LOAN AGREEMENT, SECURITY AGREEMENT AND 10% CONVERTIBLE, SECURED PROMISSORY NOTE

 

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EXHIBIT 10.27

 

                         NORTHWEST BIOTHERAPEUTICS, INC.

                     LOAN AGREEMENT, SECURITY AGREEMENT AND

                    10% CONVERTIBLE, SECURED PROMISSORY NOTE

 

$400,000.00                                                     NOVEMBER 14, 2005

 

SECTION 1. GENERAL.

 

For value received, NORTHWEST BIOTHERAPEUTICS, INC., a Delaware corporation (the

"MAKER" or the "COMPANY"), hereby promises to pay to the order of Toucan

Partners, LLC or its assigns (collectively, the "HOLDER"), the principal amount

of Four Hundred Thousand Dollars ($400,000) upon written demand by Holder made

at any time on or after the first anniversary of execution of this Loan

Agreement, Security Agreement and 10% Convertible, Secured Promissory Note (this

"NOTE" or this "AGREEMENT"), or such earlier date as may be applicable under

Sections 3 and 4 hereof (the "MATURITY DATE"). Maker shall pay interest on the

unpaid principal amount of this Note, accruing from and after the date hereof at

the rate of ten percent (10%) per annum, compounding annually (computed on the

basis of a 365-day year and the actual number of days elapsed) (the "INTEREST

RATE"). Accrued interest shall be payable upon the payment of the principal of

this Note. The principal of, and interest on, this Note shall be payable in

lawful currency of the United States of America by wire transfer in immediately

available funds to the account of Holder, as provided in writing to Maker by

Holder. All payments shall be applied first to fees, costs and charges relating

to this Note (including, without limitation, any costs of collection), then to

accrued and unpaid interest, and thereafter to principal. This loan is made by

Holder to Maker in anticipation of an equity financing. Capitalized terms used

but not defined herein shall have the meanings ascribed to them in the

Recapitalization Agreement.

 

SECTION 2. PRE-PAYMENT.

 

This Note may be pre-paid in whole or in part prior to the Maturity Date;

provided Maker provides Holder with 30 days prior written notice thereof, and

provided further that Holder shall have the option to convert this note in

accordance with Section 12 hereof by notifying Maker of Holder's election on or

before the expiration of such thirty (30) day notice period. In the event of

prepayment, Maker shall pay a penalty in the amount of 1% of the principal and

accrued interest then outstanding under this Note, unless a greater or lesser

penalty is established or approved by the U.S. Small Business Administration

("SBA"). Conversion of this Note shall not be deemed a prepayment.

 

SECTION 3. DEFAULT INTEREST.

 

Upon the occurrence of an Event of Default (as hereinafter defined), the unpaid

principal amount and accrued and unpaid interest shall bear interest payable on

demand at the lesser of (i) fourteen percent (14%) per annum, (ii) the maximum

rate permitted under applicable rules and regulations of the SBA, or (iii) the

maximum rate allowed by law (the "DEFAULT INTEREST"). Such interest shall

accrue, commencing upon the occurrence of an Event of Default and continuing

until such Event of Default is cured or waived.

 

SECTION 4. DEFAULTS.

 

            4.1 Definitions. Each occurrence of any of the following events

shall constitute an "EVENT OF DEFAULT":

 

            (a) if a default occurs in the payment of any principal of, interest

on, or other obligation with respect to, this Note, whether at the due date

thereof or upon acceleration thereof, and such default remains uncured for five

(5) business days after written notice thereof from Holder;

 

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            (b) if any representation or warranty of Maker made herein shall

have been false or misleading in any material respect, or shall have contained

any material omission, as of the date hereof;

 

            (c) if a default occurs in the due observance or performance of any

covenant or agreement on the part of Maker to be observed or performed pursuant

to the terms of this Note and such default remains uncured for five (5) business

days after written notice thereof from Holder;

 

            (d) if a default occurs in Maker's performance of any of the terms

and conditions of that certain Amended and Restated Recapitalization Agreement,

dated as of July 30, 2004 and as amended on October 22, 2004, November 10, 2004,

December 27, 2004, January 26, 2005, April 12, 2005, May 13, 2005, June 16,

2005, July 26, 2005, September 7, 2005 and November 14, 2005 (the

"RECAPITALIZATION AGREEMENT") or any Related Recapitalization Document;

 

            (e) if Maker shall (i) discontinue its business, (ii) apply for or

consent to the appointment of a receiver, trustee, custodian or liquidator of

Maker or any of its property, (iii) make a general assignment for the benefit of

creditors, or (iv) file a voluntary petition in bankruptcy, or a petition or an

answer seeking reorganization or an arrangement with creditors, or take

advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,

dissolution or liquidation laws or statutes, or file an answer admitting the

material allegations of a petition filed against it in any proceeding under any

such law, provided, however, that insolvency of Maker shall not constitute a

default, or the basis for a default, during the Bridge Period;

 

            (f) if there shall be filed against Maker an involuntary petition

seeking reorganization of Maker or the appointment of a receiver, trustee,

custodian or liquidator of Maker or a substantial part of its assets, or an

involuntary petition under any bankruptcy, reorganization or insolvency law of

any jurisdiction, whether now or hereafter in effect (any of the foregoing

petitions being hereinafter referred to as an "INVOLUNTARY PETITION") and such

Involuntary Petition shall not have been dismissed within ninety (90) days after

it was filed, provided, however, that insolvency of Maker shall not constitute a

default, or the basis for a default, during the Bridge Period;

 

            (g) if final judgment(s) for the payment of money in excess of an

aggregate of $25,000 (excluding any portion thereof that an insurance company of

nationally recognized standing and creditworthiness has agreed to pay) shall be

rendered against Maker and the same shall remain undischarged for a period of

thirty (30) days;

 

            (h) if there occurs any event that may have a material adverse

effect on the business, affairs, prospects, operations, properties, assets,

liabilities, structure or condition, financial or otherwise, of the Company (as

such business is presently currently conducted and/or as it is proposed to be

conducted), or on any material assets or any Intellectual Property or other

Collateral developed, owned, controlled, licensed, possessed, or used by Maker,

or to which Maker has any right, option, entitlement or claim, provided,

however, that ongoing weakening of Maker's financial condition due to ongoing

expenditures and Maker's failure to obtain equity financing shall not constitute

a default, or the basis for a default, during the Bridge Period; or

 

            (i) if Maker deviates, during the period covered by such budget,

more than $10,000 in aggregate from the budget included in the Disclosure

Schedule   (as defined herein), or takes any action or makes any

promise, undertaking or commitment that would result in Maker incurring or

accumulating payables and/or other financial obligations of any kind, whether

current or deferred, direct or indirect, for purposes other than as set forth in

budgets expressly agreed to by Holder, and/or in any amounts in excess of the

amounts set forth in such agreed budgets, which equal or exceed $10,000 in

aggregate, and which have not been approved in writing in advance by Holder.

 

            4.2 Cross-Default: Maker acknowledges that the financing

contemplated by this Note is part of an integrated Recapitalization Plan, as set

forth in the Recapitalization Agreement and the Related Recapitalization

Documents. Maker further acknowledges and agrees that this Note is subject to

all terms and conditions set forth in the Recapitalization Agreement and the

Related Recapitalization Documents, and that the Recapitalization Agreement and

the Related Recapitalization Documents are subject to all of the terms and

conditions of this Note. Maker agrees that any default by Maker under any

provision of this Note, the Recapitalization Agreement or any of

 

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the Related Recapitalization Documents will constitute a default under each

other Related Recapitalization Document and the Recapitalization Agreement.

 

      4.3 Remedies on Default.

 

            (a) Upon each and every such Event of Default and at any time

thereafter during the continuance of such Event of Default: (i) any and all

indebtedness of Maker to Holder under this Note or otherwise shall immediately

become due and payable, both as to principal and interest (including any

deferred interest and any accrued and unpaid interest and any Default Interest);

and (ii) Holder may exercise all the rights of a creditor under applicable state

and/or federal law.

 

             (b) In case any one or more Events of Default shall occur and be

continuing, and acceleration of this Note or any other indebtedness of Maker to

Holder shall have occurred, Holder may, inter alia, proceed to protect and

enforce its rights by an action at law, suit in equity and/or other appropriate

proceeding, whether for the specific performance of any agreement contained in

this Note, or for an injunction against a violation of any of the terms hereof

or thereof or in furtherance of the exercise of any power granted hereby or

thereby or by law. No right conferred upon Holder by this Note shall be

exclusive of any other right referred to herein or therein or now or hereafter

available at law, in equity, by statute or otherwise.

 

SECTION 5. DEFENSES.

 

      5.1 No Offsets. The obligations of Maker under this Note shall not be

subject to reduction, limitation, impairment, termination, defense, set-off,

counterclaim   or recoupment for any reason.

 

      5.2 Usury Limitations. It is the intention of the parties hereto to comply

with all applicable usury laws; accordingly, it is agreed that notwithstanding

any provisions to the contrary in this Note or any other agreements or

instruments between them, in no event shall such agreements or instruments

require the payment or permit the collection of interest (which term, for

purposes hereof, shall include any amount which, under applicable law, is deemed

to be interest, whether or not such amount is characterized by the parties as

interest) in excess of the maximum amount permitted by such laws. If any excess

of interest is unintentionally contracted for, charged or received under the

Note or under the terms of any other agreement or instrument between the

parties, the effective rate of interest shall be automatically reduced to the

maximum lawful rate of interest allowed under the applicable usury laws as now

or hereafter construed by the courts having jurisdiction thereof.

 

SECTION 6. REPLACEMENT OF NOTE.

 

      Upon receipt by Maker of reasonable evidence of the loss, theft,

destruction, or mutilation of this Note, Maker will deliver a new Note

containing the same terms and conditions in lieu of this Note. Any Note

delivered in accordance with the provisions of this Section 6 shall be dated as

of the date of this Note.

 

SECTION 7. EXTENSION OF MATURITY.

 

      Should the principal of or interest on this Note become due and payable on

other than a business day, the due date thereof shall be extended to the next

succeeding business day, and, in the case of principal, interest shall be

payable thereon at the rate per annum herein specified during such extension.

For the purposes of the preceding sentence, a business day shall be any day that

is not a Saturday, Sunday, or legal holiday in the State of Delaware.

 

SECTION 8. ATTORNEYS' FEES AND COLLECTION FEES.

 

      Should the indebtedness evidenced by this Note or any part hereof be

collected at law or in equity or in bankruptcy, receivership or other court

proceedings, arbitration or mediation, or any settlement of any of the

foregoing, Maker agrees to pay, in addition to principal and interest due and

payable hereon, all costs of collection, including, without limitation,

reasonable attorneys' fees and expenses, incurred by Holder in collecting or

enforcing this Note.

 

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SECTION 9. WAIVERS; CONSENT TO JURISDICTION.

 

      9.1 Waivers by Maker. Maker hereby waives presentment, demand for payment,

notice of dishonor, notice of protest and all other notices or demands in

connection with the delivery, acceptance, performance or default of this Note.

 

      9.2 Actions of Holder not a Waiver. No delay by Holder in exercising any

power or right hereunder shall operate as a waiver of any power or right, nor

shall any single or partial exercise of any power or right preclude other or

further exercise thereof, or the exercise of any other power or right hereunder

or otherwise; and no waiver or modification of the terms hereof shall be valid

unless set forth in writing by Holder and then only to the extent set forth

therein.

 

      9.3 Consent to Jurisdiction. Maker hereby irrevocably submits to the

jurisdiction of any state or federal court sitting in the State of Delaware over

any suit, action, or proceeding arising out of or relating to this Note or any

other agreements or instruments with respect to Holder. Maker hereby irrevocably

waives, to the fullest extent permitted by law, any objection that Maker may now

or hereafter have to the laying of venue of any such suit, action, or proceeding

brought in any such court and any claim that any such suit, action, or

proceeding brought in any such court has been brought in an inconvenient forum.

Final judgment in any such suit, action, or proceeding brought in any such court

shall be conclusive and binding upon Maker and may be enforced in any court in

which Maker is subject to jurisdiction by a suit upon such judgment, provided

that service of process is effected upon Maker as provided in this Note or as

otherwise permitted by applicable law.

 

      9.4 Waiver of Jury Trial. MAKER WAIVES ITS RIGHT TO A JURY TRIAL OF ANY

CLAIM OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN

MAKER AND HOLDER RELATING TO THE SUBJECT MATTER OF THIS NOTE. THE SCOPE OF THIS

WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE

FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS NOTE,

INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER

COMMON LAW AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY

NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY

SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY

OTHER DOCUMENT OR AGREEMENT RELATING TO THE LOAN.

 

       9.5 Service of Process. Maker hereby consents to process being served in

any suit, action, or proceeding instituted in connection with this Note by

delivery of a copy thereof by certified mail, postage prepaid, return receipt

requested, to Maker, and/or by delivery of a copy thereof to a registered agent

of Maker. Refusal to accept delivery, and/or avoidance of delivery, shall be

deemed to constitute delivery. Maker irrevocably agrees that service in

accordance with this Section 9.5 shall be deemed in every respect effective

service of process upon Maker in any such suit, action or proceeding, and shall,

to the fullest extent permitted by law, be taken and held to be valid personal

service upon Maker. Nothing in this Section 9.5 shall affect the right of Holder

to serve process in any manner otherwise permitted by law or limit the right of

Holder otherwise to bring proceedings against Maker in the courts of any

jurisdiction or jurisdictions.

 

SECTION 10. COVENANTS.

 

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

 

            (a) Office. Maker shall maintain its principal office, and the

majority of its employees, assets and operations, in the United States.

 

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

for the following purposes:

 

      (i) General operating expenses, expenses for the development and

      protection of its intellectual property, and other usual and customary

      commercial and business expenses incurred in pursuing its business plan

      and strategy, on and after the effective date hereof;

 

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      (ii) Audit expenses and regular and special SEC filing expenses, for

      audits and filings occurring on or after the effective date hereof,

      including, without limitation, SEC filings relating to solicitation of any

      shareholder consents to the recapitalization of Maker; and

 

      (iii) Expenses of accountants, attorneys, consultants and other

      professionals (including, without limitation, the expenses of Investor

      described in Section 4.11 of the Recapitalization Agreement) relating to

      the recapitalization of Maker,

 

in each case only to the extent that both the nature and the amount of such

expenses are in conformity with the budget approved in advance in writing by

Holder and included in the Disclosure Schedule. Maker will not use the proceeds

from this Note for any other purpose. Without limiting the generality of the

foregoing, none of the proceeds will be used, without prior written agreement by

the Holder, (i) to purchase or carry (or refinance any borrowing, the proceeds

of which were used to purchase or carry) any "security" within the meaning of

the Securities Act of 1933, as amended (the "SECURITIES ACT"), (ii) to repay any

indebtedness or discharge any obligation to an person or entity, other than

trade payables incurred in the ordinary course of business on or after the

effective date hereof, and consistent with Maker's operating plans and budgets

fully disclosed to the Holder prior to the Closing, or (iii) to engage in

business activities which would cause a violation of 13 CFR 107.720. This latter

limitation prohibits, without limitation, the use of proceeds: (i) directly or

indirectly, for providing funds to others; (ii) for the purchase or discounting

of debt obligations; (iii) for factoring or long-term leasing of equipment with

no provision for maintenance or repair; (iv) for engaging in real estate

transactions such that Maker could reasonably be classified under Major Group 65

(Real Estate) of the SIC Manual; (v) for business activities wherein the assets

of the business of Maker (the "BUSINESS") will be reduced or consumed, generally

without replacement, as the life of the Business progresses, and the nature of

the Business does not require that a stream of cash payments be made to the

financing sources of the Business, on a basis associated with the continuing

sale of assets (examples of such businesses would include real estate

development projects, the financing and production of motion pictures, and oil

and gas well exploration, development and production); (vi) for a foreign

operation; (vii) to provide capital to a corporation licensed or sub-licensed

under the Small Business Investment Act, (viii) to acquire farm land, (ix) to

fund production of a single item or defined limited number of items generally

over a defined production period, such production to constitute the majority, of

the activities of Maker (examples include electric generating plants), or (x)

for any purpose contrary to the public interest (including, but not limited to,

activities which are in violation of law) or inconsistent with free competitive

enterprise, in each case, within the meaning of Section 107.720 of Title 13 of

the Code of Federal Regulations.

 

            (c) Seniority. Except as otherwise expressly provided, and except

for security interests and liens described in items 2, 3, 4 and 5 of Schedule

14.11 of the Disclosure Schedule attached hereto as Exhibit B (the "DISCLOSURE

SCHEDULE"), the indebtedness evidenced by this Note: (i) shall be senior in all

respects to all other indebtedness or obligations of Maker of any kind, direct

or indirect, contingent or otherwise, other than obligations of Maker owed

directly to the state or federal government, and other than any other

indebtedness or obligations of Maker to Toucan Capital Fund II, L.P. or Holder;

(ii) shall not be made subordinate or subject in right of payment to the prior

payment of any other indebtedness or obligation of any kind, direct or indirect,

contingent or otherwise, other than obligations of Maker owed directly to the

state or federal government, and other than any other indebtedness or

obligations of Maker to Holder. The indebtedness evidenced by this Note shall be

pari passu with the indebtedness of Maker to Toucan Capital Fund II, L.P., as

evidenced by that series of Northwest Biotherapeutics, Inc. Loan Agreements,

Security Agreements and 10% Convertible, Secured Promissory Notes referenced in

item 5 of the Disclosure Schedule.

 

            (d) No Conflicting Agreements. Maker shall not enter into any

agreement that would materially impair, interfere or conflict with Maker's

obligations hereunder. Without Holder's prior written consent, Maker shall not

permit the inclusion in any material contract to which it becomes a party of any

provisions that could or might in any way result in the creation of a security

interest in any assets of Maker, including without limitation any Collateral (as

defined in Exhibit A hereto).

 

            (e) Disclosure of Material Adverse Events. Within three (3) business

days of Maker obtaining knowledge thereof, Maker will notify Holder in writing

of any event that may have a material adverse effect on the business, affairs,

prospects, operations, properties, assets, liabilities, structure or condition,

financial or otherwise, of the Company (as such business is presently conducted

and/or as it is proposed to be conducted), or on any material assets or any

Intellectual Property or other Collateral developed, owned, controlled,

licensed,

 

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possessed, or used by Maker, or to which Maker has any right, option,

entitlement or claim. Operating expenditures in the ordinary course of business

and in accordance with operating budgets approved by Maker's Board of Directors

and fully disclosed to Holder prior to the effective date hereof shall not be

deemed to be material adverse events solely because they weaken Maker's

financial condition in the absence of new equity financing of Maker.

 

            (f) Financial Information. So long as any principal and/or interest

under this Note shall remain outstanding:

 

                        (i) Promptly after the end of each fiscal year (but in

      any event prior to February 28 of each year) and at such other times as

      Holder may reasonably request, Maker shall deliver to Holder a written

      assessment, in form and substance satisfactory to Holder, of the economic

      impact of such Holder's financing hereunder, specifying the full-time

      equivalent jobs created or retained in connection with such investment,

      and the impact of the financing on Maker's business in terms of revenues

      and profits and on taxes paid by Maker and its employees.

 

                        (ii) Maker shall provide on a timely basis to Holder all

      financial information requested from time to time by Holder, including

      without limitation its quarterly and annual balance sheet and income

      statement. Such financial information shall be certified by a member of

      Maker's senior management. Financial information required shall also

      include such information as would be necessary for Holder to file form 468

      with the SBA, if it were applicable.

 

                        (iii) In addition to the information specified in

      Section 10.1(f)(i) and (ii) above, upon request, Maker agrees promptly to

      provide Holder with sufficient additional information to provide any other

      information reasonably requested or required by any governmental agency

      asserting jurisdiction over Holder.

 

                        (iv) Maker shall report its cash position and all

      expenditures and agreements, commitments or undertakings for expenditures

      to Holder on a bi-weekly basis.

 

            (g) Access. So long as any principal and/or interest under this Note

shall remain outstanding, Maker shall permit Holder and its agents or

representatives to visit and inspect Maker's properties, to examine its books of

account and records and to discuss Maker's affairs, finances and accounts with

its officers, all at such times during normal business hours as reasonably may

be requested by Holder.

 

            (h) [Reserved]

 

             (i) Business Activity. As long as this Note shall remain

outstanding, Maker shall make no change in its business activity that would make

it or any of its business activities non-compliant with SBA

regulations and guidelines.

 

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

 

            (a) Indebtedness. Maker shall not incur additional indebtedness,

beyond the indebtedness already existing as of the date hereof, for borrowed

money in excess of $10,000, in aggregate.

 

            (b) Liens. Maker shall not grant to any person or entity a security

interest, lien, license, or other encumbrance of any kind, direct or indirect,

contingent or otherwise, in, to or upon any assets of Maker, including, without

limitation, any intellectual property of any kind, as defined in Exhibit A

hereto (the "INTELLECTUAL PROPERTY").

 

            (c) Sale or License of Assets. Maker shall not sell, lease,

transfer, assign or otherwise dispose of or encumber (including, without

limitation through licensing or partnering arrangements) or abandon, conceal,

injure or destroy any material assets (whether tangible or intangible) of Maker

(including, without limitation, any Collateral (as defined in Section 11)),

other than with the prior written approval of Holder and in the ordinary course

of business.

 

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            (d) Issuance of Capital Stock. Except for (a) any transaction

pursuant to an Unsolicited Proposal that Maker accepts in accordance with the

fiduciary exception provided in Section 3.2 of the Recapitalization Agreement or

(b) shares of capital stock issuable upon exercise or conversion of warrants or

convertible securities outstanding prior to February 1, 2004, Maker shall not

without Holder's prior written approval: (i) issue any shares of capital stock

or other securities, or any instruments exercisable for or convertible into

capital stock or other securities, or (ii) make any promises, commitments,

undertakings, agreements or letters of intent for any of the issuances described

in (i) hereof.

 

            (e) Distributions and Redemptions. Maker shall not declare or pay

any dividends or make any distributions of cash, property or securities of Maker

with respect to any shares of its common stock, preferred stock or any other

class or series of its stock, or, directly or indirectly (except for repurchases

of common stock by Maker in accordance with the terms of employee benefit plans

or written agreement between Maker and any of its employees approved by the

Board of Directors of Maker prior to February 1, 2004), redeem, purchase, or

otherwise acquire for any consideration any shares of its common stock or any

other class of its stock.

 

            (f) Hiring. Maker shall not hire, engage, retain, or agree to hire,

engage or retain, any Personnel, except with Holder's express prior written

approval, on a case by case basis.

 

            (g) Severance. Maker shall not enter into, increase, expand, extend,

renew or reinstate any severance, separation, retention, change of control or

similar agreement with any Personnel, or agree, promise, commit or undertake to

do so, except with Holder's prior written approval, on a case by case basis.

 

            (h) Facilities. Maker shall not purchase, lease, hire, rent or

otherwise acquire directly or indirectly any rights in or to any asset or

facility outside of the ordinary course of business in an amount in excess of

$10,000, in aggregate, or agree, promise or commit to do so, except in

accordance with the Maker's budget that has been approved by the Maker's board

of directors and the Holder.

 

                  (i) Expenses. Maker shall make no expenditures in excess of

$10,000 in aggregate other than in accordance with a budget pre-approved by

Holder. Maker shall not deviate, during the period covered by such budget, more

than $10,000 in aggregate from the budget included in the Disclosure Schedule,

nor take any action or make any promise, undertaking or commitment that would

result in Maker incurring or accumulating payables and/or other financial

obligations of any kind, whether current or deferred, direct or indirect, for

purposes other than as set forth in budgets expressly agreed to by Holder,

and/or in any amounts in excess of the amounts set forth in such agreed budgets,

which equal or exceed $10,000 in aggregate, and which have not been approved in

writing in advance by Holder.

 

            (j) Other Limitations.

 

                  (i) Maker shall not change the nature of its business activity

in a manner that would cause a violation of 13 C.F.R. Section 107.720 and/or

Section 107.760(b) (including, without limitation, by undertaking real estate,

film production or oil and gas exploration activities). In the event that Maker

changes the nature of its business activity such that such change would render

Maker ineligible for financing pursuant to applicable SBA rules and regulations,

Maker agrees to use its best efforts to facilitate a transfer or redemption of

any securities then held by Holder.

 

                   (ii) Maker will at all times comply with the

non-discrimination requirements of 13 C.F.R. Parts 112, 113 and 117.

 

                  (iii) For a period of at least one year after the date of this

Note, Maker will locate no more than 49 percent of the employees or tangible

assets of Maker outside the United States.

 

      10.3 Additional Covenant. Until the later of the expiration of the

Standstill Period (as defined in Section 13 below) or the date on which this

Note has been discharged in full, Maker shall not sell, license, loan or

otherwise in any way transfer or distribute Maker's Tangential Flow Filtration

("TFF") devices or any similar device, or any specifications, diagrams,

description or other information about the TFF devices, to any third party, or

commit or promise or enter into any understanding of any kind, direct or

indirect, contingent or otherwise, to do any

 

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of the foregoing in regard to Maker's TFF devices or any similar device, without

the prior written consent of Holder in each case.

 

SECTION 11. SECURITY INTEREST.

 

      11.1 First Priority in All Collateral. To secure its obligations under

this Note whether at stated maturity, by acceleration or otherwise, Maker hereby

grants and pledges to Holder a first priority senior security interest in all of

Maker's right, title and interest in, to and under all of Maker's tangible and

intangible property, whether now owned, licensed or held or hereafter acquired,

licensed, developed, held or arising, as described in Exhibit A hereto (the

"COLLATERAL"), and all proceeds of any kind from any disposition of any such

Collateral. Such security interest shall be senior to any security interest in

the Collateral granted the holders of the Management Notes pursuant to any

subordination agreement between Holder, the holders of the Management Notes,

Toucan Capital Fund II, L.P. or Maker, and shall be senior to any other security

interest of any kind, direct or indirect, contingent or otherwise, in the

Collateral except for the security interests and liens described in items 2, 3,

4 and 5 of Schedule 14.11 of the Disclosure Schedule (only to the amounts set

forth on such schedule) and any other indebtedness or obligations of Maker to

Toucan Capital Fund II, L.P. or Holder. The security interest granted to Holder

hereby is pari passu with the security interests granted by Maker in favor of

Toucan Capital Fund II, L.P., pursuant to those certain Northwest

Biotherapeutics, Inc. Loan Agreements, Security Agreements and 10% Convertible,

Secured Promissory Notes. If certificates of title are now, or hereafter become,

issued or outstanding with respect to any of the Collateral, Maker promptly

shall cause the senior security interest of Holder to be properly noted thereon.

Maker agrees that the security interest herein granted has attached and shall

continue until Maker's obligations under this Note have been paid, performed and

indefeasibly discharged in full.

 

      11.2 Rights Cumulative. The rights and remedies of Holder with respect to

the senior security interest granted hereby are in addition to those which are

now or may hereafter be available to Holder as a matter of law or equity. Each

right, power and remedy of Holder provided for herein, or now or hereafter

existing at law or in equity, shall be cumulative and concurrent and shall be in

addition to every right, power and remedy provided for herein, and the exercise

by Holder of any one or more of the rights, powers and/or remedies provided for

in this Note, or now or hereafter existing at law or in equity, shall not

preclude the simultaneous or later exercise by any person, including a grantee,

of any or all other rights, powers and/or remedies.

 

      11.3 Documentation of Security Interest. Maker shall execute, deliver,

file, amend, and re-file any financing statements, instruments (including

without limitation stock certificates), continuation statements, assignments, or

other security agreements that Holder may require from time to time to confirm

the liens arising out of this Note with respect to the Collateral. Maker agrees

to pay all reasonable costs associated with filing and/or re-filing of any

financing statements, continuation statements or other security agreements

required to perfect and to continue perfection of Holder's security interest in

the Collateral and all reasonable costs required to evidence the first priority

of the security interest, including, without limitation, reasonable attorneys'

fees. Maker authorizes Holder to file financing statements under the UCC with

respect to the security interest granted hereby and agrees, upon request of

Holder, to promptly and duly execute and deliver any and all such further

instruments and documents, and to take such further action, as Holder may

reasonably deem necessary or desirable to obtain the full benefits of this grant

of security interest.

 

      11.4 No Conflicting Agreements. Maker shall not enter into any agreement

on or after the effective date of this Note that would materially impair or

conflict with Maker's obligations hereunder without Holder's prior written

consent. Without Holder's prior written consent, Maker shall not permit the

inclusion in any material contract to which it becomes a party on or after the

effective date of this Note, of any provisions that could or might in any way

prevent the creation, perfection and maintenance of a first priority security

interest in Maker's rights and interest in any property included within the

definition of th