Document:

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                                                                   EXHIBIT 10.18

                             XCYTE THERAPIES, INC.

                        2000 DIRECTORS' STOCK OPTION PLAN

        1. PURPOSES OF THE PLAN. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.

           All options granted hereunder shall be nonstatutory stock options.

        2. DEFINITIONS. As used herein, the following definitions shall apply:

           (a) "BOARD" means the Board of Directors of the Company.

           (b) "CHANGE OF CONTROL" means a sale of all or substantially all of
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.

           (c) "CODE" means the Internal Revenue Code of 1986, as amended.

           (d) "COMMON STOCK" means the Common Stock of the Company.

           (e) "COMPANY" means Xcyte Therapies, Inc., a Delaware corporation.

           (f) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of any
interruption or termination of service as a Director.

           (g) "CORPORATE TRANSACTION" means a dissolution or liquidation of the
Company, a sale of all or substantially all of the Company's assets, or a
merger, consolidation or other capital reorganization of the Company with or
into another corporation.

           (h) "DIRECTOR" means a member of the Board.

           (i) "EMPLOYEE" means any person, including any officer or Director,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

           (j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

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           (k) "FAIR MARKET VALUE" means the closing price of the Common Stock
as reported on the Nasdaq National Market or a stock exchange on which the
Shares are listed (or, in the event that the Common Stock is not traded on such
date, on the immediately preceding trading date), as reported in The Wall Street
Journal, or if there is a public market for the Common Stock but the Common
Stock is not traded on the Nasdaq National Market or on a stock exchange, the
fair market value per Share shall be the mean of the bid and asked prices of the
Common Stock in the over-the-counter market on the date of grant, as reported in
The Wall Street Journal (or, if not so reported, as otherwise reported by a
source deemed reliable by the Administrator).

           (l) "OPTION" means a stock option granted pursuant to the Plan. All
options shall be nonstatutory stock options (i.e., options that are not intended
to qualify as incentive stock options under Section 422 of the Code).

           (m) "OPTIONED STOCK" means the Common Stock subject to an Option.

           (n) "OPTIONEE" means an Outside Director who receives an Option.

           (o) "OUTSIDE DIRECTOR" means a Director who is not an Employee.

           (p) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

           (q) "PLAN" means this 2000 Directors' Stock Option Plan.

           (r) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

           (s) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

        3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the number of Shares that are available to be sold under the Plan is
400,000 Shares of Common Stock (before giving effect to a ___-for-___ stock
split effected in connection with the Company's initial public offering). The
Shares may be authorized, but unissued, or reacquired Common Stock.

        If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares that were subject
thereto shall, unless the Plan has been terminated, become available for future
grant under the Plan. In addition, any Shares of Common Stock that are retained
by the Company upon exercise of an Option in order to satisfy the exercise price
for such Option, or any withholding taxes due with respect to such exercise,
shall be treated as not issued and shall continue to be available under the
Plan. If Shares that were acquired upon exercise of an Option are subsequently
repurchased by the Company, such Shares shall not in any event be returned to
the Plan and shall not become available for future grant under the Plan.

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        4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.

           (a) ADMINISTRATOR. Except as otherwise required herein, the Plan
shall be administered by the Board.

           (b) PROCEDURE FOR GRANTS. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:

               (i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.

               (ii) Each person who becomes an Outside Director after the
effective date of this Plan, as determined in accordance with Section 6 hereof,
shall be automatically granted an Option (the "First Option") to purchase 25,000
Shares (before giving effect to a ___-for-___ stock split effected in connection
with the Company's initial public offering) on the date on which such person
first becomes an Outside Director, whether through election by the stockholders
of the Company or appointment by the Board of Directors to fill a vacancy.

               (iii) Each Outside Director shall thereafter be automatically
granted an Option (the "Annual Option") to purchase 5,000 Shares (before giving
effect to a ___-for-___ stock split effected in connection with the Company's
initial public offering) on the first day of each fiscal year of the Company,
provided that, on such date, he or she shall have served on the Board for at
least six (6) months prior to the first day of such fiscal year.

               (v) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, in the event that a grant would cause the number of Shares subject to
outstanding Options plus the number of Shares previously purchased upon exercise
of Options to exceed the Pool, then each such automatic grant shall be for that
number of Shares determined by dividing the total number of Shares remaining
available for grant by the number of Outside Directors receiving an Option on
the automatic grant date. Any further grants shall then be deferred until such
time, if any, as additional Shares become available for grant under the Plan
through action of the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

               (vi) Notwithstanding the provisions of subsections (ii) and (iii)
hereof, any grant of an Option made before the Company has obtained stockholder
approval of the Plan in accordance with Section 17 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
17 hereof.

               (vii) The terms of each Option granted hereunder shall be as
follows:

                   (1) each Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Section 9
below;

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                   (2) the exercise price per Share of the Option shall be 100%
of the fair market value per Share on the date of grant of the Option,
determined in accordance with Section 8 hereof;

                   (3) the First Option shall become vested and exercisable as
to 1/3rd of the Shares underlying the Option on the first anniversary of its
date of grant and as to 1/36th of the Shares underlying the Option each
thereafter so that, subject to Section 11 below, the Option shall be fully
vested and exercisable on the fourth anniversary of its date of grant; and

                   (4) the Annual Option shall become vested and exercisable as
to 100% of the Shares underlying the Option on the first anniversary of its date
of grant.

           (c) POWERS OF THE BOARD. Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
8(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per Share of Options to be granted, which exercise price
shall be determined in accordance with Section 8 of the Plan; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules and regulations relating to
the Plan; (v) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

           (d) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

           (e) SUSPENSION OR TERMINATION OF OPTION. If the Chief Executive
Officer or his or her designee reasonably believes that an Optionee has
committed an act of misconduct, such officer may suspend the Optionee's right to
exercise any option pending a determination by the Board (excluding the Outside
Director accused of such misconduct). If the Board (excluding the Outside
Director accused of such misconduct) determines an Optionee has committed an act
of embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company rules
resulting in loss, damage or injury to the Company, or if an Optionee makes an
unauthorized disclosure of any Company trade secret or confidential information,
engages in any conduct constituting unfair competition, induces any Company
customer to breach a contract with the Company or induces any principal for whom
the Company acts as agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to exercise any Option
whatsoever. In making such determination, the Board of Directors (excluding the
Outside Director accused of such misconduct) shall act fairly and shall give the
Optionee an opportunity to appear and present evidence on Optionee's behalf at a
hearing before the Board or a committee of the Board.

        5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) above. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

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           The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

        6. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective on the
effectiveness of the registration statement under the Securities Act of 1933, as
amended, relating to the Company's initial public offering of securities. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.

        7. TERM OF OPTIONS. The term of each Option shall be ten (10) years from
the date of grant thereof unless an Option terminates sooner pursuant to Section
9 below.

        8. EXERCISE PRICE AND CONSIDERATION.

           (a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the Fair Market Value
per Share on the date of grant of the Option.

           (b) FORM OF CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which the
Option shall be exercised (which, if acquired from the Company, shall have been
held more than six months), delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect exercise of the Option and prompt delivery
to the Company of the sale or loan proceeds required to pay the exercise price,
or any combination of such methods of payment and/or any other consideration or
method of payment as shall be permitted under applicable corporate law.

        9. EXERCISE OF OPTION.

           (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) above; provided however that no Options shall be exercisable prior to
stockholder approval of the Plan in accordance with Section 17 below has been
obtained.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to

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the Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 11 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

           (b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. If an Outside
Director ceases to serve as a Director, he or she may, but only within ninety
(90) days after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to exercise
it at the date of such termination. Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has expired.
To the extent that such Outside Director was not entitled to exercise an Option
at the date of such termination, or does not exercise such Option (to the extent
he or she was entitled to exercise) within the time specified above, the Option
shall terminate and the Shares underlying the unexercised portion of the Option
shall revert to the Plan.

           (c) DISABILITY OF OPTIONEE. Notwithstanding Section 9(b) above, in
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within twelve (12)
months from the date of such termination, exercise his or her Option to the
extent he or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that he or she was not
entitled to exercise the Option at the date of termination, or if he or she does
not exercise such Option (to the extent he or she was entitled to exercise)
within the time specified above, the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan.

           (d) DEATH OF OPTIONEE. In the event of the death of an Optionee (i)
during the term of the Option who is, at the time of his or her death, a
Director of the Company and who shall have been in Continuous Status as a
Director since the date of grant of the Option, or (ii) three (3) months after
the termination of Continuous Status as a Director, the Option may be exercised,
at any time within twelve (12) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of death or the date of termination, as applicable.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that an Optionee was not
entitled to exercise the Option at the date of death or termination or if he or
she does not exercise such Option (to the extent he or she was entitled to
exercise) within the time specified above, the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall revert to the
Plan.

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        10. NONTRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than (a)
by will or by the laws of descent or distribution; (b) pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder); (c)
by gift to the Optionee's Family; or (d) by gift or in exchange for an interest
in such entity to (i) a trust in which Optionee and/or Optionee's Family have
more than fifty percent of the beneficial interest, (ii) a foundation in which
Optionee and/or Optionee's Family control the management of assets, or (iii) any
other entity in which Optionee and/or Optionee's Family own more than fifty
percent of the voting interests. For purposes of this Section 10, Optionee's
"Family" shall include any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law; daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, and any person sharing the employee's
household (other than a tenant or employee). The designation of a beneficiary by
an Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section.

        11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

           (a) ADJUSTMENT. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of Shares of Common Stock set forth in Sections 4(b)(ii) and
(iii) above, and the number of Shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock (including any such change in the number of Shares of Common
Stock effected in connection with a change in domicile of the Company) or any
other increase or decrease in the number of issued Shares of Common Stock
effected without receipt of consideration by the Company; provided however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.

           (b) CORPORATE TRANSACTIONS. In the event of a Corporate Transaction,
each outstanding Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a Parent or Subsidiary of such
successor corporation, unless the successor corporation does not agree to assume
the outstanding Options or to substitute equivalent options, in which case the
Options shall terminate upon the consummation of the transaction; provided
however that in the event of any transaction that qualifies as a Change of
Control and notwithstanding whether or not outstanding Options are assumed,
substituted for or terminated in connection with the transaction, the vesting of
each outstanding Option shall accelerate in full

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<PAGE>   8

such that each Optionee shall have the right to exercise his or her Option as to
all of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable, immediately prior to consummation of the transaction.

           For purposes of this Section 11(b), an Option shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon such Corporate Transaction, each Optionee would be entitled
to receive upon exercise of an Option the same number and kind of shares of
stock or the same amount of property, cash or securities as the Optionee would
have been entitled to receive upon the occurrence of such transaction if the
Optionee had been, immediately prior to such transaction, the holder of the
number of Shares of Common Stock covered by the Option at such time (after
giving effect to any adjustments in the number of Shares covered by the Option
as provided for in this Section 11); provided however that if such consideration
received in the transaction was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon
exercise of the Option to be solely common stock of the successor corporation or
its Parent equal to the Fair Market Value of the per Share consideration
received by holders of Common Stock in the transaction.

           (c) CERTAIN DISTRIBUTIONS. In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

        12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

        13. AMENDMENT AND TERMINATION OF THE PLAN.

           (a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the stockholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.

           (b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

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<PAGE>   9

        14. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the legal requirements relating to the administration
of stock option plans under applicable U.S. state corporate laws, U.S. federal
and applicable state securities laws, the Code, any stock exchange or Nasdaq
rules or regulations to which the Company may be subject and the applicable laws
of any other country or jurisdiction where Options are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time to
time (the "Applicable Laws"). Such compliance shall be determined by the Company
in consultation with its legal counsel.

           As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

        15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

        16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

        17. STOCKHOLDER APPROVAL. If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the stockholders of the
Company. Such stockholder approval shall be obtained in the manner and to the
degree required under the Applicable Laws.

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<PAGE>   10

                              XCYTE THERAPIES, INC.

                        2000 DIRECTORS' STOCK OPTION PLAN

                          NOTICE OF STOCK OPTION GRANT

<<Optionee>>

        You have been granted an option to purchase Common Stock of Xcyte
Therapies, Inc. (the "Company") as follows:

<TABLE>
        <S>                                        <C>
        Date of Grant                              <<GrantDate>>

        Vesting Commencement Date                  <<VestingStartDate>>

        Exercise Price per Share                   <<ExercisePrice>>

        Total Number of Shares Granted             <<SharesGranted>>

        Total Exercise Price                       <<TotalExercisePrice>>

        Expiration Date                            <<ExpirDate>>

        Vesting/Exercise                           Schedule This Option shall
                                                   vest and become exercisable,
                                                   according to the following
                                                   schedule: _______________.

        Termination Period                         This Option may be exercised for 90 days
                                                   after termination of Optionee's Continuous
                                                   Status as a Director, or such longer
                                                   period as may be applicable upon death or
                                                   Disability of Optionee as provided in the
                                                   Plan, but in no event later than the
                                                   Expiration Date as provided above.
</TABLE>

<PAGE>   11

        By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and governed
by the terms and conditions of the 2000 Directors' Stock Option Plan and the
Nonstatutory Stock Option Agreement, all of which are attached and made a part
of this document.

OPTIONEE:                              XCYTE THERAPIES, INC.

                                       By:
------------------------------            --------------------------------------
<<Optionee>>
                                       Title:
                                             -----------------------------------

                                      -ii-
<PAGE>   12

                              XCYTE THERAPIES, INC.

                       NONSTATUTORY STOCK OPTION AGREEMENT

        1. GRANT OF OPTION. The Board of Directors of the Company hereby grants
to the Optionee named in the Notice of Stock Option Grant (the "Optionee")
attached to this Agreement an option (the "Option") to purchase a number of
Shares, as set forth in the Notice of Stock Option Grant, at the exercise price
per share set forth in the Notice of Stock Option Grant (the "Exercise Price"'),
subject to the terms and conditions of the 2000 Directors' Stock Option Plan
(the "Plan"), which is incorporated herein by reference. Capitalized terms not
defined herein shall have the meanings ascribed to such terms in the Plan. In
the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Nonstatutory Stock Option Agreement, the terms and
conditions of the Plan shall prevail.

        2. EXERCISE OF OPTION.

           (a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting/Exercise Schedule set out in the Notice of Stock
Option Grant and the applicable provisions of the Plan and this Nonstatutory
Stock Option Agreement. In the event of Optionee's death, disability or other
termination of Optionee's service as a Director, the exercisability of the
Option is governed by the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.

           (b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

           No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.

        3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

           (a) cash;

<PAGE>   13

           (b) check;

           (c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or

           (d) surrender of other Shares which (i) in the case of Shares
acquired directly or indirectly from the Company, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) in any
case which have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.

        4. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than (a)
by will or by the laws of descent or distribution; (b) pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder); (c)
by gift to the Optionee's Family; or (d) by gift or in exchange for an interest
in such entity to (i) a trust in which Optionee and/or Optionee's Family have
more than fifty percent of the beneficial interest, (ii) a foundation in which
Optionee and/or Optionee's Family control the management of assets, or (iii) any
other entity in which Optionee and/or Optionee's Family own more than fifty
percent of the voting interests. For purposes of this Section 10, Optionee's
"Family" shall include any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law; daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, and any person sharing the employee's
household (other than a tenant or employee). The designation of a beneficiary by
an Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section 4 and Section 10 of the Plan. The terms of the Plan and this
Nonstatutory Stock Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

        5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Nonstatutory Stock Option
Agreement.

        6. TAX CONSEQUENCES. Set forth below is a brief summary of certain
federal and California tax consequences relating to this Option under the law in
effect as of the date of grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT HIS OR
HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

           (a) EXERCISING THE OPTION. Since this Option does not qualify as an
incentive stock option under Section 422 of the Code, the Optionee may incur
regular federal and California income tax liability upon exercise. The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price.

                                      -2-
<PAGE>   14

           (b) DISPOSITION OF SHARES. If the Optionee holds the Option Shares
for more than one year, gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and California income tax
purposes. Long-term capital gain will be taxed for federal income tax and
alternative minimum tax purposes at a maximum rate of 20% if the Shares are held
more than one year after exercise.

        By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Nonstatutory Stock Option
Agreement. Optionee has reviewed the Plan and this Nonstatutory Stock Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Nonstatutory Stock Option Agreement and fully
understands all provisions of the Plan and Nonstatutory Stock Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Nonstatutory Stock Option Agreement.

                                       XCYTE THERAPIES, INC.

                                       By:
------------------------------            --------------------------------------
<<Optionee>>
                                       Title:
                                             -----------------------------------

                                CONSENT OF SPOUSE

        The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement.
In consideration of the Company's granting his or her spouse the right to
purchase Shares as set forth in the Plan and this Nonstatutory Stock Option
Agreement, the undersigned hereby agrees to be irrevocably bound by the terms
and conditions of the Plan and this Nonstatutory Stock Option Agreement and
further agrees that any community property interest shall be similarly bound.
The undersigned hereby appoints the undersigned's spouse as attorney-in-fact for
the undersigned with respect to any amendment or exercise of rights under the
Plan or this Nonstatutory Stock Option Agreement.

                                       -----------------------------------------
                                       Spouse of Optionee

                                      -3-
<PAGE>   15

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:            Xcyte Therapies, Inc.

Attn:          Stock Option Administrator

Subject:       Notice of Intention to Exercise Stock Option

        This is official notice that the undersigned ("Optionee") intends to
exercise Optionee's option to purchase __________ shares of Xcyte Therapies,
Inc. Common Stock, under and pursuant to the Company's 2000 Directors' Stock
Option Plan and the Nonstatutory Stock Option Agreement dated _______________,
as follows:

        Grant Number:
                                             -----------------------------------

        Date of Purchase:
                                             -----------------------------------

        Number of Shares:
                                             -----------------------------------

        Purchase Price:
                                             -----------------------------------

        Method of Payment of
        Purchase Price:
                                             -----------------------------------

        Social Security No.:
                                             -----------------------------------

        The shares should be issued as follows:

               Name:
                           -----------------------------------

               Address:
                           -----------------------------------

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

                           -----------------------------------
               Signed:
                           -----------------------------------

               Date:
                           -----------------------------------<PAGE>   1
                                                                   EXHIBIT 10.19

                                LICENSE AGREEMENT
                      BETWEEN ARCH DEVELOPMENT CORPORATION
                            AND XCYTE THERAPIES INC.

        This License Agreement ("Agreement"), dated June 28, 1999, between ARCH
Development Corporation, an Illinois not-for-profit corporation ("ARCH"), and
Xcyte Therapies, Inc., a Delaware Corporation ("Xcyte").

                               Purpose and Intent

        ARCH holds rights to the Licensed Patents defined below and desires that
these rights be used to develop medical treatments to benefit patients.

        Xcyte desires to obtain exclusive rights to such Licensed Patents for
commercialization in a certain field.

        Therefore the parties agree as follows.

                                    Agreement

        1. Definitions. The following capitalized terms used in this Agreement
will mean:

               A. "Affiliate" means any person or entity possessing 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
in countries where control of fifty percent (50%) or more of such rights is not
permitted in the country where such entity exists, the maximum permitted in such
country.

               B. "Control" means possession of the ability to grant a license
or sublicense under this Agreement without violating the terms of any agreement
with a third party.

               C. "Earlier Agreement" means the license agreement entered by
ARCH and CellGenEx, effective April 9, 1997, which was assigned to Xcyte upon
the merger of CellGenEx and CDR Therapeutics to form Xcyte.

               D. "Effective Date" means the date set forth on page 1, line 1,
of this Agreement.

               E. "Field" means all applications for prophylactic or therapeutic
use.

               F. "IND" means an Investigational New Drug Application filed
pursuant to the requirements of the United States Food and Drug Administration
as more fully defined in 21 C.F.R. Section 312 or its foreign equivalent.

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

<PAGE>   2

               G. "Inventor(s)" means Dr. David Liebowitz and/or Dr. Carl June.

               H. "Licensed Patents" means the patent applications listed on
Exhibit A attached hereto, including all divisions, continuations,
continuations-in-part foreign counterparts, and any valid patents which may
issue therefrom and any reissues, renewals, substitutions, or extensions of or
to any such patents or patent applications, in each case that are owned or
Controlled by ARCH during the term of this Agreement. Licensed Patents will not
include any applications and any patents issuing from applications filed in
countries (i) that Xcyte elected not to file in pursuant to Section 4.A and (ii)
where Xcyte's rights are terminated under Section 10.D.

               I. "Licensed Product" means any product within the scope of any
Valid Claim, or a product made by a process, method or technique within the
scope of any Valid Claim, or a product, the method of use of which is within the
scope of any Valid Claim.

               J. "Net Sales" means:

                      (1) the gross amounts received by Xcyte and its Affiliates
and Sublicensees for Licensed Products, less the following amounts directly
chargeable to such Licensed Products: (a) customary trade, quantity or cash
discounts and rebates actually allowed and taken; (b) amounts repaid or credited
to customers on account of rejections or returns; (c) freight and other
transportation costs, including insurance charges, and duties, tariffs, sales
and excise taxes and other governmental charges based directly on sales,
turnover or delivery of such Licensed Products and actually paid or allowed by
Xcyte and its Affiliates or any Sublicensee; and (d) provisions for
uncollectible accounts determined in accordance with reasonable accounting
practices, consistently applied to all products of the selling party. For
Licensed Products consumed by Xcyte, its Affiliates or any Sublicensee, the
price used to calculate Net Sales will be equal to the average of the sales
price of the same or a substantially similar Licensed Product, whichever is
relevant, sold to its three largest customers during the same time period. If
Xcyte or a Sublicensee or Affiliates of either of them do not sell Licensed
Products but use Licensed Products as part of selling a service or other means
of deriving commercial benefit from a Licensed Product, the parties agree to
negotiate in good faith to determine a method of calculating a running royalty
equivalent to the running royalty set out in this Agreement on Net Sales. Net
Sales will be calculated on sales to end-users and not on sales between Xcyte
and its Affiliates or Sublicenses.

                      (2) with respect to any Licensed Product sold in
combination with one or more other product(s) or active therapeutic
ingredient(s) or agent(s) or service(s) for which no royalty would be due
hereunder if sold separately, Net Sales for such combination sales will be
calculated by multiplying the Net Sales calculated pursuant to subsection
1.J.(1) above by the fraction A/(A + B), where A is the gross selling price of
the Licensed Product sold separately and B is the gross selling price of the
other product(s) or active therapeutic ingredient(s) or agent(s) or service(s)
sold separately. In the event that no such separate sales are made by Xcyte, Net
Sales for royalty determination will be jointly and reasonably allocated on a
commercially

                                      -2-
<PAGE>   3

reasonable basis by ARCH and Xcyte between such Licensed Product and such other
product(s), ingredient(s) or agent(s) and/or service(s) based upon their
relative importance and proprietary protection.

               K. "Royalties" means all amounts payable under Section 3.B. of
this Agreement.

               L. "Sublicensee" means any person, company or other entity
granted a sublicense by Xcyte under Section 2.B. below, including Affiliates of
the Sublicensee.

               M. "Sublicense" means the license agreement entered into by Xcyte
with a Sublicensee under Section 2.B. below.

               N. "Territory" means worldwide.

               O. "University" means the University of Chicago.

               P. "Foundation" means the Henry M. Jackson Foundation for the
Advancement of Military Medicine.

               Q. "Valid Claim" means an issued claim of any unexpired patent or
a claim of any pending patent application within the Licensed Patents which has
not been held unenforceable, unpatentable or invalid by a decision of a court or
governmental body of competent jurisdiction, in a ruling that is unappealable or
unappealed within the time allowed for appeal; which has not been rendered
unenforceable through disclaimer or otherwise; and which has not been lost
through an interference proceeding.

               R. "ARCH-Foundation Agreement" means that certain
Inter-Institutional Agreement between the Henry M. Jackson Foundation for
Advancement of Military Medicine and ARCH Development Corporation effective
April 15, 1999.

        2. Grant of License and Reservation of Research Rights.

               A. Grant. ARCH hereby grants to Xcyte and its Affiliates an
exclusive, worldwide license to make, have made, use, import, have imported,
export, offer to sell and sell Licensed Products within the Field and within the
Territory.

               B. Sublicense. Xcyte will have the exclusive right to grant and
authorize sublicenses to the rights granted Xcyte under Section 2.A. consistent
with terms of this Agreement. Xcyte will notify ARCH within sixty (60) days
after the execution of any such sublicense. Upon request by ARCH on a case by
case basis, Xcyte will promptly notify ARCH of the identity of the sublicensee
and will state in such notification that such sublicense was granted and/or
authorized (as applicable) in accordance with this Section 2.B.

               C. Reservation of Rights. ARCH reserves for itself and the
University the

                                      -3-
<PAGE>   4

nontransferable right to practice at the University the inventions claimed in
the Licensed Patents to make, have made, and use Licensed Products within the
Field for all educational and noncommercial research purposes it may choose in
its own discretion and without any payment therefore. In addition, the
inventions claimed in the Licensed Patents were made with the use of funds from
the United States government. Therefore, to the extent required by United States
law, there is reserved from the rights granted hereunder the worldwide,
non-exclusive right of the United States government to use and to practice or
have practiced the inventions claimed in the Licensed Patents.

               D. U.S. Laws. The inventions claimed in the Licensed Patents were
developed with the use of United States government funds. Therefore, any right
granted in this Agreement greater than that permitted under Public Law 96-5 17
or Public Law 98-620 will be subject to modification as may be required to
conform to the provisions of those laws.

        3. Royalties. Equity and Other Payments.

               A. License Payment. As partial consideration for the license
granted in Section 2.A. of this Agreement, Xcyte will transfer [*] shares of
Xcyte common stock to ARCH, pursuant to the terms and conditions of the
Restricted Stock Purchase Agreement attached hereto as Exhibit A. The stock due
and payable under this Section 3.A. is nonrefundable and noncreditable against
Royalties.

               B. Royalties.

                      (1) Subject to reduction pursuant to subsection 3.B.(2),
and subject to subsections 3.B.(3), 3.B.(4), and 3.B.(5) below, Xcyte will pay a
royalty to ARCH during the term of this Agreement equal to 200,000 of Net Sales
of Licensed Products within the scope of an issued Valid Claim in the country of
manufacture or sale.

                      (2) In the event that Xcyte enters into a license
agreement with any third party with respect to intellectual property rights
which are necessary or useful for Xcyte' s practice of the Licensed Patents or
the manufacture, use, import and/or sale of any Licensed Product, Xcyte may
offset any payments made in accordance with such license agreements against any
amounts owed ARCH pursuant to Article 3 herein, up to a maximum of fifty percent
(50%) of the amounts due under Article 3.

                      (3) No Royalties will be due on Licensed Products used or
distributed for use in research and/or development, in clinical trials or as
promotional samples.

                      (4) No more than one Royalty payment will be due with
respect to a sale of a particular Licensed Product. No multiple Royalties will
be payable because any Licensed Product, or its manufacture, sale or use is
covered by more than one issued Valid Claim.

                      (5) Royalties due under this Section 3.B. will be payable
on a country-

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

                                      -4-
<PAGE>   5

by-country and Licensed Product-by-Licensed Product basis until the expiration
of the last-to-expire issued Valid Claim covering such Licensed Product in such
country of manufacture or sale.

               C. Calculation of Royalties. Royalties will be payable in U.S.
currency within sixty (60) days after the end of each calendar quarter for the
term specified in Section 10.A. below, beginning with the calendar quarter in
which the first commercial sale of a Licensed Product occurs. Each payment will
be accompanied by a statement showing Net Sales for each country in the
Territory and calculation of the Royalties due. All such statements will be
deemed to be Confidential Information of Xcyte. There will be deducted from all
such payments taxes required to be withheld by any governmental authority and
Xcyte will provide copies of receipts for such taxes to ARCH along with each
Royalty payment. Any necessary conversion of currency into United States dollars
will be at the applicable rate of exchange of Citibank, N.A., in New York, New
York, on the last day of the calendar quarter in which such transaction
occurred. If at any time legal restrictions prevent the prompt remittance of any
Royalties owed on Net Sales in any jurisdiction, Xcyte and ARCH agree to discuss
reasonable alternatives with respect to the prompt remittance of such Royalties;
provided, however, that unless otherwise agreed by the parties, Xcyte may notify
ARCH and make such payments by depositing the amount thereof in local currency
in a bank account or other depository in such country in the name of ARCH, and
Xcyte will have no further obligations under this Agreement with respect
thereto.

               D. Records. Xcyte will keep, and will cause its Sublicensees and
Affiliates of either, to keep full and accurate books and records in sufficient
detail so that sums due ARCH hereunder can be properly calculated. Such books
and records will be maintained for at least three (3) years after the Royalty
reporting period(s) to which they relate. During the term hereof and for three
(3) calendar years thereafter, Xcyte will permit, and will cause its Affiliates
to permit, and use reasonable efforts to have its Sublicensees permit certified
independent accountants designated by ARCH, to whom Xcyte has no reasonable
objection, to examine its books and records solely for the purpose of verifying
the accuracy of the written statements submitted by Xcyte and sums paid or
payable. ARCH may conduct such examination no more than once in any calendar
year and conduct no more than one audit of any period. After completion of any
such examination, ARCH will promptly notify Xcyte in writing of any proposed
modification to Xcyte's statement of sums due and payable. If Xcyte accepts such
modification, or if the parties agree on other modifications, one party will
promptly pay or credit the other in accordance with such resolution. Such
examination will be made at the expense of ARCH, except that if such examination
discloses a discrepancy of ten percent (10%) or more in the amount of Royalties
and other payments due ARCH in any audit period, then Xcyte will reimburse ARCH
for the cost of such examination.

               E. Overdue Payments. Payments due to ARCH under this Agreement
will, if not paid when due under the terms of this Agreement, bear simple
interest at the lower of the prime rate of interest (as published by Citibank,
N.A. or its successor on the date such payment is due) plus one [*] or the
highest rate permitted by law, calculated on the basis of a 360-day year for the
number of days actually elapsed, beginning on the due date and ending on the day
prior to the day on which payment is made in full. Interest accruing under this
Section will be due to

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

                                      -5-
<PAGE>   6

ARCH on demand or upon payment of past due amounts, whichever is sooner. The
accrual or receipt by ARCH of interest under this Section will not constitute a
waiver by ARCH of any right it may otherwise have to declare a default under
this Agreement or to terminate this Agreement.

        4. Prosecution and Maintenance of Patents; Patent Costs.

               A. Prosecution and Maintenance.

                      (1) ARCH will be solely responsible, using patent counsel
acceptable to Xcyte, for the preparation, filing, prosecution and maintenance of
the Licensed Patents.

                      (2) ARCH will cause such patent counsel to provide Xcyte
with a list of the countries in which ARCH has filed and/or intends to file
applications. Such list will be provided to Xcyte at least sixty (60) days prior
to the expiration of the corresponding United States priority date to allow
Xcyte to suggest that additional countries be added to the list or that one or
more countries be deleted from the list. ARCH agrees to timely file applications
in each of the countries requested by Xcyte unless it otherwise notifies Xcyte
under Section 4.B. below.

                      (3) Xcyte agrees to cooperate, and agrees to cause its
Sublicensees and Affiliates of either to cooperate, with ARCH in the
preparation, filing, prosecution and maintenance of the Licensed Patents by
disclosing such information as may be necessary for the same and by promptly
executing such documents as ARCH may reasonably request in connection therewith.
Xcyte and its Sublicensees and Affiliates of either will bear their own costs in
connection with their cooperation with ARCH under this Section 4.A.(3).

                      (4) ARCH will provide Xcyte copies of all material
documents received or prepared by ARCH in the prosecution and maintenance of the
Licensed Patents. Xcyte will have reasonable opportunities to advise ARCH
concerning, and ARCH will cooperate with Xcyte with respect to, filing,
registration, prosecution and maintenance of all patents and patent applications
within the Licensed Patents. "Reasonable opportunities" means that Xcyte will
receive from ARCH or its patent counsel copies of all documents and materials
relating to filing, registration, prosecution and maintenance of patent
applications and patents within the Licensed Patents as soon as is reasonably
practical after ARCH has received such documents and materials, and at least
forty-five (45) days or the maximum time provided by the Patent Office before
any date imposed upon ARCH for action or response with respect to such patent
applications and patents. ARCH agrees to incorporate into the final version of
such documents and materials any reasonable change(s) and/or claims (s)
requested by Xcyte thereof prior to submission to the applicable government
agencies or other parties. In addition, to avoid any prejudice and added
unnecessary costs to Xcyte, ARCH will adhere to the applicable deadlines, and
Xcyte will not be responsible for the costs of any time extensions for reasons
that are not approved in advance by Xcyte.

               B. Xcyte's Rights to Prosecute and Maintain Patents. ARCH will
notify Xcyte in writing of any country(ies) where it either previously declared
its intention to file under

                                      -6-
<PAGE>   7

Section 4.A. and subsequently decided not to file in such country(ies) or
previously filed and decided to abandon the patent application or issued patent.
Such notice will be given so as to allow Xcyte a reasonable time, but not less
than sixty (60) days, within which to file in countries where ARCH either does
not intend to file a patent application or is not going to continue the
prosecution or maintenance of the application or patent, whichever is relevant.
In all cases where Xcyte elects to file, Xcyte will file, prosecute and maintain
the applications and patents in ARCH's name and at Xcyte's expense. Such
applications and patents will be included in the definition of Licensed Patents
for all purposes of this Agreement.

               C. Patent Costs. Xcyte agrees to pay all necessary and reasonable
third party fees and out-of-pocket expenses incurred by ARCH in obtaining and
maintaining the Licensed Patents, including those incurred by ARCH prior to the
Effective Date within 30 days after receipt of an invoice for such prior fees
and expenses. Payment for fees and expenses incurred after the Effective Date
will be invoiced to Xcyte on a monthly basis and Xcyte agrees to pay such
invoices within 30 days of receipt. Xcyte also agrees upon reasonable request by
ARCH to make timely reasonable estimated advanced payments for the filing of
national applications in countries selected by Xcyte; provided, that ARCH
provides Xcyte with invoices for such amounts at least thirty (30) days prior to
the date payment must be made by ARCH to a third party. Documentation received
from third party vendors to support the amounts invoiced, in a form reasonably
acceptable to Xcyte, will be included with each invoice. Xcyte will raise any
objections to such amounts invoiced within the 30 day time period for payment.
Invoices for advanced payments will be reconciled with the advance payments made
by Xcyte every six (6) months. Any excess payment by Xcyte will be credited to
future patent costs specified in this Section 4.C.

        5. Due Diligence and Milestones.

               A. Research and Development Expenditures. Xcyte or its
Sublicensees will use commercially reasonable diligent efforts to develop and
commercialize Licensed Products. Through September 30, 2000, "commercially
reasonable diligent efforts" will automatically be deemed to have been met if
[*] The foregoing Milestone may be satisfied by Xcyte and/or its Affiliates or
Sublicensees or a combination thereof.

               B. Progress Report. Within 30 days of the end of each June 30
during the term of this Agreement, Xcyte will submit a written report to ARCH
covering the preceding year and summarizing the progress of Xcyte toward
achieving the development and commercialization of Licensed Products. Xcyte
agrees to immediately notify ARCH in writing when commercial products are first
sold and when Xcyte's obligation to begin making running Royalty payments
begins.

               C. Termination Rights of ARCH. If Xcyte fails to use commercially
reasonable diligent efforts (as defined in Section 5.A. above) to develop and
commercialize at least one Licensed Product, ARCH may terminate this Agreement
pursuant to Section 10.C.

        6. Data Access and Usage.

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

                                      -7-
<PAGE>   8

        ARCH will make reasonable efforts in cooperation with the University and
the Inventors to supply Xcyte with all data, materials, documents, reports,
analyses and other information that relate to and support the claims or practice
of the Licensed Patents or Licensed Products (including, without limitation,
protocols, procedures and written communications to regulatory and other
agencies) (collectively, "Patent Related Materials"), within thirty (30) days of
execution of this Agreement by both parties. To the extent Xcyte requests
additional Patent Related Materials from ARCH during the term hereof and ARCH or
the University has such additional Patent Related Materials in its possession,
ARCH will make reasonable efforts in cooperation with the University and the
Inventors to supply such additional Patent Related Materials. Xcyte will pay the
actual handling and shipping costs for any additional Patent Related Materials
provided. Promptly following the execution of this Agreement and thereafter upon
Xcyte's request, ARCH will use reasonable efforts in cooperation with the
University and Inventors to disclose and provide to Xcyte all tangible materials
associated with the Patent Related Materials. Xcyte shall have the right, free
of charge, to refer to, access, cross reference and otherwise use all Patent
Related Materials and all associated tangible materials so provided for any
purpose relevant to this License Agreement, and to provide the same to third
parties under reasonable conditions of confidentiality customary in patent-based
product development.

        7. Warranties; Disclaimer Indemnification, Insurance.

               A. ARCH. ARCH represents and warrants that: (i) except for the
ownership rights of the Foundation as set forth in the ARCH-Foundation Agreement
attached hereto as Exhibit B, ARCH is the sole and exclusive owner of all right,
title and interest in the Licensed Patents; (ii) it has the right to grant the
rights and licenses granted herein, and the Licensed Patents are free and clear
of any lien, encumbrance, security interest or restriction on license; (iii) it
has not previously granted, and will not grant during the term of this
Agreement, any right, license or interest in and to the Licensed Patents, or any
portion thereof, inconsistent with the license granted to Xcyte herein; and (iv)
to its knowledge there are no threatened or pending actions, suits,
investigations, claims or proceedings in any way relating to the Licensed
Patents.

               B. Disclaimer of Warranties. Except as expressly provided above,
ARCH makes no representations or warranties of any kind, express or implied,
with respect to the invention(s) claimed in the Licensed Patents or with respect
to the Licensed Patents themselves, including but not limited to, any
representations or warranties about (i) the validity, scope or enforceability of
any of the Licensed Patents; (ii) the accuracy, safety or usefulness for any
purpose of any information provided by ARCH to Xcyte, its Sublicensees or
Affiliates of either, with respect to the invention(s) claimed in the Licensed
Patents or with respect to the Licensed Patents themselves and any products
developed from or covered by them; (iii) whether the practice of any claim
contained in any of the Licensed Patents will or might infringe a patent or
other intellectual property right owned or licensed by a third party; (iv) the
patentability of any invention claimed in the Licensed Patents; or (v) the
accuracy, safety, or usefulness for any purpose of any product or process made
or carried out in accordance with or through the use of the Licensed Patents.

                                      -8-
<PAGE>   9

               C. Indemnification. Xcyte agrees, and agrees to cause its
Sublicensees and Affiliates of either, to indemnify, defend and hold harmless
ARCH, its Affiliates and all trustees, directors, officers, employees, fellows
and agents of any of the foregoing (including ARCH and its Affiliates, each an
"Indemnified Person") from and against any and all third party claims, demands,
loss, damage, penalty, cost or expense (including attorneys' and witnesses' fees
and costs) of any kind or nature, arising from the development, production, use,
sale or other disposition of Licensed Products and all activities associated
therewith by Xcyte, its Sublicensees or Affiliates of either, or any use by
Xcyte and its Sublicensees or Affiliates of information provided by ARCH to
Xcyte. ARCH will be entitled to participate at its option and expense through
counsel of its own selection, and may join in any legal actions related to any
such third party claims, demands, losses, damages, costs, expenses and
penalties. Xcyte, its Sublicensees and Affiliates of either, will not enter into
any settlement which includes an express or implied admission of liability,
negligence or wrongdoing by any Indemnified Person, without the prior written
consent of such Indemnified Person, which consent will not be unreasonably
withheld.

               D. Assumption of Risk. The entire risk as to the performance,
safety and efficacy of any invention claimed in the Licensed Patents resulting
from the practice thereof by Xcyte or its Affiliates or Sublicensees or of any
Licensed Products made by Xcyte or its Affiliates or Sublicensees is assumed by
Xcyte, its Sublicensees and Affiliates of either, provided that such assumption
of the risk will not apply to the intentional misconduct or gross negligence by
Indemnified Persons. Indemnified Persons will not, except for their intentional
misconduct or gross negligence, be responsible or liable for any injury, loss,
or damage of any kind, including but not limited to direct, indirect, special,
incidental or consequential damages or lost profits to Xcyte, any Sublicensee,
Affiliates of either or customers of any of the foregoing, or for any such
injury, loss or damage to any other individual or entity, regardless of legal
theory based on the development, manufacture, use, sale or other disposition of
Licensed Products and all activities associated therewith. The above limitations
on liability apply even though the Indemnified Person may have been advised of
the possibility of such injury, loss or damage. Xcyte will not, and will require
all Sublicensees and Affiliates of either to not, make any agreements,
statements, representations or warranties or accept any liabilities or
responsibilities whatsoever with regard to any person or entity which are
inconsistent with this Section.

               E. Insurance. Xcyte will, at its sole cost and expense, procure
prior to the initiation of any human clinical trials of a Licensed Product, and
maintain thereafter, a comprehensive general liability insurance policy naming
the Indemnitees as additional insureds. The limits of such insurance shall not
be less than, [*] per incident and [*] annual aggregate for any Phase I clinical
trials of any Licensed Product, [*] per incident and [*] annual aggregate for
any later phase clinical trials of any Licensed Product and [*] per incident and
[*] annual aggregate upon the first commercial distribution or sales (other than
for the purpose of obtaining regulatory approvals) of any Licensed Product by
Xcyte or by a Sublicensee or agent of Xcyte.

Such comprehensive general liability insurance will provide (a) product
liability coverage, and (b) broad form contractual liability coverage for
Xcyte's indemnification under Section 7.C. of this Agreement. If Xcyte elects to
self-insure all or part of the limits described above (including deductibles or
retentions which are in excess of [*] annual aggregate), such self-insurance

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

                                      -9-
<PAGE>   10

program must be reasonably acceptable to ARCH. The minimum amounts of insurance
coverage required under these provisions will not be construed to create a limit
of Xcyte's liability with respect to its indemnification obligation under
Section 7.C. of this Agreement. Xcyte will provide ARCH with written evidence of
such insurance upon written request. Xcyte will provide ARCH with written notice
at least fifteen (15) days prior to the cancellation, non-renewal or material
change in such insurance. Xcyte will maintain such comprehensive general
liability insurance beyond the expiration or termination of this Agreement
during (i) the period that any product, process, or service, relating to, or
developed pursuant to, this Agreement is being commercially distributed or sold
(other than for the purpose of obtaining regulatory approvals) by Xcyte or by a
Sublicensee or agent of Xcyte, and (ii) a reasonable period after the period
referred to in (i) above which in no event will be less than fifteen (15) years.

        8. Confidentiality.

               A. Confidentiality, Publications and Data Access. All information
submitted by one party to the other concerning the invention(s) claimed in the
Licensed Patents and Licensed Products identified as confidential at the time of
disclosure will be considered as confidential ("Confidential Information") and
will be utilized only pursuant to the licenses granted hereunder. During the
term of this Agreement and for a period of ten (10) years thereafter, neither
party will disclose to any third party any Confidential Information received
from the other party without the specific written consent of such party. The
foregoing will not apply where such Information a) was or becomes public through
no fault of the receiving party, b) was, at the time of receipt, already in the
possession of the receiving party as evidenced by its prior written records, c)
was obtained from a third party legally entitled to use and disclose the same,
d) is independently developed by the receiving party without use of any
Confidential Information of the disclosing party, or e) is required by law to be
disclosed to a court or governmental agency.

               B. Permitted Use and Disclosures. Notwithstanding Section 8.A.
above, each party hereto may use or disclose information disclosed to it by the
other party to the extent such use or disclosure is reasonably necessary in
filing or prosecuting patent applications, prosecuting or defending litigation,
complying with applicable governmental regulations or otherwise submitting
information to tax or other governmental authorities, conducting clinical
trials, or making a permitted sublicense or otherwise exercising its rights
hereunder, provided that if a party is required to make any such disclosure of
another party's confidential information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the latter
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its best efforts to secure confidential treatment
of such information prior to its disclosure (whether through protective orders
or otherwise).

               C. Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, disclosures may be made as
required by securities or other applicable laws, or to actual or prospective
investors or corporate partners, or to a party's accountants, attorneys and
other professional advisors.

                                      -10-
<PAGE>   11

               D. Publications. ARCH will provide to Xcyte copies of (i) any
proposed written publication by ARCH or the University containing any
Confidential Information, (ii) any proposed written publication by the
Inventor(s) containing any Confidential Information, to the extent ARCH is aware
of, and has access to, such publication and (iii) proposed publications
containing any information relating to the Licensed Patents, to the extent ARCH
is aware of, and has access to, such publications. Xcyte will provide to ARCH
copies of (i) any proposed written publication by Xcyte, its Sublicensees and/or
Affiliates of either of them containing any Confidential Information and (ii)
proposed publications containing any information relating to the Licensed
Patents, to the extent Xcyte is aware of, and has access to, such publications.
The parties will provide copies of such proposed written publications at least
ninety (90) days in advance of publication. In addition, the topic and contents
of any proposed oral disclosures regarding the Licensed Patents which will be
made to third persons by ARCH will be disclosed in writing to Xcyte at least
thirty (30) days prior to any proposed oral presentation. The receiving party
may object to such proposed publication or disclosure on the grounds that (i) it
contains patentable subject matter that needs patent protection or (ii) that the
publication contains Confidential Information of the objecting party. At the
request of the objecting party, Confidential Information of the objecting party
will be deleted from the publication or oral disclosure.

        9. Infringement. In the event of an infringement of a Licensed Patent
the following will apply:

               A. Notice. Each party will give the other written notice if one
of them becomes aware of any infringement by a third party of any Licensed
Patent. Upon notice of any such infringement, the parties will promptly consult
with one another with a view toward reaching agreement on a course of action to
be pursued.

                                      -11-
<PAGE>   12

               B. Xcyte's Right to Bring Infringement Action.

                      (1) If a third party infringes any patent included in the
Licensed Patents within the Field, Xcyte will have the first right, but not the
obligation, to institute and prosecute an action or proceeding to abate such
infringement and to resolve such matter by settlement or otherwise. Xcyte agrees
to notify ARCH of its intention to bring an action or proceeding prior to filing
the same (or responding to any declaratory judgment action) and in sufficient
time to allow ARCH the opportunity to discuss with Xcyte the choice of counsel
for such matter. Xcyte agrees to hire counsel reasonably acceptable to ARCH.
Xcyte will keep ARCH timely informed of material developments in the prosecution
or settlement of such action or proceeding. Xcyte will be responsible for all
costs and expenses of any action or proceeding against infringers which Xcyte
initiates. ARCH will cooperate fully in such action, including without
limitation, by joining as a party plaintiff if required to do so by law to
maintain such action or proceeding, and by executing and making available such
documents as Xcyte may reasonably request. Xcyte agrees to promptly reimburse
ARCH for its reasonable third party out-of-pocket fees and expenses incurred in
joining an action or proceeding or cooperating with Xcyte. ARCH may be
represented by counsel in any such legal proceedings, at ARCH's own expense,
acting in an advisory but not controlling capacity.

                      (2) The prosecution, settlement, or abandonment of any
action or proceeding under subsection 9.B.(1) will be at Xcyte's reasonable
discretion provided that Xcyte will not have any right to surrender any of ARCH'
s rights to the Licensed Patents.

                      (3) Except as provided herein, all amounts of every kind
and nature recovered from an action or proceeding of infringement by Xcyte will
belong to Xcyte. After deduction of the fees and expenses of both parties to
this Agreement, any remaining amounts recovered will be considered Net Sales
under this Agreement and subject to Royalty payments in accordance with Section
3.B.

               C. ARCH's Right to Bring Infringement Action. If a third party
infringes any patent included in the Licensed Patents within the Field, and ARCH
wishes to initiate a legal proceeding against such infringement, ARCH will first
notify Xcyte in writing and request that Xcyte bring an action or proceeding
against the infringing third party. if Xcyte declines or fails to bring such an
action or proceeding within three hundred sixty five (365) days of receipt of
the notice, ARCH will have the right, at its discretion, to institute and
prosecute an action or proceeding to abate such infringement and to resolve such
matter by settlement or otherwise. Xcyte will cooperate fully by joining as a
party plaintiff if required to do so by law to maintain such action and by
executing and making available such documents as ARCH may reasonably request.
Except as specifically provided in this Article 9, ARCH will have the right to
retain all amounts recovered of every kind and nature. Amounts recovered by ARCH
will not be considered Net Sales under this Agreement and will not give rise to
Royalty payments under Article 3.

                                      -12-
<PAGE>   13

        10. Termination.

               A. Term. Unless terminated earlier, this Agreement will expire on
the expiration date of the last to expire of the Licensed Patents. The term of
this Agreement will commence on the Effective Date, and unless earlier
terminated as provided herein, will continue in full force and effect on a
country-by-country and Licensed Product-by-Licensed Product basis until there
are no remaining royalty payment obligations in a country, at which time the
Agreement will expire in its entirety in such country.

               B. ARCH's Right to Terminate. ARCH will have the right to
terminate this Agreement as follows, in addition to all other available
remedies:

                      (1) Subject to Section 10.C., if Xcyte fails to make any
Royalty or other payment when due, this Agreement will terminate effective
thirty (30) days after ARCH's written notice to Xcyte to such effect, unless
Xcyte makes such payment within such thirty (30) days.

                      (2) Subject to Section 10.C., if Xcyte fails to observe
any other material obligation of this Agreement, this Agreement will terminate
effective ninety (90) days after ARCH's written notice to Xcyte describing such
failure, unless Xcyte cures such failure within such ninety (90) days.

                      (3) if Xcyte will have filed by or against it a petition
under any bankruptcy or insolvency law and such petition is not dismissed within
sixty (60) days of its filing, or if Xcyte makes an assignment of all or
substantially all of its assets for the benefit of its creditors ARCH may
terminate this Agreement by written notice effective as of the (i) date of
filing by Xcyte of any such petition, (ii) date of any such assignment to
creditors, or (iii) end of the sixty (60) days if a petition is filed against it
and not dismissed by such time, whichever is applicable.

                      (4) If Xcyte will be dissolved, liquidated or otherwise
ceases to exist due to insolvency, other than for reasons specified in
subsection 10.B.(3) above, this Agreement will automatically terminate as of (i)
the date articles of dissolution or a similar document is filed on behalf of
Xcyte with the appropriate government authority or (ii) the date of
establishment of a liquidating trust or other arrangement for the winding up of
the affairs of Xcyte.

               C. Termination for Cause. If any party materially breaches this
Agreement, the Xcyte, if ARCH is the breaching party, or ARCH, if Xcyte is the
breaching party, may elect to give the breaching party written notice describing
the alleged breach. If the breaching party has not cured such breach within
sixty (60) days after receipt of such notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement effective immediately; provided, however, if either
party receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted default,
the matter will be submitted to arbitration as provided in Article 11 of this
Agreement. In

                                      -13-
<PAGE>   14

such event, the nonbreaching party shall not have the right to terminate this
Agreement until it has been determined in such arbitration proceeding that the
other party materially breached this Agreement, and the breaching party fails to
cure such breach within ninety (90) days after the conclusion of such
arbitration proceeding, including any appeal subject to Section 11.B.

               D. Xcyte's Right to Terminate. Xcyte may terminate this Agreement
as to any of the patent applications and/or patents within the Licensed Patents
and/or any country at any time by giving ARCH ninety (90) days prior written
notice.

               E. Effect of Termination.

                      (1) Accrued Rights and Obligations. Termination of this
Agreement for any reason will not release any party hereto from any liability
which, at the time of such termination, has already accrued to the other party
or which is attributable to a period prior to such termination, nor preclude
either party from pursuing any rights and remedies it may have hereunder or at
law or in equity which accrued or are based upon any event occurring prior to
such termination.

                      (2) Stock on Hand. In the event this Agreement is
terminated for any reason, Xcyte and its Affiliates and Sublicensees shall have
the right to sell or otherwise dispose of the stock of any Licensed Product
subject to this Agreement then on hand, subject to Article 3.

                      (3) Sublicensees. In the event of any termination of this
Agreement, any sublicenses granted by Xcyte shall remain in force and effect and
shall be assigned by Xcyte to ARCH; provided, the financial obligations of each
Sublicensee to ARCH shall be limited to the amounts Xcyte shall be obligated to
pay to ARCH for the activities of such Sublicensee pursuant to this Agreement,
and the obligations of ARCH to each Sublicensee will not exceed the obligations
of ARCH to Xcyte pursuant to this Agreement.

               F. Survival. The provisions of (i) Xcyte's obligation to pay
Royalties and Patent Costs accrued prior to the date of termination and which
were not paid or payable before termination, along with the report of Net Sales
and record keeping required by Sections 3.C and 3.D, and (ii) Articles 7, 8, 11
and 12 and Sections 10.E. and 10.F. will survive termination of this Agreement
for any reason.

        11. Arbitration. If the parties cannot satisfactorily settle any claim,
disagreement or controversy arising out of or related to this Agreement or its
interpretation, performance, nonperformance, breach or their respective rights
and obligations hereunder, such disagreement will, at the request of either
party, be settled by arbitration as follows:

               A. Panel. All such disputes will be referred to an arbitration
panel comprised of three persons, one to be selected by each party hereto and
the third selected by the first two. The arbitrators will be persons involved in
and familiar with the licensing and technology transfer field. Each party will
select an arbitrator within twenty (20) days of request for arbitration by
either party. The first two arbitrators will select the third member of the
panel

                                      -14-
<PAGE>   15

within fifteen (15) days after their selection. The arbitration will be held as
soon as is reasonably possible after selection of the arbitration panel. The
proceedings will be held in an informal manner as reasonably determined by the
arbitrators. Except for the right of appeal as set forth in Section 1 1.B.
below, the parties will be bound by a decision of the arbitration panel with
respect to the matter in dispute. All proceedings of the arbitration panel will
be held in Chicago, Illinois.

               B. Appeals. There will be no appeal from an arbitration panel's
unanimous decision. In the event of a majority decision by the arbitration
panel, a dissatisfied party may appeal the panel's decision to the American
Arbitration Association (AAA) for an independent, final, binding decision. All
appeals will be heard in Chicago, Illinois. The dissatisfied party must make
such an appeal within thirty (30) days after receipt of the arbitration panel's
decision and if it loses the appeal must bear the parties' expenses and costs
for such appeal. The AAA is hereby authorized to make arrangements for such
appeal, to be held under the procedures provided by its arbitration rules.
Judgment upon any award rendered by all or a majority of the appeal arbitrators
or a unanimous judgment of the initial panel, may be entered in any court of
competent jurisdiction, after any and all applicable appeal periods have passed.

        12. Miscellaneous.

               A. Marking. Xcyte will and agrees to cause its Sublicensees and
Affiliates of either, to place in a conspicuous location on Licensed Products
(or its packaging where marking the Product is physically impossible) sold to
third parties, a patent notice in accordance with the laws concerning the
marking of patented articles in the country in which such articles are sold.

               B. United States Manufacture. Xcyte agrees that, to the extent
required by 35 United States Code Section 204, any Licensed Product sold in the
United States will be manufactured substantially in the United States of
America.

               C. Export Regulations. To the extent that the United States
Export Control Regulations are applicable, neither Xcyte nor ARCH will, without
having first fully complied with such regulations, (i) knowingly transfer,
directly or indirectly, any unpublished technical data obtained or to be
obtained from the other party hereto to a destination outside the United States,
or (ii) knowingly ship, directly or indirectly, any product produced using such
unpublished technical data to any destination outside the United States.

               D. Entire Agreement, Amendment, Waiver. This Agreement together
with the Exhibits attached hereto constitutes the entire agreement between the
parties regarding the subject matter hereof, and supersedes all prior written or
oral agreements or understandings (express or implied) between them concerning
the same subject matter. This Agreement may not be amended or modified except in
a document signed by duly authorized representatives of each party. No waiver of
any default hereunder by either party or any failure to enforce any rights
hereunder will be deemed to constitute a waiver of any subsequent default with
respect to the same or any other provision hereof.

                                      -15-
<PAGE>   16

               E. Notice. Any notice required or otherwise made pursuant to this
Agreement will be in writing, sent by registered or certified mail properly
addressed, or by facsimile with confirmed answer-back, to the other party at the
address set forth below or at such other address as may be designated by written
notice to the other party. Notice will be deemed effective three (3) business
days following the date of sending such notice if by mail, on the day following
deposit with an overnight courier, if sent by overnight courier, or upon
confirmed answer-back if by facsimile.

                      If to ARCH:   ARCH Development Corporation
                                    5640 South Ellis, Suite 405
                                    Chicago, Illinois 60637
                                    Attention: President

                      If to Xcyte:  Xcyte Therapies, Inc.
                                    2203 Airport Way South
                                    Suite 300
                                    Seattle, Washington 98134
                                    Attention: President

               F. Assignment. This Agreement will be binding on the parties
hereto and upon their respective successors and assigns. Either party may at any
time, upon written notice to the other party, assign or delegate to a successor
to all or substantially all of its business any of its rights and obligations
hereunder, provided that, any such assignment or delegation will in no event
relieve either party of its primary responsibility for the same. Except as
provided in the preceding sentence, Xcyte may not assign or delegate any right
or obligation hereunder without the prior written consent of ARCH, which consent
will not be unreasonably withheld, and any attempted assignment or delegation in
violation thereof will be void. ARCH may assign this Agreement at any time to
any third party on written notice to Xcyte. In such event, the assignee will be
substituted for ARCH as a party hereto, and ARCH will no longer be bound hereby.

               G. Governing Law. The interpretation and performance of this
Agreement will be governed by the laws of the State of Illinois applicable to
contracts made and to be fully performed in that state.

               H. The University. This Agreement is entered into by ARCH in its
own private capacity and not on behalf of the University, nor as its contractor
or agent. It is understood and agreed that the University is not a party to this
Agreement and is not liable for nor assumes any responsibility or obligation
under this Agreement, and is not liable for any action or lack thereof by ARCH.

               I. Advertising. Each party agrees not to use the name of the
other party in any commercial activity, marketing, advertising or sales
brochures except with the prior written consent of the other party, which
consent may be granted or withheld in such party's sole discretion. Xcyte agrees
not to use, and will prohibit its Sublicensees and the Affiliates of either from
using, the name of the University or any of the Inventor(s) in any commercial
activity,

                                      -16-
<PAGE>   17

marketing, advertising or sales brochures, except to the extent required by law.

               J. Independent Contractors. The relationship of the parties
hereto is that of independent contractors. The parties hereto are not deemed to
be agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.

               K. Right to Develop Independently. Nothing in this Agreement will
impair Xcyte' s right to independently acquire, license, develop for itself, or
have others develop for it, intellectual property and technology performing
similar functions as the Licensed Patents or to market and distribute Licensed
Products or other products based on such other intellectual property and
technology. Nothing in this Agreement will impair ARCH's or the University's
right to independently acquire, license, develop for itself, or have others
develop for it, intellectual property and technology (other than the Licensed
Patents) performing similar functions as the Licensed Patents or to market and
distribute products (other than Licensed Products) based on such other
intellectual property and technology.

               L. Force Majeure. Neither party shall lose any rights hereunder
or be liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting party if the
failure is occasioned by war, strike, fire, Act of God, earthquake, flood,
lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the reasonable
control and not caused by the negligence, intentional conduct or misconduct of
the nonperforming party and the non-performing party has exerted all reasonable
efforts to avoid or remedy such force majeure; provided, however, that in no
event shall a party be required to settle any labor dispute or disturbance.

               M. Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT
OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

               N. Severability. In the event that any provisions of this
Agreement are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the parties in entering this
Agreement.

               O. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.

        IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective duly authorized officers or representatives on the
date first above written.

                                      -17-
<PAGE>   18

ARCH Development Corporation               Xcyte Therapies, Inc.

By: /s/: Thomas L. Churchwell              By: /s/: Ronald J. Berenson
   -----------------------------------        ---------------------------------
        Thomas L. Churchwell                       Ronald J. Berenson

        President and CEO                          President and CEO

                                      -18-
<PAGE>   19

                                    EXHIBIT A

                          SCHEDULE OF LICENSED PATENTS

                                       [*]

*Certain information on this page has been omitted and filed
 separately with the Commission. Confidential treatment has
 been requested with respect to the omitted portions.

                                      -19-

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