Exhibit 10.2

 

SPONSORED RESEARCH AGREEMENT NO. UTA12-000950

 

This Sponsored Research Agreement (“Agreement”) is made between The University
of Texas at Austin, Austin, Texas (“University”), an institution of higher
education created by the Constitution and law of the State of Texas under The
University of Texas System (“System”) and Synthetic Biologics, Inc. a Nevada
corporation with its principal place of business at 617 Detroit Street, Suite
100, Ann Arbor, MI 48104 (“Sponsor”).

 

RECITALS

 

A.           Sponsor desires that University perform certain research work
hereinafter described and is willing to advance funds to sponsor such research;

 

B.           Sponsor desires to obtain certain rights to patents and technology
developed during the course of such research with a view to profitable
commercialization of such patents and technology for the Sponsor’s benefit; and

 

C.           University is willing to perform such research and to grant rights
to such patents and technology;

 

NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the University and Sponsor agree as follows:

 

1. EFFECTIVE DATE

 

This Agreement shall be effective as of December 1, 2012 (the “Effective Date”).

 

2. RESEARCH PROGRAM

 

2.1           University will use reasonable efforts to conduct the Research
Program and Proposed Allocation of Research Responsibilities described in
Attachment A (“Research Program”), and will furnish the facilities necessary to
carry out said Research Program. The University’s proposed responsibilities
under the Research Program will be under the direction of Dr. Jennifer Maynard
(“Principal Investigator”), or (his or her) successor as mutually agreed to by
the parties and will be conducted by the Principal Investigator at the
University.

 

 

 

  

2.2           The Research Program shall be performed during the period from the
Effective Date through and including December 31, 2015 (the “Termination Date”).
Sponsor shall have the option of extending the Research Program under mutually
agreeable support terms.

 

2.3           Sponsor understands that University’s primary mission is education
and advancement of knowledge, and consequently the Research Program will be
designed to carry out that mission. As of the execution of this agreement, the
research program objectives and the proposed allocation of research
responsibilities are outlined in Attachment A.  It is understood that the
program directions may change from time to time, and that the outlines in
Attachment A serve only as guidelines that may be changed by mutual agreement of
the Parties. University does not guarantee specific results, and the Research
Program will be conducted only on a reasonable efforts basis.

 

2.4           University will keep accurate scientific records relating to the
Research Program and will make such records available to Sponsor or its
authorized representative throughout the Term of the Agreement during normal
business hours upon reasonable notice.

 

2.5           Sponsor understands that University may be involved in similar
research on behalf of itself and others. University shall be free to continue
such research provided that it is conducted separately from the Research Program
hereinafter defined, and Sponsor shall not gain any rights via this Agreement to
such other research.

 

2.6           University does not guarantee that any patent rights will result
from the Research Program, that the scope of any patent rights obtained will
cover Sponsor’s commercial interests, or that any such patent rights will be
free of dominance by other patents, including those based upon inventions made
by other inventors in The University of Texas System independent of the Research
Program.

 

3. FIXED PRICE

 

3.1           For the performance by University of its obligations under this
Agreement, Sponsor will pay the University the fixed fees set forth below during
the term of the Agreement to conduct the Research Program. Sponsor authorizes a
total fixed price of $303,287 for Year 1. Beginning with Year 2, each year of
the Research Program, with the values stipulated below, shall be subsequently
authorized by Sponsor, in its sole discretion, via a separate written amendment
to this Agreement. Notwithstanding anything to the contrary herein, University’s
efforts shall only be provided within the level of payments made under this
Agreement and University shall have no obligation to continue performance of the
Research Program beyond the payments actually received. Payments shall be made
as follows, subject to the terms of Section 10.5 of this Agreement:

 

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a)          Year 1: $303,287 in equal quarterly installments, the first
installment within 30 days following Sponsor’s execution of the Agreement and
each subsequent quarterly installment on or prior to April 1, 2013, July 1,
2013, October 1, 2013;

 

b)          Year 2: $316,438 in equal quarterly installments , the first
installment on January 2, , 2014 and each subsequent quarterly installment on or
prior to April 1, 2014, July 1, 2014 and October 1, 2014;

 

c)        Year 3: $328,758 in equal quarterly installments , the first
installment on January 2, 2015 and each subsequent quarterly installment on or
prior April 1, 2015, July 1, 2015 and October 1, 2015.

 

Payments should be made within 30 days of the receipt of an invoice and payable
to The University of Texas at Austin, make reference to the Principal
Investigator, Agreement number and title of the Research Program funded under
this Agreement, and submitted to the address in Article 3.4.

 

3.2           University shall maintain all Research Program funds in a separate
account and shall expend such funds for wages, supplies, equipment, travel, and
other operational expenses in connection with the Research Program.

 

3.3           University shall retain title to all equipment purchased and/or
fabricated by it with funds provided by Sponsor under this Agreement.

 

3.4

Checks shall be made payable to University and sent to:     Invoices shall be
sent to Sponsor at: The University of Texas at Austin       Office of Accounting
– SPAA     Synthetic Biologics, Inc. P.O. Box 7159     617 Detroit Street, Suite
100 Austin, Texas 78713-7159     Ann Arbor, Michigna 48104nd (512) 471-6231    
Attn: C. Evan Ballantyne, CFO Tax ID #:  746000203     Phone: 734-332-7800Fax:
734-332-7878

 

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4. CONSULTATION AND REPORTS

 

4.1           Sponsor’s designated representative (“Designated Representative”)
for consultation and communications with the Principal Investigator shall be
Michael Kaleko, M.D., Ph.D. or such other person as Sponsor may from time to
time designate in writing to University and the Principal Investigator.

 

4.2           During the term of the Agreement, Sponsor’s representatives may
consult informally with University’s representatives regarding the project, both
personally and by telephone. Access to work carried on in University
laboratories in the course of these investigations shall be entirely under the
control of University personnel but shall be made available on a reasonable
basis.

 

4.3           The Principal Investigator will make up to 2 in person oral
report(s) semi-annually each year as requested by Sponsor’s Designated
Representative. Semi-annually, the Principal Investigator and Sponsor’s
Designated Representative shall review and suggest reasonable changes to the
research plan based upon the outcome of research results and anticipated
priorities for the ongoing research objectives. The Principal Investigator shall
also submit a comprehensive final report within ninety (90) days of the end of
each anniversary and termination of the Agreement which shall consist of a
report of all activities undertaken and accomplishments achieved through the
Research Program, in a 4-page format that contains a summary and discussion of
each objective, progress, challenges and plans.

 

5. PUBLICITY

 

Neither party shall make reference to the other in a press release or any other
written statement in connection with work performed under this Agreement, if it
is intended for use in the public media without the other party’s prior consent,
except as required by the Texas Public Information Act or other law or
regulation including S.E.C. regulations, NYSE MKT rules and regulations or as
otherwise mutually agreed to in advance in writing by University and Sponsor.
University, however, shall have the right to acknowledge Sponsor’s support of
the investigations under this Agreement in scientific or academic publications
and other scientific or academic communications, without Sponsor’s prior
approval. In any statements, the scope and nature of participation shall be
described accurately and appropriately.

 

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6. PUBLICATION AND ACADEMIC RIGHTS

 

6.1           University and the Principal Investigator have the right to
publicly present, publish or otherwise publicly disclose information gained in
the course of this Agreement, except for Sponsor’s confidential information
(“Confidential Information”) as may be furnished to University pursuant to
Article 12 of this Agreement. In order to avoid loss of patent rights as a
result of premature public disclosure of patentable information, University will
submit any prepublication materials, whether written or oral, to Sponsor for
review and comment thirty (30) days in advance of its planned submission for
publication. If the University or Principal Investigator wishes to make an oral
presentation, it will provide the Sponsor with a summary of such presentation at
least thirty (30) calendar days before such oral presentation. Sponsor shall
notify University within ten (10) days of receipt of such materials whether it,
in good faith, determines that patentable subject matter or Confidential
Information may be disclosed. If it is determined by the Sponsor that patent
applications should be filed in advance of the proposed publication, the
publishing party shall delay its publication or presentation for a period not to
exceed sixty (60) calendar days from the Sponsor’s receipt of the proposed
publication or presentation to allow time for the filing of patent applications
covering patentable subject matter. The University shall proceed to file such
patent applications in a timely manner that shall be prior to the expiration of
the sixty (60) day period. In the event that the delay needed to complete the
filing of any necessary patent application will exceed the sixty (60) day
period, the Sponsor will discuss the need for obtaining an extension of the
publication delay beyond the sixty (60) day period. If it is determined in good
faith by a party that Confidential Information or proprietary information of
such party is being disclosed, the parties shall consult in good faith to arrive
at an agreement on mutually acceptable modifications to the proposed publication
or presentation to avoid such disclosure. University shall have final authority
to determine the scope and content of any publications, subject to the preceding
review process.

 

6.2           It is understood that the University investigators may discuss the
research being performed under this Agreement with other investigators but shall
not reveal information which is Sponsor’s Confidential Information, as may be
furnished to University pursuant to Article 12 of this Agreement. In the event
any joint inventions result, University shall grant to Sponsor the rights
outlined in Article 7 to this Agreement, to the extent these are not in conflict
with obligations to another party as a result of the involvement of the other
investigator(s). In this latter case, University shall, in good faith, exercise
reasonable efforts to enable Sponsor to obtain rights to the joint invention.

 

7. PATENTS, COPYRIGHTS AND TECHNOLOGY RIGHTS

 

7.1           New Inventions under Agreement Within the Field of Patent &
Technology License Agreement. All inventions conceived and reduced to practice
in the performance of the Research Program in the Field as defined by Section
20.1(b) of the PLA (as hereinafter defined) shall be subject to that certain
Patent & Technology License Agreement No. PM1300101 (“PLA”), between the Board
of Regents of The University of Texas System and Sponsor.

 

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7.2    New Inventions under Agreement Outside the Field of Patent & Technology
License Agreement. Title to all inventions conceived and reduced to practice
solely by University in the performance of the research performed hereunder
shall reside in University, title to all inventions conceived and reduced to
practice solely by Sponsor shall reside in Sponsor, and title to all inventions
conceived and reduced to practice jointly by Sponsor and University shall reside
jointly in Sponsor and University. University agrees to grant to Sponsor an
option to negotiate, a royalty-bearing license, to make, use, or sell under any
invention made and conceived during the term of this Agreement directly
resulting from the performance of research hereunder that is outside the Field
as defined by Section 20.1(b) of the PLA to the extent that University is
legally able to do so. University reserves for itself a royalty-free,
irrevocable license to make and use such University inventions for its own
research and educational purposes. If such invention is made resulting from the
research, the Principal Investigator shall submit an invention disclosure
(http://www.otc.utexas.edu/InventorForms.jsp) to University's Office of
Technology Commercialization ("OTC"). The OTC will then forward the invention
disclosure to Sponsor. Sponsor shall then have thirty (30) days from receipt of
such disclosure of any invention to notify University of its desire to enter
into such a license agreement, and a license agreement shall be negotiated in
good faith within a period not to exceed sixty (60) days from Sponsor's
notification to University of its desire to enter into a license agreement, or
such period of time as the parties shall mutually agree. In the event that
Sponsor and University fail to enter into an agreement during that period of
time, then the rights to such inventions shall be disposed of in accordance with
University policies, with no obligation to Sponsor. Sponsor agrees to pay a
reasonable royalty for the use of the invention to be negotiated in good faith.
Until any such invention has been presented as set forth above, University shall
not offer rights to that invention to any third party.

 

In the event Sponsor elects to exercise its option as to any invention, in
accordance with the procedures detailed above, it shall be obligated to pay all
patent expenses for such invention. This shall include, but not be limited to,
the cost of any prior activities investigating patentability of said invention
before exercise of the option, such as search and opinion for patentability,
that may have been performed by University pursuant to its arrival at a judgment
of commercially exploitable status. It is contemplated that, in the majority of
instances, Sponsor will be asked to determine whether it will exercise its
option prior to the filing of the first patent application.

 

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8. LIABILITY

 

8.1           Sponsor agrees to indemnify and hold harmless System, University,
their Regents, officers, agents and employees from any liability, loss or damage
they may suffer as a result of claims, demands, costs or judgments against them
arising out of the activities to be carried out pursuant to the obligations of
this Agreement, including but not limited to the use by Sponsor of the results
obtained from the activities performed by University under this Agreement;
provided, however, that the following is excluded from Sponsor’s obligation to
indemnify and hold harmless:

 

(a)the negligent failure of University to substantially comply with any
applicable FDA or other governmental requirements; or

 

(b)the negligence or willful malfeasance of any Regent, officer, agent or
employee of University or System.

  

8.2           Both parties agree that upon receipt of a notice of claim or
action arising out of the activities to be carried out pursuant to the project
described in Attachment A, the party receiving such notice will notify the other
party promptly. Sponsor agrees, at its own expense, to provide attorneys to
defend against any actions brought or filed against University, System, their
Regents, officers, agents and/or employees with respect to the subject of the
indemnity contained herein, whether such claims or actions are rightfully
brought or filed; and subject to the statutory duty of the Texas Attorney
General, University agrees to cooperate with Sponsor in the defense of such
claim or action.

 

9. INDEPENDENT CONTRACTOR

 

For the purposes of this Agreement and all services to be provided hereunder,
the parties shall be, and shall be deemed to be, independent contractors and not
agents or employees of the other party. Neither party shall have authority to
make any statements, representations or commitments of any kind, or to take any
action which shall be binding on the other party, except as may be expressly
provided for herein or authorized in writing.

 

10. TERM AND TERMINATION

 

10.1         This Agreement shall commence on the Effective Date and extend
until the end of the Research Program as described hereinabove, unless sooner
terminated in accordance with the provisions of this Article 10.

 

10.2         This Agreement may be terminated by the written agreement of both
parties.

 

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10.3         In the event that either party shall be in default of its material
obligations under this Agreement and shall fail to remedy such default within
sixty (60) days after receipt of written notice thereof, this Agreement may be
terminated at the option of the party not in default upon expiration of the
sixty (60) day period.

 

10.4         This Agreement shall terminate automatically and immediately if
Sponsor becomes bankrupt or insolvent and/or enters receivership or trusteeship,
whether by voluntary act of Sponsor or otherwise.

 

10.5         The Sponsor shall have the right, in its sole discretion, to
terminate this Agreement, effective any time from and after the one year
anniversary date of the execution of this Agreement, upon no less than ninety
days prior written notice which notice may be given at any time commencing
ninety days prior to such one year anniversary.

 

10.5         Termination or cancellation of this Agreement shall not affect the
rights and obligations of the parties accrued prior to termination. Upon
termination by Sponsor at any time prior to December 31, 2014, other than a
termination by Sponsor under Section 10.3 due to a breach by the University ,
the total amount to be paid by Sponsor to University under this Agreement
including amounts payable under Section 3.1 of this Agreement shall be limited
to the payment by Sponsor of all reasonable expenses incurred by University
prior to such termination date and all non-cancellable expenses committed to be
expended by University prior to the effective termination date, including
salaries for appointees for the lesser of (a) the remainder of their appointment
in the case of salaries or (b) December 31, 2014 ; provided, however that in no
event shall Sponsor be responsible in any year for the payment of any amount in
excess of the amounts set forth in clauses (a) and (b) in Section 3.1 .
University shall use its best effort to mitigate any expenses to be incurred by
Sponsor upon a termination. Upon termination by Sponsor effective at any time
after December 31, 2014 or termination by Sponsor under Section 10.3 due to a
breach by the University, the total amount to be paid by Sponsor to University
under this Agreement including amounts payable under Section 3.1 of this
Agreement shall be limited to the payment by Sponsor of all reasonable expenses
incurred by University prior to the effective date of such termination for
services performed by the University prior to the effective date provided that
such amount does not exceed the amount set forth in clause (c) of Section 3.1
and Sponsor shall have no obligation for payment of any expenses incurred by
University after the effective date of such termination or incurred by
University or committed by University to be expended prior to the effective date
of such termination for services to be performed after the effective date of
such termination.

 

10.6         Any provisions of this Agreement which by their nature extend
beyond termination shall survive such termination.

 

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11. ATTACHMENT A

 

Attachment A is incorporated and made a part of this Agreement for all purposes.

 

12. CONFIDENTIALITY

 

12.1 The Parties may wish, from time to time, in connection with work
contemplated under this Agreement, to disclose Confidential Information to each
other. Each party will use reasonable efforts to prevent the disclosure of any
of the other party’s Confidential Information to third parties for a period of
five (5) years from the Effective Date of this Agreement, provided that the
recipient party’s obligation hereunder shall not apply to Information that:

 

(1)         is not disclosed in writing and marked with an appropriate
confidentiality legend or, if disclosed orally or visually, is not identified as
confidential at the time of oral or visual disclosure and subsequently reduced
to writing and labeled with an appropriate confidentiality legend, with a copy
provided to the recipient party, within thirty (30) days of disclosure;

 

(2)         is already in the recipient party’s possession at the time of
disclosure thereof;

 

(3)         is or later becomes part of the public domain through no fault of
the recipient party;

 

(4)         is received from a third party having no obligations of
confidentiality to the disclosing party;

 

(5)         is independently developed by the recipient party; or

 

(6)         is required by law or regulation to be disclosed.

 

12.2         In the event that information is required to be disclosed pursuant
to subsection (6), the party required to make disclosure shall notify the other
to allow that party to assert whatever exclusions or exemptions may be available
to it under such law or regulation.

 

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13. GENERAL

 

13.1         This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that subject to the
approval of University, which may not be unreasonably withheld, Sponsor may
assign this Agreement to any purchaser or transferee of all or substantially all
of Sponsor’s assets or stock upon prior written notice to University; provided,
however, that such assignee shall have expressly assumed all of the obligations
and liabilities of Sponsor under this Agreement, and provided, further that,
University may assign its right to receive payments hereunder.

 

13.2         This Agreement constitutes the entire and only agreement between
the parties relating to the Research Program, and all prior negotiations,
representations, agreements and understandings are superseded hereby. No
agreements altering or supplementing the terms hereof may be made except by
means of a written document signed by the duly authorized representatives of the
parties. Terms and conditions which may be set forth (front, reverse, attached
or incorporated) in any purchase order issued by Sponsor in connection with this
Agreement shall not apply, except for informational billing purposes; i.e.,
reference to purchase order number, address for submission of invoices, or other
invoicing items of a similar informational nature.

 

13.3         Any notice required by this Agreement by Articles 7, 8 or 10 shall
be given prepaid, first class, certified mail, return receipt requested,
addressed in the case of University to:

 

The University of Texas System, O.G.C.

201 West 7th Street

Austin, Texas 78701

Attention: Intellectual Property Section

Phone: (512) 499-4462

FAX: (512) 499-4523

 

Vice President for Research

The University of Texas at Austin

P.O. Box 7996, Mail Code G1400

Austin, Texas 78713

Attention: Technology Licensing Specialist

Phone: (512) 471-2995

FAX: (512) 475-6894

 

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or in the case of the Sponsor to:

Synthetic Biologics, Inc.

617 Detroit Street, Suite 100

Ann Arbor, MI 48104

Attn: C. Evan Ballantyne , CFO

Phone: 734-332-7800

FAX: 734-332-7878

E-Mail: eballantyne@syntheticbiologics.com

 

or at such other addresses as may be given from time to time in accordance with
the terms of this notice provision.

 

Notices and other communications regarding the day-to-day administration and
operations of this Agreement shall be mailed (or otherwise delivered), addressed
in the case of University to:

 

The University of Texas at Austin

Office of Industry Engagement

North Office Building-A, Suite 5.2

Post Office Box 7727, MC A9300

Austin, Texas 78713-7727

Attention: Bill Catlett, Director

Phone: (512) 471-3866

FAX: (512) 471-7839

E-mail: industry@austin.utexas.edu

 

with a copy to:

Dr. Jennifer Maynard

The University of Texas at Austin

Department of Chemical Engineering

1 University Station, C0400

Austin, Texas 78712

Phone: 512.471.9188

E-Mail: maynard@che.utexas.edu

 

or in the case of Sponsor to:

Synthetic Biologics, Inc.

155 Gibbs Street, Suite 421Rockville, Maryland 20850

 

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Attn: Michael Kaleko, M.D., Ph.D.

Phone: 301-658-6850

FAX: 301-658-6865

E-Mail: mkaleko@syntheticbiologics.com

 

13.4         This Agreement shall be governed by, construed, and enforced in
accordance with the internal laws of the State of Texas.

 

13.5         Sponsor acknowledges that this Agreement and the performance
thereof are subject to compliance with any and all applicable United States
laws, regulations, or orders, including those that may relate to the export of
technical data, and Sponsor agrees to comply with all such laws, regulations and
orders, including, if applicable, all requirements of the International Traffic
in Arms Regulations and/or the Export Administration Act, as may be amended.
Sponsor further agrees that if the export laws are applicable, it will not
disclose or re-export any technical data received under this Agreement to any
countries for which the United States government requires an export license or
other supporting documentation at the time of export or transfer, unless Sponsor
has obtained prior written authorization from the U.S. Office of Export Control
or other authority responsible for such matters.

 

13.6 If any provision contained in this Agreement is held invalid, unenforceable
or contrary to laws then the validity of the remaining provisions of this
Agreement shall remain in full force. In such instance, Parties shall use their
best efforts to replace the invalid provision(s) with legally valid provisions
having an economic effect as close as possible to the original intent of
Parties.

 

IN WITNESS WHEREOF, the parties have caused this Agreement No. UTA12-000950 to
be executed by their duly authorized representatives.

 

THE UNIVERSITY OF TEXAS AT AUSTIN   SPONSOR           By: /s/ Bill Catlett   By:
/s/ Jeffrey Riley   Bill Catlett     Jeffrey Riley           Title:
Director-Office of Industry Engagement   Title: Chief Executive Officer        
  Date: 12.19.2012   Date: 12/19/12

 

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ATTACHMENT A – RESEARCH PROGRAM AND

PROPOSED ALLOCATION OF RESEARCH RESPONSIBILITIES

 

To be determined and separately provided by the University at a later date.

 

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