<PAGE>

                                                                   EXHIBIT 10.1*

                             CONFIDENTIAL TREATMENT

                         LICENSE AND ROYALTY AGREEMENT

     This LICENSE AND ROYALTY AGREEMENT is entered into as of June 22, 2001,
(the "Effective Date") by and between PFIZER INC and its Affiliates ("Pfizer"),
a Delaware corporation, having an office at 235 East 42nd Street, New York, New
York 10017 and Embrex, Inc. and its Affiliates ("Embrex"), a North Carolina
corporation, having an office at Research Triangle Park, NC 27709-3989.

     WHEREAS, Pfizer has developed coccidiosis vaccines and has filed patents
for such vaccines, for the production and use in animals; and

     WHEREAS, Embrex desires to obtain certain vaccine technology and materials
and a worldwide exclusive license under Pfizer's right, title and interest in
the Patent Rights and certain related technology so that Embrex can manufacture,
use, sell, offer for sale and import the Products; and

     WHEREAS, Pfizer is willing to grant such license.

     THEREFORE, in consideration of the mutual covenants and promises set forth
in this Agreement, the parties agree as follows:

1.   Definitions.

     The capitalized terms used in this Agreement and not defined elsewhere in
it shall have the meanings specified for such terms in this Section 1.





______________________
* Selected portions have been deleted as confidential pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended ("Rule 24b-2").  Complete
copies of the entire exhibit have been filed separately with the Securities and
Exchange Commission (the "Commission") and marked "CONFIDENTIAL TREATMENT".
<PAGE>

     1.1  "Affiliate" means any corporation or other legal entity owning,
          -----------
          directly or indirectly, fifty percent (50%) or more of the voting
          capital shares or similar voting securities of Pfizer or Embrex; any
          corporation or other legal entity fifty percent (50%) or more of the
          voting capital shares or similar voting rights of which is owned,
          directly or indirectly, by Pfizer or Embrex; or any corporation or
          other legal entity fifty percent (50%) or more of the voting capital
          shares or similar voting rights of which is owned, directly or
          indirectly, by a corporation or other legal entity which owns,
          directly or indirectly, fifty percent (50%) or more of the voting
          capital shares or similar voting securities of Pfizer or Embrex.

     1.2  *

     1.3  "Effective Date" is the date first written above.
          ----------------

     1.4  *

     1.5  "Net Sales" means the gross amount invoiced by Embrex, its Affiliates,
          -----------
          or any sublicensee of Embrex for sales to a third party or parties of
          Products, less normal and customary trade discounts actually allowed,
          rebates, returns, credits, taxes the legal incidence of which is on
          the purchaser and separately shown on Embrex's or any sublicensee of
          Embrex's invoices and transportation, insurance and postage charges,
          if prepaid by Embrex or any sublicensee of Embrex and billed on
          Embrex's or any sublicensee of Embrex's invoices as a separate item.

     1.6  "Patent Rights" means the patents and patent applications listed in
          ---------------
          Exhibit A of this Agreement, and patents issuing on them, including
          any substitute, divisional, continuation, continuation-in-part,
          renewal, extension, reexamination, reissue or foreign counterpart of
          such patents and patent applications.





__________________________
*  Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

     1.7  "Product" means any product the manufacture, use, sale, offer for sale
          ---------
          or import of which would infringe any Valid Claim within the Patent
          Rights in the absence of a license.

     1.8  "Research Agreement" means the collaborative research and development
          --------------------
          agreement between the parties executed on October 29, 1999.

     1.9  "Vaccine Technology" shall mean all technology, technical information,
           -------------------
          know how and expertise with respect to in ovo-delivered live vaccines
          for, the control and/or prevention of coccidiosis in poultry that
          Pfizer delivers or has previously delivered under the Research
          Agreement to Embrex in order to enable Embrex to practice the Patent
          Rights or enhance such practice including all technology listed in
          Appendix B of this agreement.

     1.10 "Vaccine Materials" shall mean the materials listed in Exhibit B of
          -------------------
          this Agreement.

     1.11 "Valid Claim" means a claim within Patent Rights so long as such
          -------------
          claim shall not have been disclaimed by Pfizer and shall not have been
          held invalid in a final decision rendered by a tribunal of competent
          jurisdiction from which no appeal has been or can be taken.

2.   Grant of Licenses, Term and Obligations.

     2.1  Licenses Granted to Embrex under the Patent Rights.

          Pfizer hereby grants to Embrex an exclusive, world-wide license,
          including the right to grant sublicenses, to manufacture, use, sell,
          offer for sale and import Products under all Pfizer's right, title and
          interest in the Patent Rights.

     2.2  Terms of Licenses. The term of the grant to Embrex set forth in
          Section 2.1 shall commence on the Effective Date and shall terminate
          on the date of the last to expire of the Patent Rights.

<PAGE>

     2.3  Embrex Obligations.

          2.3.1  Embrex shall use reasonably diligent efforts to exploit
                 Products commercially employing similar effort to that applied
                 by it to other products similarly situated including (a)
                 conducting clinical trials necessary to support applications
                 for regulatory approvals of the Products, (b) seeking and
                 maintaining regulatory approvals of the Products as may be
                 required to permit the sale of Products worldwide and (c)
                 commencing sale of Products in a timely manner upon regulatory
                 approval.

          2.3.2  If Embrex grants a sublicense pursuant to this Section 2,
                 Embrex shall guarantee that any sublicensee fulfills all of
                 Embrex's obligations under this Agreement; provided, however,
                 that Embrex shall not be relieved of its obligations pursuant
                 to this Agreement.

     2.4  Technical Assistance, Vaccine Technology and Vaccine Materials.

          2.4.1   For a period of three months after the Effective Date, Pfizer
                  shall provide to Embrex or any sublicensee of Embrex, at
                  Embrex' request and expense any agreed technical assistance,
                  including Vaccine Technology, reasonably necessary to enable
                  Embrex or such sublicensee to manufacture, use, sell, offer
                  for sale or import each Product and to enjoy fully all the
                  rights granted to Embrex pursuant to this Agreement; provided,
                  however, that Pfizer is reasonably capable of providing that
                  assistance. Embrex shall reimburse Pfizer's direct and
                  indirect costs of providing such assistance.

          2.4.2   Within thirty (30) days of the Effective Date, Pfizer shall
                  provide Embrex with the Vaccine Materials. Pfizer will not
                  under any circumstances furnish the Vaccine Technology and
                  Vaccine Materials to any other third party for use in the area
                  of coccidiosis vaccines ("Area"), provided, however, that
                  Pfizer may use the Vaccine Technology and Vaccine Materials
                  outside of the Area for any purpose it sees fit and shall have
                  the

<PAGE>

                  right to transfer said Vaccine Technology and Materials to
                  third parties for use solely outside the Area.

3.  Milestone Payments, Royalties, Accounting and Records.

    3.1   Royalty.

          3.1.1  Embrex shall pay Pfizer a royalty which shall be a percentage
                 of * for each Product. Such royalty shall be paid with respect
                 to each country of the world from the date of the first
                 commercial sale (the date of the invoice of Embrex or any
                 sublicensee of Embrex with respect to such sale) of such
                 Product in each such country until the expiration of the last
                 Patent Right to expire with respect to each such country and
                 each such Product.




     3.2  Royalty Rates.

          (a)    Except as provided in Section 3.2(b), the Royalty Rate paid by
                 Embrex to Pfizer and/or credited to milestone payments on each
                 Product for each year during the term of this Agreement shall
                 be :

                 (i)   * percent (* %) of the * for said Product if the * is
                       less than or equal to * percent (* %) of * and,
                 (ii)  * percent (* %) of the * of each said Product if the * is
                       greater than * percent (* %) of *.

          (b)    If the manufacture and sale of a Product takes place in
                 countries where there are no Patent Rights, the Royalty Rate
                 paid by Embrex to Pfizer for each Product in each such country,
                 for * (*) years beginning with the first commercial sale of
                 such Product in such country, shall be:

                 (i)  * percent (* %) of * for each said Product and each said
                      year if * is less than or equal to * percent (*%) of *
                      and,
                 (iii)* percent (* %) of * for each said Product and each said
                      year and if * is greater than * percent (* %) of *.




_____________________
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

     3.3  Payment Dates.

          Royalties shall be paid by Embrex on * within sixty (60) days after
          the end of each calendar quarter in which such sales are made.  Such
          payments shall be accompanied by a statement showing * of each Product
          by Embrex or any sublicensee of Embrex in each country, the applicable
          royalty rate for such Product, and a calculation of the amount of
          royalty due, including any offsets.

     3.4  Accounting.

          * used for computing the royalties payable to Pfizer by Embrex shall
          be converted into US dollars on a monthly basis. For the purpose of
          determining the amount of royalty due, foreign currency amounts will
          be computed by (a) converting into US dollars at the prevailing
          exchange rate for purchasing US dollars with such foreign currency as
          published in the Wall Street Journal for the close of the last
          business day of each calendar month for which the relevant royalty
          payment is to be calculated and (b) deducting the amount of any
          governmental tax, duty, charge, or other fee actually paid in respect
          of such conversion into, and remittance of, U.S. dollars. Monthly
          royalty amounts payable to Pfizer will be accumulated and paid
          quarterly in US dollars by wire transfer in immediately available
          funds to a U.S. account designated by Pfizer, or by other mutually
          acceptable means.

     3.5  Records.

          Embrex shall keep for three (3) years from the date of each payment of
          royalties complete and accurate records of sales by Embrex of each
          Product in sufficient detail to allow the accruing royalties to be
          determined accurately. Pfizer shall have the right for a period of
          three (3) years after receiving any report or statement with respect
          to royalties due and payable to appoint at its expense an independent
          certified public accountant reasonably acceptable to Embrex to inspect
          the relevant records of Embrex solely to verify such report or
          statement. Embrex shall make its records available for inspection by
          such independent




____________________
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

          certified public accountant during regular business hours at such
          place or places where such records are customarily kept, upon
          reasonable notice from Pfizer, to verify the accuracy of the reports
          and payments. Such inspection right shall not be exercised more than
          once in any calendar year nor more than once with respect to sales in
          any given period. Pfizer agrees to hold in strict confidence all
          information concerning royalty payments and reports, and all
          information learned in the course of any audit or inspection, except
          to the extent necessary for Pfizer to reveal such information in order
          to enforce its rights under this Agreement or if disclosure is
          required by law. The failure of Pfizer to request verification of any
          report or statement during said three-year period shall be considered
          acceptance of the accuracy of such report, and Embrex shall have no
          obligation to maintain records pertaining to such report or statement
          beyond said three-year period. The findings of each inspection, if
          any, shall be binding on both parties.

     3.6  Milestone Payments.  Embrex shall pay Pfizer, within sixty (60)
          days of the completion of each event set forth below ("Event"),
          the payment listed opposite that Event. Payments shall be made in
          US dollars by wire transfer in immediately available funds to a
          U.S. bank account designated by Pfizer, or other mutually
          acceptable means. Embrex shall be obligated to make each payment
          only once.

          Event                   Amount
(a)    *                       *
(b)    *                       *
(c)    *                       *
(d)    *                       *
(e)    *                       *
(f)    *                       *





________________________
*  Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

* percent (* %) of Milestone (e) and (f) shall be credited against royalties
payable to Pfizer by Embrex under this Section 3.

4.  Legal Action.

    4.1   Actual or Threatened Disclosure or Infringement.

          When information comes to the attention of Embrex to the effect that
          any Patent Rights relating to a Product have been or are threatened to
          be unlawfully infringed, Embrex shall have the right at its expense to
          take such action as it may deem necessary to prosecute or prevent such
          unlawful infringement, including the right to bring or defend any
          suit, action or proceeding involving any such infringement. Embrex
          shall notify Pfizer promptly of the receipt of any such information
          and of the commencement of any such suit, action or proceeding. If
          Embrex determines that it is necessary or desirable for Pfizer to join
          any such suit, action or proceeding, Pfizer shall, at Embrex's
          expense, execute all papers and perform such other acts as may be
          reasonably required to permit Embrex to commence and prosecute such
          action, suit or proceeding in which case Embrex shall hold Pfizer
          free, clear and harmless from any and all costs and expenses of
          litigation, including attorneys fees. If Embrex brings a suit, it
          shall have the right first to reimburse itself out of any sums
          recovered in such suit or in its settlement for all costs and
          expenses, including attorney's fees, related to such suit or
          settlement, and twenty-five percent (25%) of any funds that shall
          remain from said recovery shall be paid to Pfizer and the balance of
          such funds shall be retained by Embrex. If Embrex does not, within one
          hundred twenty (120) days after giving notice to Pfizer of the above-
          described information, notify Pfizer of Embrex's intent to bring suit
          against any infringer, Pfizer shall have the right to bring suit for
          such alleged infringement, but it shall not be obligated to do so, and
          may join Embrex as party plaintiff, if appropriate, in which event
          Pfizer shall hold Embrex free, clear and harmless from any and all
          costs and expenses of such litigation, including attorney's fees, and
          any sums recovered in any such suit or in its settlement shall belong
          to Pfizer. However, twenty-five percent (25%) of any such sums
          received by Pfizer, after deduction of all costs and expenses related
          to




____________________
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

          such suit or settlement, including attorney's fees paid, shall be paid
          to Embrex. Each party shall always have the right to be represented by
          counsel of its own selection and at its own expense in any suit
          instituted by the other for infringement under the terms of this
          Section. If Embrex lacks standing and Pfizer has standing to bring any
          such suit, action or proceeding, then Pfizer shall do so at the
          request of Embrex and at Embrex's expense.

     4.2  Defense of Infringement Claims.

          Pfizer will cooperate with Embrex at Embrex's expense in the defense
          of any suit, action or proceeding against Embrex or any sublicensee of
          Embrex alleging the infringement of the intellectual property rights
          of a third party by reason of the use of Patent Rights in the
          manufacture, use or sale of the Product. Embrex shall give Pfizer
          prompt written notice of the commencement of any such suit, action or
          proceeding or claim of infringement and will furnish Pfizer a copy of
          each communication relating to the alleged infringement. Pfizer shall
          give to Embrex all authority (including the right to exclusive control
          of the defense of any such suit, action or proceeding and the
          exclusive right after consultation with Pfizer, to compromise,
          litigate, settle or otherwise dispose of any such suit, action or
          proceeding), at Embrex's expense, including by providing information
          and assistance necessary to defend or settle any such suit, action or
          proceeding; provided, however, Embrex shall obtain Pfizer's prior
          consent to such part of any settlement which contemplates payment or
          other action by Pfizer or has a material adverse effect on Pfizer's
          business. If the parties agree that Pfizer should be joined in any
          suit, action or proceeding pursuant to this Section, Embrex may, at
          Embrex's expense, join Pfizer as a defendant, and Pfizer shall execute
          all documents and take all other actions, including giving testimony,
          which may reasonably be required in connection with the defense of
          such suit, action or proceeding and prosecution of any counterclaim or
          cross claim.

<PAGE>

     4.3  Third Party Licenses.

          If the manufacture, use or sale by Embrex of a Product in any country
          would, in the opinion of both Embrex and Pfizer, infringe a patent
          owned by a third party, Embrex and Pfizer, upon mutual consent, shall
          attempt to obtain a license under such patent at Embrex's expense. If
          such license is obtained under such patent, * percent (* %) of any
          payments made by Embrex to such third party shall be deductible from
          royalty payments due from Embrex to Pfizer pursuant to this Agreement;
          provided, however, that in no event shall royalties payable to Pfizer
          be lower than * percent (* %) of * of such Product as a result of all
          such deductions. All such computations, payments, and adjustments
          shall be on a country by country and patent by patent basis.

5.   Representation and Warranty. Pfizer makes no representation or warranty
     that the Patent Rights are valid or that the exercise of the rights granted
     hereunder will not infringe the patent rights or other rights of a third
     party.

6.   Publicity. Except as required by law, and except for a mutually approved
     press release to be issued upon the signing of this Agreement, neither
     party may disclose the terms of this Agreement without the written consent
     of the other party.

7.   Filing, Prosecution and Maintenance of Patent Rights.

     7.1  Embrex shall have the exclusive right and obligation to file,
          prosecute and maintain Patent Rights and shall have the right to
          abandon patents pursuant to Section 7.2 below.

     7.2  Abandonment.

          Embrex shall notify Pfizer in a timely manner of any decision not to
          pursue an action or to abandon a pending patent application or an
          issued patent included in Patent Rights. Embrex's notice of
          abandonment of a pending patent application or an issued patent in
          said countries will terminate all Embrex's rights in and

______________________

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

           obligations under said patent or patent application, and said rights
           shall revert to Pfizer.

8.   Other Agreements.

     This Agreement is the sole agreement with respect to the subject matter and
     supersedes all other agreements and understandings between the parties with
     respect to same; provided, however, that the confidentiality and
     publication provisions in the Research Agreement, to the extent they would
     otherwise survive and govern under said Agreement, shall continue to
     survive and govern.

9.   Termination and Disengagement.

     9.1   Events of Termination. The following events shall constitute events
           of termination ("Events of Termination"):

           (a)  If any written representation or warranty by Pfizer or Embrex,
                or any of its officers, made under or in connection with this
                Agreement shall prove to have been incorrect in any material
                respect when made;

           (b)  Pfizer or Embrex shall fail in any material respect to perform
                or observe any term, covenant or understanding contained in this
                Agreement, and any such failure shall remain unremedied for
                thirty (30) days after written notice to the failing party.

     9.2   Termination. Upon the occurrence of any Event of Termination, the
           party not responsible may, by notice to the other party, terminate
           this Agreement.

     9.3   Termination of this Agreement for any reason shall be without
           prejudice to:

           (a) the rights and obligations of the parties provided in Section 10;

           (b) Pfizer's right to receive all royalty, milestone or other
               payments accrued hereunder; or

           (c) any other remedies which either party may otherwise have.

10.  Indemnification. Embrex will indemnify, defend and hold Pfizer harmless for
     any and all damages, settlements, costs, legal fees and other expenses
     incurred in connection with a claim by a third party against Pfizer based
     on any action or omission of Embrex's agents, employees, or officers
     related to its obligations under this Agreement.

11.  Notices and Reports.

     All notices shall be in writing mailed via certified mail, return receipt
     requested, courier, or facsimile transmission addressed as follows, or to
     such other address as may be designated from time to time:

     If to Pfizer:        Pfizer Global Research and Development
                          Eastern Point Road
                          Groton, CT 06340
                          Attention: Executive Vice President, PGRD
                          Cc: Assistant General Counsel

     If to Embrex:        Embrex, Inc.
                          PO Box 13989
                          Research Triangle Park, NC 27709-3989
                          Attention: Mr. Brian Hrudka,
                          VP Global Commercial Development


Notices shall be deemed given as of the date received at the above specified
address.

12.  Governing Law.

     This Agreement shall be governed by and construed in accordance with the
     laws of the State of New York.

13.  Miscellaneous.

     13.1  Binding Effect. This Agreement shall be binding upon and inure to the
           benefit of the parties and their respective legal representatives,
           successors and permitted assigns.

     13.2  Headings. Paragraph headings are inserted for convenience of
           reference only and do not form a part of this Agreement.


<PAGE>

     13.3  Counterparts. This Agreement may be executed simultaneously in two or
           more counterparts, each of which shall be deemed an original.
           Signatures may be transmitted via facsimile, thereby constituting the
           valid signature and delivery of this Agreement.

     13.4  Amendment; Waiver; etc. This Agreement may be amended, modified,
           superseded or canceled, and any of the terms may be waived, only by a
           written instrument executed by each party or, in the case of waiver,
           by the party or parties waiving compliance. The delay or failure of
           any party at any time or times to require performance of any
           provisions shall in no manner affect the rights at a later time to
           enforce the same. No waiver by any party of any condition or of the
           breach of any term contained in this Agreement, whether by conduct,
           or otherwise, in any one or more instances, shall be deemed to be, or
           considered as, a further or continuing waiver of any such condition
           or of the breach of such term or any other term of this Agreement.

     13.5  No Third Party Beneficiaries. No third party including any employee
           of any party to this Agreement, shall have or acquire any rights by
           reason of this Agreement. Nothing contained in this Agreement shall
           be deemed to constitute the parties as partners with each other or
           any third party.

     13.6  Assignment and Successors. This Agreement may not be assigned by
           either party, except that each party may assign this Agreement and
           the rights and interests of such party, in whole or in part, to any
           of its Affiliates, any purchaser of all or substantially all of its
           assets or to any successor corporation resulting from any merger or
           consolidation of such party with or into such corporations.

     13.7  Force Majeure. Neither Embrex nor Pfizer shall be liable for failure
           of or delay in performing obligations set forth in this Agreement,
           and neither shall be deemed in breach of its obligations, if such
           failure or delay is due to natural disasters or any causes reasonably
           beyond the control of Embrex or Pfizer.

<PAGE>

     13.8  Severability. If any provision of this Agreement is or becomes
           invalid or is ruled invalid by any court of competent jurisdiction or
           is deemed unenforceable, it is the intention of the parties that the
           remainder of the Agreement shall not be affected so long as the
           essential benefits of this Agreement remains enforceable and
           obtainable.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

PFIZER INC                       Embrex, Inc.


By:   /s/ George M. Milne        By:   /s/ Randall L. Marcuson
    ------------------------         ----------------------------

Name: George M. Milne            Name: Randall L. Marcuson
Title: Sr. Vice President        Title: President & CEO

<PAGE>

EXHIBIT A
---------

1.)  US Application No. 08/973,133. WO 9640234 A (in ovo vaccination with
sporozoites and/or merozoites): Filed in June `95. (Pfizer designation PC9170).

2.)  US application no. 08/973,151. WO 9640233 A (in ovo vaccination with
oocysts and/or sporocysts): Filed in June'95 (Pfizer designation PC9215),

3.)  International application number: PCT/USOO/04733 (method for purification,
recovery, and sporulation of cysts and oocysts). International filing date
25FEB00 (Pfizer designation PC10433).

The attached table represents the countries in which those patents are filed

*


_________________________________

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".

<PAGE>

Exhibit B: Vaccine Technology and Materials

*

__________________________________________

* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Commission and marked "CONFIDENTIAL TREATMENT".