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License Agreement - The Salk Institute for Biological Studies and Nanotronics Inc.

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                                LICENSE AGREEMENT

        This License Agreement (the "Agreement") is made and entered into as of
April 1, 1993 (the "effective date"), by and between The Salk Institute for
Biological Studies, a nonprofit corporation organized under the laws of the
State of California ("Salk"), and Nanotronics, Inc., a corporation organized
under the laws of the State of California ("Licensee").

        WHEREAS, Salk is the owner of certain Patent Rights (as hereinafter
defined) and of the technical information and improvements relating to the same;

        WHEREAS, Licensee is a "small business firm" as defined in Section 2 of
Public Law 85-536 (15 U.S.C. 632);

        WHEREAS, the development of the certain inventions listed in Schedule A
was sponsored in part by the National Institutes of Health and, as a
consequence, this License Agreement is subject to overriding obligations to the
Federal Government as set forth in 35 U.S.C. Section 202-204;

        WHEREAS, Salk desires that such Patent Rights be developed and utilized
to the fullest extent possible so that products resulting therefrom may be
available for public use and benefit;

        WHEREAS, Salk has determined that the best method for disseminating such
Patent Rights is through the grant of an exclusive license to an entity willing
to enter into a program to develop therapeutic, diagnostic or research products
and services covered by such Patent Rights;

        WHEREAS, Licensee represents that it can bring to bear the scientific
talent, know-how and facilities to develop and market products and services
based upon said Patent Rights; and

        WHEREAS, Licensee wishes to obtain, and Salk is willing to grant, a
worldwide, exclusive license to practice inventions covered by such Patent
Rights and the Technical Information (as hereinafter defined) relating thereto,
with the right to grant sublicenses, for the purpose of undertaking development
and to make, have made, use, and sell therapeutic, diagnostic and research
products and services.

        NOW, THEREFORE, in consideration of the above premises and the mutual
covenants contained herein, the parties hereby agree as follows:


<PAGE>   2
        1.     Definitions.

        1.1 The term "Affiliate" shall mean any entity which controls, is
controlled by or is under common control with Licensee, where "control" means
beneficial ownership of more than fifty percent (50%) of the outstanding shares
or securities or the ability otherwise to elect a majority of the board of
directors or other managing authority.

        1.2 The term "Commercial Sale" shall mean any transaction that transfers
to a purchaser, for value, physical possession and title to a Licensed Product,
after which transfer the seller has no right or power to determine the
purchaser's resale price, if any. Transfer of possession and title to an
Affiliate or sublicensee shall not constitute a Commercial Sale unless the
Affiliate or sublicensee is an end user of the Licensed Product. Distribution of
free promotional samples, by Licensee or any of its Affiliates or sublicensees,
of any Licensed Products is not considered a Commercial Sale.

        1.3 The term "FDA" shall mean the United States Food and Drug

        1.4 The term "Later Developments" shall mean all patent applications
filed and patents issuing therefrom which arise after the effective date from
research conducted in the field of gene discovery in the laboratory of Dr. Glen
Evans at Salk in which Salk in the future acquires any interest.

        1.5 The term "Licensee Improvements," shall mean any change or
modification to any invention or discovery disclosed in the Patent Rights or the
Technical Information, performed or discovered solely by Licensee or in which
Licensee acquires rights, provided such change or modification, if unlicensed,
would infringe one or more valid claims of any issued patent included within the
Patent Rights.

        1.6 The term "Licensed Product" shall mean any substance, composition or
article of manufacture, the use or sale of which is covered by a valid claim of
one or more issued, unexpired patents within the Patent Rights or is covered by
any claim being prosecuted or previously prosecuted in an application within the
Patent Rights. "Valid claim" shall mean a claim of an issued patent, which claim
has not been declared invalid by a court of competent jurisdiction.

        1.7 The term "Licensed Service" shall mean the use of the Licensed
Technology to perform a service on behalf of a third party, or the performance
on behalf of a third party of a method within the scope of any claim of an
issued patent or any claim being prosecuted or previously prosecuted in an
application included in the Patent Rights.


<PAGE>   3
        1.8 The term "Licensed Technology" shall mean the Patent Rights and the
Technical Information.

        1.9 The term "Net Sales" shall mean the gross sales price actually
charged by Licensee, its Affiliates or sublicensees in the Commercial Sale of
Licensed Products or Licensed Services less:

                (i) shipping, storage, packing and insurance expenses, each as
            actually paid or allowed;

                (ii) distributor discounts;

                (iii) amounts repaid or credited by reason of rejections,
            defects or returns or because of retroactive price reductions; and

                (iv) sales and other excise taxes, use taxes, tariffs, export
            license fees and duties actually paid or allowed.

        1.10 The term "Patent Rights" shall mean all information, inventions or
discoveries covered by the patents and patent applications listed on Schedule A
hereto, and any and all patents issuing therefrom, owned by or licensed to Salk
with the right to sublicense. "Patents" as used in this Agreement shall include,
without limitation, all substitutions, continuations, continuations-in-part,
divisions, reissues, extensions and foreign counterparts of the aforementioned.

        1.11 The term "Technical Information" shall mean all know-how, trade
secrets, inventions, data, processes, procedures, devices, methods, formulas,
protocols and information, whether or not patentable, which are not covered by
the Patent Rights, but which are necessary or useful for the commercial
exploitation of the Patent Rights, and which are known as of the date hereof, or
become known within the term of this Agreement set forth in Section 10.1 hereof
(the "Term"), in the laboratory of Dr. Glen Evans at Salk and which Salk has the
lawful right to license and disclose.

        2.     Grant of Rights.

        2.1 Patent Rights and Technical Information. Subject to the terms and
conditions hereof, including without limitation the rights retained by Salk
under Section 2.3 below, Salk hereby grants to Licensee and its Affiliates
during the Term (a) an exclusive (including as to Salk), worldwide license,
including the right to grant sublicenses, under the Patent Rights, to make, have
made, use, have used, sell or have sold any Licensed Product or Licensed Service
and any Licensee Improvement and (b) a non-exclusive, worldwide license,
including the right to giant sublicenses, under the Technical Information, to
make, have made, use, have used, sell or have sold any Licensed Product or
Licensed Service and any Licensee Improvement.


<PAGE>   4
        2.2 Government Rights. Licensee understands that certain of the Licensed
Technology was developed in part with funds furnished by the Government of the
United States of America and that the Government has certain rights relative
thereto. This Agreement is explicitly made subject to the Government's rights
under any applicable law or regulation. To the extent that there is a conflict
between any such applicable law or regulation and this Agreement, the terms of
such applicable law or regulation shall prevail.

        2.3 Retained Rights. Salk shall have the right to make, have made and
use the inventions and discoveries within the Licensed Technology for
educational and research purposes only, including the right to publish the
general scientific findings from research related to the Licensed Technology in
scholarly journals and publications.

        2.4 Researchers. (a) Licensee agrees that it will supply kits to
researchers (including for mapping or similar uses) if Licensee believes it
makes strategic sense to exploit the Licensed Technology commercially by doing
so. (b) Further, Licensee will make a good faith effort to make transfers of
materials which are part of the Licensed Technology to researchers that are not
commercially sponsored at academic institutions for the advancement of science
and the benefit of humankind so long as such transfers are not reasonably deemed
by Licensee to be likely to impair its competitive advantages.

        2.5 Sublicenses. Licensee shall have the right to grant sublicenses
consistent with this Agreement. Licensee further agrees to deliver to Salk for
informational purposes (and under an obligation of confidentiality) a true and
correct copy of each sublicense granted by Licensee, and any modification or
termination thereof, within thirty (30) days after execution, modification, or
termination. Upon termination of this Agreement, no existing sublicenses granted
by Licensee shall be affected by such termination, and all such sublicenses
shall remain in effect according to their terms. Salk shall continue to be
entitled to royalties under such sublicenses pursuant to Section 3.4 below, and
such sublicenses shall be deemed assigned to Salk if necessary to ensure
continued royalties.

        2.6 Right to Negotiate for License to Later Development. Salk agrees to
notify Licensee in writing of any Later Development that occurs during a period
of three (3) years following the effective date of this Agreement, which notice
shall be given within sixty (60) days of the filing of a patent application by
Salk concerning such Later Development. Salk undertakes to provide such notice
to Licensee as early as reasonably practicable within such period. Salk hereby
grants to Licensee the right, during the one hundred fifty (150) day period
after delivery of such notice, to negotiate with Salk for a license to any such
Later Development. If Salk and Licensee are


<PAGE>   5
unable to agree upon mutually acceptable terms for any such license to such
Later Development by the end of the applicable one hundred fifty (150) day
period, Salk may license such Later Development to another party as long as the
initial license fees and royalty rates offered to such other party are no more
favorable than those offered to Licensee. Licensee specifically acknowledges and
agrees that the requirements of the foregoing sentence shalL apply only to
initial license fees and royalty rates and shall be without regard to any other
terms offered by Salk either to Licensee or such other party.

        2.7 Disclosure of Information. Salk agrees to provide Licensee with
copies of all published reports, manuscripts accepted for publication and all
other publications of Salk which relate to the Licensed Technology. Further
information and Technical Information will be provided to Licensee from time to
time through scientific discussions and meetings between Licensee and Salk. Salk
further agrees to provide Licensee promptly with copies of all United States
and, to the extent not duplicative, foreign patent applications which Salk files
and patents which may issue thereon, in each case which are included in the
Patent Rights.

        3.     Payments.

        3.1 Equity Payment. As partial consideration for the rights granted to
Licensee under this Agreement and as a nonrefundable license fee, Licensee shall
issue to Salk upon execution of this Agreement forty thousand (40,000) shares of
Licensee's Series A Preferred Stock of Licensee (the "Shares"). The Shares shall
have the same rights, preferences and privileges (including, without limitation,
any applicable registration, preemptive and information rights) as the rights,
preferences and privileges of the preferred stock of Licensee outstanding as of
the date of this Agreement. Licensee represents and warrants that the Shares
represent not less than five percent (5%) of the total number of outstanding
shares of all classes and series of capital stock of Licensee (including the
Shares). Licensee further represents and warrants that (i) the execution and
delivery of this Agreement and the issuance of the Shares have been duly and
validly authorized by all necessary corporate action by Licensee, (ii) the
issuance of the Shares is not subject to any preemptive or similar rights,
except for any such rights which have been waived or otherwise complied with and
(iii) it has reserved sufficient shares of Common Stock to satisfy any
conversion of the Shares.

        3.2 Milestone Payments. Licensee shall provide Salk written notice
within fifteen (15) days of its becoming aware of the achievement of each of the
milestone events set forth below in respect of any Licensed Product developed by
Licensee, its Affiliates or sublicensees hereunder. Within ten (10) days after
delivering each such notice, Licensee shall pay to Salk the amounts set forth


<PAGE>   6

        Diagnostic Products                                      Payment Amount
        -------------------                                      --------------
<S>                                                              <C>      
        Initiation of clinical trials                            $      ***

        Filing of a Pre Market Approval
        application with the FDA                                 $      ***

        Written approval by the FDA to
        market the applicable Licensed
        Product                                                  $      ***

        Therapeutic Products                                     Payment Amount
        --------------------                                     --------------

        Filing of an Investigational
        New Drug application with the
        FDA                                                      $      ***

        Submission of a New Drug
        Application to the FDA                                   $      ***

        Written approval by the FDA to
        market the applicable Licensed
        Product                                                  $      ***

        If any milestone payment is not paid when due, Salk shall have the
option to either terminate this Agreement or to convert the license to the
Patent Rights granted under this Agreement to a non-exclusive license without
the right to sublicense, which non-exclusive license shall be subject to all of
the terms and obligations of this Agreement other than this Section 3.2. The
foregoing shall not relieve Licensee of its obligation to make any milestone
payment in the event Salk has elected to convert the license to the Patent
Rights to a non-exclusive license without the right to sublicense.

        3.3 Royalty Payments. Licensee shall pay Salk royalties on Net Sales of
Licensed Products or Licensed Services sold by Licensee or its Affiliates as
follows through the period ending on the later of (i) the life of the applicable
patent included in the Patent Rights, or (ii) ten (10) years from the effective
date of this Agreement:

        Diagnostic Products, Kits
        for Research and Licensed
                Services                               Royalty Rate
        -------------------------                      ------------

        If the Licensed Products or Licensed              ***%



<PAGE>   7
        Services are based on technology
        covered by the Licensed Technology               

        If the Licensed Products or Licensed              ***%
        Services are based on discoveries made
        by Licensee using methods covered by
        the Licensed Technology                           ***%

        Therapeutic Products                           Royalty Rate
        --------------------                           ------------
        If the Licensed Products are based                ***%
        on technology covered by the Licensed

        If the Licensed Products are based on             ***%
        discoveries made by Licensee using
        methods covered by the Licensed Technology

Upon the earlier of notice of final disallowance from which no further appeal
can be taken or voluntary or involuntary abandonment which cannot be revived of
all applicable patent applications pertaining to a particular Licensed Product
or Licensed Service, the royalty rates set forth above shall be reduced by
one-half for any such Licensed Product or Licensed Service which is not covered
by an issued patent included in the Patent Rights. Any such reduction shall not
be applied retroactively. No royalty shall be payable for products or services
sold by Licensee or its Affiliates that use or include Technical Information but
that are not covered by any claim that is or was included in any patent or
patent application that is or was within the Patent Rights.

        3.4 Other Payments. Licensee shall pay Salk for amounts received by
Licensee in consideration of the sublicense of any Licensed Technology, or other
agreement with any third party (other than an Affiliate of Licensee) with
respect to the Licensed Technology, in an amount equal to the greater of (i) the
royalty determined in accordance with Section 3.3 above on Net Sales by the
sublicensee or such third party; or (ii) fifty percent (50%) of the actual
invoice amount received by Licensee from the sublicensee or third party,
provided, however, that, with respect to this subparagraph (ii), if the
sublicense or third party agreement includes technology subject to an issued
patent or a pending patent application that was developed by Licensee in
addition to the Licensed Technology, the amount to be paid by Licensee to Salk
will be fifty percent (50%) of the actual invoice amount in the first year
following the date of this Agreement and will decrease by five percent (5%) on
the first anniversary of the date of this Agreement and on the anniversary date
in each year thereafter until reaching fifteen percent (15%) of the actual
invoice amount.



<PAGE>   8
        3.5 Credit for Third Party Payments. If Licensee must make payment to a
third party (other than an Affiliate) in order to sell a Licensed Product for
which a royalty would be payable to Salk, Licensee may credit no more than fifty
percent (50%) of the actual amount of any such payment to a third party against
the royalty payable to Salk hereunder with respect to such Licensed Product;
provided, however, that in no event will the royalty payable to Salk with
respect to such Licensed Product be reduced by more than fifty percent (50%).
Any credit contemplated by the foregoing sentence that has been accrued but not
used to offset royalties owed by Licensee to Salk may be applied against future
royalty payments.

        4.     Due Diligence.

        4.1 Commercialization. Licensee shall proceed diligently with the
commercialization of products based upon the Patent Rights. Licensee will be
deemed to have met its diligence obligations if it expends at least the
following amounts, on a cumulative basis, in developing and exploiting the
Patent Rights:

        Anniversary Date of
          this Agreement                           Cumulative Dollar Amount
          --------------                           ------------------------
<S>                                                       <C>    
               First                                      $    ***
               Second                                          ***
               Third                                           ***
               Fourth                                          ***
               Fifth                                           ***
               Sixth                                           ***
               Seventh                                         ***
               Eighth                                          ***
               Ninth                                           ***
               Tenth                                           ***

        4.2 Reports. Licensee shall supply Salk annually, within ninety (90)
days of the applicable anniversary date, with a report substantiating in
reasonable detail the satisfaction of the minimum cumulative expenditures
specified in Section 4.1

        5.     Ownership: Intellectual Property.

        5.1 Patent Rights and Technical Information. Licensee (for itself, its
Affiliates and sublicensees) acknowledges and agrees that Salk is and shall
remain (as to Licensee) the sole owner of the Patent Rights and Technical
Information and that Licensee (including its Affiliates and sublicensees) has no
rights in or to them other than the rights specifically granted herein.

        5.2 Inventions. Each party acknowledges and agrees that any and all
discoveries, know-how, inventions, methods, ideas and



<PAGE>   9
 the like ("Inventions") made or discovered pursuant to this Agreement solely by
its employees, consultants or agents shall be owned solely by it.

        6.     Representations as to Patent Filings: Disclaimer.

        6.1 Patent Filings. Salk represents and warrants that, as of the
effective date of this Agreement, patent applications have been filed as
indicated in Schedule A.

        6.2    Warranty Disclaimer.  Nothing in this Agreement is or
shall be construed as:

        (a)    a warranty or representation by Salk as to the validity
               or scope of any Patent Rights;

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

        (c)    an obligation to bring or prosecute actions or suits against
               third parties for infringement, except to the extent and in the
               circumstances described in Section 8; or

        (d)    a grant by implication, estoppel, or otherwise of any licenses
               under patent applications or patents of Salk or other persons
               other than as provided in Section 2 hereof.


        6.4 Disclaimer of Liability. In no event will Salk be liable for any
incidental, special or consequential damages resulting from the exercise of
Licensee's rights under the license granted pursuant to this Agreement or the
use of the Licensed Technology.

        7.     Indemnification and Insurance

        7.1 Indemnification. Licensee agrees to indemnify, hold harmless and
defend Salk, its trustees, officers, employees and agents, the sponsors of the
research that led to the Licensed Technology and the inventors of the patents
and patent applications included in the Patent Rights against any and all
damages finally awarded, with respect to any claims, suits, demands, judgments
or causes of action arising out of (a) the development, manufacture; storage,
sale or other distribution, or any other use of Licensed Products or performance
of Licensed


<PAGE>   10
Services, or exercise of rights granted hereunder, by Licensee, its Affiliates
or subLicensees, distributors, agents or representatives; (b) the use by
end-users and other third parties of Licensed Products; or (c) any
representation, warranty or statement by Licensee or its Affiliates,
subLicensees, distributors, agents or representatives, concerning Salk or the
Patent Rights. In the event any such claims, demands or actions are made,
Licensee shall defend Salk at Licensee's sole expense by counsel selected by
Licensee, subject to approval by Salk, which such approval is not to be
unreasonably withheld.

        7.2 Insurance. In addition to the foregoing, from and after the time
Licensee or any Affiliate or sublicensee begins clinical trials on Licensed
Product, Licensee shall use reasonable commercial efforts to obtain and
maintain, during the Term, comprehensive general liability insurance, including
products liability insurance, with reputable and financially secure insurance
carriers to cover the activities of Licensee, it Affiliates and subLicensees, if
any, contemplated by this Agreement. Such insurance shall include Salk as a
named insured, shall require prior notice to Salk before cancellation and shall,
to the extent reasonably possible, be in an amount which is customarily carried
by companies at a comparable stage of development or introduction of new
pharmaceutical products.

        8.     Prosecution and Maintenance of Patent Rights.

        8.1 Prosecution and Maintenance. Salk shall have full control over
prosecution and maintenance of the patent applications and patents contained in
the Patent Rights. Salk will keep Licensee advised of the status of such
prosecution and maintenance by providing Licensee with copies of all official
communications with respect to the patent applications and patents contained in
the Patent Rights. In the event Salk elects not to prosecute or defend any
patent application or patent contained in the Patent Rights, Licensee shall have
the right to assume prosecution and defense of any such patent application or
patent, at Licensee's sole expense. Salk will notify Licensee a reasonable time
prior to the abandonment or expiration of any patent application or patent
included in the Patent Rights. In the event Licensee determines to abandon a
patent application or patent it has previously elected to continue the
prosecution and defense of pursuant to this Section 8.1, Licensee will so notify
Salk in writing within ninety (90) days of its proposed abandonment. Upon
receipt of such notice, Salk may elect to renew its prosecution and defense of
such patent application or patent, at its sole expense.

        8.2 Payment of Patent Costs. Upon execution of this Agreement, Licensee
shall pay to Salk $54,708.44 as reimbursement for all Patent Costs incurred
through December 31, 1992. Licensee shall reimburse Salk for all Patent Costs
hereafter incurred with respect to the Patent Rights, as well as for all Patent
Costs thereafter incurred with respect to all patents and


<PAGE>   11
patent applications Licensee may license from Salk pursuant to Section 2.5
above. "Patent Costs" as used in this Agreement shall mean out-of-pocket
expenses incurred in connection with the preparation, filing, prosecution and
maintenance of patent applications and patents, including the fees and expenses
of attorneys and patent agents, filing fees and maintenance fees, but excluding
costs associated with any patent infringement actions. Salk will provide an
invoice to Licensee for any such Patent Costs on a semiannual basis, and
Licensee shall reimburse Salk for such Patent Costs within thirty (30) days
after delivery of any such invoice.

        8.3 Cooperation. Salk and Licensee agree to consult and cooperate in a
mutually satisfactory manner with respect to all decisions related to the
preparation and filing of patent applications contained in the Patent Rights or
licensed by Licensee pursuant to Section 2.5 above.

        8.4 Defense Against Infringement. In the event Licensee or Salk becomes
aware of any actual or threatened infringement of any Patent Rights, that party
shall promptly notify the other and the parties shall discuss the most
appropriate action to take. Both parties shall use their best efforts in
cooperating with each other to terminate such infringement without litigation.
If, within one hundred twenty (120) days after the date of notification of
infringement, attempts to abate such infringement are unsuccessful, then
Licensee may bring such action at its own expense, in which event Salk shall
cooperate with Licensee as reasonably requested, at Licensee's expense. Salk
may, on its own initiative, join in such suit. All recoveries, damages and
awards in such suit, after reimbursement of any litigation expenses of Salk not
previously reimbursed, shall belong to Licensee. To the extent Licensee's
recoveries exceed Licensee's expenses with respect to such infringement action,
such excess recoveries shall be considered Net Sales under this Agreement,
giving rise to the royalty obligations under Section 3.3. In the event that
Licensee elects not to institute or prosecute any suit to enjoin or recover
damages from any infringer, then Salk alone may, in its sole discretion and at
its expense, initiate and conduct an infringement action and keep any settlement
or award which may be obtained. Licensee and Salk agree that neither will settle
any action commenced by it in a manner that is prejudicial to any Patent Rights
without the other party's prior written approval. The parties agree that it is
in their interest to allow non-profit research organizations to practice the
methodologies included in the Licensed Technology to the extent the results
thereof are not used or, to their knowledge, contemplated to be used for the
purpose of development or exploitation by commercial entities and that such
activity shall not constitute infringement for purposes hereof.

        8.5    Third Party Infringement Claims.  In the event any
Licensed Product or Licensed Service becomes the subject of a
claim for patent or other proprietary right infringement anywhere


<PAGE>   12
in the world by virtue of the incorporation of the Patents Rights or Technical
Information therein, the parties shall promptly give notice to the other and
meet to consider the claim and the appropriate course of action. Licensee shall
have the right to conduct the defense of any such suit brought against Licensee
and/or Salk, including the right to file counterclaims against the party
claiming infringement in the event Salk does not do so within the time to file
an answer to such claim, and shall have the sole right and authority to settle
any such suit; provided that Salk shall cooperate with Licensee, as reasonably
requested by Licensee, in connection with the defense of such claim, at
Licensee's expense; and provided further, that Salk shall use commercially
reasonable efforts to engage in negotiations for settlement of such infringement
claim and to procure for Licensee the right to continue selling the allegedly
infringing Licensed Product or Licensed Service.

        8.6 Marking. Licensee agrees to mark and to cause any Affiliate or
sublicensee to mark any Licensed Products (or their containers or labels) made,
sold, or otherwise disposed of by it or them with any notice of patent rights
necessary or desirable under applicable law to enable the Patent Rights to be
enforced to their full extent in any country where Licensed Products are made,
used or sold.

        8.7 Use of Salk's Name. Licensee shall have no right to publicize this
Agreement or its relationship with Salk without Salk's prior written approval,
except as provided in this Section 8.7 and as may be required to comply with
federal or state laws and regulations. Salk agrees that Licensee may make known
in promotional and technical literature that the Licensed Technology was
developed at Salk by Dr. Glen Evans and other scientists in his laboratory, that
products are offered under license from Salk and that Salk is a shareholder of
Licensee; provided, however, that such use shall not state or imply that Salk
has any relationship with Licensee other than as "licensor" or as "shareholder."

        9.     Reporting, Verification and Payment.

        9.1 Books and Records. Licensee agrees to keep proper records and books
of account in accordance with good accounting practices, showing the sales upon
which the royalty payments of Licensee are based, and all other information
necessary for the accurate determination of payment to be made hereunder.

        9.2 Reports. Licensee agrees to deliver to Salk, within thirty (30) days
after each half year period ending June 30 and December 31, a report showing the
information on which the payments herein provided are calculated, including a
breakdown of income from sales of each Licensed Product and Licensed Service and
to accompany each such report with the payments shown to be due thereby.


<PAGE>   13
        9.3 Audit. On reasonable written notice, Salk, at its own expense, shall
have the right to have an independent certified public accountant, satisfactory
to Licensee, inspect and audit the books and records of Licensee, its Affiliates
and its sublicensees during usual business hours for the sole purpose of, and
only to the extent necessary for, determining the correctness of payments due
under this Agreement; provided that such right may be exercised only once during
any twelve (12) month period. Such examination with respect to any fiscal year
shall not take place later than two years following the expiration of such
period. The expense of any such audit shall be borne by Salk; provided, however,
that, if the audit discloses an error in excess of 10% in favor of Licensee,
then Licensee shall pay, in addition to the amount of any underpayment, the cost
to Salk of the audit. Licensee shall include substantially the same audit rights
in any sublicense it grants in order to ensure correctness of payments due

        9.4 Foreign Payments. Royalties based on Net Sales in any foreign
country shall be payable to Salk in the United States in United States Dollars.
Dollar amounts shall be calculated using the foreign exchange rate, as published
by the Wall Street Journal, in effect for such foreign currency on the last
business day of each half year for which a report is required. Where royalties
are due for Net Sales in a country where, for reasons of currency, tax or other
regulations, transfer of foreign currency out of such country is prohibited,
Licensee has the right to place Salk's royalties in a bank account in such
country in the name of and under the sole control of Salk; provided, however,
that the bank selected be reasonably acceptable to Salk and that Licensee inform
Salk of the location, account number, amount and currency of money deposited
therein. After Salk has been so notified, those monies chewy be considered as
royalties duly paid to Salk and will be completely controlled by Salk, and
Licensee will have no further responsibility with respect thereto.

        9.5 Taxes. Licensee shall be liable for any and all taxes which may be
levied by a proper taxing authority on account of royalties or other payments
accruing to Salk under this Agreement. Such taxes may not be deducted from
royalties or other payments to be paid to Salk hereunder. Licensee acknowledges
that Salk is a not-for-profit corporation and thus does not qualify under U.S.
tax laws to obtain a tax credit for any such taxes paid by Licensee.

        10.    Term and Termination.

         10.1 Term. Unless earlier terminated under this Section 10, this
Agreement shall become effective as of the effective date and end on the later
to occur of the following (the "term"): (a) ten years from and after the
effective date; or (b) the date of expiration of the last to expire of any
patent included in the Patent Rights.


<PAGE>   14
        10.2 Termination by Either Party. This Agreement may be terminated by
either party, if the other party substantially fails to perform or otherwise
materially breaches any of the material terms, covenants or provisions of this
Agreement, such termination to be effected by giving written notice of intent to
terminate to the breaching party stating the grounds therefor. The party
receiving the notice shall have thirty (30) days thereafter to correct such
breach. If such breach is not corrected within said thirty (30) days after
notice as aforesaid, then this Agreement shall automatically terminate.

        10.3   Consequences of Termination.

        (a) In the event of termination of the Agreement for any reason
whatsoever, including the expiration of the Term pursuant to Section 10.1:

               (i) Licensee shall not thereby be discharged from any liability
        or obligation to Salk which became due or payable prior to the effective
        date of such termination.

               (ii) The rights and obligations of the parties under Sections 7,
        8.7, 10.3, 11 and 12 shall survive any termination of this Agreement.

        (b) In the event of termination of the Agreement pursuant to Section

               (i) If Licensee, its Affiliates or its sublicensees then possess
        Licensed Product, have started the manufacture thereof or have accepted
        orders therefor, Licensee, its Affiliates or its sublicensees shall have
        the right to sell their inventories thereof, complete the manufacture
        thereof and market such fully manufactured Licensed Product, in order to
        fulfill such accepted orders, subject to the obligation of Licensee to
        pay Salk the royalty payments therefor as provided in Section 3 of this

               (ii) Subject to Section 10.3(b)(i), Licensee shall discontinue,
        and shall cause its Affiliates to discontinue, the manufacture, use,
        marketing and sale of Licensed Product and shall do all things necessary
        or appropriate in order to effect the assignment of any sublicenses
        granted hereunder to Salk in accordance with Section 2.5.

            (iii) All rights sold, assigned or transferred by Salk to Licensee
        hereunder shall revert to Salk, and Licensee agrees to execute all
        instruments necessary and desirable to revest said rights in Salk.

        (c) Provided that this Agreement has not been earlier terminated, upon
the expiration of the Term pursuant to Section 10.1, Licensee shall have the
royalty-free, non-exclusive right


<PAGE>   15
to practice the Patent Rights and Technical Information previously subject to
the license set forth in Section 2.1.

        11. Confidential Information. All confidential scientific and technical
information in respect of the Licensed Technology communicated by Salk to
Licensee, including, without limitation, information contained in patent
applications, shall be received in strict confidence by Licensee, its Affiliates
and sublicensees, used only for the purposes of this Agreement and not disclosed
by Licensee, its Affiliates and sublicensees or their respective agents or
employees without the prior written consent of Salk, unless such information (i)
was in the public domain at the time of disclosure, (ii) later became part of
the public domain, through no act or omission of the recipient party, its
employees agents' successors, or assigns, (iii) was lawfully disclosed to the
recipient by a third party having the right to disclose it, (iv) was already
known by the recipient at the time of disclosure, or (v) was independently
developed by the recipient without use of any Licensed Technology and the
recipient can so demonstrate with competent written proof. Nothing contained
herein shall prevent Licensee or its Affiliates from disclosing information to
sublicensees; provided that such sublicensees agree to be bound by substantially
the same confidentiality provisions as provided herein.

        12.    Choice of Law:  Dispute Resolution.

        12.1 Governing Law. This Agreement is made in accordance with and shall
be governed and construed in accordance with the laws of the State of
California, as applied to contracts executed and performed entirely within the
State of California, without regard to conflicts of laws rules.

        12.2 Arbitration. If a dispute arises between the parties relating to
the interpretation or performance of this Agreement or the grounds for the
termination thereof, the parties agree to hold a meeting, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute prior to pursuing other
available remedies. If, within thirty (30) days after such meeting, the parties
have not succeeded in negotiating a resolution of the dispute, such dispute
shall be submitted to final and binding arbitration under the then current
Licensing Agreement Arbitration Rules of the American Arbitration Association
("AAA"), with a panel of three (3) arbitrators in San Diego County, California;
provided, however, that California Code of Civil Procedure Section 1283.05 shall
apply to any such proceeding. Such arbitrators shall be selected by the mutual
agreement of the parties or, failing such agreement, shall be selected according
to the aforesaid AAA rules. The parties shall bear the costs of arbitration
equally unless the arbitrators, pursuant to their right, but not their
obligation, require the non-prevailing party to bear all or any unequal portion
of the prevailing party's costs. The decision of the arbitrator shall be final
and may be


<PAGE>   16
sued on or enforced by the party in whose favor it runs in any court of
competent jurisdiction at the option of the successful party. The arbitrators
will be instructed to prepare and deliver a written, reasoned opinion conferring
their decision. The rights and obligations of the parties to arbitrate any
dispute relating to the interpretation or performance of this Agreement or the
grounds for the termination thereof shall survive the expiration or termination
of this Agreement for any reason.

        13.    Miscellaneous.

        13.1 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties with respect to the subject matter hereof, and
merges all prior discussions, representations and negotiations with respect to
the subject matter of this Agreement.

        13.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party without the prior written
consent of the other party (such consent not to be unreasonably withheld with
respect to an assignment in the event of a sale of all or substantially all of a
party's assets). This Agreement chewy be binding upon and inure to the benefit
of Salk, Licensee and their respective assigns and successors in interest.

        13.3 Headings. The headings used in this Agreement are for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.

        13.4 Amendment. No amendment or modification hereof shall be valid or
binding upon the parties unless made in writing and signed by both parties.

        13.5 Force Majeure. Any delays in performance by any party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to, acts of God, embargoes, governmental
restrictions, strikes or other concerted acts of workers, fire, flood,
explosion, riots, wars, civil disorder, rebellion or sabotage. The party
suffering such occurrence shall immediately notify the other party and any time
for performance hereunder shall be extended by the actual time of delay caused
by the occurrence.

        13.6 Addresses. The payments to be made hereunder to Salk shall be made
by mailing checks for the required amount to Salk's address. Notices provided
for herein shall effectively be given by mailing the same by certified or
registered mail, properly addressed. For the purposes of making payments and
giving notices, the addresses of"the parties hereto are as follows:

               The Salk Institute for Biological Studies
               Post Office Box 85800


<PAGE>   17
               San Diego, CA 92138
               Attn: Patent Administrator

               Nanotronics, Inc.
               c/o Enterprise Partners
               5000 Birch Street, Suite 6200
               Newport Beach, CA 92660
               Attn: President

or to such subsequent addresses as either party may furnish the other by giving
notice thereof as provided in this paragraph 13.6.

        13.7 Independent Contractors. In making and performing this Agreement,
Salk and Licensee act and shall act at all times as independent contractors and
nothing contained in this Agreement shall be construed or implied to create an
agency, partnership or employer and employee relationship between Salk and
Licensee. At no time shall one party make commitments or incur any charges or
expenses for or in the name of the other party except as specifically provided

        13.8 Severability. If any term, condition or provision of this Agreement
is held to be unenforceable for any reason, it shall, if possible, be
interpreted rather than voided, in order to achieve the intent of the parties to
this Agreement to the extent possible. In any event, all other terms, conditions
and provisions of this Agreement shall be deemed valid and enforceable to the
full extent.

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

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

                             THE SALK INSTITUTE FOR BIOLOGICAL

                             By                 /s/ Dilbert E. Glang
                             Title            Executive Vice President

                             NANOTRONICS, INC.

                             By                /s/ Howard C. Birndorf

                             Title                    President


<PAGE>   18
                               THE SALK INSTITUTE
                                   SCHEDULE A

                                GENOMIC ANALYSIS

                            U.S. PATENT APPLICATIONS

U.S. Serial No. ***.

U.S. Serial No. ***.

U.S. Serial-No. ***.

U.S. Serial No. ***.

                               U.S. SERIAL NO. ***

               APPLICATION          FILING         PATENT
COUNTRY             NO.              DATE            NO.         GRANTED        EXPIRES
-------             ---              ----            ---         -------        -------
<S>            <C>                  <C>            <C>           <C>            <C>

PCT            ***                  ***            ***

EPC            ***                  ***
  Great Britain



<PAGE>   19
                               U.S. SERIAL NO. ***

               APPLICATION          FILING         PATENT
COUNTRY             NO.              DATE            NO.         GRANTED        EXPIRES
-------             ---              ----            ---         -------        -------
<S>            <C>                  <C>            <C>           <C>            <C>

PCT                                 ***

  Great Britain