Exhibit 10.15

PUBLIC HEALTH SERVICE

PATENT LICENSE AGREEMENT—EXCLUSIVE

COVER PAGE

For PHS internal use only:

    Patent License Number:       L-180-97/0       Serial Number(s) of Licensed
Patent(s) and/or Patent Application(s):
USSN 08/367,841 08/520,373; 07/894,215 and U.S. Patent 5,840,686       Licensee:
      Gen Vec, Inc.       Cooperative Research and Development Agreement
(CRADA) Number (if applicable):       None       Additional Remarks:      
Subject to L-221-94/2 Interinstitutional Agreement with the University of
Southern       California       Public Benefit(s):       Licensee has agreed to
set up an indigent access program or include Licensed Products in an existing
indigent access program

This Patent License Agreement, hereinafter referred to as the AGREEMENT consists
of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix A (List of
Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan). The Parties to this
AGREEMENT are:

  1)   The National Institutes of Health (“NIH”), the Centers for Disease
Control and Prevention (“CDC”), or the Food and Drug Administration (“FDA”),
hereinafter singly or collectively referred to as PHS, agencies of the United
States Public Health Service within the Department of Health and Human Services
(DHHS); and     2)   The person, corporation, or institution identified above
and/or on the Signature Page, having offices at the address indicated on the
Signature Page, and its AFFILIATES as defined herein in Paragraph 2.15,
hereinafter referred to as LICENSEE.

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      [*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS. OMITTED TEXT IS INDICATED BY A “*”

 

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PHS PATENT LICENSE AGREEMENT-EXCLUSIVE

PHS and LICENSEE agree as follows:

1   BACKGROUND

  1.01   In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.     1.02  
By assignment of rights from PHS employees and other inventors, DHHS, on behalf
of the United States Government, owns intellectual property rights claimed in
any United States and/or foreign patent applications or patents corresponding to
the assigned inventions. DHHS also owns any tangible embodiments of these
inventions actually reduced to practice by PHS.     1.03   The Secretary of DHHS
has delegated to PHS the authority to enter into this Agreement for the
licensing of rights to these inventions.     1.04   PHS desires to transfer
these inventions to the private sector through commercialization licenses to
facilitate the commercial development of products and processes for public use
and benefit.     1.05   LICENSEE desires to acquire commercialization rights to
certain of these inventions in order to develop processes, methods, and/or
marketable products for public use and benefit.

2.   DEFINITIONS

  2.01   “BENCHMARKS” mean the performance milestones that are set forth in
Appendix E.     2.02   “COMMERCIAL DEVELOPMENT PLAN” means the written
commercialization plan attached as Appendix F.     2.03   “FIRST COMMERCIAL
SALE” means the initial transfer by or on behalf of LICENSEE or its sublicensees
of LICENSED PRODUCTS or the initial practice of a LICENSED PROCESS by or on
behalf of Licensee or its sublicensees in exchange for cash or some equivalent
to which value can be assigned for the purpose of determining NET SALES.    
2.04   “GOVERNMENT” means the Government of the United States of America.    
2.05   “LICENSED FIELDS OF USE” means the fields of use identified in
Appendix B.     2.06   “LICENSED PATENT RIGHTS” shall mean:

  a) Patent applications (including provisional patent applications and PCT
patent applications) and/or patents listed in Appendix A, all divisions and
continuations of these applications, all patents issuing from such applications,
divisions, and continuations, and any reissues, reexaminations, and extensions
of all such patents;

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  b) to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these continuations-in-part; iii)
all patents issuing from such continuations-in-part, divisions, and
continuations; iv) priority patent application(s) of a) above; and v) any
reissues, reexaminations, AND EXTENSIONS OF ALL SUCH PATENTS,     c) to the
extent that the following contain one or more claims directed to the invention
or inventions disclosed in a) above: all counterpart foreign and U.S. patent
applications and patents to a) and b) above, including those listed in
Appendix A.

      LICENSED PATENT RIGHTS shall not include b) or c) above to the extent that
they contain one or more claims directed to new matter which is not the subject
matter disclosed in a) above.     2.07   “LICENSED PROCESS(ES)” means processes
which, in the course of being practiced would, in the absence of this AGREEMENT,
infringe one or more claims of the Licensed Patent Rights that have not been
held invalid or unenforceable by an unappealed or unappealable judgment of a
court of competent jurisdiction.     2.08   “LICENSED PRODUCT(S)” means tangible
materials which, in the course of manufacture, use, offer to sell, sale, or
importation would, in the absence of this AGREEMENT, infringe one or more claims
of the LICENSED PATENT RIGHTS that have not been held invalid or unenforceable
by an unappealed or unappealable judgment of a court of competent jurisdiction.
    2.09   “LICENSED TERRITORY” means the geographical area identified in
Appendix B.     2.10   “NET SALES” means the total gross receipts for sales of
LICENSED PRODUCTS or practice of LICENSED PROCESSES by or on behalf of LICENSEE
or its sublicensees, and from leasing, renting, or otherwise making LICENSED
PRODUCTS available to others without sale or other dispositions, whether
invoiced or not, less returns and allowances, packing costs, insurance costs,
freight out, taxes or excise duties imposed on the transaction (if separately
invoiced), and wholesaler and cash discounts in amounts customary in the trade
to the extent actually granted. No deductions shall be made for commissions paid
to individuals, whether they be with independent sales agencies or regularly
employed by LICENSEE, or sublicensees, and on its payroll, or for the cost of
collections.     2.11   “PRACTICAL APPLICATION” means to manufacture in the case
of a composition or product, to practice in the case of a process or method, or
to operate in the case of a machine or system; and in each case, under such
conditions as to establish that the invention is being utilized and that its
benefits are to the extent permitted by law or GOVERNMENT regulations available
to the public on reasonable terms.     2.12   “RESEARCH LICENSE” means a
nontransferable, nonexclusive license to make and to use the LICENSED PRODUCTS
or LICENSED PROCESSES as defined by the LICENSED PATENT RIGHTS for purposes of
research and not for purposes of commercial manufacture or distribution or in
lieu of purchase.

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3.   GRANT OF RIGHTS

  3.01   PHS hereby grants and LICENSEE accepts, subject to the terms and
conditions of this Agreement, an exclusive license under the LICENSED PATENT
RIGHTS in the LICENSED TERRITORY to make and have made, to use and have used, to
sell and have sold, to offer to sell, and to import any LICENSED PRODUCTS in the
LICENSED FIELDS OF USE and to practice and have practiced any LICENSED PROCESSES
in the LICENSED FIELDS OF USE.     3.02   This AGREEMENT confers no license or
rights by implication, estoppel, or otherwise under any patent applications or
patents of PHS other than LICENSED PATENT RIGHTS regardless of whether such
patents are dominant or subordinate to LICENSED PATENT RIGHTS.

4.   SUBLICENSING

  4.01   Upon written approval by PHS, which approval will not be unreasonably
withheld, LICENSEE may enter into sublicensing agreements under the LICENSED
PATENT RIGHTS.     4.02   LICENSEE agrees that any sublicenses granted by it
shall provide that the obligations to PHS of Paragraphs 5.01-5.04, 8.01, 10.01,
10.02, 12.05, and 13.07-13.09 of this AGREEMENT shall be binding upon the
sublicensee as if it were a party to this AGREEMENT. LICENSEE further agrees to
attach copies of these Paragraphs to all sublicense agreements.     4.03   Any
sublicenses granted by LICENSEE shall provide for the termination of the
sublicense, or the conversion to a license directly between such sublicensees
and PHS, at the option of the sublicensee, upon termination of this AGREEMENT
under Article 13. Such conversion is subject to PHS approval and contingent upon
acceptance by the sublicensee of the remaining provisions of this AGREEMENT.    
4.04   LICENSEE agrees to forward to PHS a copy of each fully executed
sublicense agreement postmarked within thirty (30) days of the execution of such
agreement. To the extent permitted by law, PHS agrees to maintain each such
sublicense agreement in confidence.

5.   STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

  5.01   (a) PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice of all
inventions licensed under the LICENSED PATENT RIGHTS throughout the world by or
on behalf of the Government and on behalf of any foreign government or
international organization pursuant to any existing or future treaty or
agreement to which the Government is a signatory. Prior to the FIRST COMMERCIAL
SALE, LICENSEE agrees to provide PHS reasonable quantities of LICENSED PRODUCTS
or materials made through the LICENSED PROCESSES for PHS research use.

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  (b) In the event that Licensed Patent Rights are Subject Inventions made under
a Cooperative Research and Development Agreement (CRADA), LICENSEE grants to the
Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive,
nontransferable, irrevocable, paid-up license to practice LICENSED PATENT RIGHTS
OR HAVE LICENSED PATENT RIGHTS practiced throughout the world by or on behalf of
the Government. In the exercise of such license, the Government shall not
publicly disclose trade secrets or commercial or financial information that is
privileged or confidential within the meaning of 5 U.S.C. 552(b)(4) or which
would be considered as such if it had been obtained from a non-Federal party.
Prior to the FIRST COMMERCIAL SALE, LICENSEE agrees to provide PHS reasonable
quantities of LICENSED PRODUCTS or materials made through the LICENSED PROCESSES
for PHS research use.

  5.02   LICENSEE agrees that products used or sold in the United States
embodying LICENSED PRODUCTS or produced through use of LICENSED PROCESSES shall
be manufactured substantially in the United States, unless a written waiver is
obtained in advance from PHS.     5.03   LICENSEE acknowledges that PHS may
enter into future Cooperative Research and Development Agreements (CRADAs) under
the Federal Technology Transfer Act of 1986 that relate to the subject matter of
this AGREEMENT. LICENSEE agrees not to unreasonably deny requests for a RESEARCH
LICENSE from such future collaborators with PHS when acquiring such rights is
necessary in order to make a Cooperative Research and Development Agreement
(CRADA) project feasible. LICENSEE may request an opportunity to join as a party
to the proposed Cooperative Research and Development Agreement (CRADA).

5.04   (a) In addition to the reserved license of Paragraph 5.01 above, PHS
reserves the right to grant nonexclusive Research Licenses directly or to
require LICENSEE to grant nonexclusive Research Licenses on reasonable terms.
The purpose of this Research License is to encourage basic research, whether
conducted at an academic or corporate facility. In order to safeguard the
LICENSED PATENT RIGHTS, however, PHS shall consult with LICENSEE before granting
to commercial entities a Research License or providing to them research samples
of materials made through the LICENSED PROCESSES.

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  (b)   In exceptional circumstances, and in the event that LICENSED PATENT
RIGHTS are Subject Inventions made under a Cooperative Research and Development
Agreement (CRADA), the Government, pursuant to 15 U.S.C. 3710a(b)(1)(B), retains
the right to require the LICENSEE to grant to a responsible applicant a
nonexclusive, partially exclusive, or exclusive sublicense to use LICENSED
PATENT RIGHTS IN LICENSEE’S field of use on terms that are reasonable under the
circumstances; or if Licensee fails to grant such a license, the Government
retains the right to grant the license itself. The exercise of such rights by
the Government shall only be in exceptional circumstances and only if the
Government determines (i) the action is necessary to meet health or safety needs
that are not reasonably satisfied by LICENSEE; (ii) the action is necessary to
meet requirements for public use specified by Federal regulations, and such
requirements are not reasonably satisfied by the Licensee; or (iii) the Licensee
has failed to comply with an agreement containing provisions described in 15
U.S.C. 3710a(c)(4)(B). The determination made by the Government under this
Article is subject to administrative appeal and judicial review under 35 U.S.C.
203(2).

6.   ROYALTIES AND REIMBURSEMENT

  6.01   LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license
issue royalty as set forth in Appendix C within thirty (30) days from the date
that this AGREEMENT becomes effective.     6.02   LICENSEE agrees to pay to PHS
a nonrefundable minimum annual royalty as set forth in Appendix C. The minimum
annual royalty is due and payable on January 1 of each calendar year and may be
credited against any earned royalties due for sales made in that year. The
minimum annual royalty due for the first calendar year of this AGREEMENT may be
prorated according to the fraction of the calendar year remaining between the
effective date of this AGREEMENT and the next subsequent January 1.     6.03  
LICENSEE agrees to pay PHS earned royalties as set forth in Appendix C.     6.04
  LICENSEE agrees to pay PHS benchmark royalties as set forth in Appendix C.    
6.05   LICENSEE agrees to pay PHS sublicensing royalties as set forth in
Appendix C.     6.06   A patent or patent application licensed under this
AGREEMENT shall cease to fall within the LICENSED PATENT RIGHTS for the purpose
of computing earned royalty payments in any given country on the earliest of the
dates that a) the application has been abandoned and not continued, b) the
patent expires or irrevocably lapses, or c) the claim has been held to be
invalid or unenforceable by an unappealed or unappealable decision of a court of
competent jurisdiction or administrative agency.     6.07   No multiple
royalties shall be payable because any LICENSED PRODUCTS OR LICENSED PROCESSES
are covered by more than one of the LICENSED PATENT RIGHTS.     6.08   On sales
of LICENSED PRODUCTS by LICENSEE to sublicensees or on sales made in other than
an arm’s-length transaction, the value of the NET SALES attributed under this
Article 6 to such

 

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      a transaction shall be that which would have been received in an
arm’s-length transaction, based on sales of like quantity and quality products
on or about the time of such transaction.

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  6.09   With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all patent applications and patents included
within the LICENSED PATENT RIGHTS incurred by PHS prior to the effective date of
this AGREEMENT, LICENSEE shall pay to PHS, as an additional royalty, within
sixty (60) days of PHS’s submission of a statement and request for payment to
LICENSEE, an amount equivalent to such patent expenses previously incurred by
PHS.     6.10   With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all patent applications and patents included
within the LICENSED PATENT RIGHTS incurred by PHS on or after the effective date
of this AGREEMENT, PHS, at its sole option, may require LICENSEE: (a) to pay PHS
on an annual basis, within sixty (60) days of PHS’s submission of a statement
and request for payment, a royalty amount equivalent to all such patent expenses
incurred during the previous calendar year(s); or         (b) to pay such
expenses directly to the law firm employed by PHS to handle such functions.
However, in such event, PHS and not LICENSEE shall be the client of such law
firm. In limited circumstances, LICENSEE may be given the right to assume
responsibility for the preparation, filing, prosecution, or maintenance of any
patent application or patent included with the LICENSED PATENT RIGHTS. In that
event, LICENSEE shall directly pay the attorneys or agents engaged to prepare,
file, prosecute, or maintain such patent applications or patents and shall
provide to PHS copies of each invoice associated with such services as well as
documentation that such invoices have been paid.     6.11   LICENSEE may elect
to surrender its rights in any country of the LICENSED TERRITORY under any
LICENSED PATENT RIGHTS upon ninety (90) days written notice to PHS and owe no
payment obligation under Article 6.10 for patent-related expenses incurred in
that country after ninety (90) days of the effective date of such written
notice.

7.   PATENT FILING, PROSECUTION, AND MAINTENANCE

  7.01   Except as otherwise provided in this Article 7, PHS agrees to take
responsibility for, but to consult with, the LICENSEE in the preparation,
filing, prosecution, and maintenance of any and all patent applications or
patents included in the LICENSED PATENT RIGHTS and shall furnish copies of
relevant patent-related documents to LICENSEE.     7.02   Upon PHS’s written
request, LICENSEE shall assume the responsibility for the preparation, filing,
prosecution, and maintenance of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS and shall on an ongoing basis promptly
furnish copies of all patent-related documents to PHS. In such event, LICENSEE
shall, subject to the prior approval of PHS, select registered patent attorneys
or patent agents to provide such services on behalf of Licensee and PHS. PHS
shall provide appropriate powers of attorney and other documents necessary to
undertake such actions to the patent attorneys or patent agents providing such
services. LICENSEE and its attorneys or agents shall consult with PHS in all
aspects of the preparation, filing, prosecution and maintenance of patent
applications and patents included within the LICENSED PATENT RIGHTS and shall
provide PHS sufficient opportunity to comment on any document that LICENSEE
intends to file or to cause to be filed with the relevant intellectual property
or patent office.

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  7.03   At any time, PHS may provide LICENSEE with written notice that PHS
wishes to assume control of the preparation, filing, prosecution, and
maintenance of any and all patent applications or patents included in the
LICENSED PATENT RIGHTS. If PHS elects to assume such responsibilities, LICENSEE
agrees to cooperate fully with PHS, its attorneys, and agents in the
preparation, filing, prosecution, and maintenance of any and all patent
applications or patents included in the LICENSED PATENT RIGHTS and to provide
PHS with complete copies of any and all documents or other materials that PHS
deems necessary to undertake such responsibilities. LICENSEE shall be
responsible for all costs associated with transferring patent prosecution
responsibilities to an attorney or agent of PHS’s choice.     7.04   Each party
shall promptly inform the other as to all matters that come to its attention
that may affect the preparation, filing, prosecution, or maintenance of the
LICENSED PATENT RIGHTS and permit each other to provide comments and suggestions
with respect to the preparation, filing, prosecution, and maintenance of
LICENSED PATENT RIGHTS, which comments and suggestions shall be considered by
the other party.

8.   RECORD KEEPING

  8.01   LICENSEE agrees to keep accurate and correct records of LICENSED
PRODUCTS made, used, sold, or imported and LICENSED PROCESSES practiced under
this AGREEMENT appropriate to determine the amount of royalties due PHS. Such
records shall be retained for at least five (5) years following a given
reporting period and shall be available during normal business hours for
inspection at the expense of PHS by an accountant or other designated auditor
selected by PHS for the sole purpose of verifying reports and payments
hereunder. The accountant or auditor shall only disclose to PHS information
relating to the accuracy of reports and payments made under this AGREEMENT. If
an inspection shows an underreporting or underpayment in excess of five percent
(5%) for any twelve (12) month period, then LICENSEE shall reimburse PHS for the
cost of the inspection at the time LICENSEE pays the unreported royalties,
including any late charges as required by Paragraph 9.08 of this AGREEMENT. All
payments required under this Paragraph shall be due within thirty (30) days of
the date PHS provides LICENSEE notice of the payment due.     8.02   LICENSEE
agrees to have an audit of sales and royalties conducted by an independent
auditor at least every two (2) years if annual sales of the LICENSED PRODUCT or
LICENSED PROCESSES are over two (2) million dollars. The audit shall address, at
a minimum, the amount of gross sales by or on behalf of LICENSEE during the
audit period, terms of the license as to percentage or fixed royalty to be
remitted to the GOVERNMENT, the amount of royalty funds owed to the GOVERNMENT
under this AGREEMENT, and whether the royalty amount owed has been paid to the
GOVERNMENT and is reflected in the records of the LICENSEE. The audit shall also
indicate the PHS license number, product, and the time period being audited. A
report certified by the auditor shall be submitted promptly by the auditor
directly to PHS on completion. LICENSEE shall pay for the entire cost of the
audit.

9.   REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

  9.01   Prior to signing this AGREEMENT, LICENSEE has provided to PHS

 

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      the COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which LICENSEE
intends to bring the subject matter of the LICENSED PATENT RIGHTS to the point
of PRACTICAL APPLICATION. This COMMERCIAL DEVELOPMENT PLAN is hereby
incorporated by reference into this AGREEMENT. Based on this plan, performance
BENCHMARKS are determined as specified in Appendix E.

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  9.02   LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the COMMERCIAL
DEVELOPMENT PLAN for each of the LICENSED FIELDS OF USE within sixty (60) days
after December 31 of each calendar year. These progress reports shall include,
but not be limited to: progress on research and development, status of
applications for regulatory approvals, manufacturing, sublicensing, marketing,
importing, and sales during the preceding calendar year, as well as plans for
the present calendar year. PHS also encourages these reports to include
information on any of LICENSEE’s public service activities that relate to the
LICENSED PATENT RIGHTS. If reported progress differs from that projected in the
COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS, LINCENSEE shall explain the reasons
for such differences. In any such annual report, LICENSEE may propose amendments
to the COMMERCIAL DEVELOPMENT PLAN, acceptance of which by PHS may not be denied
unreasonably. LICENSEE agrees to provide any additional information reasonably
required by PHS to evaluate Licensee’s performance under this AGREEMENT.
LICENSEE may amend the BENCHMARKS at any time upon written consent by PHS. PHS
shall not unreasonably withhold approval of any request of LICENSEE to extend
the time periods of this schedule if such request is supported by a reasonable
showing by LICENSEE of diligence in its performance under the COMMERCIAL
DEVELOPMENT PLAN and toward bringing the LICENSED PRODUCTS to the point of
PRACTICAL APPLICATION as defined in 37 CFR 404.3(d). LICENSEE shall amend the
COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS at the request of PHS to address any
LICENSED FIELDS OF USE not specifically addressed in the plan originally
submitted.     9.03   LICENSEE shall report to PHS the dates for achieving
BENCHMARKS specified in Appendix E and the FIRST COMMERCIAL SALE in each country
in the LICENSED TERRITORY within thirty (30) days of such occurrences.     9.04
  LICENSEE shall submit to PHS within sixty (60) days after each calendar
half-year ending June 30 and December 31 a royalty report setting forth for the
preceding half-year period the amount of the LICENSED PRODUCTS sold or LICENSED
PROCESSES practiced by or on behalf of LICENSEE in each country within the
LICENSED TERRITORY, the NET SALES, and the amount of royalty accordingly due.
With each such royalty report, LICENSEE shall submit payment of the earned
royalties due. If no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be certified as
correct by an authorized officer of LICENSEE and shall include a detailed
listing of all deductions made under Paragraph 2.10 to determine Net Sales made
under Article 6 to determine royalties due.     9.05   LICENSEE agrees to
forward semi-annually to PHS a copy of such reports received by LICENSEE from
its sublicensees during the preceding half-year period as shall be pertinent to
a royalty accounting to PHS by LICENSEE for activities under the sublicense.    
9.06   Royalties due under Article 6 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion rate shall be the
New York foreign exchange rate quoted in THE WALL STREET JOURNAL on the day that
the payment is due. All checks and bank drafts shall be drawn on United States
banks and shall be payable, as appropriate, to “NIH/Patent Licensing.” All such
payments shall be sent to the following address: NIH, P.O. Box 360120,
Pittsburgh, PA 152516120. Any loss of exchange, value, taxes, or other expenses
incurred in the transfer or conversion to U.S. dollars shall be paid entirely by
LICENSEE. The royalty report

 

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      required by Paragraph 9.04 of this Agreement shall accompany each such
payment, and a copy of such report shall also be mailed to PHS at its address
for notices indicated on the Signature Page of this AGREEMENT.     9.07  
LICENSEE shall be solely responsible for determining if any tax on royalty
income is owed outside the United States and shall pay any such tax and be
responsible for all filings with appropriate agencies of foreign governments.

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  9.08   Interest and penalties may be assessed by PHS on any overdue payments
in accordance with the Federal Debt Collection Act. The payment of such late
charges shall not prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.     9.09   All plans and reports
required by this Article 9 and marked “confidential” by LICENSEE shall, to the
extent permitted by law, be treated by PHS as commercial and financial
information obtained from a person and as privileged and confidential, and any
proposed disclosure of such records by the PHS under the Freedom of Information
Act (FOIA), 5 U.S.C. section 552 shall be subject to the predisclosure
notification requirements of 45 CFR section 5.65(d).

10.   PERFORMANCE

  10.01   LICENSEE shall use its reasonable best efforts to bring the LICENSED
PRODUCTS and LICENSED PROCESSES to PRACTICAL APPLICATION. “Reasonable best
efforts” for the purposes of this provision shall include adherence to the
COMMERCIAL DEVELOPMENT PLAN at Appendix F and performance of the BENCHMARKS at
Appendix E. The efforts of a sublicensee shall be considered the efforts of
LICENSEE.     10.02   Upon the FIRST COMMERCIAL SALE, until the expiration of
this AGREEMENT, LICENSEE shall use its reasonable best efforts to make LICENSED
PRODUCTS and LICENSED PROCESSES reasonably accessible to the United States
public.

11.   INFRINGEMENT AND PATENT ENFORCEMENT

  11.01   PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT RIGHTS, as well as
any facts which may affect the validity, scope, or enforceability of the
LICENSED PATENT RIGHTS of which either Party becomes aware.     11.02   Pursuant
to this AGREEMENT and the provisions of Chapter 29 of title 35, United States
Code, LICENSEE may: a) bring suit in its own name, at its own expense, and on
its own behalf for infringement of presumably valid claims in the LICENSED
PATENT RIGHTS; b) in any such suit, enjoin infringement and collect for its use,
damages, profits, and awards of whatever nature recoverable for such
infringement; and (c) settle any claim or suit for infringement of the Licensed
Patent Rights provided, however, that PHS and appropriate GOVERNMENT authorities
shall have the first right to take such actions. If LICENSEE desires to initiate
a suit for patent infringement, LICENSEE shall notify PHS in writing. If PHS
does not notify LICENSEE of its intent to pursue legal action within ninety
(90) days, LICENSEE will be free to initiate suit. PHS shall have a continuing
right to intervene in such suit. LICENSEE shall take no action to compel the
GOVERNMENT either to initiate or to join in any such suit for patent
infringement. LICENSEE may request the GOVERNMENT to initiate or join in any
such suit if necessary to avoid dismissal of the suit. Should the GOVERNMENT be
made a party to any such suit, LICENSEE shall reimburse the GOVERNMENT for any
costs, expenses, or fees which the GOVERNMENT incurs as a result of such motion
or other action, including any and all costs incurred by the GOVERNMENT in
opposing any such motion or other action. In all cases, LICENSEE agrees to keep
PHS reasonably apprised of the status and progress of any litigation. Before
LICENSEE commences an infringement action, LICENSEE shall notify PHS

 

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      and give careful consideration to the views of PHS and to any potential
effects of the litigation on the public health in deciding whether to bring
suit.

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  11.03   In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the LICENSED PATENT RIGHTS shall be brought against
LICENSEE or raised by way of counterclaim or affirmative defense in an
infringement suit brought by LICENSEE under Paragraph 11.02, pursuant to this
AGREEMENT and the provisions of Chapter 29 of Title 35, United States Code or
other statutes, LICENSEE may: a) defend the suit in its own name, at its own
expense, and on its own behalf for presumably valid claims in the LICENSED
PATENT RIGHTS; b) in any such suit, ultimately to enjoin infringement and to
collect for its use, damages, profits, and awards of whatever nature recoverable
for such infringement; and c) settle any claim or suit for declaratory judgment
involving the LICENSED PATENT RIGHTS-provided, however, that PHS and appropriate
GOVERNMENT authorities shall have the first right to take such actions and shall
have a continuing right to intervene in such suit. If PHS does not notify
LICENSEE of its intent to respond to the legal action within a reasonable time,
LICENSEE will be free to do so. LICENSEE shall take no action to compel the
GOVERNMENT either to initiate or to join in any such declaratory judgment
action. LICENSEE may request the GOVERNMENT to initiate or to join any such suit
if necessary to avoid dismissal of the suit. Should the GOVERNMENT be made a
party to any such suit by motion or any other action of LICENSEE, LICENSEE shall
reimburse the GOVERNMENT for any costs, expenses, or fees which the GOVERNMENT
incurs as a result of such motion or other action. If LICENSEE elects not to
defend against such declaratory judgment action, PHS, at its option, may do so
at its own expense. In all cases, LICENSEE agrees to keep PHS reasonably
apprised of the status and progress of any litigation. Before LICENSEE commences
an infringement action, LICENSEE shall notify PHS and give careful consideration
to the views of PHS and to any potential effects of the litigation on the public
health in deciding whether to bring suit.     11.04   In any action under
Paragraphs 11.02 or 11.03, the expenses including costs, fees, attorney fees,
and disbursements, shall be paid by LICENSEE. The value of any recovery made by
LICENSEE through court judgment or settlement shall be treated as NET SALES and
subject to earned royalties.     11.05   PHS shall cooperate fully with LICENSEE
in connection with any action under Paragraphs 11.02 or 11.03. PHS agrees
promptly to provide access to all necessary documents and to render reasonable
assistance in response to a request by LICENSEE.

12.   NEGATION OF WARRANTIES AND INDEMNIFICATION

  12.01   PHS offers no warranties other than those specified in Article 1.    
12.02   PHS does not warrant the validity of the LICENSED PATENT RIGHTS and
makes no representations whatsoever with regard to the scope of the LICENSED
PATENT RIGHTS, or that the LICENSED PATENT RIGHTS may be exploited without
infringing other patents or other intellectual property rights of third parties.
    12.03   PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANT ABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS
OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.     12.04  
PHS does not represent that it will commence legal actions against third parties
infringing the LICENSED PATENT RIGHTS.

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  12.05   LICENSEE shall indemnify and hold PHS, its employees, students,
fellows, agents, and consultants harmless from and against all liability,
demands, damages, expenses, and losses, including but not limited to death,
personal injury, illness, or property damage in connection with or arising out
of: a) the use by or on behalf of LICENSEE, its sublicensees, directors,
employees, or third parties of any LICENSED PATENT RIGHTS; or b) the design,
manufacture, distribution, or use of any LICENSED PRODUCTS, LICENSED PROCESSES
or materials by LICENSEE, or other products or processes developed in connection
with or arising out of the LICENSED PATENT RIGHTS. LICENSEE agrees to maintain a
liability insurance program consistent with sound business practice.

13.   TERM, TERMINATION, AND MODIFICATION OF RIGHTS

  13.01   This AGREEMENT is effective when signed by all parties and shall
extend to the expiration of the last to expire of the LICENSED PATENT RIGHTS
unless sooner terminated as provided in this Article 13.     13.02   In the
event that LICENSEE is in default in the performance of any material obligations
under this AGREEMENT, including but not limited to the obligations listed in
Article 13.05, and if the default has not been remedied within ninety (90) days
after the date of notice in writing of such default, PHS may terminate this
AGREEMENT by written notice and pursue outstanding amounts owed through
procedures provided by the Federal Debt Collection Act.     13.03   In the event
that LICENSEE becomes insolvent, files a petition in bankruptcy, has such a
petition filed against it, determines to file a petition in bankruptcy, or
receives notice of a third party’s intention to file an involuntary petition in
bankruptcy, LICENSEE shall immediately notify PHS in writing. Furthermore, PHS
shall have the right to terminate this AGREEMENT immediately upon LICENSEE’S
receipt of written notice.     13.04   LICENSEE shall have a unilateral right to
terminate this AGREEMENT and/or any licenses in any country or territory by
giving PHS sixty (60) days written notice to that effect.     13.05   PHS shall
specifically have the right to terminate or modify, at its option, this
AGREEMENT, if PHS determines that the LICENSEE: 1) is not executing the
COMMERCIAL DEVELOPMENT PLAN submitted with its request for a license and the
LICENSEE cannot otherwise demonstrate to PHS’s satisfaction that the LICENSEE
has taken, or can be expected to take within a reasonable time, effective steps
to achieve PRACTICAL APPLICATION of the LICENSED PRODUCTS or LICENSED PROCESSES;
2) has not achieved the BENCHMARKS as may be modified under Paragraph 9.02; 3)
has willfully made a false statement of, or willfully omitted, a material fact
in the license application or in any report required by the license AGREEMENT;
4) has committed a material breach of a covenant or agreement contained in the
license; 5) is not keeping LICENSED PRODUCTS or LICENSED PROCESSES reasonably
available to the public after commercial use commences; 6) cannot reasonably
satisfy unmet health and safety needs; or 7) cannot reasonably justify a failure
to comply with the domestic production requirement of Paragraph 5.02 unless
waived. In making this determination, PHS will take into account the normal
course of such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual reports submitted by
LICENSEE under Paragraph 9.02. Prior to invoking this right, PHS shall give
written notice to LICENSEE providing LICENSEE specific notice of, and a ninety
(90) day

 

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      opportunity to respond to, PHS’s concerns as to the previous items 1) to
7). If LICENSEE fails to alleviate PHS’s concerns as to the previous items 1) to
7) or fails to initiate corrective action to PHS’s satisfaction, PHS may
terminate this AGREEMENT.

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  13.06   When the public health and safety so require, and after written notice
to LICENSEE providing LICENSEE a sixty (60) day opportunity to respond, PHS
shall have the right to require LICENSEE to grant sublicenses to responsible
applicants, on reasonable terms, in any LICENSED FIELDS OF USE under the
LICENSED PATENT RIGHTS, unless LICENSEE can reasonably demonstrate that the
granting of the sublicense would not materially increase the availability to the
public of the subject matter of the LICENSED PATENT RIGHTS. PHS will not require
the granting of a sublicense unless the responsible applicant has first
negotiated in good faith with LICENSEE.     13.07   PHS reserves the right
according to 35 U.S.C. section 209(f)(4) to terminate or modify this AGREEMENT
if it is determined that such action is necessary to meet requirements for
public use specified by federal regulations issued after the date of the license
and such requirements are not reasonably satisfied by LICENSEE.     13.08  
Within thirty (30) days of receipt of written notice of PHS’s unilateral
decision to modify or terminate this AGREEMENT, LICENSEE may, consistent with
the provisions of 37 CFR 404.11, appeal the decision by written submission to
the designated PHS official. The decision of the designated PHS official shall
be the final agency decision. LICENSEE may thereafter exercise any and all
administrative or judicial remedies that may be available.     13.09   Within
ninety (90) days of expiration or termination of this AGREEMENT under this
Article 13, a final report shall be submitted by LICENSEE. Any royalty payments,
including those incurred but not yet paid (such as the full minimum annual
royalty), and those related to patent expense, due to PHS shall become
immediately due and payable upon termination or expiration. If terminated under
this Article 13, sublicensees may elect to convert their sublicenses to direct
licenses with PHS pursuant to Paragraph 4.03. Unless otherwise specifically
provided for under this AGREEMENT, upon termination or expiration of this
AGREEMENT, LICENSEE shall return all LICENSED PRODUCTS or other materials
included within the LICENSED PATENT RIGHTS to PHS or provide PHS with
certification of the destruction thereof.

14.   GENERAL PROVISIONS

  14.01   Neither Party may waive or release any of its rights or interests in
this AGREEMENT except in writing. The failure of the GOVERNMENT to assert a
right hereunder or to insist upon compliance with any term or condition of this
AGREEMENT shall not constitute a waiver of that right by the GOVERNMENT or
excuse a similar subsequent failure to perform any such term or condition by
LICENSEE.     14.02   This AGREEMENT constitutes the entire agreement between
the Parties relating to the subject matter of the LICENSED PATENT RIGHTS, and
all prior negotiations, representations, agreements, and understandings are
merged into, extinguished by, and completely expressed by this AGREEMENT.    
14.03   The provisions of this AGREEMENT are severable, and in the event that
any provision of this AGREEMENT shall be determined to be invalid or
unenforceable under any controlling body of law, such determination shall not in
any way affect the validity or enforceability of the remaining provisions of
this AGREEMENT.     14.04   If either Party desires a modification to this
AGREEMENT, the Parties shall, upon reasonable notice of the proposed

 

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      modification by the Party desiring the change, confer in good faith to
determine the desirability of such modification. No modification will be
effective until a written amendment is signed by the signatories to this
AGREEMENT or their designees.

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  14.05   The construction, validity, performance, and effect of this AGREEMENT
shall be governed by Federal law as applied by the Federal courts in the
District of Columbia.     14.06   All notices required or permitted by this
AGREEMENT shall be given by prepaid, first class, registered or certified mail
or by an express/overnight delivery service provided by a commercial carrier,
properly addressed to the other Party at the address designated on the following
Signature Page, or to such other address as may be designated. In writing by
such other Party. Notices shall be considered timely if such notices are
received on or before the established deadline date or sent on or before the
deadline date as verifiable by U.S. Postal Service postmark or dated receipt
from a commercial carrier. Parties should request a legibly dated U.S. Postal
Service postmark or obtain a dated receipt from a commercial carrier or the U.S.
Postal Service. Private metered postmarks shall not be acceptable as proof of
timely mailing.     14.07   This AGREEMENT shall not be assigned by LICENSEE
except: a) with the prior written consent of PHS, such consent not to be
withheld unreasonably; or b) as part of a sale or transfer of substantially the
entire business of LICENSEE relating to operations which concern this AGREEMENT.
LICENSEE shall notify PHS within ten (10) days of any assignment of this
AGREEMENT by LICENSEE, and LICENSEE shall pay PHS, as an additional royalty, one
percent (1%) of the fair market value of any consideration received for any
assignment of this AGREEMENT within thirty (30) days of such assignment.    
14.08   LICENSEE agrees in its use of any PHS-supplied materials to comply with
all applicable statutes, regulations, and guidelines, including PHS and DHHS
regulations and guidelines. LICENSEE agrees not to use the materials for
research involving human subjects or clinical trials in the United States
without complying with 21 CFR Part 50 and 45 CFR Part 46. LICENSEE agrees not to
use the materials for research involving human subjects or clinical trials
outside of the United States without notifying PHS, in writing, of such research
or trials and complying with the applicable regulations of the appropriate
national control authorities. Written notification to PHS of research involving
human subjects or clinical trials outside of the United States shall be given no
later than sixty (60) days prior to commencement of such research or trials.    
14.09   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 without prior approval of
such agency. PHS neither represents that a license is or is not required or
that, if required, it shall be issued.     14.10   LICENSEE agrees to mark the
LICENSED PRODUCTS or their packaging sold in the United States with all
applicable U.S. patent numbers and similarly to indicate “Patent Pending”
status. All LICENSED PRODUCTS manufactured in, shipped to, or sold in other
countries shall be marked in such a manner as to preserve PHS patent rights in
such countries.     14.11   By entering into this AGREEMENT, PHS does not
directly or indirectly endorse any product or service provided, or to be
provided, by LICENSEE whether directly or indirectly related to this AGREEMENT.
LICENSEE shall not state or imply that this AGREEMENT is an endorsement by the
GOVERNMENT, PHS, any other

 

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      GOVERNMENT organizational unit, or any GOVERNMENT employee. Additionally,
LICENSEE shall not use the names of NIH, CDC, PHS, or DHHS or the GOVERNMENT or
their employees in any advertising, promotional, or sales literature without the
prior written consent of PHS.

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  14.12   The Parties agree to attempt to settle amicably any controversy or
claim arising under this AGREEMENT or a breach of this AGREEMENT, except for
appeals of modifications or termination decisions provided for in Article 13.
LICENSEE agrees first to appeal any such unsettled claims or controversies to
the designated PHS official, or designee, whose decision shall be considered the
final agency decision. Thereafter, LICENSEE may exercise any administrative or
judicial remedies that may be available.     14.13   Nothing relating to the
grant of a license, nor the grant itself, shall be construed to confer upon any
person any immunity from or defenses under the antitrust laws or from a charge
of patent misuse, and the acquisition and use of rights pursuant to 37 CFR Part
404 shall not be immunized from the operation of state or Federal law by reason
of the source of the grant.     14.14   Paragraphs 4.03, 8.01, 9.05-9.07,
12.01-12.05, 13.08, 13.09, and 14.12 of this Agreement shall survive termination
of this Agreement.

SIGNATURES BEGIN ON NEXT PAGE

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PHS PATENT LICENSE AGREEMENT-EXCLUSIVE

SIGNATURE PAGE

     For PHS:

          /s/ Signature Illegible             01/07/00   Jack Spiegel, Ph.D.  
Date   Director, Division of Technology Development and Transfer         Office
of Technology Transfer         National Institutes of Health        

Mailing Address for Notices:

Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852-3804 U.S.A.

For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):

by:

          /s/ Signature Illegible             1/8/00   Signature of Authorized
Official Thomas E. Smart   Date    

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        Printed Name        

Vice President, Corporate Development
Title

Official and Mailing Address for Notices:

GenVec, Inc

65 West Watkins Mill Road

Gaithersburg, MD 20878

Attention: President

Copies to: Vice President, Corporate Development

Any false or misleading statements made, presented, or submitted to the
GOVERNMENT, including any relevant omissions, under this AGREEMENT and during
the course of negotiation of this AGREEMENT are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. sections 3801-3812
(civil liability) and 18 U.S.C. section 1001 (criminal liability including
fine(s) and/or imprisonment).

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APPENDIX A—PATENT(S) OR PATENT APPLICATION(S)

PATENT(S) OR PATENT APPLICATION(S):

*

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APPENDIX B-LICENSED FIELDS OF USE AND TERRITORY

LICENSED FIELDS OF USE:

          Gene Therapy for Ocular Diseases, including but not limited to,
macular degeneration, cancer, diabetic retinopathy, ocular histoplasmosis
syndrome, and retinopathy associated with neovascularization in neonatals.
Licensed Territory:

          Worldwide

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APPENDIX C-Royalties

ROYALTIES:

I.   License Issue/Execution Royalty pursuant to Paragraph 6.01:

      LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of * dollars ($*) which is due upon execution of this
AGREEMENT. This * dollars ($*) is to be paid within thirty (30) days of the
EFFECTIVE DATE of this AGREEMENT.

II.   Minimum Annual Royalty pursuant to Paragraph 6.02:

LICENSEE agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of:

      * dollars ($*).

III.   Earned Royalties pursuant to Paragraph 6.03.

LICENSEE agrees to pay PHS earned royalties on NET SALES of by or on behalf of
LICENSEE and its sublicensees as follows:

                     (A) * percent (*%) on NET SALES of LICENSED PRODUCTS
manufactured or sold in a country within the LICENSED TERRITORY, where a patent
application or patent, within the Licensed Patent Rights, exists pursuant to
Article 6 and while this AGREEMENT is in force.

For Earned Royalties on NET SALES due under this, Section III, in the event
there is no issued valid patent claim in the LICENSED PATENT RIGHTS covering
such LICENSED PRODUCTS in a given country but there is a pending claim within
the LICENSED PATENT RIGHTS covering such LICENSED PRODUCTS, the royalties set
forth in paragraph (A) of this Section shall be reduced by fifty percent (50.0%)
(hereinafter the “Patent Pending Reduction”) until the date when such pending
claims are allowed for issuance by the appropriate authority of said given
country. The Patent Pending Reduction will not apply to royalties from a sale of
LICENSED PRODUCT(S) in a country where the LICENSED PRODUCT(S) are not covered
by a valid issued patent claim but where such LICENSED PRODUCTS were
manufactured in a country where the LICENSED PRODUCT(S) or LICENSED PROCESS(ES)
are covered by a valid issued patent claim.

IV. Benchmark Royalties pursuant to Paragraph 6.04:

LICENSEE agrees to pay PHS Benchmark Royalties as follows:

      (A) Upon * dollars ($*);         (B) Upon * dollars ($*);         (C) Upon
* dollars ($*); and         (D) Upon * dollars ($*).

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V.   Sublicensing Royalties pursuant to Paragraph 6.05:

LICENSEE agrees to pay PHS additional Sublicensing Royalties as follows:

      (A) * percent (*%) of the following sublicensing royalties/fees received
by LICENSEE from the sublicensing of the LICENSED PATENT RIGHTS:
(i) execution/up front royalties/fees; (ii) minimum annual royalties/fees; and
(iii) benchmark/milestone royalties; and         (B) In the event LICENSEE
enters into a Corporate Partnership, as defined in Paragraph 2.21 herein, PHS
shall receive no less than * Dollars ($*) as its share of the execution/up front
royalties, pursuant to Paragraph V(A), received by LICENSEE pursuant to the
CORPORATE PARTNERSHIP sublicense said royalties pursuant to this paragraph
(B) payable within thirty (30) days of the Effective Date of such agreement
establishing a CORPORATE PARTNERSHIP.

Such sublicensing royalties/fees do not include royalties/fees received by
LICENSEE (i) for the purchase of equity, (ii) debt financing, (iii) funds for
future research and/or development, (iv) the license or sublicense of
intellectual property other than the LICENSED PRODUCT(S), or (v) reimbursement
for patent or other intellectual property expenses incurred by LICENSEE in
connection with LICENSED PRODUCTS, or (vi) reimbursement for other expenses
incurred by LICENSEE in connection with LICENSED PRODUCTS, said other expenses
being subject to the prior approval by PHS such approval not being reasonably
withheld. Additionally, payments by LICENSEE to PHS for Benchmark Royalties as
set forth above in this Appendix C, Section IV shall be fully creditable against
amounts due PHS, under this Section V, for the same benchmarks (for example, if
PHS is due a payment under Section IV, Paragraph (A) then this amount, $* may be
deducted from (credited against) any payment received from a sublicensee for
this same benchmark prior to calculating the royalty due under this
Paragraph V(A)).

VI.   Past Patent Expenses Royalty pursuant to Paragraph 6.09:

LICENSEE agrees to pay PHS an amount equal to one-quarter (1/4) of the total
amount of patent expenses previously incurred by PHS and which is due upon
execution of this AGREEMENT. This royalty for PAST PATENT EXPENSES is to be paid
in four (4) equal installments according to the following schedule:

    (A) First Installment which is payable within thirty (30) days of the
Effective Date of this AGREEMENT;       (B) Second Installment which is payable
on January 30, 2001;       (C) Third Installment which is payable on January 30,
2002; and       (D) Fourth Installment which is payable on January 30, 2003.

VII.   Materials Transfer Royalty pursuant to Paragraph 6.13:

      LICENSEE agrees to pay PHS a materials transfer royalty in the amount of *
dollars ($*) which is due upon the EFFECTIVE DATE of this AGREEMENT and which is
payable within thirty days (30) days of the EFFECTIVE DATE of this AGREEMENT.

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APPENDIX D-MODIFICATIONS

PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this AGREEMENT:

Article 1:

Paragraph 1.02 is amended to read as follows:

  1.02   By assignment of rights from PHS employees and other inventors, DHHS,
on behalf of the United States Government, owns intellectual property rights
claimed in any United States and/or foreign patent applications or patents
corresponding to the assigned inventions. DHHS also owns any tangible
embodiments of these inventions actually reduced to practice by PHS. In
addition, PHS, through its Interinstitutional Agreement with the University of
Southern California (“USC”), L-221-94/2, effective January 4, 1999, has an
exclusive license to certain intellectual property rights claimed in any United
States and/or foreign patent applications or patents which are the subject of
said Interinstitutional Agreement.

Article 2:

Paragraph 2.03 is amended to read as follows:

  2.03   “FIRST COMMERCIAL SALE” shall mean, with respect to any LICENSED
PRODUCT(S) on a country by country basis, the first transfer of such LICENSED
PRODUCT(S), by or on behalf of LICENSEE or its sublicensees, for use or
consumption of such LICENSED PRODUCT(S) following approval by the United States
Food and Drug Administration (FDA) or comparable regulatory authority in
exchange for cash or some equivalent to which value can be assigned for the
purpose of determining NET SALES. A transfer of the LICENSED PRODUCT(S) by
LICENSEE or its sublicensees (a) solely for research and development purposes
and for the purpose of directly enabling LICENSEE and its sublicensees to
research and develop LICENSED PRODUCT(S) under this AGREEMENT and/or (b) prior
to LICENSEE’s receipt of approval of a Biologics License Application (BLA),
Product License Application (PLA), New Drug Application (NDA) or equivalent by
the FDA or comparable regulatory authority of any other country for the use of
such LICENSED PRODUCT(S) shall not be considered a FIRST COMMERCIAL SALE in the
applicable country.         THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

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Paragraphs 2.06 through 2.08 are amended to read as follows:

  2.06   “LICENSED PATENT RIGHTS” shall mean:

  a)   Patent applications (including provisional patent applications and PCT
patent applications) and/or patents listed in Appendix A, all divisions and
continuations of these applications, all patents issuing from such applications,
divisions, and continuations, and any reissues, reexaminations, and extensions
of all such patents;     b)   to the extent that the following contain one or
more claims directed to the invention or inventions disclosed in a) above: i)
continuations-in-part of a) above; ii) all divisions and continuations of these
continuations-in-part; iii) all patents issuing from such continuations-in-part,
divisions, and continuations; iv) priority patent application(s) of a) above;
and v) any reissues, reexaminations, and EXTENSIONS OF ALL SUCH PATENTS;     c)
  to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: all counterpart foreign and U.S.
patent applications and patents to a) and b) above, including those listed in
Appendix A.

      LICENSED PATENT RIGHTS shall not include those claims in b) or c) above
that are directed to new matter which is not the subject matter disclosed in a)
above, unless the applicable claims further characterize the subject matter
disclosed in a).     2.07   “LICENSED PROCESS(ES)” means processes which, in the
course of being practiced would, in the absence of this Agreement, infringe one
or more claims of the LICENSED PATENT RIGHTS that have not been held invalid or
unenforceable by an unappealed or unappealable judgment of a court of competent
jurisdiction or is otherwise expired.     2.08   “LICENSED PRODUCT(S)” means
(a) tangible materials which, in the course of manufacture, use, offer to sell,
sale, or importation would, in the absence of this Agreement, infringe one or
more claims of the LICENSED PATENT RIGHTS that have not been held invalid or
unenforceable by an unappealed or unappealable judgment of a court of competent
jurisdiction or is otherwise expired or (b) any tangible materials, including
all progeny, subclones, and derivatives or conjugates thereof, as defined below
in paragraph 2.19 as LICENSED MATERIALS.

Paragraph 2.10 is amended to read as follows:

  2.10   “NET SALES” means the total gross amounts received by LICENSEE and
sublicensees for LICENSED PRODUCTS sold in the FIRST COMMERCIAL SALE and
subsequent commercial sales, less the following amounts directly chargeable to
such LICENSED PRODUCTS: (a) customary trade, quantity or cash discounts and
rebates actually allowed and taken; (b) amounts repaid or credited to customers
on account of rejections; (c) freight and other transportation costs, including
insurance charges, and duties, tariffs, sales and excise taxes and other
governmental charges based on sales, turnover or delivery of such LICENSED
PRODUCTS and actually paid or allowed by LICENSEE or any sublicensee; and
(d) amounts actually allowed or credited due to returns or uncollectible
amounts. No deductions shall be made for commissions paid to individuals,
whether they be with independent sales agencies or regularly employed by
LICENSEE, or sublicensees, and on its payroll or for the cost of collections.

 

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The following new Paragraphs 2.13 through 2.22 are added to read as follows:

  2.13   GENE THERAPY means the introduction of a gene and/or variants of said
gene into a person for therapeutic purposes (i) by in vivo introduction for
incorporation into cells of such person or (ii) by ex vivo introduction into
cells for transfer into a person     2.14   “PERSON” means an individual,
corporation, partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.     2.15   “AFFILIATE(S)” shall mean, with respect
to LICENSEE, any other Person which during the term of this AGREEMENT controls,
is controlled by or is under common control with LICENSEE, but for only so long
as such PERSON controls, is controlled by or is under common control with
LICENSEE. For this purpose, control means the possession of the power to direct
or cause the direction of the management and the policies of an entity, whether
through ownership directly or indirectly of fifty percent (50%) or more of the
stock entitled to vote, and for non-stock organizations, the right to receive
fifty percent (50%) or more of the profits by contract or otherwise, or where
control of fifty percent (50%) or more of such rights is not permitted in the
country where such Person exists, the maximum permitted in such a country.    
2.16   “ACTIVE THERAPEUTIC AGENT(S)” means DNA or other component, which could
or does directly or indirectly impart a separate and distinct therapeutic
benefit to the recipient.     2.17   “COMBINATION PRODUCT(S)” means LICENSED
PRODUCT(S) that are sold in combination with one or more, ACTIVE THERAPEUTIC
AGENT(S) which are not LICENSED PRODUCT(S).     2.18   “VALID CLAIM(S)” means
either (a) a claim of an issued and unexpired patent included within the
LICENSED PATENT RIGHTS, which has not been held invalid by an unappealable or
unappealed within the time limit allowed for appeal, decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time limit allowed for appeal or (b) a claim of a pending patent
application included within the LICENSED PATENT RIGHTS, which claim has not been
abandoned without the possibility of revival or pursued through a timely filed
continuation or divisional application or finally disallowed without the
possibility of appeal.     2.19   “LICENSED MATERIALS” means the plasmid
phiFS17, as described in Steele, FR, et al., “Pigment epithelium-derived factor:
Neurotrophic activity and identification as a member of the serine protease
inhibitor gene family” PNAS, USA 90(4): 1526-1530 (Feb. 15, 1993) which contains
the cDNA encoding human Pigment Epithelium Derived Factor.     2.20   “EFFECTIVE
DATE” means the date of the last signature of a Party to this AGREEMENT.    
2.21   “CORPORATE PARTNERSHIP” means an agreement entered into by LICENSEE with
a corporate entity pursuant to which Licensee grants to such an entity a
sublicense under the LICENSED PATENT RIGHTS, which agreement provides that
Licensee shall receive in excess of * dollars ($*)in payments from such entity
within a * year period in exchange for such rights.

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  2.22   “TOTAL PRO RATA SHARE” means the total number of additional licenses
granted by PHS which include the LICENSED PATENT RIGHTS and which have LICENSED
FIELDS OF USE which include but are not necessarily limited to therapeutic
applications divided by the total number of licenses granted by PHS which
include the LICENSED PATENT RIGHTS and which have LICENSED FIELDS OF USE which
include but are not necessarily limited to therapeutic applications. For
example, if PHS has granted 4 additional licenses which include the LICENSED
PATENT RIGHTS and which have LICENSED FIELDS OF USE which include, but are not
necessarily limited to therapeutic applications, then the TOTAL PRO RATA SHARE
would be four fifths (4/5).

Article 3:

Paragraph 3.02 is amended to read as follows:

  3.02   This AGREEMENT confers no license or rights by implication, estoppel,
or otherwise under any patent applications or patents of PHS other than LICENSED
PATENT RIGHTS regardless of whether such patents are dominant or subordinate to
LICENSED PATENT RIGHTS, except as set forth in Paragraphs 12.01, 13.05, and
13.07.

Article 4:

Paragraphs 4.02 through 4.03 are amended to read as follows:

  4.02   LICENSEE agrees that any sublicenses granted by it shall provide that
the obligations to PHS and USC of Paragraphs 5.01-5.04, 8.01, 9.07, 10.01,
10.02, 10.04, 12.05, and 13.07-13.09 of this AGREEMENT shall be binding upon the
sublicensee as if it were a Party to this AGREEMENT. LICENSEE further agrees to
attach copies of these Paragraphs to all sublicense agreements.     4.03   Any
sublicenses granted by LICENSEE shall provide for the termination of the
sublicense, or the conversion to a license directly between such sublicensees
and PHS, at the option of the sublicensee, upon termination of this AGREEMENT
under Article 13. Such conversion is subject to PHS approval, which shall not be
withheld unless the sublicensee is in default under this, or a separate
agreement with the GOVERNMENT and has not cured such default within ninety
(90) days of notification thereof or is debarred from doing business with the
GOVERNMENT, and contingent upon acceptance by the sublicensee of the remaining
provisions of this AGREEMENT.         THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK

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Article 5:

Paragraphs 5.01 through 5.02 are amended to read as follows:

  5.01   (a) PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice of all
inventions licensed under the LICENSED PATENT RIGHTS throughout the world by or
on behalf of the GOVERNMENT and on behalf of any foreign government or
international organization pursuant to any existing or future treaty or
agreement to which the GOVERNMENT is a signatory. Prior to the FIRST COMMERCIAL
SALE, and upon request, by the GOVERNMENT, LICENSEE agrees to provide PHS
reasonable quantities of LICENSED PRODUCTS or materials made through the
LICENSED PROCESSES for PHS research use. LICENSEE shall be obligated to provide
such reasonable quantities only if such quantities are already manufactured or
plan to be manufactured and are not committed, or anticipated to be committed,
to LICENSEE’S research and development activities or to a third Party.       (b)
In the event that LICENSED PATENT RIGHTS are Subject Inventions made under a
Cooperative Research and Development Agreement (CRADA), LICENSEE grants to the
GOVERNMENT, pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive,
nontransferable, irrevocable, paid-up license to practice LICENSED PATENT RIGHTS
or have LICENSED PATENT RIGHTS practiced throughout the world by or on behalf of
the GOVERNMENT. In the exercise of such license, the GOVERNMENT shall not
publicly disclose trade secrets or commercial or financial information that is
privileged or confidential within the meaning of 5 U.S.C. 552(b)(4) or which
would be considered as such if it had been obtained from a non-Federal Party.
Prior to the FIRST COMMERCIAL SALE, and upon request by the GOVERNMENT, LICENSEE
agrees to provide PHS reasonable quantities of LICENSED PRODUCTS or materials
made through the LICENSED PROCESSES for PHS research use. LICENSEE shall be
obligated to provide such reasonable quantities only if such quantities are
already manufactured or plan to be manufactured and are not committed, or
anticipated to be committed, to LICENSEE’S research and development activities
or to a third Party.     5.02 LICENSEE agrees that components of LICENSED
PRODUCTS or LICENSED PRODUCTS used or sold in the United States embodying
LICENSED PATENT RIGHTS or produced through use of LICENSED PROCESSES shall be
manufactured substantially in the United States, unless a written waiver is
obtained in advance from PHS.

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Paragraph 5.04(a) is amended to read as follows:

  5.04 (a)  In addition to the reserved license of Paragraph 5.01 above, PHS
reserves the right to grant nonexclusive RESEARCH LICENSES to make and to use,
but not to sell or have sold, the inventions defined by the LICENSED PATENT
RIGHTS for purposes of research involving the inventions themselves, and not for
purposes of commercial manufacture or use or in lieu of purchase if the
inventions are available as commercial products for research purposes. The
purpose of this license is to encourage basic research, whether conducted at an
academic or corporate facility. In order to safeguard the LICENSED PATENT
RIGHTS, however, PHS shall consult with LICENSEE before granting to commercial
entities a RESEARCH LICENSE or providing to them research samples of materials
claimed in LICENSED PATENT RIGHTS. In the event LICENSEE can provide convincing
written evidence to PHS that a commercial entity that has been granted a
RESEARCH LICENSE TO LICENSED PATENT RIGHTS is developing the inventions for
commercial manufacture or use or in lieu of purchase if the inventions are
available as commercial products, then LICENSEE can request that PHS terminate
its RESEARCH LICENSE with such commercial entities, such request not to be
unreasonably denied.

Paragraph 5.04(b) is deleted in its entirety.

Article 6:

Paragraph 6.01 is amended to read as follows:

  6.01   LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license
issue royalty as set forth in Appendix C.

Paragraphs 6.06 through 6.11 are amended to read as follows:

  6.06   A patent or patent application licensed under this AGREEMENT shall
cease to fall within the LICENSED PATENT RIGHTS for the purpose of computing
earned royalty payments in any given country on the earliest of the dates that
a) the application has been abandoned and not continued, b) the patent expires
or irrevocably lapses, or c) all of the claims have been held to be invalid or
unenforceable by an unappealed or unappealable decision of a court of competent
jurisdiction or administrative agency.     6.07   No multiple royalties shall be
payable because any LICENSED PRODUCTS or LICENSED PROCESSES are covered by more
than one claim of the LICENSED PATENT RIGHTS.     6.08   On sales of LICENSED
PRODUCTS by LICENSEE or sublicensees made in other than an arm’s-length
transaction, the value of the NET SALES attributed under this Article 6 to such
a transaction shall be that which would have been received in an arm’s-length
transaction, based on sales of like quantity and quality products on or about
the time of such transaction.     6.09   With regard to expenses associated with
the preparation, filing, prosecution, and maintenance of all patent applications
and patents included within the LICENSED PATENT RIGHTS incurred by PHS or USC
prior to the EFFECTIVE DATE of this AGREEMENT, LICENSEE shall pay to PHS, as an
additional Past Patent Expenses Royalty, an amount as set forth in Appendix C.

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  6.10   With regard to expenses associated with the preparation, filing,
prosecution, and maintenance, including interferences, opposition, reissues and
reexaminations, of all patent applications and patents included within the
LICENSED PATENT RIGHTS incurred by PHS on or after the EFFECTIVE DATE of this
AGREEMENT PHS, at its sole option, may require LICENSEE: (a) to pay PHS on an
annual basis, within sixty (60) days of PHS’s submission of a statement and
request for payment, and subject to the provisions of Paragraph 6.12 herein, a
royalty amount equivalent to one quarter (1/4) of all such patent expenses
incurred during the previous calendar year(s) or, in the event that PHS has
granted more than three (3) additional licenses which have LICENSED FIELDS OF
USE which include but are not necessarily limited to therapeutic applications,
LICENSEE shall pay a pro rata share of such patent expenses where such pro rata
share is determined by the number of licensees to the LICENSED PATENT RIGHTS
which have LICENSED FIELD OF USE which include but are not necessarily limited
to therapeutic applications; or

      (b) to pay such expenses, in the amounts set forth in (a) above, directly
to the law firm employed by PHS to handle such functions. However, in such
event, PHS and not LICENSEE shall be the client of such law firm.

      In limited circumstances, as provided for under Paragraph 7.02 below,
LICENSEE may be given the right to assume responsibility for the preparation,
filing, prosecution, or maintenance, including interferences, oppositions,
reissues and reexaminations, of any patent application or patent included with
the LICENSED PATENT RIGHTS. In that event, LICENSEE shall directly pay the
attorneys or agents engaged to prepare, file, prosecute, or maintain such patent
applications or patents and shall provide to PHS copies of each invoice
associated with such services as well as documentation that such invoices have
been paid. In the event that LICENSEE is given the right to assume
responsibility for the preparation, filing, prosecution, or maintenance of any
patent application or patent included within the LICENSED PATENT RIGHTS pursuant
to Paragraph 7.02 herein LICENSEE may (i) if PHS has granted three (3) or fewer
additional licenses which include the LICENSED PATENT RIGHTS and which have
LICENSED FIELDS OF USE which include but are not necessarily limited to
therapeutic applications, credit an amount equal to three quarters (3/4) of the
expenses paid by LICENSEE under this Paragraph against royalties due under
Paragraphs 6.03 (Earned Royalties), 6.04 (Benchmark Royalties), and/or 6.05
(Sublicensing Royalties) of this AGREEMENT or (ii) if PHS has granted more than
three (3) additional licenses which include the LICENSED PATENT RIGHTS and which
have LICENSED FIELDS OF USE which include but are not necessarily limited to
therapeutic applications, credit an amount equal to the TOTAL PRO RATA SHARE of
the expenses paid by LICENSEE under this Paragraph, against royalties due under
Paragraph 6.03 (Earned Royalties), 6.04 (Benchmark Royalties), and/or 6.05
(Sublicensing Royalties) of this Agreement. Prior to taking this credit Licensee
shall provide to PHS copies of each invoice associated with such services as
well as documentation that such invoices have been paid.     6.11   LICENSEE may
elect to surrender its rights in any country of the LICENSED TERRITORY under any
LICENSED PATENT RIGHTS upon sixty (60) days written notice to PHS and owe no
payment obligation under Article 6.10 for patent-related expenses incurred in
that country after sixty (60) days of the effective date of such written notice.

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New Paragraphs 6.12 through 6.14 are added to read as follows:

  6.12   In the event that any of the patent applications or patents within the
LICENSED PATENT RIGHTS are subject to an interference, reexamination, reissue,
opposition proceeding, or equivalent thereof LICENSEE agrees to pay a pro rata
share of the expenses incurred by PHS in such a proceeding where said pro rata
share is determined by the total number of licenses granted by PHS which include
the patent or patent application subject to the interference, reexamination,
reissue, opposition proceeding, or equivalent thereof within the LICENSED PATENT
RIGHTS and where said license includes but is not necessarily limited to
therapeutic applications in its LICENSED FIELD OF USE. In the event that at the
time of the interference, opposition, reexamination, reissue, opposition
proceeding PHS has granted less than a total of four (4) licenses which include
a therapeutic application in their LICENSED FIELD OF USE LICENSEE may take, as a
credit against royalties due under Paragraph 6.03 (Earned Royalties),
Paragraph 6.04 (Benchmark Royalties) and/or Paragraph 6.05 (Sublicensing
Royalties) their pro rata share of expenses which shall be the amount in excess
of one quarter (1/4) of the expenses incurred under this Paragraph.     6.13  
LICENSEE agrees to pay PHS a noncreditable, nonrefundable Materials Transfer
Royalty for providing LICENSED MATERIALS as set forth in Appendix C.     6.14  
In the event LICENSEE or sublicensee sells COMBINATION PRODUCT(S), NET SALES
from such sales for the purposes of calculating the amount due under
Paragraph 6.03 of this AGREEMENT shall be calculated by multiplying the NET
SALES of that combination by the fraction A/(A+B), where A is the gross selling
price of the LICENSED PRODUCTS sold separately and B is the gross selling price
of the ACTIVE THERAPEUTIC AGENT(S) of the LICENSED PRODUCT sold separately. In
the event that no such separate sales are made by LICENSEE or sublicensee, NET
SALES receipts for royalty determination pursuant to Paragraph 6.03 shall be
reasonably allocated by LICENSEE or sublicensee between the LICENSED PRODUCTS
and the ACTIVE THERAPEUTIC AGENTS of the LICENSED PRODUCT based upon their
relative importance to the efficacy of using the COMBINED PRODUCTS and upon
their contribution to the proprietary position of the COMBINED PRODUCTS. In the
event PHS believes such allocation is inequitable and the parties are unable to
resolve such dispute, the matter may be resolved through Administrative Dispute
Resolution as required by the Administrative Dispute Resolution Act.

Article 7:

Paragraphs 7.01 through 7.04 are amended to read as follows:

  7.01   Except as otherwise provided in this Article 7, PHS agrees to take
responsibility for, but to consult with, the LICENSEE in the preparation,
filing, prosecution, and maintenance, including interferences, oppositions,
reissues and reexaminations, of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS and shall furnish copies of relevant
patent-related documents, including all communications filed with or received
from a competent examining authority, for example, the USPTO, the EPO, or the
JPO, to LICENSEE.

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  7.02   Upon PHS’s written request, LICENSEE may assume, but is not obligated
to assume, the responsibility for the preparation, filing, prosecution, and
maintenance, including interferences, oppositions, reissues, and reexaminations
of any and all patent applications or patents included in the LICENSED PATENT
RIGHTS and shall on an ongoing basis promptly furnish copies of all
patent-related documents to PHS. In such event, LICENSEE shall select registered
patent attorneys or patent agents to provide such services on behalf of LICENSEE
and PHS. PHS shall provide appropriate powers of attorney and other documents
necessary to undertake such actions to the patent attorneys or patent agents
providing such services. LICENSEE and its attorneys or agents shall consult with
PHS in all aspects of the preparation, filing, prosecution and maintenance,
including interferences, oppositions, reissues, and reexaminations of patent
applications and patents included within the LICENSED PATENT RIGHTS and shall
provide PHS sufficient opportunity to comment on any document that LICENSEE
intends to file or to cause to be filed with the relevant intellectual property
or patent office. In the event that this AGREEMENT terminates for any reason,
PHS shall take and assume all responsibility for preparation and maintenance,
including interferences, oppositions, reissues, and reexaminations of any and
all patent applications or patents included in the LICENSED PATENT RIGHTS at its
own expense     7.03   If LICENSEE exercises its rights pursuant to
Paragraph 7.02 and assumes responsibilities pursuant to Paragraph 7.02 but fails
to exercise reasonable diligence, then PHS may provide LICENSEE with written
notice that PHS wishes to assume control of the preparation, filing, prosecution
and maintenance, including interferences, oppositions, reissues and
reexaminations, of any and all patent applications or patents included in the
LICENSED PATENT RIGHTS. If PHS elects to assume such responsibilities, LICENSEE
agrees to cooperate fully with PHS, its attorneys, and agents in the
preparation, filing, prosecution, and maintenance, including interferences,
oppositions, reissues, and reexaminations, of any and all patent applications or
patents included in the LICENSED PATENT RIGHTS and to provide PHS with copies of
any and all documents or other materials that PHS deems necessary to undertake
such responsibilities. Licensee shall be responsible for all costs associated
with transferring patent prosecution responsibilities to an attorney or agent of
PHS’s choice.     7.04   Each Party shall promptly inform the other as to all
matters that come to its attention that may affect the preparation, filing,
prosecution, or maintenance, including interferences, oppositions, reissues, and
reexaminations, of the LICENSED PATENT RIGHTS and permit each other to provide
comments and suggestions with respect to the preparation, filing, prosecution,
and maintenance of LICENSED PATENT RIGHTS, which comments and suggestions shall
be considered by the other Party.         THE REMAINDER OF THIS PAGE
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Article 8:

Paragraphs 8.01 through 8.02 are amended to read as follows:

  8.01   LICENSEE agrees to keep accurate and correct records of LICENSED
PRODUCTS made, used, sold, or imported and LICENSED PROCESSES practiced under
this AGREEMENT appropriate to determine the amount of royalties due PHS. Such
records shall be retained for at least three(3) years following a given
reporting period and shall be available during normal business hours for
inspection at the expense of PHS by an accountant or other designated auditor
selected by PHS for the sole purpose of verifying reports and payments
hereunder. The accountant or auditors shall only disclose to PHS information
relating to the accuracy of reports and payments made under this AGREEMENT. If
an inspection shows an underreporting or underpayment in excess of * percent
(*%) for any twelve (12) month period, then LICENSEE shall reimburse PHS for the
cost of the inspection at the time LICENSEE pays the unreported royalties,
including any late charges as required by Paragraph 9.08 of this AGREEMENT. All
payments required under this Paragraph shall be due within thirty (30) days of
the date PHS provides LICENSEE notice of the payment due.     8.02   LICENSEE
agrees to have an audit of sales and royalties conducted, at the written request
of PHS, by an independent auditor selected by LICENSEE at least every two
(2) years if annual sales of the LICENSED PRODUCT or LICENSED PROCESSES are over
two (2) million dollars. The audit shall address, at a minimum, the amount of
gross sales by or on behalf of LICENSEE during the audit period, terms of the
license as to percentage or fixed royalty to be remitted to the GOVERNMENT, the
amount of royalty funds owed to the GOVERNMENT under this AGREEMENT, and whether
the royalty amount owed has been paid to the GOVERNMENT and is reflected in the
records of the LICENSEE. The audit shall also indicate the PHS license number,
product, and the time period being audited. A report certified by the auditor
shall be submitted promptly by the auditor directly to PHS on completion.
LICENSEE shall pay for the entire cost of the audit.

Article 9:

Paragraph 9.04 is amended to read as follows:

  9.04   LICENSEE shall submit to PHS within sixty (60) days after each calendar
half-year ending June 30 and December 31 a royalty report setting forth for the
preceding half-year period the amount of the LICENSED PRODUCTS sold or LICENSED
PROCESSES practiced by or on behalf of LICENSEE in each country within the
LICENSED TERRITORY on a product by product basis, the NET SALES, and the amount
of royalty accordingly due. With each such royalty report, LICENSEE shall submit
payment of the earned royalties due. If no earned royalties are due to PHS for
any reporting period, the written report shall so state. The royalty report
shall be certified as correct by an authorized officer of LICENSEE and shall
include a detailed listing of all deductions made under Paragraph 2.10 to
determine NET SALES made under Article 6 to determine royalties due.

Paragraph 9.07 is amended to read as follows:

  9.07   Either LICENSEE or sublicensee of LICENSEE shall be responsible for
determining if any tax on royalty income is owned outside the United States and
shall pay any such tax and

 

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      be responsible for all filings with appropriate agencies of foreign
governments.

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Article 10:

Paragraphs 10.01 through 10.02 are amended to read as follows:

  10.01   LICENSEE shall use its reasonable efforts to bring the LICENSED
PRODUCTS and LICENSED PROCESSES to PRACTICAL APPLICATION. “Reasonable efforts”
for the purposes of this provision shall include adherence to the COMMERCIAL
DEVELOPMENT PLAN at Appendix F and performance of the BENCHMARKS at Appendix E.
The efforts of a sublicensee shall be considered the efforts of LICENSEE for
purposes of Paragraph 10.01.     10.02   Upon the FIRST COMMERCIAL SALE, until
the expiration of this AGREEMENT, LICENSEE shall use its reasonable efforts to
make LICENSED PRODUCTS and LICENSED PROCESSES reasonably accessible to the
United States public.

New Paragraphs 10.03 through 10.04 are added to read as follows:

  10.03   PHS agrees to provide LICENSEE with a sample of the LICENSED MATERIALS
within thirty (30) days after PHS receives the payment of the Materials Transfer
Royalty under Paragraph 6.13 and, at reasonable cost to Licensee, to replace
them in the event of their unintentional destruction by LICENSEE. LICENSEE
agrees to retain control over the LICENSED MATERIALS and shall not distribute or
release them to others, other than its contract production facilities or in
furtherance of reasonable research and development activities to facilitate the
ability of LICENSEE to take advantage of the rights hereunder in a manner which
is not inconsistent with the practices and procedures by which LICENSEE
distributes their own proprietary materials, without the prior written consent
of PHS, except as otherwise permitted by this AGREEMENT.     10.04   Because of
the public investment in the research that culminated in the LICENSED PATENT
RIGHTS, LICENSEE agrees, within a reasonable time after FIRST COMMERCIAL SALE
following regulatory approval for marketing LICENSED PRODUCTS in the United
States, to set pup an indigent patient access program or to include in an
existing indigent patient access program LICENSED PRODUCTS. Under the terms of
LICENSEE’S indigent patient access program, reasonable quantities in excess of
commercially allocated amounts of LICENSED PRODUCT(S) may be provided to
qualified indigent citizens of the United States who are not covered under any
public or private health plan. PHS encourages and supports all contributions to
the public good an thus agrees that no earned royalties shall be due on such
donations of LICENSED PRODUCTS BY LICENSEE.

Article 11:

Paragraphs 11.01 through 11.04 are amended to read as follows:

  11.01   PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT RIGHTS, as well as
any facts which may affect the validity, scope, or enforceability of the
LICENSED PATENT RIGHTS of which either Party becomes aware. PHS agrees to inform
all licensees about each infringement promptly upon receipt of such information
and to give the Licensee the opportunity to confer with other licensees of
LICENSED PATENT RIGHTS about such infringement.

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  11.02   Pursuant to this AGREEMENT and the provisions of Chapter 29 of title
35, United States Code, LICENSEE may, but is not obliged to: a) bring suit in
its own name, at its own expense, and on its own behalf for infringement of
presumably valid claims in the LICENSED PATENT RIGHTS; b) in any such suit,
enjoin infringement and collect for its use, damages, profits, and awards of
whatever nature recoverable for such infringement; and c) settle any claim or
suit for infringement of the LICENSED PATENT RIGHTS provided, however, that
(1) PHS and appropriate GOVERNMENT authorities shall have the first right to
take such actions and (2) that PHS has informed all other licensees of LICENSED
PATENT RIGHTS of the infringement pursuant to Paragraph 11.01. If LICENSEE
desires to initiate a suit for patent infringement, LICENSEE shall notify PHS in
writing. If PHS does not notify LICENSEE of its intent to pursue legal action
within * days, LICENSEE will be free to initiate suit. PHS shall have a
continuing right to intervene in such suit. LICENSEE shall take no action to
compel the GOVERNMENT either to initiate or to join in any such suit for patent
infringement. LICENSEE may request the GOVERNMENT to initiate or join in any
such suit if necessary to avoid dismissal of the suit. Should the GOVERNMENT be
made a Party to any such suit, LICENSEE shall reimburse the GOVERNMENT for any
costs, expenses, or fees which the GOVERNMENT incurs as a result of such motion
or other action, including any and all costs incurred by the GOVERNMENT in
opposing any such motion or other action. In all cases, LICENSEE agrees to keep
PHS reasonably apprised of the status and progress of any litigation. Before
LICENSEE commences an infringement action, LICENSEE shall notify PHS and give
careful consideration to the views of PHS and to any potential effects of the
litigation on the public health in deciding whether to bring suit.
Notwithstanding the above, if LICENSEE is not the sole claimant, excluding the
GOVERNMENT, to a suit for infringement, LICENSEE will bear only its pro rata
share as determined by the total number of claimants to such suit of any such
expenses incurred as a result of such suit.     11.03   In the event that a
declaratory judgment action alleging invalidity or non-infringement of any of
the LICENSED PATENT RIGHTS shall be brought against LICENSEE or raised by way of
counterclaim or affirmative defense in an infringement suit brought by LICENSEE
under Paragraph 11.02, pursuant to this AGREEMENT and the provisions of
Chapter 29 of Title 35, United States Code or other statutes, LICENSEE may, but
is not obliged to: a) defend the suit in its own name, at its own expense, and
on its own behalf for presumably valid claims in the LICENSED PATENT RIGHTS; b)
in any such suit, ultimately to enjoin infringement and to collect for its use,
damages, profits, and awards of whatever nature recoverable for such
infringement; and c) settle any claim or suit for declaratory judgment involving
the LICENSED PATENT RIGHTS-provided, however, that PHS and appropriate
GOVERNMENT authorities shall have the first right to take such actions and shall
have a continuing right to intervene in such suit. If PHS does not notify
LICENSEE of its intent to respond to the legal action within * days, LICENSEE
will be free to do so. LICENSEE shall take no action to compel the GOVERNMENT
either to initiate or to join in any such declaratory judgment action. LICENSEE
may request the GOVERNMENT to initiate or to join any such suit if necessary to
avoid dismissal of the suit. Should the GOVERNMENT be made a Party to any such
suit by motion or any other action of LICENSEE, LICENSEE shall reimburse the
GOVERNMENT for any costs, expenses, or fees which the GOVERNMENT incurs as a
result of such motion or other action. If LICENSEE elects not to defend against
such declaratory judgment action, PHS, at its option, may do so at its own
expense. In all cases, LICENSEE agrees to keep PHS

 

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      reasonably apprised of the status and progress of any litigation. Before
LICENSEE commences an infringement action, LICENSEE shall notify PHS and give
careful consideration to the views of PHS and to any potential effects of the
litigation on the public health in deciding whether to bring suit.
Notwithstanding the above, if LICENSEE is not the sole claimant, excluding the
GOVERNMENT, to a suit for infringement, LICENSEE will bear only its pro rata
share, as determined by the total number of claimants to such suit, of any such
expenses incurred as a result of such suit.

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  11.04   In any action under Paragraphs 11.02 or 11.03, except for actions
where the LICENSEE opts-out under Paragraph 11.07, the expenses, including
costs, fees, attorney fees, and disbursements, shall be paid by LICENSEE in
accordance with Paragraphs 11.02 or 11.03. Up to * percent (*%) of such expenses
may be credited against the royalties payable to PHS under Paragraph 6.03 of
this AGREEMENT under the LICENSED PATENT RIGHTS in the country where the suit is
filed, except where LICENSEE elects to opt-out pursuant to Paragraph 11.07 of
this AGREEMENT. In the event that such expenses exceed the amount of royalties
payable by LICENSEE in any calendar year, the expenses in excess may be carried
over as a credit on the same basis into succeeding calendar years. A credit
against litigation expenses, however, may not reduce the royalties due in any
calendar year to less than the minimum annual royalty. Any recovery made by
LICENSEE, through court judgment or settlement, first shall be applied to
reimburse LICENSEE for its litigation expense and then to reimburse PHS for
royalties withheld as a credit against litigation expenses. Any remaining
recoveries shall be shared by LICENSEE and PHS as if the recovery was a
sublicensing royalty under Paragraph 6.05 of this AGREEMENT.

New Paragraphs 11.07 through 11.07 are added to read as follows:

  11.06   No suit may be brought by any other Party involving the LICENSED
PATENT RIGHTS without express written consent of LICENSEE. In the event that
another Party having rights under the LICENSED PATENT RIGHTS desires to initiate
a suit involving the LICENSED PATENT RIGHTS, LICENSEE shall be immediately
consulted. Appropriate procedures which provide LICENSEE with adequate control
of the litigation procedure shall be implemented in the event that LICENSEE
agrees to permit such a suit to go forward. PHS shall notify any other potential
licensees of the LICENSED PATENT RIGHTS of this provision and shall include this
provision in all licenses involving the LICENSED PATENT RIGHTS.     11.07   In
any action under Article 11, LICENSEE has the right to opt-out from bringing or
being a Party to such suit by notifying PHS within * days or anytime thereafter
of the date that LICENSEE first becomes aware of an infringement to the LICENSED
PATENT RIGHTS. Such course of action will not affect LICENSEE’S other rights
under this AGREEMENT, except that LICENSEE will not share in any recovery from
such a suit. LICENSEE does, however, agree to fully cooperate with PHS in
bringing such a suit, including access to, and testimonial support from,
employee of LICENSEE with any out of pocket expense to be borne by PHS.

Article 12:

Paragraphs 12.01 through 12.05 are amended to read as follows:

  12.01   PHS and USC offer no warranties other than those specified in
Article 1.     12.02   PHS and USC do not warrant the validity of the LICENSED
PATENT RIGHTS and make no representations whatsoever with regard to the scope of
the LICENSED PATENT RIGHTS, or that the LICENSED PATENT RIGHTS may be exploited
without infringing other patents or other intellectual property rights of third
parties.     12.03   PHS and USC MAKE NO WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER
DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS
RELATED THERETO.

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  12.04   PHS and USC do not represent that they will commence legal actions
against third parties infringing the LICENSED PATENT RIGHTS or permit any other
licensee of the LICENSED PATENT RIGHTS to threaten or commence legal actions
without prior written notification to LICENSEE.     12.05   LICENSEE shall
indemnify and hold PHS and USC, its employees, students, fellows, agents, and
consultants harmless from and against all liability, demands, damages, expenses,
and losses, including but not limited to death, personal injury, illness, or
property damage in connection with or arising out of: a) the use by or on behalf
of LICENSEE, its sublicensees, directors, employees, or third parties of any
LICENSED PATENT RIGHTS; or b) the use of a design, manufacture, distribution, or
use of any LICENSED PRODUCTS, LICENSED PROCESSES, LICENSED MATERIALS or
biological materials, or other products or processes covered by LICENSED PATENT
RIGHTS by LICENSEE. LICENSEE agrees to maintain a liability insurance program
consistent with sound business practice.

Article 13:

Paragraph 13.01 is amended to read as follows:

  13.01   The term of this AGREEMENT shall commence on the EFFECTIVE DATE, and
unless earlier terminated in a manner provided herein, this AGREEMENT shall
continue in full force and effect on a country by country and LICENSED PRODUCT
by LICENSED PRODUCT basis until the expiration of the last to expire of all
VALID CLAIMS in such countries included in the LICENSED PATENT RIGHTS.
Notwithstanding the above, upon expiration, but not termination of this
AGREEMENT, and subject to the provisions of Paragraph 13.09, PHS grants to
LICENSEE a non-exclusive, fully paid-up, irrevocable license to use or otherwise
exploit LICENSED MATERIALS.

Paragraphs 13.03 through 13.06 are amended to read as follows:

  13.03   In the event that LICENSEE becomes insolvent, files a petition in
bankruptcy, or determines to file a petition in bankruptcy, LICENSEE shall
immediately notify PHS in writing. Furthermore, PHS shall have the right to
terminate this AGREEMENT immediately upon PHS’s receipt of a written petition
for bankruptcy of LICENSEE under this Paragraph.     13.04   LICENSEE shall have
a unilateral right to terminate this AGREEMENT and/or any licenses in any
country or territory by giving PHS thirty (30) days written notice to that
effect.     13.05   PHS shall specifically have the right to terminate or
modify, at its option, this AGREEMENT, if PHS determines that the LICENSEE: 1)
is not executing the COMMERCIAL DEVELOPMENT PLAN submitted with its request for
a license and the LICENSEE cannot otherwise demonstrate to PHS’s satisfaction
that the LICENSEE has taken, or can be expected to take within a reasonable
time, effective steps to achieve PRACTICAL APPLICATION of the LICENSED PRODUCTS
or LICENSED PROCESSES; 2) has not achieved the BENCHMARKS as may be modified
under Paragraph 9.02; 3) has willfully made a false statement of, or willfully
omitted, a material fact in the license application or in any report required by
the license AGREEMENT; 4) has committed a material breach of a covenant or
agreement contained in the license; 5) is not keeping LICENSED PRODUCTS or
LICENSED PROCESSES reasonably available to the public after commercial use
commences; 6) cannot reasonably satisfy unmet health and safety needs; or 7)
cannot reasonably justify a failure to comply with the domestic production
requirement of Paragraph 5.02 unless waived. In making this determination, PHS
will take into account the normal course of such

 

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      commercial development programs conducted with sound and reasonable
business practices and judgment and the annual reports submitted by LICENSEE
under Paragraph 9.02. Prior to invoking this right, PHS shall give written
notice to LICENSEE providing LICENSEE specific notice of, and a ninety (90) day
opportunity to respond to, PHS’s concerns as to the previous items 1) to 7).

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  13.06   When the public health and safety so require, and after written notice
to LICENSEE providing LICENSEE with a sixty (60) day opportunity to respond, PHS
shall have the right to require LICENSEE to grant sublicenses to responsible
applicants, on reasonable terms, in LICENSED FIELD OF USE under the LICENSED
PATENT RIGHTS, unless (1) LICENSEE can reasonably demonstrate that the granting
of the sublicense would not materially increase the availability to the public
of the subject matter of the LICENSED PATENT RIGHTS or (2) submits a COMMERCIAL
DEVELOPMENT PLAN for the LICENSED PATENT RIGHTS and LICENSED PRODUCTS in such a
FIELD OF USE which PHS reasonably deems to moot concerns of public health and
safety. PHS will not require the granting of a sublicense unless the responsible
applicant has first negotiated in good faith with LICENSEE.

Paragraph 13.09 is amended to read as follows:

  13.09   Within ninety (90) days of expiration or termination of this AGREEMENT
under this Article 13, a final report shall be submitted by LICENSEE. Any
royalty payments, including those incurred but not yet paid (such as the full
minimum annual royalty), and those related to patent expense, due to PHS shall
become immediately due and payable upon termination or expiration. If terminated
under this Article 13, sublicensees may elect to convert their sublicenses to
direct licenses with PHS pursuant to Paragraph 4.03. Unless otherwise
specifically provided for under this AGREEMENT, upon termination, but not upon
expiration, of this AGREEMENT, LICENSEE shall return all LICENSED PRODUCTS or
other materials included within the LICENSED PATENT RIGHTS to PHS or provide PHS
with certification of the destruction thereof.

Article 14:

Paragraphs 14.06 and 14.07 are amended to read as follows:

  14.06   All notices required or permitted by this AGREEMENT shall be given by
prepaid, first class, registered or certified mail or by an express/overnight
delivery service provided by a commercial carrier, or by facsimile with
confirmation copy sent by regular first class, prepaid mail, properly addressed
to the other Party at the address designated on the following Signature Page, or
to such other address as may be designated in writing by such other Party. PHS
notices to LICENSEE shall be addressed: “Attention: President” with copies of
such notices sent to “Vice President, Corporate Development”, Notices shall be
considered timely if such notices are received on or before the established
deadline date or sent on or before the deadline date as verifiable by U.S.
Postal Service postmark or dated receipt from a commercial carrier. Parties
should request a legibly dated U.S. Postal Service postmark or obtain a dated
receipt from a commercial carrier or the U.S. Postal Service. Private metered
postmarks shall not be acceptable as proof of timely mailing.     14.07   This
AGREEMENT shall not be assigned by LICENSEE except: a) with the prior written
consent of PHS, such consent not to be withheld unreasonably; or b) as part of a
sale or transfer of substantially the entire business of LICENSEE relating to
operations which concern this AGREEMENT. LICENSEE shall notify PHS within ten
(10) days of any assignment of this AGREEMENT by LICENSEE.

Paragraphs 14.10 through 14.12 are amended to read as follows:

  14.10   LICENSEE agrees to mark the LICENSED PRODUCTS or their packaging sold
in the United States with all applicable U.S. patent numbers and similarly to
indicate “Patent Pending"

 

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      status. ALL LICENSED PRODUCTS manufactured in, shipped to, or sold in
other countries shall be marked in such a manner as to preserve PHS and USC
patent rights in such countries.

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  14.11   By entering into this AGREEMENT, PHS and USC do not directly or
indirectly endorse any product or service provided, or to be provided, by
LICENSEE whether directly or indirectly related to this AGREEMENT. LICENSEE
shall not state or imply that this AGREEMENT is an endorsement by the
GOVERNMENT, PHS, USC, any other GOVERNMENT organizational unit, or any
GOVERNMENT employee. Additionally, LICENSEE shall not use the names of NIH, CDC,
PHS, USC, or DHHS or the GOVERNMENT or their employees in any advertising,
promotional, or sales literature without the prior written consent of PHS and
USC.     14.12   The Parties agree to attempt to settle amicably any controversy
or claim arising under this AGREEMENT or a breach of this AGREEMENT. LICENSEE
agrees first to appeal any such unsettled claims or controversies to the
designated PHS official, or designee, whose decision shall be considered the
final agency decision. Thereafter, LICENSEE may exercise any administrative or
judicial remedies that may be available.
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APPENDIX E—BENCHMARKS AND PERFORMANCE

LICENSEE agrees to the following BENCHMARKS for its performance under this
AGREEMENT and, within thirty (30) days of achieving a BENCHMARK, shall notify
PHS that the BENCHMARK has been achieved.

It is understood that the following benchmarks are those that currently are
believed to represent the appropriate course of action for bringing a product to
market. It further is understood that changes in circumstances, including but
not limited to, changes in the applicable law, changes in the progress in the
development of a product, changes in the market for such ocular products or
changes in the type and nature of products pursued by LICENSEE, and/or delays in
the commercial or scientific progress of the product or LICENSEE’S business, may
necessitate following a different plan for commercialization of a product. In
such instances, LICENSEE may request that the schedule of BENCHMARKS be modified
and will so notify PHS in writing and submit a new schedule of BENCHMARKS
subject to the approval of PHS, such approval not unreasonably being withheld.

      BENCHMARKS   EXPECTED DATES

*

 

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APPENDIX F—COMMERCIAL DEVELOPMENT PLAN

Attached as Exhibit 1 (14 pages total including cover sheet and table of
contents), submitted to PHS by Licensee on September 20, 1999.

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TABLE OF CONTENTS

         
I.    SUMMARY
    1  
II.   COMPANY PROFILE
    1  
III.  AGE-RELATED MACULAR DEGENERATION
    3  
IV.  PRODUCT DESCRIPTION
    4  
V.   DEVELOPMENT AND MANUFACTURING PLAN
    5  
VI.  RESEARCH PLAN; ADENOVIRUS VECTOR DESIGN FOR OCULAR GENE THERAPY
    8  
VII.  CLINICAL PLAN
    9  
VIII.  TIMELINES
    10  
SELECTED REFERENCES
    12  
APPENDIX-BENCHMARKS AND PERFORMANCE
    13  

Confidential

 

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I.   SUMMARY

GenVec is an emerging pharmaceutical company and a leader in the field of gene
therapy. The Company has a product-driven culture, and has demonstrated the
ability to rapidly create, evaluate and advance product candidates that address
important medical needs. GenVec also has a significant and expanding technology
base, with over 200 patents issued and pending throughout the world. The Company
is able to draw upon this technology to create technically feasible products for
initial introduction into the medical marketplace, as well as second-generation
products to extend its product franchise.

Importantly, GenVec possesses the resources and expertise to create technically
feasible gene therapy products utilizing the Pigment Epithelium-Derived Factor
(PEDF) technology, and is a strong partner for rapidly advancing product
candidates incorporating this PHS technology. These resources and capabilities
are described in more detail throughout the Development Plan. In addition, the
discovery that PEDF is an antiangiogenic factor heightens our initial interest
in this protein because of its complementary nature with respect to our other
product programs (see COMPANY PROFILE for further details). Specifically, GenVec
is a leader in the development of therapeutic angiogenesis
(proangiogenesis) agents such as vascular endothilial growth factor for the
treatment of coronary artery and peripheral vascular diseases.

To create this leadership position, GenVec has established expertise and
capabilities pertaining to angiogenesis, gene delivery and expression systems
for such applications, and state-of-the-art process development and
manufacturing-related technologies. This expertise and our capabilities place
GenVec in the distinct position of being able to leverage not only proangiogenic
approaches in the treatment of diseases, but also antiangiogenic strategies. We
have been and are keenly interested in extending our current angiogenic program
to include a complementary antiangiogenic arm, and are interested in pursuing
the commercial development of PEDF gene therapy product for both ocular and
non-ocular indications, such as cancer. The Development Plan submitted herein
pertains to the field of ocular gene therapy applications for which GenVec has
been granted the right to pursue an exclusive license.

II.   COMPANY PROFILE

GenVec is a pioneer in the development of novel gene-based pharmaceuticals to
treat major illnesses such as cardiovascular disease and cancer. The Company is
a leader in the field of therapeutic angiogenesis (new blood vessel formation)
for the treatment of coronary artery disease (CAD) and peripheral vascular
disease (PVD). GenVec’s lead investigational product for therapeutic
angiogenesis is AdovVEGF121.10 (also referred to as BIOBYPASS-Registered
Trademark- angiogen). BIOBYPASS-Registered Trademark- is a trademark of GenVec,
Inc. This is a novel, propietary compound that combines GenVec’s gene delivery
technology and adenoviral manufacturing processes with the patern-protected
VEGFI21.10 gene, which GenVec exclusively licensed from Scios, Inc. on a
worldwide basis. BIOBYPASS-Registered Trademark- angiogen is being developed
presently under the terms of a collaboration with the Parke-Davis pharmaceutical
division of Warner-Lambert Company.

Confidential

1

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Poor blood flow, or ischemia, is typically the major problem associated with
both CAD and PVD. The goal is to induce the formation of new blood vessels in
tissues with inadequate blood flow such as in the heart and legs. Preclinical
and toxicological testing of BIOBYPASS-Registered Trademark- angiogen was
carried out successfully by GenVec in collaboration with its external scientific
advisors. BIOBYPASS-Registered Trademark- angiogen received IND approval and
multiple Phase I studies have been completed. Phase II studies will be initiated
this year.

GenVec’s other product development programs include the treatment of vascular
damage such as arterial stenosis and restenosis which frequently occur following
vascular graft procedures and balloon angioplasty. The Company is pursuing the
treatment of cancer through a drug discovery partnership with Fuso
Pharmaceutical Industries, Ltd. of Japan, as well as an alliance with Varian
Biosynergy to develop products of use in radiation oncology. Based on our
experiences and accomplishments, GenVec has the capabilities necessary to
successfully develop Pigment Epithelium-Derived Factor (PEDF) and/or its
truncated variants for an ophthalmic application. GenVec has prior experience in
the manufacture of clinical grade material as well as experience in preclinical
and clinical drug development. As described above, we have clinical experience
at Cornell Medical Center and other institutions. GenVec has a clinical
research/regulatory infrastructure; this group is capable of taking PEDF through
the clinical development phase to registration. And GenVec has experience with
the CBER gene therapy group.

GenVec, a privately held corporation, was incorporated in 1992. It holds or has
licenses to over 200 issued, allowed or pending patents worldwide, of which 28
are issued or allowed in the United States. The Company is located in Rockville,
Maryland, and has approximately 85 employees as of July 1999. The Company will
move to a new expanded facility in Gaithersburg, Maryland at the end of 1999.

A. GENVEC’S GOALS

  -   To utilize molecular-based treatment strategies to develop innovative
products that significantly improve patient care     -   To combine advances in
molecular biology and gene transfer to achieve medical and technological
breakthroughs     -   To focus on products that have a clear clinical
development path and meet patients’ needs

B. CORPORATE EXECUTIVES

      HERBERT J. CONRAD   CHAIRMAN, BOARD OF DIRECTORS
PREVIOUSLY OF HOFFMAN-LAROCHE RONALD G. CRYSTAL, M.D.   CHAIRMAN, SCIENTIFIC
ADVISORY BOARD
PRESENTLY OF CORNELL UNIVERSITY MEDICAL COLLEGE PAUL H. FISCHER, PH.D  
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
PREVIOUSLY OF ONCOLOGIX, PFIZER JEFFREY W. CHURCH   CHIEF FINANCIAL OFFICER
PREVIOUSLY OF PRICE WATERHOUSE, MERIDIAN

Confidential

2

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      HENRIK S. RASMUSSEN, M.D., PH.D   VICE PRESIDENT, CLINICAL RESEARCH AND
REGULATORY AFFAIRS
PREVIOUSLY OF BRITISH BIOTECH, PFIZER       C. RICHTER KING, PH.D   VICE
PRESIDENT, RESEARCH
PREVIOUSLY OF GEORGETOWN UNIVERSITY, ONCOLOGIX       IMRE KOVESDI, PH.D   CHIEF
SCIENTIFIC OFFICER
PREVIOUSLY OF LEDERLE       THOMAS E. SMART   VICE PRESIDENT, CORPORATE
DEVELOPMENT PREVIOUSLY OF CELL GENESYS, G.D. SEARLE       GRANT YONEHIRO   VICE
PRESIDENT, PRODUCT MANAGEMENT
PREVIOUSLY OF CELL GENESYS

C.   FACILITIES OVERVIEW       By the end of 1999, GenVec will have 44,000-sq.
ft. of new laboratory and corporate development space in Gaithersburg, Maryland.
Research and discovery laboratories, development/manufacturing scale-up
facilities, animal facilities and administrative offices will all be housed in a
single location. Future expansion space also is available.   III.   AGE-RELATED
MACULAR DEGENERATION   A.   MEDICAL NEED AND MARKET FOR AGE-RELATED MACULAR
DEGENERATION       The National Eye Institute (NEI) has published that
age-related macular degeneration (AMD) is now one of the major debilitating
diseases of the aging population. Concern has been raised so much so that
research in this area is now a high priority for the NEI and that at least
$16 million is dedicated to research directly related to AMD. This amount in
1997 represents an increase of 333% since 1989. As of 1997, it was estimated
that AMD caused visual impairment in approximately 1.7 million of the 34 million
Americans age 65 and older (1). According to the Macular Degeneration
Foundation,the prevalence for AMD in the U.S. may actually be higher, ranging
between 4 to 13 million for individuals greater than 55 years old.       AMD
exists in two forms: the dry form and wet form. The dry form, though more
prevalent, is a progressive and slow disease. In contrast, the wet form can very
rapidly lead to severe visual impairment and blindness. The wet form, also known
as exudative macular degeneration, results from new blood vessel formation as
well as blood vessel leakage. Disruption of the blood vessels distorts the
central portion of the retina, the macula, which is responsible for sharp,
central vision. Eventually, scar tissue may form and lead to further distortion
in the macula that eventually can cause severe vision loss. Approximately 10-15%
of all AMD is due to that wet form.       At present, there are no FDA-approved
products for the treatment of dry macular degeneration and although there are
several methods of treatment for the wet form of AMD, none of these methods are
considered satisfactory (see Table 1). The newest technology, a photodynamic
method, is considered by many ophthalmologists as providing only palliative
care. THUS, THERE IS A GREAT UNMET MEDICAL NEED TO IDENTIFY NEW THERAPIES THAT
CAN PROVIDE TREATMENT FOR AMD PARTICULARLY FOR THE AGGRESSIVE FORM, WET MACULAR
DEGENERATION.

Confidential

3

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    The present submission will focus on a gene therapy approach for the
treatment of wet macular degeneration.       Table 1-Estimated Cost per
Procedure in the Treatment of Wet Macular Degeneration

      PROCEDURE   COST/PROCEDURE Radiation Therapy   $1,000/visit X 8 visits =
$8,000* Laser Surgery   $3,000* Surgery (Retinal translocation)   $45,000*
Photodynamic Therapy   $1,200/visit x 6 visits = $7,200+

    *Costs based on estimations provided by the Macular Degeneration Foundation,
1999       +Cost estimate as of BioWorld Today, August 17, 1999   B.   MEDICAL
NEED AND MARKET FOR DIABETIC RETINOPATHY       Diabetic retinopathy occurs to
some extent in approximately 90% of the 8 million diagnosed diabetic patients in
the United States. It is one of the major complications of diabetes. Like
exudative macular degeneration, blurred vision and blindness in diabetic
patients results from leaking blood vessels and abnormal growth of new vessels
in the retina. Subsequent vitreous hemorrhaging and retinal detachment can lead
to permanent blindness. However, unlike exudative macular degeneration, where no
suitable treatments exist, laser treatment is considered an acceptable treatment
therapy for diabetic retinopathy. Therefore, the developmental research, and
clinical plan as stated for PEDF gene therapy product, though focused primarily
on exudative macular degeneration, is very likely to be applicable to diabetic
retinopathy (DR) and other ocular diseases in which neovascularization is part
of the pathogenesis. Our strategy will be to initiate work on relevant model
systems for macular degeneration and based on preliminary results decide whether
to expand the developmental program to include diabetic retinopathy. If so,
animal testing will be expanded to include models more physiologically relevant
to diabetic retinopathy than macular degeneration. The cost to extend the
development program to include diabetic retinopathy would be approximately
double of that for macular degeneration alone. Similarly, GenVec will
investigate additional ocular indications as future data warrant.   IV.  
PRODUCT DESCRIPTION       GenVec intends to develop a gene therapy product that
codes for the human antiangiogenic protein, Pigment Epithelium-Derived Factor
(PEDF). The lead product will be delivered locally in the eye(s) of individuals
with wet macular degeneration.   A.   MEDICAL RATIONALE       GenVec’s approach
is to *

Confidential

4

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*

[Pages 5-10 are redacted]

Confidential

5

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*

Conclusion: GenVec has identified that ophthalmic diseases, particularly wet
macular degeneration and diabetic retinopathy, as areas of high medical need as
well as promising commercial opportunities. Utility of
Pigment-Epithelium-Derived Factor (PEDF) and its distinctive biological
properties could provide potentially a major advancement toward the treatment of
blinding eye diseases resulting from aberrant neovascularization. GenVec has
identified a Project Team for this program, and has committed considerable time
and effort in evaluating this opportunity and are intent on moving this program
forward as quickly as possible.

FOR FURTHER QUESTIONS OR CONCERNS PLEASE CONTACT:

Diane Arrington, GenVec
Associate Director of Corporate Development
12111 Parklawn Drive
Rockville, MD 28852
(301)816-3016 x230 or diana_arrington@genvec.com

Confidential

11

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SELECTED REFERENCES

1.   http://www.nci.nih.gov.news/varmus.html   2.   Hanahan D. and Polkman. S.
(1996) Patents and emerging mechanisms of the angiogenci switch during
tumorigenesis. Cell 86, 353-364.   3.   Auerbach, W., and Auerbach, R.
(1994) Angiogenesis inhibition: a review. Pharmacol Ther. 63, 265-311.   4.  
Dawson, D.W.; Volpen, O.V. Gillis, P.E., Crawford, S.E., Xu, H.J. Benedict, W.,
and Bouck, N.P. (1999) Pigment epithelium-derived factor: A potent inhibitor of
angiogenesis. Science 285, 245-248.   5.   Becern, S.P. Palmer, I. Kumar, A.
Steele, E. Shilbach, J.; Notario, V., and Chader, G.J. (1993) Overexpression of
fetal human pigment epithelium-derived factor in Escherichia coli. A
functionally active neurotrophic factor. J. Biol. Chern 268:23148-23156.   6.  
Steele, F.R. Chader, G.J. Johnson, L.V. and Tombran-Tinic, J. (1993) Pigment
eipthelium-derived factor: Neurotrophic activity and identification as a member
of the serine protease inhibitor gene family. Proc. Neti Acad Sci USA 90:
1526-1530.   7.   Kovesdi, I. Brough, D.E. Bruder, J.T. and Wickham, T.J.
(1997) Adenoviral vectors for genbe transfer, Curr. Opin. Biotechnol, 8,
583-589.   8.   Brough, D.E. Lizonova, A, Han. C., Kulesa, V.A., and Kovesdi, I.
(1995) A gene transfer vector-cell line system for complete functional
complementation of adenovirus early regions E1 and E4. J. Virology, 70,
6497-6501.   9.   Brough, D.E. Han, C. Kules, V.A. Lee. G.M. Carolupo, L.J.
Lizonova, A. and Kovesdi. I. (1997) Activation of transgene expression by early
egion 4 is responsible for a high level of persistent transgene expression from
adenovirus vectors in vivo. J. Virology. 71. 9206-9233.   10.   Polverini, P.J.
Bouck N.P., and Rastinejad F. (1991) Assay and purification of naturally
occuring inhibitor of angiogenesis. Methods of Enzymol. 198: 440-459.   11.  
Frank, R.N., Das, A, and Weber, M.L. (1989) A model of subretinal
neovascularization in the pigmented Curr. Eye Res. 8: 239-247.

Confidential

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CONFIDENTIAL

PUBLIC HEALTH SERVICE

AMENDMENT TO PATENT LICENSE AGREEMENTS EXCLUSIVE
COVER PAGE

For PHS internal use only:

    Patent License Number:       L-180-97/1      

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      Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):      
USSN 08/367,841 08/520,373; 07/894,215 and U.S. Patent 5,840,686      

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      Licensee:       GenVec, Inc.      

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      Cooperative Research and Development Agreement (CRADA) Number (if
applicable):       None      

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      Additional Remarks:      

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      Public Benefit(s):      

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This Patent License Agreement, hereinafter referred to as the “Amendment”,
consists of this Cover Page, an attached Amendment, and a Signature Page. The
Parties to this Amendment are:

  1)   The National Institutes of Health (“NIH”), the Centers for Disease
Control and Prevention (“CDC”), or the Food and Drug Administration (“FDA”),
hereinafter singly or collectively referred to as “PHS”, agencies of the United
States Public Health Service within the Department of Health and Human Services
(“DHHS”); and     2)   The person, corporation, or institution identified above
and/or on the Signature Page, having offices at the address indicated on the
Signature Page, hereinafter referred to as “Licensee”.

 

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AMENDMENT TO PHS PATENT LICENSE-NONEXCLUSIVE

PHS and Licensee agree as follows:

Whereas, PHS and Licensee have previously entered into a certain Patent License
- Exclusive, L-180-97/0, (hereinafter, Agreement,), having an Effective Date of
January 8, 2000 (“L-180-97”) which relates to certain Licensed Materials,
Licensed Product(s), and Licensed Process(es) as defined therein (hereinafter,
“Licensed Technology”).

Whereas, Licensee desires L-180-97, which relates to certain Licensed
Technology, to be amended in order to facilitate the ability of Licensee to
further exploit the commercial potential of Licensed Technology; and Whereas,
PHS, in consideration of Licensee’s willingness to develop new products, and
otherwise further commercially exploit the Licensed Technology is willing to
amend L-180-97 as set forth herein to provide Licensee with the opportunity to
further commercially exploit the Licensed Technology. Unless otherwise amended
herein all definitions included in this Amendment have the same meaning as in
L-180-97.

Unless otherwise amended herein all terms and conditions of L-180-97 remain in
force, the terms and conditions of this Amendment are explicitly incorporated
into L-180-97, and this Amendment, in conjunction with L-180-97, will be
constitute the entire Agreement between Licensee and PHS. The “Effective Date”
of this Amendment will be the date of the last signature on the attached
Signature Page.

Now therefore, PHS and Licensee, intending to be bound, hereby agree to amend
L-180-97 as follows:

1.   ARTICLE 2:

Paragraph 2.19 is amended to read as follows:

  2.19   “Licensed Materials” means (a) the plasmid piFS17, as described in
Steele, FR, et al., “Pigment epithelium-derived factor: Neurotrophic activity
and identification as a member of the serine protease inhibitor gene family”
PNAS, USA 90(4): 1526-1530 (Feb. 15, 1993) which contains the eDNA encoding
human Pigment Epithelium Derived Factor; (b) approximately 10mul of polyclonal
antisera which contains polyclonal antibodies which specifically recognize
Pigment Epithelium Derived Factor (PEDF) and which is described in Wu YQ, et al.
Protein Expression Purification 6(4): 447-56 (Aug. 1995); and (c) a small
quantity, approximately 10 mug, of purified PEDF protein prepared as described
in Stratikos, E, et al. Protein Science 5(12): 2575-82 (Dec. 1996).

 

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2.   ARTICLE 6;

Paragraph 6.02 is amended to read as follows:

  6.02   Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as
set forth in Appendix C. The minimum annual royalty is due and payable on
January 1 of each calendar year and may be credited against any earned royalties
due for sales made in that year. The minimum annual royalty due for the first
calendar year of this Agreement may be prorated according to the fraction of the
calendar year remaining between the Effective Date of this Agreement and the
next subsequent January 1. The minimum annual royalty for the first calendar
year of this Agreement is due as of the Effective Date of this Agreement, may be
credited against any earned royalties due for sales made in the first calendar
year and is payable within thirty (30) days of the Effective Date of this
Agreement.

New Paragraphs 6.15 through 6.16 are added to read as follows:

  6.15   Licensee agrees to pay PHS, as an additional royalty, a nonrefundable,
non-creditable Amendment Execution Royalty as set forth in Appendix C.     6.16
  Licensee agrees to pay PHS, as an additional royalty, a nonrefundable,
non-creditable Subsequent Materials Transfer Royalty as set forth in Appendix C.

3.   ARTICLE 10;

A new Paragraph 10.05 is added to read as follows:

  10.05   PHS agrees to provide to Licensee a copy of Interinstitutional
Agreement (hereinafter, IIA), L-221-94/2, between PHS and USC upon execution of
this Amendment. Licensee agrees not to disclose this IIA to any third party,
without the prior written approval of PHS, except in conjunction with
sublicensing activities carried out under Paragraph 4.01 of this Agreement.
Licensee shall use reasonable care to maintain the confidentiality of the IIA,
with at least the same degree of care as is exercised in respect of Licensees
own proprietary information, and shall disclose the IIA, only to those of
Licensees employees who have a need to review the IIA, for the purposes of
complying with the terms of this Agreement.

4. APPENDIX C is amended to add the following new sections VIII and IX:

  VIII.   AMENDMENT EXECUTION ROYALTY according to Paragraph 6.15:     (A)   For
this, the first amendment of L-180-97, the Amendment Execution Royalty is *
dollars ($*) due as of the Effective Date of the Amendment and payable within
thirty (30) day of the Effective Date of the Amendment.     IX.   SUBSEQUENT
MATERIALS TRANSFER ROYALTY pursuant to Paragraph 6.16: (A) For this, the first
provision of additional Licensed Materials to Licensee related to Licensed
Technology, Licensee agrees to pay PHS a Subsequent Materials Transfer Royalty
in the total of * dollars ($*) with the royalty being apportioned as follows: *
dollars ($*) to item (b) of Paragraph 2.19 as amended herein and * dollars ($*)
to item (c) of Paragraph 2.19 as amended herein. The Subsequent Materials
Transfer Royalty is due as of the Effective Date of this Amendment and is
payable within thirty (30) days of the Effective Date of this Amendment.

SIGNATURES BEGIN ON NEXT PAGE

Amendment to PHS Patent License Agreement-Non-Exclusive CONFIDENTIAL L-180-97/1
Model 980611 Page 3 of 4 FINAL GenVec, Inc. March 2, 2000

 

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AMENDMENT TO PHS PATENT LICENSEE AGREEMENT—NON-EXCLUSIVE
SIGNATURE PAGE

For PHS:

          Jack Spiegel   3/9/2000    

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  Jack Spiegel, Ph.D. Date
Director, Division of Technology Development and Transfer Office of Technology
Transfer National Institutes of Health                   Mailing Address for
Notices:                   Office of Technology Transfer National Institutes of
Health 6011 Executive Boulevard, Suite 325 Rockville, Maryland 20852-3804 U.S.A.
       

For Licensee (Upon, information and belief, the undersigned expressly certifies
of or affirms that the contents of any statements of Licensee made or referred
to in this document are truthful and accurate.): by:

          Thomas E. Smart     March 2, 2000    

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Date  

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  Signature of Authorized Official

Thomas E. Smart
Printed Name

Senior Vice President, Corporate Development
Title

Official and Mailing Address for Notices:

GenVec, Inc.

65 West Watkins Mill Road

Gaithersburg, MD 208878

Attention: President
Copies to: Vice President Corporate Development

Any false or misleading statements made, presented, or submitted to the
Government, including any relevant omissions, under this Amendment and during
the course of negotiation of this Amendment are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fines(s) and/or imprisonment).

Amendment to PHS Patent License Agreement-Non-Exclusive CONFIDENTIAL L-180-97/1
Model 980611 Page 4 of 4 FINAL GenVec, Inc. March 2, 2000