EXHIBIT 10.5

 

CONFIDENTIAL TREATMENT REQUESTED [*] = Certain confidential information
contained in this document, marked with brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to, as applicable, Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, and Rule 406 of the Securities Act of 1933, as
amended.

 

STANDARD EXCLUSIVE LICENSE AGREEMENT

 

WITH KNOW HOW - Agreement No: A9672

 

TABLE OF CONTENTS

 

Section 1.

 

Definitions

 

 

2

 

 

 

 

 

 

 

 

Section 2.

 

Grant

 

 

4

 

 

 

 

 

 

 

 

Section 3.

 

Due Diligence

 

 

5

 

 

 

 

 

 

 

 

Section 4.

 

Payments

 

 

6

 

 

 

 

 

 

 

 

Section 5.

 

Certain Warranties and Disclaimers of UFRF

 

 

9

 

 

 

 

 

 

 

 

Section 6.

 

Record Keeping

 

 

9

 

 

 

 

 

 

 

 

Section 7.

 

Patent Prosecution

 

 

10

 

 

 

 

 

 

 

 

Section 8.

 

Infringement and Invalidity

 

 

10

 

 

 

 

 

 

 

 

Section 9.

 

Term and Termination

 

 

11

 

 

 

 

 

 

 

 

Section 10.

 

Assignability

 

 

12

 

 

 

 

 

 

 

 

Section 11.

 

Dispute Resolution Procedures

 

 

12

 

 

 

 

 

 

 

 

Section 12.

 

Product Liability; Conduct of Business

 

 

13

 

 

 

 

 

 

 

 

Section 13.

 

Use of Names

 

 

13

 

 

 

 

 

 

 

 

Section 14.

 

Miscellaneous

 

 

14

 

 

 

 

 

 

 

 

Section 15.

 

Notices

 

 

15

 

 

 

 

 

 

 

 

Section 16.

 

Contract Formation and Authority

 

 

16

 

 

 

 

 

 

 

 

Section 17.

 

Confidentiality

 

 

16

 

 

 

 

 

 

 

 

Section 18.

 

University Rules and Regulations

 

 

16

 

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  1

 

 

Schedule 1 — Patents and Patent Applications

Appendix A - Development Plan

Appendix B - Development Report

Appendix C - UFRF Royalty Report

Appendix D - Milestones

Appendix E - Stockholders Agreement

 

This Agreement is made effective the 22nd day of December, 2011, (the “Effective
Date”) by and between the University of Florida Research Foundation, Inc.
(hereinafter called “UFRF”), a nonstock, nonprofit Florida corporation, and Sun
BioPharma, Inc. (hereinafter called “Licensee”), a Small Entity corporation
organized and existing under the laws of Delaware ;

 

WHEREAS, UFRF owns certain inventions that are described in the “Licensed
Patents” defined below, and UFRF is willing to grant a license to Licensee under
all of the Licensed Patents and Licensee desires a license under all of them;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, the parties covenant and agree as follows:

 

Section 1 Definitions

 

1.1

“Licensed Patents” means all of the following UFRF intellectual property:

 

1.1.1

the patent(s)/patent application(s) identified on Schedule 1 hereto;

1.1.2

any and all United States and foreign patent applications claiming priority to
any of the patent(s), and any patent application(s) identified in Schedule 1;
and

1.1.3

any and all patents issuing from the patent applications identified in Section
1.1.1 and 1.1.2, including, but not limited to, letters patents, patents of
addition, divisionals, continuations, reissues, re-examinations, extensions,
restorations, and supplementary protection certificates;

 

all to the extent owned or controlled by UFRF.

 

1.2

“Licensed Product” and “Licensed Process” means:

 

1.2.1

In the case of a Licensed Product, any product or part thereof, on a
country-by-country basis, that:

 

 

(a)

is covered in whole or in part by an issued, unexpired claim or a pending claim
contained in the Licensed Patents, in any country in which such product is made,
used, imported or sold;

 

 

(b)

is manufactured by using a process which is covered in whole or in part by an
issued, unexpired claim or a pending claim contained in the Licensed Patents, in
any country in which any such process is used or in which any such product is
used, imported or sold; or

 

 

(c)

incorporates, utilizes, or was developed utilizing, Know-How, or which is
manufactured using Know-How, or using a process developed using Know-How.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  2

 

 

1.2.2

In the case of a Licensed Process, any process, on a country-by-country basis:

 

 

(a)

which is covered in whole or in part by an issued, unexpired claim or a pending
claim contained in the Licensed Patents in any country in which such process is
practiced; or

 

 

(b)

which incorporates, utilizes, or was developed utilizing, Know-How.

 

1.3

“Net Sales” means the total dollar amount invoiced on sales of Licensed Product
and/or Licensed Processes by Licensee, Sublicensee or Affiliates, less sales
and/or use taxes actually paid, import and/or export duties paid, amounts
allowed or credited from previous sales, e.g., returns , and any promotional
discounts and rebates customarily allowed and in amounts customary in the
distribution and sale of injectible oncolytics.

1.4

“Affiliate” means: (a) any person or entity which controls at least fifty
percent (50%) of the equity or voting stock of the Licensee, or (b) any person
or entity fifty percent (50%) of whose equity or voting stock is owned or
controlled by the Licensee, or (c) any person or entity of which at least fifty
percent (50%) of the equity or voting stock is owned or controlled by the same
person or entity owning or controlling at least fifty percent (50%) of Licensee.

1.5

“Patent Challenge” means a challenge to the validity, patentability,
enforceability and/or non-infringement of any of the Licensed Patents or
otherwise opposing any of the Licensed Patents.

1.6

“Sublicense” means, directly or indirectly, to sublicense, grant any other right
with respect to, or agree not to assert, any right licensed to Licensee under
this Agreement.

1.7

“Sublicensee” means any third party to whom Licensee grants a Sublicense.

1.8

“Development Plan” means a written report summarizing the development activities
that are to be undertaken by the Licensee to bring Licensed Products and/or
Licensed Processes to the market. The Development Plan is attached as Appendix
A.

1.9

“Development Report” means a written account of Licensee’s progress under the
Development Plan having at least the information specified on Appendix B to this
Agreement, and shall be sent to the address specified on Appendix B.

1.10

“Initial Capitalization” means the first time after the Effective Date when the
Licensee has achieved the raising of at least Two Hundred Thousand ($200,000)
Dollars in capital from any and all funding sources.

1.11

“Licensed Field” shall be all uses.

1.12

“Licensed Territory” shall be worldwide.

1.13

“Investigator” means Raymond Bergeron, while employed by the University of
Florida.

1.14

“Know-How” means unpatented technology and/or information that was developed by
the Investigator, including without limitation methods, processes, techniques,
compounds, cell lines, materials, sequences, drawings, indications, data,
results of tests, or studies, plans, and expertise, whether patentable or not,
which relates specifically to the Licensed Patents and existing on the date
hereof, only to the extent wholly owned and controlled by UFRF, except that
Know-How shall not include the Licensed Patents.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  3

 

 

Section 2 Grant

 

2.1

License

 

2.1.1

License under Licensed Patents

 

Subject to the terms of this Agreement, UFRF hereby grants to Licensee a
royalty-bearing, exclusive license, limited to the Licensed Field and the
Licensed Territory, under the Licensed Patents and Know-How to make, have made,
develop, use, lease, import, export, offer to sell, sell and have sold Licensed
Products and Licensed Processes. UFRF reserves to itself and the University of
Florida the right under the Licensed Patents and Know-How to make, have made,
develop, import and use Licensed Products and Licensed Processes solely for
their internal research, clinical (including, but not limited to patient care at
Shands Teaching Hospital and University of Florida patient care facilities), and
educational purposes. UFRF reserves the right to itself, to the University of
Florida and to the Investigator to publish any aspect of the Know-How for
academic and educational purposes. In addition, UFRF reserves to itself, as well
as to the University of Florida, the right to use materials that are covered
under Licensed Patents or Know-How solely for their internal research,
educational, and clinical purposes and to meet all applicable governmental
requirements governing the ability to transfer materials.

 

2.2

Sublicense

 

2.2.1

Licensee may grant written Sublicenses to third parties. However, any agreement
granting a Sublicense shall state that the Sublicense is subject to the terms
and condition of this Agreement. Licensee shall have the same responsibility for
the activities of any Sublicensee or Affiliate as if the activities were
directly those of Licensee. Licensee shall also include provisions in all
sublicenses to provide that in the event that Sublicensee brings a Patent
Challenge against UFRF or assists another party in bringing a Patent Challenge
against UFRF (except as required under a court order or subpoena) then Licensee
may terminate the Sublicense within thirty (30) days.

2.2.2

In respect to Sublicenses granted by Licensee under 2.2.1 above, Licensee shall
pay to UFRF an amount equal to what Licensee would have been required to pay to
UFRF had Licensee sold the amount of Licensed Products or Licensed Processes
sold by such Sublicensee. In addition, if Licensee receives any fees or other
payments in consideration for any rights granted under a Sublicense, and such
payments are not based directly upon the amount or value of Licensed Products or
Licensed Processes sold by the Sublicensee, then Licensee shall pay UFRF the
following percentage of such consideration, based on when such consideration is
received:

 

Up to 2 years from Effective Date of this Agreement [*]

 

Between 2 years, 1 day and 4 years from Effective Date [*]

 

After 4 years from Effective Date [*]

 

Such payments due to UFRF shall exclude amounts specifically paid for (i) future
research and development and (ii) equity and debt instruments at fair market
value. Licensee shall not receive from Sublicensees anything of value in lieu of
cash payments in consideration for any Sublicense under this Agreement without
the express prior written permission of UFRF. If Licensee or any of its
Affiliates brings a Patent Challenge against UFRF, or (ii) Licensee or any of
its Affiliates assists another party in bringing a Patent Challenge against UFRF
(except as required under a court order or subpoena), and (iii) UFRF does not
choose to exercise its rights to terminate this Agreement pursuant to Section
9.3 then, in the event that such a Patent Challenge is successful, Licensee will
have no right to recoup any consideration, including royalties, paid during the
period of challenge. In the event that a Patent Challenge is unsuccessful,
Licensee shall reimburse UFRF for all reasonable legal fees and expenses
incurred in its defense against the Patent Challenge.

 

 

2.2.3

Licensee shall provide UFRF with a final unredacted copy of each sublicense
agreement and any agreement which transfers intellectual property rights granted
hereunder, within thirty (30) days after the execution of the sublicense
agreement and further agrees to forward to UFRF annually a copy of such reports
received by Licensee from its sublicensees pertinent to the payments under said
sublicense agreements.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  4

 

 

Section 3 Due Diligence

 

3.1

Development

 

3.1.1

Licensee agrees to and warrants that:

 

 

(a)

it has, or will obtain, the expertise necessary to independently evaluate the
inventions of the Licensed Patents;

 

 

(b)

it will establish and will actively and diligently pursue the Development Plan
(see Appendix A) to the end that the inventions of the Licensed Patents will be
utilized to provide Licensed Products and/or Licensed Processes for sale in the
retail market within the Licensed Field;

 

 

(c)

it will provide to UFRF a written 3-year rolling Development Plan with respect
to the exploitation of the Licensed Patents and describe the development
activities and related regulatory activities to be undertaken by or on behalf of
Licensee with respect to Licensed Product or licensed process;

 

 

(d)

it will diligently develop markets for Licensed Products and Licensed Processes;

 

 

(e)

and until the date of first commercial sale of Licensed Products or Licensed
Processes, it will supply UFRF with a written Development Report annually
fifteen (15) days after the end of the calendar year (see Appendix B) as well as
any updates to its Development Plan; and

 

 

(f)

approximately six months before commencement of manufacturing or commercial
production, Licensee will include in the Development Report specifics of planned
manufacturing or production.

 

3.1.2

Licensee agrees that the first commercial sale of products to the retail
customer shall occur on or before December 31, 2020, or UFRF shall have the
right to terminate this Agreement pursuant to Section 9.3 hereto. In addition,
Licensee will meet the milestones shown in Appendix D or UFRF shall have the
right to terminate the Agreement pursuant to Section 9.3. Licensee will notify
UFRF promptly in writing as each milestone is met. If Licensee fails to achieve
its first commercial sale on or before December 31, 2020, or fails to meet one
or more milestones shown in Appendix D, Licensee shall provide an explanation to
UFRF as to factors causing such failure(s) and UFRF at its sole discretion may
grant Licensee a period of up to one hundred and eighty (180) days to cure the
deficiency.

3.1.3

At any time after the expiration of 36 months following the Effective date, if
Licensee has not pursued a market or territory other than the United States,
with the exceptions of India and the Peoples Republic of China, respecting the
Licensed Patents, and UFRF has received notice that a third party wishes to
negotiate a license for such market or territory, UFRF may terminate the Grant
with respect to such market or territory upon sixty (60) days written notice to
Licensee. During the notice period, Licensee may provide UFRF with a revised
Development Plan with respect to the market or territory. UFRF may consider the
revised Development Plan and determine, in UFRF’s sole discretion, whether the
revised Development Plan will be accepted or whether the license will terminate
with respect to such market or territory upon expiration of the notice period.

3.1.4

University of Florida policies may require approval of clinical trials at the
University of Florida involving technology invented at the University.
Accordingly Licensee will notify UFRF prior to commencing any clinical trials at
the University of Florida or its affiliated medical facilities.

 

3.2

Licensee shall accomplish its Initial Capitalization within Fifteen (15) months
of the Effective Date of this License Agreement and raise a cumulative total of
Three Million Dollars ($3,000,000) in external funding from any and all external
sources within thirty-six (36) months of the Effective Date, or UFRF shall, as
its sole and exclusive remedy, have the right to terminate this Agreement.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  5

 

 

Section 4 Payments

 

4.1

License Issue Fee

 

Licensee agrees to pay to UFRF a non-refundable license issue fee of [*]
dollars, within thirty (30) days of the Licensee’s Initial Capitalization or one
hundred and eighty (180) days after the Effective Date of the License Agreement,
whichever comes first.

 

4.2

Annual License Maintenance Fee

 

Licensee will pay an annual license maintenance fee of [*], each year on the
anniversary of the Effective Date of this Agreement. The annual license
maintenance fee is payable within thirty (30) days following such date each year
until the first commercial sale of a Licensed Product or Licensed Process
occurs, after which time minimum royalties instead of the annual license
maintenance fee will be due.

 

4.3

Issuance of Equity

 

As further consideration for the rights granted to Licensee by this Agreement,
as of the Effective Date, Licensee will issue to UFRF that number of shares of
common stock of Licensee equal to Ten (10%) percent of the total number of
issued and outstanding shares of Licensee on the Effective Date.

 

4.3.1

lf, at any time after the Effective Date of this Agreement and before Licensee
receives a total of Two Million dollars ($2,000,000) cash in exchange for the
issuance of Licensee’s equity securities or securities that are convertible into
Licensee’s equity securities (“Equity Securities”) Licensee issues any Equity
Securities, then Licensee shall issue additional shares or class A units to UFRF
such that immediately after such issuance to UFRF the total number of shares
issued to UFRF under this Section constitutes Ten percent (10%) of the total
number of issued and outstanding shares of Licensee calculated on a Fully
Diluted Basis. “Fully Diluted Basis” means assuming the conversion of all
outstanding convertible securities and the exercise of all outstanding options,
warrants and other similar securities, regardless of whether such securities,
units, options or warrants are then convertible or exercisable.

4.3.2

If Licensee proposes to sell any Equity Securities in a financing, then UFRF
and/or any entity to which UFRF has assigned the right to exercise UFRF’s
preemptive rights will have the right to purchase up to that portion of the
Equity Securities that equals UFRF’s then current percentage ownership of the
Licensee on a Fully Diluted Basis on the same terms as are offered with respect
to such Equity Securities sold in such financing, pursuant to the terms of the
Stockholders Agreement attached hereto as Appendix E.

4.3.3

The issuance of common stock to UFRF under this Section 4.3 shall be made in
accordance with that certain Stockholders Agreement by and among UFRF, Licensee
and all other stockholders of Licensee, a copy of which is attached hereto as
Appendix E and incorporated by reference herein. Such Stockholders Agreement
includes certain pre-emptive rights for the stockholders of Licensee, including
UFRF, as provided in Appendix E.

 

4.4

Royalty

 

Royalty on Licensed Patents: Licensee agrees to pay to UFRF as earned royalties
a royalty calculated as a percentage of Net Sales. The royalty is deemed earned
as of the date the Licensed Product and/or Licensed Process is actually sold by
Licensee, its Affiliate or Sublicensee, and paid for, or the date a Licensed
Product and/or Licensed Process is transferred to a third party for any
promotional reason. Licensee shall pay to UFRF royalties as follows:

 

(i)

[*] for Net Sales of Licensed Products, for each product, on a
country-by-country basis, that is (a) covered in whole or in part by an issued,
unexpired claim or a pending claim contained in the Licensed Patents, in the
country in which such product is made, imported, exported, used or sold or (b)
is manufactured using a process which is covered in whole or in part by an
issued, unexpired claim or a pending claim contained in the Licensed Patents, in
the country in which such process is used or in which such product is imported,
used or sold.

(ii)

[*] for Net Sales of Licensed Processes, for each process, on a
country-by-country basis, that is covered in whole or in part by an issued,
unexpired claim or a pending claim contained in the Licensed Patents in the
country in which such process is practiced.

(iii)

[*] for Net Sales of Licensed Products, for each product, on a
country-by-country basis, that is sold during a period of regulatory exclusivity
for such product in the country in which such product is sold.

(iv)

[*] for Net Sales of all other Licensed Products and Licensed Processes.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  6

 

 

Royalties are payable for the longer of (a) the last to expire of the claims in
the Licensed Patents pursuant to sections (i) and (ii) above, or (b) ten (10)
years from the first commercial sale of a Licensed Product or Licensed Process
in each country in which the Licensed Product or Licensed Process is sold
pursuant to sections (iii) and (iv) above. Royalties are payable based on the
largest applicable rate calculated per this section and such royalties based on
Licensed Patents and Know-How shall not be additive.

 

Amounts owing to UFRF under Section 4.4 shall be paid on a quarterly basis after
the amount of minimum royalties paid is exceeded, with such amounts due and
received by UFRF on or before the first business day following the thirtieth
(30th) calendar day following the end of the calendar quarter ending on March
31, June 30, September 30 or December 31 in which such amounts were earned.

 

4.5

Minimum Royalty

 

4.5.1

Licensee agrees to pay UFRF minimum royalty payments, as follows:

 

Amount

 

Date of Payment

[*]

 

270 days after occurrence of first commercial sale

[*]

 

First anniversary date of first payment

[*]

 

Second anniversary date of first payment

[*]

 

Third anniversary date of first payment and subsequent anniversary dates for
every year thereafter, for the life of this Agreement.

 

The minimum royalty shall be paid in advance on a quarterly basis on March 31,
June 30, September 30, and December 31 for the following quarters, for each year
in which this Agreement is in effect. The first minimum royalty payment shall be
due in accordance with the table above after the first occurrence of a
commercial sale of a marketed product and shall be in the amount of [*] dollars.
Any minimum royalty paid in a calendar year will be credited against the earned
royalties for that calendar year. It is understood that the minimum royalties
will be applied to earned royalties on a calendar year basis, and that sales of
Licensed Products and/or Licensed Processes requiring the payment of earned
royalties made during a prior or subsequent calendar year shall have no effect
on the annual minimum royalty due UFRF for other than the same calendar year in
which the royalties were earned.

 

4.6

Milestone Payments

 

Licensee agrees to pay UFRF milestone payments with thirty (30) days of the
first achievement of such milestone per indication, as follows:

 

Event

 

Milestone Payment

Enrollment of first subject in a Phase I trial

 

[*]

Enrollment of first subject in a Phase II clinical trial

 

[*]

Approval of NDA

 

[*]

Approval of MMA in either EU or Japan (one time only)

 

[*]

 

In addition, the following two milestone payments will be due regardless of the
number of indications for which Licensed Product is developed and regardless of
whether a Licensed Product is sold in a different dosage form or formulation.

 

First time annual Net Sales of a Licensed Product or Licensed Process by Company
reaches $100 million

 

[*]

 

 

 

First time annual Net Sales of a Licensed Product or Licensed Process by Company
reaches $500 million

 

[*]

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  7

 

 

4.7

Sublicense Fees

 

Licensee shall pay sublicense fees to UFRF per Section 2.2.2 of this Agreement
within thirty days (30) of the receipt of any such fees from Sublicensee,

 

4.8

Accounting for Payments

 

4.8.1

Any amount which remain unpaid after the date they are due to UFRF under this
Section 4, Section 2, Section 7 or any other section of this Agreement shall
accrue interest from the due date at the rate of [*] per month. However, in no
event shall this interest provision be construed as a grant of permission for
any payment delays. Licensee shall also be responsible for repayment to UFRF of
any attorney, collection agency, or other out-of-pocket UFRF expenses required
to collect overdue payments due from this Section 4, Section 2, Section 7 or any
other applicable section of this Agreement.

4.8.2

Except as otherwise directed, all amounts owing to UFRF under this Agreement
shall be paid in U.S. dollars to UFRF at the following address:

 

University of Florida Research Foundation, Inc. 

223 Grinter Hall 

PO Box 115500 

Gainesville, Florida 32611-5500 

Attention: Business Manager

All monies owing stated in currencies other than U.S. dollars shall be converted
at the rate shown in the Federal Reserve Noon Valuation - Value of Foreign
Currencies on the day preceding the payment due date.

 

4.8.3

A certified full accounting statement showing how any amounts payable to UFRF
under Section 4.4 have been calculated shall be submitted to UFRF on the date of
each such payment. In addition to being certified, such accounting statements
shall contain a written representation signed by an executive officer of
Licensee that states that the statements are true, accurate, and fairly
represent all amounts payable to UFRF pursuant to this Agreement. Such
accounting shall be on a per-country and product line, model or trade name basis
and shall be summarized on the form shown in Appendix C — UFRF Royalty Report of
this Agreement.

4.8.4

In the event no payment is owed to UFRF because the amount of minimum royalties
paid has not been exceeded or otherwise, an accounting demonstrating that fact
shall be supplied to UFRF.

4.8.5

UFRF is exempt from paying income taxes under U.S. law. Therefore, all payments
due under this Agreement shall be made without deduction for taxes, assessments,
or other charges of any kind which may be imposed on UFRF by any government
outside of the United States or any political subdivision of such government
with respect to any amounts payable to UFRF pursuant to this Agreement. All such
taxes, assessments, or other charges shall be assumed by Licensee.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  8

 

 

Section 5 Certain Warranties and Disclaimers of UFRF

 

5.1

UFRF represents that its employees have assigned or are obligated to assign to
University their entire right, title and interest in the Licensed Patents and
that UFRF has authority to grant the rights and licenses set forth in this
Agreement. However, nothing in this Agreement shall be construed as:

 

5.1.1

a warranty or representation by UFRF as to the validity or scope of any right
included in the Licensed Patents;

5.1.2

a warranty or representation that anything made, used, sold or otherwise
disposed of under the license granted in this Agreement will or will not
infringe patents of third parties;

5.1.3

an obligation to bring or prosecute actions or suits against third parties for
infringement of Licensed Patents;

5.1.4

an obligation to furnish any services other than those specified in this
Agreement; or

5.1.5

a warranty or representation by UFRF that it will not grant licenses to others
to make, use or sell products not covered by the claims of the Licensed Patents
which may be similar and/or compete with products made or sold by Licensee.

 

5.2

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, UFRF MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.
UFRF ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER
DISPOSITION BY LICENSEE, ITS SUBLICENSEE(S), OR THEIR VENDEES OR OTHER
TRANSFEREES OF PRODUCT INCORPORATING OR MADE BY USE OF INVENTIONS LICENSED UNDER
THIS AGREEMENT.

 

Section 6 Record Keeping

 

6.1

Licensee, its Affiliates and its Sublicensee(s) shall keep books and records
sufficient to verify the accuracy and completeness of Licensee’s, its
Affiliates’ and its Sublicensee(s)’s accounting referred to above, including
without limitation, inventory, purchase and invoice records, manufacturing
records, sales analysis, general ledgers, financial statements, and tax returns
relating to the Licensed Products and/or Licensed Processes. Such books and
records shall be preserved for a period not less than six years after they are
created or as required by federal law, both during and after the term of this
Agreement.

6.2

Licensee, its Affiliates and its Sublicensee(s) shall take all steps necessary
so that UFRF may, within thirty (30) days of its written request, audit, review
and/or copy all of the books and records at a single U.S. location to verify the
accuracy of Licensee’s, its Affiliates and its Sublicensee(s)’s accounting. Such
review may be performed by any authorized employees of UFRF as well as by any
attorneys and/or accountants designated by UFRF, upon reasonable notice and
during regular business hours. If a deficiency with regard to any payment
hereunder is determined, Licensee and its Sublicensee(s) shall pay the
deficiency within thirty (30) days of receiving notice thereof along with
applicable interest as described in Section 4.8. If a royalty payment deficiency
for a calendar year exceeds three percent (3%) of the royalties paid for that
year, then Licensee and its Sublicensee(s) shall be responsible for paying
UFRF’s out-of-pocket expenses incurred with respect to such review.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  9

 

 

Section 7 Patent Prosecution

 

7.1

UFRF shall prosecute and maintain the Licensed Patents using counsel of its
choice. UFRF shall provide Licensee with copies of all documents sent to and
received from the United States Patent and Trademark Office and foreign patent
offices relating to Licensed Patents. Licensee agrees to keep such information
confidential.

Licensee shall pay to UFRF the sum of [*] dollars, to reimburse any and all
expenses associated with preparation, filing, prosecution, issuance,
maintenance, defense, and reporting of the Licensed Patents incurred prior to
the Effective Date. Such payments shall be made within thirty (30) days after
the Licensee’s Initial Capitalization, or one hundred and eighty (180) days
after the Effective Date of the License Agreement, whichever occurs first.
Additionally, such reimbursement of patent costs is non-refundable.

7.2

Licensee shall be responsible for and pay all costs and expenses incurred by
UFRF related to the preparation, filing, prosecution (including interferences),
issuance, maintenance, defense (including oppositions) and reporting of the
Licensed Patents subsequent to and separate of those expenses cited in Section
7.1 within thirty (30) days of receipt of an invoice from UFRF. It shall be the
responsibility of Licensee to keep UFRF fully apprised of the “small entity”
status of Licensee and all Sublicensees with respect to the U.S. patent laws and
with respect to the patent laws of any other countries, if applicable, and to
inform UFRF of any changes in writing of such status, within thirty (30) days of
arty such change. In the event that additional licenses are granted to licensees
for alternate fields-of-use, patent expenses associated with Licensed Patents
will be divided proportionally between the number of existing licensees.

7.3

Licensee shall file and maintain the Licensed Patents at least in the following
countries: [*], if foreign rights are available. Additionally, the parties would
reasonably cooperate to enable the company to seek any patent term extensions
available for Licensed Products.

 

Section 8 Infringement and Invalidity

 

8.1

Licensee shall inform UFRF promptly in writing of any alleged infringement of
the Licensed Patents by a third party and of any available evidence thereof.

8.2

During the term of this Agreement, UFRF shall have the right, but shall not be
obligated, to prosecute at its own expense any such infringements of the
Licensed Patents. If UFRF prosecutes any such infringement, Licensee agrees that
UFRF may include Licensee as a co-plaintiff in any such suit, without expense to
Licensee.

8.3

If within six (6) months after having been notified of any alleged infringement,
UFRF shall have been unsuccessful in persuading the alleged infringer to desist
and shall not have brought an infringement action against the alleged infringer,
or if UFRF shall notify Licensee at any time prior thereto of its intention not
to bring suit against the alleged infringer, then, and in those events only,
Licensee shall have the right, but shall not be obligated, to prosecute at its
own expense any infringement of the Licensed Patents, and Licensee may, for such
purposes, use the name of UFRF as party plaintiff. No settlement, consent
judgment or other voluntary final disposition of the suit may be entered into
without the consent of UFRF, which consent shall not be unreasonably withheld.
Licensee shall indemnify UFRF against any order for costs that may be made
against UFRF in such proceedings.

8.4

In the event that a declaratory judgment action is brought against UFRF or
Licensee by a third party alleging invalidity, unpatentability,
unenforceability, or non-infringement of the Licensed Patents, UFRF, at its
option, shall have the right within twenty (20) days after commencement of such
action to take over the sole defense of the action at its own expense. If UFRF
does not exercise this right, and assuming that Licensee is the sole licensee of
the Licensed Patents, Licensee shall be responsible for the sole defense of the
action at Licensee’s sole expense, subject to Sections 8.5 and 8.6.

8.5

In the event that Licensee shall undertake the enforcement by litigation and/or
defense of the Licensed Patents by litigation, UFRF shall have the right, but
not the obligation, to voluntarily join such litigation, represented by its own
counsel at its own expense. In the event that Licensee shall undertake the
enforcement by litigation and/or defense of the Licensed Patents by litigation,
any recovery of damages by Licensee for any such suit shall be applied first in
satisfaction of any unreimbursed expenses and legal fees of Licensee relating to
the suit, and next toward reimbursement of UFRF for any legal fees, and
unreimbursed expenses. The balance remaining from any such recovery shall be
divided (75%/25%) between Licensee and UFRF in favor of the party taking the
lead in such enforcement.

8.6

In any suit in which either party is involved to enforce or defend the Licensed
Patents pursuant to this Agreement, the other party hereto shall, at the request
and expense of the party initiating such suit, cooperate in all respects and, to
the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.

8.7

In the event Licensee contests the validity of any Licensed Patents, unless and
until UFRF terminates this Agreement pursuant to Section 9.3.9, Licensee shall
continue to pay royalties and make other payments pursuant to this Agreement
with respect to that patent as if such contest were not underway until the
patent is adjudicated invalid or unenforceable by a court of last resort.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  10

 

 

Section 9 Term and Termination

 

9.1

The term of this license shall begin on the Effective Date of this Agreement and
continue until the later of the date that no Licensed Patent remains an
enforceable patent and the date on which Licensee’s obligation to pay royalties
expires pursuant to Section 4.4 above.

9.2

Licensee may terminate this Agreement at any time by giving at least sixty (60)
days written notice of such termination to UFRF. Such a notice shall be
accompanied by a statement of the reasons for termination.

9.3

UFRF may terminate this Agreement by giving Licensee at least thirty (30) days
written notice if Licensee:

 

9.3.1

is delinquent on any report or payment or required documents as specified in any
other section of this Agreement;

9.3.2

is not diligently developing and commercializing Licensed Products and Licensed
Processes pursuant to the terms in section 3.1.1;

9.3.3

is in material breach of any provision;

9.3.4

willfully provides any false report;

9.3.5

goes into bankruptcy, liquidation or has a receiver appointed to control any
assets;

9.3.6

commits a violation of any material laws or regulations of applicable government
entities;

9.3.7

shall cease to carry on its business pertaining to Licensed Patents;

9.3.8

if payments of earned royalties under Section 4.4 once begun, for more than
three (3) consecutive calendar quarters; or

9.3.9

If Licensee or any of its Affiliates brings a Patent Challenge against UFRF, or
assists others in bringing a Patent Challenge against UFRF (except as required
under a court order or subpoena), then UFRF may immediately terminate this
Agreement and/or the license granted hereunder. If a Sublicensee brings a Patent
Challenge or assists another party in bringing a Patent Challenge (except as
required under a court order or subpoena), then UFRF may send a written demand
to Licensee to terminate such sublicense. If Licensee fails to so terminate such
sublicense within forty-five (45) days after UFRF’s demand, UFRF may immediately
terminate this Agreement and/or the license granted hereunder.

 

Termination under this Section 9.3 will take effect thirty (30) days after
written notice by UFRF unless Licensee remedies the problem in that thirty (30)
day period.

 

9.4

UFRF may immediately terminate this Agreement upon the occurrence of the second
separate default by Licensee within any-one year period for failure to pay
royalties, patent or any other expenses when due.

9.5

Upon the termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that matured prior to the
effective date of such termination. Licensee shall remain obligated to provide
an accounting for and to pay royalties earned to the date of termination, and
any minimum royalties shall be prorated as of the date of termination by the
number of days elapsed in the applicable calendar year. Licensee may, however,
after the effective date of such termination, sell all Licensed Products, and
complete Licensed Products in the process of manufacture at the time of such
termination and sell the same, provided that Licensee shall remain obligated to
provide an accounting for and to pay running royalties thereon.

9.6

Licensee shall be obligated to deliver to UFRF, within ninety (90) days of the
date of termination of this Agreement a comprehensive summary of all
documentation prepared for or submitted for all regulatory approvals of Licensed
Products or Licensed Processes as well as a summary of results obtained.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  11

 

 

Section 10 Assignability

 

10.1

This Agreement may be transferred or, assigned by Licensee with the prior
written consent of UFRF, which shall not be unreasonably withheld. Any attempted
assignment in contravention of this Section 10.1 shall be null and void and
shall constitute a material breach of this Agreement.

10.2

The new assignee assumes all responsibilities under this license and must agree
in writing to UFRF to be bound by this Agreement.

 

Section 11 Dispute Resolution Procedures

 

11.1

Mandatory Procedures

 

In the event either party intends to file a lawsuit against the other with
respect to any matter in connection with this Agreement, compliance with the
procedures set forth in this Section shall be a condition precedent to the
filing of such lawsuit, other than for injunctive relief. Either party may
terminate this Agreement as provided in this Agreement without following the
procedures set forth in this section.

 

11.1.1

When a party intends to invoke the procedures set forth in this section, written
notice shall be provided to the other party. Within thirty (30) days of the date
of such notice, the parties agree that representatives designated by the parties
shall meet at mutually agreeable times and engage in good faith negotiations at
a mutually convenient location to resolve such dispute.

11.1.2

If the parties fail to meet within the time period set forth in Section 11.1.1
above or if either party subsequently determines that negotiations between the
representatives of the parties are at an impasse, the party declaring that the
negotiations are at an impasse shall give notice to the other party stating with
particularity the issues that remain in dispute.

11.1.3

Not more than fifteen (15) days after the giving of such notice of issues, each
party shall deliver to the other party a list of the names and addresses of at
least three individuals, any one of whom would be acceptable as a neutral
advisor in the dispute (the “Neutral Advisor”) to the party delivering the list.
Any individual proposed as a Neutral Advisor shall have experience in
determining, mediating, evaluating, or trying intellectual property litigation
and shall not be affiliated with the party that is proposing such individual.

11.1.4

Within ten (10) days after delivery of such lists, the parties shall agree on a
Neutral Advisor. If they are unable to so agree within that time, within five
(5) days, they shall each select one individual from the lists. Within five (5)
days, the individuals so selected shall meet and appoint a third individual from
the lists to serve as the Neutral Advisor. Within thirty (30) days after the
selection of a Neutral Advisor:

 

 

(a)

The parties shall each provide a written statement of the issues in dispute to
the Neutral Advisor.

 

 

(b)

The parties shall meet with the Neutral Advisor in Gainesville, Florida on a
date and time established by the Neutral Advisor. The meeting must be attended
by persons authorized to make final decisions on behalf of each party with
respect to the dispute. At the meeting, each party shall make a presentation
with respect to its position concerning the dispute. The Neutral Advisor will
then discuss the issues separately with each party and attempt to resolve all
issues in the dispute. At the meeting, the parties will enter into a written
settlement agreement with respect to all issues that are resolved. Such
settlement agreement shall be final and binding with respect to such resolved
issues and may not be the subject of any lawsuit between the parties, other than
a suit for enforcement of the settlement agreement.

 

11.1.5

The expenses of the neutral advisor shall be shared by the parties equally. All
other out-of-pocket costs and expenses for the alternative dispute resolution
procedure required under this Section shall be paid by the party incurring the
same.

11.1.6

Positions taken and statements made during this alternative dispute resolution
procedure shall be deemed settlement negotiations and shall not be admissible
for any purpose in any subsequent proceeding.

 

11.2

Failure to Resolve Dispute

 

If any issue is not resolved at the meeting with the Neutral Advisor, either
party may file appropriate administrative or judicial proceedings with respect
to the issue that remains in dispute. No new issues may be included in the
lawsuit without the mandatory procedures set forth in this section having first
been followed.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  12

 

 

Section 12 Product Liability; Conduct of Business

 

12.1

Licensee, Affiliates and Sublicensee(s) shall, at all times during the term of
this Agreement and thereafter, indemnify, defend and hold UFRF, the Florida
Board of Governors, the University of Florida Board of Trustees, the University
of Florida, and each of their directors, officers, employees, and agents, and
the inventors of the Licensed Patents, regardless of whether such inventors are
employed by the University of Florida at the time of the claim, harmless against
all claims and expenses, including legal expenses and reasonable attorneys fees,
whether arising from a third party claim or resulting from UFRF’s enforcing this
indemnification clause against Licensee, arising out of the death of or injury
to any person or persons or out of any damage to property and against any other
claim, proceeding, demand, expense and liability of any kind whatsoever
resulting from the development, production, manufacture, sale, use, lease,
consumption, marketing, or advertisement of Licensed Products or Licensed
Process(es) or arising from any right or obligation of Licensee hereunder.
Notwithstanding the above, UFRF at all times reserves the right to retain
counsel of its own to defend UFRF’s, the Florida Board of Governors’, the
University of Florida Board of Trustees’, the University of Florida’s, and the
inventor’s interests.

12.2

Licensee warrants that it will acquire and maintain liability insurance coverage
appropriate to the risk involved in development, producing, manufacturing,
clinical trials, selling, marketing, using, leasing, consuming, or advertising
the products subject to this Agreement and that such insurance coverage lists
UFRF, the Florida Board of Governors, the University of Florida Board of
Trustees, the University of Florida, and the inventors of the Licensed Patents
as additional insureds. Within ninety (90) days after the execution of this
Agreement and thereafter annually between January 1 and January 31 of each year,
Licensee will present evidence to UFRF that the appropriate coverage is in the
process of being obtained (before development of Licensed Products or Licensed
Processes commences), or already in place ( after development commences), with
UFRF, the University of Florida, and its inventors listed as additional
insureds. In addition, Licensee shall provide UFRF with at least thirty (30)
days prior written notice of any change in or cancellation of the insurance
coverage.

 

Section 13 Use of Names

 

Licensee and its Sublicensee(s) shall not use the names of UFRF, or of the
University of Florida, nor of any of either institution’s employees, agents, or
affiliates, nor the name of any inventor of Licensed Patents, nor any adaptation
of such names, in any promotional, advertising or marketing materials or any
other similar form of publicity, or to suggest any endorsement by the such
entities or individuals, without the prior written approval of UFRF in each
case.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  13

 

 

Section 14 Miscellaneous

 

14.1

This Agreement shall be construed in accordance with the internal laws of the
State of Florida.

14.2

The parties hereto are independent contractors and not joint venturers or
partners.

14.3

Licensee shall ensure that it applies patent markings that meet all requirements
of U.S. law, 35 U.S.C. §287, with respect to all Licensed Products subject to
this Agreement.

14.4

This Agreement constitutes the full understanding between the parties with
reference to the subject matter hereof, and no statements or agreements by or
between the parties, whether orally or in writing, shall vary or modify the
written terms of this Agreement. Neither party shall claim any amendment,
modification, or release from any provisions of this Agreement by mutual
agreement, acknowledgment, or otherwise, unless such mutual agreement is in
writing, signed by the other party, and specifically states that it is an
amendment to this Agreement.

14.5

Licensee shall not encumber or otherwise grant a security interest in any of the
rights granted hereunder to any third party.

14.6

Licensee acknowledges that it is subject to and agrees to abide by the United
States laws and regulations (including the Export Administration Act of 1979 and
Arms Export Control Act) controlling the export of technical data, computer
software, laboratory prototypes, biological material, and other commodities. The
transfer of such items may require a license from the cognizant agency of the
U.S. Government or written assurances by Licensee that it shall not export such
items to certain foreign countries and/or foreign persons without prior approval
of such agency. UFRF neither represents that a license is or is not required or
that, if required, it shall be issued.

14.7

Licensee is responsible for any and all wire/bank fees associated with all
payments due to UFRF pursuant to this Agreement.

14.8

Survival

 

The provisions of this Section shall survive termination of this Agreement. Upon
termination of the Agreement for any reason, the following sections of the
Agreement will remain in force as non-cancelable obligations:

 

·

Section 6 Record Keeping

·

Section 9 Requirement to pay royalties on sale of Licensed Products made, and in
process, at the time of-Agreement termination

·

Section 12 Product Liability; Conduct of Business

·

Section 13 Use of Names

·

Section 17 Confidentiality

·

Appendix E Stockholders Agreement

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  14

 

 

Section 15 Notices

 

Any notice required to be given pursuant to the provisions of this Agreement
shall be in writing and shall be deemed to have been given

 

 

·

when delivered personally, or

 

·

if sent by facsimile transmission, when receipt thereof is acknowledged at the
facsimile number of the recipient as set forth below, or

 

·

the second day following the day on which the notice has been delivered prepaid
to a courier service, or

 

·

five (5) business days following deposit in the U.S. mail if sent certified
mail, (return receipt acknowledgement is not required to certify delivery).

 

15.1

If to the University of Florida Research Foundation, Inc.:

 

President

University of Florida Research Foundation, Inc.

223 Grinter Hall

University of Florida

Post Office Box 115500

Gainesville, FL 32611-5500

Facsimile Number: 352-846-0505

 

with a copy to:

Office of Technology Licensing

Attn: Director

747 SW 2nd Avenue

University of Florida

Post Office Box 115575

Gainesville, FL 32611-5575

Facsimile Number: 352-392-6600

 

15.2

If to Licensee:

 

Paul M. Herron

President & CEO

Sun BioPharma , Inc.

105 Cypress Lagoon Ct.

Ponte Vedra Beach, Florida 32082

(954) 980-5285

 

with a copy to:

Jeffrey R, Harder, Esq.

Winstead PC

24 Waterway Avenue, Suite 500

The Woodlands, TX 77380

(281) 681-5931

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  15

 

 

Section 16 Contract Formation and Authority

 

The submission of this Agreement does not constitute an offer, and this document
shall become effective and binding only upon the execution by duly authorized
representatives of both Licensee and UFRF. Copies of this Agreement that have
not been executed and delivered by both UFRF and Licensee shall not serve as a
memorandum or other writing evidencing an agreement between the parties. This
Agreement shall automatically terminate and be of no further force and effect,
without the requirement of any notice from UFRF to Licensee, if UFRF does not
receive the certificates representing shares issued to UFRF pursuant to this
Agreement within thirty (30) days of the Effective Date.

 

16.1

UFRF and Licensee hereby warrant and represent that the persons signing this
Agreement have authority to execute this Agreement on behalf of the party for
whom they have signed.

16.2

Force Majeure

 

No default, delay, or failure to perform on the part of Licensee or UFRF shall
be considered a default, delay or failure to perform otherwise chargeable
hereunder, if such default, delay or failure to perform is due to causes beyond
either party’s reasonable control including, but not limited to: strikes,
lockouts, or inactions of governmental authorities, epidemics, war, embargoes,
fire, earthquake, hurricane, flood, acts of God, or default of common carrier.
In the event of such default, delay or failure to perform, any date or times by
which either party is otherwise scheduled to perform shall be extended
automatically for a period of time equal in duration to the time lost by reason
of the excused default, delay or failure to perform.

 

Section 17 Confidentiality

 

17.1

Each Party shall maintain all information of the other Party which is treated by
such other Party as proprietary or confidential (referred to herein as
“Confidential Information”) in confidence, and shall not disclose, divulge or
otherwise communicate such confidential information to others, or use it for any
purpose, except pursuant to, and in order to carry out, the terms and objectives
of this Agreement, which may include the disclosure of certain confidential
information to potential Sublicensees (in which case the appropriate
Confidential Disclosure Agreements will be obtained prior to such disclosures).
Each party hereby agrees to exercise every reasonable precaution to prevent and
restrain the unauthorized disclosure of such confidential information by any of
its Affiliates, directors, officers, employees, consultants, subcontractors,
Sublicensees or agents. The parties agree to keep the terms of this Agreement
confidential, provided that each party may disclose this Agreement to their
authorized agents and investors who are bound by similar confidentiality
provisions. Notwithstanding the foregoing, Confidential Information of a party
shall not include information which: (a) was lawfully known by the receiving
party prior to disclosure of such information by the disclosing party to the
receiving party; (b) was or becomes generally available in the public domain,
without the fault of the receiving party; (c) is subsequently disclosed to the
receiving party by a third party having a lawful right to make such disclosure;
(d) is required by law, rule, regulation or legal process to be disclosed,
provided that the receiving party making such disclosure shall take all
reasonable steps to restrict and maintain to the extent possible confidentiality
of such disclosure and shall provide reasonable notice to the other party to
allow such party the opportunity to oppose the required disclosure; or (e) has
been independently developed by employees or others on behalf of the receiving
party without access to or use of disclosing party’s information as demonstrated
by written record. Each party’s obligations under this Section 17 shall extend
for a period of five (5) years from termination or expiration of this Agreement.

 

Section 18 University Rules and Regulations

 

18.1

Licensee understands and agrees that University of Florida personnel who are
engaged by Licensee, whether as consultants, employees or otherwise, or who
possess a material financial interest in Licensee, are subject to the University
of Florida’s rule regarding outside activities and financial interests set forth
in University of Florida Regulation 1.011 , the University of Florida’s
Intellectual Property Policy, and a monitoring plan which addresses conflicts of
interests associated therewith. Any term or condition of an agreement between
Licensee and such University of Florida personnel which seeks to vary or
override such personnel’s obligations to the University of Florida may not be
enforced against such personnel, the University of Florida or UFRF, without the
express written consent of an individual authorized to vary or waive such
obligations on behalf of the University of Florida and UFRF. Furthermore, should
an interest of Licensee conflict with the interest of the University of Florida,
University of Florida personnel are obligated to resolve such conflicts
according to the guidelines and policies set forth by the University of Florida.

 

[Remainder of this page left intentionally blank]

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  16

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
dates indicated below.

 

 

UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.

 

        Date: December 22, 2011 By: /s/ David L. Day

 

 

 

David L. Day

 

 

 

Director of Technology Licensing

 

 

 

SUN BIOPHARMA, INC.

 

        Date: December 22, 2011 By: /s/ Paul M. Herron

 

 

 

Paul M. Herron

 

 

 

President & CEO

 

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  17

 

 

 

Schedule 1 - Patents and Patent Applications

 

[*]

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  18

 

 

Appendix A - Development Plan

 

A Development Plan of the scope outlined below shall be submitted to UFRF by
Licensee prior to the execution of this agreement. In general, the plan should
provide UFRF with a summary overview of the activities that Licensee believes
are necessary to bring products to the marketplace.

 

I. Development Program

 

A.

Development activities to be undertaken

 

(Please break activities into subunits with the date of completion of major
milestones)

 

 

1.

Completion of pre-clinical IND-enabling toxicology activities, 30 months after
Effective Date of License.

 

 

2.

Completion of pre-clinical IND-enabling pharmacology activities, 30 months after
Effective Date of License.

 

 

3.

Completion of pre-clinical IND-enabling CMC activities, 36 months after
Effective Date of License.

 

 

4.

Submission of IND to US FDA 36 months after Effective Date of License.

 

 

5.

Initiation of Phase 1 clinical trial 6 months after FDA acceptance for filing of
IND.

 

 

6.

Initiation of Phase 2 clinical trial 18 months after completion of Phase 1 study
report.

 

 

7.

Submission of NDA - 18 months after completion of Pivotal trial(s) study report.

 

 

8.

Commercial launch of approved product in U.S. - 6 months after NDA approval.

 

B.

Estimated total development time 7 years after Effective Date of license to NDA
submission.

 

II. Governmental Approval

 

A.

Types of submissions required: IND and NDA

B.

Government agency, FDA

 

III. Proposed Market Approach: traditional US oncology drug reimbursement,
distribution, sales and marketing effort with medical education, presentations
and publications

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  19

 

 

IV. Competitive Information

 

A.

Potential competitors: gemcitabine, TarcevaÒ and nab-paclitaxel (likely)

 

GemzarÒ injection (Gemcitabine hydrochloride)

 

Current treatment options for patients with cancer of the pancreas are limited,
and little clinically significant progress has been made since US FDA approval
of gemcitabine in 1996. GemzarÒ, a cytidine analog, was approved for the
treatment of locally advanced or metastatic pancreatic cancer. The Phase 3 study
of gemcitabine involved 126 pancreatic cancer subjects - 63 of these received
gemcitabine therapy and the other 63 subjects received treatment with 5-FU1. Of
these subjects, more than 70% entered the study with metastatic disease, the
most advanced stage of pancreatic cancer.

 

Gemcitabine demonstrated a statistically significant advantage in survival over
5-FU. Gemcitabine subjects had a 5.7 month median survival compared with 4.2
months for 5-FU subjects, a six-week advantage in median survival. Based on this
trial, the six-month probability estimate for survival of subjects treated with
gemcitabine was 46% (30 patients), compared with 29% (19 subjects) for 5-FU
subjects. After one year, the survival probability estimate was 18% (9 subjects)
for gemcitabine, compared with 2% (two subjects) for 5-FU.

 

The most frequent reason for reducing or limiting the dose of gemcitabine was
neutropenia, which was observed in 63% of subjects, (with NCI Common Toxicity
Criteria Severity Grade III/IV in 25% of subjects). Other common adverse effects
in gemcitabine clinical trials included nausea and vomiting (69%), fever (41%),
edema or fluid retention (up to 34%), rash (30%), and flu-like symptoms (19%).
Reversible alopecia was reported in 15% of subjects. About 10% of all subjects
participating in gemcitabine clinical trials discontinued therapy due to side
effects2.

 

TarcevaÒ tablets (erlotinib hydrochloride)

 

In November 2005 the FDA approved erlotinib hydrochloride, a kinase inhibitor
(TarcevaÒ tablets, made by OSI Pharmaceuticals Inc.) in combination with
gemcitabine for the treatment of patients with locally advanced, unresectable or
metastatic pancreatic carcinoma. This combination therapy approval was based
upon a single Phase 3 randomized trial of 569 patients in which the median
overall survival of the erlotinib/gemcitabine group vs. the gemcitabine alone
group was 6.24 months vs. 5.91 months. The 10-day improvement was a
statistically, although not a particularly clinically, significant difference.
The overall response rate (ORR, defined as complete plus partial response) was
8.6% for the erlotinib/gemcitabine combination and 8.0% for gemcitabine alone,
and the median duration of response was 163 days in each group.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  20

 

 

Newly recognized severe adverse reactions observed with the erlotinib
hydrochloride/gemcitabine combination included stroke, syncope, microangiopathic
anemia with thrombocytopenia, myocardial infarction/ischemia, arrhythmias, renal
insufficiency, ileus, pancreatitis and neuropathy. Patients in the
erlotinib/gemcitabine group experienced more frequent rash, diarrhea, infection,
stomatitis, interstitial lung disease and deaths on protocol3.

______________

1 Burris HA, Moore MJ, Andersen J: Improvements in Survival and Clinical Benefit
With Gemcitabine as First-Line Therapy for Patients With Advanced Pancreas
Cancer: A Randomized Trial. J Clin Oncol 1997 15:2403-2413

 

2 Center Watch Gemzar FDA Approval Notice, referenced 30 November 2010 at:
http://www.centerwatch.com/drug-information/fda-approvals/drug-details.aspx?DrugID=108

 

3 Moore, MJ, Goldstein D, Hamm J, et al: Erlotinib Plus Gemcitabine Compared
With Gemcitabine Alone in Patients With Advanced Pancreatic Cancer: A Phase III
Trial of the National Cancer Institute of Canada Clinical Trials Group. J Clin
Oncol 2007, 25:1960-196

 

4 AbraxaneÒ package inserted dated June 2011, referenced on 2 August 2011 at:
http://www.abraxane.com/professional/PDF/Abraxane_Healthcare_Professional_Information.pdf

 

AbraxancÒ (ABI-007, nabÒ-paclitaxel)

 

In April 2010 Abraxis BioScience (subsequently acquired by Celgene Corporation)
announced a median survival of 12.2 months in a 44-patient Phase 1/2 study of
nabÒ-paclitaxel (AbraxaneÒ) 125/mg/M2 in combination with gemcitabine 1000 mg/M2
in patients with advanced pancreatic cancer. The overall response rate was 50%,
compared with response rates on the order of 10% in most other trials in this
population. Neutropenia, sensory neuropathy, fatigue, thrombocytopenia and fatal
sepsis were reported adverse events. Dr. Daniel Von Hoff, Principal
Investigator, noted a 100% tumor marker reduction of at least 20% for CA-19-9, a
surrogate indicator for improved survival in pancreatic cancer. Dr. Von Hoff
presented these study results at the annual American Association for Cancer
Research (AACR) conference in Washington, DC. AbraxaneÒ represents the most
promising agent currently in clinical development for pancreatic cancer.

 

Currently enrolling in a Phase 3 trial with an Overall Survival (OS) primary
endpoint at 133 sites in the USA, Canada, Australia, the Russian Federation, and
the Ukraine, with Dr. Von Hoff as the Principal Investigator, this trial is
expected to complete enrollment in 2013. US FDA approval of nab-paclitaxel is
unlikely prior to 2014.

 

B.

Potential competitive devices/compositions: radiation therapy, intra-arterial
drug delivery devices are potential competitors: no specific devices currently
known to Licensee .

 

C.

Known competitor’s plans, developments, technical achievements: nab-paclitaxel
is in Phase 3 clinical development for pancreatic cancer indication. Currently
FDA approved for the treatment of breast cancer after failure of combination
chemotherapy for metastatic disease or relapse within 6 months of adjuvant
chemotherapy4.

 

D.

Anticipated date of SUN-101 product launch: approximately 6 months following NDA
approval.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  21

 

 

Appendix B - Development Report

 

When appropriate, indicate estimated start date and finish date for activities.

 

Full Development Plan completed and attached to this Agreement; no development
activities to be reported on prior to execution of License Agreement.

 

I. Date Development Plan Initiated and Time Period Covered by this Report.

 

II. Development Report (4-8 paragraphs).

 

A.

Activities completed since last report including the object and parameters of
the development, when initiated, when completed and the results.

B.

Activities currently under investigation, i.e., ongoing activities including
object and parameters of such activities, when initiated, and projected date of
completion.

 

III. Future Development Activities (4-8 paragraphs).

 

A.

Activities to be undertaken before next report including, but not limited to,
the type and object of any studies conducted and their projected starting and
completion dates.

B.

Estimated total development time remaining before a product will be
commercialized.

C.

Date by which manufacture of a commercial product is expected to begin (include
specifics of planned manufacturing of product, i.e., build facility or outsource
manufacturing).

 

IV. Changes to Initial Development Plan (2-4 paragraphs)

 

A.

Reasons for change.

B.

Variables that may cause additional changes.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  22

 

 

V. Items to be Provided if Applicable:

 

A.

Information relating to Licensed Products or Licensed Processes that has become
publicly available, e.g., published articles, competing products, patents, etc.

B.

Development work being performed by third parties, other than Licensee, to
include name of third party, reasons for use of third party, planned future uses
of third parties including reasons why and type of work.

C.

Update of competitive information trends in industry, government compliance (if
applicable) and market plan.

D.

Information and copies of relevant materials evidencing the status of any patent
applications or other protection relating to Licensed Products, or Licensed
Processes or the Licensed Patents.

E.

One year before commencement of manufacturing or commercial production, Licensee
will include in the Development Report specifics of planned manufacturing or
production.

 

PLEASE SEND DEVELOPMENT REPORTS TO:

 

University of Florida Research Foundation, Inc.

Attn: Director

747 SW 2nd Avenue

University of Florida

Post Office Box 115575

Gainesville, FL 32611-5575

Facsimile: 352-392-6600

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  23

 

 

Appendix C - UFRF Royalty Report

 

Company Name:_________________

 

If multiple license agreements are required to generate this product, indicate
what percentage of the royalty is attributable to each agreement.

 

 

UFRF Agreement No.:_____________

 

Percentage:____________

UFRF Agreement No.:_____________

 

Percentage:____________

Period Covered: From: / /2

 

Through: / /2

 

 

 

Prepared By:__________________

 

Date:______________________

Print Preparer Name:

 

 

 

 

 

Preparer Email Address:_____________

 

Phone No.:____________________

 

 

 

Approved By:_______________________________________

 

Date:_______________________

(Requires Executive Officer Signature)

 

 

 

Print Officer Name:

 

If license covers multiple product lines, please prepare a separate spreadsheet
for each product line, and a summary report for all products combined.

 

The spreadsheet should include the following information:

 

·

Product Name

·

Country(ies) of Sales (List each country. If royalties vary by country, provide
a breakdown of specified information for each country.)

·

Unit Sales

·

Gross Sales

·

Less Allowances (On a separate page, please indicate the reasons for returns or
other adjustments if significant.)

·

Net Sales

·

Royalty Rate (Please note any unusual occurrences that affected royalty amounts
during this period. To assist UFRF’s forecasting, please comment on any market
variables that would impact future royalties).

·

Total Royalty due this period

·

Total Royalty paid last period

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

  24

 

 

Appendix D - Milestones

 

Sun BioPharma, Inc. Performance Milestones

 

1.

Completion of pre-IND FDA teleconference — 30 months after the Effective Date of
License Agreement.

2.

Submission of IND for filing by FDA — 36 months after the Effective Date of
License Agreement.

3.

Enrollment of first subject in a Phase 1 clinical trial — 6 months after
Acceptance of IND for Filing by FDA.

4.

Enrollment of first subject in a Phase 2 clinical trial — 18 months after the
completion of the Phase 1 trial study report.

5.

Submission of NDA — 18 months after completion of Pivotal trial(s) study report.

6.

Commercial launch of approved product in U.S. — 6 months after NDA approval.

 

CONFIDENTIAL

[*] = Certain confidential information contained in this document, marked with
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment pursuant to, as
applicable, Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and
Rule 406 of the Securities Act of 1933, as amended.

 

25

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