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                                                                   EXHIBIT 10.6

GENENTECH CONFIDENTIAL


[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.


                             COLLABORATION AGREEMENT

                               GENENTECH, INC. AND

                                  TOLERRX, INC.

          This Collaboration Agreement (this "AGREEMENT") is made effective as
of December 23, 2002 (the "EFFECTIVE DATE") by and between GENENTECH, INC.
("GENENTECH"), a corporation organized under Delaware law, with its principal
office at 1 DNA Way, South San Francisco, California 94080, and TolerRx, Inc.
("TOLERRX"), a corporation organized under Delaware law, with its principal
office at 300 Technology Square, Cambridge, MA 02139.

                                    RECITALS

          WHEREAS, TolerRx is engaged in the development of therapies related to
immunological tolerance;

          WHEREAS, TolerRx owns or controls certain intellectual property
related to Licensed Product (as defined below);

          WHEREAS, the Parties desire to collaborate and wish to set out their
rights and obligations with respect to development and commercialization of
Licensed Products as set forth below;

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Genentech and TolerRx agree as
follows:

                                    ARTICLE 1

                                   DEFINITIONS

          1.1.   "AFFILIATE" of a Party means any corporation or other business
entity that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with a Party. As used
herein, the term "control" will mean the direct or indirect ownership of fifty
percent (50%) or more of the stock having the right to vote for directors
thereof or the ability to otherwise control the management thereof.

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.


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          1.2.   "AGREEMENT" means this Collaboration Agreement, including any
exhibits attached hereto which are hereby incorporated herein by reference. In
the event of any inconsistency between the terms of this Agreement and the terms
of any exhibits incorporated herein, the terms of this Agreement shall govern
unless the Parties otherwise expressly agree in writing.

          1.3.   "ANTIBODY" or "ANTIBODIES" means any and all antibodies that
target, bind to or recognize CD4, and shall include, without limitation, full
length antibodies, variants (including, without limitation, chimeric and
humanized antibodies), fragments (including, without limitation, single-chain,
Fab and F(ab)'2 fragments), analogues or derivatives (including, without
limitation, conjugates thereof with radionuclides, immunoadhesins, toxins or
other compounds) thereof, as well as the DNA encoding any of the above.
"Antibody" shall include, but is not limited to, TRX1.

          1.4.   "BLA" means a biologics license application (as that term is
used in Title 21 of the United States Code of Federal Regulations) filed with
the FDA seeking Regulatory Approval to market and sell any Licensed Product in
the United States for a particular Indication.

          1.5.   "COMMERCIAL INTRODUCTION" of Licensed Product(s) means, on a
country-by-country and Licensed Product-by-Licensed Product basis in the
Territory, the date of first commercial sale (other than for purposes of
obtaining Regulatory Approval) of a Licensed Product by Genentech, or any of its
third party sublicensees in an arms'-length transaction to an independent Third
Party in such country after obtaining all necessary Regulatory Approvals;
provided that such Licensed Product(s) are neither units provided for evaluation
purposes nor free units for indigent persons.

          1.6.   "COMMERCIALLY REASONABLE AND DILIGENT EFFORTS" has the meaning
set forth in Section 3.2.

          1.7.   "CONFIDENTIAL INFORMATION" has the meaning set forth in Section
8.1.

          1.8.   "CONTROL" or "CONTROLLED" means possession of the ability to
grant access to or a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any third party.

          1.9.   "DEVELOPMENT PLAN" means a written plan, developed by Genentech
and approved by the JSC pursuant to Section 3 below, for research and/or
development work covered by this Agreement to be performed by the Parties
relating to the Product(s) selected by the JSC, and any modifications to such
plan made by Genentech from time to time in accordance with Section 3 below. Any
and all Development Plan(s) are hereby incorporated by reference into this
Agreement.

          1.10.  "DOLLAR" OR "DOLLAR" means United States dollars.

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          1.11.  "DRUG APPROVAL APPLICATION" means an application for Regulatory
Approval required for commercial sale or use of a Licensed Product as a drug or
biologic in the Field in a regulatory jurisdiction.

          1.12.  "EMEA" means the European Agency for the Evaluation of
Medicinal Products and any successor agency or authority thereto.

          1.13.  "FDA" means the United States Food and Drug Administration and
any successor agency or authority thereto.

          1.14.  "FIELD" means any human use.

          1.15.  "FOREIGN REGULATORY AUTHORITY" means any applicable regulatory
agency, or other governmental entity or authority of any country or regulatory
jurisdiction in the Territory including but not limited to the EMEA (other than
the FDA in the United States), having responsibility in such country or
regulatory jurisdiction for any Regulatory Approvals of any kind necessary for
the development, pre-clinical and/or human clinical testing, manufacture,
supply, marketing and/or sale of Licensed Products in such country or regulatory
jurisdiction.

          1.16.  "FTE" shall mean an exempt or non-exempt employee who works one
person year's worth of effort.

          1.17.  "FTE COST" shall mean the fully burdened cost of an FTE.

          1.18.  "FULLY BURDENED MANUFACTURING COSTS" has the meaning set forth
in Exhibit A.

          1.19.  "GENENTECH PATENTS" means any and all patents and patent
applications that are owned by Genentech and solely based upon inventions
conceived and reduced to practice by Genentech employees in the course of
performing Genentech's development obligations under this Agreement under the
Development Plan to the extent that would be infringed by the use, manufacture
or sale of an existing Licensed Product that Genentech was developing or
manufacturing, if any, prior to termination. For clarity, "Genentech Patents"
shall not include (X) general patents that cover inventions that could be used
for products other than such existing Licensed Product, including without
limitation patents covering manufacturing or process inventions, (Y) any patents
arising from or related to other work (i.e. activities other than Genentech's
development obligations expressly set forth under this Agreement under the
Development Plan), nor (Z) any patents and patent applications that are (i)
owned by Genentech on or before the Effective Date or (ii) Controlled by
Genentech.

          1.20.  "IND" means an Investigational New Drug Application filed or to
be filed with the FDA with regard to a Licensed Product prior to beginning
clinical trials of any Licensed Product.

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          1.21.  "INDEPENDENT PRODUCT" has the meaning set forth in Section
4.2(a).

          1.22.  "INDICATION" means an illness, sickness, interruption,
cessation or disorder of a particular bodily function, system or organ
regardless of the severity, frequency or route of any treatment and regardless
of the patient class. For purposes of this definition, all instances of the same
disease in different patient groups shall be deemed one Indication. For example,
juvenile rheumatoid arthritis and rheumatoid arthritis shall be considered one
Indication. Also, rheumatoid arthritis shall be considered one Indication
regardless of whether such condition is mild, moderate, or severe.

          1.23.  "JSC" OR "JOINT STEERING COMMITTEE" has the meaning set forth
in Section 2.1(a).

          1.24.  "LICENSED PRODUCT" means any Product (i) the manufacture, use,
sale, offer for sale or importation of which in the Territory, but for the
licenses granted herein, would infringe a Valid Claim; or (ii) that relies on or
incorporates TolerRx Know-how including, but not limited to, Antibodies provided
by TolerRx to Genentech pursuant to this Agreement; or (iii) that was or is
being developed pursuant to the Development Plan. It is expressly understood
that TRX1 is a Licensed Product.

          1.25.  "LICENSED PRODUCT MANUFACTURING KNOW-HOW" has the meaning set
forth in Section 9.5(c)(iii).

          1.26.  "MAA" means an application filed with the EMEA seeking final
Regulatory Approval to market and sell a Licensed Product for a particular
Indication in the regulatory jurisdictions for which the EMEA is responsible.
For the purposes of this Agreement, "MAA" only refers to the EMEA equivalent of
a BLA.

          1.27.  "MARKETING PLAN" means a plan developed by Genentech for
marketing and promotional work relating to Licensed Products, and any
modifications thereto made by Genentech from time to time.

          1.28.  "MINIMUM ROYALTY RATE" means with respect to Net Sales of the
applicable Licensed Products described in Section 6.3(c) or 6.4:

                         (i)    Genentech shall pay a royalty of [***] for the
portion of Aggregate Annual Worldwide Net Sales of all such Licensed Products of
the same type that is less than or equal to $[***].

                         (ii)   Genentech shall pay a royalty of [***] for the
portion of Aggregate Annual Worldwide Net Sales of all such Licensed Products of
the same type that is greater than $[***] and less than or equal to $[***].

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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                         (iii)  Genentech shall pay a royalty of [***] for the
portion of Aggregate Annual Worldwide Net Sales of all such Licensed Products of
the same type that is greater than $[***].

"Aggregate Annual Worldwide Net Sales" means the Patented Product Aggregate
Annual Worldwide Net Sales (as defined in Section 6.3(a)) or Non-Patented
Product Aggregate Annual Worldwide Net Sales (as defined in Section 6.3(b)), as
applicable. Aggregate Annual Worldwide Net Sales consists of aggregating such
Net Sales of only such Licensed Products of the same type as described in
Section 6.3(d) below.

          1.29.  "NDA" means a New Drug Application (as that term is used in
Title 21 of the United States Code of Federal Regulations) filed with the FDA
seeking Regulatory Approval to market and sell any Licensed Product in the
United States for a particular Indication.

          1.30.  "NET SALES" shall have the meaning set forth in Exhibit A.

          1.31.  "PARTY" means Genentech or TolerRx, and, when used in the
plural, shall mean both of them.

          1.32.  "PHASE I CLINICAL TRIAL" means, as to a specific Licensed
Product, a lawful study in humans, the principal purpose of which is a
preliminary determination of safety of the Licensed Product for its intended use
in healthy individuals or patients to support its continued testing in similar
clinical trials prescribed by the FDA or any relevant Foreign Regulatory
Authority.

          1.33.  "PHASE II CLINICAL TRIAL" means, as to a specific Licensed
Product, a controlled and lawful study in humans of the safety, dose ranging and
efficacy of such Licensed Product, which is prospectively designed to generate
sufficient data (if successful) to commence a Phase III Clinical Trial (or
foreign equivalent) of such product.

          1.34.  "PHASE III CLINICAL TRIAL" means, as to a specific Licensed
Product, a controlled and lawful study in humans of the efficacy and safety of
such Licensed Product, which is prospectively designed to demonstrate
statistically whether such Licensed Product is effective and safe for use in a
particular Indication in a manner sufficient to file a BLA or NDA (or foreign
equivalent) to obtain Regulatory Approval to market and sell that Licensed
Product in the Territory for the Indication being investigated by the study.

          1.35.  "PRODUCT(S)" means any product and any formulation thereof
containing an agent targeting, binding to or recognizing CD4, either alone or
together with or incorporated into any other substance or product or material or
device, whether active or not. Product shall include Antibody.

          1.36.  "REGULATORY APPROVAL" means any and all approvals (including
pricing and reimbursement approvals), licenses, registrations or authorizations
of any kind of the FDA or

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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any Foreign Regulatory Authority necessary for the development, pre-clinical
and/or human clinical testing, manufacture, supply, marketing and sale of a
Licensed Product in any country or other regulatory jurisdiction in the
Territory. "Regulatory Approval" shall include, without limitation, approval
granted with respect to any BLA, NDA or foreign equivalent. However, with
respect to Sections 4.1 and 6.2 of the Agreement, and Section A.7.3 of Exhibit A
herein, the term "Regulatory Approval" means governmental approvals, of the FDA
or Foreign Regulatory Authority as the context indicates, only for the sale of
the applicable Licensed Product. With respect to Section 4.2(a) of the
Agreement, "Regulatory Approval" means governmental approvals of the FDA, only
for the sale of the Third Party pharmaceutical stand-alone product described in
Section 4.2(a). With respect to Section 6.3(c) of the Agreement, "Regulatory
Approval" means governmental approvals, of the FDA or Foreign Regulatory
Authority, only for the sale of the applicable Licensed Product or Another
Anti-CD4 Product, as the context indicates.

          1.37.  "ROYALTY TERM" means, with respect to each Licensed Product
in each country in the Territory on a Licensed Product-by-Licensed Product
and country-by-country basis, the period of time commencing on the Commercial
Introduction and ending ten (10) years from the date of the Commercial
Introduction of such Licensed Product in such country.

          1.38.  "TERM" has the meaning set forth in Section 9.1.

          1.39.  "TERRITORY" means the world.

          1.40.  "THIRD PARTY" shall mean any entity other than TolerRx,
Genentech, their Affiliates and their sublicensees.

          1.41.  "THIRD PARTY AGREEMENTS" means only the following agreements as
they exist as of the Effective Date: (A) the License of Certain Improvements to
anti-CD4 and anti-CD8 Antibodies by and among Isis Innovation Limited, The
Chancellor Masters and Scholars of the University of Oxford, and TolerRx, Inc.
dated December 5, 2000 (the "ISIS AGREEMENT"); and (B) the License Agreement by
and between Cambridge University Technical Services Limited and TolerRx dated
December 8, 2000 (the "CUTS AGREEMENT"). The term "Third Party Agreements" shall
include amendments thereto only if such amendments were made in compliance with
Section 5.4.

          1.42.  "TOLERRX KNOW-HOW" means any and all proprietary materials and
information that are (i) owned by TolerRx or its Affiliates as of the Effective
Date or thereafter during the Term; or (ii) licensed to TolerRx under the Third
Party Agreements; or (iii) Controlled by TolerRx or its Affiliates during the
Term but only to the extent that it is directed to a Product or the manufacture
or use thereof, in each case only to the extent that any of the foregoing under
(i)-(iii) is necessary or useful for the manufacture, use, import, offer for
sale, or sale of any Product in the Field in the Territory. "TolerRx Know-how"
excludes TolerRx's proprietary materials and information with respect to an
anti-CD8 antibody or fragment thereof. It is expressly understood that TRX1 is
included in TolerRx Know-how. TolerRx Know-how


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shall not include anything that is generally ascertainable from publicly
available information or that was known to Genentech prior to disclosure to
Genentech by TolerRx or which Genentech developed independently or obtained not
in violation of any obligation of confidentiality owed to TolerRx or any third
party.

          1.43.  "TOLERRX PATENT RIGHTS" means any and all patents and patent
applications (including inventor's certificates and utility models) throughout
the Territory, including any substitutions, extensions, reissues,
reexaminations, renewals, divisions, continuations and continuation-in-parts of
any of the foregoing, that are (i) owned by TolerRx or its Affiliates as of the
Effective Date or thereafter during the Term; or (ii) those licensed to TolerRx
under the Third Party Agreements; or (iii) Controlled by TolerRx or its
Affiliates during the Term but only to the extent that they are directed to a
Product or the manufacture or use (including but not limited to diagnostic use)
thereof, in each case only to the extent that any of the foregoing under
(i)-(iii) is necessary or useful for manufacture, use, sale, offer for sale or
import of any Product in the Field in the Territory. The TolerRx Patent Rights
do not include patents and patent applications that are directed to an anti-CD8
antibody or fragment thereof. The TolerRx Patent Rights shall include, without
limitation, the patents and patent applications listed on EXHIBIT B attached
hereto in their entirety.

          1.44.  "TRX1" means anti-CD4 monoclonal antibodies as described in the
U.S. Patent Application Serial No.10/171,452 (filed June 13, 2002).

          1.45.  "VALID CLAIM" means a claim within the TolerRx Patent Rights
(a) in an unexpired and issued patent that has not been revoked, held invalid,
declared unpatentable or unenforceable in a decision of a court or other body of
competent jurisdiction, in a decision that is unappealable or unappealed within
the time allowed for appeal, (b) that has not been rendered unenforceable
through disclaimer or otherwise and (c) is otherwise not subject to an
interference claim. Notwithstanding the foregoing, in the event that an issued
claim within the TolerRx Patent Rights that has been subject to an interference
claim is later resolved in TolerRx's favor, then such claim shall be considered
a "Valid Claim" under this Agreement and (i) Genentech shall promptly pay to
TolerRx back applicable royalties that it would have owed under this Agreement
if such claim had not been subject to the interference claim, and (ii) Genentech
shall continue to pay the applicable royalties for the remaining life of such
Valid Claim.

          1.46.  "UNITED STATES" means the fifty States of the United States of
America.

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                                    ARTICLE 2
                            MANAGEMENT OF DEVELOPMENT

          2.1.   (a)     JOINT STEERING COMMITTEE. The Parties will establish a
Joint Steering Committee (the "JSC"). The purpose of the JSC is to facilitate
the exchange of information relating to the development, marketing and sale of
Licensed Products and the coordination between the Parties relating to the
development of Licensed Products. The JSC will be composed of up to three
representatives of each Party, who are all employees of such Party and who may
be replaced from time to time with other employees of such Party. Such
representatives shall include individuals with expertise in biopharmaceutical
drug development. The JSC will meet at least twice a year during the Term, which
meeting may be in person or by telephone. The quorum for a meeting shall require
at least one representative of Genentech and at least one representative of
TolerRx. The JSC shall meet within thirty (30) days of the Effective Date.

                 (b)     JOINT PROJECT TEAM

                         (i)    ESTABLISHMENT OF A JOINT PROJECT TEAM. The
Parties shall establish a Joint Project Team ("JPT") promptly after the
Effective Date. The JPT shall coordinate all applicable activities for the
Development Plan for Licensed Products, including post-Regulatory Approval
development studies. Each Party shall appoint representatives who are employees
of such Party to the JPT and the JPT shall consist of an equal number of
representatives of each Party as are reasonably necessary to accomplish the
goals of the JPT hereunder. The number of representatives may change from time
to time. Such representatives will include, without limitation, individuals with
expertise and responsibilities in the areas of research, clinical development,
process sciences, regulatory affairs, product development and marketing, as
applicable to the stage of development of the Licensed Product. One such
representative from each Party shall be designated as that Party's "Project Team
Leader" to act as the primary JPT contact for that Party. Each Party may replace
any or all of its representatives with other employees of such Party at any
time. Any member of the JPT may designate a substitute employee of such Party to
attend and perform the functions of that member at any meeting of the JPT. The
JPT will meet in person or by conference call on a regular basis, not fewer than
one time per quarter.

                         (ii)   JOINT PROJECT TEAM RESPONSIBILITIES: The JPT
will be responsible for:

                         a.     Discussing the overall pre-clinical and clinical
                         development program and the initial and subsequent
                         annual Development Plans (if TolerRx has exercised and
                         continues to participate in the US Profit/Loss Sharing
                         Option in accordance with Section 6.5 and

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                         Exhibit A, then the Development Plan shall include the
                         annual budget and an estimate of FTE resources for
                         developing the Licensed Products in the United States);

                         b.     Developing the priority and design of all
                         clinical trials for new Indications;

                         c.     Developing a publication strategy and a calendar
                         of key scientific and clinical meetings and other
                         similar events for the Licensed Products;

                         d.     Exchanging information and facilitating
                         cooperation and coordination between the Parties as
                         they exercise their respective rights and respective
                         obligations related to development of Licensed Products
                         under this Agreement;

                         e.     Determining the priority with respect to seeking
                         Regulatory Approval of Licensed Products; and

                         f.     Implementing all development activities approved
                         by the JSC.

                         (c)    JOINT PROJECT TEAM DECISION MAKING: As a general
          principle, the JPT will operate by consensus. In the event that the
          JPT members do not reach consensus with respect to a matter that is
          within the purview of the JPT, such matter shall be resolved by the
          JSC.

          2.2.   DECISION MAKING RESPONSIBILITY. The Parties intend and agree
that development of Licensed Products in the Field in the Territory, including
but not limited to pre-clinical and clinical testing, and, if applicable as set
forth in Section 6.5, calculation of costs and Operating Profits or Losses as
set forth in Section 6.5 and Exhibit A, and the Development Plan shall be
subject to JSC approval (in the manner set forth in this Section 2.2). If
TolerRx has exercised and continues to participate in the US Profit/Loss Sharing
Option in accordance with Section 6.5 and Exhibit A, then the JSC shall receive
a copy of the budget as described in Section A.3 of the attached Exhibit A.
Subject to the next three sentences, the JSC shall operate by consensus. The JSC
representatives of each Party shall collectively have one vote for purposes of
decision-making hereunder. In the event that the JSC representatives do not
reach consensus, Genentech shall have the authority to make the final decision
and the Parties and JSC shall abide by such decision. With respect to all
decisions contemplated to be made by the JSC, notwithstanding anything else in
this Agreement, Genentech shall have the authority to make the final decision
and the Parties and JSC shall abide by such decision.



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                                    ARTICLE 3

GENENTECH CONFIDENTIAL

          3.1.   DEVELOPMENT PLAN. Genentech shall use Commercially Reasonable
and Diligent Efforts to create a Development Plan (which shall be attached as
Exhibit E hereto) within sixty (60) days and no later than ninety (90) days from
the Effective Date, which may be modified by the JSC (as provided above) from
time to time. TolerRx understands that Genentech's performance is dependent in
part on the TolerRx's actions, including but not limited to TolerRx providing
the detailed description of the studies set forth in Section 3.4(b)(i) in a
timely manner. TolerRx shall have the opportunity to provide input and
suggestions with regard to the Development Plan. The Parties initially agree to
develop a Licensed Product related to immune tolerance. Only upon the JSC's
written approval shall the Parties perform any activities other than work
related to immune tolerance. The Development Plan shall be updated by Genentech
for each calendar year and submitted to the JSC for consideration and approval
at least three months prior to the beginning of the next calendar year. The
Development Plan will include specific tasks, milestones, and estimated
timelines. As set forth in Section 3.4(b) and 3.4(f), it is anticipated that the
Development Plan may assign specific tasks to TolerRx. TolerRx shall hold in
confidence, not use (except to perform its obligations under the Development
Plan), and not disclose to anyone any and all information arising out of TolerRx
Development Plan Work (as defined in Exhibit A attached hereto), except that
TolerRx may disclose such information to Isis only to the extent required under
the Isis Agreement and only pursuant to Section 5.3(a)(iii). The foregoing
confidentiality obligations shall survive any termination of this Agreement by
Genentech under Sections 9.3 or 9.4 or expiration of this Agreement. In all
events, Genentech shall have final authority regarding the Development Plan and
the content thereof. For avoidance of doubt, the Development Plan shall exclude
marketing and other commercialization activities. The Development Plan and any
modifications thereto shall be approved by the JSC in the written minutes of the
applicable JSC meeting; anything not approved by the JSC in such written minutes
shall be deemed to be excluded from the Development Plan.

          3.2.   DEVELOPMENT EFFORTS. Subject to the terms and conditions of
this Agreement, Genentech agrees to use Commercially Reasonable and Diligent
Efforts to research, develop and obtain Regulatory Approval of a Genentech
selected Licensed Product in at least the United States and Europe. As used in
this Agreement, the term "Commercially Reasonable and Diligent Efforts" will
mean those efforts and resources consistent with the exercise of prudent
scientific and business judgment, as applied to other pharmaceutical products of
similar market potential and market size, probability of technical success, risk
of failure, and at a similar stage in the development or life of such product.
Genentech shall have full responsibility for the conduct of all research and
development activities related to Licensed Products set forth in the Development
Plan, except that TolerRx is responsible for TolerRx's obligations set forth in
Section 3.4. Genentech and TolerRx shall provide written progress reports to the
JSC every twelve (12) months with respect to the research, development and
Regulatory Approval of Licensed Product.

          3.3.   DEVELOPMENT COSTS. Genentech shall be responsible for the costs
of all activities performed by it with regard to the research and development of
Licensed Products in

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the Field in the Territory, except for US Costs (as defined in Exhibit A) if
TolerRx exercises the US Profit/Loss Sharing Option (as defined in Section 6.5).
If TolerRx exercises the US Profit/Loss Sharing Option, then all US Costs shall
be shared between Genentech and TolerRx, as provided below and in accordance
with the Financial Planning, Accounting and Reporting Procedures attached hereto
as EXHIBIT A, so that Genentech bears [***] of such costs and TolerRx bears
[***] of such costs. There shall be a reconciliation of such costs which are to
be shared and which are incurred during the prior reporting period by each
Party, in accordance with EXHIBIT A, with a payment by one Party to the other to
the extent necessary so that each Party bears its appropriate percentage of such
shared US Costs.

          3.4.   TOLERRX'S DEVELOPMENT RESPONSIBILITIES

                 (a) TRANSFER OF MATERIALS AND INFORMATION. TolerRx agrees to
provide to Genentech, promptly after execution of this Agreement and at
TolerRx's cost, all materials and information related to TolerRx Patent Rights
and/or TolerRx Know-how including, but not limited to, Antibodies and
information obtained under the Third Party Agreements.

                 (b) TOLERRX STUDIES UNDER THE DEVELOPMENT PLAN.

                         (i)    The Parties anticipate that TolerRx may perform
certain pre-clinical and clinical studies set forth in the Development Plan for
Licensed Products, designed to assess clear performance against pre-defined
decision criteria set forth in the Development Plan. If the JSC approves of
TolerRx's request to perform such studies on the Licensed Product, TolerRx will
receive a milestone payment of $[***] in the aggregate promptly after the
commencement of both the (A) preclinical study entitled "Preclinical Factor VIII
Study" and the (B) clinical study entitled "Human United Kingdom Phase I Study"
to the extent approved by the JSC and set forth in the Development Plan. For the
avoidance of doubt, TolerRx shall receive only one aggregate payment of $[***]
promptly after commencement of both of the foregoing studies. The Parties
anticipate that TolerRx shall begin both of such studies in 2003. TolerRx will
receive a milestone payment of $[***] upon completion of the clinical study
entitled "Factor VIII Clinical Study" only as approved by the JSC and set forth
in the Development Plan. The Parties anticipate that TolerRx shall begin such
study entitled "Factor VIII Clinical Study" in 2004. TolerRx shall provide a
detailed description of the foregoing studies to Genentech promptly after the
Effective Date so that such description of such studies, to the extent approved
by the JSC, shall be included in the Development Plan. For the avoidance of
doubt, the aggregate total of such milestone payments set forth in this Section
3.4(b) shall not exceed $[***]. For clarity, in no event shall Genentech have
any other payment obligations for any costs incurred by TolerRx except as
otherwise decided by the JSC and except as expressly provided herein. If
Genentech elects to use the results of the foregoing studies to develop and/or
commercialize the Licensed Product, and if TolerRx has exercised and continues
to participate in the US Profit/Loss Sharing Option in accordance with Section
6.5 and Exhibit A, then the total reasonable cost of such studies shall be
included in the calculation of "Development Costs" set forth in Exhibit A and
shall be shared in accordance with Exhibit A,

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

provided that any balancing payments owed by one Party to the other Party shall
be adjusted so that the milestone payments of $[***] are deducted from
Genentech's balancing payment (if any). For example, if the total reasonable
cost of all of the above studies is $[***], and Genentech has paid the $[***] as
set forth above, then, if Genentech elects to use the results of the foregoing
studies to develop and/or commercialize the Licensed Product, and if TolerRx has
exercised and continues to participate in the US Profit/Loss Sharing Option in
accordance with Section 6.5 and Exhibit A, then the balancing payment for the
foregoing by Genentech shall be $[***].

                         (ii)   Except for the rights granted to TolerRx
hereunder to perform its obligations under this Section 3.4(b), TolerRx shall
not use and, except to the minimum extent required by applicable law, rule or
regulation and subject to Section 5.3(a)(iii), shall not disclose to anyone
(except to Genentech) any and all results arising out of such studies, except
with prior written approval of Genentech. TolerRx shall use commercially
reasonable efforts to report all results of such studies to Genentech; TolerRx
shall report such results no later than thirty (30) days from the date such
results become available.

                 (c) Pre-Clinical and Clinical Development Outside of the
Development Plan.

                         (i)    At its sole expense, TolerRx may perform
pre-clinical and clinical studies related to Licensed Products not described in
the Development Plan ("TolerRx PreClinical and Clinical Development"), only if
TolerRx submits such study plans to the JSC and only if Genentech approves of
such TolerRx PreClinical and Clinical Development and determines that such
TolerRx PreClinical and Clinical Development is not detrimental to the safety,
prospects, or reputation of any Licensed Product, Genentech, or any other
Genentech product. TolerRx shall not perform any activities related to any
Product unless approved by the JSC. Except for the rights granted to TolerRx
hereunder to perform its obligations under this Section 3.4(c), TolerRx shall
not use and, except to the minimum extent required by applicable law, rule or
regulation, and subject to Section 5.3(a)(iii), TolerRx shall not disclose to
anyone (except to Genentech) any and all results arising out of TolerRx
PreClinical and Clinical Development, except with prior written approval of
Genentech. TolerRx shall promptly report all such results to Genentech. TolerRx
shall use commercially reasonable efforts to report such results; TolerRx shall
report such results no later than thirty (30) days from the date such results
become available.

                         (ii)   If Genentech elects to use any results or data
related to TolerRx PreClinical and Clinical Development to develop or
commercialize the Licensed Product, Genentech shall reimburse TolerRx for the
reasonable costs of such TolerRx PreClinical and Clinical Development.

                 (d) ASSISTANCE IN REGULATORY FILINGS. During the Term, TolerRx
shall assist Genentech in the preparation and filing for any Regulatory Approval
with respect to

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

Licensed Products in the Territory, by delivering, at Genentech's request and
TolerRx's expense, all information in TolerRx's possession (in a complete and
accurate form) necessary or useful for completing and filing any Regulatory
Approval for a Licensed Product.

                 (e) ADVERSE EVENTS. During the Term, TolerRx shall report
promptly to Genentech the occurrence of any adverse events that it is aware of
relating to any Licensed Product or component thereof as necessary to comply
with the adverse events reporting regulations of the FDA (as provided in Title
21 of the Code of Federal Regulations) and Foreign Regulatory Authorities.
Notwithstanding the foregoing, if such adverse event is serious or
life-threatening, TolerRx shall report such adverse event within five (5) days
of such awareness.

                 (f) TOLERRX MEDICAL SCIENCE LIAISONS IN UNITED STATES. If
TolerRx has exercised and continues to participate in the US Profit/Loss Sharing
Option in accordance with Section 6.5 and Exhibit A, then TolerRx shall have the
right to provide MSLs (as defined below) to provide expert information to the
medical community on the subject matter of immunological tolerance only in
accordance with the Development Plan. TolerRx shall have the right to provide
such MSLs only if all of the following conditions are true: (A) Genentech
determines that TolerRx, at its sole expense, has established the proper
infrastructure to support and employ such MSLs and has hired sufficient numbers
of MSLs; (B) TolerRx pays for [***] of all TolerRx MSL Costs for a period of
[***] from the date the first MSL is hired; (C) Genentech determines that the
MSLs are not duplicating or performing any work performed by Genentech's or its
sublicensees' personnel or agents (Genentech medical science liaisons will be
solely responsible for any work related to physician advocacy development or
clinical trials (including but not limited to oversight of clinical trials));
(D) MSLs shall strictly follow any and all instructions provided by Genentech
and decisions made by Genentech and shall attend all training and other
activities required by Genentech; (E) MSLs do not adversely affect Genentech's
medical science liaisons (including but not limited to Genentech's medical
science liaison infrastructure and hiring) for such Licensed Product; and (F)
the total number of MSLs shall not exceed [***], unless otherwise agreed upon by
the Parties. "MSLS" or "TOLERRX MSLS" means medical science liaisons employed by
TolerRx who are fully qualified to provide expert information to the medical
community on the subject matter of immunological tolerance. For clarity, MSLs
shall not participate in the sales, marketing, or other commercialization of the
Licensed Product. "TOLERRX MSL COSTS" means fully burdened FTE Costs
pre-approved by Genentech and incurred by TolerRx for TolerRx MSLs, provided
that all of the conditions set forth in Sections 3.4(f)(A) to (F) above are true
and TolerRx complies fully with this Section 3.4(f). Genentech shall pay for
[***] of TolerRx MSL Costs incurred by TolerRx during the [***] period set forth
in Section 3.4(f)(B) above. Such payments shall be made within sixty (60) days
from the end of the calendar quarter in which such TolerRx MSL Costs were
incurred, provided that Genentech receives an invoice for such TolerRx MSL Costs
on or before the end of such calendar quarter. If TolerRx has properly provided
MSLs for the [***] period set forth in clause (B) immediately above, then to the
extent (X) TolerRx continues to comply fully with this Section 3.4(f), and (Y)
all of the foregoing conditions set forth in Sections 3.4(f)(A) to (F) above are
all true, TolerRx MSL Costs incurred after such [***] period shall be included
in the

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

calculation of "Development Costs" set forth in Exhibit A and shall be shared in
accordance with Exhibit A.

                 (g) DISCUSSIONS WITH FDA. Other than clinical studies hereunder
for which TolerRx will have primary responsibility, if any, Genentech will be
responsible for conducting meetings and discussions, and routine telephone
communications with the FDA related to clinical trials hereunder. To the extent
practical, during the Term, a reasonable number of representatives of the Party
not primarily responsible for a clinical trial will be given the opportunity to
participate in substantive discussions and meetings with the FDA which relate to
such clinical trial. The Party primarily responsible will have decision making
authority regarding the number of, and which, representatives of the other Party
may attend such meetings, but in any case at least one representative of the
other Party may participate. TolerRx will not have the right to participate,
however, in discussions or meetings with Regulatory Agencies regarding Licensed
Product being developed or sold by or for Genentech in the Territory outside the
United States. Notwithstanding the foregoing, the primarily responsible Party
will not be obligated to permit representatives of the other Party to attend any
Regulatory Agency meetings related specifically to an inspection at such Party's
premises by any Regulatory Agency.

          3.5.   CLINICAL DATA OWNERSHIP AND DRUG APPROVAL APPLICATIONS

                 (a) All data produced as a result of clinical trials conducted
by Genentech under this Agreement shall be owned by Genentech, and all such data
shall be considered Confidential Information of Genentech, regardless of whether
the foregoing has been marked confidential or not.

                 (b) During the Term, Genentech shall be responsible for, and
will use Commercially Reasonable and Diligent Efforts in, filing Drug Approval
Applications for Licensed Products in the Territory. If TolerRx submits to the
JSC a request to file IND(s) in certain Indications then only if the JSC
approves of such filings, TolerRx may file such IND(s). TolerRx shall hold in
confidence, not use (except to perform its obligations under this Section
3.5(b)), and not disclose to anyone any and all information and data related to
such INDs filed by TolerRx. If TolerRx exercises and participates in the US
Profit/Loss Sharing Option in accordance with Exhibit A and Section 6.5, such
costs shall be included in "Development Costs" as set forth in Exhibit A and
shall be shared as set forth therein, otherwise, such costs shall be paid for by
Genentech. Genentech shall own all regulatory submissions including all Drug
Approval Applications for Licensed Products in the Territory and shall be the
holder of all Regulatory Approvals. Genentech shall have the right to own all
INDs filed by TolerRx as set forth above, and at Genentech's request, TolerRx
shall assign such INDs to Genentech. TolerRx agrees to take all additional
actions necessary to effect the foregoing assignment. Except as expressly
provided in Section 9.5(c)(iii),such ownership and status as applicant and
holder shall survive any expiration or termination of this Agreement. The
foregoing confidentiality obligations shall survive any termination of this
Agreement by Genentech under Sections 9.3 or 9.4 or expiration of this
Agreement.

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GENENTECH CONFIDENTIAL

          3.6.   SUPPLY OF LICENSED PRODUCT. During the Term, if TolerRx wants
Genentech to supply Licensed Products to TolerRx so that TolerRx may fulfill its
development obligations under Section 3.4(c) of this Agreement, the Parties
agree to negotiate in good faith regarding Genentech supplying a reasonable
amount of Licensed Products to TolerRx at Fully Burdened Manufacturing Cost (as
defined in Exhibit A). For clarity, Genentech shall not be obligated to supply
Licensed Products to TolerRx with respect to Section 3.4(b) unless approved by
the JSC in the manner set forth in Section 2.2. As a condition of the foregoing,
Genentech shall be obligated to negotiate only if Genentech determines that
supplying such Licensed Products does not adversely affect the Licensed Product
(including but not limited to supply of Licensed Product for clinical testing)
or Genentech's other products. In no event shall Genentech be obligated to
manufacture any Licensed Products for TolerRx, except to the limited extent
expressly set forth in Section 9.5(c)(iii).

          3.7.   RIGHT OF FIRST NEGOTIATION FOR RIGHTS RELATING TO ANTI-CD8
ANTIBODY. To the extent that TolerRx owns or Controls rights solely relating to
anti-CD8 antibodies or fragments thereof, TolerRx hereby grants to Genentech the
exclusive option during the Term to be the first party to negotiate (for a
ninety (90) day period) an exclusive, worldwide license to such rights.

                  ARTICLE 4 COMMERCIALIZATION IN THE TERRITORY

          4.1.   COMMERCIALIZATION EFFORTS; COSTS. During the Term, Genentech
shall use its Commercially Reasonable and Diligent Efforts to commercialize each
Licensed Product in each country in which Regulatory Approval is received.
Genentech shall have the full responsibility and sole right to make all
decisions regarding all commercialization activities, including without
limitation all manufacturing, sales, marketing and product launch activities
related to Licensed Products. Genentech shall bear all costs related to the
commercialization of the Licensed Products by Genentech in the Territory, except
for US Costs if TolerRx exercises the US Profit/Loss Sharing Option set forth in
Section 6.5.

          4.2.   DEVELOPMENT OR MARKETING WITH INDEPENDENT PRODUCTS.

                 (a) Without limiting Genentech's rights, if TolerRx reasonably
believes that marketing a Licensed Product in conjunction with an Independent
Product will maximize the profits for such Licensed Product, at TolerRx's
written request, Genentech agrees to use Commercially Reasonable and Diligent
Efforts to negotiate (for a period of sixty (60) days) in good faith an
arrangement with the Third Party that owns or Controls such Independent Product
whereby Licensed Product will be marketed in conjunction with the Independent
Product, provided that Genentech shall be obligated to do so only if it
determines in its sole discretion that (a) such development or marketing would
not adversely affect any Licensed Product, other Genentech product, or
Genentech; (b) such development or marketing would be desirable and financially
profitable and would significantly increase the Net Sales of such Licensed
Product; and (c) such Third Party is reasonably acceptable to Genentech. This
Section 4.2 shall apply

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GENENTECH CONFIDENTIAL

only after Licensed Product for Phase III Clinical Trials manufactured by
Genentech or its third party sublicensees on Genentech's behalf is available
(and Genentech shall not have any obligations under this Section 4.2 (a) to so
negotiate until such time). "INDEPENDENT PRODUCT" means a Third Party's
pharmaceutical, stand-alone product that (A) has received Regulatory Approval in
the United States; (B) has been fully developed and commercialized as a
stand-alone product by such Third Party, and Genentech is not involved in and
has no rights or obligations with respect to current or future involvement in
researching, developing or commercializing or any other aspect of such product;
and (C) Genentech determines would be desirable to market or develop with the
Licensed Product.

                 (b) If Genentech executes an agreement with such Third Party
for marketing or developing the Licensed Product in conjunction with an
Independent Product, and if (and only if) Genentech is not obligated to provide
any consideration to such Third Party, then during the Term, Genentech shall
share (in accordance with the percentages below) with TolerRx the portion of
upfront, milestone, or royalty payments, if any, actually received by Genentech
from such Third Party that would constitute Independent Product Profit for
Genentech. Such Independent Product Profit shall be shared between the Parties:
with TolerRx receiving [***] of such amounts and Genentech receiving [***] of
such amounts. "INDEPENDENT PRODUCT PROFIT" means the upfront, milestone, royalty
payments received by Genentech from such Third Party and less Reimbursements.
"REIMBURSEMENTS" means reimbursements of all fully burdened costs incurred by
Genentech related to developing, manufacturing, distribution, marketing, and/or
sales of such Licensed Product in conjunction with such Independent Product.
Independent Product Profit shall only consist of such payments received by
Genentech from such Third Party that are solely attributable to Genentech's
marketing and development activities (and not attributable to any other action
or inaction of Genentech or other reasons) for the Licensed Product in
conjunction with such Independent Product. All payments received by Genentech
from such Third Party relating to any of Genentech's intellectual property or
any other Genentech activity shall be excluded from Independent Product Profit.

                                ARTICLE 5 LICENSE

          5.1.   GRANT OF THE RIGHTS TO GENENTECH. Subject to the terms and
conditions of this Agreement, TolerRx hereby grants to Genentech an exclusive
(even as to TolerRx), sublicensable license under TolerRx Patent Rights, TolerRx
Know-how and TolerRx's joint ownership rights in Joint Patents (as defined in
Section 7 herein), to make (and have made), use, sell, offer for sale and/or
import Licensed Product, within the Field in the Territory.

          5.2.   Genentech shall have the right to grant sublicenses under the
license granted pursuant to Section 5.1 provided that: (i) Genentech shall be
responsible for the making of all payments due by reason of milestones achieved
with respect to any Licensed Product and Net Sales of any Licensed Products by
its third party sublicensees, and the making of reports as required under this
Agreement, and their compliance with all applicable licensing terms of this
Agreement to the extent that they are applicable to a sublicensee; and (ii) each
sublicensee agrees

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

in writing to comply with the record keeping obligations set forth in Section
6.7, of this Agreement and Genentech shall use reasonable commercial efforts to
enforce the foregoing terms to the extent that such sublicensee's lack of
performance of such terms would constitute a material breach of this Agreement.
Genentech shall notify TolerRx promptly in writing of the name and address of
each sublicensee.

          5.3.   RIGHTS OF TOLERRX UNDER THIRD PARTY AGREEMENT. To the extent
the rights granted herein under Sections 5.1 and 5.2 are rights obtained by
TolerRx under the Third Party Agreements, the Parties understand and agree as
follows:

                 (a) THE ISIS AGREEMENT.

                         (i)    Isis Innovation Ltd. ("Isis") has reserved the
right to grant to the University of Oxford (the "University") a license for the
University and every employee, student, agent and appointee of the University to
use and publish the technologies licensed by Isis to TolerRx under the Isis
Agreement, only to the minimum extent expressly set forth therein ("Isis
Retained Rights") for academic and research purposes; and this will include the
right for the University to use the Isis Retained Rights as enabling technology
in other research projects (including projects which benefit from third-party
funding received from commercial entities).

                         (ii)   The University and every employee, student,
agent and appointee of the University have reserved the right to transfer
antibody owned by Isis and licensed to TolerRx under the Isis Agreement to any
academic collaborator to use solely for academic and research purposes (not
including commercially funded research purposes) for in vitro research, only to
the minimum extent expressly set forth in the Isis Agreement.

                         (iii)  In the event that TolerRx, pursuant to the
relevant term expressly set forth in the Isis Agreement, communicates to Isis
any improvements which TolerRx makes to the technology licensed to TolerRx by
Isis ("TolerRx's Improvement"), TolerRx shall ensure that: (1) the TolerRx's
Improvement is made solely by TolerRx and does not contain or incorporate any of
Genentech's proprietary material or information; (2) any communication to Isis
regarding TolerRx's Improvement is properly identified as TolerRx's confidential
information as to Isis; (3) the communication is made only after proper actions
have been taken (including, but not limited to, filing of patent applications)
to protect any intellectual property related to the TolerRx's Improvement; (4)
prior to making such communication, TolerRx notifies Genentech and discloses to
Genentech the content of such communication and (5) the communication regarding
the TolerRx's Improvement is made by TolerRx to Isis solely for the purpose of
Isis's evaluation of the TolerRx's Improvement for a potential license thereto
by Isis, pursuant to the relevant term expressly set forth in the Isis
Agreement.

                 (b) THE CUTS AGREEMENT. Cambridge University Technical Services
Limited ("CUTS") and the University of Cambridge ("UC") have reserved the
non-exclusive right to use antibodies, patents and patent applications licensed
by CUTS to TolerRx under the CUTS Agreement ("CUTS Retained Rights"), only to
the minimum extent expressly set forth

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GENENTECH CONFIDENTIAL

therein for the purposes of academic research and teaching and to publish the
general scientific findings from research related to the CUTS Retained Rights,
provided that no commercial entity has rights to the results of such research in
the Field.

          5.4.   Without the express written permission of Genentech, TolerRx
shall not amend any of the Third Party Agreements or grant any rights to any
third party in a manner that would adversely affect the rights granted to
Genentech under this Agreement, including but not limited to Sections 5.1 and
5.2. Without limiting TolerRx's obligations above, TolerRx shall not enter into
any agreement with any third party in a manner that would materially adversely
affect the rights granted to Genentech under this Agreement, without the express
written permission of Genentech. This Section 5.4 shall survive any expiration
of the Agreement or termination of the Agreement by Genentech under Sections 9.3
or 9.4.

                       ARTICLE 6 MILESTONES AND ROYALTIES

          6.1.   UPFRONT PAYMENT.

                 (a) Genentech will pay TolerRx an upfront non-refundable,
non-creditable fee of two million five hundred thousand dollars ($2,500,000)
("Upfront Payment") within ten (10) business days after the Effective Date.

                 (b) Genentech shall purchase shares of TolerRx Preferred Stock
for an aggregate purchase price of three million five hundred thousand dollars
($3,500,000) on the terms and conditions set forth in the Stock Purchase
Agreement of even date herewith attached hereto as Exhibit C.

          6.2.   DEVELOPMENT MILESTONES.

                 (a) PAYMENTS FOR THE FIRST OCCURRENCE OF MILESTONES. As
consideration to TolerRx for the licenses and other rights granted to Genentech
under this Agreement, during the Term, Genentech shall pay to TolerRx the
following milestone payments upon the first occurrence of each event set forth
below with respect to only the first Licensed Product for which the milestone is
achieved by or on behalf of Genentech. For purposes of clarification, each
milestone in this Section 6.2(a) shall be payable only once. Such milestone
shall be payable within forty-five (45) days of when the first Licensed Product
that is manufactured by or on behalf of Genentech fully satisfies such milestone
requirement. For the purposes of this Section 6.2 and 6.5 only, any reference to
achieving a milestone or manufacturing "by or on behalf of Genentech" or "by or
for Genentech" refers only to achievement of such milestone or manufacturing by
Genentech or by Genentech's third party sublicensees on Genentech's behalf, and
excludes TolerRx unless otherwise agreed to expressly in writing by the parties.

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<Table>
<Caption>
                 Milestone                                                    Payment
                 ---------                                                    -------
                 <S>     <C>                                                  <C>
                 (i)     Genentech's portfolio planning committee (or
                         future equivalent)'s decision to place Licensed
                         Product into formal development for the first time   $[***]

                 (ii)    First filing of IND by Genentech for Licensed
                         Product manufactured by or for Genentech             $[***]

                 (iii)   Administration of Licensed Product manufactured by
                         or for Genentech to first patient in first Phase I
                         Clinical Trial in the United States                  $[***]

                 (iv)    Administration of Licensed Product manufactured by
                         or for Genentech to first patient in first Phase
                         II Clinical Trial in the United States               $[***]

                 (v)     Administration of Licensed Product to first
                         patient in first Phase III Clinical Trial in the
                         United States                                        $[***]

                 (vi)    Filing of first BLA for Licensed Product in United
                         States                                               $[***]

                 (vii)   First Regulatory Approval for Licensed Product in
                         United States                                        $[***]

                 (viii)  Filing of first MAA with the EMEA for Licensed
                         Product                                              $[***]

                 (ix)    First Regulatory Approval by EMEA for Licensed
                         Product                                              $[***]
</Table>

                 (b) ADDITIONAL MILESTONES FOR DIFFERENT INDICATIONS. This
Section 6.2(b) applies only after the corresponding milestone has been paid
under Section 6.2(a). As consideration to TolerRx for the licenses and other
rights granted to Genentech under this Agreement, during the Term, Genentech
shall pay to TolerRx the following milestone payments upon the first occurrence
of each event set forth below with respect to each of two Different Indications
for which the milestone is achieved by or on behalf of Genentech. "Different
Indication" means an Indication that is different from any other Indication for
which the

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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corresponding milestone was paid under Section 6.2(a) or 6.2(b). Each milestone
in this Section 6.2(b) shall be payable only once for each Different Indication,
up to a maximum of two Different Indications. Such milestone shall be payable
within forty-five (45) days of when such Indication for a Licensed Product that
is manufactured by or on behalf of Genentech fully satisfies such milestone
requirement. For avoidance of doubt, each milestone in this Section 6.2(b) shall
be paid at most twice only: (R) the first such milestone payment for the first
Different Indication to satisfy that milestone, and (S) the second payment for a
second Different Indication to satisfy that milestone. Genentech shall not make
any payments under Section 6.2(b) with regard to any other Indications or
Licensed Products.

<Table>
<Caption>
                 Milestone                                                    Payment
                 ---------                                                    -------
                 <S>     <C>                                                  <C>
                 (i)     Genentech's portfolio planning committee (or         $[***]
                         future equivalent)'s decision to place
                         Licensed Product into formal development
                         for first or second Different Indication
                         for the first time

                 (ii)    Administration of Licensed Product  to first
                         patient in first Phase III Clinical Trial in the
                         United States for first or second Different
                         Indication                                           $[***]

                 (iii)   Filing of first BLA for Licensed Product for first
                         or second Different Indication in United States      $[***]

                 (iv)    First Regulatory Approval for Licensed Product for
                         first or second Different Indication in United
                         States                                               $[***]

                 (v)     Filing of first MAA with the EMEA for Licensed
                         Product for first or second Indication in European
                         Union                                                $[***]

                 (vi)    First Regulatory Approval by EMEA for Licensed
                         Product for first or second Different Indication
                         in European Union                                    $[***]
</Table>

                 (c) EXAMPLE. The milestone payments above shall be calculated
in accordance with the following example. There are Licensed Product(s) for
three Different Indications. Licensed Product for one Indication ("LP1") is
placed into development by

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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Genentech's portfolio planning committee, continues to develop, and fails to
proceed beyond Phase III Clinical Trials. The Licensed Product for a second
Indication ("LP2") is placed into development by Genentech's portfolio planning
committee, continues to develop, and completes all possible milestones,
including receiving Regulatory Approval in the United States and from the EMEA.
The Licensed Product for a third Indication ("LP3") is placed into development
by Genentech's portfolio planning committee, continues to develop, receives
Regulatory Approval in the United States, and files MAA with the EMEA but fails
to receive Regulatory Approval by EMEA. For LP1, the applicable milestone
payments would be Section 6.2(a)(i) through 6.2(a)(v). For LP2, the applicable
milestone payments would be Section 6.2(b)(i), 6.2(b)(ii) and 6.2(a)(vi) through
6.2(a)(ix). For LP3, the applicable milestone payments would be Section
6.2(b)(i) through 6.2(b)(v). In this example, no further payments shall be made
under Section 6.2(a) and 6.2(b)(i) and 6.2(b)(ii).

          6.3.   ROYALTIES. The royalties set forth in this Section 6.3 shall
apply to Net Sales in each country within the Territory, unless TolerRx properly
exercises and participates in the US Profit/Loss Sharing Option, in which case
(P) the royalties set forth in this Section 6.3 shall apply only to Net Sales in
countries in the Territory other than the United States and (Q) Section 6.5
applies to the United States. Subject to the foregoing, royalties payable by
Genentech under this Section 6.3 shall be determined and payable on a
country-by-country and Licensed Product-by-Licensed Product basis as follows
(depending on the type of Licensed Product sold in such country): (A) with
respect to such Licensed Product that, but for the licenses granted herein,
would infringe a Valid Claim in such country, the royalties as set forth in
Section 6.3(a); or (B) with respect to such Licensed Product that would not
infringe a Valid Claim in such country, but (X) relies on or incorporates
TolerRx Know-how, including but not limited to, Antibodies provided by TolerRx
to Genentech pursuant to this Agreement or (Y) was developed pursuant to the
Development Plan, the royalties set forth in Section 6.3(b). All such royalties
shall be further reduced by one or more of the following Sections, to the extent
applicable: Sections 6.3(c) and 6.4. For clarity, no royalties for a Licensed
Product in a country shall be owed by Genentech under Sections 6.3 or 6.4 until
the date of Commercial Introduction of such Licensed Product in such country.
All references in this Agreement to "royalties under Sections 6.3 and 6.4"
"royalties set forth in Sections 6.3 and 6.4" or the like shall mean royalties
set forth in Sections 6.3, reduced by Section 6.4 if applicable.

                 (a) ROYALTIES OWED BY GENENTECH FOR LICENSED PRODUCTS COVERED
BY VALID CLAIM. As consideration to TolerRx for the licenses and other rights
granted to Genentech under this Agreement, during the Term, Genentech shall make
royalty payments to TolerRx (for each Licensed Product sold in the country(ies)
where the sale of such Licensed Product, but for the licenses granted herein,
would infringe a Valid Claim) as follows and such payments shall be reduced by
Sections 6.3(c), and/or 6.4 to the extent applicable.

                         (i)    Genentech shall pay a royalty of [***] for the
portion of Patented Product Aggregate Annual Worldwide Net Sales that is less
than or equal to $[***].

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

                         (ii)   Genentech shall pay a royalty of [***] for the
portion of Patented Product Aggregate Annual Worldwide Net Sales that is greater
than $[***] and less than or equal to $[***].

                         (iii)  Genentech shall pay a royalty of [***] for the
portion of Patented Product Aggregate Annual Worldwide Net Sales that is greater
than $[***] and less than or equal to $[***].

                         (iv)   Genentech shall pay a royalty of [***] for the
portion of Patented Product Aggregate Annual Worldwide Net Sales that is greater
than $[***].

"Patented Product Aggregate Annual Worldwide Net Sales" means aggregating the
Net Sales amounts (occurring in the applicable calendar year) of all such
Licensed Products the sales of which, but for the licenses granted herein, would
infringe a Valid Claim in the country where such sales occur. Patented Product
Aggregate Annual Worldwide Net Sales consists of aggregating such Net Sales of
only such Licensed Products of the same type as described in Section 6.3(d)
below.

For example, if Patented Product Aggregate Annual Worldwide Net Sales of Type A
Licensed Products (as defined in Section 6.3(d) below) in the Territory totaled
$[***], then the applicable royalties that Genentech would pay is ([***] X
$[***]) + ([***] X $[***]) + ([***] X $[***]) + ([***] X [***]) = $[***].

                 (b) ROYALTIES OWED BY GENENTECH FOR LICENSED PRODUCTS COVERED
BY TOLERRX KNOW-HOW. During the Royalty Term, with respect to Licensed Product
sold in the country(ies) where the sale of such Licensed Product, but for the
licenses granted herein, would not infringe a Valid Claim, but such Licensed
Product in the country where sold (A) relies on or incorporates TolerRx
Know-how, including but not limited to, Antibodies provided by TolerRx to
Genentech pursuant to this Agreement, or (B) was developed pursuant to the
Development Plan, Genentech shall make royalty payments to TolerRx for such
Licensed Products as follows and such payments shall be reduced by Sections
6.3(c), and/or 6.4 to the extent applicable.

                         (i)    Genentech shall pay a royalty of [***] for the
portion of Non-Patented Product Aggregate Annual Worldwide Net Sales that is
less than or equal to $[***].

                         (ii)   Genentech shall pay a royalty of [***]for the
portion of Non-Patented Product Aggregate Annual Worldwide Net Sales that is
greater than $[***] and less than or equal to $[***].

                         (iii)  Genentech shall pay a royalty of [***] for the
portion of Non-Patented Product Aggregate Annual Worldwide Net Sales that is
greater than $[***] and less than or equal to $[***].

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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                         (iv)   Genentech shall pay a royalty of [***] for the
portion of Non-Patented Product Aggregate Annual Worldwide Net Sales that is
greater than $[***].

"Non-Patented Product Aggregate Annual Worldwide Net Sales" means aggregating
the Net Sales amounts (occurring in the applicable calendar year) of all such
Licensed Products the sales of which, but for the licenses granted herein, would
not infringe a Valid Claim in the country where such sales occur but which
Licensed Products in the country where such sales occur (A) rely on or
incorporate TolerRx Know-how, including but not limited to, Antibodies provided
by TolerRx to Genentech pursuant to this Agreement, or (B) were developed
pursuant to the Development Plan. Non-Patented Product Aggregate Annual
Worldwide Net Sales consists of aggregating such Net Sales of only such Licensed
Products of the same type as described in Section 6.3(d) below.

                 (c) ROYALTIES OWED BY GENENTECH IF ANOTHER ANTI-CD4 PRODUCT
EXISTS. Genentech's royalty payment obligations as set forth in Sections 6.3(a)
or 6.3(b) above shall not apply in those countries for a Licensed Product during
the period that any of the following is true in such countries: (A) Another
Anti-CD4 Product has received Regulatory Approval for an Indication that is the
same as an Indication for which the Licensed Product has received Regulatory
Approval or (B) the total volume of Other Anti-CD4 Products (commercialized,
used or sold for an Indication that is the same as any Indication for which the
Licensed Product has received Regulatory Approval) equals [***] or more of the
total volume of products containing an Antibody or Antibodies or any formulation
thereof commercialized, used, or sold for such Indication. Instead, Genentech
shall only pay a royalty of (i) during the Term, with respect to those Licensed
Products described in Section 6.3(a), [***] for annual Net Sales of such
Licensed Products in such countries where sold; or (B) during the Royalty Term,
with respect to those Licensed Products described in Section 6.3(b), [***] on
all Net Sales amounts of such Licensed Product in such countries where sold
(except that such royalty payments shall not be reduced by this Section 6.3(c)
below the Minimum Royalty Rate). For the purpose of this Agreement, "ANOTHER
ANTI-CD4 PRODUCT" means any third party product containing an Antibody or
Antibodies or any formulation thereof, including, without limitation, any
lyophilized liquid, sustained release or aerosolized formulation. "OTHER
ANTI-CD4 PRODUCTS" means all of the third party products in such countries that
are Another Anti-CD4 Product.

                 (d) CALCULATIONS AND EXAMPLE. The royalties in Section 6.3 and
6.4 herein shall be calculated on a country-by-country and Licensed
Product-by-Licensed Product basis, by aggregating Net Sales for all applicable
countries with Licensed Products of the same type, as in the following example:
In France and Germany, only Licensed Products described in Section 6.3(a), but
to which Sections 6.3(c) and 6.4 do not apply ("Type A Licensed Products") are
sold. In Spain and Portugal, only Licensed Products described in Section 6.3(a)
to which Section 6.3(c) does apply (but to which Section 6.4 does not apply,
because no amounts described in Section 6.4 are paid to a third party) ("Type B
Licensed Products") are sold. In the above example, the Net Sales for France and
Germany for Type A Licensed Products shall be aggregated and the applicable
royalty for the portions of Net Sales of such Licensed Products

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

shall be as set forth in Section 6.3(a). The Net Sales for Spain and Portugal
for Type B Licensed Products shall be aggregated and the applicable royalty for
the portions of Net Sales of such Licensed Products shall be as set forth in
Section 6.3(c). For clarity, the Net Sales amounts for countries with Licensed
Product of one type shall not be aggregated with Net Sales amounts for countries
with Licensed Product of a different type. In the above example, in calculating
royalties, the Net Sales amounts of Type A Licensed Products shall not be
aggregated with the Net Sales amounts of Type B Licensed Products.

          6.4.   THIRD PARTY ROYALTIES. On a country-by-country basis and
Licensed Product-by Licensed Product basis, the royalties otherwise due and
payable by Genentech to TolerRx hereunder, with respect to a Licensed Product in
a country, shall be reduced by an amount equal to [***] of the amounts Genentech
or its third party sublicensee(s) pays to any third party with respect to the
development, manufacture, import or export, use, offer for sale or sale with
respect to such Licensed Product in such country; PROVIDED, HOWEVER, that in no
event shall the royalty payments due and payable to TolerRx with respect to such
Licensed Product in such country be reduced by this Section 6.4 by more than
[***] of Net Sales with respect to such Licensed Product in such country and the
royalty payments shall not be reduced by this Section 6.4 below the Minimum
Royalty Rate. For example, if the Net Sales amount for a Licensed Product
described in Section 6.3(a) (assuming that no other reductions in Section 6.3(c)
apply) for a country is $[***] and if Genentech owes royalties to a third party
of [***] of Net Sales, then Genentech may reduce such royalty owed to TolerRx by
[***] of such Net Sales, so that the resulting royalty rate is lowered in the
foregoing example from [***] to [***] (in other words, lowered by $[***]). If
the royalty rate to the third party is [***], the royalty reduction is still
$[***].

          6.5.   OPTION TO SHARE OPERATING PROFITS OR LOSSES IN UNITED STATES.

                 (a) Subject to the terms and conditions of this Agreement, in
lieu of the royalties set forth in Sections 6.3 and 6.4 for Net Sales in the
United States, on a Licensed Product-by-Licensed Product basis, subject to
Section 6.5(b), TolerRx shall have an option to share in Operating Profits or
Losses (as defined in Exhibit A) from sales of Licensed Products in the United
States, PROVIDED THAT, TolerRx: (A) makes the US Cost Sharing Payments within
the time period set forth below and (B) during the time period set forth below,
continues to make the applicable balancing payments, if any, relating to sharing
Operating Loss, on a timely basis in accordance with Section 6.5(c) below and
Exhibit A attached hereto (including but not limited to Section A.4 of Exhibit
A) ("US Profit/Loss Sharing Option"). "US COST SHARING PAYMENTS" means the
portion of US Costs owed by TolerRx to Genentech under this Agreement as set
forth in Exhibit A for Development Costs (as defined in Exhibit A) to the date
of the Phase II Go Decision Notice, which amount shall be identified in a
written notice to TolerRx. Upon Genentech providing written notice of its
decision to commence the first Phase II Clinical Trial for the first Indication
of the first such Licensed Product manufactured by or on behalf of Genentech by
third parties and providing TolerRx written notice of the U.S. Cost Sharing
Payments ("Phase II Go Decision Notice"), TolerRx shall have (X) thirty (30)
days from the date

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

of such Phase II Go Decision Notice to exercise the US Profit/Loss Sharing
Option by delivering proper written notice to Genentech and (Y) forty-five (45)
days from the date of such Phase II Go Decision Notice to make such US Cost
Sharing Payments.

                 (b) On a Licensed Product-by-Licensed Product basis, TolerRx
shall share in Operating Losses (as defined in Exhibit A), if any, commencing
from the date TolerRx exercises such US Profit/Loss Sharing Option and ending on
the date when Genentech terminates sales of such Licensed Product in the United
States, subject to earlier termination as set forth in Section 6.5(c) below.
Subject to the last two sentences of this Section 6.5(b), TolerRx shall share in
Operating Profits (as defined in Exhibit A), if any, commencing from the first
date that an Operating Profit exists (and TolerRx shall not have such right to
share in Operating Profits until such date) and ending on the date when
Genentech terminates sales of such Licensed Product in the United States,
subject to earlier termination as set forth in Section 6.5(c) below. For the
avoidance of doubt, the Operating Losses shall include costs incurred from the
date of filing of the first IND by Genentech (including but not limited to the
FTE Cost(s) and filing fees for filing such IND). Without limiting any of
Genentech's rights or remedies, TolerRx shall have the right to receive its
share of Operating Profits as set forth in Exhibit A and this Section 6.5 only
after Genentech has recouped all of TolerRx's share of the Operating Losses. At
Genentech's election in its sole discretion, Genentech may recoup all of such
Operating Losses either through (P) direct payment by TolerRx of all applicable
balancing payment amounts in accordance with Exhibit A and this Section 6.5 or
(Q) deducting all of such Operating Losses from TolerRx's share of Operating
Profits.

                 (c) Genentech shall only be obligated to pay the royalties set
forth in Section 6.3 and 6.4, if any, and shall not be obligated at any time to
share Operating Profits or Losses under Exhibit A, if TolerRx: (A) fails to make
US Cost Sharing Payments within forty-five (45) days from the date of such Phase
II Go Decision Notice or (B) fails to notify Genentech of its exercise of the US
Profit/Loss Sharing Option within thirty (30) days from the date of the Phase II
Go Decision Notice for the applicable Licensed Product. If TolerRx fails to make
the applicable balancing payments relating to sharing Operating Profit or Loss,
if any, on a timely basis in accordance with Exhibit A, and does not do so
within thirty (30) days of written notice of such failure from Genentech,
effective as of the beginning of the calendar quarter in which such failure to
pay by TolerRx occurs then Genentech shall not be obligated to share Operating
Profits or Losses under Exhibit A and Genentech shall only be obligated to pay
the royalties set forth in Section 6.3 and 6.4, if any. Nothing herein relieves
TolerRx of its obligation to make such delinquent payment.

                 (d) If TolerRx has exercised and continues to participate in
the US Profit/Loss Sharing Option in accordance with Section 6.5 and Exhibit A,
upon completion of Phase III Clinical Trial for a Licensed Product, Genentech
shall prepare and provide to the JSC a copy of Marketing Plan for such Licensed
Product. Thereafter, for each calendar year, at least three months prior to the
beginning thereof, Genentech shall provide the JSC an updated copy of such
Marketing Plan. The JSC may review such Marketing Plan but Genentech has sole

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GENENTECH CONFIDENTIAL

authority regarding the content of such Marketing Plan and may make
modifications thereto, from time to time. Such Marketing Plan will include a
budget.

          6.6.   PAYMENT OF ROYALTIES AND OTHER AMOUNTS.

                 (a) MODE OF PAYMENTS. Net Sales described in Sections 6.3, 6.4,
9.5(c)(iii) (to the extent applicable) will be calculated on a calendar quarter
basis. For purposes of determining when a sale of any Licensed Product occurs
under this Agreement, the sale shall be deemed to occur on the date the Licensed
Product is shipped. The obligation to pay royalties under this Agreement shall
be imposed only once with respect to the same unit of Licensed Product,
regardless of the number of patents within TolerRx Patent Rights pertaining
thereto and regardless of whether such unit of Licensed Product is based on one
or more than one of the following: TolerRx Know-how, patents within TolerRx
Patent Rights, and/or was developed pursuant to the Development Plan. After the
date of Commercial Introduction of each Licensed Product, all royalty payments
for such Licensed Product shall be made within sixty (60) days after the end of
each calendar quarter in which such sales were deemed to occur. All payments
hereunder shall be made free and clear of any taxes, duties, levies, fees or
charges, except for withholding taxes (to the extent applicable). Genentech
shall make any applicable withholding payments due on behalf of TolerRx and
shall promptly provide TolerRx with written documentation of any such payment
sufficient to satisfy the requirements of the United States Internal Revenue
Service related to an application by TolerRx for a foreign tax credit for such
payment. All payments hereunder due to TolerRx shall be made in U.S. Dollars by
bank wire transfer to: [***], except as provided below. TolerRx may modify such
bank wire transfer information upon providing written notice to Genentech.

                 (b) FOREIGN CURRENCY CONVERSION. For the purpose of calculating
royalty payments to TolerRx under Sections 6.3 and 6.4 above and calculating
royalty payments to Genentech under Section 9.5(c)(iii) (to the extent
applicable), if Licensed Products are sold in a currency other than U.S.
dollars, such non-U.S. currencies shall be converted to U.S. dollars at the
daily Reuters exchange rate for the last business day of such calendar quarter
in which the relevant financial transactions are recorded.

                 (c) RESTRICTIONS ON PAYMENT. If by law, regulations or fiscal
policy of a particular country in the Territory, remittance of royalties in U.S.
Dollars is restricted or forbidden, written notice thereof will promptly be
given to TolerRx, and payment of the royalty shall be made by the deposit
thereof in local currency to the credit of TolerRx in a recognized banking
institution in such country selected by Genentech and reasonably acceptable to
TolerRx. When, in any country in the Territory, the law or regulations prohibit
both the transmittal and deposit of royalties on sales in such country, royalty
payments shall be suspended for as long as such prohibition is in effect and as
soon as such prohibition ceases to be in effect, all royalties that Genentech
would have been under an obligation to transmit or deposit but for the
prohibition shall forthwith be deposited or transmitted to the extent allowable.

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

                 (d) REPORTS. Each royalty payment shall be accompanied by a
report, Licensed Product-by- Licensed Product and country-by-country, of the
amount of Gross Sales, the calculation of Net Sales and the units of Licensed
Product sold during such quarter, the amount of royalties due on such Net Sales,
and the conversion rates used in converting to United States Dollars.

          6.7.   RECORDS. Genentech shall keep complete and accurate records
pertaining to the sale of Licensed Products in the Territory and covering all
transactions from which Net Sales and payments to be made to TolerRx and amounts
to be charged to TolerRx are derived for a period of three calendar years after
the year in which such sales occur and such costs are incurred. TolerRx shall
keep complete and accurate records pertaining to the following, if applicable:
TolerRx MSL Costs, costs related to Sections 3.4(b) and 3.4(c) herein, TolerRx
Development Plan Work Costs, and, if Section 9.5(c)(iii) applies, the sale of
Licensed Products in the Territory and covering all transactions from which Net
Sales and payments to be made to Genentech under Section 9.5(c)(iii) are derived
for a period of three calendar years after the year in which such sales occur
and such costs are incurred.

          6.8.   AUDIT. At the request and expense (except as provided below) of
TolerRx, not more than once per year, Genentech shall permit an independent,
certified public accountant appointed by TolerRx and reasonably acceptable to
Genentech, at reasonable times during normal business hours and upon thirty (30)
days' notice, to examine those financial records of Genentech directly used in
Genentech's calculations of (A) royalties under Sections 6.3 and 6.4 herein for
a period of three years after such royalties have accrued, to determine or
verify the appropriate royalties owed to TolerRx, and (B) Direct Costs and Net
Sales (only if TolerRx has exercised and continues to participate in the US
Profit/Loss Sharing Option in accordance with Section 6.5 and Exhibit A), to
determine or verify the Direct Costs and Net Sales. The term "royalties" as
referred to in this Section 6.8 only, shall only refer to the royalties set
forth in Sections 6.3 and 6.4 of this Agreement. "Direct Costs" means (A) direct
costs of labor and materials related to Development Costs, Marketing Costs, and
Sales Costs (as defined in Exhibit A) and (B) Third Party Royalty Expense (as
defined in Exhibit A). For clarity, Direct Costs excludes indirect costs and
Allocable Overhead. For the avoidance of doubt, TolerRx shall not have such
accountant examine financial records related to other items in Exhibit A (ie. US
Costs other than Direct Costs), and shall only have the right to confirm that
Genentech's costing and accounting methodology related to such other items is
consistent with GAAP. Said accountant shall not disclose to TolerRx any
information other than information necessary to verify such royalties or Direct
Costs and Net Sales (if applicable). Subject to the foregoing, results of any
such examination shall be made available to both Parties. If, as a result of
such inspection of the books and records of Genentech to verify (X) royalties or
(Y) Direct Costs and Net Sales (if applicable), it is shown that Genentech's
royalty payments under this Agreement or balancing payments under Sections 6.5
and Exhibit A were less than the amount which should have been paid to TolerRx,
then Genentech shall make all payments required to be made to eliminate any
discrepancy revealed by said inspection within sixty (60) days after TolerRx's
demand therefor. Furthermore, if the aggregate of royalties or balancing
payments under Sections 6.5 and Exhibit A

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GENENTECH CONFIDENTIAL

(if applicable) were less than the amount which should have been paid to TolerRx
by an amount in excess of five percent (5%) of the respective payments actually
made during the period in question, Genentech shall also reimburse TolerRx for
the cost of such inspection. As a condition to such examination, such
independent public accountant shall execute a written agreement, reasonably
satisfactory in form and substance to Genentech, to maintain in confidence all
information obtained during the course of any such examination except for
disclosure to TolerRx as necessary for the above purpose. A Dispute (as defined
in Section 12.13) on the conclusions of such audit by such public accountant
shall be resolved in accordance with Section 12.13.

                       ARTICLE 7 PATENT RIGHTS; TRADEMARKS

          7.1.   OWNERSHIP OF INTELLECTUAL PROPERTY. TolerRx shall own all
inventions, whether or not patentable, made during the course of, or resulting
in whole or in part from, activities carried out under this Agreement solely by
employees of or agents of TolerRx or others obligated to assign inventions to
TolerRx. Genentech shall own all inventions, whether or not patentable, made
during the course of, or resulting in whole or in part from, activities carried
out under this Agreement solely by employees of or agents of Genentech or others
obligated to assign inventions to Genentech. Inventions made during the course
of, or resulting in whole or in part from, activities carried out under this
Agreement jointly by employees of or agents of or others obligated to assign
inventions to TolerRx and Genentech shall be jointly owned by TolerRx and
Genentech.

          7.2.   JOINT PATENTS. "JOINT PATENTS" shall mean any and all patents
and patent applications claiming inventions jointly owned by the Parties which
relate to any and all Licensed Products, their manufacture or their uses. For
the purpose of this Agreement, TolerRx Patent Rights and Genentech Patents shall
not include Joint Patents.

          7.3.   INVENTORSHIP. The determination of inventorship for inventions
made during the course of, or resulting in whole or in part from, activities
carried out under this Agreement shall be made in accordance with applicable
laws relating to inventorship set forth in the patent laws of the United States
(Title 35, United States Code). All such determinations shall be documented to
ensure that any divisional or continuation patent applications reflect
appropriate inventorship and that inventions and patent rights are assigned to
the appropriate Party.

          7.4.   DISCLOSURE OF INVENTIONS. TolerRx shall notify Genentech of any
invention made during the course of, or resulting in whole or in part from,
activities carried out under this Agreement within thirty (30) days after
TolerRx receives disclosure of such invention from its employees, agents or
others obligated to assign inventions to TolerRx.

          7.5.   PROSECUTION OF NEW PATENTS

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                 (a) Genentech is solely responsible, in its sole discretion, to
conduct all the filings and prosecutions of Genentech Patents. Genentech shall
have the first right, using in-house or outside legal counsel selected at
Genentech's sole discretion, to prepare, file, prosecute, maintain and obtain
extensions of Joint Patents in countries of Genentech's choice throughout the
Territory. Subject to Section 6.5 and Exhibit A regarding TolerRx's US
Profit/Loss Sharing Option, Genentech shall bear the costs relating to
preparation, filing, prosecution and maintenance of Genentech Patents and Joint
Patents in the Territory. Genentech shall use reasonable efforts to solicit
TolerRx's advice and review of Joint Patents and material prosecution matters
related thereto in reasonable time prior to filing thereof, and Genentech shall
consider in good faith TolerRx's reasonable comments related thereto.

                 (b) If Genentech, prior or subsequent to filing Joint Patents,
elects not to file, prosecute or maintain such patents or certain claims
encompassed thereby, Genentech shall give TolerRx notice thereof within a
reasonable period prior to allowing such patents or claims to lapse or become
abandoned or unenforceable. TolerRx shall thereafter have the right, at its sole
expense, to prepare, file, prosecute and maintain such patents or claims in
countries of its choice throughout the world.

                 (c) TolerRx shall have the first right, using in-house or
outside legal counsel selected by TolerRx and acceptable to Genentech, to
prepare, file, prosecute, maintain and obtain extensions of TolerRx Patent
Rights claiming inventions made during the course of, or resulting in whole or
in part from, activities carried out under this Agreement in the Territory.
TolerRx shall bear the costs relating to such filing, prosecution, and
maintenance activities in the Territory. TolerRx shall keep Genentech promptly
and fully informed of the course of patent preparation, filing, prosecution or
other proceeding of such TolerRx Patent Rights including, but not limited to,
providing Genentech with copies of draft applications, applications and
substantive communications by or with a domestic or foreign patent office.
TolerRx shall use reasonable efforts to solicit Genentech's advice and review of
such TolerRx Patent Rights and material prosecution matters related thereto in
reasonable time prior to filing thereof, and TolerRx shall consider in good
faith Genentech's reasonable comments and suggestions related thereto.

                 (d) If TolerRx, prior or subsequent to filing TolerRx Patent
Rights pursuant to Section 7.5(c) above, elects not to file, prosecute or
maintain such patents or certain claims encompassed thereby, TolerRx shall give
Genentech notice thereof within a reasonable period prior to allowing such
patents or claims to lapse or become abandoned or unenforceable. Genentech shall
thereafter have the right, at its sole expense (subject to Section 6.5 and
Exhibit A regarding TolerRx's US Profit/Loss Sharing Option), to prepare, file,
prosecute and maintain such patents or claims in countries of its choice
throughout the world.

          7.6.   PROSECUTION OF EXISTING TOLERRX PATENT RIGHTS.

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                 (a) TolerRx shall disclose to Genentech all information
relating to TolerRx Patent Rights claiming inventions conceived and reduced to
practice prior to the Effective Date which cover the manufacture, use, or sale
of Licensed Products including but not limited to compositions, processes and
methods of use of TRX1 ("EXISTING TOLERRX PATENT RIGHTS"). TolerRx agrees to
keep Genentech promptly and fully informed of the course of preparation, filing,
prosecution or other proceeding of Existing TolerRx Patent Rights including, but
not limited to, providing Genentech with copies of draft applications,
applications and substantive communications by or with a domestic or foreign
patent office, as well as disclosing all information received by TolerRx
concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving any Existing TolerRx Patent Rights anywhere in the
Territory. TolerRx shall use reasonable efforts to solicit Genentech's advice
and review of such Existing TolerRx Patent Rights and material prosecution
matters related thereto in reasonable time prior to filing thereof, and TolerRx
shall consider, or cause other participating party to consider, in good faith
Genentech's reasonable comments and suggestions related thereto.

                 (b) In the event that TolerRx (or TolerRx licensors in the case
of TolerRx Patent Rights in-licensed to TolerRx) intends to finally abandon or
otherwise cause or allow to be forfeited any Existing TolerRx Patent Rights,
Genentech shall have the right to assume, at its own costs (subject to Section
6.5 and Exhibit A regarding TolerRx's US Profit/Loss Sharing Option),
responsibility for preparation, filing, prosecution and maintenance of such
Existing TolerRx Patent Rights. TolerRx shall give Genentech notice thereof
within a reasonable period prior to allowing such patents to become abandoned or
otherwise forfeited.

                 (c) At Genentech's request, TolerRx shall file an application
for a Supplementary Protection Certificate for any TolerRx Patent Rights.
Genentech shall provide relevant marketing authorizations as appropriate.

          7.7.   PATENT INFRINGEMENT.

                 (a) NOTICE. If either Party learns of any infringement or
threatened infringement by a third party of any Genentech Patents, TolerRx
Patent Rights or Joint Patents ("PATENT INFRINGEMENT"), it shall promptly notify
the other Party thereof including available evidence of infringement.

                 (b) ENFORCEMENT ACTIONS.

                         (1) JOINT PATENTS. Genentech shall have the first right
(but not the obligation) to take the appropriate steps to remove the Patent
Infringement or alleged Patent Infringement of Joint Patents, including, without
limitation, by initiation, prosecution and control, at its own expense (subject
to Section 6.5 and Exhibit A regarding TolerRx's US Profit/Loss Sharing Option)
of any suit, proceeding or other legal action by counsel of its own choice.
TolerRx shall have the right, at its own expense, to be represented in any such
action by counsel of its own choice. TolerRx agrees to cooperate reasonably in
any such action Genentech

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initiates or wishes to initiate hereunder, including, without limitation,
supplying essential documentary evidence and making essential witnesses then in
TolerRx's employment available. As part of such cooperation, Genentech may join
or include TolerRx as a party, if the need arises. Genentech shall notify
TolerRx of its decision to exercise its right to enforce Joint Patents not later
than ninety (90) days following its discovery or receipt of notice of the
alleged Patent Infringement. TolerRx has no right to bring any such action or
proceeding relating to Genentech Patents. With respect to Joint Patents, if (i)
Genentech notifies TolerRx that Genentech elects not to bring a suit, action or
proceeding to enforce the Joint Patents in accordance with this Section
7.7(b)(1); or (ii) Genentech has not provided TolerRx with evidence of bona fide
negotiations with the alleged infringer, then TolerRx shall have the right (but
not the obligation), at is own expense, to bring any such suit, action or
proceeding relating to Joint Patents by counsel of its own choice, and Genentech
shall have the right, at its own expense (subject to Section 6.5 and Exhibit A
regarding TolerRx's US Profit/Loss Sharing Option), to be represented in any
such action by counsel of its own choice. In the case of infringement or alleged
infringement of a Joint Patent, Genentech in its sole discretion, may elect to
assign such Joint Patent to TolerRx so that TolerRx may maintain such suit,
proceeding or legal action in its own name. In such event, the licenses to
Genentech under such a Joint Patent shall remain unaffected. Neither Party shall
settle a dispute regarding the Joint Patents without the consent of the other
Party, which consent shall not be unreasonably withheld.

                         (2) TOLERRX PATENT RIGHTS. TolerRx shall have the first
right (but not the obligation) to take the appropriate steps to remove the
Patent Infringement or alleged Patent Infringement of TolerRx Patent Rights,
including, without limitation, by initiation, prosecution and control, at its
own expense of any suit, proceeding or other legal action by counsel of its own
choice. Genentech shall have the right, at its own expense (subject to Section
6.5 and Exhibit A regarding TolerRx's US Profit/Loss Sharing Option), to be
represented in any such action by counsel of its own choice. TolerRx shall
notify Genentech of its decision to exercise its right to enforce TolerRx Patent
Rights not later than ninety (90) days following its discovery or receipt of
notice of the alleged Patent Infringement. If (i) TolerRx notifies Genentech
that TolerRx elects not to bring a suit, action or proceeding to enforce the
TolerRx Patent Rights with respect to the Patent Infringement in accordance with
this Section 7.7(b)(2); or (ii) TolerRx has not provided Genentech with evidence
of bona fide negotiations with the alleged infringer, then Genentech shall have
the right (but not the obligation) to bring any such suit, action or proceeding
relating to TolerRx Patent Rights with respect to the Patent Infringement by
counsel of its own choice, and TolerRx shall have the right, at its own expense,
to be represented in any such action by counsel of its own choice. TolerRx
agrees to cooperate reasonably in any such action Genentech initiates or wishes
to initiate hereunder, including, without limitation, supplying essential
documentary evidence and making essential witnesses then in TolerRx's employment
available. As part of such cooperation, Genentech may join or include TolerRx as
a party, if the need arises. At Genentech's request, TolerRx shall use all
reasonable efforts to join all necessary parties to the extent that TolerRx has
rights to do so. Neither Party shall settle a dispute regarding the TolerRx
Patent Rights without the consent of the other Party, which consent shall not be
unreasonably withheld.

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GENENTECH CONFIDENTIAL

                         (3) Any damages or other monetary awards recovered
pursuant to any suit, proceeding or other legal action taken under this Section
7.7(b) shall be allocated first to the costs and expenses of the Party bringing
suit, and second to the costs and expenses (if any) of the other Party. The
balance of any recovery shall be allocated between the Parties as follows: (i)
to Genentech in an amount equal to its lost profits or a reasonable royalty on
the sales of the infringer (whichever measure of damages shall have been
applied), and (ii) to TolerRx in an amount equal to the royalties due TolerRx
based on such sales (if sales of the infringer or a reasonable royalty measure
of damages is applied) or a reasonable approximation of the royalties that
Genentech would have owed to TolerRx on sales of Licensed Products that
Genentech lost to the infringer (if a lost profits measure of damages is
applied). With respect to royalties due to TolerRx, the previous sentence shall
not apply to royalties related to the United States if TolerRx is participating
in the US Profit/Loss Sharing Option in accordance with Section 6.5 and Exhibit
A. Instead, in such circumstance, such balance related to damages for lost
profits or reasonable royalty in the United States shall be added to the
calculation of Other Operating Income/Expense (as defined in Exhibit A). The
balance, if any, remaining after Genentech and TolerRx have been compensated as
provided herein shall be allocated to the Party bringing suit.

          7.8.   THIRD PARTY PATENTS. If any notice of infringement is received
by, or a suit is initiated against, either Party with respect to any Licensed
Product, the Parties shall consult in good faith regarding the best response. If
Genentech is required to pay any third party to obtain a license under patents
owned by such third party to avoid infringement of such third party's
patent-protected technology with respect to a Licensed Product or that is
necessary or used in its manufacture, use, sale, or import, Genentech shall be
entitled to (A) offset such payments against the royalties otherwise due and
payable by Genentech under this Agreement to TolerRx as provided in Section 6
and (B) include such payments in the calculation of "US Costs" (as defined in
Exhibit A), if TolerRx is participating in the US Profit/Loss Sharing Option in
accordance with Section 6.5 and Exhibit A.

          7.9.   TRADEMARKS. Genentech shall sell all Licensed Products in the
Territory under trademarks selected and owned by Genentech worldwide. Genentech,
at its sole discretion, shall control the preparation, filing, prosecution and
maintenance of applications and/or registrations related to such trademarks in
the Territory, and shall be responsible for the costs of the foregoing (subject
to Section 6.5 and Exhibit A regarding TolerRx's US Profit/Loss Sharing Option).
Each Party shall notify the JSC promptly upon learning of any actual, alleged or
threatened infringement of a trademark applicable to a Licensed Product in the
Territory, any practice of unfair trade, trade dress imitation, passing off of
counterfeit goods, any claim conflicting with Genentech's exclusive ownership of
such trademarks or like offenses in the Territory. Genentech will have the sole
right to determine whether any action shall be taken on account of any such
infringement, practice, claim or offense with respect to any such trademarks and
TolerRx shall not take any action on account of any such infringement, practice,
claim or offense with respect to any such trademarks without the prior written
consent of Genentech. All of the costs, expenses and legal fees in bringing,
maintaining and prosecuting any action to

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GENENTECH CONFIDENTIAL

maintain, protect or defend a trademark in the Territory, and any recovery,
shall be Genentech's sole responsibility, except for costs in the United States
as set forth in Exhibit A. TolerRx agrees to cooperate with and assist Genentech
in protecting and defending any such trademarks at Genentech's expense (subject
to Section 6.5 and Exhibit A regarding TolerRx's US Profit/Loss Sharing Option).
Genentech, at its sole discretion, shall be responsible for obtaining and
maintaining any domain names corresponding to such trademarks worldwide and
shall own such domain names.

                            ARTICLE 8 CONFIDENTIALITY

          8.1.   CONFIDENTIAL INFORMATION.

                 (a) As used in this Agreement, "Confidential Information" means
nonpublic information that may be disclosed by one Party (the "Disclosing
Party") to the other Party (the "Receiving Party") in connection with this
Agreement, provided that such information is clearly marked as confidential.
Information disclosed other than in written or other tangible form will be
deemed Confidential Information only if the Disclosing Party provides the
Receiving Party with a written statement within thirty (30) days of the initial
disclosure that identifies which portion of such information is to be deemed
Confidential Information. The Receiving Party agrees (i) to use such
Confidential Information of the Disclosing Party solely in accordance with this
Agreement; and (ii) except as otherwise expressly permitted herein, to not
disclose such Confidential Information of the Disclosing Party to any third
party without prior written permission. All Development Plans, Marketing Plans,
and Genentech's reports and information related to Section 6 and/or Exhibit A,
are deemed Confidential Information of Genentech, regardless of whether the
foregoing has been marked confidential or not.

                 (b) The foregoing confidentiality obligations do not pertain to
any Confidential Information that a Receiving Party establishes: (i) was known
to the Receiving Party without restriction prior to receipt from the Disclosing
Party; (ii) is now or becomes public knowledge, other than through acts or
omissions of the Receiving Party in breach of this Agreement; (iii) is disclosed
at any time without restriction to the Receiving Party by a third party with a
lawful right to disclose such information; (iv) was independently developed by
or on behalf of the Receiving Party without use of the Confidential Information
of the Disclosing Party; or (v) is disclosed by the Receiving Party to comply
with any applicable law, court order or governmental regulation, only to the
minimum extent required to comply with such law, order, or regulation. The
confidentiality provisions of this Section will continue with respect to given
Confidential Information during the Term of this Agreement and for a period of
ten (10) years thereafter. Without limiting the Parties' obligations, the
Parties shall hold in confidence and not disclose the terms and conditions of
this Agreement, except as mutually agreed upon in writing and except to the
minimum extent required by applicable law, court order, or regulation.

          8.2.   PERMITTED DISCLOSURE. Each Party shall be entitled to disclose
Confidential Information of the other Party to consultants and other third
parties for exercising

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the rights and performing the obligations of a Party under this Agreement,
provided that the third party agrees in writing to confidentiality obligations
no less protective of the Disclosing Party`s rights as those under this
Agreement. For clarity, Genentech may provide to third party(ies) all materials
and information received from TolerRx hereunder (including but not limited to
TolerRx Know-how), provided that such third party agrees in writing to
confidentiality obligations no less protective of the TolerRx's rights as those
under this Agreement. Notwithstanding the foregoing, TolerRx shall not disclose
any Genentech Confidential Information (including but not limited to any
information and reports under Section 6, and Licensed Product Manufacturing
Know-how (except that TolerRx may disclose Licensed Product Manufacturing
Know-how to the designated contract manufacturer set forth in Section
9.5(c)(iii) in accordance therewith for the purposes set forth therein) to any
third party, unless TolerRx has obtained prior written consent from Genentech
for such disclosure. With respect to information that TolerRx is required under
the Third Party Agreements to disclose in reports to Isis, CUTS or University,
the Parties shall discuss the appropriate content of such disclosure and TolerRx
shall disclose only the content that is mutually agreed upon by the Parties and
such information shall be used by Isis, CUTS, or University only for a purpose
mutually agreed upon by the Parties, taking into account the limited disclosure
required by the Third Party Agreements.

          8.3.   SURVIVAL. This Section 8 shall survive termination or
expiration of this Agreement.

                     ARTICLE 9 TERM; EXPIRATION; TERMINATION

          9.1.   TERM; EXPIRATION. The term of this Agreement shall commence as
of the Effective Date and, unless sooner terminated as provided hereunder, shall
expire on the later of: (A) the date when Genentech has made all the royalty
payments that Genentech is obligated to make under Sections 6.3 and 6.4; or (B)
if (and only if) TolerRx has exercised and continues to participate in the US
Profit/Loss Sharing Option for a Licensed Product in accordance with Section 6.5
and Exhibit A, the date when Genentech terminates sales of Licensed Products in
the United States ("Term"). With respect to each Licensed Product in each
country, at the time that Genentech has no further royalty obligations under
Sections 6.3 and 6.4, Genentech shall have a fully paid up, perpetual,
non-cancelable, exclusive license under Section 5.1 with respect to such
Licensed Product in such country. The foregoing sentence shall survive any
expiration of this Agreement. Upon expiration of this Agreement, all obligations
and restrictions on Genentech and TolerRx shall terminate except those that
survive under Section 9.5(a), Section 9.5(b), and other sections which are
expressly indicated to survive termination.

          9.2.   UNILATERAL TERMINATION. Genentech shall have the right to
terminate this Agreement at any time, with or without cause, ninety (90) days
after written notice to TolerRx.

          9.3.   BREACH.

                 (a) In the event that a party materially breaches this
Agreement (the "Defaulting Party"), the other party (the "Non-Defaulting Party")
may provide written notice to

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the Defaulting Party describing the breach. If the Defaulting Party in good
faith disputes such breach and provides the Non-Defaulting Party in writing the
grounds for disputing the breach within thirty (30) days after receipt of the
notice of material breach from the Non-Defaulting Party, then the Non-Defaulting
may not terminate this Agreement under this Section 9.3 and the Parties shall
submit the dispute to arbitration in accordance with Section 12.13(b), and as
provided in Section 9.3(b), hereinafter such dispute is a "Dispute" as defined
in Section 12.13. In the event that the Defaulting Party does not provide a
written notice of Dispute, and fails to cure such breach within ninety (90) days
(thirty (30) days for a payment breach) of the written notice describing the
breach, then the Non Defaulting Party shall have the right to terminate this
Agreement by written notice to the Defaulting Party unless such breach is not
capable of being cured within such ninety (90) day period. If the Defaulting
Party does not provide a written notice of Dispute and if such breach is not
capable of being cured within such ninety (90) day period (thirty (30) day
period for a payment breach where no Dispute exists), then so long as the
Defaulting Party is making diligent efforts to cure such breach within such
amount of time as may be reasonably necessary to cure such breach, the
Non-Defaulting Party may not terminate this Agreement under this Section 9.3(a)
unless such breach is not cured within one-hundred and twenty (120) days of such
notice.

                 (b) In the event of a Dispute between the Parties as to whether
one Party has materially breached its material obligations, the Parties shall
resolve such Dispute in accordance with Section 12.13. With respect to a payment
Dispute, the Defaulting Party shall pay to the Non-Defaulting Party all amounts
that are due except the amount that is in Dispute. If the decision of the
arbitration tribunal (described in Section 12.13) ("Arbitration Panel" or
"arbitration tribunal") is that the Defaulting Party is in material breach of
its material obligations (an "ADVERSE JUDGMENT"), then the arbitration tribunal
shall specify the manner in which such breach could be cured. If the decision of
the arbitration tribunal is an Adverse Judgment, then the Defaulting Party shall
have thirty (30) days to cure such breach in accordance with the arbitration
tribunal's decision or as otherwise agreed by the Parties. If the Defaulting
Party fails to cure such breach within such thirty (30) day period or as
otherwise agreed, only then shall the Non-Defaulting Party have the right to
terminate this Agreement under this Section 9.3. The time table for such
arbitration proceeding for such Dispute shall be no more than one hundred twenty
(120) days from its filing date to the award. The Parties shall submit to the
Arbitration Panel at the initiation of the arbitration whether the disputed
amount shall be placed in escrow and the decision of the Arbitration Panel in
this respect shall be binding on the Parties. For clarity, if a Dispute exists
regarding payment by one Party to another, then the Non-Defaulting Party shall
not have the right to terminate this Agreement under this Section 9.3 if the
Defaulting Party complies with the arbitration tribunal's decision. In the event
that there is an Adverse Judgment against the Defaulting Party, then prejudgment
interest shall be awarded to the Non-Defaulting Party. The Party against which
an Adverse Judgment is entered shall pay all costs of the arbitration including
the attorneys fees of the other Party.

          9.4.   INSOLVENCY OR BANKRUPTCY. Each Party may, in addition to any
other remedies available to it by law or in equity, terminate this Agreement
effective on written notice

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GENENTECH CONFIDENTIAL

to the other Party in the event the other Party shall have become insolvent or
bankrupt, or shall have made an assignment for the benefit of its creditors, or
there shall have been appointed a trustee or receiver of the other Party or for
all or a substantial part of its property, or any case or proceeding shall have
been commenced or other action taken by or against the other Party in bankruptcy
or seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts or any other relief under any
bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect, or there shall have been issued a
warrant of attachment, execution, distraint or similar process against any
substantial part of the property of the other Party, and any such event shall
have continued for ninety (90) days undismissed, unbonded and undischarged. All
rights and licenses granted under this Agreement are, and shall be deemed to be,
for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(56) of the United States
Bankruptcy Code.

          9.5.   EFFECT OF EXPIRATION OR TERMINATION

                 (a) ACCRUED RIGHTS; SURVIVING OBLIGATIONS. Termination or
expiration of this Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either Party prior to such
termination or expiration, and shall not relieve either Party from its
obligations which are expressly indicated to survive expiration or termination
of this Agreement, including, without limitation, those under Sections
3.4(b)(ii), 3.4(c)(i) (last three sentences only), 3.5(a), 7.1, 7.2, 8, 9.5(a),
9.5(b), 10, 11, and 12. Termination is not the sole remedy under this Agreement
and, whether or not termination is effected, all other remedies at law and in
equity will remain.

                 (b) SUBLICENSES. No expiration or termination of this Agreement
(except termination by Genentech without cause under Section 9.2 above) shall be
construed as a termination of any sublicenses granted by Genentech under Section
5, and such sublicenses will remain in effect in accordance with their terms.

                 (c) OTHER SURVIVING OBLIGATIONS.

                         (i)    Upon any termination of this Agreement by
Genentech under Section 9.3 or 9.4, Genentech shall thereafter automatically
have in perpetuity an irrevocable, exclusive (even as to TolerRx) sublicensable,
fully transferable license within the Field in the Territory under TolerRx
Patent Rights, TolerRx Know-how and TolerRx's joint ownership rights in Joint
Patents (as defined in Section 7 herein), to make (and have made), use, sell,
offer for sale and import, Licensed Products, subject to payment to TolerRx of
only the applicable royalties under Sections 6.3 and 6.4 and applicable
milestones under Section 6.2. For clarity, if Genentech terminates this
Agreement under Section 9.3 or 9.4, Genentech shall not owe any other payments
to TolerRx, including but not limited to Operating Profits or Losses, and shall
only owe the applicable royalties under Sections 6.3 and 6.4 and applicable
milestones under Section 6.2. Upon termination by Genentech under Section 9.3 or
9.4, (A) all obligations

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GENENTECH CONFIDENTIAL

and restrictions on Genentech shall terminate, except as expressly set forth in
Sections 6.6, and 9.5(c)(i), and except for TolerRx's right as set forth in
Section 6.8, but such right shall be limited only to verifying royalties under
Sections 6.3 and 6.4 herein and (B) the following sections survive: Sections
7.5(d), 7.6(b), 7.7(b)(2), 5.3 (to the extent applicable), 9.5(a), 9.5(b), and
other sections which are expressly indicated to survive termination.

                         (ii)   Upon any termination of this Agreement by
TolerRx under Section 9.3 or 9.4 or by Genentech without cause under Section
9.2, (A) all rights granted to Genentech by TolerRx shall terminate and revert
to TolerRx, and (B) all obligations and restrictions on Genentech and TolerRx
shall terminate, including but not limited to Section 6, except those rights,
obligations and restrictions that survive under Section 9.5(a) Section 9.5(b),
and other sections which are expressly indicated to survive termination and (C)
thereafter except as provided in Section 9.5 (c) (iii), Genentech shall cease
and continue to cease to research, develop, manufacture, market and sell
Licensed Product. Upon any termination by either Party under Section 9.3 or 9.4
or by Genentech without cause under Section 9.2, or upon expiration of the
Agreement, all rights granted to TolerRx by Genentech (if any) shall terminate,
except that in the case of termination by TolerRx under Section 9.3 or 9.4 or by
Genentech without cause under Section 9.2, the rights (and only such rights)
expressly set forth in Section 9.5(c)(iii) below shall continue (and only to the
extent expressly set forth therein).

                         (iii)  This Section 9.5(c)(iii) shall only apply in the
case of termination without cause by Genentech under Section 9.2 or termination
by TolerRx under Section 9.3 or 9.4. For the purposes of this Section
9.5(c)(iii), except as expressly set forth in Section 9.5(c)(iii)(1) below,
Licensed Product(s) shall only refer to existing Licensed Product(s) which
Genentech was manufacturing in clinical or commercial quantities (if any) prior
to such termination.

                                (1) Only upon termination without cause by
Genentech under Section 9.2 or termination by TolerRx under Section 9.3 or 9.4,
subject to compliance with the terms and conditions of the Separate License
Agreement for Genentech Patents (as defined below), TolerRx shall have a
non-exclusive royalty-bearing, nontransferable, revocable (as provided below in
Section 9.5(c)(iii)(6)), sublicensable, limited license under Genentech Patents
solely to make, use, import, offer to sell and sell the Licensed Products that
Genentech was manufacturing or developing prior to such termination. The Parties
agree to negotiate in good faith the terms of a separate written agreement that
will grant TolerRx such license rights (with royalty rates not to exceed [***]
of net sales) ("Separate License Agreement for Genentech Patents"). With respect
other patent rights owned by Genentech necessary for commercializing Licensed
Products that Genentech was manufacturing in clinical or commercial quantities
(if any) or developing prior to termination, if any, the Parties agree to
negotiate in good faith regarding such rights.

                                (2) TolerRx shall use best efforts to find a
third party source of supply of Licensed Products. To the extent (A) Genentech
has already been

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

manufacturing clinical or commercial quantities of Licensed Product prior to
such termination, and (B) to the extent that Genentech determines that doing
the following would not adversely affect its manufacturing of its or its
sublicensees' products, Genentech agrees to supply TolerRx (at Genentech's
Fully Burdened Manufacturing Costs, plus a mark-up of twenty-five percent
(25%)) at Genentech's election, with (A) a quantity of Licensed Products that
is equivalent to a reasonable twelve-months' supply of Licensed Product or
(B) such lesser amount of Licensed Products as is necessary for TolerRx to
achieve the current milestone (and only that milestone) on which the Parties
were working as of the effective date of termination.

                                (3) At TolerRx's written request, if and only if
Genentech has already been manufacturing clinical or commercial quantities of
Licensed Product prior to such termination, then subject to compliance with the
terms and conditions of this Agreement, Genentech agrees to provide either to
TolerRx or to a designated Third Party contract manufacturer (and only to
TolerRx or such manufacturer, but not both), who does not sell its own products
and has expertise in recombinant protein manufacture and cell culture biology
(including but not limited to having experience and know-how necessary to
manufacture proteins at commercial scales), and who is reasonably acceptable to
Genentech, Genentech's know-how, if any, specifically related to the
manufacturing process of such existing Licensed Product and that is necessary
for TolerRx or such Third Party to assume manufacture of such existing Licensed
Product ("Licensed Product Manufacturing Know-how"). Licensed Product
Manufacturing Know-how shall only consist of such know-how owned by Genentech
(if any) that is necessary for TolerRx or such designated contract manufacturer
to achieve the current milestone (and only that milestone) on which the Parties
were working as of the effective date of termination. For example, if the
Agreement is terminated during the Phase I Clinical Trial, then such Licensed
Product Manufacturing Know-how to be transferred shall only consist of such
know-how (if any) necessary to complete such Phase I Clinical Trial.
Notwithstanding anything else, Licensed Product Manufacturing Know-how shall be
limited to such know-how for manufacturing the agent targeting, binding to, or
recognizing CD4 and shall exclude know-how related to any Genentech proprietary
product or manufacture thereof. Such Licensed Product Manufacturing Know-how is
deemed to be Confidential Information of Genentech regardless of whether such
information is marked "Confidential." Without limiting TolerRx's obligations,
TolerRx shall (and shall cause its contract manufacturer to) hold all such
Licensed Product Manufacturing Know-how in confidence, not disclose such
information to any person or entity (other than employees of TolerRx and such
designated contract manufacturer bound to similar confidentiality obligations
who have a legitimate "need to know") and to use such information solely for
manufacturing the existing Licensed Product that Genentech was manufacturing in
clinical or commercial quantities (if any) prior to such termination. For
clarity, TolerRx shall (and shall cause such contract manufacturer to) not use
such Licensed Product Manufacturing Know-how for any other purpose, including
but not limited to any other product or process. TolerRx shall not allow any
person or entity, other than itself or such designated contract manufacturer
described above, to manufacture Licensed Product using Licensed Product
Manufacturing Know-how. TolerRx's confidentiality obligations and
indemnification under this Section 9.5(c)(iii)(3) and Section 9.5(c)(iii)(4)
below shall survive in perpetuity, notwithstanding


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GENENTECH CONFIDENTIAL

Section 8.1 above or anything else. Any action or inaction by such contract
manufacturer shall be deemed an action or inaction of TolerRx and TolerRx shall
be responsible for any breach of any obligations hereunder by such contract
manufacturer. Such contract manufacturer shall be bound by an enforceable
writing for Genentech's benefit to at least the same limitations and
restrictions as the limitations and restrictions on TolerRx. TolerRx indemnifies
Genentech and its Affiliates and sublicensees from any and all claims, damages,
liability, settlement, attorneys' fees and expenses, as incurred, on account of
any breach of this Section 9.5 or any action or inaction of TolerRx or its
contract manufacturer. For clarity, Licensed Product Manufacturing Know-how, if
any, is provided nonexclusively, and remains Genentech's property and
intellectual property at all times.

                                (4) Genentech shall transfer to TolerRx, at
TolerRx's cost, all Regulatory Approvals and applications for Regulatory
Approvals for the Licensed Product(s) that Genentech holds at the time of
termination. Genentech shall also provide to TolerRx all pre-clinical and
clinical data produced by Genentech in developing the Licensed Products
hereunder (if any) that Genentech holds at the time of termination. All of the
foregoing Regulatory Approvals, applications therefor, and pre-clinical and
clinical data shall be deemed Confidential Information of Genentech,
notwithstanding Section 8.1 above or anything else, regardless of whether such
information is marked "Confidential" or not, and shall be used only for the sale
of such Licensed Product manufactured by TolerRx or by such contract
manufacturer. TolerRx shall pay all costs associated with the transfers
(including but not limited to out-of-pocket costs and fully-burdened personnel
costs) in this Section 9.5(c)(iii).

                                (5) The Parties agree that if Genentech provides
such Licensed Product Manufacturing Know-how in accordance with this Section
9.5(c)(iii), then TolerRx has access to, is privy to, and may use such Licensed
Product Manufacturing Know-how as set forth in this Section 9.5(c)(iii), and
that it is impossible to determine the extent to which TolerRx has used such
information. Accordingly, TolerRx agrees to pay the royalty set forth below on
Net Sales of all Licensed Products. If Genentech has transferred Licensed
Product Manufacturing Know-how to TolerRx or such Third Party contract
manufacturer, TolerRx shall pay to Genentech a royalty to be negotiated in good
faith between the Parties and not to exceed [***]. If the Parties agree on a
lower royalty rate or if the foregoing royalty rate to be paid by TolerRx is
[***], then Genentech shall be obligated to provide Licensed Product
Manufacturing Know-how to the extent expressly set forth in this Section
9.5(c)(iii), otherwise Genentech shall not be obligated to provide Licensed
Product Manufacturing Know-how. The terms applicable to Genentech (and payments
by Genentech) under Sections 6.6 and 6.8 (including but not limited to the right
for Genentech to audit TolerRx to verify the appropriate royalties owed to
Genentech herein) shall apply to TolerRx and such royalty payments by TolerRx.
TolerRx shall comply with the last sentence of Section 6.7, to the extent
applicable. All payments hereunder due to Genentech shall be made in U.S.
Dollars by bank wire transfer to the: [***]. The Parties shall agree to a
process transfer plan for such Licensed Product Manufacturing Know-how and all
of Genentech's obligations under this Agreement shall be deemed fulfilled when
the tasks set forth in such plan are complete.

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

                                (6) Upon any breach of Section 9.5(c)(iii)
herein by TolerRx, all rights and licenses granted to TolerRx and all
obligations of Genentech under this Section 9.5(c)(iii) shall terminate
immediately upon notice, and TolerRx shall immediately cease (and shall cause
its contract manufacturer to cease) any and all use of Licensed Product
Manufacturing Know-how, Genentech Patents and any other Confidential Information
of Genentech, and shall return all copies, extracts, and derivatives of the
foregoing to Genentech. This Section 9.5(c)(iii)(6) shall survive any
termination of this Agreement.

                                (7) Genentech agrees to negotiate in good faith
with TolerRx regarding a royalty-bearing license to TolerRx for TolerRx's use of
trademarks owned by Genentech with respect to Licensed Product.

                           ARTICLE 10 INDEMNIFICATION

          10.1.  INDEMNIFICATION BY GENENTECH. Genentech hereby agrees to
indemnify, defend and hold harmless TolerRx and its subsidiaries, parent
corporations, Affiliates, officers, directors, agents, and employees, from and
against any and all third party suits, claims, actions, demands, liabilities,
settlements, expenses and/or loss (including reasonable legal expense and
attorneys' fees) to the extent payable to such third party (collectively,
"LOSSES") and arising out of or resulting from Genentech's or its third party
sublicensee's performance of work under this Agreement, or the manufacturing,
developing, distribution, testing, labeling, marketing, use or sale of Licensed
Products by Genentech or its third party sublicensees in the Territory, except
to the extent such Losses arise out of or result from the negligence or willful
misconduct of TolerRx, TolerRx's breach of any terms of this Agreement or
violation of any applicable law or regulation. For clarity, the foregoing does
not include an indemnity regarding infringement of third party patent or
trademark rights. In addition, Genentech hereby agrees to indemnify, defend and
hold harmless TolerRx and its subsidiaries, parent corporations, Affiliates,
officers, directors, and employees harmless from and against any and all Losses
resulting from a breach by Genentech of any of its representations or warranties
under Section 11.2 of this Agreement.

          10.2.  INDEMNIFICATION BY TOLERRX. TolerRx hereby agrees to indemnify,
defend and hold harmless Genentech and its subsidiaries, parent corporations,
Affiliates, officers, directors, agents, and employees from and against any and
all Losses arising out of or resulting from TolerRx's performance of work (if
any) or clinical trials under this Agreement or the testing, development or use
of the Licensed Products or any actions of any TolerRx MSLs except to the extent
such Losses arise out of or result from the negligence or willful misconduct of
Genentech, Genentech's breach of any terms of this Agreement or violation of any
applicable law or regulation. For clarity, the foregoing does not include an
indemnity regarding infringement of third party patent or trademark rights. In
addition, TolerRx hereby agrees to indemnify, defend and hold harmless Genentech
and its subsidiaries, parent corporations, Affiliates, officers, directors,
sublicensees and employees from and against any and

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all Losses resulting from a breach by TolerRx of any of its representations or
warranties under Section 11.1 of this Agreement.

          10.3.  NOTICE. A Party's compliance with this Section 10.3 is a
condition of indemnification under this Section 10 by the other Party. A person
or entity that intends to claim indemnification under this Section (the
"Indemnitee") shall promptly notify the other Party (the "Indemnitor") of any
loss, claim, damage, liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume sole
control of the defense and settlement thereof with counsel selected by
Indemnitor and reasonably satisfactory to the Indemnitee whether or not such
third party claim is rightfully brought; provided, however, that an Indemnitee
shall have the right to retain its own counsel to participate in such defense,
with the fees and expenses to be paid by the Indemnitee. The indemnity agreement
in this Section shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld or delayed
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, only if prejudicial
to its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Section. All delays of sixty (60) days or
more shall be deemed prejudicial. Except as provided in the Agreement, the
omission to so deliver notice to the Indemnitor will not relieve it of any
liability that it may have to any Indemnitee otherwise than under this Section.
The Indemnitee under this Section, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigations of
any action, claim or liability covered by this indemnification and the defense
thereof. The Indemnitor shall have the right to settle any loss, claim, damage,
liability or action only if the Indemnitee is fully indemnified with respect
thereto by the Indemnitor. A settlement requires the consent of the Indemnitee,
which consent shall not be withheld unreasonably, only if the settlement
requires Indemnitee to bear other affirmative obligations (beyond the payment of
money damages and beyond obligations required by this Agreement).

          10.4.  INSURANCE.

                 (a) During the Term, and thereafter for the period of time
required below, each Party shall maintain an ongoing basis, COMMERCIAL GENERAL
LIABILITY ("CGL") insurance, including contractual liability, in the minimum
amount of $5,000,000 per occurrence and $10,000,000 annual aggregate combined
single limit for bodily injury and property damage liability. Commencing not
later than 30 days prior to the first use in humans of the first potential
Licensed Product and thereafter for the period of time required below each Party
shall obtain and maintain on an ongoing basis PRODUCTS LIABILITY ("PL")
insurance (including contractual liability) in the amount of at least
$10,000,000 per occurrence and annual aggregate combined single limit for bodily
injury and property damage liability. All of the above insurance coverage shall
be maintained with an insurance company or companies having an A.M. Best rating
of X-VII or better.

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                 (b) Within thirty (30) days after the Effective Date with
respect to the commercial general liability coverage, and not later than 30 days
prior to the first use in humans of the first potential Licensed Product with
respect to the products liability coverage, upon request of the other Party,
each Party shall provide to the other Party certificates evidencing all such
required coverage hereunder. Thereafter Genentech shall maintain such insurance
coverage without interruption during the Term and for 10 years after the
expiration or termination of the Term. TolerRx shall maintain such insurance
coverage without interruption during and after the Term until the later of: (A)
10 years after the expiration or termination of the Term or (B) ten (10) years
after the last sale of the last Licensed Product in the Territory by TolerRx as
permitted under Section 9.5(c)(iii), if applicable. Each Party shall provide
certificates evidencing such insurance coverage without interruption on an
annual basis (by no later than the annual renewal date for such coverage) during
the period of time for which such coverage must be maintained. Each Party shall
name the other Party as additional insureds under their respective CGL insurance
and PL insurance policies. The CGL and PL insurance policies shall be an
occurrence form, but if only a claims-made form is available, then it may be in
a claims-made form, subject to compliance with all of the terms of this Section
10.4. Each of the above insurance policies shall be primary insurance with
respect to each Party's own participation under this Agreement. The aggregate
deductibles under such CGL and PL insurance policies shall be satisfactory to
the other Party. At the request of either Party, the Parties agree to review and
discuss the requirements under this Section 10.4. Such insurance coverage shall
be subject to periodic review by the JSC and may be modified by the JSC.

          10.5.  SURVIVAL. This Section 10 shall survive termination or
expiration of this Agreement.

          10.6.  LIMITATION OF LIABILITY. EXCEPT FOR NONPAYMENT BY EITHER PARTY,
BREACH OF CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT, SECTIONS 8,
9.5(c)(iii), 10 AND/OR 12.3 (AND/OR BREACH OF SUCH SECTIONS), IN NO EVENT SHALL
EITHER PARTY BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT
UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY (I) FOR ANY AMOUNTS IN EXCESS, IN THE AGGREGATE, OF THE FEES PAID TO
TOLERRX HEREUNDER DURING THE TWELVE-MONTH PERIOD PRIOR TO THE DATE THE CAUSE OF
ACTION AROSE OR (II) FOR ANY INDIRECT, EXEMPLARY, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST DATA OR LOSS PROFITS OR (III) FOR ANY MATTER
BEYOND SUCH PARTY'S REASONABLE CONTROL, EVEN IF SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH LOSS OR DAMAGE. THIS SECTION DOES NOT LIMIT LIABILITY
FOR BODILY INJURY OF A PERSON.

                    ARTICLE 11 REPRESENTATIONS AND WARRANTIES

          11.1.  REPRESENTATIONS AND WARRANTIES OF TOLERRX. TolerRx hereby
represents and warrants that:

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                 (a) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly authorized by
all appropriate TolerRx corporate action;

                 (b) this Agreement is a legal and valid obligation binding upon
TolerRx and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by TolerRx does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it is bound;

                 (c) TolerRx has the rights to transfer to Genentech all
materials contemplated by this Agreement to be so transferred;

                 (d) TolerRx has the right to grant the licenses granted herein;

                 (e) TolerRx has not intentionally concealed any knowledge of
any rights of any third parties that would interfere with the use of the TolerRx
Know-how or practice of the TolerRx Patent Rights by Genentech.

                 (f) TolerRx is not aware of any breach of any of the Third
Party Agreements, and TolerRx shall not intentionally commit any acts or
omissions that would result in a breach of any of the Third Party Agreements
such that the other party thereto would be entitled to terminate such agreement
or amend it in a way that would adversely affect Genentech's rights under this
Agreement (including but not limited to Genentech's ability to manufacture, use,
sell, offer to sell, and import the Licensed Products);

                 (g) to the best of TolerRx's knowledge, as of the Effective
Date, except for the licenses granted herein, no additional licenses,
permissions or releases of rights related to Third Party Agreements are
necessary for Genentech's and its third party sublicensee's manufacture, sale,
use, offer for sale or import of the Licensed Product or other currently
anticipated exercise of its license hereunder;

                 (h) TolerRx shall not exercise any rights it may have with
respect to any of the Third Party Agreements or amend, or waive any of its
rights thereunder in any way that would adversely affect Genentech's rights
under this Agreement (including but not limited to Genentech's ability to
manufacture, use, sell, offer to sell, and import the Licensed Products); and

                 (i) As of the Effective Date, the Third Party Agreements are
the only agreements to which TolerRx is a party that directly relate to making,
using, importing, selling, or offering to sell a Product.

          11.2.  Representations and Warranties of Genentech. Genentech
represents and warrants that:

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                 (a) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly authorized by
all appropriate Genentech corporate action; and

                 (b) this Agreement is a legal and valid obligation binding upon
Genentech and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by Genentech does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it is bound.

          11.3.  SURVIVAL. The representation, warranties, covenants and
agreements made herein shall survive any investigation made by a Party and the
Parties may fully rely on such representations, warranties, covenants and
agreements.

          11.4.  EACH PARTY MAKES NO OTHER REPRESENTATION OR WARRANTY HEREUNDER
AND EXCEPT AS PROVIDED ABOVE, DISCLAIMS ALL OTHER REPRESENTATIONS AND
WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR USE OR WITH RESPECT TO THE VALIDITY, ENFORCEABILITY, OR
PATENTABILITY OF ITS PATENTS OR THAT LICENSED PRODUCT WILL NOT INFRINGE PATENT
RIGHTS OF A THIRD PARTY.

                       ARTICLE 12 MISCELLANEOUS PROVISIONS

          12.1.  NO PARTNERSHIP. The Parties are independent contractors and
nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, distributorship, fiduciary, employer-employee or joint
venture relationship between the Parties. No Party shall incur any debts or make
any commitments for or bind the other, except to the extent, if at all,
specifically and expressly provided herein.

          12.2.  NO OTHER RIGHTS. This Agreement does not convey to TolerRx any
rights in any Genentech Patents or Licensed Product Manufacturing Know-how
(except as expressly and unambiguously set forth in Section 9.5(c)(iii)) or any
other intellectual property of Genentech by implication, estoppel or otherwise,
and title and all rights to the Genentech Patent Rights, Licensed Product
Manufacturing Know-how, and any other intellectual property of Genentech shall
at all times remain vested in Genentech. No right or license is granted by
TolerRx to Genentech hereunder except as expressly granted under this Agreement.
Nothing herein shall restrict Genentech (whether in conjunction with third
party(ies) or independently) from researching, developing or commercializing a
product that contains an agent targeting, binding to or recognizing CD4, that is
not covered by this Agreement.

          12.3.  ASSIGNMENTS. Neither Party shall be entitled to assign this
Agreement or its rights or obligations hereunder without the express written
consent of the other Party hereto, except that both Genentech and TolerRx may
otherwise assign this Agreement and their respective rights and transfer their
respective duties hereunder to an Affiliate or to any assignee

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GENENTECH CONFIDENTIAL

of all or substantially all of their respective businesses (or that portion
thereof to which this Agreement relates) or in the event of their respective
merger or consolidation or similar transaction. Such assignment shall not
relieve the assignor of its obligations hereunder. No assignment and transfer
shall be valid or effective unless and until the assignee/transferee shall agree
in writing to be bound by the provisions of this Agreement in which case the
Agreement will inure to the benefit of such successors and assigns. Any
assignment not in accordance with this Section 12.3 shall be void.

          12.4.  FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

          12.5.  USE OF NAMES. No right, express or implied, is granted by this
Agreement to use in any manner the names "TolerRx" or "Genentech" or any other
trade name or trademark of TolerRx or Genentech without the prior written
consent of the other Party.

          12.6.  PUBLIC ANNOUNCEMENTS. Neither Party shall make any public
announcement, press release, or other public disclosure concerning this
Agreement or the subject matter hereof without the prior written consent of the
other Party. The Parties consent to the press release of Exhibit D.

          12.7.  ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes and
contains the entire understanding and agreement of the Parties and cancels and
supersedes any and all prior negotiations, correspondence, understandings and
agreements, whether verbal or written, between the Parties respecting the
subject matter hereof, and all past dealing or industry custom. Except to the
extent expressly set forth in Section 5.3 herein, Genentech does not acknowledge
any agreements between TolerRx and third parties. No waiver, modification or
amendment of any provision of this Agreement shall be valid or effective unless
made in writing and signed by a duly authorized representative of each of the
Parties and clearly understood by both Parties to be a waiver, modification or
amendment of the Agreement.

          12.8.  SEVERABILITY. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be illegal, invalid or unenforceable,
that provision shall be limited or eliminated to the minimum extent necessary so
that this Agreement shall otherwise remain in full force and effect and
enforceable.

          12.9.  CAPTIONS. The headings and captions to this Agreement are for
convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

          12.10. APPLICABLE LAW. This Agreement shall be governed in all
respects by the internal laws of the State of Delaware (as if made and entered
into between Delaware residents and fully executed within Delaware) without
regard to its conflict of laws provisions and without regard to the United
Nations Convention on Contracts for the International Sale of Goods.

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GENENTECH CONFIDENTIAL

          12.11. NOTICES AND DELIVERIES. Any notice, requests, delivery,
approval or consent required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been sufficiently given if delivered
in person, transmitted by facsimile with a confirming copy sent by overnight
courier or registered mail to the Party to whom it is directed at its address
shown below or such other address as such party shall have last given by notice
to the other Party. Any such notice, requests, delivery, approval or consent
shall be deemed received on the date of facsimile or hand delivery, one business
day after deposit with an overnight courier, or 3 business days after deposit of
the registered mail with the U. S. postal service.

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GENENTECH CONFIDENTIAL

                 If to TolerRx,

                 addressed to:

                 TolerRx, Inc.
                 300 Technology Square
                 Cambridge, MA 02139

                 Tel.: 617-354-8100
                 Fax:  617-354-8300


                 with a copy to:

                 Carella, Byrne, Bain, Gilfillan,
                 Cecchi, Stewart & Olstein
                 6 Becker Farm Road
                 Roseland, New Jersey 07068
                 Tel.: (973) 994-1700
                 Fax:  ((73) 994-1744

                 If to Genentech,

                 addressed to:

                 GENENTECH, INC.
                 1 DNA Way
                 South San Francisco, CA 94080
                 Attention: Corporate Secretary
                 Telephone: (650) 225-1000
                 Fax: (650) 952-9881

                 with a copy to:

                 Vice President of Business Development
                 Telephone: (650) 225-3705
                 Fax: (650) 225-3009


          12.12. FORCE MAJEURE. Neither Party shall lose any rights hereunder or
be liable to the other Party for damages or losses on account of failure of
performance by the defaulting

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GENENTECH CONFIDENTIAL

Party if the failure is occasioned by government action, war, terrorism, supply
shortage, labor disputes or shortages, viral contamination, earthquake, fire,
explosion, flood, strike, lockout, embargo, act of God, or any other cause
beyond the reasonable control of the defaulting Party, provided that the Party
claiming force majeure has exerted reasonable commercial efforts to avoid or
remedy such force majeure; PROVIDED, HOWEVER, that in no event shall a Party be
required to settle any labor dispute or disturbance.

          12.13. DISPUTE RESOLUTION.

                 (a) INTERNAL RESOLUTION. For clarity, any and all issues
relating to the development and commercialization of the Licensed Products
(including but not limited to the Development Plan and content thereof, and
development and commercialization budgets) shall not be subject to this Section
12.13 but shall be resolved by the JSC in accordance with Section 2.2. For
clarity, a Dispute on the conclusions of the audit by the public accountant set
forth in Section 6.8 or disputes solely on Genentech's failure to apply the
methodology set forth in Section A.5 of Exhibit A attached hereto shall be
resolved in accordance with this Section 12.13. The Parties shall attempt to
settle all other disputes, controversies or claim arising out of or relating to
the validity, enforceability or performance of this Agreement, including
disputes relating to alleged breach or termination of this Agreement but
excluding any determination as to the validity or enforceability of the Parties'
intellectual property or infringement or claim interpretation relating to a
Party's patents (hereinafter, the "DISPUTE"), in accordance with the provisions
of this Section 12.13. The Parties have entered into the Agreement in good faith
and in the belief that it is mutually advantageous to them. It is with that same
spirit of cooperation that they pledge to attempt to resolve any Dispute
amicably. Accordingly, the Parties agree that if any Dispute should arise, it
shall then be referred to a member of senior management from each of the
Parties. If those individuals are unable to resolve the disagreement, the
Parties shall mediate their Dispute with a mediator mutually agreeable between
the Parties.

                 (b) ARBITRATION. Should the mediator be unable to resolve the
Dispute, (other than those issues excluded from this Section 12.13 in Section
12.13(a) above) all Disputes arising out of or relating to the validity,
enforceability or performance of this Agreement, or the breach or termination
thereof, shall be settled by final and binding arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association as
hereinafter provided:

                         (i)    The arbitration shall be conducted by a panel of
three arbitrators ("the Panel"). Each party shall nominate in the request for
arbitration and the answer thereto one arbitrator and the two arbitrators so
named will then jointly appoint the third arbitrator as chairman of the Panel.
If one Party fails to nominate its arbitrator or, if the Parties' arbitrators
cannot agree on the person to be named as chairman within thirty (30) days, the
President of the American Arbitration Association shall make the necessary
appointments for arbitrator or chairman.

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GENENTECH CONFIDENTIAL

                         (ii)   The place of arbitration shall be in San
Francisco, California and the arbitration proceedings shall be held in English.
The procedural law of California shall apply where the said Arbitration Rules
are silent.

                         (iii)  The Panel is empowered to award any remedy
allowed by law, including money damages, prejudgment interest and attorneys'
fees, and to grant final, complete, interim or interlocutory relief, including
injunctive relief, but excluding punitive damages and multiple damages. For
purposes of all arbitration proceedings, the Parties shall be deemed to have
waived any right to such punitive damages or multiple damages. The decision of
the arbitration tribunal must be in writing and must specify the basis on which
the decision was made, and the award of the arbitration tribunal shall be final
and judgement upon such an award may be entered in any competent court or
application may be made to any competent court for judicial acceptance of such
an award and order of enforcement.

          12.14. SOLE JURISDICTION FOR INTELLECTUAL PROPERTY DISPUTES. With
regard to any disputes, controversy, or claim arising out of this Agreement
involving any determination as to the validity or enforceability of the Parties'
intellectual property, or infringement or claim interpretation relating to a
Party's patents, the jurisdiction and venue for actions related to the subject
matter hereof shall be the U.S. federal court in Delaware. The parties agree
that any such action related to this subject matter shall be brought solely in
the United States District Court ("USDC") for Delaware ("DE"). The parties
hereby submit to personal jurisdiction in the USDC for DE and waive all claims
of improper forum, forum non conveniens, or other objection to the laying of
venue in such court. Both parties consent to the jurisdiction of such courts and
agree that process may be served in the manner provided herein for giving of
notices or otherwise as allowed by Delaware or federal law.

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


                            [Signature page follows.]

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GENENTECH CONFIDENTIAL

          IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized representatives as of Effective
Date.

TOLERRX, INC.                              GENENTECH, INC.


By:     /s/ D.J. Ringler                   By:     /s/ Lou Lavigne
        ------------------------------             -----------------------------

Name:   D.J. Ringler                       Name:   Lou Lavigne
        ------------------------------             -----------------------------

Title:  CEO
        ------------------------------


                                           By:     /s/ Stephen Juelsgaard
                                                   -----------------------------

                                           Name:   Stephen Juelsgaard
                                                   -----------------------------

                                                   23 Dec 02

                                           Title:
                                                   -----------------------------

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                                    EXHIBIT A

              FINANCIAL PLANNING, ACCOUNTING AND REPORTING FOR THE
                    TOLERRX/GENENTECH COLLABORATION AGREEMENT

This Exhibit A is applicable only if TolerRx properly exercises the US
Profit/Loss Sharing Option and makes the US Cost Sharing Payments in accordance
with Section 6.5 and continues to make all balancing payments on time as
required by this Exhibit A so that each Party bears its appropriate percentage
of shared US Costs. For clarity, the definitions of "Net Sales" and "Fully
Burdened Manufacturing Cost" are applicable to Section 6 of the Agreement. For
clarity, Licensed Products(s) as referred to in this Exhibit A, shall only refer
to the Licensed Products(s) for which TolerRx has exercised and continues to
participate in the US Profit/Loss Sharing Option in accordance with Section 6.5
and Exhibit A.

This EXHIBIT A covers financial planning, accounting policies and procedures to
be followed in determining US Cost Sharing Payments and Operating Profits or
Losses and related sharing of revenue and expenses. This Exhibit A only covers
sharing of Operating Profits or Losses (including revenues and expenses)
relating to developing and commercializing Licensed Products within the United
States. Genentech shall be obligated to share Operating Profits or Losses as set
forth in Section 6.5 and this Exhibit A only during the time period set forth in
and subject to Section 6.5(b).

For purposes of this EXHIBIT A only, the accounting of Genentech's operations
related to the development and commercialization of Licensed Products in the
United States shall be referred to as the "COLLABORATION". The Collaboration is
not and shall not be characterized by either Party as a legal entity, pass
through or otherwise, for financial accounting or income tax reporting purposes,
and has been defined for identification purposes only. For the purposes of this
Agreement, any references to charging costs to the Collaboration means that such
costs shall be included in the calculation of "US Costs." For the purposes of
this Exhibit A, any references to costs incurred "by or for Genentech" "by
Genentech or for its account" or "by or on behalf of Genentech" or the like,
shall only refer to such costs incurred by Genentech or on behalf of Genentech
by Genentech's third party sublicensees and shall not refer to any costs
incurred by or on behalf of TolerRx.

For avoidance of doubt, pre-approved costs incurred by TolerRx in performing
TolerRx Development Plan Work shall be chargeable to the Collaboration (such
costs shall hereinafter be referred to as "TolerRx Development Plan Work
Costs").

All capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement, unless otherwise expressly provided herein.
The contents of this EXHIBIT A are hereby incorporated into the Agreement and
are governed by the terms and conditions of the Agreement, including, without
limitation, the confidentiality provisions set forth therein. All reports or
information related to this Exhibit A required to be disclosed hereunder are
deemed Confidential Information of Genentech, regardless of whether such reports
or information are marked confidential or not.

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GENENTECH CONFIDENTIAL

A.1.    PRINCIPLES OF REPORTING

(a)     SHARING US COSTS. US Costs shall be shared by TolerRx and Genentech as
provided in Sections 3.3 and 6.5 of the Agreement. The Parties shall establish a
Joint Finance Committee to be composed of one (1) employee representative
appointed by each Party, to coordinate the activities set forth in this Exhibit
A. Such representatives shall include individuals with expertise and
responsibilities in the areas of accounting, cost allocation, budgeting and
financial reporting. The JFC shall operate by consensus and in accordance with
the JSC's instructions, subject to the following sentence. If the JFC is unable
to resolve a dispute regarding any issue presented to it, such dispute shall be
referred to the JSC for resolution in accordance with Section 2.2. Any disputes
solely on Genentech's failure to apply the methodology set forth in Section A.5
herein or a Dispute on the conclusions of the audit by the public accountant set
forth in Section 6.8 shall be resolved in accordance with Section 12.13 of the
Agreement. All other disputes (including but not limited to budget disputes)
shall be resolved by the JSC in accordance with Section 2.2.

Results of the Collaboration will be reported by Genentech as follows:

<Table>
<Caption>
                                                   Genentech    TolerRx    Total
                                                   ---------    -------    -----
          <S>                                      <C>          <C>        <C>
          Gross Sales

          less Sales Returns and Allowances

              =  Net Sales

          less Cost of Sales

              = Gross Profits

          less Marketing Costs

          less Sales Costs

          less Development Costs

          less Other Operating Income/Expense

          less General and Administrative Costs

          less Distribution Costs

              = Operating Profits or Losses
</Table>

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GENENTECH CONFIDENTIAL

It is the intention of the Parties that the interpretation of these definitions
will be consistent with generally accepted accounting principles ("GAAP") in the
U.S.

Without limiting the foregoing, prior to the time that Gross Sales are obtained,
the Parties may eliminate the above line items related to sales and the support
of sales, and the costs thereof, and use only those terms relevant to the
sharing of Development Costs.

A.2.    REPORTING.The fiscal year of the Collaboration will be a calendar year.

Reporting by each Party for Collaboration revenues and expenses will be
performed as follows:

<Table>
<Caption>
Reporting Event                     Frequency            Timing of Submission
---------------                     ---------            --------------------
<S>                                 <C>                 <C>
Actuals (including draft            Quarterly           Q1-Q3:         + 45 days
   settlement statements)                                Q4:           + 45 days

Forecasts                           Quarterly            Q1-Q3         + 45 days
(rest of year - by month)

Settlement payments between
The Parties                         Quarterly            Quarter end   +60 days

Preliminary Budgets                 Annually             September 15
(one year)

Final Commercial
And Development Budget              Annually             October 15
(one year - by quarter)

Long Range Plan                     Annually             April 15
(current year plus 5 years)
</Table>

TolerRx shall provide to Genentech within thirty (30) days after the end of each
quarter a calculation of TolerRx Development Plan Work Costs. Genentech will be
responsible for the preparation of consolidated reports on the Collaboration
(including US Costs and any Operating Profit or Loss), and calculation of the
sharing and determination of the cash settlement. Genentech will provide to
TolerRx within forty-five (45) days of Genentech's quarter end a statement
showing the calculations of the Operating Profit or Loss sharing (or calculation
of expenses to be shared) and cash settlement required in a format substantially
listed above.

The financial representatives from the Parties (i.e. the Joint Finance Committee
members) will meet as appropriate but at least quarterly to review the
following:

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                           -        Development Costs

                           -        actual results

                           -        forecasts

                           -        budgets

                           -        Sales Returns and Allowances

                           -        other financial matters determined by JSC,
                                    including Genentech's methodologies for
                                    charging costs to the Collaboration, for
                                    determination of actuals, forecasts, budgets
                                    and long range plans and the results of
                                    applying such methodologies.

A.3.    BUDGET.

Budgets will be prepared annually with detailed development and business plans
for clinical trials, drug approval applications, strategy for product
introduction, sales and promotion efforts, as determined by Genentech.
Responsibility for the budget and a five (5) year long range plan will rest with
Genentech, who will develop budgets for development and commercialization to be
presented to the JSC and JPT annually.

After Genentech develops the budget and provides a copy of such budget to the
JSC, any material changes to such budget shall be reviewed by the JSC. Genentech
may make nonmaterial changes to the budget from time to time. For clarity,
Genentech shall retain the final authority to determine the budget (including
but not limited to Marketing Costs, Distribution Costs, Sales Costs, US Costs,
and Development Costs).

A.4.    PAYMENTS BETWEEN THE PARTIES.

Subject to Section 6.5(b), Genentech and TolerRx agree to share the Operating
Profit or Loss in the United States resulting from the Agreement in the
following manner:

            (a)     Genentech shall be allocated [***] of the Operating Profits
                    or Losses and

            (b)     TolerRx shall be allocated [***] of the Operating Profits or
                    Losses.

Payments to each Party of the percentages of Operating Profit or Loss as
provided above will be made quarterly, within sixty (60) days after the end of
each calendar quarter. Without limiting the foregoing, within sixty (60) days of
the end of each calendar quarter, there shall be reconciliation of the US Costs
which are to be shared and which are incurred during that quarter by Genentech
(including TolerRx Development Plan Work Costs incurred by TolerRx), with a
payment by TolerRx to Genentech or by Genentech to TolerRx to the extent
necessary so that

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

each Party bears its appropriate percentage of such shared US Costs. In the
event any payment is late, without limiting Genentech's other remedies
(including but not limited to Sections 6.5(b) and 6.5(c)), TolerRx or Genentech
shall increase the amount otherwise due and payable by adding interest thereon,
computed at the Prime Rate plus one percent (1%). "Prime Rate" means the rate of
interest as published in the weekly Federal Reserve H.15 Bulletin, or any
successor bulletin thereto.

A.5.    COST METHODOLOGY.

Genentech shall provide to TolerRx its costing and accounting methodology in
determining Operating Profits or Losses. TolerRx shall have the right to confirm
that such methodology is consistent with GAAP.

A.6.    START OF OPERATIONS AND EFFECTIVE ACCOUNTING DATE TERMINATION.

Operation of the Collaboration (and costs to be charged to the Collaboration)
will be deemed to have commenced as of the date of the filing of the first IND
by Genentech, only if TolerRx properly exercises the US Profit/Loss Sharing
Option and makes the US Cost Sharing Payments in accordance with Section 6.5 and
Exhibit A. Costs and expenses incurred prior to such date are not chargeable to
the Collaboration, except that costs to be charged to the Collaboration shall
include, but are not limited to, FTE Cost(s) and filing fees for filing of
IND(s) by Genentech.

For reporting and accounting purposes with respect to the Collaboration, the
effective termination date of Operating Profit or Loss sharing arrangement under
this Exhibit A (with regard to the last detailing year in the United States)
will be the earlier of: (A) on a Licensed Product-by-Licensed Product basis, the
nearest month end closest to the end of the period set forth in Section 6.5(b)
or (B) the nearest calendar quarter end prior to the date that TolerRx first
fails to make the applicable balancing payments relating to sharing Operating
Profit or Loss on a timely basis in accordance with this Exhibit A and Section
6.5.

A.7.    DEFINITIONS.

A.7.1.  "ALLOCABLE OVERHEAD" means costs incurred by a Party or for its account
which are attributable to a Party's supervisory, services, occupancy costs,
corporate bonus (to the extent not charged directly to department), and its
payroll, information systems, human relations or purchasing functions and which
are allocated to company departments based on space occupied or headcount or
other activity-based method consistently applied by a Party. Allocable Overhead
shall not include any costs attributable to general corporate activities
including, by way of example, executive management, investor relations, business
development, legal affairs and finance, and shall not duplicate G&A hereunder.

A.7.2.  "COST OF SALES" shall mean the sum of (i) Fully Burdened Manufacturing
Cost (as defined below), (ii) freight, insurance and other costs of shipping
Licensed Product to customers, (iii) any third party royalties payable with
respect to the manufacture, use or sale of Licensed

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GENENTECH CONFIDENTIAL

Product, excluding any royalties already accounted for in Fully Burdened
Manufacturing Cost and (iv) the cost of free Licensed Product for indigent
persons.

A.7.3.  "DEVELOPMENT COSTS" means the development costs INCURRED (including
accruals) by or for Genentech from the date of filing of the first IND by
Genentech, through the later of (a) the date of Regulatory Approval (including
thereafter costs to maintain or expand such Regulatory Approval) in the United
States, or (b) the date of termination of development efforts of the final
Indication of Licensed Product for which Regulatory Approval is sought in the
United States (the "Development Period"). Such costs shall comprise those costs
required to obtain, maintain and/or expand the authorization and/or ability to
manufacture, formulate, fill, ship and/or sell a Licensed Product in commercial
quantities to Third Parties in the United States. Such costs shall include FTE
Cost(s) and filing fees for filing such IND(s).

"Development Costs" shall include, but are not limited to, costs of research or
development, costs of studies on the toxicological, pharmacokinetical,
metabolical or clinical aspects of a Licensed Product conducted internally or by
individual investigators, or consultants necessary for the purpose of obtaining,
maintaining and/or expanding marketing approval of a Licensed Product, process
development, process improvement, and recovery costs, qualification lots, costs
for preparing, submitting, reviewing or developing data or information for the
purpose of submission to a governmental authority to obtain, maintain and/or
expand marketing approval of a Licensed Product, costs of all Phase I Clinical
Trials, Phase II Clinical Trials and Phase III Clinical Trials (including but
not limited to clinical materials) in the United States performed by or for
Genentech, and applicable Allocable Overhead.

"Development Costs" shall include expenses for data management, CROs,
statistical designs and studies, document preparation, and other administration
expenses associated with the clinical testing program or post-marketing studies
required to maintain product approvals. In determining "Development Costs"
chargeable under this Agreement, Genentech will use its project accounting
systems.

"Development Costs" shall include TolerRx Development Plan Work Costs and
TolerRx MSL Costs (to the extent expressly set forth in Section 3.4(f) of the
Agreement) in accordance with the same methodology applied by Genentech.

If a Licensed Product is developed or commercialized in conjunction with another
product, "Development Costs" shall mean only the portion of costs related to
developing and/or commercializing the Licensed Product.

If Genentech performs a study on Licensed Products and uses the results of such
study to commercialize Licensed Products outside the United States, then
Genentech shall remove [***] of the costs of such study from the Collaboration,
which results in a reimbursement of [***] of the costs of such study to TolerRx
via the next applicable balancing payment.

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

A.7.4.  "DISTRIBUTION COSTS" means the costs, including applicable Allocable
Overhead, specifically identifiable to the distribution of a Licensed Product by
or for Genentech including customer services, collection of data about sales to
hospitals and other end users, order entry, billing, shipping, credit and
collection and other such activities. For the purpose of this Agreement,
Genentech will charge the Collaboration for Distribution Costs an amount equal
to [***] of Net Sales in any year.

A.7.5.  "FULLY BURDENED MANUFACTURING COST" means one hundred percent (100%) of
Genentech's manufacturing cost (as defined in Genentech's accounting policies
consistently applied), which shall comprise the sum of:

(a)     the cost of goods produced as determined by Genentech in accordance with
GAAP consistently applied by Genentech, including product quality
assurance/control costs, direct labor and materials and product testing cost
incurred in connection with the manufacture and quality control testing of such
product, shipping containers, applicable Allocable Overhead, and other costs
borne by or for Genentech for packaging, transport, customs clearance and
storage of product prior to the time of sale (e.g. freight, customs, duty and
insurance); and

(b)     all of Genentech's allocable intellectual property acquisition and
licensing costs (including royalties) paid to third parties as it relates to the
manufacture of Licensed Product.

If Genentech holds inventory for commercial sales, it shall be permitted to
charge the Collaboration a reasonable and customary carrying charge to
compensate it for its financing and logistical product support.

A.7.6.  "GENERAL AND ADMINISTRATIVE COSTS" means costs chargeable to the
Collaboration equal to [***] of the sum of the Marketing Costs, Sales Costs, and
Development Costs of Genentech.

A.7.7.  "GROSS PROFIT" means Net Sales less Cost of Sales of a Licensed Product
by or for Genentech to Third Parties.

A.7.8.  "GROSS SALES" means, on a Licensed Product-by-Licensed Product basis,
the gross invoiced sales prices for all sales of Licensed Product sold by or for
Genentech or its third party sublicensees (including Affiliates to the extent
Genentech has granted a sublicense to such Affiliates) to independent Third
Parties. If a Licensed Product is sold by Genentech or its third party
sublicensees to independent Third Parties for use in combination with or as a
component of other products, notwithstanding the foregoing, "Gross Sales" shall
mean Adjusted Gross Sales. "Adjusted Gross Sales" shall mean the gross invoiced
sales price from such sales multiplied by the fraction B/(A+B), where A is the
gross invoiced sales price for the amount of the other product or components
used in the combination when distributed separately and B is the gross invoiced
sales price for the amount of the Licensed Product used in the combination when
distributed separately.

                                  * Confidential treatment requested:
                                    material has been omitted and filed
                                    separately with the Commission.

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GENENTECH CONFIDENTIAL

A.7.9.  "MARKETING COSTS" means the direct costs incurred by or for Genentech of
marketing, promotion, advertising, Licensed Product promotional materials,
professional education, product related public relations, relationships with
opinion leaders and professional societies, market research (before and after
product approval), healthcare economics studies, post-marketing studies not
required to maintain product approvals, and other similar activities related to
the Licensed Products. Such costs will include both internal costs (e.g.,
salaries, benefits, travel, supplies and materials, etc.), applicable Allocable
Overhead, and outside services and expenses (e.g., consultants, agency fees,
meeting costs, etc.). "Marketing Costs" shall also include activities related to
obtaining reimbursement from payers and costs of sales and marketing data.
"Marketing Costs" will specifically exclude the costs of activities which
promote Genentech's business as a whole without being product specific (such as
corporate image advertising).

A.7.10. "NET SALES" means Gross Sales of a Licensed Product in the Territory
less applicable Sales Returns and Allowances. If TolerRx properly exercises and
participates in the US Profit/Loss Sharing Option under Section 6.5, then (A)
when used in Section 6 of the Agreement, the term "Net Sales" excludes Net Sales
in the United States; and (B) when used in this Exhibit A, the term "Net Sales"
shall only refer to Net Sales in the United States. Bona fide sample units, free
units for indigent persons, and pre-clinical, clinical, or market-focused trial
units of Licensed Product will not be included in any calculations of Net Sales.
Genentech may deduct Sales Returns and Allowances made by or for it and/or its
sublicensees from Gross Sales regardless of the calendar quarter in which such
sales were made. In the event that Genentech or its sublicensees make any
adjustments to such deductions after the associated Net Sales have been reported
pursuant to this Agreement, the adjustments shall be reported by Genentech and
reconciled with the next report and payment of any royalties due.

A.7.11. "OPERATING PROFITS OR LOSSES" means, on a Licensed Product-by-Licensed
Product basis, Net Sales of Licensed Products in the United States less the
following items with respect to each Licensed Product, all for a given period:
Cost of Sales, Marketing Costs, Sales Costs, Development Costs, General and
Administrative Costs, Distribution Costs, and Other Operating Income/Expense.

A.7.12. "Operating Profits" means the amount of Operating Profits or Losses as
calculated in accordance with Exhibit A, when such amount is profit.

A.7.13. "Operating Losses" means the amount of Operating Profits or Losses as
calculated in accordance with Exhibit A, when such amount is loss.

A.7.14. "OTHER OPERATING INCOME/EXPENSE" means other operating income or expense
from or to third parties which is not part of the primary business activity of
the Collaboration, but is income or expense for purposes of the Collaboration
and is limited to the following:

            -       actual inventory write-offs of any Licensed Product,
                    including failed lots

            -       Patent and Trademark Costs

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GENENTECH CONFIDENTIAL

            -       product liability insurance to the extent the Parties obtain
                    a joint policy

            -       indemnification costs of Genentech (as defined in Section 10
                    of the Agreement)

            -       third party payments for royalties and other similar
                    payments applicable to the use and development (but not
                    manufacturing or sales) of Licensed Product

            -       Third Party Royalty Expense (as defined below)

            -       other (to be approved by JSC)

A.7.15. "PATENT AND TRADEMARK COSTS" means the fees and expenses paid to outside
legal counsel and experts, and filing and maintenance expenses, incurred after
the Effective Date in connection with the establishment and maintenance of
rights for intellectual property as described in Section 7 of the Agreement
covering any Licensed Product, and similar costs with respect to trademarks
described in Section 7.7 of the Agreement, including costs of patent
interference, reexamination, reissue, opposition and revocation proceedings and
similar costs with respect to registration of such trademarks and costs of
lawsuits to enforce any intellectual property rights.

A.7.16. "SALES COSTS" means costs, including Allocable Overhead incurred by
Genentech or for its account and specifically identifiable to the sales efforts
of Licensed Products to all markets in the United States including the managed
care market. "Sales Costs" shall include costs associated with sales
representatives for Licensed Product, including compensation, benefits and
travel, supervision and training of the sales representatives, sales meetings,
and other sales expenses. "Sales Costs" will not include the start-up costs
associated with Genentech's sales force, including recruiting, relocation and
other similar costs.

A.7.17. "SALES RETURNS AND ALLOWANCES" means the sum of (a) and (b), where: (a)
is a provision, determined by Genentech under GAAP for sales of Licensed
Products for (i) trade, cash and quantity discounts or price adjustments or
rebates on Licensed Products (including but not limited to discounts or rebates
to governmental or managed care organizations), other than price discounts
granted at the time of invoicing and which are included in the determination of
Gross Sales, (ii) credits or allowances given or made for rejection or return
of, and for uncollectable amounts on, previously sold Licensed Products or for
retroactive price reductions (including Medicare and similar types of rebates
and chargebacks), (iii) taxes, duties or other governmental charges (including
any tax such as a value added or similar tax or government charge other than an
income tax) levied on or measured by the billing amount for Licensed Products,
as adjusted for rebates and refunds, (iv) charges for freight and insurance
directly related to the distribution of Licensed Products, to the extent
included in Gross Sales, (v) credits for allowances given or made for wastage
replacement, and (vi) other special sales programs agreed to by the Parties for
Licensed Products; and (b) is a periodic adjustment of the provision

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GENENTECH CONFIDENTIAL

determined in (a) to reflect amounts actually incurred by Genentech and/or
sublicensees for items (i), (ii), (iii), (iv), (v), and (vi) in clause (a).

A.7.18. "Third Party Royalty Expense" means all payments made by Genentech
(and/or its sublicensee(s) on its behalf) to any third party with respect to the
development, manufacture, import or export, use, offer for sale or sale of any
Licensed Product.

A.7.19. "TolerRx Development Plan Work" means TolerRx's performance of
activities under the Development Plan at the request of the JSC. TolerRx
Development Plan Work shall exclude any work or studies performed by TolerRx
under Section 3.4(b).

A.7.20. "US COSTS" means Sales Returns and Allowances, Cost of Sales, Marketing
Costs, Sales Costs, Development Costs, Other Operating Income/Expense,
Distribution Costs, and General and Administrative Costs. For clarity, US Costs
only refers to such costs incurred by Genentech or on behalf of Genentech by
Genentech's third party sublicensees and shall not refer to any costs incurred
by or on behalf of TolerRx other than TolerRx Development Plan Work Costs.

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