|   | ***Certain                confidential information contained in this document, marked by brackets,                has been omitted and filed with the Securities and Exchange Commission                pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as                amended.** |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PUBLIC      HEALTH SERVICE**

**PATENT      LICENSE AGREEMENT--**
***EXCLUSIVE***

|   | Patent License Number:                                                                                   |   |
|--------|----------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                     |   |
|   | L-086-00/0                                                                                               |   |
|   |                                                                                                     |   |
|   | Serial Number(s) of Licensed Patent(s)              and/or              Patent Application(s):           |   |
|   |                                                                                                     |   |
|   | 07/891,962              (E-148-1992/0-US-01); 08/455,231 (E-148-1992/0-US-08);                           |   |
|   |                                                                                                     |   |
|   | 08/626,953              (E-148-1992/0-US-10); and 09/235,375              (E-148-1992/0-US-11)           |   |
|   |                                                                                                     |   |
|   | Licensee:                                                                                                |   |
|   |                                                                                                     |   |
|   | Targeted              Genetics Corporation, a corporation of              Washington                     |   |
|   |                                                                                                     |   |
|   | having              a principal place of business at 1100 Olive Way, Suite              100,             |   |
|   |                                                                                                     |   |
|   | Seattle,              WA 98101                                                                           |   |
|   |                                                                                                     |   |
|   | Cooperative              Research and Development Agreement (CRADA) Number (if              applicable): |   |
|   |                                                                                                     |   |
|   | None                                                                                                     |   |
|   |                                                                                                     |   |
|   | Additional Remarks:                                                                                      |   |
|   |                                                                                                     |   |
|   | Related                to License L-059-93/0                                                             |   |
|   |                                                                                                     |   |
|   |                                                                                                     |   |
|   |                                                                                                     |   |
|   | Public Benefit(s):                                                                                       |   |
|   |                                                                                                     |   |
|   |                                                                                                     |   |

**"Agreement"**
**Agreement**
**Agreement**

|   | 1) | The                National Institutes of Health ("NIH"), the Centers for Disease Control                and                Prevention ("CDC"), or the Food and Drug Administration ("FDA"),                hereinafter singly or collectively referred to as "**PHS**",                agencies of the United States Public Health Service within the Department                of Health and Human Services ("**DHHS**");                and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | The                person, corporation, or institution identified above and/or on the                Signature Page, having offices at the address indicated on the Signature                Page, and its Affiliates as defined in Appendix D, Paragraph 2.14,                hereinafter referred to as "**Licensee**". |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PHS      PATENT LICENSE AGREEMENT--**
***EXCLUSIVE***

**PHS**
**Licensee**

| 1. | BACKGROUND |
|----|------------|

|   | 1.01 | In                the course of conducting biomedical and behavioral research, **PHS**                investigators made inventions that may have commercial                applicability. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.02 | By                assignment of rights from **PHS**                employees and other inventors, **DHHS**,                on behalf of the United States Government, owns intellectual property                rights claimed in any United States and/or foreign patent applications                or                patents corresponding to the assigned inventions. **DHHS**                also owns any tangible embodiments of these inventions actually reduced                to                practice by **PHS**. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.03 | The                Secretary of **DHHS**                has delegated to **PHS**                the authority to enter into this **Agreement**                for the licensing of rights to these                inventions. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.04 | **PHS**                desires to transfer these inventions to the private sector through                commercialization licenses to facilitate the commercial development                of                products and processes for public use and                benefit. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.05 | **Licensee**                desires to acquire commercialization rights to certain of these inventions                in order to develop processes, methods, and/or marketable products                for                public use and benefit. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | DEFINITIONS |
|----|-------------|

|   | 2.01 | **"Benchmarks"**                mean the performance milestones that are set forth in Appendix                E. |
|--------|------|------------------------------------------------------------------------------------------------------------------|

|   | 2.02 | **"Commercial                Development Plan"**                means the written commercialization plan attached as Appendix                F. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.03 | **"First                Commercial Sale"**                means the initial transfer by or on behalf of **Licensee**                or                its sublicensees of **Licensed                Products**or                the initial practice of a **Licensed                Process**                by                or on behalf of **Licensee**or                its sublicensees in exchange for cash or some equivalent to which                value                can be assigned for the purpose of determining **Net                Sales**. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.04 | **"Government"**                means the Government of the United States of                America. |
|--------|------|------------------------------------------------------------------------------------------------------|

|   | 2.05 | **"Licensed Fields of Use"**                means the fields of use identified in                Appendix B. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.06 | **"Licensed Patent Rights"**                shall mean: |
|--------|------|-------------------------------------------------------------------|

|   | a) | Patent                applications (including provisional patent applications and PCT patent                applications) and/or patents listed in Appendix A, all divisions                and                continuations of these applications, all patents issuing from such                applications, divisions, and continuations, and any reissues,                reexaminations, and extensions of all such                patents; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | to                the extent that the following contain one or more claims directed                to the                invention or inventions disclosed in a) above: i) continuations-in-part                of                a) above; ii) all divisions and continuations of these                continuations-in-part; iii) all patents issuing from such                continuations-in-part, divisions, and continuations; iv) priority                patent                application(s) of a) above; and v) any reissues, reexaminations,                **and                extensions of all such patents**; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | to                the extent that the following contain one or more claims directed                to the                invention or inventions disclosed in a) above: all counterpart foreign                and                U.S. patent applications and patents to a) and b) above, including                those                listed in Appendix A. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensed Patent Rights**
*not*

|   | 2.07 | **"Licensed                Process(es)"**                means processes which, in the course of being practiced would be                within                the scope of one or more claims of the **Licensed Patent Rights**                that have not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent                jurisdiction. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.08 | **"Licensed                Product(s)"**                means tangible materials which, in the course of manufacture, use,                sale,                or importation would be within the scope of one or more claims of                the                **Licensed Patent Rights**                that have not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent                jurisdiction. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.09 | **"Licensed Territory"**                means the geographical area identified in                Appendix B. |
|--------|------|------------------------------------------------------------------------------------------------------------------------|

|   | 2.10 | **"Net                Sales"**                means the total gross receipts for sales of **Licensed                Products**                or                practice of **Licensed                Processes**                by                or on behalf of **Licensee**                or                its sublicensees, and from leasing, renting, or otherwise making                **Licensed                Products**                available to others without sale or other dispositions, whether invoiced                or not, less returns and allowances, packing costs, insurance costs,                freight out, taxes or excise duties imposed on the transaction (if                separately invoiced), and wholesaler and cash discounts in amounts                customary in the trade to the extent actually granted. No deductions                shall                be made for commissions paid to individuals, whether they be with                independent sales agencies or regularly employed by **Licensee**,                or sublicensees, and on its payroll, or for the cost of                collections. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.11 | **"Practical                Application"**                means to manufacture in the case of a composition or product, to                practice                in the case of a process or method, or to operate in the case of                a machine                or system; and in each case, under such conditions as to establish                that                the invention is being utilized and that its benefits are to the                extent                permitted by law or **Government**                regulations available to the public on reasonable                terms. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.12 | **"Research                License"**                means a nontransferable, nonexclusive license to make and to use                the                **Licensed                Products**                or                **Licensed                Processes**                as                defined by the **Licensed Patent Rights**                for purposes of research and not for purposes of commercial manufacture                or                distribution or in lieu of                purchase. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 3. | GRANT                OF RIGHTS |
|----|--------------------------------|

|   | 3.01 | **PHS**                hereby grants and **Licensee**                accepts, subject to the terms and conditions of this **Agreement**,                an exclusive license under the **Licensed Patent Rights**                in                the **Licensed Territory**                to                make and have made, to use and have used, to sell and have sold,                to offer                to sell, and to import any **Licensed                Products**                in                the **Licensed Fields of Use**                and to practice and have practiced any **Licensed                Processes**                in                the **Licensed Fields of Use**. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.02 | This                **Agreement**                confers no license or rights by implication, estoppel, or otherwise                under                any patent applications or patents of **PHS**                other than **Licensed Patent Rights**                regardless of whether such patents are dominant or subordinate to                **Licensed Patent Rights**. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | SUBLICENSING |
|----|--------------|

|   | 4.01 | Upon                written approval by **PHS**,                which approval will not be unreasonably withheld, **Licensee**                may enter into sublicensing agreements under the **Licensed Patent Rights**. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.02 | **Licensee**                agrees that any sublicenses granted by it shall provide that the                obligations to **PHS**                of                Paragraphs 5.01-5.04, 8.01, 10.01, 10.02, 12.05, and 13.07-13.09                of this                **Agreement**                shall be binding upon the sublicensee as if it were a party to this                **Agreement**.                **Licensee**                further agrees to attach copies of these Paragraphs to all sublicense                agreements. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.03 | Any                sublicenses granted by **Licensee**                shall provide for the termination of the sublicense, or the conversion                to                a license directly between such sublicensees and **PHS**,                at the option of the sublicensee, upon termination of this **Agreement**                under Article 13. Such conversion is subject to **PHS**                approval and contingent upon acceptance by the sublicensee of the                remaining provisions of this **Agreement**. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.04 | **Licensee**                agrees to forward to **PHS**                a                copy of each fully executed sublicense agreement postmarked within                thirty                (30) days of the execution of such agreement. To the extent permitted                by                law, **PHS**                agrees to maintain each such sublicense agreement in                confidence. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | STATUTORY                AND PHS REQUIREMENTS AND RESERVED GOVERNMENT                RIGHTS |
|----|---------------------------------------------------------------------------------------------|

|   | 5.01 | (a) | **PHS**                reserves on behalf of the Government an irrevocable, nonexclusive,                nontransferable, royalty-free license for the practice of all inventions                licensed under the **Licensed Patent Rights**                throughout the world by or on behalf of the Government and on behalf                of                any foreign government or international organization pursuant to                any                existing or future treaty or agreement to which the **Government**is a signatory. Prior to the **First                Commercial Sale**,                **Licensee**                agrees to provide **PHS**                reasonable quantities of **Licensed                Products**                or                materials made through the **Licensed                Processes**                for **PHS**                research use. |
|--------|------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | In                the event that **Licensed Patent Rights**                are Subject Inventions made under a Cooperative Research and Development                Agreement (CRADA), **Licensee**                grants to the Government, pursuant to 15 U.S.C. §3710a(b)(1)(A),                a nonexclusive, nontransferable, irrevocable, paid-up license to                practice                **Licensed Patent Rights**                or                have **Licensed Patent Rights**                practiced throughout the world by or on behalf of the                **Government**. In the exercise of such license, the                **Government** shall not publicly disclose trade secrets or                commercial or financial information that is privileged or confidential                within the meaning of 5 U.S.C. §552(b)(4) or which would be                considered as such if it had been obtained from a non-Federal party.                Prior                to the **First                Commercial Sale**,                **Licensee**                agrees to provide **PHS**                reasonable quantities of **Licensed                Products**                or                materials made through the **Licensed                Processes**                for **PHS**                research use. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 5.02 | **Licensee**                agrees that products used or sold in the United States embodying                **Licensed                Products**                or                produced through use of **Licensed                Processes**                shall be manufactured substantially in the United States, unless                a written                waiver is obtained in advance from **PHS**. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.03 | **Licensee**                acknowledges that **PHS**                may enter into future Cooperative Research and Development Agreements                (CRADAs) under the Federal Technology Transfer Act of 1986 that relate                to                the subject matter of this **Agreement**.                **Licensee**                agrees not to unreasonably deny requests for a **Research                License**                from such future collaborators with **PHS**                when acquiring such rights is necessary in order to make a Cooperative                Research and Development Agreement (CRADA) project feasible. **Licensee**                may request an opportunity to join as a party to the proposed Cooperative                Research and Development Agreement                (CRADA). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.04 | (a) | In                addition to the reserved license of Paragraph 5.01 above, **PHS**                reserves the right to grant nonexclusive **Research                Licenses** directly or to require **Licensee**                to                grant nonexclusive **Research Licenses** on reasonable terms.                The purpose of this **Research License** is to encourage                basic research, whether conducted at an academic or corporate facility.                In                order to safeguard the **Licensed Patent Rights**,                however, **PHS**                shall consult with **Licensee**                before granting to commercial entities a Research License or providing                to                them research samples of materials made through the **Licensed                Processes**. |
|--------|------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | In                exceptional circumstances, and in the event that **Licensed Patent Rights**                are Subject Inventions made under a Cooperative Research and Development                Agreement (CRADA), the Government, pursuant to                15 U.S.C. §3710a(b)(1)(B), retains the right to require the                **Licensee**                to                grant to a responsible applicant a nonexclusive, partially exclusive,                or                exclusive sublicense to use **Licensed Patent Rights**                in                **Licensee**'s                field of use on terms that are reasonable under the circumstances;                or if                **Licensee**                fails to grant such a license, the **Government** retains the                right to grant the license itself. The exercise of such rights by                the                **Governmen**t shall only be in exceptional circumstances and                only if the **Government** determines (i) the action is                necessary to meet health or safety needs that are not reasonably                satisfied                by **Licensee**;                (ii) the action is necessary to meet requirements for public use                specified                by Federal regulations, and such requirements are not reasonably                satisfied                by the **Licensee**;                or (iii) the **Licensee**                has failed to comply with an agreement containing provisions described                in                15 U.S.C. §3710a(c)(4)(B). The determination made by the                **Government**under this Article is subject to                administrative appeal and judicial review under                35 U.S.C. §203(2). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | ROYALTIES                AND REIMBURSEMENT |
|----|--------------------------------------------|

|   | 6.01 | **Licensee**                agrees to pay to **PHS**                a                noncreditable, nonrefundable license issue royalty as set forth in                Appendix C within thirty (30) days from the date that this **Agreement**                becomes effective. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.02 | **Licensee**                agrees to pay to **PHS**                a                nonrefundable minimum annual royalty as set forth in Appendix C.                The                minimum annual royalty is due and payable on January 1 of each calendar                year and may be credited against any earned royalties due for sales                made                in that year. The minimum annual royalty due for the first calendar                year                of this **Agreement**                may be prorated according to the fraction of the calendar year remaining                between the effective date of this **Agreement**                and the next subsequent January 1. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.03 | **Licensee**                agrees to pay **PHS**                earned royalties as set forth in Appendix                C. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------|

|   | 6.04 | **Licensee**                agrees to pay **PHS**                benchmark royalties as set forth in Appendix                C. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------|

|   | 6.05 | **Licensee**                agrees to pay **PHS**                sublicensing royalties as set forth in Appendix                C. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 6.06 | A                patent or patent application licensed under this **Agreement**                shall cease to fall within the **Licensed Patent Rights**                for the purpose of computing earned royalty payments in any given                country                on the earliest of the dates that a) the application has been abandoned                and not continued, b) the patent expires or irrevocably lapses, or                c) the                claim has been held to be invalid or unenforceable by an unappealed                or                unappealable decision of a court of competent jurisdiction or                administrative agency. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.07 | No                multiple royalties shall be payable because any **Licensed                Products**                or                **Licensed                Processes**                are covered by more than one of the **Licensed Patent Rights**. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.08 | On                sales of **Licensed                Products**                by                **Licensee**                to                sublicensees or on sales made in other than an arm's-length transaction,                the value of the **Net                Sales**                attributed under this Article 6 to such a transaction shall be that                which                would have been received in an arm's-length transaction, based on                sales of                like quantity and quality products on or about the time of such                transaction. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.09 | With                regard to expenses associated with the preparation, filing, prosecution,                and maintenance of all patent applications and patents included within                the                **Licensed Patent Rights**                incurred by **PHS**                prior to the effective date of this **Agreement**,                **Licensee**                shall pay to **PHS**,                as an additional royalty, within sixty (60) days of **PHS**'s                submission of a statement and request for payment to **Licensee**,                an amount equivalent to such patent expenses previously incurred                by                **PHS**. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.10 | With                regard to expenses associated with the preparation, filing, prosecution,                and maintenance of all patent applications and patents included within                the                **Licensed Patent Rights**                incurred by **PHS**                on                or after the effective date of this **Agreement**,                **PHS**,                at its sole option, may require **Licensee**: |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PHS**
**PHS**

**PHS**
**PHS**
**Licensee**

**Licensee**
**Licensed Patent Rights**
**Licensee**
**PHS**

|   | 6.11 | **Licensee**                may elect to surrender its rights in any country of the **Licensed Territory**                under any **Licensed Patent Rights**                upon ninety (90) days written notice to **PHS**                and owe no payment obligation under Article 6.10 for patent-related                expenses incurred in that country after ninety (90) days of the effective                date of such written notice. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | PATENT                FILING, PROSECUTION, AND                MAINTENANCE |
|----|---------------------------------------------------------------------------|

|   | 7.01 | Except                as otherwise provided in this Article 7, **PHS**                agrees to take responsibility for, but to consult with, the **Licensee**                in                the preparation, filing, prosecution, and maintenance of any and                all                patent applications or patents included in the **Licensed Patent Rights**                and shall furnish copies of relevant patent-related documents to                **Licensee**. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 7.02 | Upon                **PHS**'s                written request, **Licensee**                shall assume the responsibility for the preparation, filing, prosecution,                and maintenance of any and all patent applications or patents included                in                the **Licensed Patent Rights**                and shall on an ongoing basis promptly furnish copies of all                patent-related documents to **PHS**.                In such event, **Licensee**                shall, subject to the prior approval of **PHS**,                select registered patent attorneys or patent agents to provide such                services on behalf of **Licensee**                and **PHS**.                **PHS**                shall provide appropriate powers of attorney and other documents                necessary                to undertake such actions to the patent attorneys or patent agents                providing such services. **Licensee**                and its attorneys or agents shall consult with **PHS**                in                all aspects of the preparation, filing, prosecution and maintenance                of                patent applications and patents included within the **Licensed Patent Rights**                and shall provide **PHS**                sufficient opportunity to comment on any document that **Licensee**                intends to file or to cause to be filed with the relevant intellectual                property or patent office. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.03 | At                any time, **PHS**                may provide **Licensee**                with written notice that **PHS**                wishes to assume control of the preparation, filing, prosecution,                and                maintenance of any and all patent applications or patents included                in the                **Licensed Patent Rights**.                If **PHS**                elects to assume such responsibilities, **Licensee**                agrees to cooperate fully with **PHS**,                its attorneys, and agents in the preparation, filing, prosecution,                and                maintenance of any and all patent applications or patents included                in the                **Licensed Patent Rights**                and to provide **PHS**                with complete copies of any and all documents or other materials                that                **PHS**                deems necessary to undertake such responsibilities. **Licensee**                shall be responsible for all costs associated with transferring patent                prosecution responsibilities to an attorney or agent of **PHS**'s                choice. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.04 | Each                party shall promptly inform the other as to all matters that come                to its                attention that may affect the preparation, filing, prosecution, or                maintenance of the **Licensed Patent Rights**                and permit each other to provide comments and suggestions with respect                to                the preparation, filing, prosecution, and maintenance of **Licensed Patent Rights**,                which comments and suggestions shall be considered by the other                party. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | RECORD                KEEPING |
|----|-------------------------------|

|   | 8.01 | **Licensee**                agrees to keep accurate and correct records of **Licensed                Products**                made, used, sold, or imported and **Licensed                Processes**                practiced under this **Agreement**                appropriate to determine the amount of royalties due **PHS**.                Such records shall be retained for at least five (5) years following                a                given reporting period and shall be available during normal business                hours                for inspection at the expense of **PHS**                by                an accountant or other designated auditor selected by **PHS**                for the sole purpose of verifying reports and payments hereunder.                The                accountant or auditor shall only disclose to **PHS**                information relating to the accuracy of reports and payments made                under                this **Agreement**.                If an inspection shows an underreporting or underpayment in excess                of five                percent (5%) for any twelve (12) month period, then **Licensee**                shall reimburse **PHS**                for the cost of the inspection at the time **Licensee**                pays the unreported royalties, including any late charges as required                by                Paragraph 9.08 of this **Agreement**.                All payments required under this Paragraph shall be due within thirty                (30)                days of the date **PHS**                provides **Licensee**                notice of the payment due. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.02 | **Licensee**                agrees to have an audit of sales and royalties conducted by an independent                auditor at least every two (2) years if annual sales of the **Licensed                Product**                or                **Licensed                Processes**                are over two (2) million dollars. The audit shall address, at a minimum,                the amount of gross sales by or on behalf of **Licensee**                during the audit period, terms of the license as to percentage or                fixed                royalty to be remitted to the **Government**,                the amount of royalty funds owed to the **Government**                under this **Agreement**,                and whether the royalty amount owed has been paid to the **Government**                and is reflected in the records of the **Licensee**.                The audit shall also indicate the **PHS**                license number, product, and the time period being audited. A report                certified by the auditor shall be submitted promptly by the auditor                directly to **PHS**                on                completion. **Licensee**                shall pay for the entire cost of the                audit. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 9. | REPORTS                ON PROGRESS, BENCHMARKS, SALES, AND                PAYMENTS |
|----|------------------------------------------------------------------------------------|

|   | 9.01 | Prior                to signing this **Agreement**,                **Licensee**                has provided to **PHS**                the **Commercial                Development Plan**                at                Appendix F, under which **Licensee**                intends to bring the subject matter of the **Licensed Patent Rights**                to                the point of **Practical                Application**.                This **Commercial                Development Plan**                is                hereby incorporated by reference into this **Agreement**.                Based on this plan, performance **Benchmarks**                are determined as specified in Appendix                E. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.02 | **Licensee**                shall provide written annual reports on its product development progress                or efforts to commercialize under the **Commercial                Development Plan**                for each of the **Licensed Fields of Use**                within sixty (60) days after December 31 of each calendar year. These                progress reports shall include, but not be limited to: progress on                research and development, status of applications for regulatory approvals,                manufacturing, sublicensing, marketing, importing, and sales during                the                preceding calendar year, as well as plans for the present calendar                year.                **PHS**                also encourages these reports to include information on any of                **Licensee**'s                public service activities that relate to the **Licensed Patent Rights**.                If reported progress differs from that projected in the **Commercial                Development Plan**                and **Benchmarks**,                **Licensee**                shall explain the reasons for such differences. In any such annual                report,                **Licensee**                may propose amendments to the **Commercial                Development Plan**,                acceptance of which by **PHS**                may not be denied unreasonably. **Licensee**                agrees to provide any additional information reasonably required                by                **PHS**                to                evaluate **Licensee**'s                performance under this **Agreement**.                **Licensee**                may amend the **Benchmarks**                at                any time upon written consent by **PHS**.                **PHS**                shall not unreasonably withhold approval of any request of **Licensee**                to                extend the time periods of this schedule if such request is supported                by a                reasonable showing by **Licensee**                of                diligence in its performance under the **Commercial                Development Plan**                and toward bringing the **Licensed                Products**                to                the point of **Practical                Application**                as                defined in 37 CFR §404.3(d). **Licensee**                shall amend the **Commercial                Development Plan**                and **Benchmarks**                at                the request of **PHS**                to                address any **Licensed Fields of Use**                not specifically addressed in the plan originally                submitted. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.03 | **Licensee**                shall report to **PHS**                the dates for achieving **Benchmarks**                specified in Appendix E and the **First                Commercial Sale**                in                each country in the **Licensed Territory**                within thirty (30) days of such                occurrences. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.04 | **Licensee**                shall submit to **PHS**                within sixty (60) days after each calendar half-year ending June                30 and                December 31 a royalty report setting forth for the preceding half-year                period the amount of the **Licensed                Products**                sold or **Licensed                Processes**                practiced by or on behalf of **Licensee**                in                each country within the **Licensed Territory**,                the **Net                Sales**,                and the amount of royalty accordingly due. With each such royalty                report,                **Licensee**                shall submit payment of the earned royalties due. If no earned royalties                are due to **PHS**                for any reporting period, the written report shall so state. The                royalty                report shall be certified as correct by an authorized officer of                **Licensee**                and shall include a detailed listing of all deductions made under                Paragraph 2.10 to determine **Net                Sales**                made under Article 6 to determine royalties                due. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.05 | **Licensee**                agrees to forward semi-annually to **PHS**                a                copy of such reports received by **Licensee**                from its sublicensees during the preceding half-year period as shall                be                pertinent to a royalty accounting to **PHS**                by                **Licensee**                for activities under the                sublicense. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.06 | Royalties                due under Article 6 shall be paid in U.S. dollars. For conversion                of                foreign currency to U.S. dollars, the conversion rate shall be the                New                York foreign exchange rate quoted in *The                Wall Street Journal*                on                the day that the payment is due. All checks and bank drafts shall                be drawn                on United States banks and shall be payable, as appropriate, to                "NIH/Patent Licensing." All such payments shall be sent to the following                address: NIH, P.O. Box 360120, Pittsburgh, PA 15251-6120. Any                loss of exchange, value, taxes, or other expenses incurred in the                transfer                or conversion to U.S. dollars shall be paid entirely by **Licensee**.                The royalty report required by Paragraph 9.04 of this **Agreement**                shall accompany each such payment, and a copy of such report shall                also be                mailed to **PHS**                at                its address for notices indicated on the Signature Page of this                **Agreement**. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.07 | **Licensee**                shall be solely responsible for determining if any tax on royalty                income                is owed outside the United States and shall pay any such tax and                be                responsible for all filings with appropriate agencies of foreign                governments. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.08 | Interest                and penalties may be assessed by **PHS**                on                any overdue payments in accordance with the Federal Debt Collection                Act.                The payment of such late charges shall not prevent **PHS**                from exercising any other rights it may have as a consequence of                the                lateness of any payment. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.09 | All                plans and reports required by this Article 9 and marked "confidential"                by                **Licensee**                shall, to the extent permitted by law, be treated by **PHS**                as                commercial and financial information obtained from a person and as                privileged and confidential, and any proposed disclosure of such                records                by the PHS under the Freedom of Information Act (FOIA),                5 U.S.C. §552 shall be subject to the predisclosure notification                requirements of                45 CFR §5.65(d). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | PERFORMANCE |
|-----|-------------|

|   | 10.01 | **Licensee**                shall use its reasonable best efforts to bring the **Licensed                Products**                and **Licensed                Processes**                to                **Practical                Application**.                "Reasonable best efforts" for the purposes of this provision shall                include                adherence to the **Commercial                Development Plan**                at                Appendix F and performance of the **Benchmarks**                at                Appendix E. The efforts of a sublicensee shall be considered the                efforts                of **Licensee**. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.02 | Upon                the **First                Commercial Sale**,                until the expiration of this **Agreement**,                **Licensee**                shall use its reasonable best efforts to make **Licensed                Products**                and **Licensed                Processes**                reasonably accessible to the United States                public. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | INFRINGEMENT                AND PATENT ENFORCEMENT |
|-----|----------------------------------------------------|

|   | 11.01 | **PHS**                and **Licensee**                agree to notify each other promptly of each infringement or possible                infringement of the **Licensed Patent Rights**,                as well as any facts which may affect the validity, scope, or                enforceability of the **Licensed Patent Rights**                of                which either Party becomes aware. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11.02 | Pursuant                to this **Agreement**                and the provisions of Chapter 29 of title 35, United States Code,                **Licensee**                may: a) bring suit in its own name, at its own expense, and on its                own                behalf for infringement of presumably valid claims in the **Licensed Patent Rights**;                b) in any such suit, enjoin infringement and collect for its use,                damages,                profits, and awards of whatever nature recoverable for such infringement;                and c) settle any claim or suit for infringement of the **Licensed Patent Rights**                provided, however, that **PHS**                and appropriate **Government**                authorities shall have the first right to take such actions. If                **Licensee**                desires to initiate a suit for patent infringement, **Licensee**                shall notify **PHS**                in                writing. If **PHS**                does not notify **Licensee**                of                its intent to pursue legal action within ninety (90) days, **Licensee**                will be free to initiate suit. **PHS**                shall have a continuing right to intervene in such suit. **Licensee**                shall take no action to compel the **Government**                either to initiate or to join in any such suit for patent infringement.                **Licensee**                may request the **Government**                to                initiate or join in any such suit if necessary to avoid dismissal                of the                suit. Should the **Government**                be                made a party to any such suit, **Licensee**                shall reimburse the **Government**                for any costs, expenses, or fees which the **Government**                incurs as a result of such motion or other action, including any                and all                costs incurred by the **Government**                in                opposing any such motion or other action. In all cases, **Licensee**                agrees to keep **PHS**                reasonably apprised of the status and progress of any litigation.                Before                **Licensee**                commences an infringement action, **Licensee**                shall notify **PHS**                and give careful consideration to the views of **PHS**                and to any potential effects of the litigation on the public health                in                deciding whether to bring suit. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.03 | In                the event that a declaratory judgment action alleging invalidity                or                non-infringement of any of the **Licensed Patent Rights**                shall be brought against **Licensee**                or                raised by way of counterclaim or affirmative defense in an infringement                suit brought by **Licensee**                under Paragraph 11.02, pursuant to this **Agreement**                and the provisions of Chapter 29 of Title 35, United States Code                or other                statutes, **Licensee**                may: a) defend the suit in its own name, at its own expense, and                on its                own behalf for presumably valid claims in the **Licensed Patent Rights**;                b) in any such suit, ultimately to enjoin infringement and to collect                for                its use, damages, profits, and awards of whatever nature recoverable                for                such infringement; and c) settle any claim or suit for declaratory                judgment involving the **Licensed Patent Rights**-provided,                however, that **PHS**                and appropriate **Government**                authorities shall have the first right to take such actions and shall                have                a continuing right to intervene in such suit. If **PHS**                does not notify **Licensee**                of                its intent to respond to the legal action within a reasonable time,                **Licensee**                will be free to do so. **Licensee**                shall take no action to compel the **Government**                either to initiate or to join in any such declaratory judgment action.                **Licensee**                may request the **Government**                to                initiate or to join any such suit if necessary to avoid dismissal                of the                suit. Should the **Government**                be                made a party to any such suit by motion or any other action of                **Licensee**,                **Licensee**                shall reimburse the **Government**                for any costs, expenses, or fees which the **Government**                incurs as a result of such motion or other action. If **Licensee**                elects not to defend against such declaratory judgment action,                **PHS**,                at its option, may do so at its own expense. In all cases, **Licensee**                agrees to keep **PHS**                reasonably apprised of the status and progress of any litigation.                Before                **Licensee**                commences an infringement action, **Licensee**                shall notify **PHS**                and give careful consideration to the views of **PHS**                and to any potential effects of the litigation on the public health                in                deciding whether to bring suit. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.04 | In                any action under Paragraphs 11.02 or 11.03, the expenses including                costs,                fees, attorney fees, and disbursements, shall be paid by **Licensee**.                The value of any recovery made by **Licensee**                through court judgment or settlement shall be treated as **Net                Sales**                and subject to earned royalties. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.05 | **PHS**                shall cooperate fully with **Licensee**                in                connection with any action under Paragraphs 11.02 or 11.03. **PHS**                agrees promptly to provide access to all necessary documents and                to render                reasonable assistance in response to a request by **Licensee**. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | NEGATION                OF WARRANTIES AND                INDEMNIFICATION |
|-----|--------------------------------------------------------------------------|

|   | 12.01 | **PHS**                offers no warranties other than those specified in Article                1. |
|--------|-------|-----------------------------------------------------------------------------------------------------|

----

|   | 12.02 | **PHS**                does not warrant the validity of the **Licensed Patent Rights**                and makes no representations whatsoever with regard to the scope                of the                **Licensed Patent Rights**,                or that the **Licensed Patent Rights**                may be exploited without infringing other patents or other intellectual                property rights of third parties. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.03 | **PHS**                MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR                FITNESS                FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS                OF                THE **LICENSED PATENT RIGHTS**                OR                TANGIBLE MATERIALS RELATED THERETO. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.04 | **PHS**                does not represent that it will commence legal actions against third                parties infringing the **Licensed Patent Rights**. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.05 | **Licensee**                shall indemnify and hold **PHS**,                its employees, students, fellows, agents, and consultants harmless                from                and against all liability, demands, damages, expenses, and losses,                including but not limited to death, personal injury, illness, or                property                damage in connection with or arising out of: a) the use by or on                behalf of                **Licensee**,                its sublicensees, directors, employees, or third parties of any                **Licensed Patent Rights**;                or b) the design, manufacture, distribution, or use of any **Licensed                Products**,                **Licensed                Processes**                or                materials by **Licensee**,                or other products or processes developed in connection with or arising                out                of the **Licensed Patent Rights**.                **Licensee**                agrees to maintain a liability insurance program consistent with                sound                business practice. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | TERM,                TERMINATION, AND MODIFICATION OF                RIGHTS |
|-----|-----------------------------------------------------------------------------|

|   | 13.01 | This                **Agreement**                is                effective when signed by all parties and shall extend to the expiration                of                the last to expire of the **Licensed Patent Rights**                unless sooner terminated as provided in this Article                13. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.02 | In                the event that **Licensee**                is                in default in the performance of any material obligations under this                **Agreement**,                including but not limited to the obligations listed in Article 13.05,                and                if the default has not been remedied within ninety (90) days after                the                date of notice in writing of such default, **PHS**                may terminate this **Agreement**                by                written notice and pursue outstanding amounts owed through procedures                provided by the Federal Debt Collection                Act. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.03 | In                the event that **Licensee**                becomes insolvent, files a petition in bankruptcy, has such a petition                filed against it, determines to file a petition in bankruptcy, or                receives                notice of a third party's intention to file an involuntary petition                in                bankruptcy, **Licensee**                shall immediately notify **PHS**                in                writing. Furthermore, **PHS**                shall have the right to terminate this **Agreement**                immediately upon **Licensee**'s                receipt of written notice. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.04 | **Licensee**                shall have a unilateral right to terminate this **Agreement**                and/or any licenses in any country or territory by giving **PHS**                sixty (60) days written notice to that                effect. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 13.05 | **PHS**                shall specifically have the right to terminate or modify, at its                option,                this **Agreement**,                if **PHS**                determines that the **Licensee**:                1) is not executing the **Commercial                Development Plan**                submitted with its request for a license and the **Licensee**                cannot otherwise demonstrate to **PHS**'s                satisfaction that the **Licensee**                has taken, or can be expected to take within a reasonable time, effective                steps to achieve **Practical                Application**                of                the **Licensed                Products**                or                **Licensed                Processes**;                2) has not achieved the **Benchmarks**                as                may be modified under Paragraph 9.02; 3) has willfully made a false                statement of, or willfully omitted, a material fact in the license                application or in any report required by the license **Agreement**;                4) has committed a material breach of a covenant or agreement contained                in                the license; 5) is not keeping **Licensed                Products**                or                **Licensed                Processes**                reasonably available to the public after commercial use commences;                6)                cannot reasonably satisfy unmet health and safety needs; or 7) cannot                reasonably justify a failure to comply with the domestic production                requirement of Paragraph 5.02 unless waived. In making this determination,                **PHS**                will take into account the normal course of such commercial development                programs conducted with sound and reasonable business practices and                judgment and the annual reports submitted by **Licensee**                under Paragraph 9.02. Prior to invoking this right, **PHS**                shall give written notice to **Licensee**                providing **Licensee**                specific notice of, and a ninety (90) day opportunity to respond                to,                **PHS**'s                concerns as to the previous items 1) to 7). If **Licensee**                fails to alleviate **PHS**'s                concerns as to the previous items 1) to 7) or fails to initiate corrective                action to **PHS**'s                satisfaction, **PHS**                may terminate this **Agreement**. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.06 | When                the public health and safety so require, and after written notice                to                **Licensee**                providing **Licensee**                a                sixty (60) day opportunity to respond, **PHS**                shall have the right to require **Licensee**                to                grant sublicenses to responsible applicants, on reasonable terms,                in any                **Licensed Fields of Use**                under the **Licensed Patent Rights**,                unless **Licensee**                can reasonably demonstrate that the granting of the sublicense would                not                materially increase the availability to the public of the subject                matter                of the **Licensed Patent Rights**.                **PHS**                will not require the granting of a sublicense unless the responsible                applicant has first negotiated in good faith with **Licensee**. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.07 | **PHS**                reserves the right according to 35 U.S.C. §209(f)(4) to                terminate or modify this **Agreement**                if                it is determined that such action is necessary to meet requirements                for                public use specified by federal regulations issued after the date                of the                license and such requirements are not reasonably satisfied by **Licensee**. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.08 | Within                thirty (30) days of receipt of written notice of **PHS**'s                unilateral decision to modify or terminate this **Agreement**,                **Licensee**                may, consistent with the provisions of 37 CFR §404.11, appeal                the decision by written submission to the designated **PHS**                official. The decision of the designated **PHS**                official shall be the final agency decision. **Licensee**                may thereafter exercise any and all administrative or judicial remedies                that may be available. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13.09 | Within                ninety (90) days of expiration or termination of this **Agreement**                under this Article 13, a final report shall be submitted by **Licensee**.                Any royalty payments, including those incurred but not yet paid (such                as                the full minimum annual royalty), and those related to patent expense,                due                to **PHS**                shall become immediately due and payable upon termination or expiration.                If terminated under this Article 13, sublicensees may elect to convert                their sublicenses to direct licenses with **PHS**                pursuant to Paragraph 4.03. Unless otherwise specifically provided                for                under this **Agreement**,                upon termination or expiration of this **Agreement**,                **Licensee**                shall return all **Licensed                Products**                or                other materials included within the **Licensed Patent Rights**                to                **PHS**                or                provide **PHS**                with certification of the destruction                thereof. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | GENERAL                PROVISIONS |
|-----|-----------------------------------|

|   | 14.01 | Neither                Party may waive or release any of its rights or interests in this                **Agreement**                except in writing. The failure of the **Government**                to                assert a right hereunder or to insist upon compliance with any term                or                condition of this **Agreement**                shall not constitute a waiver of that right by the **Government**                or                excuse a similar subsequent failure to perform any such term or condition                by **Licensee**. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 14.02 | This                **Agreement**                constitutes the entire agreement between the Parties relating to                the                subject matter of the **Licensed Patent Rights**,                and all prior negotiations, representations, agreements, and                understandings are merged into, extinguished by, and completely expressed                by this **Agreement**. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.03 | The                provisions of this **Agreement**                are severable, and in the event that any provision of this **Agreement**                shall be determined to be invalid or unenforceable under any controlling                body of law, such determination shall not in any way affect the validity                or enforceability of the remaining provisions of this **Agreement**. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.04 | If                either Party desires a modification to this **Agreement**,                the Parties shall, upon reasonable notice of the proposed modification                by                the Party desiring the change, confer in good faith to determine                the                desirability of such modification. No modification will be effective                until                a written amendment is signed by the signatories to this **Agreement**                or                their designees. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.05 | The                construction, validity, performance, and effect of this **Agreement**                shall be governed by Federal law as applied by the Federal courts                in the                District of Columbia. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.06 | All                notices required or permitted by this **Agreement**                shall be given by prepaid, first class, registered or certified mail                or by                an express/overnight delivery service provided by a commercial carrier,                properly addressed to the other Party at the address designated on                the                following Signature Page, or to such other address as may be designated                in                writing by such other Party. Notices shall be considered timely if                such                notices are received on or before the established deadline date or                sent on                or before the deadline date as verifiable by U.S. Postal Service                postmark                or dated receipt from a commercial carrier. Parties should request                a                legibly dated U.S. Postal Service postmark or obtain a dated receipt                from                a commercial carrier or the U.S. Postal Service. Private metered                postmarks                shall not be acceptable as proof of timely                mailing. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.07 | This                **Agreement**                shall not be assigned by **Licensee**                except: a) with the prior written consent of **PHS**,                such consent not to be withheld unreasonably; or b) as part of a                sale or                transfer of substantially the entire business of **Licensee**                relating to operations which concern this **Agreement**.                **Licensee**                shall notify **PHS**                within ten (10) days of any assignment of this **Agreement**                by                **Licensee**,                and **Licensee**                shall pay **PHS**,                as an additional royalty, one percent (1%) of the fair market value                of any                consideration received for any assignment of this **Agreement**                within thirty (30) days of such                assignment. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.08 | **Licensee**                agrees in its use of any **PHS**-supplied                materials to comply with all applicable statutes, regulations, and                guidelines, including **PHS**                and **DHHS**                regulations and guidelines. **Licensee**                agrees not to use the materials for research involving human subjects                or                clinical trials in the United States without complying with 21 CFR                Part 50                and 45 CFR Part 46. **Licensee**                agrees not to use the materials for research involving human subjects                or                clinical trials outside of the United States without notifying                **PHS**,                in writing, of such research or trials and complying with the applicable                regulations of the appropriate national control authorities. Written                notification to **PHS**                of                research involving human subjects or clinical trials outside of the                United                States shall be given no later than sixty (60) days prior to commencement                of such research or trials. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.09 | **Licensee**                acknowledges that it is subject to and agrees to abide by the United                States laws and regulations (including the Export Administration                Act of                1979 and Arms Export Control Act) controlling the export of technical                data, computer software, laboratory prototypes, biological material,                and                other commodities. The transfer of such items may require a license                from                the cognizant Agency of the U.S. **Government**                or                written assurances by **Licensee**                that it shall not export such items to certain foreign countries                without                prior approval of such agency. **PHS**                neither represents that a license is or is not required or that,                if                required, it shall be issued. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 14.10 | **Licensee**                agrees to mark the **Licensed                Products**                or                their packaging sold in the United States with all applicable U.S.                patent                numbers and similarly to indicate "Patent Pending" status. All                **Licensed                Products**                manufactured in, shipped to, or sold in other countries shall be                marked in                such a manner as to preserve **PHS**                patent rights in such countries. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.11 | By                entering into this **Agreement**,                **PHS**                does not directly or indirectly endorse any product or service provided,                or to be provided, by **Licensee**                whether directly or indirectly related to this **Agreement**.                **Licensee**                shall not state or imply that this **Agreement**                is                an endorsement by the **Government**,                **PHS**,                any other **Government**                organizational unit, or any **Government**                employee. Additionally, **Licensee**                shall not use the names of NIH, CDC, **PHS**,                or **DHHS**                or                the **Government**                or                their employees in any advertising, promotional, or sales literature                without the prior written consent of **PHS**. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.12 | The                Parties agree to attempt to settle amicably any controversy or claim                arising under this **Agreement**                or                a breach of this **Agreement**,                except for appeals of modifications or termination decisions provided                for                in Article 13. **Licensee**                agrees first to appeal any such unsettled claims or controversies                to the                designated **PHS**                official, or designee, whose decision shall be considered the final                agency                decision. Thereafter, **Licensee**                may exercise any administrative or judicial remedies that may be                available. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.13 | Nothing                relating to the grant of a license, nor the grant itself, shall be                construed to confer upon any person any immunity from or defenses                under                the antitrust laws or from a charge of patent misuse, and the acquisition                and use of rights pursuant to 37 CFR Part 404 shall not be immunized                from                the operation of state or Federal law by reason of the source of                the                grant. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.14 | Paragraphs                4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09, and 14.12 of this                **Agreement**                shall survive termination of this **Agreement**. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**SIGNATURES      BEGIN ON NEXT PAGE**

----

**PHS      PATENT LICENSE AGREEMENT--**
***EXCLUSIVE***

**SIGNATURE      PAGE**

**        PHS:**

| /s/                Steven M. Ferguson                                                                                                                                                                                                          |   | 5/7/04 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Steven                  M. Ferguson, MBA Director,                  Division of Technology Development and TransferOffice                  of Technology TransferNational                  Institutes of Health                                |   | Date   |
|                                                                                                                                                                                                                                                |   |   |
| Mailing                  Address for Notices:Office                  of Technology TransferNational                  Institutes of Health6011                  Executive Boulevard, Suite 325Rockville,                  Maryland 20852-3804 U.S.A. |   |   |

**Licensee**

**Licensee**

| by:Targeted Genetics Corporation                           |   |    |
|------------------------------------------------------------|--------|---------|
| Licensee                                                   |   |    |
|                                                       |   |    |
| /s/                    H. Stewart Parker                   |   | 5/21/04 |
| Signature                    of Authorized Official   |   | Date    |
|                                                       |   |    |
| H.                    Stewart Parker                  |   |    |
| Printed Name                                               |   |    |
|                                                       |   |    |
| Pres                  & CEO                       |   |    |
| Title                                                      |   |    |
|                                                       |   |    |
| Official and Mailing Address for                  Notices: |   |    |
|                                                       |   |    |
| Targeted                  Genetics Corporation        |   |    |
|                                                       |   |    |
| 1100                  Olive Way, Suite 100            |   |    |
|                                                       |   |    |
| Seattle,                  WA 98101                         |   |    |
|                                                       |   |    |
| Attention:                                       |   |    |

**Government**
**Agreement**
**Agreement**

----

**APPENDIX      A--PATENT(S) OR PATENT APPLICATION(S)**

**Patent(s)      or Patent Application(s):**

|   | 1. | 5,587,308                issued December 24, 1996 entitled “Modified Adeno-Associated Virus Vector                Capable of Expression from a Novel Promoter” (NIH Ref:                E-148-1992/0-US-01); |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | 5,989,540                issued November 23, 1999 entitled “Modified Adeno-Associated Virus Vector                Capable of Expression from a Novel Promoter” (NIH Ref:                E-148-1992/0-US-08); |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | 5,866,696                issued February 2, 1999 entitled “Modified Adeno-Associated Virus Vector                Capable of Expression from a Novel Promoter” (NIH Ref:                E-148-1992/0-US-10); and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | 6,165,781                issued December 26, 2000 entitled “Modified Adeno-Associated Virus Vector                Capable of Expression from a Novel Promoter” (NIH Ref:                E-148-1992/0-US-11). |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1. | PCT/US93/05310                filed June 2, 1993 and published as WO 93/24641 December 9, 1993                which claims priority to U.S. Patent Application 07/891,962 filed                June 2,                1992, now U.S. Patent 5,587,308 issued December 24, 1996 (NIH Ref:                E-148-1992/0-PCT-02); |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Australian                Patent 673367 issued November 7, 1996 from Australian Patent Application                45981/93 having an international filing date of June 2, 1993 (NIH                Ref:                E-1481992/0-AU-03); |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Canadian                Patent Application 2,136,441 having an international filing date                of                June 2, 1993 (NIH Ref:                E-148-1992/0-CA-04); |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | European                Patent 0644944 issued November 21, 2001 from European Application                EP 93 916425.7 having an international filing date of June 2, 1993                including all designated countries where the patent grant was registered                (NIH Ref: E-148-1992/0-EP-06); |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Hong                Kong Patent 1014549 issued June 7, 2002 from Hong Kong Application                KH                9811581435 having an international filing date of June 3, 1993 (NIH                Ref:                E-148-1992/0-HK-07); and |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | European                Patent Application EP 01 107900.0, a divisional application of                EP 93 916425.7 having an international filing date of June 2,                1993 (NIH Ref: E-148-1992/0-EP-05). |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**APPENDIX      B--LICENSED FIELDS OF USE AND TERRITORY**

| **Licensed              Fields of Use:** | The                development of compositions and methods utilizing Adeno-Associated                Viral                Vectors embodied in the **Licensed Patent Rights**                which are useful in the treatment and prophylaxis of human and animal                diseases. This field of use is separate and distinct form that of                the                **Agreement**                between **Licensee**                and **PHS**,                having **PHS**                reference number L-059-1993/0 effective March 18, 1994 and does not                include compositions and methods for the treatment and prophylaxis                of                cystic fibrosis. |
|------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| **Licensed Territory:**  | Worldwide |
|------------------------------------|-----------|

**The      remainder of this page intentionally left blank**

----

**APPENDIX      C--ROYALTIES**

**Royalties:**

| A. | **License Issue Royalty**                pursuant to Paragraph 6.01 as amended and set forth in Appendix D                of this                Agreement: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensee**
**PHS**
**License Issue Royalty**
**[*]**
**[*]**
**License Issue Royalty**
**Agreement**
**PHS**

| B. | **Minimum Annual Royalty**                pursuant to Paragraph 6.02 as amended and set forth in Appendix D                of this                **Agreement**: |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensee**
**PHS**
**Minimum Annual Royalty**
**[*]**
**[*]**
**Minimum Annual Royalty**
**Agreement**
**Agreement**
**PHS**
**Agreement**
**Agreement**
**Agreement**
**Agreement**
**Minimum Annual Royalty**
**PHS**

| C. | **Earned Royalty(ies)**                pursuant to Paragraph 6.03, as amended and set forth in Appendix                D, of                this **Agreement**: |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensee**
**PHS**
**Earned Royalty**
**Net Sales**

|   | 1. | **[*]**                Percent (**[*]**%)                of **Net Sales**                of                **Licensee**                and its sublicensees of all **Licensed Products**                manufactured and sold in the **Licensed Territory**. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensee**
**[*]**
**[*]**
**[*]**
**[*]**
**[*]**
**Licensed Products**
**Licensed Products**
**[*]**
**[*]**

**The      remainder of this page intentionally left blank**

***Confidential      Treatment      Requested.**

----

| D. | **Benchmark Royalty(ies)**                pursuant to Paragraph 6.04 of this **Agreement**: |
|----|--------------------------------------------------------------------------------------------------|

**Licensee**
**PHS**
**Benchmark Royalties**

| **Benchmark**                                                                                                                                                                                                                                                | **Benchmark Royalty** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|
| For                each **[*]**                up                to a total of **[*]**,                at the time of **[*]**                of                a **[*]**                or                equivalent clinical trial for a particular **[*]** | **[*]**                    |
| For                each **[*]**,                up to a total of **[*]**,                at the time of **[*]**                of                enrollment in **[*]**                or                equivalent clinical trial for a particular **[*]**   | **[*]**                    |
| For                each **[*]**,                up to a total of **[*]**,                at the time of **[*]**                approval or equivalent for a particular **[*]**                                                                               | **[*]**                    |

**Benchmark Royalty**
**PHS**
**Licensee**
**Person**
**Licensee**
**Benchmark**
**PHS**
**Benchmark      Royalty**
**PHS**
**Licensee**
**Licensee**

| E. | **Sublicensing Royalty**                pursuant to Paragraph 6.05, as amended and set forth in Appendix                D, of                this **Agreement**: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PHS**
**Licensee**
**PHS**
**Agreement**
**[*]**
**[*]**
**[*]**
**Sublicensing Royalty**
**PHS**
**PHS**

| F. | **Assignment Royalty**                pursuant to Paragraph 14.07, as amended and set forth in Appendix                D, of                this **Agreement**: |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**[*]**
**[*]**
**[*]**
**[*]**
**[*]**
**[*]**
**[*]**
**[*]**
**[*]**

***Confidential        Treatment Requested.**

----

**APPENDIX      D—**MODIFICATIONS****

**PHS**
**Licensee**
**Agreement**

|   | 2.06 | **"Licensed Patent Rights"**                shall mean: |
|--------|------|-------------------------------------------------------------------|

|   | a) | Patent                applications (including PCT patent applications) and/or patents listed                in                Appendix A, all divisions and continuations of these applications,                all                patents issuing from such applications, divisions, and continuations,                and                any reissues, reexaminations, substitutions, renewals, confirmations,                supplementary protection certificates, registrations, revalidations,                additions of or to and extensions of all such                patents; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | to                the extent that the following contain one or more claims directed                to the                invention or inventions disclosed in a) above: i) continuations-in-part                of                a) above; ii) all divisions and continuations of these                continuations-in-part; iii) all patents issuing from such                continuations-in-part, divisions, and continuations; iv) priority                patent                application(s) of a) above; and v) any reissues, reexaminations,                substitutions, renewals, confirmations, supplementary protection                certificates, registrations, revalidations, additions of or to                **and                extensions of all such patents**; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | to                the extent that the following contain one or more claims directed                to the                invention or inventions disclosed in a) above: all counterpart foreign                and                U.S. patent applications and patents to a) and b) above, including                those                listed in Appendix A. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Licensed Patent Rights**
*not*
**Licensed Patent Rights**
**Licensed Patent Rights**

|   | 2.07 | “**Licensed** **Process(es)**”                means processes which, in the course of being practiced would be                within                the scope of one or more claims of the **Licensed                Patent Rights**                that have not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent jurisdiction.                Nothwithstanding the foregoing, for purposes of calculating **Net                Sales**                as                set forth in Paragraph 2.10 of this **Agreement,                Licensed Process(es)**                means processes which, in the course of being practiced would be                within                the scope of one or more claims of an issued patent within the                **Licensed                Patent Rights**                that has not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent                jurisdiction. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.08 | “**Licensed                Product(s)**”                means tangible materials which, in the course of manufacture, use,                sale,                or importation would be within the scope of one or more claims of                the                **Licensed                Patent Rights**                that have not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent jurisdiction.                Notwithstanding the foregoing, for purposes of calculating **Net                Sales**                as                set forth in Paragraph 2.10 of this **Agreement**,                **Licensed                Product(s)**                means products which, in the course of being practiced would be within                the                scope of one or more claims of an issued patent within the **Licensed                Patent Rights**                that has not been held unpatentable, invalid or unenforceable by                an                unappealed or unappealable judgment of a court of competent                jurisdiction. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.10 | **“Net                Sales**”                means the total gross receipts for sales of **Licensed                Products**                or                practice of Licensed Processes by or on behalf of Licensee or its                sublicensees, and from leasing, renting, or otherwise making **Licensed                Products**                available to others without sale or other dispositions, whether invoiced                or not, less returns and allowances, packing costs, insurance costs,                freight out, taxes or excise duties imposed on the transaction (if                separately invoiced), and wholesaler and cash discounts in amounts                customary in the trade to the extent actually granted. No deductions                shall                be made for commissions paid to individuals, whether they be with                independent sales agencies or regularly employed by **Licensee**,                or sublicensees, and on its payroll, or for cost of collections.                Notwithstanding the foregoing, transfers to **Affiliates**,                sublicensees, partners, or contractors for research purposes, including                clinical trials, and including transfers at Licensee’s fully-allocated                manufacturing cost, shall not be considered a part of **Net                Sales**. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Agreement**

|   | 2.13 | “**Person**”                means an individual, corporation, partnership, trust, business trust,                association, joint stock company, joint venture, pool, syndicate,                sole                proprietorship, unincorporated organization, governmental authority                or any                other form of entity not specifically listed                herein. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.14 | “**Affiliate(s)**”                shall mean, with respect to **Licensee**,                any other **Person**                which during the term of this **Agreement**                controls, is controlled by or is under common control with **Licensee**,                but for only so long as such **Person**                controls, is controlled by or is under common control with **Licensee**.                For this purpose, control means the possession of the power to direct                or                cause the direction of the management and the policies of an entity,                whether through ownership directly or indirectly of fifty percent                (50%) or                more of the stock entitled to vote, and for non-stock organizations,                the                right to receive fifty percent (50%) or more of the profits by contract                or                otherwise, or where control of fifty percent (50%) or more of such                rights                is not permitted in the country where such **Person**                exists, the maximum permitted in such a                country. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.15 | “**Indication(s)**”                means a disease or other physiologic condition, for example hemophilia                or                heart failure, to be treated with a **Licensed Product**                wherein the **Licensed Product**                contains a separate and distinct therapeutic gene of interest, for                exampled a Factor VII gene, a Factor IX gene or the adenylate cyclase                IV                gene. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.16 | “**Cystic Fibrosis License**”                means the license, having **PHS**                Reference Number L-059-93/0, between **PHS**                and **Licensee**                effective March 18, 1994, which includes the **Licensed Patent Rights**. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.17 | “**Fair                Market Value of Consideration (FMCV)**”                means cash received by **Licensee**                without obligation for use by **Licensee**                in                funding research and development or manufacturing efforts of a product                candidate. Payments intended to be considered include, but are not                limited                to, upfront payments for access to technology and for acknowledgement                of                investment in the development of the technology, and any premium                paid over                market price if equity is a component of the consideration received                by                Licensee upon sublicensing and there is no obligation to use that                premium                to fund R&D efforts. **FMCV**                does not include clinical development and commercialization milestones                paid by sublicensees since milestones are governed by Appendix C,                Section                D, and it does not include monies received from a sublicense for                funding                R&D efforts or equity purchased at market value by the                sublicense. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              5. | STATUTORY                AND PHS REQUIREMENTS AND RESERVED GOVERNMENT                RIGHTS |
|-------------------------|---------------------------------------------------------------------------------------------|

|   | 5.01 | **PHS**                reserves on behalf of the **Government**                an                irrevocable, nonexclusive, nontransferable, royalty-free license                for the                practice of all inventions licensed under the **Licensed                Patent Rights**                throughout the world by or on behalf of the **Government**                and on behalf of any foreign government or international organization                pursuant to ay existing or future treaty or agreement to which the                **Government**                is                a signatory. Prior to the **First                Commercial Sale**,                **Licensee**                agrees to provide PHS reasonable quantities of **Licensed                Products**                or                materials made through the **Licensed                Processes**                for **PHS**                research use, but not human clinical use. Notwithstanding the foregoing,                **Licensee**                agrees, if a written request is made by PHS, to negotiate in good                faith                with **PHS**                a                separate agreement or an amendment to this Agreement regarding the                supply                of **Licensed                Products**                or                materials made through **Licensed                Processes**                for **PHS**                use in human clinical trials. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.04 | In                addition to the reserved license in Paragraph 5.01 above, PHS reserves                the                right to grant nonexclusive **Research                Licenses**                directly or to require **Licensee**                to                grant nonexclusive **Research                Licenses**                on                reasonable terms. The purpose of this **Research                License**                is                to encourage basic research, whether conducted at an academic or                corporate                facility. In order to safeguard the **Licensed                Patent Rights**,                however, **PHS**                shall consult with **Licensee**                before granting to commercial entities a **Research                License**                or                providing to them research samples of materials made through the                **Licensed                Processes**. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              6. | ROYALTIES                AND REIMBURSEMENT |
|-------------------------|--------------------------------------------|

|   | 6.01 | **Licensee**                agrees to pay to **PHS**                a                noncreditable, nonrefundable **License Issue Royalty**                as                set forth in Appendix C, Section A. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.02 | **Licensee**                agrees to pay to **PHS**                a                nonrefundable **Minimum Annual Royalty**                as                set forth in Appendix C, Section B. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.03 | **Licensee**                agrees to pay **PHS**                earned royalties as set forth in Appendix C, Section                C. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.04 | **Licensee**                agrees to pay **PHS**                benchmark royalties as set forth in Appendix C, Section                D. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 6.05 | **Licensee**                agrees to pay **PHS**                sublicensing royalties as set forth in Appendix C, Section                E. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.09 | With                regard to expenses associated with the preparation, filing, prosecution,                and maintenance of all patent applications and patents included within                the                **Licensed Patent Rights**                incurred by **PHS**                prior to the effective date of this **Agreement** **Licensee**                shall pay to **PHS**,                as an additional royalty, within sixty (60) days of **PHS**'s                submission of a statement and request for payment to **Licensee**,                an amount equivalent to such patent expenses previously incurred                by                **PHS**.                Notwithstanding the foregoing, if **Licensee**                has previously paid to **PHS**                said expenses under Paragraph 6.08 of the **Cystic Fibrosis License**                no                additional payment of said expenses by **Licensee**                will be required. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.10 | With                regard to expenses associated with the preparation, filing, prosecution,                and maintenance of all patent applications and patents included within                the                **Licensed Patent Rights**                incurred by **PHS**                on                or after the effective date of this **Agreement**,                **PHS**,                at its sole option, may require **Licensee**: |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**PHS**
**PHS**

**PHS**
**PHS**
**Licensee**

**PHS**
**Licensee**
**Licensed      Patent Rights**
**Cystic      Fibrosis License**
**Cystic      Fibrosis License**
**Licensee**
**Agreement**
**PHS**
**Licensed      Patent Rights**
**Licensed      Patent Rights**
**Licensee**
**Licensed      Patent Rights**
**Licensee**
**PHS**
**Licensee**
**PHS**
**Licensed      Patent Rights**
**Cystic      Fibrosis License**
**Licensee**

----

| Article              7. | PATENT                FILING, PROSECUTION, AND                MAINTENANCE |
|-------------------------|---------------------------------------------------------------------------|

|   | 7.02 | **Licensee**,                in accordance with the provisions of Paragraph 7.01 of the **Cystic                Fibrosis License**                has assumed the responsibility for the preparation, filing, prosecution,                and maintenance of any and all patent applications or patents included                in                the **Licensed                Patent Rights**                and shall on an ongoing basis promptly furnish copies of all                patent-related documents to **PHS**.                **Licensee**                has, subject to the pror approval of **PHS**,                select registered patent attorneys or patent agents to provide such                services on behalf of **Licensee**                and **PHS**.                **PHS**                has provided appropriate powers of attorney and other documents necessary                to undertake such actions to the patent attorneys or patent agents                providing such services. **Licensee**                and its attorneys or agents shall consult with **PHS**                in                all aspects of the preparation, filing, prosecution and maintenance                of                patent applications and patents included within the **Licensed                Patent Rights**and                hall provide **PHS**                sufficient opportunity to comment on any document that **Licensee**                intends to file or to cause to be filed with the relevant intellectual                property or patent office. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              8. | RECORD                KEEPING |
|-------------------------|-------------------------------|

|   | 8.02 | **Licensee**                agrees to have an audit on sales and royalties conducted by an independent                auditor at lease every two (2) years, but not more than once per                year, if                annual sales of the **Licensed                Product**                or                **Licensed** **Processes**                are over two (2) million dollars. The audit shall address, at a minimum,                the amount of gross sales by or on behalf of **Licensee**                during the audit period, terms of the license as to percentage or                fixed                royalty to be remitted to the **Government**,                the amount of royalty funds owed to the **Government**                under this **Agreement**,                and whether the royalty amount owed has been paid to the **Government**                and is reflected in the records of the **Licensee**.                The audit shall also indicate the **PHS**                license number, product, and the time period being audited. A report                certified by the auditor shall be submitted promptly by the auditor                directly to **PHS**                on                completion. **Licensee**                shall pay for the entire cost of the                audit. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              9. | REPORTS                ON PROGRESS, BENCHMARKS, SALES, AND                PAYMENTS |
|-------------------------|------------------------------------------------------------------------------------|

|   | 9.04 | Prior                to **First                Commercial Sale, Licensee **shall                submit to **PHS**                within sixty (60) days after each calendar year ending December 31                a                royalty report setting forth for the preceding year period the amount                of                the **Licensed                Products**                sold or **Licensed                Processes**                practiced by or on behalf of **Licensee**                in                each country within the **Licensed Territory**,                the **Net                Sales**,                and the amount of royalty accordingly due. With each such royalty                report,                **Licensee**                shall submit payment of the earned royalties due. If no earned royalties                are due to **PHS**                for any reporting period the written report shall so state. After                **First                Commercial Sale**,                **Licensee**                shall submit to PHS within sixty (60) days after each calendar half-year                ending June 30 and December 31 a royalty report setting forth the                preceding half-year period the amount of the **Licensed** **Products**                sold or **Licensed                Processes**                practiced by or on behalf of **Licensee**                in                each country within the **Licensed                Territory**,                the **Net                Sales**,                and the amount of royalty accordingly due. With each such royalty                report,                **Licensee**                shall submit payment of the earned royalties due. If no earned royalties                are due to **PHS**                for any reporting period the written report shall so state. Any royalty                report submitted pursuant to this paragraph shall be certified as                correct                by an authorized officer of **Licensee**                and shall include a detailed listing of all deductions made under                Paragraph 2.10 to determine **Net                Sales**                made under Article 6 to determine royalties                due. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.05 | **Licensee**                agrees to forward, on an annual basis prior to the **First                Commercial Sale**                and semi-annually after **First                Commercial Sale**,                to **PHS**                a                copy of such reports received by **Licensee**                from its sublicensees during the preceding year or half-year period                respectively, as shall be pertinent to a royalty accounting to                **PHS**                by                **Licensee**                for activities under the                sublicense. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.06 | Royalties                due under Article 6 shall be paid in U.S. dollars. For conversion                of                foreign currency to U.S. dollars, the conversion rate shall be the                average                New York foreign exchange rate quoted in *The                Wall Street Journal*                for the previous thirty (30) trading days prior to the date the payment                is                due. All checks and bank drafts shall be drawn on United States banks                and                shall be payable, as appropriate, to "NIH/Patent Licensing." All                such                payments shall be sent to the following address: NIH,                P.O. Box 360120, Pittsburgh, PA 15251-6120. Any loss of                exchange, value, taxes, or other expenses incurred in the transfer                or                conversion to U.S. dollars shall be paid entirely by **Licensee**.                The royalty report required by Paragraph 9.04 of this **Agreement**                shall accompany each such payment, and a copy of such report shall                also be                mailed to **PHS**                at                its address for notices indicated on the Signature Page of this                **Agreement**. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              10. | PERFORMANCE |
|--------------------------|-------------|

|   | 10.01 | **Licensee**                shall use its commercially reasonable best efforts to bring the                **Licensed                Products**                and **Licensed                Processes**                to                **Practical                Application**.                “Commercially reasonable best efforts” for the purposes of this provision                shall include adherence to the **Commercial                Development Plan**                at                Appendix F and performance of the **Benchmarks**                at                Appendix E. The efforts of a sublicense shall be considered the efforts                of                **Licensee**. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.02 | Upon                the **First                Commercial Sale**,                until the expiration of this **Agreement**,                **Licensee**                shall use its commercially reasonable best efforts to make **Licensed                Products**                and **Licensed                Processes**                reasonably accessible to the United States                public. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              11. | INFRINGEMENT                AND PATENT ENFORCEMENT |
|--------------------------|----------------------------------------------------|

|   | 11.06 | Notwithstanding                the provisions of Paragraphs 11.02, 11.03 and 11.04 of this Agreement                **PHS**                and/or the appropriate **Government**                authorities may undertake an action under Paragraph 11.02 or Paragraph                11.03 of this **Agreement**                without the consent of **Licensee**.                In the event that **PHS**                and/or appropriate **Government**                authorities undertake an action under Paragraph 11.02 or Paragraph                11.03                of this **Agreement**,                without the consent of **Licensee**,                **Licensee**                shall not be required to reimburse **PHS**                and/or appropriate **Government**                authorities for the expenses associated with said action. However,                if PHS                and/or appropriate **Government**                authorities undertake an action under Paragraphs 11.02 or 11.03 of                this                **Agreement**,                without the consent of **Licensee**,                **PHS**                and/or appropriate **Government**                authorities will retain any and all proceeds that may be obtained                if PHS                and/or appropriate **Government**                authorities are awarded judgment in any such action. Furthermore,                **PHS**                and/or appropriate **Government**                authorities may settle any litigation undertaken by **PHS**                and/or appropriate **Government**                authorities without the consent of **Licensee**                a)                by requiring **Licensee**                to                grant a sublicense, negotiated by **PHS**                and/or appropriate **Government**                authorities, to all parties adverse to **PHS**                and/or appropriate **Government**                authorities entering into the settlement or b) **Licensee**                must agree to convert this agreement to a non-exclusive                license. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Article              12. | NEGATION                OF WARRANTIES AND                INDEMNIFICATION |
|--------------------------|--------------------------------------------------------------------------|

|   | 12.04 | **PHS**                and **Licensee**                do                not represent that either party will commence legal actions against                third                parties infringing the **Licensed                Patent Rights**. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Article              14. | GENERAL                PROVISIONS |
|--------------------------|-----------------------------------|

|   | 14.07 | This                **Agreement**                shall not be assigned by **Licensee**,                to a third party other than an Affiliate as set forth in Paragraph                2.14 if                this Agreement except: a) with the prior written consent of **PHS**,                such consent not to be withheld unreasonably; or b) as part of a                sale or                transfer of substantially the entire business of **Licensee**                relating to operations which concern this **Agreement**.                **Licensee **shall                notify **PHS**                within ten (10) days of any assignment of this **Agreement**                by                **Licensee**,                and **Licensee**                shall pay **PHS**,                as an additional royalty, an **Assignment Royalty**                as                set forth in Appendix C, Section F. Notwithstanding the foregoing,                no                **Assignment                Royalty**,                as set forth in Appendix C, Section F, would be due and payable to                **PHS**                upon assignment of this **Agreement**                to                an **Affiliate**                as                set forth in Paragraph 2.14 of this **Agreement**. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**APPENDIX      E--BENCHMARKS AND PERFORMANCE**

**Licensee**
**Benchmarks**
**Agreement**
**Benchmark**
**PHS**
**Benchmark**

| **Benchmark**                                                                                                                                                                     | **Projected                Date for Achieving Benchmark**                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
| 1. Select                **[*]**                for further clinical development                                                                                             | **[*]**                of                the effective date of this **Agreement**                       |
| 2. Begin                **[*]**                or                equivalent clinical trials for the **[*]**                and provide **PHS**                with a **[*]** | **[*]**                                                                                                 |
| 3. If                only a **[*]**                has been selected to date, **[*]**                for further clinical development                                        | Within                **[*]**                of                the effective date of this **Agreement** |
| 4. **[*]**                or                equivalent clinical trials for the **[*]**                and provide **PHS**                with a **[*]**                      | **[*]**                                                                                                 |
| 5. If                less than **[*]**                have been selected to date, select a **[*]**                for further clinical development                           | **[*]**                of                the effective date of this **Agreement**                       |
| 6. Begin                **[*]**                or                equivalent clinical trials for the **[*]**                and provide **PHS**                with a **[*]** | **[*]**                                                                                                 |

***Confidential      Treatment Requested.**

----

**APPENDIX      F—**COMMERCIAL      DEVELOPMENT PLAN****

**[*]**

----