Document:

exv10w1

 

Exhibit 10.1

AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

ROSS LONGHINI COMPENSATION SUMMARY

Base
Salary and Stock Options. In connection with the promotion of
Ross A. Longhini to Executive Vice President and Chief
Operating Officer, the Compensation Committee of the Board and the Board approved the changes
described in this Summary to Mr. Longhini’s compensation on July 15, 2006. Mr. Longhini’s annual
base salary was increased from $258,000 to $280,000, effective June 19, 2006. Mr. Longhini was
also granted a non-qualified stock option to purchase 50,000 shares of AMS common stock at an
exercise price of $16.48 per share (equal to the “fair market value” of a share of common stock on
the grant date). Such option expires on June 14, 2013 and vests with respect to 25% of the shares
on June 30, 2007 and with respect to 6.25% of the shares on the last ay of each calendar quarter
thereafter. Mr. Longhini had previously been granted an option to purchase 50,000 shares of
Company common, along with annual grants to the other executive officers.

2006 Executive Variable Incentive Plan. At the February 9, 2006 meeting, the Company’s Board of
Directors approved the 2006 Executive Variable Incentive Plan and target bonuses for executive
officers under such plan. The Compensation Committee (and the Board of Directors with respect to
executive officers) established a target bonus for each participant in the plan. The 2006 quarterly
bonus payments will be calculated at the end of each fiscal quarter based upon each fiscal
quarter’s year-over-year sales growth rate, each quarter’s year-over-year increase in sales
dollars, a measure of operating income and a cost of capital on net assets. Each quarter, the
actual quarterly results for four quarters (the current plus three past quarters) will be weighted
and compared to the plan level to generate a percent of plan achievement. This percent is applied
against the participant’s target bonus for the quarter, resulting in a quarterly bonus payment per
individual. On June 15, 2006, the Compensation Committee and the Board of Directors approved an
increase to Mr. Longhini’s target bonus under the Company 2006 Executive Variable Incentive Plan
was set at the annual rate of $140,000 for the third and fourth quarters of 2006.exv10w2

 

Exhibit 10.2

Executive Employment Agreements

     We have entered into employment agreements with Mr. Emerson, Ms. Diersen, and Mr. Longhini.
All of the employment agreements have an initial term of two years and automatically renew for
successive one-year periods until either the executive provides or we provide notice of
termination. The agreements generally provide for base salary, participation in incentive
compensation plans adopted by the board of directors, and, if the agreement was entered into at the
time of the executive’s initial employment, an initial grant of options to purchase shares of our
common stock. The salary and bonus we have paid and the stock options we have granted to the named
executive officers in the last three years are included in the Summary Compensation Table above.
The stock options granted to our executives vest over a period of four years on the same basis as
options granted to other employees. The agreements also entitle the executives to participate in
our other standard benefit programs and contain customary confidentiality and non-competition
provisions.

     The agreements also generally include the following termination benefits:

	 	•	 	If we terminate the executive without cause, we are required to continue
to pay the executive his or her salary and provide health and welfare benefits for
twelve months following termination. In certain cases, we would also be required to
pay a portion of any incentive bonus for the year in which termination occurs. If the
executive accepts other employment during the twelve-month period, we would be entitled
to deduct compensation that he or she receives from a new employer from the salary we
are obligated to pay during the twelve-month period.
	 
	 	•	 	If we terminate the executive without cause, or if the executive
terminated employment for a good reason, such as diminution in responsibility or
relocation, during the twelve-month period immediately following a change of control,
we (or our successor) would be required to pay the executive a lump sum equal to his or
her annual salary, plus his or her target bonus; provide, at our cost, continuation of
health and welfare benefits for twelve months; and all issued and outstanding options
would immediately vest and be exercisable.
	 
	 	•	 	In addition, if any payments (including the acceleration of stock options)
made by us to the executive in connection with a change in control were subject to
“excise tax” we would be required to make an additional cash “gross-up payment” to the
executive in an amount such that after payment by the executive of all taxes, including
any excise tax imposed upon the gross-up payment, the executive would retain an amount
of the gross-up payment equal to the excise tax.<PAGE>

                                                                     EXHIBIT 4.3

                               BIOVEX GROUP, INC.

                             STOCKHOLDERS' AGREEMENT

                                 AUGUST 30, 2005

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
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1. CERTAIN DEFINITIONS...................................................     1
2. REGISTRATION RIGHTS...................................................     5
   2.1  Required Registrations...........................................     5
   2.2  Incidental Registration..........................................     7
   2.3  Registration Procedures..........................................     8
   2.4  Allocation of Expenses...........................................    10
   2.5  Indemnification and Contribution.................................    10
   2.6  Other Matters with Respect to Underwritten Offerings.............    12
   2.7  Information by Holder............................................    12
   2.8  "Lock-Up" Agreement; Confidentiality of Notices..................    13
   2.9  Limitations on Subsequent Registration Rights....................    13
   2.10 Rule 144 Requirements............................................    13
3. [Reserved]............................................................    14
4. CONSENTS AND COVENANTS................................................    14
   4.1  Matters Requiring Preferred Majority Consent.....................    14
   4.2  Matters Requiring Preferred Director Consent.....................    15
   4.3  Board Committees.................................................    16
   4.4  Directors; Observers.............................................    16
   4.5  Information......................................................    18
   4.6  Managers' Restrictive Covenants..................................    20
5. TRANSFER PROVISIONS; FIRST OFFER, TAG ALONG AND DRAG ALONG RIGHTS.....    21
   5.1  Restrictions on Transfer.........................................    21
   5.2  Permitted Transfers..............................................    21
   5.3  First Offer......................................................    22
   5.4  Compulsory Transfer by Leavers...................................    24
   5.5  Tag Along........................................................    25
   5.6  Drag Along.......................................................    26
   5.7  Bank Holding Company Act Matters.................................    27
6. RESTRICTIONS ON SALES OF CONTROL OF THE COMPANY.......................    28
7. VOTING AGREEMENTS.....................................................    29
   7.1  Voting of Shares.................................................    29
   7.2  No Revocation....................................................    30
   7.3  Obligations Binding on Transferees...............................    30
8. GENERAL...............................................................    30
   8.1  Future Stockholders..............................................    30
   8.2  Confidentiality and Disclosure...................................    30
   8.3  Actions by Preferred Holders.....................................    31
   8.4  VCT Matters......................................................    31
   8.5  Legends..........................................................    31
   8.6  Severability.....................................................    32
</TABLE>

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<TABLE>
<CAPTION>
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   8.7  Governing Law....................................................    32
   8.8  Notices..........................................................    32
   8.9  Complete Agreement...............................................    33
   8.10 Amendments and Waivers...........................................    33
   8.11 Termination Provisions...........................................    33
   8.12 Transfers of Rights; Calculation of Share Numbers................    34
   8.13 Pronouns.........................................................    34
   8.14 Counterparts; Facsimile Signatures...............................    34
   8.15 Section Headings and References..................................    34
</TABLE>

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<PAGE>

                               BIOVEX GROUP, INC.

                             STOCKHOLDERS' AGREEMENT

     This Stockholders' Agreement, dated as of August 30, 2005, is entered into
by and among BioVex Group, Inc., a Delaware corporation (the "COMPANY"); the
holders of the Company's Preferred Stock listed on Exhibit A hereto (together,
the "PREFERRED HOLDERS"); the Managers (as defined below); and each other holder
of Common Stock of the Company listed on Exhibit B hereto (the "COMMON
HOLDERS").

                                    Recitals

     WHEREAS, BioVex Limited, a limited company organized under the laws of
England and Wales (the "SUBSIDIARY"), is currently a wholly owned subsidiary of
the Company; and

     WHEREAS, the Preferred Holders, the Managers and the Common Holders
previously held shares in the Subsidiary, all of which were exchanged for shares
in the capital stock of the Company pursuant to a Share Contribution and
Exchange Agreement dated as of the date hereof (such transaction, the "SHARE
EXCHANGE"); and

     WHEREAS, in their capacity as shareholders of the Subsidiary, the Preferred
Holders were entitled to certain rights and privileges pursuant to the Articles
of Association of the Subsidiary (the "ARTICLES"); an Investment Agreement dated
as of October 3, 2003 (the "INVESTMENT AGREEMENT") by and among the Subsidiary,
the Managers (as defined therein) and the Preferred Holders, as holders of
shares in the Subsidiary; a Subscription Agreement dated as of December 21, 2004
(the "DECEMBER SUBSCRIPTION AGREEMENT") by and among the Subsidiary, the
Managers (as defined therein) and the Preferred Holders; and a Subscription
Agreement dated as of May 26, 2005 (the "MAY SUBSCRIPTION AGREEMENT") by and
among the Subsidiary, the Managers (as defined therein) and the Preferred
Holders; and

     WHEREAS, the Company, the Managers, the Common Holders and the Preferred
Holders intend that (i) with respect to the Company and in their capacity as
holders of Preferred Stock of the Company, the Preferred Holders shall be
entitled to rights and privileges under the Company's Certificate of
Incorporation and this Agreement that are comparable to those previously enjoyed
with respect to the Subsidiary and in their capacity as shareholders of the
Subsidiary under the Articles, the Investment Agreement, the December
Subscription Agreement and the May Subscription Agreement and (ii) the Managers
shall be subject to certain restrictive covenants under this Agreement;

     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

     1. CERTAIN DEFINITIONS.

     As used in this Agreement, the following terms shall have the following
respective meanings:

<PAGE>

          "AFFILIATED PARTY" means, with respect to any Preferred Holder, any
person or entity which, directly or indirectly, controls, is controlled by or is
under common control with such Preferred Holder, including, without limitation,
any general partner, officer or director of such Preferred Holder and any
venture capital fund now or hereafter existing which is controlled by one or
more general partners of, or shares the same management company as, such
Preferred Holder.

          "BOARD" means the Board of Directors of the Company as constituted
from time to time.

          "BUDGET" means the annual budget of the Group from time to time, as
defined in Section 4.5 (Information).

          "CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation
of the Company, as amended or restated from time to time.

          "COMMISSION" means the U.S. Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.

          "COMMON STOCK" means the common stock, $0.0001 par value per share, of
the Company.

          "COMPANY" means BioVex Group, Inc., a Delaware corporation.

          "COMPANY SALE" means: (a) a merger or consolidation in which (i) the
Company is a constituent party, or (ii) a Company Subsidiary is a constituent
party and the Company issues shares of its capital stock pursuant to such merger
or consolidation, except in the case of either clause (i) or (ii) any such
merger or consolidation involving the Company or a Company Subsidiary in which
the shares of capital stock of the Company outstanding immediately prior to such
merger or consolidation continue to represent, or are converted into or
exchanged for shares of capital stock which represent, immediately following
such merger or consolidation, a majority by voting power of the capital stock of
(A) the surviving or resulting corporation or (B) if the surviving or resulting
corporation is a wholly owned subsidiary of another corporation immediately
following such merger or consolidation, the parent corporation of such surviving
or resulting corporation; (b) the sale, lease, transfer, exclusive license or
other disposition, in a single transaction or series of related transactions, by
the Company or a Company Subsidiary of all or substantially all the assets of
the Company and the Company Subsidiaries taken as a whole (except where such
sale, lease, transfer, exclusive license or other disposition is to a wholly
owned Company Subsidiary); or (c) the sale or transfer, in a single transaction
or series of related transactions, by the stockholders of the Company of a
majority by voting power of the then-outstanding capital stock of the Company to
any person or entity or group of affiliated persons or entities.

          "COMPANY SUBSIDIARY" means any corporation, partnership, trust,
limited liability company or other non-corporate business enterprise in which
the Company (or another Company Subsidiary) holds stock or other ownership
interests representing (a) more than 50% of the voting power of all outstanding
stock or ownership interests of such entity or (b) the right to

                                      -2-

<PAGE>

receive more than 50% of the net assets of such entity available for
distribution to the holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such entity.

          "CONFIDENTIAL INFORMATION" means any information that is labeled as
confidential, proprietary or secret that a Preferred Holder obtains from the
Company pursuant to financial statements, reports and other materials provided
by the Company to such Preferred Holder pursuant to this Agreement or pursuant
to visitation or inspection rights granted hereunder.

          "EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.

          "GROUP" means the Company and the Company Subsidiaries from time to
time, taken as a whole.

          "INDEMNIFIED PARTY" means a party entitled to indemnification pursuant
to Section 2.5 (Indemnification and Contribution).

          "INDEMNIFYING PARTY" means a party obligated to provide
indemnification pursuant to Section 2.5 (Indemnification and Contribution).

          "INITIAL PUBLIC OFFERING" means the initial underwritten public
offering of shares of Common Stock.

          "INITIATING HOLDERS" means the Preferred Holders initiating a request
for registration pursuant to Section 2.1(a) or 2.1(b) (Required Registrations),
as the case may be.

          "MANAGER" means each of Dr. Gareth Beynon, Dr. Robert Coffin, Philip
Astley-Sparke and Dr. Colin Love.

          "MANAGERS' SHARES" means shares of the capital stock of the Company
owned by the Managers from time to time.

          "OTHER HOLDERS" means holders of securities of the Company (other than
Preferred Holders) who are entitled, by contract with the Company, to have
securities included in a Registration Statement.

          "PREFERRED DIRECTOR" means a member of the Board nominated solely by
the holders of Preferred Stock pursuant to the Certificate of Incorporation and
Section 7 (Voting), below.

          "PREFERRED MAJORITY" means the holders of at least sixty percent (60%)
of the Preferred Stock outstanding from time to time (voting together as a
single class and not as separate series).

          "PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective

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<PAGE>

amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

          "PREFERRED HOLDER" means the holders of Preferred Stock as of the date
hereof.

          "PREFERRED STOCK" means the Series A Stock, the Series B Stock, the
Series C Stock, the Series D Stock and the Series M Stock.

          "REGISTRABLE SHARES" means (a) the shares of Common Stock issued or
issuable upon conversion of the Preferred Stock; (b) any other shares of Common
Stock, and any shares of Common Stock issued or issuable upon the conversion or
exercise of any other securities, acquired by the Preferred Holders; (c) any
other shares of Common Stock issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations or similar
events); and (d) for purposes of Section 2.2 only, the Managers' Shares;
provided, however, that shares of Common Stock which are Registrable Shares
shall cease to be Registrable Shares (i) upon any sale pursuant to a
Registration Statement or Rule 144 under the Securities Act; (ii) upon any sale
in any manner to a person or entity which is not entitled to the rights under
this Agreement; or (iii) at such time, following an Initial Public Offering, as
they become eligible for sale pursuant to Rule 144(k) under the Securities Act.
Wherever reference is made in this Agreement to a request or consent of holders
of a certain percentage of Registrable Shares, the determination of such
percentage shall include shares of Common Stock issuable upon conversion of the
Preferred Stock even if such conversion has not been effected.

          "REGISTRATION EXPENSES" means all expenses incurred by the Company in
complying with the provisions of Section 2 (Registration Rights), including,
without limitation, all registration and filing fees, exchange listing fees,
printing expenses, fees and expenses of counsel for the Company and the fees and
expenses of one counsel selected by the Selling Stockholders to represent the
Selling Stockholders, state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of Selling
Stockholders' own counsel (other than the counsel selected to represent all
Selling Stockholders).

          "REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

          "REMUNERATION COMMITTEE" means the remuneration committee of the Board
from time to time, as appointed in accordance with Section 4.3 (Remuneration
Committee).

          "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
issued under such act, as they each may, from time to time, be in effect.

          "SELLING STOCKHOLDER" means any Preferred Holder or Manager owning
Registrable Shares included in a Registration Statement.

                                      -4-

<PAGE>

          "SERIES A STOCK" means the Series A Preferred Stock of the Company,
$0.0001 par value per share; "SERIES B STOCK" means the Series B Preferred Stock
of the Company, $0.0001 par value per share; "SERIES C STOCK" means the Series C
Preferred Stock of the Company, $0.0001 par value per share; "SERIES D STOCK"
means the Series D Preferred Stock of the Company, $0.0001 par value per share;
and "SERIES M STOCK" means the Series M Preferred Stock of the Company, $0.0001
par value per share.

          "SHARES" means any and all shares of Common Stock and/or shares of
capital stock of the Company, by whatever name called, that carry voting rights
(including voting rights which arise by reason of default) and shall include any
such shares now owned or subsequently acquired by a Stockholder, however
acquired, including without limitation stock splits and stock dividends.

          "STOCKHOLDER" means a holder of Common Stock or Preferred Stock.

     2. REGISTRATION RIGHTS.

          2.1 Required Registrations.

               (a) At any time after six months following the closing of the
Initial Public Offering, a Preferred Holder or Preferred Holders holding in the
aggregate at least 20% of the Registrable Shares then outstanding may request,
in writing, that the Company effect the registration on Form S-1 or Form S-2 (or
any successor form) of Registrable Shares owned by such Preferred Holder or
Preferred Holders having an aggregate value of at least $7,500,000 (based on the
market price or fair value on the date of such request).

               (b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Preferred Holder or Preferred Holders holding Registrable Shares
may request, in writing, that the Company effect the registration on Form S-3
(or such successor form), of Registrable Shares having an aggregate value of at
least $1,000,000 (based on the public market price on the date of such request).

               (c) Upon receipt of any request for registration pursuant to this
Section 2, the Company shall promptly give written notice of such proposed
registration to all other Preferred Holders. Such Preferred Holders shall have
the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of their Registrable Shares as such Preferred Holders may request in such notice
of election, subject in the case of an underwritten offering to the terms of
Section 2.1(d). Thereupon, the Company shall, as expeditiously as possible, and
in any event within 60 days of the receipt of the request from the Initiating
Holders, file with the Commission a Registration Statement and use its best
efforts to effect the registration on an appropriate registration form of all
Registrable Shares which the Company has been requested to so register;
provided, however, that in the case of a registration requested under Section
2.1(b), the Company will only be obligated to effect such registration on Form
S-3 (or any successor form).

               (d) If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part

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<PAGE>

of their request made pursuant to Section 2.1(a) or (b), as the case may be, and
the Company shall include such information in its written notice referred to in
Section 2.1(c). In such event, (i) the right of any other Preferred Holder to
include its Registrable Shares in such registration pursuant to Section 2.1(a)
or (b), as the case may be, shall be conditioned upon such other Preferred
Holder's participation in such underwriting on the terms set forth herein, and
(ii) all Preferred Holders including Registrable Shares in such registration
shall enter into an underwriting agreement upon customary terms with the
underwriter or underwriters managing the offering; provided that such
underwriting agreement shall not provide for indemnification or contribution
obligations on the part of the Preferred Holders greater than the obligations of
the Preferred Holders pursuant to Section 2.5 and shall not include any
representations or warranties of such Preferred Holders other than with respect
to authority and ownership of shares. The Initiating Holders shall have the
right to select the managing underwriter(s) for any underwritten offering
requested pursuant to Section 2.1(a) or (b), subject to the approval of the
Company, which approval will not be unreasonably withheld, conditioned or
delayed. If any Preferred Holder who has requested inclusion of its Registrable
Shares in such registration as provided above disapproves of the terms of the
underwriting, such Preferred Holder may elect, by written notice to the Company,
to withdraw its Registrable Shares from such Registration Statement and
underwriting. If the Company desires that any officers or directors of the
Company holding securities of the Company be included in any registration for an
underwritten offering requested pursuant to Section 2.1 or if Other Holders
request such inclusion, the Company may include the securities of such officers,
directors and Other Holders in such registration and underwriting on the terms
set forth herein applicable to the Preferred Holders. If the managing
underwriter advises the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the shares held by
officers or directors of the Company and by Other Holders (other than
Registrable Shares) shall be excluded from such Registration Statement and
underwriting to the extent deemed advisable by the managing underwriter, and if
a further reduction of the number of shares is required, the number of shares
that may be included in such Registration Statement and underwriting shall be
allocated among all Preferred Holders requesting registration in proportion, as
nearly as practicable, to the respective number of Registrable Shares held by
them on the date of the request for registration made by the Initiating Holders
pursuant to Section 2.1(a) or (b), as the case may be, and initially requested
to be included therein. If any such Stockholder would thus be entitled to
include more shares than such Stockholder requested to be registered, the excess
shall be allocated among other participating Stockholders pro rata in the manner
described in the preceding sentence. If the managing underwriter has not limited
the number of Registrable Shares or other securities to be underwritten, the
Company may include securities for its own account in such registration if the
managing underwriter so agrees and if the number of Registrable Shares and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.

               (e) The Company shall not be required to effect more than three
registrations pursuant to Section 2.1(a) or more than two registrations pursuant
to Section 2.1(b) in any 12 month period. In addition, the Company shall not be
required to effect any registration within six months after the effective date
of the Registration Statement relating to the Initial Public Offering. For
purposes of this Section 2.1(e), a Registration Statement shall not be counted
until such time as such Registration Statement has been declared effective by
the Commission and, in the case of a non-underwritten offering, the shares
requested thereunder

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<PAGE>

have been sold pursuant to such Registration Statement (unless the Initiating
Holders withdraw their request for such registration (other than as a result of
information concerning the business or financial condition of the Company which
becomes known to the Preferred Holders after the date on which such registration
was requested) and elect not to pay the Registration Expenses therefor pursuant
to Section 2.4). For purposes of this Section 2.1(e), a Registration Statement
shall not be counted if, as a result of an exercise of the underwriter's
cut-back provisions, less than 67% of the total number of Registrable Shares
that Preferred Holders have requested to be included in such Registration
Statement are so included.

               (f) If at the time of any request to register Registrable Shares
by Initiating Holders pursuant to this Section 2.1, the Company is engaged or
has plans to engage in a registered public offering or is engaged in any other
activity which, in the good faith determination of the Company's Board of
Directors as evidenced by a resolution of the Company's Board of Directors,
would be materially adversely affected by the requested registration, then the
Company may at its option direct that such request be delayed for a period not
in excess of 75 days from the date of such request, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.

          2.2 Incidental Registration.

               (a) Whenever the Company proposes to file a Registration
Statement covering shares of Common Stock (other than a Registration Statement
filed pursuant to Section 2.1 and a Registration Statement covering shares to be
sold solely for the account of Other Holders, which shares were acquired
pursuant to either (i) an acquisition of a company of which they were formerly
stockholders, (ii) a "private placement" under the Securities Act or (iii) Rule
144A under the Securities Act) at any time and from time to time, it will, prior
to such filing, give written notice to all Preferred Holders and Managers of its
intention to do so. Upon the written request of Preferred Holder(s) or
Manager(s) given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Shares), the Company shall use its best efforts to cause all Registrable Shares
which the Company has been requested by such Preferred Holder(s) or Manager(s)
to register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Preferred Holder(s) or
Manager(s); provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2.2 without
obligation to any Preferred Holder or Manager.

               (b) If the registration for which the Company gives notice
pursuant to Section 2.2(a) is a registered public offering involving an
underwriting, the Company shall so advise the Preferred Holders and Managers as
a part of the written notice given pursuant to Section 2.2(a). In such event,
(i) the right of any Preferred Holder or Manager to include its Registrable
Shares in such registration pursuant to this Section 2.2 shall be conditioned
upon such Preferred Holder's or Manager's participation in such underwriting on
the terms set forth herein and (ii) all Preferred Holders and Managers including
Registrable Shares in such registration shall enter into an underwriting
agreement upon customary terms with the underwriter or underwriters selected for
the underwriting by the Company. If any Preferred Holder or Manager who has
requested inclusion of its Registrable Shares in such registration as

                                      -7-

<PAGE>

provided above disapproves of the terms of the underwriting, such person may
elect, by written notice to the Company, to withdraw its shares from such
Registration Statement and underwriting. If the managing underwriter advises the
Company in writing that marketing factors require a limitation on the number of
shares to be underwritten, the shares held by holders of securities of the
Company other than Preferred Holders, Managers and Other Holders shall be
excluded from such Registration Statement and underwriting to the extent deemed
advisable by the managing underwriter, and, if a further reduction of the number
of shares is required, the number of shares that may be included in such
Registration Statement and underwriting shall be allocated first among all
participating Preferred Holders, then among all participating Managers, and then
among Other Holders requesting registration in proportion, as nearly as
practicable, to the respective number of shares of Common Stock (on an
as-converted basis) held by them on the date the Company gives the notice
specified in Section 2.2(a) and requested for inclusion therein. If any
Preferred Holder, Manager or Other Holder would thus be entitled to include more
shares than such holder requested to be registered, the excess shall be
allocated among other requesting Preferred Holders, Managers and Other Holders
pro rata in the manner described in the preceding sentence.

          2.3 Registration Procedures.

               (a) If and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect the registration of any
Registrable Shares under the Securities Act, the Company shall:

                    (i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become effective as soon as possible;

                    (ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to comply
with the provisions of the Securities Act (including the anti-fraud provisions
thereof) and to keep the Registration Statement effective for one hundred twenty
(120) days from the effective date or such lesser period until all such
Registrable Shares are sold;

                    (iii) as expeditiously as possible furnish to each Selling
Stockholder such reasonable numbers of copies of the Prospectus, including any
preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by such Selling Stockholder;

                    (iv) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the Selling Stockholders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the Selling Stockholders; provided, however, that the Company shall not be
required in

                                      -8-

<PAGE>

connection with this paragraph (iv) to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction;

                    (v) as expeditiously as possible, cause all such Registrable
Shares to be listed on each securities exchange or automated quotation system on
which similar securities issued by the Company are then listed;

                    (vi) promptly provide a transfer agent and registrar for all
such Registrable Shares not later than the effective date of such Registration
Statement;

                    (vii) promptly make available for inspection by the Selling
Stockholders, any managing underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant or other agent
retained by any such underwriter or selected by the Selling Stockholders, all
financial and other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;

                    (viii) notify each Selling Stockholder, promptly after it
shall receive notice thereof, of the time when such Registration Statement has
become effective or a supplement to any Prospectus forming a part of such
Registration Statement has been filed; and

                    (ix) as expeditiously as possible following the
effectiveness of such Registration Statement, notify each seller of such
Registrable Shares of any request by the Commission for the amending or
supplementing of such Registration Statement or Prospectus.

               (b) If the Company has delivered a Prospectus to the Selling
Stockholders and after having done so the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.

               (c) In the event that, in the judgment of the Company, it is
advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be materially detrimental to the Company as evidenced by a resolution of the
Company's Board of Directors, the Company shall notify all Selling Stockholders
to such effect, and, upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such

                                      -9-

<PAGE>

Prospectus. Notwithstanding anything to the contrary herein, the Company shall
not exercise its rights under this Section 2.3(c) to suspend sales of
Registrable Shares for a period in excess of 30 days consecutively or 60 days in
any 365-day period.

          2.4 Allocation of Expenses. The Company will pay all Registration
Expenses for all registrations under this Agreement; provided, however, that if
a registration under Section 2.1 is withdrawn at the request of the Initiating
Holders (other than as a result of information concerning the business or
financial condition of the Company which becomes known to the Selling
Stockholders after the date on which such registration was requested) and if the
Initiating Holders elect not to have such registration counted as a registration
requested under Section 2.1, the Selling Stockholders shall pay the Registration
Expenses of such registration pro rata in accordance with the number of their
Registrable Shares included in such registration.

          2.5 Indemnification and Contribution.

               (a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Stockholder, each underwriter of such
Registrable Shares, and each other person, if any, who controls such Selling
Stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Selling Stockholder, underwriter or controlling person
may become subject under the Securities Act, the Exchange Act, state securities
or Blue Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, (ii) the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities law in connection with the Registration Statement or the
offering contemplated thereby; and the Company will reimburse such Selling
Stockholder, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such Selling Stockholder, underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
Selling Stockholder, underwriter or controlling person specifically for
inclusion therein.

               (b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each Selling
Stockholder, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses,

                                      -10-

<PAGE>

claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or (ii) any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if and to the extent (and only to the extent) that the statement or
omission was made in reliance upon and in conformity with information relating
to such Selling Stockholder furnished in writing to the Company by such Selling
Stockholder specifically for inclusion in such Registration Statement,
prospectus, amendment or supplement; provided, however, that the obligations of
a Selling Stockholder under this Section 2.5 shall be limited to an amount equal
to the net proceeds actually received by such Selling Stockholder of Registrable
Shares sold in connection with such registration.

               (c) Each Indemnified Party shall give notice to the Indemnifying
Party promptly after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;
provided, that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld, conditioned or delayed); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 2.5 except to the extent (and only to the extent) that the
Indemnifying Party is materially prejudiced by such failure. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if the Indemnified
Party reasonably concludes that representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding; provided further that in
no event shall the Indemnifying Party be required to pay the expenses of more
than one law firm per jurisdiction as counsel for the Indemnified Party. The
Indemnifying Party also shall be responsible for the expenses of such defense if
the Indemnifying Party does not elect to assume such defense. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, which does not provide for
only money damages or which includes any statement as to the fault or
culpability of any Indemnified Person. No Indemnified Party shall consent to
entry of any judgment or settle such claim or litigation without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed.

               (d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to

                                      -11-

<PAGE>

any losses, claims, damages and liabilities referred to herein, then the
Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities to which such party may be
subject in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and such Selling Stockholder on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and such Selling Stockholder
shall be determined by reference to, whether the untrue or alleged untrue
statement of material fact related to information supplied by the Company or
such Selling Stockholder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Stockholders agree that it would not be just and
equitable if contribution pursuant to this Section 2.5(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 2.5(d), (i) in no case shall any one Selling
Stockholder be liable or responsible under this Section 2.5 for any amount in
excess of the net proceeds actually received by such Selling Stockholder from
such offering of Registrable Shares and (ii) the Company shall be liable and
responsible for any amount in excess of such proceeds; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section
2.5(d), notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be
sought shall not relieve such party from any other obligation it or they may
have thereunder or otherwise under this Section 2.5(d). No party shall be liable
for contribution with respect to any action, suit, proceeding or claim settled
without its prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.

               (e) The rights and obligations of the Company and the Selling
Stockholders under this Section 2.5 shall survive the termination of this
Agreement.

          2.6 Other Matters with Respect to Underwritten Offerings. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2.1, the Company agrees to (a) enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its best efforts to cause
its legal counsel to render customary opinions to the underwriters with respect
to the Registration Statement; and (c) use its best efforts to cause its
independent public accounting firm to issue customary "cold comfort letters" to
the underwriters with respect to the Registration Statement.

          2.7 Information by Holder. Each holder of Registrable Shares included
in any registration shall furnish to the Company such information regarding such
holder and the distribution proposed by such holder as the Company may
reasonably request in writing and as

                                      -12-

<PAGE>

shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.

          2.8 "Lock-Up" Agreement; Confidentiality of Notices. Each Preferred
Holder, Manager and Common Holder, if requested by the Company and the managing
underwriter of the Initial Public Offering, shall not sell or otherwise transfer
or dispose of any Registrable Shares or other securities of the Company
(excluding securities acquired in the Initial Public Offering or in the public
market after such offering) held by such holder for a period of 180 days
following the effective date of the Registration Statement for the Initial
Public Offering; provided, that all Stockholders then holding at least 2% of the
outstanding Common Stock (on an as-converted basis) and all officers and
directors of the Company enter into similar agreements.

     The Company may impose stop-transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of such 180-day period.

     Any holder receiving any written notice from the Company regarding the
Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.

          2.9 Limitations on Subsequent Registration Rights. The Company shall
not, prior to the Initial Public Offering, without the prior written consent of
Preferred Holders holding at least sixty percent (60%) of the Registrable Shares
then held by all Preferred Holders, enter into any agreement (other than this
Agreement) with any holder or prospective holder of any securities of the
Company which grants such holder or prospective holder rights to include
securities of the Company in any Registration Statement, unless (a) such rights
to include securities in a registration initiated by the Company or by Preferred
Holders are not more favorable than the rights granted to Other Holders under
Sections 2.1 and 2.2, and (b) no rights are granted to initiate a registration,
other than registration pursuant to a registration statement on Form S-3 (or its
successor) in which Preferred Holders are entitled to include Registrable Shares
on a pro rata basis with such holders based on the number of shares of Common
Stock (on an as-converted basis) owned by Preferred Holders and such holders.

          2.10 Rule 144 Requirements. After the earliest of (i) the closing of
the sale of securities of the Company pursuant to a Registration Statement, (ii)
the registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:

               (a) make and keep current public information about the Company
available, as those terms are understood and defined in Rule 144;

               (b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and

                                      -13-

<PAGE>

               (c) furnish to any holder of Registrable Shares upon request (i)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it to
sell any such securities without registration.

     3. [Reserved]

     4. CONSENTS AND COVENANTS.

          4.1 Matters Requiring Preferred Majority Consent. The Company shall
not, without prior written consent of at least a Preferred Majority:

               (a) amend, alter or repeal any provision of the Certificate of
Incorporation or Bylaws of the Company or the comparable charter documents of
any direct or indirect subsidiary;

               (b) purchase or redeem (or permit any direct or indirect
subsidiary to purchase or redeem) or pay or declare any dividend or make any
distribution on, any shares of capital stock of the Company or any direct or
indirect subsidiary thereof other than (A) redemptions of or dividends or
distributions on the Preferred Stock as expressly authorized herein, (B)
dividends or other distributions payable on the Common Stock solely in the form
of additional shares of Common Stock, (C) dividends or other distributions made
by a direct or indirect subsidiary to the Company or another direct or indirect
subsidiary of the Company, or (D) repurchases of stock from former employees,
officers, directors, consultants or other persons who performed services for the
Company or any direct or indirect subsidiary in connection with the cessation of
such employment or service at the lower of the original purchase price or the
then-current fair market value thereof;

               (c) liquidate, dissolve or wind-up the business and affairs of
the Company or any direct or indirect subsidiary, effect any Deemed Liquidation
Event, or consent to any of the foregoing;

               (d) create, or authorize the creation of, any additional class or
series of capital stock, or increase the authorized number of shares of any
series of Preferred Stock or increase the authorized number of shares of any
additional class or series of shares of capital stock;

               (e) enter into, or permit any direct or indirect subsidiary to
enter into, any transaction, arrangement or commitment for the purposes of
creating a partnership, joint venture or consortium or syndicate arrangement
that is not in the ordinary course of business;

               (f) enter into, or permit any direct or indirect subsidiary to
enter into, any transaction outside the ordinary course of business with a
member of the Board of Directors or a member of the board of directors of any
direct or indirect subsidiary of the Company or any of their respective
affiliates;

                                      -14-

<PAGE>

               (g) effect a material change in the nature of the business of the
Company or any direct or indirect subsidiary of the Company;

               (h) issue, or permit any direct or indirect subsidiary to issue,
any shares of capital stock, any rights, options or warrants to purchase shares
of capital stock, or securities of any type whatsoever that are or may become
convertible into shares of capital stock, other than pursuant to the grant of
options approved by, or pursuant to plans approved by, the Board of Directors
(including at least a majority of the Preferred Directors);

               (i) expand, develop or evolve the Company's business in any
material way otherwise than through the Company or a wholly owned subsidiary of
the Company; provided that Group companies may enter into a licensing,
partnership or joint venture arrangement at arm's length and in the ordinary
course of business in relation to the manufacture, research, development,
marketing or sale of the Group's products without such prior written approval;

               (j) enter into any material transaction outside the ordinary
course of the Company's business as carried on by it from time to time;

               (k) make any loan to or payment on behalf of any person or entity
other than a subsidiary (other than in respect of approved employee expenses and
ordinary trade credit);

               (l) assign, transfer, sell or otherwise dispose of or license of
all or any material part of the business, undertaking, property or other assets,
including (without limitation) intellectual property and know how of the Group
other than in the ordinary course of the Group's business;

               (m) appoint or remove any member of the Remuneration Committee or
amend the Remuneration Committee charter; or

               (n) commence any a any clinical trial in relation to the
Company's HSV II vaccine candidate or any second local control 24 patient
OncoVEX study;

          4.2 Matters Requiring Preferred Director Consent. The Company shall
not, without prior written consent of the Board, including at least a majority
of the Preferred Directors:

               (a) dispose of (including by lease to a third party) or acquire
in any fiscal year assets representing more than 5% of the consolidated net
assets of the Company on a consolidated basis, as shown by the latest financial
statements, and for the purpose of each calculation all disposals or
acquisitions in any one financial year shall be aggregated;

               (b) change the fiscal year end of the Company or any subsidiary;

               (c) incur on behalf of the Company or any subsidiary any
borrowing or any other indebtedness or liability in the nature of borrowing
other than normal trade credit in the ordinary course of business;

                                      -15-
<PAGE>

               (d) incur on behalf of the Company or any subsidiary borrowings
or capital expenditure that, in each case, exceeds by more than 5% the amount
provided in the Budget;

               (e) create any mortgage, charge or other encumbrance over any
asset of the Company or any subsidiary or give any guarantee by the Company or
any subsidiary;

               (f) enter into any contract (other than as provided in the
Budget) for the provisions of goods or services valued at more than $100,000 or
permit any subsidiary to enter into such a contract;

               (g) incorporate a new direct or indirect subsidiary or acquire or
any subsidiary of any shares in the capital of any legal entity;

               (h) instigate or settle of any material litigation or similar
proceeding or permit any subsidiary to take such action;

               (i) enter into, or permit any subsidiary to enter into, any
transaction, arrangement or commitment for the purposes of creating a
partnership, joint venture or consortium or syndicate arrangement;

               (j) other than as approved by the Remuneration Committee, enter
into, or permit any subsidiary to enter into, any contract with or the make any
change to the terms of employment of any employee earning more than L50,000 per
annum or the terms of employment of any officer (including, without limitation,
agreeing any terms and conditions of any bonus arrangements in respect thereof);

               (k) appoint or remove any chairman of the Company;

               (l) amend any stock incentive plan;

               (m) update or amend the Budget; or

               (n) appoint professional advisers in connection with a public
offering or stock exchange listing or any private placement of equity or debt
securities.

          4.3 Board Committees.

               (a) The Board shall form a remuneration committee (the
"REMUNERATION COMMITTEE"), including the Chairman of the Board and no more than
three (3) Preferred Directors, and such committee shall adopt a charter
governing its operations.

               (b) The Board shall form an audit committee, including no more
than three (3) Preferred Directors, and such committee shall adopt a charter
governing its operations.

          4.4 Directors; Observers. The proceedings of the Board shall be
governed by the Bylaws of the Company and as provided below.

                                      -16-

<PAGE>

               (a) Meetings. A meeting of the Board shall be convened at least
six (6) times in each calendar year and a strategic advisory board meeting and a
science review meeting shall each be convened at least annually, unless
otherwise agreed by a Preferred Majority.

               (b) Board Observers. The Company shall permit the persons
identified below to attend all meetings of its Board in a nonvoting observer
capacity and, in this respect, shall give each such representative copies of all
notices, minutes, consents and other materials that it provides to its
directors; provided, however, that such representative shall agree to hold in
confidence and trust and to act in a fiduciary manner with respect to all
information so provided; and, provided further, that the Company reserves the
right to withhold any information and to exclude such representative from any
meeting or portion thereof if access to such information or attendance at such
meeting could adversely affect the attorney-client privilege between the Company
and its counsel or would result in disclosure of trade secrets to such
representative or if such Preferred Holder or its representative is or is
affiliated with a direct competitor of the Company. Such persons shall be:

                    (i) one observer designated by West KB - Westdeutsche
KapitalBeteiligungsgesellschaft mbH, for so long as it (together with its
affiliated entities) holds at least 5% of the shares of Series A Stock
outstanding from time to time;

                    (ii) one observer designated by V-Sciences Investments Pte
Ltd for so long as it (together with its affiliated entities) holds at least 5%
of the shares of Series A Stock outstanding from time to time;

                    (iii) one observer designated by Avalon Ventures VI LP for
so long as it (together with its affiliated entities) holds at least 5% of the
shares of Series B Stock outstanding from time to time;

                    (iv) one observer designated by Innoven Partenaires SA, as
management company of Innoven 2001 FCPI No 5, Innoven 2003 FCPI No 7, FCPI Poste
Innovation, FCPI Poste Innovation 5, FCPI Poste Innovation 6, Innoven 2002 FCPI
No 6, FCPI Poste Innovation 2 and FCPI Poste Innovation 3, for so long as they
(together with their affiliated entities) together hold at least 5% of the
shares of Series D Stock outstanding from time to time; and

                    (v) at any time that it elects not to designate a person to
service as a Director, one observer designated by Scottish Equity Partners
Limited for so long as it (together with its affiliated entities) holds at least
5% of the shares of Series B Stock outstanding from time to time.

               (c) The Company shall pay an annual fee of $22,508 to (i) each
Preferred Director (or to such person or entity as any such Preferred Director
or the Stockholder with the contractual right to appoint any such Preferred
Directors may direct); and (ii) in the event that Scottish Equity Partners
Limited elects to appoint a Board observer in lieu of designating a Preferred
Director, to such observer.

                                      -17-

<PAGE>

               (d) The Company shall promptly reimburse in full each Preferred
Director for all of his or her reasonable out-of-pocket expenses incurred in
attending each meeting of the Board of Directors of the Company or any committee
thereof.

               (e) In the event that the Company or any of its successors or
assigns (i) consolidates with or merges into any other entity and shall not be
the continuing or surviving corporation in such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any entity, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Company assume
the obligations of the Company with respect to indemnification of members of the
Board of Directors as contained in the Company's Certificate of Incorporation.

          4.5 Information.

               (a) The Company shall deliver to each Preferred Holder:

                    (i) within 120 days after the end of each fiscal year of the
Company, an audited balance sheet of the Company as at the end of such year and
audited statements of income and of cash flows of the Company for such year,
certified by certified public accountants of established national reputation
selected by the Company, and prepared in accordance with generally accepted
accounting principles consistently applied; and

                    (ii) within 45 days after the end of each fiscal quarter of
the Company (other than the fourth quarter), an unaudited balance sheet of the
Company as at the end of such quarter, and unaudited statements of income and of
cash flows of the Company for such fiscal quarter and for the current fiscal
year to the end of such fiscal quarter.

               (b) The Company shall deliver to each Preferred Holder:

                    (i) within 15 days after the end of each month (other than
the last month of any fiscal quarter), an unaudited balance sheet of the Company
as at the end of such month and unaudited statements of income and of cash flows
of the Company for such month and for the current fiscal year to the end of such
month, setting forth in comparative form the Company's projected financial
statements for the corresponding periods for the current fiscal year;

                    (ii) as soon as available, but in any event not less than
four (4) weeks prior to the commencement of each new fiscal year, a budget and
projected financial statements for such fiscal year (the "BUDGET"); such budget
to include a profit and loss budget, forecast balance sheet, capital expenditure
budget and cashflow forecast or projection (broken down in each case into
periods of not more than one calendar month and otherwise in such form and
detail as the Preferred Directors may reasonably require) for the Company and
for each Group Company for the such fiscal year;

                    (iii) such other notices, information and data with respect
to the Company as the Company delivers to the holders of its capital stock at
the same time it delivers such items to such holders; and

                                      -18-

<PAGE>

                    (iv) with reasonable promptness, such other information and
data as such Preferred Holder may from time to time reasonably request.

               (c) The foregoing financial statements shall be prepared on a
consolidated basis if the Company then has any subsidiaries. The financial
statements delivered pursuant to clause (ii) of paragraph (a) and clause (i) of
paragraph (b) shall be accompanied by a certificate of the chief financial
officer of the Company stating that such statements have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as noted) and fairly present the financial condition and results of
operations of the Company at the date thereof and for the periods covered
thereby.

               (d) The Company agrees that no material variation during any
fiscal year from the amount of any items specified in an approved Budget,
forecast or projection may be made without the prior written consent of the
Preferred Directors.

               (e) The Company shall permit each Preferred Holder, or any
authorized representative thereof, to visit and inspect the properties of the
Company, including its corporate and financial records, and to discuss its
business and finances with officers of the Company, during normal business hours
following reasonable notice and as often as may be reasonably requested;
provided, however, that the Company shall not be obligated pursuant to this
Section 4.5 to provide access to any information which it reasonably considers
to be a trade secret.

               (f) If the Company shall, for whatever reason, fail in any
material respect to perform its obligations under paragraphs (a) or (b) above,
the holders of at least a Preferred Majority shall be entitled (without
prejudice to any other remedies or rights they may have in respect of such
non-performance) to appoint an independent accountant or accountants of their
own choosing to investigate the affairs of the Company and/or of any Group
company with a view to obtaining the information to be delivered pursuant to
paragraphs (a) or (b) above, and in the event that such accountant or
accountants shall be so appointed:

                    (i) the Company and/or the relevant Group company shall
afford to such accountant or accountants such assistance and co-operation
(including, without limitation, full and unrestricted access to the accounting
books and records of the Company or such Group company) as he or they may from
time to time request, and shall cause its auditors to do the same;

                    (ii) the reasonable costs of and incidental to such
appointment shall be borne entirely by the Company; and

                    (iii) the Preferred Holders appointing such accountant or
accountants shall make any information obtained by such accountant or
accountants available to each of the Preferred Holders.

               (g) No press release or other public statement concerning the
Preferred Holders' investment in the Company shall be made by or on behalf of
any party unless it shall have been jointly agreed by a Preferred Majority and
the Company.

                                      -19-

<PAGE>

          4.6 Managers' Restrictive Covenants.

               (a) As further consideration for their acquisition of Preferred
Stock in the Share Exchange, each of the Managers hereby covenants and
undertakes to each Preferred Holder and to the Company that he shall not,
without the previous written consent of the Board (including the Preferred
Directors) during the course of his employment with the Company or any direct or
indirect subsidiary thereof:

                    (i) directly or indirectly engage or be interested in any
business other than that of the Group;

                    (ii) hold any directorship of any company; provided that he
may hold or beneficially own solely for investment purposes less than five
percent of the securities of any public company; and further provided that Dr.
Robert Coffin may hold academic posts for 20% of his working time; and

                    (iii) be employed or engaged by, act for or collaborate
with, in any manner whatsoever (whether as a consultant, advisor, director or
other employee or otherwise) any company, firm, business, academic institution
or other entity active in the development and application of HSV based vectors
for therapeutic use, including the delivery of potentially therapeutic genes but
excluding therapeutic, prophylactic and diagnostic uses of therapeutic genes
other than in conjunction with HSV based vectors.

               (b) Each of the Managers further covenants and undertakes that he
shall not directly or indirectly:

                    (i) at any time after the termination of his employment
under his agreement of employment or services with the Company or any Group
company (each, a "SERVICE CONTRACT") directly or indirectly disclose or make use
of any Confidential Information (as defined in the relevant Service Contract);

                    (ii) at any time after the termination of his engagement,
represent himself or permit himself to be held out as having any connection with
or interest in the Company or any direct or indirect subsidiary thereof;

                    (iii) for the period of 12 months after the termination of
his employment under his Service Contract be engaged or concerned or interested
in any commercial activity or business carried on within the Restricted Area (as
defined in the relevant Service Contract) in competition with any Restricted
Business (as defined in the relevant Service Contract);

                    (iv) for the period of 12 months after the termination of
such employment, induce or attempt to persuade any Employee (as defined in the
relevant Service Contract) to leave employment or engagement by the Company or
any Group company or offer employment or engagement to any such Employee;

                    (v) at any time, before or for the period of 12 months after
the termination of his said employment, induce or seek to induce, by any means
involving the

                                      -20-

<PAGE>

disclosure of or use of Confidential Information or otherwise, any customer of
the Company to cease dealing with the Company or to restrict or vary the terms
upon which it deals with the Company;

                    (vi) for the period of 12 months after the termination of
his employment, deal with, seek employment or engagement with, be employed or
engaged by or engage in business with any customer of the Company or any Group
company or work on any account or business of any customer of the Company or any
Group company for the purpose of providing that customer with services which are
the same as or similar to any services which he was involved in providing to
that customer at any time in the 12 months preceding the termination of his
employment;

                    (vii) for the period of 12 months after the termination of
his said employment, solicit business from any customer of the Company or any
Group company for the purpose of providing to that customer services which are
the same as or similar to those which he has been involved in providing to that
customer at any time in the 12 months preceding the termination of his said
employment (or where he is required not to perform those duties pursuant to
clause 11.5 of the relevant Service Contract if either party gives notice to
terminate at any time in the 12 months preceding the date on which the period of
notice referred to therein expires);

                    (viii) interfere or seek to interfere with contractual or
other trade relations between the Company or any such Group company and any of
its or their suppliers; or

                    (ix) communicate to any person, concern, undertaking, firm
or body corporate anything which is intended to or which will or may damage the
reputation or good standing of the Company or any such Group Company.

               (c) For the avoidance of doubt nothing in this Section 4 shall
restrict Dr. Robert Coffin from taking any employment the sole purpose of which
is academic research, meaning research otherwise than for commercial gain for
Dr. Coffin or any other person.

     5. TRANSFER PROVISIONS; FIRST OFFER, TAG ALONG AND DRAG ALONG RIGHTS.

          5.1 Restrictions on Transfer. Any sale, transfer or other disposition,
whether voluntarily or by operation of law ("TRANSFER") of any Shares, other
than according to the terms of this Agreement, shall be void and transfer no
right, title, or interest in or to any of such Shares to the purported
transferee. No Transfer of any Shares (including any Permitted Transfer, as
defined below) shall be permitted to any transferee who is not, or does not
become, a party to this Agreement.

          5.2 Permitted Transfers. The following transactions shall be exempt
from the provisions of Section 5.3 (First Offer) and Section 5.5 (Tag Along)
below (each, a "PERMITTED TRANSFER"):

               (a) a Stockholder's transfer of any or all of his Shares either
during his lifetime or on death by will or intestacy to his immediate family or
to a trust the beneficiaries of which are exclusively one or more of the
Stockholder and a member or members of the

                                      -21-

<PAGE>

Stockholder's immediate family. "IMMEDIATE FAMILY" shall mean such transferring
Stockholder's spouse, lineal descendant, father, mother, brother sister or
anyone sharing such Stockholders' household;

               (b) if the Stockholder is a legal entity, a transfer to any
holding or subsidiary company of that Stockholder or to any other subsidiary of
any such Stockholder's holding company (all such entities together, the
"STOCKHOLDER'S GROUP"), provided that if the transferee ceases to be a member of
the Stockholder's Group, it shall, immediately prior to such event, transfer the
Shares back to the original transferor or to another member of the Stockholder's
Group at that time and also provided that no transfer shall take place under
this Section 5.2 unless the business of the proposed transferee consists wholly
or mainly of holding securities for investment purposes;

               (c) a transfer to a person who is the beneficial owner of such
Share or (in the case of the legal title only) to a different or additional
nominee or trustee on behalf of such beneficial owner, provided that such person
has not become the beneficial owner thereof other than in accordance with the
provisions hereof;

               (d) if the transferor is either a person whose principal business
is to make, manage or advise upon investments (an "INSTITUTIONAL PREFERRED
HOLDER") (or a nominee thereof), or a fund, partnership or other entity managed
or advised by an Institutional Preferred Holder, to any affiliated or parallel
fund or partnership (or nominee thereof) managed or advised by such
Institutional Preferred Holder, to any participant or partner or former partner
in such fund, partnership or other entity (or nominee thereof), to such
Institutional Preferred Holder itself or to any successor manager of such fund
or partnership or to any subsidiary or holding company from time to time of any
limited or general partner of such fund or partnership;

               (e) a Stockholder's transfer of Shares pursuant to the
"drag-along rights" and "tag-along rights" set forth in Sections 5.4 and 5.5 of
this Agreement, respectively;

               (f) any transfer pursuant to an effective registration statement
filed by the Company with the Securities and Exchange Commission; or

               (g) any transfer approved by a Preferred Majority.

provided, however, that in any such case, the transferee or other recipient
shall receive and hold such stock subject to the provisions of this Section 5.2
and there shall be no further transfer of such stock except in accordance with
this Section 5.2.

          5.3 First Offer. Except for Permitted Transfers and subject to the
provisions of Section 5.5 (Drag Along), no Stockholder shall sell, assign,
pledge or otherwise transfer (collectively, "TRANSFER") any Shares or any right
or interest therein, whether voluntarily or by operation of law, or by gift or
otherwise, except by a transfer which meets the following requirements:

               (a) If any Stockholder (the "TRANSFERRING STOCKHOLDER") proposes
to transfer any Shares (the "OFFERED SHARES"), then the Transferring Stockholder
shall first give written notice of the proposed transfer (the "TRANSFER NOTICE")
to the Company, which shall

                                      -22-

<PAGE>

promptly give written notice thereof (the "STOCKHOLDER NOTICE") to all holders
of the capital stock of the Company other than the Transferring Stockholder
("ELIGIBLE STOCKHOLDERS"). The Transfer Notice shall name the proposed
transferee (the "OFFEROR") and state the number of Offered Shares, the price per
share and all other material terms and conditions of the transfer, and may state
that if not all Offered Shares are sold, none shall be sold.

               (b) Eligible Stockholders may give written notice to the
Secretary of the Company of their desire to purchase the Offered Shares, on the
terms and conditions set forth in the Transfer Notice, and/or to sell shares of
capital stock held by any Eligible Stockholder to the Offeror pursuant to
Section 5.5 (Tag Along). Pursuant to this Section 5.3:

                    (i) first, each holder of shares of Series B Stock, Series C
Stock or Series D Stock (excluding the Transferring Stockholder, if applicable),
shall have an option, exercisable for a period of 21 days from the date of
delivery of the Stockholder Notice, to purchase, on a pro rata basis according
to the number of shares of Series B Stock, Series C Stock or Series D Stock
owned by such holder (on an as-converted basis) in relation to the number of
shares of Series B Stock, Series C Stock and Series D Stock outstanding (on an
as-converted basis) (excluding the Transferring Stockholder, if applicable), the
Offered Shares for the consideration per share and on the terms and conditions
set forth in the Transfer Notice; and

                    (ii) second, if the holders of Series B Stock, Series C
Stock and Series D Stock do not elect to purchase all of the Offered Shares, the
other Eligible Stockholders shall have an option, exercisable for a period of 21
days from the date of delivery of the Stockholder Notice, to purchase, on a pro
rata basis according to the number of shares of Series A Stock (on an
as-converted basis), Series M Stock (on an as-converted basis) and Common Stock
owned by such Eligible Stockholder in relation to the number of Shares owned by
all such other Eligible Stockholders, the balance of such Offered Shares for the
consideration per share and on the terms and conditions set forth in the
Transfer Notice.

                    (c) In the event options to purchase have been exercised by
the Eligible Stockholders with respect to some but not all of the Offered
Shares, those Eligible Stockholders who have exercised their options within the
21-day period specified in Subsection (c) above shall have an additional option,
for a period of five (5) days next succeeding the expiration of such 21-day
period, to purchase all or any part of the balance of such Offered Shares on the
terms and conditions set forth in the Transfer Notice, which option shall be
exercised by the delivery of written notice to the Secretary of the Company. In
the event there are two or more such Eligible Stockholders that choose to
exercise the last-mentioned option for a total number of Offered Shares in
excess of the number available, the Offered Shares available for each such
Eligible Stockholder's option shall be allocated to such Eligible Stockholder
pro rata based on the number of Shares owned (on an as-converted basis) by the
Eligible Stockholders so electing.

               (d) If Eligible Stockholders elect to acquire any of the Offered
Shares (or all of such Offered Shares, if the Transfer Notice so provides), the
Company shall so notify the Transferring Stockholder and settlement shall be
made at the principal office of the Company within 5 days after the Company
after the date of such notice. To the extent that the consideration proposed to
be paid by for the Offered Shares consists of property other than cash

                                      -23-

<PAGE>

or a promissory note, the consideration required to be paid by the Eligible
Stockholders exercising their options under this Section 5.3 may consist of cash
equal to the value of such property, as determined in good faith by agreement of
the Transferring Stockholder, the Company, and the Eligible Stockholders
acquiring such Offered Shares.

               (e) If the Eligible Stockholders do not elect to acquire all of
the Offered Shares, the Transferring Stockholder may, within the 60-day period
following the expiration of the option rights granted to the Eligible
Stockholders, transfer the Offered Shares to the proposed transferee, provided
that this sale shall not be on terms and conditions more favorable to the
Preferred Holder than those contained in the Transfer Notice and further
provided that no transfer may be made to any proposed transferee that is
determined in good faith by the Board (including at least a majority of the
Preferred Directors) to be a competitor of the Company. Notwithstanding any of
the above, all Offered Shares transferred pursuant to this Section 5.3 shall be
subject to the provisions of this Section 5.3 and of Section 5.5 (Tag Along) in
the same manner and to the same extent as before the transfer.

          5.4 Compulsory Transfer by Leavers

               (a) A holder of Common Stock shall be deemed to have given a
Transfer Notice to the Company and to have offered to sell all of the shares of
Common Stock of the Company then held by such stockholder if (i) such
stockholder is an employee or director of the Company of a direct or indirect
subsidiary thereof (or acquired its Shares pursuant to a right or interest
acquired by an employee of director of the Company or a direct or indirect
subsidiary thereof) and (ii) such employee or director ceases to provide
services to the Company or its subsidiaries for any reason or no reason, with or
without cause. If any offer is deemed to have been made under this Subsection
(a), the Company may elect to purchase all or any portion of such Offered
Shares, and the price to be paid by the Company for the Offered Shares so deemed
to be offered shall be: (i) for any such employee or director who ceases to
provide services to the Company or a direct or indirect Subsidiary for any
reason other than a dismissal for cause, the fair market value of the Offered
Shares as determined by the Board of Directors in good faith; and (ii) for any
such employee or director who ceases to provide services to the Company or a
direct or indirect Subsidiary due to a dismissal for cause, the cash
consideration paid by such employee or director to the Company for such Offered
Shares or, if less, the amount specified in clause (i) of this sentence. If the
parties do not agree with the price set by the Board of Directors, then the
price shall be the fair market value of such shares as determined by an
appraiser mutually satisfactory to the Company and the Transferring Stockholder
deemed to be making such offer or his successors-in-interest, or, if they cannot
agree on a single appraiser, by an appraiser appointed by the Company, a second
appraiser appointed by such Transferring Stockholder or his
successors-in-interest and a third appraiser appointed by the other two
appraisers. Each party shall bear the cost of his or its own appraiser, and the
cost of the third appraiser shall be shared equally by the parties. If the
shares are not purchased by the Company but are transferred to other parties,
the transferee shall hold such stock subject to the provisions of this Section
5.4 and there shall be no further transfer of such stock except in accordance
with Section 5.3.

               (b) The provisions set forth in the preceding Subsection shall be
waived in respect of shares of Common Stock held on the date hereof by Dr.
Robert Coffin, John

                                      -24-

<PAGE>

Gordon, Professor David Latchman and James Noble. The provisions set forth in
the preceding Subsection may be waived in any other instance by the Board
(including at least a majority of the Preferred Directors).

          5.5 Tag Along.

               (a) If the Company and Eligible Stockholders do not exercise
their options to purchase all of the Offered Shares within the periods described
in this Agreement (the "OPTION PERIOD"), then all options of the Company and the
Eligible Stockholders to purchase the Offered Shares, whether exercised or not,
shall terminate. If the proposed transfer would result in the Offeror acquiring
more than fifty percent (50%) of the voting power of the then outstanding
capital stock of the Company (a "CONTROLLING INTEREST") (or if the Offeror
already holds a Controlling Interest, increasing such holding), then each
Eligible Stockholder that has, pursuant to Section 5.3 (First Offer), expressed
a desire to sell Shares in the transaction (a "PARTICIPATING ELIGIBLE
STOCKHOLDER"), shall be entitled to sell Shares pursuant to this Section 5.5.
The Company shall promptly, on expiration of the Option Period, notify the
Transferring Stockholder of the aggregate number of Shares the Participating
Eligible Stockholders wish to sell. The Transferring Stockholder shall use his
or her best efforts to interest the Offeror in purchasing, in addition to the
Offered Shares, the Shares the Participating Eligible Stockholders wish to sell.
If the Offeror does not wish to purchase all of the Shares made available by the
Transferring Stockholder and the Participating Eligible Stockholders, then each
Participating Eligible Stockholder and the Transferring Stockholder shall be
entitled to sell, at the price and on the terms and conditions set forth in the
Notice (provided that the price set forth in the Offer with respect to shares of
Common Stock shall be appropriately adjusted, if necessary, based on the
conversion ratio of any Preferred Stock to be sold), a portion of the Shares
being sold to the Offeror, in the same proportion as such Transferring
Stockholder or Participating Eligible Stockholder's ownership of Shares bears to
the aggregate number of Shares owned by the Transferring Stockholder and the
Participating Eligible Stockholders. The transaction contemplated by the Notice
shall be consummated not later than 60 days after the expiration of the Option
Period.

               (b) If the Participating Eligible Stockholders do not elect to
sell the full number of Shares which they are entitled to sell pursuant to this
Section 5.5, the Transferring Stockholder shall be entitled to sell to the
Offeror, according to the terms set forth in the Notice, that number of his or
her own Shares which equals the difference between the number of Shares desired
to be purchased by the Offeror and the number of Shares the Participating
Eligible Stockholders are entitled to sell pursuant to this Section 5.5. If the
Transferring Stockholder wishes to Transfer any such Shares at a price per Share
which differs from that set forth in the Notice, upon terms different from those
previously offered to the Company and the Eligible Stockholders, or more than 60
days after the expiration of the Option Period, then, as a condition precedent
to such transaction, such Shares must first be offered to the Company and the
Eligible Stockholders on the same terms and conditions as given the Offeror, and
in accordance with the procedures and time periods set forth above.

               (c) The proceeds of any sale made by the Transferring Stockholder
without compliance with the provisions of this Section 5.5 shall be deemed to be
held in

                                      -25-

<PAGE>

constructive trust in such amount as would have been due the Participating
Eligible Stockholders if the Transferring Stockholder had complied with this
Agreement.

          5.6 Drag Along.

               (a) If either:

                    (i) any person or entity offers to acquire all or
substantially all of the stock, assets or business of the Company, by merger,
sale of assets or otherwise, and stockholders holding shares representing 60% of
the voting power of all Shares then outstanding consent in writing to such
transaction (including by means of a proxy or stockholder consent voting in
favor of such transaction), or

                    (ii) any person or entity offers to acquire Shares
representing more than 50% of the voting power of all Shares then outstanding
(or, if such person or entity already owns Shares representing more than 50% of
the voting power of all Shares then outstanding, any additional Shares), and
such transaction is approved by the Board of Directors of the Company and a
Preferred Majority consent in writing to such transaction (including by means of
a proxy or stockholder consent voting in favor of such transaction),

then, in either case, each party to this Agreement shall be obligated to:

                    (iii) then each party to this Agreement shall be obligated
to:

                    (iv) vote all of his, her or its Shares in favor of such
transaction, to the extent any such vote is required for the consummation of
such transaction,

                    (v) if applicable, sell, transfer or exchange all of his,
her or its Shares in connection with such transaction on the same terms as those
consented to by such stockholders or Preferred Holders, as the case may be,
(with appropriate adjustment to reflect the conversion of convertible securities
and the preference and priorities of the Preferred Stock), and

                    (vi) execute and deliver such instruments of sale, transfer
and exchange and take such other action, including executing any purchase
agreement, merger agreement, indemnity agreement, escrow agreement or related
documents, as may be reasonably required by the Company in order to carry out
the terms and provisions of this Section 5.6.

               (b) If a party to this Agreement fails or refuses to vote or sell
his, her or its Shares as required by, or votes his, her or its Shares in
contravention of this Section 5.6, then such party hereby grants to the
President and Treasurer of the Company an irrevocable proxy, coupled with an
interest, to vote such Shares in accordance with this Section 5.6, and hereby
appoints the President and Treasurer of the Company and each of them acting
singly, his, her or its attorney in fact, to sell, transfer or exchange such
Shares in accordance with the terms of this Section 5.6. At the closing of such
transaction, each of the parties to this Agreement shall deliver, against
receipt of the consideration payable in such transaction, certificates
representing the Shares which such party holds of record or beneficially, with
all endorsements necessary for transfer. In the event that any party fails or
refuses to comply with the provisions of this Section 5.6, the Company, the
Preferred Holders and the Preferred Holder in such transaction, at their

                                      -26-

<PAGE>

option, may elect to proceed with such transaction notwithstanding such failure
or refusal and, in such event and upon tender of the specified consideration to
any such party, the rights of any such party with respect to the Shares of such
party shall cease.

          5.7 Bank Holding Company Act Matters.

               (a) For the purpose of this Section 5.7:

                    (i) "BHC SHAREHOLDER" means West KB - Westdeutsche
Kapitalbeteiligungsgesellschaft mbH, so long as it is a non-US bank or affiliate
thereof that is subject to the United States Bank Holding Company Act of 1956,
as amended ("BHCA"), and is a qualifying foreign banking organization pursuant
to the requirements of Section 211.23(b) of Regulation K (12 C.F.R. Section
211.23(b) (2002)) (or any successor regulation);

                    (ii) "REGULATION K" means Regulation K of the Board of
Governors of the United States Federal Reserve System (12 C.F.R. Part 211
(2002)); and

                    (iii) "REGULATION Y" means Regulation Y of the Board of
Governors of the United States Federal Reserve System (12 C.F.R. Part 225
(2002)).

               (b) The Company shall provide the BHC Shareholder upon request
the following information regarding the Company or any subsidiary or branch,
office, representative, entity or enterprise of a company of the BioVex group of
companies in the United States of America ("U.S. PRESENCE"):

                    (i) a description of the activities being conducted in the
United States; and

                    (ii) the amounts of assets and revenues for the respective
company and its subsidiaries, including an estimated breakdown of those amounts
of assets and revenues that are located in or sourced from the United States,
assets and revenues that are located in or sourced from outside the United
States, and assets and revenues that are located in or sourced from particular
countries,

all on the basis of a fiscal year and as of the last business day of a fiscal
year, as appropriate.

               (c) The Company shall use its reasonable best efforts to send the
information set forth in paragraph (b) above no later than 30 days following the
date on which the BHC Shareholder requests any such information. The Company
shall exercise its best efforts to obtain additional information reasonably
requested by the BHC Shareholder for the purpose of ascertaining its compliance
with the BHCA.

               (d) The BHC Shareholder agrees that any information sent to it
pursuant to the terms of this Section 5.7 may only be used for the purposes of
its compliance with the BHCA, and may not be used or disclosed for any other
purpose unless required by law or an order of a public authority.

                                      -27-

<PAGE>

               (e) The Company and the Stockholders acknowledge that, in the
event that the BHC Shareholder determines that the Company's US Presence causes
(i) the BHC Shareholder to be in violation ("ACTUAL VIOLATION") of the BHCA or
the rules, regulations and written governmental interpretations relating
thereto, Regulation K, or Regulation Y (collectively, the "BHCA Requirements"),
or (ii) a situation where the BCH Shareholder will be in violation of the BHCA
Requirements after only the passage of a period of time ("POTENTIAL VIOLATION"),
the BHC Shareholder may be required to transfer some portion of its shares in
the Company to another party in order to cure or avoid an Actual or Potential
Violation of the BHCA. In the event the BHC Shareholder delivers to the Company
an opinion of counsel (in-house counsel being sufficient) to the effect that the
Company's U.S. Presence would cause the BHC Shareholder to be in Actual or
Potential Violation of the BHCA Requirements, the BHC Shareholder will be
permitted to transfer to a third party or to Eligible Stockholders such number
of shares as may be necessary in order to avoid or cure such Actual or Potential
Violation (a "MANDATORY TRANSFER").

               (f) For the avoidance of doubt, the parties agree that in the
event of a Mandatory Transfer, the BHC Shareholder shall be free to transfer
such percentage of its Shares as is required in order for such BHC Shareholder
to remain or come into compliance with the BHCA to any third party and on any
terms, subject only to the first refusal rights of the other Stockholders
pursuant to Section 5.3 above. In the event a Mandatory Transfer is necessary in
order to ensure such compliance with the BHCA, the parties agree to use their
good faith efforts to facilitate and expedite any such Mandatory Transfer,
either to other Stockholders pursuant to the exercise of their rights of first
refusal pursuant to Section 5.3 above or to such third party as may have been
selected by the BHC Shareholder.

     6. RESTRICTIONS ON SALES OF CONTROL OF THE COMPANY.

     No Common Holder or Preferred Holder shall be a party to any transaction or
series of related transactions that involves the sale, to any person or entity
or group of affiliated persons or entities, of shares of capital stock
representing a majority of the voting power of all outstanding capital stock of
the Company unless (1) such transfer shall have been approved by a Preferred
Majority and (2) all holders of Preferred Stock are allowed to participate in
such transaction and the consideration received pursuant to such transaction is
allocated among the parties thereto in the manner specified in Section 2
(Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and
Asset Sales) of Part B of Article FOURTH of the Company's Certificate of
Incorporation (as if such transaction were a Deemed Liquidation Event for such
purpose).

                                      -28-

<PAGE>

     7. VOTING AGREEMENTS.

          7.1 Voting of Shares.

               (a) In any and all elections of directors of the Company (whether
at a meeting or by written consent in lieu of a meeting), each Stockholder shall
vote or cause to be voted all Shares owned by him or it, or over which he or it
has voting control, and otherwise use his or its respective best efforts, so as
to fix the number of directors of the Company at fifteen (15) and to elect as
directors:

                    (1) one member designated by Merlin General Partner Limited
     (No: 66881) as general partner of The Merlin Fund L.P.; Merlin General
     Partner II Limited as general partner of The Merlin Biosciences Fund L.P.
     and as managing partner of the Merlin Biosciences Fund GbR; and Merlin
     Equity Limited (No: 3146571) (acting together), for so long as they
     (together with their affiliated entities) together hold at least 5% of the
     shares of Series A Stock outstanding from time to time; the initial such
     director to be Dr. Susan Foden;

                    (2) one member designated by Lloyds TSB Development Capital
     Limited (No: 1107542); LDC Co-Investment Plan 2001 'A' (No: LP007381); LDC
     Co-Investment Plan 2001 'B' (No: LP007382); and Technomark Co-Investment
     L.P. (No: LP007381), for so long as they together (and together with they
     affiliated entities) hold at least 5% of the shares of Series A Stock
     outstanding from time to time; which position shall initially remain
     vacant;

                    (3) one member designated by GeneChem Therapeutics Venture
     Fund L.P. on behalf of its general partner, GeneChem Therapeutics Inc., for
     so long as it (together with its affiliated entities) holds at least 5% of
     the shares of Series A Stock outstanding from time to time; the initial
     such director to be Dr. Ines Holzbaur;

                    (4) one member designated by ABN Amro Participaties B.V, for
     so long as it (together with its affiliated entities) holds at least 5% of
     the shares of Series B Stock outstanding from time to time; the initial
     such director to be Hugo Alexander Slooweg;

                    (5) one member designated by Scottish Equity Partners
     Limited, for so long as it (together with its affiliated entities) holds at
     least 5% of the shares of Series B Stock outstanding from time to time; the
     initial such director to be Brian Kerr; and

                    (6) one member designated by Credit Agricole Private Equity
     SA, for so long as it (together with its affiliated entities) holds at
     least 5% of the shares of Series B Stock outstanding from time to time; the
     initial such director to be Dr. Phillippe Guinot.

               (b) The remaining nine members shall each be elected by the
holders of a majority of all voting shares then outstanding, subject to the
approval in each case of a Preferred Majority. The initial such directors shall
be Philip Astley-Sparke, Gareth Beynon,

                                      -29-

<PAGE>

Robert Coffin, Dr. John Gordon, Professor David Latchman, Dr. Colin Love, Dr.
Paul Nicholson, Louis Nisbet, and Dr. Timothy Rink.

               (c) The Stockholders shall not vote to remove any director unless
(i) the Stockholders are instructed to remove such director by the person(s) or
entity(ies) entitled to designate or approve such director pursuant to
Subsection (a) above or; (ii) the person(s) or entity(ies) originally entitled
to designate or approve such director pursuant to Subsection (a) above is no
longer entitled to designate or approve such director.

               (d) The Company shall provide the Stockholders with 15 days'
prior written notice of any intended mailing of a notice to stockholders for a
meeting at which directors are to be elected. The Preferred Holders and Managers
shall give written notice to all other parties to this Agreement, no later than
ten days after the receipt of such notice from the Company, of the persons
designated pursuant to this Section 7 as nominees for election as directors. The
Company agrees to nominate and recommend for election as directors only the
individuals designated, or to be designated, pursuant to this Section 7. If the
Preferred Holders or Managers shall fail to give notice to the Company as
provided above, it shall be deemed that the designees then serving as directors
shall be the designees for reelection.

          7.2 No Revocation. The voting agreements contained herein are coupled
with an interest and may not be revoked, except by an amendment, modification or
termination effected in accordance with the terms hereof.

          7.3 Obligations Binding on Transferees. Any person or entity to which
Shares are transferred by a Stockholder, whether voluntarily or by operation of
law, shall be bound by the voting obligations imposed upon the transferor under
this Agreement, to the same extent as if such transferee were a Stockholder
hereunder; and no Stockholder shall transfer any Shares unless the transferee
provides a written instrument to the Company notifying the Company of such
transfer and agreeing in writing to be bound by the terms of this Agreement.

     8. GENERAL.

          8.1 Future Stockholders.

               (a) The Company shall cause any person to whom it issues Shares
after the date hereof who is not already a party hereto, as a precondition of
such issuance, to become a party hereto by executing a counterpart Adoption
Agreement in the form of Exhibit C prior to or simultaneously with such
issuance.

          8.2 Confidentiality and Disclosure. Each Preferred Holder agrees that
he, she or it will keep confidential and will not disclose, divulge or use for
any purpose, other than to monitor its investment in the Company, any
Confidential Information, unless such Confidential Information (a) is known or
becomes known to the public in general (other than as a result of a breach of
this Section 8.2 by such Preferred Holder), (b) is or has been independently
developed or conceived by the Preferred Holder without use of the Company's
Confidential Information or (c) is or has been made known or disclosed to the
Preferred Holder by a third party without a breach of any obligation of
confidentiality known to such Preferred Holder that such third party may have to
the Company; provided, however, that a Preferred Holder may disclose
Confidential

                                      -30-

<PAGE>

Information (i) to its attorneys, accountants, consultants, and other
professionals to the extent necessary to obtain their services in connection
with monitoring its investment in the Company, (ii) to any prospective
transferee of any Shares from such Preferred Holder as long as such prospective
Preferred Holder agrees to be bound by the provisions of this Section 8.2, (iii)
to any Affiliated Party of such Preferred Holder, provided that such party is
obligated not to disclose, divulge or use any Confidential Information to the
same extent as the Preferred Holders, or (iv) as may otherwise be required by
law, provided that the Preferred Holder takes reasonable steps to minimize the
extent of any such required disclosure. Notwithstanding the foregoing, such
information shall not be deemed confidential for the purpose of enforcing this
Agreement.

          8.3 Actions by Preferred Holders.

               (a) All consents required of and all dealings with SEP II and SEP
IIB under this Agreement and the Certificate of Incorporation shall be granted
or effected by or with Scottish Equity Partners Limited, as manager of SEP II
and SEP IIB, for and on their behalf, and all rights of SEP II and SEP IIB may
be enforced by Scottish Equity Partners Limited on their behalf.

               (b) All consents required of and all dealings with Credit
Lyonnais Innovation 3 Fonds commun de placement dans l'innovation ("CLI3"),
Credit Lyonnais Innovation 4 Fonds commun de placement dans l'innovation
("CLI4"), Credit Lyonnais Innovation 5 Fonds commun de placement dans
l'innovation ("CLI5"), Lion Capital Investissement Fonds commun a risque ("LCI")
and Credit Lyonnais Venture 1 Fonds commun de placement a risque ("CLV1") under
this Agreement and the Certificate of Incorporation shall be granted or effected
by or with Credit Agricole Private Equity SA, as manager of CLI3, CLI4, CLI5,
LCI and CLV1, for and on their behalf and all rights of CLI3, CLI4, CLI5, LCI
and CLV1 may be enforced by Credit Agricole Private Equity SA on their behalf.

          8.4 VCT Matters.

               (a) The Company acknowledges the requirements of Sitka Health
Fund VCT plc ("SITKA") as regards the preservation of its investment in the
Company as a Qualifying Holding and the status of the shares of Common Stock of
the Company as Eligible Shares (as defined in Schedule 28B and 842AA ICTA 1988
respectively) and agrees with Sitka that for so long as Sitka or its permitted
transferees hold Shares in the Company to ensure that the business and structure
of the Company and its group is conducted and structured in such a way as to
ensure that Sitka's investment continues to satisfy the definition of a
Qualifying Holding. Nothing in this Section 8.4 shall require the Company to
take any action that conflicts with the best commercial interests of the
Company.

               (b) The Company agrees to send to Sitka within three months of
the end of each fiscal year a letter confirming that the Company continues to be
a Qualifying Company for the purposes of Schedule 28B ICTA 1988 and to provide
Sitka from time to time with such other information as Sitka may reasonably
request in this regard.

          8.5 Legends. All certificates representing Shares shall bear a legend
substantially in the following form (in addition to, or in combination with, any
legends required

                                      -31-

<PAGE>

by applicable federal and state securities laws and agreements relating to the
transfer of the Company's securities):

               "The shares represented by this certificate are subject to
               certain voting agreements and rights of first refusal and co-sale
               in favor of the Company's other stockholders, as provided in the
               Certificate of Incorporation of the Company or a Stockholders'
               Agreement by and among the registered owner of this certificate,
               the Company and certain other stockholders of the Company, a copy
               of which is available for inspection at the offices of the
               Secretary of the Company."

          8.6 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

          8.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the General Corporation Law of the State of Delaware, as to
matters within the scope thereof, and the internal laws of the Commonwealth of
Massachusetts (without reference to the conflicts of law provisions thereof), as
to all other matters.

          8.8 Notices. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) three
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:

     If to the Company, at 245 First Street, Suite 800, Cambridge, Massachusetts
02142, Attention: President, or at such other address as may have been furnished
in writing by the Company to the other parties hereto, with a copy to Wilmer
Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts,
Attention: Joe Pillman; or

     If to a Preferred Holder, at its address set forth on Exhibit A, or at such
other address as may have been furnished in writing by such Preferred Holder to
the other parties hereto; or

     If to a Manager, at the address set forth below such Manager's signature to
this Agreement, or at such other address as may have been furnished in writing
by such Manager to the other parties hereto.

     Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section 8.8.

                                      -32-

<PAGE>

          8.9 Complete Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.

          8.10 Amendments and Waivers.

               (a) This Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived with respect to all
parties to this Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of (a) the
Company, (b) Preferred Holders holding Shares representing at least sixty
percent (60%) of the voting power of all Shares then held by Preferred Holders,
and (c) Managers and Common Holders holding Shares representing at least fifty
percent (50%) of the voting power of all Shares then held by all Managers and
Common Holders

               (b) In lieu of the provisions of Subsection (a), any amendment,
termination or waiver to the terms of Section 2 (or a defined term used therein)
shall instead require the written consent of (x) the Company, (y) Preferred
Holders holding Registrable Shares representing at least sixty percent (60%) of
the voting power of all Registrable Shares then held by all Preferred Holders,
and (z) Managers, if any, holding Registrable Shares representing at least fifty
percent (50%) of the voting power of all Registrable Shares then held by all
Managers.

               (c) Notwithstanding the foregoing, this Agreement may not be
amended or terminated and the observance of any term hereunder may not be waived
with respect to any Preferred Holder without the written consent of such
Preferred Holder unless such amendment, termination or waiver applies to all
Preferred Holders in the same fashion.

               (d) In addition, notwithstanding the foregoing, no consent of
Managers or Common Holders shall be required for any amendment that does not
adversely affect the Managers or the Common Holders or the Shares held by them.

               (e) The Company shall give prompt written notice of any amendment
or termination hereof or waiver hereunder to any party hereto that did not
consent in writing to such amendment, termination or waiver. Any amendment,
termination or waiver effected in accordance with this Section 8.10 shall be
binding on all parties hereto, even if they do not execute such consent. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.

          8.11 Termination Provisions.

               (a) All of the Company's obligations to register Registrable
Shares under Sections 2.1 and 2.2 shall terminate upon the earliest of (a) three
years after the closing of the Initial Public Offering, (b) the date on which no
Preferred Holder holds any Registrable Shares or (c) a Company Sale.

               (b) All other provisions of this Agreement shall terminate upon
the earlier of the closing of an Initial Public Offering or the closing of a
Company Sale.

                                      -33-

<PAGE>

          8.12 Transfers of Rights; Calculation of Share Numbers.

               (a) Transfer of Rights. This Agreement, and the rights and
obligations of each Preferred Holder hereunder, may be assigned by such
Preferred Holder to (a) any person or entity to which at least 250,000 Shares
(subject to appropriate adjustment for stock splits, stock dividends,
recapitalizations and similar events occurring after the date of this Agreement)
are transferred by such Preferred Holder, or (b) to any Affiliated Party of such
Preferred Holder, and, in each case, such transferee shall be deemed a
"Preferred Holder" for purposes of this Agreement; provided that such assignment
of rights shall be contingent upon the transferee providing a written instrument
to the Company notifying the Company of such transfer and assignment and
agreeing in writing to be bound by the terms of this Agreement and further
provided that such transferee is not, in the reasonable determination of the
Board (excluding any interested director) a competitor of the Group.
Notwithstanding the foregoing, any person or entity to which any Shares or
Registrable Shares are transferred by a Preferred Holder, whether voluntarily or
by operation of law, shall be bound by the obligations under Section 2.8
("Lock-Up" Agreement; Confidentiality of Notices) to the same extent as if such
transferee were a Preferred Holder hereunder and no Preferred Holder shall
transfer any Shares or Registrable Shares unless the transferee provides a
written instrument to the Company notifying the Company of such transfer and
agreeing in writing to be bound by the terms of Section 2.8 ("Lock-Up"
Agreement; Confidentiality of Notices).

               (b) Calculation of Share Numbers. In determining the number of
Shares owned by a Preferred Holder or a Common Holder for purposes of exercising
rights under this Agreement, (a) Shares owned by a Preferred Holder shall be
deemed to include Shares which have been converted into Common Stock so long as
such Common Stock is owned by such Preferred Holder and (b) all Shares held by
affiliated entities or persons shall be aggregated together (provided that no
shares shall be attributed to more than one entity or person within any such
group of affiliated entities or persons).

          8.13 Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

          8.14 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.

          8.15 Section Headings and References. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties. Any reference in this agreement to a
particular section or subsection shall refer to a section or subsection of this
Agreement, unless specified otherwise.

                                      *****

                                      -34-

<PAGE>

     Executed as of the date first written above.

                                        COMPANY:

                                        BIOVEX GROUP, INC.

                                        By: /s/ Dr. Gareth Beynon
                                            ------------------------------------
                                            Dr. Gareth Beynon
                                            Chief Executive Officer

                                        By: /s/ Philip Astley-Sparke
                                            ------------------------------------
                                            Philip Astley-Sparke
                                            President

                                        MANAGERS:

                                        /s/ Philip Astley-Sparke
                                        ----------------------------------------
                                        Philip Astley-Sparke

                                        245 First Street, Suite 1800
                                        Cambridge, Massachusetts 02142

                                        /s/ Dr. Gareth Beynon
                                        ----------------------------------------
                                        Dr. Gareth Beynon

                                        245 First Street, Suite 1800
                                        Cambridge, Massachusetts 02142

                                        /s/ Dr. Robert Coffin
                                        ----------------------------------------
                                        Dr. Robert Coffin

                                        245 First Street, Suite 1800
                                        Cambridge, Massachusetts 02142

                                        /s/ Dr. Colin Love
                                        ----------------------------------------
                                        Dr. Colin Love

                                        245 First Street, Suite 1800
                                        Cambridge, Massachusetts 02142

                            [Stockholders' Agreement]

<PAGE>

                                        PREFERRED HOLDERS:

                                        ABN AMRO PARTICIPATIES B.V.

                                        By: /s/ H.A. Slootweg
                                            ------------------------------------
                                        Name: H.A. Slootweg
                                        Title: Director

                                        AVALON VENTURES VI LP

                                        By: AVALON VENTURES VI GP FUND LLC
                                            Its General Partner

                                        By: /s/ Kevin J. Kinsella
                                            ------------------------------------
                                        Name: Kevin J. Kinsella
                                        Title:
                                               ---------------------------------

                                        AVALON VENTURES VI GP FUND LLC

                                        By: /s/ Kevin J. Kinsella
                                            ------------------------------------
                                        Name: Kevin J. Kinsella
                                        Title:
                                               ---------------------------------

                                        BIONEX INVESTMENT PLC

                                        By: /s/ Chris Roberts
                                            ------------------------------------
                                        Name: Chris Roberts
                                        Title: Exec. Chairman

                                        CREDIT LYONNAIS INNOVATION 3 FONDS
                                        COMMUN DE PLACEMENT DANS
                                        L'INNOVATION

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      -2-

<PAGE>

                                        CREDIT LYONNAIS INNOVATION 4 FONDS
                                        COMMUN DE PLACEMENT DANS
                                        L'INNOVATION

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        CREDIT LYONNAIS INNOVATION 5 FONDS
                                        COMMUN DE PLACEMENT DANS
                                        L'INNOVATION

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        CREDIT LYONNAIS VENTURE 1 FONDS
                                        COMMUN DE PLACEMENT A RISQUES

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        FCPI POSTE INNOVATION

                                        By: INNOVEN PARTENAIRES SA

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        FCPI POSTE INNOVATION 2

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                      -3-

<PAGE>

                                        FCPI POSTE INNOVATION 3

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        FCPI POSTE INNOVATION 5

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        FCPI POSTE INNOVATION 6

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        GENECHEM THERAPEUTICS VENTURE FUND L.P.
                                        on behalf of its General Partner
                                        GENECHEM THERAPEUTICS INC.

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        /s/ John Laurie Gordon
                                        ----------------------------------------
                                        JOHN LAURIE GORDON

                                      -4-
<PAGE>

                                        INNOVEN 2001 FCPI No 5

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        INNOVEN 2002 FCPI No 6

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        INNOVEN 2003 FCPI No 7

                                        By its management company INNOVEN
                                        PARTENAIRES SA

                                        By: /s/ Paul Toon
                                            ------------------------------------
                                            Paul Toon
                                            Authorized signatory

                                        J EDWARD SELLARS NOMINEES LTD

                                        By: /s/ D. E. Babbington
                                            ------------------------------------
                                        Name: Diane Babbington
                                        Title: Company Secretary

                                        LION CAPITAL INVESTISSEMENT FONDS
                                        COMMUN DE PLACEMENT A RISQUES

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      -5-

<PAGE>

                                        LLOYDS TSB DEVELOPMENT CAPITAL
                                        LIMITED

                                        By: /s/ Stewart Licudi
                                            ------------------------------------
                                        Name: Stewart Licudi
                                        Title: Investment Director

                                        LDC CO-INVESTMENT PLAN 2001 'A'

                                        By: LLOYDS TSB VENTURES GENERAL
                                        PARTNER LIMITED
                                        Its general partner

                                        By: /s/ Stewart Licudi
                                            ------------------------------------
                                        Name: Stewart Licudi
                                        Title: Investment Director

                                        LDC CO-INVESTMENT PLAN 2001 'B'

                                        By: LLOYDS TSB VENTURES GENERAL
                                        PARTNER LIMITED Its general partner

                                        By: /s/ Stewart Licudi
                                            ------------------------------------
                                        Name: Stewart Licudi
                                        Title: Investment Director

                                        MERLIN GENERAL PARTNER LIMITED

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name: illegible
                                        Title: Director

                                        MERLIN GENERAL PARTNER II LIMITED
                                        (AS GENERAL PARTNER OF THE MERLIN
                                        BIOSCIENCES FUND LP)

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name: illegible
                                        Title: Director

                                      -6-

<PAGE>

                                        MERLIN GENERAL PARTNER II LIMITED
                                        (AS GENERAL PARTNER OF THE MERLIN
                                        BIOSCIENCES FUND GBR)

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name: illegible
                                        Title: Director

                                        /s/ Timothy James Rink
                                        ----------------------------------------
                                        TIMOTHY JAMES RINK

                                        SCOTTISH EQUITY PARTNERS LIMITED

                                        By: /s/ Richard Sparrow
                                            ------------------------------------
                                        Name: Richard Sparrow
                                        Title: Director

                                        SEP II

                                        By: SCOTTISH EQUITY PARTNERS LIMITED
                                        Its Manager

                                        By: /s/ Richard Sparrow
                                            ------------------------------------
                                        Name: Richard Sparrow
                                        Title: Director

                                        SEP II B

                                        By: SCOTTISH EQUITY PARTNERS LIMITED
                                        Its Manager

                                        By: /s/ Richard Sparrow
                                            ------------------------------------
                                        Name: Richard Sparrow
                                        Title: Director

                                        SITKA HEALTH FUND VCT PLC

                                        By: /s/ Louis Joseph Nisbet
                                            ------------------------------------
                                        Name: Louis Joseph Nisbet
                                        Title: Director

                                      -7-

<PAGE>

                                        TECHNOMARK CO-INVESTMENT L.P.

                                        By: TECHNOMARK CONSULTING SERVICES
                                        LIMITED
                                        Its General Partner

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        V-SCIENCES INVESTMENTS PTE LTD

                                        By: /s/ S. Iswaran
                                            ------------------------------------
                                        Name: S. Iswaran
                                        Title: Director

                                        WEST KB - WESTDEUTSCHE
                                        KAPITALBETEILIGUNGSGESELLSCHAFT MBH

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        COMMON HOLDERS:

                                        /s/ D. S. Latchman
                                        ----------------------------------------
                                        DAVID SEYMOUR LATCHMAN

                                        MERLIN EQUITY LIMITED

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      -8-

<PAGE>

                                        JAMES NOBLE

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        UNIVERSITY COLLEGE LONDON

                                        By: /s/ [signature illegible]
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      -9-
<PAGE>

                                    EXHIBIT A

                            LIST OF PREFERRED HOLDERS

Name and Address

ABN Amro Participaties B.V.
Gustav Mahlerlaan 10
1082 PP
Amsterdam

Avalon Ventures VI GP Fund LLC
4370 La Jolla Village Drive
Suite 685
San Diego
CA 92122

Avalon Ventures VI LP
4370 La Jolla Village Drive
Suite 685
San Diego
CA 92122

Bionex Investment plc
223a Kensington High Street
London
W8 6SG

Robert Stuart Coffin
Flat 4
43 Colville Gardens
London
W11 2BU

Credit Lyonnais Innovation 3 Fonds
Commun de Placement dans L'Innovation "CLI3"

Credit Lyonnais Innovation 4 Fonds
Commun de Placement dans L'Innovation "CLI4"

Credit Lyonnais Innovation 5 Fonds
Commun de Placement dans L'Innovation "CLI5"

                                      A-1

<PAGE>

Credit Lyonnais Venture 1 Fonds
Commun de Placement a Risques
"CLV1"

FCPI Poste Innovation
10 rue de la Paix
75002 Paris
France

FCPI Poste Innovation 2
10 rue de la Paix
75002 Paris
France

FCPI Poste Innovation 3
10 rue de la Paix
75002 Paris
France

FCPI Poste Innovation 5
10 rue de la Paix
75002 Paris
France

FCPI Poste Innovation 6
10 rue de la Paix
75002 Paris
France

Genechem Therapeutics Venture Fund LP
1001 de Maisonneuve West
Suite 920
Montreal
Quebec
H3A 3C8

Dr John Gordon
Bishop Oak
Jarn Way
Old Boars Hill
Oxford
OX1 5JF

<PAGE>

Innoven 2001 FCPI No5
10 rue de la Paix
75002 Paris
France

Innoven 2002 FCPI No6
10 rue de la Paix
75002 Paris
France

Innoven 2003 FCPI No7
10 rue de la Paix
75002 Paris
France

J Edward Sellars Nominees Ltd (a/c Technomark Co-investment Ltd Partnership)
503 Worle Parkway
Worle
Weston-super-Mare
BS22 0WA

Lion Capital Investissement Fonds
Commun de Placement a Risques "LCI FCPR"

Lloyds TSB Development Capital Limited
45 Old Bond Street
London
W1S 4QT

Lloyds TSB Ventures Nominees Limited
(A/C LDC Co-investment plan 2001 "A")
45 Old Bond Street
London
W1S 4QT

Lloyds TSB Ventures Nominees Limited
(A/C LDC Co-investment plan 2001 "B")
45 Old Bond Street
London
W1S 4QT

<PAGE>

Merlin General Partner II Ltd (as general partner of the Merlin Biosciences
Fund LP)
La Motte Chambers
St Helier
Jersey
JE1 1BJ

Merlin General Partner II Ltd (as general partner of the Merlin Biosciences
Fund GbR)
La Motte Chambers
St Helier
Jersey
JE1 1BJ

Merlin General Partner Limited
La Motte Chambers
St Helier
Jersey
JE1 1BJ

Dr Timothy J Rink
41 Avenue Hector Otto
Apt 81
MC9800 Monaco

SEP II
17 Blythswood Square
Glasgow
G2 4AD

SEP II B
17 Blythswood Square
Glasgow
G2 4AD

Sitka Health Fund VCT Plc
23 Buckingham Gate
London
SW1E 6LB

Technomark Co-investment LP
King House
5-11 Westbourne Grove
London
W2 4WA

<PAGE>

V-Sciences Investments Pte Ltd
8 Shenton Way
#38-03 Temasek Tower
Singapore
068811

West KB - Westdeutsche Kapitalbeteiligungsgesellschaft mbH
Herzogstrasse 15
D-40217
Dusseldof
Germany

<PAGE>

                                   EXHIBIT B

                             LIST OF COMMON HOLDERS

Name and Address

David Seymour Latchman
9 Gresham Gardens
London
NW11 8NX

Merlin Equity Limited
33 King Street
St James's
London
SW1Y 6RJ

Mr James Noble
20 Charlbury Road
Oxford
OX2 6UU

University College
London
Gower Street
London
WC1E 6BT

<PAGE>

                                    EXHIBIT C

                               ADOPTION AGREEMENT

     This Adoption Agreement (the "ADOPTION AGREEMENT") is executed by the
undersigned (the "NEW STOCKHOLDER") pursuant to the terms of the Stockholders'
Agreement dated as of ______________, 2005 (the "AGREEMENT") by and among BioVex
Group, Inc., a Delaware corporation (the "COMPANY") and the Company's
stockholders. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreement. By the execution of this
Adoption Agreement, the New Stockholder agrees as follows:

     1. Acknowledgment. The New Stockholder acknowledges that the New
Stockholder is acquiring certain shares of the capital stock of the Company (the
"STOCK"), subject to the terms and conditions of the Agreement.

     2. Agreement. The New Stockholder (i) agrees that the Stock acquired by the
New Stockholder shall be bound by and subject to the terms of the Agreement, and
(ii) hereby adopts the Agreement with the same force and effect as if the New
Stockholder were originally a party thereto.

     3. Notice. Any notice required or permitted by the Agreement shall be given
to the New Stockholder at the address listed beside the New Stockholder's
signature below.

     EXECUTED AND DATED as of ______________, 20__.

                                        NEW STOCKHOLDER:

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Address:
                                                 -------------------------------
                                        Fax:
                                             -----------------------------------

Accepted and Agreed:

BIOVEX GROUP, INC.:

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]