Exhibit 10.3

CONFIDENTIAL

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of

the Commission pursuant to the Company’s application requesting confidential
treatment

under Rule 24b-2 of the Exchange Act.

ASSET PURCHASE AND LICENSE AGREEMENT

BY AND AMONG

3M COMPANY, 3M INNOVATIVE PROPERTIES COMPANY,

AND COLEY PHARMACEUTICAL GROUP, INC.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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ASSET PURCHASE AND LICENSE AGREEMENT

THIS AGREEMENT, made this 8th of June, 2007, (“Signing Date”) by and among 3M
COMPANY (hereinafter “3M”), 3M INNOVATIVE PROPERTIES COMPANY (hereinafter “3M
IPC”), Delaware corporations having offices at 3M Center, St. Paul, Minnesota
55144, USA and COLEY PHARMACEUTICAL GROUP, INC. a Delaware corporation having
its address at 93 Worcester Street, Suite 101, Wellesley, MA 02481 USA
(hereinafter “COLEY”). 3M IPC is a wholly owned subsidiary of 3M. Hereinafter a
reference to “3M” or “COLEY” shall include their respective Affiliates where
performance would be expected from or required by an Affiliate.

WITNESSETH:

WHEREAS, 3M has conducted extensive research and development in the area of
small-molecule immune response modifier compounds and other small molecule
compounds, some of which act by stimulating basic immune cell receptors known as
toll-like receptors (TLRs) 7 and/or 8, for possible treatment of various
conditions, including, for example, cancers, viral, bacterial, and fungal
infections, inflammatory diseases such as asthma and allergic rhinitis,
autoimmune diseases, wound-healing, photoaged skin, scar-reduction, as well as
being useful as Vaccine Adjuvants (as defined below).

WHEREAS, 3M has discovered and tested many thousands of such compounds, and has
conducted preclinical and, in some cases, clinical testing on a number of them,
such as imiquimod, the active drug in 3M’s Aldara™ topical cream product, and
others designated [***] and others.

WHEREAS, 3M has already entered into transactions conveying some or all rights
in [***] to third parties, but still retains rights to the remaining compounds
for most uses.

AND WHEREAS, 3M and 3M IPC wish to sell and license, and COLEY wishes to
purchase and license the rights set forth herein.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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NOW, THEREFORE, in consideration of the foregoing premises and mutual promises
set forth in this Agreement, the Parties agree as follows:

ARTICLE 1. DEFINITIONS

The terms defined in Article 1 shall have the following meanings (applicable
both to the singular and the plural forms):

“3M Compound(s)” means any compound that is covered by an Existing Claim within
any of the patent families identified as the “Compound Cases” in the Assigned
Patent Rights and Licensed Patent Rights including any prodrug or any hydrate,
solvate, conjugate, salt, ester, stereoisomer or polymorph of such compound or
prodrug, or otherwise provided to Coley by 3M as a Tangible Asset under this
Agreement, other than Excluded 3M Compounds. Provided, however, that 3M
Compound(s) does not include (i) metabolites of, or compounds used as
intermediates for making, compounds that otherwise do not constitute 3M
Compounds, and (ii) the conjugation compounds identified as [***] for use as
Vaccine Adjuvants.

“Affiliate” means with respect to any of the Parties to this Agreement, any
person, firm, trust, corporation, company or other entity or combination
thereof, whether now existing or created in the future, that directly or
indirectly (a) owns or controls said Party, (b) is owned or controlled by said
Party or (c) is under common ownership or control with said Party. The term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Party, whether through
the ownership of voting securities, by contract or otherwise. Control will be
presumed if any person, firm, trust, corporation, company or other entity or
combination thereof owns, either of record or beneficially, fifty percent
(50%) or more of the voting stock of any Party.

“Assigned Agreements” means the agreements listed on Schedule A.

“Assigned Patent Rights”. means the Patent Rights listed on Schedule B-1.

“Closing” and “Closing Date” shall be as set forth in Section 2.2.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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“Excluded 3M Compound(s)” means [***].

“Excluded Field” has the meaning set forth in the definition of the term “Field”
below.

“Existing Claim” means a claim of (i) an issued and unexpired patent, which
claim has not been revoked or held invalid or unenforceable by a court or other
government agency of competent jurisdiction from which no appeal can be or has
been taken and has not been held or admitted to be invalid or unenforceable
through re-examination or disclaimer, reissue, opposition procedure, nullity
suit or otherwise, or (ii) a pending patent application that has not been
cancelled, withdrawn or abandoned, provided, however, that if a claim of a
pending patent application shall not have issued within five (5) years after the
earliest filing date from which such claim takes priority, such claim shall not
constitute an Existing Claim for the purposes of this Agreement unless and until
a patent issues with such claim.

“Field” means the diagnosis, treatment, mitigation, or prevention of any disease
or condition in humans or animals, other than uses that are within the “Excluded
Fields.” The Excluded Fields are:

 

  (1) [***];

 

  (2) [***];

 

  (3) [***]; and

 

  (4) any use of the 3M Compounds as a Vaccine Adjuvant.

“First Commercial Sale” means the first sale of a Product by COLEY, a
Sublicensee of COLEY, or one of their respective Affiliates, to a third party.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

3

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“Issued Patents” has the meaning provided in the definition of the term “Patent
Rights” below.

“Know-How” means all non-public data and information owned by, used by or
licensed to 3M, or its Affiliates, existing on the Closing Date and contained in
the items described on Schedule D, including all processes, methods, compounds,
regulatory and clinical information, formulae, pharmacophores, discoveries,
developments, designs, techniques, improvements, trade secrets, molecules,
know-how, specifications, inventions, assays and other research tools, and other
scientific or technical data or information conceived, memorialized, developed
and/or reduced to practice, set forth therein.

“Licensed Patent Rights” means the Patent Rights listed on Schedule C.

“Major Market Country” means the United States, Great Britain, Germany, France,
Italy, Spain, India, Japan and China.

“Net Sales” shall mean, for any period, COLEY and COLEY Affiliates’ gross
invoiced sales for such period, less (i) promotional allowances, rebates,
pre-bates, administrative fees, profit share payments, quantity and cash
discounts, and other customary discounts to customers, wholesalers,
distributors, buying groups or health care insurance carriers, (ii) excise,
sales and other consumption taxes, value added taxes, taxes and duties paid,
absorbed or allowed which are directly related to the sale, (iii) the amount of
charge backs, and amounts repaid or credited by reason of rejections,
allowances, billing errors, rejected goods, recalls, damages or returns of
goods, or because of retroactive price adjustments, (iv) freight and insurance
costs, and (v) discounts or rebates or other payments required by law to be made
under governmental special medical assistance programs, all determined in
accordance with United States generally accepted accounting principles
consistently applied. If COLEY or a COLEY Affiliate sells any Product in a
non-arms-length transaction, then the gross invoiced sales amount shall be
equitably adjusted by COLEY as necessary to make it equivalent to an arms-length
price.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

4

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“Patent Rights” means (i) issued and existing letters patent, U.S. and foreign,
including extensions (whether arising from patent or regulatory law),
supplemental protection certificates, registrations, confirmations, reissues,
reexaminations or renewals thereof (“Issued Patents”); and (ii) pending patent
applications, U.S. and foreign (including any continuation, divisional,
reissues, continuation-in-part or division thereof, or any substitute
application therefor or equivalent thereof) on which a patent application may be
filed, and all Issued Patents arising therefrom. For avoidance of doubt, it is
understood that Patent Rights in family [***] are not included even though they
claim common priority with [***]

“Parties” means COLEY, 3M, their permitted assignees, and as the context
requires, 3M IPC; and a “PARTY” means individually COLEY, 3M, their permitted
assignees and/or 3M IPC, as the context requires.

“Product” means a product, the manufacture, use or sale of which in a particular
country, or the importation of which into a particular country, is covered by an
Existing Claim within the Licensed Patent Rights or Assigned Patent Rights
and/or contains a 3M Compound.

“Purchased Assets” means the Assigned Patent Rights, Assigned Agreements,
Tangible Assets, and transferred Regulatory Filings.

“Regulatory Filings” means the items listed on Schedule E.

“Royalty Term” has the meaning provided in Section 4.3.

“Tangible Assets” means the items listed on Schedule F.

“Topical Field” has the meaning provided in the definition of the term “Field”
above.

“Third Party” means a party other than COLEY, 3M, 3M IPC, RIKER or any of their
respective Affiliates.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

5

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“Vaccine Adjuvant” means a compound which is used to induce, augment, fine-tune,
enhance, or desensitize an antigen-specific immune response to an antigen
contained in a vaccine or generated by a DNA vaccine for the therapeutic
treatment of an existing disease or prophylactic use as protection against
future disease (including desensitization to allergens). The antigen and the
vaccine adjuvant may be admixed, delivered simultaneously, conjugated, or
delivered separately, provided however, that the separate administration of the
antigen and vaccine adjuvant is (a) limited to the topical (dermal or mucosal)
or intradermal routes of administration and (b) must be administered within 48
hours at substantially the same site and (c) labeled as such by the applicable
regulatory authority. For avoidance of doubt, aside from vaccination through the
topical and intradermal routes, the antigen and the vaccine adjuvant must be
co-formulated (including the use of dual barrel syringes or tamper-proof kits
for co-formulation prior to injection) and co-administered. The antigen may not
be administered intra-tumorally and may not be administered more than once in
any four (4) week period. When the antigen and the vaccine adjuvant are admixed,
delivered simultaneously, conjugated or delivered separately, except in the case
of topical or intradermal administration, the maximum dose for the vaccine
adjuvant shall not be unreasonably in excess of an adjuvant dose for the purpose
of enhancing immune response to the vaccine antigen and shall not be for the
purpose of effecting an immune response independent of the vaccine. Any
administration of the vaccine adjuvant and the antigen may include other
adjuvant compounds and pharmaceutical formulations such as nanoparticles,
microparticles, liposomes, or emulsions. For example, applying resiquimod gel
topically as an adjuvant at the site of and in conjunction with topical or
intradermal vaccination (within 48 hours) would be a Vaccine Adjuvant. Also for
avoidance of doubt, vaccine adjuvants may be used with any and all types of
antigens, including DNA vaccines, allergens for desensitization, and
patient-derived antigens that are removed and processed with dendritic cells and
administered as a vaccine, but not a patient’s endogenous disease antigens
residing within the body or non-tumor cells derived from the body.

“Vaccine Adjuvant Patents” means the patents and applications listed on Schedule
H.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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ARTICLE 2. CLOSING

2.1 Mutual Cooperation. Each Party shall use good faith reasonable efforts to
cooperate with the other Party in overcoming any objection raised by any
government authority regarding the legality of the transaction proposed herein,
including, if required by federal or state antitrust authorities, each Party
promptly taking all reasonable steps to secure government antitrust clearance.
Each Party shall cooperate in good faith at its own cost with any government
investigation regarding the legality of the transaction proposed herein and
promptly produce documents, witnesses, and information demanded by a request for
documents and witnesses if requested by the governmental authority; provided,
however, that nothing herein shall require either Party to make any changes to
this Agreement that would materially affect the value of the Agreement to a
Party.

2.2 Closing Date and Location. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Purchased Assets shall take place at a
closing (the “Closing”) no later than June 29, 2007, at a location or in a
manner agreeable to 3M and COLEY or at such other date as 3M and COLEY may
mutually agree upon in writing (the day on which the Closing takes place being
the “Closing Date” with the Closing effective as of 12:01 a.m. on the Closing
Date).

2.3 Conditions to Closing. The Parties agree to be bound by the terms and
conditions of this Agreement as of the Effective Date, but the rights and
obligations of the Parties shall be subject to the following closing conditions:
(i) the representations and warranties of the Parties shall have been true and
correct in all material respects when made and shall be true and correct in all
respects on and as of the Closing Date, and each Party shall have performed all
agreements and covenants required by this Agreement to be performed by it on or
prior to the Closing Date, and (ii) no actions or proceedings that question the
validity or legality of the transactions contemplated hereby shall have been
instituted by a Third Party and not settled or otherwise terminated.

ARTICLE 3. TRANSFER OF RIGHTS AND ASSETS

3.1 Assigned Patent Rights. Subject to the terms of this Agreement, 3M and 3M
IPC shall assign their entire right, title and interest in the Assigned Patent
Rights to COLEY and, for avoidance of doubt, 3M shall retain no right to
license, assign or otherwise exploit, develop or commercialize any of the 3M
Compounds as active pharmaceutical ingredient (as opposed to intermediates) for
any use outside the Field, including specifically any use as

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

7

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Vaccine Adjuvant or as a component of a vaccine. Such assignment shall be
evidenced by delivery of the attached Schedule B Patents Assignment at Closing.
3M IPC shall deliver the patent files relating to the Assigned Patent Rights to
COLEY or COLEY’s selected outside patent firm prior to or on the Closing Date,
from which time COLEY shall assume full responsibility and bear all costs for
the further filing, prosecution, maintenance, defense, and enforcement of the
Assigned Patent Rights. Such patent files shall contain and include all
applications, patents, correspondence with patent offices, legal memoranda and
opinions, correspondence with patent agents as kept in such files in the normal
course of 3M IPC’s practice.

3.2 Assigned Agreements. 3M and 3M IPC shall as of the Closing Date assign, and
COLEY shall accept, all of their rights and obligations under the Assigned
Agreements. The Parties shall provide each other reasonable cooperation in
efforts to transfer such rights and obligations under the Assigned Agreements.
In the event, any material rights and obligations under such agreements are not
assignable despite reasonable efforts to do so, the Parties shall cooperate to
the extent reasonably practical to provide COLEY the effective rights and
obligations thereunder. Further, subject to the written approval of both
Parties, such approval not be unreasonably withheld, in the six months following
Closing, other agreements which are useful to develop or commercialize the
Products in the Field which are available for assignment, they will be assigned
to COLEY and added to the list of Assigned Agreements on Schedule A. Further, in
the event that an Assigned Agreement relates to subject matter outside the Field
the rights and obligations shall be deemed assigned only commensurate in scope
with the Field.

3.3 Regulatory Filings. Subject to the terms of this agreement, 3m and 3M IPC
shall, and hereby do, assign their entire right, title and interest in the
Regulatory Filings to COLEY. Promptly following the Closing Date, 3M will assign
and transfer all of its right, title and interest in and to the Regulatory
Filings to COLEY, or, if such assignment is not permitted, 3M shall provide
access and a right of reference under the Regulatory Filings to COLEY, and shall
promptly take such other measures as are reasonably requested by COLEY in order
for COLEY to obtain substantially all of the rights and benefits of such
Regulatory Filings as if they were fully assigned to COLEY hereunder.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

8

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3.4 Tangible Assets. 3M and 3M IPC will deliver an executed Bill of Sale on the
Closing Date and will delivery the Tangible Assets on the Closing Date or within
ten (10) business days thereafter (unless later delivery or other arrangements
are indicated on Schedule F). It is understood that Tangible Assets and Know-How
reflected therein, may be provided in the form of copies and that 3M and 3M IPC
may retain copies as set forth in Section 3.8. Further, subject to the written
approval of both Parties, such approval not be unreasonably withheld, in the six
months following Closing, other assets and items may be added to the list of
Tangible Assets on Schedule F which are useful to develop or commercialize the
Products in the Field and if the relevant tangible asset is available, it would
be provided to COLEY.

3.5. License Grants by 3M. 3M, 3M IPC and their Affiliates hereby grant to
COLEY, as of the Closing Date:

3.5.1 a royalty-bearing, exclusive license, with right to sublicense through one
or more tiers, under the Licensed Patent Rights to make, have made, use, have
used, sell, have sold, offer for sale, have offered for sale, import and have
imported Products in the Field. Provided, such license does not include any
rights under family [***] for any products not containing 3M Compounds.

3.5.2 a royalty-bearing, exclusive license, with right to sublicense through one
or more tiers, under the Know-How, to make, have made, use, have used, sell,
have sold, offer for sale, have offered for sale, import and have imported
Products in the Field and a nonexclusive license to any other know-how existing
on the Closing Date and provided to Coley which is useful to develop or
commercialize the Products in the Field. 3M will provide such other know-how to
Coley after Closing only to the extent it is readily available or accessible to
3M, but, for the avoidance of doubt, 3M is not obligated to develop or transfer
any know-how which is not pre-existing or readily available or accessible to 3M.

3.6 License Grant Back from COLEY. Once the Assigned Patent Rights are
transferred pursuant to Section 3.1, COLEY hereby grants back to 3M IPC, as of
the Closing Date, a permanent and irrevocable, fully paid, royalty-free,
exclusive license, with right to sublicense, under the Assigned Patent Rights,
to make, use, sell, offer for sale, and import products not containing the 3M
Compounds as an active pharmaceutical ingredient outside the Field.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

9

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3.7 Post-Closing Cooperation. 3M and 3M IPC will, at COLEY’s request and expense
for any filing fees or other external out-of-pocket costs, take all such other
and further acts and execute, acknowledge and deliver all instruments of
conveyance, assignment, transfer, consent and assumption as COLEY may reasonably
request to confirm the conveyance and transfer to COLEY of any of the rights or
assets conveyed or transferred hereunder.

3.8 Retention of Certain Records. It is understood and agreed that 3M reserves
the right to retain copies of written records related to the Purchased Assets as
required by law or as reasonably necessary for use outside the Field or in
connection with defending any claims, losses, causes of action or lawsuits,
including those related to the sale of the Purchased Assets by 3M, and for the
purpose of preparing any tax returns or financial statements or reports. Use and
disclosure of any such information shall be subject to the terms and conditions
of this Agreement, including without limitation, Section 6.1.

3.9 No Implied Licenses. Except as expressly set forth in this Agreement, no
right, license or immunity from suit under any Patent Rights, trademark, or
other proprietary rights is granted by either Party or any of its Affiliates
pursuant to this Agreement.

3.10 Post-Closing Liabilities. Unless otherwise provided in this Agreement or
expressly agreed in writing by the Parties, any formal written legal claims
pending or asserted, and any actual liabilities incurred (whether such
liabilities were formally asserted, known or unknown prior to the Closing Date)
in connection with the Purchased Assets the Licensed Patent Rights and Know-How,
existing prior to the Closing Date shall be the responsibility of 3M and 3M IPC,
and those that are incurred on or after the Closing Date shall be the
responsibility of COLEY. For avoidance of doubt, with regard to any liabilities
or obligations under Assigned Agreements, 3M shall only be responsible for
payments owed or incurred prior to the Closing Date and COLEY shall have
liability for all other obligations arising under such Assigned Agreements.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

10

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3.11 Covenant. 3M and its Affiliates will not market, nor assign, license or
otherwise transfer any rights to the Vaccine Adjuvant Patents to a Third Party
to market any product containing a compound claimed under the Compound Cases of
the Vaccine Adjuvant Patents for any use other than as a Vaccine Adjuvant.

ARTICLE 4. PAYMENTS

4.1 Upfront Payments. COLEY shall be obligated, unconditionally guaranteed
without exception or offset under any circumstances, to pay 3M IPC a total of
twenty million dollars ($20,000,000) in four (4) equal, non-refundable payments,
by wire transfer, as follows:

$5 million within ten (10) days after the Signing Date.

$5 million on the first anniversary of the Closing Date.

$5 million on the second anniversary of the Closing Date.

$5 million on the third anniversary of the Closing Date.

4.2 Milestone Payments. COLEY will pay 3M IPC the indicated milestone payments
within 10 days upon achievement by COLEY of each of the following milestone
events. For avoidance of doubt, each milestone payment shall be payable only one
time.

 

Milestone Event

  

Milestone Payment

First acceptance for filing by a regulatory agency of an application for
marketing approval of a Product by the U.S. FDA, EU EMEA, or equivalent agency
in UK, France, Germany, Italy, or Spain.    [***] First approval of an
application for marketing approval for a Product by the U.S. FDA, EU EMEA, or
equivalent agency in UK, France, Germany, Italy, or Spain.    [***]

4.3 Royalty Payments. COLEY shall pay 3M IPC, or a designated Affiliate, a
nonrefundable royalty of [***] of Net Sales of any and all Products during the
applicable Royalty Term. Such royalty shall be payable on Net Sales of each
Product for the longer of (i)

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

11

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ten (10) years from the First Commercial Sale of such Product in a Major Market
Country or (ii) until the expiration or termination of the last Existing Claim
within the Assigned Patent Rights or Licensed Patent Rights that claims the
manufacture, use or sale of such Product in a country, or the importation of
such Product into a country (such period is the “Royalty Term”). For avoidance
of doubt, the Royalty Term for each Product shall be determined on a
Product-by-Product and country-by-country basis.

4.3.1 Combination Products. In the event that a Product is sold in combination
with another product or active component for a single price, Net Sales from
sales of such combination product, for purposes of calculating royalties due
under this Agreement, shall be calculated by multiplying the Net Sales of such
combination product by the fraction A/(A+B), where A is the average per unit Net
Sales of the Product sold separately in the country of sale and B is the average
per unit Net Sales of the other product(s) or component(s) sold separately in
the country of sale. In the event that no such separate sales are made, Net
Sales, for purposes of determining royalty payments on such combination
products, shall be a reasonable apportionment of the gross amount invoiced
therefore based upon the relative contribution of the Product to the price of
the combination product. Such apportionment shall be negotiated in good faith
between the parties and, if they are unable to agree, resolved in accordance
with the dispute resolution mechanism in Section 10.7.

4.4 License Income. COLEY shall also pay 3M IPC [***] of any non-royalty license
income that COLEY receives during each calendar quarter in connection with the
grant of licenses or sublicenses by COLEY of rights in the Assigned Patent
Rights, and Licensed Patent Rights. For these purposes, “non-royalty license
income” means and includes upfront payments and milestone payments received in
connection with such licenses and sublicenses but does not include royalties
(that is, payments made in connection with the sale of products) received from
such licensees or sublicensees, amounts paid to reimburse COLEY for actual
development costs, or amounts paid for other assets unrelated to the Purchased
Assets or Licensed Patent Rights sold by COLEY, or reimbursing the cost of
services provided by COLEY, to such licensees or sublicensees in connection with
the grant of such licenses or sublicenses. In addition to the foregoing, COLEY
shall pay to 3M IPC twenty percent (20%) of all royalties received by COLEY
during each calendar quarter from such licensees and

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

12

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sublicensees on account of sales by such licensees and sublicensees of Licensed
Products. 3M IPC shall be deemed a third party beneficiary with the right to
take direct action against any COLEY licensees or sublicensees to enforce
payment obligations should COLEY fail to do so after notice from 3M IPC.

4.5 Royalty and License Income Payments. Other than as provided in the “Net
Sales” definition above, COLEY shall pay the royalties and license income
payments due hereunder in US Dollars, not later than sixty (60) days following
the end of each calendar quarter in which the payments accrue. Each payment
shall be accompanied by a report identifying the unit volume and royalty due for
the subject Products, or the basis for non-royalty income, as the case may be.
Whenever a conversion from one currency to another is involved, the exchange
rate shall be as reported in the Wall Street Journal on the last business day of
the period for which the payment or report applies. Late payments shall accrue a
late fee at a rate of 1% per month. Payments shall be made via wire transfer to
the following:

Wells Fargo Bank NA

420 Montgomery Street

San Francisco, CA 94104-1298

ABA Number: 121000248

Beneficiary: 3M Company

Account Number: 0000030103

Re: “COLEY IRM Agreement”

or to such other address as 3M or 3M IPC may from time to time designate.

All payments required to be made by COLEY under this Agreement shall be made
without set-off and free and clear of and without deduction or withholding for
or on account of, any taxes, duties, imposts, fees or charges, except as
withholding which may be required under applicable law. COLEY shall furnish 3M
or 3M IPC with proof of such withholdings, and shall provide a certificate or
other documentary evidence to assist 3M or 3M IPC to submit a claim for a refund
or a foreign tax credit with respect to any withheld taxes. The Parties will
co-operate under the provisions of any applicable taxation treaty or under any
other applicable law, in order to assist 3M or 3M IPC in obtaining such payments
without any deduction or withholding.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

13

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4.6 Right to Audit. 3M IPC may inspect and audit the records of COLEY in
connection with royalty and non-royalty payments due through an independent
certified public accounting firm of its own selection and reasonably acceptable
to COLEY. COLEY shall provide such accountants with access to the records during
reasonable business hours, to check, at 3M IPC’s expense, the payments due
hereunder. Such access shall be provided only one time for any particular period
and need not be given to any such set of records more often than once each year
nor more than three years after the date of any report to be audited. The
accountants shall report to 3M IPC only the information set forth above. 3M IPC
shall give COLEY written notice of its election to inspect and audit the records
related to the royalty due hereunder not less than 30 days prior to the proposed
date of review of the records by the independent certified public accounting
firm. COLEY shall maintain sufficient records to permit the inspection and
auditing permitted hereunder for three years after the date of each respective
reporting period. COLEY shall prepare its records and reports according to
generally accepted accounting principles.

4.6.1 Inaccurate Payments. In the event that an audit under Section 4.6 reveals
an underpayment by COLEY, COLEY shall within two months of its receipt of the
accounting firm’s audit report, pay the amount due in excess of the amount
actually paid. In the event that an audit under Section 4.6 reveals an
underpayment by COLEY of more than 10% of the amount due for the period under
audit, COLEY shall, in addition to interest on the late paid amount, pay for 3M
IPC’s reasonable costs in conducting the audit.

4.7 Taxes and Fees. COLEY shall pay all value added tax, sales, use, transfer
taxes, stamp duties, registration taxes and fees, and all other taxes, duties,
fees and levies equivalent in nature or effect other than capital gains and
income taxes, whether imposed by federal, state, local or foreign taxing or
other authorities, and all recording fees, conveyance fees and other
governmental fees and charges associated with the transfer of Purchased Assets
hereunder, if any, including but not limited to all fees imposed by any
regulatory authority. COLEY and/or COLEY Affiliates shall reimburse 3M, 3M IPC
and its Affiliates fully for any such taxes, duties, levies, or fees that are
paid by 3M, 3M IPC or any of its Affiliates to any such taxing authorities,
government agency or regulatory authority after the Signing Date at 3M’s
request.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

14

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4.8 General Diligence. COLEY shall use commercially reasonable efforts to
develop and commercialize, itself or via licensees, the Purchased Assets. Such
efforts shall include an ongoing program to develop at least one compound and
one backup compound leveraging COLEY’s existing research and development
expertise and resources, as well as COLEY’s established and anticipated
strategic partnerships, aimed at developing and commercializing Products. In the
event COLEY (i) makes a decision that it will discontinue or suspend such
commercially reasonable efforts, or (ii) subject to the notice and cure
provisions set forth in Section 9.2, otherwise fails to use such commercially
reasonable efforts, COLEY shall promptly notify 3M IPC of such decision or
failure, in which event all licenses granted by 3M IPC hereunder shall terminate
and COLEY shall and hereby does transfer back to 3M and 3M IPC any remaining
rights in the Purchased Assets.

4.9 [***]

ARTICLE 5. PATENT PROSECUTION AND ENFORCEMENT

5.1 Responsibility for Assigned Patent Rights. COLEY shall have the sole right
to prepare, file, prosecute, defend, maintain, and enforce the Assigned Patent
Rights at its sole discretion and expense. Provided, however, in the event COLEY
elects to abandon or fails to maintain, defend or enforce a patent or
application in the Assigned Patent Rights, it shall notify 3M IPC in writing at
least 30 days in advance of any loss of rights or decision not to enforce, in
which case 3M IPC shall have the right upon request to assume responsibility for
such patent or application and have the subject patent(s) assigned to 3M IPC,
upon which such patent or application shall become one of the Licensed Patent
Rights. However, in the event that COLEY reasonably decides that the abandonment
or failure to maintain, defend or enforce a Patent Right within the Assigned
Patent Rights will avoid a greater liability or will preserve or achieve a
greater commercial advantage other than avoiding payments hereunder, then 3M IPC
shall have no right to assume responsibility for or perform such activities.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

15

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5.2 Enforcement of Assigned Patent Rights. COLEY and 3M IPC shall each provide
prompt written notice to the other Party of any alleged infringement by a Third
Party of Assigned Patent Rights. COLEY shall have the right, but not the
obligation, to institute and control, at its expense, any action against Third
Party infringement of the Assigned Patent Rights in the Field. 3M shall provide
reasonable cooperation in enforcing the Assigned Patent Rights at Coley’s
request and expense, and shall, if required, be joined as a necessary party to
such action. Coley shall be entitled to retain all proceeds of such action,
subject to payments due under Section 4.4, and shall indemnify 3M and 3M IPC for
any and all liability of any kind relating to such enforcement.

5.3 No Obligation to Enforce or Maintain Licensed Patent Rights. Notwithstanding
the grant of exclusive licenses under Section 3.1 above, 3M and 3M IPC shall
have the right but not the obligation, and COLEY shall have no right, to enforce
the Licensed Patent Rights against Third Parties. All such enforcement, and
prosecution, maintenance, and defense, of Licensed Patent rights shall be at 3M
IPC’s sole discretion and expense. If 3M IPC elects not to continue the
prosecution or maintenance of Licensed Patent Rights, 3M IPC shall so notify
COLEY in writing at least 30 days in advance of any loss of rights, in which
case Coley shall have the right upon request to assume responsibility for such
patent or application and have subject patent or application assigned to Coley,
upon which such patent or application shall become one of the Assigned Patent
Rights. However, in the event that 3M IPC reasonably decides that the
abandonment or failure to maintain, or defend any Patent Rights within the
Licensed Patent Rights will avoid a greater liability or will preserve or
achieve a greater commercial advantage, for example due to another commercial
relationship or licensee relating to such Patent Rights, then COLEY shall have
no right to assume responsibility for or receive assignment of such Patent
Rights.

ARTICLE 6. CONFIDENTIAL INFORMATION

6.1 Obligations. Each Party agrees not to disclose to Third Parties or use
Confidential Information (as hereinafter defined) furnished by another Party for
any purpose other than for purposes of performing under this Agreement.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

16

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Each Party will treat Confidential Information furnished by the other Party with
the same degree of care as if it were its own confidential proprietary
information and, except as required for purposes of performing or exercising its
rights under this Agreement, will not disclose such information to any Third
Party, other than its employees, agents or consultants who have a need to know
the information for such purpose and who have agreed, or who are informed of and
agree, to be bound by and comply with all of the provisions of this Article,
without the prior written consent of the Party who furnished such information,
except to the extent that such Confidential Information is required to be
disclosed for the purpose of complying with law or government regulations. The
receiving Party shall undertake to have any and all employees, agents and
consultants observe the obligations of this Section and shall be responsible for
any failure of any of them to do so.

“Confidential Information” refers to all technical and business information
including but not limited to regulatory filings, know-how, manufacturing, and
testing information, clinical data, marketing plans and studies, patent
information, and relevant clinical and regulatory programs, disclosed by one
Party to the other under this Agreement, except information which:

i) was known or used by the receiving Party as evidenced by its written records
made prior to the time of receipt hereunder;

ii) either before or after the time of disclosure becomes known to the public
other than by an unauthorized act or omission of the receiving Party or its
employees, agents or consultants;

iii) was lawfully disclosed to the receiving Party by a Third Party having the
right to disclose said Confidential Information; or

iv) was information developed by the receiving Party independently from the
Confidential Information provided by the other Party hereto as evidenced by the
receiving Party’s written records.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

17

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Except for uses and disclosures reasonably required or permitted in connection
with this Agreement, 3M shall treat the Purchased Assets as COLEY Confidential
Information (subject to any rights retained by or licensed back to 3M or 3M IPC)
and COLEY shall treat the Know-How and Licensed Patent Rights as Confidential
Information of 3M for all purposes outside the Field.

6.2 Right to Disclose in Hearings and Proceedings. The parties shall maintain,
however, the right to disclose such Confidential Information in judicial or
administrative hearings or proceedings to the extent necessary. If one Party
finds it necessary to disclose any such Confidential Information in any such
judicial or administrative hearing or proceeding, the disclosing Party shall
provide prompt written notice to the other Party in advance of such disclosure
and shall cooperate with any efforts of the other Party to disclose such
Confidential Information “in camera” or on some other protected non-public
basis.

6.3 Duration. Except as otherwise expressly provided herein, each Party’s
obligations under this Article shall survive for 5 years after the termination
or expiration of this Agreement, but in any event shall not expire earlier than
January 1, 2022.

6.4 Applicability of Previous CDAs. All Confidential Information exchanged
between the Parties in the confidential disclosure agreements previously
executed by and between 3M and COLEY relating to the subject matter of this
Agreement shall continue to be treated as Confidential Information under this
Agreement. This Agreement shall supplement such previous agreements to the
extent the provisions of this Agreement extend or enlarge any term of any
previous agreement.

6.5 Disclosure of Agreement. Neither this Agreement nor its terms shall by
disclosed by a Party except as required by law or government regulation to
prospective permitted assignees of the Agreement under Section 10.4, or by 3M
and 3M IPC, with financial terms redacted, to existing or prospective Third
Party licensees and/or acquirers of rights to other 3M IRM technology for the
sole purpose of allowing such Third Party to conduct due diligence regarding
possible restrictions under, and compatibility of rights with, this Agreement.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

18

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ARTICLE 7. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS

7.1 General Representations. Each Party represents and warrants that (a) it is a
duly organized corporation in good standing and has power and authority to
perform its obligations under this Agreement including the right, power and
authority to grant the licenses granted herein, (b) the execution and
performance of this Agreement has been duly authorized by all requisite
corporate action, (c) the execution and performance of this Agreement and
compliance with its terms does not and will not violate any applicable law or
regulation (d) this Agreement does not conflict with or violate or result in a
breach or default under any agreement with a Third Party, and (e) this Agreement
does not conflict with or violate any order, writ, injunction or decree of any
court or governmental authority.

7.2 3M Warranties. 3M and 3M IPC hereby represent and warrant that, except as
disclosed in Schedule G or otherwise known to COLEY, as of the Closing Date:

7.2.1 3M, 3M IPC, and/or a 3M Affiliate owns all right, title and interest in
and to the Purchased Assets and on the Closing Date will convey, rights to and
ownership of, the Purchased Assets to COLEY, free and clear of any and all liens
and encumbrances.

7.2.2 To the actual knowledge of 3M, 3M IPC and/or a 3M Affiliate, through the
Office of Intellectual Property Counsel, there have been no undisclosed claims
made in writing by Third Parties received by and against 3M asserting the
invalidity, abuse, misuse, misappropriation, or unenforceability of any of the
Purchased Assets.

7.2.3 To the actual knowledge of 3M IPC through it Office of Intellectual
Property Counsel, the 3M Compounds (i.e., the molecules as opposed to uses and
formulations thereof), the [***] (as they exist on the Closing Date) [***], and
the [***] (as it exists on the Closing Date) [***], do not infringe upon the
valid patent rights of any Third Party or constitute misappropriation of any
know-how rights of a Third Party.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

19

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7.2.4 3M and 3M IPC have assigned and/or granted to COLEY under Section 3.5 all
patent rights owned or controlled by 3M and 3M IPC covering the 3M Compounds,
the [***] (as they exist on the Closing Date) [***][***], and the [***] (as it
exists on the Closing Date) [***].

7.2.5 Any claim for breach of the representations and warranties in Sections 7.1
or 7.2 must be made within 3 years of the Closing Date by providing written
notice before such time detailing the facts and allegations relating to such
breach.

7.2.6 3M and its Affiliates have not knowingly and willfully failed to disclose
any materially adverse information regarding the safety and efficacy of the 3M
Compounds [***].

7.3 COLEY Warranty. COLEY hereby represents and warrants COLEY has, or will
obtain, cash and/or access to funding sources sufficient to enable it to
consummate the transactions and undertake the obligations contemplated by this
Agreement.

7.4 Disclaimers. 3M and 3M IPC have made available to COLEY and its
representatives information and records relating to Purchased Assets and
provides the Purchased Assets, licenses, and any technical or other assistance
or cooperation on an “AS IS” basis. It is understood and agreed by the Parties
that no representation or warranty, express or implied, has been made by 3M, 3M
IPC or their Affiliates or agents regarding the accuracy or completeness of any
such information or records. Accordingly, other than as specifically set forth
in Sections 7.1 or 7.2, NO EXPRESS OR IMPLIED WARRANTIES ARE GIVEN BY 3M, 3M
IPC, OR ANY 3M AFFILIATE WITH RESPECT TO PURCHASED ASSETS, SAFETY OR TOXICITY OF
3M IRM COMPOUNDS, LICENSES, SUCCESS OF THE PURCHASED ASSETS OR ANY RELATED
PRODUCT CLINICALLY OR IN THE MARKETPLACE, OR ANY OTHER MATTER OR SUBJECT ARISING
OUT OF THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ANY IMPLIED WARRANTY ARISING
OUT OF COURSE OF

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

20

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DEALING OR USAGE OF TRADE, AND ANY IMPLIED WARRANTY OF FREEDOM FROM
INFRINGEMENT, OR REGARDING THE VALIDITY, SCOPE, OR ENFORCEABILITY OF ANY PATENT
OR KNOW-HOW ASSIGNED OR LICENSED UNDER THIS AGREEMENT.

7.5 Acknowledgment. COLEY HEREBY ACKNOWLEDGES THAT IT HAS EXPERIENCE IN THE
OPERATION OF PHARMACEUTICAL DEVELOPMENT, MANUFACTURING, DISTRIBUTION AND SALES,
HAS INDEPENDENTLY EVALUATED AND CONDUCTED THOROUGH DUE DILIGENCE WITH RESPECT TO
THE PURCHASED ASSETS, KNOW-HOW, AND EXCLUDED PATENT RIGHTS (INCLUDING ASSESSING
THE ADEQUACY OF KNOW-HOW AND PATENT RIGHTS), AND HAS BEEN REPRESENTED BY, AND
HAD THE ASSISTANCE OF, COUNSEL INCLUDING INTELLECTUAL PROPERTY COUNSEL IN THE
CONDUCT OF SUCH DUE DILIGENCE, THE PREPARATION AND NEGOTIATION OF THIS
AGREEMENT, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.

ARTICLE 8. INDEMNIFICATION AND LIMITATION OF REMEDIES

8.1 3M Indemnification. 3M shall defend, indemnify and hold harmless, COLEY and
its Affiliates, directors, officers and shareholders, harmless against and with
respect to any and all Third Party claims, losses, injuries, damages,
deficiencies, liabilities, obligations, assessments, judgments, costs and
expenses, including (except as otherwise expressly provided in this Agreement)
costs and expenses of litigation and reasonable attorneys’ fees to the extent
caused by or arising out of: (i) any material breach of any representation or
warranty of 3M contained in Sections 7.1 or 7.2 of this Agreement, (ii) any
claim by a Third Party for damages of any kind by or relating to Purchased
Assets, or 3M’s, its Affiliates or licensees use thereof, and (iii) the exercise
of the grantback license in Section 3.6 by 3M or any Third Party, to the extent
such damages under (i) – (iii) were incurred prior to the Closing Date.

8.2 COLEY Indemnification. COLEY shall defend, indemnify and hold 3M, 3M IPC,
their Affiliates, directors, officers and shareholders harmless against and with
respect to any and all Third Party claims, losses, injuries, damages,
deficiencies, liabilities, obligations, assessments, judgments, costs and
expenses, including (except as otherwise expressly provided in this Agreement)
costs and expenses of litigation and reasonable attorneys’ fees to

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

21

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the extent caused by any material breach of any representation or warranty of
COLEY contained in Sections 7.1 or 7.3 of this Agreement, and any claim by a
Third Party for damages of any kind by or relating to COLEY’s or its Affiliates’
or licensees’, development, use, testing, manufacturing, sale, marketing,
licensing or enforcement of, or any Product relating to, the Purchased Assets,
arising on or after the Closing Date.

8.3 Limitation of Liability. In no event shall a Party be liable to any other
Party for any indirect, incidental, special, punitive or consequential damages
in any way related to this Agreement or the performance or non-performance of
this Agreement, under any theory of law or equity, including but not limited to,
contract, tort or strict liability.

ARTICLE 9. TERM AND TERMINATION

9.1 Term of Agreement. The term of this Agreement shall commence upon the
Closing Date and continue until the later of (i) expiration of all Patent Rights
licensed or assigned under this Agreement, or (ii) COLEY’s obligations to make
payments under Article 4 , unless terminated earlier pursuant to Section 9.2.

9.2 Material Breach. Upon material breach by a Party in the performance of any
material obligation or warranty in this Agreement that results in significant
harm, or potential harm, to another Party, the non-breaching Party may give
notice in writing to the Party in breach, and the breaching Party shall have 90
days thereafter to cure the breach. If the breaching Party does not cure or
institute measures to substantially cure such breach within the 90 days, the
non-breaching Party shall have the right to terminate. In the event of
termination by 3M for material breach by COLEY, all licenses from 3M IPC shall
terminate and COLEY shall upon request assign, and if such breach is a failure
to pay any of the annual $5 million payments under Section 4.1 Coley hereby does
assign, to 3M and 3M IPC all rights to the Assigned Patent Rights, Regulatory
Filings, and Assigned Agreements.

9.3 Disputed Breach. If COLEY disputes in good faith the existence or
materiality of a breach specified in a notice provided by 3M pursuant to
Section 9.2 other than breach for failure to make the payments under
Section 4.1, and COLEY provides notice to 3M of such dispute within the
applicable 90 day cure period, 3M shall not have the right to terminate this

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

22

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Agreement unless and until the existence of such material breach by COLEY has
been determined in accordance with Section 10.7 and COLEY fails to cure such
breach within sixty (60) days following such determination (except to the extent
such breach involves the failure to make a payment when due, which breach must
be cured within ten (10) business days following such determination). It is
understood and acknowledged that during the pendency of such a dispute, all of
the terms and conditions of this Agreement shall remain in effect and the
Parties shall continue to perform all of their respective obligations hereunder.

ARTICLE 10. MISCELLANEOUS

10.1 Approvals. In any provision of this Agreement where one Party is required
to obtain the consent or approval of the other Party before taking some action,
the parties agree that such consent or approval shall not be unreasonably
withheld. This Section 10.1 shall apply in all instances, except where the other
provision specifically leaves a decision to the sole discretion of a Party.

10.2 Events of Excused Performance. Neither COLEY nor 3M (nor 3M IPC if
applicable) shall be considered in default or be liable to the other Party for
any delay in performance or non-performance caused by circumstances beyond the
reasonable control of such Party, including but not limited to acts of God,
explosion, fire, flood, earthquake, war whether declared or not, accident, labor
strike or labor disturbances, sabotage, transportation strike or interference,
order or decrees of any court or action of governmental authority or shortages
in or an inability to procure materials beyond 3M’s or COLEY’s reasonable
control; provided, however, that diligent efforts are made to resume performance
as quickly as possible.

10.3 Notices. Except as otherwise provided herein, any notice or other
communications sent or delivered hereunder shall be in writing and shall be
effective if hand delivered or if sent by express delivery service or certified
or registered mail, postage prepaid or by facsimile transmission.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

23

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If to 3M and 3M IPC, to:

Chief Intellectual Property Counsel

3M Office of Intellectual Property Counsel

3M Center, Bldg. 220-10W

St. Paul, Minnesota 55144-1000

Fax Number: 651-736-3833

If to COLEY, to:

Coley Pharmaceutical Group, Inc.

93 Worcester Street, Suite 101

Wellesley, MA 02481, U.S.A.

Attention: President and CEO

Facsimile: 1-781-431-6403

with a copy to:

Coley Pharmaceutical Group, Inc.

93 Worcester Street, Suite 101

Wellesley, MA 02481, U.S.A.

Attention: Senior Vice President and General Counsel

Facsimile: 1-781-431-6403

or to such address as a Party shall hereafter designate by notice to the other
Party. A notice shall be deemed to have been given on the date of delivery to
the Party.

10.4 Assignability. This Agreement and the rights hereunder shall be assignable
by a Party at its sole discretion provided any assignee thereof is in good
financial standing and confirms in writing to the other Party its intent to
accept and comply in good faith with all the terms of this Agreement.

10.5 Waiver. The failure of any Party at any time to require performance by the
other Party of any provision of this Agreement shall not affect the right of
such aggrieved Party to require future performance of that provision, and any
waiver by any Party of any breach of any provision of this Agreement must be in
writing to be effective and shall not be construed as a waiver of any continuing
or succeeding breach of such provision, a waiver of the provision itself, or a
waiver of any right under this Agreement.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

24

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10.6 Relationship of Parties. Nothing contained in this Agreement shall create a
partnership or joint venture between the Parties, and the Parties shall be
considered independent contractors. Except as specifically provided herein,
neither of the Parties shall hold itself out as the agent of the other, nor
shall either of the Parties incur any indebtedness or obligation in the name of,
or which shall be binding on the other, without the prior written consent of the
other. No employees or agents of a Party shall be deemed employees or agents of
the other Party.

10.7 Dispute Resolution. All disputes between the Parties relating to this
Agreement shall be resolved in the following order of preference: (i) by good
faith negotiations between representatives of 3M, 3M IPC and COLEY who have
authority to fully and finally resolve the dispute; (ii) in the event such
representatives are unable to resolve such dispute within a thirty (30) day
period, either Party may invoke the provisions of this Section 10.7. Any
dispute, controversy or claim arising out of or relating to this Agreement, or
the breach thereof, including any question regarding this Agreement’s existence,
termination or validity, shall be referred to and finally settled by binding
arbitration, in accordance with the rules of the American Arbitration
Association in force on the date the demand for arbitration is filed. The demand
for arbitration may be filed by either Party within a reasonable time after the
controversy or claim has arisen, but no later than after the date upon which
institution of legal proceedings shall be barred by the applicable statute of
limitations. There shall be three (3) arbitrators, each Party to designate one
arbitrator and the two Party-designated arbitrators to select the third
arbitrator. The Party initiating recourse to arbitration shall include in its
notice of arbitration its appointment of an arbitrator. The place of arbitration
shall be Delaware. The language to be used in the arbitral proceedings shall be
English. Any determination by such arbitration shall be final and conclusively
binding, and shall not include any damages expressly prohibited by Section 8.3.
Judgment on the arbitral award may be entered in any court having jurisdiction
thereof. All costs incurred in connection with such arbitration, including
reasonable attorneys’ fees, shall be borne by the Party which incurs the costs;
provided that a Party which is determined by the arbitral tribunal to have been
in willful default of the provisions of this Agreement shall bear all costs of
arbitration. Nothing herein shall preclude either party from seeking injunctive
relief to enforce specific performance under the contract or to prevent
immediate, irreparable harm to its interests.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

25

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10.8 Governing Law. This Agreement shall be governed by and construed under
Delaware law, notwithstanding any choice of law provision to the contrary.

10.9 Entire Agreement/Interpretation. This Agreement and any previous
Confidentiality Agreements signed by the Parties constitute the entire
understanding of the Parties hereto and cancels and supersedes all previous
agreements between the Parties with respect to the matters contained herein. No
modification of this Agreement or terms or conditions hereof shall be binding
upon a Party unless approved in writing by an authorized representative of each
of the Parties. This Agreement has been prepared jointly and shall not be
strictly construed against a Party.

10.10 Partial Invalidity. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated herein to be impossible or significantly frustrated and provided
that the performance required by this Agreement with such clause deleted remains
substantially consistent with the intent of the Parties.

10.11 Required Disclosure. If a Party is required by judicial or administrative
process to disclose Information that is subject to the non-disclosure provisions
of Section 9.1, then such Party shall promptly inform the other Party of the
disclosure that is being sought in order to provide the other Party an
opportunity to challenge or limit the disclosure obligations. Information that
is disclosed by judicial or administrative process shall remain otherwise
subject to the confidentiality and non-use provisions of Section 9.1, and the
Party disclosing Information pursuant to law or court order shall take all steps
reasonably necessary, including without limitation obtaining an order of
confidentiality, to ensure the continued confidential treatment of such
Information.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

26

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10.12 Disclosure of Financial Terms. Each Party shall have the further right to
disclose the financial terms of this Agreement under a confidentiality
obligation no less stringent than those contained in this Agreement, to any bona
fide potential acquirer, merger partner, potential provider of financing and
existing stockholder or investor of such Party and their respective advisors.

10.13 SEC Filings. The Parties shall agree in advance with each other on the
terms of this Agreement to be redacted in any Securities and Exchange Commission
filings; provided, that, each Party shall have the right to comply with any
requests of the SEC to include in any such filing previously redacted
information.

10.14 Publicity/Use of Names. Except as expressly set forth in this Agreement,
no disclosure of the existence, or the terms, including the financial terms, of
this Agreement may be made by either Party, in any publicity, promotion, news
release or disclosure relating to this Agreement or its subject matter, without
the prior express written permission of the other Party, except as may be
required by Applicable Laws. Notwithstanding anything to the contrary in this
Section 10.14, the Parties shall have the right to issue a press release with
respect to this Agreement following signature which reasonably reflects the
overall scope and nature of the transaction. Each Party shall upon request
provide reasonable cooperation in reviewing the content of any press release,
but the issuing Party is fully responsible for the content of any press release
it issues. Either Party may make subsequent public disclosure of the contents of
such press release or any subsequent press release without approval of the other
Party.

10.15 Headings. The headings of the Articles or Sections of this Agreement are
for the convenience of the Parties only and shall not be deemed a substantive
part of this Agreement.

10.16 3M Affiliates. 3M shall cause its Affiliates to comply with this
Agreement.

10.17 COLEY Affiliates. COLEY shall cause its Affiliates to comply with this
Agreement.

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

27

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10.18 Execution. This Agreement may be executed by counterparts and by facsimile
transmission of separately signed signature pages to the other Parties, followed
by mail of the originals.

Balance of page intentionally left blank

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

28

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IN WITNESS WHEREOF, authorized representatives for each of the Parties hereto
have caused this Agreement to be duly executed in duplicate as of the date and
year above stated.

 

ACCEPTED AND AGREED TO:     3M COMPANY     COLEY PHARMACEUTICAL GROUP, INC By:
    /s/ John Sampson             By:     /s/ Robert L. Bratzler         Print
Name:     John Sampson             Print Name:     Robert L. Bratzler        
Title: General Manager/Vice President, 3M Pharmaceuticals Division     Title:
President and Chief Executive Officer

 

3M INNOVATIVE PROPERTIES COMPANY By:     /s/ Robert W. Sprague         Print
Name:     Robert W. Sprague         Title:     Secretary        

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

29

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SCHEDULE A

ASSIGNED AGREEMENTS

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

30

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SCHEDULE B

ASSIGNED PATENT RIGHTS ASSIGNMENT

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

31

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SCHEDULE B-1

ASSIGNED PATENT RIGHTS LIST

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

32

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SCHEDULE C

LICENSED PATENT RIGHTS

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

33

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SCHEDULE D

KNOW-HOW

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

34

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SCHEDULE E

REGULATORY FILINGS

Regulatory Filings and Information

IND Numbers

 

Compound

  Indications   IND Number   Availability [***]   Melanoma, IV   66,797  
Transfer to Buyer [***]   Melanoma, topical   68,761   Transfer to Buyer EU
Development Programs       Compound   Indication   EUDRACT Number   Availability
[***]   Melanoma, IV   2004-003910-41   Transfer to Buyer Other Information    
  [***]   Hepatitis C   Pre-IND meeting package   Transfer, pdf only [***]  
Viral Warts   Pre-IND meeting package   Transfer, pdf only [***]  
Allergy/Asthma   Pre-IND meeting package   Transfer, pdf only

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

35

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SCHEDULE F

TANGIBLE ASSETS

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

36

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SCHEDULE G

DISCLOSURE SCHEDULE

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

37

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SCHEDULE H

VACCINE ADJUVANT PATENTS

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

38

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SCHEDULE I

[***]

 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

39