Document:

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                                                                   Exhibit 10.11

                            ROSETTA BIOSYSTEMS, INC.

                         COMMON STOCK PURCHASE AGREEMENT

         This Common Stock Purchase Agreement (the "AGREEMENT") is made as of
May 15, 1997 by and between Rosetta Biosystems, Inc., a Delaware corporation
(the "COMPANY"), and Stephen H. Friend ("PURCHASER").

         1. SALE OF STOCK. Subject to the terms and conditions of this
Agreement, on the Purchase Date (as defined below) the Company will issue and
sell to Purchaser, and Purchaser agrees to purchase from the Company, 1,860,118
shares of the Company's Common Stock (the "SHARES") at a purchase price of $.01
per Share for a total purchase price of $18,601.18. The term "Shares" refers to
the purchased Shares and all securities received in replacement of or in
connection with the Shares pursuant to stock dividends or splits, all securities
received in replacement of the Shares in a recapitalization, merger,
reorganization, exchange or the like, and all new, substituted or additional
securities or other properties to which Purchaser is entitled by reason of
Purchaser's ownership of the Shares.

         2. PURCHASE. The purchase and sale of the Shares under this Agreement
shall occur at the principal office of the Company simultaneously with the
execution of this Agreement by the parties, or on such other date as the Company
and Purchaser shall agree (the "PURCHASE DATE"). On the Purchase Date, the
Company will deliver to Purchaser a certificate representing the Shares to be
purchased by Purchaser (which shall be issued in Purchaser's name) against
payment of the purchase price therefor by Purchaser by delivery of (a) a check
in the amount of $1,861.18, (b) a promissory note in the form attached as
EXHIBIT A to this Agreement in the principle amount of $16,740.00 and (c) a
Pledge and Security Agreement in the form attached as EXHIBIT B to this
Agreement.

         3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants and covenants to Purchaser that the
authorized capital of the Company consists, as of the Purchase Date, of
5,000,000 shares of Preferred Stock, none of which are issued and outstanding,
and 10,000,000 shares of Common Stock, 6,386,227 shares of which will be issued
and outstanding as of the Purchase Date. All of the outstanding shares of Common
Stock have been duly authorized, fully paid and are nonassessable and issued in
compliance with all applicable federal and state securities laws.

         4. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares while the Shares are subject
to the Company's Repurchase Option (as defined below), except as provided below.
After any Shares have been released from the Repurchase Option, Purchaser shall
not assign, encumber or dispose of any interest in such Shares except in
compliance with the provisions below and applicable securities laws.

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                  (a)      REPURCHASE OPTION.

                           (i) In the event of the voluntary or involuntary
termination of Purchaser's employment or consulting relationship with the
Company for any reason (including death or disability), with or without cause,
the Company shall upon the date of such termination (the "TERMINATION DATE")
have an irrevocable, exclusive option (the "REPURCHASE OPTION") for a period of
60 days from such date to repurchase all or any portion of the Shares held by
Purchaser as of the Termination Date which have not yet been released from the
Company's Repurchase Option at the original purchase price per Share specified
in Section 1 (adjusted for any stock splits, stock dividends and the like);
PROVIDED, HOWEVER, that the Repurchase Option shall continue for a period of up
to one year from the Termination Date to the extent that the Company reasonably
determines that such an extension of time is necessary to prevent the repurchase
of Purchaser's Shares from causing other capital stock of the Company to not
qualify as "small business stock" under Section 1202 of the Internal Revenue
Code of 1986, as amended.

                           (ii) The Repurchase Option shall be exercised by the
Company by written notice to Purchaser or Purchaser's executor and, at the
Company's option, (A) by delivery to Purchaser or Purchaser's executor with such
notice of a check in the amount of the purchase price for the Shares being
purchased, or (B) in the event Purchaser is indebted to the Company, by
cancellation by the Company of an amount of such indebtedness equal to the
purchase price for the Shares being repurchased, or (C) by a combination of (A)
and (B) so that the combined payment and cancellation of indebtedness equals
such purchase price. Upon delivery of such notice and payment of the purchase
price in any of the ways described above, the Company shall become the legal and
beneficial owner of the Shares being repurchased and all rights and interest
therein or related thereto, and the Company shall have the right to transfer to
its own name the number of Shares being repurchased by the Company, without
further action by Purchaser.

                           (iii) One hundred percent (100%) of the Shares shall
initially be subject to the Repurchase Option. 1/8 of the Shares shall be
released from the Repurchase Option on the date that is six (6) months after the
Vesting Commencement Date (as set forth on the signature page of this
Agreement), and 1/48 of the total number of Shares shall be released from the
Repurchase Option at the end of each month thereafter, until all Shares are
released from the Repurchase Option (provided in each case that Purchaser's
employment or consulting relationship with the Company has not been terminated
prior to the date of any such release). Fractional shares shall be rounded to
the nearest whole share.

                           (iv) Notwithstanding the above, in the event of
Purchaser's death or disability at such time as more than fifty percent (50%) of
the Shares remain subject to the Repurchase Option, all Shares in excess of such
fifty percent (50%) that remain subject to the Repurchase Option shall be deemed
to be released from the Repurchase Option as of the time of such death or
disability.

                           (v) Notwithstanding the above, in the event
Purchaser's employment or consulting relationship with the Company is
involuntarily terminated without cause

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(excluding Purchaser's death or disability), fifty percent (50%) of the of the
Shares held by Purchaser which are still subject to the Company's Repurchase
Option as of the Termination Date shall be deemed to have been released from the
Repurchase Option immediately prior to the Termination Date.

                           (vi) Notwithstanding the above, if Purchaser
voluntarily terminates his employment or consulting relationship with the
Company prior to the closing of a sale of equity securities by the Company in
which the gross proceeds to the Company when added together with all other
amounts previously received by the Company for the sale of equity securities are
greater than One Million Dollars ($1,000,000) then all of Purchasers' Shares
shall remain subject to the Repurchase Option.

                  (b) RIGHT OF FIRST REFUSAL. Before any Shares held by
Purchaser or any transferee of Purchaser (either being sometimes referred to
herein as the "HOLDER") may be sold or otherwise transferred (including transfer
by gift or operation of law), the Company or its assignee(s) shall have a right
of first refusal to purchase the Shares on the terms and conditions set forth in
this Section 4(b) (the "RIGHT OF FIRST REFUSAL").

                           (i) NOTICE OF PROPOSED TRANSFER. The Holder of the
Shares shall deliver to the Company a written notice (the "NOTICE") stating: (A)
the Holder's bona fide intention to sell or otherwise transfer such Shares; (B)
the name of each proposed purchaser or other transferee ("PROPOSED TRANSFEREE");
(C) the number of Shares to be transferred to each Proposed Transferee; and (D)
the terms and conditions of each proposed sale or transfer. The Holder shall
offer the Shares at the same price (the "OFFERED PRICE") and upon the same terms
(or terms as similar as reasonably possible) to the Company or its assignee(s).

                           (ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time
within thirty (30) days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to purchase all,
but not less than all, of the Shares proposed to be transferred to any one or
more of the Proposed Transferees, at the purchase price determined in accordance
with subsection (iii) below.

                           (iii) PURCHASE PRICE. The purchase price ("PURCHASE
PRICE") for the Shares purchased by the Company or its assignee(s) under this
Section 4(b) shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in
good faith. In the event the transfer occurs by gift or operation of law, the
Offered Price shall be equal to the fair market value as determined by the Board
of Directors of the Company in its reasonable judgment.

                           (iv) PAYMENT. Payment of the Purchase Price shall be
made, at the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

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                           (v) HOLDER'S RIGHT TO TRANSFER. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section
4(b), then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that
such sale or other transfer is consummated within 60 days after the date of the
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section 4 shall continue to apply
to the Shares in the hands of such Proposed Transferee. If the Shares described
in the Notice are not transferred to the Proposed Transferee within such period,
or if the Holder proposes to change the price or other terms to make them more
favorable to the Proposed Transferee, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

                           (vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything
to the contrary contained in this Section 4(b) notwithstanding, the transfer of
any or all of the Shares during Purchaser's lifetime or on Purchaser's death by
will or intestacy to Purchaser's Immediate Family or a trust for the benefit of
Purchaser's Immediate Family shall be exempt from the provisions of this Section
4(b). "IMMEDIATE FAMILY" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section 4.

                  (c)      INVOLUNTARY TRANSFER.

                           (i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY
TRANSFER. In the event, at any time after the date of this Agreement, of any
transfer by operation of law or other involuntary transfer (including death or
divorce, but excluding a transfer to Immediate Family as set forth in Section
4(b)(vi) above) of all or a portion of the Shares by the record holder thereof,
the Company shall have an option to purchase all of the Shares transferred at
the greater of the purchase price paid by Purchaser pursuant to this Agreement
or the fair market value of the Shares on the date of transfer. Upon such a
transfer, the person acquiring the Shares shall promptly notify the Secretary of
the Company of such transfer. The right to purchase such Shares shall be
provided to the Company for a period of thirty (30) days following receipt by
the Company of written notice by the person acquiring the Shares.

                           (ii) PRICE FOR INVOLUNTARY TRANSFER. With respect to
any stock to be transferred pursuant to Section 4(c)(i), the price per Share
shall be a price set by the Board of Directors of the Company that will reflect
the current value of the stock in terms of present earnings and future prospects
of the Company. The Company shall notify Purchaser or his or her executor of the
price so determined within thirty (30) days after receipt by it of written
notice of the transfer or proposed transfer of Shares. However, if the Purchaser
does not agree with the valuation as determined by the Board of Directors of the
Company, the Purchaser shall be

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entitled to have the valuation determined by an independent appraiser to be
mutually agreed upon by the Company and the Purchaser and whose fees shall be
borne equally by the Company and the Purchaser.

                  (d) ASSIGNMENT. The right of the Company to purchase any part
of the Shares may be assigned in whole or in part to any stockholder or
stockholders of the Company or other persons or organizations; provided,
however, that an assignee, other than a corporation that is the parent or a 100%
owned subsidiary of the Company, must pay the Company, upon assignment of such
right, cash equal to the difference between the original purchase price and fair
market value, if the original purchase price is less than the fair market value
of the Shares subject to the assignment.

                  (e) RESTRICTIONS BINDING ON TRANSFEREES. All transferees of
Shares or any interest therein will receive and hold such Shares or interest
subject to the provisions of this Agreement, including, insofar as applicable,
the Repurchase Option. Any sale or transfer of the Company's Shares shall be
void unless the provisions of this Agreement are met.

                  (f) TERMINATION OF RIGHTS. The right of first refusal granted
the Company by Section 4(b) above and the option to repurchase the Shares in the
event of an involuntary transfer granted the Company by Section 4(c) above shall
terminate upon the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act. Upon
termination of the right of first refusal described in Section 4(b) and the
expiration or exercise of the Repurchase Option, a new certificate or
certificates representing the Shares not repurchased shall be issued, on
request, without the legend referred to in Section 7(a)(ii) below and delivered
to Purchaser.

         5. ESCROW OF UNVESTED SHARES. For purposes of facilitating the
enforcement of the provisions of Section 4 above, Purchaser agrees, immediately
upon receipt of the certificate(s) for the Shares subject to the Repurchase
Option, to deliver such certificate(s), together with an Assignment Separate
from Certificate in the form attached to this Agreement as EXHIBIT C executed by
Purchaser and by Purchaser's spouse (if required for transfer), in blank, to the
Secretary of the Company, or the Secretary's designee, to hold such
certificate(s) and Assignment Separate from Certificate in escrow and to take
all such actions and to effectuate all such transfers and/or releases as are in
accordance with the terms of this Agreement. Purchaser hereby acknowledges that
the Secretary of the Company, or the Secretary's designee, is so appointed as
the escrow holder with the foregoing authorities as a material inducement to
make this Agreement and that said appointment is coupled with an interest and is
accordingly irrevocable. Purchaser agrees that said escrow holder shall not be
liable when acting in good faith to any party hereof (or to any other party).
The escrow holder may rely upon any letter, notice or other document executed by
any signature purported to be genuine and may resign at any time. Purchaser
agrees that if the Secretary of the Company, or the Secretary's designee,
resigns as escrow holder for any or no reason, the Board of Directors of the
Company shall have the power to appoint a successor to serve as escrow holder
pursuant to the terms of this Agreement.

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         6. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with the
purchase of the Shares, Purchaser represents to the Company the following:

                  (a) Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Shares. Purchaser is
purchasing the Shares for investment for his or her own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act.

                  (b) Purchaser understands that the Shares have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.

                  (c) Purchaser understands that the Shares are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, Purchaser must hold the Shares indefinitely unless they
are registered with the Securities and Exchange Commission and qualified by
state authorities, or an exemption from such registration and qualification
requirements is available. Purchaser acknowledges that the Company has no
obligation to register or qualify the Shares for resale. Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, and
requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.

                  (d) Purchaser understands that Purchaser may suffer adverse
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted any tax consultants
Purchaser deems advisable in connection the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.

         7.       RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a) LEGENDS. The certificate or certificates representing the
Shares shall bear the following legends (as well as any legends required by
applicable state and federal corporate and securities laws):

                  (i)      THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                           BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
                           UNDER THE SECURITIES LAWS OF ANY PARTICULAR STATE,
                           AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
                           VIEW TO, OR IN CONNECTION WITH, THE SALE OR
                           DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY
                           BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
                           STATEMENT RELATED THERETO OR AN OPINION

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                           OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS
                           NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                  (ii)     THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
                           TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
                           AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A
                           COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
                           COMPANY.

                  (iii)    Any legend required to be placed thereon by the
                           Washington Secretary of State or other applicable
                           state securities laws.

                  (b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

                  (c) REFUSAL TO TRANSFER. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

         8. NO EMPLOYMENT RIGHTS. Nothing in this Agreement shall affect in any
manner whatsoever the right or power of the Company, or a parent or subsidiary
of the Company, to terminate Purchaser's employment, for any reason, with or
without cause.

         9. SECTION 83(b) ELECTION. Purchaser understands that Section 83(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), taxes as ordinary
income the difference between the amount paid for the Shares and the fair market
value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "RESTRICTION" means the right of the Company to buy back the Shares
pursuant to the Repurchase Option set forth in Section 4(a) of this Agreement.
Purchaser understands that Purchaser may elect to be taxed at the time the
Shares are purchased, rather than when and as the Repurchase Option expires, by
filing an election under Section 83(b) (an "83(b) ELECTION") of the Code with
the Internal Revenue Service within 30 days from the date of purchase. Even if
the fair market value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income under Section 83(a) in the future. Purchaser understands that
failure to file such an election in a timely manner may result in adverse tax
consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her federal income tax
return for the calendar year in which the date of this Agreement falls.
Purchaser acknowledges that the foregoing is only a summary of the effect of
United States federal income taxation with respect to purchase of the Shares
hereunder, and does not purport to be complete. Purchaser further acknowledges
that the Company has directed Purchaser to seek

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independent advice regarding the applicable provisions of the Code, the income
tax laws of any municipality, state or foreign country in which Purchaser may
reside, and the tax consequences of Purchaser's death.

                  Purchaser agrees that he will execute and deliver to the
Company with this executed Agreement a copy of the Acknowledgment and Statement
of Decision Regarding Section 83(b) Election (the "ACKNOWLEDGMENT"), attached
hereto as EXHIBIT D. Purchaser further agrees that Purchaser will execute and
submit with the Acknowledgment a copy of the 83(b) Election, attached hereto as
EXHIBIT E, if Purchaser has indicated in the Acknowledgment his or her decision
to make such an election.

         10. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Purchaser agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Shares (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of the public
offering.

         11. REGISTRATION RIGHTS. The Company will use best efforts to ensure
that Purchaser shall be entitled to the same or substantially similar piggy-back
registration rights that the Company grants to investors in the Company.

         12.      MISCELLANEOUS.

                  (a) GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Washington, without giving effect to principles of conflicts of
law.

                  (b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement
sets forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

                  (c) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

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                  (d) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

                  (e) NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.

                  (f) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

                  (g) SUCCESSORS AND ASSIGNS. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

                            [Signature Page Follows]

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<PAGE>

         The parties have executed this Agreement as of the date first set forth
above.

                                   ROSETTA BIOSYSTEMS, INC.

                                   By: /s/
                                      ------------------------------------------
                                   Title:
                                         ---------------------------------------

                                   Address:
                                   c/o Venture Law Group
                                   4750 Carillon Point
                                   Kirkland, WA  98033

         PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR
CONSULTANT AT THE WILL OF THE COMPANY OR BY THE PROVISIONS OF SECTION 4(A)(IV)
AND SECTION 4(A)(V). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN
THIS AGREEMENT SHALL CONFER UPON PURCHASER ANY RIGHT WITH RESPECT TO
CONTINUATION OF SUCH EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.

                                   PURCHASER:

                                   STEPHEN H. FRIEND

                                   /s/ Stephen H. Friend
                                   ---------------------------------------------
                                   (Signature)

                                  Address:

Vesting Commencement
Date:  April 15, 1997

I, Diana Gayle Bowman Friend, spouse of Stephen H. Friend, have read and hereby
approve the foregoing Agreement. In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Agreement, I hereby
agree to be irrevocably bound by the Agreement and further agree that any
community property or other such interest shall be similarly bound by the
Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any
amendment or exercise of any rights under the Agreement.

                                     /s/ Diana Friend
                                   ---------------------------------------------

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                                    EXHIBIT A

                                 PROMISSORY NOTE

        $16,740.00                                           Seattle, Washington
                                                                    May __, 1997

         For value received, the undersigned promises to pay Rosetta Biosystems,
Inc., a Delaware corporation (the "COMPANY"), at its principal office the
principal sum of $16,740.00 with interest from the date hereof at a rate of 8%
per annum, compounded semiannually, on the unpaid balance of such principal sum.
Such principal and interest shall be due and payable on November 31, 1997.

         If the undersigned's employment or consulting relationship with the
Company is terminated prior to payment in full of this Note, this Note shall be
immediately due and payable.

         Principal and interest are payable in lawful money of the United States
of America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME WITHOUT
INTEREST OR PENALTY.

         Should suit be commenced to collect any sums due under this Note, such
sum as the Court may deem reasonable shall be added hereto as attorneys' fees.
The makers and endorsers have severally waived presentment for payment, protest,
notice of protest, and notice of nonpayment of this Note.

         This Note, which is full recourse, is secured by a pledge of certain
shares of Common Stock of the Company and is subject to the terms of a Pledge
and Security Agreement between the undersigned and the Company of even date
herewith.

                                                  -----------------------------
                                                  Stephen H. Friend

<PAGE>

                                    EXHIBIT B

                          PLEDGE AND SECURITY AGREEMENT

         This Pledge and Security Agreement (the "AGREEMENT") is entered into
this ___ day of May, 1997 by and between Rosetta Biosystems, Inc., a Delaware
corporation (the "COMPANY") and Stephen H. Friend ("PURCHASER").

                                    RECITALS

         In connection with Purchaser's purchase of certain shares of the
Company's Common Stock (the "SHARES") pursuant to a Common Stock Purchase
Agreement dated May __, 1997 between Purchaser and the Company, Purchaser is
delivering a promissory note of even date herewith (the "NOTE") in full or
partial payment of the purchase price for the Shares. The company requires that
the Note be secured by a pledge of the Shares on the terms set forth below.

                                    AGREEMENT

         In consideration of the Company's acceptance of the Note as full or
partial payment of the exercise price of the Shares, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:

         1. The Note shall become payable in full upon the voluntary or
involuntary termination or cessation of employment of Purchaser with the
Company, for any reason, with or without cause (including death or disability).

         2. Purchaser shall deliver to the Secretary of the Company, or his or
her designee (hereinafter referred to as the "PLEDGE HOLDER"), all certificates
representing the Shares, together with an Assignment Separate from Certificate
in the form attached to this Agreement as ATTACHMENT A executed by Purchaser and
by Purchaser's spouse (if required for transfer), in blank, for use in
transferring all or a portion of the Shares to the Company if, as an when
required pursuant to this Agreement. In addition, if Purchaser is married,
Purchaser's spouse shall execute the signature page attached to this Agreement.

         3. As security for the payment of the Note and any renewal, extension
or modification of the Note, Purchaser hereby grants to the Company a security
interest in and pledges and delivers to the Company Purchaser's Shares
(sometimes referred to herein as the "COLLATERAL").

         4. In the event that Purchaser prepays all or a portion of the Note, in
accordance with the provisions thereof, Purchaser intends, unless written notice
to the contrary is delivered to the Pledge Holder, that the Shares represented
by the portion of the Note so repaid, including annual interest thereon, shall
continue to be so held by the Pledge Holder, to serve as independent collateral
for the outstanding portion of the Note for the purpose of commencing the
holding

<PAGE>

period set forth in Rule 144(d) promulgated under the Securities Act of 1933, as
amended (the "SECURITIES ACT").

         5. In the event of any foreclosure of the security interest created by
this Agreement, the Company may sell the Shares at a private sale or may
repurchase the Shares itself. The parties agree that, prior to the establishment
of a public market for the Shares of the Company, the securities laws affecting
sale of the Shares make a public sale of the Shares commercially unreasonable.
The parties further agree that the repurchasing of such Shares by the Company,
or by any person to whom the Company may have assigned its rights under this
Agreement, is commercially reasonable if made at a price determined by the Board
of Directors in its discretion, fairly exercised, representing what would be the
fair market value of the Shares reduced by any limitation on transferability,
whether due to the size of the block of shares or the restrictions of applicable
securities laws.

         6. In the event of default in payment when due of any indebtedness
under the Note, the Company may elect than, or at any time thereafter, to
exercise all rights available to a secured party under the Washington Commercial
Code including the right to sell the Collateral at a private or public sale or
repurchase the Shares as provided above. The proceeds of any sale shall be
applied in the following order:

                           (a) To the extent necessary, proceeds shall be used
to pay all reasonable expenses of the Company in enforcing this Agreement and
the Note, including, without limitation, reasonable attorney's fees and legal
expenses incurred by the Company.

                           (b) To the extent necessary, proceeds shall be used
to satisfy any remaining indebtedness under Purchaser's Note.

                           (c) Any remaining proceeds shall be delivered to
Purchaser.

         7. Upon full payment by Purchaser of all amounts due under the Note,
Pledge Holder shall deliver to Purchaser all Shares in Pledge Holder's
possession belonging to Purchaser, and Pledge Holder shall thereupon be
discharged of all further obligations under this Agreement; PROVIDED, HOWEVER,
that Pledge Holder shall nevertheless retain the Shares as escrow agent if at
the time of full payment by Purchaser said Shares are still subject to a
Repurchase Option in favor of the Company.

                                      -2-
<PAGE>

        The parties have executed this Pledge and Security Agreement as of the
date first set forth above.

                                    COMPANY:

                                    ROSETTA BIOSYSTEMS, INC.

                                    By:
                                       ------------------------------------
                                    Name:
                                         ----------------------------------
                                               (print)
                                    Title:
                                          -------------------------------

                                    Address:
                                    c/o Venture Law Group
                                    4750 Carillon Point
                                    Kirkland, WA  98033

                                   PURCHASER:

                                   STEPHEN H. FRIEND

                                    ----------------------------------------
                                   (Signature)

                                   Address:

                                      -3-
<PAGE>

                                  ATTACHMENT A

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

                  FOR VALUE RECEIVED and pursuant to that certain Pledge and
Security Agreement between the undersigned ("PURCHASEr") and Rosetta Biosystems,
Inc. (the "COMPANY") dated May __, 1997 (the "AGREEMENT"), Purchaser hereby
sells, assigns and transfers unto the Company _______________________________
(________) shares of the Common Stock of the Company standing in Purchaser's
name on the Company's books and represented by Certificate No. _____, and hereby
irrevocably appoints _______________________ to transfer said stock on the books
of the Company with full power of substitution in the premises. THIS ASSIGNMENT
MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT.

Dated: ____________

                                   Signature:

                                   -----------------------------------
                                   Stephen H. Friend

                                   -----------------------------------
                                   Diana Gayle Bowman Friend

Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to perfect the security interest of the Company
pursuant to the Agreement.

<PAGE>

                                    EXHIBIT C

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR VALUE RECEIVED and pursuant to that certain Common Stock Purchase
Agreement between the undersigned ("PURCHASER") and Rosetta Biosystems, Inc.
(the "COMPANY") dated May __, 1997 (the "AGREEMENT"), Purchaser hereby sells,
assigns and transfers unto the Company _________________________________
(________) shares of the Common Stock of the Company standing in Purchaser's
name on the Company's books and represented by Certificate No. ___, and does
hereby irrevocably constitute and appoint _____________________________ to
transfer said stock on the books of the Company with full power of substitution
in the premises. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT
AND THE EXHIBITS THERETO.

Dated: ______________________

                                   Signature:

                                  ------------------------------
                                  Stephen H. Friend

                                  ------------------------------
                                  Diana Gayle Bowman Friend

Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Company to exercise its repurchase
option set forth in the Agreement without requiring additional signatures on the
part of Purchaser.

<PAGE>

                                    EXHIBIT D

                    ACKNOWLEDGMENT AND STATEMENT OF DECISION
                        REGARDING SECTION 83(b) ELECTION

         The undersigned has entered a stock purchase agreement with Rosetta
Biosystems, Inc., a Delaware corporation (the "COMPANY"), pursuant to which the
undersigned is purchasing 1,860,118 shares of Common Stock of the Company (the
"SHARES"). In connection with the purchase of the Shares, the undersigned hereby
represents as follows:

         1._______The undersigned has carefully reviewed the stock purchase
agreement pursuant to which the undersigned is purchasing the Shares.

         2._______ The undersigned either [check and complete as applicable]:

         (a)      ____ has consulted, and has been fully advised by, the
                  undersigned's own tax advisor, __________________________,
                  whose business address is _____________________________,
                  regarding the federal, state and local tax consequences of
                  purchasing the Shares, and particularly regarding the
                  advisability of making elections pursuant to Section 83(b) of
                  the Internal Revenue Code of 1986, as amended (the "CODE") and
                  pursuant to the corresponding provisions, if any, of
                  applicable state law; or

         (b) ____ has knowingly chosen not to consult such a tax advisor.

         3._______The undersigned hereby states that the undersigned has decided
                  [check as applicable]:

         (a)      ____ to make an election pursuant to Section 83(b) of the
                  Code, and is submitting to the Company, together with the
                  undersigned's executed Common Stock Purchase Agreement, an
                  executed form entitled "Election Under Section 83(b) of the
                  Internal Revenue Code of 1986;" or

         (b) ____ not to make an election pursuant to Section 83(b) of the Code.

<PAGE>

         4._______Neither the Company nor any subsidiary or representative of
the Company has made any warranty or representation to the undersigned with
respect to the tax consequences of the undersigned's purchase of the Shares or
of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.

Date:    _________                                   -----------------
                                                     Stephen H. Friend

Date:     _________                                -------------------------
                                                   Diana Gayle Bowman Friend

                                      -2-
<PAGE>

                                    EXHIBIT E

                          ELECTION UNDER SECTION 83(b)

                      OF THE INTERNAL REVENUE CODE OF 1986

         The undersigned taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:

1.       The name, address, taxpayer identification number and taxable year of
         the undersigned are as follows:

         NAME OF TAXPAYER:  Stephen H. Friend

         NAME OF SPOUSE:  Diana Gayle Bowman Friend

         ADDRESS:

         IDENTIFICATION NO. OF TAXPAYER:

         IDENTIFICATION NO. OF SPOUSE:

         TAXABLE YEAR:  1997

2.       The property with respect to which the election is made is described as
         follows: 1,860,118 of the Common Stock (the "Shares"), $.001 par value,
         of Rosetta Biosystems, Inc., a Delaware corporation (the "Company").

3.       The date on which the property was transferred is: May __, 1997

4.       The property is subject to the following restrictions:

         Repurchase option at cost in favor of the Company upon termination of
         taxpayer's employment or consulting relationship.

5.       The fair market value at the time of transfer, determined without
         regard to any restriction other than a restriction which by its terms
         will never lapse, of such property is: $18,601.18

6.       The amount (if any) paid for such property: $18,601.18

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.

Dated: _____________________                 -----------------------------
                                             Taxpayer

Dated: ______________________                -----------------------------
                                             Spouse of Taxpayer

<PAGE>

                                     RECEIPT

         Rosetta Biosystems, Inc. hereby acknowledges receipt of a check in the
amount of $1,861.18 and a promissory note in the amount of $16,740.00 given by
Stephen H. Friend as consideration for Certificate No. ___ for 1,860,118 shares
of Common Stock of Rosetta Biosystems, Inc.

Dated:  ________________

                                     Rosetta Biosystems, Inc.

                                     By:________________________________________

                                     Title:_____________________________________

<PAGE>

                               RECEIPT AND CONSENT

         The undersigned hereby acknowledges receipt of a photocopy of
Certificate No. ___ for 1,860,118 shares of Common Stock of Rosetta Biosystems,
Inc. (the "COMPANY").

         The undersigned further acknowledges that the Secretary of the Company,
or his or her designee, is acting as escrow holder pursuant to the Common Stock
Purchase Agreement Purchaser has previously entered into with the Company. As
escrow holder, the Secretary of the Company, or his or her designee, holds the
original of the aforementioned certificate issued in the undersigned's name.

Dated:  _________________________

                                                -------------------------------
                                                 Stephen H. Friend<PAGE>

December 22, 1998

UNIVERSITY OF CALIFORNIA, BERKELEY

OFFICE OF TECHNOLOGY LICENSING                                          [SEAL]

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

                      AMENDED AND RESTATED EXCLUSIVE. LICENSE

                                       BETWEEN

                              ACACIA BIOSCIENCES, INC.

                                        AND

                     THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

                                         FOR

                                GENE REPORTER MATRIX

                                                       UC Case No.: B95-034

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

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

<PAGE>

                                  TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION   TITLE                                                                       PAGE
<S>       <C>                                                                         <C>
1.        BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2.        DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

3.        GRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

4.        SUBLICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

5.        LICENSE ISSUE FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

6.        ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

7.        DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

8.        PROGRESS AND ROYALTY REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . .9

9.        BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

10.       LIFE OF THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11.       TERMINATION BY REGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

12.       TERMINATION BY LICENSEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

13.       DISPOSITION OF PRODUCTS ON HAND UPON TERMINATION. . . . . . . . . . . . . . . 11

14.       PATENT PROSECUTION AND MAINTENANCE. . . . . . . . . . . . . . . . . . . . . . 11

15.       MARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

16.       USE OF NAMES AND TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . 13

17.       LIMITED WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

18.       PATENT INFRINGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

19.       INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

20.       EXPORT CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

21.       FOREIGN GOVERNMENTAL APPROVAL OR REGISTRATION . . . . . . . . . . . . . . . . 15

22.       ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

23.       NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

24.       LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

25.       WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

26.       CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

27.       FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

28.       SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

29.       APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

30.       SCOPE OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

<PAGE>

UNIVERSITY OF CALIFORNIA, BERKELEY
OFFICE OF TECHNOLOGY LICENSING                                [SEAL]

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

                                 AMENDED AND RESTATED

                                 EXCLUSIVE LICENSE

                                      BETWEEN

                              ACACIA BIOSCIENCES, INC.

                                        AND

                    THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

                                        FOR

                                 GENE REPORTER MATRIX

                                             UC Case No.: B95-034
                                             [***]

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

Effective as of September 1, 1995 (the "EFFECTIVE DATE") and amended and
restated as of December 1, 1998 (the "RESTATEMENT DATE"), THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA, a California corporation, whose legal address is 1111
Franklin Street, Fifth Floor, Oakland, California 946xx, acting through its
Office of Technology Licensing, at the University of California, Berkeley, 2150
Shattuck Avenue, Suite 510, Berkeley, CA 94720-1620 ("REGENTS") and ACACIA
BIOSCIENCES, INC., a Delaware corporation having a principal place of business
at 4136 Lakeside Drive, Richmond, California 94806 ("LICENSEE"), agree as
follows:

1.     BACKGROUND

       1.1    REGENTS has an assignment of the Genome Reporter Matrix for Drug
Discovery and Development invented by Jasper D. Rine, Ph.D., a molecular
geneticist employed by the University of California, Berkeley, and Matthew N.
Ashby, Ph.D., a postdoctoral fellow in Dr. Rifle's laboratory ("INVENTION"), as
described in REGENTS' Case No. B95-034 and REGENTS' PATENT RIGHTS as defined
below, which are directed to the INVENTION.

       1.2    LICENSEE entered into a Letter Agreement and extension thereof
with REGENTS effective January 13, 1995, terminating on October 13, 1995, for
the purpose of evaluating the INVENTION and granting LICENSEE an exclusive right
to negotiate an option or exclusive license of the INVENTION, which Letter
Agreement covers the LICENSEE's commitment to reimburse

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 1                       Confidential

<PAGE>

REGENTS' patent costs during the period of good-faith negotiation for an
exclusive license.

       1.3    LICENSEE provided REGENTS with an Executive Summary of its drug
discovery process and business strategy in order to evaluate its capabilities as
a LICENSEE to commercialize the INVENTION.

       1.4    The INVENTION was developed without Government support.

       1.5    Both parties recognize and agree that royalties due hereunder will
be paid to REGENTS on both pending patent applications and issued patents.

       1.6    REGENTS wish to have said INVENTION perfected and marketed at the
earliest possible time in order that products resulting therefrom may be
available for public use and benefit.

       1.7    LICENSEE wishes to acquire a license under the REGENTS' PATENT
RIGHTS for the purpose of undertaking development and to manufacture, use, and
distribute under license PRODUCTS as defined below.

       1.8    REGENTS have disclosed to LICENSEE certain information and
technical data pertaining to the INVENTION and such disclosure gives the
LICENSEE an economic advantage in bringing the INVENTION to market.

       1.9    LICENSEE and REGENTS entered into an Exclusive License Agreement
for Gene Reporter Matrix for New Drug Discovery, effective September 1, 1995
with respect to the INVENTION and the REGENTS' PATENT RIGHTS (the "ORIGINAL
AGREEMENT").  -

       1.10   LICENSEE and REGENTS desire to amend and restate certain
provisions of the ORIGINAL AGREEMENT as set forth in this Amended and Restated
Exclusive License Agreement for Gene Reporter Matrix in light of, inter alia,
changes in market conditions and changes in the sublicensing strategy of the
LICENSEE.

2.     DEFINITIONS

       2.1    "AGREEMENT" means this Amended and Restated Exclusive License
Agreement for Gene Reporter Matrix.

       2.2    "REGENTS' PATENT RIGHTS" means [***] entitled, [***]
filed by Drs. Rine and Ashby and assigned to REGENTS; and continuing
applications of the patent applications from which such Letters Patent
issued, including divisions, substitutions, extensions and
continuation-in-part applications (only to the extent, however, that claims
in the continuation-in-part applications are entitled to the priority filing
date of the parent patent application), any patents issuing on said
application or continuing applications including reissues; and any
corresponding foreign patents or applications.

       2.3    "LICENSED PRODUCTS AND SERVICES" means any product, service,
apparatus, kit or component part thereof or other material (i) produced by, or
used in, the LICENSED METHOD or (ii) the manufacture, use, sale, offer for sale
or importation of which in a particular country:

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 2                       Confidential
<PAGE>

              (a)    Is covered by a valid claim of an issued, unexpired patent
under the REGENTS' PATENT RIGHTS in that country in which such patent has issued
(claim of an issued, unexpired REGENTS' PATENT RIGHTS shall be presumed to be
valid unless and until it has been held to be invalid by a final judgment of a
court of competent jurisdiction from which no appeal can be or is taken) or;

              (b)    Is covered by a pending claim being prosecuted in a pending
patent application under the REGENTS' PATENT RIGHTS in that country in which
such application is pending.

       2.4    "LICENSED METHOD" means any process or method (i) that is covered
by the REGENTS' PATENT RIGHTS in the country in which such process or method is
used or (ii) the use or practice of which would constitute, but for the license
granted to the LICENSEE pursuant to this Agreement, an infringement of any
issued or pending claim within REGENTS' PATENT RIGHTS in that country in which
the LICENSED METHOD is used or practiced.

       2.5    "LICENSED FIELD OF USE" means use of the LICENSED PRODUCTS AND
SERVICES for any purpose, including without limitation, the identification,
discovery, development, optimization or characterization of genetic materials or
chemical compounds for diagnostic or therapeutic use, or for agricultural uses
such as pesticides, herbicides, and transgenic plant development.

       2.6    "NET LICENSEE REVENUES" means the gross revenues actually received
by LICENSEE from the sale, lease or distribution of LICENSED PRODUCTS AND
SERVICES by LICENSEE in the form in which they are sold, leased, used or
distributed under license, whether or not assembled (and without excluding
therefrom any components or subassemblies thereof, whatever their origin and
whether or not patent impacted), less the following items but only insofar as
they actually pertain to the disposition of such LICENSED PRODUCTS AND SERVICES
by LICENSEE and are included in such gross revenues, and (except Item d) are
separately billed:

              (a)    Import, export, excise, and sales taxes, plus custom
duties; if custom duties are part of the licensed price, REGENTS will accept
LICENSEE's statement to that effect provided accounting statement is supplied,
identifying each item and duty amount included.

              (b)    Costs of insurance, packing, and transportation from the
place of manufacture to the customer's premises or point of installation;

              (c)    Costs of installation at the place of use; and

              (d)    Credit for returns, allowances, or trades.

       2.7    "SUBLICENSING REVENUES" means the gross revenues actually received
by LICENSEE (whether in the form of upfront payments, license fees, license
maintenance fees, milestone payments, royalties, minimum royalties or advance
royalties) from its sublicensees of the REGENTS PATENT RIGHTS under this
Agreement to the extent received in consideration for the sublicensing of such
REGENTS PATENT RIGHTS. [***]

       (i) as research and development funding or support payments, to the
extent such payments are

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 3                       Confidential

<PAGE>

allocated for a specific research and development project or to the extent
such payments do not exceed LICENSEE's research and development costs for a
project, determined using the then-applicable full-time equivalent funding
rate for LICENSEE's research and development personnel (i.e., the rate
applicable to LICENSEE's personnel allocated to research and development
activities, including salary, benefits, materials, equipment, and allocated
overhead),

       (ii) for the purchase of an equity interest in LICENSEE at the fair
market value of such interest (with any premium paid by a sublicensee in excess
of such fair market value being included in SUBLICENSING REVENUES),

       (iii) as a loan to LICENSEE, to the extent that such loan is not
forgivable, and

       (iv) in the form of any advanced royalty payments or option payments to
LICENSEE that are refundable to such sublicensee. SUBLICENSING REVENUES
specifically excludes any NET LICENSEE REVENUES of LICENSEE.

       2.8    "LICENSED TERRITORY" means United States of America, its
territories and possessions, any foreign countries where REGENTS have filed or
obtained corresponding foreign patents or applications, and any other foreign
countries throughout the world for which REGENTS may lawfully grant a license of
REGENTS' PATENT RIGHTS.

3.     GRANT

       3.1    Subject to the limitations set forth in this Agreement REGENTS
hereby grants and LICENSEE hereby accepts an exclusive license under the
REGENTS' PATENT RIGHTS to make, have made, use, sell, offer for sale, import and
distribute under license LICENSED PRODUCTS AND SERVICES and to practice or use
the LICENSED METHOD in the LICENSED TERRITORY and in the LICENSED FIELD OF USE.

       3.2    The license under Article 3.1 shall be exclusive for a term
commencing as of the effective date of this Agreement and ending on the date of
the last to expire patent under the REGENTS' PATENT RIGHTS.

       3.3    REGENTS expressly reserves the non-transferrable right to use the
INVENTION and related technology solely for educational and noncommercial
research purposes provided, however, that REGENTS may extend such right to any
other non-profit entity.

       3.4    LICENSEE shall have a continuing responsibility to keep the
REGENTS informed of its large/small entity status (as defined by the United
States Patent and Trademark Office) of itself and its sublicensees.

4.     SUBLICENSES

       4.1    LICENSEE shall have the right to sublicense to third parties the
rights granted in Section 3.1 above, provided that LICENSEE has current
exclusive rights under this Agreement at the time of grant of such sublicense.
REGENTS and LICENSEE agree and understand that LICENSEE may sublicense the
REGENTS' PATENT RIGHTS in the following ways:

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 4                       Confidential

<PAGE>

       (i) by means of non-exclusive patent licenses to third party potential
infringers pursuant to an agreement under which LICENSEE is not obligated to
perform services or develop products as part of a collaborative project (a
"PATENT SUBLICENSE") and,

       (ii) by means of exclusive or non-exclusive arrangements with third party
collaborators for the discovery and development of lead compounds, target genes
or products wherein LICENSEE also provides to such third party technology or
services proprietary to LICENSEE (a "COLLABORATION AGREEMENT").

       If LICENSEE receives consideration for the grant of a sublicense pursuant
to a PATENT SUBLICENSE in a form other than cash, LICENSEE will pay royalties
pursuant to Section 6.1(ii) on such consideration on the fair market value of
such non-cash consideration. The parties intend that all SUBLICENSING REVENUES
that LICENSEE receives from third parties pursuant to a PATENT SUBLICENSE or a
COLLABORATION AGREEMENT shall be subject to the royalty provided in Section
6.1(ii), and not included in the calculation of NET LICENSEE REVENUES. For
clarification of LICENSEE's obligations under Section 6.1, if LICENSEE enters
into an agreement with a third party collaborator for the discovery and
development of lead compounds, target genes or products wherein LICENSEE
provides to such third party both:

       (A) technology or services that are not covered by the REGENTS' PATENT
RIGHTS and,

       (B) LICENSED PRODUCTS AND SERVICES, but such agreement does not
provide for such third party to obtain a sublicense under the REGENTS PATENT
RIGHTS, then such agreement shall not be a COLLABORATION AGREEMENT and shall
be subject to the obligations under Section 6.1(i).

       4.2    Every such sublicense shall contain at least the following:

              (a)    A statement setting forth the date upon which LICENSEE's
exclusive rights, privileges, and license hereunder shall expire.

              (b)    A statement such that the obligations of Articles 9.1, 10,
and 16 of this Agreement shall be binding upon the sublicensee as if it were in
place of LICENSEE,

              (c)    The same provision for indemnification of REGENTS as has
been provided for in this Agreement.

       4.3    Every PATENT SUBLICENSE shall contain the following:

                     (i)    A statement that such sublicensee(s) shall be
precluded from granting further sublicenses.

       4.4    Every COLLABORATION AGREEMENT shall contain the following:

                     (i)    A statement that such sublicensee(s) shall be
precluded from granting further sublicenses, except to its affiliates and except
as agreed upon by LICENSEE, and provided that such sublicensee promptly notifies
LICENSEE of any such sublicense, and that such sublicense is subject

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 5                       Confidential

<PAGE>

to the same terms as set forth in this Article 4.

       4.5    LICENSEE shall notify REGENTS of each sublicense granted hereunder
and furnish to REGENTS a summary of the non-confidential material terms of each
such sublicense agreement.

       4.6    LICENSEE shall deliver all reports due REGENTS and received from
sublicensees.

       4.7    Upon termination of this Agreement for any reason, all sublicenses
that are granted by LICENSEE pursuant to this Agreement shall remain in effect
and shall be assigned by LICENSEE to REGENTS except that REGENTS shall not be
bound to perform any duties or obligations set forth in any sublicenses that
extend beyond the duties and obligations of REGENTS set forth in this Agreement.

5.     LICENSE ISSUE FEE

       5.1    LICENSEE shall pay to REGENTS a non-creditable, non-refundable
license issue fee of [***] shares of common stock in accordance with the
following schedule:

              5.1.a  [***] shares of common stock due within thirty (30) days
                     of the effective date of this Agreement;

              5.2.b  [***] of the effective date of this agreement;

              5.1.c  [***] of the effective date of this Agreement;

              5.1.d  [***] of the effective date of this Agreement;

              5.1.e  [***] upon obtaining cumulative equity financing of
                     [***];

              5.1.f  [***] at the time the first patent included within
                     REGENTS' PATENT RIGHTS is allowed; and

              5.1.g  [***] upon the first occurrence of NET LICENSEE REVENUES.

              The University acknowledges that prior to the Restatement Date,
LICENSEE has paid the portions of the license issue fee provided for in Sections
5.1(a) through 5.1(f). This fee is non-refundable and not an advance against
royalties.

6.     ROYALTIES

       6.1    LICENSEE shall pay to REGENTS earned royalties at the rate of
(i) [***] of all NET LICENSEE REVENUES and (ii) [***] of all SUBLICENSING
REVENUES.

       6.2    Royalties shall be payable on NET LICENSEE REVENUES and
SUBLICENSING REVENUES covered by both pending patent applications and issued
patents.

       6.3    Royalties accruing to the REGENTS shall be paid to the REGENTS
quarterly on or before the following dates of each calendar-year:

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 6                       Confidential

<PAGE>

                     February 28 for the calendar quarter ending December 31

                     May 31 for the calendar quarter ending March 31

                     August 31 for the calendar quarter ending June 30

                     November 30 for the calendar quarter ending September 30

       6.4    Beginning in the first calendar year after the first occurrence
of NET LICENSEE REVENUES and in each succeeding calendar year thereafter,
LICENSEE shall pay to the REGENTS a minimum annual royalty of [***] for the
life of this Agreement. This minimum annual royalty shall be paid to the
REGENTS by February 28 of each year and shall be credited against the earned
royalty due and owing on NET LICENSEE REVENUES under Section 6.1 for the
calendar year in which the minimum payment was made.

       6.5    All royalties due the REGENTS shall be payable in United States
funds collectible at par in San Francisco, California. When LICENSED PRODUCTS
AND SERVICES are sold for monies other than United States dollars, the earned
royalties will first be determined in the foreign currency of the country in
which the LICENSED PRODUCTS AND SERVICES were licensed and then converted into
equivalent United States funds. The exchange rate will be that rate quoted in
the Wall Street Journal on the last business day of the reporting period.

       6.6    Earned royalties on licensed distribution of LICENSED PRODUCTS AND
SERVICES occurring in any country outside the United States shall not be reduced
by any taxes, fees, or other charges imposed by the government of such country
on the remittance of royalty income. The LICENSEE shall also be responsible for
all bank transfer charges.

       6.7    LICENSEE shall make all payments under this Agreement by check
payable to "The Regents of the University of California" and forward it to
REGENTS at the address shown in Article 23.

       6.8    In the event that any patent or any claim thereof included within
the REGENTS' PATENT RIGHTS expires or shall be held invalid in a final decision
by a court of competent jurisdiction and last resort and from which no appeal
has been or can be taken, all obligation to pay royalties for LICENSED PRODUCTS
AND SERVICES based on, covered by, or made using such patent or claims or any
claims patentably indistinct therefrom shall cease as of the date of such
expiration or final decision. LICENSEE shall not, however, be relieved from
paying any royalties for LICENSED PRODUCTS AND SERVICES that accrued before such
expiration or decision or that are based on another valid patent or claim not
expired or involved in such decision.

7.     DUE DILIGENCE

       7.1    LICENSEE, upon execution of this Agreement, shall use diligent
commercial efforts to proceed with the development, manufacture, and
distribution under license of LICENSED PRODUCTS AND SERVICES and shall use
diligent commercial efforts to market them in quantities sufficient to meet the
market demand. LICENSEE shall be entitled to exercise prudent and reasonable
business judgment in meeting its due diligence obligations hereunder.

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 7                       Confidential

<PAGE>

       7.2    LICENSEE specifically commits to achieving the following
objectives in its due diligence activities hereunder:

              (a)    Provide a business plan to REGENTS within [***] from the
effective date of this Agreement which demonstrates how LICENSEE plans to
acquire and apply the resources needed to commercialize the INVENTION;

              (b)    Establish a sponsored research program with the
University of California, Berkeley, within [***] of the effective date of
this Agreement to complete development and test the INVENTION. Should
permission to conduct a sponsored research program be denied by the campus
committee on conflict of interest, then THE REGENTS shall inform LICENSEE in
writing of this decision. LICENSEE must then provide a written plan to THE
REGENTS for the alternative development of the technology by another means
within sixty (60) days of the receipt of the notification from THE REGENTS.
THE REGENTS shall respond promptly to the alternative plan but if not
acceptable, then LICENSEE agrees to implement THE REGENTS' reasonable
requests.

              (c)    Develop and implement a patent strategy that results in
appropriate filings of additional patent applications covering inventions
relating to the INVENTION within [***] of the effective date of this
Agreement and meet any statutory bar deadlines due to publications by filing
appropriate patent applications;

              (d)    Establish a facility for the research, development,
sale, and marketing of LICENSED PRODUCTS AND SERVICES and LICENSED METHODS
within [***] of the effective date of this Agreement;

              (e)    Achieve either private, venture capital or corporate
research or equity financing in the minimum amount of [***] within thirty
(30) months of the effective date of this Agreement; and

              (f)    Have first occurrence of NET LICENSEE REVENUES within
[***] of the effective date of this Agreement.

              The University acknowledges that prior to the Restatement Date,
LICENSEE has achieved the requirements in this Article 7.2 (a) -(e).

       7.3    If LICENSEE is unable to meet any of its due diligence
obligations set forth in Article 7.2, then REGENTS shall so notify LICENSEE
of failure to perform. LICENSEE shall have the right and option to extend the
target date of any such due diligence obligation for a period of [***] upon
the payment of [***]of the extension date for each [***] extension option
exercised by LICENSEE. These payments are in addition to the minimum royalty
payments specified in Article 6.4. Should LICENSEE opt not to extend the
obligation or fail to meet it by the extended target date, then REGENTS shall
have the right and option either to terminate this Agreement or to reduce the
LICENSEE's exclusive license to a non-exclusive royalty bearing license. This
right, if exercised by REGENTS, supersedes the rights granted in Article 3.
The right to terminate this Agreement or reduce LICENSEE's exclusive license
granted hereunder to a non-exclusive license shall be REGENTS' sole remedy
for breach of Article 7. However, if LICENSEE is unable to perform any of the
due diligence obligations set forth in Article 7.2 due to hardships beyond
LICENSEE's control while LICENSEE has demonstrated diligent commercial
efforts to perform these obligations, then

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 8                       Confidential

<PAGE>

REGENTS may extend the dates as appropriate (after conferring with LICENSEE
in good faith and, in any event, on at least a day to day basis) in writing
to LICENSEE, and REGENTS shall not terminate this Agreement or reduce
LICENSEE's exclusive license to a non-exclusive license.

       7.4    At the request of either party, any controversy or claim arising
out of or relating to the diligence provisions of Article 7.2 shall be settled
by arbitration conducted in San Francisco, CA in accordance with the then
current Licensing Agreement Arbitration Rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered by either party in the court or forum,
state or federal, having jurisdiction. In determination of due diligence, the
arbitrator may determine solely the issues of fact or law with respect to
termination of LICENSEE's or REGENTS' respective rights under this Agreement but
shall not have the authority to award monetary damages or grant equitable
relief.

       7.5    To exercise either the right to terminate this Agreement or to
reduce the license to a non-exclusive license for lack of diligence required
in Article 7.2, REGENTS must give LICENSEE written notice of the deficiency.
The LICENSEE thereafter has [***] to cure the deficiency or to request
arbitration. If REGENTS has not received a written request for arbitration or
satisfactory tangible evidence that the deficiency has been cured by the end
of the [***] period, then REGENTS may, at its option, either terminate the
Agreement or reduce LICENSEE's exclusive license to a non-exclusive license
by giving written notice to LICENSEE. These notices shall be subject to
Article 23 (Notices).

8.     PROGRESS AND ROYALTY REPORTS

       8.1    Prior to the Restatement Date, LICENSEE has submitted to REGENTS a
progress report covering LICENSEE's activities related to the development and
testing of all LICENSED PRODUCTS AND SERVICES and the obtaining of the
governmental approvals necessary, if any, for marketing in the United States.
These progress reports have been made for all LICENSED PRODUCTS AND SERVICES
prior to the first commercial sale of such LICENSED PRODUCTS AND SERVICES in the
United States.

       8.2    LICENSEE also agrees to report to REGENTS in its immediately
subsequent progress and royalty report, due on Jan. 1, 1999, the date of first
commercial distribution under license of LICENSED PRODUCTS AND SERVICES.

       8.3    After the first commercial distribution under license of LICENSED
PRODUCTS AND SERVICES by LICENSEE anywhere in the world, LICENSEE will make
quarterly royalty reports to REGENTS within sixty (60) days after the quarters
ending March 31, June 30, September 30, and December 31, of each year. Each such
royalty report shall include at least the following:

              (a)    The number of LICENSED PRODUCTS AND SERVICES manufactured
and the number of customers to whom LICENSED PRODUCTS AND SERVICES were provided
or licensed;

              (b)    Gross revenue for LICENSED PRODUCTS AND SERVICES licensed;

              (c)    NET LICENSEE REVENUES pursuant to Article 2.6;

              (d)    Total SUBLICENSING REVENUES;

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 9                       Confidential

<PAGE>

              (e)    Total royalties due REGENTS on such NET LICENSEE REVENUES
and SUBLICENSING REVENUES; and

              (f)    Names and addresses of any new sublicensees along with a
summary of the non-confidential material terms of each new sublicense agreement
entered into during the reporting quarter.

       8.4    If no distribution under license of LICENSED PRODUCTS AND SERVICES
has been made during the report period, a statement to this effect is required.

9.     BOOKS AND RECORDS

       9.1    LICENSEE shall keep full, true, and accurate books of accounts
containing all particulars that may be necessary for the purpose of showing
the amount of royalties payable to REGENTS. Said books of accounts shall be
kept at LICENSEE's principal place of business or the principal place of
business of the appropriate division of LICENSEE to which this Agreement
relates. Said books and the supporting data shall be open at all reasonable
times during normal business hours upon reasonable notice, for [***]
following the end of the calendar year to which they pertain, to the
inspection and audit by an independent certified public accountant retained
by REGENTS for the purpose of verifying LICENSEE's royalty statement or
compliance in other respects with this Agreement. Such independent certified
accountant shall be bound to hold all information in confidence except as
necessary to communicate LICENSEE's non-compliance with this AGREEMENT to
REGENTS.

       9.2    The fees and expenses of REGENTS' representatives performing
such an examination shall be borne by REGENTS. However, if an error in
underpaid royalties to REGENTS of more than [***] of the total royalties due
for any year is discovered, then the fees and expenses of these
representatives shall be borne by LICENSEE.

10.    LIFE OF THE AGREEMENT

       10.1   Unless otherwise terminated by the operation of law or by acts of
the parties in accordance with the terms of this Agreement, this Agreement shall
be in force from the effective date recited on page one and shall remain in
effect for the life of the last-to-expire patent licensed under this Agreement.

       Any termination of this Agreement shall not affect the rights and
obligations set forth in the following articles:

                     Article 4     Sublicenses

                     Article 9     Books and Records

                     Article 10    Life of the Agreement

                     Article 13    Disposition of PRODUCTS on Hand Upon
                                   Termination

                     Article 16    Use of Names and Trademarks

                     Article 19    Indemnification

                     Article 24    Late Payments

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 10                      Confidential

<PAGE>

                     Article 26    Confidentiality

       10.3   Any termination of this Agreement shall not relieve LICENSEE of
its obligation to pay any monies due or owing at the time of such termination
and shall not relieve any obligations, of either party to the other party,
established prior to termination.

11.    TERMINATION BY REGENTS

       If LICENSEE should violate or fail to perform any term or covenant of
this Agreement, then REGENTS may give written notice of such default ("Notice
of Default") to LICENSEE. If LICENSEE should fail to repair such default
within [***] of the effective date of such notice, REGENTS shall have the
right to terminate this Agreement and the licenses herein by a second written
notice ("Notice of Termination") to LICENSEE. If a Notice of Termination is
sent to LICENSEE, this Agreement shall automatically terminate on the
effective date of such notice, Such termination shall not relieve LICENSEE of
its obligation to pay any royalty or license fees owing at the time of such
termination and shall not impair any accrued rights of REGENTS. These notices
shall be subject to Article 23 (Notices).

12.    TERMINATION BY LICENSEE

       12.1   LICENSEE shall have the right at any time to terminate this
Agreement in whole or as to any portion of REGENTS' PATENT RIGHTS by giving
notice in writing to REGENTS. Such notice of termination shall be subject to
Article 23 (Notices) and termination of this Agreement shall be effective
[***] from the effective date of such notice.

       12.2   Any termination pursuant to the above paragraph shall not
relieve LICENSEE of any obligation or liability accrued hereunder prior to
such termination or rescind anything done by LICENSEE or any payments made to
REGENTS hereunder prior to the time such termination becomes effective, and
such termination shall not affect in any manner any rights of REGENTS arising
under this Agreement prior to such termination.

13.    DISPOSITION OF PRODUCTS ON HAND UPON TERMINATION

       Upon termination of this Agreement LICENSEE shall have the privilege of
disposing of all previously made or partially made LICENSED PRODUCTS, but no
more, within a period of one hundred and twenty (120) days following the
effective date of termination, provided, however, that the sale of such LICENSED
PRODUCTS shall be subject to the terms of this Agreement including, but not
limited to, the payment of royalties at the rate and at the time provided herein
and the rendering of reports thereon.

14.    PATENT PROSECUTION AND MAINTENANCE

       14.1   REGENTS shall diligently prosecute and maintain the United States
and foreign patent applications and patents under REGENTS' PATENT RIGHTS using
counsel of its choice, provided that the continued use of such counsel at any
point in the patent prosecution process subsequent to initial filing of a U.S.
patent application covering the INVENTION, including preparation and filing of
divisions, substitutions, extensions, continuation-in-part applications, and
corresponding foreign applications, shall be subject to the approval of
LICENSEE. REGENTS shall promptly provide

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 11                      Confidential

<PAGE>

LICENSEE with copies of all relevant documentation so that LICENSEE may be
currently informed and apprised of the continuing prosecution and LICENSEE
agrees to keep this documentation confidential in accordance with Article 26
herein. LICENSEE may comment upon such documentation, provided, however, that
if LICENSEE has not commented upon such documentation prior to the deadline
for filing a response with the relevant government patent office, REGENTS
shall be free to respond appropriately without consideration of LICENSEE's
comments. LICENSEE and LICENSEE's patent counsel shall have the right to
consult with patent counsel chosen by REGENTS.

       14.2   REGENTS shall use all reasonable efforts to prepare or amend any
patent application to include claims reasonably requested by LICENSEE to protect
the products contemplated to be sold, or methods or procedures to be practiced
under this Agreement.

       14.3   Subject to Articles 14.4 and 14.6, all past, present, and future
costs for preparing, filing, prosecuting, and maintaining all United States and
foreign patent applications, and patents issuing thereon and contemplated by the
executed Letter Agreement dated January 13, 1995, and this Agreement and not
paid for by a third party shall be borne by LICENSEE, so long as the licenses
granted to LICENSEE herein are exclusive. If, however, REGENTS reduces the
exclusive licenses granted herein to non-exclusive licenses pursuant to Articles
7.3, 7.4, or 7.5 and REGENTS grants additional license(s), the costs of
preparing, filing, prosecuting and maintaining such patent applications and
patents shall be divided equally among the licensed parties from the effective
date of each subsequently granted license agreement.

       14.4   REGENTS shall file, prosecute and maintain, at the request of
LICENSEE, patent applications and patents covered by REGENTS' PATENT RIGHTS in
foreign countries, if available, and if LICENSEE so desires. LICENSEE must
notify REGENTS within nine (9) months of the filing of the corresponding United
States application of its decision to obtain foreign patents. The notice
concerning foreign filing shall be in writing and must identify the countries
desired. The absence of such a notice from LICENSEE to REGENTS within such nine
(9) month period shall be considered an election not to secure foreign rights.
REGENTS shall have the right to file patent applications at its own expense in
any country which LICENSEE has not included in the list of desired countries and
such application and resultant patents shall not be subject to this Agreement.

       14.5   All patents and patent applications under this Agreement shall be
held in the name of REGENTS, and shall be subject to the terms and provisions
hereof. REGENTS shall take into consideration LICENSEE's reasonable suggestions
in the preparation and prosecution of REGENTS' PATENT RIGHTS covering the
INVENTION in order to obtain the broadest claims and protection.

       14.6   LICENSEE's obligation to underwrite and to pay all domestic and
foreign patent filing, prosecution, and maintenance costs shall continue for
so long as this Agreement remains in effect, provided, however, that LICENSEE
may terminate its obligations with respect to any given patent application or
patent in any or all designated countries upon [***] written notice to
REGENTS. REGENTS will use its best efforts to curtail patent costs when such
a notice is received from LICENSEE. REGENTS may continue prosecution and/or
maintenance of such application(s) or patent(s) at its sole discretion and
expense; provided, however, that LICENSEE shall have no further right or
licenses thereunder.

15.    MARKING

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 12                      Confidential

<PAGE>

       Prior to the issuance of patents under REGENTS' PATENT RIGHTS, LICENSEE
agrees to mark LICENSED PRODUCTS AND SERVICES (or their containers or labels)
made, sold, licensed or otherwise disposed of by it in the United States under
the license granted in this Agreement with the words "Patent Pending," and
following the issuance in the United States of one or more patents under
REGENTS' PATENT RIGHTS, with the numbers of the REGENTS' PATENT RIGHTS. All
LICENSED PRODUCTS OR SERVICES shipped to, manufactured, or sold in other
countries shall be marked in such manner as to conform with the patent laws and
practice of such countries.

16.    USE OF NAMES AND TRADEMARKS

       Nothing contained in this Agreement shall be construed as conferring
any right to use in advertising, publicity or other promotional activities
any name, trademark, trade name, or other designation of either party hereto
(including any contraction, abbreviation, or simulation of any of the
foregoing). Unless required by law or consented to in writing by REGENTS, the
use of the name "The Regents of the University of California" or the name of
any University of California campus is expressly prohibited.

17.    LIMITED WARRANTIES

       17.1   REGENTS warrants to LICENSEE that it has the lawful right to grant
this license.

       17.2   These licenses and the associated INVENTION are provided without
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESSED OR IMPLIED. REGENTS MAKES NO REPRESENTATIONS OR WARRANTIES
THAT THE LICENSED PRODUCTS AND SERVICES OR LICENSED METHOD WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHTS.

       17.3   IN NO EVENT WILL REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THE LICENSE GRANTED HEREUNDER
OR THE USE OF THE INVENTION OR LICENSED PRODUCTS.

       17.4   Nothing in this Agreement is or shall be construed as:

              (a)    A warranty or representation by REGENTS as to the validity
or scope of any REGENTS' PATENT RIGHTS; or

              (b)    A warranty or representation that anything made, used,
sold, or otherwise disposed of under any license granted in this Agreement is or
will be free from infringement of patents of third parties; or

              (c)    An obligation to bring or prosecute actions or suits
against third parties for patent infringement, except as provided in Article 18;
or

              (d)    Conferring by implication, estoppel, or otherwise any
license or rights under any patents of REGENTS other than REGENTS' PATENT RIGHTS
as defined herein; or

              (e)    An obligation to furnish any know how, not provided in
REGENTS' PATENT RIGHTS.

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 13                      Confidential

<PAGE>

18.    PATENT INFRINGEMENT

       18.1   In the event that LICENSEE shall learn of the substantial
infringement of any REGENTS' PATENT RIGHTS under this Agreement, LICENSEE
shall promptly inform REGENTS with reasonable evidence of such infringement.
Both parties to this Agreement agree that during the period and in a
jurisdiction where LICENSEE has exclusive rights under this Agreement,
neither will notify a third party of the infringement without first obtaining
consent of the other party, which consent shall not be unreasonably denied.
Both parties shall use their best efforts, in cooperation with each other, to
terminate such infringement without litigation.

       18.2   LICENSEE may request that REGENTS take legal action against the
infringement. Such request shall be made in writing and shall include reasonable
evidence of such infringement and damages to LICENSEE. If the infringing
activity has not been abated within ninety (90) days following the effective
date of such request, REGENTS shall have the right to:

              (a)    Commence suit on its own account; or

              (b)    Refuse to participate in such suit.

REGENTS shall give notice of its election in writing to LICENSEE by the end of
the 100th day after receiving notice of such request from LICENSEE, and absent
refusal to participate in such suit, shall commence suit promptly thereafter.
LICENSEE shall have the right to join or intervene at its own expense in any
such suit commenced by REGENTS.

LICENSEE may bring suit for patent infringement if, and only if, REGENTS elects
not to commence suit and if the infringement occurred during the period and in a
jurisdiction where LICENSEE had exclusive rights under this Agreement. However,
in the event LICENSEE elects to bring suit in accordance with this paragraph,
REGENTS may thereafter join such suit at its own expense.

       18.3   Such legal action as is decided upon shall be at the expense of
the party on whose account suit is brought and all recoveries recovered thereby
shall belong to such party, provided that legal action brought jointly by
REGENTS and LICENSEE (or by one such party with later joinder or intervention by
the other) and fully participated in by both, shall be shared jointly by them in
proportion to the share of expense paid by each party.

       18.4   Each party agrees to cooperate with the other in legal proceedings
instituted hereunder but at the expense of the party on account of whom suit is
brought. Such legal proceedings shall be controlled by the party bringing the
action, except that REGENTS may be represented by counsel of its choice, at its
sole expense, in any action brought by LICENSEE and LICENSEE may be represented
by counsel of its choice, at its sole expense, in any action brought by REGENTS.

19.    INDEMNIFICATION

       LICENSEE agrees, and agrees to require its sublicensees, to indemnify,
hold harmless, and defend REGENTS and its officers, employees, and agents;
sponsor(s) of the research that led to the INVENTION; and the inventors of
the patents and patent applications in REGENTS' PATENT RIGHTS

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 14                      Confidential

<PAGE>

and their employees against any and all liability, claims, suits, losses,
damages, costs, fees, and expenses for death, illness, personal injury,
property damage, and improper business practices arising out of the
manufacture, use, sale, lease or other disposition of the INVENTION, REGENTS'
PATENT RIGHTS, or LICENSED PRODUCTS AND SERVICES by LICENSEE, by its
sublicensees, or each of their customers.

20.    EXPORT CONTROLS

       LICENSEE understands that REGENTS are subject to United States laws and
regulations (including the Arms Export Control Act, as amended, and the Export
Administration Act of 1979), controlling the export of technical data, computer
software, laboratory prototypes and other commodities, and REGENTS' obligations
under this Agreement are contingent on compliance with such laws and
regulations. The transfer of certain technical data and commodities may require
a license from the cognizant agency of the United States Government and/or
written assurances by LICENSEE that LICENSEE shall not export such technical
data and/or commodities to certain foreign countries without prior approval of
such agency. REGENTS neither represent that a license shall not be required nor
that, if required, it shall be issued.

21.    FOREIGN GOVERNMENTAL APPROVAL OR REGISTRATION

       If this Agreement or any associated transaction is required by the law of
any nation to be either approved or registered with any governmental agency,
LICENSEE shall assume all legal obligations to do so.

22.    ASSIGNMENT

       This Agreement is binding upon and shall inure to the benefit of REGENTS,
its successors and assigns, provided, however, this Agreement shall be personal
to LICENSEE and assignable by LICENSEE only with the written consent of REGENTS,
which consent shall not be unreasonably withheld, except that LICENSEE may
freely assign this Agreement to an acquirer of all or substantially all of
LICENSEE's stock, assets or business.

23.    NOTICES

       All notices under this Agreement shall be deemed to have been fully given
when done in writing and deposited in the United States mail, registered or
certified, and addressed as follows:

       To REGENTS:          Office of Technology Licensing
                            2150 Shattuck Avenue, Suite 510
                            Berkeley, CA 94720-1620
                            Attn: Director (UC Case No.: B95-034)

       To LICENSEE:         Acacia Biosciences, Inc. 4136 Lakeside Drive
                            Richmond, CA 94806
                            Attn.: President

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 15                      Confidential

<PAGE>

       Either party may change its address upon written notice to the other
       party.

24.    LATE PAYMENTS

       In the event royalty payments or fees are not received by REGENTS when
due, LICENSEE shall pay to REGENTS interest charges at a rate of [***]. Such
interest shall be calculated from the date payment was due until actually
received by REGENTS.

25.    WAIVER

       25.1   The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.

       25.2   None of the terms, covenants, and conditions of this Agreement can
be waived except by the written consent of the party waiving compliance.

26.    CONFIDENTIALITY

       26.1   LICENSEE and REGENTS respectively shall hold the other party's
proprietary business, terms of this Agreement, patent prosecution material, and
technical information and other proprietary information in confidence and
against disclosure to third parties with at least the same degree of care as it
exercises to protect its own data and license agreements of a similar nature.

       26.2   Nothing contained herein shall in any way restrict or impair the
right of LICENSEE or REGENTS to use, disclose, or otherwise deal with any
information or data which:

              (a)    at the time of disclosure to a receiving party is generally
available to the public or thereafter becomes generally available to the public
by publication or otherwise through no act of the receiving party;

              (b)    the receiving party can show by written record was in its
possession prior to the time of disclosure to it hereunder and was not acquired
directly or indirectly from the disclosing party;

              (c)    is independently made available to the receiving party
without restrictions as a matter of right by a third party;

              (d)    is subject to disclosure under the California Public
Records Act or other requirements of law.

       26.3   It is understood that REGENTS shall be free to release to the
inventors and senior administrators employed by REGENTS the terms and conditions
of this Agreement upon their request. If such release is made, REGENTS shall
inform such employees of the confidentiality obligations set forth above and
shall request and use its best efforts to ensure that they do not disclose such
terms and conditions to others. it is further understood that should a third
party inquire whether a license to REGENTS' PATENT RIGHTS is available, REGENTS
may disclose the existence of this Agreement and the extent of the grant in
Article 3 to such third party, but shall not disclose the name of LICENSEE,
except where REGENTS are required to release information under either the
California Public Records

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 16                      Confidential

<PAGE>

Act or other applicable law, provided REGENTS shall give prior written notice
to LICENSEE of such disclosure.

       26.4   LICENSEE and REGENTS agree to destroy or return to the disclosing
party proprietary information received from the other in its possession within
fifteen (15) days following the effective date of termination of this Agreement.
However, each party may retain one copy of proprietary information of the other
solely for archival purposes in non-working files for the sole purpose of
verifying the ownership of the proprietary information, provided such
proprietary information shall be subject to the confidentiality provisions set
forth in Article 26.1. LICENSEE and REGENTS agree to provide each other, within
thirty (30) days following termination of this Agreement, with a written notice
that proprietary information has been returned or destroyed.

       26.5   The terms of this Article 26 (Confidentiality) shall expire in
[***] from the official date of termination of this Agreement.

27.    FORCE MAJEURE

       The parties to this Agreement shall be excused from any performance
required hereunder if such performance is rendered impossible or unfeasible due
to any catastrophes or other major events beyond their reasonable control,
including, without limitation, war, riot, and insurrection; laws, proclamations,
edicts, ordinances, or regulations; strikes, lockouts, or other serious labor
disputes; and floods, fires, explosions, or other natural disasters. When such
events have abated, the parties' respective obligations hereunder shall resume.

28.    SEVERABILITY

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

29.    APPLICABLE LAW

       THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED, AND APPLIED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA. QUESTIONS CONCERNING THE LAW AND
EFFECT OF THE REGENTS' PATENT RIGHTS SHALL BE DETERMINED BY THE LAW OF THE
COUNTRY IN WHICH THE PATENT WAS GRANTED.

30.    SCOPE OF AGREEMENT

       This Agreement (except for the Letter Agreement dated January 13, 1995
and extension thereof, which shall continue to the extent it is not inconsistent
with this Agreement) incorporates the entire agreement between the parties with
respect to the subject matter hereof, and this Agreement may be altered. or
modified only by written amendment duly executed by the parties hereto.

       IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals by their duly authorized officers or representatives.

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 17                      Confidential

<PAGE>

THE REGENTS OF THE                        ACACIA BIOSCIENCES, INC.
UNIVERSITY OF CALIFORNIA

By: /s/: William A. Hoskins               By: /s/: Bruce Cohen
    ---------------------------------        ----------------------------------
         William A. Hoskins                        Bruce Cohen
         Director                                  President and Chief Executive
         Office of Technology Licensing            Officer

Date: January 4, 1999                     Date: December 23, 1998
     --------------------------------          --------------------------------

*  Material has been omitted pursuant to a request for confidential treatment,
   and such material has been filed separately with the SEC.

                                    Page 18                      Confidential

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