE, there are no outstanding agreements, assignments or encumbrances
inconsistent with the provisions of this Agreement; and that pursuant to an
existing confidentiality agreement between the parties, SCS has disclosed to BTI
all INVENTIONS, INFORMATION, MATERIALS and PATENT RIGHTS known to SCS prior to
the EFFECTIVE DATE.

         SECTION 9 - INDEMNIFICATION AND INSURANCE.

         9.1 Subject to Clause 7.3 each party shall notify the other of any
claim, lawsuit or other proceeding related to PRODUCT, PATENT RIGHTS, MATERIAL,
INVENTION or INFORMATION. BTI agrees that it will defend, indemnify and hold
harmless SCS and its employees, officers, and agents and each of them (the
"Indemnified Parties") from and against any and all third party claims, causes
of action and costs (including attorney's fees) of any nature made or lawsuits
or other proceedings filed or otherwise instituted against the Indemnified
Parties arising out of the design, manufacture, sale or use of PRODUCT by BTI or
its licensees except to the extent of the negligence or willful misconduct of an
Indemnified Party. BTI will also assume responsibility for all costs and
expenses related to such claims and lawsuits for which it is obligated to
Indemnify the Indemnified Parties pursuant to this Paragraph 9.1 including, but
not limited to, the payment of all attorney's fees and costs of litigation or
other defenses. SCS shall promptly notify BTI of any such claim and BTI shall
have the right to control the defense, settlement or compromise, of any such
claim.

         9.2 In the event such insurance is available at commercially reasonable
rates, BTI will, at all times following first commercial sale of PRODUCT,
maintain and keep current in respect of manufacture and sale of PRODUCT, product
liability insurance obtained from a

                                       21
<PAGE>

reputable insurer (or an equivalent program of self-insurance) and shall make
available to SCS such policy for inspection, upon request, by SCS.

         9.3 BTI shall use reasonable efforts to manufacture and sell PRODUCT
and use reasonable efforts to ensure that its AFFILIATES and SUBLICENSEES
manufacture and sell PRODUCT in accordance with the regulatory requirements set
forth by the country where the particular PRODUCT is to be sold.

         SECTION 10 - ASSIGNMENT; SUCCESSORS.

         10.1 This Agreement shall not be assignable by either of the parties
without the prior written consent of the other party (which consent shall not be
unreasonably withheld or delayed), except that BTI without the consent of SCS
may assign this Agreement to an AFFILIATE or to a successor in interest or in
the case of a sale or transfer of all or substantially all of the portion of the
business to which this Agreement relates provided that such assignee shall agree
to be bound by the terms of this Agreement; provided, further that in "the
foregoing circumstances, BTI shall promptly provide SCS with a copy of such
executed assignment.

         10.2 Subject to the limitations on assignment herein, this Agreement
shall be binding upon and inure to the benefit of said successors in interest
and assigns of BTI and SCS. Any such successor or assignee of a party's interest
shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by said party.

         SECTION 11 - TERM AND TERMINATION.

         11.1 (a) Except as otherwise specifically provided herein and unless
sooner terminated pursuant to Paragraphs 11.1(c), 11.2 or 11.3 of this
Agreement, this Agreement and the licenses and rights granted thereunder shall
remain in full force and effect until the expiration of BTI's obligation to pay
royalties hereunder, at which firm BTI shall have a fully paid-up NON-CANCELABLE

                                       22
<PAGE>

license; provided that no payments shall be required hereunder nor under the
Shareholder's Agreement unless and until the ORIGINAL LICENSE is executed and
(i) such license terms are in accordance with the provisions of Section
5.1(b)(ii) and do not increase the obligations of BTI under this Agreement and
(ii) royalties payable under the ORIGINAL LICENSE arc not in excess of royalties
payable under this Agreement.

             (b) Notwithstanding anything to the contrary to this Agreement, to
the extent that this Agreement confers a license of a patent granted pursuant to
the law of the Commonwealth of Australia, that license terminates in relation to
that patent (and in relation to that patent only) on the expiry of that patent.
Termination of such license will not, of itself, affect the ongoing operation of
any other provision of this Agreement.

             (c) This Agreement shall terminate in the event BTI fails to
exercise its option to purchase shares in SCS as provided in the Shareholder's
Agreement provided that in the event of such termination, BTI shall be assigned
all rights or where such rights are not owned by SCS, granted an exclusive
license to INFORMATION developed in the performance of RESEARCH directly
supported by BTI up to the time of termination and retain a non-exclusive
license under PATENT RIGHTS arising out of RESEARCH directly supported by BTI up
to the time of termination, which shall be sublicensable as set forth below. In
addition and to the extent necessary to practice any such PATENT RIGHTS, BTI
shall retain a non-exclusive license to any PATENT RIGHTS of SCS in the FIELD
which license shall be sublicensable to entities which are developing,
manufacturing or selling a PRODUCT of BTI. With respect to those rights to which
BTI retains a non-exclusive license (i) SCS shall take over from BTI the filing,
prosecution and maintenance of any PATENT RIGHTS which BTI has the right to
file,

                                       23
<PAGE>

prosecute and maintain under Section 5.3(b); and (ii) SCS will continue to be
bound by its obligations under Section 5.4(b).

         11.2 On or after the third anniversary of the EFFECTIVE DATE BTI shall
have the right to terminate this Agreement or any or all of its licenses under
one or more PATENT RIGHTS in one or more countries upon sixty (60) days prior
written notice to SCS.

         11.3 (a) Subject to Section 11.3(b), upon material breach of any
material provisions of this Agreement by either party to this Agreement, in the
event the breach is not cured within sixty (60) days after written notice to the
breaching party by the other party, in addition to any other remedy it may have,
the other party at its sole option may terminate this Agreement, provided that
such other party is not then in breach of this Agreement. In the event that a
party in breach disputes such termination and institutes legal action with
respect thereto, the Agreement shall not be terminated under there is a final
court decision in this respect from which no appeal can be or is taken.

             (b) In the event that SCS is in material breach of any material
provision of this Agreement and in the event that the breach is not cured within
sixty (60) days of written notice to SCS by BTI, in addition to any other remedy
it may have, BTI may withhold fifty percent (50%) of any payment due to SCS
under this Agreement until such breach is cured such withholding of payments by
BTI shall not constitute a breach of this Agreement.

         11.4 Upon any termination of this Agreement, BTI shall have the option
but not the obligation to finish any work-in-progress and to sell any completed
inventory of a PRODUCT covered by this Agreement which remains on hand as of the
date of the termination, so long as BTI pays to SCS the royalties applicable to
said subsequent sales in accordance with the same terms and conditions as set
forth in this Agreement.

                                       24
<PAGE>

         11.5 In the event that the licenses granted to BTI under this Agreement
are terminated, any granted sub-licenses shall remain in full force and effect,
provided that the SUBLICENSEE is not then in breach of its sub-license agreement
and the SUBLICENSEE agrees to be bound to SCS as a licensor under the terms and
conditions of the sub-license agreement.

         11.6 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.

         11.7 The obligations of Sections 4, 8 and 9, Paragraph 11.1, 11.4,
11.5, 11.8, 12.4 and this Clause 11.7 shall survive any termination of this
Agreement. In addition, Section 6.3 shall survive for two (2) years after
termination with respect to the right of SCS to audit provided that BTI must
continue to comply with its obligation to keep or cause to be kept its books of
account and necessary supporting data for seven (7) years; and Sections 6.4 and
6.5 shall survive termination only to the extent that royalties due for PRODUCTS
sold prior to termination have not been paid or PRODUCT is being sold under
Section 11.4.

         11.8 Upon termination of this Agreement:

             (a) Each party will use its best endeavors to return to the other
party all of the second mentioned party's CONFIDENTIAL INFORMATION in the
possession or under the control or in the possession or under the control of the
servants or agents of, the first mentioned party, except to the extent that BTI
retains a license thereto under this Agreement, provided that one copy of such
information may be retained for purposes of complying with this Agreement.

             (b) Subject to paragraph 11.1(c) and Section 11.5, neither party
will have any further rights in relation to the other party's CONFIDENTIAL
INFORMATION whether under common or other law, statute or otherwise and, each
party will, at its own expense, execute and

                                       25
<PAGE>

deliver to the other party such instruments and take all other action as the
other party deems reasonably necessary to ensure the termination of any such
rights and to vest every interest in the CONFIDENTIAL INFORMATION in the party
owning that CONFIDENTIAL INFORMATION.

         SECTION 12 - GENERAL PROVISIONS.

         12.1 The relationship between SCS and BTI is that of independent
contractors. SCS and BTI are not joint ventures, partners, principal and agent,
master and servant, employer or employee, and have no relationship other than as
independent contracting parties. SCS shall have no power to bind or obligate BTI
in any manner. Likewise, BTI shall have no power to bind or obligate SCS in any
manner.

         12.2 Any matter or disagreement under Paragraph 3.2 which this
Agreement specifically specifies is to be resolved by arbitration shall be
submitted to an arbitrator to so decide any such matter or disagreement. The
arbitrators shall conduct the arbitration in accordance with the Rules of the
International Chamber of Commerce, unless the parties agree otherwise, if the
parties are unable to mutually select an arbitrator, the arbitrator shall be
selected in accordance with the procedures of the International Chamber of
Commerce. The decision and award rendered by the arbitrator shall be final and
binding. Judgment upon the award may be entered in any court having jurisdiction
thereof. Any arbitration pursuant to this section shall be held in London,
England, in the English language or such other place as may be mutually agreed
upon in writing by the parties.

         12.3 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all prior
agreements in this respect. There

                                       26
<PAGE>

shall be no amendments or modifications to this Agreement, except by a written
document which is signed by both parties.

         12.4 The construction and interpretation of this Agreement shall be
construed and interpreted in accordance with the laws of the State of Delaware
without reference to its choice of law principles. Any question as to the
validity or enforceability of this Agreement shall be construed and interpreted
in accordance with the laws of the state of Victoria, Australia, without
reference to its choice of law principles. Subject to the foregoing this
Agreement may be enforced by either party in either jurisdiction.

         12.5 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.

         12.6 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement, excepting only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.

         12.7 Notices. Any notices given pursuant to this Agreement shall be in
writing and shall be deemed delivered upon the earlier of (i) when received at
the address set forth below, or (ii) ten (10) business days after mailed by
certified or registered mail postage prepaid and properly addressed, with return
receipt requested, or (iii) by facsimile on receipt by the sender of
confirmation of successful transmission. Notices shall be delivered to the
respective parties as indicated or any other address designated by a party to
the other party in writing under the notice provisions of this Section 14.7:

                                       27
<PAGE>

                  To BTI:           Biotransplant, Inc.
                                    13th Street
                                    Building 96
                                    Charlestown Navy Yard
                                    Charlestown, MA  02129
                                    Attn: CEO

                  Copy to:          Elliot M. Olstein, Esq.
                                    Carella, Byrne, Bain, Gilfillan, Cecchi,
                                      Stewart & Olstein
                                    6 Becker Farm Road
                                    Roseland, NJ  07068

                  To SCS:           Stem Cell Sciences
                                    420 St. Kilda Road
                                    Level 10
                                    Melbourne, 3004
                                    Victoria, Australia
                                    Attn: President

         12.8 In the event a court or governmental agency of competent
jurisdiction holds any provision of this Agreement to be invalid, such holding
shall have no effect on the remaining provisions of this Agreement, and they
shall continue in full force and effect. Upon such holding, the parties shall,
within a reasonable period of time, determine whether the severed provision(s)
detrimentally and materially affect the obligations or performance of either or
both parties. If so affected, the parties shall, within a reasonable period of
time, negotiate in good faith to modify this Agreement to relieve such effects.
If such negotiations do not result in mutually agreeable modification to this
Agreement, either effected party may terminate this Agreement upon providing the
other party with thirty (30) days written notice of such termination.

         12.9 This Agreement shall not create any rights, including without
limitation third-party beneficiary rights, in any person or entity not a party
to this Agreement.

         12.10 This Agreement may be signed in two or more counterparts, each
such counterpart shall be deemed an original and together shall constitute one
and the same Agreement.

                                       28
<PAGE>

         12.11 Each party shall execute such agreements, deeds and documents or
do or cause to be executed or done all such acts and things as shall be
necessary to give effect to this Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement in two or
more counterparts, each as an original and all together as one instrument as of
the date set forth above.

SCS:                                          STEM CELL SCIENCES, PTY, LTD.

By:    /s/ Malcolm Roy Brandon                By:    /s/ Peter Scott Mountford
       -----------------------                       -------------------------
Name:  Malcolm Roy Brandon                    Name:  Peter Scott Mountford

Title: Director                               Title: Director

BTI:                                          BIOTRANSPLANT, INC.

                                              By:    /s/ Roderick L J Lyle
                                                     ---------------------
                                              Name:  Roderick L J Lyle

                                              Title: ATTORNEY

                                       29
<PAGE>

                                   APPENDIX A

               DESCRIPTION OF RESEARCH BY STEM CELL SCIENCES (SCS)

The program outlined below will be carried out under contract Research and
Licensing Agreements sponsored by SCS at both the University of Melbourne and at
the University of Edinburg. Detailed research plans will be developed and
progress continuously monitored by a joint BTI/SCS - Research Steering
Committee. This committee will meet within 45 days following the EFFECTIVE DATE
of this Research and License Agreement.

AT THE CENTER FOR ANIMAL BIOTECHNOLOGY IN MELBOURNE:

A.       Establishment of mini-swine nucleus herd to be used for collections of
         embryos at the pre-implantation (ICM) and post-implantation stages
         (PGC).

B.       Cloning and validation of the porcine Oct-4 expression cassette.

C.       Transection of the porcine Oct-4.neo cassette into primary cultures of
         porcine primordial germ cells or cells isolated from the inner cell
         mass (ICM) and establishing porcine cell lines.

D.       Microinjection of the porcine Oct-4.neo cassette into porcine oocytes
         and the generation of transgenic pigs.

E.       Characterization and validation of porcine ES cells for their potential
         to contribute to the germ line.

F.       Evaluate genetic selection technologies for the derivation of
         hematopoietic stem cells.

AT THE CENTER FOR GENOME RESEARCH IN EDINBURGH:

A.       Identification and molecular cloning of alternative DIA/LIF activities.

B.       Studies on problems related to factors that control ES growth, survival
         and differentiation.

                                       30
<PAGE>

                                   APPENDIX B

1.       BRITISH PATENT APPLICATION

         UK Patent Application Number:                        GB 9308271.1
         Title:  "Expression Vectors for In Vitro Derivation of Stem Cells"
         Filed:  21st April 1993
         Applicant:  The University of Edinburg
         Inventors:
                  Drs. Peter Scott Mountford and Austin Gerard Smith
                  Both of:
                        AFRC-Centre for Genome Research
                        The University of Edinburg
                        King's Buildings
                        West Mains Road
                        Edinburg EH9 3JQ
                        United Kingdom

2.       BRITISH PATENT APPLICATION

         UK Patent Revised Application Number:                GB 9401011.3
         Original Application Number:                         GB 9313323.9
         Title:  "Expression of Heterologous Genes"
         Filed:  28 June 1993; Revised:  20 January 1994
         Applicant:  The University of Edinburgh
         Inventors:
                  Drs. Peter Scott Mountford, Austin Gerard Smith and
                  Richard Frank Lathe
                  All of:
                       AFRC-Centre for Genome Research
                       The University of Edinburgh
                       Kings Buildings
                       West Mains Road
                       Edinburgh EH9 3JQ
                       United Kingdom

                                       31

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