Document:

Exhibit 10.23

           CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
                 HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
                 SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
      PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE
                                OMITTED PORTIONS.
                    OMITTED PORTIONS ARE INDICATED BY [***].

                             COLLABORATION AGREEMENT

      THIS COLLABORATION AGREEMENT ("Agreement") is made and entered into
effective as of November 29, 2004 (the "Effective Date"), by and between
PHARMATHENE, INC., having principal offices at 175 Admiral Cochrane Dr., Suite
400, Annapolis, MD 21401 ("PharmAthene") and MEDAREX, INC., having principal
offices at 707 State Road, Princeton, New Jersey 08540-1437, on behalf of itself
and its wholly owned subsidiary, GENPHARM INTERNATIONAL, INC., with principal
offices at 521 Cottonwood Drive, Milpitas, California 95035 (collectively,
"Medarex"). PharmAthene and Medarex each may be referred to herein individually
as a "Party," or collectively as the "Parties."

      WHEREAS, Medarex and PharmAthene desire to enter into a definitive
agreement to collaborate in order to commercialize fully human antibodies with
respect to the anthrax protective factor antigen, as more fully described in
Appendix C attached hereto (the "Collaboration Target"), on the terms set forth
below; and;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, do hereby agree as follows:

                                   ARTICLE 1 -
                SCOPE OF COLLABORATION; COLLABORATION ACTIVITIES

      Section 1.1 Scope of Collaboration. The Parties have entered into this
collaboration (such collective enterprise, the "Collaboration") to jointly

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research, develop and commercialize Collaboration Products with respect to the
Collaboration Target throughout the Territory as set forth in this Agreement.
Any capitalized term used in this Agreement not otherwise defined herein shall
have the meaning set forth on Appendix A.

      Section 1.2 Research Activities.

            1.2.1 General. Under the direction and supervision of the Steering
Committee, the Parties shall use Commercially Reasonable Efforts to conduct
their respective research activities in accordance with this Agreement, each
Project Plan and each Project Budget.

            1.2.2 Allocation of Costs. All costs associated with the
immunization of the HuMAb Mice and the raising of the Collaboration Antibodies
(as defined in Section 1.2.3(a) below) to the Collaboration Target that are in
existence as of the Effective Date and the initial development work performed by
Medarex prior to the Effective Date (the "Medarex Research Activities") shall be
borne one-hundred percent (100%) by Medarex. All other costs and expenses
incurred by the Parties with respect to the Project Plan and the Project Budget
shall be borne by PharmAthene and shall be governed by Sections 4.1.1, 4.1.2
and/or 4.1.3, as applicable. PharmAthene will fund all Collaboration Activities
contemplated under the first year Project Plan and Project Budget that are not
covered in full by a Government Award received by either Party, and PharmAthene
will be solely responsible for funding 100% of all research, development, and
commercialization activities (on a fully-burdened basis in accordance with
Section 4.1.1) not funded by a Government Award but included in any future
Project Plan and Project Budget. PharmAthene shall also be responsible for
funding 100% of all activities associated with securing and managing any
Government Contract(s) (the "PharmAthene Activities").

            1.2.3 Collaboration Antibodies.

            (a) The list of antibodies set forth on Appendix D shall be the
initial "Collaboration Antibodies". As the Parties gain greater understanding of
the Collaboration Antibodies (including the amino acid sequence of such
Collaboration Antibodies as described in Section 1.2.3(b), to the extent not
already determined) and the potential utility of Antibody Products, or in the
event that the Parties designate future Collaboration Antibodies, they shall

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update, to the extent appropriate, the description of the Collaboration
Antibodies on Appendix D to more accurately reflect the identity of the
Collaboration Antibodies.

            (b) The Parties shall determine the amino acid sequence of at least
one heavy chain variable region corresponding to a contiguous portion spanning
CDR1 through CDR3 and defining a complete antibody-heavy chain antigen binding
domain (a "Binding Sequence") for each Collaboration Antibody for which such
sequence has not been determined. Except with respect to the Lead Collaboration
Antibody (as defined below), Medarex shall have the right to delete any such
Collaboration Antibody from Appendix D, on written notice to PharmAthene within
thirty (30) days of its receipt of the correct sequence data for any such
Collaboration Antibody, if Medarex (i) is researching or developing, or has
researched or developed, either alone or in collaboration with a Third Party, or
(ii) has previously granted a Third Party rights with respect to, any Antibody
that has the same Binding Sequence as such Collaboration Antibody, whereupon
such Collaboration Antibody shall no longer be deemed a Collaboration Antibody,
and all amounts of such Collaboration Antibody (and any cell lines expressing
such Collaboration Antibody and other Biological Materials with respect to such
Collaboration Antibody) produced pursuant to this Agreement will be destroyed.

            (c) Once the amino acid sequence for a given Collaboration Antibody
has been determined as provided in Section 1.2.3(b), Medarex shall use
Commercially Reasonable Efforts to deliver to the Collaboration the Antibody
Materials with respect to such Collaboration Antibody in such form as the
Steering Committee may designate. Medarex shall have no obligation under this
Agreement to provide PharmAthene with any Mice Materials or other Biological
Materials other than the Collaboration Antibody (and Antibody Materials with
respect thereto) as provided in this Section 1.2.3.

            1.2.4 Lead Collaboration Antibody. The Parties agree that the
Collaboration Antibody listed in Appendix D under the heading Lead Collaboration
Antibody is the "Lead Collaboration Antibody" pursuant to this Agreement." It is
understood that without the written consent of PharmAthene the Steering
Committee shall not (i) select more than one Lead Collaboration Antibody, (ii)
substitute one Lead Collaboration Antibody for another, or research, develop or

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commercialize a Collaboration Antibody other than the Lead Collaboration
Antibody without the written authorization of the Steering Committee and the
written consent of PharmAthene and Medarex. With respect to the Lead
Collaboration Antibody, the Steering Committee shall solicit bids from suppliers
to perform the Production Process Development. Each Party shall have the right
to submit a bid on such terms as it desires. The Steering Committee shall use
Commercially Reasonable Efforts to enter into a development agreement with the
supplier that is best able to meet the Parties' requirements, taking into
consideration such factors as price, quality, capacity, quantity, reliability
and reputation. In the event the Steering Committee selects a Party to perform
Production Process Development pursuant to this Section 1.2.4, the price and
other terms and conditions of such Production Process Development shall be based
on arm's length negotiations with the Steering Committee

      Section 1.3 Project Plan and Project Budget. From time to time, Medarex
and PharmAthene shall jointly develop and implement a project plan (each a
"Project Plan") and project budget (each a "Project Budget") for the research,
development, manufacture and commercialization of Collaboration Products. It is
understood and agreed by the Parties that:

            1.3.1 an outline of the initial Project Plan with respect to the
Lead Collaboration Antibody is set forth on Appendix E hereto;

            1.3.2 within sixty (60) days of the Effective Date, Medarex and
PharmAthene will agree to a Project Plan and a Project Budget with respect to
the Lead Collaboration Antibody such Project Plan and Project Budget to address
activities to be performed during the first calendar year of the Collaboration;

            1.3.3 PharmAthene shall pay Two Million United States Dollars
(US$2,000,000) (the "Initial PharmAthene Contribution") to Medarex within
fifteen (15) days of the Effective Date, which amount shall be used by Medarex
solely for purposes of funding activities specified in the initial Project Plan;

            1.3.4 The components of each Project Plan and Project Budget will
evolve as the applicable Collaboration Products move through the research,
development, manufacture and commercialization life cycle, and no later than
December 15th of each calendar year, or upon such date as the Steering Committee

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otherwise determines, the Steering Committee shall agree upon an update to the
Project Plan and Project Budget which will specify in greater detail the
activities to be undertaken by the Parties during the next calendar year;

            1.3.5 the Parties agree that the Project Plan for the Lead
Collaboration Antibody will include, at a minimum, those research and
development activities described in the two grant proposals submitted by Medarex
to the National Institutes of Health/National Institute of Allergy and
Infectious Disease (NIH/NIAID) and under which the NIH/NIAID has agreed to fund
those activities as performed by Medarex pursuant to the specific activities and
milestones outlined in such proposals and the budgets submitted therewith. Such
research and development activities to be performed by Medarex under the
Government Awards are set forth in Appendix E;

            1.3.6 if the Parties disagree as to the nature and scope of any
additional activities to be included in the initial Project Plan, then the
Project Plan shall be subject to dispute resolution as set forth in Section 2.3;
provided that, at a minimum, the activities described in the two grant proposals
submitted by Medarex and funded by the NIH/NIAID shall be included in the
initial Project Plan;

            1.3.7 any changes or additions to a Project Plan that would alter
the activities that Medarex has agreed to perform under the Government Awards
awarded to Medarex prior to the Effective Date must be approved in advance by
the NIH/NIAID and if approval is not given, then the activities described in the
two grant proposals submitted by Medarex and funded by the NIH/NIAID shall be
performed and shall be Collaboration Activities;

            1.3.8 at each quarterly meeting of the Steering Committee, the
Steering Committee shall review the activities of the Parties during the
upcoming calendar quarter and shall adjust the Project Plan and Project Budget
accordingly;

            1.3.9 upon approval by the Parties of a Project Plan and a Project
Budget, subject to Sections 1.2.2 and 2.3.5, PharmAthene shall fund all
Collaboration activities agreed to in the Project Plan and Project Budget, and
neither Party will commit to a Project Plan or Project Budget without the
ability to undertake (and/or fund) its respective activities and, with respect
to PharmAthene its funding obligations, under such Project Plan or Project
Budget;

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            1.3.10 no research and development activities shall be conducted by
a Party unless such activities are included in an approved Project Plan and
Project Budget; and

            1.3.11 Unless otherwise agreed to in writing by the Parties, the
Project Plan(s) will provide that PharmAthene will be responsible for
commercialization of Collaboration Product in the United States and in any other
country of the Territory in which the Parties jointly agree to commercialize a
Collaboration Product and will be responsible for securing and managing any
Government Contract(s) for the procurement of Collaboration Products; provided
that Medarex, through the Steering Committee, shall have the right to review and
approve any such Government Contract(s). For the purposes of clarity, no
contract for the sale of Collaboration Products (including without limitation a
Government Contract) shall be entered into without the express written consent
of both Parties, and any decision as to whether or not the Parties (or one of
the Parties) shall enter into such a contract shall not be subject to the
expedited arbitration procedures set forth in Section 2.3.4. If a Party is
willing to enter into a Government Contract and the other Party does not consent
to such Government Contract, then the non-consenting Party shall become an
Opting-Out Party; provided, however, that PharmAthene, as the party responsible
for securing a contract (including without limitation a Government Contract),
shall have used best efforts to secure a contract under terms and conditions
acceptable to Medarex, such terms and conditions including, but not limited to,
terms and conditions that adequately address price, product liability,
intellectual property ownership, and indemnification. In no event shall
PharmAthene agree to enter into a contract (including without limitation a
Government Contract) that would not result in Operating Profit for the
Collaboration based upon the projected calculation of Operating Profit jointly
determined and agreed to by the Parties.

      Section 1.4 Performance Standards. Each Party shall perform, or cause to
be performed, its respective activities hereunder in good scientific manner, and
in compliance in all material respects with all Applicable Law and shall use
Commercially Reasonable Efforts to (a) research, develop, obtain and maintain
Regulatory Approval for and commercialize one or more Collaboration Products
with respect to the Lead Collaboration Antibody, and (b) achieve the objectives

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of each Project Plan in accordance with each Project Budget, in each case,
efficiently and expeditiously by allocating sufficient time, effort, equipment
and skilled personnel to complete such activities successfully and promptly.

      Section 1.5 Product Trademarks. The Parties shall develop Product
Trademarks for the Lead Collaboration Antibody that will be commercialized. Such
Product Trademarks shall not be confusingly similar to, misleading or deceptive
with respect to, or dilute any of the Trademarks owned or Controlled by either
of the Parties, or any part of such Trademarks. No Party or any of its
Affiliates or sublicensees shall commercialize the Lead Collaboration Antibody
under any Trademark other than the Product Trademarks. No Party or any of its
Affiliates or sublicensees shall use in its business any Trademark that is
confusingly similar to, misleading or deceptive with respect to, or dilutes any
of the Lead Collaboration Antibody or any other Trademarks used to identify or
distinguish the Lead Collaboration Antibody, or any part of the foregoing. The
Steering Committee shall oversee the filing, prosecution and maintenance of all
Product Trademark registrations with respect to the Lead Collaboration Antibody.
The Parties shall share equally (50%/50%) in the costs and expenses of such
filing, prosecution and maintenance. Subject to Applicable Law, the label of the
Lead Collaboration Antibody shall include, at PharmAthene's sole discretion, the
name of PharmAthene and, at Medarex's sole discretion, the name of Medarex.

      Section 1.6 Supply of Collaboration Products. With respect to clinical and
commercial supplies of the Lead Collaboration Antibody, the Steering Committee
shall solicit bids from suppliers to supply the Parties' requirements thereof.
Each Party shall have the right to submit a bid on such terms as it desires. The
Steering Committee shall use Commercially Reasonable Efforts to enter into a
supply agreement with the supplier that is best able to meet the Parties'
requirements, taking into consideration such factors as price, quality,
capacity, quantity, reliability and reputation. In the event the Steering
Committee selects a Party to produce clinical and/or commercial supplies
pursuant to this Section 1.6, a definitive agreement consistent with the terms
of the bid shall be negotiated by such Party (through individuals who are not
members of the Steering Committee) and the other Party. If the Parties fail to
execute a definitive agreement with respect to such clinical and/or commercial
supply within ninety (90) days of the selection of such bid, or such longer
period as the Steering Committee may decide, then the Steering Committee shall
commence negotiations with respect to the next most favorable bid.

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                                   ARTICLE 2 -
                         OPERATION OF THE COLLABORATION

      Section 2.1 Steering Committee.

            2.1.1 Formation of Steering Committee. The Parties shall establish a
joint committee (the "Steering Committee"), which shall oversee the research,
development and commercialization activities hereunder. Each of PharmAthene and
Medarex shall appoint an equal number of representatives with the requisite
experience and seniority to enable them to make decisions on behalf of the
Parties with respect to the Collaboration. From time to time, PharmAthene and
Medarex each may substitute any of its representatives to the Steering Committee
on written notice to the other Party.

            2.1.2 Responsibilities. The Steering Committee shall, in addition to
its other responsibilities described in this Agreement: (a) prioritize the
research, development, manufacturing and commercialization activities with
respect to Collaboration Antibodies and Collaboration Products; (b) subject to
Section 1.3, allocate responsibility for such activities between PharmAthene and
Medarex taking into consideration their relevant expertise and available
resources; (c) develop and implement a strategy for researching, developing,
manufacturing, obtaining and maintaining Regulatory Approvals for, and
commercializing, the Lead Collaboration Antibody; (d) determine whether to enter
into any agreements pursuant to Section 7.4 or otherwise that would give rise to
Third-Party Payments; (e) establish such subcommittees as deemed appropriate by
the Steering Committee; and (f) take such other actions as are set forth in this
Article 2 or as the Parties may unanimously agree. The Steering Committee may
evaluate additional technologies that may be necessary or beneficial to the
Collaboration and may recommend the acquisition or in-licensing of these
technologies to the Parties.

            2.1.3 Procedural Rules for the Steering Committee.

            Generally. Except as explicitly set forth in this Section 2.1.3, the
Steering Committee shall establish its own procedural rules for its operation.

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            Voting. The Steering Committee shall take action by unanimous
consent of PharmAthene and Medarex, with each such Party having a single vote,
irrespective of the number of representatives actually in attendance at a
meeting, or by a written resolution signed by the designated representatives of
each of PharmAthene and Medarex.

      Section 2.2 Progress Reports. Within thirty (30) days after the end of
each calendar quarter, or as otherwise required by the Steering Committee, each
Party shall provide to the other Party a written progress report, which shall
(a) describe any research, development or commercialization activities,
including any activities or communications regarding the securing of a
Government Contract, with respect to Collaboration Products and any other work
relating to the Collaboration Products that it has performed, or caused to be
performed, since the last such report, (b) evaluate the work performed in
relation to the goals of this Agreement and the applicable Project Plan, and (c)
provide such other information as may be required by this Agreement and the
applicable Project Plan or reasonably requested by the other Party relating to
such activities. In addition to the progress reports provided hereunder, it is
contemplated that the Parties will maintain informal communications through the
Steering Committee and their day-to-day activities under this Agreement.

      Section 2.3 Disputes; Dispute Resolution.

            2.3.1 Referral to Steering Committee. Any dispute that may arise
relating to the terms of this Agreement or the activities of the Parties
hereunder shall be brought to the attention of the Steering Committee, which
shall attempt in good faith to achieve a resolution. Either Party may convene a
special meeting of the Steering Committee for the purpose of resolving disputes.

            2.3.2 Referral to Chief Executive Officers of the Parties. If the
Steering Committee is unable to resolve such a dispute within twenty (20) days
of the first presentation of such dispute to the Steering Committee, and with
respect to all other disputes, such dispute shall be referred to the Chief
Executive Officers of each of the Parties (or their respective designees) who
shall use their good faith efforts to mutually agree upon the proper course of
action to resolve the dispute.

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            2.3.3 Unresolved Disputes. If any dispute is not resolved by the
Chief Executive Officers of the Parties (or their designees) within ten (10)
business days after such dispute is referred to them, or such longer period as
the Chief Executive Officers (or their respective designees) may collectively
agree, then either Party shall have the right (a) if such dispute relates to
Section 1.3 (to the extent the dispute relates to the Project Budget or the
determination of the activities to be undertaken pursuant to a Project Plan, but
not with respect to a dispute regarding (i) which Party will perform or fund any
such activities, (ii) the decision as to whether Medarex will perform the
activities described in the two grant proposals submitted by Medarex and funded
by the NIH/NIAID, or (iii) the decision to enter into a contract for sale of
Collaboration Products including without limitation a Government Contract) or
2.1.2(d), to refer such dispute to an Expert for expedited arbitration as set
forth in Section 2.3.4, or (b) with respect to any other dispute, including with
respect to a Party's interpretation of, or any allegation of breach of, this
Agreement, to litigate such dispute in accordance with Section 11.5 or to pursue
such other dispute resolution mechanism as the Parties may agree.

            2.3.4 Expedited Arbitration.

            With respect to disputes under Section 2.3.3(a) above that are not
resolved by the Chief Executive Officers of the Parties (or their designees)
pursuant to Section 2.3.2, upon written request by either Party to the other
Party, the Parties shall promptly negotiate in good faith to appoint a mutually
acceptable disinterested, conflict-free individual not affiliated with either
Party, with scientific, technical and regulatory experience with respect to the
development of Antibody-Based Products necessary to resolve such dispute (an
"Expert"). If the Parties are not able to agree within five (5) days after the
receipt by a Party of the written request in the immediately preceding sentence,
the CPR Institute for Dispute Resolution, or such other similar entity as the
Parties may agree, shall be responsible for selecting an Expert within seven (7)
days of being approached by a Party. The fees and costs of the Expert and the
CPR Institute for Dispute Resolution (or such other entity) shall be shared
equally (50%/50%) by the Parties.

            Within fifteen (15) days after the designation of the Expert, the
Parties shall each simultaneously submit to the Expert and one another a written
statement of their respective positions on such disagreement. Each Party shall

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have five (5) days from receipt of the other Party's submission to submit a
written response thereto, which shall include any scientific and technical
information in support thereof. The Expert shall have the right to meet with the
Parties, either alone or together, as necessary to make a determination.

            No later than thirty (30) days after the designation of the Expert,
the Expert shall make a determination by selecting the resolution proposed by
one of the Parties that as a whole is the most fair and reasonable to the
Parties in light of the totality of the circumstances and shall provide the
Parties with a written statement setting forth the basis of the determination in
connection therewith. The decision of the Expert shall be final and conclusive,
absent manifest error.

            2.3.5 It is expressly understood and agreed by the Parties that
without the express written permission a Party, such Party will not be required
to pay the cost and expense for the research, development or commercialization
of, or perform research and development activities with respect to, (i) a
Collaboration Product other than the Lead Collaboration Antibody or (ii) for the
Lead Collaboration Antibody other than for research and development thereof for
commercialization in the United States.

                                   ARTICLE 3 -
                                 GRANT OF RIGHTS

      Section 3.1 License Grants for Collaboration Activities.

            3.1.1 Medarex Grant. Subject to Section 3.3 and the other terms and
conditions of this Agreement, Medarex hereby grants to PharmAthene and its
Affiliates a co-exclusive (with Medarex and its Affiliates), worldwide,
royalty-free right and license, with the right to sublicense solely as provided
in Sections 3.3.5 and 3.4, under the Medarex Technology, the Collaboration
Technology and the Joint Technology, in each case to (a) perform PharmAthene's
activities under the Project Plan, and (b) jointly Exploit the Collaboration
Products in accordance with this Agreement.

            3.1.2 PharmAthene Grant. Subject to the terms and conditions of this
Agreement, PharmAthene hereby grants to Medarex and its Affiliates a
co-exclusive (with PharmAthene and its Affiliates), worldwide, royalty-free
right and license, with the right to sublicense solely as provided in Section
3.4, under the PharmAthene Technology, the Collaboration Technology and the

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Joint Technology, in each case to (a) perform Medarex's activities under the
Project Plan, and (b) jointly Exploit the Collaboration Products in accordance
with this Agreement.

      Section 3.2 Product Trademarks for Collaboration Products.

            3.2.1 Medarex Grant. Subject to the terms and conditions of this
Agreement, Medarex hereby grants to PharmAthene and its Affiliates a
co-exclusive (with Medarex and its Affiliates), worldwide, fully-paid,
royalty-free right and license, with the right to sublicense solely as provided
in Section 3.4, to use the Product Trademarks to Exploit the Collaboration
Products in accordance with this Agreement.

            3.2.2 PharmAthene Grant. Subject to the terms and conditions of this
Agreement, PharmAthene hereby grants to Medarex and its Affiliates a
co-exclusive (with PharmAthene and its Affiliates), worldwide, fully-paid,
royalty-free right and license, with the right to sublicense solely as provided
in Section 3.4, to use the Product Trademarks to Exploit the Collaboration
Products in accordance with this Agreement.

      Section 3.3 Exclusivity, Reserved Rights and Pre-Existing Grants.

            3.3.1 Antigen Exclusivity. Subject to Sections 3.3.2, 3.3.3 and
3.3.4, the Parties acknowledge and agree that no Party shall engage, directly or
indirectly, on behalf of itself or with or through any other party, in the
research, development, commercialization or other Exploitation of Antibody-Based
Products with respect to the Collaboration Target, or grant any other right or
license to do so, other than with respect to the Collaboration Products and
Unilateral Products as provided in this Agreement and any related agreements
between the Parties.

            3.3.2 Research and Commercialization Agreements. Medarex shall have
the right to (a) grant licenses and other rights to other parties, under the
Mice Related Technology for such parties to Exploit Antibody Products (but not
Collaboration Products) with respect to Antigens, including the Collaboration
Target, (b) transfer Mice Related Know-How to such parties in connection
therewith, including by providing instruction with respect to the use and
immunization of HuMAb Mice and the Additional Mice and assistance with respect
to the Mice Related Technology, (c) develop production processes for, and
manufacture, such Antibody Products, and (d) receive license fees, milestone
payments, royalties and other remuneration in connection therewith, but, in

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connection with clause (a), (b), (c) or (d) above, not to otherwise actively
participate in the clinical development or commercialization of such Antibody
Products by such parties (each agreement with respect to the foregoing, a
"Research and Commercialization Agreement").

            3.3.3 Retained Rights. Notwithstanding anything in this Agreement to
the contrary, Medarex and PharmAthene hereby retain the right to (a) enter into
collaborations or other agreements with, and to grant licenses and other rights
under the Medarex Technology and PharmAthene Technology, respectively, to Third
Parties to Exploit Antibody Products with respect to Antigens other than the
Collaboration Target, and/or (b) independently Exploit Antibody Products with
respect to Antigens other than the Collaboration Target.

            3.3.4 Existing Grants. The Parties further acknowledge and agree
that (a) pursuant to the Cross-License Agreement, Medarex has granted a
non-exclusive license under certain Medarex Patents to Exploit Antibody
Products, including Collaboration Products, with respect to Antigens, including
the Collaboration Target, in the Territory; and (b) pursuant to certain existing
agreements with Third Parties, Medarex has granted exclusive rights under the
Medarex Technology to Exploit Antibody Products with respect to Antigens other
than the Collaboration Target, which Antibody Products could be the same as
Collaboration Products.

            3.3.5 Cross-License Agreement. The Cross-License Agreement prohibits
Medarex from granting commercialization rights to the same Antibody Product,
whether by license or sublicense, under certain Medarex Technology to more than
one party in a territory. The Parties shall structure their respective
commercialization rights in each country in the Territory, in accordance with
this Section 3.3.5, so as to comply with the requirements of the Cross-License
Agreement and shall use good faith efforts to ensure that any such structure
preserves the intended economic benefits of the Collaboration to the Parties.

            So long as the Cross-License Agreement is in effect, if the Steering
Committee desires to grant a sublicense with respect to commercialization of a
Collaboration Product pursuant to Section 3.4 or Section 5.2, then the Steering
Committee shall provide Medarex with written notice thereof, which shall set

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forth in reasonable detail the terms and conditions of such sublicense, the
Medarex Technology and Collaboration Product involved, and the identity of the
proposed sublicensee. Upon receipt of such notice, Medarex shall make a good
faith determination as to whether such Medarex Technology is subject to the
sublicense restrictions contained in the Cross-License Agreement.

            To the extent that Medarex determines that such Medarex Technology
is not subject to the sublicense restrictions contained in the Cross-License
Agreement, Medarex shall so notify the Steering Committee in writing and the
Collaboration thereafter shall have the right to grant such sublicense, subject
to Section 3.4 or Section 5.2, as applicable.

            To the extent that Medarex determines that all or part of such
Medarex Technology is subject to the sublicense restrictions contained in the
Cross-License Agreement, Medarex shall so notify the Steering Committee in
writing. The Parties shall then meet to discuss in good faith how to proceed in
order to optimize the commercialization of the applicable Collaboration Product
hereunder while complying with the requirements of the Cross-License Agreement.

      Section 3.4 Sublicenses. Subject to Section 3.3.5, each Party shall have
the right to grant sublicenses under the licenses granted in Sections 3.1 and
3.2 pursuant to Section 5.2 or as set forth in a Project Plan to perform
activities under a Project Plan.

      Section 3.5 License Limitations. Each Party hereby covenants to the other
Party that neither such first Party nor any of its Affiliates, licensees or
sublicensees has received, a license to use or practice the Technology of such
other Party, directly or indirectly, on behalf of itself or any other party, for
any purpose other than as permitted under Section 3.1 and in particular, but
without limiting the generality of the foregoing, for any research, development,
commercialization or other Exploitation of an Antibody Product or any other
product or method with respect to the Collaboration Target, other than a
Collaboration Product or a Unilateral Product as provided hereunder or in the
applicable Unilateral Development and Commercialization Agreement.

      Section 3.6 No Other Rights. For the avoidance of doubt, Medarex and its
Affiliates shall have no right, express or implied, with respect to the
PharmAthene Technology and PharmAthene and its Affiliates shall have no right,
express or implied, with respect to the Medarex Technology, in each case except

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as expressly provided in Section 3.1. For the further avoidance of doubt, under
this Agreement PharmAthene and its Affiliates shall have no rights, express or
implied, in or to the Mice Materials, the Mice-Related Technology or any other
Information and Inventions or Patents or other intellectual property rights of
Medarex or its Affiliates with respect to the Mice Materials.

                                   ARTICLE 4 -
                              FINANCIAL PROVISIONS

      Section 4.1 Profit and Expense Allocation with Respect To Collaboration
Products.

            4.1.1 Research and Development and Commercialization Expenses.
Except as otherwise provided in this Agreement, and subject to Sections 1.2.2
and 2.3.5 PharmAthene shall be responsible for payment of all Authorized R&D
Expenses and Authorized Commercialization Expenses incurred by or on behalf of
the Parties in connection with their activities hereunder, other than the
Medarex Research Activities which shall be the responsibility of Medarex. In the
event that a Government Award is awarded to either Medarex and/or PharmAthene,
funds from such Government Award will be used by the Parties to fund the
Collaboration. Within thirty (30) days after the end of each calendar quarter,
each Party shall furnish the Steering Committee with a statement detailing the
research and development activities performed pursuant to the Project Plan and
the costs and expenses actually incurred in connection with such research and
development activities performed by or on behalf of such Party during such
calendar quarter. Within forty-five (45) days after the end of each calendar
quarter, PharmAthene shall make any necessary payments to Medarex to reimburse
Medarex for any Authorized R&D Expenses and any Authorized Commercialization
Expenses incurred by Medarex during such calendar quarter.

            4.1.2 Operating Profits and Operating Losses.

                  (a) Subject to paragraphs (b) through (i) below, the Parties
      shall share in the Operating Profits, on a calendar quarter-by-calendar
      quarter basis, with respect to Collaboration Products according to each
      Party's Allocation Percentage.

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                  (b) Prior to any distribution of Operating Profits to the
      Parties, out of Operating Profits, PharmAthene first will reimburse
      Medarex for the expenses incurred by Medarex with respect to the Medarex
      Research Activities prior to the Effective Date, which amount shall be
      provided to PharmAthene within ten (10) days subsequent to the Effective
      Date.

                  (c) Prior to any distribution of Operating Profits to the
      Parties and after reimbursement to Medarex pursuant to 4.1.2(b), out of
      Operating Profits, PharmAthene will retain 100% of any PharmAthene
      non-government funding of Authorized R&D Expenses in excess of the Initial
      PharmAthene Contribution.

                  (d) Any reimbursement of a Party pursuant to paragraphs (b)
      through (c) of this Section 4.1.2 shall be dollar for dollar, with no
      additional consideration (e.g. time or risk factor) included.

                  (e) With respect to each Government Contract, within sixty
      (60) days after execution of the Government Contract and prior to delivery
      of Collaboration Product under the Government Contract, the Steering
      Committee shall make a good faith estimate of (i) the Operating Profits
      for each calendar year of the Government Contract ("Estimated Yearly
      Profit") and (ii) the Operating Profits over the life of the Government
      Contract ("Estimated Total Profit"). After sale of Collaboration Product
      under a Government Contract, at each Steering Committee meeting, the
      Estimated Yearly Profit and Estimated Total Profit shall be reviewed and
      changed for the Government Contract, as required, based on actual
      experience with respect to Operating Profits under the Government Contract

                  (f) Within thirty (30) days after the end of each calendar
      quarter, the Selling Party shall provide the Non-Selling Party with a
      report detailing the calculation of the Operating Profits for each
      Government Contract.

                  (g) Within forty-five days after the end of each Calendar
      Quarter, with respect to each Government Contract, the Selling Product
      Party shall pay the Non-Selling Party its Allocation Percentage multiplied
      by Operating Profit less any payments made under paragraphs (b) - (c) for
      the applicable calendar quarter.

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                  (h) Within forty-five (45) days after the end of each year of
      a Government Contract and upon termination or expiration of a Government
      Contract, the Selling Party shall send to the Non-Selling Party a report
      as to Operating Profits with respect to Collaboration Product over the
      year or the term of the Government Contract, as the case may be, and if
      the amount of Operating Profits previously paid by the Selling Party to
      the Non-Selling Party under such Government Contract for the year or the
      term, as the case may be is less than the Non-Selling Party's Allocation
      Percentage of Operating Profits less any payments made under paragraphs
      (b) - (c) for the year or the term, as the case may be, then the Selling
      Party shall pay such deficiency to the Non-Selling Party at the time of
      such report. If the amount of Operating Profits previously paid by the
      Selling Party to the Non-Selling Party under such Government Contract for
      the year or the term, as the case may be is in excess of the Non-Selling
      Party's Allocation Percentage of Operating Profits less payments made
      under paragraphs (b) - (c) for the year or the term, as the case may be,
      then the Non-Selling party shall refund the Selling Party such amount so
      that the Selling-Party's Allocation Percentage of Operating Profits less
      payments made under paragraphs (b) - (c) is accurate for such year or the
      term within forty-five (45) days of such report.

                  (i) Within thirty (30) days after the end of each calendar
      quarter, each Party shall furnish the Steering Committee with a statement
      of the Authorized Commercialization Expenses paid by the Party for the
      calendar quarter, and within forty-five (45) days after the end of the
      calendar quarter, PharmAthene shall reimburse Medarex for Authorized
      Commercialization Expenses paid by Medarex in the calendar quarter.

            4.1.3 Other Expenses. With respect to Collaboration Expenses that
are not otherwise addressed in Section 4.1.1 or 4.1.2, each Party shall, within
thirty (30) days after the end of each calendar quarter in which such costs or
expenses are incurred, furnish the Steering Committee and the other Party with a
statement detailing such costs and expenses actually incurred by such Party
during such calendar quarter. In addition, each Party shall promptly furnish the

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Steering Committee and the other Party with such supporting documentation for
such costs and expenses as the Steering Committee or such other Party may
reasonably request. In the event that the Steering Committee does not approve
such costs and expenses within fifteen (15) days of receipt of such statement,
the party incurring such costs and expenses shall be responsible for such costs
and expenses, and such costs and expenses shall not be included in Authorized
R&D Expenses or Authorized Commercialization Expenses for purposes of
calculating Operating Profits or Operating Losses.

      Section 4.2 Payment Method. All amounts due by one Party hereunder shall
be paid in U.S. dollars by wire transfer in immediately available funds to an
account designated by the receiving Party. Any payments or portions thereof due
hereunder which are not paid on the date such payments are due under this
Agreement shall bear interest at a rate equal to the lesser of the prime rate as
published in The Wall Street Journal, Eastern Edition, on the first day of each
calendar quarter in which such payments are overdue, plus two (2) percentage
points, and the maximum rate permitted by law, calculated on the number of days
such payment is delinquent, compounded monthly.

      Section 4.3 Currency; Foreign Payments. If any currency conversion shall
be required in connection with any payment hereunder, such conversion shall be
made by using the arithmetic mean of the exchange rates for the purchase of U.S.
dollars as published in The Wall Street Journal, Eastern Edition, on the last
business day of each month in the calendar quarter to which such payments
relate. If at any time legal restrictions prevent the prompt remittance of any
Operating Profits with respect to Net Sales in any jurisdiction, the applicable
Party may notify the other 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 the receiving Party or its designee, and such Party shall have no
further obligations under this Agreement with respect thereto.

      Section 4.4 Taxes. A Party may deduct from any amounts it is required to
pay pursuant to this Agreement an amount equal to that withheld for or due on
account of any taxes (other than taxes imposed on or measured by net income) or
similar governmental charge imposed by a jurisdiction other than the United
States ("Withholding Taxes"). At the receiving Party's request, the paying Party

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shall provide the receiving Party a certificate evidencing payment of any
Withholding Taxes hereunder and shall reasonably assist the receiving Party, at
the receiving Party's expense, to obtain the benefit of any applicable tax
treaty.

      Section 4.5 Records Retention; Audit.

            4.5.1 Record Retention. Each Party shall maintain (and shall ensure
that its Affiliates and permitted sublicensees shall maintain) complete and
accurate books, records and accounts that fairly reflect their respective (a)
Authorized R&D Expenses, Authorized Commercialization Expenses, Other Operating
(Income)/Expenses, any costs and expenses reimbursable or shared under Article
7, and any other costs and expenses reimbursable or otherwise shared by the
Parties hereunder (collectively, the "Collaboration Expenses"), and (b) Net
Sales of Collaboration Products and Operating Profits and Operating Losses with
respect to Collaboration Products, in each case in sufficient detail to confirm
the accuracy of any payments required hereunder and in accordance with GAAP,
which books, records and accounts shall be retained by such Party until the
later of (i) three (3) years after the end of the period to which such books,
records and accounts pertain, and (ii) the expiration of the applicable tax
statute of limitations (or any extensions thereof), or for such longer period as
may be required by Applicable Law.

            4.5.2 Audit. Each Party shall have the right to have an independent
certified public accounting firm of nationally recognized standing, reasonably
acceptable to the audited Party, to have access during normal business hours,
and upon reasonable prior written notice, to such of the records of the other
Party (and its Affiliates and sublicensees) as may be reasonably necessary to
verify the accuracy of such Collaboration Expenses, Net Sales, or Operating
Profits or Operating Losses, as applicable, for any calendar quarter ending not
more than thirty-six (36) months prior to the date of such request; provided,
however, that neither Party shall have the right to conduct more than one such
audit in any twelve (12)-month period. The accounting firm shall disclose to
each Party whether such Collaboration Expenses, Net Sales, or Operating Profits
or Operating Losses, as applicable, are correct or incorrect and the specific
details concerning any discrepancies. No other information shall be provided to

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the requesting Party. The requesting Party shall bear the cost of such audit
unless the audit reveals a variance of more than five percent (5%) from the
reported results, in which case the audited Party shall bear the cost of the
audit. The results of such accounting firm shall be final, absent manifest
error.

            4.5.3 Payment of Additional Amounts. If, based on the results of
such audit, additional payments are owed by a Party under this Agreement, such
Party shall make such additional payments, with interest from the date
originally due at the rate of one and a half percent (1.5%) per month, within
sixty (60) days after the date on which such accounting firm's written report is
delivered to such Party.

            4.5.4 Confidentiality. The auditing Party shall treat all
information subject to review under this Section 4.5 in accordance with the
confidentiality provisions of Article 6 and shall cause its accounting firm to
enter into a reasonably acceptable confidentiality agreement with the audited
Party obligating such firm to maintain all such financial information in
confidence pursuant to such confidentiality agreement.

                                   ARTICLE 5 -
          UNILATERAL AND THIRD PARTY DEVELOPMENT AND COMMERCIALIZATION

      Section 5.1 Unilateral Development and Commercialization.

            5.1.1 Opting-Out by a Party. Each Party (i.e., Medarex, on the one
hand, and PharmAthene, on the other hand) (the "Opting-Out Party") shall have
the right, on ninety (90) days' written notice to the other (an "Opt-Out
Notice"), to elect not to proceed with the research, development and
commercialization ("Opt-Out") of all Collaboration Products at any time,
provided that, in the case of PharmAthene, PharmAthene shall be responsible for
all budgeted costs and expenses associated with any Collaboration Activities,
including research and development activities, with respect to the Collaboration
Product(s) that have been committed to in the applicable Project Budget as
necessary to complete that phase of the Project Plan (e.g., establishment of
Master Cell bank, toxicology studies in support of an IND or phase I, phase II
or phase III studies) that were under way when PharmAthene Opted-Out. By way of
clarification, if a Party Opts-Out of a Collaboration Product, such Party will
be deemed to have Opted-Out with respect to all Antibody Products with respect
to the Collaboration Target.

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<PAGE>

            5.1.2 Rights and Obligations of Parties with Respect To Unilateral
Products.

            (a) Unilateral Development and Commercialization. Upon receipt by a
Party of an Opt-Out Notice, the receiving Party shall have the right, on written
notice to the Opting-Out Party within thirty (30) days following receipt of the
Opt-Out Notice (an "Election Notice"), to proceed unilaterally with the
research, development and commercialization of all Collaboration Antibodies and
Collaboration Products (each such antibody and product, a "Discontinued
Product") pursuant to the separate agreement with the Opting-Out Party attached
hereto as Appendix F-1 or Appendix F-2, as applicable (each, a "Unilateral
Development and Commercialization Agreement"). Upon receipt by Medarex of an
Election Notice from PharmAthene, the Unilateral Development and
Commercialization Agreement set forth in Appendix F-1 shall be automatically
amended to include the Collaboration Target and any Discontinued Products with
respect thereto. Upon receipt by PharmAthene of an Election Notice from Medarex
with respect to the Collaboration Target, the Unilateral Development and
Commercialization Agreement set forth in Appendix F-2 shall be automatically
amended to include the Collaboration Target as a Unilateral Target and any
Discontinued Products with respect thereto. Upon such amendment of a Unilateral
Development and Commercialization Agreement pursuant to this Section 5.1.2, the
Collaboration Target shall cease to be a Collaboration Target and Appendix C
shall be amended accordingly, all Antibodies and all Antibody Products with
respect to the Collaboration Target shall cease to be Collaboration Antibodies
or Collaboration Products, as applicable, and any licenses granted pursuant to
Article 3, with respect to such Antigen and any Antibodies and Antibody Products
with respect thereto, shall terminate. The Parties shall work together to ensure
a smooth and orderly transition of the Discontinued Products to the
non-Opting-Out Party (the "Pursuing Party"), including the assignment of any
contracts and transfer of Biological Materials (but not Mice Materials) with
respect to the Exploitation of such Discontinued Products to the Pursuing Party,
and the assumption by the Pursuing Party of any obligations thereunder. Except
for the obligations provided for in Section 5.1.1, the Opting-Out Party shall
have (i) no further financial obligation to support or otherwise fund any
additional efforts in respect of such Discontinued Products, and (ii) no

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obligation, responsibility, or authority regarding such additional efforts in
respect of such Discontinued Products. In the event that neither Party elects to
proceed with the research, development or commercialization of any Collaboration
Product, the rights and obligations of the Parties with respect to the
Collaboration Target shall be governed by Sections 5.2 and 5.3.

            (b) Opt-Out of Unilateral Products.

                  (i) If, at any time, the Pursuing Party elects to Opt-Out of
all Unilateral Products with respect to a Unilateral Target (each as defined in
the applicable Unilateral Development and Commercialization Agreement) pursuant
to such Unilateral Development and Commercialization Agreement and the other
Party does not elect to proceed unilaterally with the research, development and
commercialization of such Unilateral Products, such Unilateral Target shall
become a Collaboration Target (and Appendix C shall be amended accordingly) and
all such Unilateral Products shall become Dormant Products pursuant to Section
5.3 and the Pursuing Party shall, without any additional consideration, assign
the Opting-Out Party's Allocation Percentage of its right, title and interest in
and to: any Unilateral Products in addition to the Discontinued Products, and
any Improvements thereto, developed by or on behalf of the Pursuing Party under
the applicable Unilateral Development and Commercialization Agreement; any
Product Trademarks and other Trademarks developed by the Pursuing Party for such
Unilateral Products; and any Regulatory Documentation with respect to such
Unilateral Products created by or on behalf of the Pursuing Party under the
applicable Unilateral Development and Commercialization Agreement (but excluding
any Regulatory Documentation comprising Production Process Technology, including
drug master files), to the other Party. If the Parties elect to proceed jointly
with the research, development and commercialization of such Dormant Product as
a Collaboration Product pursuant to Section 5.3 or to jointly sublicense such
Dormant Product to a Third Party pursuant to Section 5.2 (whereupon such Dormant
Product shall become a Collaboration Product), all milestone payments that were
paid by the Pursuing Party to the Opting-Out Party with respect to such Dormant
Product under the applicable Unilateral Development and Commercialization
Agreement shall be refunded by the Opting-Out Party.

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<PAGE>

            5.1.3 Return of Information and Materials. Upon the receipt by a
Party of an Election Notice with respect to the Collaboration Target or the
Unilateral Target, as applicable, such Party, at the request of the Pursuing
Party, shall return, or at the election of the Pursuing Party, destroy, and
thereafter provide the Pursuing Party written certification evidencing such
destruction, any or all Biological Materials (including Antibodies and Antibody
Materials), Collaboration Technology, Technology and other Confidential
Information of the Pursuing Party in such Party's possession or control relating
to Discontinued Products or Unilateral Products, as applicable, in each case, to
which such Party does not retain rights hereunder (except one copy of which
(other than Biological Materials) may be retained solely for archival purposes).

      Section 5.2 Third-Party Development and Commercialization of Collaboration
Products. If the Parties do not elect to proceed with the development and
commercialization of a Collaboration Product in one or more countries in the
Territory, the Parties shall have the right, at any time, to jointly license
such rights to Third Parties in one or more such countries on such terms and
conditions as the Parties may mutually agree; provided that (a) any such
sublicense with respect to the Medarex Technology shall be governed by the
procedures set forth in Sections 3.3.5 and 3.4 and any such sublicense with
respect to any other Technology of a Party (which for purposes of this Section
5.2 shall be deemed to include the Collaboration Technology and Joint
Technology) shall be governed by the procedures set forth in Section 3.4; and
(b) if there is any dispute between the Parties as to whether or not to grant
such a license, no such license shall be granted and such dispute shall not be
subject to litigation or any other Third Party dispute resolution mechanism.

      Section 5.3 Dormant Products. If the Parties do not elect to proceed with
the development and commercialization of a particular Collaboration Product, and
the Parties have not licensed rights to such Collaboration Product to a Third
Party pursuant to Section 5.2 that would be inconsistent therewith, (each such
Collaboration Product may also be referred to as a "Dormant Product") either
Party shall have the right at any time, subject to Section 3.3, to bring such
Dormant Product to the Steering Committee to discuss whether to initiate or
reinitiate the research, development or commercialization of such Dormant
Product. The initiating Party shall specify the reasons for proposing to

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<PAGE>

initiate or reinitiate such research, development or commercialization. If,
within thirty (30) days after the receipt of such notice, the other Party fails
to notify the interested Party in writing that it wishes to participate in the
research, development or commercialization of such Dormant Product, then the
interested Party shall have the right to pursue research, development or
commercialization of such Dormant Product under a Unilateral Development and
Commercialization Agreement pursuant to Section 5.1, provided that no
Collaboration Product or Unilateral Product as such Dormant Product is being
Exploited under this Agreement or by the other Party under a Unilateral
Development and Commercialization Agreement.

                                   ARTICLE 6 -
                                 CONFIDENTIALITY

      Section 6.1 Definition. "Confidential Information" of a Party shall mean
all information and know-how and any tangible embodiments thereof provided by or
on behalf of such Party to the other Party either in connection with the
discussions and negotiations pertaining to, or in the course of performing, this
Agreement or the Unilateral Development and Commercialization Agreements,
including the terms of this Agreement and the Unilateral Development and
Commercialization Agreements; data; knowledge; practices; processes; ideas;
research plans; engineering designs and drawings; research data; manufacturing
processes and techniques; scientific, manufacturing, marketing and business
plans; and financial and personnel matters relating to the disclosing Party or
to its present or future products, sales, suppliers, customers, employees,
investors or business. For purposes of this Agreement and the Unilateral
development and Commercialization Agreements, notwithstanding the Party that
disclosed such information or know-how, (a) all PharmAthene Know-How shall be
Confidential Information of PharmAthene, (b) all Medarex Know-How, including all
Mice-Related Know-How, shall be Confidential Information of Medarex and (c) all
Collaboration Know-How and Joint Know-How shall, with respect to Medarex, be
Confidential Information of PharmAthene and, with respect to PharmAthene, shall
be Confidential Information of Medarex.

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      Section 6.2 Exclusions. Notwithstanding the foregoing, information or
know-how of a Party shall not be deemed Confidential Information with respect to
a receiving Party for purposes of this Agreement if such information or
know-how:

            (a) was already known to the receiving Party or its Affiliates,
other than under an obligation of confidentiality or non-use, at the time of
disclosure to, such receiving Party or with respect to Collaboration Know-How
prior to discovery or development thereof;

            (b) was part of the public domain, at the time of its disclosure to,
such receiving Party or with respect to Collaboration Know-How prior to
discovery or development thereof;

            (c) became part of the public domain, after its disclosure to, such
receiving Party through no fault of a Party other than the Party that Controls
such information and know-how or with respect to Collaboration Know-How prior to
discovery or development thereof;

            (d) was disclosed to such receiving Party or its Affiliates, other
than under an obligation of confidentiality or non-use, by a Third Party who had
no obligation to the Party that Controls such information and know-how not to
disclose such information or know-how to others; or

            (e) was independently discovered or developed by such receiving
Party or its Affiliates, as evidenced by their written records, without the use
of Confidential Information belonging to the Party that Controls such
information and know-how.

Specific aspects or details of Confidential Information shall not be deemed to
be within the public domain or in the possession of a Party merely because the
Confidential Information is embraced by more general information in the public
domain or in the possession of such Party. Further, any combination of
Confidential Information shall not be considered in the public domain or in the
possession of a Party merely because individual elements of such Confidential
Information are in the public domain or in the possession of such Party unless
the combination and its principles are in the public domain or in the possession
of such Party.

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      Section 6.3 Disclosure and Use Restriction.

            6.3.1 General. Except as expressly provided herein, the Parties
agree that, for the Term and for five (5) years thereafter, each Party and its
Affiliates and sublicensees shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose except for the
purposes contemplated by this Agreement any Confidential Information of the
other Party, its Affiliates or sublicensees.

      Section 6.4 Authorized Disclosure. Subject to Section 6.3.2, each Party
may disclose Confidential Information of the other Party to the extent that such
disclosure is:

            6.4.1 Required by Governmental Order. Made in response to a valid
order of a court of competent jurisdiction or other supra-national, federal,
national, regional, state, provincial or local governmental or regulatory body
of competent jurisdiction; provided, however, that such Party shall first have
given notice to such other Party and given such other Party a reasonable
opportunity to quash such order or to obtain a protective order requiring that
the Confidential Information and documents that are the subject of such order be
held in confidence by such court or agency or, if disclosed, be used only for
the purposes for which the order was issued; and provided further that if a
disclosure order is not quashed or a protective order is not obtained, the
Confidential Information disclosed in response to such court or governmental
order shall be limited to that information which is legally required to be
disclosed in response to such court or governmental order;

            6.4.2 Required by Law. Otherwise required by law; provided, however,
that the disclosing Party shall (a) provide the other Party with reasonable
advance notice of and an opportunity to comment on any such required disclosure,
(b) if requested by such other Party, seek confidential treatment with respect
to any such disclosure to the extent available, and (c) use good faith efforts
to incorporate the comments of such other Party in any such disclosure or
request for confidential treatment;

            6.4.3 Required by Regulatory Authority. Made by such Party to the
Regulatory Authorities as required in connection with any filing, application or
request for Regulatory Approval for a Collaboration Product or a Unilateral
Product; provided, however, that reasonable measures shall be taken to assure
confidential treatment of such information;

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<PAGE>

            6.4.4 Required by Agreement. Made by such Party, in connection with
the performance of this Agreement, to Affiliates, permitted sublicensees,
research parties, employees, consultants, representatives or agents, assignees,
manufacturers, and contractors, each of whom prior to disclosure must be bound
by obligations of confidentiality and non-use at least equivalent in scope to
those set forth in this Article 6; or

            6.4.5 Required by Certain Third Parties. Made by such Party to
existing or potential acquirers or merger candidates; existing or potential
pharmaceutical collaborators (to the extent contemplated hereunder); investment
bankers; existing or potential investors, venture capital firms or other
financial institutions or investors for purposes of obtaining financing; or
Affiliates, each of whom prior to disclosure must be bound by obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Article 6. Notwithstanding this Section 6.4.5, PharmAthene shall not
disclose any item of Medarex's Confidential Information to any existing or
potential acquirer, merger partner or collaborator that is substantially
involved in the Exploitation of Antibodies or Antibody Products without first
providing Medarex with reasonable advance written notice of each such
disclosure. This Agreement may be disclosed by a Party to investment bankers,
financial institutions, venture capital firms, and potential investors in
connection with a loan, merger or financing or a proposed loan, merger or
financing without an obligation of confidentiality in the event that after
reasonable efforts such Party can not obtain a confidentiality agreement. This
Agreement may be disclosed where required by applicable rule, law or regulation.

            Section 6.5 Use of Name. Each Party may use the name, insignia,
symbol, trademark, trade name or logotype of the other Party only (a) in
connection with announcements and other permitted disclosures relating to this
Agreement and the activities contemplated hereby, (b) as required by Applicable
Law, and (c) otherwise as agreed in writing by such other Party.

            Section 6.6 Press Releases. Press releases or other similar public
communication by either Party relating to this Agreement, shall be approved in
advance by the other Party, which approval shall not be unreasonably withheld or

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<PAGE>

delayed, except for those communications required by Applicable Law (which shall
be provided to the other Party as soon as practicable after the release or
communication thereof), disclosures of information for which consent has
previously been obtained, and information of a similar nature to that which has
been previously disclosed publicly with respect to this Agreement, each of which
shall not require advance approval.

      Section 6.7 Publications. The Parties acknowledge that scientific
lead-time is a key element of the value of the research and development
activities under the Collaboration and further agree that scientific
publications must be strictly monitored to prevent any adverse effect from
premature publication of results of the research or development activities
hereunder. At least sixty (60) days prior to submission of any material related
to the research or development activities hereunder for publication or
presentation, the submitting Party shall provide to the other Party a draft of
such material for its review and comment. The receiving Party shall provide any
comments to the submitting Party within sixty (60) days of receipt of such
materials. No publication or presentation with respect to the research or
development activities hereunder shall be made unless and until the other
Party's comments on the proposed publication or presentation have been addressed
and changes have been agreed upon and any information determined by the other
Party to be Confidential Information has been removed. If requested in writing
by the other Party, the submitting Party shall withhold material from submission
for publication or presentation for an additional sixty (60) days to allow for
the filing of a patent application or the taking of such measures to establish
and preserve proprietary rights in the information in the material being
submitted for publication or presentation.

                                   ARTICLE 7 -
                              INTELLECTUAL PROPERTY

      Section 7.1 Intellectual Property Ownership.

            7.1.1 Ownership of Medarex Technology. Subject to the license grants
to PharmAthene under Article 3, as between the Parties, Medarex shall own and
retain all right, title and interest in and to any and all: (a) Antibody
Materials and Information and Inventions with respect thereto that are owned by
Medarex as of the Effective Date or generated by Medarex pursuant to the

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<PAGE>

Collaboration; (b) Collaboration Antibodies and Information and Inventions with
respect thereto in existence as of the Effective Date; (c) Information and
Inventions that are conceived, discovered, developed or otherwise made, by or on
behalf of Medarex (or its Affiliates or its licensees or sublicensees (other
than PharmAthene and its Affiliates)), whether or not patented or patentable,
and any and all Patent and other intellectual property rights with respect
thereto, except to the extent that any such Information and Inventions, or any
Patent or other intellectual property rights with respect thereto, are
Collaboration Technology; (d) other Information and Inventions, and Patent and
other intellectual property rights that are Controlled (other than pursuant to
the license grants set forth in Article 3) by Medarex, its Affiliates or its
licensees or sublicensees (other than PharmAthene and its Affiliates); and (e)
other Medarex Technology.

            7.1.2 Ownership of PharmAthene Technology. Subject to the license
grants to Medarex under Article 3, as between the Parties, PharmAthene shall own
and retain all right, title and interest in and to any and all: (a) Information
and Inventions that are conceived, discovered, developed or otherwise made, by
or on behalf of PharmAthene (or its Affiliates or its licensees or sublicensees
(other than Medarex and its Affiliates)), whether or not patented or patentable,
and any and all Patent and other intellectual property rights with respect
thereto, except to the extent that any such Information and Inventions, or any
Patent or other intellectual property rights with respect thereto, are
Collaboration Technology; (b) other Information and Inventions, and Patent and
other intellectual property rights that are Controlled (other than pursuant to
the license grants set forth in Article 3) by PharmAthene, its Affiliates or its
licensees or sublicensees (other than Medarex and its Affiliates); and (c) other
PharmAthene Technology.

            7.1.3 Ownership of Mice-Related Technology. Medarex shall own and
retain all right, title and interest in and to all Mice Materials and
Mice-Related Technology, including any and all Information and Inventions with
respect to the Mice Materials or the Mice-Related Technology (including any
Improvements thereto) that are conceived, discovered, developed or otherwise
made, by or on behalf of Medarex, its Affiliates or its licensees or
sublicensees (other than PharmAthene and its Affiliates), whether or not

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<PAGE>

patented or patentable, and any and all Patent and other intellectual property
rights with respect thereto. PharmAthene is not granted any rights, express or
implied, under this Agreement with respect to any Mice-Related Technology or
Mice Materials and nothing in this Agreement is intended to or shall be
interpreted as granting PharmAthene any license to such Mice-Related Technology
or Mice Materials whether subordinate or dominant to any other Technology (which
for purposes of this Section 7.1.3 shall be deemed to include Collaboration
Technology and Joint Technology) pursuant to this Agreement.

            7.1.4 Ownership of Production Process Technology. Subject to the
licenses granted under this Agreement, each Party shall own and retain all
right, title and interest in and to such Party's Production Process Technology,
including any and all Information and Inventions with respect to such Production
Process Technology (including any Improvements thereto) that are conceived,
discovered, developed or otherwise made, by or on behalf of such Party, its
Affiliates or, to the extent permitted, its sublicensees, whether or not
patented or patentable, and any and all Patent and other intellectual property
rights with respect thereto. Except as set forth in this Section 7.1.4, or as
the Parties may otherwise expressly agree ,including by separate written
agreement pursuant to Section 1.2.4 or Section 1.6, neither Party shall have any
rights, express or implied, under this Agreement with respect to any Production
Process Technology of the other Party and nothing in this Agreement is intended
to or shall be interpreted as granting a Party any license to such Production
Process Technology, whether subordinate or dominant to any other Technology
(which for purposes of this Section 7.1.4 shall be deemed to include
Collaboration Technology and Joint Technology). Notwithstanding the foregoing,
the Parties acknowledge and agree that (i) certain Production Process Technology
of Medarex has been used and may be used with respect to the development and the
manufacture of the Lead Collaboration Antibody; (ii) in the event that either or
both of the Parties enter into a written agreement with a Third Party pursuant
to Section 1.6 with respect to the manufacture and supply of Collaboration
Products, or pursuant to a Party's development and/or commercialization of a
Unilateral Product pursuant to Section 5.1 and a Unilateral Development and
Commercialization Agreement, each of the Parties covenants that it will provide
such Third Party with a Party's Production Process Technology used by the

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<PAGE>

Collaboration prior to entering into said Third Party written agreement pursuant
to Section 1.6 or used by the Collaboration prior to the Opting-Out of one Party
and the continuation of the Non-Opting-Out Party under a Unilateral Development
and Commercialization Agreement pursuant to Section 5.1, that is necessary or
reasonably useful with respect to the development and commercialization of such
Collaboration Product or Unilateral Product, as the case may be, and will grant
the Third Party or the Pursuing Party the right and license, without the right
to sublicense, to use such Party's Production Process Technology solely for such
manufacture and supply of such Collaboration Product or Unilateral Product, in
each case without compensation from the Third Party and without any cost or
expense to the other Party other than as otherwise set forth in this Agreement.
The provision of the Production Process Technology and the license thereto shall
be under a separate written agreement that reasonably protects the
confidentiality and unauthorized use of the providing Party's Production Process
Technology and that reasonably protects the intellectual property rights of the
providing Party in and to its Production Process Technology.

            7.1.5 Ownership of Collaboration Technology. Subject to Sections
7.1.3 and 7.1.4 and the license grants under Article 3, the Parties shall each
own an equal, undivided interest in any Collaboration Technology; provided,
however, that, except as otherwise expressly provided in this Agreement or the
Unilateral Development and Commercialization Agreements, neither a Party nor any
of its Affiliates, licensees or sublicensees shall, directly or indirectly,
Exploit any Collaboration Technology, or any intellectual property rights with
respect thereto, without the consent of the other Party, not to be unreasonably
withheld or delayed, except that each Party shall have the right to Exploit such
Collaboration Technology for research and discovery purposes (as opposed to the
development, commercialization or other Exploitation of products or technology
resulting therefrom), and to license others to do so, without the consent of the
other Party; provided, however, that, except as expressly provided in the
Unilateral Development and Commercialization Agreements attached hereto, neither
Party shall have the right to use or otherwise Exploit outside the Collaboration
(a) any Collaboration Antibodies, Collaboration Products or Antibody Materials
with respect thereto produced under this Agreement; or (b) any Collaboration

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Technology for the Exploitation of products with respect to the Collaboration
Target. Each Party shall promptly disclose to the other Party in writing, and
shall cause its Affiliates, licensees and sublicensees to so disclose, the
development, making, conception or reduction to practice of any Collaboration
Technology, and shall, and does hereby, assign, and shall cause its Affiliates,
licensees and sublicensees to so assign, to the other Party, without additional
compensation, such right, title and interest in and to any Collaboration
Technology as well as any intellectual property rights with respect thereto, as
is necessary to fully effect the joint ownership provided for in the foregoing
sentence.

            7.1.6 Ownership of Product Trademarks. Subject to the license grants
in Article 3, the Parties shall each own an equal, undivided interest in each
Product Trademark with respect to a Collaboration Product. In the event that a
Party Opts-Out with respect to a Collaboration Product or Unilateral Product, it
shall, without any additional consideration, assign all of its right, title and
interest in and to any Product Trademark with respect to such Collaboration
Product to the Pursuing Party; provided, however, that each Party shall retain
all of its right, title and interest in and to any Product Trademarks with
respect to Dormant Products.

            7.1.7 Ownership of Regulatory Approvals.

            Subject to the license grants in Article 3, each Regulatory Approval
and any Regulatory Documentation with respect to a Collaboration Product shall
be owned by Medarex, unless otherwise agreed by the Steering Committee.
Notwithstanding the Party that owns a Regulatory Approval with respect to a
Collaboration Product, the Parties shall cooperate in obtaining, maintaining and
satisfying their obligations under such Regulatory Approval, including by
promptly exchanging information, such as adverse event data, so as to enable the
owner to make reports to, and respond to requests of, the Regulatory Authorities
and perform its other obligations under such Regulatory Approval.

            In the event that a Party Opts-Out with respect to a Collaboration
Product and the non-Opting Out Party elects to proceed unilaterally with the
research, development and commercialization of such Collaboration Product, the
Opting-Out Party shall assign all of its right, title and interest in and to all
Regulatory Approvals for such Collaboration Product, including any applications
therefor, to the Pursuing Party (or its designee).

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<PAGE>

            Notwithstanding the ownership of any Regulatory Approval, neither a
Party nor any of its Affiliates, licensees or sublicensees shall, directly or
indirectly, use or reference any Regulatory Approval with respect to a
Collaboration Product without the consent of the other Party, not to be
unreasonably withheld or delayed; provided, however, that each Party shall have
the right to use and reference any Regulatory Approval with respect to a
Collaboration Product or a Unilateral Product in connection with the
Exploitation of Collaboration Products as provided in this Agreement or
Unilateral Products or other Antibody-Based Products as provided in any
Unilateral Development and Commercialization Agreement. Notwithstanding the
foregoing, any Regulatory Approval containing Production Process Know-How of a
Party or, with respect to Medarex, the Mice-Related Know-How shall be and remain
the sole and exclusive property of such Party and such Party shall have the
right to submit any such Production Process Know-How or, with respect to
Medarex, the Mice-Related Know-How, directly to the Regulatory Authorities using
a drug master file, or any foreign equivalent that is designed to protect such
Party's Confidential Information, which filing shall be and remain the sole and
exclusive property of such Party.

            7.1.8 United States Law. The determination of whether Information
and Inventions are conceived, discovered, developed or otherwise made by a Party
for the purpose of allocating proprietary rights (including Patent, copyright or
other intellectual property rights) therein, shall, for purposes of this
Agreement, be made in accordance with applicable United States law.

      Section 7.2 Prosecution of Patents and Trademarks.

            7.2.1 Medarex Rights. As between the Parties, Medarex shall, subject
to Section 7.2.5, have the sole right, at its cost and expense, to obtain,
prosecute and maintain throughout the world the Medarex Patents, the
Mice-Related Patents and its Production Process Patents.

            7.2.2 PharmAthene Rights. As between the Parties, PharmAthene shall,
subject to Section 7.2.5, have the sole right, at its cost and expense, to
obtain, prosecute and maintain throughout the world the PharmAthene Patents,
including its Production Process Patents.

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<PAGE>

            7.2.3 Collaboration Technology and Product Trademarks. The Steering
Committee shall formulate a strategy for the filing, prosecution and maintenance
of Collaboration Patents and Product Trademark registrations. The Steering
Committee shall establish a process under which each Party shall have a
reasonable opportunity to review and comment upon drafts of each new application
for a Collaboration Patent or Product Trademark registration and all substantive
correspondence to or from any patent or trademark authority with respect
thereto, prior to the filing of such application or correspondence. Subject to
Section 7.2.6, the Parties shall share equally in the expenses associated with
the filing, prosecution (including any interferences, reissue proceedings and
reexaminations) and maintenance of all Collaboration Patents and Product
Trademark registrations.

            7.2.4 Cooperation. Subject to Section 7.2.6, each Party shall, and
shall cause its Affiliates, licensees and sublicensees, as applicable, to,
cooperate fully in the preparation, filing, prosecution and maintenance of the
Product Trademark registrations, Collaboration Patents and, if requested by the
other Party, such other Party's Patents, provided that such other Party shall
reimburse the cooperating Party for its reasonable out-of-pocket expenses
incurred in connection with such requested cooperation. Such cooperation
includes (a) selecting outside counsel, reasonably acceptable to the Parties, to
handle such filing, prosecution and maintenance of the Collaboration Patents and
the Product Trademark registrations; (b) promptly executing all papers and
instruments and requiring employees to execute such papers and instruments as
reasonable and appropriate so as to enable such other Party or the Steering
Committee, as applicable, to file, prosecute, and maintain its Patents or the
Collaboration Patents and Product Trademark registrations in any country; and
(c) promptly informing such other Party of matters that may affect the
preparation, filing, prosecution, or maintenance of any such Patents or Product
Trademark registrations.

            7.2.5 Patent Filings. PharmAthene covenants not to, and to cause its
Affiliates, licensees and sublicensees, as applicable, not to, file any patent
application disclosing or claiming any Information and Inventions comprising any

                                       34
<PAGE>

Medarex Technology or the Exploitation thereof, without Medarex's prior written
consent, which consent shall not be unreasonably withheld or delayed with
respect to the Medarex Technology. Medarex covenants not to, and to cause its
Affiliates, licensees and sublicensees, as applicable, not to, file any patent
application disclosing or claiming any Information and Inventions comprising any
PharmAthene Technology or the Exploitation thereof, without PharmAthene's prior
written consent, which consent shall not be unreasonably withheld or delayed
with respect to the PharmAthene Technology.

            7.2.6 Election Not to Prosecute. If a Party elects not (a) to pursue
the filing, prosecution or maintenance of a Collaboration Patent in a particular
country, (b) to pursue the registration, prosecution or maintenance of a Product
Trademark in a particular country, or (c) to take any other action with respect
to Collaboration Technology or a Product Trademark in a particular country that
is necessary or reasonably useful to establish or preserve rights thereto, then
in each such case such Party shall so notify the other Party promptly in writing
and in good time to enable such other Party to meet any deadlines by which an
action must be taken to establish or preserve any such rights in such
Collaboration Technology or Product Trademark, as applicable, in such country.
Upon receipt of each such notice by such other Party or if, at any time, such
Party fails to initiate any such action within thirty (30) days after a request
by such other Party that it do so (or thereafter diligently pursue such action),
such other Party shall have the right, but not the obligation, to pursue the
filing or registration, or support the continued prosecution or maintenance, of
such Patent or Product Trademark, as applicable, at its expense in such country.
If such other Party elects to pursue such filing or registration, as the case
may be, or continue such support, then such other Party shall notify such Party
of such election and such Party shall, and shall cause its Affiliates, licensees
and sublicensees, as applicable, to, (x) reasonably cooperate with such other
Party in this regard, and (y) subject to Article 3, promptly release or assign
to such other Party, without compensation, all right, title and interest in and
to such Collaboration Patent or Product Trademark, as applicable, in such
country.

      Section 7.3 Enforcement of Patents and Trademarks.

            7.3.1 Rights and Procedures. If Medarex or PharmAthene determines
that any Technology (which for purposes of this Section 7.3.1 shall be deemed to

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<PAGE>

include the Collaboration Technology) or Product Trademark is being infringed by
a Third Party's activities with respect to an Antibody-Based Product against the
Collaboration Target and, (an "Infringing Activity"), it shall promptly notify
the other Party in writing and provide such other Party with any evidence of
such infringement that is reasonably available. Promptly after the receipt of
such written notice, the Parties shall meet and discuss in good faith the
removal of such infringement. The pursuing Party shall consider in good faith
any comments from the other Party and shall keep the other Party reasonably
informed of any steps taken to remove such infringement.

            7.3.2 Collaboration Technology and Product Trademarks. With respect
to Collaboration Technology and Product Trademarks and an Infringing Activity,
the Steering Committee shall have the first right, through one or both of the
Parties, to remove such infringement using commercially appropriate steps,
including the filing of an infringement suit or taking other similar action.
Each Party shall be responsible for half of the reasonable and verifiable costs
and expenses incurred in connection with such action.

            In the event the Steering Committee fails to take commercially
appropriate steps to remove any infringement of any such Collaboration
Technology or Product Trademark or an Infringing Activity within ninety (90)
days following notice of such infringement, or earlier notifies the Parties in
writing of its intent not to take such steps, and (i) such failure to act is due
to the refusal of one Party's representatives on the Steering Committee to
authorize action over the objection of the other Party's representatives, then
the Party whose representatives wish to proceed shall have the right to do so at
its expense and retain any amounts recovered thereby, or (ii) such failure to
act is due to any reason other than as set forth in clause (i) above, then
either Party or both Parties shall have the right to proceed at its expense and
retain any amounts recovered thereby; provided, however, that if the Steering
Committee has commenced negotiations with an alleged infringer for
discontinuance of such Infringing Activity within such ninety (90)-day period,
the Steering Committee shall have an additional ninety (90) days to conclude its
negotiations before a Party unilaterally may bring suit for such infringement.
Any amounts recovered by a Party pursuant to this Section 7.3.2 as a result of
an action authorized by the Steering Committee, whether by settlement or
judgment, shall be used to reimburse the Parties for their reasonable costs and

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<PAGE>

expenses in making such recovery (which amounts shall be allocated pro rata if
insufficient to cover the totality of such expenses), with any remainder being
equally shared by the Parties

            7.3.3 Other Technology. With respect to Technology of a Party, the
owner of such Technology at its cost and expense shall have the sole right, but
not the obligation, to remove an infringement that is not an Infringing
Activity, and to retain any amounts recovered thereby.

            7.3.4 Cooperation. The Party not enforcing the applicable Technology
(which for purposes of this Section 7.3.4 shall be deemed to include the
Collaboration Technology) or Product Trademark shall provide reasonable
assistance to the other Party, including providing access to relevant documents
and other evidence, making its employees available at reasonable business hours,
and joining the action to the extent necessary to allow the enforcing Party to
maintain the action.

            7.3.5 Invalidity or Unenforceability Defenses or Actions.

            (a) If a Third Party asserts, as a defense or as a counterclaim in
any infringement action under Section 7.3.2 (a) authorized by the Steering
Committee, that any Technology, Collaboration Technology, Product Trademark, or
Production Process Technology is invalid or unenforceable (or, with respect to
Product Trademarks, is confusing, deceptive or dilutes one or more of such Third
Party's Trademarks), then the Parties shall promptly meet to discuss the
response to such defense or defense of such counterclaim or action (as
applicable) and shall cooperate with one another in such response or defense.
The Party or Parties that are the plaintiffs in the underlying suit or action
against such Third Party shall have the initial right to respond to such defense
or defend against such counterclaim (as applicable), provided that such response
or defense shall be conducted under the supervision, and at the direction, of
the Steering Committee as provided in Section 7.3.2 and, to the extent that the
other Party's intellectual property rights are the subject of such invalidity or
unenforceability defense or counterclaim, the Party plaintiff shall involve such
other Party in all decisions as to such response or defense, and in any event
such Party plaintiff shall not settle or otherwise compromise such defense or
counterclaim in any way that adversely affects such other Party's intellectual
property rights or its interest therein without such other Party's written
consent, not to be unreasonably withheld or delayed.

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<PAGE>

            (b) If a Third Party asserts, in a declaratory judgment action or
similar action or claim filed by such Third Party based upon actions or
activities of a Party under this Agreement or a Unilateral Development and
Commercialization Agreement, that any Technology, Collaboration Technology,
Product Trademark, or Production Process Technology is invalid or unenforceable
(or, with respect to Product Trademarks, is confusing, deceptive or dilutes one
or more of such Third Party's Trademarks), then the Parties shall promptly meet
to discuss the defense of such action or claim and shall cooperate with one
another in such defense. The Party that is the defendant in such claim, suit or
action shall have the initial right to defend against same, provided that such
defense shall be conducted under the supervision, and at the direction, of the
Steering Committee, which shall establish a process under which each Party shall
have a reasonable opportunity to participate in such defense, and provided
further that to the extent that the other Party's intellectual property rights
are the subject of such invalidity or unenforceability claim, suit or action,
the defending Party shall involve such other Party in all decisions as to such
defense, and in any event such defending Party shall not settle or otherwise
compromise such defense in any way that adversely affects such other Party's
intellectual property rights or its interest therein without such other Party's
written consent, not to be unreasonably withheld or delayed.

            (c) Notwithstanding the foregoing, if the defense, counterclaim,
action or claim alleges invalidity or unenforceability of Mice-Related
Technology, Medarex shall have the sole right (except as Medarex may otherwise
agree) to respond or defend against same, and may intervene to effect such
defense or responses.

            (d) The Parties shall share equally the costs and expenses of any
defenses under this Section 7.3.5 with respect to the Collaboration Technology.
With respect to the Medarex Technology (or the Mice-Related Technology) or the
PharmAthene Technology, Medarex and PharmAthene, respectively, shall be
responsible for one-hundred percent (100%) of those costs and expenses, except
to the extent related to the Exploitation of Collaboration Products and the
other activities of the Parties hereunder, where the Parties shall share equally
such costs and expenses.

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<PAGE>

      Section 7.4 Potential Third-Party Rights.

            7.4.1 Third-Party Licenses. If (a) in the Collective Opinion of
Counsel, a Party, or any of its Affiliates, licensees or permitted sublicensees,
cannot Exploit a Collaboration Product in a country in the Territory without
infringing one or more Patents that have issued to a Third Party in such
country, or (b) as a result of any claim made against a Party, or any of its
Affiliates, licensees or permitted sublicensees, alleging that the Exploitation
of a Collaboration Product infringes or misappropriates any Patent or any other
intellectual property right of a Third Party in a country in the Territory, a
judgment is entered by a court of competent jurisdiction from which no appeal is
taken within the time permitted for appeal, such that a Party cannot Exploit
such Collaboration Product in such country without infringing the Patent or
other proprietary rights of such Third Party, then, in either case, the Parties
shall use commercially reasonable efforts to obtain a license in the names of
the Parties from such Third Party as necessary for the Exploitation of any
Collaboration Products hereunder in such country. For purposes of this Section
7.4.1, "Collective Opinion of Counsel" shall mean the final joint opinion of
patent counsel selected by PharmAthene and patent counsel selected by Medarex,
after review of all data and information reasonably available at the time such
opinion is rendered. If patent counsel for the Parties cannot agree on a final
joint opinion within twenty (20) days after submission of the matter to such
counsel, the patent counsel of the Parties shall agree on a third patent counsel
who shall offer an independent opinion on the subject matter, which independent
opinion shall be deemed the Collective Opinion of Counsel.

            7.4.2 Third-Party Litigation. In the event that a Third Party
institutes a Patent, Trademark or other infringement suit against either Party
or its respective Affiliates, licensees or permitted sublicensees during the
Term, alleging that the Exploitation of the Collaboration Products in the
Territory or any other activities hereunder, infringes one or more Patent,
Trademark or other intellectual property rights held by such Third Party (an
"Infringement Suit"), the Parties shall cooperate with one another in defending
such suit. The Parties shall jointly direct and control the defense of any
Infringement Suit with respect to Collaboration Products or any other activity
of the Parties under this Agreement. The Parties shall share equally any costs
and expenses of such defense, and any damages awarded therein.

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<PAGE>

            7.4.3 Retained Rights. Nothing in this Section 7.4 shall prevent
either Party, at its own expense, from obtaining any license or other rights
from Third Parties it deems appropriate in order to permit the full and
unhindered exercise of its rights under this Agreement.

      Section 7.5 Exchange of Know-How.

            7.5.1 Information Disclosure. Each Party shall, and shall cause its
Affiliates, licensees and sublicensees, as applicable, to, without additional
compensation and at such Party's sole expense, disclose and make available to
the other Party, in whatever form each such other Party may reasonably request,
all of its Know-How and all Regulatory Documentation and other Information and
Inventions included in the Collaboration Technology, and any other Information
and Inventions relating, directly or indirectly, to the Exploitation of any
Collaboration Antibodies or Collaboration Products (other than Mice Materials,
Mice-Related Know-How, Excluded Know-How or Production Process Know-How (except
as set forth in Section 7.1.4 above)) promptly after the Effective Date and
thereafter promptly upon the earlier of the conception or reduction to practice,
discovery, development, making or other Control of each such Regulatory
Documentation, Know-How, or other Information and Inventions.

            7.5.2 Cooperation. With respect to the research, development,
commercialization and other Exploitation of the Collaboration Products, each
Party, shall cooperate with any and all reasonable requests for assistance from
the other Party, including by making its employees, consultants and other
scientific staff available upon reasonable notice during normal business hours
at their respective places of business to consult with such other Party, as
applicable, on issues arising during such research, development,
commercialization or Exploitation.

            7.5.3 Biological Materials. For purposes of facilitating the conduct
of the research and development activities under this Agreement, Medarex and
PharmAthene shall each provide to the other tissues, cells, cell lines,
organisms, blood samples, genetic material, and other biological substances and
materials, including the Collaboration Antibodies and Antibody Materials with
respect thereto, and the Collaboration Target (collectively, "Biological

                                       40
<PAGE>

Materials") specified from time to time in this Agreement or the applicable
Project Plan. Each Party agrees to provide all such Biological Materials to the
other in accordance with this Agreement and the applicable Project Plan, and
under the supervision of the Steering Committee. The Parties agree that: (a) all
Biological Materials provided by one Party to the other Party and any Biological
Material (including Collaboration Antibodies, the Antibody Materials and, if
applicable, any Mice Materials) produced against or with, or derived from, such
Biological Materials shall be used solely for the research and development
activities as provided in the Project Plan, and in material compliance with all
Applicable Law; (b) all such Biological Materials shall be provided without any
warranties, express or implied; (c) the Party providing such Biological
Materials shall obtain (or cause its Third Party collaborators to obtain or
certify that they have obtained) all appropriate and required consents from the
source of such Biological Materials; (d) Biological Materials provided by one
Party to the other Party (other than Collaboration Products) shall not be made
available by such other Party to any Third Party except as expressly provided
(i) in the Project Plan or (ii) in the applicable Unilateral Development and
Commercialization Agreement, unless the prior written consent of the Party
providing such Biological Materials is first obtained; and (e) all right, title
and interest in and to the Mice Materials shall be, and remain, vested in
Medarex.

            7.5.4 Regulatory Records. With respect to the subject matter of this
Agreement, each Party shall maintain, or cause to be maintained, records of its
respective research, development, manufacturing and commercialization
activities, including all Regulatory Documentation and Regulatory Approvals with
respect to the Collaboration Antibodies and the Collaboration Products, in
sufficient detail and in good scientific manner appropriate for patent and
regulatory purposes, which shall be complete and accurate and shall fully and
properly reflect all work done and results achieved in the performance of such
activities, and which shall be retained during the Term and for a period of five
(5) years thereafter, or for such longer period as may be required by Applicable
Law. Each Party shall have the right, during normal business hours and upon
reasonable notice, to inspect and copy any such records, except(a) with respect
to Medarex's records, to the extent that such records contain proprietary

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<PAGE>

information with respect to the Mice Materials and Mice-Related Technology, or
(b) with respect to a Party's records, to the extent that such records contain
proprietary information with respect to its Production Process Technology.

            7.5.5 Production Process Technology. Notwithstanding anything to the
contrary in this Section 7.5 or elsewhere in this Agreement, neither Party shall
be obligated to disclose or provide any of its Production Process Technology,
including Biological Materials with respect thereto, to the other Party, any of
such other Party's Affiliates or any Third Party except as may be required or
permitted under a separate written agreement entered into by the Parties
pursuant to Sections 1.2.4, 1.6, or 7.1.4.

            7.5.6 Mice Materials. Notwithstanding anything to the contrary in
this Section 7.5 or elsewhere in this Agreement, neither Medarex nor its
Affiliates shall be obligated to provide, transfer, deliver or otherwise
disclose any Mice-Related Technology, Mice Materials, including Biological
Materials with respect thereto, or any Information and Inventions with respect
thereto, to PharmAthene, any of PharmAthene's Affiliates or any Third Party
except for the Antibodies (and Antibody Materials related thereto).

                                   ARTICLE 8 -
                              TERM AND TERMINATION

      Section 8.1 Term. The term of this Agreement (the "Term") shall commence
upon the Effective Date and shall continue in effect until the date which is two
years subsequent to the first date upon which (a) there is no longer any (i)
Collaboration Product being Exploited hereunder, or (ii) Unilateral Product
being Exploited under a Unilateral Development and Commercialization Agreement,
unless this Agreement is terminated at an earlier date in accordance with the
terms and conditions set forth in this Article 8.

      Section 8.2 Termination for Material Breach. Subject to the final sentence
of this Section 8.2, any material failure by a Party to comply with any of its
material obligations contained in this Agreement shall entitle the Party not in
default to give to the Party in default written notice specifying the nature of
the default, requiring the defaulting Party to make good or otherwise cure such
default, and stating its intention if such default is not cured to convert a
Collaboration Product to which the material breach applies to a Discontinued

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<PAGE>

Product pursuant to Section 5.1. If such default is not cured within thirty (30)
days after the receipt of such notice (or, if such default cannot be cured
within such thirty (30)-day period, if the Party in default does not commence
actions to cure such default within such period and thereafter diligently
continue such actions or if such default is not otherwise cured within
one-hundred and eighty (180) days after the receipt of such notice), except in
the case of a payment default, as to which the defaulting Party shall have only
a thirty (30)-day cure period, the Party not in default shall be entitled, on
written notice to the other Party, without prejudice to any of its other rights
conferred on it by this Agreement, and in addition to any other remedies
available to it by law or in equity, to convert such Collaboration Product to a
Discontinued Product pursuant to Section 5.1, whereupon the defaulting Party
shall be deemed the Opting-Out Party with respect to such Discontinued Product
for all purposes hereunder and the notice provided under this provision shall be
deemed equivalent to an Election Notice as provided in Section 5.1.
Notwithstanding the foregoing, if the Party alleged to be in breach disputes
such termination through the dispute resolution procedures set forth in this
Agreement, then such right to terminate shall be tolled for so long as such
dispute resolution procedures are being pursued by such Party in good faith and
if it is finally and conclusively determined that such Party is in breach, then
such Party shall have the right to cure such breach as provided above within
sixty (60) days after such determination.

      Section 8.3 Termination Upon Insolvency. Either Party may terminate this
Agreement if, at any time, the other Party shall file in any court or agency
pursuant to any statute or regulation of any state, country or jurisdiction, a
petition in bankruptcy or insolvency or for the appointment of a receiver or
trustee of that Party or of its assets, or if such other Party proposes a
written agreement of composition or extension of its debts, or if such other
Party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, in each of the foregoing cases only if such
proceedings is for liquidation of such other Party.

      Section 8.4 Rights in Bankruptcy. All rights and licenses granted under or
pursuant to this Agreement by Medarex or PharmAthene are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section 101

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<PAGE>

of the United States Bankruptcy Code. The Parties agree that the Parties, as
licensees of such rights under this Agreement, shall retain and may fully
exercise all of their rights and elections under the United States Bankruptcy
Code. The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against a Party under the United States Bankruptcy
Code, the Party hereto that is not a party to such proceeding shall be entitled
to a complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual property, which,
if not already in the non-subject Party's possession, shall be promptly
delivered to it (a) upon any such commencement of a bankruptcy proceeding upon
the non-subject Party's written request therefor, unless the Party subject to
such proceeding continues to perform all of its obligations under this Agreement
or (b) if not delivered under clause (a) above, following the rejection of this
Agreement by or on behalf of the Party subject to such proceeding upon written
request therefor by the non-subject Party. It is the understanding and intent of
the Parties that this Agreement and the Unilateral Development and
Commercialization Agreements represent one single transaction that, for the
convenience of the Parties, was prepared in three separate but interrelated
agreements, that the consideration for this Agreement and the Unilateral
Development and Commercialization Agreements is indivisible, that the Parties
would not have entered into any one of this Agreement or the Unilateral
Development and Commercialization Agreements without also entering into the
other agreements, and that, by their terms, each of this Agreement and the
Unilateral Development and Commercialization Agreements depends on the continued
effectiveness and enforceability of the other agreements. Accordingly, the
Parties acknowledge and agree that this Agreement and the Unilateral Development
and Commercialization Agreements may only be rejected as a group and that any
rejection of one of the agreements necessarily entails the rejection of the
other agreements.

      Section 8.5 Cross Default. Any breach of this Agreement shall be deemed to
be a breach of the Unilateral Development and Commercialization Agreements and
vice-versa and any termination or rejection of this Agreement shall be deemed a
termination or rejection of the Unilateral Development and Commercialization
Agreements. The Unilateral Development and Commercialization Agreements shall
automatically terminate upon the expiration or earlier termination of this
Agreement.

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<PAGE>

      Section 8.6 Consequences of Expiration or Termination.

            8.6.1 Licenses. Upon expiration of the Term in accordance with
Section 8.1 and payment of all amounts owed pursuant to Section 4.1, the
licenses granted by Medarex to PharmAthene, and by PharmAthene to Medarex,
hereunder shall terminate.

            8.6.2 Return of Information and Materials. Upon expiration of this
Agreement pursuant to Section 8.1 or upon termination of this Agreement in its
entirety by either Party pursuant to this Article 8, each Party, at the request
of the other Party, shall return, or at the election of such other Party,
destroy, and thereafter provide such other Party written certification
evidencing such destruction, all Biological Materials of such other Party
(including, with respect to PharmAthene, any Mice Materials, Antibodies and
Antibody Materials in its possession or control) and all data, files, records
and other materials in its possession or control relating to such other Party's
Technology (including, with respect to Medarex, Mice-Related Technology), or
containing or comprising such other Party's Information and Inventions or other
Confidential Information and, in each case, to which the returning Party does
not retain rights hereunder (except one copy of which (other than Biological
Materials) may be retained solely for archival purposes).

      Section 8.7 Accrued Rights; Surviving Obligations.

            8.7.1 Accrued Rights. Termination or expiration of this Agreement
for any reason shall be without prejudice to any rights that shall have accrued
to the benefit of a Party prior to such termination or expiration. Such
termination or expiration shall not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this Agreement.

            8.7.2 Survival. Articles 4 (with respect to obligations arising
prior to expiration or termination of this Agreement), 6 and 9 (provided Section
9.1 shall survive for three (3) years after the expiration or termination of
this Agreement), and Sections 1.2.2 (with respect to obligations arising prior
to the expiration or termination of this Agreement), 2.3, 3.3.3, 3.3.5, 7.1 (but
not the provisos in Section 7.1.5), 7.2, 7.5.3 (with respect only to the last
sentence thereof), 7.5.4, 7.5.5, 7.5.6, 8.6, 10.4, 11.5 and 11.6 and Appendix A,
Appendix B and Appendix G of this Agreement and this Section 8.7 shall survive
expiration or termination of this Agreement for any reason.

                                       45
<PAGE>

                                   ARTICLE 9 -
                          INSURANCE AND INDEMNIFICATION

      Section 9.1 Insurance. Each Party shall have and maintain such types and
amounts of liability insurance as is normal and customary in the industry
generally for parties similarly situated, and shall upon request provide the
other Party with a copy of its policies of insurance in that regard, along with
any endorsements, schedules or riders thereto. Further, the Parties shall
jointly purchase and maintain, with each Party bearing fifty percent (50%) of
all premiums thereon, such types and amounts of product and other liability
insurance as the Steering Committee designate from time to time.

      Section 9.2 Indemnification of Medarex. Except as otherwise covered by any
insurance policy purchased jointly by the Parties as described in Section 9.1,
PharmAthene shall indemnify Medarex, its Affiliates and their respective
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and expenses) (collectively,
"Losses") in connection with any and all Third-Party suits, investigations,
claims or demands (collectively, "Third-Party Claims") arising from or occurring
as a result of the negligence (except to the extent that such Loss is covered by
one or more product liability insurance policies that were purchased jointly by
the Parties) or willful misconduct on the part of PharmAthene or its Affiliates,
licensees or sublicensees (other than Medarex and its Affiliates and any Third
Parties to whom the Parties license rights with respect to a Collaboration
Product pursuant to Section 5.2) in performing any activity contemplated by this
Agreement, except for those Losses for which Medarex has an obligation to
indemnify PharmAthene and its Affiliates pursuant to Section 9.3, as to which
Losses each Party shall indemnify the other to the extent of their respective
liability for the Losses.

      Section 9.3 Indemnification of PharmAthene. Except as otherwise covered by
any insurance policy purchased jointly by the Parties as described in Section
9.1.2, Medarex shall indemnify PharmAthene, its Affiliates and their respective
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all Losses in connection with any and all

                                       46
<PAGE>

Third-Party Claims arising from or occurring as a result of the negligence
(except to the extent that such Loss is covered by one or more product liability
insurance policies that were purchased jointly by the Parties) or willful
misconduct on the part of Medarex or its Affiliates, licensees or sublicensees
(other than PharmAthene and its Affiliates and any Third Parties to whom the
Parties license rights with respect to a Collaboration Product pursuant to
Section 5.2) in performing any activity contemplated by this Agreement, except
for those Losses for which PharmAthene has an obligation to indemnify Medarex
and its Affiliates pursuant to Section 9.2, as to which Losses each Party shall
indemnify the other to the extent of their respective liability for the Losses.

      Section 9.4 Product Liability. Except as provided under Section 9.2 or
Section 9.3, all Losses arising from or occurring as a result of any Third-Party
Claim for product liability or personal injury that are not covered by one or
more insurance policies that were purchased jointly by the Parties shall be
borne equally by the Parties.

      Section 9.5 Indemnification Procedure.

            9.5.1 Notice of Claim. The indemnified Party shall give the
indemnifying Party prompt written notice (an "Indemnification Claim Notice") of
any Losses or discovery of fact upon which such indemnified Party intends to
base a request for indemnification under Section 9.3 or Section 9.4, but in no
event shall the indemnifying Party be liable for any Losses that result from any
delay in providing such notice. Each Indemnification Claim Notice must contain a
description of the claim and the nature and amount of such Loss (to the extent
that the nature and amount of such Loss are known at such time). The indemnified
Party shall furnish promptly to the indemnifying Party copies of all papers and
official documents received in respect of any Losses. All indemnification claims
in respect of a Party, its Affiliates or their respective directors, officers,
employees and agents (collectively, the "Indemnitees" and each an "Indemnitee")
shall be made solely by such Party to this Agreement (the "Indemnified Party").

            9.5.2 Control of Defense. At its option, the indemnifying Party may
assume the defense of any Third-Party Claim by giving written notice to the
Indemnified Party within thirty (30) days after the indemnifying Party's receipt
of an Indemnification Claim Notice. The assumption of the defense of a

                                       47
<PAGE>

Third-Party Claim by the indemnifying Party shall not be construed as an
acknowledgment that the indemnifying Party is liable to indemnify any Indemnitee
in respect of the Third-Party Claim, nor shall it constitute a waiver by the
indemnifying Party of any defenses it may assert against any Indemnitee's claim
for indemnification. Upon assuming the defense of a Third-Party Claim, the
indemnifying Party may appoint as lead counsel in the defense of the Third-Party
Claim any legal counsel selected by the indemnifying Party that is reasonably
acceptable to the Indemnified Party. In the event the indemnifying Party assumes
the defense of a Third-Party Claim, the Indemnified Party shall immediately
deliver to the indemnifying Party all original notices and documents (including
court papers) received by any Indemnitee in connection with the Third-Party
Claim. Should the indemnifying Party assume the defense of a Third-Party Claim,
the indemnifying Party shall not be liable to the Indemnified Party or any other
Indemnitee for any legal expenses subsequently incurred by such Indemnified
Party or other Indemnitee in connection with the analysis, defense or settlement
of the Third-Party Claim. In the event that it is ultimately determined that the
indemnifying Party is not obligated to indemnify, defend or hold harmless an
Indemnitee from and against the Third-Party Claim, the Indemnified Party shall
reimburse the indemnifying Party for any and all costs and expenses (including
attorneys' fees and costs of suit) and any Losses incurred by the indemnifying
Party in its defense of the Third-Party Claim with respect to such Indemnitee.

            9.5.3 Right to Participate in Defense. Without limiting Section
9.5.2, any Indemnitee shall be entitled to (a) participate in, but not control,
the defense of such Third-Party Claim and to engage counsel of its choice for
such purpose; provided, however, that such engagement shall be at the
Indemnitee's own expense unless the engagement thereof has been specifically
authorized by the indemnifying Party in writing, and (b) control its defense of
such Third-Party Claim and to engage counsel of its choice for such purpose, at
the expense of the indemnifying Party, if (i) the indemnifying Party has failed
to assume the defense and engage counsel in accordance with Section 9.5.2, (ii)
the use of the counsel chosen by the indemnifying Party would present such
counsel with a conflict of interest, (iii) the actual or potential defendants
in, or targets of, such action include both the Indemnifying Party and the
Indemnitee or the Indemnified Party, and the Indemnified Party reasonably

                                       48
<PAGE>

concludes that there may be legal defenses available to it or the Indemnitee
that are different from or additional to those available to the indemnifying
Party, (iv) the indemnifying Party denies or fails to timely admit its
obligation to defend and indemnify the action, or (v) in the reasonable opinion
of counsel to the Indemnified Party, the claim could result in the Indemnitee or
the Indemnified Party becoming subject to injunctive relief or relief other than
the payment of money damages that could have a materially adverse effect on the
ongoing business of such Indemnitee of the Indemnified Party.

            9.5.4 Settlement. With respect to any Losses relating solely to the
payment of money damages in connection with a Third-Party Claim and that will
not result in the Indemnitee becoming subject to injunctive or other relief or
otherwise adversely affect the business of the Indemnitee in any manner, and as
to which the indemnifying Party shall have acknowledged in writing the
obligation to indemnify the Indemnitee hereunder, the indemnifying Party shall
have the sole right to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss, on such terms as the indemnifying
Party, in its sole discretion, shall deem appropriate. With respect to all other
Losses in connection with Third-Party Claims, where the indemnifying Party has
assumed the defense of the Third-Party Claim in accordance with Section 9.5.2,
the indemnifying Party shall have authority to consent to the entry of any
judgment, enter into any settlement or otherwise dispose of such Loss provided
it obtains the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld or delayed). The indemnifying Party shall not
be liable for any settlement or other disposition of a Loss by an Indemnitee
that is reached without the written consent of the indemnifying Party.
Regardless of whether the indemnifying Party chooses to defend or prosecute any
Third-Party Claim, no Indemnitee shall admit any liability with respect to, or
settle, compromise or discharge, any Third-Party Claim without the prior written
consent of the indemnifying Party, not to be unreasonably withheld or delayed.

            9.5.5 Cooperation. Regardless of whether the indemnifying Party
chooses to defend or prosecute any Third-Party Claim, the Indemnified Party
shall, and shall cause each other Indemnitee to, reasonably cooperate in the
defense or prosecution thereof and shall furnish such records, information and

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<PAGE>

testimony, provide such witnesses and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested in
connection therewith. Such cooperation shall include access during normal
business hours afforded to the indemnifying Party to, and reasonable retention
by the Indemnified Party of, records and information that are reasonably
relevant to such Third-Party Claim, and making Indemnitees and other employees
and agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and the
indemnifying Party shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith.

            9.5.6 Expenses. Except as provided above, the reasonable and
verifiable costs and expenses, including fees and disbursements of counsel,
incurred by the Indemnified Party in connection with any claim shall be
reimbursed on a calendar quarter basis by the indemnifying Party, without
prejudice to the indemnifying Party's right to contest the Indemnified Party's
right to indemnification and subject to refund in the event the indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified Party.

                                  ARTICLE 10 -
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      Section 10.1 Representations, Warranties and Covenants. Each Party hereby
represents, warrants and covenants to the other Party as of the Effective Date
as follows:

            10.1.1 Corporate Authority. Such Party (a) has the power and
authority and the legal right to enter into this Agreement and the Unilateral
Development and Commercialization Agreements and to perform its obligations
hereunder and thereunder, and (b) has taken all necessary action on its part
required to authorize the execution and delivery of this Agreement and the
Unilateral Development and Commercialization Agreements and the performance of
its obligations hereunder and thereunder. This Agreement and the Unilateral
Development and Commercialization Agreements have been duly executed and
delivered on behalf of such Party and constitute legal, valid and binding
obligations of such Party and are enforceable against it in accordance with
their respective terms subject to the effects of bankruptcy, insolvency or other
laws of general application affecting the enforcement of creditor rights and

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<PAGE>

judicial principles affecting the availability of specific performance and
general principles of equity, whether enforceability is considered a proceeding
at law or equity.

            10.1.2 Litigation. Such Party is not aware of any pending or
threatened litigation (and has not received any communication) that alleges that
such Party's activities related to this Agreement or the Unilateral Development
and Commercialization Agreements have violated, or that by conducting the
activities as contemplated herein or therein such Party would violate, any of
the intellectual property rights of any other party.

            10.1.3 Consents, Approvals, etc. All necessary consents, approvals
and authorizations of all Regulatory Authorities and other parties required to
be obtained by such Party in connection with the execution and delivery of this
Agreement and the Unilateral Development and Commercialization Agreements and
the performance of its obligations hereunder and thereunder have been obtained.

            10.1.4 Conflicts. The execution and delivery of this Agreement and
the Unilateral Development and Commercialization Agreements and the performance
of such Party's obligations hereunder and thereunder (a) do not conflict with or
violate any requirement of Applicable Law or any provision of the articles of
incorporation, bylaws or any similar instrument of such Party, as applicable, in
any material way, and (b) do not conflict with, violate, or breach or constitute
a default or require any consent under, any contractual obligation or court or
administrative order by which such Party is bound.

            10.1.5 Debarment. No such Party nor any of its Affiliates has been
debarred or is subject to debarment and neither such Party nor any of its
Affiliates will use in any capacity, in connection with the services to be
performed under this Agreement or the Unilateral Development and
Commercialization Agreements, any party who has been debarred pursuant to
Section 306 of the Federal Food, Drug, and Cosmetic Act, as amended, or who is
the subject of a conviction described in such section. Each Party will inform
the other Party in writing immediately if it or any party who is performing
services hereunder is debarred or is the subject of a conviction described in
Section 306, or if any action, suit, claim, investigation or legal or
administrative proceeding is pending or, to such Party's knowledge, is
threatened, relating to the debarment or conviction of such Party or any party
performing services hereunder or thereunder.

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<PAGE>

      Section 10.2 Additional Representations and Warranties of Medarex. Medarex
represents and warrants to PharmAthene that (i) Medarex is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey, has full corporate power and authority and the legal right to own
and operate its property and assets and to carry on its business as it is now
being conducted and as it is contemplated to be conducted by this Agreement and
the Unilateral Development Commercialization Agreements, and (ii) as of the
Effective Date, Medarex has made available to PharmAthene upon the request of
PharmAthene the material technical information and data with respect to the Lead
Collaboration Antibody known to Medarex as of the Effective Date, including but
not limited to the feasibility of producing such Lead Collaboration Antibody,
the efficacy, safety, side effects and toxicity thereof, that the technical
information and data provided to PharmAthene is to the best of Medarex's
knowledge accurate in all material respects and that to the best of Medarex's
knowledge Medarex has not withheld any information or data from PharmAthene that
would make such technical information and data provided to PharmAthene
misleading in any material respect.

      Section 10.3 Additional Representations, Warranties and Covenant of
PharmAthene.

            10.3.1 PharmAthene represents and warrants to Medarex that
PharmAthene is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has full corporate power and authority
and the legal right to own and operate its property and assets and to carry on
its business as it is now being conducted and as it is contemplated to be
conducted by this Agreement and the Unilateral Development and Commercialization
Agreements. PharmAthene shall comply with all the applicable terms and
conditions of the MRC Agreement and the Cross-License Agreement.

            10.3.2 PharmAthene represents and warrants to Medarex that, except
as set forth on Schedule 10.3.2, as of the Effective Date, neither PharmAthene
nor its Affiliates has, directly or indirectly, expressly or by implication, by
action or omission or otherwise (x) assigned, transferred, granted, conveyed or

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<PAGE>

otherwise encumbered any right, title or interest in or to any Patent, know-how
or other intellectual property rights owned by, licensed to or otherwise
controlled by PharmAthene or its Affiliates with respect to the Collaboration
Target, or (y) agreed to or is otherwise bound by any covenant not to sue for
any infringement, misuse or otherwise with respect to the foregoing intellectual
property rights.

      Section 10.4 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET
FORTH IN SECTIONS 10.1, 10.2 AND 10.3, PHARMATHENE AND MEDAREX MAKE NO
REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, UNDER THIS AGREEMENT OR THE
UNILATERAL DEVELOPMENT AND COMMERCIALIZATION AGREEMENTS, AND PHARMATHENE AND
MEDAREX EACH SPECIFICALLY DISCLAIM ANY OTHER WARRANTIES, WHETHER WRITTEN OR
ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF
ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES UNDER THIS AGREEMENT OR THE UNILATERAL DEVELOPMENT AND COMMERCIALIZATION
AGREEMENTS.

                                  ARTICLE 11 -
                                  MISCELLANEOUS

      Section 11.1 Force Majeure. Neither Party shall be held liable or
responsible to the other Party or be deemed to have defaulted under or breached
this Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from events beyond
the reasonable control of the non-performing Party, including fires, floods,
earthquakes, embargoes, shortages, epidemics, quarantines, war, acts of war
(whether war be declared or not) or terrorism, insurrections, riots, civil
commotion, strikes, lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority. The non-performing
Party shall notify the other Party of such force majeure within ten (10) days

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<PAGE>

after such occurrence by giving written notice to the other Party stating the
nature of the event, its anticipated duration, and any action being taken to
avoid or minimize its effect. The suspension of performance shall be of no
greater scope and no longer duration than is necessary and the non-performing
Party shall use Commercially Reasonable Efforts to remedy its inability to
perform; provided, however, that in the event the suspension of performance
continues for one-hundred and eighty (180) days after the date of the
occurrence, the Parties shall meet to discuss in good faith how to proceed in
order to accomplish the goals of the Collaboration outlined in this Agreement.

      Section 11.2 Subcontractors. Each Party shall have the right, subject to
the prior written consent of the Steering Committee, such consent not to be
unreasonably withheld or delayed, to subcontract any of its research,
development, manufacture or commercialization activities to a Third Party,
provided that it furnishes the other Party with advanced written notice thereof,
which notice shall specify the work to be subcontracted, and obtains a written
undertaking from the subcontractor that it shall be subject to the applicable
terms and conditions of this Agreement, including the provisions of Article 6.
If a Party wishes to subcontract any of its research, development, manufacturing
or commercialization activities to a Third Party and the Steering Committee
consents, the other Party may submit a bid to the subcontracting Party to
perform such work. The subcontracting Party shall use Commercially Reasonable
Efforts to enter into an agreement with the bidder that is best able to meet the
Collaboration's requirements, taking into consideration such factors as price,
quality, capacity, quantity, reliability and reputation, provided that such
bidder is reasonably acceptable to the Steering Committee. Unless the Project
Plan provides, or the Steering Committee agrees otherwise, PharmAthene shall be
responsible for all the budgeted costs and expenses (in accordance with the
applicable Project Budget) associated with the use of a subcontractor to conduct
research, development, manufacture and commercialization activities, but, unless
the Parties agree otherwise, the subcontracting Party shall remain solely liable
for the performance of its research, development, manufacture or
commercialization activities by its subcontractor; provided, however, that
PharmAthene and Medarex each shall remain solely responsible for all costs and
expenses associated with its use of subcontractor(s) with respect to the
PharmAthene Activities and the Medarex Research Activities, respectively.

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<PAGE>

      Section 11.3 Assignment. (a) Without the prior written consent of the
other Party hereto, neither Party shall sell, transfer, assign, pledge or
otherwise dispose of, whether voluntarily, involuntarily, by operation of law or
otherwise, this Agreement; provided, however, that either Party hereto may (a)
assign or transfer this Agreement or any of its rights or obligations hereunder
without the consent of the other Party to any Affiliate of such Party; or (b)
assign or transfer this Agreement to any Third Party with which it merges or
consolidates, or to which it transfers all or substantially all of its assets;
provided, however, that with respect to both (a) and (b), (i) the assigning
Party (provided that it is not the surviving entity) shall remain jointly and
severally liable with the relevant PharmAthene Affiliate, Medarex Affiliate or
Third Party assignee under this Agreement, and (ii) the relevant PharmAthene
Affiliate assignee, Medarex Affiliate assignee, Third Party assignee or
surviving entity shall assume in writing all of the assigning Party's
obligations under this Agreement that have been assigned pursuant to either (a)
or (b). For purposes of clarification with respect to subsection (b) herein, a
Third Party that merges or consolidates with a Party, or to which a Party
transfers all or substantially all of its assets, shall not be deemed to grant
the other Party to this Agreement any license to such Third Party's technology
in existence as of the effective date of such merger, consolidation or transfer,
unless such grant is made pursuant to a separate agreement, provided such Third
Party shall maintain all licenses granted hereunder by such first Party with
respect to its Technology (which for purposes of this Section 11.3 shall be
deemed to include Collaboration Technology and Joint Technology) and any
Information and Inventions with respect thereto. Any purported assignment or
transfer in violation of this Section shall be void ab initio and of no force or
effect.

      (b) Neither Party shall assign any Technology licensed to the other Party
without written acknowledgement by the assignee that such assigned Technology is
subject to the rights and licenses granted to the other Party under this
Agreement.

      Section 11.4 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of either Party under this Agreement will not be
materially and adversely affected thereby, (a) such provision shall be fully

                                       55
<PAGE>

severable, (b) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and reasonably
acceptable to the Parties. To the fullest extent permitted by applicable law,
each Party hereby waives any provision of law that would render any provision of
this Agreement illegal, invalid or unenforceable in any respect.

      Section 11.5 Governing Law, Jurisdiction, Venue and Service.

            11.5.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction.

            11.5.2 Jurisdiction. Subject to Section 2.3, the Parties hereby
irrevocably and unconditionally consent to the exclusive jurisdiction of the
courts of the State of Delaware and the United States District Court of Delaware
for any action, suit or proceeding (other than appeals therefrom) arising out of
or relating to this Agreement, and agree not to commence any action, suit or
proceeding (other than appeals therefrom) related thereto except in such courts.

            11.5.3 Venue. The Parties further hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding (other than appeals therefrom) arising out of or relating to this
Agreement in the courts of the State of Delaware or the United States District
Court of Delaware, and hereby further irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

            11.5.4 Service. Each Party hereto further agrees that service of any
process, summons, notice or document by U.S. registered mail to its address set
forth below shall be effective service of process for any action, suit or
proceeding brought against it under this Agreement in any such court.

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<PAGE>

            11.5.5 Patents and Trademarks. Notwithstanding the foregoing, any
disputes regarding the validity, scope or enforceability of Patents or
Trademarks shall be submitted to a court of competent jurisdiction in the
territory in which such rights apply.

      Section 11.6 Notices. All notices or other communications that are
required or permitted hereunder shall be in writing and delivered personally,
sent by facsimile (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier as provided herein), sent by
nationally-recognized overnight courier or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

            If to PharmAthene, to:

                      PharmAthene, Inc.
                      175 Admiral Cochrane Drive
                      Suite 101
                      Annapolis, MD  21401
                      Attention:  David P. Wright
                      Facsimile:  (410) 571-8927

                      With a copy to:

                      Elliot M. Olstein
                      Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein
                      5 Becker Farm Road
                      Roseland,  NJ  07068-1739
                      Facsimile:  (973) 994-1744

            If to Medarex, to:

                      Medarex, Inc.
                      707 State Road
                      Princeton, New Jersey 08540-1437
                      Attention: President
                      Facsimile: (609) 430-2850

                                       57
<PAGE>

                      with copies to:

                      Medarex, Inc.
                      707 State Road
                      Princeton, New Jersey 08540-1437
                      Attention: General Counsel
                      Facsimile: (609) 430-2850

                      Medarex, Inc.
                      707 State Road
                      Princeton, New Jersey 08540-1437
                      Attention: Contracts Administrator
                      Facsimile: (609) 430-2850

or to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such
communication shall be deemed to have been received (a) when delivered, if
personally delivered or sent by facsimile on a business day, (b) on the business
day after dispatch, if sent by nationally-recognized overnight courier, and (c)
on the third business day following the date of mailing, if sent by mail. It is
understood and agreed that this Section 11.6 is not intended to govern the
day-to-day business communications necessary between the Parties in performing
their duties, in due course, under the terms of this Agreement.

      Section 11.7 Entire Agreement; Modifications. This Agreement, together
with the Schedules and the Appendices attached hereto (including the Unilateral
Development and Commercialization Agreements), sets forth and constitutes the
entire agreement and understanding between the Parties with respect to the
subject matter hereof and all prior agreements, understanding, promises and
representations, whether written or oral, with respect thereto are superseded
hereby. Each Party confirms that it is not relying on any representations or
warranties of the other Party except as specifically set forth herein. No
amendment, modification, release or discharge shall be binding upon the Parties
unless in writing and duly executed by authorized representatives of both
Parties.

      Section 11.8 Relationship of the Parties. It is expressly agreed that the
Parties shall be independent contractors of one another and that the
relationship between the Parties shall not constitute a partnership, joint
venture or agency. Neither Party shall have the authority to make any

                                       58
<PAGE>

statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written consent of the
other to do so. All persons employed by a Party shall be employees of such Party
and not of the other Party and all costs and obligations incurred by reason of
any such employment shall be for the account and expense of such Party.

      Section 11.9 Equitable Relief. Each Party acknowledges and agrees that the
restrictions set forth in Articles 6 and 7 of this Agreement are reasonable and
necessary to protect the legitimate interests of the other Party and that such
other Party would not have entered into this Agreement in the absence of such
restrictions, and that any violation or threatened violation of any provision of
Article 6 or 7 will result in irreparable injury to such other Party. Each Party
also acknowledges and agrees that in the event of a violation or threatened
violation of any provision of Article 6 or 7, the other Party shall be entitled
to seek preliminary and permanent injunctive relief, without the necessity of
proving irreparable seek injury or actual damages, as well as to seek an
equitable accounting of all earnings, profits and other benefits arising from
any such violation. The rights provided in the immediately preceding sentence
shall be cumulative and in addition to any other rights or remedies that may be
available to such other Party. Nothing in this Section 11.9 is intended, or
should be construed, to limit such other Party's right to preliminary and
permanent injunctive relief or any other remedy for a breach of any other
provision of this Agreement.

      Section 11.10 Waiver. Any term or condition of this Agreement may be
waived at any time by the Party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. The waiver
by either Party hereto of any right hereunder or of the failure to perform or of
a breach by the other Party shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by said other Party whether of a
similar nature or otherwise.

      Section 11.11 Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                       59
<PAGE>

      Section 11.12 No Benefit to Third Parties. The representations,
warranties, covenants and agreements set forth in this Agreement are for the
sole benefit of the Parties hereto and their successors and permitted assigns,
and they shall not be construed as conferring any rights on any other parties,
other than MRC as provided in the last sentence of Section 10.3.1.

      Section 11.13 Further Assurance. Each Party shall duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including the filing
of such assignments, agreements, documents and instruments, as may be necessary
or as the other Party may reasonably request in connection with this Agreement
or to carry out more effectively the provisions and purposes, or to better
assure and confirm unto such other Party its rights and remedies under this
Agreement.

      Section 11.14 English Language. This Agreement has been written and
executed in the English language. Any translation into any other language shall
not be an official version thereof, and in the event of any conflict in
interpretation between the English version and such translation, the English
version shall control.

      Section 11.15 References. Unless otherwise specified, (a) references in
this Agreement to any Article, Section, Appendix, Schedule or Exhibit shall mean
references to such Article, Section, Appendix, Schedule or Exhibit of this
Agreement, (b) references in any section to any clause are references to such
clause of such section, and (c) references to any agreement, instrument or other
document in this Agreement refer to such agreement, instrument or other document
as originally executed or, if subsequently varied, replaced or supplemented from
time to time, as so varied, replaced or supplemented and in effect at the
relevant time of reference thereto.

      Section 11.16 Construction. Except where the context otherwise requires,
wherever used, the singular shall include the plural, the plural the singular,
the use of any gender shall be applicable to all genders and the word "or" is
used in the inclusive sense (and/or). The captions of this Agreement are for
convenience of reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement or the intent of any provision contained
in this Agreement. The term "including" as used herein shall mean including,
without limiting the generality of any description preceding such term.

                                       60
<PAGE>

The language of this Agreement shall be deemed to be the language mutually
chosen by the Parties and no rule of strict construction shall be applied
against either Party hereto.

         [The remainder of this page has been intentionally left blank.]

                                       61
<PAGE>

      IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.

MEDAREX, INC.                                PHARMATHENE, INC.

By: /s/Ronald A. Pepin, Ph.D.                By: /s/David P. Wright
    ------------------------------               ------------------
Name: Ronald A. Pepin, Ph. D.                Name: David P. Wright
Title: Sr. VP, Business Development          Title: President & CEO

                                       62
<PAGE>

                                 SCHEDULE 10.3.2
                      Encumbrances on Collaboration Targets

      This Schedule to the COLLABORATION AGREEMENT ("Agreement") effective as of
November 29, 2004, by and between PHARMATHENE, INC. ("PharmAthene") and MEDAREX,
INC., on behalf of itself and its wholly owned subsidiary, GENPHARM
INTERNATIONAL, INC., (collectively, "Medarex") sets forth any and all
encumbrances on any right, title or interest in or to any Patent, know-how or
other intellectual property rights owned by, licensed to or otherwise controlled
by PharmAthene or its Affiliates with respect to the Collaboration Target listed
on Appendix C. All capitalized terms used herein without definition shall have
the meanings ascribed thereto in the Agreement, unless otherwise expressly
provided herein.

      The contents of this Schedule 10.3.2 are hereby incorporated into the
Agreement and are governed by the terms and conditions of the Agreement,
including the confidentiality provisions set forth therein.

                                      None

<PAGE>

                                   APPENDIX A

                                   Definitions

      This Appendix to the COLLABORATION AGREEMENT ("Agreement") effective as of
November 29, 2004, by and between PHARMATHENE, INC. ("PharmAthene") and MEDAREX,
INC., on behalf of itself and its wholly owned subsidiary, GENPHARM
INTERNATIONAL, INC., (collectively, "Medarex") provides agreed upon definitions
applicable to the Parties for purposes of the Agreement. All capitalized terms
used herein without definition shall have the meanings ascribed thereto in the
Agreement, unless otherwise expressly provided herein.

      The contents of this Appendix A are hereby incorporated into the Agreement
and are governed by the terms and conditions of the Agreement, including the
confidentiality provisions set forth therein.

      "Affiliate" of a party shall mean any other party that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such first party. For purposes of this definition
only, "control" and, with correlative meanings, the terms "controlled by" and
"under common control with" shall mean (a) the possession, directly or
indirectly, of the power to direct the management or policies of a party,
whether through the ownership of voting securities or by contract relating to
voting rights or corporate governance, or (b) the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting securities or other
ownership interest of a party.

      "Allocation Percentage" of a Party means such Party's share of Operating
Profits with respect to commercialization of Collaboration Products and shall be
determined by reference to Appendix G hereto.

      "Antibody" shall mean any fully human antibody, or fragment thereof, with
a unique amino acid sequence that has a therapeutically meaningful binding
affinity for an Antigen. By way of clarification, Antibodies with different
amino acid sequences shall be deemed to be different Antibodies, irrespective of
whether they bind to the same Antigen. For the avoidance of doubt, any

<PAGE>

Improvement to an Antibody, such as, by way of example, through affinity
maturation or other similar techniques, shall continue to be an "Antibody" for
purposes of this Agreement.

      "Antibody-Based Product" shall mean any composition or formulation
containing or comprising one or more (a) (i) antibodies, whether or not human,
(ii) with respect to each such antibody, one or more fragments of such antibody
containing a portion of such antibody that confers binding specificity for an
Antigen, or (iii) any protein or other composition of matter that mimics such
antibody or fragment, (b) cells expressing or secreting one or more such
antibodies, fragments or mimetics or containing nucleotide sequences (whether
coding or non-coding) with respect to the expression of such antibodies,
fragments or mimetics, or (c) nucleotide sequences (whether coding or
non-coding) with respect to the expression of one or more such antibodies,
fragments or mimetics.

      "Antibody Material" shall mean, with respect to a particular Antibody, (a)
the nucleic acids (including DNA, RNA, and complementary and reverse
complementary nucleic acids thereto, whether intact or a fragment) that code
specifically for such Antibody (or active fragments thereof) and do not code for
multiple Antibodies, or (b) a host cell (other than a host cell obtained
directly from the HuMAb Mice, or parts of such mice) into which the nucleic
acids described in (a) are introduced or are otherwise present, which cell is
capable of expressing such Antibody.

      "Antibody Product" shall mean any composition or formulation containing or
comprising one or more (a) Antibodies, (b) cells expressing or secreting one or
more Antibodies or containing nucleotide sequences (whether coding or
non-coding) with respect to the expression of Antibodies, or (c) nucleotide
sequences (whether coding or non-coding) with respect to the expression of one
or more Antibodies (or a fragment of an entire Antibody containing that portion
of such Antibody conferring binding specificity for an Antigen), for the
diagnosis, prophylaxis or treatment of human diseases or conditions.

      "Antigen" shall mean any protein (including any glyco- or lipo-protein),
carbohydrate, compound or other composition, and any fragment, peptide or
epitope thereof, that stimulates the production of antibodies.

<PAGE>

      "Applicable Law" shall mean the applicable laws, rules, and regulations,
including any rules, regulations, guidelines, or other requirements of the
Regulatory Authorities, that may be in effect from time to time in the
Territory.

      "Authorized Commercialization Expenses" shall mean the cost and expenses
incurred by a Party as Commercialization Expenses under the Project Plan not to
exceed one-hundred and ten percent (110%) of the amount authorized by the
Project Budget for the applicable period for the Party.

      "Authorized R&D Expenses" shall mean the cost and expenses incurred by a
Party for performing research and development activities as set forth in the
Project Plan which cost and expense shall not exceed one-hundred and ten percent
(110%) of the amount authorized by the Project Budget for the applicable period
for the Party.

      "Biosite Agreement" shall mean that certain Collaboration Agreement, dated
as of June 1, 2000, between Medarex and Biosite Diagnostics Incorporated, a
Delaware corporation.

      "BLA" or "Biologics License Application" shall mean a Biologics License
Application, as defined in the U.S. Federal Food, Drug, and Cosmetics Act, as
amended, and the regulations promulgated thereunder, and any corresponding
supranational, foreign or domestic marketing authorization application,
registration or certification, necessary or reasonably useful to market a
Collaboration Product in the Territory, but not including pricing and
reimbursement approvals.

      "Collaboration Product" shall mean any Antibody Product that contains,
expresses or secretes a Collaboration Antibody or any Improvement thereto or
contains nucleotide sequences with respect to the expression of a Collaboration
Antibody or any Improvement thereto.

      "Collaboration Target" shall mean the Antigen listed on Appendix C, as
such appendix may be amended pursuant to this Agreement.

      "Collaboration Technology" shall mean any and all (a) Information and
Inventions, conceived, discovered, developed or otherwise made, by or on behalf
of a Party or its Affiliates or, to the extent permitted, its sublicensees
(whether alone or jointly), in connection with the work conducted under or in
connection with this Agreement (but not the Unilateral Development and
Commercialization Agreements), whether or not patented or patentable, but

<PAGE>

excluding any Antibody Materials, Collaboration Antibodies, Mice Materials,
Mice-Related Technology or Production Process Technology (the "Collaboration
Know-How"); and (b) Patents and other intellectual property rights with respect
thereto (collectively, "Collaboration Patents"). The determination of whether
Information and Inventions are conceived, discovered, developed or otherwise
made by a Party for purposes of allocating proprietary rights (including Patent,
copyright or other intellectual property rights) therein, shall be made in
accordance with Section 7.1.8.

      "Commercially Reasonable Efforts" shall mean, with respect to the
research, development, manufacture or commercialization of a Collaboration
Product, efforts and resources commonly used in the biotechnology industry for
an antibody of similar commercial potential at a similar stage in its lifecycle,
taking into consideration its safety and efficacy, its cost to develop, the
competitiveness of alternative products, its proprietary position, the
likelihood of regulatory approval, its profitability and all other relevant
factors. Commercially Reasonable Efforts shall be determined on a
market-by-market basis for each Collaboration Product, without regard to the
particular circumstances of a Party, including any other product opportunities
of such Party.

      "Control" shall mean, with respect to any Information and Invention,
Patent or other intellectual property right, possession of the right, whether
directly or indirectly, and whether by ownership, license or otherwise, to
assign, or grant a license, sublicense or other right to or under, such
Information and Invention, Patent or right as provided for herein without
violating the terms of any agreement or other arrangement with any Third Party.

      "Corixa Agreement" shall mean that certain Asset Purchase Agreement, by
and between Medarex and Corixa Corporation, dated as of May 24, 2002.

      "Cross-License Agreement" shall mean that certain Cross-License Agreement
entered into by and among Abgenix, Inc., Cell Genesys, Inc., Japan Tobacco Inc.,
Xenotech L.P., and GenPharm International, Inc., effective as of March 26, 1997,
as amended from time to time.

      "Excluded Know-How" shall mean (a) with respect to Medarex, any and all
Information and Inventions that Medarex or any of its Affiliates Control
pursuant to the Biosite Agreement, the Kirin Agreement (subject to Section

<PAGE>

1.2.6(d)), the Corixa Agreement or any other agreement with a Third Party that
is entered into after the Effective Date, including the ultra potent toxin and
linker technology that Medarex or any of its Affiliates Control pursuant to the
Corixa Agreement (including any Improvements with respect thereto), and (b) with
respect to PharmAthene any and all Information and Inventions that PharmAthene
or its Affiliates Control pursuant to an agreement entered into after the
Effective Date, but in each case excluding any Information and Inventions that
are claimed or covered by the Excluded Patents.

      "Excluded Patent" shall mean any Patent that Medarex or any of its
Affiliates Control pursuant to the Biosite Agreement, the Kirin Agreement
(subject to Section 1.2.6(d)), the Corixa Agreement or any other agreement with
a Third Party that is entered into after the Effective Date, including any
Patents claiming or covering the ultra potent toxin and linker technology that
Medarex or any of its Affiliates Control pursuant to the Corixa Agreement
(including any Improvements with respect thereto), and (b) with respect to
PharmAthene any Patent that PharmAthene or any of its Affiliates Control
pursuant to an Agreement entered into after the Effective Date.

      "Exploit" or "Exploitation" shall mean to make, have made, import, use,
sell, offer for sale, or otherwise dispose of, including all discovery,
research, development, registration, modification, enhancement, improvement,
manufacture, storage, formulation, exportation, transportation, distribution,
promotion and marketing activities related thereto.

      "FDA" shall mean the United States Food and Drug Administration and any
successor agency thereto.

      "GAAP" shall mean United States generally accepted accounting principles
consistently applied.

      "Government Award" shall mean a grant received by a Party from the U.S.
federal government (or any subdivision thereof) for the purpose of researching,
developing or manufacturing Collaboration Products.

      "Government Contract" shall mean a contract, between the Selling Party and
the U.S. federal government (or any subdivision thereof or any foreign
Government ) for the procurement of a specific quantity of one or more
Collaboration Products at a set price over a specific time period for the

<PAGE>

purposes of stocking (e.g. Strategic National Stockpile) and intended treatment
and not for testing or otherwise evaluating the Collaboration Product for
consideration as a potential treatment.

      "HuMAb Mice" shall mean any immunizable transgenic mice containing
unrearranged human immunoglobulin transgenes inserted into mouse chromosomes,
but not containing any human chromosomes or fragments thereof, that are
Controlled by Medarex or its Affiliates as of the Effective Date, but excluding
any immunizable mice capable of producing human antibodies that are in-licensed
or otherwise acquired by Medarex or its Affiliates after the Effective Date.

      "Improvement" shall mean any modification to an antibody, compound,
product or technology or any discovery, device, process or formulation related
to such antibody, compound, product or technology, whether or not patented or
patentable, including any enhancement in the efficiency, operation, manufacture,
ingredients, preparation, presentation, formulation, means of delivery,
packaging or dosage of an antibody, compound, product or technology, any
discovery or development of any new or expanded indications or applications for
an antibody, compound, product or technology, or any discovery or development
that improves the stability, safety or efficacy of an antibody, compound,
product or technology.

      "IND" shall mean an investigational new drug application filed with the
FDA for authorization to commence human clinical trials, and its equivalent in
other countries or regulatory jurisdictions.

      "Information and Inventions" shall mean all technical, scientific and
other know-how and information, trade secrets, knowledge, technology, means,
methods, processes, practices, formulas, instructions, skills, techniques,
procedures, experiences, ideas, technical assistance, designs, drawings,
assembly procedures, computer programs, apparatuses, specifications, data,
results and other material, including high-throughput screening, gene
expression, genomics, proteomics and other drug discovery and development
technology, pre-clinical and clinical trial results (including Regulatory
Documentation), manufacturing procedures, test procedures and purification and
isolation techniques, (whether or not confidential, proprietary, patented or
patentable) in written, electronic or any other form now known or hereafter
developed, and all Improvements, whether to the foregoing or otherwise, and
other discoveries, developments, inventions and other intellectual property
(whether or not confidential, proprietary, patented or patentable).

<PAGE>

      "Kirin Agreement" shall mean that certain Collaboration and License
Agreement between Kirin Brewery Co, Ltd. ("Kirin") and Medarex, effective as of
September 4, 2002, as amended from time to time.

      "Know-How" shall mean the Medarex Know-How, the PharmAthene Know-How
and/or the Collaboration Know-How, as applicable.

      "Lead Collaboration Antibody" shall have the meaning set forth in Section
1.2.4. For the avoidance of doubt, a Collaboration Antibody that has been
designated the Lead Collaboration Antibody shall continue to be a Collaboration
Antibody for purposes of this Agreement.

      "Medarex Know-How" shall mean all Information and Inventions owned by or
in the Control of Medarex or its Affiliates as of the Effective Date or at any
time during the Term that are necessary or reasonably useful for the
Exploitation of the Collaboration Products and the Unilateral Products or for
the exercise of the Medarex Patents, in each case that are not generally known,
but excluding (w) any Excluded Know-How, (x) any Collaboration Know-How and
Joint Know-How, and (y) any Mice Materials, Mice-Related Know-How and Production
Process Know-How. Subject to the foregoing exclusions, Medarex Know-How shall
include all: (a) biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical and safety data and
information related to the Collaboration Targets, the Collaboration Products or
the Unilateral Products, and (b) data and information with respect to, or
resulting from, assays and biological methodologies necessary or reasonably
useful for the Exploitation of Collaboration Products or the Unilateral
Products. By way of clarification, PharmAthene shall not have any rights with
respect to Excluded Know-How under this Agreement unless the Parties enter into
a separate written agreement with respect thereto. For purposes of this
definition, Medarex Know-How is not intended, and shall not be construed, to
include any Information and Inventions that are licensed to Medarex and its
Affiliates under Section 3.1.2 of this Agreement or under Section 2.1 of the
applicable Unilateral Development and Commercialization Agreement.

<PAGE>

      "Medarex Patents" shall mean all of the Patents that Medarex or its
Affiliates own or Control as of the Effective Date and at any time during the
Term, that cover or claim any invention necessary or reasonably useful for the
Exploitation of the Collaboration Products or the Unilateral Products, but
excluding any Excluded Patents, any Collaboration Patents, any Joint Patents,
any Mice-Related Patents and any Production Process Patents. By way of
clarification, PharmAthene shall not have any rights with respect to any
Excluded Patents under this Agreement unless the Parties enter into a separate
written agreement with respect thereto. For purposes of this definition, Medarex
Patents are not intended, and shall not be construed, to include any Patents
that are licensed to Medarex and its Affiliates under Section 3.1.2 of this
Agreement or under Section 2.1 of the applicable Unilateral Development and
Commercialization Agreement.

      "Medarex Technology" shall mean the Medarex Know-How and Medarex Patents.

      "Mice Materials" shall mean the HuMAb Mice, any parts or derivatives of
such mice, including hybridomas, cells, genetic material (including nucleotide
sequences (e.g., DNA, RNA, and complementary and reverse complementary
nucleotide sequences thereto, whether coding or non-coding) with respect to the
expression of an Antibody or fragment thereof, and any replicates or
modifications thereof or Improvements thereto (e.g., additions, deletions or
substitutions of nucleotides therein)), Antibodies, Antibody Products or other
biological materials derived directly or indirectly from the HuMAb Mice, but
excluding any Collaboration Antibodies and Antibody Materials related thereto.

      "Mice-Related Know-How" shall mean (a) any Information and Inventions with
respect to any Mice Materials or other biological materials derived directly or
indirectly from the HuMAb Mice, but excluding any Information and Inventions
that relate solely to the Exploitation of Collaboration Products (as
distinguished from the Exploitation of the Mice Materials), and (b) any
Information and Inventions with respect to the HuMAb Mice or the Additional
Mice, and the Exploitation thereof, but in each case excluding any Information
and Inventions to the extent covered or claimed by the Mice-Related Patents.

      "Mice-Related Patents" shall mean any Patents that claim or cover (a) Mice
Materials or other biological materials derived directly or indirectly from the
HuMAb Mice, and any Information and Inventions with respect to the foregoing,

<PAGE>

but excluding any claims that relate solely to the Exploitation of Collaboration
Products (as distinguished from the Exploitation of the Mice Materials), and (b)
the HuMAb Mice or the Additional Mice, and the Exploitation thereof.

      "Mice-Related Technology" shall mean the Mice-Related Know-How and the
Mice-Related Patents.

      "MRC Agreement" shall mean that certain License Agreement entered into by
the Medical Research Council Institute of Animal Physiology and Genetics
Research of Babraham Hall and Marianne Bruggemann and GenPharm International,
Inc., effective October 1, 1993, as amended on August 12, 1994.

      "Non-Selling Party" shall mean with respect to each country of the
Territory the Party that is not the Selling Party.

      "Patent(s)" shall mean (a) all patents and patent applications, (b) any
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates and the like, and any provisional
applications, of any such patents or patent applications, and (c) any foreign or
international equivalent of any of the foregoing.

      "PharmAthene Know-How" shall mean all Information and Inventions owned by
or in the Control of PharmAthene or its Affiliates as of the Effective Date or
at any time during the Term that are necessary or reasonably useful for the
Exploitation of the Collaboration Products and the Unilateral Products,
including the discovery, identification or characterization of Collaboration
Targets, or for the exercise of the PharmAthene Patents, in each case that are
not generally known, but excluding (w) any Excluded Know-How, and (x) any
Collaboration Know-How and Joint Know-How, (y) Patents and (z) any Production
Process Know-How. Subject to the foregoing exclusions, PharmAthene Know-How
shall include all: (a) biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical and safety data and
information related to the Collaboration Targets, the Collaboration Products or
the Unilateral Products, and (b) data and information with respect to, or
resulting from, assays and biological methodologies necessary or reasonably
useful for the Exploitation o the Collaboration Targets, the Collaboration
Products or the Unilateral Products. For purposes of this definition,

<PAGE>

PharmAthene Know-How is not intended, and shall not be construed, to include any
Information and Inventions that are licensed to PharmAthene and its Affiliates
under Section 3.1.1 of this Agreement or under Section 2.1 of the applicable
Unilateral Development and Commercialization Agreement.

      "PharmAthene Patents" shall mean all of the Patents that PharmAthene and
its Affiliates own or Control as of the Effective Date and at any time during
the Term, that claim or cover any invention necessary or reasonably useful for
the Exploitation of the Collaboration Products or the Unilateral Products, but
excluding any Excluded Patents, Collaboration Patents, any Joint Patents and any
Production Process Patents. For purposes of this definition, PharmAthene Patents
are not intended, and shall not be construed, to include any Patents that are
licensed to PharmAthene and its Affiliates under Section 3.1.1 of this Agreement
or under Section 2.1 of the applicable Unilateral Development and
Commercialization Agreement.

      "PharmAthene Technology" shall mean the PharmAthene Know-How and
PharmAthene Patents.

      "Product Trademarks" shall mean the Trademarks developed for the
Collaboration Products by the Steering Committee, all packaging designs and
other trade dress used in connection with the Collaboration Products and such
other Trademarks relating thereto and any registrations thereof or any pending
applications relating thereto.

      "Production Process Development" shall mean the development of processes
and technology for the production, purification, evaluation, characterization,
stability assessment, vialing and distribution, and release of a Collaboration
Antibody or Collaboration Product.

      "Production Process Know-How" shall mean any Information and Inventions of
a Party with respect to the Production Process Development or the manufacture of
Antibody Products.

      "Production Process Patents" shall mean any Patents of a Party that claim
or cover the Production Process Development or the manufacture of Antibody
Products.

      "Production Process Technology" shall mean any Production Process Know-How
and Production Process Patents of a Party.

<PAGE>

      "Regulatory Approval" shall mean any and all approvals (including pricing
and reimbursement approvals), licenses, registrations or authorizations of any
Regulatory Authority, necessary for the Exploitation of a product in a country,
including any (a) approval for a product (including any INDs, BLAs and
supplements and amendments thereto); (b) pre- and post-approval marketing
authorizations (including any prerequisite manufacturing approval or
authorization related thereto); (c) labeling approval; and (d) technical,
medical and scientific licenses.

      "Regulatory Authority" shall mean any applicable government entities
regulating or otherwise exercising authority with respect to the Exploitation of
the Collaboration Products or Unilateral Products, as applicable, in the
Territory.

      "Regulatory Documentation" shall mean all applications, registrations,
licenses, authorizations and approvals, all correspondence submitted to or
received from Regulatory Authorities (including minutes and official contact
reports relating to any communications with any Regulatory Authority), all
supporting documents and all clinical studies and tests, relating to any
product, and all data contained in any of the foregoing, including all
regulatory drug lists, advertising and promotion documents, adverse event files
and complaint files, but excluding any and all Regulatory Approvals with respect
to such product.

      "Selling Party" means, PharmAthene unless otherwise agreed to in writing
by both Parties.

      "Technology" shall mean, with respect to Medarex, the Medarex Technology
and, with respect to PharmAthene, the PharmAthene Technology and, when used
without reference to a specific Party, the Medarex Technology and the
PharmAthene Technology.

      "Territory" shall mean the entire world.

      "Third Party" shall mean any party other than Medarex, PharmAthene or
their respective Affiliates.

      "Trademark" shall include any word, name, symbol, color, designation or
device or any combination thereof, including any trademark, trade dress, service
mark, service name, brand mark, trade name, brand name, logo or business symbol.

      Terms Defined Elsewhere in this Agreement. The following terms are defined
in the applicable Sections of this Agreement:

<PAGE>

Defined Term                                        Section

Authorized Commercialization Expenses               Section 4.1.1

Authorized R&D Expenses                             Section 4.1.2

Binding Sequence                                    Section 1.2.3(b)

Biological Materials                                Section 7.5.3

Collaboration                                       Section 1.1

Collaboration Antibody                              Section 1.2.3(a)

Collaboration  Expenses                             Section 4.5.1

Collective Opinion of Counsel                       Section 7.4.1

Commercialization Expenses                          Appendix B

Confidential Information                            Section 6.1

Discontinued Product                                Section 5.1.2(a)

Dormant Product                                     Section 5.3

Effective Date                                      Preamble

Election Notice                                     Section 5.1.2(a)

Expert                                              Section 2.3.4(a)

Indemnification Claim Notice                        Section 9.5.1

Indemnified Party                                   Section 9.5.1

Indemnitee                                          Section 9.5.1

Infringement Suit                                   Section 7.4.2

Initial PharmAthene Contribution                    Section 1.3.2

Joint Know-How                                      Unilateral Development and
                                                    Commercialization Agreements

Joint Patents                                       Unilateral Development and
                                                    Commercialization Agreements

Joint Technology                                    Unilateral Development and
                                                    Commercialization Agreements

Lead Collaboration Antibody                         Section 1.2.4

Losses                                              Section 9.2

<PAGE>

Defined Term                                        Section

Medarex Research Activities                         Section 1.2.2

Net Sales                                           Appendix B

Operating Profits, Operating Losses                 Appendix B

Opt-Out                                             Section 5.1.1

Opt-Out Notice                                      Section 5.1.1

Opting-Out Party                                    Section 5.1.1

Other Operating (Income)/Expense                    Appendix B

Party                                               Preamble

PharmAthene Activities                              Section 1.2.2

Project Budget                                      Section 1.3

Project Plan                                        Section 1.3

Pursuing Party                                      Section 5.1.2(a)

Research and Commercialization

Agreement                                           Section 3.3.2

Reversion Target                                    Section 1.7

Steering Committee                                  Section 2.1.1

Term                                                Section 8.1

Third-Party Claims                                  Section 9.2

Third-Party Payments                                Appendix B

Unilateral Development and

Commercialization Agreement                         Section 5.1.2(a)

Unilateral Product                                  Unilateral Development and
                                                    Commercialization Agreements

Withholding Taxes                                   Section 4.4

<PAGE>

                                   APPENDIX B

                              Financial Definitions

            This Appendix to the COLLABORATION AGREEMENT ("Agreement") effective
as of November 29, 2004, by and between PHARMATHENE, INC. ("PharmAthene") and
MEDAREX, INC., on behalf of itself and its wholly owned subsidiary, GENPHARM
INTERNATIONAL, INC., (collectively, "Medarex") provides agreed upon definitions
of financial terms applicable to the Parties for purposes of the Agreement. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement, unless otherwise expressly provided herein.

            The contents of this Appendix B are hereby incorporated into the
Agreement and are governed by the terms and conditions of the Agreement,
including the confidentiality provisions set forth therein.

            It is the intention of the Parties that the interpretation of these
definitions will be in accordance with GAAP.

      1. "Net Sales" shall mean, for any period, the gross amount invoiced by
the Parties and their Affiliates and sublicensees for the sale of Collaboration
Product(s) or Unilateral Product(s), as applicable, to Third Parties, less
deductions for: (a) normal and customary trade, quantity and cash discounts and
sales returns and allowances (other than allowances for doubtful accounts),
including (i) those granted on account of price adjustments, billing errors,
rejected goods, damaged goods, returns and rebates, (ii) administrative and
other fees and reimbursements and similar payments directly related to the sale
or delivery of Collaboration Product(s) or Unilateral Product(s), as applicable,
paid to wholesalers and other distributors, buying groups, pharmacy benefit
management organizations, health care insurance carriers and other institutions,
(iii) allowances, rebates and fees directly related to the sale or delivery of
Collaboration Product(s) or Unilateral Product(s), as applicable, paid to
distributors and (iv) chargebacks; (b) freight, postage, shipping and insurance

<PAGE>

costs to the extent that such items are included in the gross amount invoiced;
(c) customs and excise duties and other duties related to the sales to the
extent that such items are included in the gross amount invoiced; (d) rebates
and similar payments made with respect to sales paid for or reimbursed by any
governmental or regulatory authority such as, by way of illustration and not in
limitation of the Parties' rights hereunder, Federal or state Medicaid, Medicare
or similar state program or equivalent foreign governmental program; (e) sales
and other taxes and duties (including withholding taxes established by
individual country treaties not reimbursed or creditable) directly related to
the sale or delivery of Collaboration Product(s) or Unilateral Product(s), as
applicable, (but not including taxes assessed against the income derived from
such sale); (f) distribution costs and expenses to the extent that such items
are included in the gross amount invoiced; and (g) any such invoiced amounts
that are not collected by the Parties or their Affiliates or sublicensees;
provided, however, that an amount shall be deducted only once regardless of how
many categories may apply to it. Any of the deductions listed above that
involves a payment by a Party or its Affiliates or sublicensees shall be taken
as a deduction in the calendar quarter in which the payment is accrued by such
entity. Deductions pursuant to subsection (g) above shall be taken in the
calendar quarter in which such sales are no longer recorded as a receivable. For
purposes of determining Net Sales, the Collaboration Product(s) or Unilateral
Product(s), as applicable, shall be deemed to be sold when invoiced and a "sale"
shall not include transfers or dispositions for charitable, promotional,
pre-clinical, clinical, regulatory or governmental purposes.

            For purposes of calculating Net Sales of Collaboration Products,
sales between or among the Parties or their Affiliates shall be excluded from
the computation of Net Sales, but sales of Collaboration Products by a Party or
its Affiliates (other than sales pursuant to a supply agreement entered into
pursuant to Section 1.2.8 or 1.6) to sublicensees or Third Parties shall be
included in the computation of Net Sales.

            For purposes of the Unilateral Development and Commercialization
Agreements, "Net Sales" shall be deemed to be Net Sales of Unilateral Products.
For purposes of calculating Net Sales of Unilateral Products, sales between or
among the Pursuing Party or its Affiliates or its sublicensees shall be excluded
from the computation of Net Sales, but sales by the Pursuing Party or its

                                      B-2
<PAGE>

Affiliates or, subject to Section 3.2.3 of the applicable Unilateral Development
and Commercialization Agreement, its sublicensees to Third Parties shall be
included in the computation of Net Sales.

      2. "Operating Profits" and, with correlative meaning, "Operating Losses",
shall mean, with respect to a Collaboration Product, Net Sales of such
Collaboration Product by a Party or its Affiliates (but excluding Net Sales by a
Party's sublicensees) less (a) Authorized Commercialization Expenses (to the
extent not already deducted from Net Sales) and (b) Other Operating
(Income)/Expense with respect to such Collaboration Product, all for a given
period.

      3. "Commercialization Expenses" shall mean all Cost of Sales, Distribution
Costs, Marketing Costs, Sales Costs, General and Administrative Costs (in each
case, to the extent not deducted from Net Sales under Section 1 hereof) of the
Parties and their Affiliates with respect to the applicable Collaboration
Products approved by the Steering Committee in, and in accordance with, the
applicable Project Budget.

            3.1 "Cost of Sales" shall mean (a) the supply price with respect to,
      and any other direct costs and expenses of acquiring, including costs of
      transport, customs, clearance and storage of product (if necessary),
      freight, customs, duty, and insurance borne by the Parties (to the extent
      not included in such supply price) of a Collaboration Product, and (b) any
      Third-Party Payments with respect to the sale of such Collaboration
      Product, to the extent not included in such supply price or reimbursed by
      a Third Party.

                  3.1.1 "Third-Party Payments" shall mean intellectual property
            and technology acquisition and license payments (including
            royalties, license fees, milestone payments and other payment
            obligations) made to Third Parties with respect to a Collaboration
            Product during the Term pursuant to activities under this Agreement,
            only to the extent that such payment obligations are approved by the
            Steering Committee pursuant to Section 2.1.2(d) and/or Section
            7.4.1. For purposes of clarity, any payments made pursuant to the
            MRC Agreement and/or the Kirin Agreement with respect to a
            Collaboration Product shall be Third-Party Payments.

                                      B-3
<PAGE>

            3.2 "Distribution Costs" shall mean the direct costs and expenses
      specifically identifiable to the distribution of a Collaboration Product a
      Party including customer services, collection of data about sales to
      hospitals and other end users, order entry, billing, shipping, credit and
      collection and other such activities, but in any case, not including any
      costs or expenses which are reimbursed by any Third Party.

            3.3 "Marketing Costs" shall mean, with respect to a Collaboration
      Product, the direct costs and expenses of marketing, promotion,
      advertising, promotional materials, professional education,
      product-related public relations, relationships with opinion leaders and
      professional societies, market research (before and after Regulatory
      Approval of a Collaboration Product), healthcare economics studies,
      post-marketing studies required to obtain, maintain or expand Regulatory
      Approvals of such Collaboration Product (to the extent not included in
      Authorized R&D Expenses) and other similar activities related to such
      Collaboration Product and approved by the Steering Committee. Such costs
      and expenses will include both internal costs (e.g., salaries, benefits,
      supplies and materials, etc.) and costs of outside services and expenses
      (e.g., consultants, agency fees, meeting costs, etc.). Marketing Costs
      shall also include costs and expenses directly related to obtaining
      reimbursement from payers and the cost of obtaining sales and marketing
      data (to the extent not included in the Distribution Costs).
      Notwithstanding anything to the contrary in the foregoing, Marketing Costs
      shall specifically exclude the cost and expense of activities that promote
      a Party's business as a whole without being specific to a Collaboration
      Product (e.g., corporate image advertising).

            3.4 "Sales Costs" shall mean, with respect to a Collaboration
      Product, direct costs and expenses incurred by either Party or for its
      account and specifically identifiable to the sales efforts for such
      Collaboration Product in all markets in the Territory including the
      managed care market. Sales Costs shall include costs and expenses
      associated with sales representatives for a Collaboration Product,
      including the cost of compensation, benefits, travel, supervision,
      training, sales meetings, and other sales expenses for such sales

                                      B-4
<PAGE>

      representatives. Notwithstanding anything to the contrary in the
      foregoing, Sales Costs shall exclude costs and expenses associated with
      the start-up of a Party's sales force, including recruiting, relocation
      and other similar costs and expenses.

            3.5 "General and Administrative Costs" shall mean, with respect to a
      Collaboration Product, costs equal to ten percent (10%) of the sum of the
      Distribution Costs, Marketing Costs and Sales Costs related to such
      Collaboration Product in any country, of the Parties, in the aggregate,
      but only to the extent these costs are chargeable under the Agreement.
      Each Party shall have the right to charge General and Administrative Costs
      with respect to its Distribution Costs, Marketing Costs and Sales Costs
      chargeable under the Agreement. For the avoidance of doubt, neither Party
      shall charge the Collaboration for overhead with respect to the
      commercialization of a Collaboration Product other than General and
      Administrative Costs as provided above, except to the extent that such
      overhead charges are specifically set forth in the applicable Project
      Budget.

      4. "Other Operating (Income)/Expense" shall mean (a) payments and other
consideration received from Third Parties with respect to the commercialization
of a Collaboration Product, including any license fees, milestone payments,
royalties or other payments (including the fair market value of any
consideration received) in connection with the license, sublicense, assignment
or transfer of rights with respect to such Collaboration Product (to the extent
not included in Net Sales but excluding any amounts received by Medarex in
connection with royalties payable by the Parties under the MRC Agreement with
respect to Collaboration Products), (b) any Third-Party Payments with respect to
the sale of such Collaboration Product, to the extent not included in such
supply price or reimbursed by a Third Party, and (c) any other operating income
received from or expense owed to Third Parties in connection with an activity
that is not part of the primary business activity of a Party under the Agreement
but is considered and approved by the Parties as income or expense for purposes
of the Agreement, which may include: (i) the cost and expense of prosecuting,
maintaining and enforcing patent, trademark and other intellectual property
rights and defending against claims of infringement; and (ii) product liability
insurance to the extent the Parties obtain a joint policy pursuant to Section

                                      B-5
<PAGE>

9.1, and (c) other expenses indirectly associated with the commercialization of
a Collaboration Product as approved by the Steering Committee in the applicable
Project Budget.

                                      B-6
<PAGE>

                                   APPENDIX C

                              Collaboration Target

      This Appendix to the COLLABORATION AGREEMENT ("Agreement") effective as of
November 29, 2004, by and between PHARMATHENE, INC. ("PharmAthene") and MEDAREX,
INC., on behalf of itself and its wholly owned subsidiary, GENPHARM
INTERNATIONAL, INC., (collectively, "Medarex") sets forth the Collaboration
Target.

      The contents of this Appendix C are hereby incorporated into the Agreement
and are governed by the terms and conditions of the Agreement, including the
confidentiality provisions set forth therein.

      [***]

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***Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

<PAGE>

                                   APPENDIX D

                           Lead Collaboration Antibody

                                      [***]

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***Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

<PAGE>

                                   APPENDIX E

                              Initial Project Plan

                                      [***]

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***Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      G-2
<PAGE>

                                  APPENDIX F-1

             Unilateral Development and Commercialization Agreement

[Pursuant to the terms of the Collaboration Agreement effective as of November
29, 2004 between PharmAthene, Inc. and Medarex, Inc., on behalf of itself and
its wholly owned subsidiary GenPharm International, Inc., this document is not
currently operative.]

                                      G-3
<PAGE>

                                  APPENDIX F-2

             Unilateral Development and Commercialization Agreement

[Pursuant to the terms of the Collaboration Agreement effective as of November
29, 2004 between PharmAthene, Inc. and Medarex, Inc., on behalf of itself and
its wholly owned subsidiary GenPharm International, Inc., this document is not
currently operative.]

<PAGE>

                                   APPENDIX G

                     Determination of Allocation Percentage

A.    The initial Allocation Percentage of Medarex shall be 100% and the initial
      Allocation Percentage of PharmAthene shall be 0%. The sum of the Parties'
      Allocation Percentages shall at all times equal 100%, and any increase in
      one Party's Allocation Percentage shall be deemed a corresponding decrease
      in the other Party's Allocation Percentage in the same amount.

B.    Pursuant to Section 1.3.2 of this Agreement, PharmAthene will make the
      Initial PharmAthene Contribution of Two Million Dollars (US $2,000,000) to
      Medarex within fifteen (15) days of Effective Date such Initial
      PharmAthene Contribution to be used by Medarex solely for purposes of
      funding activities specified in the initial Project Plan outlined in
      Appendix E. Upon Medarex's receipt of the Initial PharmAthene
      Contribution, PharmAthene's Allocation Percentage will be increased to
      20%.

C.    In order to maintain PharmAthene's Allocation Percentage at 20% following
      Medarex's receipt of the Initial PharmAthene Contribution, PharmAthene
      shall contribute to the Collaboration no less than the amount (dollar for
      dollar) received by Medarex from the U.S. Government as reimbursement of
      the costs incurred by the Collaboration in the performance of the
      activities outlined in the two Government Awards granted to Medarex by the
      National Institutes of Health/National Institute of Allergy and Infectious
      Disease (NIH/NIAID) (the " PharmAthene Government Grant Match
      Contribution"). Such PharmAthene Government Grant Match Contribution will
      due and payable to Medarex by PharmAthene upon receipt by PharmAthene of
      an invoice from Medarex detailing the funds received by Medarex from the
      U.S. Government as reimbursement for costs incurred in performance of the
      activities outlined in the Government Awards, and will be used to offset
      expenses incurred by the Collaboration that are not fully covered by the
      monies received as reimbursement from the Government Awards awarded to
      Medarex. The PharmAthene Government Grant Match Contribution shall not be
      included in the calculation of PharmAthene's Allocation Percentage for
      purposes of Paragraph D below.

                                      G-2
<PAGE>

D.    PharmAthene's Allocation Percentage will increase by 10% for every
      $5,000,000 spent in the Collaboration after the Effective Date and in
      excess of the Initial PharmAthene Contribution and the PharmAthene
      Government Grant Match Contribution up to a maximum Allocation Percentage
      of: (i) fifty percent (50%) in the absence of a Government Contract and
      (ii) sixty percent (60%) if a Government Contract is secured. Any monies
      received by Medarex as a result of a Government Award which are based on
      the Government Awards awarded to Medarex as of the Effective Date shall
      not be included as money spent in the Collaboration by PharmAthene.

E.    In the event that revenue is received in connection with a Government
      Contract that is awarded to the Selling Party prior to PharmAthene
      contributing an amount in excess of the sum of (i) the Initial PharmAthene
      Contribution and (ii) the amount of PharmAthene Government Grant Match
      Contribution (such sum, the "Milestone Trigger Amount"), then PharmAthene
      shall make a milestone payment in the amount of One Million Five Hundred
      Dollars ($1,500,000) to Medarex within fifteen (15) days after the receipt
      of revenue from such Government Contract; provided that if PharmAthene's
      contribution at the time that such revenue is received is between ninety
      percent (90%) and one hundred percent (100%) of the Milestone Trigger
      Amount, then in lieu of making such milestone payment, PharmAthene shall
      pay to Medarex the difference between (x) the Milestone Trigger Amount and
      (b) the amount contributed by PharmAthene at the time that such revenue is
      received (such difference, the "Make-Up Payment"). This milestone payment
      (or Make-Up Payment") shall not be considered for purposes of the
      calculation of PharmAthene's Allocation Percentage, and PharmAthene will
      not be reimbursed for such milestone payment (or Make-Up Payment) under
      Section 4.1.2 of the Agreement. In the event that PharmAthene has funded
      the activities of the Collaboration in an amount greater than the sum of
      (i) the Initial PharmAthene Contribution and (ii) the PharmAthene
      Government Grant Match Contribution, then no milestone payment or Make-Up
      Payment shall be owed to Medarex.

                                      G-3
<PAGE>

F.    Upon compliance with the payment obligations set forth in Paragraph E
      above, PharmAthene's Allocation Percentage will be adjusted to 50%.

                                      G-4Exhibit 10.24

      CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT HAS BEEN
          OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION (THE "SEC") PURSUANT TO A REQUEST FOR CONFIDENTIAL
                 TREATMENT WITH RESPECT TO THE OMITTED PORTIONS.
                     OMITTED PORTIONS ARE INDICATED BY [***]

                         RESEARCH AND LICENSE AGREEMENT

      This Agreement ("AGREEMENT") is made and entered into August 8, 2006 (the
"EFFECTIVE DATE") by and between Nektar Therapeutics AL, Corporation, having its
principal place of business at 490 Discovery Drive, Huntsville, AL 35806
("NEKTAR AL"); and PharmAthene, Inc. having its principal place of business at
175 Admiral Cochrane Drive, Suite 101, Annapolis, MD 21401 ("COMPANY"). NEKTAR
AL and COMPANY may be referred to herein individually as a "PARTY" and
collectively as the "PARTIES."

                                    RECITALS

WHEREAS, COMPANY is in the business of developing, making, marketing and selling
pharmaceutical products for the treatment of diseases;

WHEREAS, NEKTAR AL has proprietary technology useful for attaching
poly(ethylene) glycol-based molecules to pharmaceutical compounds;

WHEREAS, COMPANY desires to obtain a license under certain of NEKTAR AL's
intellectual property rights and proprietary technology to make, have made, use,
sell, offer for sale and import the SELECTED PRODUCT (as defined herein)
throughout the world, under the terms and conditions specified herein;

WHEREAS, NEKTAR AL is also engaged in the business of performing research in
relation to REAGENTS and CONJUGATES (as defined herein) and manufacturing bulk
quantities of REAGENTS used in the manufacture of pharmaceutical products;

WHEREAS, COMPANY desires NEKTAR AL to perform research in relation to REAGENTS
and CONJUGATES, and NEKTAR AL agrees to undertake such research, all in
accordance with and subject to the terms and conditions specified below; and

                                                                    Page 1 of 70
<PAGE>

NOW, THEREFORE, in consideration of the foregoing and the covenants and promises
contained in this AGREEMENT, the PARTIES agree as follows:

                                    AGREEMENT

1. Definitions

1.1 "AFFILIATE" means, with respect to any person or entity, any other person or
entity that directly or indirectly controls, is controlled by, or is under
common control with, such person or entity. For purposes of this definition
only, "control," "controlled by" and "under common control with" shall mean the
possession of the power to direct or cause the direction of the management and
policies of an entity, whether through the ownership of voting stock or
partnership interest, by contract or otherwise. In the case of a corporation,
the direct or indirect ownership of fifty percent (50%) or more of its
outstanding voting shares or the ability otherwise to elect a majority of the
board of directors or other managing authority of the entity shall in any event
be deemed to confer control, it being understood that the direct or indirect
ownership of a lesser percentage of such shares shall not necessarily preclude
the existence of control.

1.2 "BIODEFENSE SALES" means sales of SELECTED PRODUCT for the purpose of the
treatment or prophylaxis of organophosphate poisoning by a nerve agent (i) to a
government or agency thereof and/or (ii) to non-government entities that are
required by a government or agency thereof to purchase SELECTED PRODUCT provided
that the price paid by such non-government entities does not exceed ([***]%)
(net of all discounts) of the price paid by the federal government in the
country where such sale occurs.

1.3 "BLA" means a Biologics License Application filed with the FDA or any
foreign equivalent filed with the regulatory authorities in a country or
territory to obtain MARKETING AUTHORIZATION for SELECTED PRODUCT in such country
or territory.

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                                                    Page 2 of 70
<PAGE>

1.4 "CLAIMS" has the meaning set forth in Section 10.1.1.

1.5 "COMBINATION PRODUCT" means a product that contains one or more clinically
active components that are not SELECTED PRODUCT in addition to the SELECTED
PRODUCT.

1.6 "COMMERCIAL SALES" has the meaning set forth in Section 2.8.2.

1.7 "COMMERCIALLY REASONABLE EFFORTS" means, with respect to the research,
development or commercialization of the SELECTED PRODUCT under this AGREEMENT,
as the case may be, the efforts and resources typically used by pharmaceutical
companies for an internally-developed product of similar commercial potential at
a similar stage in its development or commercialization lifecycle, without
regard to the particular circumstances of a PARTY, including any other product
opportunities of such PARTY.

1.8 "COMPANY CORE TECHNOLOGY" means: (i) the composition of the THERAPEUTIC
AGENT; (ii) methods of using the THERAPEUTIC AGENT; and/or (iii) methods of
making the THERAPEUTIC AGENT but, in each case, specifically excluding
PEGYLATION of any REAGENT (including SELECTED REAGENT) to or with the
THERAPEUTIC AGENT.

1.9 "COMPANY CORE TECHNOLOGY INVENTIONS" has the meaning set forth in Section
11.5.

1.10 "COMPANY INDEMNITEE" has the meaning set forth in Section 10.1.1.

1.11 "COMPANY KNOW-HOW" means all KNOW-HOW CONTROLLED by COMPANY that is
necessary or useful for NEKTAR AL in connection with NEKTAR AL's performance of
its obligations under this AGREEMENT. COMPANY PATENT RIGHTS are excluded from
the definition of COMPANY KNOW-HOW.

                                                                    Page 3 of 70
<PAGE>

1.12 "COMPANY PATENT RIGHTS" means all PATENTS and PATENT APPLICATIONS
CONTROLLED by COMPANY that are necessary for NEKTAR AL in connection with NEKTAR
AL's performance of its obligations under this AGREEMENT.

1.13 "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 7.1.

1.14 "CONJUGATE" has the meaning set forth in Section 3.3.

1.15 "CONTROL(LED)" means the ability to grant a license or sublicense as
provided for herein without violating the terms of any agreement or other
arrangement with any THIRD PARTY.

1.16 "DISCLOSING PARTY" means the PARTY disclosing CONFIDENTIAL INFORMATION to
the other PARTY hereunder.

1.17 "DOLLAR(S)" means United States dollars.

1.18 "EMEA" means the European Medicines Agency, and any successor agency
thereto, having the administrative authority to regulate the marketing of human
pharmaceutical products, biological therapeutic products and delivery systems in
the European Union.

1.19 "FDA" means the United States Food and Drug Administration, or any
successor entity that may be established hereafter which has substantially the
same authority or responsibility currently vested in the United States Food and
Drug Administration.

1.20 "FIELD" means the treatment, prevention or diagnosis of human diseases,
disorders or conditions (other than Hemophilia A).

1.21 "FIRST COMMERCIAL SALE" means, with respect to SELECTED PRODUCT, the first
sale by COMPANY or its SUBLICENSEE to a THIRD PARTY following receipt of
MARKETING AUTHORIZATION in the country of sale; provided, however, that SELECTED
PRODUCT shipped by COMPANY or its SUBLICENSEE to a THIRD PARTY prior to receipt
of MARKETING AUTHORIZATION therefor in a particular country where such SELECTED
PRODUCT is intended for sale, shall be deemed for the purposes hereof a FIRST
COMMERCIAL SALE to the extent such SELECTED PRODUCT is sold to a THIRD PARTY for
sale in that country after such MARKETING AUTHORIZATION is obtained.

                                                                    Page 4 of 70
<PAGE>

1.22 "INQUIRIES" has the meaning set forth in Section 8.3.

1.23 "INVENTIONS" means any and all ideas, concepts, methods, procedures,
processes, improvements, inventions and discoveries, whether or not patentable,
that are conceived or made after the EFFECTIVE DATE during and in the course of
the performance of activities conducted under this AGREEMENT including the
development or manufacture of SELECTED PRODUCT.

1.24 "JOINT INVENTION" has the meaning set forth in Section 11.3.

1.25 "JOINT PATENT APPLICATIONS" has the meaning set forth in Section 11.7.

1.26 "KNOW-HOW" means all technical, scientific and other know-how, data,
materials, information, trade secrets, ideas, formulae, inventions, discoveries,
processes, machines, manufactures, compositions of matter, improvements,
protocols, techniques, works of authorship, and results of experimentation and
testing (whether or not patentable) in written, electronic, oral or any other
form.

1.27 "LAW(S)" means any local, state or federal rule, regulation, statute or law
in the United States or any foreign country relevant to the activities
undertaken pursuant to this AGREEMENT or applicable to either of the PARTIES
with respect to any matters set forth herein.

1.28 "MANAGING COMMITTEE" means the committee described in Section 14.1.

1.29 "MARKETING AUTHORIZATION" means the requisite governmental approval for the
marketing and sale of SELECTED PRODUCT in a given country.

1.30 "MSA" has the meaning set forth in Section 4.9.

                                                                    Page 5 of 70
<PAGE>

1.31 "NEKTAR AL CORE TECHNOLOGY" means: (i) the composition of REAGENTS
(including SELECTED REAGENT); (ii) methods of using REAGENTS (including SELECTED
REAGENT) by themselves or in combination; (iii) methods of making, processing,
analyzing or characterizing REAGENTS (including SELECTED REAGENT) or products
(including SELECTED PRODUCT) incorporating REAGENT by means of covalent chemical
bonding; (iv) methods of attaching one or more REAGENTS (including SELECTED
REAGENT) to or associating one or more REAGENTS (including SELECTED REAGENT)
with or to any therapeutic agent (including the THERAPEUTIC AGENT); (v) methods
of directing or determining the point of attachment of one or more REAGENTS
(including SELECTED REAGENT) to or associating one or more REAGENTS (including
SELECTED REAGENT) with any therapeutic agent (including the THERAPEUTIC AGENT);
(vi) the chemical structure of product (including the chemical structure of
SELECTED PRODUCT) obtained by attaching or associating one or more REAGENTS
(including by PEGYLATION and including SELECTED REAGENT) to or with any
therapeutic agent (including the THERAPEUTIC AGENT) but for the avoidance of
doubt, excluding the chemical structure and composition of THERAPEUTIC AGENT;
and (vii) methods of making, formulating, combining, processing, using,
analyzing or characterizing two (2) or more REAGENTS (including SELECTED
REAGENT) in combination.

1.32 "NEKTAR AL CORE TECHNOLOGY INVENTIONS" has the meaning set forth in Section
11.4.

1.33 "NEKTAR AL INDEMNITEE" has the meaning set forth in Section 10.1.2.

1.34 "NEKTAR AL KNOW-HOW" means all KNOW-HOW that

      (a) is owned in whole or in part by NEKTAR AL, or licensed to NEKTAR AL as
of the EFFECTIVE DATE; or

      (b) that becomes owned in whole or in part by NEKTAR AL during the TERM;
or

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<PAGE>

      (c) that is licensed to NEKTAR AL during the TERM with the right to grant
a sublicense;

in each case that is necessary or useful for COMPANY to develop, make, have
made, use, sell, offer for sale or import SELECTED PRODUCT pursuant to the
license granted under Sections 2.1 and 3.2 of this AGREEMENT, but excluding
KNOW-HOW for manufacture of SELECTED REAGENT and/or methods for delivery of
SELECTED PRODUCT to a patient by a means other than injection.

1.35 "NEKTAR AL LICENSED TECHNOLOGY" means, collectively, the NEKTAR AL PATENT
RIGHTS and NEKTAR AL KNOW-HOW.

1.36 "NEKTAR AL MATERIALS" has the meaning set forth in Section 3.3.

1.37 "NEKTAR AL PATENT RIGHTS" means all PATENTS and PATENT APPLICATIONS (a)
that are owned in whole or in part by NEKTAR AL, or licensed to NEKTAR AL, as of
the EFFECTIVE DATE, (b) that become owned in whole or in part by NEKTAR AL at
any time during the TERM, or (c) that are licensed to NEKTAR AL after the
EFFECTIVE DATE, with the right to grant a sublicense, in each of the foregoing
cases ((a), (b) and (c)), to the extent that such PATENTS or PATENT APPLICATIONS
are infringed (in the case of a pending patent application, would be infringed
if granted) by making, having made, using, selling, offering to sell or
importing SELECTED PRODUCT and/or the SELECTED REAGENT in accordance with the
terms of the license granted under Section 2.1 or Section 3.2 of this AGREEMENT.

1.38 "NET SALES" means the amount invoiced (or in the absence of an invoice,
received) by COMPANY, its AFFILIATES or SUBLICENSEES for the sale to THIRD
PARTIES (including without limitation, distributors) of SELECTED PRODUCT less
the following, to the extent included in the amount invoiced:

            (i) trade, quantity and/or cash discounts, allowances or rebates,
including promotional or similar discounts or rebates and discounts or rebates
to governmental or managed care organizations, in each case to the extent
reasonable and customary;

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<PAGE>

            (ii) credits or allowances with respect to SELECTED PRODUCT by
reason of rejection, defects, recalls or returns, or chargebacks;

            (iii) an allowance for bad debt not to exceed ([***] percent
([***]%)) of NET SALES, provided such amounts are included in NET SALES if and
when subsequently collected;

            (iv) any tax, tariff, duty or government charge (including any
sales, value added, excise or similar tax or government charge, but excluding
any income tax) levied on the sale, transportation or delivery of any SELECTED
PRODUCT; and

            (v) any charges for freight, postage, shipping or transportation, or
for insurance (if charged to the purchaser).

      NET SALES shall be deemed to accrue upon the date of the invoice for
SELECTED PRODUCT. In addition, NET SALES by COMPANY hereunder are subject to the
following:

            (a) In the case of pharmacy incentive programs, hospital performance
      incentive program charge backs, disease management programs, similar
      programs or discounts on "bundles" of products, all discounts and the like
      shall be allocated among products on the basis on which such discounts and
      the like were accrued, or if such basis cannot be determined,
      proportionately to the list prices of such products; and

            (b) In the case of any sale or other disposal of SELECTED PRODUCT by
      COMPANY to an AFFILIATE, for resale, the NET SALES shall be calculated as
      above on the value charged or invoiced on the first arm's length sale to a
      THIRD PARTY.

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      If the SELECTED PRODUCT is sold as part of a COMBINATION PRODUCT, then the
NET SALES from the COMBINATION PRODUCT, for the purposes of determining royalty
payments, shall be determined by multiplying the NET SALES of the COMBINATION
PRODUCT (as determined using the standard NET SALES definition), during the
applicable royalty reporting period, by the fraction, A/A+B, where A is the
average unit net sales price of the SELECTED PRODUCT in the applicable country,
where net sales is calculated in the same manner as NET SALES, when sold
separately in finished form and B is the average unit net sales price in the
same country (net sales being calculated in the same manner as NET SALES) of
products that include only the therapeutically active ingredient other than the
SELECTED PRODUCT that is included in the COMBINATION PRODUCT ("OTHER PRODUCTS")
when such OTHER PRODUCTS are sold separately in finished form at the same dosage
levels, in each case during the applicable royalty reporting period or, if sales
of both the SELECTED PRODUCT, and the OTHER PRODUCT(S) did not occur in the same
country in such period, then in the most recent royalty reporting period in
which sales of both occurred. In the event that such average unit sale price
cannot be determined for both the SELECTED PRODUCT and all such OTHER PRODUCT(S)
included in the COMBINATION PRODUCT, NET SALES for the purposes of determining
royalty payments shall be calculated by multiplying the NET SALES of the
COMBINATION PRODUCT by the fraction of C/C+D where C is the fair market value of
the SELECTED PRODUCT, and D is the fair market value of all OTHER PRODUCTS
included in the COMBINATION PRODUCT, as agreed by the PARTIES as follows:
COMPANY shall initially make a reasonable determination of such fair market
values for purposes of its royalty reporting and payments and shall advise
NEKTAR AL of its basis for such determination. NEKTAR AL shall have the right to
review such COMPANY determination and supporting data with respect to fair
market value, and to notify COMPANY if it disagrees with such determination. If
NEKTAR AL does not agree with such determination and if the PARTIES are unable
to agree in good faith as to such respective fair market values, then the
determination of fair market value shall be determined by an independent THIRD
PARTY.

                                                                    Page 9 of 70
<PAGE>

      NET SALES will be determined in accordance with GAAP consistently applied.

1.39 "NON-DISCLOSURE AGREEMENT" means that agreement entered into between the
PARTIES on July 15, 2005 providing for confidential treatment of the PARTIES'
information.

1.40 "PATENT" means: (i) any letters patent and utility models including any
extension, substitution, registration, confirmation, reissue, supplemental
protection certificate, re-examination or renewal thereof; and (ii) to the
extent valid and enforceable rights are granted by a governmental authority
thereunder, a PATENT APPLICATION (and in each case any foreign counterpart
thereto).

1.41 "PATENT APPLICATION" means an application for letters patent, including a
provisional application, converted provisional application, continuation
application, a continued prosecution application, a continuation-in-part
application, a divisional application, a re-examination application, and a
reissue application (and in each case any foreign counterpart thereto).

1.42 "PEG" means poly(ethylene) glycol or a derivative thereof.

1.43 "PEGYLATION," with correlative meanings "PEGYLATED" or to "PEGYLATE", means
covalent chemical bonding of any REAGENT (including SELECTED REAGENT and
including covalent chemical bonding through linking groups) with or to another
material or materials. Such materials include, without limitation, proteins,
peptides, oligonucleotides, other biomolecules, small molecules, therapeutic
agents (including THERAPEUTIC AGENT), diagnostic agents, imaging agents and
detectable labels. Additional materials that may be PEGYLATED include without
limitation, polymers, liposomes, films, chemical separation and purification
surfaces, solid supports, metal/metal oxide surfaces and other surfaces such as,
by way of example but not limitation, those on implanted devices, and equipment,
where a REAGENT is covalently chemically bonded to one or more reactive
molecules on the surface of such device or equipment. "PEGYLATION" shall include
the synthesis, derivatization, characterization, and modification of PEG for

                                                                   Page 10 of 70
<PAGE>

such purposes, together with the synthesis, derivatization, characterization,
and modification of the raw materials and intermediates for the manufacture of
REAGENTS (including SELECTED REAGENT) or products (including SELECTED PRODUCT)
incorporating such REAGENT by means of covalent chemical bonding, and all
methods of making and using each and all of the foregoing.

1.44 "PHASE I CLINICAL TRIAL" means a study in humans, conducted in accordance
with 21 C.F.R. ss. 312.21(a), as amended from time to time or any successor
regulation thereto, including, as applicable, the corresponding regulation in
jurisdictions other than the United States.

1.45 "PHASE III CLINICAL TRIAL" means a study in humans, conducted in accordance
with 21 C.F.R. ss. 312.21(c) as amended from time to time or any successor
regulation thereto, including, as applicable, the corresponding regulation in
jurisdictions other than the United States.

1.46 "PLAN" means the work plan attached hereto as Schedule I.

1.47 "PURCHASE PRICE" has the meaning set forth in Section 4.5.1.

1.48 "REAGENT" means a PEG derivative used in the manufacture of a
pharmaceutical or diagnostic product or medical device.

1.49 "RECIPIENT" means the PARTY receiving CONFIDENTIAL INFORMATION hereunder.

1.50 "RESEARCH COMMITTEE" means the committee described in Section 14.2.

1.51 "RESEARCH PROGRAM" means the PARTIES' respective activities and
responsibilities as set forth in the PLAN attached hereto as Schedule I and made
a part hereof, and COMPANY's payment obligations in respect thereof.

1.52 "RESPONSIBLE PARTY" has the meaning set forth in Section 11.7.

1.53 "ROYALTY TERM" means, with respect to SELECTED PRODUCT in each country in
the world, the period of time commencing on the date of the FIRST COMMERCIAL

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<PAGE>

SALE of the first SELECTED PRODUCT in such country and expiring for such a
SELECTED PRODUCT in such country upon the later of: (a) [***] years after such
FIRST COMMERCIAL SALE of such SELECTED PRODUCT; and (b) the expiration date of
the last VALID CLAIM in such country that is infringed in such country by the
manufacture, use, importation, sale or offer to sell SELECTED REAGENT or such
SELECTED PRODUCT.

1.54 "SELECTED PRODUCT" means the chemical entity resulting from attachment of
the THERAPEUTIC AGENT to the SELECTED REAGENT by means of PEGYLATION, as
formulated, packaged and sold in finished form.

1.55 "SELECTED REAGENT" means the REAGENT that is selected by the RESEARCH
COMMITTEE pursuant to the RESEARCH PROGRAM to be attached to the THERAPEUTIC
AGENT by means of PEGYLATION.

1.56 "SOLE INVENTION" has the meaning set forth in Section 11.3.

1.57 "SPECIFICATIONS" has the meaning set forth in Section 4.7.

1.58 "SUBLICENSEE" means any person or entity, including AFFILIATES, to which
COMPANY grants a sublicense (i) to research and/or develop SELECTED PRODUCT, or
(ii) to make, have made, use, sell, have sold and/or import SELECTED PRODUCT.

1.59 "TERRITORY" means the world.

1.60 "TERM" has the meaning set forth in Section 13.1.

1.61 "THERAPEUTIC AGENT" means human recombinant butyrylcholinesterase (BChE)
having the amino acid sequence shown in Schedule II or having an amino acid
sequence with ([***]%) sequence identity to such human BChE sequence or a
fragment of such a BChE and in each case which has activity of human recombinant
butyrylcholinesterase (BChE).

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1.62 "THIRD PARTY" means any entity other than NEKTAR AL, COMPANY and their
respective AFFILIATES.

1.63 "VALID CLAIM" means either: (a) a claim of an issued and unexpired PATENT
covering the manufacture, use, import, sale or offer for sale of SELECTED
REAGENT or SELECTED PRODUCT, which PATENT is owned or CONTROLLED by NEKTAR AL or
jointly by the PARTIES and has not (i) expired or been canceled, (ii) been
declared invalid by an unreversed and unappealable or unappealed decision of a
court or other appropriate body of competent jurisdiction, (iii) been admitted
to be invalid or unenforceable through reissue, disclaimer, or otherwise, or
(iv) been abandoned; or (b) a claim filed and kept pending in good faith that is
included in a PATENT APPLICATION, provided that such PATENT APPLICATION has not
been pending for the longer of [***] years from the EFFECTIVE DATE or for more
than [***] years from the earliest priority date to which the PATENT APPLICATION
is entitled.

2. Licenses to NEKTAR AL LICENSED TECHNOLOGY and COMPANY Technology

2.1 License to COMPANY. Subject to the terms and conditions of this AGREEMENT
and upon selection of the SELECTED REAGENT pursuant to Section 3.4, NEKTAR AL
agrees to grant and hereby grants to COMPANY a worldwide, exclusive,
royalty-bearing license, with the right to grant sublicenses as provided in
Section 2.2, in the NEKTAR AL LICENSED TECHNOLOGY solely to use SELECTED REAGENT
for and to research, develop, make, have made, import, use, offer for sale and
sell SELECTED PRODUCT in the FIELD and in the TERRITORY. Except as may be
provided in the MSA, no license is granted to make or have made SELECTED
REAGENT.

2.2 Terms of Sublicense. Subject to Section 3.4, COMPANY shall have the right to
grant sublicenses under the rights and licenses granted to COMPANY under this
Agreement subject to the terms of this Agreement; provided, however, COMPANY

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shall neither grant a sublicense to nor exercise COMPANY's rights under Section
2.1 to have made SELECTED PRODUCT by an AFFILIATE or THIRD PARTY in either case
when such AFFILIATE or THIRD PARTY, at the time of the proposed grant of a
sublicense or exercise of COMPANY's rights under Section 2.1 to have made
SELECTED PRODUCT, is engaged in the business of manufacturing REAGENTS or
attaching REAGENTS to pharmaceutical or biotechnology products, without NEKTAR
AL's prior written consent, provided however that no such consent shall be
required with respect to a CMO listed on Schedule III. Notwithstanding the
foregoing, NEKTAR AL's prior written consent shall no longer be required after
(i) first dosing in a phase III clinical study of the SELECTED PRODUCT in
primate animals for BIODEFENSE SALES or (ii) first dosing in a human in a PHASE
III CLINICAL TRIAL of the SELECTED PRODUCT in the FIELD. The sublicense shall be
consistent with the terms and conditions of this AGREEMENT. COMPANY's grant of
any sublicense shall not relieve COMPANY from any of its obligations (including
without limitation financial obligations) or liability under this AGREEMENT.
Without limiting the foregoing, COMPANY shall require that each SUBLICENSEE
comply with the provisions of Sections 2.4, 2.7, 2.8, 6.1, 6.2, 8.3, 8.4, 9.5,
17.9 and 17.12 and Articles 7, 10, 11, and 12 of this AGREEMENT; provided,
however, that to the extent that the U.S. government or agency thereof is a
SUBLICENSEE, COMPANY shall not be required to include in a sublicense agreement
provisions to comply with Section 2.7.1, and/or Articles 10, 11 or 12 of this
AGREEMENT. Notwithstanding the foregoing or anything to the contrary herein, if
COMPANY is unwilling or unable to enforce any SUBLICENSEE's (including without
limitation the U.S. government or agency thereof) compliance with any of the
foregoing Sections or Articles, then NEKTAR AL shall have the right to terminate
this AGREEMENT under Section 13.2.

2.3 NEKTAR AL Research Rights and Limitations. Notwithstanding anything to the
contrary in this AGREEMENT and without limiting any other retained rights, the
license granted under Section 2.1 shall be subject to the retained right of
NEKTAR AL and its AFFILIATES: (i) to practice the NEKTAR AL LICENSED TECHNOLOGY
for the conduct of research and development of products that it is developing
either itself or with others that are not SELECTED PRODUCTS, and in connection

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with the sale of REAGENTS through NEKTAR AL's catalog for research purposes;
(ii) to develop, make, have made, use, sell, offer for sale, import and license
products other than SELECTED PRODUCT, including products containing SELECTED
REAGENT that are not SELECTED PRODUCTS; and (iii) to practice the NEKTAR AL
LICENSED TECHNOLOGY solely to the extent necessary or useful to perform its
obligations under this AGREEMENT.

2.4 No Implied Rights or Licenses. Neither PARTY grants to the other PARTY any
rights or licenses, including without limitation to any PATENTS, PATENT
APPLICATIONS, KNOW -HOW or other intellectual property rights, whether by
implication, estoppel or otherwise, except to the extent expressly provided for
under this AGREEMENT. Other than as expressly provided for or licensed herein or
in the MSA, COMPANY is not authorized or licensed to develop, make, have made,
use, sell, offer for sale or import NEKTAR AL MATERIALS or SELECTED REAGENT.
Except as expressly permitted by or licensed under this AGREEMENT or the MSA,
COMPANY may not copy, distribute, reverse engineer (except for quality control)
(by way of example but not limitation, by performing tests such as HPLC, gas
chromatography or x-ray crystallography), sell, lease, license or otherwise
transfer, modify, adapt or create derivatives of any NEKTAR AL MATERIALS or
SELECTED REAGENT.

2.5 License to NEKTAR AL. COMPANY hereby grants to NEKTAR AL a non-exclusive,
worldwide, royalty-free license, with the right to grant and authorize the grant
of sublicenses under the COMPANY KNOW-HOW owned by the COMPANY and COMPANY
PATENT RIGHTS owned by the COMPANY only to the extent useful or necessary for
NEKTAR AL to fulfill its obligations under this AGREEMENT.

2.6 Use of Therapeutic Agent. COMPANY hereby acknowledges and agrees that
COMPANY has the right to transfer to NEKTAR AL the THERAPEUTIC AGENT that
COMPANY will transfer to NEKTAR AL for performing work pursuant to the RESEARCH
PROGRAM and that NEKTAR AL has the right to use the THERAPEUTIC AGENT for
performing work pursuant to the RESEARCH PROGRAM. NEKTAR AL acknowledges and

                                                                   Page 15 of 70
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agrees that COMPANY shall retain all right, title and interest in and to such
transferred THERAPEUTIC AGENT and that NEKTAR AL will not use or transfer such
THERAPEUTIC AGENT to a THIRD PARTY except for use in connection with the
RESEARCH PROGRAM.

2.7 Covenants.

      2.7.1 COMPANY covenants and agrees that neither it nor COMPANY's
AFFILIATES will use the SELECTED REAGENT or the PEGYLATION process transferred
by NEKTAR AL to COMPANY with respect to producing SELECTED PRODUCT or any
CONFIDENTIAL INFORMATION of NEKTAR AL provided by NEKTAR AL to COMPANY for any
purpose other than for research, development, making, having made, selling,
offering for sale and/or importing SELECTED PRODUCT in accordance with the
licenses granted under this AGREEMENT. A breach of this covenant that results in
material harm to NEKTAR AL shall be a material breach of this AGREEMENT. COMPANY
covenants and agrees to cease any non-permitted use and to take all necessary
actions to assign to NEKTAR AL any inventions made through use of CONFIDENTIAL
INFORMATION of NEKTAR AL outside the scope of the license rights granted
hereunder.

      2.7.2 Other than for the purposes of obtaining MARKETING AUTHORIZATION of
SELECTED PRODUCT, and except as may be permitted by the MSA COMPANY agrees not
to disclose to any foreign government or agency thereof any of the CONFIDENTIAL
INFORMATION of NEKTAR AL that is provided to COMPANY pursuant to this AGREEMENT.
Except as permitted by the MSA and/or except as permitted pursuant to NEKTAR
AL's prior written consent, COMPANY shall not enter into an agreement with a
foreign government or agency thereof that requires NEKTAR AL to disclose to a
foreign government or agency thereof CONFIDENTIAL INFORMATION with respect to
SELECTED REAGENT.

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2.8 Diligence.

      2.8.1 COMPANY shall use COMMERCIALLY REASONABLE EFFORTS (a) to perform any
other activities or undertakings assigned to it under the PLAN in accordance
with this AGREEMENT, (b) to develop and obtain BLA approval for SELECTED PRODUCT
for BIODEFENSE SALES in accordance with the outline of Schedule IV, and (c) to
market, promote, distribute and sell SELECTED PRODUCT for BIODEFENSE SALES in
each country in the TERRITORY within [***] months after receiving the approval
of the BLA for such SELECTED PRODUCT in such country. The remedy for the failure
to meet such obligation will be handled according to Section 13.2; except that
with respect to Section 2.8.1 (c), such remedy shall apply only to the
applicable country; however, if the failure is primarily due to a suspension of
government funding of development of SELECTED PRODUCT or the government or
government agency causing a delay or suspension of such development work, and in
each case provided that COMPANY has not caused such suspension or delay (a
"GOVERNMENT DELAY"), there shall be no breach and the obligation shall be
suspended until the GOVERNMENT DELAY is terminated unless the GOVERNMENT DELAY
exceeds [***] consecutive months, in which case NEKTAR AL, by written notice to
COMPANY, may convert the exclusive license granted under this AGREEMENT with
respect to BIODEFENSE SALES to a non-exclusive license with respect to
BIODEFENSE SALES. In addition to (and without limiting) the foregoing general
diligence obligation, COMPANY shall meet the following objectives by the
following dates (each, a "DEVELOPMENT DATE"):

      First dosing of the first patient in a PHASE I CLINICAL TRIAL with respect
to SELECTED PRODUCT for BIODEFENSE SALES by [***]; and

      Submission of the first BLA for SELECTED PRODUCT with respect to SELECTED
PRODUCT for BIODEFENSE SALES by [***].

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In the event that COMPANY has not successfully achieved a DEVELOPMENT DATE,
NEKTAR AL may terminate this AGREEMENT in accordance with Section 13.2, except
in the case of a GOVERNMENTAL DELAY, in which case the applicable DEVELOPMENT
DATES shall be extended by the aggregate period of GOVERNMENT DELAY. Without
limiting the foregoing, if COMPANY's inability to achieve a DEVELOPMENT DATE is
due to (a) an event of Force Majeure, or (b) any material breach of this
AGREEMENT by NEKTAR AL, or (c) any regulatory delays, in each case that
materially and adversely affects COMPANY's ability to meet the relevant
deadline, then the applicable DEVELOPMENT DATE shall be extended by a period of
time equivalent to the length of such delay; provided, however, that in no event
shall a DEVELOPMENT DATE be extended more than (i) [***] years, in any one
instance, or (ii) [***] years, in the aggregate, during TERM.

2.8.2 COMPANY shall use COMMERCIALLY REASONABLE EFFORTS to (a) develop and
obtain BLA approval for SELECTED PRODUCT for sales other than BIODEFENSE SALES
(such other sales being "COMMERCIAL SALES"), and (b) market, promote, distribute
and sell SELECTED PRODUCT for COMMERCIAL SALES in each country in the TERRITORY
within [***] months after receiving the approval of the BLA for such SELECTED
PRODUCT in such country. The sole and exclusive remedy for the breach of either
such obligation is termination of the license granted under this AGREEMENT with
respect to SELECTED PRODUCT for COMMERCIAL SALES by written notice from NEKTAR
AL to COMPANY, except that with respect to Section 2.8.2(b), such remedy shall
apply only to the applicable country. In addition to (and without limiting) the
foregoing general diligence obligation, COMPANY shall meet the following
objectives by the following dates (each, a "COMMERCIAL DEVELOPMENT DATE"):

      First dosing of the first patient in a PHASE I CLINICAL TRIAL with respect
to SELECTED PRODUCT for COMMERCIAL SALES by [***]; and

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      Submission of the first BLA for SELECTED PRODUCT with respect to SELECTED
PRODUCT for COMMERCIAL SALES by [***].

      In the event that COMPANY has not successfully achieved a COMMERCIAL
DEVELOPMENT DATE, as the sole and exclusive remedy, NEKTAR AL may terminate the
license granted under this AGREEMENT with respect to SELECTED PRODUCT for
COMMERCIAL SALES by written notice to COMPANY. Without limiting the foregoing,
if COMPANY's inability to achieve a COMMERCIAL DEVELOPMENT DATE is due to (a) an
event of Force Majeure, or (b) any material breach of this AGREEMENT by NEKTAR
AL, or (c) any regulatory delays, in each case that materially and adversely
affects COMPANY's ability to meet the relevant deadline, then the applicable
DEVELOPMENT DATE shall be extended by a period of time equivalent to the length
of such delay; provided, however, that in no event shall a COMMERCIAL
DEVELOPMENT DATE be extended more than (i) [***] years, in any one instance, or
(ii) [***] years, in the aggregate, during TERM.

3. RESEARCH PROGRAM

3.1 PLAN. NEKTAR AL and COMPANY shall use COMMERCIALLY REASONABLE EFFORTS to
collaborate and cooperate in researching and developing the SELECTED PRODUCT as
specified in the PLAN for the RESEARCH PROGRAM that is attached hereto as
Schedule I and made a part hereof. In consideration of NEKTAR AL's performance
under the PLAN, COMPANY shall make the payments to NEKTAR AL as provided in
Schedule I.

3.2 Research Licenses. In addition to the licenses granted under Section 2.1,
NEKTAR AL hereby grants to COMPANY a non-assignable, non-exclusive,
royalty-free, sublicensable (but only to the parties listed in Schedule III)
license under PATENTS, PATENT APPLICATIONS and KNOW HOW owned by NEKTAR AL for
the sole purpose of performing COMPANY's activities under the PLAN. For clarity,

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other than the THIRD PARTIES listed in Schedule III, COMPANY shall not have the
right to use any THIRD PARTY in connection with the performance of its
activities under the PLAN, except with the prior written consent of NEKTAR AL
which consent may be withheld at NEKTAR AL's sole discretion.

3.3 NEKTAR AL Materials. Any samples of REAGENTS or chemical entities that are
the product of the covalent chemical attachment of a REAGENT to a therapeutic
agent (including the THERAPEUTIC AGENT) ("CONJUGATES") that are provided by
NEKTAR AL to COMPANY in the course of the PLAN (collectively, the "NEKTAR AL
MATERIALS") are owned exclusively by NEKTAR AL and provided solely for the
performance of the PLAN and for no other purpose. Without limitation, except as
authorized by the licenses of Section 2.1 and Section 3.2, COMPANY will not use
any such NEKTAR AL MATERIALS (i) in any research or other activities except for
the PLAN, (ii) or any derivative products thereof in humans, or (iii) for any
commercial purpose. COMPANY understands and agrees that the NEKTAR AL MATERIALS
may have unpredictable and unknown biological and/or chemical properties, and
that they are to be handled and used with caution. COMPANY will handle and use
the NEKTAR AL MATERIALS and conduct its activities under the PLAN in compliance
with LAWS and the terms of this AGREEMENT. COMPANY will maintain reasonable
security measures, no less strict than it maintains to protect its own valuable
tangible property against loss, theft or destruction. Except as permitted in
accordance with Schedule III or expressly authorized in or licensed under this
AGREEMENT, COMPANY will not sell, transfer, disclose or otherwise provide access
to any NEKTAR AL MATERIALS to any THIRD PARTY, without the prior written consent
of NEKTAR AL.

3.4 Selection of SELECTED REAGENT; Technology Transfer and Assistance.

      3.4.1 The RESEARCH COMMITTEE shall select the SELECTED REAGENT(S) and,
following such selection, NEKTAR AL shall (i) transfer to COMPANY and/or a THIRD
PARTY designated by COMPANY and approved by NEKTAR AL, all of the NEKTAR AL
KNOW-HOW necessary for enabling COMPANY and/or such THIRD PARTY to attach the
SELECTED REAGENT to the THERAPEUTIC AGENT by means of PEGYLATION, which shall

                                                                   Page 20 of 70
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include a description of the synthetic and analytical methods for the SELECTED
PRODUCT and (ii) reasonably assist in the technical transfer of such NEKTAR AL
KNOW-HOW, including such synthetic and analytical methods at the laboratory
scale used in the RESEARCH PROGRAM. The CMO's listed in Schedule III and
permitted SUBLICENSEES are hereby approved by NEKTAR AL, as a THIRD PARTY who
can be designated by COMPANY for such transfer. After dosing of a first primate
in a phase III clinical trial with respect to a SELECTED PRODUCT for BIODEFENSE
SALES or first dosing of a human patient in a PHASE III CLINICAL TRIAL of the
SELECTED PRODUCT in the FIELD, the approval of NEKTAR AL shall not be required
for such transfer to any THIRD PARTY whether or not such THIRD PARTY is on
Schedule III.

      3.4.2 If, following NEKTAR AL's receipt of COMPANY's notice to proceed
with the use of a SELECTED REAGENT in accordance with Section 12.1.5, NEKTAR AL
reasonably believes that the use of such SELECTED REAGENT for the SELECTED
PRODUCT may pose a risk of infringement or misappropriation of THIRD PARTY
intellectual property rights that have been identified by either PARTY, within
thirty (30) days after such notice from COMPANY, NEKTAR AL shall notify COMPANY
and identify such intellectual property rights to COMPANY. In such case, COMPANY
shall have the right to cause NEKTAR AL to proceed with such SELECTED REAGENT
for the SELECTED PRODUCT if, and only if, (x) COMPANY assumes sole and exclusive
responsibility for making any and all payments to any and all THIRD PARTIES
arising out of the manufacture, use, sale offer for sale or import of such
SELECTED REAGENT used in SELECTED PRODUCT, and (y) in accordance with Section
10.1.2, COMPANY assumes sole and exclusive responsibility for indemnifying any
and all NEKTAR AL INDEMNITEES against any CLAIMS based on infringement or
misappropriation of such identified THIRD PARTY intellectual property arising
from the use, manufacture, sell, offer for sale, or import of such SELECTED
REAGENT or SELECTED PRODUCT, and (z) NEKTAR AL's royalties are not reduced as a
result thereof.

      3.4.3 NEKTAR AL shall provide COMPANY and/or a THIRD PARTY designated by
COMPANY (subject to the limitations of Sections 2.2 and 3.4) with the technical

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<PAGE>

assistance reasonably requested by COMPANY and agreed in writing by NEKTAR AL in
order to manufacture and produce SELECTED PRODUCT from SELECTED REAGENT for
research, development, clinical trials and commercialization of SELECTED
PRODUCT. COMPANY shall pay NEKTAR AL for such technical assistance at a rate
agreed to by the PARTIES to compensate NEKTAR AL for the cost (including FTE
time) and expenses associated with such technical assistance.

      3.4.4 NEKTAR AL shall assist COMPANY with respect to selecting a SELECTED
REAGENT and a CMO for producing SELECTED PRODUCT incorporating such SELECTED
REAGENT. In this respect NEKTAR AL shall assist COMPANY by providing, to the
CMO's listed in Schedule III, certain information that will enable such CMOs to
assess the manufacturability of a potential SELECTED PRODUCT utilizing potential
SELECTED REAGENT; provided however, COMPANY shall not make any disclosures of
such information to such CMO's except with NEKTAR AL, and in no event shall
COMPANY disclose any NEKTAR AL CONFIDENTIAL INFORMATION related to REAGENTS or
CONJUGATES without NEKTAR AL's prior written consent, such consent not to be
unreasonably withheld.

      3.4.5 NEKTAR AL shall provide reports to COMPANY as provided for in
Schedule I..

3.5 Disclaimer of Warranty. EXCEPT FOR THE WARRANTIES MADE BY EACH PARTY IN
SECTION 4.10 AND ARTICLE 9 OF THIS AGREEMENT, NEITHER PARTY PROVIDES WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE PLAN OR ANY REAGENT, CONJUGATE, PRODUCT OR
DELIVERABLE PROVIDED PURSUANT TO THE PLAN, AND DISCLAIMS ALL EXPRESS AND IMPLIED
WARRANTIES, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH
RESPECT THERETO. MOREOVER, EXCEPT FOR THE WARRANTIES MADE BY EACH PARTY IN
SECTION 4.10 AND ARTICLE 9 OF THIS AGREEMENT, NEITHER PARTY PROVIDES WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE NEKTAR AL LICENSED TECHNOLOGY, SELECTED

                                                                   Page 22 of 70
<PAGE>

REAGENT OR SELECTED PRODUCT (INCLUDING THE SUCCESSFUL DEVELOPMENT, REGISTRATION,
MANUFACTURE OR COMMERCIALIZATION OF SELECTED PRODUCT), AND EXCEPT FOR THE
WARRANTIES MADE IN SECTION 4.10 AND ARTICLE 9 OF THIS AGREEMENT, EACH PARTY
DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

3.6 Records. NEKTAR AL shall maintain records, in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes, which shall
fully and properly reflect all work done and results achieved in the performance
of its work pursuant to the RESEARCH PROGRAM. At the reasonable request of
COMPANY following the conclusion of an applicable stage of the RESEARCH PROGRAM,
NEKTAR AL shall provide COMPANY with copies of the above-described records.
COMPANY shall have the right, twice per calendar year, during normal business
hours and upon reasonable notice, to inspect the above-described records as
applicable to COMPANY's performance of its activities under the PLAN (including
COMPANY's production of SELECTED PRODUCT by PEGYLATION with the SELECTED
REAGENT).

3.7 Reports. At each Committee meeting during the RESEARCH PROGRAM, each PARTY
shall provide to the other PARTY a report on the progress and evaluate the work
performed in relation to the RESEARCH PROGRAM. Such report shall include all
other information reasonably requested by the other PARTY relating to such
progress and reasonably necessary to assess the completion of the other PARTY's
activities under the PLAN.

4. Manufacture and Supply of SELECTED REAGENT

4.1 Manufacturing Process Development. Upon selection of a SELECTED REAGENT, if
not established, NEKTAR AL shall establish a manufacturing process for SELECTED
REAGENT in order to meet the obligations of NEKTAR AL with respect to
manufacture of SELECTED REAGENT for use in pre-clinical development and in PHASE

                                                                   Page 23 of 70
<PAGE>

I CLINICAL TRIALS under this AGREEMENT. NEKTAR AL agrees to establish such
manufacturing process on a fixed fee basis based on NEKTAR AL's then current
rates, which shall be payable by COMPANY in installments as set forth in the
applicable work order agreed upon by the PARTIES. The fixed fee to be charged by
NEKTAR AL shall be inclusive of all work and materials and NEKTAR AL shall
notify COMPANY thereof in writing promptly after selection of the SELECTED
REAGENT. Such fixed fee shall be approved by COMPANY prior to NEKTAR AL
commencing any such services. Such fixed fee when agreed to by the PARTIES shall
cover NEKTAR AL's performance of all activities appropriate for the development,
scale-up and validation of the manufacture of SELECTED REAGENT, including, but
not limited to:

      (a)   improvements to and expansion of facilities, analytical method
            development, analytical method validation, cleaning method
            validation, process validation, reprocessing, supporting
            documentation including, but not limited to, the preparation, filing
            and maintenance of Drug Master Files and other regulatory filings;

      (b)   NEKTAR AL's generating and providing information or performing work
            pursuant to any governmental or regulatory agency requests for
            information or work (including any testing) regarding SELECTED
            REAGENT or its manufacturing process; and

      (c)   installation, qualification and validation needed for SELECTED
            REAGENT including scale-up.

4.2 Pre-Clinical and Phase I Clinical Supply. Upon establishing a manufacturing
process for SELECTED REAGENT, NEKTAR AL shall manufacture and supply to COMPANY
the SELECTED REAGENT for the purpose of producing SELECTED PRODUCT under the
terms of this Article 4 solely for use in pre-clinical development and PHASE I
CLINICAL TRIALS. NEKTAR AL shall manufacture and produce SELECTED REAGENT in
accordance with applicable laws, rules and regulations and with respect to
SELECTED REAGENT produced for PHASE I CLINICAL TRIALS such work shall be
consistent with ICH Q7A. COMPANY agrees to purchase and NEKTAR AL agrees to
supply one hundred percent (100%) of COMPANY's requirements of such SELECTED
REAGENT for pre-clinical and PHASE I CLINICAL TRIALS.

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<PAGE>

4.3 Forecasts. No later than [***] days after selection of the SELECTED REAGENT,
COMPANY shall provide NEKTAR AL with a [***] quarter rolling forecast of its
requirements of SELECTED REAGENT. COMPANY shall update such forecast at least
[***] days following the start of each calendar quarter. Such forecasts are
estimates and are not binding on either PARTY.

4.4 Purchase Orders. COMPANY shall, from time to time, purchase SELECTED REAGENT
from NEKTAR AL by a written purchase order provided to NEKTAR AL. Each such
purchase order shall be sent to the attention of NEKTAR AL's Contract Management
and shall specify the quantity and requested delivery date of SELECTED REAGENT,
as well as the site to which SELECTED REAGENT is to be shipped; provided,
however, that COMPANY shall not designate in any purchase order a delivery date
that is less than [***] months after the date of such purchase order. No
purchase order shall be binding upon NEKTAR AL until accepted by NEKTAR AL in
writing. NEKTAR AL shall accept such orders for SELECTED REAGENT to the extent
that the quantities of SELECTED REAGENT do not exceed the forecasted amount and
to the extent such order is consistent with the terms of this AGREEMENT. Upon
acceptance of a purchase order, NEKTAR AL shall have each shipment of SELECTED
REAGENT shipped pursuant to its standard shipping procedures and documentation.
Any change to NEKTAR AL's standard shipping procedures and documentation will be
addressed through NEKTAR AL's change control procedures. The terms and
conditions of this AGREEMENT shall govern all purchase orders, notwithstanding
the fact that a purchase order or the standard shipping document may provide for
additional or different obligations of NEKTAR AL than the terms and conditions
of this AGREEMENT. Any such additional or different terms in any such purchase
order or shipping documents are hereby expressly rejected. NEKTAR AL shall
deliver SELECTED REAGENT in the quantities and at the delivery schedules set

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forth in this Section 4.4 provided, however, the specifics thereof will be
mutually agreed to by the PARTIES in writing and set forth in a purchase order
delivered in accordance with this Section 4.4.

4.5 Fees for Manufacturing and Supply of SELECTED REAGENT.

      4.5.1 NEKTAR AL shall supply SELECTED REAGENT to COMPANY at a commercially
reasonable price (the "PURCHASE PRICE"), equal to the BENCHMARK PRICE for such
SELECTED REAGENT as that BENCHMARK PRICE is adjusted as provided for herein. For
the purposes hereof, BENCHMARK PRICE (at a scale of [***]kg or less) means [***]
DOLLARS per gram of the REAGENT [***] (2006 NEKTAR AL catalogue price is $[***]
per gram), and [***] DOLLARS per gram of the REAGENT [***])) (2006 NEKTAR AL
catalogue price is $[***] per gram); if a REAGENT other than [***] is being
considered for selection as a SELECTED REAGENT, prior to selection thereof,
NEKTAR AL shall provide to COMPANY the PURCHASE PRICE of such REAGENT. Prior to
selection of a REAGENT as a SELECTED REAGENT, NEKTAR AL shall disclose to
COMPANY any increase or decrease to the applicable BENCHMARK to reflect the cost
of raw materials for such REAGENT, any process changes related to such REAGENT
and any changes required by LAW. If such REAGENT is selected as the SELECTED
REAGENT such increased or decreased price shall be the PURCHASE PRICE for such
SELECTED REAGENT.

      4.5.2 During the TERM hereof, COMPANY shall pay to NEKTAR AL the PURCHASE
PRICE for the supply of SELECTED REAGENT, which PURCHASE PRICE shall be adjusted
on an annual basis as follows: by November 1st during the TERM, the PURCHASE
PRICE will be:

      (a)   Increased for the following year by adding to the PURCHASE PRICE a
            number obtained by multiplying the then-current PURCHASE PRICE by a
            fraction, the

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            numerator of which is the United States Department of Labor Producer
            Price Index for Chemical Manufacturing Series ID: PCU325---325---
            ("PPI") in the month and year of the EFFECTIVE DATE subtracted from
            the PPI in the month three (3) months prior to November 1st and the
            denominator of which is the PPI in the month and year of the
            EFFECTIVE DATE. If the numerator reflects an increase, the number
            will be added to the PURCHASE PRICE; and

      (b)   increased or decreased for the following year to reflect the then
            current forecasted cost of raw materials for such SELECTED REAGENT,
            any process changes related to such SELECTED REAGENT, and any
            changes required by applicable LAW; in each case to the extent not
            covered by the change to PPI described in Section 4.5.2(a).

4.6 Delivery and Shipment; Title and Risk of Loss. NEKTAR AL shall deliver all
SELECTED REAGENT to COMPANY, and title to and risk of loss of each quantity of
SELECTED REAGENT so delivered shall pass to COMPANY Ex Works (Incoterms 2000)
NEKTAR AL's manufacturing or storage facilities. Such delivery shall constitute
a shipment hereunder. COMPANY shall pay all packaging, storage, shipping,
customs, duties, taxes, freight and insurance charges associated with shipments
of SELECTED REAGENT. All shipments shall be addressed to the destination
selected by COMPANY and set forth in the relevant purchase order. NEKTAR AL
shall send invoices to COMPANY for any SELECTED REAGENT shipped to COMPANY no
earlier than the date of shipment pursuant to this Section.

4.7 Acceptance and Rejection. COMPANY shall notify NEKTAR AL in writing if
COMPANY believes that a shipment of SELECTED REAGENT does not meet
specifications therefor that have been mutually agreed in writing by the PARTIES
("SPECIFICATIONS"). Such notice must be received by NEKTAR AL within [***] days
after COMPANY's receipt of the relevant shipment of SELECTED REAGENT (or [***]
days if the cycle time of tests require a longer period, such notice date to be

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determined upon selection of the SELECTED REAGENT), and shall include full
details of the basis for its assertion of such nonconformance (including
supporting data) for purposes of consideration and verification by NEKTAR AL. If
no such written notice of nonconformance is received by NEKTAR AL within the
above [***] day period, COMPANY shall be deemed to have accepted the applicable
shipment of SELECTED REAGENT, and NEKTAR AL shall thereafter have no liability
with respect to such delivered SELECTED REAGENT under the warranty or any other
provision of this AGREEMENT.

4.8 Replacement of Nonconforming SELECTED REAGENT. NEKTAR AL shall at no
additional cost to COMPANY, supply COMPANY with a replacement quantity of
SELECTED REAGENT in an amount equal to that which is determined not to meet the
SPECIFICATIONS (provided notice thereof is given to NEKTAR AL within the [***]
day period or longer, as applicable, specified in Section 4.7. Such replacement
shipment shall be made within a timeframe that has been mutually agreed to by
both PARTIES in writing, such agreement not to be unreasonably withheld or
delayed and which timeframe shall be no longer than the normal timeframe for
producing SELECTED REAGENT. In addition, NEKTAR AL shall replace, upon a
timeframe that is mutually agreed to by both PARTIES in writing (which time
period shall be no longer than the normal time for producing SELECTED REAGENT),
all SELECTED REAGENT that is lost or damaged during shipment at the cost and
expense of COMPANY, except if caused by NEKTAR AL, in which case, such
replacement shall be at the cost and expense of NEKTAR AL. Notwithstanding
anything to the contrary in this AGREEMENT, NEKTAR AL's sole liability and
COMPANY's sole remedy for any SELECTED REAGENT that does not meet the
SPECIFICATIONS, shall be limited to NEKTAR AL's replacement of such
nonconforming SELECTED REAGENT as provided for in this Section 4.8.

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4.9 Manufacturing and Supply Agreement. Upon selection of the SELECTED REAGENT,
the PARTIES shall commence good-faith negotiations of and enter into a
Manufacturing and Supply Agreement ("MSA") for SELECTED REAGENT to govern the
exclusive purchase of SELECTED REAGENT other than in connection with
pre-clinical or PHASE I CLINICAL TRIALS. Until such MSA is completed, the terms
and conditions of this AGREEMENT shall be applicable to the purchase of SELECTED
REAGENT by COMPANY from NEKTAR AL; provided that, pursuant to this Article 4,
NEKTAR AL shall have no obligation to supply SELECTED REAGENT for uses other
than for research, pre-clinical and PHASE I CLINICAL TRIALS. In the event that
the PARTIES are not able to reach agreement as to all of the terms of the MSA
within [***] days after initiating such negotiations, either PARTY shall have
the right to initiate an arbitration proceeding in accordance with Schedule VIII
in order to resolve the dispute as to the terms that have not been agreed to by
the PARTIES.

4.10 Warranty. NEKTAR AL hereby warrants and represents that all SELECTED
REAGENTS purchased by COMPANY from NEKTAR AL under this AGREEMENT shall conform
to the SPECIFICATIONS when delivered to COMPANY and will have been manufactured
for and delivered to COMPANY in accordance with applicable laws, rules and
regulations, and except for SELECTED REAGENTS to be used for preclinical use,
consistent with ICH Q7A.

4.11 Records; Audits. NEKTAR AL shall keep full and accurate records and books
of account containing all particulars that may be reasonably necessary for the
purpose of determining amounts that are charged to COMPANY pursuant to this
AGREEMENT are consistent with NEKTAR AL's standard current practices for
charging THIRD PARTIES for similar services for similar REAGENTS as those
provided by NEKTAR AL to COMPANY pursuant to this AGREEMENT. Such books of
account shall be kept by NEKTAR AL at its places of business and, with all
necessary supporting data shall, for the two (2) years following the end of the
calendar year to which each shall pertain be open for inspection by an
independent certified accountant selected by COMPANY and reasonably acceptable

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to NEKTAR AL upon reasonable notice during normal business hours for the sole
purpose of verifying that the amounts charged to COMPANY under this AGREEMENT
are consistent with NEKTAR AL's standard practices for charging THIRD PARTIES
for similar services for similar REAGENTS as those provided by NEKTAR AL to
COMPANY pursuant to this AGREEMENT. The foregoing inspection shall occur no more
than once each calendar year. All information and data offered shall be redacted
to protect any confidential information of the THIRD PARTY and shall be used
only for the purpose of verifying the consistency of amounts charged to COMPANY.
In the event that such inspection shall indicate in any calendar year that the
charges paid by COMPANY exceeded by [***] percent or more the charges (as
adjusted to reflect any increase in PPI) paid by THIRD PARTIES for similar
services for similar REAGENTS as those provided by NEKTAR AL to COMPANY pursuant
to this AGREEMENT, then NEKTAR AL shall pay the cost of the inspection. COMPANY
will invoice NEKTAR AL for any overpayments, which shall become due and payable
no later than [***] days after receipt of an invoice from COMPANY.

4.12 NEKTAR AL agrees that it will comply with the FAR and DFAR clauses of
Schedule VII of this Agreement (such clauses being incorporated herein in their
entirety). For the purposes of this AGREEMENT NEKTAR AL shall be considered the
"Contractor" and COMPANY shall be the "Government" under such clauses.

With respect to the inclusion of clauses 52.215 -- 2 and 52.215 -- 20, if as a
result of any government audit or inspection of NEKTAR AL's books or records
(including any contracts) under these clauses, the government determines that
the pricing of the SELECTED REAGENT and/or the SELECTED PRODUCT is too high
under this AGREEMENT, or that the government otherwise does not agree with
NEKTAR AL's methodology in determining the pricing of the SELECTED REAGENT under
this AGREEMENT, and the government wants NEKTAR AL to supply the SELECTED
REAGENT at a lower price than what has been agreed by NEKTAR AL and COMPANY in

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this AGREEMENT, or wants COMPANY to supply the SELECTED PRODUCT at a lower
price, or if the government decides not to purchase the SELECTED PRODUCT at all
from COMPANY because of the pricing of the SELECTED REAGENT under this
AGREEMENT, then NEKTAR AL shall have no liability whatsoever to COMPANY (other
than as contractually obligated under this AGREEMENT) or to the government as a
result thereof. Any kind of information that is required to be provided to the
government under such clauses would be provided by NEKTAR AL directly to the
government, and not to COMPANY as an intermediary.

If in connection with COMPANY's compliance with FAR 52.246-2 or similar
Inspection Clause, the government or an agency thereof requires access to NEKTAR
AL'S facilities where the SELECTED REAGENT is made, NEKTAR AL will provide
access to the government for such purpose provided that COMPANY bears the costs
and expenses of such access and inspection. Moreover if the government requires
that any samples of SELECTED REAGENT be provided to the government, NEKTAR AL
will agree to do so entirely at COMPANY's cost and expense. In the event that as
a result of any government inspection pursuant to such clause with respect to
NEKTAR AL'S manufacturing facility and or samples of SELECTED REAGENT, the
government requires any corrective actions on the part of NEKTAR AL or otherwise
finds the SELECTED REAGENT not to be acceptable, in each case for reasons other
than what NEKTAR AL is contractually obligated to provide to COMPANY under this
AGREEMENT, then NEKTAR AL, will take corrective action only if COMPANY agrees to
be solely responsible for all of the costs and expenses that may be required in
connection with such corrective actions, including any government re-inspection
of NEKTAR AL's facilities, or other steps that must be taken in order to meet
the government's requirements regarding the SELECTED REAGENT.

5. Milestones; Royalty Payments; Royalty Reports

5.1 Milestone Payments. COMPANY shall pay to NEKTAR AL milestone payments in
accordance with and on the dates provided in Schedule V hereto for SELECTED
PRODUCT. Such milestone payments shall be non-refundable and non-creditable, and

                                                                   Page 31 of 70
<PAGE>

in addition to any royalty or other payments due under this AGREEMENT. If for
whatever reason, Milestone Event A is not achieved then in such case, the
milestone payment that NEKTAR AL would have received upon the occurrence of
Milestone Event A shall be paid on the occurrence of any of the next occurring
Milestone Events B through E, which payment shall be paid in addition to and not
instead of the milestone payment that is to be paid to NEKTAR AL upon the
occurrence of any of the next occurring Milestone Events B through E.

5.2 Royalties.

      5.2.1 During the ROYALTY TERM for a country, COMPANY shall pay NEKTAR AL
non-refundable and non-creditable royalties for sales of SELECTED PRODUCT on a
country-by-country basis as follows:

      (a)   For sales that are BIODEFENSE SALES, a royalty of [***] percent
            ([***]%) of NET SALES of SELECTED PRODUCT.

      (b)   For NET SALES of SELECTED PRODUCT other than those of Section
            5.2.1(a):

                          Annual NET SALES                         Royalty Rate

               (i) If aggregate, worldwide, NET SALES of            ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year do not exceed $[***]

               (ii) If aggregate, worldwide, NET SALES of           ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year exceed $[***] but not
               $[***]

               (iii) If aggregate, worldwide, NET SALES of          ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year exceed $[***]

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      By way of example, for purposes of this Section 5.2.1(b) if aggregate,
worldwide NET SALES of SELECTED PRODUCT other than BIODEFENSE SALES during a
calendar year were equal to $[***], then the [***]% royalty rate would apply to
all such NET SALES, not just the portion in excess of $[***], resulting in a
royalty of $[***].

      5.2.2 The royalties payable pursuant to Section 5.2.1 for NET SALES of
SELECTED PRODUCT sold in a country shall be reduced by [***] percent ([***]%) in
such country if manufacture, use, import, offer for sale and or sale of SELECTED
PRODUCT in such country does not infringe a VALID CLAIM in such country. In any
country where the royalty reduction of Section 5.2.2 is in effect, there shall
not be any further royalty reduction pursuant to Sections 5.2.3, 5.2.4 or
12.1.4.

      5.2.3 [***]

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                                     [***]

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                                     [***]

      5.2.4 [***]

      5.2.5 Only one royalty shall be due under this AGREEMENT with respect to
the same unit of SELECTED PRODUCT.

      5.2.6 Notwithstanding anything to the contrary in this AGREEMENT, in no
event shall the royalties paid by COMPANY for SELECTED PRODUCT be lower than the
following:

      (a)   For sales that are BIODEFENSE SALES, a royalty of [***] percent
            ([***]%) of NET SALES of SELECTED PRODUCT.

      (b)   For NET SALES of SELECTED PRODUCT other than those of Section
            5.2.6(a):

                          Annual NET SALES                         Royalty Rate

               (i) If aggregate, worldwide, NET SALES of            ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year do not exceed $[***]

               (ii) If aggregate, worldwide, NET SALES of           ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year exceed $[***] but not
               $[***]

               (iii) If aggregate, worldwide, NET SALES of          ([***]%) of
               SELECTED PRODUCT other than for BIODEFENSE            NET SALES
               SALES in a calendar year exceed $[***]

5.3 Reports, Exchange Rates. COMPANY shall notify NEKTAR AL in writing promptly
upon the FIRST COMMERCIAL SALE of SELECTED PRODUCT in each country. Commencing
upon the FIRST COMMERCIAL SALE of SELECTED PRODUCT, COMPANY shall furnish to

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NEKTAR AL with respect to NET SALES of SELECTED PRODUCT for which royalties are
payable under this AGREEMENT a quarterly written report showing, on a
country-by-country basis, according to the volume of units of SELECTED PRODUCT
sold in each such country during the reporting period: (a) the gross invoiced
sales of the SELECTED PRODUCT subject to royalty sold in each country during the
reporting period, and the amounts deducted therefrom to determine NET SALES from
such gross invoiced sales detailed in accordance with those deductions provided
for in the definition of NET SALES; (b) the royalties payable in DOLLARS, if
any, which shall have accrued hereunder based upon the NET SALES of SELECTED
PRODUCT; (c) the withholding taxes, if any, required by LAW to be deducted in
respect of such sales; and (d) the date of the FIRST COMMERCIAL SALE of SELECTED
PRODUCT in each country during the reporting period. With respect to sales of
SELECTED PRODUCT invoiced in DOLLARS, the gross invoiced sales, NET SALES, and
royalties payable shall be expressed in the report in DOLLARS. With respect to
sales of SELECTED PRODUCT invoiced in a currency other than DOLLARS, the gross
invoiced sales, NET SALES and royalties payable shall be expressed in the report
provided hereunder in the domestic currency of the party making the sale as well
as in the DOLLAR equivalent of the royalty payable and the exchange rate used in
determining the amount of DOLLARS. The DOLLAR equivalent shall be calculated
using the average exchange rate (local currency per DOLLAR) published in The
Wall Street Journal, Western Edition, under the heading "Currency Trading," on
the last business day of each month during the applicable calendar quarter.
Reports shall be due hereunder on the thirtieth (30th) day following the close
of each quarter.

6. Records; Audits; Shipment Terms; Payment Terms

6.1 Records. COMPANY and its SUBLICENSEES shall keep complete and accurate
records in sufficient detail to make the reports required hereunder. Without
limiting the foregoing, COMPANY shall include in each sublicense granted by it
pursuant to this AGREEMENT a provision requiring the SUBLICENSEE to make reports
to COMPANY consistent with those COMPANY is required to provide hereunder, to
keep and maintain records of sales made and deductions taken in calculating
royalties due to NEKTAR AL with respect to such sublicense, and to grant access
to such records by NEKTAR AL's independent accountant pursuant to Section 6.2
below to the same extent required of COMPANY under this AGREEMENT.

                                                                   Page 36 of 70
<PAGE>

6.2 Audits. Upon reasonable advance written notice from NEKTAR AL, COMPANY shall
permit an independent certified public accounting firm of recognized national
standing in the United States, selected by NEKTAR AL and reasonably acceptable
to COMPANY, at NEKTAR AL's expense, to have access during normal business hours
to such of the records of COMPANY as may be reasonably necessary to verify (i)
COMPANY's compliance with the purchase requirements of Section 4.2 and the
royalty payments of Section 5.2, and (ii) the accuracy of any amounts reported,
actually paid or payable under this AGREEMENT for any year ending not more than
twenty-four (24) months prior to the date of such request. Such inspection shall
occur no more than once a year. If such accounting firm concludes that
additional royalty amounts were owed to NEKTAR AL during such period, or that
there has been an overpayment of royalties, COMPANY shall pay NEKTAR AL such
additional royalties or NEKTAR AL shall credit COMPANY the amount of such
overpayment (including interest on such additional royalties or overpayment at
the prime rate reported in the Wall Street Eastern Edition plus [***] percent
([***]%), compounded annually, or the maximum rate allowed under LAW, whichever
is less from the date such royalty amounts were payable) within [***] days of
the date NEKTAR AL delivers to COMPANY such accounting firm's written report so
concluding. The fees charged by such accounting firm shall be paid by NEKTAR AL;
provided however, that if the audit discloses that the royalties payable by
COMPANY for the audited period are more than [***] percent ([***]%) of the
royalties actually paid for such period or if the audit discloses that COMPANY
has breached its obligations under Section 4.2, then COMPANY shall pay the
reasonable fees and expenses charged by such accounting firm. Upon the
expiration of twenty-four (24) months following the end of any calendar year,
the calculation of royalties payable with respect to such calendar year shall be
binding and conclusive upon NEKTAR AL and COMPANY and its SUBLICENSEES.

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*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

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<PAGE>

6.3 Invoicing; Payment Terms. All undisputed payments due under this AGREEMENT
(other than royalty and milestone payments) shall be due and payable thirty (30)
days from date of invoice but in no event later than any date otherwise
prescribed by this AGREEMENT. Royalties shown to have accrued to NEKTAR AL as
set forth in each royalty report to be provided under Section 5.3 shall be due
and payable on or before the date such royalty report is due. Any and all
amounts past due under this AGREEMENT shall bear interest at the prime rate
reported in the Wall Street Eastern Edition plus [***] percent ([***]%),
compounded annually, or the maximum rate allowed under LAW, whichever is less.
If there is a dispute between NEKTAR AL and COMPANY as to whether a royalty or
milestone is owed and/or the amount thereof, and such amount has not been
determined pursuant to an audit under Section 6.2, if COMPANY pays such amount,
such payment itself shall not limit the COMPANY's right to seek to recover such
payment including through a legal action provided that COMPANY notifies NEKTAR
in writing within thirty (30) days after the end of the quarter in which the
payment is made that the COMPANY has the right to recover such payment.

6.4 Payment Method. Except as otherwise provided for herein, all payments by
COMPANY under this AGREEMENT shall be paid in DOLLARS, and all such payments
shall be made by bank wire transfer in immediately available funds to such
account as NEKTAR AL shall designate before such payment is due. Upon the
election of NEKTAR AL made in writing not less than thirty (30) days prior to
any payment date, COMPANY shall pay all royalties owing to NEKTAR AL hereunder
in the currency in which such royalties accrued, without conversion into
DOLLARS. If at any time legal restrictions prevent the prompt remittance of part
or all royalties due with respect to sales of SELECTED PRODUCT in any country
where SELECTED PRODUCT is sold, payment shall be made through such lawful means
or methods as NEKTAR AL shall reasonably determine.

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*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

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<PAGE>

6.5 Taxes. All royalty amounts due hereunder shall be paid with deduction for
withholding for any taxes or similar governmental charges imposed by a
jurisdiction other than the United States, and COMPANY shall provide NEKTAR AL
evidence of its payment of any such withholdings that may be required to claim a
credit against NEKTAR AL's United States tax liability.

7. Confidentiality

7.1 In General. For the TERM and for a period of ten (10) years thereafter, each
PARTY shall maintain in confidence all information and materials of the other
PARTY (including, but not limited to, KNOW-HOW and samples of THERAPEUTIC AGENT,
any NEKTAR AL MATERIALS, SELECTED REAGENT, and SELECTED PRODUCT) disclosed or
provided to it by the other PARTY and identified as confidential in writing or,
if disclosed verbally or by observation, summarized in writing and submitted to
RECIPIENT within thirty (30) days of the oral or visual disclosure thereof
(together with all embodiments thereof, the "CONFIDENTIAL INFORMATION").
CONFIDENTIAL INFORMATION may also include information regarding intellectual
property and confidential or proprietary information of THIRD PARTIES. In
addition, and notwithstanding the foregoing, INVENTIONS that, under Article 11
are to be owned by one PARTY, shall be deemed CONFIDENTIAL INFORMATION of such
PARTY and not the other PARTY, even if such INVENTIONS initially are generated
and disclosed by the other PARTY. The terms and conditions of this AGREEMENT and
the NON-DISCLOSURE AGREEMENT, also shall be deemed CONFIDENTIAL INFORMATION of
both PARTIES. Notwithstanding the foregoing, CONFIDENTIAL INFORMATION shall not
include that portion of information or materials that the RECIPIENT can
demonstrate by written documentation or other competent proof was (i) known to
the general public at the time of its disclosure to the RECIPIENT, or thereafter
became generally known to the general public, other than as a result of actions
or omissions of the RECIPIENT; (ii) known by the RECIPIENT prior to the date of
disclosure by the DISCLOSING PARTY; (iii) disclosed to the RECIPIENT on an

                                                                   Page 39 of 70
<PAGE>

unrestricted basis from a source unrelated to the DISCLOSING PARTY and not under
a duty of confidentiality to the DISCLOSING PARTY; or (iv) independently
developed by the RECIPIENT by personnel that did not have access to or use of
CONFIDENTIAL INFORMATION of the DISCLOSING PARTY.

Any combination of features or disclosures shall not be deemed to fall within
the foregoing exclusions merely because individual features are published or
known to the general public or in the rightful possession of the RECIPIENT
unless the combination itself and principle of operation thereof are published
or known to the general public or are in the rightful possession of the
RECIPIENT.

7.2 Additional Protections. Each PARTY shall take reasonable steps to maintain
the confidentiality of the CONFIDENTIAL INFORMATION of the other PARTY, which
steps shall be no less protective than those that such PARTY takes to protect
its own information and materials of a similar nature, but in no event less than
a reasonable degree of care. Neither PARTY shall use or permit the use of any
CONFIDENTIAL INFORMATION of the other PARTY except for the purposes of carrying
out its obligations or exercising its rights under this AGREEMENT. All
CONFIDENTIAL INFORMATION of a PARTY, including all copies thereof, is and shall
remain the sole and exclusive property of the DISCLOSING PARTY and subject to
the restrictions provided for herein. Neither PARTY shall disclose any
CONFIDENTIAL INFORMATION of the other PARTY other than to those of its
directors, officers, AFFILIATES, employees, licensors, independent contractors,
SUBLICENSEES, assignees, agents and external advisors directly concerned with
the carrying out of this AGREEMENT (in the case of COMPANY, subject to the
limitations and restrictions on disclosures to be made to potential and actual
CMOs and government agencies and entities hereunder); provided, however, that
any such disclosure is subject to written confidentiality and non-use
obligations no less protective than those provided herein. Other than as
expressly permitted herein, RECIPIENT may not use CONFIDENTIAL INFORMATION of
the other PARTY in applying for PATENTS or securing other intellectual property
rights.

                                                                   Page 40 of 70
<PAGE>

7.3 Permitted Disclosures. The obligations of Sections 7.1 and 7.2 shall not
apply to the extent RECIPIENT (a) is required to disclose information by LAW,
judicial order by a court of competent jurisdiction, or rules of a securities
exchange or requirement of a governmental agency (provided the RECIPIENT shall
provide prior written notice thereof to the DISCLOSING PARTY and sufficient
opportunity for the DISCLOSING PARTY to review and comment on such required
disclosure and request confidential treatment thereof or a protective order
therefor), or (b) discloses information to a patent office for the purposes of
filing or maintaining a PATENT APPLICATION or PATENT to the extent covering an
INVENTION assigned to a PARTY pursuant to Article 11 of this AGREEMENT, or (c)
discloses CONFIDENTIAL INFORMATION of NEKTAR AL (other than CONFIDENTIAL
INFORMATION of NEKTAR AL with respect to manufacture of SELECTED REAGENT) to a
government or agency thereof in order to obtain regulatory approval of SELECTED
PRODUCT and/or discloses CONFIDENTIAL INFORMATION of NEKTAR AL with respect to
production of SELECTED PRODUCT to a government or government agency pursuant to
a contract with a government or government agency related to research,
development or supply of SELECTED PRODUCT, provided that in each case COMPANY
requests confidential treatment thereof.

7.4 Publicity/Use of Names; Selected Transactions.

      7.4.1 A PARTY may issue a press release relating to entry into this
AGREEMENT only if approved in advance, in writing, by the other PARTY. A PARTY
may issue subsequent press releases relating to this AGREEMENT, upon prior
written approval of the other PARTY, such approval not to be unreasonably
withheld or delayed; provided, however, that no approval of the other PARTY
shall be required if a subsequent press release or SEC filing solely discloses
any information that has previously been approved and disclosed as permitted by
this Section 7.4. Except as otherwise provided in this Section 7.4, neither
PARTY shall use the name, trademark, trade name or logo of the other PARTY or
its employees in any publicity or news release relating to this AGREEMENT or its
subject matter, without the prior express written permission of the other PARTY.
Neither PARTY shall publicly disclose the existence or terms of this AGREEMENT
pursuant to a press release or otherwise except as provided in this Article 7.

                                                                   Page 41 of 70
<PAGE>

      7.4.2 Notwithstanding the terms of this Article 7, either PARTY shall be
permitted to disclose the existence and terms of this AGREEMENT to the extent
required, in the reasonable opinion of such PARTY'S legal counsel, to comply
with applicable laws, rules or regulations, including without limitation the
rules and regulations promulgated by the United States Securities and Exchange
Commission or any other governmental agency. Notwithstanding the foregoing,
before disclosing this AGREEMENT or any of the terms hereof pursuant to this
Section 7.4, the PARTIES will consult with one another on the terms of this
AGREEMENT for which confidential treatment will be sought in making any such
disclosure. If a PARTY wishes to disclose this AGREEMENT or any of the terms
hereof in accordance with this Section 7.4, such PARTY agrees, at its own
expense, to seek confidential treatment of the portions of this AGREEMENT or
such terms as may be reasonably requested by the other PARTY, provided that the
disclosing PARTY shall always be entitled to comply with legal requirements,
including without limitation the requirements of the SEC.

      7.4.3 Either PARTY may also disclose the existence and terms of this
AGREEMENT in confidence to its attorneys and advisors, and to potential
acquirors (and their respective professional advisors), in connection with a
potential change of control and to existing and potential investors or lenders
of such PARTY, as a part of their due diligence investigations, or to potential
licensees and SUBLICENSEES or to permitted assignees and SUBLICENSEES in each
case under an agreement to keep the terms of this AGREEMENT confidential under
terms of confidentiality and non-use substantially similar to the terms
contained in this AGREEMENT and to use such CONFIDENTIAL INFORMATION solely for
the purpose permitted pursuant to this Section 7.4.3. A PARTY may disclose this
AGREEMENT to investment bankers in connection with a contemplated transaction
without an obligation of confidentiality provided that reasonable efforts are
exerted to obtain such obligation and that the PARTY wishing to make such
disclosure notifies the other PARTY in advance thereof.

                                                                   Page 42 of 70
<PAGE>

7.5 Notwithstanding the obligations in this Section 7.1 and 7.2, COMPANY may
disclose the CONFIDENTIAL INFORMATION of NEKTAR AL, if such disclosure is made
to governmental or other regulatory agencies in order to gain or maintain
approval to conduct clinical trials or to market SELECTED PRODUCT, but such
disclosure may be only to the extent reasonably necessary to obtain such
approvals or authorizations; or is deemed necessary by COMPANY to be disclosed
to SUBLICENSEES, AFFILIATES, agents, consultants, or other THIRD PARTIES for the
development or commercialization of SELECTED PRODUCT, or in connection with an
assignment of this AGREEMENT, a licensing transaction related to such SELECTED
PRODUCT(s) or loan, financing or investment or acquisition, merger,
consolidation or similar transaction (or for such entities to determine their
interest in performing such activities), in each case on the condition that any
THIRD PARTIES to whom such disclosures are made agree to be bound by
confidentiality and non-use obligations substantially similar to those contained
in this AGREEMENT. In the event a THIRD PARTY who receives CONFIDENTIAL
INFORMATION of NEKTAR AL from COMPANY breaches any of the obligations of
confidentiality in this Article 7, COMPANY agrees to enforce such provisions
against such THIRD PARTY and the failure to enforce such provisions shall be a
material breach as to which NEKTAR AL shall have the ability to terminate this
AGREEMENT under Section 13.2, provided that the cure period shall be limited to
thirty (30) days.

7.6 Irreparable Injury. The PARTIES acknowledge that either PARTY'S breach of
this Article 7 would cause the other PARTY irreparable injury for which it would
not have an adequate remedy at LAW. In the event of a breach, the nonbreaching
PARTY shall be entitled to seek injunctive relief in addition to any other
remedies it may have at LAW or in equity without necessity of posting a bond.

7.7 Return of CONFIDENTIAL INFORMATION. Each PARTY shall return or destroy all
CONFIDENTIAL INFORMATION of the other PARTY in its possession upon termination
or expiration of this AGREEMENT, except any CONFIDENTIAL INFORMATION that is
necessary to allow such PARTY to perform or enjoy any of its rights or
obligations that expressly survive the termination or expiration of this
AGREEMENT.

                                                                   Page 43 of 70
<PAGE>

8. Regulatory Matters

8.1 In General. Upon completion of the RESEARCH PROGRAM, as between the PARTIES,
COMPANY shall be responsible for the research, development, testing, use,
manufacture, transport, storage, disposal of, commercialization and marketing of
SELECTED PRODUCT and, except as specifically provided in this AGREEMENT, COMPANY
shall bear all costs of doing so. As authorized in writing in advance by
COMPANY, to the extent NEKTAR AL advances or incurs any of the costs
contemplated in the preceding sentence, COMPANY shall reimburse NEKTAR AL for
such costs within thirty (30) days after the date of any invoice therefor. Each
PARTY shall promptly notify the other in writing of any information that comes
to its attention concerning the safety or efficacy of SELECTED REAGENT and/or
SELECTED PRODUCT and/or any PEG and/or any product conjugated to a PEG,
including, without limitation, any threatened or pending action by any
regulatory authority with respect thereto.

8.2 Specific Requirements. Without limiting the generality of Section 8.1,
COMPANY shall learn and verify the hazards involved in using SELECTED REAGENT,
including the Material Safety Data Sheet ("MSDS") therefor. COMPANY shall comply
with safety instructions provided by NEKTAR AL. COMPANY shall warn COMPANY's
freight handlers, SUBLICENSEES, customers and others who reasonably might be
expected to come into contact with SELECTED REAGENT or SELECTED PRODUCT of any
risks involved in using or handling SELECTED REAGENT or SELECTED PRODUCT,
including providing them with the MSDS.

8.3 Complaints and Communications. COMPANY shall be responsible for handling all
complaints and communications (including with regulatory authorities) relating
to SELECTED PRODUCT. In addition to the foregoing, COMPANY shall promptly notify
NEKTAR AL and make NEKTAR AL aware of the nature of any communications with or
inspections by regulatory authorities relating to, or which could affect,

                                                                   Page 44 of 70
<PAGE>

SELECTED REAGENT, including any questions, complaints or comments ("INQUIRIES")
by regulatory authorities relating to or affecting SELECTED REAGENT. COMPANY
shall provide NEKTAR AL with copies of any correspondence with regulatory
authorities that relate to or could affect SELECTED REAGENT. COMPANY shall give
NEKTAR AL sufficient opportunity to review and comment on any proposed response
to any INQUIRIES prior to filing any such response, and shall give NEKTAR AL a
copy of any final response so filed.

8.4 Adverse Reaction Reporting. To the extent permitted by LAW, each PARTY shall
notify the other in writing of all information that comes to its attention
concerning serious adverse events relating to SELECTED REAGENT or SELECTED
PRODUCT. Such reports shall be provided to the other PARTY within forty-eight
(48) hours after receipt of the information in the case of any experience
coincident with the use of SELECTED REAGENT or SELECTED PRODUCT, whether or not
considered related to the SELECTED REAGENT or SELECTED PRODUCT, that suggests a
significant hazard, contraindication, side effect or precaution or results in
death, a life-threatening experience, inpatient hospitalization, prolongation of
an existing hospitalization, a persistent or significant disability or
incapacity, or a congenital anomaly or birth defect. Information concerning all
other serious adverse events not covered by the preceding sentence (including
those covered in summary reports that may be prepared annually by a PARTY
covering product complaints and complaint handling) shall be provided on a
semi-annual basis by each PARTY to the other.

9. Representations, Warranties; Covenants; Limitation of Liability

9.1 By Both PARTIES. Each PARTY represents and warrants to the other that as of
the EFFECTIVE DATE to the best of its knowledge and belief: (a) it has the full
corporate power to enter into and perform this AGREEMENT; (b) this AGREEMENT
constitutes its legal, valid and binding obligation; (c) it has sufficient legal
and/or beneficial title or other rights under its intellectual property rights
to grant the licenses contained in this AGREEMENT; (d) each of such PARTY'S
employees and officers has executed an agreement that requires such employee or
officer to the extent permitted by law, to assign all INVENTIONS, PATENTS, and

                                                                   Page 45 of 70
<PAGE>

KNOW-HOW made during the course of and as a result of the performance of such
PARTY'S obligations under this AGREEMENT, to such PARTY; and (e) each of such
PARTY'S employees and officers is subject to an executed agreement that requires
such employee or officer to maintain as confidential any information CONTROLLED
by such PARTY, or provided by the other PARTY, that is CONFIDENTIAL INFORMATION
under this AGREEMENT.

9.2 By NEKTAR AL.

      9.2.1 As of the effective date of the license of Section 2.1, NEKTAR AL
shall represent and warrant to COMPANY that, to the knowledge of NEKTAR AL,
NEKTAR AL has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in the NEKTAR AL PATENT RIGHTS, or the
NEKTAR AL KNOW-HOW, with respect to SELECTED PRODUCT in a manner that conflicts
and/or is inconsistent with the rights granted to COMPANY under this AGREEMENT.

      9.2.2 NEKTAR AL agrees that if during the TERM, NEKTAR AL assigns to an
AFFILIATE any of the NEKTAR AL LICENSED TECHNOLOGY that is subject to the
license grant provided for in Section 2.1 or Section 3.4 of this AGREEMENT, then
COMPANY's license under such NEKTAR AL LICENSED TECHNOLOGY shall follow such
assignment and COMPANY's license under such NEKTAR AL LICENSED TECHNOLOGY will
not, as a result of such assignment, be diminished or impaired.

      9.2.3 As of the effective date of the license of Section 2.1, NEKTAR AL
shall represent and warrant to COMPANY that to the knowledge of NEKTAR AL except
for PATENTS AND PATENT APPLICATIONS licensed to COMPANY under Section 2.1,
AFFILIATES of NEKTAR AL do not own any PATENTS or PATENT APPLICATIONS that if
owned by NEKTAR AL as of such effective date would be NEKTAR AL PATENT RIGHTS
licensed to COMPANY under 2.1 of the AGREEMENT.

                                                                   Page 46 of 70
<PAGE>

9.3 Exclusion of Damages.

      9.3.1 EXCEPT FOR INTENTIONAL OR WILLFUL MISCONDUCT, AND EXCEPT FOR
INTENTIONAL OR WILLFUL MATERIAL BREACH AS TO WHICH COMPANY HAS KNOWLEDGE AND HAS
PROVIDED WRITTEN NOTICE THEREOF TO NEKTAR AL WITHIN FIVE (5) DAYS OF SUCH
KNOWLEDGE: (i) IN NO EVENT SHALL NEKTAR AL's LIABILITY ARISING OUT OF THE
DEVELOPMENT, MANUFACTURE, SUPPLY, USE OR SALE OF SELECTED REAGENT OR SELECTED
PRODUCT, EXCEED NEKTAR AL's OBLIGATION TO REPLACE THAT QUANTITY OF SELECTED
REAGENT GIVING RISE TO THE LIABILITY, AND (ii) IN NO EVENT SHALL NEKTAR AL's
LIABILITY ARISING OUT OF THIS AGREEMENT, EXCEED IN THE AGGREGATE, AN AMOUNT THAT
IS EQUAL TO THE TOTAL AMOUNT PAID BY COMPANY UNDER THE RESEARCH PLAN. THE
FOREGOING LIMITATION ON NEKTAR AL'S LIABILITY SHALL NOT APPLY WITH RESPECT TO
THE AMOUNT OF ANY OVERPAYMENT OF ROYALTIES OR MILESTONES BY COMPANY TO NEKTAR AL
HEREUNDER, PROVIDED SUCH OVERPAYMENT IS (X) NOTIFIED IN WRITING BY COMPANY TO
NEKTAR AL PROMPTLY AFTER SUCH OVERPAYMENT IS DISCOVERED BY COMPANY, BUT IN NO
EVENT LATER THAN 30 DAYS AFTER THE QUARTER IN WHICH SUCH OVERPAYMENT WAS MADE,
OR (Y) REVEALED BY AN AUDIT AS PROVIDED FOR UNDER SECTION 6.2. IN THE EVENT OF
SUCH OVERPAYMENT, NEKTAR AL SHALL CREDIT COMPANY WITH RESPECT TO FUTURE PAYMENTS
OWED BY COMPANY TO NEKTAR AL HEREUNDER, TO THE EXTENT OF SUCH OVERPAYMENT

      9.3.2 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT
LIMITATION, DAMAGES RESULTING FROM LOSS OF USE, LOSS OF PROFITS, INTERRUPTION OR
LOSS OF BUSINESS OR OTHER ECONOMIC LOSS) ARISING OUT OF THIS AGREEMENT OR WITH
RESPECT TO A PARTY'S PERFORMANCE OR NON-PERFORMANCE HEREUNDER.

                                                                   Page 47 of 70
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      9.3.3 Nothing in this Article 9 shall limit COMPANY's and/or NEKTAR AL'S
indemnification obligation under Article 10 or recovery of damages for breach of
Article 7 or COMPANY's indemnification under Section 3.4.2 or Section 12.1.2.

9.4 Essential Basis. The limitation of liability and exclusion of damages under
this AGREEMENT: (i) apply even if a PARTY had or should have had knowledge,
actual or constructive, of the possibility of such damages; (ii) are a
fundamental element of the basis of the bargain between the PARTIES and this
AGREEMENT would not be entered into without such limitations and exclusions and
(iii) shall apply whether a claim is based on breach of contract, breach of
warranty, tort (including negligence), product liability, strict liability or
otherwise, and notwithstanding any failure of essential purpose of any limited
remedy herein. Moreover, the exclusive remedies under this AGREEMENT are
intended to be exclusive and the limitations of liability and the exclusion of
damages under this AGREEMENT are intended to apply even if there is a total and
fundamental breach of this AGREEMENT, and the essential purpose of these
provisions is to limit the PARTIES' respective liabilities hereunder.

9.5 Covenant. COMPANY agrees that COMPANY will not use government funds to pay
for work performed by NEKTAR AL (a) under the RESEARCH PROGRAM or (b) with
respect to the development of the manufacturing process by NEKTAR AL pursuant to
Section 4.1 of this AGREEMENT, in either case, unless NEKTAR AL provides its
prior written consent to the use of such government funds or monies for such
purpose. COMPANY may use government funds (i) to purchase SELECTED REAGENT from
NEKTAR AL under this AGREEMENT and/or (ii) to manufacture and sell SELECTED
PRODUCT to the government, which SELECTED PRODUCT includes SELECTED REAGENT
obtained from NEKTAR AL, and/or (ii) to pay NEKTAR AL for transfer of NEKTAR AL
KNOW-HOW pursuant to Section 3.4.1 and 3.4.3 of this AGREEMENT. COMPANY may
provide the government with the necessary information and data with respect to
manufacture of SELECTED PRODUCT, provided that such use of government funds
and/or the providing of such information and data does not breach the covenant
of COMPANY set forth in the first sentence of this Section and provided further
that COMPANY seek confidential treatment of any such information and data
provided to the government.

                                                                   Page 48 of 70
<PAGE>

      COMPANY covenants and agrees that the COMPANY will not grant any rights or
licenses under this AGREEMENT to a THIRD PARTY, including, without limitation,
any agency of the U.S. federal government other than as permitted by this
AGREEMENT and/or as may be permitted by the MSA. Except as provided in the MSA,
COMPANY may not authorize, or purport to authorize, the government (or any THIRD
PARTY) to manufacture SELECTED REAGENT and/or to use, practice or otherwise
exploit any intellectual property of NEKTAR AL for manufacture of SELECTED
REAGENTS.

10. Indemnification; Insurance

10.1 Indemnity.

      10.1.1 By NEKTAR AL. NEKTAR AL shall defend, indemnify and hold COMPANY,
COMPANY's AFFILIATES, COMPANY SUBLICENSEES and their respective shareholders,
directors, officers, employees and agents (each, a "COMPANY INDEMNITEE")
harmless from and against all losses, liabilities, damages, costs and expenses
(including reasonable attorney's fees and costs of investigation and litigation,
regardless of outcome) resulting from all claims, demands, actions and other
proceedings by or on behalf of any THIRD PARTY (including any governmental
authority) (collectively, "CLAIMS") to the extent arising from: (a) the breach
of any representation, warranty (other than any warranty that SELECTED REAGENT
conforms to SPECIFICATIONS), covenant or material obligation of NEKTAR AL under
this AGREEMENT; or (b) the gross negligence, recklessness or willful misconduct
of NEKTAR AL in the performance of its obligations under this AGREEMENT, or (c)
any CLAIMS brought by an employee or contractor of NEKTAR AL, for personal
injury or death or damage to property caused directly and proximately by such
employee's or contractor's performance of the manufacture of SELECTED REAGENT
for NEKTAR AL under this AGREEMENT, or (d) any CLAIMS brought by a THIRD PARTY
for personal injury or death or damage to property, which personal injury, death
or damage occurs as a direct and proximate result of an accident occurring at
the facility of NEKTAR AL where the manufacture of SELECTED REAGENT is carried

                                                                   Page 49 of 70
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out under this AGREEMENT, except in each case (i) to the extent such claim,
demand, action or proceeding arises from COMPANY's material breach of this
AGREEMENT or a breach of any representation or warranty of COMPANY under this
AGREEMENT, or the gross negligence, recklessness or willful misconduct of a
COMPANY INDEMNITEE; or (ii) to the extent that COMPANY is obligated to indemnify
NEKTAR AL under Section 10.1.2.

      10.1.2 By COMPANY. Subject to the limitations and exclusions set forth in
Section 9.3, COMPANY shall defend, indemnify and hold NEKTAR AL, NEKTAR AL
AFFILIATES, and their respective shareholders, directors, officers, employees
and agents (each, a "NEKTAR AL INDEMNITEE") harmless from and against all
losses, liabilities, damages, costs and expenses (including reasonable
attorney's fees and costs of investigation and litigation, regardless of
outcome) resulting from all CLAIMS to the extent arising from: (a) the breach of
any representation, warranty, covenant or material obligation of COMPANY under
this AGREEMENT; (b) the development (including without limitation the conduct of
clinical trials), manufacturing, testing, storage, handling, transportation,
disposal, commercialization (including any recalls, field corrections or market
withdrawals), marketing, distribution, promotion, sale or use of SELECTED
PRODUCT by or for COMPANY or its SUBLICENSEES or any of their respective THIRD
PARTY agents or subcontractors (including as a result of any illness, injury or
death to persons, including employees, agents or contractors of COMPANY or its
SUBLICENSEES, or damage to property); or (c) the gross negligence, recklessness
or willful misconduct of COMPANY or its SUBLICENSEES or any of their respective
THIRD PARTY agents or subcontractors in the performance of its or their
obligations under this AGREEMENT, except in each case (i) to the extent such
claim, demand, action or proceeding arises from NEKTAR AL's material breach of
this AGREEMENT or the gross negligence, recklessness or willful misconduct of a
NEKTAR AL INDEMNITEE and/or (ii) to the extent that NEKTAR AL is obligated to
indemnify COMPANY under Section 10.1.1.

10.2 Procedures. If any CLAIM covered by Section 10.1 is brought: (i) the
indemnified PARTY shall promptly notify the indemnifying PARTY in writing of
such CLAIM, (ii) the indemnifying PARTY shall assume, at its cost and expense,

                                                                   Page 50 of 70
<PAGE>

the sole defense of such CLAIM through counsel selected by the indemnifying
PARTY and reasonably acceptable to the other PARTY, except that those
indemnified may at their option and expense select and be represented by
separate counsel; provided that the indemnifying PARTY shall have the sole right
to control such defense; (iii) the indemnifying PARTY shall maintain control of
such defense and/or the settlement of such CLAIM; (iv) those indemnified may, at
their option and expense, participate in such defense, and if they so
participate, the indemnifying PARTY and those indemnified shall cooperate with
one another in such defense, provided that the indemnifying PARTY shall have the
sole right to control such defense; (v) the indemnifying PARTY will have
authority to consent to the entry of any judgment, to enter into any settlement
or otherwise to dispose of such CLAIM, and (vi) an indemnified PARTY may not
consent to the entry of any judgment, enter into any settlement or otherwise to
dispose of such CLAIM or admit liability with respect thereto without the prior
written consent of the indemnifying PARTY.

10.3 Insurance. COMPANY, at its own expense, shall maintain comprehensive
general liability insurance, including product liability insurance, in the
minimum amount of [***] DOLLARS ($[***]) per occurrence, and [***] DOLLARS
($[***]) in the aggregate, with NEKTAR AL named as an additional insured,
provided however that such aggregate shall be increased to [***] dollars
($[***]) when SELECTED PRODUCT is used in a human. Such policies shall include a
provision that NEKTAR AL shall be given [***] days written notice prior to
cancellation or material change in such a policy, except in the case of
non-payment, which shall require at least [***] days notice. The insurance
carriers must be rated A-, VII or better by A.M. Best Company. COMPANY shall
maintain such insurance for so long as it continues to research or develop or
commercialize SELECTED PRODUCT, and shall from time to time provide copies of
certificates of such insurance to NEKTAR AL upon its request. If the insurance
policy is written on a claims-made basis than the coverage must be kept in place
for at least [***] years after the termination of this AGREEMENT.

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*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                                                   Page 51 of 70
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11. INVENTIONS, KNOW-HOW and PATENTS

11.1 Existing Intellectual Property. Other than as expressly provided in this
AGREEMENT, neither PARTY grants nor shall be deemed to grant any right, title or
interest to the other PARTY in any PATENT, PATENT APPLICATION, KNOW-HOW or other
intellectual property right CONTROLLED by such PARTY as of the EFFECTIVE DATE.

11.2 Disclosure. Each PARTY shall promptly disclose in writing to the other all
INVENTIONS arising from the joint or separate activities (including any
INVENTIONS first made, conceived or first reduced to practice as a result of
such activities) of the PARTIES or their employees, agents, independent
contractors or SUBLICENSEES; provided, however, NEKTAR AL shall not be obligated
to disclose a SOLE INVENTION to the extent such SOLE INVENTION falls outside the
scope of COMPANY CORE TECHNOLOGY owned by COMPANY and that COMPANY shall not be
obligated to disclose a SOLE INVENTION to the extent such SOLE INVENTION falls
outside the scope of NEKTAR AL CORE TECHNOLOGY owned by NEKTAR AL.

11.3 Ownership of INVENTIONS. Except as otherwise set forth in Sections 11.4 or
11.5, all INVENTIONS made solely by employees, agents, independent contactors or
SUBLICENSEES of a PARTY (each, a "SOLE INVENTION") shall be the exclusive
property of such PARTY. Except as otherwise set forth in Sections 11.4 or 11.5,
if employees, agents, independent contractors or SUBLICENSEES of each of NEKTAR
AL and COMPANY jointly develop any INVENTION (each, a "JOINT INVENTION"),
COMPANY and NEKTAR AL shall each own an undivided one-half (1/2) interest in and
to such JOINT INVENTION, and, subject to the exclusive licenses granted to
COMPANY under this AGREEMENT, each PARTY shall have the right to freely exploit
and grant licenses under any such JOINT INVENTION and any PATENT claiming such
JOINT INVENTION without consent of or a duty of accounting to the other PARTY.
For the avoidance of doubt, the determination as to whether an INVENTION has
been "solely" or "jointly" made shall be based upon whether employees, agents,
independent contractors or SUBLICENSEES of a PARTY would be or are properly
named as an inventor on a corresponding PATENT APPLICATION under United States
inventorship laws.

                                                                   Page 52 of 70
<PAGE>

11.4 NEKTAR AL CORE TECHNOLOGY INVENTIONS. Any and all rights, title and
interest in and to all SOLE INVENTIONS and JOINT INVENTIONS which fall within
the scope of NEKTAR AL CORE TECHNOLOGY that are potentially patentable and/or as
to which a patent application has been filed shall belong solely to NEKTAR AL
("NEKTAR AL CORE TECHNOLOGY INVENTIONS"). COMPANY hereby agrees to and hereby
does, and shall, without additional consideration transfer and assign to NEKTAR
AL all of its right, title and interest in and to such NEKTAR AL CORE TECHNOLOGY
INVENTIONS and all intellectual property rights therein including enforcement
rights, and, except for a government or government agency, shall require its
employees, agents, independent contractors and SUBLICENSEES to so transfer and
assign their right, title and interest therein to NEKTAR AL. NEKTAR AL shall be
responsible, at its sole expense and discretion, and with the cooperation of
COMPANY, for the filing, prosecution and maintenance of foreign and domestic
PATENT APPLICATIONS and PATENTS covering such NEKTAR AL CORE TECHNOLOGY
INVENTIONS. Any disputes arising from the foregoing or under Section 11.5 as to
ownership shall be presented to the MANAGING COMMITTEE for discussion and
resolution, provided neither PARTY shall have the right of final determination
with respect to such dispute. In the event the MANAGING COMMITTEE cannot agree
on the foregoing, either PARTY may seek remedy in accordance with Schedule VIII.

11.5 COMPANY CORE TECHNOLOGY INVENTIONS. Any and all rights, title and interest
in and to all SOLE INVENTIONS and JOINT INVENTIONS which fall within the scope
of COMPANY CORE TECHNOLOGY that are potentially patentable and/or as to which a
patent application has been filed shall belong solely to COMPANY ("COMPANY CORE
TECHNOLOGY INVENTIONS"). NEKTAR AL hereby agrees to and hereby does, and shall,
without additional consideration transfer and assign to COMPANY all of its
right, title and interest in and to any COMPANY CORE TECHNOLOGY INVENTIONS and
all intellectual property rights therein including enforcement rights, and shall
require its employees, agents, independent contractors to so transfer and assign

                                                                   Page 53 of 70
<PAGE>

their right, title and interest therein to COMPANY. COMPANY shall be
responsible, at its sole expense and discretion, and with the cooperation of
NEKTAR AL if requested by COMPANY, for the filing, prosecution and maintenance
of foreign and domestic PATENT APPLICATIONS and PATENTS covering such COMPANY
CORE TECHNOLOGY INVENTIONS.

11.6 Individual PATENT Filings. Each PARTY shall have sole discretion and right
to prepare, file, prosecute, maintain and defend PATENT APPLICATIONS or PATENTS
for INVENTIONS it solely owns under this AGREEMENT, and shall be responsible for
related interference proceedings.

11.7 Joint PATENT Filings. With respect to all PATENT APPLICATIONS on JOINT
INVENTIONS that are jointly owned by the PARTIES (i.e., JOINT INVENTIONS that
have not been assigned nor are assignable to the other PARTY pursuant to
Sections 11.4 and 11.5) (the "JOINT PATENT APPLICATIONS"), the PARTIES shall
determine which PARTY shall be responsible for filing, prosecuting and
maintaining PATENT APPLICATIONS and PATENTS on behalf of both PARTIES (the
"RESPONSIBLE PARTY") based on a good faith determination of the relative
contributions of the PARTIES to the INVENTION and the relative interests of the
PARTIES in the INVENTION. At least twenty (20) days prior to the contemplated
filing of such PATENT APPLICATION, the RESPONSIBLE PARTY shall submit a
substantially completed draft of the JOINT PATENT APPLICATION to the other PARTY
for its approval, which shall not be unreasonably withheld or delayed. Except as
set forth below, the PARTIES shall share equally the costs of the preparation,
filing, prosecution and maintenance of all JOINT PATENT APPLICATIONS. If either
PARTY elects not to pay its portion of any shared costs for a JOINT PATENT
APPLICATION or PATENT issuing therefrom, the other PARTY may proceed with such
JOINT PATENT APPLICATION in its own name and at its sole expense, in which case
the PARTY electing not to pay its share of costs hereby agrees to transfer and
assign and shall transfer and assign its entire right, title and interest in and
to such JOINT PATENT APPLICATION to the other PARTY and such INVENTION shall be
treated as a SOLE INVENTION of the assignee for the purposes hereof.

                                                                   Page 54 of 70
<PAGE>

11.8 The PARTIES recognize and agree that this Agreement is a "joint research
agreement" under 35 U.S.C. 103(c)(3). The PARTIES further agree to cooperate to
avail themselves and each other of the provisions of said section 35 U.S.C.
103(c) amended through the CREATE Act on December 10. 2004.

12. Infringement

12.1 Infringement of THIRD PARTY Rights.

      12.1.1 Notice. If the development, manufacture, use, import, sale or offer
for sale of SELECTED PRODUCT or SELECTED REAGENT results in a claim for PATENT
infringement by a THIRD PARTY, the PARTY to this AGREEMENT first having notice
shall promptly notify the other PARTY in writing. The notice shall set forth the
facts of the claim in reasonable detail.

      12.1.2 Indemnification by COMPANY. Except to the limited extent provided
for in Section 12.1.3, COMPANY shall defend, indemnify and hold harmless each
NEKTAR AL INDEMNITEE from and against all losses, liabilities, damages, costs
and expenses (including reasonable attorney's fees and costs of investigation
and litigation, regardless of outcome) resulting from any claim that the
development, manufacture, use, import, offer for sale or sale of SELECTED
PRODUCT infringes a THIRD PARTY patent or misappropriates THIRD PARTY KNOW-HOW,
and the provisions of Sections 10.1.2 and 10.3 shall apply with respect to any
such claim to the same extent as though it were a CLAIM for which COMPANY has an
obligation to defend, indemnify and defend NEKTAR AL under Section 10.1.2. In
the event of a conflict between the provisions of Article 10 and this Section
12.1.2, the provisions of this Section 12.1.2 shall govern. NEKTAR AL shall
cooperate with COMPANY at COMPANY's request and expense in such defense, and
shall have the right to be represented by counsel of its own choice, at NEKTAR
AL's expense.

      12.1.3 Limitation on Indemnity by COMPANY. COMPANY's obligations under
Section 12.1.2 shall not apply to the extent that (a) any infringement of a
THIRD PARTY PATENT or misappropriation of THIRD PARTY KNOW -HOW results solely

                                                                   Page 55 of 70
<PAGE>

from the composition of matter or the manufacture of SELECTED REAGENT, or (b)
the synthetic and/or analytical methods for the SELECTED PRODUCT at the
laboratory scale used in the RESEARCH PROGRAM, which are transferred by NEKTAR
AL to COMPANY pursuant to Section 3.4.1(ii), have been misappropriated by NEKTAR
AL from a THIRD PARTY. Nothing in this Section 12.1.3 shall be deemed to limit
COMPANY's obligations set forth in Section 3.4.2.

      12.1.4 Third Party Royalties. If either PARTY is required to pay royalties
or any other payments to a THIRD PARTY because the composition of matter or
method of making of the SELECTED REAGENT contained in the SELECTED PRODUCT
infringes a PATENT of a THIRD PARTY in a particular country, then COMPANY shall
pay such THIRD PARTY any royalties or other payments for a license under such
PATENT necessary to use, manufacture, import, sell or offer for sale such
SELECTED PRODUCT in such country. In the event that payment of such THIRD PARTY
royalties in accordance with this Section 12.1.4 causes the total royalty
payable by COMPANY to exceed the ORIGINAL ROYALTY cap, or any REVISED ROYALTY
CAP, as applicable, then the terms of Sections 5.2.3 or 5.2.4 shall apply.

      12.1.5 Freedom to Operate Determination. Promptly after the selection of
the SELECTED REAGENT, NEKTAR AL will provide to COMPANY any information,
including any freedom to operate studies, then in NEKTAR AL's possession,
relating to composition of matter or method of manufacturing the SELECTED
REAGENT, and following COMPANY's receipt of such information but in no event
later than 30 days following such receipt, COMPANY shall notify NEKTAR AL in
writing whether or not COMPANY shall proceed with the use of such SELECTED
REAGENT and along with such notification, shall provide to NEKTAR AL any and all
freedom to operate studies that COMPANY may have conducted with respect to such
SELECTED REAGENT, in each case, only after entering into a joint defense
agreement or other agreement sufficient to preserve any privilege (including the
attorney client privilege) held by either PARTY.

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<PAGE>

12.2 Infringement By THIRD PARTIES.

      12.2.1 Notice of Infringement. If any VALID CLAIM is infringed by a THIRD
PARTY, or any NETKTAR AL KNOW-HOW utilized in the manufacture, use, import or
sale of SELECTED REAGENT or SELECTED PRODUCT is misappropriated by a THIRD
PARTY, the PARTY first having knowledge of such infringement or misappropriation
shall promptly notify the other PARTY in writing. The notice shall set forth the
facts of such infringement or misappropriation in reasonable detail.

      12.2.2 Prosecution of Actions Relating to SELECTED REAGENT.

            (a)   NEKTAR AL shall have the primary right, but not the
                  obligation, to institute, prosecute and control any action or
                  proceeding with respect to any infringement of a VALID CLAIM
                  or misappropriation of NEKTAR AL KNOW-HOW by reason of a THIRD
                  PARTY'S manufacture, use, import, offer for sale or sale of
                  SELECTED REAGENT using counsel of its own choice, at its own
                  expense. COMPANY shall cooperate with NEKTAR AL at NEKTAR AL's
                  request and expense in the prosecution of such action or
                  proceeding. If NEKTAR AL determines that COMPANY is an
                  indispensable PARTY to the action, COMPANY hereby consents to
                  be joined. In such event, COMPANY shall have the right to be
                  represented in that action by its own counsel and at its own
                  expense.

            (b)   If NEKTAR AL fails to bring an action or proceeding within a
                  period of sixty (60) days after receiving written notice from
                  COMPANY or otherwise having knowledge of such infringement or
                  misappropriation by reason of a THIRD PARTY'S manufacture,
                  use, import, offer for sale or sale of SELECTED REAGENT,
                  COMPANY shall have the right to bring and control any such
                  action using counsel of its own choice, and at its own
                  expense. If COMPANY determines that NEKTAR AL is an

                                                                   Page 57 of 70
<PAGE>

                  indispensable PARTY to the action, NEKTAR AL hereby consents
                  to be joined. In such event, NEKTAR AL shall have the right to
                  be represented in such action by its own counsel at its own
                  expense. No settlement, consent judgment or other voluntary
                  final disposition of a suit under this Section 12.2.2 may be
                  entered into without the joint consent of COMPANY and NEKTAR
                  AL (which consent shall not be withheld or delayed
                  unreasonably).

            (c)   If either PARTY brings an action for infringement or
                  misappropriation by a THIRD PARTY under this Section 12.2.2,
                  any damages or other monetary awards or payments in settlement
                  recovered by such PARTY shall be applied first to defray the
                  costs and expenses incurred by both PARTIES in the action. If
                  NEKTAR AL has brought the action, any remainder shall be
                  retained by NEKTAR AL. If COMPANY has brought the action, any
                  remainder shall be retained by COMPANY, except to the extent
                  that damages are based on lost sales of COMPANY, in which
                  event such amounts shall be deemed NET SALES and subject to
                  the payment of royalties under this AGREEMENT.

      12.2.3 Prosecution of Actions Related to SELECTED PRODUCT.

            (a)   Subject to NEKTAR AL's right under Section 12.2.2, COMPANY
                  shall have the primary right, but not the obligation, to
                  institute, prosecute and control any action or proceeding with
                  respect to any infringement of NEKTAR AL PATENT RIGHTS or
                  misappropriation of NEKTAR AL KNOW -HOW by reason of a THIRD
                  PARTY'S manufacture, use, import, offer for sale or sale of
                  SELECTED PRODUCT, using counsel of its own choice, at its own
                  expense. NEKTAR AL shall cooperate with COMPANY at COMPANY's
                  request and expense in the prosecution of such action or
                  proceeding. If COMPANY reasonably determines that NEKTAR AL is

                                                                   Page 58 of 70
<PAGE>

                  an indispensable PARTY to the action, NEKTAR AL hereby
                  consents to be joined. In such event, NEKTAR AL shall have the
                  right to be represented in that action by its own counsel and
                  at its own expense.

            (b)   If COMPANY fails to bring an action or proceeding within a
                  period of sixty (60) days after receiving written notice from
                  NEKTAR AL of the possibility of a claim, or otherwise having
                  knowledge of a claim described in Section 12.2.3(a), NEKTAR AL
                  shall have the right, but not the obligation, to bring and
                  control any such action using counsel of its own choice, at
                  its own expense. If NEKTAR AL determines that COMPANY is an
                  indispensable PARTY to the action, COMPANY hereby consents to
                  be joined. In such event, COMPANY shall have the right to be
                  represented in such action using counsel of its own choice, at
                  its own expense. No settlement, consent judgment or other
                  voluntary final disposition of a suit under this Section
                  12.2.3(b) may be entered into without the joint consent of
                  NEKTAR AL and COMPANY (which consent shall not be withheld
                  unreasonably).

            (c)   If either PARTY brings an action for infringement or
                  misappropriation by a THIRD PARTY under this Section 12.2.3
                  any damages or other monetary awards or payments in settlement
                  recovered by such PARTY shall be applied first to defray the
                  costs and expenses incurred by both PARTIES in the action. Any
                  remainder shall be retained by the PARTY bringing such action,
                  provided that if the remainder is retained by COMPANY, such
                  remainder shall be treated as NET SALES subject to royalty
                  under this AGREEMENT.

                                                                   Page 59 of 70
<PAGE>

13. Term and Termination

13.1 Expiration. The term of this AGREEMENT (the "TERM") shall commence on the
EFFECTIVE DATE and shall expire on a country-by-country basis upon the
expiration of all royalty obligations in the applicable country, unless earlier
terminated as provided herein.

13.2 Termination for Default. Each PARTY shall have the right to terminate this
AGREEMENT for material breach by the other PARTY by providing written notice to
the other PARTY, which notice shall specify the breach and notify the other
PARTY that this AGREEMENT will be terminated if such breach is not cured. If the
material breach is a payment breach and such payment is not made within [***]
days of such notice or if the material breach is other than a payment breach,
and such material breach is not cured in [***] days, then this AGREEMENT shall
be terminated at the end of such [***] day period.

13.3 Voluntary Termination. COMPANY has the right within its sole discretion to
terminate this AGREEMENT by [***] days prior written notice to NEKTAR AL.

13.4 Effect of Termination.

      13.4.1 The provisions of Sections 2.4, 3.5, 4.11 (with respect to amounts
charged prior to termination), 6.1 - 6.5 (as to accrued amounts), 9.3, 9.4,
12.1.2, 12.1.3, 13.4, 17.1 - 17.8, and 17.10 - 17.12 and 17.14 and Articles 7,
8, 10, and 11 (and in each case together with any defined terms applicable to
such provisions) shall survive termination of this AGREEMENT for any reason
whatsoever.

      13.4.2 Notwithstanding anything in this AGREEMENT to the contrary, if this
AGREEMENT is terminated for any reason whatsoever:

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            (a)   COMPANY shall have the right to use or sell SELECTED PRODUCTS
                  on hand on the date of such termination and to complete
                  SELECTED PRODUCTS in the process of manufacture at the time of
                  such termination and use or sell the same as if licensed under
                  this AGREEMENT for a period of [***] months, provided that
                  COMPANY shall submit the applicable royalty report, along with
                  the royalty payments required by this AGREEMENT; provided that
                  COMPANY's right to use or sell SELECTED PRODUCTS pursuant to
                  this subsection (a) shall be at the discretion of NEKTAR AL if
                  the AGREEMENT is terminated by NEKTAR AL for material breach
                  of COMPANY; and

            (b)   COMPANY shall continue to be obligated to purchase and shall
                  purchase SELECTED REAGENT manufactured pursuant to any issued
                  purchase orders pursuant to Article 4, and any SELECTED
                  REAGENT so manufactured shall be invoiced to COMPANY in full
                  and paid by COMPANY in accordance with the terms of this
                  AGREEMENT; and

            (c)   COMPANY shall be responsible for all unavoidable authorized
                  costs and expenses, including arising out of those activities
                  that would reasonably have been required by NEKTAR AL in order
                  to meet COMPANY's requirements of SELECTED REAGENT, except if
                  this AGREEMENT is terminated by COMPANY for material breach by
                  NEKTAR AL; and,

            (d)   COMPANY shall pay NEKTAR AL all accrued milestone payments and
                  accrued royalties in accordance with the terms of this
                  AGREEMENT.

      13.4.3 Subject to Section 13.4.2, if this AGREEMENT is terminated for any
reason whatsoever, any licenses granted under this AGREEMENT shall automatically

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terminate and all licensed rights shall revert in their entirety to the
respective licensor and all obligations of each PARTY shall terminate except
those that survive under Section 13.4.1. Subject to the limitations of liability
and exclusions of damages provided for herein, termination of this AGREEMENT by
a PARTY shall not be an exclusive remedy and all other remedies will be
available to the terminating PARTY, in equity and at LAW.

14. Governance

14.1 MANAGING COMMITTEE.

            (i) To facilitate communication between the PARTIES during the
RESEARCH PROGRAM, the PARTIES shall appoint a MANAGING COMMITTEE consisting of
two (2) representatives from each of NEKTAR AL and COMPANY. The initial
representatives are set forth on Schedule VI hereto. Each PARTY may replace its
representatives on the MANAGING COMMITTEE by prior written notice to the other
PARTY. The MANAGING COMMITTEE shall have such responsibilities as set forth
herein and as the PARTIES may agree from time to time. The MANAGING COMMITTEE
shall supervise the activities of the RESEARCH COMMITTEE; resolve issues
referred by members of the RESEARCH COMMITTEE; make strategic decisions related
to research and development activities in connection with the SELECTED PRODUCT
and review the progress of research and development activities in connection
with the SELECTED PRODUCT. The MANAGING COMMITTEE shall meet at such times and
places, in person or by telephone conferencing or other electronic
communication, as it shall determine to carry out its responsibilities;
provided, that a meeting of the MANAGING COMMITTEE shall take place no later
than thirty (30) days after the EFFECTIVE DATE.

            (ii) The MANAGING COMMITTEE shall operate by consensus with
representatives of NEKTAR AL having one (1) collective vote and representatives
of COMPANY having one (1) collective vote. If a dispute arises or there is not a
unanimous vote regarding matters within the scope of responsibilities of the
MANAGING COMMITTEE, and the MANAGING COMMITTEE fails to reach a consensus on its

                                                                   Page 62 of 70
<PAGE>

resolution within thirty (30) days of when the dispute was presented to the
MANAGING COMMITTEE or when a unanimous vote is not obtained, then the dispute
shall be referred to the senior management representatives of each PARTY. If
such senior management representatives fail to agree, then (a) NEKTAR AL shall
have the right to resolve the dispute and/or cast the deciding vote on matters
pertaining to (i) the choice of REAGENTS used in the PLAN but not the selection
of a SELECTED REAGENT and (ii) after selection of a SELECTED REAGENT, the
development and/or manufacture of the SELECTED REAGENT, and (b) COMPANY shall
have the right to resolve the dispute and/or cast the deciding vote on all other
matters, provided that resolution or decision does not require NEKTAR AL to
allocate financial or personnel resources or manufacturing capacity not already
provided for in the PLAN in effect at that time.

14.2 RESEARCH COMMITTEE. The MANAGING COMMITTEE shall appoint a RESEARCH
COMMITTEE to plan and manage the research and development activities to be
conducted in connection with the SELECTED PRODUCT pursuant to the RESEARCH
PROGRAM and to facilitate communication on research and development issues
between the PARTIES. Implementation of the RESEARCH PROGRAM and other day-to-day
research and development activities shall be managed by the RESEARCH COMMITTEE,
subject to oversight by the MANAGING COMMITTEE. The RESEARCH COMMITTEE shall be
comprised of appropriate representatives of both PARTIES, and shall meet no less
frequently than once a month in person or by teleconference as agreed upon by
the PARTIES. Each PARTY shall appoint a RESEARCH PROGRAM team leader (and other
key contacts, as necessary) to serve as principal RESEARCH COMMITTEE liaisons
for the PARTIES. Employees of each PARTY who are not on the RESEARCH COMMITTEE
may attend meetings of the RESEARCH COMMITTEE, as required to further the
research and development of the SELECTED PRODUCT. The RESEARCH COMMITTEE shall
operate by consensus with representatives of NEKTAR AL having one (1) collective
vote and representatives of COMPANY having one (1) collective vote. Any
disagreements between the PARTIES' representatives at the RESEARCH COMMITTEE
level shall be referred to the MANAGING COMMITTEE. Members of the RESEARCH
COMMITTEE will be notified by each PARTY to the other PARTY within twenty (20)
days after the EFFECTIVE DATE.

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<PAGE>

14.3 Notwithstanding anything to the contrary herein, neither the MANAGING
COMMITTEE nor the RESEARCH COMMITTEE shall have the right or power to amend the
terms of this AGREEMENT or waive rights or obligations of the PARTIES hereunder,
or take any action that would conflict with any provision of this AGREEMENT.

15. Assignment

      (a) Unless otherwise expressly permitted hereunder, neither PARTY may
assign any of its rights or delegate any of its duties under this AGREEMENT
without the prior written consent of the other PARTY, except that either PARTY
may assign its rights and responsibilities hereunder without the other PARTY'S
consent as part of: (i) either (a) the sale of all or substantially all of the
assets or the entire business to which this AGREEMENT relates or (b) a merger,
consolidation, reorganization or other combination with or into another person
or entity; or (ii) the transfer or assignment to an AFFILIATE, in each case,
pursuant to which the surviving entity or assignee assumes the assigning or
merging PARTY'S obligations hereunder. Any assignment made in violation of this
Article 15 shall be null and void.

      (b) NEKTAR AL shall not assign or transfer PATENTS licensed to COMPANY
under this AGREEMENT without making such assignment or transfer subject to the
licenses granted under this AGREEMENT.

16. Notices

Any notice or other communication or payment herein required or permitted to be
given shall be deemed sufficient if and when personally delivered in writing or
if and when given by United States registered or certified mail, postage
prepaid, return receipt requested, properly addressed to the respective
addresses of the PARTIES as written below. Notices so given shall be effective

                                                                   Page 64 of 70
<PAGE>

upon the earlier to occur of (i) receipt by the PARTY to which notice is given,
or (ii) the fourth (4th) business day following the date such notice was posted,
whichever occurs first.

If to COMPANY, addressed to:

PharmAthene, Inc.
175 Admiral Cochrane Drive, Suite 101,
Annapolis, MD 21401
Attention: CEO

If to NEKTAR AL, addressed to:

NEKTAR Therapeutics AL, Corporation
1112 Church Street
Huntsville, AL 35801
Attention: Contract Management

With a copy to:

Nektar Therapeutics
150 Industrial Road
San Carlos, CA 94070-6256
Attention: Vice President, Corporate Legal

17. Miscellaneous

17.1 Force Majeure. Neither PARTY shall be held liable or responsible to the
other PARTY nor be deemed to have defaulted under or breached this AGREEMENT for
failure or delay in fulfilling or performing any term of this AGREEMENT to the
extent, and for so long as, such failure or delay is caused by or results from
causes beyond the reasonable control of the affected PARTY; provided, however,
that the foregoing shall not be applied to excuse or delay any payment
obligation of COMPANY under this AGREEMENT.

17.2 Severability. If any one or more of the provisions contained in this
AGREEMENT is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affects the substantive rights of the

                                                                   Page 65 of 70
<PAGE>

PARTIES. The PARTIES shall in such an instance use their best efforts to replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, implement the purposes of
this AGREEMENT.

17.3 Variation. This AGREEMENT may not be amended, varied or modified in any
manner except by an instrument in writing signed by a duly authorized officer or
representative of each PARTY hereto.

17.4 Forbearance and Waiver. No waiver by a PARTY in respect of any breach shall
operate as a waiver in respect of any subsequent breach. No forbearance, failure
or delay by a PARTY in exercising any right or remedy shall operate as a waiver
thereof, nor shall any single or partial forbearance, exercise or waiver of any
right or remedy prejudice its further exercise of any right or remedy under this
AGREEMENT or at LAW.

17.5 Counterparts. This AGREEMENT may be executed in more than one counterpart,
each of which constitutes an original and all of which together shall constitute
one enforceable agreement.

17.6 No Partnership. The relationship of the PARTIES is that of independent
contractors and this AGREEMENT shall not operate so as to create a partnership
or joint venture of any kind between the PARTIES.

17.7 Construction. The PARTIES have participated jointly in the negotiation and
drafting of this AGREEMENT. In the event that an ambiguity or question of intent
or interpretation arises, this AGREEMENT shall be construed as if drafted
jointly by the PARTIES and no presumption or burden of proof shall arise
favoring or disfavoring any PARTY by virtue of the authorship of any of the
provisions of this AGREEMENT. Except where the context otherwise requires, where
used, the singular shall include the plural, the plural the singular, the use of
any gender shall be applicable to all genders and the word "or" is used in the
inclusive sense (and/or). The captions of this AGREEMENT are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this AGREEMENT or the intent of any provision contained in this
AGREEMENT. The term "including" as used herein means including the generality of
any description preceding such term.

                                                                   Page 66 of 70
<PAGE>

17.8 Entire Agreement. This AGREEMENT and the Schedules attached hereto
constitute the entire understanding between the PARTIES and supersedes any prior
or contemporaneous written or oral understanding, negotiations or agreements
between and among them respecting the subject matter hereof. This AGREEMENT
shall be binding upon, and inure to the benefit of, the PARTIES and their
respective successors and assigns.

17.9 Patent Marking and SELECTED PRODUCT Marking. COMPANY shall place
appropriate NEKTAR AL patent and/or patent pending markings on SELECTED PRODUCT
or the packaging therefor provided that NEKTAR AL provides to COMPANY the
identity of such patents and the SELECTED PRODUCT and country for which marking
is applicable. The content, form, size, location and language of such markings
shall be in accordance with the laws, regulations, and practices of the country
in which the applicable units of SELECTED PRODUCT is distributed. In the event
that COMPANY believes that such marking is not in accordance with applicable
law, rules or regulations, COMPANY shall inform NEKTAR AL and COMPANY shall not
be required to mark the SELECTED PRODUCT unless COMPANY is indemnified by NEKTAR
AL in writing with respect to any and all losses that may arise from such
marking. COMPANY shall be responsible for all packaging (non-commercial and
commercial) and labeling of SELECTED PRODUCT. To the extent allowed by the
applicable laws and regulations, all SELECTED PRODUCT labeling, packaging and
package inserts and any promotional materials associated with SELECTED PRODUCT
shall carry, in a conspicuous location, the trademark of NEKTAR AL, the identity
and style of which shall be selected by NEKTAR AL in its sole discretion,
provided that such identity and style is reasonably acceptable to COMPANY.
NEKTAR AL authorizes the use of its trademark pursuant to this Section 17.9.

17.10 Governing Law. All questions of inventorship will be determined in
accordance with U.S. patent laws. In respect to all other PATENT rights, the

                                                                   Page 67 of 70
<PAGE>

rights of the PARTIES will be governed by the laws of the jurisdiction in which
the applicable PATENT is filed or granted. In all other respects, this AGREEMENT
shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to its choice of law rules that would require
application of the law of another jurisdiction.

17.11 Termination of NON-DISCLOSURE AGREEMENT. All provisions of, rights granted
and covenants made in the NON-DISCLOSURE AGREEMENT are hereby terminated and of
no further force and effect and are superseded in their entirety by the
provisions of, rights granted and covenants made in this AGREEMENT. The PARTIES
acknowledge and agree that any disclosure made pursuant to the NON-DISCLOSURE
AGREEMENT shall be governed by the terms and conditions of Article 7.

17.12 Compliance with Laws. COMPANY will comply with all LAWS in performing its
obligations and exercising its rights hereunder, and NEKTAR AL will comply with
all United States laws in performing its obligations and exercising its rights
hereunder. Nothing in this AGREEMENT shall be deemed to permit COMPANY or its
SUBLICENSEES to export, re-export or otherwise transfer any information or
materials (including NEKTAR AL MATERIALS and SELECTED REAGENT) transferred
hereunder or SELECTED PRODUCT manufactured therefrom without complying with
LAWS.

17.13 Section 365(n) of the Bankruptcy Code. All rights and licenses granted
under or pursuant to this AGREEMENT by one PARTY to the other PARTY are, for all
purposes of Section 365(n) of Title 11, U.S. Code (the "BANKRUPTCY CODE"),
licenses of rights to "intellectual property" as defined in the BANKRUPTCY CODE.
As a licensee of such rights under this AGREEMENT, a PARTY shall retain and may
fully exercise all of its rights and elections under the BANKRUPTCY CODE. If a
BANKRUPTCY CODE case is commenced by or against a PARTY (the "BANKRUPTCY PARTY")
and this AGREEMENT is rejected as provided in the BANKRUPTCY CODE and the
BANKRUPTCY PARTY elects to retain its rights hereunder as provided in the
BANKRUPTCY CODE, then the BANKRUPTCY PARTY (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a BANKRUPTCY CODE trustee) shall take such steps as are necessary to

                                                                   Page 68 of 70
<PAGE>

permit the other PARTY to exercise its rights under this AGREEMENT. All rights,
powers and remedies of the non-BANKRUPTCY PARTY provided under this provision
are in addition to and not in substitution for any and all other rights, powers
and remedies now or hereafter existing at law or in equity (including, without
limitation, the BANKRUPTCY CODE) in the event of any such commencement of a
bankruptcy proceeding by or against a BANKRUPTCY PARTY.

17.14 Export Restrictions. NEKTAR AL acknowledges and understands that the
CONFIDENTIAL INFORMATION supplied by COMPANY with respect to this AGREEMENT are
subject to the export control and sanctions laws and regulations of the United
States and other applicable countries, including without limitation, the
International Traffic in Arms Regulations, the Foreign Assets Control
Regulations, and the Export Administration Regulations. Diversion contrary to
United States and other laws is strictly prohibited. COMPANY will comply with
all applicable laws and regulations and shall ensure, at its sole expense, that
such CONFIDENTIAL INFORMATION are maintained, used disclosed, and transferred in
accordance with United States and other applicable laws and regulations,
including without limitation any restrictions on disclosures to non-United
States persons, export license requirements, or reporting requirements.

                            Signature Page to Follow

                                                                   Page 69 of 70
<PAGE>

IN WITNESS WHEREOF, the PARTIES hereto have caused their authorized
representatives to execute this AGREEMENT by signing below:

Signed:
For and on behalf of:                         For and on behalf of:
NEKTAR Therapeutics AL, Corporation           PharmAthene, Inc.

Signature                                     Signature

/s/ Jennifer A. Filbey                        /s/ Richard Schoenfeld
----------------------------------            ----------------------------------
Name: Jennifer A. Filbey                      Name: Richard Schoenfeld
Title:  V.P., Business Development            Title:  V.P., Operations

                Signature Page for Research and License Agreement

                                                                   Page 70 of 70

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