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                                                                    Exhibit 10.3

                             COLLABORATION AGREEMENT

This Agreement is entered into as of June 4, 2001, by and between:

         SEATTLE GENETICS, INC., a Delaware corporation, having its principal
         place of business at 22215 26th Avenue S.E., Suite 3000, Bothell,
         Washington 98021

         (hereinafter referred to as "SGI")

AND:

         EOS BIOTECHNOLOGY, INC., a Delaware corporation, having its principal
         place of business at 225A Gateway Blvd, S. San Francisco, California
         94080

         (hereinafter referred to as "EOS").

                                   WITNESSETH

         WHEREAS, SGI owns or controls intellectual property rights relating to
certain drug conjugation and linker technology;

         WHEREAS, EOS is currently conducting research and development programs
aimed at the discovery of antigens and the development of antibodies targeting
those antigens;

         WHEREAS, EOS wishes to acquire from SGI exclusive options to worldwide
exclusive licenses under SGI's patent rights and know-how related to SGI's drug
conjugation and linker technology;

         WHEREAS, SGI is willing to grant to EOS such exclusive options in order
to allow EOS to evaluate SGI's drug conjugation and linker technology for use
with certain of EOS's proprietary antigens and antibodies, and

         WHEREAS, SGI is willing to grant to EOS such exclusive licenses,
subject to the terms of and conditioned upon this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, the Parties hereto, intending to be legally bound,
agree as follows:

ARTICLE I - DEFINITIONS AND INTERPRETATION

         1.1.     DEFINITIONS: For the purposes of this Agreement the following
words and phrases shall have the following meanings:

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                  "ADC" means any Antibody or Control Antibody that incorporates
or uses Drug Conjugation Technology.

                  "AFFILIATE" means, with respect to a Party, any person,
corporation or business entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, a
Party. For the purpose of this definition, control of a corporation or of
another business entity shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or the policies of
the entity, whether through the ownership of voting securities, by agreement or
otherwise; PROVIDED, HOWEVER, that the direct or indirect beneficial ownership
of less than [***] percent ([***]) of the voting interests in, or less than a
[***] percent ([***]) interest in the equity of, such corporation or other
business entity shall not alone constitute control of such corporation or other
business entity.

                  "AGREEMENT" means this agreement, all amendments and
supplements to this Agreement and all schedules to this Agreement, including the
following:

                           SCHEDULE A    -    Drug Conjugation Technology Field;
                           SCHEDULE B    -    Licensed Patents;
                           SCHEDULE C    -    Research Antigens;
                           SCHEDULE D    -    ADC Preparation Terms; and
                           SCHEDULE E    -    SGI In-Licenses

                  "ANTIBODY" or "ANTIBODIES" means any monoclonal antibody
[***], or fragment thereof, with a unique amino acid sequence that binds to a
Research Antigen or Exclusive Antigen. By way of clarification, Antibodies with
different amino acid sequences shall be deemed to be different Antibodies,
irrespective of whether they bind to the same Research Antigen or Exclusive
Antigen.

                  "ANTIGEN" means any protein (including any glyco- or
lipo-protein), carbohydrate, compound or other composition, and any fragment,
peptide or epitope thereof, to which an antibody binds.

                  "CALENDAR QUARTER" means any of the three-month periods
beginning January 1, April 1, July 1 and October 1 in any year.

                  "CONFIDENTIAL INFORMATION" has the meaning ascribed to it in
Section 10.1. of this Agreement.

                  "CONTROL ANTIBODY" shall have the meaning set forth in Section
3.5.

                  "COST OF GOODS" shall mean with respect to Drug Conjugate
Materials manufactured and supplied to EOS (i) if by Third-Parties, [***] in
such manufacture and supply of Drug Conjugate Materials; and (ii) if by SGI or
its Affiliates, [***] Percent ([***]%) of the consolidated fully burdened cost
of providing such goods or services which shall be limited to the following
factors: [***]

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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[***] costs and expenses other than those remitted by EOS in accordance to the
terms and conditions of this Agreement (including royalties, license fees,
milestone payments and other payment obligations) paid to Third-Parties with
respect to providing such goods and services.

                  "DRUG CONJUGATE MATERIALS" means research grade small
molecular weight cytotoxic drugs, including [***], and linkers for attaching
drugs to proteins, specifically monoclonal antibodies and fragments thereof.

                  "DRUG CONJUGATION TECHNOLOGY" means drug conjugation chemistry
owned or controlled by SGI, including [***] and linker technology for attaching
drugs to Antibodies that is the subject matter of the Licensed Patents and SGI
Know-How.

                  "EFFECTIVE DATE" means the date of this Agreement.

                  "EOS PATENTS" shall have the meaning set forth in Section
11.2.2.

                  "EVENTS OF FORCE MAJEURE" shall have the meaning set forth in
Article 17.

                  "EXCLUSIVE ANTIGEN" shall have the meaning set forth in
Section 4.2.1.

                  "EXCLUSIVE LICENSE" has the meaning ascribed to it in Section
4.2.1 of this Agreement.

                  "FIELD" means any and all [***] applications for human [***]
use, unless mutually agreed to by the Parties and set forth in SCHEDULE A.

                  "FIRST COMMERCIAL SALE" means, in each country of the
Territory, the first commercial sale, where sale means when delivered, billed
out, or invoiced, whichever comes first, of a Product by EOS, its Affiliates or
Sublicensees to a Third-Party (other than a Sublicensee) following Regulatory
Approval in the country in which the sale is to be made.

                  "IMPROVEMENTS" means all patentable or non-patentable
inventions, discoveries, technology and information of any type whatsoever,
including compositions, chemical compounds, biological materials, methods,
processes, technical information, knowledge, experience and know-how which (i)
utilize, incorporate, derive from, are based on or relate to the [***], (ii) add
to the knowledge of the [***], or (iii) help mastering or enhancing [***] or
using the [***] in combination with [***].

                  "INITIAL RESEARCH PROGRAM FEE" has the meaning ascribed to it
in Section 3.4(a) hereof.

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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                  "INITIATION" means, with respect to a human clinical trial,
the treatment of the first patient with a Product pursuant to a clinical
protocol of the specified clinical trial.

                  "LICENSED PATENTS" means:

                           (i)      any existing patents and patent applications
listed in SCHEDULE B to this Agreement;

                           (ii)     any patents and patent applications covering
[***], and covering [***] to the extent included in this Agreement pursuant to
[***];

                           (iii)    any future patents issued from any patent
applications referred to above and any future patents issued from a patent
application filed in any country in the Territory which corresponds to a patent
or patent application identified above; and

                           (iv)     any reissues, confirmations, renewals,
extensions, counterparts, divisions or continuations issued, assigned or
licensed to SGI of or relating to the patents or patent applications identified
above.

                  "NET SALES" means the gross amount received by EOS, its
Affiliates and Sublicensees from the sale or other disposition of Products to
Third-Parties (other than Sublicensees), less the sum of the following
deductions for amounts actually incurred related to said sale or other
disposition:

                  (i)      normal, customary trade discounts (including volume
discounts), credits and allowances and adjustments for rejections, recalls and
returns;

                  (ii)     cost of freight and insurance, sales, use, excise,
value added and similar taxes, surcharges, duties and other governmental charges
(other than income tax) imposed on the sale and included in the gross amount
charged to customers;

                  (iii)    normal, customary wholesaler chargebacks and rebates
(including rebates to government agencies and government mandates and managed
healthcare negotiated rebates); and

                  (iv)     retroactive price reductions; provided that no
deduction for retroactive price reductions shall be taken for the sale or
disposition of Products incorporating technology sublicensed under the [***].

                  "NEW TECHNOLOGIES" has the meaning ascribed in Section 4.3
hereof.

                  "OPTION" means, with respect to each Research Antigen, the
exclusive option granted by SGI to EOS pursuant to the provisions of Section 4.1
hereof to obtain an Exclusive License under Section 4.2 hereof.

                  "OPTION EXERCISE FEE" has the meaning ascribed to it in
Section 4.1.2 hereof.

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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                  "OPTION PERIOD" means, with respect to each Research Antigen,
the period commencing as of (i) the date that SGI delivers to EOS [***], or (ii)
the date that EOS informs SGI of [***], and continuing for a period of two (2)
years unless terminated earlier pursuant to the provisions of Article 15 herein.

                  "PARTIES" means EOS and SGI, and "Party" means any one of
them.

                  "PHASE I CLINICAL TRIAL" means a clinical study in subjects to
evaluate the pharmacokinetic and pharmacodynamic properties, maximum tolerated
dose, dosing interval, and absorption, distribution, metabolism and excretion of
a candidate drug.

                  "PHASE II CLINICAL TRIAL" means a controlled dose ranging
clinical trial to evaluate the efficacy and safety of a candidate drug in the
targeted patient population and to define the optimal dosing regimen.

                  "PHASE III CLINICAL TRIAL" means a series of controlled,
pivotal, multi-center clinical trials, involving patients with the disease or
condition of interest to obtain sufficient efficacy and safety data to support
regulatory submissions and labeling of a candidate drug.

                  "PHASE IV CLINICAL TRIAL" means human clinical trials
conducted for inclusion in (i) that portion of the FDA submission and approval
process which provides for continued trials of a Product after Regulatory
Approval has been achieved (such trials may be designed to provide information
that will optimize or expand use of the Product, provide information from
additional drug interaction, dose-response and safety studies, or provide
pharmacoeconomic, epidemiological, comparative efficacy or other data from
studies in a therapeutic use environment) and (ii) foreign equivalents thereof.

                  "PRODUCT" means any and all products where the manufacture,
sale or use of such products would have constituted a misappropriation of Drug
Conjugation Technology, SGI Know-How, Improvements or New Technologies, and/or
an infringement of the Licensed Patents but for the licenses granted in this
Agreement.

                  "REGULATORY APPROVAL" means final regulatory approval
(including, where applicable, pricing approval in the event that actual sales do
not take place before such approval) required to market a Product for a disease
or condition in accordance with the applicable laws and regulations of a given
country. In the United States, its territories and possessions, Regulatory
Approval means approval of a Biologics License Application ("BLA") or its
equivalent by the United States Food and Drug Administration ("FDA"), or
successor agency.

                  "RESEARCH ANTIGEN" means any Antigen that is [***] designated
a "RESEARCH ANTIGEN" under this Agreement pursuant to Section 2.1.

                  "RESEARCH PROGRAM" means the research program conducted
pursuant to Article 3.

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THE OMITTED PORTIONS.

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                  "RESEARCH PROGRAM TERM" shall mean the term of the Research
Program set forth in Section 3.3.

                  "ROYALTY TERM" means, on a Product-by-Product and
country-by-country basis, the period of time equal to the longer of (a) ten (10)
years from the date of First Commercial Sale of the Product in such country or
(b) the term for which a Valid Patent Claim directly relating to the Product in
such country remains in effect.

                  "SECOND RESEARCH PROGRAM FEE" has the meaning ascribed to it
in Section 3.4(b) hereof.

                  "SGI IN-LICENSES" means the following agreements between SGI
and the indicated Third-Parties: (i) the License Agreement between [***] and SGI
dated [***], as amended (the "[***]"), (ii) the License Agreement between [***]
and SGI dated [***], as amended (the "[***]"), and (iii) [***].

                  "SGI KNOW-HOW" means any and all technical information,
processes, formulae, data, engineering, inventions, chemical compounds, know-how
and trade secrets, in each case that is Confidential Information according to
Article 10, that relate to the Drug Conjugation Technology and which have been,
or hereafter are during the term of this Agreement, either developed by SGI or
its Affiliates, or have been acquired by SGI or its Affiliates with the right to
grant licenses, immunities or other rights thereon.

                  "SGI TECHNOLOGY" means the Licensed Patents, the SGI Know-How,
Improvements to the extent included in this Agreement pursuant to Section 4.3.1
and New Technologies to the extent included in this Agreement pursuant to
Section 4.3.2.

                  "SUBLICENSEES" means any person acting pursuant to a
sublicense granted to it by EOS or its Affiliates under the terms of this
Agreement.

                  "TERM" has the meaning ascribed to it in Article 15

                  "TERRITORY" means all countries in the world.

                  "THIRD-PARTY" means any person other than EOS, SGI and their
respective Affiliates.

                  "THIRD RESEARCH PROGRAM FEE" has the meaning ascribed to it in
Section 3.4(c) hereof.

                  "VALID PATENT CLAIM" means a claim of an issued and unexpired
patent included in Licensed Patents or EOS Patents which has not been held
permanently revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction,

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

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unappealable or unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.

         1.2.     CERTAIN RULES OF INTERPRETATION IN THIS AGREEMENT AND THE
                  SCHEDULES.

                  (a)      Unless otherwise specified, all references to
monetary amounts are to United States of America currency (US Dollars);

                  (b)      The descriptive headings of Articles and Sections are
inserted solely for convenience of reference and are not intended as complete or
accurate descriptions of the content of such Articles or Sections;

                  (c)      The use of words in the singular or plural, or with a
particular gender, shall not limit the scope or exclude the application of any
provision of this Agreement to such person or persons or circumstances as the
context otherwise permits;

                  (d)      The words "include" and "including" have the
inclusive meaning frequently identified with the phrases "without limitation"
and "but not limited to";

                  (e)      Whenever a provision of this Agreement requires an
approval or consent by a Party to this Agreement and notification of such
approval or consent is not delivered within the applicable time limit, then,
unless otherwise specified, the Party whose approval or consent is required
shall be conclusively deemed to have withheld its approval or consent;

                  (f)      Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the period commences and including the
day on which the period ends and by extending the period to the next business
day following if the last day of the period is not a business day in the
jurisdiction of the Party to make such payment or do such act; and

                  (g)      Whenever any payment is to be made or action to be
taken under this Agreement is required to be made or taken on a day other than a
business day, such payment shall be made or action taken on the next business
day following such day to make such payment or do such act.

ARTICLE 2 - RESEARCH ANTIGENS

         2.1.     DESIGNATION OF RESEARCH ANTIGENS.

         Subject to the provisions of this Agreement, including the availability
of the Antigen pursuant to Section 2.3, EOS may acquire Options pursuant to
Section 4.1 for the following number of Research Antigens during the term of the
Research Program:

                  (a)      Upon payment of the Initial Research Program Fee set
forth in Section 3.4(a), EOS may acquire Options for up to [***] Research
Antigens for evaluation in the Research Program.

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                  (b)      Upon payment of the Second Research Program Fee set
forth in Section 3.4(b), EOS may acquire Options for up to an additional [***]
Research Antigens for evaluation in the Research Program.

                  (c)      Upon payment of the Third Research Program Fee set
forth in Section 3.4(c), EOS may acquire Options for up to an additional [***]
Research Antigens for evaluation in the Research Program.

         EOS may acquire an Option for an Antigen by notifying SGI of the
identity of, and to the extent available the genetic sequence for, the Antigen
for which EOS wishes to acquire an Option. Within fourteen (14) days following
receipt of such EOS notice, SGI will notify EOS whether the Option requested by
EOS is available pursuant to Section 2.3.

         Upon notice by SGI to EOS that an Option is available for such Antigen
pursuant to Section 2.3, such Antigen shall be deemed to be a "RESEARCH ANTIGEN"
under this Agreement for the duration of the Option Period. SCHEDULE C to this
Agreement will be amended from time to time to list the Research Antigens
(including a description thereof) under this Agreement.

         2.2.     RESEARCH LICENSE TO EOS.

         Subject to the provisions of this Agreement, SGI hereby grants to EOS
and its Affiliates, for the term of the Research Program, an exclusive license
in the Territory under the SGI Technology solely for the purpose of conducting
research and development activities on the Research Antigens and evaluating
EOS's interest to exercise the Options. The research license granted to EOS
under this Section 2.2 shall not include (i) the right to use SGI Technology for
any commercial purpose whatsoever, (ii) the right to grant sublicenses thereto
to any Affiliate or Third-Party, (iii) the right to initiate any human clinical
trial in any country, or (iv) the right to make, have made, use or sell a
Product or the Drug Conjugation Technology for any purpose other than the
foregoing evaluation, including for any commercial purpose.

         2.3.     AVAILABILITY OF AN ANTIGEN.

         It is understood and agreed that SGI may be unable to grant an Option
or Exclusive License to an Antigen if, prior to EOS's request for an Option for
such Antigen pursuant to Section 2.1, (i) [***], or (ii) [***] EOS's written
request for an Option for the Antigen.

ARTICLE 3 - RESEARCH PROGRAM

         3.1.     OBJECTIVE. EOS intends to conduct a Research Program to
evaluate Research Antigens and Antibodies for commercial development under this
Agreement. In support of the Research Program, upon receipt of Antibodies from
EOS, SGI will prepare ADCs for EOS pursuant to Section 3.5.

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THE OMITTED PORTIONS.

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         3.2.     CONDUCT OF RESEARCH PROGRAM. EOS and SGI shall use all
reasonable efforts to complete research works in accordance with the stated
objective of the Research Program. Any research work performed by EOS and SGI
pursuant hereto shall be performed in a good scientific manner and in compliance
with all applicable laws.

         3.3.     TERM OF THE RESEARCH PROGRAM. The initial term of the Research
Program shall be for a period of three (3) years from the Effective Date (the
"INITIAL RESEARCH PROGRAM TERM"), unless terminated earlier upon termination of
this Agreement in accordance with Article 15 hereof. Subject to the written
approval of SGI and to payment of the fee by EOS to extend, as set forth in
Section 3.4(d) below, the Research Program will be extended for [***] additional
period of [***] upon EOS's request by giving written notice to SGI not less than
[***] prior to the expiration of the Initial Research Program Term (collectively
with the Initial Research Program Term, the "RESEARCH PROGRAM TERM").

         3.4.     RESEARCH PROGRAM FEES. EOS shall pay to SGI the following
amounts in consideration of the Research Program:

                  (a)      Upon execution and delivery of this Agreement by both
Parties, EOS shall pay to SGI a payment in the sum of [***] dollars ([***]) by
wire transfer of immediately available funds, which payment shall be
nonrefundable and non-creditable (the "INITIAL RESEARCH PROGRAM FEE").

                  (b)      If EOS elects to [***] Options [***] Options pursuant
to Section 2.1(b), EOS shall pay a second payment in the sum of [***] Dollars
($[***])by wire transfer of immediately available funds, which payment shall be
nonrefundable and non-creditable (the "SECOND RESEARCH PROGRAM FEE").

                  (c)      If EOS elects to [***] Options [***] Options pursuant
to Section 2.1(c), EOS shall pay a third payment in the sum of [***] Dollars
($[***]) by wire transfer of immediately available funds, which payment shall be
nonrefundable and non-creditable (the "THIRD RESEARCH PROGRAM FEE").

                  (d)      If EOS and SGI agree to extend the Research Program
for an additional [***] month period pursuant to Section 3.3, EOS shall pay an
additional payment in the sum of [***] Dollars ($[***]) by wire transfer of
immediately available funds, which payment shall be nonrefundable [***]

         3.5.     SGI PREPARATION OF ADCS.

         At the request of EOS during the Research Program Term, SGI will use
reasonable commercial efforts to prepare ADC's for (i) Antibodies provided by
EOS recognizing [***]and (ii) up to [***] antibody [***]

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("[***] ANTIBODY") per ADC being prepared; provided that the Antibody(ies) [***]
Antibody(ies) are provided to SGI at the same time; and provided further that
SGI may decline to prepare [***]. The terms and conditions applicable to SGI's
ADC preparation are set forth on SCHEDULE D. EOS shall pay SGI the amount set
forth in SCHEDULE D within thirty (30) days of receipt of an invoice from SGI
for such amounts. The Parties acknowledge and agree that SGI will prepare at
least the [***]. If SGI is unable to prepare an ADC within [***] months
following EOS's delivery of the required quantity of Antibody material (and if
applicable, Control Antibody material), EOS will have the option to designate a
replacement Antibody to the same Research Antigen (including a replacement
Control Antibody, if applicable) at any time during the Research Program Term
and SGI will use reasonable commercial efforts to prepare an ADC for such
replacement Antibody (and replacement Control Antibody, if applicable) for no
additional charge. EOS's right to designate a replacement Antibody (and
replacement Control Antibody, if applicable) is EOS's sole and exclusive remedy
for any failure by SGI to prepare any ADC contemplated by this Section 3.5.

         EXCEPT AS MAY BE OTHERWISE PROVIDED IN ARTICLE 14, SGI MAKES NO
REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, REGARDING THE ADC'S PREPARED BY
SGI INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE.

         3.6.     CONFIDENTIALITY. In order to facilitate the Research Program,
either Party may disclose confidential or proprietary information owned or
controlled by it to the other. It is hereby understood and agreed that such
information shall be deemed "CONFIDENTIAL INFORMATION" as defined in Article 10
and treated as such.

ARTICLE 4 - OPTIONS AND LICENSES

         4.1.     OPTION GRANT.

                  4.1.1.   GRANT OF THE OPTIONS. Subject to the provisions of
this Agreement, SGI hereby grants to EOS an exclusive Option for each Research
Antigen designated pursuant to Section 2.1 to obtain the Exclusive License set
forth in Section 4.2.1 during the Option Period.

                  4.1.2.   EXERCISE OF THE OPTION. At any time during the Option
Period with respect to a particular Research Antigen, EOS may provide notice to
SGI that it wishes to acquire an Exclusive License for the SGI Technology solely
for use with Products containing ADC's directed against the specified Research
Antigen. Upon the exercise of each Option, EOS shall make a payment to SGI in
the sum of [***] Dollars ($[***]) by wire transfer of immediately available
funds, which payment shall be nonrefundable and non-creditable (the "OPTION
EXERCISE FEE").

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                  4.1.3.   NON-EXERCISE OF THE OPTION. At the end of an Option
Period for a particular Research Antigen and in exchange for a payment to SGI in
the sum of $[***], EOS may be granted a [***] month extension of the Option
Period for such Research Antigen. If by the end of an Option Period (including
its extension, as above) for any Research Antigen, EOS has not exercised its
Option, all rights related to the use of SGI Technology in connection with the
Antigen shall revert back to SGI.

         4.2.     EXCLUSIVE LICENSE GRANT TO EOS.

                  4.2.1.   GRANT. If (i) EOS elects to exercise its option to
acquire an Exclusive License with respect to a particular Research Antigen
pursuant to Section 4.1.2, and (ii) EOS pays the Option Exercise Fee pursuant to
Section 4.1.2, then subject to the terms and conditions of this Agreement, and
commencing as of the date that SGI has received the Option Exercise Fee from
EOS, SGI is automatically deemed to grant, and in such event hereby grants, to
EOS, on a Research Antigen-by-Research Antigen basis, a worldwide, exclusive
(even as to SGI), non-transferable, royalty-bearing license under the SGI
Technology, with the right to sublicense as permitted in Section 4.2.2, to
discover, have discovered, to develop, have developed, make, have made, import,
have imported, export, have exported, use, sell and have sold Products directed
toward such Research Antigen within the Field in the Territory (an "EXCLUSIVE
LICENSE"), whereupon the Research Antigen shall thereafter be deemed to be an
"EXCLUSIVE ANTIGEN". EOS may obtain an Exclusive License for each Research
Antigen pursuant to this Section 4.2.1 until the expiration of the term of the
Option Period for such Research Antigen. Upon expiration of the term of the last
Option Period hereunder, no further Exclusive Licenses shall be granted under
the terms of this Agreement.

                  The date upon which an Exclusive License is granted with
respect to each Research Antigen under this Section 4.2 is referred to herein as
the "EXCLUSIVE LICENSE DATE" for such Research Antigen.

                  4.2.2.   RIGHTS TO SUBLICENSE.

                           (a)      EOS shall have the right to sublicense the
rights granted to EOS pursuant to this Agreement to any Affiliate or any
Third-Party for any Exclusive Antigen or Product developed by EOS subject to the
terms and conditions of the SGI In-Licenses attached hereto as SCHEDULE E.

                           (b)      EOS [***] all payments due to SGI by reason
of completion of any milestones or Net Sales of any Products by any such
Sublicensee and its compliance with all terms of this Agreement applicable to
EOS (including all terms of this Agreement identified as applicable to
Sublicensee); and any such Sublicensee agrees in writing (i) to keep books and
records and permit SGI to review the information concerning such books and
records that EOS has in its possession in accordance with the terms of this
Agreement and (ii) to comply with all other terms of this Agreement applicable
to EOS (including all terms of this Agreement identified as applicable to a
Sublicensee).

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                           (c)      EOS shall notify SGI of each sublicense
granted to Affiliates or Third-Parties and shall provide SGI with the name and
address of each Sublicensee and a description of the rights granted and the
territory covered by each Sublicensee.

         4.3.     IMPROVEMENTS AND NEW TECHNOLOGIES.

                  4.3.1.   IMPROVEMENTS. In the event that, during the Research
Program Term, SGI conceives, develops or reduces to practice an Improvement that
relates to [***], SGI shall promptly notify EOS of the discovery of such
Improvement. EOS may, at any time during the Research Program Term, [***].

                  4.3.2.   NEW TECHNOLOGIES. Subject to the bona fide rights of
Third-Parties that may exist, SGI hereby grants to EOS the right to [***] as
"SGI TECHNOLOGY," [***] during the Research Program Term ("New Technology"). SGI
shall promptly notify EOS of any New Technology by providing a description of
the New Technology, including all material terms applicable to sublicensees of
the New Technology. Upon such notification, EOS may, by giving written notice to
SGI at any time during the Research Program Term, [***] under this Agreement;
provided that EOS will be obligated [***] as a result of EOS's development and
commercialization of a Product, in addition to any milestones and royalties that
are otherwise payable under this Agreement. For the purposes of clarity, the
Parties acknowledge and agree that EOS shall not be obligated to pay [***].
SCHEDULE B shall be amended from time to time to add the patents and patent
applications covering New Technologies and may be amended from time to time to
add any new patents or patent applications covering New Technologies and
Improvements related thereto and the specific terms of the SGI In-Licenses
covering such New Technologies and Improvements related thereto with which EOS
shall comply.

         4.4.     COMPLIANCE WITH THE SGI IN-LICENSES.

                  4.4.1.   EOS, its Affiliates and Sublicensees agree to comply
with those covenants and conditions of the SGI In-Licenses disclosed to EOS by
SGI in advance and attached hereto in SCHEDULE E, as if they were a party to the
SGI In-Licenses. The Parties agree that [***] are Third-Party beneficiaries
to this Agreement with respect to SGI Technology that includes technology
sublicensed under the [***] and/or the [***].

                  4.4.2.   SGI will not enter into any amendment to an SGI
In-License that imposes additional obligations on EOS, or diminishes EOS's
rights, without the prior written consent of EOS. In the event of any amendment
or termination of any SGI In-License set forth on SCHEDULE E that relates to
technology sublicensed to EOS under such SGI In-License, SGI shall notify EOS no
later than fifteen (15) days before the execution of any proposed amendment to
or termination of an SGI In-License. In the case of an amendment, such
notification will include disclosure of the material terms of the proposed
amendment to an SGI In-License, including all terms

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applicable to EOS. If EOS elects to accept an amendment to an SGI In-License,
SCHEDULES B AND E shall be amended to reflect the amended terms of the SGI
In-License. If EOS does not elect to accept an amendment to an SGI In-License,
[***] and if EOS does not [***] then the existing Agreement and all its terms or
conditions shall continue to govern.

                  4.4.3    SGI will use commercially reasonable efforts to
comply with, and exercise its rights under, the SGI In-Licenses so as to ensure
compliance by SGI of its obligations under this Agreement. SGI will not take any
action (or omit to take any action) that would [***] insofar as it would relate
to technology [***].

ARTICLE 5 - TECHNOLOGY DISCLOSURE AND SUPPLY

         5.1.     DISCLOSURE OF DRUG CONJUGATION TECHNOLOGY.

         SGI shall disclose to EOS such Drug Conjugation Technology, SGI
Know-How, New Technologies and Improvements as is necessary to enable EOS to use
the Drug Conjugation Technology, SGI Know-How, New Technologies and Improvements
at its own facilities on the terms and subject to the conditions of this
Agreement. In addition, during the term of this Agreement, SGI shall, upon EOS's
reasonable request and with adequate notice to SGI, make available to EOS at
SGI's facilities, SGI's personnel to provide a reasonable amount of technical
assistance and training to EOS's personnel. If such SGI personnel are engaged in
preparing ADC's when such training occurs, then the fees listed in SCHEDULE D
shall [***] providing such technical assistance. If not, then EOS [***].

         5.2.     IDENTIFICATION OF TECHNOLOGY.

The Parties agree that all Drug Conjugation Technology, SGI Know-How and Drug
Conjugate Materials to be transferred to EOS pursuant to this Agreement
("TRANSFERRED TECHNOLOGY, KNOW-HOW AND MATERIALS") shall be so transferred in
the form of written memoranda marked confidential in the case of such Technology
and Know-How and, in the case of such Materials, by clearly marked containers.
When presented in this manner, these shall be deemed to be "CONFIDENTIAL
INFORMATION" in accordance with Section 10.1. EOS will take reasonable and
appropriate measures to ensure that the confidentiality of all Transferred
Technology, Know-How and Materials is preserved and that the Transferred
Technology, Know-How and Materials are only used for the purposes authorized
under the Agreement and in compliance with this Agreement. Failure by SGI to
transfer such TRANSFERRED TECHNOLOGY, KNOW-HOW AND MATERIALS in the manner
contemplated in this Section 5.2 will not be construed to limit the license
granted to EOS under such SGI Technology pursuant to Sections 2.2 or 4.2 hereof.

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         5.3.     SUPPLY OF DRUG CONJUGATE MATERIALS.

         During the term of the Research Program and any subsequent portion of
the Option Period related to a specific Research Antigen, SGI will provide
reasonable quantities of Drug Conjugate Materials to EOS on [***] terms, not to
exceed [***] % of [***].

         If at any time during the term of this Agreement, SGI [***] for the
Drug Conjugate Materials [***], SGI will [***] Drug Conjugate Materials, [***]
to EOS, for [***].

         SGI will [***] orders for Drug Conjugate Materials and for [***] Drug
Conjugate Materials [***].

         If at any time during the Agreement, SGI [***] SGI will [***] with EOS
[***].

         5.4.     COMMUNICATION AMONG PARTIES.

         Each of EOS and SGI shall appoint a specific individual who shall be
available and shall act as a liaison person to facilitate the day-to-day
communications among the Parties. The names of the initial liaison persons who
shall act on behalf of each of the Parties shall be Richard Murray for EOS and
Peter Senter for SGI. Each of EOS and SGI agrees to notify the other in
accordance with the terms of Section 21.1 of this Agreement in the event of a
change in liaison person.

ARTICLE 6 - DEVELOPMENT AND COMMERCIALIZATION

         EOS shall use its commercially reasonable efforts and diligence in
developing and commercializing Product(s) related to Exclusive Antigen(s) in
accordance with its business, legal, medical and scientific judgment, and in
undertaking investigations and actions required to obtain appropriate Regulatory
Approval(s) necessary to market such Products that EOS determines in its sole
discretion to pursue in the Territory, such reasonable efforts and diligence to
be in accordance with the efforts and resources EOS would use for product(s)
owned by it or to which it has rights, which is of similar market potential at a
similar stage in development as the Products directed towards the applicable
Exclusive Antigen taking into account the competitiveness of the marketplace,
the proprietary position of the Product(s) that EOS determines in its sole
discretion to pursue, the relative potential safety and efficacy of such
Product(s), the regulatory requirements involved in such Products' development,
commercialization and Regulatory Approval, the Cost of Goods and availability of
capacity to

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manufacture and supply such Product(s) at commercial scale, the profitability of
such Product(s), and other relevant factors including technical, legal,
scientific or medical factors.

         As to between the Parties, EOS shall be solely responsible for funding
all costs of the development and commercialization of each Product EOS
determines in its sole discretion to pursue. EOS shall keep SGI informed in a
timely manner as to the progress of the development of Products EOS determines,
from time to time, to pursue. Beginning on January 1, 2002 and thereafter within
thirty (30) days following the end of each calendar year, EOS shall provide SGI
with a written report summarizing EOS's activities related to research and
development of Products and status of clinical trials and government approvals
necessary for marketing Products. Beginning on January 1, 2002 and thereafter
within thirty (30) days following the end of each calendar year, SGI shall
provide EOS with a written report summarizing SGI's activities related to
preparing ADCs and developing new Drug Conjugation Technology.

ARTICLE 7 - MAINTENANCE FEES, ROYALTIES AND MILESTONES.

         7.1.     MAINTENANCE FEES

                  7.1.1.   EOS shall pay to SGI an annual maintenance fee in the
amount of [***] Dollars ($[***]) for each Exclusive Antigen, beginning on the
[***] anniversary of the Exclusive License Date for each Exclusive Antigen. This
annual maintenance fee[***]. SGI shall [***] payable on the anniversary of the
Exclusive License Date following each of the following milestone events
applicable to such Exclusive Antigen: (a) [***] for a Product related to such
Exclusive Antigen, (b) [***] for a Product related to such Exclusive Antigen
provided that it occurs within [***] years of the [***] for such Product, (c)
the [***] for a Product related to such Exclusive Antigen, and (d) the [***] of
the [***] for a Product related to such Exclusive Antigen. Notwithstanding the
foregoing, in no event shall EOS be required to pay SGI [***]: (y) [***] Dollars
($[***]) if EOS [***] and (z) [***] Dollars ($[***]) if EOS [***].

                  7.1.2.   EOS may terminate the Exclusive License for any
Exclusive Antigen for any reason and at any time upon [***] days' prior notice
to SGI, in which event no maintenance fees shall accrue to SGI under Section
7.1.1 for such Research Antigen following the termination date; provided that
[***]. The Exclusive License for such Exclusive Antigen shall terminate
effective as of such termination date. All rights related to the use of SGI
Technology in connection with the Exclusive Antigen shall revert back to SGI
after a waiting period of [***] after such termination date.

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                  7.1.3. Notwithstanding anything to the contrary in this
Section 7.1, EOS may reinstate the Exclusive License for such former Exclusive
Antigen within [***] following the termination date by notifying SGI and making
an additional payment in the sum of $[***] to SGI.

         7.2.     ROYALTIES PAYABLE BY EOS.

         In consideration for the Exclusive Licenses granted to EOS herein,
during the Royalty Term, EOS shall pay to SGI royalties on Net Sales of
Products. Such royalties shall be established at the following rates, determined
on a Product-by-Product basis:

                  (a)      [***]% of the first [***] Dollars ($[***]) in
aggregate Net Sales of the Product in each calendar year;

                  (b)      [***]% of incremental aggregate Net Sales of the
Product up to [***] Dollars ($[***]) in each calendar year; and

                  (c)      [***]% of incremental aggregate Net Sales of the
Product in excess of [***] Dollars ($[***]) in each calendar year.

         7.3.     THIRD-PARTY ROYALTIES.

                  7.3.1.   EOS shall pay any Third-Party royalties owed on
account of its sales of Product in the Licensed Territory, including royalties
owed due to use of the SGI Technology; PROVIDED, HOWEVER, [***] in accordance
with Section 7.3.2 where applicable. All current Third-Party royalties known to
SGI are set forth on SCHEDULE B and the terms of such royalties have been
disclosed to EOS and are set forth in SCHEDULE E.

                  7.3.2.   [***], then the royalty rates payable to SGI under
Section 7.2 shall be [***]; PROVIDED, HOWEVER, that in no event shall [***] the
following rates, determined on a [***]:

                  (a)      [***] of [***] in aggregate Net Sales of the
Product[***];

                  (b)      [***] of [***] aggregate Net Sales of the Product
[***]; and

                  (c)      [***].

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THE OMITTED PORTIONS.

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         7.4.     NON-ROYALTY SALES.

         No royalty shall be payable under this Article 7 with respect to sales
of Products among EOS and its Affiliates or its Sublicensees or among
Sublicensees and their Affiliates, but a royalty shall be due upon the
subsequent sale of the Product to a Third-Party.

         7.5.     MILESTONE PAYMENTS.

         As additional consideration for the licenses, rights and privileges
granted to it hereunder, EOS shall pay to SGI the following milestone payments
to SGI within thirty (30) days of the first occurrence of each event set forth
below with respect to Products, whether such events are achieved by EOS, its
Affiliates or Sublicensees:

                  (a)      Upon [***] for each Product, [***] Dollars ($[***]);

                  (b)      Upon [***] for each Product, [***] Dollars ($[***]);

                  (c)      Upon [***] for each Product, [***] Dollars ($[***]);

                  (d)      Upon [***] for each Product in either the [***]
(each, a "MAJOR MARKET"), [***] Dollars ($[***]);

                  (e)      Upon [***] for each Licensed Product in a second
Major Market, [***] Dollars ($[***]); and

                  (f)      Upon [***], said indication to be the result of an
[***] for each Product in a Major Market, [***] Dollars ($[***]).

         EOS will only be required to pay each of the above milestones (other
than the milestone set forth in Section 7.5(f)) to SGI for the [***] Product for
each Exclusive Antigen to complete the milestone event. EOS will only be
required to pay the milestone set forth in Section 7.5(f) to SGI for the [***]
Product for each Exclusive Antigen that completes such milestone event.

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ARTICLE 8 - ROYALTY REPORTS AND ACCOUNTING

         8.1.     REPORTS, EXCHANGE RATES.

                  8.1.1.   During the term of this Agreement following the First
Commercial Sale and during the Royalty Term, EOS shall furnish to SGI, with
respect to each Calendar Quarter, a written report showing on a consolidated
basis in reasonably specific detail and on a country-by-country basis, (a) the
gross sales of Products sold by EOS, its Affiliates and its Sublicensees in the
Territory during the corresponding Calendar Quarter and the calculation of Net
Sales from such gross sales; (b) the royalties payable in US dollars, if any,
which shall have accrued hereunder based upon Net Sales of Products; (c) the
withholding taxes, if any, required by law to be deducted in respect of such
royalties; (d) the dates of the First Commercial Sale of each Product in each
country in the Territory if it has occurred during the corresponding Calendar
Quarter; and (e) the exchange rates (as determined pursuant to Section 8.1.4
herein) used in determining the royalty amount expressed in US dollars
(collectively, "REPORTS").

                  8.1.2.   EOS shall include in each permitted sublicense
granted by it pursuant to this Agreement a provision requiring its Sublicensees
to make Reports to EOS within [***] ([***]) days of the close of each Calendar
Quarter, to keep and maintain records of sales made pursuant to such sublicense
and to grant access to such Reports by SGI's independent accountant to the same
extent required with respect to EOS's Reports under this Agreement.

                  8.1.3.   Reports shall be due on the [***] ([***]) day
following the close of each Calendar Quarter. EOS shall keep complete and
accurate records in sufficient detail to properly reflect all gross sales and
Net Sales and to enable the royalties payable hereunder to be determined.

                  8.1.4.   With respect to sales (if any) of Products invoiced
in US dollars, the gross sales, Net Sales, and royalties payable shall be
expressed in US dollars. With respect to sales of Products invoiced in a
currency other than US dollars, the gross sales, Net Sales and royalties payable
shall be expressed in the currency of the invoice issued by the Party making the
sale together with the US dollars equivalent of the royalty payable, calculated
using the following rates: (i) if the Product incorporates technology [***] then
the rate published in the Wall Street Journal for the last banking day of the
applicable Calendar Quarter, or (ii) if the Product does not include technology
[***,] then the average of the daily rates for such currency quoted by Citibank,
N.A. for each of the last fifteen (15) banking days of the applicable Calendar
Quarter.

         8.2.     AUDITS.

                  8.2.1.   Upon the written request of SGI and not more than
once in each calendar year, EOS shall permit an independent certified public
accounting firm of internationally recognized standing, selected by SGI and
reasonably acceptable to EOS, at SGI's expense, to have access during normal
business hours to such of the records of EOS and its Affiliates as may

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be reasonably necessary to verify the accuracy of the Reports hereunder for any
year ending not more than [***] ([***]) months prior to the date of such
request. The accounting firm shall disclose to SGI only whether the records are
correct or not and the specific details concerning any discrepancies. No other
information shall be shared.

                  8.2.2.   If such accounting firm concludes that additional
royalties were owed during such period, EOS shall pay the additional royalties
within thirty (30) days of the date SGI delivers to EOS such accounting firm's
written report so concluding. The fees charged by such accounting firm shall be
paid by SGI; PROVIDED, HOWEVER, if the audit discloses that the royalties
payable by EOS for the audited period are more than [***] percent ([***]%) of
the royalties actually paid for such period, then EOS shall pay the reasonable
fees and expenses charged by such accounting firm.

                  8.2.3.   Upon the expiration of [***] ([***]) months following
the end of any calendar year, the calculation of royalties payable with respect
to such year shall be binding and conclusive upon SGI, and EOS, its Affiliates
and Sublicensees shall be released from any liability or accountability with
respect to royalties for such year.

         8.3.     CONFIDENTIAL FINANCIAL INFORMATION.

         SGI shall treat all financial information subject to review under this
Article 8 or under any sublicense agreement as Confidential Information of EOS,
and shall cause its accounting firm to retain all such financial information in
confidence.

ARTICLE 9 - PAYMENTS.  LATE PAYMENTS

         9.1.     PAYMENT TERMS.

         Royalties shown to have accrued by each Report provided for under
Article 8 of this Agreement shall be due on the date such Report is due. Payment
of royalties in whole or in part may be made in advance of such due date. Past
due payments shall accrue interest at a rate of [***] percent ([***]%) per
annum, or the maximum applicable rate permitted by law, unless occurring as a
result of an event the Parties agree constitutes an Event of Force Majeure or as
a result of a good faith dispute between the Parties regarding performance or
breach of their obligations hereunder.

         9.2.     PAYMENT METHOD.

         All payments by EOS to SGI under this Agreement shall be paid in US
dollars, and all such payments shall be made by bank wire transfer in
immediately available funds to the bank account designated by SGI in writing.

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         9.3.     EXCHANGE CONTROL.

         If at any time legal restrictions prevent the prompt remittance of part
or all royalties with respect to any country in the Territory where Product is
sold, payment shall be made through such lawful means or method as the Parties
reasonably shall determine.

         9.4.     WITHHOLDING TAXES.

         Except as otherwise provided below, all amounts owing from EOS to SGI
under this Agreement are gross amounts. EOS shall be entitled to deduct the
amount of any withholding taxes payable or required to be withheld by EOS, its
Affiliates or Sublicensees, to the extent EOS, its Affiliates or Sublicensees
pay to the appropriate governmental authority on behalf of SGI such taxes. EOS
shall use commercially reasonable efforts to minimize any such taxes, levies or
charges required to be withheld on behalf of SGI by EOS, its Affiliates or
Sublicensees. EOS promptly shall deliver to SGI proof of payment of all such
taxes, levies and other charges, together with copies of all communications from
or with such governmental authority with respect thereto.

ARTICLE 10 - CONFIDENTIALITY

         10.1.    NON-DISCLOSURE OBLIGATIONS.

         Except as otherwise provided in this Article 10, during the Term and
for a period of [***] ([***]) years thereafter, each Party shall maintain in
confidence, and use only for purposes as expressly authorized and contemplated
by this Agreement, all confidential or proprietary information, data, documents
or other materials supplied by the other Party under this Agreement and marked
or otherwise identified as "CONFIDENTIAL," including SGI Know-How, Drug
Conjugation Technology, Improvements and New Technologies. For purposes of this
Agreement, information and data described above shall be hereinafter referred to
as "CONFIDENTIAL INFORMATION." Each Party shall use at least the same standard
of care as it uses to protect its own Confidential Information to ensure that
its and its Affiliates' employees, agents, consultants and clinical
investigators only make use of Confidential Information for purposes as
expressly authorized and contemplated by this Agreement and do not disclose or
make any unauthorized use of such Confidential Information.

         10.2.    PERMITTED DISCLOSURES.

         Notwithstanding the foregoing, the provisions of Section 10.1 hereof
shall not apply to information, documents or materials that the disclosing Party
can conclusively establish:

                  (a)      have become published or otherwise entered the public
domain other than by acts of the disclosing Party or its Affiliates in
contravention of this Agreement;

                  (b)      are permitted to be disclosed by prior consent of the
other Party;

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                  (c)      have become known to the disclosing Party by a
Third-Party, provided such Confidential Information was not obtained by such
Third-Party directly or indirectly from the other Party under this Agreement on
a confidential basis;

                  (d)      prior to disclosure under the Agreement, was already
in the possession of the disclosing Party, its Affiliates or Sublicensees,
provided such Confidential Information was not obtained directly or indirectly
from the other Party under this Agreement;

                  (e)      is disclosed in a press release agreed to by both
Parties hereto, which agreement shall not be unreasonably withheld; and

                  (f)      are required to be disclosed by the disclosing Party
to comply with any applicable law, regulation or court order, or are reasonably
necessary to obtain patents, copyrights or authorizations to conduct clinical
trials with, and to commercially market Product(s), provided that the disclosing
Party shall provide prior notice of such disclosure to the other Party and take
reasonable and lawful actions to avoid or minimize the degree of disclosure.

         10.3.    TERMS OF THE AGREEMENT.

         EOS and SGI shall not disclose any terms or conditions of this
Agreement to any Third-Party without the prior consent of the other Party,
except as required by applicable laws, regulations or a court order (and in any
such case the disclosing Party shall provide notice to the other Party and takes
reasonable and lawful actions to avoid or minimize the degree of such
disclosures).

         10.4.    PRESS RELEASES AND OTHER DISCLOSURES TO THIRD-PARTIES.

         Neither SGI nor EOS will, without the prior consent of the other, issue
any press release or make any other public announcement or furnish any statement
to any Person (other than either Parties' respective Affiliates) concerning the
existence of this Agreement, its terms and the transactions contemplated
thereby, except for (i) general statement referring to the existence of this
Agreement, and identity of the Parties but no other details, (ii) disclosures
made in compliance with Sections 10.2 and 10.3 hereof, (iii) attorneys,
consultants, and accountants retained to represent them in connection with the
transactions contemplated hereby and (iv) occasional, brief comments by the
respective officers of EOS and SGI consistent with such guidelines for public
statements as may be mutually agreed by EOS and SGI made in connection with
routine interviews with analysts or members of the financial press.

         10.5.    PUBLICATIONS REGARDING RESULTS OF THE RESEARCH PROGRAM.

         No Party may publish, present or announce results of the Research
Program either orally or in writing (the "PUBLICATION") without obtaining the
written consent of the other Party. The other Party shall have thirty (30) days
from receipt of the proposed Publication to provide comments and/or proposed
changes to the disclosing Party. The disclosing Party shall take into account
the comments and/or proposed changes made by the other Party on any Publication
and

                                      -21-
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shall agree to have employees or others acting on behalf of the other Party be
mentioned as co-authors on any Publication describing results to which such
persons have contributed. If the other Party reasonably determines the
Publication would amount to the public disclosure of such Party's Confidential
Information and/or of a patentable invention upon which a patent application
should be filed prior to any such disclosure, submission of the concerned
Publication to Third-Parties shall be delayed for a sixty (60) day period from
the date of said notice, or for such longer period which may appear necessary
for appropriately deleting Confidential Information from the proposed
Publication and/or drafting and filing a patent application covering such
invention.

ARTICLE 11 - INVENTIONS AND PATENTS

         11.1.    OWNERSHIP OF INVENTIONS.

                  11.1.1.  INVENTORSHIP. Subject to the terms of this Article
11, inventorship of any inventions arising out of the Research Program or under
this Agreement shall be determined according to U.S. law. Any inventions or
other intellectual property invented solely by one Party shall be owned by that
Party.

                  11.1.2.  OWNERSHIP OF SGI TECHNOLOGY AND JOINTLY-INVENTED
INVENTIONS RELATED THERETO.

         All right, title and interest to the SGI Technology shall (subject to
any licenses explicitly granted hereunder) at all times remain with and be
vested in SGI. Any invention or other intellectual property made, and data
derived, by jointly EOS or its respective employees, consultants or agents and
SGI or its respective employees, consultants or agents that relate to the SGI
Technology shall be owned by [***]. EOS shall promptly notify SGI of any such
invention or other intellectual property, and cooperate with SGI at SGI's
request and expense, in the preparation, filing, prosecution, and defense of
patent applications and patents relating thereto. Subject to the terms of this
Article 11, [***] that relate to the SGI Technology, and shall in a reasonably
timely manner execute those documents, as requested by SGI, necessary to
document and/or perfect the assignment of such inventions and intellectual
property.

                  11.1.3.  OWNERSHIP OF ANTIBODIES, RESEARCH ANTIGENS, EXCLUSIVE
ANTIGENS,AND JOINTLY-INVENTED INVENTIONS RELATED THERETO. Subject to Section
11.1.2, all right, title and interest to the Antibodies, Research Antigens and
Exclusive Antigens shall at all times remain with and be vested in EOS. Any
invention or other intellectual property made, and data derived, by jointly SGI
or its respective employees, consultants or agents and EOS or its respective
employees, consultants or agents that relate to the Antibodies, the Research
Antigens, the Exclusive Antigens or any Antibody included in the ADC, shall be
owned by [***]. SGI shall promptly notify EOS of any such invention or other
intellectual property, and cooperate with EOS at EOS's request and expense, in
the preparation, filing, prosecution, and defense of patent applications and
patents relating thereto. Subject to the terms of this Article 11, [***] that

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THE OMITTED PORTIONS.

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relate to the above noted technology as well as any invention or other
intellectual property made, and data derived as it directly relates, and only
insofar as it directly relates, to an ADC licensed under this Agreement
regardless of inventorship, and shall in a reasonably timely manner execute
those documents, as requested by EOS, necessary to document and/or perfect the
assignment of such inventions and intellectual property.

         11.2.    PATENT PROSECUTION AND MAINTENANCE.

                  11.2.1.  SGI shall be responsible for and shall control the
preparation, filing, prosecution, grant and maintenance of all Licensed Patents.
SGI shall, at its sole expense, prepare, file, prosecute and maintain such
Licensed Patents in good faith consistent with its customary patent policy and
its reasonable business judgment, and shall consider in good faith the interests
of EOS in so doing.

                  11.2.2.  Subject to Section 11.2.1, EOS shall be responsible
for and shall control the preparation, filing, prosecution, grant and
maintenance, of any patents and patent applications having as subject matter an
ADC, Antibody, Research Antigen or Exclusive Antigen Invention (the "EOS
PATENTS"). EOS shall have the right, but not the obligation, at its sole
discretion and expense, prepare, file, prosecute and maintain such patent rights
in good faith consistent with its customary patent policy and its reasonable
business judgment.

                  11.2.3.  The Parties shall at all times fully cooperate in
order to reasonably implement the foregoing provisions.

         11.3.    ENFORCEMENT OF LICENSED PATENTS.

                  11.3.1.  SGI shall have the obligation in Major Markets and
the right in all other markets, at its sole expense, to determine the
appropriate course of action to enforce the Licensed Patents or otherwise abate
the infringement thereof, to take (or refrain from taking) appropriate action to
enforce the Licensed Patents, to control any litigation or other enforcement
action and to enter into, or permit, the settlement of any such litigation or
other enforcement action with respect to the Licensed Patents, and in good faith
shall consider the interests of EOS in so doing; provided that nothing herein
shall be construed to obligate SGI to take any action that would be commercially
unreasonable or would subject SGI to undue business risk. All monies recovered
upon the final judgment or settlement of any such suit to enforce any Licensed
Patents shall be retained by SGI. EOS and SGI shall fully cooperate with each
other in any action to enforce the Licensed Patents. If SGI fails to take any
action to enforce the Licensed Patents or control any litigation with respect to
the licensed Patents within a period of ninety (90) days after reasonable notice
of the infringement of the Licensed Patents, then EOS shall have the right to
bring and control any such action by counsel of its own choice, and in such
case, all monies recovered upon the final judgment or settlement of any such
suit to enforce any Licensed Patents shall be retained by EOS. In such a case,
SGI shall cooperate fully with EOS, at EOS's expense, in its efforts to enforce
the Licensed Patents, including being joined as a party to such action if
necessary.

                                      -23-
<Page>

                  11.3.2.  EOS shall have the right, at its sole expense, to
determine the appropriate course of action to enforce the EOS Patents or
otherwise abate the infringement thereof, to take (or refrain from taking)
appropriate action to enforce the EOS Patents, to control any litigation or
other enforcement action and to enter into, or permit, the settlement of any
such litigation or other enforcement action with respect to the EOS Patents. All
monies recovered upon the final judgment or settlement of any such suit to
enforce any EOS Patents shall be retained by EOS. SGI and EOS shall fully
cooperate with each other in any action to enforce the EOS Patents.

         11.4.    PRIOR PATENT RIGHTS. Notwithstanding anything to the contrary
in this Agreement, with respect to any Licensed Patents that are subject to the
SGI In-Licenses, the rights and obligations of the Parties under Section 11.2
and 11.3 shall be subject to SGI's licensees' rights to participate in and
control prosecution, maintenance and enforcement of such Licensed Patents in
accordance with the terms and conditions of the applicable SGI In-License.

ARTICLE 12 - INFRINGEMENT ACTIONS BY THIRD-PARTIES

         If EOS, SGI or their respective Affiliates, or EOS's Sublicensees,
is sued by a Third-Party for infringement of a Third-Party's patent because
of the use of the Drug Conjugation Technology, the Party which has been sued
shall promptly notify the other Party no event later than thirty (30) days of
the institution of such suit. The notice shall set forth the facts of such
infringement and provide evidence of such infringement that is within the
notifying Party's control. SGI shall have the right, in its sole discretion,
to control the defense of such suit at its own expense, in which event EOS
shall have the right to be represented by advisory counsel of its own
selection, at its own expense, and shall cooperate fully in the defense of
such suit and furnish to SGI all evidence and assistance in its control. If
SGI does not elect within thirty (30) days after receipt of such notice to so
control the defense of such suit, EOS may undertake such control at its own
expense, and SGI shall then have the right to be represented by advisory
counsel of its own selection and at its own expense, and SGI shall cooperate
fully in the defense of such suit and furnish to EOS all evidence and
assistance in SGI's control. The Party controlling the suit shall keep the
other Party reasonably informed of the status of the suit under this Article
12. In no event may the Party controlling the suit settle or otherwise
consent to an adverse judgment in such suit that diminishes the rights or
interests of the non-controlling Party without the express written consent of
the non-controlling Party. Any judgments, awards, settlements or damages
payable with respect to legal proceedings covered by this Article 12 shall be
paid by or to the Party which controls the litigation; PROVIDED, HOWEVER,
that if the other Party has elected to be represented by advisory counsel,
the other Party shall receive the actual reasonable cost of its legal fees
for such advisory counsel.

ARTICLE 13 - REGULATORY ASSISTANCE

         Should EOS develop an ADC for clinical development, SGI will provide to
a reasonable extent, at EOS's request, technical information required for EOS to
file for and obtain permission to commence human clinical trials. This
information will include, as available, Chemistry Manufacturing and Controls
documentation, other toxicity and safety data, access to any drug master files
on record with the FDA and any other relevant materials. EOS shall reimburse SGI

                                      -24-
<Page>

for any out-of-pocket costs incurred by SGI in providing such information plus
an amount equal to SGI's fully burdened FTE rate, which rate shall not exceed
$[***] per year.

ARTICLE 14 - REPRESENTATIONS AND WARRANTIES

         14.1.    REPRESENTATIONS AND WARRANTIES.

                  (a)      This Agreement has been duly executed and delivered
by each Party and constitutes the valid and binding obligation of each Party,
enforceable against such Party in accordance with its terms, except as
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally and by general equitable principals. The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
action on the part of each Party, its officers and directors.

                  (b)      The execution, delivery and performance of the
Agreement by each Party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by which it is bound,
nor violate any law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it.

                  (c)      SGI has not, and during the term of the Agreement
will not, grant any right to any Third-Party relating to the Licensed Patents
and SGI Know-how which would conflict with the rights granted to EOS hereunder.

                  (d)      SGI represents and warrants that it has the right to
grant the licenses granted herein and that it has no knowledge of any rights of
any Third-Parties that would interfere with the practice of the Licensed Patents
or other SGI Technology.

                  (e)      SGI represents and warrants that all Drug Conjugate
Materials manufactured under SGI's authority will be in conformity with the
agreed upon specifications upon delivery to EOS.

         14.2.    PERFORMANCE BY AFFILIATES.

         The Parties recognize that each may perform some or all of its
obligations under this Agreement through Affiliates, PROVIDED, HOWEVER, that
each Party shall remain responsible and be guarantor of the performance by its
Affiliates and shall cause its Affiliates to comply with the provisions of this
Agreement in connection with such performance.

ARTICLE 15 - TERM AND TERMINATION

         15.1.    TERM

         Unless earlier terminated pursuant to this Article 15, the term of this
Agreement shall commence on the Effective Date and shall remain in full force
and effect until the earlier of (i)

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[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -25-
<Page>

the expiration of the last to expire Option Period unless EOS exercises
at least [***] ([***]) Option prior to such date; or (ii) the expiration of the
last to expire Royalty Term.

         15.2.    TERMINATION BY EOS.

         EOS shall have the right, at any time in its sole discretion, to
terminate this Agreement as a whole, either forthwith upon written notice to SGI
if such notice is sent before the end of the Research Program Term, or by
providing not less than three (3) months prior notice to SGI of such
termination; PROVIDED, HOWEVER if EOS elects to terminate this Agreement as a
result of an amendment to an SGI In-License as set forth in Section 7.3.1, EOS
shall have to provide only thirty (30) days prior notice to SGI of such
termination.

         15.3.    DISCONTINUANCE OF DEVELOPMENT EFFORTS BY EOS.

         EOS shall promptly give SGI notice if EOS intends to abandon
permanently the commercial development of any Exclusive Antigen whereupon any
Exclusive License with respect to such Exclusive Antigen shall automatically
terminate and all rights related to the use of SGI Technology in connection with
the Exclusive Antigen shall revert back to SGI.

         15.4.    TERMINATION FOR CAUSE.

         Either Party may terminate this Agreement for material breach by the
other Party (the "BREACHING PARTY") of any material provision of the Agreement,
if the Breaching Party has not cured such breach within ninety (90) days after
notice thereof; PROVIDED, HOWEVER, that neither Party shall be deemed to be in
material breach of this Agreement for purposes of a termination hereunder during
any period in which a good faith dispute between the Parties exists regarding
performance of breach of its obligations hereunder, and provided further,
however, that in the event EOS fails to timely pay SGI the annual maintenance
fees, royalty payments and milestone payments set forth in Article 7, the
Research Program Fee(s) set forth in Section 3.4 or the Option Exercise Fee(s)
set forth in Section 4.1.2, EOS shall have only thirty (30) days to cure such
material breach.

         15.5.    TERMINATION UPON INSOLVENCY.

         Either Party may terminate this Agreement if, at any time, the other
Party shall file in any court or agency pursuant to any statute or regulation of
any state, country or jurisdiction, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of that Party or of its assets, or if such other Party proposes a
written agreement of composition or extension of its debts, or if such other
Party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, or if such other Party shall propose or be a
party to any dissolution or liquidation, or if such other Party shall make an
assignment for the benefit of its creditors.

----------
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -26-
<Page>

         15.6.    TERMINATION OF SGI IN-LICENSES. All rights and obligations
under an SGI In-License sublicensed under this Agreement shall terminate upon
thirty (30) days prior written notice by SGI if EOS breaches any material
provision of such SGI In-License Agreement and fails to cure such breach within
such sixty (60) day period; provided, however such cure period may be extended
by consent of the Parties. All rights and obligations under the [***] shall
automatically terminate if EOS fails to maintain the insurance required under
the [***]. All rights and obligations under an SGI In-License sublicensed under
this Agreement shall terminate upon termination of such SGI In-License; subject
to EOS's right, if any, under such SGI In-License to enter into a direct license
with licensor upon the terms and conditions set forth in such SGI In-License.

         15.7.    EFFECT OF EXPIRATION AND TERMINATION.

                  15.7.1.  Except where explicitly provided within this
Agreement, termination of this Agreement for any reason, or expiration of this
Agreement, with not affect any: (i) obligations, including payment of any
royalties or other sums which have accrued as of the date of termination or
expiration, and (ii) rights and obligations which, from the context thereof, are
intended to survive termination or expiration of this Agreement, including
provisions of Articles 10, 11, 12, 16 and 22, and Sections 8.2, 8.3 and 15.7,
which shall survive the expiration or termination of the Agreement.
Notwithstanding the foregoing, all licenses granted by SGI to EOS hereunder,
including all Exclusive Licenses, will immediately terminate upon termination of
this Agreement pursuant to Section 15.2 or Section 15.4 or Section 15.5.

                  15.7.2.  Upon the expiration of the Royalty Term for each
Exclusive Antigen pursuant to Section 15.1, SGI shall grant EOS a royalty-free,
perpetual, worldwide, license to use the SGI Technology for that Exclusive
Antigen.

ARTICLE 16 - INDEMNITY.

         16.1.    DIRECT INDEMNITY.

                  16.1.1.  Each Party shall indemnify and hold harmless, and
hereby forever releases and discharges the other Party from and against all
claims, demands, liabilities, damages and expenses, including attorneys' fees
and costs (collectively, the "LIABILITIES") arising out of (i) the breach of any
material provision of this Agreement by the indemnifying Party (or the
inaccuracy of any representation or warranty made by such Party in this
Agreement), except to the extent such Liabilities resulted from the gross
negligence, recklessness or willful misconduct of the other Party; or (ii) the
gross negligence, recklessness or willful misconduct of the indemnifying Party.

                  16.1.2.  EOS shall indemnify and hold harmless, and hereby
forever releases and discharges SGI from and against all Liabilities suffered or
incurred arising out of any Third-Party claims for personal injury, death or
disability or any product recall to the extent caused by (a) any failure to test
for or provide adequate warnings of adverse side effects to the extent such
failure arises out of acts or omissions in connection with the preclinical or
clinical testing of any

----------
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -27-
<Page>

Product, (b) any manufacturing defect in any Product or (c) any other act or
omission of EOS in connection with its obligations under this Agreement; except
in each case to the extent such Liabilities resulted from the gross negligence,
recklessness or willful misconduct by SGI or the inaccuracy of any
representation or warranty made by SGI in this Agreement.

                  16.1.3.  SGI shall indemnify and hold harmless, and hereby
forever releases and discharges EOS from and against all Liabilities suffered or
incurred arising out of any Third-Party claims for personal injury, death or
disability or any product recall to the extent caused by (a) any SGI Technology
incorporated in a product other than an EOS Product, (b) any manufacturing
defect in any SGI Technology, or (c) any other act or omission of SGI in
connection with its obligations under this Agreement; except in each case to the
extent such Liabilities resulted from the gross negligence, recklessness or
willful misconduct by EOS or the inaccuracy of any representation or warranty
made by EOS in this Agreement.

         16.2.    PROCEDURE.

         A Party (the "INDEMNITEE") that intends to claim indemnification under
this Article 16 shall promptly provide notice to the other Party (the
"INDEMNITOR") of any Liability or action in respect of which the Indemnitee
intends to claim such indemnification, which notice shall include a reasonable
identification of the alleged facts giving rise to such Liability, and the
Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, jointly with any other Indemnitor similarly noticed, to
assume the defense thereof with counsel selected by the Indemnitor; PROVIDED,
HOWEVER, that the Indemnitee shall have the right to retain its own counsel,
with the fees and expenses to be paid by the Indemnitor, if representation of
such Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other Party represented by such counsel in such proceedings. Any settlement of a
Liability for which any Indemnitee seeks to be reimbursed, indemnified, defended
or held harmless under this Article 16 shall be subject to prior consent of such
Indemnitee, such consent shall be withheld unreasonably.

ARTICLE 17- FORCE MAJEURE

         No Party (or any of its Affiliates) shall be held liable or responsible
to the other Party (or any of its Affiliates) nor be deemed to have defaulted
under or breached the Agreement for failure or delay in fulfilling or performing
any term of the Agreement when such failure or delay is caused by or results
from causes beyond the reasonable control of the affected Party (or any of its
Affiliates) including fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, acts of God or acts,
or omissions or delays in acting by any governmental authority (collectively,
"EVENTS OF FORCE MAJEURE"); PROVIDED, HOWEVER, that the affected Party shall
exert all reasonable efforts to eliminate, cure or overcome any such Event of
Force Majeure and to resume performance of its covenants with all possible
speed. Notwithstanding the foregoing, to the extent that an Event of Force
Majeure continues for a period in excess of six (6) months, the affected Party
shall promptly notify in writing the other Party of such Event of Force Majeure
and within four (4) months of the other Party's receipt of such notice, the
Parties agree to negotiate in good faith either (i) to resolve the Event of
Force Majeure, if possible, (ii) to extend by mutual agreement the time period
to resolve, eliminate,

                                      -28-
<Page>

cure or overcome such Event of Force Majeure, (iii) to amend this Agreement to
the extent reasonably possible, or (iv) to terminate this Agreement.

ARTICLE 18 - ASSIGNMENT

         This Agreement may not be assigned or otherwise transferred, nor,
except as expressly provided hereunder, may any right or obligations hereunder
be assigned or transferred to any Third-Party by either Party without the
consent of the other Party, such consent not to be unreasonably withheld;
PROVIDED, HOWEVER, that either Party may, without such consent but with
notification, assign this Agreement and its rights and obligations hereunder to
any of its Affiliates or in connection with the transfer or sale of all or
substantially all of its business, or in the event of its merger or
consolidation (such merger or consolidation shall be hereinafter referred to as
a "CHANGE IN CONTROL"). Any permitted assignee shall assume all rights and
obligations of its assignor under this Agreement; provided, however, that an
acquiror of SGI in connection with a Change of Control shall not be obligated,
but shall have the right, to disclose or offer to EOS pursuant to Section 4.3
any Improvements or New Technologies owned or controlled by such acquiror prior
to the Change of Control, or any Improvements or New Technologies owned or
controlled by acquiror or SGI after a Change of Control; provided, however, to
the extent that SGI continues to exist as a separate entity, Improvements
derived from the SGI Technology will continue to be subject to the terms and
conditions of this Agreement.

ARTICLE 19 - SEVERABILITY

         Each Party hereby agrees that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries. Should one or more provisions of this Agreement be or
become invalid, the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the Parties would have entered into this Agreement with
such provisions.

In case such provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the Parties would not have
entered into this Agreement without the invalid provisions.

ARTICLE 20 - INSURANCE

         During the term of this Agreement and thereafter for the period of time
required below, each Party shall maintain [***] insurance in the minimum amount
of [***] and [***]; and commencing not later than [***] of the [***] and
thereafter for the period of time required below, EOS shall obtain and maintain
on an ongoing basis [***] in the amount of at least [***] and [***]

----------
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -29-
<Page>

[***] provided that [***]. All of such insurance coverage shall be
maintained with an insurance company or companies having an A.M. Best rating of
"A-" or better and an aggregate deductible not to exceed [***].

         Not later than the effective date of this Agreement with respect to the
[***], and not later than [***], EOS shall provide to SGI a certificate(s)
evidencing all such required coverage hereunder. Thereafter EOS shall maintain
such insurance coverage without interruption during the term of this Agreement
and for a period of at least [***] and shall provide certificates evidencing
such insurance coverage without interruption on an annual basis (by no later
than the annual renewal date for such coverage) during the period of time for
which such coverage must be maintained.

         EOS's insurance shall [***] on [***] insurance required hereunder and
shall state that [***] shall [***] of [***] in the insurance policy.

ARTICLE 21 - EXCLUSIVITY

         [***]

ARTICLE 22 - MISCELLANEOUS

         22.1.    NOTICES.

          Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the Parties hereto to the other shall be
in writing, delivered personally or by facsimile (and promptly confirmed by
personal delivery, first class air mail or courier), first class air mail or
courier, postage prepaid (where applicable), addressed to such other Party at
its address indicated below, or to such other address as the addressee shall
have last furnished in writing to the address or in accordance with this
Section 22.1 and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.

----------
[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      -30-
<Page>

         IF TO SEATTLE GENETICS:
         22215 26th Avenue SE
         Suite 3000
         Bothell, WA 98021
         Attention:  Chief Executive Officer

         WITH COPY TO:
         Venture Law Group
         4750 Carillon Point
         Kirkland, WA  98033
         Attention: Sonya F. Erickson

         IF TO EOS BIOTECHNOLOGY:
         225A Gateway Blvd
         S. San Francisco, CA 94080
         Attention:  Chief Executive Officer

         WITH COPY TO:
         Morgan, Lewis & Bockius LLP
         1701 Market Street
         Philadelphia, PA 19103
         Attention:  Manya S. Deehr

         22.2.    APPLICABLE LAW.

         The Agreement shall be governed by and construed in accordance with the
laws of the State of Washington, without regard to the conflict of law
principles thereof.

         22.3.    DISPUTE RESOLUTION.

         The Parties agree that if any dispute or disagreement arises between
EOS on the one hand and SGI on the other in respect of this Agreement, they
shall follow the following procedure in an attempt to resolve the dispute or
disagreement.

                  (a)      The Party claiming that such a dispute exists shall
give notice in writing ("NOTICE OF DISPUTE") to the other Party of the nature of
the dispute;

                  (b)      Within fourteen (14) business days of receipt of a
Notice of Dispute, a nominee or nominees of EOS and a nominee or nominees of SGI
shall meet in person and exchange written summaries reflecting, in reasonable
detail, the nature and extent of the dispute, and at this meeting they shall use
their reasonable endeavors to resolve the dispute;

                  (c)      If, within a further period of fourteen (14) business
days, the dispute has not been resolved, the President of SGI and the President
of EOS shall meet at a mutually agreed upon time and location for the purpose of
resolving such dispute;

                                      -31-
<Page>

                  (d)      If, within a further period of thirty (30) business
days, the dispute has not been resolved or if, for any reason, the required
meeting has not been held, then the same shall be submitted by the Parties to
arbitration in Seattle, Washington in accordance with the then-current
commercial arbitration rules of the American Arbitration Association ("AAA")
except as otherwise provided herein. The Parties shall choose, by mutual
agreement, one (1) arbitrator within thirty (30) days of receipt of notice of
the intent to arbitrate. If no arbitrator is appointed within the times herein
provided or any extension of time that is mutually agreed upon, the AAA shall
make such appointment within thirty (30) days of such failure. The judgment
rendered by the arbitrator shall include costs of arbitration, reasonable
attorneys' fees and reasonable costs for expert and other witnesses. Nothing in
this Agreement shall be deemed as preventing either Party from seeking
injunctive relief (or any other provisional remedy). If the issues in dispute
involve scientific, technical or commercial matters, any arbitrator chosen
hereunder shall have educational training and/or industry experience sufficient
to demonstrate a reasonable level of relevant scientific, medical and industry
knowledge.

                  (e)      In the event of a dispute regarding any payments
owing under this Agreement, all undisputed amounts shall be paid promptly when
due and the balance, if any, promptly after resolution of the dispute.

         22.4.    ENTIRE AGREEMENT.

         This Agreement contains the entire understanding of the Parties with
respect to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly superseded
by this Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both Parties hereto.

         22.5.    INDEPENDENT CONTRACTORS.

         SGI and EOS each acknowledge that they shall be independent contractors
and that the relationship between the two Parties shall not constitute a
partnership, joint venture or agency. Neither SGI nor EOS shall have the
authority to make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on the other Party, without the prior
consent of the other Party to do so.

         22.6.    AFFILIATES

         Each Party shall cause its respective Affiliates to comply fully with
the provisions of this Agreement to the extent such provisions specifically
relate to, or are intended to specifically relate to, such Affiliates, as though
such Affiliates were expressly named as joint obligors hereunder.

         22.7.    WAIVER.

                                      -32-
<Page>

         The waiver by either Party hereto of any right hereunder or the failure
to perform or of a breach by the other Party shall not be deemed a waiver of any
other right hereunder or of any other breach or failure by said other Party
whether of a similar nature or otherwise.

                                      -33-
<Page>

         22.8.    COUNTERPARTS.

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

         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

                                          SEATTLE GENETICS, INC.

                                          By:      /s/ CLAY B. SIEGALL
                                                --------------------------------

                                          Name:     CLAY B. SIEGALL
                                                --------------------------------

                                          Title:   PRESIDENT AND CSO
                                                --------------------------------

                                          EOS BIOTECHNOLOGY, INC.

                                          By:      /s/ DAVID W. MARTIN, JR.
                                                --------------------------------

                                          Name:     DAVID W. MARTIN, JR.
                                                --------------------------------

                                          Title:   PRESIDENT AND CEO
                                                --------------------------------

                                      -34-
<Page>

                                   SCHEDULE A

                        DRUG CONJUGATION TECHNOLOGY FIELD

<Page>

                                   SCHEDULE B

                                LICENSED PATENTS

                             EXISTING SGI TECHNOLOGY

<Table>
<Caption>

------------------------------- ------------------------------------- ----------------- -----------------------
PATENT NO.                      DESCRIPTION                           LICENSOR          [***]
------------------------------- ------------------------------------- ----------------- -----------------------
<S>                             <C>                                   <C>               <C>
[***]                           [***]                                 [***]             [***]
------------------------------- ------------------------------------- ----------------- -----------------------
[***]                           [***]                                 [***]             [***]
------------------------------- ------------------------------------- ----------------- -----------------------
[***]                           [***]                                 [***]             [***]
------------------------------- ------------------------------------- ----------------- -----------------------

</Table>

                        IMPROVEMENTS AND NEW TECHNOLOGIES

<Table>
<Caption>

------------------------------- ------------------------------------- ----------------- -----------------------
PATENT NO.                      DESCRIPTION                           LICENSOR          [***]
------------------------------- ------------------------------------- ----------------- -----------------------
<S>                             <C>                                   <C>               <C>
------------------------------- ------------------------------------- ----------------- -----------------------

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

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

</Table>

[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<Page>

                                   SCHEDULE C

                                RESEARCH ANTIGENS

<Page>

                                   SCHEDULE D

                              ADC PREPARATION TERMS

PREPARATION OF ADC'S BY SGI

-        EOS will provide [***] of each Antibody and any Control Antibody
         requested in connection with such Antibody to SGI in [***].

-        SGI will produce and deliver to EOS [***] of ADC for such Antibody(ies)
         and Control Antibody(ies) [***].

-        SGI will not be obligated to produce ADC's [***].

-        EOS will pay SGI the following amounts for preparation of ADC's for one
         or more [***]:

         AMOUNT($)                  ANTIBODIES (#)

         [***]                      [***]

         [***]                      [***]

         [***]                      [***]

         [***]                      [***]

-        EOS may [***].

-        EOS will pay SGI the following amounts [***]:

         For the toxin and selected linker preparation, SGI will charge [***].
         In addition, EOS will pay the following amount [***]:

                           [***] of ADC
                           [***] of ADC

-        SGI will produce ADCs that [***]

-        SGI's obligations to prepare ADCs hereunder [***]

[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<Page>

                                   SCHEDULE E

                                 SGI IN-LICENSES<Page>

              DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
                        OF PENNZOIL-QUAKER STATE COMPANY

                        (EFFECTIVE AS OF JANUARY 1, 2002)

                                    ARTICLE I
                        PURPOSES OF PLAN AND DEFINITIONS

               1.1.  PURPOSE. Pennzoil-Quaker State Company, a Delaware
corporation (the "Company"), has established the PENNZOIL-QUAKER STATE COMPANY
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS, effective as of January
1, 2002 (the "PLAN"), for the purpose of providing non-employee directors of the
Company the opportunity to defer all or a portion of their cash compensation and
to provide greater incentives for those directors to attain and maintain the
highest standards of performance, to attract and retain directors of outstanding
competence and ability, to stimulate the active interest of such persons in the
development and financial success of the Company, to further the identity of
interests of such directors with those of the Company's stockholders generally,
and to reward such directors for outstanding performance.

               1.2.  DEFINITIONS.

                     "Applicable Quarterly Rate" initially will be equal to the
         prime interest rate at JP Morgan Chase in Houston, Texas, as of the
         Effective Date and thereafter will be adjusted as of the first day
         of each calendar quarter of each year to that rate that is equal to the
         prime interest rate at JP Morgan Chase in Houston, Texas, as of such
         date.

                     "Award" means any incentive award made to a Participant
         under the Plan or any other Plan of the Company.

                     "Beneficiary" means the person(s) or entity(ies)
         designated by the Participant, as provided in Section 4.5, to receive
         any payments otherwise due the Participant under this Plan in the event
         of the Participant's death.

                     "Board of Directors" or "Board" means the Board of
         Directors of the Company.

                     "Cash Compensation" means all of the cash compensation
         payable to a Participant, including annual, meeting and other fees.

                     "Change in Control" means a Change in Control as defined
         in the Pennzoil-Quaker State Company Executive Severance Plan, as
         amended and restated effective October 4, 2001, and as may thereafter
         be amended from time to time.

                     "Code" means the Internal Revenue Code of 1986, as amended
         from time to time.

                                       1
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                     "Committee" means the Compensation Committee of the
         Board or such other committee of the Board as is designated by the
         Board to administer the Plan in accordance with Article II.

                     "Common Stock" means the common stock, par value $0.10
         per share, of the Company.

                     "Company" means Pennzoil-Quaker State Company.

                     "Deferred Compensation Period" means such period of
         365 days (or such longer or shorter period) as shall from time to time
         be prescribed by the Committee, in its sole discretion, during which
         Participants shall be entitled to defer receipt of all or any part of
         their Cash Compensation.

                     "Deferred Interest Bearing Account" means the bookkeeping
         account maintained for each Participant to record certain amounts
         deferred by the Participant in accordance with Article III hereof.

                     "Determination Date" means the date on which payment
         of a Participant's deferred compensation is made or commences, as
         determined in accordance with Section 4.1.

                     "Director" means an individual who is serving as a member
         of the Board.

                     "Effective Date" means January 1, 2002.

                     "Election Effective Date" means the date upon which a
         Participant's deferred Cash Compensation is credited to his Deferred
         Interest Bearing Account pursuant to Section 3.3 of this Plan.

                     "Eligible Director" means each Director who is not an
         employee of the Company or any of the Company's subsidiaries.

                     "Exchange Act" means the Securities Exchange Act of 1934,
         as amended from time to time.

                     "Fair Market Value" of a share of Common Stock means,
         as of a particular date, (1) if shares of Common Stock are listed on a
         national securities exchange, the mean between the highest and lowest
         sales price per share of Common Stock reported on the consolidated
         transaction reporting system for the principal national securities
         exchange on which shares of Common Stock are listed on that date, or,
         if there shall have been no such sale so reported on that date, on the
         last preceding date on which such a sale was so reported, (2) if shares
         of Common Stock are not so listed but are quoted on the Nasdaq National
         Market, the mean between the highest and lowest sales price per share
         of Common Stock reported by the Nasdaq National Market on that date,
         or, if there shall have been no such sale so reported on that date, on
         the last preceding date on which such a sale was so reported or, at the
         discretion of the Committee, the price prevailing on the exchange at
         the time of exercise, (3) if the Common Stock is not so listed or
         quoted, the

                                       2
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         mean between the closing bid and asked price on that date, or if
         there are no quotations available for such date, on the last preceding
         date on which such quotations are available, as reported by the Nasdaq
         Stock Market, or, if not reported by the Nasdaq Stock Market, by the
         National Quotation Bureau Incorporated or, at the discretion of the
         Committee, the price prevailing on the exchange at the time of exercise
         or (4) if shares of Common Stock are not publicly traded, the most
         recent value determined by an independent appraiser appointed by the
         Company for such purpose. "Fair Market Value" of a Stock Unit means,
         as of a particular date, the Fair Market Value of a share of Common
         Stock on such date.

                     "Participant" means an Eligible Director who elects to
         participate in the Plan.

                     "Stock Account" means the bookkeeping account maintained
         for each Participant to record certain amounts deferred by the
         Participant in accordance with Article III hereof.

                     "Stock Unit" means a unit equal to one share of Common
         Stock (as determined in accordance with Section 3.2 and as adjusted
         pursuant to Section 3.6) utilized for the purpose of measuring the
         benefits payable under Section 4.3.

                     "Total Deferred Unit Amount" means the aggregate Fair
         Market Value on the Valuation Date coinciding with or immediately
         preceding the Determination Date of the number of Stock Units then
         credited to a Participant's Stock Account.

                     "Valuation Date" means the Effective Date and the first
         day of each month thereafter or, in the event Common Stock is traded
         or quoted on a national securities exchange or in the over-the-counter
         market, each day on which a sale or sales of Common Stock is reported
         or a quotation for Common Stock is available, as applicable.

                                   ARTICLE II
                           ADMINISTRATION OF THE PLAN

               2.1.  COMMITTEE. This Plan shall be administered by the
Committee. The Committee shall consist of at least two members of the Board.

               2.2.  COMMITTEE'S POWERS. Subject to the provisions hereof, the
Committee shall have full and exclusive power and authority to administer this
Plan and to take all actions which are specifically contemplated hereby or are
necessary or appropriate in connection with the administration hereof. The
Committee shall also have full and exclusive power to interpret this Plan and to
adopt such rules, regulations and guidelines for carrying out this Plan as it
may deem necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of this Plan. The
Committee may, in its discretion, determine the eligibility of individuals to
participate herein, determine the amount of Cash Compensation a Participant may
elect to defer, or waive any restriction or other provision of this Plan. The
Committee may correct any defect or supply any omission or reconcile any

                                       3
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inconsistency in this Plan in the manner and to the extent the Committee deems
necessary or desirable to carry it into effect.

               2.3.  COMMITTEE DETERMINATIONS CONCLUSIVE. Any decision of the
Committee in the interpretation and administration of this Plan shall lie within
its sole and absolute discretion and shall be final, conclusive and binding on
all parties concerned.

               2.4.  COMMITTEE LIABILITY. No member of the Committee or
officer of the Company to whom the Committee has delegated authority in
accordance with the provisions of Section 2.5 of this Plan shall be liable for
anything done or omitted to be done by him or her, by any member of the
Committee or by an officer of the Company in connection with the performance of
any duties under this Plan, except for his or her own willful misconduct or as
expressly provided by statute.

               2.5.  DELEGATION OF AUTHORITY. The Committee may delegate to
the Chief Executive Officer and to other senior officers of the Company its
duties under this Plan pursuant to such conditions or limitations as the
Committee may establish.

                                   ARTICLE III
                                    ACCOUNTS

               3.1.  ESTABLISHMENT OF ACCOUNTS. The Company shall set up an
appropriate record (hereinafter called the "Deferred Interest Bearing Account"),
which will from time to time reflect the name of each Participant and the
amounts deferred by such Participant to an interest bearing account pursuant to
Section 3.2. The Company shall also set up an appropriate record (hereinafter
called the "Stock Account"), which will from time to time reflect the name of
each Participant, the number of Stock Units credited to such Participant
pursuant to Section 3.2, and the Fair Market Value of that number of Stock Units
credited to the Participant.

               3.2.  DEFERRED COMPENSATION. A Participant may elect to defer
receipt of all or any part of the Cash Compensation payable to the Participant
for serving on the Board of Directors for any Deferred Compensation Period. At
the election of the Participant, the amount deferred shall be credited to: (a)
his or her Deferred Interest Bearing Account; (b) his or her Stock Account; or
(c) a combination of both. If a Participant chooses to receive a credit to his
Stock Account, a number of Stock Units (rounded up to the nearest whole number)
relating to Common Stock of the Company having a Fair Market Value on the
Election Effective Date equal to the dollar amount of Cash Compensation the
Participant elects to forego in the applicable Deferred Compensation Period in
exchange for Stock Units shall be credited to such account. A Participant may
only elect to defer Cash Compensation that is otherwise payable after an
election to defer compensation is made pursuant to Section 5.1 hereof.

               3.3.  CREDITING OF DEFERRED AMOUNTS. Any Cash Compensation
credited to a Participant's Deferred Interest Bearing Account or Stock Account
shall be credited to such account on the last day of the month in which the
deferred Cash Compensation would otherwise have been paid (the "Election
Effective Date"). For example, if a Participant effectively elects to defer Cash
Compensation to his Deferred Interest Bearing Account for a Deferred
Compensation Period of 365 days beginning January 1 by notifying the Company in
the manner provided in

                                       4
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Section 5.1, the Cash Compensation which accrues for the month of January
shall be credited to such Participant's Deferred Interest Bearing Account on
January 31.

               3.4.  INTEREST ON DEFERRED INTEREST BEARING ACCOUNTS. The
amount of deferred compensation credited to a Participant's Deferred Interest
Bearing Account will bear interest from (but excluding) the date so credited
through (and including) the Determination Date, at a rate per calendar quarter
equal to the Applicable Quarterly Rate in effect from time to time, compounded
monthly, and such interest shall be credited to the Deferred Interest Bearing
Account as of the last day of each calendar month during the applicable Deferred
Compensation Period and the last day of the calendar month in which such period
ends (or, if applicable, the Determination Date). Interest so credited shall
similarly bear interest from (but excluding) the date so credited through (and
including) the Determination Date, at a rate per calendar quarter equal to the
Applicable Quarterly Rate in effect from time to time, compounded monthly and
credited as of the last day of each calendar month during the applicable
Deferred Compensation Period and the last day of the calendar month in which
such period ends (or, if applicable, the Determination Date).

               3.5.  DIVIDENDS ON STOCK ACCOUNTS. A Participant's Stock
Account will be credited with additional Stock Units, as of each date that
dividends are paid with respect to Common Stock, equal to the number of Stock
Units relating to the Common Stock credited to the Participant's Stock Account
as of each such dividend payment date. Thus, the Stock Units credited in respect
of dividends shall have a Fair Market Value equal to the dollar amount of the
dividend paid per share of Common Stock as of such dividend payment date
multiplied by the number of Stock Units relating to Common Stock credited to the
Participant's Stock Account immediately prior to such dividend payment date.

               3.6.  ADJUSTMENTS.

                     (a)  EXERCISE OF CORPORATE POWERS. The existence of this
Plan shall not affect in any manner the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital stock of the Company or its
business or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock (whether or not such
issue is prior to, on a parity with or junior to the existing Common Stock)
or the dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding of any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.

                     (b)  RECAPITALIZATIONS, REORGANIZATIONS AND OTHER
ACTIVITIES. In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of Common
Stock or other stock split, then (i) the number of Stock Units relating to
Common Stock and (ii) the appropriate Fair Market Value and other price
determinations for such Stock Units shall each be proportionately adjusted by
the Board to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any consolidation
or merger of the Company with another corporation or entity, the adoption by
the Company of any plan of exchange affecting Common Stock or any
distribution to holders of Common Stock of securities or property (other than
normal cash dividends or

                                       5
<Page>

dividends payable in Common Stock), the Board shall make appropriate
adjustments to (i) the number of Stock Units relating to Common Stock and
(ii) the appropriate Fair Market Value and other price determinations for
such Stock Units to give effect to such transaction; provided that such
adjustments shall only be such as are necessary to preserve, without
increasing, the value of such units. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization
or liquidation, the Board shall be authorized to issue or assume units by
means of substitution of new units, as appropriate, for previously issued
units or an assumption of previously issued units as part of such adjustment.

                                   ARTICLE IV
                                    PAYMENTS

               4.1.  PERIOD OF DEFERRAL. A Participant may elect that payment
of amounts credited to the account(s) of the Participant under this Plan be made
at (a) a date that is five years following the date of the termination of the
Participant's status as a Director, or (b) the date of the termination of the
Participant's status as a Director of the Company (either of such dates elected
by the Participant to be known as the "Determination Date"). Payment will be
made within 60 days after the applicable Determination Date.

               4.2.  PAYMENT OF AMOUNTS IN DEFERRED INTEREST BEARING ACCOUNT.
As of the Determination Date, the sum of the amounts theretofore credited to a
Participant's Deferred Interest Bearing Account for each Deferred Compensation
Period, plus all interest accrued thereon to, and including, the Determination
Date (the "Total Deferred Compensation Amount") shall be calculated. A
Participant shall receive payment of his Total Deferred Compensation Amount with
respect to each Deferred Compensation Period in the form provided under Section
4.4.

               4.3.  PAYMENT OF AMOUNTS IN STOCK ACCOUNT. As of the
Determination Date, the aggregate Fair Market Value on the Valuation Date
coinciding with or immediately preceding the Determination Date of that number
of Stock Units credited to a Participant's Stock Account as of such
Determination Date with respect to each Deferred Compensation Period shall be
calculated. The result is the "Total Deferred Unit Amount." A Participant shall
receive payment of his Total Deferred Unit Amount with respect to each Deferred
Compensation Period in the form provided under Section 4.4.

               4.4.  FORM OF PAYMENT. Payment to a Participant of amounts in
his Deferred Interest Bearing Account shall be made in the form of a lump sum
cash payment as of the Determination Date. Payment to a Participant in respect
of Stock Units in his Stock Account shall be made in the form of a lump-sum
payment of Common Stock (which may be treasury shares) as of the Determination
Date; provided, however, that under conditions established by the Committee, a
Participant may elect to receive an amount payable in respect of Stock Units in
the form of a lump-sum cash payment as of the Determination Date.

               4.5.  DEATH PRIOR TO PAYMENT. In the event that a Participant
dies prior to payment of the amount payable pursuant to this Plan, the unpaid
amount, together with all interest accrued thereon, shall be paid to the
Participant's designated Beneficiary in a lump sum

                                       6
<Page>

payment within 60 days following the Company's notification of the
Participant's death. If no Beneficiary has been designated, such payment
shall be made to the Participant's estate. A beneficiary designation, or
revocation of a prior beneficiary designation, shall be effective only if it
is made in writing on a form provided by the Company, signed by the
Participant and received by the Committee. In the event that a Participant
dies prior to payment of all of the amounts payable pursuant to this Plan,
and the designated Beneficiary dies prior to payment of all the amounts
payable pursuant to this Plan, payment shall be made to the Participant's
estate in a lump sum payment within 60 days of notification of the
Beneficiary's death.

               4.6.  PAYMENTS TO MINORS AND INCOMPETENTS. Should the
Participant become incompetent or should the Participant designate a Beneficiary
who is a minor or incompetent, the Company shall be authorized to pay such funds
to a parent or guardian of such minor or incompetent, or directly to such minor
or incompetent, whichever manner the Committee shall determine in its sole
discretion.

               4.7.  CHANGE IN CONTROL. Participants may elect that upon a
Change in Control, the entire amounts payable under Sections 4.2 and 4.3 be made
in a lump sum payment within 60 days of the Change in Control.

                                    ARTICLE V
                               ELECTING DEFERRALS

               5.1.  MANNER OF ELECTING DEFERRAL. Each election made by a
Participant to defer Cash Compensation under this Plan (i) shall take the form
of a written document (provided by the Company) signed by the Participant and
filed with the Committee, (ii) shall designate the Deferred Compensation Period
for which such deferral is elected, the account to which such deferral shall be
credited, the period of deferral and the form and manner of payment, (iii) shall
only apply to Cash Compensation payable after the date of such election and (iv)
may not be revoked or modified without the prior written approval of the
Committee if the proposed revocation or modification applies to amounts deferred
with respect to a Deferred Compensation Period which has already commenced at
the time such revocation or modification is proposed to be effected. The
Committee shall be authorized to adopt such rules and limitations as it shall
determine are necessary or appropriate with respect to the timing of elections
to defer compensation under this Plan.

                                   ARTICLE VI
                                  MISCELLANEOUS

               6.1.  UNFUNDED PLAN. Nothing contained herein shall be deemed
to create a trust of any kind or create any fiduciary relationship. This Plan
shall be unfunded. Funds invested hereunder shall continue for all purposes to
be part of the general funds of the Company. To the extent that a Participant
acquires a right to receive payments from the Company under this Plan, such
right shall not be greater than the right of any unsecured general creditor of
the Company and such right shall be an unsecured claim against the general
assets of the Company. Although bookkeeping accounts may be established with
respect to Participants, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not

                                       7
<Page>

be required to segregate any assets that may at any time be represented by
cash or rights thereto, nor shall this Plan be construed as providing for
such segregation, nor shall the Company, the Board or the Committee be deemed
to be a trustee of any cash or rights thereto to be granted under this Plan.
Any liability or obligation of the Company to any Participant with respect to
cash or rights thereto under this Plan shall be based solely upon any
contractual obligations that may be created by this Plan, and no such
liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the
Company nor the Board nor the Committee shall be required to give any
security or bond for the performance of any obligation that may be created by
this Plan.

               6.2.  TITLE TO FUNDS REMAINS WITH COMPANY. Amounts credited to
each Participant's Deferred Interest Bearing Account and Stock Account shall not
be specifically set aside or otherwise segregated, but will be combined with
corporate assets. Title to such funds will remain with the Company and the
Company's only obligation will be to make timely payments to Participants in
accordance with this Plan.

               6.3.  STATEMENT OF ACCOUNT. A statement will be furnished to
each Participant annually on such date as may be determined by the Committee
stating the balance of the Participant's Deferred Interest Bearing Account and
Stock Account and accrued interest thereon as of a recent date designated by the
Committee.

               6.4.  ASSIGNABILITY. Except as provided in Section 4.5, no
right to receive payment hereunder shall be transferable or assignable by a
Participant except by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. Any attempted assignment of any benefit under this Plan in violation
of this Section 6.4 shall be null and void.

               6.5.  AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that no amendment, modification or termination shall,
without the consent of the Participant, impair the rights of any Participant to
the balance in such Participant's Deferred Interest Bearing Account or Stock
Account or the amount of interest accrued thereon as of the date of such
amendment, modification or termination. The Board may at any time and from time
to time delegate to the Committee any or all of this authority under this
Section 6.5.

               6.6.  GOVERNING LAW. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.

                                                   PENNZOIL-QUAKER STATE COMPANY

                                       8

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