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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to _______

Commission File Number: 001-35737

NORTHWEST BIOTHERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

 

94-3306718

(State or Other Jurisdiction of Incorporation or Organization)

 

 (I.R.S. Employer Identification No.)

4800 Montgomery Lane, Suite 800, Bethesda, MD 20814

(Address of principal executive offices) (Zip Code)

(240497-9024

(Registrant’s telephone number)

N/A

(Former Name, Former Address and Former Fiscal Year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s):

Name of each exchange on which registered:

Common Stock, par value $0.001 per share

NWBO

OTCQB

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes      No   

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes      No   

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes        No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $234,821,000 on June 30, 2020. As of March 26, 2021, the registrant had 842,137,013 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

FORM 10-K

TABLE OF CONTENTS

PART I

Item 1.

Business

3

Item 1A.

Risk Factors

6

Item 1B.

Unresolved Staff Comments

21

Item 2.

Properties

21

Item 3.

Legal Proceedings

21

Item 4.

Mine Safety Disclosures

21

PART II

Item 5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

21

Item 6.

Selected Financial Data

22

Item 7.

Management’s Discussion and Analysis of Financial Condition And Results of Operations

22

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 8.

Financial Statements and Supplementary Data

29

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

29

Item 9A.

Controls and Procedures

29

Item 9B.

Other Information

30

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

30

Item 11.

Executive Compensation

31

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

31

Item 13.

Certain Relationships and Related Transactions, and Director Independence

31

Item 14.

Principal Accountant Fees and Services

31

PART IV

Item 15.

Exhibits and Financial Statement Schedules

31

SIGNATURES

34

2

Table of Contents

PART I

This Report on Form 10-K for Northwest Biotherapeutics, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A of this Report, including the uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate safety and efficacy in larger-scale clinical trials, the risk that we will not obtain approval to market our products, the risks associated with dependence upon key personnel and the need for additional financing. We do not assume any obligation to update forward-looking statements as circumstances change.

Unless the context otherwise requires, “Northwest Biotherapeutics,” the “Company,” “we,” “us,” “our” and similar names refer to Northwest Biotherapeutics, Inc. DCVax® is a registered trademark of the Company.

ITEM 1. BUSINESS.

Overview

We are a biotechnology company focused on developing personalized immune therapies for cancer. We have developed a platform technology, DCVax®, which uses activated dendritic cells to mobilize a patient’s own immune system to attack their cancer.

Our lead product, DCVax®-L, is designed to treat solid tumor cancers in which the tumor can be surgically removed. We have completed a 331-patient international Phase III trial of DCVax-L for Glioblastoma multiforme brain cancer (GBM). As previously reported, the data collection and confirmation process was conducted by the independent contract research organization (CRO) who managed the trial and by other independent service firms.  On October 5, 2020, the Company announced that Data Lock for the Phase III trial had been reached, and that a series of steps and processes would follow. These processes included data validation, analyses of the data by independent statisticians, preparations by the statisticians of summaries of the Trial results for review by the Company, the Principal Investigator, the Steering Committee of the Trial, the Scientific Advisory Board, and a panel of independent brain cancer experts, in preparation for publication in a scientific journal and public announcement.  This series of processes is under way.  It is anticipated that public announcement will follow these processes.

As also previously reported, coronavirus-related difficulties have impacted most aspects of the process, especially with the successive waves of COVID cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family.  Other experts have gone on extended leave due to restrictions on operations. Clinical trial site personnel have been unavailable due to being reassigned for COVID, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses, continue to have only limited operations. Even logistical matters such as the shipping of materials have been, and continue to be, subjected to substantial restrictions and delays.

On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system to close and automate the manufacturing of cell therapy products such as DCVax®. The Company acquired 100% of the ownership, and  Flaskworks became a wholly-owned subsidiary of the Company. Flaskworks was previously owned by its technical founders and Corning Inc. The technical team from Flaskworks joined the Company as part of the Acquisition. It is anticipated that the Flaskworks system will enable substantial scale-up of production volumes of DCVax products and substantial reduction of production costs. The Company’s buildout of the Sawston, UK facility has been designed to proceed in phases, as modules, both for efficiency in the timing of capital costs and to allow flexibility in operations and usage. The Company anticipates that implementation of the Flaskworks system will enable certain phases of the buildout to be simplified and streamlined.  For further details on the financial aspects of the acquisition, please see Item 8 Note 5 below.

3

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Our second product, DCVax®-Direct, is designed to treat inoperable solid tumors. A 40-patient Phase I trial has been completed, and included treatment of a diverse range of more than a dozen types of cancers. The Company is working on preparations for Phase II trials of DCVax-Direct, as resources permit.

The DCVax Technology

Our platform technology, DCVax, is a personalized immune therapy that uses a patient’s own dendritic cells, or DCs, the master cells of the immune system, as the therapeutic agent. The patient’s DCs are obtained through a blood draw, or leukapheresis. The DCs are then activated and loaded with biomarkers (“antigens”) from the patient’s own tumor. For DCVax-L, the antigen loading process takes place during the manufacturing of the product. For DCVax-Direct, the antigen loading process takes place in situ in the tumor after the product is directly injected into the patient’s inoperable tumor. The loading of antigens into the DCs “educates” the DCs about what the immune system needs to target.

Manufacturing of DCVax

We use a batch manufacturing technology for our DCVax products, and we believe this manufacturing approach is a key part of the practicality of our product and its economic feasibility. Generally, we are able to produce enough doses for the patient’s treatment regimen through just one manufacturing process. When a batch of DCVax product has been made, we then cryopreserve it.

Both of these technologies, the personalized batch manufacturing for each patient and the cryopreservation, are essential elements of our manufacturing model and product economics. Together, they enable us to usually incur the high costs of manufacturing just one time for each patient, and then store the multi-year or multi-dose quantity of product, frozen, in single doses. This makes DCVax effectively an “off the shelf” product for the patient after the initial manufacturing, even though it is personalized, and we anticipate that this will enable the pricing of DCVax to be in line with other new cancer drugs. We also believe that both economies of scale and automation will further enhance the product economics. The manufacturing process today is also rapid: about 8 days for DCVax-L, and 7 days for DCVax-Direct, followed by quality control and release testing (including a sterility test that may take a couple of weeks).

As previously reported, we have been developing a manufacturing facility in Sawston, U.K. To date, the Company's production of dendritic cell vaccine products in the UK has been taking place in a GMP (clean room) facility in London, with a capacity of about 4 - 6 patients per month. The Sawston facility contains a total of 88,345 square feet on two floors. The initial production capacity comprises two manufacturing suites, occupying approximately 4,400 square feet on the ground floor. These two suites, together with some additional support and storage space, have anticipated potential capacity to produce dendritic cell vaccines for about 40 to 45 patients per month, or approximately 450 to 500 patients annually. The final stage of development of the initial production capacity (the Performance Qualification stage) is under way, and when that stage is completed it is anticipated that an application for certification of the facility will be submitted to the UK regulatory authority.

Since the initial production capacity will occupy only a small fraction of the total space in the Sawston facility, it is anticipated that additional capacity for third party production of other cell therapy products may be developed in some of the other space. GMP facilities are capital intensive both to develop and to operate. Third party production of other products will help support the Sawston facility costs and, in light of the growing demand for cell therapy manufacturing capacity, could substantially increase the asset value of the Sawston facility.

All of the development activities for the Sawston facility have been carried out by Advent BioServices, who is also the operator of the facility.

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Intellectual Property and Orphan Drug Designation

We have an integrated strategy for protection of our technology through both patents and other mechanisms, such as Orphan Drug status. As of December 31, 2020, we have 202 issued patents and 63 pending patent applications worldwide, grouped into 11 patent families. Of these, 194 issued patents and 52 pending patent applications directly relate to our DCVax products. In the United States and Europe, some of our patents and applications relate to compositions and the use of products, while other patents and applications relate to other aspects such as manufacturing and quality control. For example, in the United States, we have four issued and seven pending patent applications that relate to the composition and/or use of our DCVax products. We also have other U.S patents and applications that cover, among other things, quality control for DCVax and an automated system which we believe will help enable the scale-up of production for large numbers of patients on a cost-effective basis. Similarly, in Europe, we have seven patents issued by and five pending patent applications with the European Patent Office ("EPO") that cover our DCVax products, and other patents and applications that cover aspects such as manufacturing and quality control, and the automated system. In Japan, we have seven issued patents and four pending patent applications relating to our DCVax products, as well as manufacturing related patents. Patents have been granted and are pending in other foreign jurisdictions which may be potential future markets for our DCVax products.

During 2020, three new patents were issued to us as part of our worldwide patent portfolio. The newly issued patents cover methods for manufacturing dendritic cells related to our DCVax products, as well as encompassing certain methods of use and compositions that may be potential future markets related DCVax products. Additionally, with the addition of Flaskworks, the Company gained one issued patent and eight pending patent applications.  In addition, the Company gained the rights to an another issued patent and 15 pending patent applications that Flaskworks had exclusively licensed from Northeastern University.  Collectively these patents and patent applications cover key aspects of the design and function of automated cell culture systems.

During 2019, six new patents were issued to us as part of our worldwide patent portfolio. The newly issued patents cover methods and devices for manufacturing dendritic cells related to our DCVax products, as well as encompassing certain methods and compositions that may be potential future markets related DCVax products.

The expiration dates of the issued U.S. patents involved in our current business range from 2022 to 2026. The expiration dates of the issued European patents involved in our current business range from 2022 to 2024. For some of the earlier dates, we plan to seek extensions of the patent life, and believe we have reasonable grounds for doing so.

In addition to our patent portfolio, we have obtained Orphan Drug designation for our lead product, DCVax-L for glioma brain cancers. Such designation brings with it a variety of benefits, including potential market exclusivity for seven years in the U.S. and ten years in Europe if our product is the first of its type to reach the market.

This market exclusivity applies regardless of patents, (i.e., even if the company that developed it has no patent coverage on the product). In addition, the time period for such market exclusivity does not begin to run until product sales begin. In contrast, the time period of a patent begins when the patent is filed and runs down during the years while the product is going through development and clinical trials.

Competition

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. A large and growing number of companies are actively involved in the research and development of immune therapies or cell-based therapies for cancer (including Juno, Kite, Bellicum, Agenus, Asterias, Dandrit, Immunicum, Sotio, AiVita and many others). In addition, many big pharma companies (including BMS, Merck, Pfizer, Astra Zeneca, Roche and others) are rapidly commercializing checkpoint inhibitor drugs to “take the brakes off” patients’ immune responses to cancer. Other novel technologies for cancer are also under development or have recently been approved, such as the Optune electro-therapy device developed by NovoCure and various oncolytic virus therapies and gene therapies. Additionally, many companies are actively involved in the research and development of monoclonal antibody-based and bi-specific or tri-specific antibody-based cancer therapies. Currently, a substantial number of antibody-based drugs are approved for commercial sale for cancer therapy, and a large number of additional ones are under development. Many other third parties compete with us in developing alternative therapies to treat cancer, including: biopharmaceutical companies; biotechnology companies; pharmaceutical companies; academic institutions; and other research organizations, as well as some medical device companies.

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We face extensive competition from companies developing new treatments for brain cancer. These include a variety of immune therapies, as mentioned above, as well as a variety of small molecule drugs and biologics. There are also a number of existing drugs used for the treatment of brain cancer that may compete with our product, including, Avastin® (Roche Holding AG), Gliadel® (Eisai Co. Ltd.), and Temodar® (Merck & Co., Inc.), as well as the Optune electro-therapy device (Novocure) and oncolytic viruses. Both checkpoint inhibitor drugs and T cell-based therapies are pursuing clinical trials for solid tumors, including brain cancer, as well.

Most of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals and marketing and sales than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly if they enter into collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel and collaborators, as well as in acquiring technologies complementary to our programs, and in obtaining sites for our clinical trials and enrolling patients.

Corporate Information

We were formed in 1996 and incorporated in Delaware in July 1998. Our principal executive offices are located in Bethesda, Maryland, and our telephone number is (240) 497-9024. Our website address is www.nwbio.com. The information on our website is not part of this report. We have included our website address as a factual reference and do not intend it to be an active link to our website.

Available Information

Our website address is www.nwbio.com. We make available, free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as is reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”), but other information on our website is not incorporated into this report. The SEC maintains an Internet site that contains these reports at www.sec.gov.

Human Capital

The Company continues to operate with a lean staff, supplementing its full time employees with consultants with various expertise. The Company began the year with 17 full-time employees (FTEs) and ended the year on December 31, 2020 with 19 FTEs. With the acquisition of Flaskworks during FY2020, the Company gained additional experienced technical scientific management (1) and scientists (2). The Company's internal workforce is approximately gender equal. As in the past, the Company relied upon specialists in the areas of manufacturing, construction and construction management, clinical trial management, data validation and analysis, scientific advisory, legal, financial accounting and tax, and Information Technology. At the Company's international operations in the UK and Germany, the company relies on a contracted workforce. To attract and retain talent, the Company offers a competitive pay and benefits package.

ITEM 1A. RISK FACTORS

Our business, financial condition, operating results and prospects are subject to the following material risks. Additional risks and uncertainties not presently foreseeable to us may also impair our business operations. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and our stockholders may lose all or part of their investment in the shares of our common stock.

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Risks Related to our Operations

We will need to raise substantial funds, on an ongoing basis, for general corporate purposes and operations, including our clinical trials. Such funding may not be available or may not be available on acceptable terms.

We will need substantial additional funding, on an ongoing basis, in order to continue execution of our clinical trials, to move our product candidates towards commercialization, to continue prosecution and maintenance of our large patent portfolio, to continue development and optimization of our manufacturing and distribution arrangements, and for other corporate purposes. Any financing, if available, may include restrictive covenants and provisions that could limit our ability to take certain actions, preference provisions for the investors, and/or discounts, warrants, anti-dilution rights, the provision of collateral, or other incentives. Any financing will involve issuance of equity and/or debt, and such issuances will be dilutive to existing shareholders. There can be no assurance that we will be able to complete any of the financings, or that the terms for such financings will be acceptable. If we are unable to obtain additional funds on a timely basis or on acceptable terms, we may be required to curtail or cease some or all of our operations at any time.

We are likely to continue to incur substantial losses, and may never achieve profitability.

As of December 31, 2020, we had net cash outflows (losses) from operations, since inception. We may never achieve or sustain profitability.

Our auditors have issued a “going concern” audit opinion.

Management has determined and our independent auditors have indicated in their report on our December 31, 2020 financial statements that there is substantial doubt about our ability to continue as a going concern. We have received such a “going concern” opinion each of the preceding years for more than a decade. A “going concern” opinion indicates that the financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, you should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to stockholders, in the event of liquidation.

Our management and our independent auditors previously identified certain internal control deficiencies which, while now considered remediated, had been considered by our management and our independent auditor as material weaknesses.

In connection with the preparation of our financial statements for the year ended December 31, 2019, and prior years, our management and our independent auditor identified a certain internal control deficiency that, in the aggregate, represent material weaknesses, as described more fully in “Item 9A. Controls and Procedures” of Part I of this Form 10-K. Although we have undertaken and continue to undertake efforts to strengthen our internal controls and have remediated the material weaknesses, with no material weakness noted for the year ended December 31, 2020, maintaining a consistently strong control environment requires the ability to retain sufficient qualified personnel and other factors.

If we do not successfully maintain a strong controlled environment this could lead to heightened risk for financial reporting mistakes and irregularities, and/or lead to a loss of public confidence in our internal controls that could have a negative effect on the market price of our common stock. In addition, our ability to retain or attract qualified individuals to serve on our Board and to take on key management or other roles within our Company is uncertain.

As a company with a novel technology and unproven business strategy, an evaluation of our business and prospects is difficult.

We are still in the process of developing our product candidates through clinical trials. Our technology is novel and involves mobilizing the immune system to fight a patient’s cancer. Immune therapies have been pursued by many parties for decades, and have experienced many failures. In addition, our technology involves personalized treatment products, a new approach to medical products that involves new product economics and business strategies, which have not yet been shown to be commercially feasible or successful. We have not yet gone through scale-up of our operations to commercial scale. The novelty of our technology, product economics, and business strategy, and the limited scale of our operations to date, makes it difficult to assess our prospects for generating revenues commercially in the future.

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We will need to expand our management and technical personnel as our operations progress, and we may not be able to recruit such additional personnel and/or retain existing personnel.

As of December 31, 2020, we had 18 full-time employees in the US, and one full-time employee in Europe. Of this group, only four employees are considered Management. Other personnel are retained on a consulting or contractor basis. Many biotech companies would typically have a larger number of employees by the time they reach late stage clinical trials. Such trials and other programs require extensive management capabilities, activities and skill sets, including scientific, medical, regulatory (for FDA and foreign regulatory counterparts), manufacturing, distribution and logistics, site management, reimbursement, business, financial, legal, public relations outreach to both the patient community and physician community, intellectual property, administrative, regulatory (SEC), investor relations and other.

In order to fully perform all these diverse functions, at many sites across the U.S. and in Europe, we may need to expand our management, technical and other personnel. However, with respect to management and technical personal, the pool of such personnel with expertise and experience with living cell products, such as our DCVax immune cell product, is very limited. In addition, we are a small company with limited resources, our business prospects are uncertain and our stock price is volatile. For some or all of such reasons, we may not be able to recruit all the management, technical and other personnel we need, and/or we may not be able to retain all of our existing personnel. In such event, we may have to continue our operations with a small team of personnel, and our business and financial results may suffer.

We rely at present on third-party contract manufacturers. As a result, we may be at risk for issues with manufacturing agreements, capacity limitations and/or supply disruptions, and/or issues with product equivalency.

We rely upon specialized contract manufacturers, operating in specialized GMP (clean room) manufacturing facilities, to produce all of our DCVax products. We have worked with several such manufacturers, in several different locations, during various periods of our clinical trials and our compassionate treatment programs, including Advent BioServices, Cognate BioServices and the Fraunhofer Institute.

We will need to enter into new contractual agreements for manufacturing at our Sawston, U.K. facility and new agreements for commercial production in any locations. We may encounter difficulties reaching such agreements, or the terms of such agreements may not be favorable. Following negotiations, if it is necessary or desirable to change our facility design and development arrangements or our manufacturing arrangements, that could involve increased facility costs and/or increased costs related to manufacturing of our products, and could result in delays in our programs or applications for various regulatory approvals. In addition, after such contracts are in place, the third party contractors may have capacity limitations and/or supply disruptions, and as a client we may not be able to prevent such limitations or disruptions, and not be able to control or mitigate the impact on our programs.

We have been in breach of the services agreements with our contract manufacturers on numerous occasions, primarily for untimely or non-payment. Our breaches of the services agreements may not be tolerated in the future as they have been in the past, and if we continue to breach the services agreements, for non-payment or otherwise, the contract manufacturers could cease providing services and/or terminate these agreements.

Our intention is for the U.K. facility to manufacture DCVax products for both the UK and other regions. However, this may not turn out to be feasible, for regulatory, operational and/or logistical reasons. It is also unclear whether or how Brexit will affect or interfere with these plans in regard to Europe.

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Problems with the manufacturing facilities, processes or operations of our contract manufacturer(s) could result in a failure to produce, or a delay in producing adequate supplies of our DCVax product candidates. A number of factors could cause interruptions or delays, including the inability of a supplier to provide raw materials, equipment malfunctions or failures, damage to a facility due to natural disasters or otherwise, changes in FDA, U.K. or European regulatory requirements or standards that require modifications to our manufacturing processes, action by the FDA, U.K. or European regulators, or by us that results in the halting or slowdown of production of components or finished products due to regulatory issues, our manufacturers going out of business or failing to produce product as contractually required, insufficient technical personnel and/or specialized facilities to produce sufficient products, and/or other factors. A number of factors could also cause possible issues about the equivalency of DCVax product produced in different facilities or locations, which could make it necessary for us to perform additional studies and incur additional costs and delays. Because manufacturing processes for our DCVax product candidates are highly complex, require specialized facilities (dedicated exclusively to DCVax production) and personnel that are not widely available in the industry, involve equipment and training with long lead times, and are subject to lengthy regulatory approval processes, alternative qualified production capacity may not be available on a timely basis or at all. Also, as noted above, our contract manufacturer(s) could choose to terminate their agreements with us if we are in breach, or if we undergo a change of control. Difficulties, delays or interruptions in the manufacturing and supply and delivery of our DCVax product candidates could require us to stop enrolling new patients into clinical trials, and/or require us to stop the trials or other programs, stop the treatment of patients in the trials or other programs, increase our costs, damage our reputation and, if our product candidates are approved for sale, cause us to lose revenue or market share if our manufacturers are unable to timely meet market demands.

The manufacturing of our product candidates will have to be greatly scaled up for commercialization, and neither we nor our contract manufacturers have experience with such scale-up.

As is the case with any clinical trial, our Phase III clinical trial of DCVax-L for GBM involves a number of patients that is a small fraction of the number of potential patients for whom DCVax-L may be applicable in the commercial market. The same will be true of our other clinical programs with DCVax-L or other DCVax product candidates. If our DCVax-L and/or other DCVax product candidates are approved for commercial sale, it will be necessary to greatly scale up the volume of manufacturing, far above the level needed for clinical trials. Neither we nor our contract manufacturers have experience with such scale-up. In addition, there are likely only a few consultants or advisors in the industry who have such experience and can provide guidance or assistance, because active immune therapies such as DCVax are a fundamentally new category of product in two major ways: these active immune therapy products consist of living cells, not chemical or biologic compounds, and the products are personalized. To our knowledge, very few such products have successfully completed the necessary scale-up for commercialization. For example, Dendreon Corporation encountered substantial difficulties trying to scale up the manufacturing of its Provenge® product for commercialization. To our knowledge, even the CAR-T products which are being commercialized have so far only scaled up to moderate product volumes.

The necessary specialized facilities, equipment and personnel may not be available or obtainable for the scale-up of manufacturing of our product candidates.

The manufacture of living cells requires specialized facilities, equipment and personnel which are entirely different than what is required for the manufacturing of chemical or biologic compounds. Scaling up the manufacturing of living cell products to volume levels required for commercialization will require enormous amounts of these specialized facilities, equipment and personnel - especially where, as in the case of our DCVax product candidates, the product is personalized and must be made for each patient individually. Since living cell products are so new, and have barely begun to reach commercialization, the supply of the specialized facilities and personnel needed for them is not widely available and therefore is in the process of being developed. However, there has been a sharp increase in the demand for these specialized facilities and personnel, as large numbers of companies seek to develop T cell and other immune cell products. It may not be possible for us or our manufacturers to obtain all of the specialized facilities and personnel needed for commercialization of our DCVax product candidates, or even for further sizeable trials. This could delay or halt our commercialization and/or further substantial trials.

We are anticipating that the production systems developed by Flaskworks may play an important role in enabling scale-up of production and reducing the number of GMP (clean room) suites and personnel needed for scale-up.  However, the Flaskworks systems are still undergoing development and optimization, and have not been operated at commercial scale to date.  It could turn out that the Flaskworks systems are not capable of or suitable for substantial scale-up, or not acceptable to regulatory authorities for such scale-up.  It could also turn out that deployment the Flaskworks system does not reduce the number of GMP suites and personnel needed for DCVax production as anticipated.

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Our technology is novel, involves complex immune system elements, and may not prove to be effective.

Data already obtained, or in the future obtained, from pre-clinical studies and clinical trials do not necessarily predict the results that will be obtained from later pre-clinical studies and clinical trials. Over the course of several decades, there have been many different immune therapy product designs - and many product failures and company failures. To our knowledge, to date, only a couple of active immune therapies have been approved by the FDA, including one dendritic cell therapy and a couple of CAR-T cell therapies. The human immune system is complex, with many diverse elements, and the state of scientific understanding of the immune system is still limited. Some immune therapies previously developed by other parties showed surprising and unexpected toxicity in clinical trials. Other immune therapies developed by other parties delivered promising results in early clinical trials, but failed in later stage clinical trials.

Although we believe the results from the small early stage clinical trials of DCVax-L for newly diagnosed GBM were quite positive, those results may not be achieved in our later stage clinical trials, such as the 331-patient Phase III trial for GBM that is nearing completion, and our product candidates may not ultimately be found to be effective. Similarly, although we believe the interim blinded data from the Phase III trial that we have collected and reported to date are encouraging, the results of this trial when the data are unblinded may not be as encouraging or may not be positive at all. Further, although the safety profile of our DCVax-L product was excellent in the early stage clinical trials, toxicity may be seen as we treat larger numbers of patients in late stage clinical trials. If such toxicity occurs, it could limit, delay or stop further clinical development or commercialization of our DCVax-L product.

We have only conducted the Phase I portion of our first-in-man Phase I/II clinical trial with our DCVax Direct product, after prior early stage trials with DCVax-L and DCVax-Prostate. Although the early results have not indicated any significant toxicity, we do not yet know what efficacy or toxicity DCVax-Direct may show in a larger sample of human patients. This product may not ultimately be found to be effective, and/or it may be found to be toxic, which could limit, delay or stop clinical development or commercialization of DCVax-Direct.

Clinical trials for our product candidates are expensive and time consuming, and their outcome is uncertain.

The process of obtaining and maintaining regulatory approvals for new therapeutic products is expensive, lengthy and uncertain. Costs and timing of clinical trials may vary significantly over the life of a project owing to any or all of the following non-exclusive reasons:

the duration of the clinical trial;
the number of sites included in the trials;
the countries in which the trial is conducted;
the length of time required and ability to enroll eligible patients;
the number of patients that participate in the trials;
the number of doses that patients receive;
the drop-out or discontinuation rates of patients;
per patient trial costs;
third party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;
our final product candidates having different properties in humans than in laboratory testing;
the need to suspend or terminate our clinical trials;

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insufficient or inadequate supply or quality of necessary materials to conduct our trials;
potential additional safety monitoring, or other conditions required by the FDA or comparable foreign regulatory authorities regarding the scope or design of our clinical trials, or other studies requested by regulatory agencies;
problems engaging independent review Boards, or IRBs, to oversee trials or in obtaining and maintaining IRB approval of studies;
the duration of patient follow-up;
the efficacy and safety profile of a product candidate;
the costs and timing of obtaining regulatory approvals; and
the costs involved in enforcing or defending patent claims or other intellectual property rights.

Late stage clinical trials, such as our Phase III clinical trial for GBM patients, are especially expensive, typically requiring tens or hundreds of millions of dollars, and take years to reach their outcomes. Such outcomes often fail to reproduce the results of earlier trials. It is often necessary to conduct multiple late stage trials (including multiple Phase III trials) in order to obtain sufficient results to support product approval, which further increases the expense and time involved. Sometimes trials are further complicated by changes in requirements while the trials are under way (for example, when the standard of care changes for the disease that is being studied in the trial, or when there are changes in the scientific understanding of the disease or the treatment, and/or changes in the competitive landscape.) For example, while the Company’s lead program, the Phase III clinical trial of DCVax-L for brain cancer, has been under way, there has been a very large proliferation of new treatments in various stages of development, as well as some new product approvals, for brain cancer. Any of our current or future product candidates could take a significantly longer time to gain regulatory approval than we expect, or may never gain approval, either of which could delay or stop the commercialization of our DCVax product candidates.

We have limited experience in conducting and managing clinical trials, or collecting, confirming and analyzing trial data, and we rely on third parties to conduct these activities.

We rely on third parties to assist us, on a contract services basis, in managing and monitoring all of our clinical trials as well as the collection, confirmation and analysis of the trial data. We do not have experience conducting late stage clinical trials, or collecting, validating and analyzing trial data by ourselves without third party service firms, nor do we have experience in supervising such third parties in managing late stage, multi-hundred patient clinical trials, and collecting, validating and analyzing the data, other than our current Phase III trial for GBM. Our lack of experience and/or our reliance on these third-party service firms may result in delays or failure to complete these trials and/or the data collection, validation and analyses successfully or on time. If the third parties fail to perform, we may not be able to find sufficient alternative suppliers of those services in a reasonable time period, or on commercially reasonable terms, if at all.

We may fail to comply with regulatory requirements.

Our success will be dependent upon our ability, and our collaborative partners’ abilities, to maintain compliance with regulatory requirements in multiple countries, including current good manufacturing practices, or cGMP, and safety reporting obligations. The failure to comply with applicable regulatory requirements can result in, among other things, fines, injunctions, civil penalties, total or partial suspension of regulatory approvals, refusal to approve pending applications, recalls or seizures of products, operating and production restrictions and criminal prosecutions.

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Regulatory approval of our product candidates may be withdrawn at any time.

After any regulatory approval has been obtained for medicinal products (including any early or conditional approval), the product and the manufacturer are subject to continual review, including the review of adverse experiences and clinical results that are reported after our products are made available to patients, and there can be no assurance that such approval will not be withdrawn or restricted. Regulators may also subject approvals to restrictions or conditions, or impose post-approval obligations on the holders of these approvals, and the regulatory status of such products may be jeopardized if such obligations are not fulfilled. If post-approval studies are required, such studies may involve significant time and expense.

The manufacturer and manufacturing facilities we use to make any of our products will also be subject to periodic review and inspection by the FDA, MHRA, EMA or other regulator, as applicable. The discovery of any new or previously unknown problems with the product, manufacturer or facility may result in restrictions on the product or manufacturer or facility, including withdrawal of the product from the market. We will continue to be subject to the FDA, the U.K. Medicines and Healthcare Products Regulatory Agency, or MHRA, the European Medicines Agency, or EMA, and other regulatory requirements, as applicable, governing the labeling, packaging, storage, advertising, promotion, recordkeeping, and submission of safety and other post-market information for all of our product candidates, even those that the FDA, MHRA, EMA, or other regulator, as applicable, had approved. If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines, restriction, suspension or withdrawal of regulatory approval, product recalls and seizures, operating restrictions and other adverse consequences.

Our Operations under early access programs may not be successful.

There is not much accumulated or available experience, information or precedents in regard to early access programs, especially for new types of treatments such as immune therapies. Establishing operations under an early access program will require us to establish and implement new operational, contractual, financial and other arrangements with physicians, hospitals, patients and others. We may not be successful in establishing and implementing such arrangements, and/or such arrangements may not be financially satisfactory or viable.

We may not be successful in negotiating reimbursement.

If our DCVax-L product obtains regulatory approval for commercialization, such commercialization will be difficult and may not be feasible unless we obtain coverage by health insurance and/or national health systems for reimbursement of our product price. Obtaining such coverage by health insurance and/or national health systems will be difficult and we do not have experience with such processes. Our DCVax-L product is a fully personalized, individual product and, as such, is expected to be expensive. In addition, our DCVax-L product involves a cost structure (with much of the costs upfront, in connection with the manufacturing of the personalized DCVax-L product for a patient) that is different than traditional drugs and may require different reimbursement arrangements. These factors may make our negotiations for reimbursement more difficult. We may not be successful in negotiating or obtaining reimbursement, or obtaining it on acceptable or viable terms.

Our product candidates will require a different distribution model than conventional therapeutic products, and this may impede commercialization of our product candidates.

Our DCVax product candidates consist of living human immune cells. Such products are entirely different from chemical or biologic drugs, and require different handling, distribution and delivery than chemical or biologic drugs. One crucial difference is that the biomaterial ingredients (immune cells and tumor tissue) from which we make DCVax products and the finished DCVax products themselves are subject to time constraints in the shipping and handling. The biomaterial ingredients come from the medical centers to the manufacturing facility fresh and not frozen, and must arrive within a certain window of time and in usable condition. Performance failures by the medical center or the courier company can result in biomaterials that are not usable, in which case it may not be possible to make DCVax product for the patient involved. The finished DCVax products are frozen, and must remain frozen throughout the process of distribution and delivery to the medical center or physician’s office, until the time of administration to the patient, and cannot be handled at room temperature until then or their viability will be lost. In addition, our DCVax product candidates are personalized and they involve ongoing treatment cycles over several years for each patient. Each product shipment for each patient must be tracked and managed individually. For all of these reasons, among others, we will not be able to simply use the distribution networks and processes that already exist for conventional drugs. It may take time for shipping companies, hospitals, pharmacies and physicians to adapt to the requirements for handling, distribution and delivery of these products, which may adversely affect our commercialization.

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Our product candidates will require different marketing and sales methods and personnel than conventional therapeutic products. Also, we lack sales and marketing experience. These factors may result in significant difficulties in commercializing our product candidates.

The commercial success of any of our product candidates will depend upon the strength of our sales and marketing efforts. We do not have a marketing or sales force and have no experience in marketing or sales of products like our lead product, DCVax-L for GBM, or our additional product, DCVax-Direct. To fully commercialize our product candidates, we will need to recruit and train marketing staff and a sales force with technical expertise and ability to manage the distribution of our DCVax-L for GBM. As an alternative, we could seek assistance from a corporate partner or a third-party services firm with a large distribution system and a large direct sales force. However, since our DCVax products are living cell, immune therapy products, and these are a fundamentally new and different type of product than are on the market today, we would still have to train such partner’s or such services firm’s personnel about our products, and would have to make changes in their distribution processes and systems to handle our products. We may be unable to recruit and train effective sales and marketing forces or our own, or of a partner or a services firm, and/or doing so may be more costly and difficult than anticipated. Such factors may result in significant difficulties in commercializing our product candidates, and we may be unable to generate significant revenues.

The availability and amount of potential reimbursement for our product candidates by government and private payers is uncertain and may be delayed and/or inadequate.

The availability and extent of reimbursement by governmental and/or private payers is essential for most patients to be able to afford expensive treatments, such as cancer treatments. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payers tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for fundamentally novel products such as ours, as there have been very few products similar to ours to date., We are aware of only a couple of active immune therapies that have reached the stage of reimbursement decision making processes, including one dendritic cell therapy and a couple of CAR-T cell therapies. Although CMS has approved coverage and reimbursement for a couple of these products, and private payers seem to be following suit in the US, there remain substantial questions and concerns about reimbursement for these products, especially outside the US.

Reimbursement agencies in Europe can be even more conservative than CMS in the U.S. A number of cancer drugs which have been approved for reimbursement in the U.S. have not been approved for reimbursement in certain European countries, and/or the level of reimbursement approved in Europe is lower than in the U.S. Reportedly, in Europe reimbursement for certain immune therapies was initially declined, and reportedly involved difficult negotiations. The same could happen with respect to our DCVax products.

Various factors could increase the difficulties for our DCVax products to obtain reimbursement. Costs and/or difficulties associated with the reimbursement of Provenge and/or T cell therapies could create an adverse environment for reimbursement of other immune therapies, such as our DCVax products. Approval of other competing products (drugs and/or devices) for the same disease indications could make the need for our products and the cost-benefit balance seem less compelling. The cost structure of our product is not a typical cost structure for medical products, as the majority of our costs are incurred up front, when the manufacturing of the personalized product is done. Our atypical cost structure may not be accommodated in any reimbursement for our products. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell our product candidates will be adversely affected.

The manner and level at which reimbursement is provided for services related to our product candidates (e.g., for administration of our product to patients) are also important. If the reimbursement for such services is inadequate, that may lead to physician resistance and adversely affect our ability to market or sell our products.

The methodology under which CMS makes coverage and reimbursement determinations is subject to change, particularly because of budgetary pressures facing the Medicare program. For example, the Medicare Prescription Drug, Improvement, and Modernization Act, or Medicare Modernization Act, enacted in 2003, provided for a change in reimbursement methodology that has reduced the Medicare reimbursement rates for many drugs, including oncology therapeutics. The Affordable Care Act may also result in changes in reimbursement arrangements that adversely affect the prospects for reimbursement of our products.

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In markets outside the U.S., the prices of medical products are subject to direct price controls and/or to reimbursement with varying price control mechanisms, as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the U.S. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other countries allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. Accordingly, in markets outside the U.S., the reimbursement for our products may be reduced compared with the U.S. and may be insufficient to generate commercially reasonable revenues and profits.

Competition in the biotechnology and biopharmaceutical industry is intense, rapidly expanding and most of our competitors have substantially greater resources than we do.

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. A growing number of other companies, such as Juno, Kite Bellicum, Agenus, Asterias, Dandrit, Immunicum, Sotio, AiVita and many others, are actively involved in the research and development of immune therapies or cell-based therapies for cancer. In addition, other novel technologies for cancer are under development or commercialization, such as checkpoint inhibitor drugs (which are being rapidly developed by numerous big pharma companies including BMS, Merck, Pfizer, Astra Zeneca, Roche and others) and various T cell-based therapies (which are also being rapidly developed by numerous companies with extraordinary resource backing), as well as the electro-therapy device of NovoCure. Additionally, many companies are actively involved in the research and development of monoclonal antibody-based cancer therapies. Currently, a substantial number of antibody-based products are approved for commercial sale for cancer therapy, and a large number of additional ones are under development, including late stage trials. Many other third parties compete with us in developing alternative therapies to treat cancer, including: biopharmaceutical companies; biotechnology companies; pharmaceutical companies; academic institutions; and other research organizations, as well as some medical device companies (e.g., NovoCure and MagForce Nano Technologies AG).

We face extensive competition from companies developing new treatments for brain cancer. These include a variety of immune therapies, as mentioned above (including T cell-based therapies and checkpoint inhibitor drugs), as well as a variety of small molecule drugs and biologics drugs. There are also a number of existing drugs used for the treatment of brain cancer that may compete with our product, including, Avastin® (Roche Holding AG), Gliadel® (Eisai Co. Ltd.), and Temodar® (Merck& Co., Inc.), as well as NovoCure’s electrotherapy device.

Most of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals and marketing and sales than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly if they enter into collaborative arrangements with large and established companies.

These third parties compete with us in recruiting and retaining qualified scientific and management personnel and collaborators, as well as in acquiring technologies complementary to our programs, and in obtaining sites for our clinical trials and enrolling patients.

Our competitors may complete their clinical development more rapidly than we and our products do, may develop more effective or affordable products, or may achieve earlier or longer patent protection or earlier product marketing and sales. Any products developed by us may be rendered obsolete and non-competitive.

Competing generic medicinal products may be approved.

In the E.U., there exists a process for approval of generic biological medicinal products once patent protection and other forms of data and market exclusivity have expired. Arrangements for approval of generic biologics products exist in the U.S. as well, and the FDA has begun approving bio-similar products. Jurisdictions may approve generic biologic medicinal products as well. If generic biologic medicinal products are approved, competition from such products may substantially reduce sales of our products.

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We may be exposed to potential product liability claims, and our existing insurance may not cover these claims, in whole or in part. In addition, insurance against such claims may not be available to us on reasonable terms in the future, if at all.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing, marketing, sale and use of therapeutic products. We have insurance coverage but this insurance may not cover any claims made. In the future, insurance coverage may not be available to us on commercially reasonable terms (including acceptable cost), if at all. Insurance that we obtain may not be adequate to cover claims against us. Regardless of whether they have any merit or not, and regardless of their eventual outcome, product liability claims may result in substantially decreased demand for our product candidates, injury to our reputation, withdrawal of clinical trial participants or physicians, and/or loss of revenues. Thus, whether or not we are insured, a product liability claim or product recall may result in losses that could be material.

We may be subject to environmental regulatory requirements, and could fail to meet such requirements, and we do not carry insurance against environmental damage or injury claims.

We may need to store, handle, use and dispose of controlled hazardous, radioactive and biological materials in our business. Our development activities may result in our becoming subject to regulatory requirements, and if we fail to comply with applicable requirements, we could be subject to substantial fines and other sanctions, delays in research and production, and increased operating costs. In addition, if regulated materials were improperly released at our current or former facilities or at locations to which we send materials for disposal, we could be liable for substantial damages and costs, including cleanup costs and personal injury or property damages, and we could incur delays in research and production and increased operating costs.

Insurance covering certain types of claims of environmental damage or injury resulting from the use of these materials is available but can be expensive and is limited in its coverage. We have no insurance specifically covering environmental risks or personal injury from the use of these materials and if such use results in liability, our business may be seriously harmed.

Collaborations play an important role in our business, and could be vulnerable to competition or termination.

We work with scientists and medical professionals at a variety of academic and other institutions, some of whom have conducted research for us or have assisted in developing our research and development strategy. These scientists and medical professionals are collaborators, not our employees. They may have commitments to, or contracts with, other institutions or businesses (including competitors) that limit the amount of time they have available to work with us. We have little control over these individuals. We can only expect that they devote time to us and our programs as required by any license, consulting or sponsored research agreements we may have with them. In addition, these individuals may have arrangements with other companies to assist in developing technologies that may compete with our products. If these individuals do not devote sufficient time and resources to our programs, or if they provide substantial assistance to our competitors, our business could be seriously harmed.

The success of our business strategy may partially depend upon our ability to develop and maintain our collaborations and to manage them effectively. Due to concerns regarding our ability to continue our operations or the commercial feasibility of our personalized DCVax product candidates, these third parties may decide not to conduct business with us or may conduct business with us on terms that are less favorable than those customarily extended by them. If either of these events occurs, our business could suffer significantly.

We may have disputes with our collaborators, which could be costly and time consuming. Failure to successfully defend our rights could seriously harm our business, financial condition and operating results. We intend to continue to enter into collaborations in the future. However, we may be unable to successfully negotiate any additional collaboration and any of these relationships, if established, may not be scientifically or commercially successful.

Our business could be adversely affected by new legislation and/or product related issues.

Changes in applicable legislation and/or regulatory policies or discovery of problems with the product, production process, site or manufacturer may result in delays in bringing products to market, the imposition of restrictions on the product’s sale or manufacture, including the possible withdrawal of the product from the market, or may otherwise have an adverse effect on our business.

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Our business could be adversely affected by animal rights activists.

Our business activities have involved animal testing and could involve further such testing, as such testing is required before new medical products can be tested in clinical trials in human patients. Animal testing has been the subject of controversy and adverse publicity. Some organizations and individuals have attempted to stop animal testing by pressing for legislation and regulation in these areas. To the extent that the activities of such groups are successful, our business could be adversely affected. Negative publicity about us, our pre-clinical trials and our product candidates could also adversely affect our business.

Multiple late stage clinical trials of DCVax-L for GBM, our lead product, may be required before we can obtain regulatory approval.

Typically, companies conduct multiple late stage clinical trials of their product candidates before seeking product approval. Our current Phase III 331-patient clinical trial of DCVax-L for GBM is our first late stage trial. We may be required to conduct additional late stage trials with DCVax-L for GBM before we can obtain product approval. This would substantially delay our commercialization, and might not be possible to carry out, due to development and/or approval of competing products, lack of funding, and/or other factors. In addition, our Phase III trial of DCVax-L was placed on a partial clinical hold for new screening for enrollment in 2015. Although the FDA lifted its hold in February 2017 as previously reported by the Company, the Company had already closed enrollment with 331 of the planned 348 patients. Since we did not enroll the last 17 of the planned 348 patients, this could adversely affect the statistical and other analyses of our Phase III trial results, and could make it more difficult to seek product approval or more likely that further trials could be required. In addition, a rapidly growing number of products are under development for brain cancer, including immunotherapies such as checkpoint inhibitor drugs and T cell-based therapies, and some (e.g., NovoCure’s device) have been approved in the U.S. It is possible that the standard of care for brain cancer could change before we complete our Phase III trial and analysis of its results, or before we are able to seek approval for commercialization. This could necessitate further clinical trials with our DCVax-L product candidate for brain cancer, which may not be feasible.

Changes in manufacturing methods for DCVax-L could require us to conduct equivalency studies and/or additional clinical trials.

With biologics products, in some cases “the process is the product”: i.e., the manufacturing process is considered to be as integral to the product as is the composition of the product itself. If any changes are made in the manufacturing process, and such changes are considered material by the regulatory authorities, the company sponsor may be required to conduct equivalency studies to show that the product is equivalent under the changed manufacturing processes as under the original manufacturing processes, and/or the company sponsor may be required to conduct additional clinical trials. In addition, if there are multiple manufacturing locations, equivalency studies may be required to show that the products produced in the respective facilities are substantially the same. Our manufacturing processes have undergone some changes during or since the early clinical trials, and we have multiple manufacturing locations. Accordingly, we may be required to conduct equivalency studies, and/or additional clinical trials, before we can obtain product approval, unless the regulatory authorities are satisfied that the changes in processes do not affect the quality, efficacy or safety of the product, and satisfied that the products made in each manufacturing location are substantially the same.

We may not receive regulatory approvals for our product candidates or there may be a delay in obtaining such approvals.

Our products and our ongoing development activities are subject to regulation by regulatory authorities in the countries in which we and our collaborators and distributors wish to test, manufacture or market our products. For instance, the FDA will regulate our product in the U.S. and equivalent authorities, such as the MHRA and EMA will regulate in Europe and other jurisdictions. Regulatory approval by these authorities will be subject to the evaluation of data relating to the quality, efficacy and safety of the product for its proposed use, and there can be no assurance that the regulatory authorities will find our data sufficient to support product approval of DCVax-L or DCVax-Direct. In addition, the endpoint against which the data is measured must be acceptable to the regulatory authorities, and the statistical analysis plan for how the data will be evaluated must also be acceptable to the regulatory authorities. The statistical analysis plan that we submitted to regulators for the Phase III trial embodies a different primary endpoint and secondary endpoint than did the original Protocol for the trial. Under the Protocol the primary endpoint was progression free survival, or PFS, and the secondary endpoint was overall survival, or OS. Both of these endpoints were confounded: the PFS endpoint by pseudo-progression, and the OS endpoint by the “crossover” provision in the trial design, which allowed all of the patients in the trial to cross over to DCVax-L treatment after tumor recurrence (while remaining blinded as to which treatment they received before tumor recurrence).  The statistical analysis plan uses external control patients rather than within-study controls. There can be no assurance that regulatory authorities will allow a product approval to be based upon this approach.

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The time period required to obtain regulatory approval varies between countries. In the U.S., for products without “Fast Track” status, it can take up to 18 months after submission of an application for product approval to receive the FDA’s decision. Even with Fast Track status, FDA review and decision can take up to 12 months. At present, we do not have Fast Track status for our lead product, DCVax-L for GBM. We plan to apply for Fast Track status, but there can be no assurance that FDA will grant us such status for DCVax-L.

Different regulators may impose their own requirements and may refuse to grant, or may require additional data before granting, an approval, notwithstanding that regulatory approval may have been granted by other regulators. Regulatory approval may be delayed, limited or denied for a number of reasons, including clinical data, the product not meeting safety or efficacy requirements or any relevant manufacturing processes or facilities not meeting applicable requirements as well as case load at the regulatory agency at the time.

We may not obtain or maintain the benefits associated with orphan drug status, including market exclusivity.

Although our lead product, DCVax-L for GBM, has been granted orphan drug status in both the U.S. and the E.U., we may not receive the benefits associated with orphan drug designation (including the benefit providing for market exclusivity for a number of years). This may result from a failure to maintain orphan drug status, or result from a competing product reaching the market that has an orphan designation for the same disease indication. Under U.S. and E.U. rules for orphan drugs, if such a competing product reaches the market before ours does, the competing product could potentially obtain a scope of market exclusivity that limits or precludes our product from being sold in the U.S. for seven years or from being sold in the E.U. for ten years. Also, in the E.U., even after orphan status has been granted, that status is re-examined shortly prior to the product receiving any regulatory approval. The EMA must be satisfied that there is evidence that the product offers a significant benefit relative to existing therapies, in order for the therapeutic product to maintain its orphan drug status. Accordingly, our product candidates will have to re-qualify for orphan drug status prior to any potential product approval in the E.U., and may have to do so elsewhere as well.

Our intellectual property rights may be overturned, narrowed or blocked, and may not provide sufficient commercial protection for our product candidates, or third parties may infringe upon our intellectual property.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Patent laws afford only limited protection and may not protect our rights to the extent necessary to sustain any competitive advantage we may have. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights in those countries. Moreover, patents and patent applications relating to living cell products are relatively new, involve complex factual and legal issues, and are largely untested in litigation - and as a result, are uncertain. Our pending and future patent applications may not result in patents being issued which adequately protect our technology or products or which effectively prevent others from commercializing the same or competitive technologies and products. As a result, we may not be able to obtain meaningful patent protection for our commercial products, and our business may suffer as a result. Third parties may challenge our existing patents, and such challenges could result in overturning or narrowing some of our patents. Even if our patents are not challenged, third parties could assert that their patents block our use of technology covered by some or all of our patents

As of December 31, 2020, we had over 204 issued patents and 86 pending patent applications worldwide relating to our product candidates and related matters such as manufacturing processes. The issued patents expire at various dates from 2022 to 2026. Our issued patents may be challenged, and such challenges may result in reductions in scope, cancellations or invalidations. Our pending patent applications may not result in issued patents. Moreover, our patents and patent applications may not be sufficiently broad to prevent others from using substantially similar technologies or from developing competing products. We also face the risk that others may independently develop similar or alternative technologies, or design around our patented technologies. As a result, no assurance can be given that any of our pending or future patent applications will be granted, that the scope of any patent protection currently granted or that may be granted in the future will exclude competitors or provide us with competitive advantages, that any of the patents that have been or may be issued to us will be held valid if subsequently challenged, or that other parties will not claim rights to or ownership of our patents or other proprietary rights that we hold.

We have taken security measures (including execution of confidentiality agreements) to protect our proprietary information, especially proprietary information that is not covered by patents or patent applications. These measures, however, may not provide adequate protection for our trade secrets or other proprietary information. In addition, others may independently develop substantially equivalent proprietary information or techniques or otherwise gain access to our trade secrets.

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We may be exposed to claims or lawsuits that our products infringe patents or other proprietary rights of other parties.

Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. We have not conducted a comprehensive freedom-to-operate review to determine whether our proposed business activities or use of certain of the technology covered by patent rights owned by us would infringe patents issued to third parties.

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries generally. The patent landscape is especially uncertain in regard to cell therapy products, as it involves complex legal and factual questions for which important legal principles remain unresolved. We may become party to, or be threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference proceedings, Inter Partes Reexamination, or Post Grant Review before the U.S. Patent and Trademark Office. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages. If the infringement is found to be willful, we could be liable for treble damages. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We have already been exposed to one patent lawsuit by a large company, which we vigorously defended. Our defense resulted in the plaintiff withdrawing nearly all of the claims it filed, and in settlement of the last claims without our paying the plaintiff anything. However, the litigation was expensive and time consuming. In the past, we have also been exposed to claims (without a lawsuit) by a competitor asserting or implying (and commentaries by third parties based on the claims by our competitor) that a patent issued to our competitor covers our products. We obtained and publicly reported legal advice that those claims were without merit. However, in the future, we could again be exposed to claims by third parties - with or without merit - that our products infringe their intellectual property rights.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

DCVax is our only technology in clinical development.

Unlike many pharmaceutical companies that have a number of products in development and which utilize many different technologies, we are dependent on the success of our DCVax platform technology. While the DCVax technology has a wide scope of potential use, and is embodied in several different product lines for different clinical situations, if the core DCVax technology is not effective or is toxic or is not commercially viable, our business could fail. We do not currently have other technologies that could provide alternative support for us.

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Risks Related to our Common Stock

The market price of our common stock is volatile and can be adversely affected by several factors.

The share prices of publicly traded biotechnology and emerging pharmaceutical companies, particularly companies without consistent product revenues and earnings, can be highly volatile and are likely to remain highly volatile in the future. The price which investors may realize in sales of their shares of our common stock may be materially different than the price at which our common stock is quoted, and will be influenced by a large number of factors, some specific to us and our operations, and some unrelated to our operations. Such factors may cause the price of our stock to fluctuate frequently and substantially. Such factors may include large purchases or sales of our common stock, shorting of our stock, positive or negative events, commentaries or publicity relating to our company, management or products, or other companies, management or products, including other immune therapies for cancer or immune therapies or cancer therapies generally, positive or negative events relating to healthcare and the overall pharmaceutical and biotech sector, the publication of research by securities analysts and changes in recommendations of securities analysts, legislative or regulatory changes, and/or general economic conditions. In the past, shareholder litigation, including class action litigation, has been brought against other companies that experienced volatility in the market price of their shares and/or unexpected or adverse developments in their business. Whether or not meritorious, litigation brought against a company following such developments can result in substantial costs, divert management’s attention and resources, and harm the company’s financial condition and results of operations.

Our Common Stock is considered a “penny stock” and may be difficult to sell.

The Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. Historically, the price of our Common Stock has fluctuated greatly. As of the date of this filing, the market price of our common stock is less than $5.00 per share, and therefore is a “penny stock” according to Commission rules. The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.

The requirements of the Sarbanes-Oxley Act of 2002 and other U.S. securities laws impose substantial costs, and may drain our resources and distract our management.

We are subject to certain of the requirements of the Sarbanes-Oxley Act of 2002, as well as the reporting requirements under the Exchange Act. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We have tested and concluded that we have remediated the identified material weaknesses in our internal controls that were reported over the years. The substantial efforts and resources the Company has invested achieved remediation of the previously identified weaknesses. However, requirements continue to become more stringent, requiring even more time and resources to be invested to maintain a controlled environment, which is difficult for a small company like ours. Continued additional investments and management time to meet these requirements will be necessary since control weaknesses raise the risk of future material errors in the company’s financial statements. We may not be able to maintain effective controls over time. If we have material weaknesses in the future, this may subject us to SEC enforcement action, which could include monetary fines or other equitable remedies that could be detrimental to the ongoing business of the Company.

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We do not intend to pay any cash dividends in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the market price of our common stock.

We have not paid any cash dividends on our common stock to date in our history, and we do not intend to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Also, any credit agreements which we may enter into with institutional lenders may restrict our ability to pay dividends. Therefore, any return on your investment in our capital stock must come from increases in the fair market value and trading price of our common stock. Such increases in the trading price of our stock may not occur.

Our certificate of incorporation and bylaws and Delaware law, have provisions that could discourage, delay or prevent a change in control.

Our certificate of incorporation and bylaws and Delaware law contain provisions which could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 100,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our Board of Directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. No preferred stock is currently outstanding. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

Provisions of our certificate of incorporation and bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or tender offers or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, the certificate of incorporation and bylaws and Delaware law, as applicable, among other things:

provide the Board of Directors with the ability to alter the bylaws without stockholder approval;
establish staggered terms for board members;
place limitations on the removal of directors; and
provide that vacancies on the Board of Directors may be filled by a majority of directors in office, although less than a quorum.

We are also subject to Section 203 of the Delaware General Corporation Law which, subject to certain exceptions, prohibits “business combinations” between a publicly-held Delaware corporation and an “interested stockholder,” which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock for a three-year period following the date that such stockholder became an interested stockholder.

A substantial number of shares of common stock may be sold in the market, which may depress the market price for our common stock.

Sales of a substantial number of shares of our common stock in the public market could cause the market price of our common stock to decline. A substantial majority of the outstanding shares of our common stock are freely tradable without restriction or further registration under the Securities Act. As of December 31, 2020, 829.6 million shares of our common stock are issued and outstanding. In addition, as of December 31, 2020, 269 million shares of our common stock are issuable upon exercise of outstanding warrants and 18 million shares of our common stock are issuable upon exercise of outstanding options.

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We may have claims and lawsuits against us that may result in adverse outcomes.

From time to time, we may be subject to a variety of claims and lawsuits. As described more fully in “Item 3. Legal Proceedings,” of Part I of this Form 10-K, in the past, we were engaged in responding to a shareholder demand for access to certain corporate books and records, and we were also engaged in several shareholder litigations. We believed that that the claims were without merit, fought them vigorously and settled them. We have also had several small litigations, for example relating to certain payables. However, litigation and claims are subject to inherent uncertainties, and adverse rulings or outcomes could occur, and/or could lead to further claims or litigation. Adverse outcomes or further litigation could result in significant monetary damages or injunctive relief that could adversely affect our business. A material adverse impact on our financial statements also could occur for the period in which an unfavorable final outcome becomes probable and its effect becomes reasonably estimable. In addition, litigation and claims may divert material amounts of management time and attention from our business, and/or involve significant legal costs and expenses.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our corporate headquarters are located at 4800 Montgomery Lane, Bethesda, Maryland, where we lease and occupy an aggregate of approximately 7,097 square feet of office space. The lease covering this property is currently scheduled to expire in August 2024.

Our research and development operations are mainly based in Sawston, U.K., where we lease and occupy an aggregate of approximately 87,000 square feet of building. The lease covering this property is currently scheduled to expire in December 2038.

We believe that our existing facilities are adequate for our immediate needs and that, should it be needed, additional space can be leased to accommodate any future growth.

ITEM 3. LEGAL PROCEEDINGS

Not Applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUERS PURCHASES OF EQUITY SECURITIES

Market for Common Equity and Related Stockholder Matters

Our common stock trade on OTCQB under the trading symbols “NWBO” effective December 19, 2016. No assurance can be given that an active market will exist for our common stock.

As of March 26, 2021, there were approximately 40,000 holders of record of our common stock. Such holders may include any broker or clearing agencies as holders of record, and in such cases exclude the individual stockholders whose shares are held by such brokers or clearing agencies.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all future earnings, if any, to fund the ongoing development and growth of our business. We do not currently anticipate paying any cash dividends in the foreseeable future.

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Stock Performance Graph

Not Applicable

Recent Sales of Unregistered Securities

During the year ended December 31, 2020, the Company issued certain equity securities as set forth in footnote 11 (Stockholders’ Equity) to our financial statements, for the consideration described in such footnote, which disclosure is incorporated into this Item 5. Such securities were issued by the Company pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, or the provisions of Rule 506 of Regulation D promulgated under the Securities Act. Except as set forth in such footnote, the Company did not utilize an underwriter or a placement agent for any of these offerings of its securities.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

Not Applicable

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion together with the Financial Statements, related Notes and other financial information included elsewhere in this Form 10-K. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” and elsewhere in this Form 10-K. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

We are a biotechnology company focused on developing personalized immune therapies for cancer. We have developed a platform technology, DCVax®, which uses activated dendritic cells to mobilize a patient’s own immune system to attack their cancer.

Our lead product, DCVax®-L, is designed to treat solid tumor cancers in which the tumor can be surgically removed. We have completed a 331-patient international Phase III trial of DCVax-L for Glioblastoma multiforme brain cancer (GBM). As previously reported, the data collection and confirmation process was conducted by the independent contract research organization (CRO) who managed the trial and by other independent service firms.  On October 5, 2020, the Company announced that Data Lock for the Phase III trial had been reached, and that a series of steps and processes would follow. These processes included data validation, analyses of the data by independent statisticians, preparations by the statisticians of summaries of the Trial results for review by the Company, the Principal Investigator, the Steering Committee of the Trial, the Scientific Advisory Board, and a panel of independent brain cancer experts, in preparation for publication in a scientific journal and public announcement.  This series of processes is under way.  It is anticipated that public announcement will follow these processes.

As also previously reported, coronavirus-related difficulties have impacted most aspects of the process, especially with the waves of COVID cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family. Other experts have gone on extended leave due to restrictions on operations. Clinical trial site personnel have been unavailable due to being reassigned for COVID, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses, continue to have only limited operations. Even logistical matters such as the shipping of materials have been, and continue to be, subjected to substantial restrictions and delays.

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On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system to close and automate the manufacturing of cell therapy products such as DCVax®. The Company acquired 100% of the ownership, and  Flaskworks became a wholly-owned subsidiary of the Company. Flaskworks was previously owned by its technical founders and Corning Inc. The technical team from Flaskworks joined the Company as part of the Acquisition. It is anticipated that the Flaskworks system will enable substantial scale-up of production volumes of DCVax products and substantial reduction of production costs. The Company’s buildout of the Sawston, UK facility has been designed to proceed in phases, as modules, both for efficiency in the timing of capital costs and to allow flexibility in operations and usage. The Company anticipates that implementation of the Flaskworks system will enable certain phases of the buildout to be simplified and streamlined.  For further details on the financial aspects of the acquisition, please see Item 8 Note 5 below.

Our second product, DCVax®-Direct, is designed to treat inoperable solid tumors. A 40-patient Phase I trial has been completed, and included treatment of a diverse range of more than a dozen types of cancers. The Company is working on preparations for Phase II trials of DCVax-Direct, as resources permit.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses.

On an ongoing basis, we evaluate our estimates and judgments, including those related to derivative liabilities, accrued expenses and stock-based compensation. We based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic (“COVID-19”) and the COVID-19 control responses.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

Level 1 - defined as observable inputs such as quoted prices for identical instruments in active markets;
Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

We account for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging (“ASC 815”). We classify as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). We account for certain common stock warrants outstanding as a liability at fair value and adjust the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our consolidated statements of operations. The fair value of the warrants issued by us has been estimated using Monte Carlo simulation and or a Black Scholes model. The warrant liabilities are valued using Level 3 valuation inputs.

Derivative Financial Instruments

The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are recorded in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

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Impairment of Long-Lived Assets

The Company assesses its long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Management determines fair value using the discounted cash flow method or other accepted valuation techniques.

As of December 31, 2020 and 2019, the undiscounted net future cash flows of the U.K. property were greater than the carrying value. Therefore, no impairment loss was considered necessary.

Leases

We adopted ASC 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. We recognize these lease expenses on a straight-line basis over the lease term. Based on the analysis, on January 1, 2019, we recorded right of use (“ROU”) assets and lease liabilities of approximately $4.3 million, which represented operating lease entered prior to January 1, 2019. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Additionally, we recorded an adjustment to opening accumulated deficit of $4.8 million related to the derecognition of deferred profit related to the U.K facility sales leaseback transaction.

Stock Based Compensation

Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award using the Black-Scholes option-pricing model, and is recognized over the service period required for the award.

We estimate the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

We recognize forfeitures when they occur.

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Recent Accounting Standards

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Debt

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

Revision of Previously Issued Financial Statements

We have revised certain previously reported non-material financial information for the year ended December 31, 2019 in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including but not limited to information within the Results of Operations section.

See Note 14, Revision to Prior Period Financial Statements, for additional information related to the revision, including descriptions of the misstatements and the non-material impact on our consolidated financial statements.

Results of Operations

Operating costs:

Operating costs and expenses consist primarily of research and development expenses, including clinical trial expenses, which increase when we are actively participating in clinical trials and especially when we are in a large ongoing international phase III trial or we are completing such a large international trial, and undertaking substantial one-time expenses such as for final site visits, query resolutions, statistical work for the Statistical Analysis Plan, preparations for data analyses and other activities related to completion and assessment of the trial and its results. The operating costs also include administrative expenses associated with trials, and increase as such operating activities grow.

In addition to clinical trial related costs, our operating costs may include ongoing work relating to our DCVax products, including R&D, product characterization, and related matters. Going forward, we are also incurring large amounts of costs to carry out and complete statistical analyses, process validation work, final data collection and validation, and other work associated with moving towards preparing for locking, unblinding and analyzing the trial results.

Following our acquisition of Flaskworks, our operating costs now include the costs for its ongoing operations and its intellectual property filings.

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Our operating costs also include the costs of preparations for the launch of new or expanded clinical trial programs, such as our planned Phase II clinical trials. The preparation costs include payments to regulatory consultants, lawyers, statisticians, sites and others, evaluation of potential investigators, the clinical trial sites and the CROs managing the trials and other service providers, and expenses related to institutional approvals, clinical trial agreements (business contracts with sites), training of medical and other site personnel, trial supplies and other. Additional substantial costs relate to the maintenance and substantial expansion of manufacturing capacity, in both the US and Europe.

Our operating costs also include significant legal and accounting costs in operating the Company.

Research and development:

Discovery and preclinical research and development expenses include costs for substantial external scientific personnel, technical and regulatory advisers, and others, costs of laboratory supplies used in our internal research and development projects, travel, regulatory compliance, and expenditures for preclinical and clinical trial operation and management when we are actively engaged in clinical trials.

Because we are pre-revenue company, we do not allocate research and development costs on a project basis. We adopted this policy, in part, due to the unreasonable cost burden associated with accounting at such a level of detail and our limited number of financial and personnel resources.

General and administrative:

General and administrative expenses include personnel related salary and benefit expenses, cost of facilities, insurance, travel, legal services, property and equipment and amortization of stock options and warrants.

For the Years Ended December 31, 2020 and 2019

We recognized a net loss of $529.8 million and $20.8 million for the years ended December 31, 2020 and 2019, respectively. The net loss of $529.8 million for the year ended December 31, 2020 included a cash loss of $32 million and a non-cash loss of $497.8 million. The increase in net loss for the year ended December 31, 2020 was primarily due to the increased stock price, which resulted in significant non-cash loss from the change on the derivative liability.

Net cash used in operations was $32.1 million and $31.9 million for the years ended December 31, 2020 and 2019, respectively.

Research and development expense

For the years ended December 31, 2020 and 2019, research and development expense was $33.6 million and $14.1 million, respectively. Research and development expenses included activities and involvement of external consultants as the Phase 3 trial moved through final data collection and query resolution, independent data validation, and other preparations for Data Lock and analyses. The increase of $19.5 million was mainly due to the recognition of approximately $19.8 million stock-based compensation under research and development during the year ended December 31, 2020.

The following table summarizes expenses incurred (i.e., amounts invoiced, including those which have only been partly paid) to entities as related parties during the years ended December 31, 2020 and 2019 (amount in thousands):

For the year ended

December 31, 2020

    

2020

    

2019

(As Revised)

Advent BioServices

 

$

7,543

$

5,735

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General and Administrative Expense

General and administrative expenses were $51.0 million and $12.5 million for the years ended December 31, 2020 and 2019, respectively. The increase was mainly related to a one-time cost of $30.8 million stock-based compensation that covered several years of such compensation and that was recognized in general and administrative.

Legal Expenses

Legal costs were $3.3 million and $3.7 million for the years ended December 31, 2020 and 2019, respectively. The decrease in legal costs reflects a reduction in the need for legal services.

Change in fair value of derivatives

We recognized a non-cash loss of $435.4 million and a non-cash gain of $11.8 million for the years ended December 31, 2020 and 2019, respectively. The non-cash loss was primarily due to the increase of our stock price as of December 31, 2020 ($1.53 per share) compared to December 31, 2019 ($0.21 per share). In the year ended December 31, 2019, the non-cash gain was primarily due to the decrease in stock price as of December 31, 2019 compared with December 31, 2018.

Loss from Extinguishment of Debt

During the year ended December 31, 2020, we converted debt of approximately $12.7 million principal and $1.2 million accrued interest into approximately 58.4 million shares of common stock and 6.2 million warrants. We also extinguished $6.6 million embedded derivative liabilities, wrote off $0.9 million unamortized debt discount and made some debt amendment upon the conversion. We recorded an approximate $1.6 million debt extinguishment loss from the conversion.

Our PPP Loan forgiveness application was approved on December 7, 2020. We recorded approximate $0.4 million debt extinguishment gain from the forgiveness of PPP Loan.

During the year ended December 31, 2019, we recorded loss from extinguishment of debt of $1.9 million. The debt extinguishment loss resulted from debt conversion, when the fair value of common stock exceeded the book value of the debt as of the conversion date. We also amended certain notes in 2019, which was treated as an extinguishment for accounting purposes.

Interest expense

During the years ended December 31, 2020 and 2019, we recorded interest expense of $8.5 million and $3.0 million, respectively.

Foreign currency transaction gain

During the years ended December 31, 2020 and 2019, we recognized foreign currency transaction gain of $2.3 million and $0.3 million, respectively. The gain was due to the weakening of the U.S. dollar relative to the British pound sterling.

Liquidity and Capital Resources

We have experienced recurring losses from operations since inception. We have not yet established an ongoing source of revenues and must cover our operating expenses through debt and equity financings to allow us to continue as a going concern. Our ability to continue as a going concern depends on the ability to obtain adequate capital to fund operating losses until we generate adequate cash flows from operations to fund our operating costs and obligations. If we are unable to obtain adequate capital, we could be forced to cease operations.

We depend upon our ability, and will continue to attempt, to secure equity and/or debt financing. We cannot be certain that additional funding will be available on acceptable terms, or at all. Our management determined that there was substantial doubt about our ability to continue as a going concern within one year after the consolidated financial statements were issued, and management’s concerns about our ability to continue as a going concern within the year following this report persist.

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Contingent Contractual Payment

The following table summarizes our contractual obligations as of December 31, 2020 (amount in thousands):

Payment Due by Period

Less than

1 to 2

3 to 5

    

Total

    

1 Year

    

Years

Years

Short term convertible notes payable (1)

    

  

    

  

  

6% unsecured

 

$

226

$

226

$

$

8% unsecured

2,218

2,218

Short term notes payable (2)

 

  

  

  

8% unsecured

 

1,807

1,807

10% unsecured

 

329

329

12% unsecured

 

624

624

Long term notes payable (3)

 

  

  

  

8% unsecured

 

7,413

7,413

6% secured

2,202

262

1,940

Operating leases (4)

 

20,913

6,097

12,080

2,736

Purchase obligation (5)

 

Total

 

$

35,732

$

11,301

$

19,755

$

4,676

(1) The obligations related to short-term convertible notes were approximately $2.4 million as of December 31, 2020, which included remaining contractual unpaid interest of $0.2 million.
(2) The obligations related to short-term notes were approximately $2.8 million as of December 31, 2020, which included unpaid interest of $0.3 million.
(3) The obligations related to long-term notes were approximately $9.6 million as of December 31, 2020, which included unpaid interest for the next 5 years of approximately $0.6 million.
(4) The operating lease obligations during the next 2 years included approximately $468,000 and $9,000 for our offices in Maryland and Germany, respectively, and approximately $513,000 for our office in Maryland for the next 3-4 years. Approximately £1 million ($1.5 million) in lease obligations during the next 2 years and approximately £1.5 million ($2.2 million) for the next 3 to 5 years related to the Vision Centre in the U.K. that we leased back in December 2018. We also included approximately $10.3 million of anticipated payments to Advent BioServices, which represents the next 2 years’ obligation. The remaining contract term as of December 31, 2020 was approximately 2 years under the Manufacturing Services Agreement with Advent.
(5) We have possible contingent obligations to pay certain fees to contract manufacturers if we shut down or suspend programs.

For a shut down or suspension of the DCVax-L program at Advent, the Company must give 12 months’ advance notice. During the notice period services would still be provided. Minimum required payments for this notice period total approximately £3.8 million ($5 million).

As of December 31, 2020, no shut-down or suspension fees were triggered.

Operating Activities

We used $32.1 million and $31.9 million in cash for operating activities during the years ended December 31, 2020 and 2019, respectively. The increase in cash used in operating activities was primarily attributable to an increase in clinical trial related expenditures.

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Investing Activities

During the year ended December 31, 2020, we spent approximately $6.6 million to purchase additional equipment in the UK and construction in progress.

During the year ended December 31, 2020, we spent approximately $1.5 million related to the Flaskworks acquisition.

During the year ended December 31, 2019, we spent approximately $360,000 to purchase additional equipment in the UK.

Financing Activities

We received approximately $26.8 million and $6.9 million in cash proceeds from issuance of convertible preferred stock, common stock and warrants, in both public and private offerings during the years ended December 31, 2020 and 2019, respectively.

We received approximately $13.9 million and $2.2 million cash proceeds from the exercise of warrants during the years ended December 31, 2020 and 2019, respectively.

We received approximately $13.7 million and $7.0 million in cash proceeds from the issuance of multiple notes payable during the years ended December 31, 2020 and 2019, respectively.

We received approximately $0.3 million in cash proceeds from issuances of debt with a related party during the year ended December 31, 2020.

We made aggregate debt payments of $2.0 million and $6.1 million during the years ended December 31, 2020 and 2019, respectively.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The full text of our audited consolidated financial statements as of December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020 and 2019, begins on page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We, the management of Northwest Biotherapeutics, Inc. (the “Company”), are responsible for establishing and maintaining adequate internal control over financial reporting of the Company.

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

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As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020. In making this assessment, the Company’s management used the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Our management concluded that as of December 31, 2020, our disclosure controls and procedures were effective, and previous noted deficiencies have been remediated, as described below.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management of the Company, including our CEO and Principal Financial and Accounting Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. Based on this assessment, we determined that we have effectively designed and implemented, consistently performed, and tested the functioning of these controls.

Based on the efforts identified above, we have concluded that the previously identified material weaknesses in the Company’s internal control over financial reporting have been remediated through the following efforts:

The Company has added and implemented financial operational policies and related procedures which govern our system of internal controls over evaluating disclosures under ASC740. These policies were reviewed and tested to be effective as of December 31, 2020.

Because the material weakness was successfully remediated and additional material weaknesses were not identified, management, including our principal executive officer and principal financial officer, has concluded that our internal control over financial reporting was effective as of December 31, 2020.

Changes in Internal Control Over Financial Reporting

There were no changes, other than those described above, in our internal control over financial reporting during the fiscal quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is hereby incorporated by reference from our 2021 Proxy Statement under the captions “Election of Directors” and “Code of Ethics.” To the extent that we do not file the 2021 Proxy Statement prior to the end of the 120-day period following December 31, 2020, we will amend this Annual Report on Form 10-K to provide the required information.

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ITEM 11. EXECUTIVE COMPENSATION

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS-EQUITY COMPENSATION PLAN INFORMATION

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this item will be contained in the Proxy Statement and is incorporated herein by reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by an asterisk (*) are management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.

EXHIBIT INDEX

Exhibit

Number

    

Description

3.1

 

Seventh Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1(File No. 333-134320) on July 17, 2006).

3.2

 

Third Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on June 22, 2007).

3.3

 

Amendment to Seventh Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 filed with the Registrant’s Current Report on Form 8-K on June 22, 2007).

3.5

 

Amendment to Seventh Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Quarterly Report on Form 10-Q on May 21, 2012).

3.6

 

Amendment to Seventh Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on September 26, 2012).

3.7

 

Amendment to Third Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on December 11, 2012).

3.8

 

Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on December 21, 2017).

3.9

 

Amended and Restated Certificate of Designations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K on January 4, 2018).

4.1

 

Description of Securities

4.2

 

Form of common stock certificate (incorporated by reference to Exhibit 4.1 filed with the Registrant’s Amendment No. 3 to the Registration Statement on Form S-1 (Registration No. 333-67350) on November 14, 2001).

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4.3

 

Form of Warrant Agency Agreement by and between Northwest Biopharmaceuticals, Inc. and Computershare Trust Company, N.A. and Form of Warrant Certificate (incorporated by reference to Exhibit 4.2 filed with the Registrant’s Form S-1 on December 4, 2012).

10.49

 

Series E Common Stock Purchase Warrant (incorporated by reference as Exhibit 10.2 filed with the Company’s Current Report on Form 8-K/A on September 19, 2016).

10.50

 

Registration Rights Agreement dated August 22, 2016 (incorporated by reference as Exhibit 10.3 filed with the Company’s Current Report on Form 8-K/A on September 19, 2016).

10.64

 

Form of Warrant Repricing Letter Agreement dated August 7, 2017 by and between Northwest Biotherapeutics, Inc. and a certain institutional investor (incorporated by reference as Exhibit 10.1 filed with the Company’s Current Report on Form 8-K on August 7, 2017).

10.65

 

Form of Series A Common Stock Purchase Warrant (incorporated by reference as Exhibit 10.2 filed with the Company’s Current Report on Form 8-K on August 7, 2017).

10.66

 

Form of Securities Purchase Agreement, dated September 20, 2017, by and between Northwest Biotherapeutics, Inc. and certain institutional investors (incorporated by reference as Exhibit 10.1 filed with the Company’s Current Report on Form 8-K on September 22, 2017).

10.67

 

Form of Class A Common Stock Purchase Warrant (incorporated by reference as Exhibit 10.2 filed with the Company’s Current Report on Form 8-K on September 22, 2017).

10.70

 

Form of Class D-1 Common Stock Purchase Warrant (incorporated by reference as Exhibit 10.1 filed with the Company’s Current Report on Form 8-K on December 7, 2017).

10.72

 

Form of Subscription Agreement (incorporated by reference as Exhibit 10.3 filed with the Company’s Current Report on Form 8-K on December 7, 2017).

10.73

 

Settlement and Amendment Agreement (2016 Obligations Agreement), dated as of December 31, 2017, by and between Northwest Biotherapeutics, Inc. and Cognate BioServices, Inc.

10.74

 

Settlement and Amendment Agreement (2017 Obligations Agreement), dated as of December 31, 2017, by and between Northwest Biotherapeutics, Inc. and Cognate BioServices, Inc.

10.75

 

Note and Loan Agreement, dated as of March 14, 2018, by and between Northwest Biotherapeutics, Inc. and Linda F. Powers.

10.76

 

Note and Loan Agreement, dated as of March 19, 2018, by and between Northwest Biotherapeutics, Inc. and Linda F. Powers.

10.78

 

Form of Loan Agreement, dated as of November 7, 2018, by and between Northwest Biotherapeutics, Inc. and a Group of Private Lenders.

10.79

 

Contract Relating to Sale of Spicers, Sawston, Cambridge, dated as of December 5, 2018, by and between Aracaris Capital Limited and Huawei Technologies Research & Development (UK) Limited.

10.80

 

Lease Relating to Vision Centre, Sawston, Cambridge, by and between Aracaris Capital Limited and Aracaris Limited, dated as of December 14, 2018.

10.81

Equity Compensation Plan, dated May 29, 2020.

10.82

Note and Loan Agreement, dated August 14, 2021, by and between Northwest Biotherapeutics, Inc. and Iliad Research and Trading L.P.

10.83

Agreement to acquire Flaskworks, L.L.C, August 28, 2020.

32

Table of Contents

10.84

Change in Registrant’s Accountants (incorporated by reference as Exhibit 16.1 filed with the Company’s Current Report on Form 8-K January 26, 2021).

10.85

Loan Agreement, dated March 1, 2021, by and between Northwest Biotherapeutics, Inc. and Streeterville Capital, L.L.C.

21.1

 

Subsidiaries of the Registrant.

23.1

 

Independent Registered Public Accounting Firm’s Consent.

31.1

 

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

32.1

 

Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

 

XBRL Instance Document.

101.SCH 

 

XBRL Schema Document.

101.CAL

 

XBRL Calculation Linkbase Document.

101.DEF

 

XBRL Definition Linkbase Document.

101.LAB 

 

XBRL Label Linkbase Document.

101.PRE

 

XBRL Presentation Linkbase Document.

*Confidential information in this exhibit has been omitted and filed separately with the SEC pursuant to a confidential treatment request.

33

Table of Contents

ITEM 16.FORM 10–K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

NORTHWEST BIOTHERAPEUTICS, INC.

(Registrant)

Date: March 31, 2021

By:

/s/ Linda F. Powers

Linda F. Powers,

President and Chief Executive Officer

Principal Executive Officer

Principal Financial and Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

    

Title

    

Date

/s/ Linda F. Powers

President and Chief Executive Officer

March 31, 2021

Linda F. Powers

Principal Executive Officer

Principal Financial and Accounting Officer

/s/ Alton L. Boynton

Director

March 31, 2021

Alton L. Boynton

/s/ Navid Malik

Director

March 31, 2021

Dr. Navid Malik

/s/ Jerry Jasinowski

Director

March 31, 2021

Jerry Jasinowski

/s/ J. Cofer Black

Director

March 31, 2021

J. Cofer Black

34

Table of Contents

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NORTHWEST BIOTHERAPEUTICS, INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

F-2

 

 

Consolidated Balance Sheets as of December 31, 2020 and 2019

F-6

 

 

Consolidated Statements of Operations and Comprehensive Loss  for the years ended December 31, 2020 and 2019

F-7

 

 

Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2020 and 2019

F-8

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019

F-9

 

 

Notes to the Consolidated Financial Statements

F-11

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Northwest Biotherapeutics, Inc.

Bethesda, Maryland

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Northwest Biotherapeutics, Inc. and Subsidiaries (the “Company”) as of December 31, 2020, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and conditions and management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board of the United States of America (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter – Debt and Equity Accounting Considerations

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the Company’s Audit Committee and that: (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Table of Contents

Critical Audit Matter Description

As disclosed in Notes 4, 8, and 11 to the consolidated financial statements, the Company had various debt, derivative, and equity transactions where management evaluated required accounting considerations, significant estimates, and judgements around certain features, the possibility of conversion or redemption, and the valuation of certain components of the financings, including the valuation around certain freestanding and embedded derivatives. Certain features were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period.

There is no current observable market for these types of features and, as such, the Company determined the fair value of the freestanding instruments or embedded derivatives using the Black-Scholes-Merton or the Monte Carlo option pricing model to measure the fair value of the debt and/or equity instrument both with and without the derivative liability features. As a result, a high degree of auditor judgment and effort was required in performing audit procedures to evaluate the various components of these instruments.

How the Critical Audit Matter Was Addressed In the Audit

Our principal audit procedures performed to address this critical audit matter included the following:

We obtained an understanding of the internal controls and processes surrounding complex debt, derivative liabilities, and equity transactions.
We obtained a listing and of all debt, derivative liabilities, and equity transactions and management’s accounting analysis supporting these transactions. We evaluated the conclusions reached to ensure these were recorded in accordance with the relevant accounting guidance.
We identified and evaluated the accounting considerations in determining the nature of the various features and weighting of evidence, the potential bifurcation of these instruments, and considerations related to the determination of the fair value of the various debt and equity instruments and the conversion and redemption features that include complex valuation models and assumptions utilized by management. We reviewed the fair value models used, significant assumptions, and underlying data used in the models.
We evaluated the disclosures surrounding debt, derivative liabilities, and equity transactions to ensure these were disclosed in accordance with the relevant accounting guidance.

We have served as the Company’s auditors since 2021.

/s/ Cherry Bekaert LLP

Tampa, Florida

March 31, 2021

F-3

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Northwest Biotherapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Northwest Biotherapeutics, Inc. and Subsidiaries (the “Company”) as of December 31, 2019, the related statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 16, 2020, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting, except for the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to ineffective designed controls over the evaluation and conclusion of contingencies under ASC 740, as to which the date is June 23, 2020.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred recurring operating losses and net operating cash flow deficits, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of the guidance in ASC Topic 842, Leases (“Topic 842”).

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum LLP

F-4

Table of Contents

We served as the Company’s auditor from 2013 to 2021.

New York, NY

March 16, 2020, except for the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to ineffective designed controls over the evaluation and conclusion of contingencies under ASC 740, as to which the date is June 23, 2020.

F-5

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

    

December 31, 

    

December 31, 

2020

2019

(As revised) (Note 14)

ASSETS

 

  

 

Current assets:

 

  

 

  

Cash and cash equivalents

$

9,983

$

372

Prepaid expenses and other current assets

 

5,528

 

2,828

Total current assets

 

15,511

 

3,200

Non-current assets:

 

 

  

Property, plant and equipment, net

 

1,040

 

281

Construction in progress

9,074

1,685

Right-of-use asset, net

4,489

4,679

Indefinite-lived intangible asset

1,292

Goodwill

626

Other assets

 

867

 

798

Total non-current assets

 

17,388

 

7,443

TOTAL ASSETS

$

32,899

$

10,643

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

  

Current liabilities:

 

 

  

Accounts payable and accrued expenses

$

7,380

$

6,348

Accounts payable and accrued expenses to related parties and affiliates

 

5,363

 

3,844

Convertible notes, net

 

3,830

 

568

Notes payable, net

 

2,437

 

5,501

Notes payable to related party

 

 

66

Contingent payable derivative liability

8,275

7,261

Warrant liability

 

354,972

 

20,213

Lease liabilities

167

395

Total current liabilities

 

382,424

 

44,196

Non-current liabilities:

 

  

 

  

Note payable, net of current portion, net

 

8,507

 

6,588

Lease liabilities, net of current portion

4,916

4,914

Total non-current liabilities

 

13,423

 

11,502

Total liabilities

 

395,847

 

55,698

COMMITMENTS AND CONTINGENCIES (Note 12)

 

  

 

  

Stockholders’ deficit:

 

  

 

  

Preferred stock ($0.001 par value); 100,000,000 shares authorized as of December 31, 2020 and 2019, respectively

Common stock ($0.001 par value); 1,200,000,000 shares authorized; 829.6 million and 614.3 million shares issued and outstanding as of December 31, 2020 and 2019, respectively

 

830

 

614

Additional paid-in capital

 

1,008,665

 

794,900

Stock subscription receivable

 

(79)

 

(10)

Accumulated deficit

 

(1,371,216)

 

(841,395)

Accumulated other comprehensive income

 

(1,148)

 

836

Total stockholders’ deficit

 

(362,948)

 

(45,055)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$

32,899

$

10,643

See accompanying notes to the consolidated financial statements

F-6

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

For the Years ended

December 31, 

2020

    

2019

(As revised) (Note 14)

Revenues:

  

 

  

Research and other

$

1,291

$

2,410

Total revenues

 

1,291

 

2,410

Operating costs and expenses:

 

  

 

  

Research and development

 

33,637

 

14,106

General and administrative

 

50,992

 

12,541

Legal expenses

 

3,267

 

3,742

Total operating costs and expenses

 

87,896

 

30,389

Loss from operations

 

(86,605)

 

(27,979)

Other income (expense):

 

 

  

Change in fair value of derivative liabilities

 

(435,351)

 

11,828

Loss from extinguishment of debt

 

(1,582)

 

(1,941)

Interest expense

 

(8,544)

 

(2,975)

Foreign currency transaction gain

 

2,261

 

255

Total other income (expense)

 

(443,216)

 

7,167

Net loss

$

(529,821)

$

(20,812)

Other comprehensive loss

Foreign currency translation adjustment

(1,984)

(164)

Total comprehensive loss

$

(531,805)

$

(20,976)

Net loss per share applicable to common stockholders - basic and diluted

$

(0.73)

$

(0.04)

Weighted average shares used in computing basic and diluted loss per share

725,129

564,188

See accompanying notes to the consolidated financial statements

F-7

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Subscription

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Par value

    

Capital

    

Receivable

Deficit

    

Income (Loss)

    

Equity (Deficit)

Balance at January  1, 2019

 

523,232

 

$

523

 

$

775,741

 

$

(10)

 

$

(825,385)

 

$

1,000

 

$

(48,131)

Issuance of common stock and warrants for cash in a registered direct offering (net of $2.7 million warrant liability and $0.4 million cash offering cost)

 

32,708

 

33

 

4,040

 

 

 

 

4,073

Warrants exercised for cash

 

9,532

 

10

 

2,210

 

 

 

 

2,220

Reclassification of warrant liabilities related to warrants exercised for cash

 

 

 

1,759

 

 

 

 

1,759

Issuance of common stock and warrants for conversion of debt and accrued interest

 

35,480

 

35

 

9,138

 

 

 

 

9,173

Stock-based compensation

 

1,340

 

1

 

1,818

 

 

 

 

1,819

Cumulative effect of adopting new accounting standard

 

 

 

 

 

4,802

 

 

4,802

Issuance of common shares in connection with a settlement agreement

 

12,000

 

12

 

(12)

 

 

 

 

Beneficial conversion feature related to amended convertible note

 

 

 

68

 

 

 

 

68

Reclass between shares payable and additional paid-in capital

 

 

 

138

 

 

 

 

138

Net loss  (As revised) (Note 14)

 

 

 

 

 

(20,812)

 

 

(20,812)

Cumulative translation adjustment

 

 

 

 

 

 

(164)

 

(164)

Balance at December 31, 2019

 

614,292

614

794,900

(10)

(841,395)

836

(45,055)

Issuance of common stock and warrants for cash in a registered direct offering (net of $10.3 million warrant liability and $0.6 million cash offering cost)

97,981

98

16,462

(69)

16,491

Issuance of common stock and warrants for conversion of debt and accrued interest

58,368

58

19,591

19,649

Warrants exercised for cash

47,511

48

13,867

13,915

Reclassification of warrant liabilities related to warrants exercised for cash

22,701

22,701

Cashless warrants exercise

7,086

7

(7)

Cashless option exercise

71

-

Reclassification of warrant liabilities related to cashless warrants exercise

9,478

9,478

Beneficial conversion feature related to amended convertible note

44

44

Issuance of common stock in connection with Flaskworks acquisition

655

1

1,132

1,133

Stock-based compensation

3,667

4

52,205

52,209

Reclassification of warrant liabilities related to sequencing policy

78,292

78,292

Net loss

-

(529,821)

(529,821)

Cumulative translation adjustment

-

(1,984)

(1,984)

Balance at December 31, 2020

829,631

$

830

$

1,008,665

$

(79)

$

(1,371,216)

$

(1,148)

$

(362,948)

See accompanying notes to the consolidated financial statements

F-8

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Years ended

December 31, 

2020

    

2019

(As revised) (Note 14)

Cash Flows from Operating Activities:

  

 

  

Net loss

$

(529,821)

$

(20,812)

Reconciliation of net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

87

 

21

Amortization of debt discount

 

3,013

 

1,430

Change in fair value of derivatives

 

435,351

 

(11,828)

Change in fair value of contingent liability

913

Loss from extinguishment of debt

 

1,582

 

1,941

Amortization of operating lease right-of-use asset

338

(322)

Stock-based compensation related to warrants modification

 

 

3

Stock-based compensation for services

 

52,209

 

1,819

Non-cash interest expense

4,270

Subtotal of non-cash charges

 

497,763

 

(6,936)

Changes in operating assets and liabilities:

 

  

 

  

Prepaid expenses and other current assets

 

(2,350)

 

(1,226)

Other non-current assets

 

(31)

 

(11)

Accounts payable and accrued expenses

 

1,702

 

30

Related party accounts payable and accrued expenses

 

431

 

(3,230)

Lease liabilities

213

326

Net cash used in operating activities

 

(32,093)

 

(31,859)

Cash Flows from Investing Activities:

 

  

 

  

Purchase of equipment and construction in progress

 

(6,610)

 

(360)

Acquisition of Flaskworks, net of cash

(1,532)

Net cash used in investing activities

 

(8,142)

 

(360)

Cash Flows from Financing Activities:

 

  

 

  

Proceeds from issuance of common stock and warrants in a registered direct offering, net

 

26,814

 

6,874

Proceeds from exercise of warrants

 

13,915

 

2,220

Proceeds from warrants modification

 

4

 

7

Proceeds from issuance of notes payable, net

 

8,557

 

7,000

Proceeds from issuance of convertible notes payable, net

 

5,115

 

Proceeds from issuance of convertible notes payable to related party

 

315

 

Repayment of notes payable

 

(1,556)

 

(420)

Repayment of notes payable to related parties

 

(379)

 

(329)

Repayment of convertible notes payable

 

(89)

 

Repayment of convertible notes payable to related parties

(5,400)

Net cash provided by financing activities

 

52,696

 

9,952

Effect of exchange rate changes on cash and cash equivalents

 

(2,850)

 

415

Net increase (decrease) in cash and cash equivalents

 

9,611

 

(21,852)

Cash and cash equivalents, beginning of the year

 

372

 

22,224

Cash and cash equivalents, end of the year

$

9,983

$

372

Supplemental disclosure of cash flow information

 

  

 

  

Interest payments on notes payable  

$

$

(43)

Interest payments on notes payable to related party

$

(9)

$

(177)

Interest payments on convertible notes payable

$

(11)

$

Interest payments on convertible notes payable to related party

$

(19)

$

(795)

See accompanying notes to the consolidated financial statement

F-9

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Years ended

December 31, 

2020

    

2019

(As revised) (Note 14)

Supplemental schedule of non-cash investing and financing activities:

  

 

  

Issuance of common stock as consideration related to Flaskworks acquisition

$

220

$

Cashless warrants exercise

$

7

$

Reclassification of warrant liabilities related to warrants exercised for cash

$

22,701

$

1,759

Reclassification of warrant liabilities related to cashless warrants exercise

$

9,478

$

Reclassification of warrant liabilities related to sequencing policy

$

78,292

$

Issuance of common stock and warrants for conversion of debt and accrued interest

$

8,230

$

7,313

Offering cost related to warrant liability

$

4,876

$

2,693

Deferred offering cost

$

$

108

Issuance of warrants in conjunction with convertible note payable

$

153

$

Issuance of warrants in connection with debt modification

$

395

$

Warrant modification in connection with debt amendment

$

91

$

Beneficial conversion feature related to amended convertible note

$

44

$

68

Reclass between shares payable and additional paid-in capital

$

$

138

Capital expenditures included in accounts payable

$

1,088

$

947

Conversion of outstanding accounts payables to note payable and contingent payable

$

$

8,560

Issuance of common shares in connection with a settlement agreement

$

$

12

See accompanying notes to the consolidated financial statement

F-10

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

1. Organization and Description of Business

Northwest Biotherapeutics, Inc. and its wholly owned subsidiaries NW Bio GmbH, Aracaris Ltd, Aracaris Capital, Ltd, and Northwest Biotherapeutics B.V. (collectively, the “Company”, “we”, “us” and “our”) were organized to discover and develop innovative immunotherapies for cancer. The Company has developed DCVax® platform technologies for both operable and inoperable solid tumor cancers. The Company has wholly owned subsidiaries in the U.K. and on April 25, 2019, the Company established a new wholly owned subsidiary Northwest Biotherapeutics B.V. in the Netherlands, where the European Medicines Agency is relocating.

The Company relies upon contract manufacturers for production of its DCVax products, research and development services, distribution and logistics, and related services, in compliance with the Company’s specifications and the applicable regulatory requirements.

On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system to close and automate the manufacturing of cell therapy products such as DCVax®.

2. Financial Condition, Going Concern and Management Plans

The Company has incurred annual net operating losses since its inception. The Company had a net loss of $529.8 million, which included a cash loss of $32 million and a non-cash loss of $497.8 million, for the year ended December 31, 2020. The increase in net loss for the year ended December 31, 2020 was primarily due to the increased stock price, which resulted in significant non-cash loss from the change on the derivative liability. The Company used approximately $32.1 million of cash in its operating activities for the year ended December 31, 2020. Management believes that the Company has access to capital resources through the sale of equity and debt financing arrangements. However, the Company has not secured any commitments for new financing for this specific purpose at this time.

The Company does not expect to generate material revenue in the near future from the sale of products and is subject to all of the risks and uncertainties that are typically faced by biotechnology companies that devote substantially all of their efforts to R&D and clinical trials and do not yet have commercial products. The Company expects to continue incurring annual losses for the foreseeable future. The Company’s existing liquidity is not sufficient to fund its operations, anticipated capital expenditures, working capital and other financing requirements until the Company reaches significant revenues. Until that time, the Company will need to obtain additional equity and/or debt financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or from expansion of operations. If the Company attempts to obtain additional equity or debt financing, the Company cannot assume that such financing will be available to the Company on favorable terms, or at all. Because of recurring operating losses and operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date of this filing. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

As also previously reported, coronavirus-related difficulties have impacted most aspects of the process, especially with the successive waves of COVID cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family.  Other experts have gone on extended leave due to restrictions on operations. Clinical trial site personnel have been unavailable due to being reassigned for COVID, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses, continue to have only limited operations. Even logistical matters such as the shipping of materials have been, and continue to be, subjected to substantial restrictions and delays.

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Company were prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of the wholly owned subsidiaries in Germany, United Kingdom and Netherlands. All intercompany transactions and accounts have been eliminated in consolidation.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Consolidation

The Company’s policy is to consolidate all entities in which it can vote a majority of the outstanding voting stock. In addition, the Company consolidates entities that meet the definition of a variable interest entity (VIE) for which the Company is the primary beneficiary, if any. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the VIE.

As of December 31, 2020, the Company did not consolidate any VIE's as the Company has concluded that it is not the primary beneficiary.

Use of Estimates

In preparing consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic ("COVID-19") and the COVID-19 control responses.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution, which at times may exceed the Federal depository insurance coverage (“FDIC”) of $250,000. As of December 31, 2020, of the total $10 million in cash and cash equivalents, $0.6 million was held by foreign subsidiaries. The Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Property, Plant and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided for using straight-line methods, in amounts sufficient to charge the cost of depreciable assets to operations over their estimated service lives. Repairs and maintenance costs are charged to operations as incurred.

Costs for capital assets not yet placed into service are capitalized as construction in progress on the consolidated balance sheets and will be depreciated once placed into service.

The Company assesses its long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected undiscounted net future cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Goodwill and Intangible Assets

Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. The Company's intangible asset with an indefinite life is related to in-process research and development ("IPR&D") programs acquired in the Flaskworks Acquisition, as the Company expects future research and development on these programs to provide the Company with substantial benefit for a period that extends beyond the foreseeable horizon. Intangible assets with indefinite useful lives are measured at their respective fair values as of the acquisition date. The Company does not amortize goodwill and intangible assets with indefinite useful lives. Intangible assets related to IPR&D projects are considered to be indefinite lived until the completion or abandonment of the associated R&D efforts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite lived and would then be amortized based on their respective estimated useful lives at that point in time.

The Company has one operating segment and one reporting unit. The Company reviews goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or the indefinite-lived intangible assets below their carrying values. No impairment charge was recognized for the year ended December 31, 2020.

Fair Value of Financial Instruments

ASC 820, Fair Value Measurements, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

Level 1:    Quoted prices in active markets for identical assets or liabilities.

Level 2:    Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3:    Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

The Company accounts for the issuance of common stock purchase warrants issued in connection with the equity offerings in accordance with the provisions of ASC 815, Derivatives and Hedging ("ASC 815"). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company accounts for certain common stock warrants outstanding as a liability at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in its Consolidated Statements of Operations and Comprehensive Loss. The fair value of the warrants issued by the Company has been estimated using Monte Carlo simulation and or a Black Scholes model. The warrant liabilities are valued using Level 3 valuation inputs (see Note 4).

Embedded Conversion Features

The Company evaluates embedded conversion features within convertible debt instruments to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in the Statement of Operations. If the conversion feature does not require recognition of a bifurcated derivative, the convertible debt instrument is evaluated for consideration of any beneficial conversion feature (“BCF”) requiring separate recognition. When the Company record a BCF, the intrinsic value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid-in capital) and amortized to interest expense over the life of the debt.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Derivative Financial Instruments

The Company has derivative financial instruments that are not hedges and do not qualify for hedge accounting. Changes in the fair value of these instruments are recorded in other income (expense), on a net basis in the Consolidated Statements of Operations and Comprehensive Loss.

Contingent payable derivative liability

During the year ended December 31, 2019, the Company entered into a settlement agreement with Cognate BioServices, resolving past matters and providing for the restart of DCVax®-Direct Production.

As part of this overall settlement, the Company also provided a contingent note payable (the “Contingent Payable Derivative”) of $10 million, which is only payable upon the Company’s first financing after DCVax product approval in or outside the U.S. If such product approval has not been obtained by the seventh anniversary of the agreement, such Contingent Payable Derivative will expire without becoming payable.

On a quarterly basis, management makes estimates for key performance milestones and uses the expected dates as the inputs for valuation. The fair value of the Contingent Payable Derivative has been estimated using Monte Carlo simulation, which are valued using Level 3 valuation inputs.

Leases

Prior to January 1, 2019, the Company recognized rent expense on a straight-line basis over the lease period and accounts for the difference between straight-line rent and actual lease payments as deferred rent.

Subsequent to the adoption of the new leasing standard on January 1, 2019, the Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The Company determines whether an arrangement is or contains a lease at contract inception. Operating leases with a duration greater than one year are included in right-of-use assets, lease liabilities, and lease liabilities, net of current portion in the Company’s consolidated balance sheets. Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate represents the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset.

The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the expected lease term. Variable lease expenses are recorded when incurred.

Foreign Currency Translation and Transactions

The Company has operations in Germany, the United Kingdom and Netherlands in addition to the U.S. The Company translated its assets and liabilities into U.S. dollars using end of period exchange rates and revenues and expenses are translated into U.S. dollars using weighted average rates. Foreign currency translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) within stockholders’ equity deficit.

The Company converts receivables and payables denominated in other than the Company’s functional currency at the exchange rate as of the balance sheet date. The resulting transaction exchange gains or losses related to intercompany receivable and payables, are included in other income and expense.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Comprehensive Loss

The Company reports comprehensive loss and its components in its consolidated financial statements. Comprehensive loss consists of net loss and foreign currency translation adjustments, affecting stockholders’ equity deficit that, under U.S, GAAP, is excluded from net loss.

Revenue Recognition

The Company recognizes revenue in accordance with the terms stipulated under the patient service contract. In various situations, the Company receives certain payments for DCVax®-L for patient treatment. These payments are assessed and recognized in accordance with ASC 606 in the period when the performance obligation has been met.

Accrued Outsourcing Costs

Substantial portions of our preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestones achieved. For clinical studies, expenses are accrued when services are performed. The Company monitors patient enrollment, the progress of clinical studies and related activities through internal reviews of data that is tracked by the CROs under contractual arrangements, correspondence with the CROs and visits to clinical sites.

Research and Development Costs

Research and development costs are charged to operations as incurred and consist primarily of clinical trial related costs (including costs for collection, validation and analysis of trial results), related party manufacturing costs, consulting costs, contract research and development costs, clinical site costs and compensation costs.

Income Taxes

The Company evaluates its tax positions and estimates its current tax exposure along with assessing temporary differences that result from different book to tax treatment of items not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities on the Company’s Consolidated Balance Sheets, which are estimated based upon the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates that will be in effect when these differences reverse. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the Company’s Consolidated Statements of Comprehensive Loss become deductible expenses under applicable income tax laws or loss or credit carryforwards are utilized. Accordingly, realization of the Company’s deferred tax assets is dependent on future taxable income against which these deductions, losses and credits can be utilized.

The Company must assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance. Management judgment is required in determining the Company’s provision for income taxes, the Company’s deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. Excluding foreign operations, the Company recorded a full valuation allowance at each balance sheet date presented because, based on the available evidence, the Company believes it is more likely than not that it will not be able to utilize all of its deferred tax assets in the future. The Company intends to maintain the full valuation allowance until sufficient evidence exists to support the reversal of the valuation allowance.

Stock Based Compensation

The Company measures stock-based compensation to employees, consultants, and Board members at fair value on the grant date of the award. Compensation cost is recognized as expense on a straight-line basis over the requisite service period of the award. For awards that have a performance condition, compensation cost is measured based on the fair value of the award on the grant date, the date performance targets are established, and is expensed over the requisite service period for each separately vesting tranche when achievement of the performance condition becomes probable. The Company assess the probability of the performance conditions being

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

met on a continuous basis. Forfeitures are recognized when they occur. Prior to January 1, 2019, share-based compensation cost for non-employees was re-measured at every reporting period.

The Company estimates the fair value of stock option grants that do not contain market-based vesting conditions using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company is also required to make estimates as to the probability of achieving the specific performance conditions. If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s consolidated results of operations.

Debt Extinguishment

The Company accounts for the income or loss from extinguishment of debt by comparing the difference between the reacquisition price and the net carrying amount of the debt being extinguished and recognizes this as gain or loss when the debt is extinguished. The gain or loss from debt extinguishment is recorded in the consolidated statements of operations under “other income (expense)” as loss from extinguishment of convertible debt.

Sequencing

The Company adopted a sequencing policy under ASC 815-40-35 whereby in the event that reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares. This was previously the result of certain financial instruments with a potentially indeterminable number of shares and most recently due to the company committing more shares than authorized. While temporary suspensions are in place to keep the potential exercises beneath the number authorized, certain instruments are classified as liabilities, after allocating available authorized shares on the basis of the earliest grant date of potentially dilutive instruments. Pursuant to ASC 815, issuance of stock based awards to the Company’s employees, nonemployees or directors are not subject to the sequencing policy.

Loss per Share

Basic loss per share is computed on the basis of the weighted average number of shares outstanding for the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock method. Any potentially dilutive securities are anti-dilutive due to the Company’s net losses. For the years presented, there is no difference between the basic and diluted net loss per share.

Recent Accounting Standards

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Debt

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on the its consolidated financial statements and related disclosures.

4. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants, certain embedded conversion feature associated with convertible debt and contingent payable to Cognate BioServices on a recurring basis to determine the fair value of the liability.

Fair value measured at December 31, 2020

    

    

Quoted prices in active

    

Significant other

    

Significant

Fair value at

markets

observable inputs

unobservable inputs

December 31, 2020

(Level 1)

(Level 2)

(Level 3)

Warrant liability

$

354,972

$

$

$

354,972

Embedded conversion option

2,507

2,507

Contingent payable derivative liability

 

8,275

 

 

 

8,275

Total fair value

$

365,754

$

$

$

365,754

Fair value measured at December 31, 2019

    

    

Quoted prices in active

    

Significant other

    

Significant

Fair value at

markets

observable inputs

unobservable inputs

December 31, 2019

(Level 1)

(Level 2)

(Level 3)

Warrant liability

$

20,213

$

$

$

20,213

Contingent payable derivative liability

 

7,261

 

 

 

7,261

Total fair value

$

27,474

$

$

$

27,474

There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2020 and 2019.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The following table presents changes in Level 3 liabilities measured at fair value for the years ended December 31, 2020 and 2019. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands).

Contingent

Embedded

Payable

Warrant

Conversion

Derivative

    

Liability

    

Option

    

Liability

    

Total

Balance - January 1, 2019

$

29,995

$

357

$

$

30,352

Additional contingent liability in connection with a settlement agreement

6,602

6,602

Additional warrant liability

4,110

4,110

Extinguishment of derivative liabilities

(3)

(3)

Extinguishment of warrant liabilities related to warrants exercised for cash

(1,759)

(1,759)

Change in fair value

(12,133)

(354)

659

(11,828)

Balance - December 31, 2019

20,213

7,261

27,474

Additional warrant liability

18,864

18,864

Reclassification of warrant liabilities

(110,471)

(110,471)

Extinguishment of embedded conversion option due to debt conversion and debt repayment

(8,271)

(8,271)

Additional embedded conversion option

2,807

2,807

Change in fair value

426,366

7,971

1,014

435,351

Balance - December 31, 2020

$

354,972

$

2,507

$

8,275

$

365,754

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of December 31, 2020 and 2019 is as follows:

    

As of December 31, 2020

 

Warrant

Embedded

Contingent Payable

 

Liability

Conversion Option

Derivative Liability

 

Strike price

$

0.28

$

0.59

$

1.53

Contractual term (years)

 

1.6

 

0.9

 

1.4

Volatility (annual)

 

116

%  

 

106

%  

 

126

%

Risk-free rate

 

0.2

%  

 

0.1

%  

 

0.1

%

Dividend yield (per share)

 

0

%  

 

0

%  

 

0

%

As of December 31, 2019

 

    

Warrant

    

Contingent Payable

 

Liability

Derivative Liability

 

Strike price

$

0.21

$

0.21

Contractual term (years)

 

1.4

 

1.0

Volatility (annual)

 

74

%  

 

62

%  

Risk-free rate

 

2

%  

 

2

%  

Dividend yield (per share)

 

0

%  

 

0

%  

* contingent payable derivative liability based on stock price as of December 31, 2020 and December 31, 2019

5. Flaskworks Acquisition

On August 28, 2020, the Company completed the acquisition of Flaskworks (the “Acquisition”), whereby Flaskworks became a wholly-owned subsidiary of the Company.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Unit Purchase Agreement was executed and closed on August 28, 2020. The Company acquired 100% of the ownership units of Flaskworks. Flaskworks was previously owned by its technical founders and Corning Inc. The technical team from Flaskworks has joined the Company as part of the Acquisition. It is anticipated that the Flaskworks system will enable substantial scale-up of production volumes of DCVax products and substantial reduction of production costs. The Company’s buildout of the Sawston, UK facility has been designed to proceed in phases, as modules, both for efficiency in the timing of capital costs and to allow flexibility in operations and usage. The Company anticipates that implementation of the Flaskworks system will enable certain phases of the buildout to be simplified and streamlined.

The total purchase price was approximately $4.3 million, of which $1.7 million was paid in cash at closing, up to $2.01 million will be paid in stock subject to milestone-based vesting (see Note 6), and $0.7 million was paid in either cash or stock, or a combination thereof, within 120 days after the closing. Between October and December 2020, $0.5 million was paid in cash upon the seller’s election.

In addition to the $0.5 million cash payment, on December 25, 2020, upon the seller’s election, the Company issued 654,762 shares in equivalent of $0.2 million special consideration payment pursuant to the Unit Purchase Agreement. The $0.336 per share price was established by the Unit Purchase Agreement. The incremental change in fair value of the shares resulting from market price increase was approximately $0.9 million, which was recognized as a component of general and administrative expense in the consolidated statement of operations.

Based on the Company's preliminary valuation, the total estimated consideration of $2.1 million has been allocated to assets acquired and liabilities assumed as of the acquisition date as follows (amount in thousands):

Cash

    

$

146

Current assets

 

135

Fixed assets, net

 

188

Indefinite-lived intangible asset

 

1,292

Security deposits

 

8

Total assets acquired

 

1,769

Accounts payable

 

(12)

Accrued expenses

 

(240)

Total liabilities assumed

 

(252)

Net identifiable assets acquired

 

1,517

Goodwill

 

626

Total estimated consideration (1)

$

2,143

Less special consideration paid in cash and stock

$

(465)

Less cash acquired

 

(146)

Total consideration paid, net of cash acquired

$

1,532

(1) The purchase price allocation excludes $2.01 million stock consideration, which was recorded as stock-based compensation for accounting purposes, although the treatment for tax purposes is anticipated to be different (see Note 6), and $0.2 million payable for services not related to the Acquisition in either cash or stock within 120 days after the closing.

The Acquisition was accounted for under the acquisition method of accounting in accordance with US GAAP. As such, results of operations for Flaskworks are included in the accompanying consolidated statements of operations since the Acquisition date, and the assets acquired and liabilities assumed were recorded at their fair value as of the Acquisition date.

Accordingly, goodwill has been measured as the excess of the total consideration over the amounts assigned to the identifiable assets acquired and liabilities assumed. Based on the Company's preliminary valuation, the Company recorded goodwill of approximately $0.6 million, which was primarily related to the acquisition of the assembled workforce and other indefinite-lived intangible asset of approximate $1.3 million in connection with the Acquisition. The $0.6 million of goodwill is expected to be deductible for tax purposes.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The acquired Licensed IP Agreement was identified as an intangible asset and valued separate and apart from goodwill. Specifically, the Company used the Relief-from-Royalty Method, a form of the Income Approach, to estimate the fair value of the Licensed IP Agreement based on projected sales and cash flow. In application of the Relief-from-Royalty Method, we estimate the value of the Licensed IP Agreement by capitalizing the royalties saved because the Company owns the specific technology and the owner of the technology realizes a benefit from owning the intangible asset rather than paying a rent or royalty for the use of the asset.

The royalty rate used for this Licensed IP Agreement was based on the rate and terms indicated in the license agreement that was corroborated with the Company’s external research of third-party royalty rates for technology and patents in the pharma, healthcare, and medical industries. The estimation of fair value was determined based on the projected sales assuming commercialization of Flaskworks’ products and the respective royalty rate, tax affected and discounted to the present using a discount rate based on Flaskworks’ weighted average cost of capital.

The preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuations and liabilities assumed.

6. Stock-based Compensation

The following table summarizes total stock-based compensation expense recognized for the years ended December 31, 2020 and 2019 (in thousands):

    

For the years ended

December 31,

 

2020

 

2019

Research and development

$

19,792

$

471

General and administrative (1)

 

32,163

 

1,350

Total stock-based compensation expense

$

51,955

$

1,821

(1) The general and administrative expense during the years ended December 31, 2020 and 2019 is related to the applicable vesting portion of stock options awards made in the past and new options granted during the year ended December 31, 2020 to directors, employees and external consultants.

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted. The weighted average assumptions used in calculating the fair values of stock options that were granted during the years ended December 31, 2020 and 2019:

    

For the years ended

 

December 31,

 

Grant Date

2020

2019

 

Exercise price

$

0.26

$

0.20

Expected term (years)

 

5.2

 

5.6

Expected stock price volatility

 

98

%  

 

86

%

Risk-free rate of interest

 

0

%  

 

1

%

The total unrecognized compensation cost was approximately $17 million as of December 31, 2020, and will be recognized over the next 1.8 years.

Stock Options

Equity Compensation Plan

On May 29, 2020, the Board of Directors of the Company approved a new equity compensation plan (the “Plan”). The Company’s prior plan was adopted in 2007, was updated in amended and restated plans that were approved by shareholders in 2012 and 2013, and expired in 2017 (the “Prior Plan”).

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Plan is substantially similar to the Prior Plan. The Plan has a 10-year life, and allows for awards to employees, directors and consultants of the Company, as did the Prior Plan. The Plan allows for any type of equity security to be awarded, as did the Prior Plan. The awards and their terms (including vesting) will be determined by the Board and applicable Committees, as was the case under the Prior Plan. The Plan establishes a pool of potential equity compensation equal to twenty percent of the outstanding securities of the Company, which is on an evergreen basis as under the Prior Plan.

The following table summarizes stock option activity for the Company’s option plans during the years ended December 31, 2020 and 2019 (amount in thousands, except per share number):

    

    

    

Weighted

    

Average

Weighted

Remaining

Number of

Average Exercise

Contractual Life

Total Intrinsic

Shares

Price

(in years)

Value

Outstanding as of January 1, 2019

 

100,159

0.24

 

9.3

Granted

4,500

0.22

10.4

Outstanding as of December 31, 2019

104,659

$

0.24

8.4

$

Granted (Approved 2018-2020) (1)

208,525

0.37

(3)

10.0

Cashless exercise

 

(94)

 

0.34

 

Forfeited/expired

 

(4,250)

 

0.22

 

 

Outstanding as of December 31, 2020

 

308,840

$

0.33

 

8.9

$

372,219

Options vested (2)

 

223,720

$

0.30

 

8.7

$

276,432

(1) The options granted during the year ended December 31, 2020 included options already approved at various times during the 3 years 2018 - 2020 but not issued until Q3 2020, and also included options that will vest for performance and milestones going forward over the next 2 years. The options included awards to key external consultants and vendors in addition to internal parties.
(2) Approximately 128 million vested options as of December 31, 2020 are not exercisable until January 15, 2021. See Note 15 below under Subsequent Events for more information about additional options suspensions for further periods.
(3) The weighted average exercise price of the Q3 2020 options was initially $0.25. However, subsequently, the exercise price was amended to a weighted average exercise price of $0.36.

Stock Options Modification

On April 30, 2020, the Company's CEO, Linda Powers agreed to not exercise approximately 39.2 million existing options held by her for 6 months, until November 1, 2020 and correspondingly extended the contractual term for 6 months. The Company recognized approximately $78,000 of incremental stock-based compensation for this modification during the year ended December 31, 2020, based on the following weighted average assumptions:

    

Post Modification

    

Pre Modification

 

Exercise price

$

0.23

$

0.23

Expected term (years)

 

4.3

 

4.0

Expected stock price volatility

 

97

%

 

97

%

Risk-free rate of interest

 

0

%  

 

0

%

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

For another officer, on August 5, 2020, the Company cancelled 1.75 million options which were originally issued in December 2019 and issued 3 million options (the “Replacement Options”) with an exercise price of $0.22 and vesting of 1/3 immediately and the remaining 2/3 vesting ratably over the following 24 months from the grant date. The incremental stock-based compensation for this modification was approximately $0.3 million based on the following weighted average assumptions, which will be amortized over the new vesting terms.

    

Post Modification

    

Pre Modification

 

Exercise price

$

0.22

$

0.22

Expected term (years)

 

5.3

 

4.7

Expected stock price volatility

 

96

%  

 

97

%

Risk-free rate of interest

 

0

%  

 

0

%

Flaskworks Acquisition

On August 28, 2020, the Company entered into a Unit Purchase Agreement (the “Agreement”) to acquire Flaskworks. Included in the consideration pursuant to the Agreement was Stock Consideration in the amount of approximately $2 million. This Stock Consideration is issued in the form of Rights to receive such value in shares issued pursuant to and subject to the vesting criteria set forth in a Rights Issuance Agreement entered into in connection with the closing of Flaskworks Acquisition. Because the Rights were subject to future employment and performance conditions, the Stock Consideration was not included in consideration payable for the Flaskworks Acquisition but rather was recorded as contingent consideration payable to employees for accounting purposes. The Company anticipates that the treatment of this Stock Consideration for tax purposes may be different than for accounting purposes, and will reflect the fact that this Stock Consideration was payment for acquisition of the ownership interests of certain shareholders of Flaskworks.

On December 1, 2020, the Company issued 1.5 million shares of common stock based upon the Flaskworks team having completed a significant milestone, in accordance with the Rights Issuance Agreement entered on August 28, 2020. During the year ended December 31, 2020, the Company recognized approximately $1.0 million stock-based compensation related to the Flaskworks Acquisition. Approximate $0.5 million was recognized in general and administrative and $0.5 million was recognized in research and development.

7. Property, Plant and Equipment

Property, plant and equipment consist of the following at December 31, 2020 and 2019 (in thousands):

    

December 31, 

    

December 31, 

    

Estimated

2020

2019

Useful Life

Leasehold improvements

$

81

$

186

 

Lesser of lease term or estimated useful life

Office furniture and equipment

 

219

 

59

 

3-5 years

Computer equipment and software

 

1,403

 

611

 

3-5 years

Land in the United Kingdom

93

90

NA

 

1,796

 

946

Less: accumulated depreciation

 

(756)

 

(665)

 

  

Total property, plant and equipment, net

$

1,040

$

281

 

  

Construction in progress

$

9,074

$

1,685

 

  

Depreciation expense was approximately $87,000 and $21,000 for the years ended December 31, 2020 and 2019, respectively.

Construction in Progress

In connection with the Company’s manufacturing facility in U.K, the Company has incurred and is incurring costs with certain vendors to design and build out certain stages of the facility. Additionally, the Company purchased certain manufacturing equipment that has been or will be installed in connection with the buildout. These costs were all capitalized and recorded as part of construction in progress as of December 31, 2020 and 2019. Upon completion of the buildout, all costs associated with the buildout will be recorded as manufacturing equipment or leasehold improvement, and amortized over the estimated useful life of the facility.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

8. Notes Payable

The following two tables summarize outstanding debt as of December 31, 2020 and December 31, 2019, respectively (amount in thousands):

    

    

Stated

    

    

    

    

Embedded

    

Interest

Conversion

Remaining

Conversion

Carrying

Maturity Date

Rate

Price

Face Value

Debt Discount

Option

Value

Short term convertible notes payable

 

  

 

  

 

  

 

  

 

  

 

  

 

  

6% unsecured (1)

 

Due

 

6

%  

$

3.09

$

135

$

$

$

135

8% unsecured (3) (4)

 

4/30/2021

 

8

%  

$

0.85

 

2,125

 

(937)

 

2,507

 

3,695

2,260

(937)

2,507

3,830

Short term notes payable

 

  

 

  

 

  

 

  

 

  

 

  

 

  

8% unsecured (5)

 

Various

 

8

%  

 

N/A

 

1,785

 

(51)

 

 

1,734

10% unsecured (6)

 

Various

 

10

%  

 

N/A

 

263

 

 

 

263

12% unsecured (7)

 

On Demand

 

12

%  

 

N/A

 

440

 

 

 

440

 

2,488

 

(51)

 

 

2,437

Long term notes payable

 

  

 

  

 

  

 

  

 

  

 

  

 

  

8% unsecured (10)

 

Various

 

8

%  

 

N/A

 

7,160

 

(496)

 

 

6,664

6% secured (11)

 

3/25/2025

 

6

%  

 

N/A

 

1,843

 

 

 

1,843

 

9,003

 

(496)

 

 

8,507

Ending balance as of December 31, 2020

$

13,751

$

(1,484)

$

2,507

$

14,774

    

    

Stated

    

    

    

    

Interest

Conversion

Remaining

Carrying

Maturity Date

Rate

Price

Face Value

Debt Discount

Value

Short term convertible notes payable

 

  

 

  

 

  

 

  

 

  

 

  

6% unsecured (1)

 

Due

 

6

%  

$

3.09

$

135

$

$

135

10% unsecured (2)

 

4/18/2020

 

10

%  

$

0.22

 

500

 

(67)

 

433

 

635

(67)

 

568

Short term notes payable

 

  

 

  

 

  

 

  

 

  

 

  

8% unsecured (5)

 

Various

 

8

%  

 

N/A

 

555

 

(43)

 

512

10% unsecured (6)

 

Various

 

10

%  

 

N/A

 

3,551

 

(73)

 

3,478

12% unsecured (7)

 

On Demand

 

12

%  

 

N/A

 

440

 

 

440

0% unsecured (8)

 

8/1/2020

 

0

%  

 

N/A

 

1,156

 

(85)

 

1,071

 

5,702

 

(201)

 

 

5,501

Short term notes payable - related parties

 

  

 

  

 

  

 

  

 

  

 

  

10% unsecured - Related Parties (9)

 

On Demand

 

10

%  

 

N/A

 

66

 

 

66

 

66

 

 

 

66

Long term notes payable

 

  

 

  

 

  

 

  

 

  

 

  

8% unsecured (5)

 

Various

 

8

%  

 

N/A

 

7,008

 

(420)

 

6,588

 

7,008

 

(420)

 

 

6,588

Ending balance as of December 31, 2019

$

13,411

$

(688)

$

12,723

(1) This $135,000 note as of December 31, 2020 and 2019 consists of two separate 6% notes in the amounts of $110,000 and $25,000. In regard to the $110,000 note, the Company has made ongoing attempts to locate the creditor to repay or convert this note, but has been unable to locate the creditor to date. In regard to the $25,000 note, the holder has elected to convert these notes into equity, the Company has delivered the applicable conversion documents to the holder, and the Company is waiting for the holder to execute and return the documents.
(2) In February 2020, the Company entered into multiple one-year convertible notes (the “February Notes”) with multiple holders (the “Holders”) for an aggregate principal amount of $1.0 million. The Notes are convertible into common shares of the Company at $0.21 per share and bear interest at the rate of 10% per annum. Upon issuance of the February Notes, the Holders also received a 2-year warrant to purchase a total of 1.4 million common shares of the Company at an exercise price of $0.35 per share. The fair value of the warrants was approximately $79,000 on the grant date.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

During the year ended December 31, 2020, the Company converted the entire February Notes, including $68,000 accrued interest into approximate 5.1 million shares of the Company's common stock.

In April 2020, the Company entered into a six-month convertible note (the “April Note”) with an individual investor (the “Holder”) with an aggregate principal amount of $0.8 million for cash proceeds of $0.7 million. The Company also incurred approximately $69,000 placement agent costs, including both a cash fee and the fair value of common stock warrants issued to the placement agent, which was recognized as additional debt discount.

The April Note bears interest at the rate of 10% per annum and is convertible into common shares of the Company at $0.17 per share plus a warrant to purchase a number of exercise shares equal to 50% of the number of common shares issued upon conversion (the “Conversion Warrants”). The Conversion Warrants will be exercisable until April 9, 2022 beginning on November 1, 2020, with an exercise price of $0.20 per share. The conversion option within the April Note is required to be bifurcated at fair value, which was approximately $0.4 million on the issuance date, resulting in additional debt discount to the April Note.

As consideration for entering into the April Note, the Company also agreed to amend the Holder’s existing outstanding warrants to purchase 5.1 million common shares of the Company. The exercise price of the warrants was amended from $0.25 per share to $0.20 per share. The incremental change in fair value resulting from the amendment was approximately $51,000, which was recognized as additional debt discount to the April Note.

On August 3, 2020, the Company converted approximately $0.8 million of outstanding principal and $26,000 of accrued interest of the April Note into approximately 5.1 million shares of common stock and 2.5 million warrants with fair value of approximately $2.4 million. The Company also extinguished $1.5 million embedded derivative liability and $0.2 million unamortized debt discount upon the conversion. The Company recorded approximately $0.3 million debt extinguishment loss.

In April 2020, the Company entered into a Note Amendment Agreement (the “Amendment”) with an individual holder of a short-term convertible note, primarily to agree on the following changes:

- Reclassed $75,000 accrued interest as of amendment date to the outstanding principal amount;
- Extended the maturity date of a convertible note with approximately $0.6 million of principal outstanding, as of the amendment date, to October 18, 2020 (the “Amended Note”);
- Reduced the conversion price from $0.22 to $0.181
- Issued a new 2-year warrant for up to 2.3 million shares of the Company’s common stock at an exercise price of $0.25 per share valued at $115,000 on the amendment date;

The amendment was recognized as a debt extinguishment, resulting in a loss on debt extinguishment of approximately $70,000.

During the year ended December 31, 2020, the Company converted the entire Amended Note of approximately $0.6 million, including $28,000 accrued interest into approximately 3.3 million shares of common stock.

(3) In May 2020, the Company entered into a six-month convertible note (the “May Note”) with an individual investor (the “Holder”) with an aggregate principal amount of $0.6 million. The May Note contains an original issue discount (“OID”) in the amount of $50,000.

The May Note bears interest at the rate of 8% per annum and is convertible into common shares of the Company at $0.25 plus a warrant to purchase a number of exercise shares equal to 40% of the number of common shares issued upon conversion (the “Conversion Warrants”). The Conversion Warrants will be exercisable until November 28, 2022 beginning on November 1, 2020 with exercise price of $0.25 per share. The conversion option within the May Note required bifurcation at fair value, which was approximately $0.5 million on the issuance date, resulting in additional debt discount to the May Note.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

On October 1, 2020, the Company converted the entire $0.6 million of the May Note including $19,000 accrued interest, into approximately 2.3 million shares of the Company's common stock and 0.9 million warrants with fair value of approximate $3.4 million. The Company also extinguished $2.8 million embedded derivative liability upon the conversion.

In August 2020, the Company entered into another convertible note (the "August Note") with the same investor as the May Note (the "Holder") with an aggregate principal amount of $1.1 million. The August Note contains OID in the amount of $110,000.

The August Note bears interest at the rate of 8% per annum and is convertible into common shares of the Company at $0.345 plus a warrant to purchase a number of exercise shares equal to 35% of the number of common shares issued upon conversion (the "Conversion Warrants"). The Conversion Warrants will be exercisable until February 4, 2023 beginning on December 15, 2020 with exercise price of $0.34 per share. The conversion option within the August Note is required to be bifurcated at fair value, which was approximately $0.6 million on the issuance date, resulting in additional debt discount to the August Note.

On September 29, 2020, the Company converted entire $1.1 million of August Note into approximately 3.3 million shares of the Company's common stock and 1.1 million warrants with fair value of approximate $3.3 million. The Company also extinguished $2.3 million embedded derivative liability and $0.5 million unamortized debt discount upon the conversion. The company recorded approximately $0.4 million debt extinguishment loss.

(4) In October 2020, the Company entered into a convertible note (the "October Note") with the same investor as the August Note (the "Holder") with an aggregate principal amount of $2.1 million. The October Note contains OID in the amount of $200,000.

The October Note bears interest at the rate of 8% per annum and is convertible into common shares of the Company at $0.85 plus a warrant to purchase a number of exercise shares equal to 30% of the number of common shares issued upon conversion (the "Conversion Warrants"). The Conversion Warrants will be exercisable until January 12, 2022 beginning on January 15, 2021 with exercise price of $2.00 per share. The conversion option within the October Note is required to be bifurcated at fair value, which was approximately $1.4 million on the issuance date, resulting in additional debt discount of $1.4 million to the October Note.

(5) During the year ended December 31, 2020, the Company converted approximately $5.8 million of outstanding principal and $0.6 million of accrued interest into approximately 29.1 million shares of the Company’s common stock with a fair value of $7.6 million. The Company recognized approximately $1.2 million in debt extinguishment loss from this conversion.
(6) In May 2020, the Company converted approximately $0.3 million of outstanding principal and accrued interest into approximately 1.3 million shares of the Company’s common stock with a fair value of $0.5 million. The Company recognized approximately $0.2 million in debt extinguishment loss from this conversion.

In August 2020, the Company extinguished approximately $1.5 million of outstanding principal and accrued interest into approximately 4.8 million shares of the Company's common stock and 1.7 million warrants. The Company also modified certain existing warrants and issued additional 6.5 million warrants consideration for certain suspension. The Company also agreed to amend the remaining outstanding $1.5 million outstanding debt. The note became convertible at a conversion price of $0.34 (the “Amended August Note”). The amendment was accounted as debt extinguishment and the Company recognized approximately $1.6 million in debt extinguishment loss from this transaction.

During the year ended December 31, 2020, the Company made $0.1 million cash payment and converted approximate $1.4 million outstanding debt including $15,000 accrued interest into approximately 4.1 million shares of the Company’s common stock.

During the year ended December 31, 2020, the Company entered into multiple Note Extension Agreements with multiple holders, primarily resulting in the following changes:

- Extended the maturity dates of promissory notes with outstanding principal balances aggregating approximately $3.3 million for an additional 6 to 12 months from the original maturity date;
- Issued new 2-year warrants to purchase up to 10.3 million shares of the Company’s common stock at an exercise prices ranging from $0.20 and $0.23 per share valued at approximately $0.5 million on the amendment date;

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The Note Extension Agreements for approximately $2.3 million of outstanding principal of promissory notes was recognized as a debt modification, while the amendments for approximately $1.0 million of outstanding principal of promissory notes was recognized as a debt extinguishment, resulting in a loss on extinguishment of debt of approximately $0.1 million.

(7) The $440,000 balance of outstanding principal as of December 31, 2020 and 2019 consists of two separate 12% demand notes in the amounts of $300,000 and $140,000.
(8) On May 28, 2019, the Company issued a deferred note to a third-party vendor pursuant to a settlement agreement resolving past matters and providing for the restart of DCVax®-Direct Production. During the year ended December 31, 2020, the Company made full repayment of $1.2 million to the note holder.
(9) On September 26, 2018, Advent BioServices (“Advent”), a related party of the Company, provided a short-term loan in the amount of $65,000. The loan bore interest at 10% per annum, and is payable upon demand, with 7 days’ prior written notice to the Company. During the year ended December 31, 2020, the Company made full repayment to Advent, including all outstanding interest.

Between February and May 2020, the Company entered into multiple demand loan agreements with Leslie Goldman, the Company’s Senior Vice President, General Counsel, for an aggregate principal amount of $0.3 million (the “Goldman Notes”). The Goldman Notes bear interest rate at 10% per annum, and are repayable upon 15 days' notice from Mr. Goldman.

The Goldman Notes are convertible into common shares of the Company at conversion prices ranging from $0.23 to $0.25 per share. Additionally, the Company agreed to issue warrants to Mr. Goldman to purchase 0.6 million shares of the Company’s common stock (the “Initial Warrants”) in conjunction with the Goldman Notes. The Initial Warrants have a five - year term and are exercisable at prices ranging from $0.23 and $0.25 per share. The fair value of the Initial Warrants was approximately $66,000, which was recognized as debt discount to the Goldman Notes at the issuance date. The conversion option within the Goldman Notes were required to be bifurcated at fair value, which was approximately $36,000 on the issuance date, resulting in additional debt discount to the Goldman Notes.

Upon conversion, Mr. Goldman would also receive a five-year term warrant to purchase a number of the Company’s common shares equal to 50% of the number of common shares issued upon conversion of the Goldman Notes (the “Conversion Warrants”). The Conversion Warrants will be exercisable at $0.25 per share.

During the year ended December 31, 2020, the Company made full repayment of $0.3 million to Mr. Goldman, including all outstanding interest. Upon the repayment, the Company also extinguished $1.6 million embedded derivative liability, which was recorded as debt extinguishment gain.

(10) During the year ended December 31, 2020, the Company entered into two note purchase agreements (the “Notes”) with same investor for an aggregate principal amount of approximate $7.2 million. The Notes bear interest at 8% per annum with 21-month term. There are no repayments during the first 7 months of the term. The Notes are amortized in 14 installments starting in month 8. The Notes carry an original issue discount of $650,000 and $10,000 legal costs that were reimbursable to the investor.
(11) Cambridge Loan

On March 26, 2020, the Company entered into a Loan Agreement (the “Loan Agreement”) with Cambridge & Peterborough Combined Authority (the “Lender”) for a loan of £1.35 million (approximately $1.7 million) (the “Loan”) for the current phase of buildout of the Sawston facility. The Company received funds on April 6, 2020. The Lender provides funding for selected economic development projects in the Cambridge region through a competitive selection process.

Under the Loan Agreement, there will be no repayments during the first year of the Loan term, although interest will accrue. Following the first anniversary, repayment of the Loan principal and interest will take place over 4 years, for a total term of 5 years.  The interest rate on the Loan is 6.25% per annum.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

In conjunction with the Loan, the Company agreed to enter into a Security Agreement with the Lender under which the Company granted a security interest in the Company’s 17-acre property in Sawston, U.K. to secure the Loan.  No other tangible or intangible assets of the Company or its subsidiaries are subject to any security interest. Such security interest on the 17-acre property will be released upon completion of repayment

PPP Loan

The Company received a loan under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act’s Paycheck Protection Program (“PPP”). The PPP loan was received on May 20, 2020 in the amount of $0.4 million. The current terms of the PPP loan is two years with a maturity date of May 20, 2022 and it contains a favorable fixed annual interest rate of 1.00%. Payments of principal and interest on the PPP Loan are deferred for the first six months of the term of the PPP Loan until November 20, 2020. The Company used the loan to make payments for payroll, health and disability insurance and rent.

The Company submitted a PPP loan forgiveness application to the Lender on October 26, 2020, with the amount which may be forgiven equal to the sum of qualifying expenses, including payroll costs, covered rent obligations, and covered utility payments incurred by the Company during the twenty-four week period beginning on May 20, 2020, calculated in accordance with the terms of the CARES Act. The forgiveness application was approved on December 7, 2020. The Company recorded approximate $0.4 million debt extinguishment gain from the forgiveness of PPP Loan.

The following table summarizes total interest expenses related to outstanding debt for the years ended December 31, 2020 and 2019, respectively (in thousands):

For the year ended

December 31, 

    

2020

    

2019

Interest expenses related to outstanding notes:

  

 

  

Contractual interest

$

1,231

$

1,168

Amortization of debt discount

 

2,891

 

1,430

Total interest expenses related to outstanding notes

 

4,122

 

2,598

Interest expenses related to outstanding notes to related parties:

 

 

Contractual interest

 

20

 

366

Amortization of debt discount

 

122

 

Total interest expenses related to outstanding notes to related parties

 

142

 

366

Interest expenses related to forbearance of debt to related parties

4,270

Other interest expenses

 

10

 

11

Total interest expense

$

8,544

$

2,975

The following table summarizes the principal amounts of the Company’s debt obligations as of December 31, 2020 (amount in thousands):

Payment Due by Period

Less than

1 to 2

3 to 5

    

Total

    

1 Year

    

Years

    

Years

Short term convertible notes payable

6% unsecured

$

135

$

135

$

$

8% unsecured

2,125

2,125

Short term notes payable

8% unsecured

1,785

1,785

10% unsecured

263

263

12% unsecured

440

440

Long term notes payable

8% unsecured

7,160

7,160

6% secured

1,843

1,843

Total

$

13,751

$

4,748

$

7,160

$

1,843

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

9. Net Loss per Share Applicable to Common Stockholders

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similar to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented (in thousands):

For the year ended

December 31, 

    

2020

    

2019

Common stock options

 

308,840

 

104,659

Common stock warrants

 

328,979

 

347,734

Contingently issuable warrants

 

2,774

 

11,739

Convertible notes and accrued interest

 

2,617

 

2,617

Potentially dilutive securities

 

643,210

 

466,749

10. Related Party Transactions

Advent BioServices Agreement

The Company has a Manufacturing Services Agreement with Advent BioServices for manufacture of DCVax-L products at an existing facility in London, as previously reported. The Company also has an Ancillary Services Agreement with Advent, which establishes a structure under which Advent will submit Statements of Work (“SOWs”) for activities related to the development of the Sawston facility and the compassionate use activities in the UK, as previously reported. The Ancillary Services Agreement had an original term of 8 months, which ended in July 2020. The Company extended the term by 12 months, and did not make any other changes.

Related Party Expenses and Accounts Payable

The following table summarizes expenses incurred to related parties (i.e., amounts invoiced) during the year ended December 31, 2020 and 2019 (amount in thousands) (some of which were for previous periods’ services and remain unpaid as noted in the second table below):

For the year ended

December 31, 

2020

    

2019

(As revised) (Note 14)

Advent BioServices

$

7,543

 

$

5,735

During the years ended December 31, 2020 and 2019, the Company capitalized $3.6 million and $0.9 million costs related to Sawston buildout in addition to the costs disclosed in the above table.

The following table summarizes outstanding unpaid accounts payable and the accrued amount under the SOWs relating to the Sawston Facility and the compassionate use programs held by related parties as of December 31, 2020 and outstanding unpaid accounts payable

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

as of December 31, 2019 (amount in thousands). These unpaid amounts include part of the expenses reported in the table above and also certain expenses incurred in prior periods.

    

December 31, 2020

    

December 31, 2019

(As revised) (Note 14)

Advent BioServices – amount invoiced

$

3,734

$

834

Advent BioServices – amount accrued

1,629

3,002

Accounts payable and accrued expenses to Advent BioServices

$

5,363

$

3,836

Related Parties Loans

Linda F. Powers - Demand Loans

Between February 2018 and April 2018, the Company’s Chief Executive Officer, Linda Powers, loaned the Company aggregate funding of $5.4 million pursuant to convertible Notes. The Notes were 15-day demand notes, for loans provided as short-term bridge loans. However, repayment was not completed for nearly 1-1/2 years.

During the year ended December 31, 2019, the Company repaid the $5.4 million principal and approximately $0.8 million interest.

Loan from Advent BioServices

Advent BioServices provided a short-term loan to the Company in the amount of $65,000 on September 26, 2018. The loan bore interest at 10% per annum, and is payable upon demand, with 7 days’ prior written notice to the Company.

During the year ended December 31, 2020, the Company made full repayment of $73,000 to Advent, including all outstanding interest.

Loan from Leslie Goldman

During the year ended December 31, 2020, the Company's Senior Vice President, General Counsel, Leslie Goldman, loaned the Company $315,000 pursuant to various convertible notes (the “Notes”). The Notes bore interest rate at 10% per annum and fifty percent warrant coverage, and are repayable upon 15 days' notice from the holder. The Notes were convertible, in whole or in part, into stock together with warrants.

During the year ended December 31, 2020, the Company made full repayment of $0.3 million to Mr. Goldman, including all outstanding interest.

Warrants issued to Linda Powers

On July 2, 2020, the Company issued approximately 15.2 million warrants (the "Forbearance Warrants") to Ms. Powers in consideration for Ms. Powers' previously reported forbearance and extension of loans of $5.4 million from Ms. Powers to the Company. These warrants were approved by the Board in November 2018 when the loans were long overdue, as previously reported, and the warrants were re-approved in January 2020, but were not issued until July 2, 2020.

The Forbearance Warrants have an exercise price of $0.21 per share with 5-year contractual term. The fair value of the Forbearance Warrants was approximately $4.3 million on the grant date, which was recognized as an additional interest expense.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The following table summarizes total interest expenses related to outstanding notes to related parties for the three months and nine months ended December 31, 2020 and 2019, respectively (in thousands):

For the year ended

December 31, 2020

    

2020

    

2019

Interest expenses related to outstanding notes to related parties:

 

  

 

  

Contractual interest

$

20

$

366

Amortization of debt discount

 

122

 

Interest expenses related to forbearance of debt to related parties

4,270

Total interest expense

$

4,412

$

366

11. Stockholders’ Deficit

2020 Activities

Registered Direct Offering

Between January and February 2020, the Company issued an aggregate of 34.5 million shares of its common stock in a registered direct offering (the “Offering”). The net proceeds from the Offering were approximately $5.7 million, after deducting offering costs of $0.4 million paid by the Company.

In connection with the Offering, the Company also issued approximately 8.5 million 2-year term warrants with an exercise price of $0.25 per share to the investors and approximately 0.8 million 2-year term warrants with an exercise price between $0.17 and $0.21 per share to placement agent in this direct offering. The fair value of these new issued warrants was approximately $1.0 million. Additionally, the Company agreed to extend by twelve months the maturity date of certain existing warrants already held by some of those investors. The Company recorded an incremental change of approximately $2.5 million on the fair value of warrants due to the modifications, which was recorded as part of offering cost during the year ended December 31, 2020.

During April 2020, the Company issued an aggregate of 19.9 million shares of its common stock and 11.3 million new issued warrants in a registered direct offering (the "April Financing"). The common stock was offered at a price of $0.153 per share. The warrants are exercisable at $0.20 per share. The net proceeds from the April Financing were approximately $3.0 million, after deducting offering costs of $68,000 paid by the Company. An approximate $0.8 million of proceeds were allocated to warrant liabilities.

During May 2020, the Company issued an aggregate 14.2 million shares of its common stock and 5.6 million new issued warrants in a registered direct offering (the "May Financing"). The common stock was offered at a price between $0.17 and $0.225 per share. The warrants have an exercise price between $0.22 and $0.23 per share and an exercise period between 1.5-2.5 years. The Company received approximately $2.9 million from the May Financing. An approximate $0.9 million of proceeds were allocated to warrant liabilities.

All of the warrants issued in the May Financings were not exercisable until November 1, 2020. In addition, as part of these agreements, the investors who have existing outstanding warrants that had not already been suspended until November 1, suspended approximately 14.6 million existing warrants until November 1, 2020.

On August 5, 2020, the Company entered into financings totaling approximately $8 million (the "August Financing"). The financings were comprised of:

Approximately $7 million from an offering at $0.32 per share of newly registered common stock of approximately 21.8 million shares with 20-35% warrants coverage. The warrants are exercisable at $0.34 per share for approximately 5.3 million shares, with an exercise period of 18 to 30 months. The fair value of these 5.3 million warrants was approximately $1.5 million.
$1 million from a convertible note (the "August Note") which is convertible at $0.345 per share. The August Note carries no warrants unless it is converted. If, and only to the extent, the note is converted it will carry 35% warrants exercisable at $0.34 per share.
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NORTHWEST BIOTHERAPEUTICS, INC.
Notes to the Consolidated Financial Statements
All of the new warrants issued in the August Financing were suspended until December 15, 2020.
In addition, as part of these agreements, the investors who have existing outstanding warrants that had not yet been suspended, suspended approximately 75.5 million additional existing warrant exercise shares until December 15, 2020. In consideration for the suspension of the 75.5 million existing warrant shares as part of the August Financing, the Company issued approximately 12.5 million warrants with an exercise price of $0.34 per share and an exercise period ranging from approximately 13.5 to 25.5 months following the termination of the suspensions. These suspension consideration warrants were also suspended until the same December date.
Only the common stock sold directly or underlying the warrants and convertible note were registered in this transaction.

On October 12, 2020, the Company entered into financings totaling approximately $11.9 million (the “Offering”). The financings were comprised of:

Approximately $10 million from an offering at $0.816 per share (based upon the average 10 day closing price ending on October 12, 2020) of newly registered common stock of approximately 12.2 million shares with 30% warrants coverage. The warrants are exercisable at an exercise price of $2.00 per share for approximately 3.6 million shares, with an exercise period of 12 months (following a 3-month suspension after issuance). The fair value of these 3.6 million warrants was approximately $1.2 million.
Approximately $1.9 million from a convertible note which is convertible at $0.85 per share (the “Note”). The Note carries no warrants unless it is converted. If, and only to the extent, the Note is converted it will carry 30% warrants with an exercise price of $2.00 per share and an exercise period of 12 months (following a 3-month suspension after issuance).
All of the new warrants issued in the Offering are suspended until January 15, 2021.

In addition, as part of these agreements, certain investors who have existing outstanding warrants that have not yet been suspended are now suspending approximately 3.5 million additional existing warrant exercise shares until January 15, 2021.

In consideration for the suspension of the 3.5 million existing warrant shares as part of the Offering, the Company issued approximately 261,000 warrants with an exercise price of $2.00 per share and an exercise period of 12 months (following a 3-month suspension after issuance). These suspension consideration warrants are also suspended until the same January date.

Warrants Exercised for Cash

During the year ended December 31, 2020, the Company issued 47.5 million shares of its common stock from warrants exercised for cash. The Company received $13.9 million in cash.

Cashless Warrants Exercise

During the year ended December 31, 2020, The Company issued approximately 7.1 million shares of common stock upon 8.6 million warrant cashless exercises with weighted average exercise price of $0.22.

Debt Conversion

During the year ended December 31, 2020, the Company converted approximately $13.9 million outstanding debt and interest into 58.4 million shares of common stock and 6.2 million warrants, see Note 8 for further details.

Flaskworks Shares Issuance

On December 1, 2020, the Company issued 1.5 million shares of common stock based upon the Flaskworks team having completed a significant milestone, in accordance with the Rights Issuance Agreement entered on August 28, 2020.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

On December 25, 2020, upon the seller’s election, the Company issued 0.7 million shares in equivalent of $0.2 million special consideration payment pursuant to the Unit Purchase Agreement. The $0.336 per share price was established by the Unit Purchase Agreement. The incremental change in fair value of the shares resulting from market price increase was approximately $0.9 million, which was recognized as additional general and administrative expense on the consolidated statement of operations.

2019 Activities

Registered Direct Offering

During the year ended December 31, 2019, the Company issued an aggregate of 32.7 million shares of its common stock at a purchase price between $0.19 and $0.23 per share to certain institutional investors in multiple registered direct offerings (the “Offering”). Included with the Offering were 1.3 million shares of common stock which were issued from the conversion of an existing loan and the related accrued interest totaling $306,000. The net proceeds from the Offering were approximately $6.9 million, after deducting offering costs of $0.3 million paid by the Company.

In connection with the Offering, the Company did not issue any additional warrants for the new investment by the investors, but the Company, in effect, agreed to modify certain existing warrants already held by some of those investors. The Company extended the expiration date for additional 12 to 18 months after the original expiration date and the weighted average exercise price of warrants was reduced by an amount ranging from 2 to 8 cents as well. The Company recorded an incremental change of $2.5 million on the fair value of warrants due to the modification and recorded it as part of offering cost during the year ended December 31, 2019.

Debt Conversion

During the year ended December 31, 2019, the Company converted debt of approximately $6.8 million of principal and $0.7 million of accrued interest into approximately 35.5 million shares of the Company’s common stock at a fair value of $9.2 million. The Company recorded approximately $1.7 million of debt extinguishment loss from the conversion.

Warrants Exercised for Cash

During the year ended December 31, 2019, the Company issued 9.5 million shares of its common stock from warrants exercised for cash. The Company received $2.2 million in cash.

Shares Settlement

On May 28, 2019, the Company entered into a settlement agreement with Cognate BioServices, resolving past matters and providing for the restart of DCVax®-Direct Production (see Note 8).

As part of the settlement agreement, the number of shares of the Company’s common stock which the Company was to issue to Cognate was substantially reduced: 52 million shares of the Company’s common stock which the Company had previously agreed to issue to Cognate were reduced to 12 million shares. The Company considers the reduction in shares owed to Cognate a modification. Because the 52 million shares were never issued and the modification, which resulted in a decrease in fair value, is not a forfeiture, previously recognized expense related to services performed by Cognate is not reversed in connection with this modification. During the year ended December 31, 2019, the Company recorded $12,000 in its common stock par and reduced same amount in additional paid-in capital.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Stock Purchase Warrants

The following is a summary of warrant activity for the years ended December 31, 2020 and 2019 (dollars in thousands, except per share data):

    

Number of

    

Weighted Average

    

Remaining

Warrants

Exercise Price

Contractual Term

Outstanding as of January 1, 2019

 

372,153

$

0.29

 

1.97

Warrants granted

 

8,067

 

0.23

 

  

Warrants exercised for cash

 

(9,532)

 

0.23

 

  

Warrants expired and cancelled

 

(11,215)

 

0.62

 

  

Outstanding as of December 31, 2019

 

359,473

$

0.27

 

1.42

Warrants granted

88,658

0.22

Contingently issuable warrants (1)

 

2,774

 

1.48

 

  

Warrants exercised for cash

 

(47,511)

 

0.29

 

  

Cashless warrants exercise

(8,631)

0.22

Warrants expired and cancelled

 

(63,010)

 

0.32

 

  

Outstanding as of December 31, 2020 (2)

 

331,753

$

0.28

 

1.61

(1) The approximately 2.8 million warrants represent compensation warrants to be issued to the Company’s CEO, Linda Powers, in accordance with her warrants and options suspension agreement dated November 1, 2020.
(2) As of December 31, 2020, approximately 62.1 million warrants were not exercisable until January 15, 2021. Subsequent to January 15, 2021, the Company suspended 58.8 million warrants until February 28, 2021.

As of December 31, 2020, approximately 272.8 million warrants were treated as liability warrants due to the sequencing policy (see note 3).

Warrant Adjustments

Between April and August 2020, the Company undertook negotiations related to certain warrant adjustments, including suspending certain outstanding warrants, making them unexercisable for a defined period, and suspending extensions of the warrants during that period.

As previously reported, on May 10, 2020, for a number of unrelated warrant holders, the Company agreed to issue 17.5% new warrants and extend the investors' current warrant terms by six months, in consideration of the investor's suspension of the current and newly issued warrants until November 1, 2020. The unrelated investors suspended warrants for the purchase of approximately 81 million shares of the Company’s common stock. The Company agreed to issue new warrants to purchase 14.2 million shares of the Company’s common stock to these investors under the suspension agreements, and these additional warrants were also suspended until November 1, 2020.

On August 5, 2020, the investors who had existing outstanding warrants, that had not yet been suspended, suspended approximately 75.5 million additional existing warrant exercise shares until December 15, 2020. In consideration for the suspension of the 75.5 million existing warrant shares as part of the August Financing, the Company issued approximately 12.5 million warrants with an exercise price of $0.34 per share and an exercise period ranging from approximately 13.5 to 25.5 months following the termination of the suspensions. These suspension consideration warrants were also suspended until December 15, 2020.

On April 30, 2020, the Company entered into an agreement with its CEO, Linda Powers, in regard to approximately 90 million warrants and options held by Ms. Powers. She agreed to suspend approximately 60 million existing warrants and options held or due to her until November 1, 2020, making them unexercisable during this period. In consideration, the Company extended the exercise period of a separate 29 million existing warrants held by Ms. Powers (not part of the 60 million warrants and options), and Ms. Powers also agreed to suspend those 29 million warrants until November 1, 2020. The extension of the 29 million warrants provides an exercise period of 2-1/2 years after the suspension period.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

On October 31, 2020, the Company further extended the suspension of approximately 157 million of those 171 million warrants and options through December 15, 2020. Furthermore, other holders agreed to new suspensions of approximately 21 million additional warrants (in addition to the 157 million suspended) through December 15, 2020, making for a total of approximately 178 million suspensions through December 15, 2020.

Still another 96 million warrants (beyond the 178 million described above) were also suspended earlier in connection with other new share purchases. Consequently, a total of approximately 274 million warrants and options were suspended through December 15, 2020.

On December 15, 2020, the Company further extended the suspension of approximately 183 million warrants and options held by the Company’s certain officers and board of directors until January 15, 2021. Total warrants and options suspended until January 15, 2021 were approximately 190 million. See Note 15 below under Subsequent Events for more information about additional suspensions of warrants and options suspensions for further periods.

12. Commitments and Contingencies

Operating Lease

The Company adopted ASC Topic 842 - Leases as of January 1, 2019, using the transition method per ASU No. 2018-11 issued on July 2018 wherein entities were allowed to initially apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, all periods prior to January 1, 2019 were presented in accordance with the previous ASC Topic 840, Leases, and no retrospective adjustments were made to the comparative periods presented. Adoption of ASC 842 resulted in an increase to total assets and liabilities due to the recording of operating lease right-of-use assets ("ROU") and operating lease liabilities of approximately $4.3 million, as of January 1, 2019.  On March 4, 2019, the Company recognized additional $0.6 million ROU and lease liabilities to its amended office lease in the U.S. The adoption did not materially impact the Company’s consolidated statements of operations or cash flows.

The Company has operating leases for corporate offices in the U.S., U.K., Germany and the Netherlands, and for manufacturing facilities in the U.K. Leases with an initial term of 12 months or less are not recorded in the balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which among other things, allows the Company to carry forward historical lease classification. The renewal options have not been included in the calculation of the lease liabilities and ROU as the Company is not reasonably certain to exercise the options. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense.

At December 31, 2020, the Company had operating lease liabilities of approximately $5.1 million for both the 20-year lease of the building for the manufacturing facility in Sawston, U.K., and the current office lease in the U.S. and ROU of approximately $4.5 million for the Sawston lease and US office lease, which were included in the consolidated balance sheet.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The following summarizes quantitative information about the Company’s operating leases (amount in thousands):

For the Year ended

December 31, 2020

    

U.K

    

U.S

    

Total

Lease cost

Operating lease cost

$

610

$

330

$

940

Short-term lease cost

44

44

Variable lease cost

45

20

65

Total

$

699

$

350

$

1,049

Other information

Operating cash flows from operating leases

$

(661)

$

(332)

$

(993)

Weighted-average remaining lease term - operating leases

9.1

0.2

Weighted-average discount rate - operating leases

12

%

12

%

For the Year ended

December 31, 2019

    

U.K

    

U.S

    

Total

Lease cost

 

  

 

  

 

  

Operating lease cost

$

607

$

247

$

854

Short-term lease cost

 

50

 

81

 

131

Variable lease cost

 

 

15

 

15

Total

$

657

$

343

$

1,000

Other information

 

 

 

Operating cash flows from operating leases

$

$

(244)

$

(244)

Weighted-average remaining lease term – operating leases

 

10.0

 

0.9

 

  

Weighted-average discount rate – operating leases

 

12

%  

 

12

%  

 

  

The Company recorded lease costs as a component of general and administrative expense during the years ended December 31, 2020 and 2019.

Maturities of our operating leases, excluding short-term leases, are as follows:

    

U.K

    

U.S

    

Total

Year ended December 31, 2021

$

644

$

84

$

728

Year ended December 31, 2022

644

644

Year ended December 31, 2023

644

644

Year ended December 31, 2024

644

644

Thereafter

8,990

8,990

Total

11,566

84

11,650

Less present value discount

(6,565)

(2)

(6,567)

Operating lease liabilities included in the Consolidated Balance Sheet at December 31, 2020

$

5,001

$

82

$

5,083

Manufacturing Services Agreements

The Company has a manufacturing services agreement with Advent BioServices in the U.K.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Advent BioServices

On May 14, 2018, the Company entered into a DCVax®-L Manufacturing and Services Agreement (“MSA”) with Advent BioServices, a related party which was formerly part of Cognate BioServices and was spun off separately as part of an institutional financing of Cognate. The Advent Agreement provides for manufacturing of DCVax-L products at an existing facility in London. The Agreement is structured in the same manner as the Company’s prior agreements with Cognate BioServices. The Advent Agreement provides for a program initiation payment of approximately $1.0 million (which was fully paid in 2018), in connection with technology transfer and operations to the U.K. from Germany, development of new Standard Operating Procedures (SOPs) for the London facility, selection of new suppliers and auditing for GMP compliance, and other preparatory activities. The Advent Agreement provides for certain payments for achievement of milestones and, as was the case under the prior agreement with Cognate BioServices, the Company is required to pay certain fees for dedicated production capacity reserved exclusively for DCVax production, and pay for manufacturing of DCVax-L products for a certain minimum number of patients, whether or not the Company fully utilizes the dedicated capacity and number of patients. Either party may terminate the MSA on twelve months’ notice, to allow for transition arrangements by both parties.

On November 8, 2019, the Company and Advent entered into an Ancillary Services Agreement with an 8-month Term for U.K. Facility Development Activities and Compassionate Use Program Activities. The Ancillary Services Agreement establishes a structure under which Advent will develop Statements of Work (“SOWs”) for each portion of the U.K. Facility Development Activities and Compassionate Use Program Activities, and will deliver those SOWs to the Company for review and approval. After an SOW is approved by the Company, Advent will proceed with or continue the applicable services and will invoice the Company pursuant to the SOW. Since both the U.K. Facility Development and the Compassionate Use Program involve pioneering and uncertainties in most aspects, the invoicing under the Ancillary Services Agreement is on the basis of costs incurred plus fifteen percent. The Ancillary Services Agreement had an original term of 8 months, which ended in July 2020. The Company extended the term by 12 months, and did not make any other changes.

German Tax Matter

The German tax authorities have audited our wholly owned subsidiary, NW Bio GmbH, for 2013-2015. During those years, NWBio, Inc. sent funds to NWBio GmbH to pay for operating expenses and costs associated with the Phase III clinical trial. The German tax authorities have asserted that the subsidiary should have charged NWBio parent company a  profit margin on top of these costs, that they will deem that such a profit margin was charged by the subsidiary (even though it was not) and that they will tax this deemed profit margin, although neither NW Bio, Inc. nor NW Bio GmbH made any profit during the period in question (or at any other time), and even though the funds provided by NW Bio, Inc. were used by NW Bio GmbH entirely for operating expenses and clinical trial costs.   They have also made claims for other taxes including penalties and interest.

In July, NW Bio GmbH submitted substantial documentation to refute the assessments of the German tax authorities.  The authorities responded in December that they were open to settlement negotiations.

On February 12, 2021, the German tax authorities agreed in principle with the Company’s settlement offer. The Company has accrued for the Company approved tax settlement offer of €351,000 (approximately $421,000 as of December 31, 2020) for the years under audit, with an addition of €156,000 (approximately $187,000) for the more recent years to date.  Penalties and interest are still under negotiation. After considering further negotiations, under its evaluation under ASC 740, it is the view of the Company currently that it is not more likely than not that the resolution of these tax matters will ultimately result in a net material charge to the Company.

13. Income Taxes

No provision was made for U.S. taxes on undistributed foreign earning as such earnings are considered to be permanently reinvested. It is not practicable to determine the amount of additional tax, if any that might be payable on those earnings if repatriated.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2020 and 2019 are comprised of the following (in thousands):

    

As of December 31, 2020

    

As of December 31, 2019

Deferred tax asset

 

  

 

  

Net operating loss carryforward

$

185,308

$

176,140

Research and development credit carry forwards

 

18,580

 

16,983

Stock based compensation and other

 

22,997

 

14,565

Total deferred tax assets

 

226,885

 

207,688

Valuation Allowance

 

(226,885)

 

(207,688)

Deferred tax asset, net of allowance

$

$

The Company has identified the United States, Maryland, Germany and United Kingdom as significant tax jurisdictions.

The Company’s U.S. net operating loss (“NOL”) carryforwards for tax purposes as of December 31, 2020, are approximately $654.5 million. Unused NOL carryforwards from years prior to 2018 of $547.0 million will begin to expire in 2020 through 2037. NOL incurred in 2018 and later amount to $107.5 million and shall carryforward indefinitely. NOL carryforwards are generally available to offset future taxable income; however, the utilization of NOL may be limited under the Internal Revenue Code Section 382 as a result of changes in ownership of the Company’s stock over the loss periods and prior to utilization of the carryforwards. The Company also has approximately $18.6 million in research and development tax credits available to offset federal income tax in future periods. If unused, these credits expire through 2037. The Company’s NOL carryforwards for foreign tax purposes as of December 31, 2020 are $30.0 million. NOL in the United Kingdom and Germany of $13.3 million and $16.5 million respectively do not expire over time. NOL in the Netherlands of $208,000 will begin to expire in 2025 through 2031. The Company’s tax years are still open under statute from 2016 to present, although NOL carryovers from prior tax years are subject to examination and adjustments to the extent utilized in future years.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2020 and 2019.

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

(dollars in thousands)

    

As of December 31, 2020

    

As of December 31, 2019

 

Statutory federal income tax rate

 

21.0

%  

21.0

%  

State taxes, net of federal tax benefit

 

1.1

%  

8.9

%  

Tax rate differential on foreign income

 

0.0

%  

(0.4)

%  

Derivative gain or loss

 

(17.3)

%  

12.2

%  

Expiration of net operating losses

 

(1.5)

%  

(7.9)

%  

Other permanent items and true ups

 

(0.1)

%  

(2.3)

%  

R&D Credit

 

0.3

%  

3.0

%  

Change in valuation allowance

 

(3.5)

%  

(34.5)

%  

Income tax provision (benefit)

 

0.0

%  

0.0

%  

    

As of December 31, 2020

    

As of December 31, 2019

Federal

 

  

 

  

Current

$

$

Deferred

 

(15,539)

 

(5,183)

State

 

 

  

Current

 

 

Deferred

 

(4,327)

 

(1,421)

Foreign

 

 

  

Current

 

 

  

Deferred

 

670

 

(404)

Change in valuation allowance

 

19,196

 

7,008

Income tax provision (benefit)

$

$

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of December 31, 2020, and 2019, there were no uncertain tax positions. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest during the year ended December 31, 2020. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

14. Revision to Prior Period Financial Statements

During the course of preparing the quarterly report on Form 10-Q for the three and nine months ended September 30, 2020 and 2019, the Company identified an error in its accrual and capitalization related to the Sawston Facility and research and development costs under the Advent Ancillary Services Agreement. This resulted in an understatement of construction in progress of $1.5 million as of December 31, 2019, and an understatement of accounts payable and accrued expenses to related parties and affiliates of $3.0 million as of December 31, 2019.

The Company concluded that the error was not material to any prior annual period and the error had no material impact to any prior interim period. Nevertheless, the Company has revised its historical consolidated financial statements to properly reflect research and development expenses, capitalization of construction in progress and accrued liabilities in the prior periods.

The effect of the revisions to the consolidated financial statements is as follows (amount in thousands):

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NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Consolidated Balance Sheet

As of December 31, 2019

As Previously

 

    

  Reported 

    

Adjustments

    

As Revised

Construction in progress

$

171

$

1,514

$

1,685

Total non-current assets

 

5,929

 

1,514

 

7,443

TOTAL ASSETS

$

9,129

$

1,514

$

10,643

 

  

 

  

 

  

Accounts payable and accrued expenses to related parties and affiliates

$

842

$

3,002

$

3,844

Total current liabilities

 

41,194

 

3,002

 

44,196

Total liabilities

 

52,696

 

3,002

 

55,698

 

  

 

  

 

  

Accumulated deficit

 

(839,907)

 

(1,488)

 

(841,395)

Total stockholders' deficit

 

(43,567)

 

(1,488)

 

(45,055)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

9,129

$

1,514

$

10,643

Consolidated Statement of Operations

For the year ended

December 31, 2019

As Previously

 

    

  Reported 

    

Adjustments

    

As Revised

Research and development expenses

$

13,590

$

516

$

14,106

Total operating costs and expenses

 

29,873

 

516

 

30,389

Loss from operations

 

(27,463)

 

(516)

 

(27,979)

Net loss

$

(20,296)

$

(516)

$

(20,812)

Total comprehensive loss

$

(20,460)

$

(516)

$

(20,976)

Consolidated Statement of Cash Flows

For the year ended

December 31, 2019

As Previously

 

    

  Reported 

    

Adjustments

    

As Revised

Cash Flows from Operating Activities:

  

  

  

Net loss

$

(20,296)

$

(516)

$

(20,812)

Related party accounts payable and accrued expenses

 

(3,746)

 

516

 

(3,230)

Net cash used in operating activities

$

(31,859)

$

$

(31,859)

Supplemental schedule of non-cash investing and financing activities:

 

  

 

  

 

  

Capital expenditures included in accounts payable and accrued expenses to related parties and affiliates

$

$

947

$

947

15. Subsequent Events

Debt Offering

On March 1, 2021, the Company entered into a Commercial Loan Agreement (the “Note”) with an individual investor for an aggregate principal amount of $10 million. The Note bears interest at 8% per annum with a 22-month term. There are no repayments during the first 8 months of the term. The note is amortized in 14 installments starting on November 1, 2021. The Note carries an original issue discount of $1 million and $5,000 legal costs that were reimbursable to the investor.

F-39

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

Notes to the Consolidated Financial Statements

Warrants and Options Suspension

On January 15, 2021, the Company further extended the suspension of approximately 256 million warrants and options held by certain officers and directors of the Company until February 28, 2021.

On February 28, 2021, the Company further extended the suspension of approximately 262 million warrants and options held by certain officers and directors of the Company until April 30, 2021.

A total 262 million warrants and options will be suspended until April 30, 2021.

Warrants Exercised for Cash and Cashless Warrants Exercise

Between January and March 2021, the Company received $0.7 million from the exercise of warrants with an exercise price between $0.175 and $0.34. The Company issued approximately 2.6 million shares of common stock upon these warrant exercises.

Between January and March 2021, certain warrants allowing for cashless exercise were exercised, with exercise prices between $0.22 and $0.52. The Company issued approximately 2.1 million shares of common stock upon 2.6 million warrant exercises.

Stock Options Exercised for Cash and Cashless Stock Options Exercise

Between January and March 2021, the Company received $46,000 from the exercise of stock options with an exercise price of $0.25. The Company issued approximately 0.2 million shares of common stock upon these options exercises.

Between January and March 2021, certain stock options holders elected to cashless exercise their options, with exercise prices between $0.25 and $0.34. The Company issued approximately 3.1 million shares of common stock upon 3.7 million options exercises.

Debt Conversion

Between January and March 2021, the Company converted approximately $4.6 million outstanding debt and interest into approximately 4.5 million shares of common stock.

F-40

Exhibit 4.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO

SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following description of the common stock of Northwest Biotherapeutics, Inc. (the “Corporation,” “us,” “our” or ”we”) does not purport to be complete and is subject to, and qualified in its entirety by, our certificate of incorporation, as amended (“certificate”), and our amended and restated bylaws (“bylaws”), each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.

General

Our authorized capital stock consists of 1,200,000,000 shares of common stock, par value $0.001 per share, and 100,000,000 shares of preferred stock, par value $0.001 per share. We have one class of securities registered under Section 12 of the Securities Exchange Act of 1934, our common stock, which is listed on the OTCQB tier of the OTC Markets under the symbol “NWBO.” There are no shares of preferred stock outstanding.

Common Stock

Voting rights. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. A plurality of the votes cast is required for stockholders to elect directors. All other matters put to a stockholder vote generally require the approval of a majority of the votes cast by the shares represented at a meeting of the stockholders, except as otherwise provided by our certificate or bylaws or required by law. Stockholders do not have cumulative voting rights.

Dividends. Subject to the prior rights of any series of preferred stock which may from time to time be outstanding, the holders of our common stock are entitled to receive such dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. As of the date of this filing, we have not declared or paid any cash dividends on our shares of common stock.

Liquidation. In the event we are liquidated, dissolved or our affairs are wound up, after we pay or make adequate provision for all of our known debts and liabilities, each holder of common stock will receive distributions pro rata out of assets that we can legally use to pay distributions, subject to any rights that are granted to the holders of any class or series of preferred stock.

Preemptive, subscription and conversion rights. Our common stock is not redeemable and has no preemptive, subscription or conversion rights.

Transfer agent. The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. Its address is P.O. Box 30170, College Station, Texas 77842 and its phone number is (866) 282-9695

Our common stock is subject and subordinate to any rights and preferences granted under our certificate and any rights and preferences which may be granted to any series of preferred stock by our board pursuant to the authority conferred upon our board under our certificate.

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Anti-Takeover Provisions

Some provisions of our certificate, bylaws and Delaware law may have the effect of delaying, discouraging or preventing a change in control of us or changes in our management. Pursuant to our certificate and bylaws:

·

the board of directors is authorized to issue preferred stock without stockholder approval;

·

the board of directors is expressly authorized to make, alter or repeal any provision of our bylaws

·

stockholders may only alter, amend, rescind or adopt the bylaws with the affirmative vote of two-thirds of the voting power of all outstanding stock of the Corporation, voting together as a single class;

·

the board of directors is classified, with members serving staggered three-year terms

·

stockholders may not cumulate votes in the election of directors;

·

stockholders may take action only at a duly called meeting of the stockholders, and stockholders are not permitted to act by written consent or cause the Corporation to call a special meeting;

·

special meetings of the stockholders may only be called by the Chairman of the Board (if any) or the Chief Executive Officer and shall be called by the Secretary at the written request, or by resolution adopted by the affirmative vote of a majority of the Corporations directors;

·

a director may be removed from office only for cause at a special meeting of stockholders called for that purpose, by the affirmative vote of the holders of not less than two-thirds of the shares entitled to elect the Director or Directors whose removal is being sought;

·

stockholders must satisfy advance notice procedures to submit proposals or nominate directors for consideration at a stockholders meeting; and

·

we will indemnify officers and directors against losses that they may incur as a result of investigations and legal proceedings resulting from their services to us, which may include services in connection with takeover defense measures.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”). In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date that the person became an interested stockholder unless, with some exceptions, the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation’s outstanding voting stock. This provision may have the effect of delaying, deferring or preventing a change in control without further action by the stockholders.

2


Exhibit 10.81

NORTHWEST BIOTHERAPEUTICS, INC.

2020 EQUITY COMPENSATION PLAN

1. GENERAL.

(a) Eligible Award Recipients. The persons eligible to receive Awards are Employees, Directors and Consultants inside and outside of the United States.

(b) Available Securites. The Plan provides for the grant of any type of equity security, equity-linked security or equity security equivalent, including without limitation, the following: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Awards (including restricted stock units), (iv) Purchase Rights, or (vi) other forms of derivative securities with underlying Common Stock (each an “Award”).

(c) General Purpose. The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Awards as set forth in Section 1(a), to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide a means by which such eligible recipients may be given an opportunity to benefit from increases in value of the Common Stock through the granting of Awards.

2. ADMINISTRATION.

(a) Administration by Board. The Board shall administer the Plan except to the extent the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 2(c).

(b) Powers of Board. The Board shall have the power, pursuant to the Plan and/or otherwise:

(i) To determine from time to time (A) which of the persons eligible under the Plan shall be granted Awards; (B) when and how each Award shall be granted, and whether and to what extent an award is deemed to be made under the Plan or outside of the Plan; (C) what type or combination of types of Award shall be granted; (D) the provisions of each Award granted (which need not be identical), including, without limitation, the vesting schedule and terms, the time or times when a person shall be permitted to receive cash or Common Stock pursuant to an Award, and any tax payment or make-whole arrangements; (E) the number of shares of Common Stock with respect to which an Award shall be granted to each such person and (F) other terms of an Award.

(ii) To construe and interpret the Plan and Awards, and to establish, amend and revoke rules and regulations for the Plan’s administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award in a manner and to the extent it shall deem necessary or expedient to make the Plan or Award fully effective.

(iii) To settle all controversies regarding the Plan and Awards.

(iv) To determine case by case whether to accelerate the time at which an Award may be exercised or the time during which and/or basis upon which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may be exercised or the time during which and/or basis upon which it will vest, or to make other case by case changes provided that such changes are not adverse to the Awardholder and/or the Awardholder consents in writing to the changes.

(v) To suspend or terminate the Plan at any time. Suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the Plan was in effect except with the written consent of the affected Participant.

(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and to bring the Plan and/or Awards into compliance therewith, subject to the limitations, if any, of applicable law.

1


(vii) To approve forms of Awards for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that the Participant’s rights under any Award shall not be adversely affected by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing.

(viii) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company, pursuant to the Plan or otherwise, and that are not in conflict with the provisions of existing Awards.

(ix) To adopt such procedures and/or sub- or separate plans as are necessary or appropriate to provide for Awards to Employees, Directors or Consultants who are foreign nationals or employed outside the United States.

(c) Delegation to Committee(s).

(i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board to the extent that such powers have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee(s) and may, at any time, revest in the Board some or all of the powers previously delegated to the Committee, Committees, subcommittee or subcommittees.

(ii) Rule 16b-3 Compliance. In the sole discretion of the Board, the Committee may consist solely of two (2) or more Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or the Committee, in its sole discretion, may delegate to a Committee which need not consist of Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

(d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

3. SECURITIES SUBJECT TO THE PLAN.

(a) Notwithstanding any other provision of this Plan or other document, and subject only to adjustments for stock splits, reverse splits and similar transactions which apply to all issued and outstanding securities of the Company, the number of Securities that may be issued pursuant to Awards made under this Plan shall equal twenty percent (20%) of the total issued and outstanding Securities of the Company at the Calculation Date, provided that in no event shall the number of issuable Securities be decreased. “Calculation Date” means any date on which the outstanding capitalization of the Company is increased.

(b) If any Securities issued pursuant to an Award expire or are forfeited back to the Company, then the shares which expire or are forfeited shall revert to and again become available for issuance under the Plan. Notwithstanding the provisions of this subsection 3(b), if and to the extent that applicable law precludes the reissuance of any such shares pursuant to Incentive Stock Options, then, only to such extent, any such shares shall not be subsequently issued pursuant to the exercise of Incentive Stock Options but in such case may be subsequently issued as Non-Statutory Options or other Awards.

4. ELIGIBILITY.

(a) Eligibility for Specific Options. To the extent required by applicable law, Incentive Stock Options may be granted only to employees of the Company or a parent or subsidiary (as such terms are defined in Sections 424(e) and (f) of the Code). Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants of the Company or an Affiliate of the Company.

2


(b) Ten Percent Stockholders. To the extent required by applicable law, a Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant, and the Option is not exercisable after the expiration of five (5) years from the date of grant, provided however, that Ten Percent Stockholders may be granted Non-qualified Stock Options at any exercise price and exercise terms agreed by the parties (subject to Section 5 hereof).

5. AWARD PROVISIONS.

Each Award shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. Options may be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant. If an Option is not specifically designated as an Incentive Stock Option, then the Option shall be deemed to be a Nonstatutory Stock Option. The provisions of separate Awards need not be identical and, notwithstanding anything to the contrary in this Plan, the nature, terms and conditions of all Awards shall be determined by the Board or Committee in good faith, in its sole discretion, to be in the best interests of the Company. Pursuant to such Board or Committee determinations, each Award shall include (through incorporation of provisions hereof by reference in the Award or otherwise) the following categories of provisions:

(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the term (which need not be the same for different Award grants) shall be determined by the Board and set forth in the Award. No Award shall be exercisable after the expiration of ten (10) years from the date it becomes exercisable, or such shorter period specified in the Award, unless the term is extended.

(b) Price. For Incentive Stock Options, subject to the provisions of Section 4(b) hereof, the exercise price of each Incentive Stock Option shall, to the extent required by law, be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Option or other Securities may be granted to any party with an exercise price at any level below one hundred percent (100%) of the Fair Market Value of the Common Stock underlying such Option or other Securities (i) if such Option or other Security is not an Incentive Stock Option, (ii) if such Option or other Security is granted pursuant to an assumption of or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code (whether or not such options are Incentive Stock Options), or (iii) if the Board determines the grant of such Option or other Security to be in the best interests of the Company to attract, retain or incentivize an Employee, Director or Consultant. The price per share for each Award shall be established by the Board or Committee, taking into account considerations such as relevant market factors and any noncash consideration to be received by the Company from the recipient of the Award.

(c) Consideration. The purchase price of Common Stock acquired pursuant to the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and/or to grant Options that require the consent of the Company to utilize a particular method of payment. AwardThe methods of payment permitted by this Section 5(c) are:

(i) by cash, check, bank draft or money order payable to the Company;

(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

(iii) cashless exercise pursuant to provisions therefor; or

(iv) by any other form of legal consideration that may be acceptable to the Board.

(d) Transferability and Exercise of Awards. The Board may, in an Award, impose such limitations on the transferability of Awards (or Securities issued pursuant to an exercise of an Award) as the Board shall determine, but may only do so by setting forth such restrictions explicitly in the Award. In the absence of such an explicit

3


restriction, an Award shall be freely transferable by the Awardholder to the maximum extent allowed by law.

(e) Beneficiary Designation. The Awardholder may, by written notice to the Company, by will or by other legally permitted methods designate a third party who, in the event of the death of the Awardholder, shall thereafter be the beneficiary of an Award with the right receive the Award and any consideration resulting from an Award exercise.

(f) Vesting Generally. The total number of Securities subject to an Award may vest and therefore become receivable, nonforfeitable or exercisable in periodic installments that may or may not be equal. The installments may be based upon time, upon trigger events and/or upon achievement of milestones, or any combination of such factors and/or other factors. The Award may be subject to such other terms and conditions on the time or times when it may or may not be exercised as the Board may deem appropriate. The vesting provisions of individual Awards may vary. The provisions of this Section 5(f) are subject to any terms and conditions of individual Awards.

(g) Disability of Awardholder. In the event that an Awardholder’s Continuous Service terminates as a result of the Awardholder’s Disability, the Awardholder may exercise or manage his or her Award according to its terms, or as otherwise determined by the Board (provided that such Board determination shall not modify the terms of an existing Award in a manner adverse to the Awardholder).

(h) Death of Awardholder. In the event that an Awardholder’s Continuous Service terminates as a result of the Awardholder’s death, then the Award may be exercised or managed according to its terms by the Awardholder’s estate or applicable heirs, or by persons designated by the Awardholder in written notice to the Company as the beneficiary of the Award upon the Awardholder’s death.

6. COVENANTS OF THE COMPANY.

(a) Availability of Shares. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock reasonably required to satisfy such Awards.

(b) Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell Securities upon exercise of the Awards; provided, however , that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Securities issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of Securities under the Plan, the Company shall be relieved from any liability for a reasonable period of time for failure to issue and sell Securities upon exercise of such Awards unless and until such authority is obtained, provided that the Company continues to use best efforts to obtain such authority.

(c) Company Obligations. The Company shall have no duty or obligation to any Awardholder to advise such holder as to the time or manner of exercising such Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised. The Company may have a duty or obligation to minimize the tax consequences of an Award to the holder of such Award, as provided in an Award or pursuant to an agreement relating thereto.

7. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the number of Securities subject to the Plan shall adjust automatically as provided in Section 3(a) above. In no event will fractional shares of Common Stock be issued under the Plan.

(b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company, all outstanding Awards shall become fully vested, and/or exercisable (to the extent such Awards have not previously expired or terminated).

(c) Corporate Transaction. In the event of a Corporate Transaction, vesting of all Awards, and the time at which such Awards may be exercised, will be accelerated in full to a date at least one business day prior to the effective

4


time of such Corporate Transaction (contingent upon the effectiveness of the Corporate Transaction). If there is a Corporate Transaction and any Award is not exercised, such Award will continue to remain outstanding per its terms except that in lieu of being exercisable forSecurities of the Company, it will be exercisable for the consideration which would have been received in the Corporate Transaction had it been exercised for such Securities before the Corporate Transaction took place.

8. TERM AND TERMINATION OR SUSPENSION OF THE PLAN.

(a) Plan Effective Date. The Plan shall become effective on the Effective Date determined by the Board.

(b) Plan Term. Unless sooner terminated by the Board pursuant to Section 2, the Plan shall automatically terminate on the day before the tenth (10th) anniversary of the Effective Date. The Plan may be suspended temporarily by the Board in its sole discretion. No new Awards may be granted under the Plan while the Plan is suspended or after it is terminated, provided, however, that the issuance of Awards that were approved by the Board while the Plan was not suspended or terminated shall be completed.

(c) No Impairment of Rights. Termination of the Plan shall not impair rights and obligations under any Award approved or granted while the Plan was in effect except with the written consent of the affected Participant.

9. MISCELLANEOUS.

(a) Corporate Action for Awards. Corporate action (such as Board approval) relating to an Award to any Participant shall be deemed effective as of the date of such corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received by or executed or accepted by, the Participant.

(b) No Employment or Other Service Rights. Nothing in the Plan, any Award or other instrument executed thereunder or in connection with any Award granted pursuant to the Plan shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause (except as otherwise provided in an employment agreement or other agreement), (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state and/or country in which the Company or the Affiliate is incorporated, as the case may be.

(c) Incentive Stock Option $100,000 Limitation. To the extent required by applicable law, to the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of the applicable Option Agreement(s).

(d) Withholding Obligations. Unless prohibited by the terms of an Award, the Company may, in its sole discretion, satisfy any federal, state or local tax withholding obligation relating to an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) with the approval of the Board to the extent required for compliance with Rule 16b-3, withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection with the Award; (iii) withholding cash from an Award settled in cash; or (iv) by such other method as may be set forth in the Award.

(e) Electronic Delivery. Any reference herein to a “written” agreement or document shall include any agreement or document delivered electronically.

(f) Deferrals. To the extent permitted by applicable law, the Board, with consent of the Awardholder in his or her discretion, may determine that the delivery of Securities or the payment of cash, upon the exercise, vesting or

5


settlement of all or a portion of any Award may be deferred and may establish programs and procedures for deferral elections to be made by Participants. Deferrals by Participants will be made in accordance with Section 409A of the Code. Consistent with Section 409A of the Code, the Board may provide for distributions while a Participant is still an employee. The Board is authorized to make deferrals of Awards, with consent of the Awardholder, and determine (also with the consent of the Awardholder, except in cases of termination for cause) when, and in what annual percentages, Participants may receive payments, including lump sum payments, following the Participant’s termination of employment or retirement, and implement such other terms and conditions consistent with the provisions of the Plan and in accordance with applicable law.

10. CHOICE OF LAW.

The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

11. DEFINITIONS. As used in the Plan, the definitions contained in this Section 13 shall apply to the capitalized terms indicated below:

(a) Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act, as well as any party under common majority ownership with the Company. The Board shall have the authority to determine “affiliate” status and the time or times at which “affiliate” status is determined.

(b) Award” means a written document signed by the Company evidencing the terms and conditions of an Award grant. Each Award shall be subject to the terms and conditions of the Plan.

(c) Awardholder” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award (including, without limitation, an assignee or transferee).

(d) Board” means the Board of Directors of the Company.

(e) “Calculation Date” means any date on which the outstanding capitalization of the Company is increased (including, without limitation, by issuance of any Company Securities). As provided in Section 3(a), the aggregate number of Company Securities that may be issued pursuant to Awards under this Plan shall equal twenty percent (20%) of the total issued and outstanding Securities of the Company at the Calculation Date, provided that in no event shall the number of issuable shares be decreased.

(f) Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Securities subject to the Plan or subject to any Award after the Effective Date (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company).

(f) Change in Control” means, unless otherwise determined by the Board, the occurrence, in a single transaction or in a series of transactions, of any one or more of the following events:

(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an investor or any other Exchange Act Person from the Company in a transaction or series of transactions which are initiated by the Company and/or expressly approved by the Company’s Board of Directors, the primary purpose of which is to obtain financing for the Company through the issuance by the Company of securities, or (B) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person ”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share

6


acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold. For the avoidance of doubt, in the event of acquisitions of securities and/or interests therein by one or more investors and/or other parties, directly or indirectly, representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, in a single transaction or a series of transactions that in whole or in part have not been initiated by the Company or expressly approved by the Company’s Board of Directors, then a Change in Control shall be deemed to have occurred.

(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such transaction;

(iii) the stockholders of the Company approve or the Board approves a plan of dissolution or liquidation of all or substantially all of the Company, or a dissolution or liquidation of all or substantially all of the Company shall otherwise occur, except for a liquidation into a parent corporation; or

(iv) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition.

For the avoidance of doubt, the term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.

Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an Award shall supersede the foregoing definition with respect to such Awards; provided, however, that if no definition of Change in Control or any analogous term is set forth in such an individual Award, the Board shall determine whether the foregoing definition or an alternative definition shall apply.

(h) Code” means the Internal Revenue Code of 1986, as amended.

(i) Committee” means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c).

(j) Common Stock” means the common stock of the Company and any securities exercisable for or convertible into Common Stock.

(k) Company” means Northwest Biotherapeutics, Inc., a Delaware corporation.

(l) Consultant” means any person, including an advisor, who (i) renders consulting or advisory services or other services to or for the benefit of the Company or an Affiliate, whether or not such person is compensated for such services apart from Awards under the Plan, or (ii) is serving as a member of the board of directors or management of an Affiliate. However, service solely as a Director of the Company, or payment of a fee solely for such service as a Director and not for any other services, shall not cause such Director to be considered a “Consultant” for purposes of the Plan.

(m) Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant

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renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For example, a change in status from an employee of the Company to a consultant to an Affiliate or to a Director shall not constitute an interruption of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave, or in the case of a gap in service in connection with a change in capacity or change of entity.

(n) Corporate Transaction” means the occurrence, in a single transaction or in a series of transactions, of any one or more of the following events:

(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

(ii) a Change of Control;

(iii) the consummation of a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

(iv) the consummation of a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

(o) Director” means a member of the Board of the Company.

(p) Disability” means the permanent or temporary (i) inability of a person to perform or fulfill all employment services in the usual manner or (ii) disability within the meaning of Section 22(e)(3) of the Code.

(q) Effective Date” means the date of approval of this Plan by the Board.

(r) Employee” means any person employed by the Company or an Affiliate.

(s) Entity” means a corporation, partnership, limited liability company or other entity.

(t) Exchange Act” means the Securities Exchange Act of 1934, as amended.

(u) Exchange Act Person” means any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date of the Plan as set forth in Section 11, is the Owner, directly or indirectly, of securities of the Company representing more than twenty five percent (25%) of the combined voting power of the Company’s then outstanding securities.

(v) Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) for the last market trading day prior to the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.

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(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined by the Board in good faith.

(w) Incentive Stock Option” means an option granted pursuant to Section 5 of the Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(x) Non-Employee Director” means a Director who either (i) is not a current employee or officer of the Company or an Affiliate, or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

(y) Nonstatutory Stock Option” means any option granted pursuant to the Plan that does not qualify as an Incentive Stock Option.

(z) Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(aa) Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan.

(bb) Own ,” “Owned ,” “Owner ,” “Ownership” A person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

(cc) Participant” means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award (including, without limitation, an assignee or transferee).

(dd) Plan” means this Northwest Biotherapeutics, Inc. 2020 Equity Compensation Plan.

(ee)Purchase Rights” means the grant to Employees, Directors and Consultants of the Company or an Affiliate of opportunities to make purchases of Common Stock.

(ff) Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

(gg) “Securities” means any type of equity security, equity-linked security or equity security equivalent, direct or contingent, including without limitation, Common Stock, preferred stock, restricted stock units, warrants, options and other securities of any kind directly or indirectly exercisable for or convertible into Common Stock.

(hh) Securities Act” means the Securities Act of 1933, as amended.

(ii) Stock Awards” means awards of any Securities.

(jj) Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the voting power of the outstanding capital stock is directly or indirectly Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital) of more than fifty percent (50%).

(kk) Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate.

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Exhibit 10.82

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of August 14, 2020, is entered into by and between NORTHWEST BIOTHERAPEUTICS, INC., a Delaware corporation ("Company"), and ILIAD RESEARCH AND TRADING, L.P., a Utah limited partnership, its successors and/or assigns ("Investor").

A.           Investor desires to purchase and Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a Promissory Note, in the form attached hereto as Exhibit A, in the original principal amount of $5,505,000.00 (the "Note").

B.            This Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement, as the same may be amended from time to time, are collectively referred to herein as the "Transaction Documents".

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Company  and  Investor hereby agree as follows:

1.            Purchase and Sale of Note.

1.1.         Purchase of Note. Company shall issue and sell to Investor and Investor agrees to purchase from Company the Note. In consideration for the issuance of the Note, Investor shall pay the Purchase Price (as defined below) to Company.

1.2.         Form of Payment. On the Closing Date, Investor shall pay the Purchase Price to Company via wire transfer of immediately available funds against delivery of the Note.

1.3.         Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the "Closing Date") shall be 5:00 p.m., Eastern Time on or about August 14, 2020, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the "Closing") shall occur on the Closing Date by means of the exchange by express courier and email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

1.4.         Collateral for the Note. The Note shall not be secured.

1.5.         Original Issue Discount; Transaction Expenses. The  Note carries  an original issue discount of $500,000.00 (the "OID"). In addition, Company agrees to pay $5,000.00 to Investor to cover Investor's legal fees, accounting costs, due diligence, monitoring and other  transaction  costs incurred in connection  with the  purchase and sale of the Note (the "Transaction  Expense Amount"),  all of which amount is included in the initial principal balance of the Note. The "Purchase Price", therefore, shall be $5,000,000.00, computed as follows: $5,505,000.00  original principal balance, less the OID, less the Transaction Expense Amount.

2.            Investor's Representations and Warranties. Investor represents and warrants to Company that: (i) this Agreement has been duly and validly authorized; (ii) this Agreement constitutes a valid and binding agreement of Investor enforceable in accordance with its terms; and (iii) Investor 1s  an "accredited investor" as that term is defined in Rule 501(a) of Regulation D of the 1933 Act.

3.            Representations and Warranties of Company. Company represents and warrants to Investor that: (i) Company is a corporation duly organized, validly existing and in good standing under

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the laws of its state of incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted; (ii) Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary; (iii) Company has registered its shares of common stock, $0.001 par value per share (the "Common Stock"), under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly authorized by Company; (v) this Agreement, the Note, and the other Transaction Documents have been duly executed and delivered by Company and constitute the valid and binding obligations of Company enforceable in accordance with their terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally; (vi) the execution and delivery of the Transaction Documents by Company and the consummation by Company of the other transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach by Company of any of the terms or provisions of, or constitute a default under (a) Company's formation documents or bylaws, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock, or (c) any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over Company or any of Company's properties or assets; (vii) no further authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of Company is required to be obtained by Company for the issuance of the Note to Investor; (viii) none of Company's filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ix) Company has filed all reports, schedules, forms, statements and other documents required to be filed by Company with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration of any such extension; (x) Company has not consummated any financing transaction that has not been disclosed in a periodic or other filing with the SEC under the 1934 Act; (xi) Company is not, nor has it ever been, a "Shell Company," as such type of"issuer" is described in Rule 144(i)(l) under the 1933 Act or is in compliance with Rule 144(i)(2) under the 1933 Act; (xii) with respect to any commissions, placement agent or finder's fees or similar payments that will or would become due and owing by Company to any person or entity as a result of this Agreement or the transactions contemplated hereby ("Broker Fees"), any such Broker Fees will be made in full compliance with all applicable laws and regulations and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiii) Investor shall have no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Company shall indemnify and hold harmless each of Investor, Investor's employees, officers, directors, stockholders, managers, agents, and partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys' fees) and expenses suffered in respect of any such claimed or existing Broker Fees; and (xiv) neither Investor nor any of  its officers, directors, members, managers, employees, agents or representatives has made any representations or warranties to Company or any of its officers, directors, employees, agents or representatives except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors, members, managers, employees, agents or representatives other than as set forth in the Transaction Documents.

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4.            Company Covenants. Until all of Company's obligations under the Note are paid and performed in full, or within the timeframes otherwise specifically set forth below, Company will at all times comply with the following covenants: (i) Company will timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or lS(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to Company, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) the Common Stock shall be listed or quoted for trading on any of(a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink Current Information; and (iii) trading in Company's Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease on Company's principal trading market.

5.            Conditions to Company's Obligation to Sell. The obligation of Company hereunder to issue and sell the Note to Investor at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:

5.1.         Investor shall have executed this Agreement and delivered the same to Company.

5.2.         Investor shall have delivered the Purchase Price to Company in accordance with Section 1.2 above.

6.            Conditions to Investor's Obligation to Purchase. The obligation of Investor hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for Investor's sole benefit and may be waived by Investor at any time in its sole discretion:

6.1.         Company shall have executed this Agreement and the Note and delivered the same to Investor.

6.2.         Company shall have delivered to Investor a fully executed Secretary' s Certificate substantially in the form attached hereto as Exhibit B evidencing Company's approval of the Transaction Documents.

6.3.         Company shall have delivered to Investor fully executed copies of all other Transaction Documents required to be executed by Company herein or therein.

7.            Miscellaneous. The provisions set forth in this Section 7 shall apply to this Agreement, as well as all other Transaction Documents as if these terms were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section 7 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.

7.1.         Certain Capitalized Terms. To the extent any capitalized term used in any Transaction Document is defined in any other Transaction Document (as noted therein), such capitalized term shall remain applicable in the Transaction Document in which it is so used even if the other Transaction Document (wherein such term is defined) has been released, satisfied, or is otherwise cancelled or terminated.

7.2.         Arbitration of Claims. The parties shall submit all Claims (as defined in Exhibit .C.) arising under this Agreement or any other Transaction Document or other agreement between the parties and their affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit.C. attached hereto (the "Arbitration Provisions") . The parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions of this Agreement. By executing this Agreement, Company represents, warrants and covenants

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that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. Company acknowledges and agrees that Investor may rely upon the foregoing representations and covenants of Company regarding the Arbitration Provisions.

7.3.        Governing Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each party consents to and expressly agrees that exclusive venue for arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties' obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents, each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, and (iii) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.

7.4.        Specific Perfonnance. Company acknowledges and agrees that irreparable damage may occur to Investor in the event that Company fails to perform any material provision of this Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly agreed that Investor shall be entitled to an injunction or injunctions to cure breaches of the provisions of this Agreement or such other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any Investor may be entitled under the Transaction Documents, at law or in equity. For the avoidance of doubt, in the event Investor seeks to obtain an injunction against Company or specific performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Investor under any Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms of the Transaction Documents.

7.5.         Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party's executed counterpart of a Transaction Document (or such party's signature page thereof) will be deemed to be an executed original thereof.

7.6.         Document Imaging. Investor shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments, documents, and items and records governing, arising from or relating to this loan, including, without limitation, this Agreement and the other Transaction Documents, and Investor may destroy or archive the paper originals. The parties hereto (i) waive any right to insist or require that Investor produce paper originals, (ii) agree that such images shall be accorded the same force and effect as the paper originals, (iii) agree that Investor is entitled to use such images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or any other Transaction Document shall be deemed to be of the same force and effect as the original manually executed document.

7.7.         Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

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7.8.         Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

7.9.         Entire Agreement. This Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters.

7.10.       No Reliance. Company acknowledges and agrees that neither Investor nor any of its officers, directors, members, managers, representatives or agents has made any representations or warranties to Company or any of its officers, directors, representatives, agents or employees except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by the Transaction Documents, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors, members, managers, agents or representatives other than as set forth in the Transaction Documents.

7.11.       Amendments. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the parties hereto.

7.12.       Notices. Any notice required or permitted hereunder shall be given in writing and via email to lgoldman@nwbio.com and lpowers@nwbio.com (unless otherwise specified herein) and shall be deemed effectively given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation), (ii) the earlier of the date delivered or the fifth business day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (iii) the earlier of the date delivered or the fifth business day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5) calendar days' advance written notice similarly given to each of the other parties hereto):

If to Company:

Northwest Biotherapeutics, Inc.

Attn: Linda Powers and Les Goldman

4800 Montgomery Lane, Suite 800

Bethesda, Maryland 20814

If to Investor:

Iliad Research and Trading, L.P.

Attn: John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

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With a copy to (which copy shall not constitute notice):

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan Hansen

3051 West Maple Loop Drive,

Suite 325 Lehi, Utah 84043

7.13.      Successors and Assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor hereunder  may be assigned  by Investor to a third party, including its financing sources, in whole or in part, without the need to obtain Company's consent thereto. Company may not assign its rights or obligations under this Agreement or delegate its duties hereunder without the prior written consent of Investor.

7.14.      Survival. The representations and warranties  of Company  and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Investor. Company agrees to indemnify and hold harmless Investor and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach by Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

7.15.      Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates,  instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

7.16.      Investor's Rights and Remedies Cumulative; Liquidated Damages. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Investor may have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to time and as often and in such order as Investor may deem expedient. The parties acknowledge and agree that upon Company's failure to comply with the provisions of the Transaction Documents, Investor's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability to predict future interest rates, Investor's increased risk, and  the uncertainty of the availability of a suitable substitute investment opportunity for Investor, among other reasons. Accordingly, any fees, charges, and default interest due under the Note and the other Transaction Documents are intended by the parties to be, and shall be deemed, liquidated damages. The parties agree that such liquidated damages are a reasonable estimate of Investor's actual damages  and  not a penalty, and shall not be deemed in any way to limit any other right or remedy Investor may have hereunder,  at law or in equity. The parties acknowledge and agree that under the circumstances existing at the time this Agreement is entered into, such liquidated damages are fair and reasonable and are not penalties. All fees, charges, and default interest provided for in the Transaction Documents are agreed to by the parties to be based upon the obligations and the risks assumed by the parties as of the Closing Date and are consistent with investments of this type. The liquidated damages provisions of the Transaction Documents shall not limit or preclude a party from pursuing any other remedy available at law or in equity; provided, however, that the liquidated damages provided for in the Transaction Documents are intended to be in lieu of actual damages.

7.17.       Attorneys'  Fees and Cost of Collection. In the event of any arbitration  or action at law or in equity to enforce or interpret the terms of this Agreement or any of the other Transaction

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Documents, the parties agree that the party who is awarded the most money shall be deemed  the prevailing party for all purposes and shall therefore  be entitled to an additional award of the full amount of the reasonable attorneys' fees, deposition costs, and expenses paid by such prevailing party in connection with arbitration or litigation without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrator's or a court's power to award fees and expenses for frivolous or bad faith pleading. If (i) the Note is placed in the hands of an attorney for collection or enforcement  prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Investor otherwise takes action to collect amounts due under the Note or to enforce the provisions of the Note; or (ii) there occurs any bankruptcy, reorganization, receivership of Company or other proceedings affecting Company's creditors' rights and involving a claim under the Note; then Company shall pay the costs incurred by Investor for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, reasonable attorneys' fees, expenses, deposition costs, and disbursements.

7.18.        Waiver. No waiver of any provision of this Agreement shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

7.19.        Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY'S RIGHT TO DEMAND TRIAL BY JURY.

7.20.        Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement and the other Transaction Documents.

7.21.        Voluntary Agreement. Company has carefully read this Agreement and each of the other Transaction Documents and has asked any questions needed for Company to understand the terms, consequences and binding effect of this Agreement and each of the other Transaction Documents and fully understand them. Company has had the opportunity to seek the advice of an attorney of Company's choosing, or has waived the right to do so, and is executing this Agreement and each of the other Transaction Documents voluntarily and without  any duress or undue influence by Investor or anyone else.

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the undersigned Investor and Company have caused this Agreement to be duly executed as of the date first above written.

SUBSCRIPTION AMOUNT:

Principal Amount of Note:

$5,505,000.00

Purchase Price:

$5,000,000.00

INVESTOR:

ILIAD RESEARCH AND TRADJNG, L.P.

By: Iliad Management, LLC, its General Partner

By: Fife Trading, Inc., its Manager

By: /s/ John M. Fife

President

COMPANY:

By:|/s/ Leslie J. Goldman

Senior VP General Counsel

ATTACHED EXHIBITS:

Exhibit A

Note

ExhibitB

Secretary's Certificate

Exhibit C

Arbitration Provisions

[Signature Page to Note Purchase Agreement]


PROMISSORY NOTE

U.S. $5,505,000.00

August 14, 2020

FOR VALUE RECEIVED, Northwest Biotherapeutics, Inc., a Delaware corporation ("Borrower"), promises to pay in lawful money of the United States of America to the order of Iliad Research and Trading, L.P., a Utah limited partnership, or its successors or assigns ("Lender"), the principal sum of $5,505,000.00, together with all other amounts due under this Promissory Note (this "Note"). This Note is issued pursuant to that certain Note Purchase Agreement of even date herewith between Borrower and Lender (the "Purchase Agreement").

1.            PAYMENT. Borrower shall pay to Lender the entire outstanding balance of this Note on or before the date that is twenty-one (21) months from the date hereof (the "Maturity Date"). Borrower will make all payments of sums due hereunder to Lender at Lender's address set forth in the Purchase Agreement, or at such other place as Lender may designate in writing. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs and late charges, then to accrued interest and finally to principal.

2.            INTEREST. Interest shall accrue on the outstanding balance of this Note at the rate of eight percent (8%) per annum from the date hereof until this Note is paid in full. Upon the occurrence of an Event of Default (as defined below), interest shall accrue on the outstanding balance of this Note at the lesser of the rate of fifteen percent (15%) per annum or the maximum rate permitted by applicable law. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note.

3.            ORIGINAL ISSUE DISCOUNT; TRANSACTION EXPENSES. This Note carries an original issue discount of $500,000.00. In addition, Borrower agrees to pay $5,000.00 to Lender to cover Lender's legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note, all of which amounts are included in the initial principal balance of this Note and are fully earned and payable as of the date hereof.

4.            PREPAYMENT. Borrower may pay all or any portion of the amount owed earlier than it is due; provided that in the event Borrower elects to prepay all or any portion of the outstanding balance, it shall pay to Lender 115% of the portion of the outstanding balance Borrower elects to prepay. Early payments of less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's remaining obligations hereunder.

5.            REDEMPTIONS. Beginning on the date that is seven (7) months from the date hereof and at the intervals indicated below until this Note is paid in full, Lender shall have the right to redeem up to one fourteenth (1/14) of the principal and accrued interest then outstanding for each month remaining on the term of the Note (each monthly exercise, a "Monthly Redemption Amount") by providing written notice (each, a "Monthly Redemption Notice") delivered to Borrower by facsimile, email, mail, overnight courier, or personal delivery; provided, however, that if Lender does not exercise any Monthly Redemption Amount in its corresponding month then such Monthly Redemption Amount shall be available for Lender to exercise in any future month in addition to such future month's Monthly Redemption Amount.


Upon receipt of any Monthly Redemption Notice, Borrower shall pay the applicable Monthly Redemption Amount multiplied by 110% in cash to Lender within five (5) business days of Borrower's receipt of such Monthly Redemption Notice.

6.            EVENT OF DEFAULT. The occurrence of any of the following shall constitute an "Event of Default" under this Note:

(a)          Failure to Pay. Borrower shall fail to pay when due, whether at stated maturity, upon acceleration or otherwise, any principal or interest payment, or any other payment required under the terms ofthis Note on the date due.

(b)          Breaches of Covenants. Borrower or any other person or entity defaults or otherwise fails to observe or perform any covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document (as defined in the Purchase Agreement).

(c)          Representations and Warranties. Any representation or warranty made by Borrower to Lender in this Note, the Purchase Agreement, any other Transaction Document, or any related agreement shall be false, incorrect, incomplete or misleading in any material respect when made or furnished.

(d)          Voluntary Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its or any of its creditors, (iii) be dissolved or liquidated, or (iv) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it.

(e)          Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator, or custodian of Borrower or of all or a substantial part of its property, or an involuntary case or other proceedings seeking liquidation, reorganization, or other relief with respect to Borrower or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within sixty (60) days of commencement.

(f)           Judgment. A judgment or judgments for the payment of money in excess of the sum of $500,000.00 in the aggregate shall be rendered against Borrower and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid   or undischarged for more than sixty (60) days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal from such judgment.

(g)          Attachment. Any execution or attachment shall be issued whereby any substantial part of the property of Borrower shall be taken and the same shall not have been vacated or stayed within thirty (30) days after the issuance thereof.

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(h)           Cross Default. Borrower breaches or any event of default occurs under any term or provision of any Other Agreement (as defined hereafter). For purposes hereof, "Other Agreement" means collectively, all existing and future agreements and instruments between, among or by Borrower, on the one hand, and Lender, on the other hand.

7.            ACCELERATION; REMEDIES.

(a)           At any time following the occurrence of an Event of Default (other than an Event of Default referred to in Sections 6(d) and 6(e)), Lender may, by written notice to Borrower, declare all unpaid principal, plus all accrued interest and other amounts due hereunder to be immediately due and payable at the Mandatory Default Amount (as defined below) without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in Sections 6(d) and 6(e). immediately and without notice, all outstanding unpaid principal, plus all accrued interest and other amounts due hereunder shall automatically become immediately due and payable at the Mandatory Default Amount, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, Lender may exercise any other right, power or remedy permitted to it by law, either by suit in equity or by action at law, or both. For purposes hereof, the term "Mandatory Default Amount" means an amount equal to 115% of the outstanding balance of this Note (which outstanding balance, for avoidance of doubt, shall include principal, interest, fees and any previously incurred prepayment penalty or redemption premium) as of the date the applicable Event of Default occurred, plus all interest, fees, and charges that may accrue on such outstanding balance thereafter.

(b)          Upon the occurrence of a Change in Control (as defined below), and without further notice to Borrower, all unpaid principal, plus all accrued interest, original issue discount, and other amounts due hereunder, shall become immediately due and payable. For purposes hereof, a "Change in Control" means a sale of all or substantially all of Borrower's assets, or a merger, consolidation, or other capital reorganization of Borrower with or into another company, and does not include a significant equity financing; provided however that a merger, consolidation, or other capital reorganization in which the holders of the equity of Borrower outstanding immediately prior to such transaction continue to hold (either by the voting securities remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of Borrower, or such surviving entity, outstanding immediately after such transaction shall not constitute a Change in Control.

8.            UNCONDITIONAL OBLIGATION; NO OFFSET. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter against Lender, its successors and assigns, and agrees to make all payments due hereunder in accordance with the terms ofthis Note.

9.            NO USURY. Notwithstanding any other provision contained in this Note or in any instrument given to evidence the obligations evidenced hereby: (a) the rates of interest and charges provided for herein and therein shall in no event exceed the rates and charges which

3


result in interest being charged at a rate equaling the maximum allowed by law; and (b) if, for any reason whatsoever, Lender ever receives as interest in connection with the transaction of which this Note is a part an amount which would result in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder and not toward payment of interest.

10.          ATTORNEYS' FEES. If this Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender otherwise takes action to collect overdue amounts due under this Note or to enforce the provisions of this Note, then Borrower shall pay the reasonable costs incurred by Lender for such collection, enforcement or action including, without limitation, reasonable attorneys' fees and disbursements.

11.          GOVERNING LAW; VENUE. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.

12.          ARBITRATION OF DISPUTES. Borrower agrees that any dispute arising under this Note shall be subject to the Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

13.          WAIVERS. Borrower hereby waives presentment, notice of nonpayment, notice of dishonor, protest, demand and diligence.

14.          LOSS OR MUTILATION. On receipt by Borrower of evidence reasonably satisfactory to Borrower of the loss, theft, destruction or mutilation of this Note and, in the case of any such loss, theft or destruction of this Note, on delivery of an indemnity agreement reasonably satisfactory in form and amount to Borrower or, in the case of any such mutilation, on surrender and cancellation of such Note, Borrower at its expense will execute and deliver, in lieu thereof, a new Note oflike amount and tenor.

15.          NOTICES. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled "Notices" in the Purchase Agreement, the terms of which are incorporated herein by this reference.

16.          AMENDMENT AND WAIVER. This Note and its terms and conditions may be

amended, waived or modified only in writing by Borrower and Lender.

17.          SEVERABILITY. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Note shall remain in full force and effect.

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18.          ASSIGNMENTS. Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned or transferred by Lender without the consent of Borrower.

19.          FINAL NOTE. This Note, together with the other Transaction Documents, contains the complete understanding and agreement of Borrower and Lender and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations. THIS NOTE, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

20.          WAIVER OF JURY TRIAL. BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, BORROWER ACKNOWLEDGES THAT IT KNOWINGLY AND VOLUNTARILY IS WAIVING SUCH PARTY'S RIGHT TO DEMAND TRIAL BY JURY.

21.          TIME IS OF THE ESSENCE. Time is of the essence of this Note and each and every provision hereof in which time is an element.

22.          LIQUIDATED DAMAGES. Lender and Borrower agree that in the event Borrower fails to comply with any of the tenns or provisions of this Note, Lender's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability to predict future interest rates and other relevant factors. Accordingly, Lender and Borrower agree that any fees, balance adjustments, default interest or other charges assessed under this Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages.

[Remainder of page intentionally left blank]

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IN WI1NESS WHEREOF, Borrower has caused this Note to be issued as of the date first set forth above.

BORROWER:

NORTHWEST BIOTHERAPEUTICS, INC.

/s/ Leslie J. Goldman

Title: Senior Vic President, General Counsel

[Signature Page to Promissory Note]


EXHIBITC

ARBITRATION PROVISIONS

1.     Dispute Resolution. For purposes of this Exhibit C. the term "Claims" means any disputes, claims, demands, causes of action, requests for injunctive relief, requests for specific  performance,  liabilities, damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. The term "Claims" specifically excludes a dispute over Calculations. The parties to the Agreement (the "parties") hereby agree that the arbitration provisions set forth in this Exhibit C ("Arbitration Provisions")  are binding on each of them. As a result, any attempt to rescind  the Agreement  (or these Arbitration  Provisions)  or declare the Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable for any reason is subject to these Arbitration  Provisions. These Arbitration  Provisions  shall also survive any termination or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in the Agreement.

2.    Arbitration. Except as otherwise provided herein, all Claims must be submitted to arbitration ("Arbitration") to be conducted exclusively in Salt Lake County or Utah County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right  provided  for  in Paragraph 5 below (the "Appeal  Right"), the  parties agree that the award of the  arbitrator rendered pursuant to Paragraph 4 below (the "Arbitration Award") shall be (a) final and binding upon the  parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys' fees, incurred in connection with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Arbitration Award shall include default interest (as defined or otherwise provided for in the  Note, "Default Interest") (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake County, Utah.

3.    The Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act, U.C.A. § 788-11-101 et seq. (as amended or superseded from time to time, the "Arbitration Act"). Notwithstanding the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict or variation between the terms of these Arbitration Provisions and the provisions of the  Arbitration Act, the  terms of these Arbitration  Provisions shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the  Arbitration  Act that may conflict with or vary from these Arbitration Provisions.

4.     Arbitration Proceedings. Arbitration between the parties will be subject to the following:

4.1       Initiation of Arbitration. Pursuant to Section 110 of the  Arbitration Act, the  parties agree that a party may initiate Arbitration by giving written notice to the other party ("Arbitration Notice") in the same manner that notice is permitted under Section 7.12 of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of  the  date that the Arbitration Notice is deemed delivered to such other party under Section 7.12 of the Agreement (the "Service Date"). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 7.12 of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the Utah Rules of Civil Procedure.

Arbitration Provisions, Page 1


4.2          Selection and Payment of Arbitrator.

(a)   Within ten (10) calendar days after the Service Date, Investor shall select and submit to Company the names of three (3) arbitrators that are designated as "neutrals" or qualified arbitrators by Utah ADR Services (http :// www.utahadrse rvices.com)  (such three (3) designated  persons hereunder are referred to herein as the "Proposed Arbitrators"). For the avoidance of doubt, each Proposed Arbitrator must be qualified as a "neutral" with Utah ADR Services. Within five (5) calendar days after Investor has submitted to Company the names of the Proposed Arbitrators, Company must select, by written notice to Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Company fails to select one of the Proposed  Arbitrators in writing within such 5-day period, then  Investor may select the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Company.

(b)  If Investor fails to submit to Company the Proposed Arbitrators within ten (10) calendar days after the Service Date pursuant to subparagraph  (a) above, then  Company  may at  any time prior to Investor so designating the Proposed Arbitrators, identify the names of three (3) arbitrators that are designated as "neutrals" or qualified arbitrators by Utah ADR Service by written notice to Investor. Investor may then, within five (5) calendar days after Company has submitted notice of its Proposed Arbitrators to Investor, select, by written notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Investor fails to select in writing and within such 5-day period one (1) of the three (3) Proposed Arbitrators selected by Company, then Company may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to Investor.

(c)  If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph 4.2.

(d)  The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve as the arbitrator hereunder is referred to herein as the "Arbitration Commencement Date". If an arbitrator resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue the Arbitration.  If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association.

(e)  Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.

4.3      Applicability of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of Civil Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties' intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between the Utah Rules of Civil Procedure ortheUtah Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall control.

4.4      Answer and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline, the  arbitrator must provide written  notice to  the defaulting  party stating that the arbitrator  will enter a default award  against such  party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the  Arbitration  Notice, against a party that fails to submit an answer within such time period.

Arbitration Provisions, Page 2


4.5      Related Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal proceedings with any state or federal court sitting in Salt Lake County, Utah ("Litigation Proceedings"), subject to the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration Notice, provided that an additional cause of action to compel arbitration  will also be included therein, (b) so long as the  other party files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation Proceedings will be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable)  hereunder, (c) if the  other party fails to file an answer in the Litigation  Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration shall be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any legal or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation Proceedings pursuant to the Arbitration Act.

4.6      Discovery. Pursuant to Section 118(8) of the Arbitration  Act, the  parties agree that discovery shall be conducted as follows:

(a)  Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration. The party seeking written  discovery shall always have the  burden of showing that all of the  standards and limitations  set  forth in these Arbitration Provisions are  satisfied. The scope of discovery in the Arbitration  proceedings shall also be limited as follows:

(i)       To facts directly connected with the transactions contemplated by the Agreement.

(ii)      To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less expensive than in the manner requested.

(b)   No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission (including discrete subparts), (iii) more than ten

(10) document requests (including discrete subparts),  or  (iv)  more than three (3) depositions  (excluding expert depositions)  for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by the party taking the  deposition. The party defending  the  deposition  will submit a notice to the party taking the deposition of the estimated attorneys' fees that such party expects to incur in connection with defending the deposition. If the  party defending the deposition fails to submit an estimate of attorneys' fees within five (5) calendar days of its receipt of a deposition notice, then such party shall be deemed to have waived its right to the estimated attorneys' fees. The party taking the  deposition  must  pay  the  party defending the deposition the estimated attorneys' fees prior to taking the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys' fees are unreasonable, such  party  may  submit  the  issue  to  the arbitrator for a decision. All depositions will be taken in Utah.

(c)  All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator and the  other  party.  The  party  submitting  the  written discovery requests must include with such discovery requests a detailed explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed

discovery requests, to submit to the arbitrator an estimate of the attorneys' fees and costs associated with responctlng to such written discovery requests and a written challenge to each applicable discovery request. After  receipt  of an  estimate  of attorneys'  fees and  costs and/or  challenge(s)  to  one or  more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding as to the likely attorneys' fees and costs associated with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay the attorneys' fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within twenty-five (25) calendar days of the arbitrator's finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys' fees and costs and/or a challenge to discovery requests fails to do so within such 5-day period, the arbitrator will make a finding that (A) there are no attorneys' fees or costs associated with responding to such discovery requests,

Arbitration Provisions, Page 3


and (B) the responding party must respond to such discovery requests (as may be limited by the arbitrator) within twenty-five (25) calendar days of the arbitrator's finding with respect to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys' fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above.

(d)   In order to allow a written discovery request, the  arbitrator  must find  that  the discovery request satisfies the standards set forth in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request does  not satisfy  any of  the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure, the arbitrator may modify such discovery request to satisfy the applicable  standards, or strike such  discovery  request  in whole or in part.

(e)  Each party may submit expert reports  (and  rebuttals thereto), provided  that such reports  must be submitted within sixty (60) days of the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following:  (i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the expert's name and qualifications, including a list of all the expert's publications within the preceding ten (10) years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten  (10) years; and (iii) the compensation  to be paid for the expert's report and testimony. The parties are entitled  to depose any other  party's expert witness  one (1)  time for no more than  four (4) hours. An expert may not testify in a party's case-in-chief concerning any matter not fairly disclosed in the expert report.

4.6      Dispositive Motions.  Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of Civil Procedure (a "Dispositive Mot ion"). The party submitting the Dispositive Motion may, but  is not required  to, deliver to the arbitrator and to the other party a memorandum in support (the "Memorandum in Support") of the Dispositive Motion. Within seven (7) calendar days of delivery of the  Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum in opposition to the Memorandum in Support (the "Memorandum in Opposition"). Within seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition ("Reply Me morandum"). If the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.

4.7       Confidentiality. All information disclosed by either party (or such party's agents) during the Arbitration process (including without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including without limitation during the discovery  process or any Appeal)  unless (a) prior to or after the time of disclosure such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving party's agents, representatives and legal counsel on a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon the written request of either party.

4.8      Authorization; Timing; Scheduling Order. Subject to all other portions of  these  Arbitration Provisions, the parties hereby authorize and  direct the arbitrator  to take such actions and  make such  rulings as may be necessary to carry out the parties' intent for the Arbitration proceedings to be efficient and expeditious. Pursuant to Section 120  of the  Arbitration Act, the  parties hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and  directed to  hold a scheduling conference within ten (10)

Arbitration Provisions, Page 4


calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the  parties to enable the arbitrator to render a decision prior to the end of such 120-day period.

4.9       Relief The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator may not award exemplary or punitive damages.

4.10     Fees and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and (b) reimburse the prevailing party for all reasonable attorneys' fees, arbitrator costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.

5.    Arbitration Appeal.

5.1       Initiation of Appeal. Following the entry of the Arbitration Award, either party (the "Appellant") shall have a period of thirty (30) calendar days in which to notify the other party (the "Appellee"), in writing, that the Appellant elects to appeal (the "Appeal")  the  Arbitration Award (such notice, an "Appeal Notice") to a panel of arbitrators as provided in Paragraph  5.2  below.  The date the Appellant delivers an Appeal  Notice to the Appellee is referred to herein as the "Appeal  Date". The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect to delivery of an Arbitration Notice.  In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing.  In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set  forth herein, will not be further conditioned.   In the  event a party does not deliver an Appeal Notice (along with proof of payment of the  applicable bond) to the other party within the  deadline prescribed  in this Paragraph  5.1, such  party shall lose its right to appeal the Arbitration Award. If no party delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph 5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties' agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.

5.2      Selection and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration panel (the "Appeal Panel").

(a)       Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the  names of five (5) arbitrators  that are designated  as "neutrals" or qualified arbitrators  by Utah ADR Services (http: // www.utahadrse rvices.com) (such five (5) designated persons hereunder are referred to herein as the "Proposed Appeal Arbitrators"). For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a "neutral" with Utah ADR Services, and shall not be the arbitrator who rendered the Arbitration Award being appealed (the "Original Arbitrator"). Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select by v.n-itt<>n notice to the Appellee, three (3) of the Propo:sed Appeal Arbitrator:, to act a:, themembers of the Appeal Panel. If the Appellant fails to select three (3) of the  Proposed  Appeal Arbitrators in writing within such 5-day period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant.

(b)       If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as "neutralsl) or qualified arbitrators by Utah ADR Service (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five

(5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by

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written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within such 5-day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellant's list of five (5) arbitrators by providing written notice of such selection to the Appellee.

(c)      If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal Arbitrator selection process shall begin again in accordance  with this Paragraph 5.2;  provided, however, that any Proposed Appeal Arbitrators who have already agreed to serve shall remain on the Appeal Panel.

(d)      The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph 5.2 agree in writing (including via email) delivered to both the Appellant and the Appellee to  serve as members of the Appeal Panel hereunder is referred to herein as the "Appeal Commencement Date".  No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including via email) to the Appellant and the Appeal Panel the  name of one (1) of the  three (3) members of the Appeal Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon the approval or vote of no less than the majority vote of its members,  as announced  or communicated  by the  lead arbitrator on the Appeal Panel. If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration Association.

(d) Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the

Appellant.

5.3      Appeal Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrator's findings or the Arbitration Award.

5.4      Timing.

(a)      Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents filed with  the  Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellant's arguments concerning or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7) calendar days of the Appellant's delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellee's delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply

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Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless.

(b)       Subject to subparagraph  (a) above, the  parties  hereby agree that the Appeal  must be heard by the Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after  the Appeal  is heard  (and  in  no event later than sixty (60) calendar days after the Appeal Commencement Date).

5.5      Appeal Panel Award. The Appeal Panel shall issue its decision (the "Appeal Panel Award") through the lead arbitrator on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall remain in full force and effect), (b) be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings  presented or pleaded in the Arbitration, and (d) be promptly payable in United States dollars free of any tax, deduction  or offset (with respect to monetary awards). Any costs or fees, including without limitation attorneys' fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include Default Interest (with  respect to monetary awards)  at the rate specified  in the  Note for Default Interest both before and after the Arbitration Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in Salt Lake County, Utah.

5.6       Relief The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may not award exemplary or punitive damages.

5.7       Fees and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded the least amount of money by the  arbitrator,  which, for  the avoidance of doubt, shall be determined without regard to any statutory  fines,  penalties,  fees,  or  other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the  Arbitration  and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or  other charges awarded  to any part) the reasonable attorneys' fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation in connection with the Appeal).

6.     Miscellaneous.

6.1      Severability. If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified to the minimum  extent  necessary to  make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions shall remain unaffected and in full force and effect.

6.2      Governing Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles therein.

6.3       Interpretation. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation of, these Arbitration Provisions.

6.4      Waiver. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party granting the waiver.

6.5   Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.

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Exhibit 10.83

Execution Version

UNIT PURCHASE AGREEMENT

UNIT PURCHASE AGREEMENT, dated as of August 28, 2020 (this “Agreement”), among Northwest Biotherapeutics, Inc., a Delaware corporation (the “Buyer”), Flaskworks, LLC, a Massachusetts limited liability company (“Flaskworks”), and each of the other Persons (as hereinafter defined) set forth on the signature pages hereto (each, a “Seller” and collectively, the “Sellers”).

RECITALS

A.The Sellers own 100% of the issued and outstanding Units (the “Units”), of Flaskworks.

B.The Sellers wish to sell to the Buyer, and the Buyer wishes to purchase from the Sellers, the Units, upon the terms and subject to the conditions of this Agreement.

AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.1Purchase and Sale of the Units. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall sell, convey, assign, transfer and deliver the Units to the Buyer for an aggregate purchase price equal to the sum of each Seller’s Cash Closing Consideration, Stock Closing Consideration and Special Consideration, plus the Buyer-Paid Expenses, in each case, as set forth on the Closing Payment Schedule (the “Purchase Price”), to be paid as set forth in this Article.

Section 1.2Closing. The sale and purchase of the Units shall take place at a closing to be held in Boston, Massachusetts via the remote exchange of documents, effective as of 12:01 a.m., Eastern time on the date hereof, or at such other place or at such other time or on such other date as the Sellers and the Buyer mutually may agree in writing (the “Closing” and such date, the “Closing Date”).

Section 1.3Closing Actions; Closing Payments; Other Payments.

(a)

At the Closing, the Buyer shall:

(i)deliver or cause to be delivered to each applicable Seller payment in an amount equal to the Cash Closing Consideration amount(s) set forth next to such Seller’s name on the Closing Payment Schedule (or, to the extent set forth on the Closing Payment schedule, deliver or cause to be delivered to Flaskworks for distribution to the applicable Sellers through Flaskworks’ payroll system, less applicable employee income tax withholdings);


(ii)deliver or cause to be delivered to each applicable Seller rights to receive Shares with an aggregate value equal to the Stock Closing Consideration amount set forth next to such Seller’s name on the Closing Payment Schedule (such rights and the underlying Shares to be issued pursuant to, and subject to the applicable vesting and other terms set forth in, the applicable Rights Issuance Agreement);

(iii)deliver or cause to be delivered to the Sellers a counterpart to each Special Consideration Agreement, Rights Issuance Agreement, Special Expense Agreement and Installment Expense Agreement required by the Closing Payment Schedule, duly executed by the Buyer; and

(iv)on behalf of Flaskworks, deliver or cause to be delivered to each applicable recipient of Buyer-Paid Expenses payment in an amount equal to the Cash Closing Expenses amount set forth next to such Person’s name on the Closing Payment Schedule.

(b)

At the Closing, the Sellers shall deliver or cause to be delivered to Buyer:

(i)a duly executed counterpart to each Special Consideration Agreement, Rights Issuance Agreement, Special Expense Agreement, and/or Installment Expense Agreement from each of the Sellers and each recipient of Buyer-Paid Expenses, as required by the Closing Payment Schedule;

(ii)an executed certificate from each of the Sellers duly completed pursuant to Section 1446(f) of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder certifying that each such Seller is not a “foreign person” within the meaning of Section 1446(f) of the Code;

(iii)duly executed copies of the consents, waivers, approvals and authorizations of Governmental Authorities and third parties set forth on Schedule 1.3(b)(iii);

(iv)a duly executed termination agreement between Flaskworks and Corning Incorporated (“Corning”) with respect to that certain Supply Agreement between Corning and Flaskworks, as amended and supplemented to date, in form and substance reasonably satisfactory to the Buyer;

(v)duly executed letters of resignation, effective on the Closing Date, of all officers and managers/directors of Flaskworks, provided that Mr. Shashi Murthy shall resign in all capacities other than his capacity as an employee of Flaskworks;

(vi)duly executed invention assignment agreements in form and substance reasonably satisfactory to the Buyer from each of Mr. Shashi Murthy and Mr. Andrew Kozbial;

(vii)a duly executed License Agreement Amendment;

(viii)duly executed Payoff Letters with respect to each of the Employee Loans;

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(ix)instruments of transfer executed by each Seller for the Units held by such Seller, duly endorsed in blank in proper from for transfer with appropriate transfer stamps, if any, affixed; and

(x)duly executed copies of such other documents relating to Flaskworks and the transactions contemplated hereby as the Buyer may reasonably request.

(c)Other Payments. Following the Closing, the Buyer shall pay any Special Consideration, Special Expenses and Installment Expenses to the Persons, in the amounts, and in accordance with the procedures, set forth in the Closing Payment Schedule.

(d)The Buyer’s obligation to pay the Purchase Price shall be deemed satisfied upon the Buyer’s payment of the amounts specified in Section 1.3, in each case, to the Persons, in the amounts, and in accordance with the procedures, set forth on the Closing Payment Schedule, and the Buyer shall not be responsible or liable to any Person with respect to the division of such amounts among the Sellers or the recipients of payments made on account of Buyer-Paid Expenses.

(e)All payments hereunder (including with respect to payments, if any, made pursuant to Article VI hereof) shall be made by wire transfer of immediately available funds in United States dollars to such account(s) as may be designated to the payor by the payee(s) at least five business days prior to the applicable payment date. The Buyer shall be entitled to rely in all respects on the Closing Payment Schedule in making all payments due under this Agreement (including with respect to payments, if any, made pursuant to Article VI hereof), and the Buyer shall not be responsible or have any liability to any Person for any inaccuracy thereof or omission therein. Each Seller hereby acknowledges that such Seller does not have any right or claim to any consideration with respect to its Units or in connection with the transactions contemplated hereby other than that set forth beside such Seller’s name in the Closing Payment Schedule (except to the extent that Seller ultimately is owed any amounts pursuant to Article VI).

Section 1.4Waiver; Termination of Agreements; New Operating Agreement. Except as contemplated by Section 5.5, each Seller, by his, her or its execution of this Agreement or acceptance of the portion of the Purchase Price allocated to such Seller on the Closing Payment Schedule, hereby waives (i) any required notice, if any, to which such Person is entitled (including under Flaskworks’ governing documents, the Equity Documents, the Delaware General Corporation Law, as amended, the Massachusetts Limited Liability Company Act, as amended (collectively, “State Law”) and any agreement, arrangement or understanding or other Law pursuant to which such Person may have rights or be bound) in connection with this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby; (ii) any period of time that is required to elapse (including under Flaskworks’ governing documents, the Equity Documents, State Law and any agreement, arrangement or understanding or other Law pursuant to which such Person may have rights or be bound) before the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby, if any; and (iii) any and all pre-emptive rights, rights of first refusal, co-sale or other rights of any kind it may have under the Equity Documents as a result of, or in connection with this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby (for the

3


avoidance of doubt, including any rights pursuant to Section 2.11(c) of the Flaskworks LLC Agreement). Effective as of immediately prior to the Closing, without any further action by any party hereto, each Equity Document is hereby terminated in its entirety and no party thereto shall have any further rights or obligations thereunder. Upon the Closing, without any further action on the part of any party, the Flaskworks LLC Agreement shall be replaced in its entirety with the form of limited liability company agreement attached hereto as Exhibit F, with Buyer as the sole member of Flaskworks (the “New Flaskworks LLC Agreement”).

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each of the Sellers, severally and not jointly, hereby represents and warrants to the Buyer as follows:

Section 2.1Organization and Qualification. If such Seller is a legal entity, such Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all necessary corporate power and authority to own the Units owned by it.

Section 2.2Authority. If such Seller is a legal entity, such Seller has full corporate, power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. If such Seller is a natural person, such Seller has legal capacity to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. If such Seller is a legal entity, the execution, delivery and performance by the Seller of this Agreement and each Ancillary Agreement to which it is a party, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate action on the part of such Seller, and this Agreement and each Ancillary Agreement to which it is a party have been duly executed and delivered by such Seller and, assuming due authorization, execution and delivery by the Buyer, are legal, valid, binding and enforceable upon and against such Seller (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity). If such Seller is a natural person, this Agreement and each Ancillary Agreement to which it is a party have been duly executed and delivered by such Seller and, assuming due authorization, execution and delivery by the Buyer, are legal, valid, binding and enforceable upon and against such Sellers (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity). If such Seller is married, and any of the Units of such Seller constitute community property or otherwise need spousal or other approval for this Agreement to be legal, valid and binding, this Agreement and each Ancillary Agreement to which it is a party has been duly and validly executed and delivered by such Seller’s spouse and, assuming due authorization, execution and delivery by the Buyer, constitute legal, valid and binding obligations of such Seller’s spouse, enforceable upon and against such Seller’s spouse, (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity).

4


Section 2.3No Conflict; Required Filings and Consents. The execution, delivery and performance by such Seller of this Agreement and each of the Ancillary Agreements and the consummation by such Seller of the transactions contemplated hereby and thereby do not and will not (a) violate any provision of the organizational documents of such Seller; (b) violate in any material respect any federal, state or local statute, law, regulation, order, injunction or decree (“Law”) applicable to such Seller; (c) conflict with, create a breach or default under, require any consent of or notice to or give to any third party any right of modification, acceleration or cancellation, or result in the creation of any lien, security interest, charge or encumbrance upon any property or right of such Seller or upon any Units, pursuant to, any Contract, agreement, license, permit or other instrument to which such Seller is a party or by which such Seller’s properties, assets (including the Units) or rights may be bound, affected or benefited, except for any such breaches, defaults or other occurrences that, individually or in the aggregate, are not and would not reasonably be expected to have a Material Adverse Effect; (d) allow the imposition of any material fees or penalties or require the offering or making of any payment to a third party on the part of such Seller; or (e) assuming the accuracy of the representations and warranties made by the Buyer in Article IV hereof, require any consent or approval of, registration or filing with, or notice to any federal, state or local governmental authority or any agency or instrumentality thereof (a “Governmental Authority”), except in the case of clause (e) for such consents, approvals, registrations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to materially impair, or prevent or materially delay, the ability of such Seller to consummate transactions contemplated by this Agreement and the Ancillary Agreements.

Section 2.4Units. Such Seller is the record and beneficial owner of its respective Units, free and clear of any charge, limitation, condition, mortgage, lien, security interest, adverse claim, encumbrance or restriction of any kind (collectively, “Encumbrances”). Such Seller has the right, authority and power to sell, convey, assign, transfer and deliver the Units owned by such Seller to the Buyer. Upon delivery to the Buyer of executed instruments of transfer for the Units at the Closing and the Buyer’s payment of the Purchase Price, the Buyer shall acquire good, valid and marketable title to the Units, free and clear of any Encumbrance.

Section 2.5Litigation. There is no claim, action, suit, proceeding, inquiry, investigation or arbitration by or before any governmental, regulatory, administrative, judicial or arbitral body (an “Action”) pending or to the best knowledge of such Seller threatened (a) to restrain or prevent the consummation of the transactions contemplated hereby; or (b) that might affect the right of the Buyer to own and vote such Seller’s Units, nor is there any basis for any of the foregoing. There is no outstanding or to the best knowledge of such Seller threatened order, writ, judgment, injunction, decree, determination or award of, or investigation by, any Governmental Authority relating to such Seller with respect to Flaskworks, or any of Flaskworks’ properties or assets, any of its officers or managers or members or the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 2.6Brokers. No broker, finder or agent will have any claim against the Buyer (or after the Closing, Flaskworks) for any fees or commissions in connection with the transactions contemplated by this Agreement and each of the Ancillary Agreements based on arrangements made by or on behalf of such Seller.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF FLASKWORKS

Flaskworks hereby represents and warrants to the Buyer as follows:

Section 3.1Organization and Qualification. Flaskworks is a limited liability company duly organized, validly existing and in good standing under the laws of Massachusetts, and has full limited liability company power and authority to own, lease and operate its properties and to carry on its business. Flaskworks is duly qualified or licensed as a foreign limited liability company to do business, and is in good standing, in each jurisdiction where the character of its properties or the nature of its business makes such qualification or licensing necessary, except as has not, or would not reasonably be expected to materially impair the ability of Flaskworks or the Sellers to timely consummate, or prevent, any of the transactions contemplated by this Agreement or the Ancillary Agreements or to have, individually or in the aggregate, a material adverse effect on the business, properties, financial condition or results of operations of Flaskworks (a “Material Adverse Effect”).

Section 3.2Authority. Flaskworks has full limited liability company power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Flaskworks of this Agreement and each Ancillary Agreement to which it is a party, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary limited liability company action on the part of Flaskworks, and this Agreement and each Ancillary Agreement to which it is a party have been duly executed and delivered by Flaskworks and, assuming due authorization, execution and delivery by the Buyer, are legal, valid, binding and enforceable upon and against Flaskworks (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity).

Section 3.3No Conflict; Required Filings and Consents. The execution, delivery and performance by Flaskworks of this Agreement and each of the Ancillary Agreements and the consummation by Flaskworks of the transactions contemplated hereby and thereby do not and will not (a) violate any provision of the certificate of formation (as amended to date, the “Certificate”) or the amended and restated limited liability company agreement of Flaskworks (as amended to date, the “Flaskworks LLC Agreement”); (b) violate in any material respect any Law applicable to Flaskworks; (c) conflict with, create a breach or default under, require any consent of or notice to or give to any third party any right of modification, acceleration or cancellation, or result in the creation of any lien, security interest, charge or encumbrance upon any property or right of the Sellers or Flaskworks pursuant to, any Contract, agreement, license, permit or other instrument to which the Sellers or Flaskworks is a party or by which the Sellers, Flaskworks or any of Flaskworks’ properties, assets or rights may be bound, affected or benefited, except for any such breaches, defaults or other occurrences that, individually or in the aggregate, are not and would not reasonably be expected to have a Material Adverse Effect; (d) allow the imposition of any material fees or penalties or require the offering or making of any payment to a third party on the part of Flaskworks; or (e) assuming the accuracy of the representations and warranties made by the Buyer in Article IV hereof, require any consent or

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approval of, registration or filing with, or notice to any Governmental Authority, except in the case of clause (e) for such consents, approvals, registrations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to materially impair the ability of Flaskworks or the Sellers to timely consummate, or prevent, any of the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 3.4Capitalization. Schedule 3.4 sets forth a complete and accurate list, as of the date hereof, of all record owners of the issued and outstanding Units (of any and all classes), indicating the respective number and class of Units held by each. Except for the Units, Flaskworks has not issued or agreed to issue any (a) Units or other equity, ownership or voting interests; (b) securities or instruments convertible into or exchangeable for Units or other equity, ownership or voting interests; or (c) equity-equivalents, earnings, profits or revenue-based or equity-based rights. All Units have been duly authorized and validly issued, are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. Other than the rights under to the Equity Documents that are waived pursuant to Section 1.4 hereof, there are no outstanding obligations of Flaskworks to issue, sell, transfer, repurchase or redeem any Units or other equity interests of Flaskworks, or any securities or instruments convertible into or exchangeable for or that otherwise give rights with respect to Units or other equity interests of Flaskworks, or that relate to the holding, voting or disposition thereof. No Units have been issued in violation of any rights, agreements, commitments or arrangements under applicable Law, the Certificate, the Flaskworks LLC Agreement or any Contract or agreement to which Flaskworks is a party or by which it is bound. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Units. Flaskworks has obtained valid waivers with respect to any rights by other parties to purchase any of the Units covered by this Agreement.

Section 3.5Subsidiaries. Flaskworks does not presently own or control, directly or indirectly, any interest in any other entity of any type. Flaskworks is not a participant in any joint venture, partnership or similar arrangement.

Section 3.6Financial Statements.

(a)True and complete copies of the unaudited balance sheet of Flaskworks as at December 31, 2018, December 31, 2019, and the related unaudited statements of income, retained earnings, unitholders’ equity and changes in financial position of Flaskworks, together with all related notes and schedules thereto (collectively referred to as the “Financial Statements”) and the unaudited balance sheet of Flaskworks as at April 30, 2020, and the related statements of income, retained earnings, unitholders’ equity and changes in financial position of Flaskworks, together with all related notes and schedules thereto (collectively referred to as the “Interim Financial Statements”) are attached hereto as Schedule 3.6(a). Each of the Financial Statements and the Interim Financial Statements (i) accurately reflect and have been prepared in accordance with the books and records of Flaskworks, (ii) have been prepared in accordance with United States GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (iii) fairly present, in all material respects, the financial position, results of operations and cash flows of Flaskworks as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and

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subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments that will not, individually or in the aggregate, be material.

(b)The books of account and financial records of Flaskworks are true and correct and have been prepared and are maintained in accordance with sound accounting practice. Flaskworks has not made any changes in its accounting practice since December 31, 2019.

Section 3.7Absence of Undisclosed Liabilities. Except as and to the extent adequately accrued or reserved against in the audited balance sheet of Flaskworks as at December 31, 2019 (such balance sheet, together with all related notes and schedules thereto, the “Balance Sheet”), Flaskworks has no liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, known or unknown and whether or not required by United States GAAP to be reflected on a balance sheet of Flaskworks, except for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet that are not, individually or in the aggregate in excess of $20,000.

Section 3.8Absence of Certain Changes or Events. Since the date of the Balance Sheet: (a) Flaskworks has conducted its business only in the ordinary course consistent with past practice; (b) no event or development has had, or would reasonably be expected to have, individually or in the aggregate a Material Adverse Effect; (c) Flaskworks has not suffered any loss, damage, destruction or other casualty affecting any of its material properties or assets, whether or not covered by insurance; and (d) Flaskworks has preserved substantially intact its business organization and assets, has kept available the services of its current officers, employees and consultants and has preserved the goodwill of its customers, suppliers and employees. Since the date of the Balance Sheet, the Sellers have not caused Flaskworks to, and Flaskworks did not, (i) declare, set aside, make or pay any dividend or other distribution on or with respect to any of Flaskworks’ units or other equity or ownership interest, (ii) accelerate the collection of or discount any accounts receivable, delay the payment of accounts payable or defer expenses or capital expenditures, reduce inventories, or otherwise increase cash on hand, (iii) make any payments to Related Parties pursuant to Contract or otherwise or (iv) or make any other changes in the management of working capital, or modify practices with respect thereto.

Section 3.9Compliance with Law; Permits. Flaskworks is and has been since January 28, 2016 in compliance in all material respects with all Laws applicable to it and there is no investigation pending, or to the best knowledge of the Sellers, threatened by any Governmental Authority regarding a material violation of any such Law. Flaskworks is in possession of all permits, licenses and other authorizations of any Governmental Authority (“Permits”) necessary for it to own, lease and operate its properties and to carry on its business as currently conducted, and is and has been in compliance in all material respects with all such Permits. To the best knowledge of the Sellers, there is no basis for the revocation or withdrawal of any Permit. Flaskworks will continue to have the use and benefit of all Permits following the consummation of the transactions contemplated hereby.

Section 3.10Litigation. There is no Action pending or to the best knowledge of the Sellers threatened (a) affecting Flaskworks, its officers or directors in regards to their actions as such, its assets or its business; (b) to restrain or prevent the consummation of the transactions

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contemplated hereby; or (c) that might affect the right of the Buyer to own and vote the Units, nor is there any basis for any of the foregoing. There is no outstanding or to the best knowledge of the Sellers threatened order, writ, judgment, injunction, decree, determination or award of, or investigation by, any Governmental Authority relating to Flaskworks, any of its properties or assets, any of its officers or managers or members or the transactions contemplated by this Agreement or the Ancillary Agreements. There is no Action initiated by Flaskworks pending, or which Flaskworks or any of its subsidiaries has commenced preparations to initiate, against any other Person. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened in writing (or any basis therefor known to Flaskworks) involving the prior employment of any of Flaskworks’ employees, their services provided in connection with Flaskworks’ business, any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers.

Section 3.11Employee Benefit Plans. Except as set forth on Schedule 3.11, there are no current employment Contracts or consulting agreements by which Flaskworks is bound, and no deferred compensation, bonus, incentive compensation, option, severance or termination pay agreement or plan or any other employee benefit plan, agreement, arrangement or commitment, whether formal or informal, maintained, entered into or contributed to, or which is required to be maintained, entered into or contributed to, by Flaskworks for the benefit of any current or former employee, officer or director of Flaskworks, or with respect to which Flaskworks has any liability, contingent or otherwise (collectively, “Benefit Plans”). None of the Benefit Plans is a multiemployer plan (as defined in Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), is subject to Title IV of ERISA or Section 412 of the Code, or provides post-employment welfare benefits (except to the extent required by Section 4980B of the Code). All of the Benefit Plans currently comply, and have complied in the past, both as to form and operation, with the terms of such Benefit Plans and with the applicable provisions of ERISA, the Code and other applicable Law.

Section 3.12Labor and Employment Matters. Flaskworks is not a party to any Contract or collective bargaining agreement with any labor organization. No organization or representation question, labor dispute or unfair labor practice or complaint is pending or has been threatened in the past five years.

Section 3.13Real and Personal Property.

(a)Flaskworks does not own any Real Property. Schedule 3.13 sets forth a true and complete list of all real property and interests in real property leased or subleased by Flaskworks or which Flaskworks otherwise has a right to use or occupy (the “Real Property”). Flaskworks has good and marketable leasehold title to all Real Property, in each case together with all plants, buildings, improvements and fixtures thereon, free and clear of all Encumbrances, other than Encumbrances for current taxes not yet past due and Encumbrances that do not, individually or in the aggregate, materially impair the ownership, use and operation of the related assets (collectively, “Permitted Encumbrances”). No parcel of Real Property is or is to the best knowledge of the Sellers threatened to (i) become subject to any governmental decree or order to be sold or is or (ii) be condemned, expropriated or otherwise taken by any public authority. True and complete copies of all leases (including all amendments) in respect of

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or affecting any Real Property have been delivered to the Buyer. Flaskworks has valid licenses and/or permits to operate on the Real Property listed in Schedule 3.13(a).

(b)Flaskworks has good and valid title to or a valid leasehold interest in all of its personal property, including all personal property reflected on the Balance Sheet or acquired in the ordinary course of business since the date of the Balance Sheet, except for any personal property sold or otherwise disposed of for fair value since the date of the Balance Sheet in the ordinary course of business consistent with past practice. None of the personal property owned or leased by Flaskworks is subject to any Encumbrance other than Permitted Encumbrances. Each item of tangible personal property of Flaskworks is in all material respects in good operating condition and repair, ordinary wear and tear excepted, and is adequate for the uses to which it is being put.

(c)The assets owned or leased by Flaskworks constitute all of the assets necessary for Flaskworks to carry on its business as currently conducted.

Section 3.14Taxes. Flaskworks has filed all income and other material tax returns and other reports required of it under all federal, state, local and foreign tax laws and there are in effect no waivers of applicable statutes of limitations with respect to taxes for any year. All such returns and reports are correct and complete in all material respects. Flaskworks has paid in full all taxes and other material amounts due thereunder, including without limitation all taxes that Flaskworks is obligated to withhold from amounts paid or payable to or benefits conferred upon employees, creditors and third parties. There are no accrued and unpaid federal, state, country, local or foreign taxes of Flaskworks that exceed the reserve for tax liability set forth on the face of the Interim Financial Statements. There have been no tax examinations or audits of Flaskworks, nor are any in progress. Flaskworks has not agreed, nor is it required, to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of state or local law by reason of a change of accounting method initiated by it or any other relevant party. Flaskworks is not and has not been a party to any “listed transaction” as defined in Treasury Regulation Section 1.6011-4(b)(2) or to any other transaction that is a “reportable transaction” pursuant to Treasury Regulation Section 1.6011-4(b). Flaskworks has not applied for or received a loan pursuant to the Paycheck Protection Program as established under Title I of the Coronavirus Aid, Relief, and Economic Security Act, Pub.L. 116–136 (116th Cong.) (Mar. 27, 2020), requested or received any tax credits under any Stimulus Legislation, or deferred any payment of taxes under any Stimulus Legislation, Internal Revenue Service Notice 2020-18, Internal Revenue Service Notice 2020-20, or Internal Revenue Service Notice 2020-23.

Section 3.15Environmental Matters.

(a)(i) Neither Flaskworks, the Sellers nor to the best knowledge of the Sellers any previous owner, occupant or user of any Real Property or any other Person has engaged in or permitted any operation or activity at or upon, or any use or occupancy of, any Real Property that has resulted in a Release of any Hazardous Materials on, under, in or about any Real Property, or involved the generation, manufacture, storage, treatment or disposal of any Hazardous Materials at or on any Real Property, nor to the best knowledge of the Sellers, have any Hazardous Materials migrated from any Real Property to any adjacent properties; (ii) Flaskworks has received no notices, requests for information, claims, subpoenas or summons from any person

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that allege any violation by Flaskworks of Environmental Law or Environmental Permits, whether or not corrected, or any Environmental Liabilities of Flaskworks; (iii) there are no pending or threatened Actions against Flaskworks or any of its respective predecessors in interest alleging any material violation of Environmental Law or Environmental Permits or any material Environmental Liability and, to the Sellers’ knowledge, there exists no basis for any Action, citation, or directive against Flaskworks or the Sellers involving claims for Environmental Liabilities; (iv) Flaskworks is and has been in compliance in all material respects with all Environmental Law and Environmental Permits; (v) Flaskworks has obtained all Permits, licenses, registrations and other authorizations required pursuant to Environmental Laws (“Environmental Permits”); all such Environmental Permits are in full force and effect; and Flaskworks has not received any notice regarding the revocation, suspension or amendment of any Environmental Permit; and (vi) the Sellers have supplied the Buyer with true and complete copies of all notices, reports (including Phase I and Phase II environmental site assessments, as applicable) and other documents received by the Sellers or in the Sellers’ possession relating to (A) any environmental conditions at any facility or real property ever owned, operated or leased by Flaskworks or any of its respective predecessors in interest, (B) Flaskworks’ compliance with Environmental Law or Environmental Permits or (C) any Environmental Liability of Flaskworks or any of its respective predecessors-in-interest.

Section 3.16Material Contracts. Schedule 3.16 lists all agreements, arrangements or understandings, whether written or oral (“Contracts”), that are material to Flaskworks or its business, for the avoidance of doubt, including, but not limited to, all Contracts (a) with respect to Real Property, (b) with respect to Intellectual Property, (c) that involves aggregate receivables or liabilities of Flaskworks in excess of $20,000 on an annual basis, (d) with any Governmental Authority or (e) that limits, or purports to limit, the ability of Flaskworks to compete in any line of business or with any Person or in any geographic area or during any period of time, or that restricts the right of Flaskworks to sell to or purchase from any Person or to hire any person,(each, a “Material Contract”). Each Material Contract is legal, valid, binding and enforceable, and is in full force and effect (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity). Flaskworks is not, and to the best knowledge of the Sellers, no other party is in breach or violation of, or (with or without notice or lapse of time or both) default under any Material Contract, nor has Flaskworks or any Seller received any written claim of any such breach, violation or default. The Sellers have delivered to the Buyer true and complete copies of all Material Contracts, including any amendments thereto.

Section 3.17Related Party Interests and Transactions. There is no agreement, arrangement or understanding between any Seller, any of the Sellers’ Affiliates, or any of their respective officers, directors or employees or any family member (each of the foregoing, including the Sellers, a “Related Party”), on the one hand, and Flaskworks or any Affiliate of Flaskworks, on the other hand, nor any advances or other amounts owing to or from Flaskworks by or to any Related Party, except for any such arrangements, understandings, advances or amounts set forth on Schedule 3.17 and with respect to which the underlying documentation has been provided to the Buyer prior to the date hereof. No Related Party (a) owns or has owned, directly or indirectly any interest in any property, assets or rights used in the business of Flaskworks or has or has had any material commercial, industrial, banking, consulting, legal, accounting, charitable or other business relationship with or interest in any of Flaskworks’

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customers, suppliers, service providers, joint venture partners, licensees or competitors, (b) is or has been involved in any business dealings or transactions with Flaskworks other than in the ordinary course of business at prevailing market terms or (c) except for the Sellers themselves (excluding any Seller that is not a natural person) is or has been employed by Flaskworks.

Section 3.18Intellectual Property.

(a)Schedule 3.18(a) sets forth a true and complete list of all issued, registered and applied-for Intellectual Property owned or purported to be owned by Flaskworks. Flaskworks is the sole and exclusive beneficial and record owner of all of such Intellectual Property, and all such Intellectual Property is valid, subsisting and, to Flaskworks’ knowledge, enforceable. Flaskworks owns or otherwise holds valid rights to use all Intellectual Property used or contemplated to be used in the operation of its business as currently conducted, and all such rights are free of all Encumbrances (except Permitted Encumbrances). The consummation of the transactions contemplated by this Agreement and each of the Ancillary Agreements will not alter or impair the ownership or right of Flaskworks to use any Intellectual Property used or contemplated to be used in the operation of its business as currently conducted. The development, manufacture, sale, distribution or other commercial exploitation of products, and the provision of any services, by or on behalf of Flaskworks, and the operation of the businesses of Flaskworks, in each case, as conducted on the date hereof and as conducted since January 28, 2016, does not infringe upon or, misappropriate, in each case, in any material respect, and has not infringed upon or misappropriated any Intellectual Property of any third party in any material respect. To the best knowledge of the Sellers, no valid basis for any such infringement or misappropriation claim exists. Flaskworks has taken reasonable measures to protect the secrecy, confidentiality and value of all trade secrets used in the business of Flaskworks, including entering into appropriate confidentiality agreements with all officers, directors, employees, and other Persons with access to such trade secrets. None of such trade secrets has been disclosed or authorized to be disclosed to any Person other than to employees or agents of Flaskworks for use in connection with the business of Flaskworks or pursuant to a confidentiality or non-disclosure agreement that reasonably protects the interest of Flaskworks in and to such matters. To the best knowledge of the Sellers, no unauthorized disclosure of any such trade secrets has occurred. All Intellectual Property developed by or for Flaskworks was conceived, invented, reduced to practice, authored or otherwise created solely by either employees of Flaskworks acting within the scope of their employment, or independent contractors of Flaskworks pursuant to agreements containing an assignment of Intellectual Property to Flaskworks. No Person who was involved in, or who contributed to, the creation or development of any Intellectual Property, has performed services for the United States or a foreign government, university, college, or other educational or medical institution or research center in a manner that would affect Flaskworks’ rights in the Intellectual Property.

(b)Flaskworks (i) takes reasonable measures, directly or indirectly, to ensure the confidentiality, privacy and security of customer, employee and other confidential information and (ii) complies and has complied with applicable data protection, privacy and similar Laws, directives and codes of practice in any jurisdiction relating to any data processed by Flaskworks.

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Section 3.19Certain Contractual Arrangements. None of Mr. Shashi Murthy, Ms. Lekhana Bhandary and Mr. Andrew Kozbial is party to any Contract that would or would reasonably be expected to prevent or materially impair such Person’s ability to work in the Business, as conducted by Flaskworks or otherwise, in each case, on Buyer’s behalf, following the Closing.

Section 3.20Brokers. No broker, finder or agent will have any claim against the Buyer (or after the Closing, Flaskworks) for any fees or commissions in connection with the transactions contemplated by this Agreement and each of the Ancillary Agreements based on arrangements made by or on behalf of the Sellers or Flaskworks.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer hereby represents and warrants to the Sellers as follows:

Section 4.1Organization. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of Delaware.

Section 4.2Authority. The Buyer has full corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby. This Agreement and the Ancillary Agreements to which it is a party have been duly executed and delivered by the Buyer and, assuming due authorization, execution and delivery by each of the Sellers, are legal, valid, binding and enforceable upon and against the Buyer (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity).

Section 4.3Required Filings and Consents. Assuming the accuracy of the representations and warranties made by the Sellers in Article II hereof, the execution, delivery and performance by the Buyer of this Agreement and the Ancillary Agreements and the consummation by the Buyer of the transactions contemplated hereby and thereby do not and will not require any consent or approval of, registration or filing with, or notice to any Governmental Authority, except for any filings with the U.S. securities and exchange commission and such other consents, approvals, registrations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to materially impair the ability of Buyer to timely consummate, or prevent, any of the transactions contemplated by this Agreement or the Ancillary Agreements.

Section 4.4Brokers. No broker, finder or agent will have any claim against the Sellers for any fees or commissions in connection with the transactions contemplated by this Agreement or any Ancillary Agreement based on arrangements made by or on behalf of the Buyer.

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ARTICLE V

COVENANTS

Section 5.1Transfer of Permits. Effective as of the Closing, the Sellers duly and validly transferred or caused to be transferred to Flaskworks without any additional consideration all Permits that are held in the name of any Seller or any of its Affiliates (other than Flaskworks) on behalf of Flaskworks and used in connection with the business of Flaskworks, and the representations, covenants and agreements contained herein shall apply to such Permits as if held by Flaskworks on the date hereof.

Section 5.2Confidentiality.

(a)From and after the Closing, until the third anniversary of the Closing Date, each Seller shall not, and each Seller shall cause its Affiliates (other than Flaskworks) and its and their respective Representatives not to, use for any purpose other than to benefit the Buyer or disclose to any third Person, any Confidential Information; provided, however, that any such Person may disclose Confidential Information to the extent (i) such disclosure is required by Law or legal process, (ii) unless impossible or otherwise prohibited by Law or legal process, such Person notifies the Buyer of the existence, terms and circumstances surrounding such disclosure obligation and consults with the Buyer on the advisability of taking steps available under applicable Law to resist or narrow such disclosure obligation, (iii) such Person cooperates reasonably with any efforts of the Buyer, if any, to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information, and (iv) such Person discloses only that portion of the Confidential Information that it is so required to disclose. Effective as of the Closing, the Sellers hereby assign to the Buyer all of the Sellers’ right, title and interest in and to any confidentiality agreements entered into by the Sellers (or their Affiliates or Representatives) in connection with any transaction involving the acquisition or purchase of all or any portion of Flaskworks. From and after the Closing, the Sellers shall take all actions reasonably requested by the Buyer, at Buyer’s sole cost, in order to assist in enforcing the rights so assigned. For the avoidance of doubt, Sellers who are employed by Flaskworks or Buyer following the Closing shall be permitted to use Confidential Information in the course of performing their respective responsibilities pursuant to such employment (during the course of such employment).

(b)Corning has used, and if such process has not been completed as of the date hereof, will use as rapidly as practicable, its commercially reasonable efforts to destroy or to return to Flaskworks any Confidential Information of Flaskworks, including any drawings, specifications or other information and materials, in any embodiment, relating to the design, development and/or operation of any equipment and/or systems (including any software) related to the Flaskworks Business, in each case, its possession or under its control (including any copies, excerpts and/or summaries thereof), including by expunging all such information from any storage media or device containing such information, provided that (i) it is not required to expunge any system back-up media such as copies of any computer records or files containing Confidential Information created solely pursuant to automatic archiving or back-up procedures on secured central storage servers and that cannot reasonably be expunged and (ii) it is permitted to retain one copy of the Confidential Information solely for the purpose of monitoring compliance with its obligations under Section 5.2 (Confidentiality) and agrees that it shall not

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knowingly access, review or distribute any of such materials other than to the extent it determines in good faith that doing so is necessary to monitor compliance with its obligations under Section 5.2 (Confidentiality). Notwithstanding any of the foregoing, Corning and its Affiliates will continue to be bound by their obligations under Section 5.2 (Confidentiality), including for the avoidance of doubt with respect to the information retained pursuant to the foregoing clause (ii).

Section 5.3Non-Competition; Non-Solicitation.

(a)For a period of six (6) months following the Closing with respect to Andrew Kozbial, and for a period of eighteen (18) months following the Closing for each of Jennifer Rossi and Shashi Murthy, each such Person shall not, and shall cause its respective Affiliates not to, directly or indirectly through any Person or contractual arrangement:

(i)engage or assist in the design, development, optimization, evaluation, testing, production, sale, licensing, usage (whether for proprietary operations, contract services or otherwise) or commercialization of any bioreactor or other equipment or system for the culture, maturation, activation, transformation or other production or manipulation of any type of living cell (the “Business”), or perform management, executive or supervisory functions with respect to, own, operate, join, control, render financial assistance to, receive any economic benefit from, exert any influence upon, participate in, render services or advice to, or allow any of its officers or employees to be connected as an officer, employee, partner, member, stockholder, consultant or otherwise with, any business or Person that competes in whole or in part with the Business; provided, however, that for purposes of Section 5.3, ownership of securities having no more than two percent of the outstanding voting power of any competitor which are listed on any national securities exchange shall not be deemed to be a violation of Section 5.3 so long as the Person owning such securities has no other association or relationship with such competitor. For the avoidance of doubt, Sellers who are employed by Flaskworks or Buyer following the Closing shall not be restricted by this Section 5.3(a)(i) with respect to the performance of their respective responsibilities pursuant to such employment (during the course of such employment) and the applicable period for each such Person set forth in Section 5.3(a) shall continue to run during the course of such employment;

(ii)solicit, recruit or hire any person who at any time on or after the date of this Agreement is a Covered Employee (as hereinafter defined); provided, that the foregoing shall not prohibit (A) a general solicitation to the public of general advertising or similar methods of solicitation by search firms not specifically directed at Covered Employees or (B) such Seller or any of its respective Affiliates from soliciting, recruiting or hiring any Covered Employee who has ceased to be employed or retained by Flaskworks, the Buyer or any of their respective Affiliates for at least 12 months. For purposes of Section 5.3, “Covered Employees” means, collectively, officers, managers and employees of Flaskworks, the Buyer and their respective Affiliates. For the avoidance of doubt, Sellers who are employed by Flaskworks or Buyer following the Closing shall not be restricted by this Section 5.3(a)(ii) with respect to the performance of their respective responsibilities pursuant to such employment (during the course of such employment) and the applicable period for each such Person set forth in Section 5.3(a) shall continue to run during the course of such employment;

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(iii)solicit Business from any Customer (as hereinafter defined), refer Business from any Customer to any Person or be paid commissions based on Business sales received from any Customer by any Person. For purposes of Section 5.3, the term “Customer” means any Person to which any Seller, Flaskworks, the Buyer or any of their respective Affiliates provided products or services of the Business during the 12-month period prior to the time at which a determination must be made as to whether such Person is a Customer; provided, that the foregoing shall not prohibit any referral of Business by any Seller or Flaskworks to the Buyer; or

(iv)disparage the Buyer or any of its Affiliates in any way that would reasonably be expected to adversely affect the goodwill, reputation or business relationships of the Buyer or any of its Affiliates with the public generally, or with any of their customers, suppliers or employees.

(b)Each Seller acknowledges that the covenants of the Sellers set forth in Section 5.3 are an essential element of this Agreement and that any breach by such Persons of any provision of Section 5.3 will result in irreparable injury to the Buyer. Each Seller acknowledges that in the event of such a breach, in addition to all other remedies available at law, the Buyer shall be entitled to equitable relief, including injunctive relief, and an equitable accounting of all earnings, profits or other benefits arising therefrom, as well as such other damages as may be appropriate. Each Seller has independently consulted with its counsel and after such consultation agrees that the covenants set forth in Section 5.3 are reasonable and proper to protect the legitimate interest of the Buyer.

(c)If a court of competent jurisdiction determines that the character, duration or geographical scope of the provisions of Section 5.3 are unreasonable, it is the intention and the agreement of the parties that these provisions shall be construed by the court in such a manner as to impose only those restrictions on the Sellers’ conduct that are reasonable in light of the circumstances and as are necessary to assure to the Buyer the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants of Section 5.3 because taken together they are more extensive than necessary to assure to the Buyer the intended benefits of this Agreement, it is expressly understood and agreed by the parties that the provisions hereof that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding, shall be deemed eliminated, for the purposes of such proceeding, from this Agreement.

(d)Notwithstanding the foregoing, the Buyer hereby acknowledges that Jennifer Rossi is employed by Kerafast, Inc. and its affiliate Absolute Antibody Limited and such employment, as it involves or relates to antibodies or reagents (but not including any work with respect to the manufacture of systems or processes), shall not to be deemed to be in violation of Section 5.3(a)(i) or Section 5.3(a)(ii).

Section 5.4Affiliate Arrangements; Release of Obligations.

(a)Except as set forth on Schedule 5.4, all Contracts between Flaskworks, on the one hand, and the Sellers and their respective Affiliates (other than Flaskworks), on the other

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hand, were cancelled without any consideration or further liability to any party and without the need for any further documentation, effective as of immediately prior to the Closing.

(b)Effective as of the Closing, each Seller does hereby, for itself and each of its Affiliates (excluding Flaskworks) and each of its and their Related Parties (each, a “Seller Releasing Party”), irrevocably release, waive and absolutely forever discharge Flaskworks and all its respective, past, present and future directors, officers, managers, agents, consultants, representatives, successors and assigns (collectively, the “Released Persons”), from any and all actions, causes of action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants, Contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands of every type and nature whatsoever, known or unknown, at law or in equity (each a “Claim” and collectively, the “Claims”), that any Seller Releasing Party has had, may now have or may hereinafter have against any Released Person relating to, arising out of or resulting from any matter, act or omission whatsoever during all periods through the Closing and whether or not first asserted before or after the Closing (together, the “Released Matters”). The Released Matters shall not include (i) any agreement listed on Schedule 5.4, (ii) this Agreement or any Ancillary Agreement, (iii) the rights expressly contemplated to survive the Closing pursuant to Section 5.5, and (iv) any right of any Seller Releasing Party that is a natural person to salary, bonus, expense reimbursement or other ordinary compensation earned in the capacity as a manager, officer or employee of Flaskworks and that is set forth on Schedule 5.4(b)(iv). It is the intention of such Seller in providing this release to the Released Persons, and in giving and receiving the consideration called for in this Agreement, that this release shall be effective as a full and final accord and satisfaction and general release of and from all Released Matters and the final resolution by the applicable Seller Releasing Party, Flaskworks and its subsidiaries of all Released Matters.

Section 5.5Manager and Officer Indemnification. Prior to Closing, Flaskworks purchased a D&O tail policy to be in effect for, and with a claims period of, six years following the Closing (the “Tail Policy”). Buyer shall take no steps to terminate the D&O tail policy during such six year period and shall not be required to pay any premium, fee, deductible or other amount with respect to the Tail Policy. Any indemnification payable by Flaskworks or Buyer (such paying party, the “Payor”) with respect to the managers and officers of Flaskworks (including for the avoidance of doubt with respect to any Person represented by such a manager and their respective affiliates) will be limited to proceeds paid to the Payor on account of valid insurance claims made under the Tail Policy. In the event that the Buyer or Flaskworks or any of their respective successors or assigns (a) consolidates with or merges into any other Person or (b) transfers all or substantially all of its properties or assets to any Person, then, and in each case, the successors and assigns of Buyer or Flaskworks, as the case may be, shall assume the obligations set forth in this Section 5.5. The obligations of Buyer under this Section 5.5 shall not be terminated or modified in such a manner as to adversely any Indemnified Person without the consent of such affected Person.

Section 5.6Public Announcements. No party to this Agreement shall, and each shall cause its Affiliates and its and their Representatives not to, issue any press release or make any other public statement with respect to this Agreement, the Ancillary Agreements and the other transactions contemplated hereby and thereby, except for any such disclosure, release or public

17


statement that is necessary under applicable Law or stock exchange (including for this purpose, the OTC Markets) rule, reporting obligation or similar requirement.

Section 5.7Further Assurances. Following the Closing, each party hereto shall from time to time do such further acts and execute and deliver such further documents regarding its obligations hereunder as may be reasonably required for the purpose of (a) accomplishing the purposes of this Agreement or (b) assuring and confirming the validity of any documents of conveyance to be delivered at Closing.

ARTICLE VI

INDEMNIFICATION

Section 6.1Survival of Representations and Warranties. The representations and warranties of Flaskworks, the Sellers and the Buyer contained in this Agreement, the Ancillary Agreements and any schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby shall be continuing and survive the Closing for a period of twelve (12) months, and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Sellers or the Buyer; provided, however that (a) the representations and warranties set forth in Section 3.14 (Taxes) shall survive until the close of business on the 90th day following the expiration of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) and (b) any representation in the case of fraud shall survive the Closing for a period of 20 years. The covenants and agreements of the parties contained in this Agreement and in any Ancillary Agreement shall survive the Closing until the expiration of the statute of limitations following the date all performance thereunder was due to be performed; provided, however, that the obligation to provide indemnification pursuant to and in accordance with the other provisions of this Article VI shall survive for a period of 20 years.

Section 6.2Indemnification by the Sellers. Each Seller, severally and not jointly, shall save, defend, indemnify and hold harmless the Buyer and its Affiliates (including Flaskworks) and the respective Representatives, successors and assigns of each of the foregoing, from and against any and all losses, damages, liabilities, deficiencies, claims, interest, awards, judgments, penalties, costs and expenses (including reasonable attorneys’ fees, costs and other out-of-pocket expenses incurred in investigating, preparing or defending the foregoing) (hereinafter collectively, “Losses”), asserted against, incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to:

(a)any breach of any representation or warranty made by such Seller in Article II of this Agreement, or any Ancillary Agreement, schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby;

(b)any breach of any representation or warranty made by Flaskworks contained in this Agreement, or any Ancillary Agreement, schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby;

(c)any breach of any covenant or agreement by such Seller or Flaskworks contained in this Agreement or in any Ancillary Agreement;

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(d)(i) any and all taxes (including any interest, additions and penalties with respect thereto, but excluding the portion of any Transfer Taxes payable by Buyer pursuant to Section 8.4) imposed on Flaskworks, or for which Flaskworks is liable, with respect to all periods ending on or before the Closing Date, or a pro rata portion (based on the proration under Section 8.2) of any such taxes for any period that ends after but includes the Closing Date or (ii) any and all income taxes (including any interest, additions and penalties with respect thereto) incurred or otherwise payable by the Sellers as a result of the consummation of the transactions contemplated hereby;

(e)any inaccuracy of or omission in the Closing Payment Schedule (including with respect to Buyer-Paid Expenses);

(f)any claims by direct or indirect equity holders or employees, or former equity holders or employees, or any Persons claiming to be an equity holder, in each case of Flaskworks or any of its Affiliates, relating to any claims against any of the foregoing entities arising prior to the Closing, including any claims with respect to the sale, purchase, termination, cancellation, expiration, redemption, forfeiture or conversion of the equity securities of Flaskworks in connection with this Agreement, any Ancillary Agreement or otherwise;

(g)any claims by any member, officer, manager, employee or other agent of Flaskworks for indemnification required under Flaskworks’ organizational documents (including under the New Flaskworks LLC Agreement) or otherwise by reason of the fact that such Person was a member, officer, manager, employee or other agent of Flaskworks for acts or omissions occurring prior to the Closing, in each case, to the extent not reimbursed by applicable insurance; and

(h)

any and all (i) Transaction Expenses and (ii) Indebtedness.

Section 6.3Indemnification by the Buyer. The Buyer shall save, defend, indemnify and hold harmless the Sellers and their respective Representatives, successors and assigns of each of the foregoing from and against any and all Losses asserted against, incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to:

(a)any breach of any representation or warranty made by the Buyer contained in this Agreement, Ancillary Agreement or any schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby; and

(b)any breach of any covenant or agreement by the Buyer contained in this Agreement or any Ancillary Agreement.

Section 6.4Procedures. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “Indemnified Party”) shall promptly provide written notice of such claim to the party obligated to provide such indemnification (the “Indemnifying Party”) describing such claim in reasonable detail (such notice, a “Claim Notice”). The failure to promptly deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article VI except to the extent that the Indemnifying Party is materially prejudiced by such failure. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim, action or demand by a

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Person who is not a party to this Agreement, the Indemnifying Party, if it acknowledges in writing its obligation to indemnify the Indemnified Party with respect to such claim, shall have the right, at its sole cost and expense and upon written notice to the Indemnified Party within 15 days of receipt of a Claim Notice in respect of such claim, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party. Notwithstanding the foregoing, the Indemnifying Party may not assume the defense of any claim for equitable or injunctive relief or any claim that would impose criminal liability on the Indemnified Party (or its Affiliates), and the Indemnified Party shall have the right to defend, at the expense of the Indemnifying Party, any such claim. If the Indemnifying Party assumes the defense of such a claim, the Indemnified Party may participate in the defense of any such claim, action or demand with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such claim, the Indemnified Party may, but shall not be obligated to, defend against such claim in such manner as it may deem appropriate (and the Indemnifying Party shall cooperate with the Indemnified Party with respect to such defense), including, but not limited to, settling such claim, after giving notice to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate. No action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations with respect to any damages resulting therefrom. In no event may the Indemnifying Party settle any such claim without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

Section 6.5Limitations on Indemnification.

(a)Notwithstanding anything to the contrary herein the total aggregate amount in respect of which the Sellers shall be liable for indemnification under any provision of Section 6.2 shall not exceed (i) fifteen percent (15%) of the Purchase Price received by the Sellers hereunder and, (ii) with respect to each Seller, shall not exceed the proportionate amount of the Purchase Price received by the Sellers hereunder, provided, however, that the foregoing clause (i) shall not apply to Losses claimed pursuant to Sections 6.2(c) (but only with respect to a breach of Section 5.2 or 5.3), 6.2(d), 6.2(e), 6.2(f), 6.2(g) and 6.2(h) or arising out of or relating to the representations and warranties set forth in Section 3.14 (Taxes) (the maximum aggregate amount in respect of which the Sellers shall be liable for indemnification shall not exceed the Purchase Price received by the Sellers hereunder); and the foregoing clauses (i) and (ii) shall not apply in cases involving fraud. For the avoidance of doubt, no Seller shall be liable for the fraud or intentional misrepresentation of any other Seller.

(b)For purposes of calculating the amount of any Loss arising from a breach of any representation or warranty subject to indemnification under Section 6.2(a), as well as for purposes of determining whether there has been a breach of any such representation or warranty, all “material”, “materially”, “in all material respects”, “Material Adverse Effect”, and other like qualifications shall be disregarded.

(c)For the avoidance of doubt and notwithstanding anything herein to the contrary, nothing herein shall be deemed to limit Buyer’s remedies against Sellers or any other Person with respect to infringement or similar impermissible uses by such Persons of the intellectual property of or licensed by Flaskworks and/or the Buyer and its Affiliates.

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Section 6.6Tax Treatment. The parties agree to treat any amounts payable pursuant to this Article VI as an adjustment to the purchase price for all tax-related purposes to the extent permitted by Law.

ARTICLE VII

GENERAL PROVISIONS

Section 7.1Fees and Expenses. Except as otherwise provided herein, all fees and expenses incurred in connection with or related to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby shall be paid by the party incurring such fees or expenses, provided that all Transaction Expenses shall be paid by the Sellers and not by Flaskworks. If Flaskworks shall pay or be liable for any fee, expense, or liability described in this Section, the sum of all such payments or liabilities shall be paid by the Sellers to the Buyer upon demand.

Section 7.2Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

Section 7.3Waiver. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof. Any such waiver by a party shall be valid only if set forth in writing by such party.

Section 7.4Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by e-mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

Section 7.5Entire Agreement. This Agreement and the Ancillary Agreements constitute the entire agreement, and supersedes all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement. No party to this Agreement shall have any legal obligation to enter into the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

Section 7.6Third-Party Beneficiaries. Except as provided in Article VI and in Section 5.5 (for the limited purpose set forth therein), nothing in this Agreement shall confer upon any person other than the parties and their respective successors and permitted assigns any right of any nature.

Section 7.7Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement, the Ancillary Agreements or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

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Section 7.8Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or the Ancillary Agreements brought by any party or its successors or assigns against the other party shall be brought and determined in the Court of Chancery of the State of Delaware, provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal action or proceeding may be brought in any federal court located in the State of Delaware or any other Delaware state court, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein.

Section 7.9Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 7.10Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by either party without the prior written consent of the other party, and any such assignment without such prior written consent shall be null and void; provided, however, that the Buyer may assign this Agreement to any Affiliate of the Buyer without the prior consent of the Seller; provided further, that no assignment shall limit the assignor’s obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon the parties and their respective successors and assigns, heirs and executors.

Section 7.11Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security as a prerequisite to obtaining equitable relief.

Section 7.12Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party, such holding or action shall be strictly construed and shall not affect the validity or effect of any

22


other provision hereof, as long as the remaining provisions, taken together, are sufficient to carry out the overall intentions of the parties as evidenced hereby.

Section 7.13Counterparts. This Agreement may be executed in counterparts (including facsimile, .pdf and electronic transmission counterparts), all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

Section 7.14Interpretation. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified.

Section 7.15Certain Defined Terms. For purposes of this Agreement, certain terms used herein shall have the meanings set forth in Annex A.

ARTICLE VIII

TAXES

Section 8.1Tax Treatment. For U.S. federal income tax purposes, the parties hereto agree to treat the purchase of Units pursuant to this Agreement in the manner required by Situation 2 of Revenue Ruling 99-6, such that Flaskworks terminates as a partnership under Section 708(b)(1)(A) of the Code, Flaskworks is deemed to make a liquidating distribution of the assets held by Flaskworks to the Sellers and the Buyer is deemed to acquire, by purchase from the Sellers, all of the assets held by Flaskworks immediately following the deemed distribution.

Section 8.2Proration. For all purposes under this Agreement involving the determination of taxes (including the determination of taxes that imposed on, or for which Flaskworks is liable, for purposes of Section 6.2(c)), in the case of taxes that are payable with respect to any period that includes but does not end on the Closing Date, the portion of any such tax that is allocable to the portion of the period ending on the close of the Closing Date shall be (i) in the case of taxes that are (x) based upon or related to income or receipts, (y) imposed in connection with the sale or other transfer or assignment of property (real or personal, tangible or intangible) or other transaction-based taxes or (z) employment, social security or other similar taxes, deemed equal to the amount which would be payable if the taxable year ended at the close of business on the Closing Date; and (ii) in the case of taxes imposed on a periodic basis with respect to any assets, deemed to be the amount of such taxes for the entire period (or, in the case

23


of such taxes determined on an arrears basis, the amount of such taxes for the immediately preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the period ending at the close of business on the Closing Date and the denominator of which is the number of calendar days in the entire period.

Section 8.3Cooperation on Tax Matters. Buyer and Seller shall cooperate, as and to the extent reasonably requested by the other party and at the requesting party’s expense, in connection with the filing of tax returns pursuant to this Agreement and any action, suit, demand or other proceeding with respect to taxes relating to the transaction pursuant to this Agreement.

Section 8.4Transfer Taxes. All Transfer Taxes payable on or in connection with the transfer of the Units to Buyer and the transactions contemplated by this Agreement shall be borne and paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller when due in compliance with applicable Laws. The Party responsible under applicable Law for filing the applicable tax return with respect to such Transfer Tax shall prepare and file all necessary tax returns and other documentation required to be filed by it with respect to all Transfer Taxes, and, if required by applicable Law, the Parties will, and will cause their applicable Affiliates to, join in the execution of any such tax returns and other documentation. Seller and Buyer agree to cooperate with each other in the filing of any tax returns with respect to Transfer Taxes, including by promptly supplying any information in its possession that is reasonably necessary to complete such tax returns and other documentation.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the Buyer, Flaskworks and the Sellers have caused this Agreement to be executed as of the date first written above (and with respect to the Buyer and Flaskworks, by their respective officers thereunto duly authorized).

BUYER

    

Address for Notices:

NORTHWEST BIOTHERAPEUTICS, INC.

Linda Powers, Leslie J. Goldman

4800 Montgomery Lane

Suite 800

/s/ Leslie J Goldman

Bethesda, MD 20814

Name: Leslie J Goldman

E-mail: lpow ers@nwbio.com;

Title: Senior Counsel

lgoldman@nwbio.com

With a copy to:

Brian Lane

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue NW

Washington, DC 20036

E-mail: BLane@gibsondunn.com

FLASKWORKS

FLASKWORKS, LLC.

Address for Notices:

By:

/s/ Jennifer M Rossi

165 Waltham Street

Name:

Jennifer M Rossi, PHD

Newton, MA 02465

President & CEO

SELLER

By:

/s/ Shashi Murthy

Address for Notices:

Name: Shashi Murthy

165 Waltham Street

Newton, MA 02465

By:

/s/ Andrew Kozbial

Address for Notices:

Name: Andrew Kozbial

165 Waltham Street

Newton, MA 02465

By:

/s/ Keith L Olson

Coming Incorporated

Name: Vice President, CLS

One Riverfront Plaza Coming, NY 14831

Corning Incorporated

Attention: Corporate Secretary


ANNEX A

Certain Defined Terms

For purposes of this Agreement:

Affiliate” means, with respect to any Person, any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such person.

Ancillary Agreements” means each Special Consideration Agreement, Rights Issuance Agreement, Special Expense Agreement and Installment Expense Agreement, and all other agreements, documents and instruments required to be delivered by any party pursuant to this Agreement, and any other agreements, documents or instruments entered into at or prior to Closing in connection with this Agreement or the transactions contemplated hereby.

Cash Closing Consideration” means with respect to a Person, the amount and type of consideration designated as “Cash Closing Consideration” set forth next to such Person’s name on the Closing Payment Schedule.

Cash Closing Expenses” means with respect to a Person, the amount and type of expenses designated as “Cash Closing Expenses” set forth next to such Person’s name on the Closing Payment Schedule.

Closing Payment Schedule” means the schedule attached hereto as Exhibit A (which shall form a part of this Agreement) setting forth, as of the Closing Date: (a) the name of each Seller and each recipient of Buyer-Paid Expenses; (b) for each Seller, (i) the number and class of Units held by such Person and (ii) the amount and form (i.e., cash and/or Shares) of consideration payable to such Seller, broken down into each individual component thereof and noting the manner in which each such item will be paid; and (c) for each recipient of Cash Closing Expenses, Special Expenses or Installment Expenses, the amount and form (i.e., cash and/or Shares) of consideration payable to such Person at the Closing as a component of the Purchase Price (“Buyer-Paid Expenses”), broken down into each individual component thereof and noting the manner in which each such item will be paid. The Closing Payment Schedule shall also set forth applicable procedures for payment of consideration and expenses set forth thereon, including any agreements required to be entered into in connection therewith.

Confidential Information” means all material information and data relating to Flaskworks, except for data or information that is or becomes available to the public other than as a result of a breach by any Seller of this Section, that was in the Sellers’ possession or available to the Sellers prior to receipt from Flaskworks, that is or becomes available to the Sellers on a nonconfidential basis from a source other than Flaskworks, or that is independently developed by the Sellers or others on its behalf without reference to or reliance on any Confidential Information.


control,” as used in the definition of Affiliate, means, with respect to a corporation, the right to exercise directly or indirectly, 50% or more of the voting rights attributable to the controlled corporation, and, with respect to any partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

Employee Loans” means each of the outstanding loans made to Flaskworks by each of Shashi Murthy and Jennifer Rossi.

Environmental Law” means all Laws (including common law), statutes, regulations, rules, policy, guidance, ordinances, codes, orders, approvals and similar items, of all Governmental Authorities and all judicial and administrative and regulatory writs, injunctions, decrees, judgments and orders relating to (A) occupational health or safety; (B) the protection of public health, natural resources or the environment; (C) the treatment, storage, disposal, handling or release of Hazardous Materials or Remediation of Releases; or (D) exposure of persons to Hazardous Materials.

Environmental Liabilities” means all fees (including, but not limited to, attorneys’ and consultants’ fees), costs and expenses (including, but not limited to, costs of investigation, monitoring and cleanup), fines, penalties, judgments, settlements and liabilities, whether accrued, fixed or contingent, known or unknown, and whether or not included in a schedule to this Agreement, any of which are incurred at any time arising out of, based on or resulting from (A) the presence or Release of Hazardous Materials into the environment, on or prior to the Closing Date, upon, beneath, or from any Real Property or other location (whether or not owned or operated by the Sellers or Flaskworks at the time such Hazardous Materials were present or released) where the Sellers or Flaskworks conducted operations or generated, stored, released, sent, transported, disposed or arranged for the disposal of Hazardous Materials, (B) human exposure to Hazardous Materials or (C) any violation of Environmental Law by the Sellers on or prior to the Closing.

Equity Documents” means all agreements, arrangements and understandings governing or otherwise defining the terms of the Units as of immediately prior to the Closing, including any awards thereof, including the Flaskworks LLC Agreement.

Hazardous Materials” means any substance, material, chemical or waste that is defined, classified or regulated as a “hazardous waste,” “hazardous substance,” “toxic substance,” “pollutant” or “contaminant” under any Environmental Law, including but not limited to gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls, asbestos, lead or urea formaldehyde foam insulation, the presence of which requires reporting, investigation, monitoring, maintenance, removal, abatement, mitigation or Remediation under any Environmental Law or which causes or threatens to cause a nuisance, trespass or other tortious condition or poses a hazard to human health and safety or the environment.

Indebtedness” means, without duplication, (i) the unpaid principal amount, accrued interest, premiums, penalties and other fees, expenses (if any), and other payment obligations and amounts due (including such amounts that would become due as a result of the

2


consummation of the transactions contemplated by this Agreement) in respect of any indebtedness for borrowed money or evidenced by notes, bonds, debentures or other similar instruments, obligations with respect to interest-rate hedging, swaps or similar financial arrangements; (ii) all obligations under capitalized leases with respect to which Flaskworks is liable; (iii) any amounts for the deferred purchase price of goods and services, including any earn out liabilities associated with past acquisitions; (iv) all deposits and monies received in advance; (v) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by any company; and (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons for the payment of which Flaskworks is responsible or liable, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations; provided, that Indebtedness shall not include the Specified Short-Term Debt, any Buyer-Paid Expenses or any other component of the Purchase Price.

Installment Expense Agreement” means an agreement substantially in the form attached hereto as Exhibit B, between Flaskworks and the Installment Payee with respect to the payment to the Installment Payee of expenses due as of the Closing Date.

Installment Expenses” means the amount designated as “Installment Expenses” set forth next to the Installment Payee’s name on the Closing Payment Schedule.

Installment Payee” means the Person denoted as such on the Closing Payment Schedule.

Intellectual Property” means all intellectual property rights of every kind and description throughout the world, including all U.S and non-U.S. (i) trademarks, service marks, brand names, corporate names, certification marks, collective marks, Internet domain names, trade dress, and other indicia of origin, including all registrations and applications for all of the foregoing, and all goodwill associated with all of the foregoing; (ii) patents, patent applications and invention disclosures; (iii) trade secrets, including know-how, proprietary information, inventions, discoveries and ideas, whether tangible or intangible and whether stored, compiled or memorialized physically, electronically, graphically, photographically or in writing; (iv) published and unpublished works of authorship (including software), copyrights therein and thereto, moral rights and rights of attribution, including all registrations and applications for all of the foregoing; and (v) all other intellectual property or proprietary rights, remedies and claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including rights to recover for past, present and future violations thereof.

License Agreement Amendment” means an amended and restated version of that certain license agreement between Northeastern University and Flaskworks (as amended and restated prior to such time), in form and substance reasonably satisfactory to the Buyer.

Payoff Letter” means a duly executed letter in form and substance reasonably satisfactory to the Buyer, in which the payee agrees that, upon payment of the amount specified in such payoff letter, all obligations of Flaskworks arising under or related to the applicable indebtedness is repaid, discharged and extinguished in full and all Encumbrances in connection therewith shall be released.

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Person” means any individual, corporation, partnership, trust, limited liability company, association, governmental body or agency, or other entity.

Release” means any spilling, leaking, pumping, emitting, emptying, pouring, discharging, depositing, injecting, escaping, leaching, migrating, dumping, or disposing (including the abandonment or discarding of barrels, containers or other receptacles containing Hazardous Materials) into the environment.

Remediation” means (A) any remedial action, remedy, response or removal action as those terms are defined in 42 U.S.C. § 9601, (B) any corrective action as that term has been construed pursuant to 42 U.S.C. § 6924, and (C) any measures or actions required or undertaken to investigate, assess, evaluate, monitor, or otherwise delineate the presence or Release of any Hazardous Material in or into the environment or to prevent, clean up or minimize a Release or threatened release of Hazardous Materials.

Rights Issuance Agreement” means an agreement substantially in the form attached hereto as Exhibit C, between a recipient of Stock Closing Consideration (as dictated by the Closing Payment Schedule) and the Buyer, with respect to the issuance of Stock Closing Consideration to such recipient.

Shares” means shares of common stock of the Buyer issued based upon a value equal to the trailing five-trading day volume-weighted average closing price of the Buyer’s stock on the OTCQB Venture Market on the Closing Date. Such Shares shall be unregistered securities when issued and will bear restrictive legends to that effect.

Special Consideration” means with respect to a Person, the amount and type of consideration designated as “Special Consideration” set forth next to such Person’s name on the Closing Payment Schedule.

Special Consideration Agreement” means an agreement substantially in the form attached hereto as Exhibit D, between a recipient of Special Consideration (as dictated by the Closing Payment Schedule) and the Buyer, with respect to the issuance of Special Consideration to such recipient.

Special Expense Agreement” means an agreement substantially in the form attached hereto as Exhibit E, between a recipient of Special Expenses (as dictated by the Closing Payment Schedule) and the Buyer, with respect to the issuance of Special Expenses to such recipient.

Special Expenses” means with respect to a Person, the amount and type of expenses designated as “Special Expenses” set forth next to such Person’s name on the Closing Payment Schedule.

Specified Short-Term Debt” means the Indebtedness of Flaskworks set forth on Schedule A. (For the purposes of this definition only, the proviso at the end of the definition of “Indebtedness” shall not be deemed to apply.)

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Stimulus Legislation” means, collectively, the Families First Coronavirus Response Act, Pub. L. No. 116-127 (116th Cong.) (Mar. 18, 2020), the Coronavirus Aid, Relief, and Economic Security Act, Pub.L. 116–136 (116th Cong.) (Mar. 27, 2020), and any similar legislation enacted between March 18, 2020 (inclusive) and the Closing Date.

Stock Closing Consideration” means with respect to a Person, the amount and type of consideration designated as “Stock Closing Consideration” set forth next to such Person’s name on the Closing Payment Schedule.

Transaction Expenses” means any fees and expenses payable by Flaskworks or the Sellers in connection with the transactions contemplated by this Agreement or the Ancillary Agreements, including, without limitation, fees and expenses payable to all attorneys, accountants, financial advisors and other professionals and bankers’, brokers’ or finders’ fees for persons not engaged by the Buyer, but excluding any Buyer-Paid Expenses or any other component of the Purchase Price.

Transfer Taxes” means any U.S., state, county, local, non-U.S. and other sales, use, transfer, goods and services, value added, conveyance, documentary transfer, stamp duty, recording or other similar tax, fee or charge imposed on or in connection with the transactions contemplated by or the instruments executed under or in connection with this Agreement or the recording of any sale, transfer, or assignment or property (or any interest therein) effected pursuant to this Agreement.

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EXHIBIT A

Closing Payment Schedule


Execution Version

Exhibit A

Closing Payment Schedule

Person

Consideration

Sellers

Shashi Murthy

Units Owned: 2,636,147 Class A-1 Units

Cash Closing Consideration:

·

$100,000 loan repayment, payable in cash at Closing

·

$50,000 loan repayment, payable in cash at Closing

$82,894.32 in deferred salary, to be paid off by Buyer (to Flaskworks for further distribution to Mr. Murthy through the Flaskworks payroll system, less applicable employee income tax withholdings)

Stock Closing Consideration: Rights issued at Closing to receive $1,945,056 in Shares issued pursuant to, and subject to the vesting criteria set forth in, a Rights Issuance Agreement entered into with effect as of the Closing

Jennifer Rossi

Units Owned: 465,203 Class B Units

Cash Closing Consideration: $15,000 loan repayment, payable in cash at Closing

$47,983.24 in deferred salary, to be paid off by Buyer (to Flaskworks for further distribution to Ms. Rossi through the Flaskworks payroll system, less applicable employee income tax withholdings)

Special Consideration: $465,203 change-of-control payment, payable in accordance with the procedures set forth below

Andrew Kozbial

Units Owned: 63,292 Class B Units

Stock Closing Consideration: Rights issued at Closing to receive $63,292 in Shares issued pursuant to, and subject to the vesting criteria set forth in, a Rights Issuance Agreement entered into with effect as of the Closing

Corning Incorporated

Units Owned: 750,000 Class A-2 Units

Cash Closing Consideration: $900,000, payable in cash at Closing

Cash Closing Expenses: $98,928, payable in cash at Closing


Person

Consideration

Non-Seller Recipients of Buyer-Paid Expenses

Northeastern University

Cash Closing Expenses: $51,895.16 patent cost reimbursement and licensing fees, payable in cash at Closing

Special Expenses: $116,652, payable in accordance with the procedures set forth below and pursuant to a Special Expense Agreement entered into with effect as of the Closing

Fikst Product Development

Cash Closing Expenses: $32,194.29, payable in cash at Closing

Brown Rudnick LLP

(“Installment Payee”)

Cash Closing Expenses: $271,220.32, payable in cash at Closing [Note: represents 75% of $361,627.10]

Installment Expenses: $90,406.78, payable in two equal cash installments of $45,203.39 on each of the 30th and 60th day following the Closing (or, if any such date is not a business day, on the business day immediately preceding such date) [Note: each installment represents 12.5% of $361,627.10]

All payments to such payee shall be made pursuant to an Installment Expense Agreement entered into with effect as of the Closing.

Procedures for Payment of Special Consideration / Special Expenses: No earlier than the 90th day, and no later than the 120th day after the Closing Date, each Person entitled to Special Consideration and/or Special Expenses as set forth above shall deliver to the Buyer a written notice executed by an authorized representative of such Person electing to receive the Special Consideration and/or Special Expenses due to it hereunder, in the form of cash, Shares or a combination thereof. Within five business days after receipt of such notice from such a Person and upon execution by such Person of (a) a Special Consideration Agreement (if and only if such Person elected to receive any Special Consideration in the form of Shares) or (b) the appropriate exhibits(s) to a Special Expense Agreement, as applicable, Buyer shall deliver or cause to be delivered to such Person the form and amount of Special Consideration and/or Special Expenses elected by such Party. Any Shares issued pursuant to such arrangement shall be unregistered securities when issued and will bear restrictive legends to that effect.

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EXHIBIT B

Installment Expense Agreement


GRAPHIC

MICHAEL J. COHEN

direct dial: 617.856.8296

fax: 617.289.0553

mcohen@brownrudnick.com

August 28, 2020

Flaskworks, LLC; Northwest Biotherapeutics, Inc.

RE:Acknowledgement of Obligations and Amendment to Engagement Letter

Dear Dr. Murthy and Ms. Powers:

This letter confirms your agreements regarding the obligations of (i) Flaskworks, LLC (the “Client”), and, (ii) following the closing of the transactions contemplated by that certain unit purchase agreement among Client, the current members of Client, and NWBio (as defined below) (the “Purchase Agreement”), Northwest Biotherapeutics, Inc. as the sole member of Client (“NWBio”, and together with Client, the “Payor”), jointly and severally, to pay Brown Rudnick LLP ("Firm") for legal services rendered by the Firm to the Client.

The Client acknowledges that, in accordance with the engagement letter dated as of May 13, 2016 (the "Engagement Letter"), the Firm has provided, and may continue to provide, legal and other professional services to the Client for which the Client is liable to the Firm for fees, costs, and expenses (“Legal Fees”). This letter modifies the payment obligations under the Engagement Letter.

Client agrees that as of August 28, 2020, the unpaid balance of the Legal Fees is $361,627.10 (the “Existing Balance”), which is now fully and unconditionally due and payable in cash by the Client to the Firm, without offset, defense, discount, or counterclaim of any kind, nature, or description whatsoever. The Existing Balance reflects all amounts reflected through our invoice dated August 25, 2020, does not include any time that we have worked but not yet billed or any expenses which we have incurred but not yet invoiced for reimbursement.

Concurrently with the closing of the transactions contemplated by the Purchase Agreement (the “Closing”), the Payor agrees to pay to the Firm in immediately available funds $271,220.32 towards satisfaction of the Existing Balance. Payor agrees to pay the balance of the Existing Balance in two (2) equal installments of $45,203.39, the first thereof no later than the thirtieth (30th) day following the Closing, an amount equal to , and the second thereof no later than the sixtieth (60th) day following the Closing, in each case in immediately available funds. Payor further agrees to pay any Legal Fees in excess of the Existing Balance (whether incurred prior to August 28, 2020 or thereafter) within thirty (30) days of the rendering of an invoice therefor.

GRAPHIC


GRAPHIC

Dr. Murthy and Ms. Powers

August 28, 2020

Page 2

In the event that the Payor shall fail to timely satisfy any of its obligations hereunder or under the Engagement Letter (as modified hereby), then, without limitation of any other rights of the Firm: (a) the Firm shall have the right in its sole and absolute discretion to terminate its engagement as legal counsel to the Client (and NWBio, to the extent applicable), and (b) the entire unpaid amount of the Legal Fees (including without limitation the Existing Balance) shall thereupon and without further notice be accelerated and become automatically due and payable in full and in immediately available funds. Interest shall accrue thereafter on any and all amounts owed to the Firm at the rate of twelve percent (12.0%) per annum, which shall be due and payable upon demand. Nothing in this letter shall impair any lien or other rights the Firm may have with respect to the assets or properties of the Client, all of which are expressly preserved.

This letter represents the entire agreement and understanding concerning the subject matter hereof between the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions regarding such subject matter.

Each of Client and NWBio agree that, notwithstanding that the Firm provides legal representation to the Client in other matters, the Firm has not provided legal representation to Client or NWBio in connection with the preparation of this letter. Each of the Client and NWBio acknowledges that the Firm as advised the Client and NWBio to, and the Client and NWBio has had a reasonable opportunity to, seek the advice of independent legal counsel in connection with this letter.

[Remainder of page intentionally left blank.]


GRAPHIC

Dr. Murthy and Ms. Powers

August 28, 2020

Page 3

To confirm your agreement to the terms of this letter and the agreements contained herein, please return a countersigned copy of this letter to me.

   

BROWN RUDNICK LLP

By:

Michael J. Cohen, Partner

CLIENT:

FLASKWORKS, LLC

By:

Name:

Title:

NWBIO:

NORTHWEST BIOTHERAPEUTICS, INC.

By:

Name:

Title:


EXHIBIT C

Rights Issuance Agreement


THE SHARES OF COMMON STOCK AWARDED PURSUANT TO THIS AGREEMENT WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. TRANSFER OF SUCH SHARES IS ALSO RESTRICTED BY THE TERMS OF THIS AGREEMENT.

NORTHWEST BIOTHERAPEUTICS, INC.

RIGHTS ISSUANCE AGREEMENT

THIS AGREEMENT (this “Agreement”) is entered into as of August 28, 2020 (the “Closing Date”), between Northwest Biotherapeutics, Inc., a Delaware corporation (the “Company”), and the undersigned recipient (“Recipient”).

WHEREAS, pursuant to that certain Unit Purchase Agreement, dated as of August 28, 2020 (the “Purchase Agreement”), among the Company and each of the other Persons set forth on the signature pages thereto, Recipient will receive the right to receive, subject to the vesting conditions set forth herein, the number of shares of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), set forth across from such party’s name on Exhibit A hereto (such shares, the “Shares”). Capitalized terms used but not otherwise defined herein will have the meanings set forth in the Purchase Agreement

NOW, THEREFORE, it is agreed as follows:

1.Grant of Rights. The Company hereby grants to Recipient as of the Closing Date the right to receive [•] shares of Common Stock, which shall vest and be issued in accordance with the terms and conditions of this Agreement (such rights, the “Rights”). Recipient irrevocably agrees on behalf of Recipient and Recipient’s successors and permitted assigns to all of the terms and conditions of the award as set forth in or pursuant to this Agreement.

2.

Vesting; Settlement; Termination.

(a)Subject to the other conditions set forth in this Agreement, the Rights shall become vested as follows:

(i)Twenty-five percent (25%) of the Rights shall vest upon completion of all of the following:

(A)delivery to the Company by Recipient of a document listing all technical and regulatory requirements for the deployment of the EDEN system to manufacture DCVax-L, together with a detailed timeline;

(B)the initiation of EDEN system consumable sourcing from Saint Gobain or an equivalent supplier, via issued purchase order;


(C)the technology transfer of all relevant Company manufacturing protocols for DCVax-L to Flaskworks’ Boston site;

(D)

readiness of the EDEN prototype for testing at Advent

Bioservices; and

(E)

a period of ninety (90) days after the Closing.

(ii)Twenty-five percent (25%) of the Rights shall vest upon the demonstration to the Company’s reasonable satisfaction that the EDEN system can replicate the Company’s current DCVax-L manufacturing process as verified by yield, phenotype and functional assay data.

(iii)Twenty-five percent (25%) of the Rights shall vest upon the completion to the Company’s reasonable satisfaction of comparability studies that demonstrate equivalence between EDEN and the Company’s current process for DCVax-L, and equivalence of the DCVax-L products manufactured through EDEN and those manufactured through the Company’s current process. For purposes of this Agreement, “Completion” shall mean that all applicable data is available and prepared in a consolidated format sufficient for submission to regulatory agencies in the UK, US, Canada and EU.

(iv)Twenty-five percent (25%) of the Rights shall vest upon approval by the regulator in the US or EU of the comparability of the EDEN process and the Company’s current processes, and the comparability of DCVax-L products manufactured through EDEN and those manufactured through the Company’s current processes, for commercial use.

(b)Notwithstanding anything herein to the contrary, all Rights, whether or not vested in accordance with the vesting schedule set forth in Section 2(a) above shall vest, in each case, provided that the Recipient remains employed by the Company or its affiliate and the Recipient (in Recipient’s capacity as an employee of the Company or its affiliate) have not abandoned work on the EDEN system prior to such time:

(i)as of immediately prior to the consummation of a Change in Control of the Company (as defined in the Company’s Second Amended and Restated 2007 Stock Plan);

(ii)upon Recipient’s termination without Cause from employment (“Employment”) by the Company or its applicable affiliate; and/or

(iii)

in the event of Recipient’s death.

(c)The Rights that have vested are referred to herein as “Vested Rights.” The Rights that have not vested are referred to herein as “Unvested Rights.”

(d)Vested Rights shall be settled by the delivery to Recipient or a designated brokerage firm of one share of Common Stock (subject to equitable adjustment for any stock splits or similar transaction as of such date) per Vested Right within 30 days following the vesting of such Rights; provided that Recipient has satisfied all of the tax withholding

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obligations described in Section 7 below, and that Recipient has completed, signed and returned any documents and taken any additional action that the Company deems appropriate to enable it to accomplish the delivery of the shares of Common Stock. For the avoidance of doubt, each payment hereunder shall be treated as a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended.

(e)Notwithstanding anything contained in this Agreement to the contrary, upon Recipient’s termination of Employment for any reason (excluding Recipient’s death or termination without Cause by the Company or its applicable affiliate), any then Unvested Rights held by Recipient shall be forfeited and canceled as of the date of such termination (the “Termination Date”). Further, upon Recipient’s termination of Employment for Cause, any then Vested Rights not yet settled and any shares of Common Stock previously issued in respect of Vested Rights held by Recipient shall be forfeited and canceled as of the Termination Date.

(f)

For purposes of this agreement, “Cause” shall mean any of the following:

(i)Recipient has been convicted of (or has entered a plea of nolo contendere to) any felony or a misdemeanor involving moral turpitude;

(ii)Recipient failed to substantially perform Recipient’s material duties, which failure lasted for a period of at least fifteen (15) days after delivery to Recipient of a written notice of such failure;

(iii)Recipient’s fraud, embezzlement or other act of material dishonesty with respect to the Company or any of its affiliates; or

(iv)Recipient’s material breach of this Agreement or any other agreement between Recipient and the Company or any affiliate; provided that Recipient has been given written notice of any such alleged breach and an opportunity to cure such breach within fifteen (15) days after Recipient’s receipt of such notice.

3.

Representations. Recipient represents to the Company the following:

(a)Recipient is familiar with the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Stock underlying the Rights. Recipient is acquiring the Common Stock issuable hereunder for investment for his or her own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(b)Recipient understands that the shares of Common Stock issuable hereunder have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Recipient’s investment intent as expressed herein.

(c)Recipient understands that, in addition to the restrictions set forth in this Agreement, the shares of Common Stock issuable hereunder are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, Recipient must

3


hold such shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Recipient acknowledges that the Company has no obligation to register or qualify the shares of Common Stock issuable hereunder for resale. Recipient further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the shares of Common Stock issuable hereunder, and requirements relating to the Company which are outside of Recipient’s control, and which the Company is under no obligation and may not be able to satisfy.

(d)Recipient understands that Recipient may suffer adverse tax consequences as a result of Recipient’s acquisition, holding or disposition of the Rights and/or the shares of Common Stock issuable hereunder. Recipient represents that Recipient has consulted any tax consultants Recipient deems advisable in connection with the acquisition, holding and disposition of the Rights and the shares of Common Stock issuable hereunder (or has knowingly chosen not to consult a tax advisor) and that Recipient is not relying on the Company or its employees, officers, directors, attorneys or accountants for any tax advice.

(e)

[Accredited Investor Version: Financial Status.

(i)Recipient is an Accredited Investor (as defined in Rule 501(a)(3), (4), (5), (6), (7) or (8) of Regulation D promulgated under the Securities Act) because, (A) Recipient’s individual net worth or joint net worth with Recipient’s spouse at the time of the execution of this Agreement is in excess of $1,000,000, (B) Recipient had an individual income in excess of $200,000 in each of the two (2) most recent years or joint income with Recipient’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year or (C) Recipient is an executive officer or director of the Company or its subsidiaries.

(ii)Recipient is able to bear the economic risk of an investment in the Common Stock for an indefinite period of time, has adequate means of providing for his or her current financial needs and personal contingencies, has no need for liquidity in the investment in the Common Stock, understands that Recipient may not be able to liquidate his or her investment in the Company in an emergency, if at all, and can afford a complete loss of the investment.

(iii)Recipient has delivered to the Company an executed Confidential Investment Qualification Questionnaire in the form(s) attached hereto as Exhibit B. The information contained therein is complete and accurate in all material respects.]

(f)

[Alternative Version: Purchaser Representative; Sophistication; Financial

Status.

(i)Representative. Recipient hereby acknowledges and consents to the appointment of Shashi Murthy to act as Recipient’s “purchaser representative” in connection with evaluating the merits and risks of the issuance of Rights (and underlying Shares) hereunder (the “Representative”). Recipient has received from Shashi Murthy a letter describing any

4


material relationship between he and the Company and its affiliates, which has existed during the last two years or is contemplated to exist in the future.

(ii)Representative is an Accredited Investor (as defined in Rule 501(a)(3), (4), (5), (6), (7) or (8) of Regulation D promulgated under the Securities Act) because, (A) Representative’s individual net worth or joint net worth with Representative’s spouse at the time of the execution of this Agreement is in excess of $1,000,000, (B) Representative had an individual income in excess of $200,000 in each of the two (2) most recent years or joint income with Representative’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year or (C) Representative is an executive officer or director of the Company or its subsidiaries.

(iii)Representative has delivered to the Company an executed Confidential Investment Qualification Questionnaire in the form(s) attached hereto as Exhibit B. The information contained therein is complete and accurate in all material respects.

(iv)Recipient is able to bear the economic risk of an investment in the Common Stock for an indefinite period of time, has adequate means of providing for his or her current financial needs and personal contingencies, has no need for liquidity in the investment in the Common Stock, understands that Recipient may not be able to liquidate his or her investment in the Company in an emergency, if at all, and can afford a complete loss of the investment.

(v)Recipient has such knowledge and experience in financial and business matters that Recipient: (i) is capable of evaluating the merits and risks of the transactions contemplated by the issuance of the Rights (and underlying Shares) hereunder; or (ii)if Recipient does not have the knowledge and experience described in the preceding clause (i), Recipient has relied upon and believes that Representative has such knowledge and experience.]

4.Rights as a Stockholder. Subject to the provisions of this Agreement, Recipient shall not have voting rights or dividend rights with respect to shares of Common Stock underlying the Rights unless and until such shares of Common Stock are reflected as issued and outstanding shares on the Company’s stock ledger.

5.Certification. To the extent the Company determines to certificate the shares of Common Stock issued hereunder, such shares, to the extent applicable, shall be subject to the following provisions, and Recipient covenants and agrees to Recipient’s obligations set forth in this Section 5.

(a)In addition to other legends that may be required by applicable law or as deemed appropriate by the Company, all certificates issued hereunder shall be endorsed the following legends:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,

5


HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW, INCLUDING PURSUANT TO RULE 144 OR RULE 144A, PROVIDED THAT, EXCEPT IN THE CASE OF ANY TRANSACTION EXEMPT FROM REGISTRATION REQUIREMENT OF THE ACT PURSUANT TO RULE 144 OR RULE 144A, AN OPINION OF COUNSEL SHALL BE FURNISHED TO THE ISSUER (IF REQUESTED BY THE ISSUER) IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR APPLICABLE STATE SECURITIES LAW.

6.No Guarantee of Continued Employment or other Service Rights. Nothing in this Agreement shall confer upon or grant any greater right to Recipient to continue to serve the Company or any of its affiliates in the capacity in effect at the time of this Agreement, nor shall this Agreement affect the rights of the Company or any of its affiliates to terminate, where applicable (i) the employment of Recipient for any reason, or no reason, with or without cause and with or without notice, (ii) the employment of Recipient pursuant to the terms of such Recipient’s employment or other service agreement(s) with the Company or any of its affiliates, (iii) the service as a consultant of Recipient pursuant to the terms of such Recipient’s consulting agreement with the Company or any of its affiliates, or (iv) the service of Recipient as a director or manager of the Company or any of its affiliates, as the case may be, and any provisions of applicable law.

7.

Withholding Obligations.

(a)At any time requested by the Company, Recipient hereby authorizes withholding from payroll and any other amounts payable to Recipient, and otherwise agrees to pay to the Company any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any of its subsidiaries, if any, which arise in connection with the Rights and/or the issuance of any shares of Common Stock hereunder. Promptly upon request from the Company, Recipient shall demonstrate to the reasonable satisfaction of the Company that Recipient has paid all taxes incurred in connection with the award, vesting or settlement of the Rights.

(b)Unless the tax withholding obligations of the Company and/or any subsidiary are satisfied, the Company shall have no obligation to issue any shares of Common Stock in respect of the Rights or release such shares from any escrow provided for herein.

(c)Notwithstanding anything to the contrary in this Agreement, Recipient may be permitted, in the sole discretion of the Company, to pay the statutory minimum withholding tax obligation incurred by reason of the vesting, settlement or transfer of any Rights by delivery of a

6


properly executed notice instructing the Company to withhold shares of Common Stock otherwise deliverable to Recipient hereunder having an aggregate fair market value (as determined by the Company in its sole discretion) on the date the obligation arises equal to the amount required to be withheld. ALTHOUGH IT IS CONTEMPLATED THAT RECIPIENT MAY BE PERMITTED TO USE THE WITHHOLDING OF SHARES TO SATISFY RECIPIENT’S TAX OBLIGATIONS, THERE IS NO ASSURANCE THAT THE COMPANY WILL BE IN A POSITION TO ALLOW RECIPIENT TO USE THIS OPTION AT THE TIME A TAX OBLIGATION ARISES.

8.

Miscellaneous.

(a)The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by Recipient or other subsequent transfers by Recipient of any shares issued as a result of or under this Agreement, including without limitation (i) restrictions under an insider trading policy, (ii) restrictions that may be necessary in the absence of an effective registration statement under the Securities Act, covering the shares of Common Stock issued hereunder and (iii) restrictions as to the use of a specified brokerage firm or other agent for such resales or other transfers. Any sale of the shares of Common Stock issued hereunder must also comply with other applicable laws and regulations governing the sale of such shares.

(b)From time to time, the parties will execute and deliver, or cause to be executed and delivered, such documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

(c)This Agreement and the Purchase Agreement constitute the entire agreement, and supersede all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement.

(d)This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

(e)This Agreement may be executed in counterparts (including facsimile, .pdf and electronic transmission counterparts), all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

(f)This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

(g)All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by e mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the

7


party to receive such notice, or to such other address as may be designated in writing by such party.

[Signature page follows]

8


IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, in the case of the Company by its duly authorized officer, as of the date first above written.

COMPANY

Address for Notices:

NORTHWEST BIOTHERAPEUTICS, INC.

4800 Montgomery Lane

Suite 800

Bethesda, MD 20814

E-mail: []

By:

Name:

Title:

RECIPIENT

Address for Notices:

By:

[]

Name:

[]

Title:

E-mail: []


[Signature Page to Rights Issuance Agreement]


EXHIBIT A

Name:

Number of Shares underlying the Rights

[Shashi Murthy][Andrew Kozbial]

[]


EXHIBIT B

CERTIFICATION OF STATUS AS AN ACCREDITED INVESTOR

(Print or Type Recipient’s Name)


Reference is made to the Rights Issuance Agreement (the “Agreement”), dated as of even date herewith, by and between Northwest Biotherapeutics, Inc. (the “Company”) and the undersigned (“Undersigned”). Capitalized terms not otherwise defined herein shall have the same meanings specified in the Agreement. The Undersigned hereby certifies, pursuant to the Agreement, that:

1.Regulation D Matters

Undersigned is an “Accredited Investor” as that such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, unless Item VII below is marked with an “X” or similar check mark. Undersigned meets each of the following “Accredited Investor” categories marked with an “X” or similar check mark:

i.

an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the Common Stock offered, with total assets in excess of $5,000,000;

ii.

a director, executive officer, or general partner of the issuer of the securities being offered or sold;

iii.

a natural person whose individual net worth, or joint net worth with his or her spouse, at the time of his or her purchase exceeds $1,000,000;1


1    In calculating “individual net worth” or “joint net worth” for purposes of this item, the Recipient must exclude the value of his, her or its primary residence. The related amount of indebtedness secured by the primary residence up to its fair market value may also be excluded from the calculation, but any indebtedness secured by the residence in excess of such fair market value must be treated as a liability and deducted from the Recipient’s net worth. Even if such fair market value exceeds the aggregate amount of indebtedness secured by the Recipient’s primary residence, any increase in the amount of such indebtedness incurred within 60 days before the Recipient enters into this Subscription Agreement must be treated as a liability and deducted from the Recipient’s net worth.


iv.

a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income2 with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

v.

a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Common Stock offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;

vi.

an entity in which all of the equity owners are Accredited Investors; or

vii.

none of the above (Undersigned is not an Accredited Investor).

IN WITNESS WHEREOF, the Undersigned has executed this Certificate on the date set forth below.

Dated:

, 2020

Name:


2    For purposes of this item, “joint income” means adjusted gross income as reported for U.S. Federal income tax purposes, including any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any interest income received which is tax-exempt under Section 103 of the Code, (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code, and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code prior to its repeal by the Tax Reform Act of 1986.


EXHIBIT D

Special Consideration Agreement


SPECIAL CONSIDERATION AGREEMENT

THIS SPECIAL CONSIDERATION AGREEMENT (this “Agreement”), dated as of [•], 2020, is entered into between Northwest Biotherapeutics, Inc., a Delaware corporation (the “Company”), and the undersigned recipient (“Recipient”).

WHEREAS, pursuant to that certain Unit Purchase Agreement, dated as of August 28, 2020 (the “Purchase Agreement”), among the Company and each of the other Persons set forth on the signature pages thereto, the Recipient has elected to receive the number of shares of the Company’s Common Stock, par value $0.001 per share (“Common Stock”), set forth in Section 1.1 below (such shares, the “Shares”). Capitalized terms used but not otherwise defined herein will have the meanings set forth in the Purchase Agreement.

NOW, THEREFORE, it is agreed as follows:

ARTICLE I

DELIVERY OF SECURITIES

1.1 Issuance of Shares. Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of the parties contained herein, the Company hereby agrees to deliver to Recipient [•] shares of Common Stock. The Company shall deliver to Recipient the shares and appropriate evidence of issuance of the Shares. Each Share so delivered shall be registered on the books and records of the Company in the name of Recipient.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Recipient as follows:

2.1Organization and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware.

2.2Authorization. The Company has full corporate power and authority to execute, deliver and perform its obligations under this Agreement and to deliver the Shares to the Recipient. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Recipient, is legal, valid, binding and enforceable upon and against the Company (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity).

2.3Validity of Securities. The Shares to be issued pursuant to this Agreement have been duly and validly issued.


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF RECIPIENT

Recipient hereby represents and warrants to the Company as follows:

3.1

Investment Intent and Eligibility.

(a)Recipient is an “accredited investor” within the meaning of Rule 501(a) under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the certifications made by Recipient in Appendix I in connection with this subscription are true and complete.

(b)Recipient has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his, her or its prospective investment and is able, without materially impairing his financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss on such investment.

(c)Recipient has prior investment experience, or will rely upon his, her, or its financial advisor in connection with evaluating his, her or its decision to invest in the Shares.

(d)Recipient is acquiring the Shares for its own account, for investment and not with a view towards resale or distribution.

(e)Recipient has not been convicted, within the last ten years, of any felony or misdemeanor, and is not subject to any order, judgment or decree of any court, or subject to any order of any of the US Securities and Exchange Commission (the “SEC”), the Financial Industry Regulatory Authority, the U.S. Postal Service, a stock exchange or a state regulator, in each case entered within the last five years, that restrains or enjoins Recipient from engaging or continuing to engage in any conduct or practice: (i) in connection with the purchase or sale of any security; (ii) involving the making of any false filing with the SEC; or (iii) arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities or from engaging in the business of securities, insurance or banking.

3.2Delivery of Information; Material Changes. Any information which Recipient has furnished to the Company with respect to Recipient’s financial position and business experience is correct and complete as of the date hereof. Recipient promptly notified the Company of any material changes in any of the representations or warranties set forth in this Agreement (including in Appendix 1) prior to the date hereof.

3.3

Receipt of Information; No Representations or Warranties.

(a)Recipient has carefully evaluated the risks involved in investing in the Shares. Recipient has been afforded the opportunity to ask such questions as he, she or it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of acquiring the Shares. Recipient has received information about the Company and the Shares requested by or on behalf


of Recipient and has reviewed such information to the satisfaction of Recipient as Recipient has deemed appropriate in making an investment decision with respect to the Shares.

(b)Recipient acknowledges that, except as expressly provided herein, it is acquiring the Shares without any representation or warranty, express or implied, at law or in equity, by the Company, any of the other direct or indirect owners of the Company, or any of their respective officers, directors, employees, affiliates or advisors.

3.4Reliance. Recipient understands that the Company is relying upon its representations and warranties herein in determining whether Recipient is suitable as a recipient of the Shares, whether the Shares may be issued to Recipient without first registering the Shares under the Securities Act and all applicable state securities laws.

3.5Acknowledgement of Risk. Recipient acknowledges that an investment in the Company includes a high degree of risk and that Recipient could lose his, her or its entire investment. Recipient acknowledges that the Company has no current plans to file a registration statement to register the Shares with the SEC and that the Company has no obligation to Recipient to register such Shares in the future.

ARTICLE IV

MISCELLANEOUS

4.1

Transfer Restrictions. Recipient acknowledges and agrees that:

(a)the offering and sale of the Shares is intended to be exempt from registration under the Securities Act, by virtue of the provisions of either Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act by the SEC;

(b)none of the Shares have been registered under the Securities Act or any securities or “Blue Sky” laws of any state;

(c)none of the Shares may be offered, sold, transferred, pledged, hypothecated or otherwise assigned unless such Shares are registered under the Securities Act or any securities or “Blue Sky” laws of any state or an exemption from such registration is available; and

(d)certificate(s), if any, representing the Shares and each such certificate issued to any subsequent transferee of the Shares shall bear a conspicuous legend in substantially the following form (unless transferred in the manner described in the following legend):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED,ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER THE ACT OR APPLICABLE


STATE SECURITIES LAW OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW, INCLUDING PURSUANT TO RULE 144 OR RULE 144A, PROVIDED THAT, EXCEPT IN THE CASE OF ANY TRANSACTION EXEMPT FROM REGISTRATION REQUIREMENT OF THE ACT PURSUANT TO RULE 144 OR RULE 144A, AN OPINION OF COUNSEL SHALL BE FURNISHED TO THE ISSUER (IF REQUESTED BY THE ISSUER) IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE ACT AND/OR APPLICABLE STATE SECURITIES LAW.

4.2Further Assurances. From time to time, the parties will execute and deliver, or cause to be executed and delivered, such documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

4.3Entire Agreement. This Agreement and the Purchase Agreement constitute the entire agreement, and supersedes all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement.

4.4Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

4.5Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

4.6Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by e mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

4.7Counterparts. This Agreement may be executed in counterparts (including facsimile, .pdf and electronic transmission counterparts), all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

[Signature Page Follows]


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

COMPANY

   

Address for Notices:

NORTHWEST BIOTHERAPEUTICS, INC.

4800 Montgomery Lane

Suite 800

Bethesda, MD 20814

By:

E-mail: []

Name:

Title:

RECIPIENT

Address for Notices:

By:

[]

Name:

[]

Title:

E-mail: []


[Signature Page to Special Consideration Agreement]


APPENDIX I

CERTIFICATION OF STATUS AS AN ACCREDITED INVESTOR

(Print or Type Recipient’s Name)


Reference is made to the Special Consideration Agreement (the “Agreement”), dated as of even date herewith, by and between Northwest Biotherapeutics, Inc. (the “Company”) and the undersigned (“Undersigned”). Capitalized terms not otherwise defined herein shall have the same meanings specified in the Agreement. The Undersigned hereby certifies, pursuant to the Agreement, that:

1.Regulation D Matters

Undersigned is an “Accredited Investor” as that such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, unless Item VII below is marked with an “X” or similar check mark. Undersigned meets each of the following “Accredited Investor” categories marked with an “X” or similar check mark:

i.

an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the Common Stock offered, with total assets in excess of $5,000,000;

ii.

a director, executive officer, or general partner of the issuer of the securities being offered or sold;

iii.

a natural person whose individual net worth, or joint net worth with his or her spouse, at the time of his or her purchase exceeds $1,000,000;1


1     In calculating “individual net worth” or “joint net worth” for purposes of this item, the Recipient must exclude the value of his, her or its primary residence. The related amount of indebtedness secured by the primary residence up to its fair market value may also be excluded from the calculation, but any indebtedness secured by the residence in excess of such fair market value must be treated as a liability and deducted from the Recipient’s net worth. Even if such fair market value exceeds the aggregate amount of indebtedness secured by the Recipient’s primary residence, any increase in the amount of such indebtedness incurred within 60 days before the Recipient enters into this Subscription Agreement must be treated as a liability and deducted from the Recipient’s net worth.


iv.

a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income2 with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

v.

a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Common Stock offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;

vi.

an entity in which all of the equity owners are Accredited Investors; or

vii.

none of the above (Undersigned is not an Accredited Investor).

IN WITNESS WHEREOF, the Undersigned has executed this Certificate on the date set forth below.

Dated:

, 2020

Name:


2     For purposes of this item, “joint income” means adjusted gross income as reported for U.S. Federal income tax purposes, including any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any interest income received which is tax-exempt under Section 103 of the Code, (ii) the amount of losses claimed as a limited partner in a limited partnership (as reported on Schedule E of Form 1040), (iii) any deduction claimed for depletion under Section 611 et seq. of the Code, and (iv) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code prior to its repeal by the Tax Reform Act of 1986.


EXHIBIT E

Special Expense Agreement

2


SPECIAL EXPENSE AGREEMENT

This Special Expense Agreement (this “Agreement”) is made and entered into as of August 28, 2020, by and among Corning Incorporated, a New York corporation (“Payee”), Flaskworks, LLC, a Massachusetts limited liability company (the “Company”), and Northwest Biotherapeutics, Inc., a Delaware corporation (“Buyer”).

WHEREAS, Buyer, the Company and Payee are parties to that certain Unit Purchase Agreement dated as of the date hereof by and among Buyer, the Company and each of the other persons and entities set forth on the signature pages thereto (the “Purchase Agreement”); and

WHEREAS, the Purchase Agreement requires the payoff of the $98,928.00 in expenses (the “Expenses”) owed to Payee by the Company and contemplates that such payoff will be evidenced by the delivery of this Agreement at the Closing (as defined in the Purchase Agreement) and the payment to Payee at such time of the Expenses by Buyer in cash.

AGREEMENT

NOW, THEREFORE, in consideration of their mutual covenants contained herein, the receipt and efficiency of which are hereby acknowledged, the Parties hereto (the “Parties” and each individually, a “Party”) agree as follows:

1.Payoff Acknowledgment. Payee hereby acknowledges that (a) as of the date hereof, the Expenses set forth herein are the sole remaining expenses owed to Payee by the Company excluding, for the avoidance of doubt, any amounts payable as consideration to Payee as a seller under the Purchase Agreement and (b) upon the payment of the Expenses in accordance with Section 2 hereof, (i) all obligations of the Company to the Payee as of the date hereof shall be repaid, discharged and extinguished in full and (ii) the Company, the Buyer and their respective affiliates are released and discharged from any liability with respect to the Expenses and shall have no further obligations with respect thereto.

2.Mechanics for Payment. The Expenses shall be paid in accordance with the Purchase Agreement and the Closing Payment Schedule (as defined therein) attached thereto.

3.Miscellaneous. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each Party. This letter may be executed in multiple counterparts and by facsimile signature, each of which shall be deemed an original and all of which together shall constitute one instrument. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any Party without the prior written consent of the other Parties, and any such assignment without such prior written consent shall be null and void. This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of


the conflicts of laws principles of the State of Delaware. All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by e- mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the Party to receive such notice, or to such other address as may be designated in writing by such Party.

[Signature Page Follows]


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

BUYER

    

Address for Notices:

NORTHWEST BIOTHERAPEUTICS, INC.

4800 Montgomery Lane

Suite 800

Bethesda, MD 20814

E-mail: lpowers@nwbio.com;

By:

lgoldman@nwbio.com

Name:

Title:

PAYEE

Address for Notices:

[]

[]

By:

Name:

Title:

COMPANY

Address for Notices:

FLASKWORKS, LLC

38 Wareham Street, 3rd Floor

Boston, MA 02118

E-mail:

shashi.k.murthy@flaskworks.com

By:

Name:

Title:


SPECIAL EXPENSE AGREEMENT

This Special Expense Agreement (this "Agreement") is made and entered into as of August 28, 2020, by and among Northeastern University ("Payee"), Flaskworks, LLC, a Massachusetts limited liability company (the "Company"), and Northwest Biotherapeutics, Inc., a Delaware corporation ("Buyer").

WHEREAS, Buyer and the Company are parties to that certain Unit Purchase Agreement dated as of the date hereof by and among Buyer, the Company and each of the other persons and entities set forth on the signature pages thereto (the "Purchase Agreement"); and

WHEREAS, the Purchase Agreement requires the payoff of the $168,547.16 in expenses (the "Expenses") owed to Payee by the Company and contemplates that such payoff will be evidenced by (a) the payment by Buyer to Payee at the Closing (as defined in the Purchase Agreement) of $51,895.16 the ("Cash Payment") out of the total amount of Expenses and (b) the delivery of this Agreement at the Closing and the subsequent payment to Payee ofan amount equal to the Expenses, less the Cash Payment (such $116,652 difference, the "Remaining Expenses") by Buyer in cash, shares of Buyer's common stock ("Shares"), or some combination thereof, at the election of Payee, which election is to be made between the 901h and 1201h day following the date hereof.

AGREEMENT

NOW, THEREFORE, in consideration of their mutual covenants contained herein, the receipt and efficiency of which are hereby acknowledged, the Parties hereto (the "Parties" and each individually, a "Party") agree as follows:

1.Payoff Acknowledgment. Payee hereby acknowledges that (a) as of the date hereof, the Expenses set forth herein are the sole remaining expenses owed to Payee by the Company excluding, for the avoidance of doubt, any amounts due following the date hereof under that certain License Agreement by and between Payee and the Company, as amended and restated as of the date hereof (the "License Agreement") and (b) upon the payment of the Remaining Expenses in accordance with Section 2 hereof and of the Cash Payment, (i) all obligations of the Company to the Payee as of the date hereof shall be repaid, discharged and extinguished in full and (ii) the Company, the Buyer and their respective affiliates are released and discharged from any liability with respect to the Expenses and shall have no further obligations with respect thereto.

2.Mechanics for Payment. The Remaining Expenses shall be paid in accordance Section 10 of the License Agreement. In the event that Payee elects to receive any Shares, it shall execute and deliver in to Buyer in connection with such election the form of agreement attached hereto as Exhibit A.

3.Miscellaneous. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing

Page 1 of 11


specifically designated as an amendment hereto, signed on behalf of each Party. This letter may be executed in multiple counterparts and by facsimile sig nat w-e, each of which shall be deemed an original and all of which together shall constitute one instrument. Neither this Agreement nor any of the rights , interests or obligations under this Agreement may be assigned or deleg ated, in whole or in part, by operation of law or otherwise, by any Party without the prior written consent of the other Parties, and any such assignment without such prior written consent shall be null and void. This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and constrned in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts oflaws principles of the State of Delaware . All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent by e­ mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the Pa1ty to receive such notice, or to such other address as may be designated in writing by such Party.

[Signature page follows]

Page 2 of 11


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

BUYER

   

Address for Notices:

NORTHWEST BIOTHERAPEUTICS, INC.

4800 Montgomery Lane

Suite 800

Bethesda, MD 20814

E-mail: lpowers@nwbio.com;

By:

lgoldman@nwbio.com

Name:

Title:

PAYEE

Address for Notices:

[]

[]

By:

Name:

Title:

COMPANY

Address for Notices:

FLASKWORKS, LLC

38 Wareham Street, 3rd Floor

Boston, MA 02118

E-mail:

By:

shashi.k.murthy@flaskworks.com

Name:

Title:


EXHIBIT A

AGREEMENT FOR PAYMENT OF EXPENSES IN SHARES

Page 4 of 11


AGREEMENT FOR PAYMENT OF EXPENSES IN SHARES

TIDS AGREEMENT FOR PAYMENT OF EXPENSES IN SHARES (this "Agreement"), dated as of [· ], 2020 , is entered into between Northwest Biotherapeut ics , Inc., a Delaware corporation (the "Company"), and the undersigned recipient ("Recipient").

WHE REAS, pursuant to that certain Special Expense Agreement dated as of the date hereof by and among Recipient , Flaskworks , LLC, a Massachusetts limited liability company , and the Company, and in connection with the transactions contemplated by that certain Unit Purchase Agreement, dated as of [· ], 2020 (the "Purchase Agreement") , among the Company and each of the other Persons set forth on the signature pages thereto, the Recipient has elected to receive the number of shares of the Company's Common Stock, par value $0.001 per share ("Common Stock"), set forth in Section 1.1 below (such shares , the "Shares"). Capitalized tenns used but not otherwise defined herein will have the meanings set forth in the Purchase Agreement.

NOW, THEREFORE, it is agreed as follows:

ARTICLE I

DELIVERY OF SECURITIES

1.I Issuance of Shares.  Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of the parties contained herein, the Company hereby agrees to deliver to Recipient [· ] shares of Common Stock. The Company shall deliver to Recipient the shares and appropriate evidence of issuance of the Shares. Each Share so delivered shall be registered on the books and records of the Company in the name of Recipient.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Recipient as follows:

2.1Organization and Authority. he Company is a corporation duly organized, validly existing and in good standjng under the laws of Delaware .

2.2Authorization. The Company has full corporate power and authority to execute, deliver and perform its obligations under this Agreement and to deliver the Shares to the Recipient. This Agreement has been duly executed and delivered by the Company and, assuming due authori zation, execution and delivery by the Recipie nt, is legal, valid, binding and enforceable upon and against the Company (except as enforcement may be limited by applicable bankm ptcy, insolvency , reorganization, moratorium or similar laws affecting creditors' rights generally and by general principles of equity).

2.3Validity of Securities. The Shares to be issued pursuant to this Agreement have been duly and validly iss ued.

Page 5 of 11


ARTICLE III

REPRESENTATIONS AND \VARRANTIES OF RECIPIENT

Recipient hereby represents  and  warrants to the Company  as follows:

3.1 Investment Intent and Eligibi lit y.

(a)Recipient is an "accredited investor" within the meaning of Rule 501(a) under Regulation D promulgated under the Securities Act of 193 3, as amended (the "Securities Act"), and  the certifications made by Recipient in Appendix I in connection with this subscription are true and complete.

(b)Recipient has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of his, her or its prospective investment and is able, without materially impairing his financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss on such investment.

(c)Recipient has prior investment experience, or will rely upon his, her, or its financial advisor in connection with evaluating his , her or its decision to invest in the Shares.

(d)Recipient is acquiring the Shares for its own account, for investment and not with a view towards resale or distribution.

(e)Recipient has not been convicted, within the last ten years, of any felony or misdemeanor , and is not subject to any order, judgment or decree of any comt, or subject to any order of any of the US Securities and Exchange Commission (the "SEC''), the Financial Industry Regulatory Authori ty, the U.S. Postal Service, a stock exchange or a state regula tor, in each case entered within the last five years, that restrains or enjoins Recipient from engaging or continuing to engage in any conduct or practice: (i) in connection with the purchase or sale of any securi ty; (ii) involving the making of any false filing with the SEC; or (iii) arising out of the conduct of the business of an unde rwriter , broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities or from engaging in the business of securiti es, insurance or banking .

3.2Delive ry ofl nfonnation; Material Changes . Any info1m at ion which Recipient has furnished to the Company with respect to Recipient's financial position and business experience is correct and complete as of the date hereof. Recipient promptly notified the Company of any material changes in any of the representations or warranties set forth  in  this Agreement  (including in Appendix 1) prior to the date hereof.

3.3

Receipt of Information; No Representations or Wan-anties.

(a)Recipient has carefully evaluated the risks involved in investing in the Shares. Recipient has been afforded the opportunity to ask such questions as he, she or it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of acquiring the Shares. Recipient has received information about the Company and the Shares requested by or on behalf

Page 6 of 11


of Recipient and has reviewed such information to the satisfaction of Recipient as Recipient has deemed appropriate in making an investment decision with respect to the Shares.

(b)Recipient acknowledges that, except as expressly provided herein , it is acquiring the Shares without any representation or warranty, express or implied, at law or in equity, by the Company, any of the other direct or indirect owners of the Company, or any of their respective officers, directors, employees, affiliates or advisors.

3.4Reliance. Recipient understands that the Company is relying upon its representations and warranties herein in determining whether Recipient is suitable as a recipient of the Shares, whether the Shares may be issued to Recipient without first registering the Shares under the Securities Act and all applicable state securities laws.

3.5Acknowledgement of Risk. Recipient acknowledges that an investment in the Company includes a high degree of risk and that Recipient could lose his, her or its entire investment. Recipient acknowledges that the Company has no current plans to file a registration statement to register the Shares with tbe SEC and that the Company has no obligation to Recipient to register such Shares in the future.

ARTICLE IV

MISCELLANEOUS

4.1

Transfer Restrictions. Recipient acknowledges and agrees that:

(a)the offering and sale of the Shares is intended to be exempt from registration under the Securities Act, by virtue of the provisions of either Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act by the SEC;

(b)none of the Shares have been registered under the Securities Act or any securities or "Blue Sky" laws of any state;

(c)none of the Shares may be offered, sold, transferred, pledged, hypothecated or otherwise assigned unless such Shares are registered under the Securities Act or any securities or "Blue Sky" laws of any state or an exemption from such registration is availab le; and

(d)certificate(s), if any, representing the Shares and each such certificate issued to any subsequent transferee of the Shares shall bear a conspicuous legend in substantially the following form (unless transferred in the manner described in the following legend):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") , OR THE SECURITIES LAWS OF ANY JURJSDIC TION. SUCH S CURITIES MAY NOT BE OFFERED, SOLD, RANSF RRED, P EDGED, ASSIGNED, CUMBERED, HYPOTHECA TED OR OTHER WISE DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENTWITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UND R THE ACT OR APPLICABLE

Page 7 of 11


STATE SECURITIES LAW OR (II) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW, INCLUDING PURSUANT TO RULE 144 OR RULE 144A, PROVIDED  THAT,   EXCEPT   IN  THE  CAS   OF   ANY  TRANSACTION EXEM PT FROM REGISTRATION REQUIREM NT OF THE ACT PURSUANT TO RULE 144 OR RULE 144A, AN OPINION OF  COUNSEL SHALL BE FURNISHED TO THE ISSUER (IF REQUESTED BY THE ISSUER) 1N FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH TRANSACTION  DOES  NOT REQUIRE REGISTRATION UNDER  THE  ACT  AND/OR  APPLICABLE STATE SECURITIES LAW.

4.2Further Assurances. From time to time, the parties will execute and deliver, or cause to be executed and delivered, such documents and instruments as may be reasonably necessary to con ummate the transactions contemplated by this Agreement.

4.3Entire Agreement.  This Agreement and the Special Expense Agreement constitute the entire agreement, and supersedes all prior written agreements, arrangements and understandings and all prior and contemporaneous oral agreements, arrangements and understandings between the parties with respect to the subject matter of this Agreement.

4.4Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether  by course of conduct or otherwise,  except  by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party.

4.5Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

4.6Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given if delivered personally or sent bye  mail, overnight courier or registered or certified mail, postage prepaid, to the address set forth on the signature pages hereto opposite the party to receive such notice, or to such other address as may be designated in writing by such party.

4.7Counterparts. This Agreement may be executed in counterparts (including facsimile, .pdf and electronic transmission  counterparts), all of which shall be considered  one and the same instrument and shall become effective when one or more counterparts bave been signed by each of the parties and delivered to the other patty.

[Signature Page Follows]

Page 8 of 11


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

COMPANY

   

Address for Notices :

NORTHW ST BIOTH RAP UTICS, INC.

4800 Montgomery Lane

Suite 800

By:

Bethesda, MD 20814

Name:

E-mail: []

Title:

RECIPIENT

Address for Notices :

By:

[]

Name:

[]

Title:

E-mail: []

Page 9 of 11


[Signature Page to

Agreement for

Payment of Expenses

in Shares]

Page 10 of 11


APPENDI X I

CERTIFICATION OF STATUS AS AN ACCREDITED INVESTOR

(Print or Type Recipient's Name)


Reference is made to the Agreement for Payment of Expenses in Shares (the "Agreement"), dated as of even date herewith, by and between Northwest Biotherapeutics, Inc. (the "Company") and the undersigned ("Undersigned"). Capitalized terms not otherwise defined herein sha ll have the same meanings specified in the Agreement. The Undersigned hereby certifies, pursuant to the Agreement, that:

1.

Regulation D Matters

Undersigned is an " Accredi ted Investor" as that such term is defined in Rule 50 l (a) of Regulation D promulgated under the Securities Act, unless Item VII below is marked with an "X" or similar check mark. Undersigned meets each of the following "Accredited Investor" categories marked with an "X" or similar check mark:

i. an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the Common Stock offered, with total assets in excess of 5,000,000;

ii. adirec tor, executive officer, or general partner of the issuer of the securities being offered or sold;

iii. a natural person whose individual net worth, or joint net worth with his or her spouse at the time of his or her purchase exceeds $1 000,000;

iv. a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation ofreaching the same income level in the current year;

v. a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Common Stock offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;

vi .an entity in which all of the equity owners are Accredited Investors; or

vii. none of the above (Undersigned is not an Accredited Investor).

Page 11 of 11


IN WITNESS WHEREOF, the Undersigned bas executed thjs Certificate on tbe date set forth below.

Dated:

, 2020

Name:

Page 12 of 11


EXHIBIT F

New Flaskworks LLC Agreement

3


Execution Version

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

OF

FLASKWORKS, LLC

This Second Amended and Restated Operating Agreement (this “Agreement”) of Flaskworks, LLC (the “Company”) is entered into and shall be effective as of August 28, 2020, by Northwest Biotherapeutics, Inc., as the sole member (the “Member”).

The Member, by execution of this Agreement, hereby forms a limited liability company pursuant to and in accordance with the Massachusetts Limited Liability Company Act, as amended from time to time (the “Act”), and hereby agrees as follows:

1.Name. The name of the limited liability company is Flaskworks, LLC. The business of the Company may be conducted under that name or, upon compliance with applicable laws, any other name that the Member deems appropriate or advisable.

2.Filing of Certificates. The Member is authorized to execute, deliver and file any other certificates, notices or documents (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business.

3.Purposes. The purposes of the Company are to engage in any lawful act, business or activity for which limited liability companies may be organized under the Act and that the Member shall approve.

4.Powers. In furtherance of its purposes, but subject to all of the provisions of this Agreement, the Company shall have and may exercise all the powers now or hereafter conferred by the Commonwealth of Massachusetts law on limited liability companies formed under the Act and all powers necessary, convenient or incidental to accomplish its purposes as set forth in Section 3.

5.Office and Agent. The Company will continuously maintain a registered office and registered agent in the Commonwealth of Massachusetts as required by the Act. The principal office will be as the Member from time to time may determine. The Company also may have such offices, anywhere within and without the Commonwealth of Massachusetts, as the Member from time to time may determine, or the business of the Company may require.

6.Member. The name and the mailing address of the Member are as follows:

Name

Address

Northwest Biotherapeutics, Inc.

4800 Montgomery Lane, Suite 800

Bethesda, MD 20814


7.Limited Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Member shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member of the Company.

8.Capital Contributions. The Member is deemed admitted as a member of the Company upon its execution and delivery of this Agreement.

9.Additional Contributions. The Member is not required to make any capital contribution to the Company. However, the Member may voluntarily make capital contributions to the Company at any time.

10.Allocation of Profits and Losses. For so long as the Member is the sole member of the Company, the Company’s profits and losses shall be allocated solely to the Member.

11.Distributions. Distributions shall be made to the Member at the times and in the aggregate amounts determined by the Member. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to the Member on account of its interest in the Company if such distribution would violate the Act or other applicable law.

12.Management. In accordance with the Act, management of the Company shall be vested in the Member. The Member shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes of the Company described herein, including all powers, statutory or otherwise, possessed by members of a limited liability company under the laws of the Commonwealth of Massachusetts. Notwithstanding any other provision of this Agreement (other than the last sentence of this Section), the Member is authorized to execute and deliver any document on behalf of the Company without any vote or consent of any other person. The Member has the authority to bind the Company. Notwithstanding any other provision herein, the Member shall not take any action that would cause the Company to fail to be treated as an entity disregarded for US federal (and applicable state) income tax purposes.

13.Officers. The Member may, from time to time as it deems advisable, select natural persons who are employees or agents of the Company and designate them as officers of the Company (the “Officers”) and assign titles (including, without limitation, President, Vice President, Secretary, and Treasurer) to any such person. Unless the Member decides otherwise, if the title is one commonly used for officers of a business entity formed under the Act or other corporate law of the Commonwealth of Massachusetts, the assignment of such title shall constitute the delegation to such person of the authorities and duties that are normally associated with that office. Any delegation pursuant to this Section may be revoked at any time by the Member. An Officer may be removed with or without cause by the Member.

2


14.Other Business Opportunities. The Member and any person or entity affiliated with the Member may engage in or possess an interest in other business opportunities or ventures (unconnected with the Company) of every kind and description, independently or with others, including, without limitation, businesses that may compete with the Company. Neither the Member nor any person or entity affiliated with the Member shall be required to present any such business opportunity or venture to the Company, even if the opportunity is of the character that, if presented to the Company, could be taken by it. Neither the Company nor any person or entity affiliated with the Company shall have any rights in or to such business opportunities or ventures or the income or profits derived therefrom by virtue of this Agreement, notwithstanding any duty otherwise existing at law or in equity. The provisions of this Section shall apply to the Member solely in its capacity as member of the Company and shall not be deemed to modify any contract or arrangement otherwise agreed to by the Company and the Member.

15.

Exculpation and Indemnification.

(a)None of the Member or any of its current or former affiliates, stockholders, equityholders, officers, directors, employees or agents, any manager or officer of the Company prior to the adoption of this Agreement, or any affiliate, stockholder, equityholder, manager, officer, director, employee or agent of the Company after the adoption of this Agreement (including in each case the executors, heirs, assigns, successors or other legal representatives of any such persons) (collectively, the “Covered Persons”) shall be liable to the Company, the Member or any other person or entity who is a party to or is otherwise bound by this Agreement for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, unless such Covered Person engaged in fraud, gross negligence, intentional misconduct or a knowing violation of applicable law.

(b)To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person by this Agreement, unless such Covered Person engaged in fraud, gross negligence, intentional misconduct or a knowing violation of applicable law; provided, however, that any indemnity under this Section shall be provided out of and to the extent of Company assets only, and the Member shall not have any personal liability on account thereof.

(c)To the fullest extent permitted by applicable law, expenses (including reasonable and documented legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in this Section.

3


(d)A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by the person or entity as to matters the Covered Person reasonably believes are within such other person or entity’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.

(e)Notwithstanding the foregoing provisions of this Section, the Company shall indemnify a Covered Person in connection with a proceeding (or part thereof) initiated by such Covered Person only if such proceeding (or part thereof) was authorized by the Member; provided, however, that a Covered Person shall be entitled to reimbursement of his or her reasonable and documented counsel fees with respect to a proceeding (or part thereof) initiated by such Covered Person to enforce his or her right to indemnity or advancement of expenses under the provisions of this Section to the extent the Covered Person is successful on the merits in such proceeding (or part thereof)

(f)The foregoing provisions of this Section shall survive any termination of this Agreement. Notwithstanding anything herein to the contrary, (i) the Company shall not exculpate, indemnify, or otherwise protect any Covered Person resulting from a breach by such person of this Agreement or any other agreement between such Covered Person and the Company, any affiliates of the Company, or any other Covered Person (including, for the avoidance of doubt, that certain Unit Purchase Agreement, dated as of August 28, 2020, by and among the Member and each of the parties set forth on the signature pages thereto (the “Purchase Agreement”)) and (ii) any indemnification or other payments pursuant to this Section 15 owed to any person that was a manager or officer of the Company prior to the adoption of this Agreement (with respect to claims relating to conduct during the period prior to the adoption of this Agreement) shall be limited and paid out of proceeds paid on account of valid insurance claims made under the applicable “Tail Policy” (as defined in the Purchase Agreement).

16.

Dissolution.

(a)The Company shall dissolve and its affairs shall be wound up upon the first to occur of: (i) the written consent of the Member, (ii) the entry of a decree of judicial dissolution of the Company as provided in the Act, or (iii) the occurrence of any other event which, pursuant to any non-waivable provision of the Act, causes dissolution of the Company.

(b)In the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Company in an orderly manner), and the assets or proceeds from the sale of the assets of the Company shall be applied in the manner, and in the order of priority, set forth in the Act.

4


17.Benefits of Agreement; No Third-Party Rights. The provisions of this Agreement are intended solely to benefit the Member (unless express provision is made herein to the contrary) and, to the fullest extent permitted by applicable law, shall not be construed as conferring any benefit upon any other person or entity, or upon any creditor of the Company (and no such person, entity or creditor shall be a third-party beneficiary of this Agreement), and the Member shall have no duty or obligation to any such person, entity or creditor of the Company to make any contributions or payments to the Company.

18.Severability of Provisions. Each provision of this Agreement shall be considered severable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Agreement which are valid, enforceable and legal.

19.Entire Agreement. This Agreement constitutes the entire agreement of the Member with respect to the subject matter hereof.

20.Governing Law. This Agreement shall be governed by, and construed under, the laws of the Commonwealth of Massachusetts (without regard to conflict of laws principles), all rights and remedies being governed by said laws.

21.Amendments. This Agreement may not be modified, altered, supplemented or amended except pursuant to a written agreement executed and delivered by the Member.

[The remainder of this page is intentionally left blank.]

5


IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Agreement as of the date first written above.

NORTHWEST BIOTHERAPEUTICS, INC.

By:

Name:

Title:

Second Amended and Restated Operating Agreement – Flaskworks, LLC


Schedule A

1.

Unsecured Promissory Note Agreement, dated June 30, 2020, between Buyer, as holder, and Flaskworks, as maker, with aggregate principal face amount of $30,000.

2.

Unsecured Promissory Note Agreement, dated August 6, 2020, between Buyer, as holder, and Flaskworks, as maker, with aggregate principal face amount of $25,000.


Execution Version

DISCLOSURE SCHEDULE

This Disclosure Schedule is made and given pursuant to Articles II and III of the Unit Purchase Agreement, dated as of August 28, 2020 (the “Agreement”), between Northwest Biotherapeutics, Inc., a Delaware corporation (the “Buyer”), and each of the other Persons set forth on the signature pages to the Agreement (each, a “Seller” and collectively, the “Sellers”). All capitalized terms used but not defined herein shall have the meanings as defined in the Agreement. The section or subsection numbers below correspond to the section or subsection numbers of the representations and warranties in the Agreement and this Disclosure Schedule is qualified in its entirety by reference to the Agreement. Inclusion of any item in this Disclosure Schedule (1) does not represent a determination that such item is material or establish a standard of materiality, (2) does not represent a determination that such item did not arise in the ordinary course of business, (3) does not represent a determination that the transactions contemplated by the Agreement require the consent of third parties, and (4) shall not constitute, or be deemed to be, an admission to any third Person concerning such item. Headings have been inserted in this Disclosure Schedule for convenience of reference only and shall not have the effect of amending or changing the express description of the sections or subsections as set forth in the Agreement.


Section 3.4 of Disclosure Schedule

Equity Capitalization of the Company

No. of Units

% Ownership

Class A-l Unitholders

Shashi Murthy

2,636,147

65.02%

Class A-2 Unitholders

Corning Incorporated

750,000

18.50%

Class B Unitholders (Profits Interests)

Jennifer Rossi

465,203

11.48%

Andrew Kozbial

63,292

1.56%

Unallocated Pool

139,410

3.44%

Total

4,054,052

100.00%


Schedule 3.6(a) of Disclosure Schedule

Financial Statements Attached.


Schedule 3.7 of Disclosure Schedule

See Schedule A.


Section 3.11 of Disclosure Schedule

1.

Under the Offer Letter, dated September 21, 2016, by and between Flaskworks, LLC and Jennifer Rossi, as amended on May 12, 2017 and the date hereof, Jennifer Rossi is entitled to a cash bonus in connection with a change of control of the Company.

2.

Supply Agreement, dated September 13, 2018, made by and between Corning Incorporated and Flaskworks, LLC.

3.

Admission Letter, dated October 22, 2018, made by and between Flaskworks, LLC and Jennifer Rossi.

4.

Admission Letter, dated October 22, 2018, made by and between Flaskworks, LLC and Andrew Kozbial.


Section 3.13 of Disclosure Schedule

1.

License Agreement with Triple Ring Technologies for the lease of office and laboratory space at 38 Wareham Street, 3rd Floor, Boston, MA 02118.


Section 3.16 of Disclosure Schedule

1.

Supply Agreement, dated September 13, 2018, made by and between Corning Incorporated and Flaskworks, LLC (to be terminated in connection with closing).

2.

License Agreement with Triple Ring Technologies for the lease of office and laboratory space at 38 Wareham Street, 3rd Floor, Boston, MA 02118.

3.

Exclusive Patent License Agreement, dated November 30, 2016, made by and between Northeastern University and Flaskworks, LLC.

4.

Notice of Award to Shashi Murthy of a National Science Foundation SBIR Phase II grant dated August 28, 2019.

7


Section 3.17 of Disclosure Schedule

·

Jennifer Rossi is entitled to a cash bonus in connection with a change of control of the Company.

·

Shashi Murthy has loaned the company an aggregate principal amount of $150,000 and Jennifer Rossi has loaned the Company an aggregate principal amount of $15,000.

8


Section 3.18 of Disclosure Schedule

(a)

Patents and Patent Applications

BR Ref. No.

Application/Publ.

No.

Patent No.

Country

Status

Owner

1

FLAS- 001/00US

62/185,906

US

Converted

Licensed from Northeastern University

Record unavailable

2

FLAS- 001/00WO

PCT/US2016/040042 WO/2017/004169

WO

National Stage

Licensed from Northeastern University

Owner: Northeastern University Inventors: Shashi K.

Murthy/Bradley B. Collier Priority 62/185906

3

FLAS- 001/01EP

16818659.1

EP3313434

EP

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventors: Shashi K. Murthy/Bradley B. Collier

Nat. PCT/US2016/040042

Priority 62/185906

4

FLAS- 001/01US

15/736257

20180171296

US

Allowed

Licensed from Northeastern University

Owner: Northeastern University Inventors: Shashi K. Murthy/Bradley B. Collier

Nat. PCT/US2016/040042

Priority 62/185906

5

FLAS- 002/00US_0

62/250,630

US

Converted

Licensed from Northeastern University

Record unavailable

6

FLAS- 002/00US_01

62/250,618

US

Converted

Licensed from Northeastern University

Record unavailable

7

FLAS- 002/01WO

PCT/US2016/060701 WO/2017/079674

WO

National Stage

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy Priority 62/250618 and 62/250630

8

FLAS- 002/01EP

16819715.0

EP3371295

EP

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy Nat. PCT/US2016/060701

Priority 62/250618 and 62/250630

9

FLAS- 002/01US

15/970664

20180251723

US

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy

Response to office action due 5/6/2020

9


BR Ref. No.

Application/Publ.

No.

Patent No.

Country

Status

Owner

Cont. PCT/US2016/060701

Priority claim: 62/250618 and 62/250630

10

FLAS- 003/00US_0

62/356,504

US

Converted

Licensed from Northeastern University

Record unavailable

11

FLAS- 003/00US_1

62/357,937

US

Converted

Licensed from Northeastern University

Record unavailable

12

FLAS- 003/00WO

PCT/US2017/039538 WO/2018/005521

WO

National Stage

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy

Priority 62/356504 and 62/357937

13

FLAS- 003/01CN

201780038219.2

CN109312282

CN

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy Nat. PCT/US2017/039538

Priority 62/356504 and 62/357937

14

FLAS- 003/01EP

17771906.9

EP3478818

EP

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy Nat. PCT/US2017/039538

Priority 62/356504 and 62/357937

15

FLAS-003/01JP

2018567803

JP

Pending

Licensed from Northeastern University

Owner: Northeastern University Inventor: Shashi K. Murthy Nat. PCT/US2017/039538

Priority 62/356504 and 62/357937

16

FLAS- 003/01US

16/310680

US

Pending

Licensed from Northeastern University

Record unavailable

17

FLAS- 004/00US

16/192062

US

Allowed

Assigned to Flaskworks, LLC Record unavailable

18

FLAS- 004/01WO

PCT/US2019/060695

WO

Pending

Assigned to Flaskworks, LLC Record unavailable

FLAS- 004/01US

16/841,197 (filed on 04-06-2020)

US

Pending

Assigned to Flaskworks, LLC Continuation of 16/192062

19

FLAS- 005/00US

62/828696

US

Pending

Assigned to Flaskworks, LLC Record unavailable

20

FLAS- 006/00US

16/539916

US

Pending

Assigned to Flaskworks, LLC Record unavailable

10


BR Ref. No.

Application/Publ.

No.

Patent No.

Country

Status

Owner

21

FLAS- 007/00US

62/923963

US

Pending

Assigned to Flaskworks, LLC Record unavailable

22

FLAS- 008/00US

62/923967

US

Pending

Assigned to Flaskworks, LLC Record unavailable

23

FLAS- 009/00US

62/923973

US

Pending

Assigned to Flaskworks, LLC Record unavailable

24

FLAS- 010/00US

62/923975

US

Pending

Assigned to Flaskworks, LLC Record unavailable

25

FLAS- 011/00US

62/923978

US

Pending

Assigned to Flaskworks, LLC Record unavailable

26

FLAS- 012/00US

62/923982

US

Pending

Assigned to Flaskworks, LLC Record unavailable

Trademarks and Trademark Applications

BR Ref. No.

Mark

Drawing Code

Application Serial No.

Registratio n No.

Countr y

Status

Owner/ Next Action

33365/18

STANDAR D CHARACT ER MARK

88/182010

US

Allowed

Flaskworks, LLC

Statement of Use or Extension due

7/30/2020

33365/23

STANDAR D CHARACT ER MARK

88/553706

US

Allowed

Flaskworks, LLC

Statement of Use or Extension

due 7/28/2020

33365/17

STANDAR D CHARACT ER MARK

88/182005

US

Allowed

Flaskworks, LLC

Statement of Use or Extension

due 7/30/2020

11


BR Ref. No.

Mark

Drawing Code

Application Serial No.

Registratio n No.

Countr y

Status

Owner/ Next Action

33365/19

DESIGN PLUS WORDS, LETTERS, AND/OR NUMBERS

88/195551

5945774

US

Registered

Flaskworks, LLC

Decl. of Use due 12/24/2025

33365/15

STANDAR D CHARACT ER MARK

88/181978

5945727

US

Registered

Flaskworks, LLC

Decl. of Use due 12/24/2025

33365/22

STANDAR D CHARACT ER MARK

88/553686

5990620

US

Registered

Flaskworks, LLC

Decl. of

Use due 2/18/2026

33365/16

STANDAR D CHARACT ER MARK

88/181996

6019871

US

Registered

Flaskworks, LLC

Decl. of Use due 3/24/2026

U.S. Registered Copyrights: None.

Domain Name

Domain Name

Creation Date

Expiration Date

Registrant Name/Organization

Registrar

Flaskworks.com

1/25/2016

1/25/2021

Private registration

GoDaddy.com

12


Section 5.4

(b)(iv)1

Shashi Murths’s deferred salary amount: $82,894.32

Jennifer Rossi’s deferred salary amount that will not be covered by company funds at closing: $47,983.24

Andrew Kozbial was paid his salary earned to date on August 11, 2020. He will be owed salary from August 12, 2020 to the Closing Date at a daily rate of approximately $246.58 based on his annual salary of $90,000.00


1 These figures do not include the extra 8% required to be paid for payroll tax purposes.


Exhibit 10.85

COMMERCIAL LOAN AGREEMENT

THIS COMMERCIAL LOAN AGREEMENT (this “Loan Agreement”), dated as of March 1, 2021, is entered into by and between NORTHWEST BIOTHERAPEUTICS, INC., a Delaware corporation (“Borrower”), and STREETERVILLE CAPITAL, LLC, a Utah limited liability company, its successors and/or assigns (“Lender”).

A.           Lender desires to loan and Borrower desires to borrow, upon the terms and conditions set forth in this Loan Agreement, a Promissory Note in the form attached hereto as Exhibit A, in the original principal amount of $11,005,000.00 (the Loan).

B.           This Loan Agreement, the Note, and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Loan Agreement, as the same may be amended from time to time, are collectively referred to herein as the Loan Documents.

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower and Lender hereby agree as follows:

1.  Promissory Note.

1.1.  Promissory Note. On the Closing Date Borrower shall execute and deliver the Promissory Note to Lender, and in consideration for delivery of the Note, Lender shall pay the Loan Amount (as defined below) to Borrower.

1.2.  Form of Payment. On the Closing Date, Lender shall pay the Loan Amount to Borrower via wire transfer of immediately available funds against delivery of the Note.

1.3.  Closing Date. Subject to the satisfaction (or written waiver) of the conditions set forth in Section 5 and Section 6 below, the date and time of the execution of the Loan Documents pursuant to this Loan Agreement (the Closing Date) shall be 5:00 p.m., Eastern Time on or about March 1, 2021, or such other mutually agreed upon time. The closing of the transactions contemplated by this Loan Agreement (the Closing) shall occur on the Closing Date by means of the exchange by express courier and email of .pdf documents, but shall be deemed to have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi, Utah.

1.4.  Collateral for the Note. The Note shall not be secured.

1.5.  Original Issue Discount; Transaction Expenses. The Note carries an original issue discount of $1,000,000.00 (the OID). In addition, Borrower agrees to pay $5,000.00 to Lender to cover Lenders legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the execution of the Note (the Transaction Expense Amount), all of which amount is included in the initial principal balance of the Note. The Loan Amount, therefore, shall be $10,000,000.00, computed as follows: $11,005,000.00 original principal balance, less the OID, less the Transaction Expense Amount.

2.  Lenders Representations and Warranties. Lender represents and warrants to Borrower that: (i) this Loan Agreement has been duly and validly authorized; and (ii) this Loan Agreement constitutes a valid and binding agreement of Lender enforceable in accordance with its terms.

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3.  Representations and Warranties of Borrower. Borrower represents and warrants to Lender that: (i) Borrower is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted; (ii) Borrower is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary; (iii) Borrower has registered its shares of common stock, $0.001 par value per share (the “Common Stock”), under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is obligated to file reports pursuant to Section 13 or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the transactions contemplated hereby and thereby, have been duly and validly authorized by Borrower; (v) this Loan Agreement, the Note, and the other Transaction Documents have been duly executed and delivered by Borrower and constitute the valid and binding obligations of Borrower enforceable in accordance with their terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors’ rights generally; (vi) the execution and delivery of the Transaction Documents by Borrower and the consummation by Borrower of the other transactions contemplated by the Transaction Documents do not and will not conflict with or result in a breach by Borrower of any of the terms or provisions of, or constitute a default under (a) Borrower’s formation documents or bylaws, each as currently in effect, (b) any indenture, mortgage, deed of trust, or other material agreement or instrument to which Borrower is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock, or (c) any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over Borrower or any of Borrower’s properties or assets; (vii) no further authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders or any lender of Borrower is required to be obtained by Borrower for the issuance of the Note to Lender; (viii) none of Borrower’s filings with the SEC contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (ix) Borrower has filed all reports, schedules, forms, statements and other documents required to be filed by Borrower with the SEC under the 1934 Act on a timely basis or has received a valid extension of such time of filing ; (x) Borrower has not consummated any financing transaction that has not been disclosed in a periodic or other filing with the SEC under the 1934 Act; (xi) Borrower is not, nor has it ever been, a “Shell Company,” as such type of “issuer” is described in Rule 144(i)(1) under the 1933 Act or is in compliance with Rule 144(i)(2) under the 1933 Act; (xii) with respect to any commissions, placement agent or finder’s fees or similar payments that will or would become due and owing by Borrower to any person or entity as a result of this Loan Agreement or the transactions contemplated hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws and regulations and only to a person or entity that is a registered investment adviser or registered broker-dealer; (xiii) Lender shall have no obligation with respect to any Broker Fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this subsection that may be due in connection with the transactions contemplated hereby and Borrower shall indemnify and hold harmless each of Lender, Lender’s employees, officers, directors, stockholders, managers, agents, and partners, and their respective affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’ fees) and expenses suffered in respect of any such claimed or existing Broker Fees; and (xiv) neither Lender nor any of its officers, directors, members, managers, employees, agents or representatives has made any representations or warranties to Borrower or any of its officers, directors, employees, agents or representatives except as expressly set forth in the Transaction Documents Borrower, and in making its decision to enter into the transactions contemplated by the Transaction Documents, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, employees, agents or representatives other than as set forth in the Transaction Documents.

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4.  Borrowers Covenants. Until all of Borrower obligations under the Note are paid and performed in full, or within the timeframes otherwise specifically set forth below, Borrower will at all times comply with the following covenants: (i) Borrower will timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to Borrower, as required in accordance with Rule 144 of the 1933 Act, is publicly available, and will not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination; (ii) the Common Stock shall be listed or quoted for trading on any of (a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink Current Information; and (iii) trading in Borrowers Common Stock will not be suspended, halted, chilled, frozen, reach zero bid or otherwise cease on Borrowers principal trading market.

5.  Conditions to Borrowers Obligation to deliver the Note. The obligation of Borrower hereunder to issue and deliver the Note to Lender at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:

5.1.  Lender shall have executed this Loan Agreement and delivered the same to Borrower.

5.2.  Lender shall have delivered the Loan Amount to Borrower in accordance with Section 1.2 above.

6.  Conditions to Lenders Obligation to Pay Borrower the Loan Amount. The obligation of Lender to pay Borrower the Loan Amount at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for Lenders sole benefit and may be waived by Lender at any time in its sole discretion:

6.1.  Borrower shall have executed this Loan Agreement and the Note and delivered the same to Lender.

6.2.  Borrower shall have delivered to Lender a fully executed Secretary’s Certificate substantially in the form attached hereto as Exhibit B evidencing Borrowers approval of the Transaction Documents.

6.3.  Borrower shall have delivered to Lender fully executed copies of all other Transaction Documents required to be executed by Borrower herein or therein.

7.  Miscellaneous. The provisions set forth in this Section 7 shall apply to this Loan Agreement, as well as all other Transaction Documents as if these terms were fully set forth therein; provided, however, that in the event there is a conflict between any provision set forth in this Section 7 and any provision in any other Transaction Document, the provision in such other Transaction Document shall govern.

7.1.  Certain Capitalized Terms. To the extent any capitalized term used in any Transaction Document is defined in any other Transaction Document (as noted therein), such capitalized term shall remain applicable in the Transaction Document in which it is so used even if the other Transaction Document (wherein such term is defined) has been released, satisfied, or is otherwise cancelled or terminated.

7.2.  Arbitration of Claims. The parties shall submit all Claims (as defined in Exhibit C) arising under this Loan Agreement or any other Transaction Document or other agreement between the

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parties and their affiliates to binding arbitration pursuant to the arbitration provisions set forth in Exhibit C attached hereto (the “Arbitration Provisions”). The parties hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the parties hereto and are severable from all other provisions of this Loan Agreement. By executing this Loan Agreement, Borrower represents, warrants and covenants that Borrower has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Borrower will not take a position contrary to the foregoing representations. Borrower acknowledges and agrees that Lender may rely upon the foregoing representations and covenants of Borrower regarding the Arbitration Provisions.

7.3.  Governing Law; Venue. This Loan Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each party consents to and expressly agrees that exclusive venue for arbitration of any dispute arising out of or relating to any Transaction Document or the relationship of the parties or their affiliates shall be in Salt Lake County, Utah. Without modifying the parties’ obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents, each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, and (iii) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper.

7.4.  Specific Performance. Borrower acknowledges and agrees that irreparable damage may occur to Lender in the event that Borrower fails to perform any material provision of this Loan Agreement or any of the other Transaction Documents in accordance with its specific terms. It is accordingly agreed that Lender shall be entitled to an injunction or injunctions to cure breaches of the provisions of this Loan Agreement or such other Transaction Document and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any Lender may be entitled under the Transaction Documents, at law or in equity. For the avoidance of doubt, in the event Lender seeks to obtain an injunction against Borrower or specific performance of any provision of any Transaction Document, such action shall not be a waiver of any right of Lender under any Transaction Document, at law, or in equity, including without limitation its rights to arbitrate any Claim pursuant to the terms of the Transaction Documents.

7.5.  Counterparts. Each Transaction Document may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another partys executed counterpart of a Transaction Document (or such partys signature page thereof) will be deemed to be an executed original thereof.

7.6.  Document Imaging. Lender shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments, documents, and items and records governing, arising from or relating to this Loan, including, without limitation, this Loan Agreement and the other Transaction Documents, and Lender may destroy or archive the paper originals. The parties hereto (i) waive any right to insist or require that Lender produce paper originals, (ii) agree that such images shall be accorded the same force and effect as the paper originals, (iii) agree that Lender is entitled to use such images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed facsimile (faxed),

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scanned, emailed, or other imaged copy of this Loan Agreement or any other Transaction Document shall be deemed to be of the same force and effect as the original manually executed document.

7.7.  Headings. The headings of this Loan Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Loan Agreement.

7.8.  Severability. In the event that any provision of this Loan Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

7.9.  Entire Agreement. This Loan Agreement, together with the other Transaction Documents, contains the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Borrower nor

7.10.   Lender makes any representation, warranty, covenant or undertaking with respect to such matters.

7.11.   No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, representatives or agents has made any representations or warranties to Borrower or any of its officers, directors, representatives, agents or employees except as expressly set forth in the Transaction Documents and, in making its decision to enter into the transactions contemplated by the Transaction Documents, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, agents or representatives other than as set forth in the Transaction Documents.

7.12.   Amendments. No provision of this Loan Agreement may be waived or amended other than by an instrument in writing signed by the parties hereto.

7.13.   Notices. Any notice required or permitted hereunder shall be given in writing and via email to lgoldman@nwbio.com and lpowers@nwbio.com (unless otherwise specified herein) and shall be deemed effectively given on the earliest of: (i) the date delivered, if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by facsimile (with successful transmission confirmation), (ii) the earlier of the date delivered or the fifth business day after deposit, postage prepaid, in the United States Postal Service by certified mail, or (iii) the earlier of the date delivered or the fifth business day after mailing by express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5) calendar days advance written notice similarly given to each of the other parties hereto):

If to Borrower:

    

Northwest Biotherapeutics, Inc.

Attn:

Linda Powers and Les Goldman

4800 Montgomery Lane, Suite 800

Bethesda, Maryland 20814

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If to Lender:

    

Streeterville Capital, LLC

Attn:

John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

With a copy to (which copy shall not constitute notice):

    

Hansen Black Anderson Ashcraft PLLC

Attn:

Jonathan Hansen

3051 West Maple Loop Drive, Suite 325

Lehi, Utah 84043

7.14.   Successors and Assigns. This Loan Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by

7.15.   Lender hereunder may be assigned by Lender to a third party, including its financing sources, in whole or in part, without the need to obtain Borrower’s consent thereto. Borrower may not assign its rights or obligations under this Loan Agreement or delegate its duties hereunder without the prior written consent of Lender.

7.16.   Survival. The representations and warranties of Borrower and the agreements and covenants set forth in this Loan Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of Lender. Borrower agrees to indemnify and hold harmless Lender and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach by Borrower of any of its representations, warranties and covenants set forth in this Loan Agreement or any of its covenants and obligations under this Loan Agreement, including advancement of expenses as they are incurred.

7.17.   Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Loan Agreement and the consummation of the transactions contemplated hereby.

7.18.   Lenders Rights and Remedies Cumulative; Liquidated Damages. All rights, remedies, and powers conferred in this Loan Agreement and the Transaction Documents are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that Lender may have, whether specifically granted in this Loan Agreement or any other Transaction Document, or existing at law, in equity, or by statute, and any and all such rights and remedies may be exercised from time to time and as often and in such order as Lender may deem expedient. The parties acknowledge and agree that upon Borrowers failure to comply with the provisions of the Transaction Documents, Lenders damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties inability to predict future interest rates, Lenders increased risk, and the uncertainty of the availability of a suitable substitute lending opportunity for Lender, among other reasons. Accordingly, any fees, charges, and default interest due under the Note and the other Transaction Documents are intended by the parties to be, and shall be deemed, liquidated damages. The parties agree that such liquidated damages are a reasonable estimate of Lenders actual damages and not a penalty, and shall not be deemed in any way to limit any other right or remedy Lender may have hereunder, at law or in equity. The parties acknowledge and agree that under the circumstances existing at the time this Loan Agreement is entered into, such liquidated damages are fair and reasonable and are not penalties. All fees,

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charges, and default interest provided for in the Transaction Documents are agreed to by the parties to be based upon the obligations and the risks assumed by the parties as of the Closing Date and are consistent with investments of this type. The liquidated damages provisions of the Transaction Documents shall not limit or preclude a party from pursuing any other remedy available at law or in equity; provided, however, that the liquidated damages provided for in the Transaction Documents are intended to be in lieu of actual damages.

7.19.   Attorneys Fees and Cost of Collection. In the event of any arbitration or action at law or in equity to enforce or interpret the terms of this Loan Agreement or any of the other Transaction Documents, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the reasonable attorneys fees, deposition costs, and expenses paid by such prevailing party in connection with arbitration or litigation without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair an arbitrators or a courts power to award fees and expenses for frivolous or bad faith pleading. If (i) the Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings, or is collected or enforced through any arbitration or legal proceeding, or Lender otherwise takes action to collect amounts due under the Note or to enforce the provisions of the Note; or (ii) there occurs any bankruptcy, reorganization, receivership of Borrower or other proceedings affecting Borrowers creditors rights and involving a claim under the Note; then Borrower shall pay the costs incurred by Lender for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, reasonable attorneys fees, expenses, deposition costs, and disbursements.

7.20.   Waiver. No waiver of any provision of this Loan Agreement shall be effective unless it is in the form of a writing signed by the party granting the waiver. No waiver of any provision or consent to any prohibited action shall constitute a waiver of any other provision or consent to any other prohibited action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver or consent in the future except to the extent specifically set forth in writing.

7.21.       Waiver of Jury Trial. EACH PARTY TO THIS LOAN AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS LOAN AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTYS RIGHT TO DEMAND TRIAL BY JURY.

7.22.   Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of this Loan Agreement and the other Transaction Documents.

7.23.   Voluntary Agreement. Borrower has carefully read this Loan Agreement and each of the other Transaction Documents and has asked any questions needed for Borrower to understand the terms, consequences and binding effect of this Loan Agreement and each of the other Transaction Documents and fully understand them. Borrower has had the opportunity to seek the advice of an attorney of Borrowers choosing, or has waived the right to do so, and is executing this Loan Agreement and each

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of the other Transaction Documents voluntarily and without any duress or undue influence by Lender or anyone else.

[Remainder of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the undersigned Lender and Borrower have caused this Loan Agreement to be duly executed as of the date first above written.

LOAN AMOUNTS:

Principal Amount of Note to be Paid to Lender:

    

$

11,005,000.00 

 

Loai Amount to be Paid to Borrower :

$

10,000,000.00

LENDER :

STREETERVILLE CAPITAL , LLC

By:

_/s/ John M. Fife

John M. Fife, President

BORROWER:

NORTHWEST BIOTHERAP EUTICS, INC.

By:

/s/ Leslie J. Goldman

Leslie J. Goldman

Senior Vice President, General Counsel

ATTACHED EXHIBITS:

Exhibit A

Note

Exhibit B

Secretary's Certificate

Exhibit C

Arbitration Provisions

[Signature Page to Loan Agreement}


EXHIBIT C

ARBITRATION PROVISIONS

1.  Dispute Resolution. For purposes of this Exhibit C, the term Claims means any disputes, claims, demands, causes of action, requests for injunctive relief, requests for specific performance, liabilities, damages, losses, or controversies whatsoever arising from, related to, or connected with the transactions contemplated in the Transaction Documents and any communications between the parties related thereto, including without limitation any claims of mutual mistake, mistake, fraud, misrepresentation, failure of formation, failure of consideration, promissory estoppel, unconscionability, failure of condition precedent, rescission, and any statutory claims, tort claims, contract claims, or claims to void, invalidate or terminate the Agreement (or these Arbitration Provisions (defined below)) or any of the other Transaction Documents. The term Claims specifically excludes a dispute over Calculations. The parties to the Agreement (the parties) hereby agree that the arbitration provisions set forth in this Exhibit C (Arbitration Provisions) are binding on each of them. As a result, any attempt to rescind the Agreement (or these Arbitration Provisions) or declare the Agreement (or these Arbitration Provisions) or any other Transaction Document invalid or unenforceable for any reason is subject to these Arbitration Provisions. These Arbitration Provisions shall also survive any termination or expiration of the Agreement. Any capitalized term not defined in these Arbitration Provisions shall have the meaning set forth in the Agreement.

2.      Arbitration. Except as otherwise provided herein, all Claims must be submitted to arbitration (Arbitration) to be conducted exclusively in Salt Lake County or Utah County, Utah and pursuant to the terms set forth in these Arbitration Provisions. Subject to the arbitration appeal right provided for in Paragraph 5 below (the Appeal Right), the parties agree that the award of the arbitrator rendered pursuant to Paragraph 4 below (the Arbitration Award) shall be (a) final and binding upon the parties, (b) the sole and exclusive remedy between them regarding any Claims, counterclaims, issues, or accountings presented or pleaded to the arbitrator, and (c) promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Subject to the Appeal Right, any costs or fees, including without limitation attorneys fees, incurred in connection with or incident to enforcing the Arbitration Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Arbitration Award shall include default interest (as defined or otherwise provided for in the Note, Default Interest) (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Arbitration Award will be entered and enforced by any state or federal court sitting in Salt Lake County, Utah.

3.  The Arbitration Act. The parties hereby incorporate herein the provisions and procedures set forth in the Utah Uniform Arbitration Act, U.C.A. § 78B11101 et seq. (as amended or superseded from time to time, the Arbitration Act). Notwithstanding the foregoing, pursuant to, and to the maximum extent permitted by, Section 105 of the Arbitration Act, in the event of conflict or variation between the terms of these Arbitration Provisions and the provisions of the Arbitration Act, the terms of these Arbitration Provisions shall control and the parties hereby waive or otherwise agree to vary the effect of all requirements of the Arbitration Act that may conflict with or vary from these Arbitration Provisions.

4.  Arbitration Proceedings. Arbitration between the parties will be subject to the following:

4.1 Initiation of Arbitration. Pursuant to Section 110 of the Arbitration Act, the parties agree that a party may initiate Arbitration by giving written notice to the other party (Arbitration Notice) in the same manner that notice is permitted under Section 7.12 of the Agreement; provided, however, that the Arbitration Notice may not be given by email or fax. Arbitration will be deemed initiated as of the date that the Arbitration Notice is deemed delivered to such other party under Section 7.12 of the Agreement (the Service Date). After the Service Date, information may be delivered, and notices may be given, by email or fax pursuant to Section 7.12 of the Agreement or any other method permitted thereunder. The Arbitration Notice must describe the nature of the controversy, the remedies sought, and the election to commence Arbitration proceedings. All Claims in the Arbitration Notice must be pleaded consistent with the Utah Rules of Civil Procedure.

4.2 Selection and Payment of Arbitrator.

(a)  Within ten (10) calendar days after the Service Date, Lender shall select and submit to Borrower the names of three (3) arbitrators that are designated as neutrals or qualified arbitrators by Utah ADR

Arbitration Provisions, Page 1


Services ( http://www.utahadrservices.com) (such three (3) designated persons hereunder are referred to herein as the Proposed Arbitrators). For the avoidance of doubt, each Proposed Arbitrator must be qualified as a neutral with Utah ADR Services. Within five (5) calendar days after Lender has submitted to Borrower the names of the Proposed Arbitrators, Borrower must select, by written notice to Lender, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Borrower fails to select one of the Proposed Arbitrators in writing within such 5day period, then Lender may select the arbitrator from the Proposed Arbitrators by providing written notice of such selection to Borrower.

(b)  If Lender fails to submit to Borrower the Proposed Arbitrators within ten (10) calendar daysafter the Service Date pursuant to subparagraph (a) above, then Borrower may at any time prior to Lender so designating the Proposed Arbitrators, identify the names of three (3) arbitrators that are designated as neutrals or qualified arbitrators by Utah ADR Service by written notice to Lender. Lender may then, within five (5) calendar days after Borrower has submitted notice of its Proposed Arbitrators to Lender, select, by written notice to Borrower, one (1) of the Proposed Arbitrators to act as the arbitrator for the parties under these Arbitration Provisions. If Lender fails to select in writing and within such 5day period one (1) of the three (3) Proposed Arbitrators selected by Borrower, then Borrower may select the arbitrator from its three (3) previously selected Proposed Arbitrators by providing written notice of such selection to Lender.

(c)  If a Proposed Arbitrator chosen to serve as arbitrator declines or is otherwise unable to serve as arbitrator, then the party that selected such Proposed Arbitrator may select one (1) of the other three (3) Proposed Arbitrators within three (3) calendar days of the date the chosen Proposed Arbitrator declines or notifies the parties he or she is unable to serve as arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise unable to serve as arbitrator, then the arbitrator selection process shall begin again in accordance with this Paragraph 4.2.

(d)              The date that the Proposed Arbitrator selected pursuant to this Paragraph 4.2 agrees in writing (including via email) delivered to both parties to serve as the arbitrator hereunder is referred to herein as the Arbitration Commencement Date. If an arbitrator resigns or is unable to act during the Arbitration, a replacement arbitrator shall be chosen in accordance with this Paragraph 4.2 to continue the Arbitration. If Utah ADR Services ceases to exist or to provide a list of neutrals and there is no successor thereto, then the arbitrator shall be selected under the then prevailing rules of the American Arbitration Association.

(e)  Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid equally by both parties. Subject to Paragraph 4.10 below, if one party refuses or fails to pay its portion of the arbitrator fee, then the other party can advance such unpaid amount (subject to the accrual of Default Interest thereupon), with such amount being added to or subtracted from, as applicable, the Arbitration Award.

4.3 Applicability of Certain Utah Rules. The parties agree that the Arbitration shall be conducted generally in accordance with the Utah Rules of Civil Procedure and the Utah Rules of Evidence. More specifically, the Utah Rules of Civil Procedure shall apply, without limitation, to the filing of any pleadings, motions or memoranda, the conducting of discovery, and the taking of any depositions. The Utah Rules of Evidence shall apply to any hearings, whether telephonic or in person, held by the arbitrator. Notwithstanding the foregoing, it is the parties intent that the incorporation of such rules will in no event supersede these Arbitration Provisions. In the event of any conflict between the Utah Rules of Civil Procedure or the Utah Rules of Evidence and these Arbitration Provisions, these Arbitration Provisions shall control.

4.4 Answer and Default. An answer and any counterclaims to the Arbitration Notice shall be required to be delivered to the party initiating the Arbitration within twenty (20) calendar days after the Arbitration Commencement Date. If an answer is not delivered by the required deadline, the arbitrator must provide written notice to the defaulting party stating that the arbitrator will enter a default award against such party if such party does not file an answer within five (5) calendar days of receipt of such notice. If an answer is not filed within the five (5) day extension period, the arbitrator must render a default award, consistent with the relief requested in the Arbitration Notice, against a party that fails to submit an answer within such time period.

4.5 Related Litigation. The party that delivers the Arbitration Notice to the other party shall have the option to also commence concurrent legal proceedings with any state or federal court sitting in Salt Lake County, Utah (Litigation Proceedings), subject to the following: (a) the complaint in the Litigation Proceedings is to be substantially similar to the claims set forth in the Arbitration Notice, provided that an additional cause of action to compel arbitration will also be included therein, (b) so long as the other party files an answer to the complaint in the Litigation Proceedings and an answer to the Arbitration Notice, the Litigation

Arbitration Provisions, Page 2


Proceedings will be stayed pending an Arbitration Award (or Appeal Panel Award (defined below), as applicable) hereunder, (c) if the other party fails to file an answer in the Litigation Proceedings or an answer in the Arbitration proceedings, then the party initiating Arbitration shall be entitled to a default judgment consistent with the relief requested, to be entered in the Litigation Proceedings, and (d) any legal or procedural issue arising under the Arbitration Act that requires a decision of a court of competent jurisdiction may be determined in the Litigation Proceedings. Any award of the arbitrator (or of the Appeal Panel (defined below)) may be entered in such Litigation Proceedings pursuant to the Arbitration Act.

4.6 Discovery. Pursuant to Section 118(8) of the Arbitration Act, the parties agree that discovery shall be conducted as follows:

(a)             Written discovery will only be allowed if the likely benefits of the proposed written discovery outweigh the burden or expense thereof, and the written discovery sought is likely to reveal information that will satisfy a specific element of a claim or defense already pleaded in the Arbitration. The party seeking written discovery shall always have the burden of showing that all of the standards and limitations set forth in these Arbitration Provisions are satisfied. The scope of discovery in the Arbitration proceedings shall also be limited as follows:

(i) To facts directly connected with the transactions contemplated by the Agreement.

(ii) To facts and information that cannot be obtained from another source or in another manner that is more convenient, less burdensome or less expensive than in the manner requested.

(b)  No party shall be allowed (i) more than fifteen (15) interrogatories (including discrete subparts), (ii) more than fifteen (15) requests for admission (including discrete subparts), (iii) more than ten (10) document requests (including discrete subparts), or (iv) more than three (3) depositions (excluding expert depositions) for a maximum of seven (7) hours per deposition. The costs associated with depositions will be borne by the party taking the deposition. The party defending the deposition will submit a notice to the party taking the deposition of the estimated attorneys fees that such party expects to incur in connection with defending the deposition. If the party defending the deposition fails to submit an estimate of attorneys fees within five (5) calendar days of its receipt of a deposition notice, then such party shall be deemed to have waived its right to the estimated attorneys fees. The party taking the deposition must pay the party defending the deposition the estimated attorneys fees prior to taking the deposition, unless such obligation is deemed to be waived as set forth in the immediately preceding sentence. If the party taking the deposition believes that the estimated attorneys fees are unreasonable, such party may submit the issue to the arbitrator for a decision. All depositions will be taken in Utah.

(c)  All discovery requests (including document production requests included in deposition notices) must be submitted in writing to the arbitrator and the other party. The party submitting the written discovery requests must include with such discovery requests a detailed explanation of how the proposed discovery requests satisfy the requirements of these Arbitration Provisions and the Utah Rules of Civil Procedure. The receiving party will then be allowed, within five (5) calendar days of receiving the proposed discovery requests, to submit to the arbitrator an estimate of the attorneys fees and costs associated with responding to such written discovery requests and a written challenge to each applicable discovery request. After receipt of an estimate of attorneys fees and costs and/or challenge(s) to one or more discovery requests, consistent with subparagraph (c) above, the arbitrator will within three (3) calendar days make a finding as to the likely attorneys fees and costs associated with responding to the discovery requests and issue an order that (i) requires the requesting party to prepay the attorneys fees and costs associated with responding to the discovery requests, and (ii) requires the responding party to respond to the discovery requests as limited by the arbitrator within twentyfive (25) calendar days of the arbitrators finding with respect to such discovery requests. If a party entitled to submit an estimate of attorneys fees and costs and/or a challenge to discovery requests fails to do so within such 5day period, the arbitrator will make a finding that (A) there are no attorneys fees or costs associated with responding to such discovery requests, and (B) the responding party must respond to such discovery requests (as may be limited by the arbitrator) within twentyfive (25) calendar days of the arbitrators finding with respect to such discovery requests. Any party submitting any written discovery requests, including without limitation interrogatories, requests for production subpoenas to a party or a third party, or requests for admissions, must prepay the estimated attorneys fees and costs, before the responding party has any obligation to produce or respond to the same, unless such obligation is deemed waived as set forth above.

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(d)   In order to allow a written discovery request, the arbitrator must find that the discovery request satisfies the standards set forth in these Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator must strictly enforce these standards. If a discovery request does not satisfy any of the standards set forth in these Arbitration Provisions or the Utah Rules of Civil Procedure, the arbitrator may modify such discovery request to satisfy the applicable standards, or strike such discovery request in whole or in part.

(e)  Each party may submit expert reports (and rebuttals thereto), provided that such reports must be submitted within sixty (60) days of the Arbitration Commencement Date. Each party will be allowed a maximum of two (2) experts. Expert reports must contain the following: (i) a complete statement of all opinions the expert will offer at trial and the basis and reasons for them; (ii) the experts name and qualifications, including a list of all the experts publications within the preceding ten (10) years, and a list of any other cases in which the expert has testified at trial or in a deposition or prepared a report within the preceding ten (10) years; and (iii) the compensation to be paid for the experts report and testimony. The parties are entitled to depose any other partys expert witness one (1) time for no more than four (4) hours. An expert may not testify in a partys caseinchief concerning any matter not fairly disclosed in the expert report.

4.6 Dispositive Motions. Each party shall have the right to submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of Civil Procedure (a Dispositive Motion). The party submitting the Dispositive Motion may, but is not required to, deliver to the arbitrator and to the other party a memorandum in support (the Memorandum in Support) of the Dispositive Motion. Within seven (7) calendar days of delivery of the Memorandum in Support, the other party shall deliver to the arbitrator and to the other party a memorandum in opposition to the Memorandum in Support (the Memorandum in Opposition). Within seven (7) calendar days of delivery of the Memorandum in Opposition, as applicable, the party that submitted the Memorandum in Support shall deliver to the arbitrator and to the other party a reply memorandum to the Memorandum in Opposition (Reply Memorandum). If the applicable party shall fail to deliver the Memorandum in Opposition as required above, or if the other party fails to deliver the Reply Memorandum as required above, then the applicable party shall lose its right to so deliver the same, and the Dispositive Motion shall proceed regardless.

4.7 Confidentiality. All information disclosed by either party (or such partys agents) during the Arbitration process (including without limitation information disclosed during the discovery process or any Appeal (defined below)) shall be considered confidential in nature. Each party agrees not to disclose any confidential information received from the other party (or its agents) during the Arbitration process (including without limitation during the discovery process or any Appeal) unless (a) prior to or after the time of disclosure such information becomes public knowledge or part of the public domain, not as a result of any inaction or action of the receiving party or its agents, (b) such information is required by a court order, subpoena or similar legal duress to be disclosed if such receiving party has notified the other party thereof in writing and given it a reasonable opportunity to obtain a protective order from a court of competent jurisdiction prior to disclosure, or (c) such information is disclosed to the receiving partys agents, representatives and legal counsel on a need to know basis who each agree in writing not to disclose such information to any third party. Pursuant to Section 118(5) of the Arbitration Act, the arbitrator is hereby authorized and directed to issue a protective order to prevent the disclosure of privileged information and confidential information upon the written request of either party.

4.8 Authorization; Timing; Scheduling Order. Subject to all other portions of these Arbitration Provisions, the parties hereby authorize and direct the arbitrator to take such actions and make such rulings as may be necessary to carry out the parties intent for the Arbitration proceedings to be efficient and expeditious. Pursuant to Section 120 of the Arbitration Act, the parties hereby agree that an Arbitration Award must be made within one hundred twenty (120) calendar days after the Arbitration Commencement Date. The arbitrator is hereby authorized and directed to hold a scheduling conference within ten (10) calendar days after the Arbitration Commencement Date in order to establish a scheduling order with various binding deadlines for discovery, expert testimony, and the submission of documents by the parties to enable the arbitrator to render a decision prior to the end of such 120day period.

4.9 Relief. The arbitrator shall have the right to award or include in the Arbitration Award (or in a preliminary ruling) any relief which the arbitrator deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the arbitrator may not award exemplary or punitive damages.

4.10  Fees and Costs. As part of the Arbitration Award, the arbitrator is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of

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doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration, and (b) reimburse the prevailing party for all reasonable attorneys fees, arbitrator costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration.

5.  Arbitration Appeal.

5.1 Initiation of Appeal. Following the entry of the Arbitration Award, either party (the Appellant) shall have a period of thirty (30) calendar days in which to notify the other party (the Appellee), in writing, that the Appellant elects to appeal (the Appeal) the Arbitration Award (such notice, an Appeal Notice) to a panel of arbitrators as provided in Paragraph 5.2 below. The date the Appellant delivers an Appeal Notice to the Appellee is referred to herein as the Appeal Date. The Appeal Notice must be delivered to the Appellee in accordance with the provisions of Paragraph 4.1 above with respect to delivery of an Arbitration Notice. In addition, together with delivery of the Appeal Notice to the Appellee, the Appellant must also pay for (and provide proof of such payment to the Appellee together with delivery of the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to the Appellee as a result of the Arbitration Award the Appellant is appealing. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as specifically set forth herein, will not be further conditioned. In the event a party does not deliver an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline prescribed in this Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. If no party delivers an Appeal Notice (along with proof of payment of the applicable bond) to the other party within the deadline described in this Paragraph 5.1, the Arbitration Award shall be final. The parties acknowledge and agree that any Appeal shall be deemed part of the parties agreement to arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.

5.2 Selection and Payment of Appeal Panel. In the event an Appellant delivers an Appeal Notice to the Appellee (together with proof of payment of the applicable bond) in compliance with the provisions of Paragraph 5.1 above, the Appeal will be heard by a three (3) person arbitration panel (the Appeal Panel).

(a)Within ten (10) calendar days after the Appeal Date, the Appellee shall select and submit to the Appellant the names of five (5) arbitrators that are designated as neutrals or qualified arbitrators by Utah ADR Services (http://www.utahadrservices.com) (such five (5) designated persons hereunder are referred to herein as the Proposed Appeal Arbitrators). For the avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a neutral with Utah ADR Services, and shall not be the arbitrator who rendered the Arbitration Award being appealed (the Original Arbitrator). Within five (5) calendar days after the Appellee has submitted to the Appellant the names of the Proposed Appeal Arbitrators, the Appellant must select, by written notice to the Appellee, three (3) of the Proposed Appeal Arbitrators to act as the members of the Appeal Panel. If the Appellant fails to select three (3) of the Proposed Appeal Arbitrators in writing within such 5day period, then the Appellee may select such three (3) arbitrators from the Proposed Appeal Arbitrators by providing written notice of such selection to the Appellant.

(b)If the Appellee fails to submit to the Appellant the names of the Proposed Appeal Arbitrators within ten (10) calendar days after the Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any time prior to the Appellee so designating the Proposed Appeal Arbitrators, identify the names of five (5) arbitrators that are designated as neutrals or qualified arbitrators by Utah ADR Service (none of whom may be the Original Arbitrator) by written notice to the Appellee. The Appellee may then, within five (5) calendar days after the Appellant has submitted notice of its selected arbitrators to the Appellee, select, by written notice to the Appellant, three (3) of such selected arbitrators to serve on the Appeal Panel. If the Appellee fails to select in writing within such 5day period three (3) of the arbitrators selected by the Appellant to serve as the members of the Appeal Panel, then the Appellant may select the three (3) members of the Appeal Panel from the Appellants list of five (5) arbitrators by providing written notice of such selection to the Appellee.

(c)   If a selected Proposed Appeal Arbitrator declines or is otherwise unable to serve, then the party that selected such Proposed Appeal Arbitrator may select one (1) of the other five (5) designated Proposed Appeal Arbitrators within three (3) calendar days of the date a chosen Proposed Appeal Arbitrator declines or notifies the parties he or she is unable to serve as an arbitrator. If at least three (3) of the five (5) designated Proposed Appeal Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal

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Arbitrator selection process shall begin again in accordance with this Paragraph 5.2; provided, however, that any Proposed Appeal Arbitrators who have already agreed to serve shall remain on the Appeal Panel.

(d)  The date that all three (3) Proposed Appeal Arbitrators selected pursuant to this Paragraph

5.2 agree in writing (including via email) delivered to both the Appellant and the Appellee to serve as members of the Appeal Panel hereunder is referred to herein as the Appeal Commencement Date. No later than five (5) calendar days after the Appeal Commencement Date, the Appellee shall designate in writing (including via email) to the Appellant and the Appeal Panel the name of one (1) of the three (3) members of the Appeal Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration Provisions and the Arbitration Act, provided that, in conducting the Appeal, the Appeal Panel may only act or make determinations upon the approval or vote of no less than the majority vote of its members, as announced or communicated by the lead arbitrator on the Appeal Panel.

If an arbitrator on the Appeal Panel ceases or is unable to act during the Appeal proceedings, a replacement arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue the Appeal as a member of the Appeal Panel. If Utah ADR Services ceases to exist or to provide a list of neutrals, then the arbitrators for the Appeal Panel shall be selected under the then prevailing rules of the American Arbitration Association.

(d) Subject to Paragraph 5.7 below, the cost of the Appeal Panel must be paid entirely by the Appellant.

5.3  Appeal Procedure. The Appeal will be deemed an appeal of the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall conduct a de novo review of all Claims described or otherwise set forth in the Arbitration Notice. Subject to the foregoing and all other provisions of this Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal Panel considers appropriate for a fair and expeditious disposition of the Appeal, may hold one or more hearings and permit oral argument, and may review all previous evidence and discovery, together with all briefs, pleadings and other documents filed with the Original Arbitrator (as well as any documents filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel shall not permit the parties to conduct any additional discovery or raise any new Claims to be arbitrated, shall not permit new witnesses or affidavits, and shall not base any of its findings or determinations on the Original Arbitrators findings or the Arbitration Award.

5.4 Timing.

(a)  Within seven (7) calendar days of the Appeal Commencement Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal Panel copies of the Appeal Notice, all discovery conducted in connection with the Arbitration, and all briefs, pleadings and other documents filed with the Original Arbitrator (which material Appellee shall have the right to review and supplement if necessary), and (ii) may, but is not required to, deliver to the Appeal Panel and to the Appellee a Memorandum in Support of the Appellants arguments concerning or position with respect to all Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration. Within seven (7) calendar days of the Appellants delivery of the Memorandum in Support, as applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant a Memorandum in Opposition to the Memorandum in Support. Within seven (7) calendar days of the Appellees delivery of the Memorandum in Opposition, as applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee a Reply Memorandum to the Memorandum in Opposition. If the Appellant shall fail to substantially comply with the requirements of clause (i) of this subparagraph (a), the Appellant shall lose its right to appeal the Arbitration Award, and the Arbitration Award shall be final. If the Appellee shall fail to deliver the Memorandum in Opposition as required above, or if the Appellant shall fail to deliver the Reply Memorandum as required above, then the Appellee or the Appellant, as the case may be, shall lose its right to so deliver the same, and the Appeal shall proceed regardless.

(b)   Subject to subparagraph (a) above, the parties hereby agree that the Appeal must be heard by the Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date, and that the Appeal Panel must render its decision within thirty (30) calendar days after the Appeal is heard (and in no event later than sixty (60) calendar days after the Appeal Commencement Date).

5.5 Appeal Panel Award. The Appeal Panel shall issue its decision (the Appeal Panel Award) through the lead arbitrator on the Appeal Panel. Notwithstanding any other provision contained herein, the Appeal Panel Award shall (a) supersede in its entirety and make of no further force or effect the Arbitration Award (provided that any protective orders issued by the Original Arbitrator shall remain in full force and effect), (b)

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be final and binding upon the parties, with no further rights of appeal, (c) be the sole and exclusive remedy between the parties regarding any Claims, counterclaims, issues, or accountings presented or pleaded in the Arbitration, and (d) be promptly payable in United States dollars free of any tax, deduction or offset (with respect to monetary awards). Any costs or fees, including without limitation attorneys fees, incurred in connection with or incident to enforcing the Appeal Panel Award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. The Appeal Panel Award shall include Default Interest (with respect to monetary awards) at the rate specified in the Note for Default Interest both before and after the Arbitration Award. Judgment upon the Appeal Panel Award will be entered and enforced by a state or federal court sitting in Salt Lake County, Utah.

5.6 Relief. The Appeal Panel shall have the right to award or include in the Appeal Panel Award any relief which the Appeal Panel deems proper under the circumstances, including, without limitation, specific performance and injunctive relief, provided that the Appeal Panel may not award exemplary or punitive damages.

5.7 Fees and Costs. As part of the Appeal Panel Award, the Appeal Panel is hereby directed to require the losing party (the party being awarded the least amount of money by the arbitrator, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) to (a) pay the full amount of any unpaid costs and fees of the Arbitration and the Appeal Panel, and (b) reimburse the prevailing party (the party being awarded the most amount of money by the Appeal Panel, which, for the avoidance of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any part) the reasonable attorneys fees, arbitrator and Appeal Panel costs and fees, deposition costs, other discovery costs, and other expenses, costs or fees paid or otherwise incurred by the prevailing party in connection with the Arbitration (including without limitation in connection with the Appeal).

6.  Miscellaneous.

6.1 Severability. If any part of these Arbitration Provisions is found to violate or be illegal under applicable law, then such provision shall be modified to the minimum extent necessary to make such provision enforceable under applicable law, and the remainder of the Arbitration Provisions shall remain unaffected and in full force and effect.

6.2 Governing Law. These Arbitration Provisions shall be governed by the laws of the State of Utah without regard to the conflict of laws principles therein.

6.3 Interpretation. The headings of these Arbitration Provisions are for convenience of reference only and shall not form part of, or affect the interpretation of, these Arbitration Provisions.

6.4 Waiver. No waiver of any provision of these Arbitration Provisions shall be effective unless it is in the form of a writing signed by the party granting the waiver.

6.5 Time is of the Essence. Time is expressly made of the essence with respect to each and every provision of these Arbitration Provisions.

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EXHIBIT 21.1

Subsidiaries of the Registrant

Name:

    

Jurisdiction

Aracaris, Ltd.

 

United Kingdom

 

 

 

Aracaris Capital, Ltd.

 

United Kingdom

 

 

 

NW Bio Gmbh

 

Germany

 

 

 

Northwest Biotherapeutics B.V.

 

Netherlands

Flaskworks LLC

 

United States


Exhibit 23.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the incorporation by reference in the Registration Statement of Northwest Biotherapeutics, Inc. on Form S-3 [File No. 333-213777 and 333-234248] of our report dated March 16, 2020, except for the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to ineffective designed controls over the evaluation and conclusion of contingencies under ASC 740, as to which the date is June 23, 2020, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audit of the consolidated financial statements of Northwest Biotherapeutics, Inc. as of December 31, 2019 and for the year ended December 31, 2019, which report is included in this Annual Report on Form 10-K of Northwest Biotherapeutics, Inc. for the year ended December 31, 2020.

Our report on the consolidated financial statements refers to a change in the method of accounting for leases due to the adoption of the guidance in ASC Topic 842 effective January 1, 2019.

/s/ Marcum LLP

Marcum LLP

New York, NY

March 31, 2021


EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Linda F. Powers, certify that:

(1) I have reviewed this annual report on Form 10-K of Northwest Biotherapeutics, Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)), for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 31, 2021

By:

/s/ Linda F. Powers

Name:

Linda F. Powers

Title:

President and Chief Executive Officer

Principal Executive Officer

Principal Financial and Accounting Officer


EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Northwest Biotherapeutics, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Linda F. Powers, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 31, 2021

By:

/s/ Linda F. Powers

Name:

Linda F. Powers

Title:

President and Chief Executive Officer

Principal Executive Officer

Principal Financial and Accounting Officer