EXHIBIT 10.1

EXCLUSIVE LICENSE AGREEMENT

This Agreement, dated as of September 24, 1986, is entered into by and between
THE BOARD OF REGENTS of THE UNIVERSITY OF TEXAS SYSTEM (hereinafter “BOARD”), a
governing board established under the laws of the State of Texas, THE UNIVERSITY
OF TEXAS SYSTEM CANCER CENTER (hereinafter “UTSCC”), a component institution of
The University of Texas System (hereinafter “System”) and THE MACROPHAGE
COMPANY, INC. (hereinafter “LICENSEE”), a Delaware corporation, whose address is
2201 Timberloch Place, The Woodlands, Texas 77380.

WITNESSETH:

WHEREAS, BOARD is the owner of the BOARD Patent Rights and BOARD Technical
Information, as hereinafter defined, developed by UTSCC; and

WHEREAS, LICENSEE is desirous of obtaining a world-wide, non-assignable (except
as expressly provided herein), royalty-bearing exclusive license, with the right
to grant sublicenses, under the BOARD Patent Rights and BOARD Technical
Information; and

WHEREAS, LICENSEE desires the right to use the names Board of Regents, The
University of Texas System and The University of Texas System Cancer Center to
the extent necessary to enforce and protect LICENSEE’s rights hereunder; and

WHEREAS, BOARD desires to grant LICENSEE such a world-wide, exclusive license
under the following terms and conditions;

NOW, THEREFORE, in consideration of the foregoing, and the covenants and
promises contained herein, the sufficiency of which are hereby acknowledged by
the parties, BOARD, UTSCC and LICENSEE hereby agree as follows:

I.

DEFINITIONS

A. The term “BOARD Patent Rights”, when used herein, shall mean those United
States and foreign patents and patent applications or prospective patent
applications, including any division, continuation, continuation-in-part or
reissue thereof, or substitute therefor, and the letters patent that may be
issued thereon, which relate to the Licensed Subject Matter; together with all
other Patents and Patent Applications which claim any invention or discovery
useful in connection with the Licensed Subject Matter developed or invented by
Robert Kilbourn, M.D., Ph.D., Jim Klostergaard, Ph.D and Gabriel
Lopez-Berestein, M.D., in the case of the

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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murine macrophage described in the definition of Licensed Subject Matter set out
in Section I.E., and by Jim Klostergaard, Ph.D., Jim Turpin, M.S., and Gabriel
Lopez-Berestein, M.D., in the case of the human monocyte described in the
definition of Licensed Subject Matter set out in Section I.E, or any of them,
during the life of any patents or patent applications included within the BOARD
Patent Rights, in which BOARD now has or in the future acquires any interest.
Without limiting the generality of the preceding sentence, the term “BOARD
Patent Rights” shall include, but not be limited to, the patents and patent
applications listed on Schedule I which is attached to this Agreement and
incorporated herein by reference for all purposes.

B. The term “BOARD Technical Information”, when used herein, shall mean (i) any
technical information disclosed or claimed in connection with any patent or
patent application included within the BOARD Patent Rights; and (ii) any
invention, discovery, know-how, process, procedure, method, protocol, formula,
technique, software, design, drawing, data, devices, specifications, sketches or
other technical information relating to the Licensed Subject Matter.

C. The term “Licensed Patented Product or Process”, when used herein, shall mean
any product, apparatus or process made, used, marketed or sold in any country
where such product, apparatus or process is covered by the claims of an issued
patent or a pending patent application included within the BOARD Patent Rights,
together with any product made by the use of any process in a country in which
such process or apparatus is covered by the claims of an issued patent or a
pending patent application included within the BOARD Patent Rights.

D. The term “Licensed Non-Patented Product or Process”, when used herein, shall
mean any product, apparatus or process utilizing or relating to the Licensed
Subject Matter which is manufactured, used, marketed or sold with the use of any
BOARD Technical Information (but which are not covered by BOARD Patent Rights),
together with any product utilizing the Licensed Subject Matter which is
manufactured by a process or apparatus which uses any BOARD Technical
Information.

E. The term “Licensed Subject Matter” shall mean the process (as defined below)
to develop human monocyte or murine macrophage - derived cytotoxins which either
kill or inhibit the proliferation of tumor cells as developed by the
researchers/ inventors named in the definition of BOARD Patent Rights set out in
Section I.A., and all compositions, products and uses resulting therefrom,
together with any change or modification to any such process, composition,
products or uses which is developed pursuant to the research and development
agreement contemplated by Article VI.A. hereof. The term “process” shall mean
and include the isolation, purification, manufacturing, gene expression,
synthesis, and utilization of cytotoxins for therapeutic purposes.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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F. The term “Net Sales”, when used herein, shall mean the amount received or
collected by LICENSEE from commercial sales or other use or disposition for
value (including any marketing fees paid to LICENSEE in connection with sales of
Licensed Patented Products or Processes and Licensed Non-Patented Products or
Processes, but not including proceeds received from the sale of marketing rights
as described in Section IV.A.3 hereof), of Licensed Patented Products or
Processes and Licensed Non-Patented Products or Processes in bona fide
arms-length transactions, f.o.b. place of manufacture or point of storage, less
(i) cash, trade and/or quantity discounts, (ii) amounts repaid or credited by
reason of rejections, defects or returns or because of retroactive price
reductions, (iii) freight, transportation and insurance (iv) taxes and (v) other
charges which, under generally accepted accounting principles, are deemed to be
incidental to the sale.

G. The term “Subsidiary” shall mean a corporation, partnership, association,
trust or other legal entity which owns, controls, is owned or controlled by, or
is under common ownership or control of, a party to this Agreement. For purposes
of this definition, “control” shall mean the ownership of such number of
outstanding shares or other interests aggregating more than 50% of the ordinary
voting power for the election of directors or the exercise of control of such
entity.

II.

GRANT OF RIGHTS

A. BOARD hereby grants to LICENSEE an exclusive, worldwide license, including
the right to grant sublicenses, under the BOARD Patent Rights and the BOARD
Technical Information to manufacture, use, market and sell any Licensed Patented
Product or Process and any Licensed Non-Patented Product or Process throughout
the United States of America, its territories and possessions and in all foreign
countries.

B. BOARD and UTSCC hereby grant to LICENSEE the right to use the name “Board of
Regents, The University of Texas System” and “The University of Texas System
Cancer Center” to the extent necessary to enforce and protect LICENSEE’s rights
hereunder; provided however, that LICENSEE shall not be obligated to use the
name “Board of Regents, The University of Texas System” or “The University of
Texas System Cancer Center” in any manner.

C. BOARD and UTSCC hereby grant to LICENSEE the right of access to, during
normal business hours, and the use of, all experimental or other data which
relate in any manner to the BOARD Patent Rights or the BOARD Technical
Information, including without limitation, all data which BOARD has provided to
the United States Patent Office, the Food and Drug Administration (FDA) or any
other state, federal, foreign or local regulatory authority which relate in any
manner to the BOARD Patent Rights or the BOARD Technical Information, and BOARD
and UTSCC agree that they will not use, or permit the use of, such information
and

 

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treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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data, nor do anything else which will adversely affect LICENSEE’s rights under
this Agreement in any manner. BOARD and UTSCC shall cooperate fully with
LICENSEE, at LICENSEE’s expense, in order to obtain the regulatory approval of
any state, federal, foreign or local authority which now is or later becomes
necessary to develop, manufacture, use, market or sell any Licensed Patented
Product or Process or Licensed Non-Patented Product or Process. Such cooperation
shall include, but not be limited to, obtaining all necessary regulatory
approvals which are now required, or may in the future be required, to
manufacture, use, market or sell any Licensed Patented Product or Process or
Licensed Non-Patented Product or Process for use in any application thereof.
BOARD and UTSCC shall execute any and all documents reasonably necessary to
obtain such approvals upon request by LICENSEE. LICENSEE shall reimburse BOARD
and UTSCC for any reasonable out-of-pocket costs, plus overhead not to exceed
50% of out-of-pocket costs, including attorneys’ fees, incurred by BOARD and
UTSCC in connection with such cooperation. At such time as clinical trials are
commenced, LICENSEE agrees that it will enter into an appropriate agreement with
UTSCC regarding the conduct of such trials.

D. UTSCC shall promptly provide LICENSEE and shall continue to provide LICENSEE,
during the term of this Agreement, with all information relating to
(i) pharmacological, toxicological or clinical data, (ii) synthetic,
formulative, manufacturing or analytical data, and (iii) such other chemical,
physical or biological data which UTSCC may now or in the future possess or
control which relates in any manner to the Licensed Subject Matter, except for
that information made confidential by law or prior agreement.

E. The parties recognize that LICENSEE may encounter patents held by third
parties which dominate activities covered by the BOARD Patent Rights and that
cross-licenses between the BOARD (or LICENSEE) and such third parties may be
necessary in order to enable LICENSEE to make or market Licensed Patented
Products or Processes or Licensed Non-Patented Products or Processes. In that
event, LICENSEE has the right to enter into cross-licensing agreements with
third parties and to grant cross-licenses under any or all of the BOARD Patent
Rights, provided:

1. BOARD, through UTSCC, is consulted beforehand and is reasonably satisfied
that the third party does in fact hold a patent that limits LICENSEE’s
competitiveness in making or marketing Licensed Patented Products or Processes
or Licensed Non-Patented Products or Processes;

2. In BOARD’s reasonable judgment, the rights received by LICENSEE under such
cross-licensing agreement cover only Licensed Patented Products or Processes or
Licensed Non-Patented Products or Processes and are not directed to other
products;

3. BOARD incurs no financial or legal liabilities under the cross-licensing;

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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4. Any money or the value of any equipment, including license issue fees (and
not including proceeds from sale of marketing rights as described in Section
IV.A.3.), received by LICENSEE in exchange for such cross-licensing is treated
as Net Sales for Licensed Patented Products or Processes or Licensed
Non-Patented Products or Processes.

III.

ISSUANCE OF COMMON STOCK AND PREFERRED STOCK

A. In consideration of the right to use the names set forth in Section II.B.
above in connection with the grant by BOARD to LICENSEE of this license,
LICENSEE agrees that, upon execution of this Agreement by BOARD, it shall issue
BOARD 400,000 shares of its Common Stock, $.001 par value, which shares of
Common Stock shall be subject to cancellation in accordance with the terms of
Sections III.B. and III.C. below. In addition, LICENSEE agrees to reserve a seat
on its Board of Directors for a designee selected by BOARD, until the closing of
the first public offering of equity securities by LICENSEE. In accordance with
LICENSEE’S customary practice with respect to offerings of any securities of the
LICENSEE, BOARD hereby makes the representations, warranties and covenants to
LICENSEE contained in Exhibit A hereto, which Exhibit A is incorporated herein
for all intents and purposes.

B. In addition, LICENSEE hereby grants BOARD an option, exercisable in its sole
discretion, to elect to purchase a total of 600,000 shares of the Series A
Preferred Stock (the “Shares”) of LICENSEE, at a purchase price of $.50 per
share, on the same general terms and conditions as are applicable to the initial
purchasers of such Series A Preferred Stock, such purchase option to be subject
to and conditioned upon the following:

1. The BOARD shall have the option to purchase all of the Shares, or a lesser
amount in accordance with the schedule attached hereto as Exhibit B and
incorporated herein for all purposes, by providing written notice to LICENSEE to
such effect no later than May 1, 1987, which notice shall specify the number of
Shares which BOARD desires to purchase and the date of purchase, which date
shall not be later than May 30, 1987. Effective at 12:01 a.m., May 2, 1987, the
option hereinabove provided shall expire for any and all Shares as to which the
LICENSEE has not received such written notice, and BOARD shall have no further
right to purchase any such Shares, unless otherwise extended by agreement of the
parties.

2. In the event that BOARD does properly elect to exercise its right to purchase
any of the Shares, and completes the purchase of such Shares as required, a
proportionate amount of the Common Stock issued to Board in connection with the
execution of this License Agreement shall, concurrent with the closing of such
purchase of the Shares, thereupon be returned to LICENSEE by BOARD, in
accordance with the schedule attached as Exhibit B hereto, whereupon such shares
of Common Stock shall be cancelled and BOARD shall no longer have any right,
title or interest therein.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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3. Effective upon the purchase by BOARD of any or all of the Shares, the royalty
obligations of LICENSEE provided for in Section IV.A.1. and IV.A.2. shall
increase to the applicable percentage amount as provided in the Schedule
attached hereto as Exhibit B.

C. As an alternative to the election by BOARD to purchase the Shares, BOARD may
elect to make a contribution to LICENSEE, in an aggregate amount not exceeding
$300,000, said sum to be applied to research and development activities in
accordance with the R & D Agreement (as defined hereinafter). In exchange for
such contributions, LICENSEE shall issue BOARD up to 600,000 shares of Series A
Preferred Stock of LICENSEE, such election option to be exercised in accordance
with and subject to the following conditions:

1. BOARD shall have the right to contribute funds, in accordance with the
schedule set out on Exhibit B hereto, for research and development activities of
LICENSEE, by providing written notice to LICENSEE no later than May 1, 1987,
which notice shall specify the amount of funds which BOARD desires to contribute
and the date of such contribution, which date shall not be later than May 30,
1987. Effective at 12:01 a.m. on May 2, 1987, BOARD’S option to acquire Series A
Preferred Stock shall expire for the corresponding amount of shares for which
LICENSEE has not received written notice of BOARD’S election to fund, and BOARD
shall have no further right to acquire such shares of Series A Preferred Stock,
unless otherwise extended by agreement of the parties.

2. In the event that BOARD does properly elect to contribute funds to the
LICENSEE’s research and development activities, and makes the contribution as
required, a proportionate amount of Common Stock issued in connection with the
execution of this License Agreement shall, concurrent with such funding, be
returned to LICENSEE by BOARD in accordance with the schedule set out on Exhibit
B hereto, whereupon such shares of Common Stock shall be cancelled and BOARD
shall no longer have any right, title or interest therein.

3. Effective upon the contribution by BOARD of some or all of the funds for
research and development, as provided herein, the royalty obligations of
LICENSEE provided for in Sections IV.A.1. and 2. would increase to the
applicable percentage amount as provided in the schedule attached hereto as
Exhibit B.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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D. The option to purchase Series A Preferred Stock under Section III.B. and to
acquire shares of Series A Preferred Stock under Section III.C. are mutually
exclusive and can not be jointly exercised in any form or fashion.

E. In consideration of the granting of the mutually exclusive options by
LICENSEE to BOARD as set forth in Sections III.B. and III.C., BOARD hereby
consents to the issuance of, and, upon issuance of the Common Stock to it as
provided in Section III.A. above, agrees to vote such shares, if required, in
order to authorize and issue, the following securities to the initial round of
venture capital firms:

1. 8% Convertible Notes (the “Notes”), in the amount of $300,000, such Notes to
accrue interest at the rate of 8% per year until the Notes are converted to
Series A Preferred Stock or redeemed by LICENSEE, whichever first occurs,
interest to be payable at the closing of the second round of venture capital
financing. Such Notes may, at LICENSEE’S option, be redeemed by LICENSEE at any
time prior to May 30, 1987, in the principal amount of all outstanding Notes, or
a portion thereof, plus accrued interest. In the event such Notes are not
redeemed in whole by LICENSEE, the Notes shall automatically be converted into
shares of Series A Preferred Stock, equal to twice the unredeemed amount of
Notes then outstanding, not exceeding 600,000 shares (see Exhibit C attached
hereto.) Such Notes shall contain such other terms and conditions as are
customary for such transactions.

2. Warrants to Purchase Common Stock, at a purchase price of $.10 share, in a
total amount of 150,000 shares of Common Stock of LICENSEE, to be issued to the
holders of the LICENSEE’S 8% Convertible Notes, pro rata, which warrants shall
only be exercisable in an amount equal to one-half of the principal amount of 8%
Convertible Notes of the LICENSEE which are redeemed by LICENSEE (see Exhibit C
attached hereto).

F. BOARD acknowledges that The Woodlands Venture Capital Company has been issued
10,000 shares of Common Stock of LICENSEE in consideration of the payment of
$10.00 by it and of the efforts of its employees in establishing LICENSEE,
managing it, and negotiating this Agreement. BOARD further acknowledges that
LICENSEE has, prior to the effective date hereof, issued 300,000 shares of
Class A Common Stock to each of Gabriel Lopez-Berestein, M.D., and Jim
Klostergaard, Ph.D., in exchange for payment by them of $300.00 each, and their
services in inventing the Licensed Subject Matter.

 

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treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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IV.

ROYALTIES

A. In consideration of the grant by BOARD to LICENSEE of this license, LICENSEE
shall pay to BOARD as follows:

1. An earned royalty of [**] of the Net Sales of a Licensed Patented Product or
Process by LICENSEE or its Subsidiaries in each country where a patent included
within the BOARD Patent Rights issues, or a patent application has been filed
and is pending, with claims covering such Licensed Patented Product or Process,
until the expiration, termination or invalidation of the patent in that country
by a Court of final jurisdiction or the determination that a patent will not
issue in that country.

2. An earned royalty of [**] of the Net Sales of a Licensed Non-Patented Product
or Process by LICENSEE or its Subsidiaries during the term of this Agreement.

3. An earned royalty of [**] of the royalty received by the LICENSEE from Net
Sales of a Licensed Patented Product or Process and Licensed Non-Patented
Product or Process by sublicensees of LICENSEE or its Subsidiaries, such royalty
to be measured upon and based on the actual proceeds received by LICENSEE or its
Subsidiaries under the Sublicense Agreement and not the total net sales
generated by the marketing or distribution of the Licensed Patented Products or
Processes and the Licensed Non-Patented Products or Processes by the
sublicensee. Such earned royalty shall be due for as long as LICENSEE or its
Subsidiary is receiving proceeds from the sublicensee, but not in excess of the
duration of this Agreement.

In addition, in the event LICENSEE transfers or sells any of the marketing
rights to any Licensed Patented Product or Process or Licensed Non-Patented
Product or Process to a non-related corporation, firm, association, partnership,
or other entity, the proceeds from such sale of marketing rights is hereby
expressly excluded from the terms of this Article IV, and no royalty payments
shall be due thereon, provided, however, that the sales of any Licensed Patented
Products or Processes or Licensed Non-Patented Products or Processes by said
entity, association, firm, partnership or corporation shall be subject to the
royalty provided in this Section IV.A.3; and provided further, that the total
royalty under Sections IV.A.I, IV.A.2., and IV.A.3. shall not in any event
exceed that amount which would otherwise be due and payable under Section
IV.A.I. or IV.A.2., as the case may be, had such royalties been paid on the
ultimate sale on such Licensed Patented Product or Process or Licensed
Non-Patented Product or Process in the marketplace.

4. In no event will LICENSEE be obligated to pay royalties under Sections
IV.A.1., IV.A.2. and IV.A.3. simultaneously for Net Sales of any particular
product or process in any given country (except as may arise in connection with
sales to a marketing entity and resales by said entity, in accordance with
Section IV.A.3. above). A single royalty will be due on each sale of Licensed
Patented Products or Processes no matter how many items in the BOARD Patent
Rights cover such Licensed Patented Products or Processes. No royalty shall be
paid on a Licensed Patented Product or Process after the BOARD Patent Rights
covering said Licensed Patented Product or Process have expired.

 

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treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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5. Earned royalties in the amount set out in Section IV. A. 2. shall accrue in
each country only for the period that the LICENSEE is the exclusive commercial
source in that country of a Licensed Non-Patented Product or Process. The term
“exclusive commercial source” as used above shall mean that the LICENSEE is the
sole commercial source of the Licensed Non-Patented Product or Process in that
country and that there is no commercial product available in that country that
is substantially equivalent in market acceptance. If the LICENSEE believes that
it is not the exclusive commercial source of a Licensed Non-Patented Product or
Process in any designated country, then it shall so notify BOARD and provide
reasonable evidence thereto. Within 45 days of receipt of said notice and
evidence, BOARD shall notify the LICENSEE in writing of its acceptance or
rejection of the evidence as to the existence of another commercial source. Upon
acceptance by BOARD, the LICENSEE shall, as of said date of acceptance, no
longer have any obligation to pay royalties on Net Sales in “that country based
on the amount set out in Section IV.A.2. herein. In such event, the amount set
out in Section IV.A.2. shall be reduced to an amount equal to [**] of the
applicable amount, and LICENSEE shall pay such reduced royalty amount.

6. BOARD agrees that in order to successfully market products and processes
covered by this Agreement, LICENSEE must have complete freedom in marketing.
Thus, BOARD understands that LICENSEE makes no warranty that it will market the
products or processes covered by this Agreement or, if LICENSEE does market any
of such products or processes, that they will be the exclusive means by which
LICENSEE will participate in this field. All business decisions relating to use,
manufacture, sale or marketing of products covered under this Agreement will be
within the sole discretion of LICENSEE.

7. In the event that LICENSEE enters into a joint venture with another entity
and utilizes BOARD Technical Information in combination with the technology of
such entity, then Net Sales for purposes of calculating royalties shall be
deemed to be LICENSEE’s income received from such joint venture. Subject to the
foregoing sentence, where a Licensed Patented Product or Process or a Licensed
Non-Patented Product or Process is not sold separately but is sold in
combination with or as part of other products, the Net Sales of the Licensed
Patented Product or Process or the Licensed Non-Patented Product or Process so
sold shall be calculated, for the purpose of computing royalties due, by
applying to the total selling price of the combination or composite product a
fractional multiplier having as its denominator the total selling price of the
combined or composite product (determined by generally accepted accounting
principles) and as its numerator the selling price of the included Licensed
Patented Product or Process or Licensed Non-Patented Product or Process
(similarly determined).

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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B. Notwithstanding anything contained in Section IV.A. to the contrary, if, by
May 1, 1987, BOARD elects to exercise its rights under Section III.B. or III.C.
hereof, to acquire Series A Preferred Stock and does in fact purchase or acquire
any such shares of Series A Preferred Stock, the royalties provided in Section
IV.A.1. and IV.A.2. will increase in accordance with the terms set forth in
Sections III.B. or III.C., as the case may be, immediately upon the closing of
the applicable investment. In such event, the BOARD shall return the
certificate(s) for Common Stock issued under Article III.A. hereof to the
LICENSEE, and such certificate(s) shall be thereupon cancelled and of no further
effect. In the event BOARD has elected to acquire some but not all of the Series
A Preferred Stock available to it, LICENSEE shall issue BOARD a new certificate
for that amount of shares of Common Stock which BOARD has not forfeited.

V.

REPORTING, PAYMENT AND MARKING

A. LICENSEE agrees to keep proper records and books of account in accordance
with generally accepted accounting principles, showing the sales upon which the
royalty payments of LICENSEE are based, and all other information necessary for
the accurate determination of payment to be made hereunder and to deliver to
UTSCC, within forty-five (45) days after each calendar quarter ending on
March 31, June 30, September 30 and December 31, a report showing the
information on which the payments herein provided are calculated and to
accompany each such report with the payments shown to be due thereby.

B. On reasonable written notice, UTSCC at its own expense, shall have the right,
exercisable only once in any calendar year, to have an independent certified
public accountant or an appropriate representative of UTSCC, reasonably
satisfactory to LICENSEE, inspect and audit the books and records of LICENSEE,
its Subsidiaries and its sublicensees during usual business hours of LICENSEE,
its Subsidiaries and its sublicensees for the sole purpose of, and only to the
extent necessary for, determining the correctness of payments due under this
Agreement. Such examination with respect to any fiscal year shall not take place
later than three years following the expiration of such period. If such
inspection and audit results in a discrepancy in the correctness of the payments
due under this Agreement in an amount in excess of five percent (5%), LICENSEE
shall pay any and all costs or fees associated with said audit and charged to
UTSCC by said independent accounting firm, together with the corrected amount of
royalty payments due hereunder, within thirty (30) days of receipt of the audit
results.

C. Royalties based on Net Sales in any foreign country shall be payable to BOARD
in the United States in United States Dollars. Dollar amounts shall be
calculated using the foreign exchange rate, as published by the Wall Street
Journal, in effect for such foreign currency on the last business day of each
calendar quarter for which a report is required. Where royalties are due for Net
Sales in a country where, for reasons of currency, tax or other regulations,
transfer of foreign currency out of such country is prohibited,

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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LICENSEE has the right to place BOARDS’s royalties in a bank account in such
country in the name of and under the sole control of BOARD; provided, however,
that the bank selected be reasonably acceptable to BOARD and that LICENSEE
inform BOARD of the location, account number, amount and currency of money
deposited therein. After BOARD has been so notified, those monies shall be
considered as royalties duly paid to BOARD, will be completely controlled by
BOARD, and LICENSEE will have no further responsibility with respect thereto.

D. All foreign taxes on royalty payments hereunder, imposed upon or required to
be withheld by LICENSEE, its Subsidiaries or its sublicensees, shall be deducted
from such payments (but not in excess of BOARD royalties), and evidence of such
foreign taxes shall be delivered to BOARD at the time of the reports with
respect to such royalty payments. LICENSEE agrees, however, to assist BOARD in
recovering or preventing the levy or withholding of any such taxes, provided
that LICENSEE shall be reimbursed for its out-of-pocket expenses incurred in
rendering any such assistance.

E. LICENSEE agrees to mark all Licensed Patented Products or Processes sold by
it or its sublicensees covered by the BOARD Patent Rights with appropriate
patent marking, such marking to be agreed upon between the parties hereto,
together with notice of copyright sufficient to maintain legal claim to
copyright in the country of origin of such Licensed Patented Product or Process,
as well as for Licensed Non-Patented Product or Process.

VI.

RESEARCH AND DEVELOPMENT

A. In addition to the above agreements on its part, LICENSEE has established an
operating budget for the next two years equal to $600,000.00, which shall be
allocated and expended in the following manner: (i) the sum of $413,000.00 to be
paid to UTSCC over the next two years for research and development of the
Licensed Subject Matter and to be expended by UTSCC for salaries and fringe
benefits, supplies, animals and institutional overhead; (ii) the sum of
$131,775.00 to be used by LICENSEE for direct purchases made by it for certain
equipment, supplies and animals for the research and development project; and
(iii) the sum of $55,000.00 to be used as working capital by LICENSEE, in its
sole discretion; all in accordance with the terms of that certain Research and
Development Contract attached hereto as Exhibit D and incorporated herein for
all purposes (“R & D Agreement”). In consideration thereof, BOARD and UTSCC
hereby grant to LICENSEE an exclusive, world-wide license, including the right
to grant sublicenses, in and to the Base Technology, the Products, the
Improvements, and all Proprietary Property (as said terms are defined in the R &
D Agreement) conceived or developed pursuant to such R & D Agreement and or work
done in connection with such Agreement, to manufacture, use, market and sell any
Products and Improvements (as defined therein) throughout the United States of
America, its territories and possessions, and in all foreign countries, on the
same terms and conditions, with the identical rights and obligations, and
governed in all respects by this License Agreement.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

B. UTSCC and its personnel shall have the right to publish papers disclosing the
general scientific findings related to the BOARD Patent Rights and BOARD
Technical Information, including results of the work conducted by them on behalf
of LICENSEE under the R & D Agreement, in accordance with the terms hereof and
of the R & D Agreement. A copy of each proposed publication shall be provided to
LICENSEE at least ninety (90) days in advance of submission for publication
thereof to permit LICENSEE time to comment thereon and to allow UTSCC and its
personnel to make corrections or revisions, where appropriate, and to permit
LICENSEE or BOARD time in which to prepare application(s) for Letters Patent
treating the subject matter of such publication or to take other steps necessary
to protect such proprietary rights. UTSCC shall refrain from submitting such
manuscript or information for publication until the expiration of such review
period. Any proposed publication provided to LICENSEE shall be considered as
acceptable for the submission for publication unless LICENSEE notifies UTSCC
within said ninety (90) day period that in LICENSEE’s judgment, such publication
discloses developments which are potentially patentable and may be necessary or
useful to the commercial exploitation of any Products, Improvements, the Base
Technology, or Proprietary Property (as defined in said R & D Agreement). If
LICENSEE notifies UTSCC in writing that such publication does disclose
potentially patentable developments, UTSCC shall refrain from submitting such
manuscript or publication for the duration of the above-referenced ninety
(90) day period following delivery to LICENSEE of such notice, in order for
BOARD or LICENSEE to take steps to prepare and file patent applications.

C. Notwithstanding any other provision of this Agreement, BOARD shall
specifically retain, for itself, SYSTEM, and its component institutions, the
right to use the Licensed Subject Matter, the BOARD Patent Rights, and the BOARD
Technical Information for research, teaching, and other related non-commercial
purposes.

D. UTSCC hereby agrees that it shall engage in good faith negotiations with
LICENSEE on an exclusive basis, for a period of up to ninety (90) days,
concerning the terms and conditions under which UTSCC and BOARD shall agree to
license, on an exclusive basis, to LICENSEE any and all New Technology (as
defined in the R & D Agreement) conceived or developed by UTSCC, prior to UTSCC
or BOARD discussing such New Technology with any other potential licensee or
sponsor. LICENSEE agrees, however, that any technology which is developed as a
result of a research and development program sponsored by another firm as of the
date hereof is excluded from this right of first refusal if such firm has rights
to acquire such technology. UTSCC agrees that it shall (1) refrain from
disclosing such patentable technology to third parties or entering into
negotiations or agreements with third parties with regard to the disposition of
a development except as otherwise expressly permitted by this Section VI.D.; and
(2) give LICENSEE prompt

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

written notice of any such development, which notice shall specify all relevant
technical and scientific information pertaining to the technology in sufficient
detail to permit LICENSEE to reasonably assess its interest in the technology
and UTSCC’s projected research funding requirements, if any (the “Development
Notice”). If LICENSEE delivers notice to UTSCC of its interest in a development
(“Notice of Interest”) within 90 days of delivery of the Development Notice,
LICENSEE and UTSCC shall undertake negotiations for the acquisition by LICENSEE
of rights to the development. If LICENSEE fails to deliver a timely Notice of
Interest, or if UTSCC, BOARD and LICENSEE fail to enter into a written agreement
within 90 days of delivery of the Development Notice or such additional time as
may be agreed to by the parties, BOARD and UTSCC shall be free to consult with
and license said technology to any other firm on the same terms and conditions
as were last offered to LICENSEE, provided, however, that if the proposed terms
of said license agreement to a third party vary from those offered to LICENSEE,
BOARD and UTSCC shall first offer the new terms to LICENSEE, which shall have 10
days to accept or reject. In the event BOARD and UTSCC do not successfully
license such technology to a third party within 360 days of the expiration of
the offer period to LICENSEE, then BOARD and UTSCC shall no longer be free to
offer said technology to a third party without first offering it to LICENSEE.

This first right of refusal by LICENSEE shall exist so long as this License
Agreement between LICENSEE and the BOARD is in effect, and in no event beyond
the termination of this License Agreement. LICENSEE and UTSCC agree that they
will use their respective best efforts to comply in all material respects with
the terms of this section.

VII.

ADDITIONAL PATENT APPLICATIONS AND RIGHT TO FILE SUIT

A. 1. BOARD shall file additional patent applications in the United States and
in any foreign countries in which LICENSEE notifies BOARD that LICENSEE desires
applications relating to the Licensed Subject Matter to be filed, and such
additional patent applications, and all patents issuing thereon, shall be
included within the BOARD Patent Rights, or, with prior approval of BOARD,
LICENSEE may file any particular patent application. LICENSEE shall reimburse
BOARD for its reasonable out-of-pocket costs, plus overhead not to exceed fifty
percent (50%) of BOARD’s out-of-pocket costs, including attorneys’ fees, of
filing and prosecuting such additional patent applications. BOARD, at its
expense, shall be free to file in any foreign country not elected by LICENSEE,
provided that BOARD provides LICENSEE with thirty (30) days advance written
notice of its desire to file for any such patent. If LICENSEE does not notify
BOARD within such time period of its desire to have BOARD file for a patent on
LICENSEE’s behalf, then the patent rights associated with such filing shall not
be subject to this Agreement.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

2. BOARD shall have the full and complete control over the prosecution of such
domestic and foreign patent applications, but shall keep LICENSEE advised as to
such patent prosecution by supplying to LICENSEE copies of any official Actions,
amendments, responses and other correspondence, including copies of patents or
other material referred to or cited therein, within a reasonable period of time
after receipt or filing thereof by BOARD.

B. 1. LICENSEE shall have the right, exercisable at LICENSEE’s sole discretion,
to file and control the prosecution of any and all suits seeking to enjoin or
recover damages from any and all infringers of any patent which is then included
within the BOARD Patent Rights, and shall have the right to join BOARD as a
party in any such suit filed by LICENSEE. LICENSEE shall bear the expense of any
such suit, and any amounts recovered, whether by final judgment, settlement or
otherwise, as a result of such suit shall be the sole property of LICENSEE,
subject to the royalty provisions of Article IV.

2. In the event that LICENSEE shall not institute or prosecute any suit to
enjoin or recover damages from any infringer, BOARD may do so at its sole
expense, provided BOARD has first given LICENSEE 60 days’ advance notice of its
intention to take such action and, provided further, that LICENSEE has not
itself taken appropriate action during such 60-day period. Any amounts recovered
in an action brought by BOARD, whether by final judgment, settlement or
otherwise in any such suit shall be the sole property of BOARD.

3. LICENSEE and BOARD agree that neither will settle any action commenced by it
in a manner that is prejudicial to any BOARD Patent Rights without the other
party’s prior written approval. BOARD and LICENSEE each agree that it will
promptly notify the other of any infringement or potential infringement of any
BOARD Patent Rights which comes to its attention.

4. In any suit or dispute involving any infringement, BOARD and LICENSEE shall
cooperate fully, and upon the request of the party bringing suit, the other
party shall make available all relevant records, papers, information, samples,
specimens, and the like which may be relevant and in its possession. In the
event a court of competent, final jurisdiction determines that one or more of
the BOARD Patent Rights are invalid or unenforceable, no further royalty
payments on operations covered by such BOARD Patent Rights shall be due or owing
hereunder with respect thereto.

In the event the making, using or selling of the Licensed Patented Products or
Processes or Licensed Non-Patented Products or Processes is determined, by a
court of final competent jurisdiction, to infringe one or more claims of a
valid, subsisting patent owned by a third party, no royalty payments shall be
due BOARD with respect to such product or process from such infringing
activities in that jurisdiction from the time such determination is made until
such patent expires. In the event that

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

either party is able to negotiate a license with royalties based on a good faith
assessment of the strength and enforceability of said third party’s patent,
royalty payments due hereunder will be paid only to the extent that such
payments exceed any royalty payments made by LICENSEE to such third party as a
result of such negotiated license but in no event shall such payments be reduced
below fifty percent (50%) of that otherwise due.

VIII.

DURATION AND TERMINATION

A. Unless otherwise provided herein, this Agreement shall remain in force and
effect until the expiration of the last patent relating to the Licensed Subject
Matter and, at the option of LICENSEE, from year to year thereafter; however, it
is understood that no royalties shall be due on any sales of Licensed Patented
Products or Processes and Licensed Non-Patented Product or Processes in any
country where the applicable BOARD Patent Rights have previously expired or
where, pursuant to other provisions of this Agreement, no further royalty
payments are due for other reasons.

B. This Agreement may be terminated by either party, if the other party
substantially fails to perform or otherwise materially breaches any of the
material terms, covenants or provisions of this Agreement, such termination to
be effected in accordance with the provisions hereof. In such event, the
non-breaching party shall give written notice of intent to terminate to the
breaching party stating the grounds therefor. The party receiving the notice
shall have sixty (60) days thereafter to correct such breach. If such breach is
not corrected within said sixty (60) days after notice as aforesaid, then the
party sending the notice of intent to terminate, at its option, may terminate
this Agreement by further written notice thereof to the party in breach,
provided however, that if such breaching party notifies the terminating party
that it is in good faith attempting to cure such breach, describing the manner
thereof, or if the breach is incurable and the breaching party is willing to
compensate in damages, such termination may not occur during the period of such
cure or negotiation of damages.

C. After three (3) years from the effective date of this Agreement, BOARD shall
have the right, upon ninety (90) days’ written notice, to terminate this
Agreement if LICENSEE has failed to commercialize the Licensed Subject Matter.
If, as of said date, LICENSEE has commercialized some but not all aspects of the
Licensed Subject Matter, then the BOARD’s right to terminate this Agreement
shall not apply. Furthermore, if the LICENSEE shall demonstrate to the
reasonable satisfaction of the BOARD that it has an ongoing and active research,
developmental, manufacturing, marketing, clinical testing, or licensing program,
directed toward production and sale of products, then LICENSEE shall be deemed
to have satisfied the requirements herein to commercialize the Licensed Subject
Matter.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

D. In the event of termination of the Agreement in whole or in part for any
reason whatsoever, the following shall apply, limited, however, to those BOARD
Patent Rights being terminated and applicable Licensed Patented Products or
Processes and Licensed Non-Patented Products or Processes:

1. LICENSEE shall not thereby be discharged from any liability or obligation to
BOARD which became due or payable prior to the effective date of such
termination;

2. If LICENSEE, its Subsidiaries or its sublicensees then possess Licensed
Patented Products or Processes or Licensed Non-Patented Products or Processes,
have started the manufacture thereof or have accepted orders therefor, LICENSEE,
its Subsidiaries or sublicensees shall have the right to sell their inventories
thereof, complete the manufacture thereof and market such fully manufactured
Licensed Patented Products or Processes or Licensed Non-Patented Products or
Processes, and/or manufacture and sell Licensed Patented Products or Processes
or Licensed Non-Patented Products or Processes, in order to fulfill such
accepted orders, subject to the obligation of LICENSEE to pay BOARD the earned
royalty payments therefor as provided in Section IV of this Agreement;

3. Subject to Section VIII.D.2., LICENSEE shall discontinue, and shall cause its
Subsidiaries and sublicensees to discontinue, the manufacture, use, marketing
and sale of Licensed Patented Products or Processes or Licensed Non-Patented
Products or Processes, and shall assign any sublicenses granted hereunder to
BOARD, and LICENSEE shall immediately discontinue use of the words “Board of
Regents, The University of Texas System”, “University of Texas System Cancer
Center”, or any language which would connect sales of products by LICENSEE with
or imply the sponsorship of BOARD, except that packaging and advertising
material may be used for products permitted to be sold under Section VIII.D.2.
above; and

4. All rights sold, assigned or transferred by BOARD to LICENSEE hereunder and
then subject to termination shall revert to BOARD, and LICENSEE agrees to
execute all instruments necessary and desirable to revest said rights in BOARD.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

IX.

ADDRESSES

A. Any notice, communication, request, instruction, payment or other document
required or permitted herein shall be deemed delivered upon mailing by regular
mail (except in the case of notice provided for herein, in which case certified
mail, return receipt requested, shall be required), postage prepaid, or by
prepaid telegram, or upon personal delivery, to the parties at the following
addresses:

 

If to the LICENSEE:

   

The Macrophage Company, Inc.

2201 Timberloch Place

The Woodlands, Texas 77380

Attention: President

If to UTSCC:

   

Mr. Steven C. Schultz

Executive Vice President for Administration

The University of Texas System Cancer Center

6723 Bertner

Houston, Texas 77030

If to BOARD, or SYSTEM:

   

Office of General Counsel

The University of Texas System

201 West 7th Street

Austin, Texas 78701

(or at such other address in care of such other person as hereafter shall be
designated in writing by any party). With respect to any notices to the BOARD,
SYSTEM, or UTSCC involving intellectual property right matters, a copy shall be
sent to:

 

System Intellectual Property Officer

Office of General Counsel

The University of Texas System

201 West 7th Street

Austin, Texas 78701

X.

CONFIDENTIAL INFORMATION

A. BOARD, UTSCC and LICENSEE each agree that all information relating to the
research and development project referred to in Article VI hereof and the
Licensed Subject Matter and contained in documents marked “Confidential” which
are forwarded to one by the other shall be received in strict confidence, used
only for the purposes of this Agreement or said R & D Agreement, and not
disclosed by the recipient party (except as required by the Texas Open Records
Act), its agents or employees without the prior written consent of the other
party, unless such information (i) was in the public domain at the time of
disclosure, (ii) later became part of the public domain through no act or
omission of the recipient party, its employees, agents, successors, or assigns,
(iii) was lawfully disclosed to the recipient party by a third party having the
right to disclose it, (iv) was already known by the recipient party at the time
of disclosure or (v) was independently developed or is required to be submitted
to a government agency pursuant to any obligation imposed or right granted
hereunder.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

Each party’s obligation of confidence hereunder shall be fulfilled by using the
same degree of care with the other party’s confidential information it uses to
protect its own confidential information. Nothing contained herein shall prevent
BOARD, UTSCC or LICENSEE, its Subsidiaries or its sublicensees from disclosing
information to the extent such information is required to be disclosed, and
after securing or making a good faith effort to secure, confidentiality
limitations comparable to the foregoing, (i) in connection with the securing of
necessary governmental authorization for LICENSEE’s, its Subsidiaries’ or
sublicensees’ manufacture, use or sale of a Licensed Patented Product or Process
or Licensed Non-Patented Product or Process, (ii) for the purpose of BOARD’s,
UTSCC’s, LICENSEE’s, or any of their Subsidiaries’ or sublicensees’ compliance
with governmental regulations, (iii) for the purpose of sublicensing or
distribution and sale as provided for herein, or (iv) in connection with the
development, manufacture, use or sale of any Licensed Patented Product or
Process or Licensed Non-Patented Product or Process as provided for herein.

Except as herein expressly provided or in the R & D Agreement, UTSCC further
agrees that it will not use the Base Technology, Products, Improvements or
Proprietary Property (as defined in said R & D Agreement) for its own benefit or
for the benefit of any party other than LICENSEE, and that any such use (except
as provided for non-commercial academic purposes) shall be solely for the
performance of its obligations under such Agreements. It shall obtain
appropriate written agreements in form satisfactory to LICENSEE from all persons
other than employees that may have access to the Base Technology, Products,
Improvements or Proprietary Property pursuant to which such party agrees to so
maintain in strict confidence all such material and not to use such material
except for the benefit of LICENSEE, and shall ensure that all employees shall
likewise maintain the confidentiality of all such information and shall not use
such material except as permitted in such Agreements. The obligations imposed by
this section shall exist for so long as this License Agreement is in force and
for a period of three (3) years thereafter.

XI .

ENTIRE AGREEMENT

A. This Agreement, together with the R & D Agreement attached hereto as Exhibit
D, contains the entire agreement and understanding between the parties with
respect to the subject matter hereof, and merges all prior discussions,
representations and negotiations with respect to the subject matter of this
Agreement and is to be interpreted in accordance with the Laws of the State of
Texas.

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

XII.

ASSIGNMENT

A. This Agreement may not be assigned by either party, without the prior written
consent of the other, which consent shall not be unreasonably withheld, provided
that LICENSEE may assign this Agreement to any purchaser or transferee of all or
substantially all of LICENSEE’s business upon prior written notice to BOARD, and
provided further, that nothing shall prevent LICENSEE from entering into
sublicensing agreements with other parties. This Agreement shall be binding upon
and inure to the benefit of BOARD, LICENSEE and their respective permitted
assigns and successors in interest.

LICENSEE agrees that it shall use its best efforts to provide copies of all
sublicenses and assignments to UTSCC.

XIII.

REPRESENTATIONS AND WARRANTIES

BOARD, and where applicable, UTSCC, make the following representations and
warranties, as of the effective date hereof:

A. BOARD represents and warrants that it is the owner of the entire right, title
and interest in and to the BOARD Patent Rights, including without limitation the
patents and patent applications listed on Schedule I., and the BOARD Technical
Information and that there are no outstanding liens, encumbrances, agreements or
understandings of any kind, either written, oral or implied which are
inconsistent with any provision of this Agreement, except to the extent that
research funded by Federal Government grants may be subject to a reserved
non-exclusive license to the Government. Except for the foregoing, BOARD
represents and warrants that it has the sole right to grant licenses under the
BOARD Patent Rights and BOARD Technical Information and that it has not granted
licenses to any other person.

B. BOARD represents and warrants that no individual or entity has asserted that
BOARD, or any employee, agent, representative or other person affiliated with
BOARD is infringing or has infringed any foreign or domestic patent or has
misappropriated or improperly used or disclosed any trade secret, confidential
information or know-how which relates in any manner to the subject matter of
this Agreement.

C. BOARD represents and warrants that it has no knowledge that any person or
individual is infringing or has infringed any foreign or domestic patent
included within the BOARD Patent Rights, or has misappropriated or improperly
used or disclosed any trade secret, confidential information, or know-how
included within the BOARD Technical Information.

 

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treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

D. BOARD represents and warrants that no patent or patent application listed on
Schedule I. is the subject of any re-examination proceeding or any pending
interference, opposition, cancellation or other protest proceeding.

E. BOARD represents and warrants that it has no knowledge of any foreign or
domestic patent or patent application which is reasonably expected by BOARD to
restrict LICENSEE from manufacturing, using or selling any Licensed Patented
Product or Process any Licensed Non-Patented Product or Process or any portion
of the BOARD Technical Information.

F. BOARD and UTSCC represent and warrant that neither of them is aware of any
sponsored research and development program between either of them or any other
component of System and a party other than LICENSEE which relates to or in any
way affects the Licensed Subject Matter.

XIV.

INDEMNIFICATION

A. LICENSEE agrees to indemnify and hold harmless UTSCC, SYSTEM, BOARD and their
Regents, officers, agents and employees (“Indemnified Person”) from any
liability, loss or damage they may suffer as a result of claims, demands, costs
or judgments against them arising out of the activities conducted pursuant to
this Agreement, provided, however, that any such liability, loss or damage
resulting from, arising out of, or incident to, directly or indirectly, the
following subsections a. or b. is excluded from this indemnification:

a. Any negligent or willful failure to comply with any applicable FDA or other
governmental requirements; or

b. The negligence or willful malfeasance of an Indemnified Person.

Each Indemnified Person agrees to endeavor to provide LICENSEE with a copy of a
notice of claim or action which is a matter subject to indemnification in
accordance with the terms hereof, in order for LICENSEE to defend such claim or
action. LICENSEE shall have the right to control the defense of any such claim
or action, at its own expense. The Indemnified Person or Persons agree to
cooperate with LICENSEE in the defense of such claim or action. Failure of the
Indemnified Person to notify LICENSEE as required above or to cooperate with
LICENSEE, which failure materially adversely affects LICENSEE’s ability to
defend such claim or action or directly results in LICENSEE incurring liability
hereunder, shall relieve LICENSEE from any obligation of indemnification
hereunder.

 

- 20 -

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

XV.

PUBLICITY AND NEWS RELEASES

BOARD, UTSCC and LICENSEE acknowledge that any party hereto may wish to
distribute periodically informational releases and announcements to the news
media regarding this Agreement. No party shall release such materials containing
the name of another party or any of its employees without the prior approval by
an authorized representative of such party, which said approval shall not be
unreasonably withheld. Should a party reject a proposed news release, the
parties agree to discuss the reasons for such rejection, and every effort shall
be made to develop an appropriate informational news release.

XVI.

MISCELLANEOUS

A. CAPTIONS. The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement .

B. SEVERABILITY. If any term or other provision of this Agreement is held to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

C. EFFECTIVE DATE. This Agreement shall be effective as of the date of execution
hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 15th day
of October, 1986.

[SIGNATURES ON NEXT PAGE]

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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ATTEST:     THE MACROPHAGE COMPANY, INC.

/s/ Illegible

    BY:  

/s/ Illegible

Secretary     TITLE:   President ATTEST:     THE UNIVERSITY OF TEXAS SYSTEM
CANCER CENTER

/s/ Illegible

    BY:  

/s/ Steven C. Schultz

      Steven C. Schultz     TITLE:   Executive Vice President for Administration
FORM APPROVED:      

/s/ Illegible

      Office of General Counsel       The University of Texas System      
CONTENT APPROVED:
        (FOR U.T. SYSTEM)     BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM
BY:  

 

    BY:  

/s/ Illegible

TITLE:  

 

    TITLE:   Executive Vice President

 

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[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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CERTIFICATE OF APPROVAL

I hereby certify that pursuant, to procedures authorized by the Board of Regents
of The University of Texas System the foregoing Agreement was approved on the
19th day of January 1987, and that the person whose signature appears above is
authorized to execute such agreement on behalf of the Board.

 

/s/ Illegible

Executive Secretary, Board of Regents

The University of Texas System

 

- 23 -

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

Exhibit A

to

Exclusive License Agreement

To induce the LICENSEE to deliver the above-specified Common Stock to the BOARD,
BOARD hereby represents and warrants to the LICENSEE as follows:

1. BOARD is acquiring the Common Stock for its own account as principal, for
investment purposes only, and not with a view to, or for, resale or
distribution, and no other person has a direct or indirect beneficial interest
in the Common Stock;

2. The BOARD has not offered any of the Common Stock for resale and has no
present intention of dividing its interest with others or of reselling or
otherwise disposing of the Common Stock;

3. The BOARD further represents, warrants and agrees that it will not sell or
otherwise dispose of the Common Stock without registration under the Securities
Act of 1933, as amended (the “Act”), or an exemption therefrom, and fully
understands and agrees that it must bear the economic risk of its investment for
an indefinite period of time because, among other reasons, the Common Stock has
not been registered under the Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Act and under the applicable
securities laws of such states or an exemption from such registration is
available. BOARD also understands that the LICENSEE is under no obligation to
register the Common Stock on its behalf or to assist it in complying with any
exemption from registration under the Act. BOARD further understands that any
certificate evidencing the Common Stock will bear a legend restricting the
transfer thereof consistent with the foregoing and that a notation may be made
in the records of the LICENSEE restricting the transfer of any Common Stock in a
manner consistent with the foregoing.

C. The BOARD acknowledges that it is aware that:

(1) No federal or state agency has passed upon the Common Stock or made any
finding or determination as to fairness of this investment;

(2) There are substantial risks of loss of investment incident to an investment
in the Common Stock and such an investment is highly speculative;

(3) The LICENSEE is only recently organized, has not conducted any substantial
business to date and does not have any substantial working capital or financial
resources. The business in which the LICENSEE proposes to engage is highly
speculative and success in the LICENSEE’s business may depend on, among other
things, the LICENSEE’S ability to obtain financing, to complete product
development, to

 

24

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

Exhibit B

to

Exclusive License Agreement

Schedule of Funding by Board of Regents

 

Amount of Funds

Contributed

by Board

  

Amount of Series
A Preferred Stock
to be Issued

  

Amount of Common
Stock to be
Forfeited

  

New Royalty
Amount
IV.A.1

  

New Royalty
Amount
IV.A.2

- 0 -    - 0 -    - 0 -    No Change    No Change $  50,000    100,000   
  67,000    3.5%    2.33% $100,000    200,000    133,000    4.0%    2.67%
$150,000    300,000    200,000    4.5%    3.00% $200,000    400,000    267,000
   5.0%    3.33% $250,000    500,000    333,000    5.5%    3.67% $300,000   
600,000    400,000    6.0%    4.00%

 

25

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

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Exhibit C

to

Exclusive License Agreement

 

Principal Amount

of 8% Convertible
Notes Redeemed
by LICENSEE

  

Amount of Series
A Preferred Stock
Issued Upon
Conversion of 8%
Convertible Notes

  

Amount of Shares
to be Exercisable
under Stock
Purchase Warrants
at $.10/share

- 0 -

   600,000    - 0 -

  50,000

   500,000      25,000

100,000

   400,000      50,000

150,000

   300,000      75,000

200,000

   200,000    100,000

250,000

   100,000    125,000

300,000

   - 0 -    150,000

 

26

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

SCHEDULE I

to

EXCLUSIVE LICENSE AGREEMENT

 

1. “Methods and Compositions for the Inhibition of Tumor Cell Proliferation”,
U.S. Serial No. 794,348. Filed November 1, 1985.

 

2. “Human Monocyte Dervied Soluble Factors with Tumoricidal Properties”. Patent
Application Recommended by UTSCC Patent Committee on August 11, 1986.

 

27

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.

--------------------------------------------------------------------------------

SCHEDULE I

to

EXCLUSIVE LICENSE AGREEMENT

Of October 15, 1986

 

1. “Arginine Independent Macrophage Cytotoxin (AIMC)”, Sivaramakrishman, Lopez-
Berestein, Tucker, Klostergaard. (UTCS: 181)

 

2. “Preparation and Characterization of Liposomal Formulations of Lipophilic
Human Tumor Necrosis Factor”, Utsumi, Hung, Klostergaad. (ID90-030)

 

28

[**] = Portions of this agreement have been omitted pursuant to a confidential
treatment request. An unredacted version of this agreement has been filed
separately with the Commission.