Document:

<PAGE>

                                                                   Exhibit 10.13

NATIONSBANK, N.A.

                       AMENDED AND RESTATED LOAN AGREEMENT

This Loan Agreement (the "Agreement") dated as of April 30, 1999, by and between
NationsBank, N.A. (the "Bank") and the Borrower described below:

                                    RECITALS
A.    The Borrower and the Bank entered into a Loan Agreement (the Original
      Agreement) dated April 30, 1995.

B.    The Borrower and the Bank entered into a First Amendment to Loan Agreement
      ("First Amendment") dated April 30, 1996 to extend the maturity,, and
      modify certain covenants.

C.    The Borrower and the Bank entered into a Second Amendment to Loan
      Agreement ("First Amendment") dated April 30, 1997 to extend the maturity,
      and modify, certain covenants.

D.    The Borrower and the Bank now wish to further amend the Original Agreement
      to modify certain covenants, increase the amount of the credit facility
      and for certain other matters, as set forth in this Agreement.

      In consideration of the Loan or Loans described below and the mutual
      covenants and agreements contained herein, and intending to be legally,
      bound hereby, Bank and Borrower agree as follows:

      1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:

             A.   BORROWER.  Performance Engineering Corporation

             B.   BORROWER'S ADDRESS: 3949 Pender Drive
                                      Suite 300 Fairfax,
                                      Virginia 22030

             C. HAZARDOUS MATERIALS. Hazardous Materials include all materials
defined as hazardous wastes or substances under any local, state or federal
environmental laws, rules or regulations. and petroleum, petroleum products, oil
and asbestos.

             D. LOAN(S). Loan(s) means collectively any and all loans heretofore
or hereafter made by Bank to the Borrower.

             E. LOAN DOCUMENTS. Loan Documents means this Agreement and any and
all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guarantees, certificates and agreements executed and/or
delivered by Borrower, any guarantor or third party in connection with any Loan.

<PAGE>

             F. NET INCOME. Net profit after tax excluding all gains on the sale
of assets, and any other extraordinary gains.

             G. TANGIBLE NET WORTH. Tangible Net Worth means the amount by which
total assets exceed total liabilities in accordance with GAAP, less accounts
receivable from affiliates, any surplus resulting from any write up of assets;
goodwill, patents, trademarks, services marks. trade names and copyrights; other
intangible assets, leasehold improvements; investments in non-marketable
securities or affiliated companies, capitalized development costs; and
capitalized expenses.

             H. ACCOUNTING TERMS. All accounting terms not specifically defined
or specified herein hall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied, with respect to the financial statements
referenced in Section 3.H. hereof.

      2. LOANS.

         A. LOAN. Bank hereby agrees to make (or has made) a loan or loans to
Borrower in the aggregate principal amount of $2,700,000.00. The obligation to
repay the loan is evidenced by a promissory note or notes dated April 30, 1999
(the promissory, note or notes together with any other promissory notes
heretofore or hereafter executed by Borrower in favor of Bank and any and all
renewals, extensions or rearrangements thereof being hereafter collectively
referred to as the "Note") having a maturity date, repayment terms and interest
rate as set forth in the Note.

         B. REVOLVING CREDIT FEATURE. The Loan provides for a revolving line of
credit (the "Line") under which Borrower may from time to time, borrow, repay
and re-borrow funds.

         C. LETTER OF CREDIT SUBFEATURE. As a subfeature under the Line, the
Bank may from time to time up to and including April 30, 2001. issue letters of
credit for the account of Borrower (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided, however that the form and substance of each
Letter of Credit shall be subject to approval by Bank in its sole discretion;
and provided further that the aggregate undrawn amount of all outstanding
Letters of Credit shall not at any time exceed $1,400,000.00. Each Letter of
Credit shall be issued for a term not to exceed 365 days, provided that no
Letter of Credit shall have an expiration date subsequent to April 30, 2001,
unless the Letter of Credit is secured by Borrower's cash. The undrawn amount of
all Letters of Credit plus any and all amounts paid by Bank in connection with
drawings under any Letter of Credit for which the Bank has not been reimbursed
shall be reserved under the Line and shall not be available for advances
thereunder. Each draft paid by Bank under a Letter of Credit shall be deemed an
advance under the Line and shall be repaid 'In accordance with the terms of the
Line; provided however that if the Line is not available for any reason
whatsoever, at the time any draft is paid by the Bank, or if advances are not
available under the Line in any such amount due to any limitation of borrowing
set forth herein, then the full amount of such drafts shall be immediately due
and payable, together with interest thereon, from the date such amount is paid
by Bank to the date such amount is fully repaid by Borrower, at that rate of
interest applicable to advances under the Line. In such event, Borrower agrees
that Bank, at Bank's sole discretion may debit Borrower's deposit account with
Bank for the amount of such draft. For each Letter of Credit issued on behalf of
the Borrower under this subfeature, the Borrower shall pay a fee of 1.5% of the
face amount of the Letter of Credit per annum, with a minimum fee of $300.00.
Letters of Credit shall automatically renew for a period of one year upon
maturity unless otherwise specified in advance, with a renewal fee of 1.0%
payable upon renewal, unless the Borrower gives notice 60 days prior to
maturity, of their intent to let the Letter of Credit expire, or if the maturity
of the Loan is less than one year hence.

         D. ADVANCES. Whenever the Borrower desires that the Bank make an
advance under the Line, the Borrower shall provide a notice to the Bank setting
forth (a) the date, which shall be a Business Day, on which such advance shall
be made and (b) the total principal amount of the advance (the "Standard
Notice"). If Standard Notice is provided, no later than 10:00 a.m., Eastern
Standard Time, on the date specified in such Standard Notice, the Bank will make
available the requested funds by depositing such proceeds in the Borrower's
account No. 7922-5641 maintained at the Bank's office. All advances must be in
minimum amounts of $25,000.00.

<PAGE>

         E. INTEREST RATE. The interest rate will float at the option of the
Borrower at the Bank's Prime lending rate, varying as that rate varies from time
to time or the London Inter-Bank Offered Rate plus 250 basis points. Interest
shall be charged and calculated on a 360 day year factor applied to actual days,
and shall be payable monthly. The "PRIME" rate is a reference used by the Bank
in determining interest rates on certain loans and is not intended to be the
lowest rate of interest charged on any extension of credit to any customer.

         F. COMMITMENT FEE. Borrower wi11 pay hereafter on July, 31, 1999 and
continuing on the last day of each successive quarter for the periods from and
including the date the Line was established to and including the maturity date
of the Line, a $5,000.00 fee per annum, payable in quarterly payments of
$1,250.00 per quarter.

      3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Bank as follows:

         A. GOOD STANDING. Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of Virginia and has the power and
authority to own its property and to carry on its business in each jurisdiction
in which Borrower does business.

         B. AUTHORITY AND COMPLIANCE. Borrower has full power and authority, to
execute and deliver the Loan Documents and to incur and perform the obligations
provided for therein, all of which have been duly authorized by all proper and
necessary action of the appropriate governing body of Borrower. No consent or
approval of any public authority or other third party is required as a condition
to the validity of any Loan Document, and Borrower is in compliance with all
laws and regulatory requirements to which it is subject.

         C. BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by Borrower constitute valid and legallv binding obligations of
Borrower, enforceable in accordance with their terms.

         D. LITIGATION. There is no proceeding involving Borrower pending or, to
the knowledge of Borrower, threatened before any court or governmental
authority, agency or arbitration authority, except as disclosed to Bank in
writing and acknowledged by Bank prior to the date of this Agreement.

         E. NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization. power or authority of Borrower and no provision of any existing
agreement, mortgage, indenture or contract binding on Borrower or affecting its
property, which would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement and the other Loan
Documents. F. OWNERSHIP OF ASSETS. Borrower has good title to its assets, and
its assets are free and clear of Liens, except those granted to Bank and as
disclosed to Bank in writing prior to the date of this Agreement.

         G. TAXES. All taxes and assessments due and payable by Borrower have
been p 'd or are being contested in good faith by appropriate proceedings and
the Borrower has filed all tax returns -which it is required to file.

         H. FINANCIAL STATEMENTS. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved and fairly present
Borrower's financial condition as of the date or dates thereof, and there has
been no material adverse change in Borrower's financial condition or operations
since December 31, 1998. To the best of Borrower's knowledge, all factual
information furnished by Borrower to Bank in connection with this Agreement and
the other Loan Documents is and will be accurate and complete on the date as of
which such information is delivered to Bank and is not and will not be
incomplete by the omission of any material fact necessary to make such
information not misleading.

<PAGE>

         I. PLACE OF BUSINESS. Borrower's chief executive office is located at

                           3949 Pender Drive
                           Suite 300
                           Fairfax.  VA 22030

         J. ENVIRONMENTAL MATTERS. ENVIRONMENTAL LAW COMPLIANCE. The conduct of
Borrower's business operations do not and not violate any federal laws, rules or
ordinances for environmental protection, regulations of the Environmental
Protection Agency and any applicable local or state law, rule, regulation or
rule of common law and any judicial interpretation thereof relating primarily to
the environment or Hazardous Materials and Borrower will not use or permit any
other party to use any Hazardous Materials at any of Borrower's places of
business or at any other property owned by Borrower except such materials as are
incidental to Borrower's normal course of business, maintenance and repairs and
which are handled in compliance with all applicable environmental laws. Borrower
agrees to permit Bank, its agents, contractors and employees to enter and
inspect any of Borrower's places of business or any other property of Borrower
at any reasonable times upon three (3) days prior notice for the purposes of
conducting an environmental investigation and audit (including taking physical
samples) to insure that Borrower is complying with this covenant and Borrower
shall reimburse Bank on demand for the costs of any such environmental
investigation and audit. Borrower shall provide Bank, its agents, contractors,
employees and representatives with access to and copies of any and all data and
documents relating to or dealing with any Hazardous Materials used, generated,
manufactured, stored or disposed of by Borrower's business operations within
FIVE (5) days of the request therefore.

         K. YEAR 2000 COMPLIANCE. The Borrower has (1) initiated a review and
assessment of all area within its and each of its subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its' subsidiaries (or its suppliers
and vendors) may be unable to recognize or perform properlv date-sensitive
functions involving certain dates prior to and any date after December 3 1,
1999), (ii) developed a plan and timetable for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance ,with
that timetable. The Borrower reasonably believes that all computer applications
(including those of suppliers and vendors) that are material to its or any of
its subsidiaries' business and operations will on a timely basis be able to
perform properly date sensitive functions for all dates before and after January
1. 2000, except to the extent that a failure to do so could not reasonably be
expected to have material adverse effect.

         L. CONTINUATION. OF REPRESENTATION AND WARRANTIES. All representations
and warranties made under this Agreement shall be deemed to be made at and as of
the date hereof and at and as of the date of any future advance under any Loan.

      4. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):

         A. FINANCIAL CONDITION. Maintain Borrower's financial condition as
follows, determined in accordance with GAAP applied on a consistent basis
throughout the period involved except to the extent modified by the following
definitions:

         (i) Maintain a ratio of Total Liabilities to Tangible Net Worth of not
      more than 2.00 to 1.0. for each fiscal quarter beginning June 30, 1999 and
      each quarter thereafter.

         (ii) Maintain a ratio of Earnings before Interest Expense and Taxes
      divided by Interest Expense of not less than 2.5 to 1.0 calculated for the
      twelve month period ending December 31, 1998 and thereafter, measured
      annually.

<PAGE>

         B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period 'Involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's books of account and
other records at such reasonable times and as often as Bank may desire, and pay
the reasonable fees and disbursements of any accountants or other agents of Bank
selected by Bank for the foregoing purposes. Unless written notice of another
location .is given to Bank, Borrower's books and records will be located at
Borrower's chief executive office set forth above. All financial statements
called for below shall be prepared in form and content acceptable to Bank and by
independent certified public accountants acceptable to Bank.

In addition, Borrower will:

      (i). Furnish to Bank AUDITED financial statements of Borrower for each
fiscal year of Borrower, within 90 days after the close of each such fiscal
year.

      (ii). Furnish to Bank SELF PREPARED financial statements attested by an
officer of the Borrower (including a balance sheet and profit and loss
statement) for each quarter end of each fiscal year of Borrower, within 45 days
after the close of each such period.

      (iii). Furnish to Bank a compliance certificate, "Exhibit A", for (and
executed by an authorized representative of) Borrower, concurrently with and
dated as of the date of delivery of each of the financial statements as required
in paragraphs (i) and (ii) above, containing (a) a certification that the
financial statements of even date are true and correct and that the Borrower is
not in default under the terms of this Agreement, and (b) computations and
conclusions, in such detail as Bank may request, with respect to compliance with
this Agreement, and the other Loan Documents, including computations of all
quantitative covenants.

      (iv). Furnish to Bank promptly such additional information, reports and
statements respecting the business operations and financial condition of
Borrower as Bank may reasonably, request, from time to time, including but not
limited to:

      A current status report in a form satisfactory to the Bank, including
      listing of new contracts or installations added during the period,
      including the name of the contracting officer at the agency, each
      certified by an officer of the Borrower within 45 days of each fiscal
      quarter end.

      An aging of all accounts receivable, submitted quarterly within 45 days of
      each fiscal quarter end,

         C. INSURANCE. Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same vicinity,
specifically to include fire and extended coverage insurance covering all
assets, business interruption insurance, workers compensation insurance and
liability insurance.

         D. EXISTENCE AND COMPLIANCE. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.

         E. ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing of (1)
any condition, event or act which comes to Its attention that would or might
materially adversely affect Borrower's financial condition or operations, the
Collateral, or Bank's rights under the Loan Documents, (ii) any litigation in
which the claim against the Borrower assets and property exceed $1,000,000.00.
filed by or against Borrower, (iii) any event that has occurred that would
constitute an event of default under any Loan Documents and (iv) any uninsured
or partially uninsured loss through fire, theft, liability or property damage in
excess of an aggregate of $1,000,000.

         F. TAXES AND OTHER OBLIGATIONS. Pay all of its taxes, assessments and
other obligations, including, but not limited to taxes, costs or other expenses
arising out of this transaction, as the same become due and payable, except to
the extent the same are being contested in good faith by appropriate proceedings
in a diligent manner.

<PAGE>

         G. MAINTENANCE. Maintain all of its tangible property in good condition
and repair and make all necessary, replacements thereof, and preserve and
maintain all licenses, trademarks, privileges, permits,franchises, certificates
and the like necessary for the operation of its business.

         H. NOTIFICATION OF ENVIRONMENTAL CLAIMS. Borrower shall immediately
advise Bank in writing of any and all enforcement, cleanup, remedial, removal,
or other governmental or regulatory actions instituted, completed or threatened
pursuant to any applicable federal, state, or local laws, ordinances or
regulations relating to any Hazardous Materials affecting Borrower's business
operations, and (ii) all claims made or threatened by any third party against
Borrower relating to damages, contribution, cost recovery, compensation, loss or
Injury resulting from any Hazardous Materials. Borrower shall immediatelv notify
Bank of any remedial action taken by Borrower with respect to Borrower's
business operations.

         5. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents. Borrower will not, without the
prior written consent of Bank (and without limiting any requirement of any other
Loan Documents):

         A. TRANSFER OF ASSETS OR CONTROL. Sell, lease, assign or otherwise
dispose of or transfer any assets, except in the normal course of its business,
or enter into any merger or consolidation, or transfer control or ownership of
the Borrower or from or acquire any subsidiary.

         B. LIENS. Grant, suffer or permit any contractual or noncontractual
lien on or security interest in its assets, except in favor of Bank, or purchase
money obligations, in excess of $500,000.00, for capital expenditures or fail to
promptly pay when due all lawful claims, whether for labor, materials or
otherwise,

         C. ADVANCES. Make any advances, except in the ordinary course of
business, to any individual, partnership, corporation or other entity.

         D. BORROWINGS. Create, incur, assume or become liable in any manner for
any indebtedness (for borrowed money, deferred payment for the purchase of
assets, lease payments, as surety or guarantor for the debt for another, or
otherwise) other than to Bank, in excess of $500,000.00, except for normal trade
debts incurred in the ordinary course of Borrower's business, and except for
existing indebtedness disclosed to Bank in writing and acknowledged by Bank
prior to the date of this Agreement.

         E. PURCHASE OF CAPITAL STOCK. Purchase, redeem or retire any of its
capital stock in excess of $500.000 in the aggregate per annum, or make any
other distribution of property in respect of the Borrower's stock.

         F. LOANS. Make any loan to any person, firm or corporation or to their
employees, officers, directors. or stockholders in excess of $25O,000.00 in the
aggregate.

         G. GUARANTEES AND ENDORSEMENTS. Assume, guarantee, endorse, lease, or
otherwise become liable on the obligations of any person. firm, or corporation:
except by endorsement, for the purpose of discount or collection. of notes or
other instruments received by the Borrower from customers in the ordinary course
of its business.

         H. PLEDGES. Pledge, mortgage, encumber, lease, or sell any of its
assets except in the ordinary course of business and for permitted fixed assets
purchases and leases not to exceed $500,000.00.

         I. MERGER AND CONSOLIDATIONS. Be party to any acquisition, merger or
consolidation, or sell or transfer all, or substantially all, their property, to
any person, firm or corporation.

         J. CHARACTER OF BUSINESS. Change the general character of business as
conducted at the date hereof, or engage in any type of business not reasonably
related to its business as presently conducted.

<PAGE>

         K. 0WNERSHIP. David Karlgaard, Paul Rice and Alan Harbitter shall not
decrease their ownership percentage below 51 % of issued shares and voting
control in the Company in the aggregate and shall not pledge, assets encumber or
cause to be pledged any such ownership or voting control

         L. MANAGEMENT. Change the current management of the Borrower without
prior consent from the Bank.

      6. SECURITY DOCUMENTATION. On or before the Closing Date the Bank shall
have received:

         (a) duly executed and delivered copies of the guarantees, security
agreement, note and all other required documents.

         (b) evidence satisfactory to the Bank of the completion of all
recordings, registrations and filings as may be necessary or in the opinion of
the Bank, desirable to perfect or preserve the security interests created by the
security agreement, including without limitation, copies of proper financing
statements on Form UCC-1 duly filed in all jurisdictions as may be necessary or.
in the opinion of the Bank, desirable to perfect the security interests created
by the security agreement.

      7. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents if it shall default in the payment of any
amounts due and owing under the Loans or should it fall to timely and properly
observe, keep or perform any term, covenant, agreement or condition in any Loan
Document or in any other loan agreement, promissory note, security agreement,
deed of trust, deed to secure debt, mortgage, assignment or other contract
securing or evidencing payment of any indebtedness of Borrower to Bank or any
affiliate or subsidiary of Nations Bank Corporation.

      8. REMEDIES UPON DEFAULT. If an event of default shall occur Bank shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.

      9. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to the other party at the following address:

     BORROWER:
     Performance Engineering Corporation
     David Karlgaard, President
     3949 Pender Drive
     Suite 300
     Fairfax, VA 22030

     BANK:
     NationsBank, N.A.
     Commercial Department - Government Contracts & Technology Banking Group
     Elaine Eaton, Senior Vice President
     8300 Greensboro Dr. Suite 550
     McLean, VA 22102

or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:

     A. If sent by hand delivery, upon delivery,

<PAGE>

     B. If sent by mail, upon the earlier of the date of receipt or five (5)
days after deposit in the U.S. Mail, first class postage prepaid.

     10. COSTS, EXPENSES AND ATTORNEY'S FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of Bank's in-house counsel if permitted by applicable law), incurred by
Bank in connection with (a) negotiation and preparation of this Agreement and
each of the Loan Documents, and (b) Bank's continued administration and
collection thereof.

     11. CONDITIONS OF EACH ADVANCE/CONDITIONS ANTECEDENT. Each time the
Borrower requests an advance under the Revolving Line of Credit, the Borrower
will provide a Borrowing Base Certificate, containing a list of the book
value of the Borrower's eligible accounts receivable, unless the last
Borrowing Base Certificate submitted is less than 30 days old.
Notwithstanding the maximum amount of the Loan, the total of advances
outstanding under the Loan at any time shall not exceed an amount equal to
the sum of 80% of the book value of Borrower's eligible accounts receivable.

     12. MISCELLANEOUS. Borrower and Bank further covenant and agree as follows,
without limiting any requirement of any other Loan Document:

         A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be cumulative
of each other and may be exercised in addition to any and all other rights of
Bank, and no delay in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise bv Bank of any right preclude any other
or future exercise thereof or the exercise of any other right. Borrower
expressly ,waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Borrower in any case shall, of itself,
entitle Borrower to any other or future notice or demand in similar or other
circumstances.

         B. APPLICABLE LAW. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance with
the laws of Virginia and applicable United States federal law.

         C. AMENDMENT. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of Borrower's
rights or obligations hereunder shall be made or be effective without Bank's
prior ,written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.

         D. DOCUMENTS. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content satisfactory to Bank and its counsel.

         E. PARTIAL INVALIDITY. The unenforceability or invalidity, of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity, of such provision as it may apply to other
persons or circumstances.

         F. INDEMNIFICATION. Borrower shall indemnify, defend and hold Bank and
its successors and assigns harmless from and against any and all claims.
demands, suits. losses, damages, assessments, fines, penalties, costs or other
expenses including reasonable attorneys' fees and court costs) arising from or
in any way related to any of the transactions contemplated hereby, including but
not limited to actual or threatened damage to the environment, agency costs of
investigation, personal injury or death, or property damage, due to a release or
alleged release of Hazardous Materials, arising from Borrower's business
operations, any other property owned by Borrower or in the surface or ground
water arising from Borrower's business operations, or gaseous emissions arising
from Borrower's business operations or any other condition existing or arising
from Borrower's business operations resulting from

<PAGE>

the use or existence of Hazardous Materials, whether such claim proves to be
true or false. Borrower further agrees that its indemnity obligations shall
include, but are not limited to, 1iability for damages resulting from the
personal injury or death of an employee of the Borrower, regardless of whether
the Borrower has paid the employee under the workmen' s compensation laws of any
state or other similar federal or state legislation for the protection of
employees. The term "property damage" as used in this paragraph includes. but is
not limited to, damage to any real or personal property of the Borrower, the
Bank, and of any third parties. The Borrower's obligations under this paragraph
shall survive the repayment of the Loan and any deed in lieu of foreclosure or
foreclosure of any Deed to Secure Debt, Deed of Trust, Security Agreement or
Mortgage securing the Loan.

         G. SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of the Bank to make any advances under the Line
shall not have expired.

     13.ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT. (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

         (A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
THE BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY THE JUDICIAL ARBITRATION & MEDIATION SERVICES ("JAMS") OFFICE,
WHO WILL APPOINT AN ARBITRATOR, IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTRATING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION
("AAA") WILL SERVE. ALL ARBITRATION WILL BE COMMENCED WITHIN 90 DAYS OF THE
DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL, ONLY UPON A SHOWING OF
CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT PERIOD FOR AN ADDITIONAL 60 DAYS.

         (B) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY APPLICABLE STATUTES OF LIMITATION OR REPOSE
OR ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE BANK OF
THE PROTECTION AFFORDED TO IT BY 12 U.S.C. 91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW- OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP
REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF. OR (B) TO FORECLOSE AGAINST ANY
REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

<PAGE>

     14. NO ORAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.

BORROWER: PERFORMANCE ENGINEERING CORPORATION     BANK: NATIONSBANK, N.A.

By: /s/ STUART LLOYD  (Seal)                      By: /s/ ELAINE EATON
    ---------------                                   ----------------
    Stuart Lloyd                                  Elaine Eaton
    Chief Financial Officer                       Senior Vice President

    [Corporate Seal]

If the Borrower is a corporation, the signature should be attested by the
Secretary or Assistant Secretary of the corporation and corporate seal affixed.

Attest: /s/ ALAN HARBITTER (Seal)
        ------------------
Name: Alan Harbitter
Title: Secretary

<PAGE>

                                    Exhibit A

                             COMPLIANCE CERTIFICATE

      This Compliance Certificate is delivered pursuant to Section 4(B)(iii) of
the Amended and Restated Loan Agreement dated as of April 30, 1999 (together
with all amendments and modifications, if any, from time to time made thereto,
the "Agreement"), between Performance Engineering Corporation (the "Borrower")
and NationsBank, N.A. Unless otherwise defined, terms used herein (including the
attachments hereto) have the meanings provided in the Loan Agreement.

      The undersigned, being the duly elected, qualified and acting of the
Borrower, on behalf of the Borrower and solely in hi, or her capacity as an
officer of the Borrower, hereby certifies and warrants that:

      1.   He or she is the             of the Borrower and that,as such, he or
           she, is authorized to execute this certificate on behalf of th
           Borrower.

      2.        As of                       . 19     :

           (a)  The Borrower was not in default of any of the provisions of the
                Loan Agreement during the period as to which this Compliance
                Certificate relates,

           (b)  Borrower's ratio of Total Liabilities to Tangible Net Worth was
                to 1.0 as computed on Attachment 1 hereto,

           (c)  Borrower's Earnings before Interest Expense and Taxes divided by
                Interest Expense ratio was to 1.0 as computed on Attachment 1
                hereto; and

      3.    The Borrower's loans to employees for the period ending was $
        as computed on Attachment 1 hereto.

      4.       The Borrower's capital stock repurchases for the period ending
                     was $     as computed on Attachment 1 hereto.

      5.       The Borrower's Indebtedness incurred for fixed assets for the
               period ending      was $     as computed on Attachment 1 hereto.

      6.    The Borrower's Pledges on fixed assets for the period ending     was
         $     as computed on Attachment 1 hereto.

    IN WITNESS WHEREOF, the undersigned has executed and delivered this
    certificate,this day of       19.

                                         PERFORMANCE ENGINEERING CORPORATION

                                          By:

                                          Title:

<PAGE>

                                  ATTACHMENT 1

Period ending

RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH

      1.        Total Liabilities:                $

      2.        Tangible Net Worth:               $

Ratio:Total liabilities to Tangible Net Worth (1/2)= to 1.0 required Ratio: 2.00
to 1.0

Measured quarterly

CASH FLOW COVERAGE RATIO
1. Aggregate of earnings before interest expense and taxes      $       .  2.
Interest Expense:                               $
Ratio 1/2            to 1.0            Required Ratio: 2.5 to 1.0

Measured annually at year-end
LOANS
    1. Maximum aggregate loans shall not to exceed $250,000.00.
       MAXIMUM YEAR TO DATE

ADDITIONAL INDEBTEDNESS
    1. Maximum aggregate debt for fixed assets shall not to exceed $500,000.00.
       MAXIMUM YEAR TO DATE                     $

PLEDGE OF ASSETS
    1 .Maximum aggregate pledge against fixed assets not to exceed $500,000.00.
       MAXIMUM YEAR TO DATE                     $

CAPITAL STOCK REPURCHASE
    1 .Maximum aggregate annual stock repurchase not to exceed $500,000
       MAXIMUM YEAR TO DATE                      $<PAGE>

                                                                     Exhibit 4.4

                               PURCHASE AGREEMENT

                  THIS PURCHASE AGREEMENT ("Agreement") is made as of the 16th
day of December, 1999 by and between Avi BioPharma, Inc., a corporation
organized under the laws of Oregon, with headquarters located at Portland,
Oregon (the "Company"), and the persons identified on the signature pages hereto
(each an "Investor" and collectively, the "Investors").

                                    RECITALS

                  A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended;

                  B. The Investors wish to purchase, and the Company wishes to
sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, certain of the Company's shares of Common Stock, par value $.0001 per
share (the "Common Stock") and warrants to acquire shares of Common Stock in the
form attached hereto as EXHIBIT A (the "Warrants") for an aggregate purchase
price of $4.0 million; and

                  C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT B (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, and applicable state securities laws;

                  In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         1. DEFINITIONS. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:

                  1.1 "AFFILIATE" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person.

                  1.2 "AGREEMENTS" means this Agreement, the Registration Rights
Agreement, and the Warrants

<PAGE>

                  1.3 "CLOSING" means the consummation of the transactions
contemplated by this Agreement, and "CLOSING DATE" means the date of such
Closing.

                  1.4 "CONTROL" means the possession , direct or indirect, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.

                  1.5 "MARKET PRICE" means the average of the lowest ten (10)
closing bid prices of the Common Stock over the immediately preceding thirty
(30) trading days as reported by NASDAQ National Market ("the Nasdaq Stock
Market").

                  1.6 "MATERIAL ADVERSE EFFECT" means a material adverse effect
on the (i) condition (financial or otherwise), business, assets, or results of
operations of the Company and its subsidiaries, taken as a whole; (ii) ability
of the Company to perform any of its material obligations under the Agreements;
or (iii) rights and remedies of the Investor under the Agreements.

                  1.7 "PERSON" means an individual, corporation, partnership,
trust, business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

                  1.8 "SEC FILINGS" has the meaning set forth in Section 4.6.

                  1.9 "SECURITIES" means the Shares, the Warrants and the
Warrant Shares (defined below).

                  1.10 "SHARES" means the shares of Common Stock being purchased
by the Investor hereunder.

                  1.11 "WARRANT SHARES" means the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants.

                  1.12 "1933 ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  1.13 "1934 ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

         2. PURCHASE AND SALE OF THE SHARES AND WARRANTS. Subject to the terms
and conditions of this Agreement, each Investor severally hereby agrees to
purchase and the Company hereby agrees to sell and issue to such Investor, the
number of Shares and Warrants to purchase the number of shares of Common Stock
set forth on such Investor's signature page attached hereto. The number of
Shares to be purchased by such Investor shall be determined by dividing such
Investor's aggregate purchase price (as the aggregate purchase price is set
forth on such Investor's signature page attached hereto), by an amount equal to
75% of the Market Price

<PAGE>

of the Common Stock on the date hereof (the "Purchase Price"); provided that the
Purchase Price shall not be less than $3.50 per share nor more than $4.00 per
share (subject to appropriate adjustment for stock splits, reverse splits,
dividends and distributions), and the aggregate Purchase Price shall not exceed
$5.0 million. The number of shares of Common Stock purchasable by the Investor
pursuant to the Warrants shall be equal to 30% of the number of Shares purchased
by the Investor, with an initial exercise price equal to 115% of the Market
Price on the date hereof.

         3. CLOSING. On the date of this Agreement, the Purchase Price shall be
determined. The Company shall promptly deliver to Kleinberg, Kaplan, Wolff &
Cohen, P.C. ("KKWC"), on the date hereof, in trust, (i) the Warrants and a
certificate registered in such name or names as the Investor may designate,
representing all of the Shares, and (ii) payment in full of the fees and
expenses referred to in Section 10.5(b) and (c) below, with instructions that
such certificates, Warrants and dollar amounts are to be held for release to an
Investor only upon payment of the applicable Purchase Price by such Investor to
the Company. Upon receipt by KKWC of the certificates, the Warrants and dollar
amounts, each Investor shall promptly cause a wire transfer in same day funds to
be sent to the account of the Company as instructed in writing by the Company,
in amounts representing such Investor's aggregate Purchase Price. On the date
the Company receives funds from an Investor, the certificates evidencing the
Shares and the Warrants shall be released to such Investor and the allocable
dollar amounts shall be released to the payees as contemplated by Sections 10.5
(b) and (c)(and such date, as to such Investor, shall be deemed the "Closing
Date").

         4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investors that:

                  4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of Oregon and has all requisite power and authority to carry on its
business and own its properties as now conducted and owned. The Company is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification or licensing necessary
unless the failure to so qualify or be licensed would not have a Material
Adverse Effect. SCHEDULE 4.1 lists all subsidiaries of the Company. Except when
the context otherwise requires, representations and warranties in this Section 4
by the Company shall be deemed to include representations and warranties as to
its subsidiaries as well.

                  4.2 AUTHORIZATION. The Company has full power and authority
and has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of the Agreements, (ii) the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The Agreements
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,

<PAGE>

moratorium and similar laws of general applicability, relating to or affecting
creditors' rights generally.

                  4.3 CAPITALIZATION. Set forth on SCHEDULE 4.3 hereto is (a)
the authorized capital stock of the Company on the date hereof; (b) the number
of shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth on SCHEDULE 4.3, no Person is entitled to
preemptive or similar statutory or contractual rights with respect to any
securities of the Company, including the Shares, the Warrants and the Warrant
Shares. Except as set forth on SCHEDULE 4.3, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of
any character under which the Company is or may be obligated to issue any equity
securities of any kind, or to transfer any equity securities of any kind, and
except as contemplated by this Agreement, the Company does not have any present
plan or intention to issue any equity securities of any kind, or to transfer any
equity securities of any kind owned by it. Except as set forth on SCHEDULE 4.3,
the Company does not know of any voting agreements, buy-sell agreements, option
or right of first purchase agreements or other agreements of any kind among any
of the securityholders of the Company relating to the securities held by them.
Except as set forth on SCHEDULE 4.3, the Company has not granted any Person the
right to require the Company to register any securities of the Company under the
1933 Act, whether on a demand basis or in connection with the registration of
securities of the Company for its own account or for the account of any other
Person.

                  4.4 VALID ISSUANCE. The Company has reserved a sufficient
number of shares of Common Stock for issuance pursuant to this Agreement and
upon exercise of the Warrants. The Company will take such steps as may be
necessary to reserve sufficient shares for issuance pursuant to Section 7 below
when such issuance is determinable. The Shares and Warrants are duly authorized,
and such Securities, along with the Warrant Shares when issued in accordance
herewith and with the terms of the Warrants, will be duly authorized, validly
issued, fully paid, non-assessable and free and clear of all encumbrances and
restrictions, except for restrictions on transfer imposed by applicable
securities laws.

                  4.5 CONSENTS. The execution, delivery and performance by the
Company of the Agreements and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than (i) filings that have been
made pursuant to applicable state securities laws and the requirements of the
Nasdaq Stock Market and (ii) post-sale filings pursuant to applicable state and
federal securities laws and the requirements of the Nasdaq Stock Market which
the Company undertakes to file within the applicable time periods.

                  4.6 DELIVERY OF SEC FILINGS; BUSINESS. The Company has
provided each Investor with copies of the Company's most recent Annual Report on
Form 10K for the fiscal

<PAGE>

year ended December 31, 1998, and all other reports filed by the Company
pursuant to the 1934 Act since the filing of the Annual Report on Form 10K
(collectively, the "SEC Filings"). The Company is engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description of the business of the Company. The Company has not provided to any
Investor (i) any information required to be filed under the 1934 Act that has
not been so filed or (ii) any non-public information.

                  4.7 USE OF PROCEEDS. The proceeds of the sale of the
Securities hereunder shall be used by the Company for working capital and
general corporate purposes.

                  4.8 NO MATERIAL ADVERSE CHANGE. Since the filing of the
Company's most recent Annual Report on Form 10K or as otherwise identified and
described in subsequent reports filed by the Company pursuant to the 1934 Act,
there has not been:

                         (i) any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the Company's most recent Report on Form
10Q, except changes in the ordinary course of business which have not had, in
the aggregate, a Material Adverse Effect;

                         (ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;

                         (iii) any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company or any of
its subsidiaries;

                         (iv) any waiver by the Company of a valuable right or
of a material debt owed to it;

                         (v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company taken as a
whole (as such business is presently conducted and as it is proposed to be
conducted);

                         (vi) any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or properties
is bound or subject;

                         (vii) any labor difficulties or labor union organizing
activities with respect to employees of the Company;

                         (viii) any transaction entered into by the Company
other than in the ordinary course of business; or

                         (ix) any other event or condition of any character that
might have a Material Adverse Effect.

<PAGE>

                  4.9 SEC FILINGS; MATERIAL CONTRACTS.

                         (a) As of its filing date, each report filed by the
Company with the SEC pursuant to the 1934 Act, complied as to form in all
material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.

                         (b) Each registration statement and any amendment
thereto filed by the Company pursuant to the 1933 Act and the rules and
regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933
Act, as of its issue date and as of the closing of any sale of securities
pursuant thereto did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.

                         (c) Except as set forth on SCHEDULE 4.3 hereto, there
are no agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.

                  4.10 FORM S-3 ELIGIBILITY.

                  The Company is currently eligible to register the resale of
its Common Stock on a registration statement on Form S-3 under the 1933 Act.

                  4.11 NO CONFLICT, BREACH, VIOLATION OR DEFAULT. (a) The
execution, delivery and performance of the Agreements by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company's Certificate of Incorporation ("Articles") or Bylaws,
each as in effect on the date hereof, or (ii) except where it would not have a
Material Adverse Effect, (a) any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties, or (b) any agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the properties of the Company are subject.

                         (b) Except as set forth on SCHEDULE 4.11 hereto, or
where it would not have a Material Adverse Effect, the Company (i) is not in
violation of any statute, rule or regulation applicable to the Company or its
assets, (ii) is not in violation of any judgment, order or decree applicable to
the Company or its assets; and (iii) is not in breach or violation of any
agreement, note or instrument to which it or its assets are a party or are
bound. The Company

<PAGE>

has not received notice from any Person of any claim or investigation that, if
adversely determined, would render the preceding sentence untrue or incomplete.

                  4.12 TAX MATTERS. The Company has correctly and timely
prepared and filed or timely obtained extensions for, all tax returns required
to have been filed by it with all appropriate governmental agencies and timely
paid all taxes owed by it. The charges, accruals and reserves on the books of
the Company in respect of taxes for all fiscal periods are adequate in all
material respects, and there are no material unpaid assessments of the Company
nor, to the knowledge of the Company, any basis for the assessment of any
additional taxes, penalties or interest for any fiscal period or audits by any
federal, state or local taxing authority except such as which are not material.
All material taxes and other assessments and levies that the Company is required
to withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party. There are no tax liens or
claims pending or threatened against the Company or any of its assets or
property. There are no outstanding tax sharing agreements or other such
arrangements between the Company and any other corporation or entity.

                  4.13 TITLE TO PROPERTIES. Except as disclosed in the SEC
Filings, the Company has good and marketable title to all real properties and
all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, the Company holds any
leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or currently
planned to be made thereof by them.

                  4.14 CERTIFICATES, AUTHORITIES AND PERMITS. The Company
possesses adequate certificates, authorizations or permits issued by appropriate
governmental agencies or bodies necessary to conduct its business as presently
operated and has not received any written notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit that, if
determined adversely to the Company, would individually or in the aggregate have
a Material Adverse Effect.

                  4.15 NO LABOR DISPUTES. No labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent.

                  4.16 INTELLECTUAL PROPERTY. The Company owns or possesses
adequate trademarks and trade names and have all other rights to inventions,
know-how, patents, copyrights, trademarks, trade names, confidential information
and other intellectual property (collectively, "Intellectual Property Rights"),
free and clear of all liens, security interests, charges, encumbrances, equities
and other adverse claims, necessary to conduct the business now operated by it,
or presently employed by it, and presently contemplated to be operated by it,
and has not received any notice of infringement of or conflict with asserted
rights of others with respect to any Intellectual Property Rights. SCHEDULE 4.16
sets forth a list by serial number and title of the patents and/or patent
applications owned or possessed by the Company. No proprietary technology of any
Person was used in the design or development by the Company of

<PAGE>

(or otherwise with respect to) any of the Intellectual Property Rights, which
technology was not properly acquired by the Company from such Person.

                  4.17 ENVIRONMENTAL MATTERS. The Company is not in violation of
any statute, rule, regulation, decision or order of any governmental agency or
body or any court, U.S. or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), does not own or operate any real property
contaminated with any substance that is subject to any Environmental Laws, is
not liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is not subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.

                  4.18 LITIGATION. Except as disclosed in the SEC Filings, there
are no pending actions, suits or proceedings against or affecting the Company,
or any of its properties that, if determined adversely to the Company, would
individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under the Agreements, or which are otherwise material in the context
of the sale of the Securities; and to the Company's knowledge, no such actions,
suits or proceedings are threatened or contemplated.

                  4.19 FINANCIAL STATEMENTS. The financial statements included
in each SEC Filing present fairly and accurately the consolidated financial
position of the Company as of the dates shown and its results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. Except as set forth on SCHEDULE 4.19 or in the financial
statements of the Company included in the SEC Filings filed prior to the date
hereof, the Company has no liabilities, contingent or otherwise, except those
which individually or in the aggregate are not material to the financial
condition or operating results of the Company.

                  4.20 INSURANCE COVERAGE. The Company maintains in full force
and effect insurance coverage that is customary for comparably situated
companies for the business being conducted, and properties owned or leased, by
the Company, and the Company reasonably believes such insurance coverage to be
adequate against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.

                  4.21 COMPLIANCE WITH NASDAQ CONTINUED LISTING REQUIREMENTS.
The Company is in compliance with all applicable Nasdaq continued listing
requirements for the Nasdaq Stock Market and is listed in good standing on the
Nasdaq Stock Market. There are no proceedings pending or, to the Company's
knowledge, threatened against the Company relating to the continued listing of
the Company's Common Stock on the Nasdaq Stock Market and the Company has not
received any notice of, nor to the knowledge of the Company is there any basis
for, the delisting of the Common Stock from the Nasdaq Stock Market.

<PAGE>

                  4.22 ACKNOWLEDGEMENT OF DILUTION. The number of shares of
Common Stock issuable pursuant to this Agreement may increase significantly. The
Company's executive officers and directors have studied and fully understand the
nature of the transactions being contemplated hereunder and recognize that they
have a potential dilutive effect.

                  4.23 BROKERS AND FINDERS. The Investors shall have no
liability or responsibility for the payment of any commission or finder's fee to
any third party in connection with or resulting from this agreement or the
transactions contemplated by this Agreement by virtue of any agreement made by
the Company to a third party, and except as set forth in Section 10.5 below, the
Company shall have no such liability or responsibility for any such commission
or finder's fee.

                  4.24 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION.
Neither the Company nor, to its knowledge, any Person acting on its behalf has
conducted any general solicitation or general advertising (as those terms are
used in Regulation D) in connection with the offer or sale of any of the
Securities.

                  4.25 NO INTEGRATED OFFERING. Neither the Company nor any of
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would adversely affect reliance by
the Company on Section 4(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities
under the 1933 Act; or would require the integration of this offering with any
other offering of securities for purposes of determining the need to obtain
shareholder approval of the transactions contemplated hereby under the rules of
the Nasdaq Stock Market.

                  4.26 DISCLOSURES. No representation or warranty made under any
Section hereof and no information furnished by the Company pursuant hereto, or
in any other document, certificate or statement furnished by the Company to the
Investors or any authorized representative of any of the Investors, pursuant to
the Agreements or in connection therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the respective
statements contained herein or therein, in light of the circumstances under
which the statements were made, not misleading.

                  4.27 CORPORATE PARTNER FINANCING. In the fourth quarter of
calendar year 1999 the Company closed a transaction with a strategic investor
which included the purchase by such investor of 1.0 million shares of Common
Stock at $5.00 per share. The Company has received the full $5 million
investment, and the 1.0 million shares have been issued and are outstanding.

         5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each Investor hereby
severally represents and warrants to the Company as to itself that:

                  5.1 ORGANIZATION AND EXISTENCE. The Investor is a validly
existing company and has all requisite corporate or limited liability company
power and authority to invest in the Securities pursuant to this Agreement.

<PAGE>

                  5.2 AUTHORIZATION. The execution, delivery and performance by
the Investor of the Agreements have been duly authorized and the Agreements will
each constitute the valid and legally binding obligation of the Investor,
enforceable against the Investor in accordance with their terms.

                  5.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be
received by the Investor hereunder will be acquired for the Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of securities laws, and the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of securities laws. The Investor is
not a registered broker dealer or an entity engaged in the business of being a
broker dealer.

                  5.4 INVESTMENT EXPERIENCE. The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby.

                  5.5 DISCLOSURE OF INFORMATION. The Investor has had an
opportunity to receive documents related to the Company and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. Neither such inquiries
nor any other due diligence investigation conducted by the Investor shall
modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement or made pursuant to
this Agreement.

                  5.6 RESTRICTED SECURITIES. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.

                  5.7 LEGENDS. It is understood that, until registration for
resale pursuant to the Registration Rights Agreement or until sales under Rule
144 are permitted, certificates evidencing the Securities will bear one or all
of the following legends or legends substantially similar thereto:

                  "These securities have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be offered, sold,
pledged, hypothecated, assigned or transferred except (i) pursuant to a
registration statement under the Act which has become effective and is current
with respect to these securities, or (ii) pursuant to a specific exemption from
registration under the Act but only upon a holder hereof first having obtained
the written opinion of counsel to the Corporation, or other counsel reasonably
acceptable to the Corporation, that the proposed disposition is consistent with
all applicable provisions of the Act."

                  Upon registration for resale pursuant to the Registration
Rights Agreement, or when sales under Rule 144 are permitted, the Company shall
promptly cause certificates

<PAGE>

evidencing the Shares previously issued hereunder to be replaced with
certificates which do not bear such restrictive legends.

                  5.8 ACCREDITED INVESTOR. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933
Act.

                  5.9 NO GENERAL SOLICITATION. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.

         6. REGISTRATION RIGHTS AGREEMENT. The parties acknowledge and agree
that part of the inducement for the Investors to enter into this Agreement is
the Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.

         7. COVENANTS AND AGREEMENTS OF THE COMPANY.

                  7.1 SUBSEQUENT SALE AT LOWER PRICE.

                         (a) REQUIRED ADJUSTMENTS. Subject to the exclusions
contained in Section 7.1(f) below, if during the period ending on the later of
(i) thirty-six (36) months following the Closing Date or (ii) thirty-three (33)
months following the effective date of the Registration Statement contemplated
by the Registration Rights Agreement (the "MFN Period"), the Company sells any
shares of its Common Stock at a per share selling price ("Per Share Selling
Price") lower than the Purchase Price per share set forth in Section 2 hereof,
the Purchase Price per share of the Shares originally sold to an Investor
hereunder shall be adjusted downward to equal such lower Per Share Selling Price
and such Investor shall be entitled to receive the additional shares as provided
by Section 7.1(c); provided, however, that in the event the Investor then owns
less than 51% of the Shares originally acquired by it hereunder, such Investor
shall be entitled to additional shares only with respect to the number of Shares
originally acquired and then owned by the Investor as provided in Section
7.1(c). For so long as such Investor owns 51% or more of the Shares originally
acquired by such Investor hereunder, the Investor shall be entitled to the full
benefit of the Purchase Price adjustment required by this Section 7.1. The
Company shall give to each Investor written notice of any such sale within 24
hours of the closing of any such sale and shall within such 24 hour period issue
a press release announcing such sale.

                         (b) DEFINITIONS.

                            (i) For the purposes of this Section 7.1, the term
"Per Share Selling Price" as used in this Section 7.1 shall mean the amount
actually paid by third parties for each share of Common Stock. A sale of shares
of Common Stock shall include the sale or issuance of rights, options, warrants
or convertible securities ("derivative securities") under which the Company is
or may become obligated to issue shares of Common Stock, and in such
circumstances the sale of Common Stock shall be deemed to have occurred at the
time of the issuance of the derivative securities and the Per Share Selling
Price of the Common Stock

<PAGE>

covered thereby shall also include the exercise or conversion price thereof (in
addition to the consideration per underlying share of Common Stock received by
the Company upon such sale or issuance of the derivative security, less the fee
amount as provided above). In case of any such security issued within the MFN
Period in a "Variable Rate Transaction" or an "MFN Transaction" (each as defined
below), the Per Share Selling Price shall be deemed to be the lowest conversion
or exercise price at which such securities are converted or exercised or might
have been converted or exercised in the case of a Variable Rate Transaction, or
the lowest adjustment price in the case of an MFN Transaction. If shares are
issued for a consideration other than cash, the per share selling price shall be
the fair value of such consideration as determined in good faith by the Board of
Directors of the Company.

                            (ii) The term "Variable Rate Transaction" shall mean
a transaction in which the Company issues or sells (a) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (x) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (y) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock (but
excluding standard stock split anti-dilution provisions), or (b) any securities
of the Company pursuant to an "equity line" structure which provides for the
sale, from time to time, of securities of the Company which are registered for
resale pursuant to the 1933 Act.

                            (iii) The term "MFN Transaction" shall mean a
transaction in which the Company issues or sells any securities in a capital
raising transaction or series of related transactions (the "New Offering") which
grants to an investor (the "New Investor") the right to receive additional
shares based upon future transactions of the Company on terms more favorable
than those granted to the New Investor in the New Offering.

                            (iv) The term "MFN Period" shall have the meaning
set forth in Section 7.1(a), above.

                            (c) ADJUSTMENT MECHANISM. If an adjustment of the
Purchase Price is required pursuant to Section 7.1(a), the Company shall deliver
to the Investor within eight calendar days of the closing of the transaction
giving rise to the adjustment or by such other date as may be required by
Section 7.1(d) ("Delivery Date") the Investor's share of such number of
additional shares of Common Stock equal to (i) the aggregate Purchase Price paid
by the Investor divided by the adjusted Per Share Purchase Price as required
under Section 7.1(a), minus (ii) the total number of shares of Common Stock
previously delivered to the Investor hereunder; PROVIDED HOWEVER, that the
Company shall delay effecting such adjustment, in whole or in part, to the
extent required by Section 7.1(d). In the event the Company fails to deliver the
additional shares by the applicable Delivery Date, the Company shall be liable
to the Investor for a delay payment equal to 2% of the Purchase Price per month
payable in Common Stock or cash, at the Investor's election. If at the time of
any adjustment the proviso of the first sentence of Section 7.1(a) is
applicable, then the number of additional shares otherwise determined as
deliverable under this Section

<PAGE>

7.1(c) shall be adjusted so that it is equal to such number, multiplied by a
fraction, the numerator of which is the number of Shares acquired on the Closing
Date and still owned at the time of the adjustment and the denominator is the
total number of Shares acquired on the Closing Date.

                         (d) LIMITATION ON NUMBER OF SHARES.

                            (i) If by way of any adjustment required by this
Section 7.1, the Investor would receive a number of shares of Common Stock such
that the total number of such shares beneficially owned (within the meaning of
Section 13(d) of the 1934 Act) by the Investor as of the date of such adjustment
would be greater than 9.90% but less than 13.0% of the total outstanding Common
Stock of the Company, then the Company shall not effect the adjustment required
by this Section to the extent necessary to avoid causing the aforesaid
limitation to be exceeded until 120 days following the date such adjustment
would have otherwise been made.

                            (ii) If by way of any adjustment required by this
Section 7.1, the Investor would receive a number of shares of Common Stock such
that the total number of such shares held by the Investor as of the date of such
adjustment would equal or exceed 13.0% of the total outstanding Common Stock of
the Company, then the Company shall not effect the adjustment required by this
Section to the extent necessary to avoid causing the aforesaid limitation to be
exceeded until 180 days following the date such adjustment would have otherwise
been made.

                            (iii) In no event shall the Company issue to an
Investor additional shares pursuant to an adjustment required by this Section
7.1 such that the total number of shares issued to such Investor (when added to
the Warrant Shares actually received upon exercise of Warrants by such Investor)
would exceed such Investor's "pro rata" share of 2,861,361 shares of Common
Stock (the "allocation") (subject to appropriate adjustment for stock splits or
stock dividends). Instead, the Company shall redeem excess shares at 110% of the
Per Share Purchase Price, as adjusted. At such time as an Investor owns neither
any Shares that were originally acquired pursuant to this Agreement nor any
Warrants, it shall notify the Company, who then shall notify the other
Investors. At such time, to the extent such Investor's allocation has not been
exhausted, it shall be divided, pro rata, among the remaining Investors. An
Investor's pro rata share shall be the portion determined by dividing its
aggregate Purchase Price by the total Purchase Price of all Investors holding
shares at the time the pro rata share is being determined. Each Investor's
initial allocation is listed on the signature page for such Investor. Only
shares acquired pursuant to this Agreement or upon exercise of Warrants will be
included in determining whether the limitations would be exceeded for purposes
of this Section 7.1(d)(iii).

                            (iv) The time periods in paragraphs (i) (120 days)
and (ii) (180 days) above shall be extended one (1) day for each day, prior to
the time that sales under Rule

<PAGE>

144(k) would be permitted, that sales under the Registration Statement
contemplated by the Registration Rights Agreement may not be made.

                         (e) CAPITAL ADJUSTMENTS. In case of any stock split or
reverse stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of Section 7.1 shall be applied
in a fair, equitable and reasonable manner so as to give effect, as nearly as
may be, to the purposes hereof.

                         (f) EXCLUSIONS. Section 7.1(a) shall not apply to (i)
sales of shares of Common Stock by the Company upon conversion or exercise of
any convertible securities, options or warrants outstanding prior to the date
hereof; or (ii) sales of shares of Common Stock by the Company pursuant to the
provisions of any shareholder-approved option or similar plan heretofore adopted
by the Company.

                         (g) RULE 144. The Company agrees to take the position
that, for purposes of determining the holding period under Rule 144 for shares
of Common Stock issued pursuant to Section 7.1(a), the holding period of such
shares shall be tacked to the holding period of the Shares.

                  7.2 LIMITATION ON TRANSACTIONS.

                         (a) Until the expiration of the MFN Period, without the
prior written consent of the Investors (which consent may be withheld in the
Investor's discretion), the Company shall not (i) issue or sell or agree to
issue or sell any securities for cash in a non-public MFN Transaction; or (ii)
issue or sell, or agree to issue or sell, any securities for cash in a
non-public Variable Rate Transaction.

                         (b) During the period after effectiveness of the
registration statement contemplated by the Registration Rights Agreement and
until the expiration of the MFN Period, without the prior written consent of the
Investor (which consent may be withheld in the Investor's discretion), the
Company shall not (i) issue or sell or agree to issue or sell any securities for
cash in a non-public MFN Transaction; or (ii) issue or sell, or agree to issue
or sell, any securities for cash in a non-public Variable Rate Transactions.

                         (c) Except as contemplated by paragraph (e) below, the
Company shall not issue any securities in any transaction that would be
integrated with the Securities issued pursuant to this Agreement.

                         (d) The Company may issue securities pursuant to
"equity line" financing (as described in Section 7.1(b)(ii) above) provided the
number of common shares issued does not exceed 8% of the number of common shares
outstanding on the initiation of the equity line.

                         (e) The Company may issue additional equity securities,
for an aggregate purchase price equal to $3.0 million. There can be no more than
four institutional

<PAGE>

investors ("other investors") in such transaction, who shall be identified to
Tail Wind Inc. If the Company issues such equity with six (6) months of the date
hereof, the allocation provided for in Section 7.1(d)(iii) above shall be
proportionally reduced in a manner acceptable to all the Investors, and each
Investor shall be notified of its new allocation. No more than six institutional
investors will be approached in connection with such transaction. The
transaction with the "other investors" will be on the terms, conditions and
provisions as set forth in the documents supplied to KKWC and Tail Wind Inc. on
December 15, 1999. The Company will supply each Investor with complete copies of
all of the transaction documents applicable to the investment by the other
investors at the time such documents are agreed to by the Company.

                  7.3 RIGHT OF INVESTOR TO PARTICIPATE IN FUTURE TRANSACTIONS.
The Company agrees that during the MFN Period the Investor will have a right to
participate in future non-public capital raising transactions as set forth in
this Section 7.3. The Company shall give advance written notice to each Investor
prior to any offer or sale of any of its equity securities or any securities
convertible into or exchangeable or exercisable for such securities in a
non-public capital raising transaction. Prior to the closing of any such
transaction, each Investor shall have the right to participate in its pro rata
share of up to 50% of such new offering (or in the case of a Variable Rate
Transaction, up to 75% of such new offering) and purchase such securities for
the same consideration and on the same terms and conditions as contemplated for
such third-party sale. In order to exercise this right, an Investor must give
written notice to the Company of the Investor's election to participate and such
notice must be given within ten (10) days following receipt of the notice from
the Company. In the event the Company gives notice to the Investor of an
expected transaction pursuant to this Section 7.3 but cannot consummate such
transaction, the Company will give the Investor prompt written notice of the
cancellation of such transaction. If, subsequent to the Company giving notice to
the Investor hereunder, the terms and conditions of the proposed third-party
sale are changed in any way, the Company shall be required to provide a new
notice to the Investor hereunder and the Investor shall have the right to
participate in the offering on such changed terms and conditions as provided
hereunder.

                  7.4 OPINION OF COUNSEL. On or prior to the Closing Date, the
Company will deliver to the Investor the opinions of independent legal counsel
to the Company, in form and substance reasonably acceptable to the Investor,
addressing those legal matters set forth in SCHEDULE 7.4 hereto.

                  7.5 RESERVATION OF COMMON STOCK PURSUANT TO SECTION 7.1 AND
EXERCISE OF WARRANTS. The Company hereby agrees, at all times with respect to
shares issuable upon exercise of the Warrants, and at all appropriate times with
respect to shares issuable pursuant to Section 7.1, to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the additional issuance(s) of Common Stock pursuant
to Section 7.1 and exercise of the Warrants, such number of shares of Common
Stock as shall from time to time equal the number of shares sufficient to permit
the issuance, if any, required pursuant to Section 7.1 plus the number of shares
of Common Stock as shall be necessary to permit the exercise of the Warrants in
accordance with the terms of the Warrants.

<PAGE>

                  7.6 REPORTS. Within one week of filing the following reports
with the SEC, or in the absence of such filing within the time periods specified
below, the Company shall send a copy of the following reports to each Investor
by regular mail:

                         (a) QUARTERLY REPORTS. As soon as available the
Company's quarter-annual report on Form 10-Q or, in the absence of such report,
consolidated balance sheets of the Company and its subsidiaries as at the end of
such period and the related consolidated statements of operations, stockholders'
equity and cash flows for such period and for the portion of the Company's
fiscal year ended on the last day of such quarter, all in reasonable detail and
certified by a principal financial officer of the Company to have been prepared
in accordance with generally accepted accounting principles, subject to year-end
and audit adjustments.

                         (b) ANNUAL REPORTS. As soon as available after the end
of each fiscal year of the Company, the Company's Form 10K or, in the absence of
a Form 10K, consolidated balance sheets of the Company and its subsidiaries as
at the end of such year and the related consolidated statements of earnings,
stockholders' equity and cash flows for such year, all in reasonable detail and
accompanied by the report on such consolidated financial statements of an
independent certified public accountant selected by the Company and reasonably
satisfactory to the Investor.

                         (c) SECURITIES FILINGS. As promptly as practicable and
in any event within one week after the same are issued or filed, copies of (i)
all notices, proxy statements, financial statements, reports and documents as
the Company or any subsidiary shall send or make available generally to its
stockholders or to financial analysts, and (ii) all periodic and special
reports, documents and registration statements which the Company or any
subsidiary furnishes or files, or any officer or director of the Company or any
of its subsidiaries (in such person's capacity as such) furnishes or files with
the SEC.

                         (d) OTHER INFORMATION. Such other information relating
to the Company or its subsidiaries as from time to time may reasonably be
requested by the Investor provided the Company produces such information in its
ordinary course of business, and further provided that the Company, solely in
its own discretion, determines that such information is not confidential in
nature and disclosure to the Investor would not be harmful to the Company.

                         (e) RULE 144. The Company agrees to make publicly
available on a timely basis the information necessary to enable Rule 144 to be
available for resale.

                  7.7 PRESS RELEASES. Any press release or other publicity
concerning this Agreement or the transactions contemplated by this Agreement
shall be submitted to the Investor for comment at least two (2) business days
prior to issuance, unless the release is required to be issued within a shorter
period of time by law or pursuant to the rules of a national securities
exchange. The Company shall issue a press release concerning the fact and
material terms of this Agreement within one business day of the Closing.

                  7.8 NO CONFLICTING AGREEMENTS. The Company will not, and will
not permit its subsidiaries to, take any action, enter into any agreement or
make any commitment that would

<PAGE>

conflict or interfere in any material respect with the obligations to the
Investor under the Agreements.

                  7.9 INSURANCE. For so long as any Investor beneficially owns
any of the Securities, the Company shall, and shall cause each subsidiary to,
have in full force and effect (a) insurance reasonably believed to be adequate
on all assets and activities of a type customarily insured, covering property
damage and loss of income by fire or other casualty, and (b) insurance
reasonably believed to be adequate protection against all liabilities, claims
and risks against which it is customary for companies similarly situated as the
Company and the subsidiaries to insure.

                  7.10 COMPLIANCE WITH LAWS. For so long as any Investor
beneficially owns any of the Securities, the Company will use reasonable
efforts, and will cause each of its subsidiaries to use reasonable efforts, to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.

                  7.11 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. The
Company hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action to cause the Shares, the
Warrant Shares and the shares of Common Stock issuable under Section 7.1(a)
hereof to be listed on the Nasdaq Stock Market as promptly as possible but no
later than the effective date of the registration contemplated by the
Registration Rights Agreement. The Company further agrees that if the Company
applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it will include in such application the
Common Stock underlying the Warrants, and will take such other action as is
necessary to cause such Common Stock to be so listed. The Company will take all
action necessary to continue the listing and trading of its Common Stock on the
Nasdaq Stock Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such
exchange, as applicable, to ensure the continued eligibility for trading of the
Shares and the Warrant Shares thereon.

                  7.12 CORPORATE EXISTENCE. So long as any Investor beneficially
owns any of the Shares or Warrants, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving or successor
entity in such transaction (a) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith,
regardless of whether or not the Company would have had a sufficient number of
shares of Common Stock authorized and available for issuance in order to fulfill
its obligations hereunder and effect the exercise in full of all Warrants
outstanding as of the date of such transaction; (b) has no legal, contractual or
other restrictions on its ability to perform the obligations of the Company
hereunder and under the agreements and instruments entered into in connection
herewith; and (c) (i) is a publicly traded corporation whose common stock and
the shares of capital stock issuable upon exercise of the Warrants are (or would
be upon issuance thereof) listed for trading on the Nasdaq Stock Market, New
York Stock Exchange or American Stock Exchange, or (ii) if not such a publicly
traded corporation, then the buyer agrees that it will, at

<PAGE>

the election of the Investor, purchase such Investor's Shares (and Warrant
Shares) at a price equal to 120% of the Per Share Purchase Price of such Shares.

         8. SURVIVAL. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement.

         9. ARBITRATION.

                  9.1 SCOPE. Resolution of any and all disputes arising from or
in connection with the Agreements, whether based on contract, tort, common law,
equity, statute, regulation, order or otherwise ("Disputes"), shall be
exclusively governed by and settled in accordance with the provisions of this
Section 9; provided, that the foregoing shall not preclude equitable or other
judicial relief to enforce the provisions hereof or to preserve the status quo
pending resolution of Disputes hereunder.

                  9.2 BINDING ARBITRATION. The parties hereby agree to submit
all Disputes to arbitration for final and binding resolution. Either party may
initiate such arbitration by delivery of a demand therefor (the "Arbitration
Demand") to the other party. The arbitration shall be conducted in New York, New
York by a sole arbitrator selected by agreement of the parties not later than 10
days after delivery of the Arbitration Demand, or, failing such agreement,
appointed pursuant to the Commercial Arbitration Rules of the America
Arbitration Association, as amended from time to time (the "AAA Rules"). If the
arbitrator becomes unable to serve, his successor(s) shall be similarly selected
or appointed.

                  9.3 PROCEDURE. The arbitration shall be conducted pursuant to
the Federal Arbitration Act and such procedures as the parties may agree or, in
the absence of or failing such agreement, pursuant to the AAA Rules.
Notwithstanding the foregoing, (a) each party shall have the right to conduct
limited discovery of information relevant to the Dispute; (b) each party shall
provide to the other, reasonably in advance of any hearing, copies of all
documents that a party intends to present in such hearing; (c) all hearings
shall be conducted on an expedited schedule; and (d) all proceedings shall be
confidential, except that either party may at its expense make a stenographic
record thereof.

                  9.4 TIMING. The arbitrator shall use best efforts to complete
all hearings not later than 90 days after his or her selection or appointment,
and shall use best efforts to make a final award not later than 30 days
thereafter. The arbitrator shall apportion all costs and expenses of the
arbitration, including the arbitrator's fees and expenses, and fees and expenses
of experts ("Arbitration Costs") between the prevailing and non-prevailing party
as the arbitrator shall deem fair and reasonable. In circumstances where a
Dispute has been asserted or defended against on grounds that the arbitrator
deems manifestly unreasonable, the arbitrator may assess all Arbitration Costs
against the non-prevailing party and may include in the award the prevailing
party's attorney's fees and expenses in connection with any and all proceedings
under this Section 9. Notwithstanding the foregoing, in no event may the
arbitrator award multiple or punitive damages

<PAGE>

         10. MISCELLANEOUS.

                  10.1 SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by a party hereto without the prior written consent of the other party
hereto, except that without the prior written consent of the Company, but after
notice duly given, an Investor may assign its rights hereunder in whole or in
part to any purchaser of Securities from the Investor. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

                  10.2 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                  10.3 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                  10.4 NOTICES. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) telex or telecopier, upon receipt of the electronically
generated confirmation of delivery, or (iii) a recognized overnight air courier,
addressed to the party to be notified at the address as follows, or at such
other address as such party may designate by ten days' advance written notice to
the other party:

                           If to the Company:

                                    Avi BioPharma, Inc.
                                    One SW Columbia Street, Suite 1105
                                    Portland, Oregon  97258
                                    Telephone: (503) 227-0554
                                    Telefax:   (503) 227-0751
                                    Attention: Alan P. Timmins
                                               Chief Financial Officer

<PAGE>

                                    with a copy to:

                                    Ater Wynne
                                    222 SW Columbia, Suite 1800
                                    Portland, Oregon 97201
                                    Attention:       Byron Milstead
                                    Telephone:       (503) 226-1191
                                    Facsimile:       (503) 226-0079

                           If to the Investor:

                           To the address specified therefor on the applicable
signature pages.

                                    and with a copy to:

                                    Kleinberg, Kaplan, Wolff & Cohen, P.C.
                                    551 Fifth Avenue
                                    New York, New York  10176
                                    Attn:  Stephen M. Schultz
                                    Telephone: (212) 986-6000
                                    Facsimile: (212) 986-8866

                  10.5 FEES AND EXPENSES.

                         (a) Except as set forth below, the parties hereto shall
pay their own costs and expenses in connection herewith.

                         (b) European American Securities, Inc. (EASI), a member
firm of the NASD, and a regulated entity of the Securities and Futures Authority
of Great Britain, will act as agent for the Investor in the transaction. EASI
shall be entitled to a fee equal to $0.28 per share, which shall be paid by the
Company at the Closing.

                         (c) Tail Wind Inc. shall receive an expense allowance
to cover due diligence expenses and legal expenses, in an amount equal to 1% of
the aggregate Purchase Price (not to exceed $40,000) less the portion of the
expense allowance previously paid ($13,000). Such expense allowance shall be
paid by the Company at the Closing.

                  10.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and 75% in interest
(based upon pro rata share) of the Investors. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
Securities purchased under this Agreement at the time outstanding, each future
holder of all such securities, and the Company.

<PAGE>

                  10.7 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

                  10.8 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto, and the Registration Rights Agreement constitute the
entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.

                  10.9 FURTHER ASSURANCES. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.

                  10.10 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.

                  10.11 REMEDIES.

                         (a) The Investors shall be entitled to specific
performance of the Company's obligations under the Agreements.

                         (b) The Company shall indemnify each Investor and each
such Investor's officers, directors, partners, agents and employees
(collectively, "Indemnitees") and hold the Indemnitees harmless from any loss,
cost, expense or fees (including attorneys' fees and expenses) arising out of
(i) any breach of any representation, warranty, covenant or agreement in any of
the Agreements, (ii) any cause of action, suit or claim brought or made against
such Indemnitee (other than directly by the Company solely for breach of this
Purchase Agreement, the Warrant, or the Registration Rights Agreement by the
Indemnitee or by governmental or regulatory authorities), and arising out of or
resulting from (whether in whole or in part) the execution, delivery,
performance or enforcement of the Agreements or any other instrument, document
or agreement executed pursuant hereto or thereto or contemplated hereby or
thereby (including without limitation the acquisition of the Warrants and/or the
Warrant Shares), any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities or
the status of the purchaser as an investor in the Company, except to the extent
that such actual loss or damage directly results from a breach by such
Indemnitee of the Agreements or from a violation of law, or (iii) arising out of
the enforcement of this Section 10.11. The right to indemnification shall
include the right to advancement of expenses as they are incurred.

<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

The Company:

                                      AVI BIOPHARMA, INC.

                                      By:_________________________
                                      Name:
                                      Title:

The Investor:                         THE TAIL WIND FUND, LTD.

                                      By:_________________________
                                      Name:
                                      Title:

                                      By:_________________________
                                      Name:
                                      Title:

Aggregate Purchase Price:  $2,500,000
Number of Shares of Common Stock:  714,286
Number of Warrants:  214,286
Effective per share Purchase Price of Shares:  $3.50
Exercise price of Warrants:  $4.03
Share Allocation 1,788,351 (per Section 7.1(d)(iii))
Address for Notice:

The Tail Wind Fund, Ltd.            With copies to:
Windermere House
404 East Bay Street                 Tail Wind, Inc
P.O. Box SS-5539                    C/o European American Securities, Inc.
Nassau, Bahamas                     One Regent Street, 4th Floor
Attn:  J. McCarroll                 London SW1Y 4NS
Telephone:  242/393-8777            England
Facsimile:   242/393-9021           Attn:  David Crook
                                    Telephone:  44-171-468-7660
                                    Facsimile:   44-171-468-7657

                                    Kleinberg, Kaplan, Wolff & Cohen, P.C.
                                    551 Fifth Avenue
                                    New York, New York  10176
                                    Attn:  Stephen M. Schultz
                                    Telephone: (212) 986-6000
                                    Facsimile: (212) 986-8866

                              [PURCHASE AGREEMENT]

<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

The Company:

                                        AVI BIOPHARMA, INC.

                                        By:_________________________
                                        Name:
                                        Title:

The Investor:                           RESONANCE LTD.

                                        By:_________________________

Name:  Mo Bodner

                                        Title:

Aggregate Purchase Price:  $1,500,000
Number of Shares of Common Stock:  428,571
Number of Warrants:  128,571
Effective per share Purchase Price of Shares:  $3.50
Exercise price of Warrants:  $4.03
Share Allocation 1,073,010 (per Section 7.1(d)(iii))
Address for Notice:

                            Resonance Ltd.
                            c/o International Securities Corporation
                            551 Fifth Avenue
                            Suite 1425
                            New York, New York 10176
                            Attn: Mo Bodner
                            Telephone: (212) 986-7811
                            Facsimile:

                              [PURCHASE AGREEMENT]

<PAGE>

                                 EXHIBIT 7.2(e)

                   TERMS FOR PRIVATE PLACEMENT OF COMMON STOCK
                             OF AVI BIOPHARMA, INC.

ISSUE SIZE:                                          $3.0 million.

PRICING:                                             A 25% discount off the
                                                     market price prior to the
                                                     close of the transaction,
                                                     with the "Market Price"
                                                     defined as the average of
                                                     the lowest 10 closing bid
                                                     prices out of a 30 trading
                                                     day period; however, in no
                                                     event will the purchase
                                                     price be below $3.50 or
                                                     above $4.00.

WARRANTS:                                            30% coverage in 5 year
                                                     warrants with a strike
                                                     price at a 15% premium to
                                                     the Market Price prior to
                                                     the close of the
                                                     transaction.

ANTI DILUTION PROTECTION:                            MFN provision no more
                                                     favorable to the investors
                                                     than those included in the
                                                     agreement with The Tail
                                                     Wind Fund Ltd.

REGISTRATION:                                        The company will file a
                                                     registration statement for
                                                     resale for the shares
                                                     issued, and if this is not
                                                     declared effective within 3
                                                     months, penalties will
                                                     accrue at the rate of 2%
                                                     per month.

FEE:                                                 To be agreed between the
                                                     parties.

<PAGE>

                                  SCHEDULE 4.1

AntiVirals Acquisition Corp., a California corporation, a wholly-owned
subsidiary if AVI BioPharma, Inc.

<PAGE>

                                  SCHEDULE 4.11

No items to report

<PAGE>

                                  SCHEDULE 4.19

No items to report.

<PAGE>

                                  SCHEDULE 4.3

(a)      50,000,000 shares of Common Stock authorized 2,000,000 shares of
         Preferred Stock authorized

(b)      14,378,698 shares of Common Stock issued and outstanding no shares of
         Preferred Stock issued and outstanding

(c)      2,144,277 shares of Common Stock issuable pursuant to stock option
         plans

(d)      4,898,681 shares of Common Stock issuable pursuant to warrant
         agreements

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}]]