Exhibit 10.3

EXECUTION COPY

UNC/NIIGATA/PANACOS LICENSE AGREEMENT

UNC/NIIGATA/PANACOS LICENSE AGREEMENT (this “Agreement”), effective as of
January 20, 2009 (the “Effective Date”), between THE UNIVERSITY OF NORTH
CAROLINA AT CHAPEL HILL having an address at CB #4105, 308 Bynum Hall, Chapel
Hill, NC (hereinafter referred to as “University”), NIIGATA UNIVERSITY OF
PHARMACY AND APPLIED LIFE SCIENCES having an address at 5-13-2 Kamishin’Ei-cho
Niigata 950-2081, Japan (“Niigata”) and PANACOS PHARMACEUTICALS, INC., a
corporation organized and existing under the laws of Delaware and having an
address at 209 Perry Parkway, Gaithersburg, MD 20877 (together with its
Affiliates hereinafter referred to as “Licensee”).

WITNESSETH

WHEREAS, University owns and controls its share of the ownership interest in the
inventions covered by the Patents listed in Appendix A attached hereto
(“University Inventions”), developed jointly by University and Licensee pursuant
to the Sponsored Research Agreement, and Niigata owns and controls its share of
the ownership interest in the inventions covered by the Patent listed on
Appendix B attached hereto (“Niigata Inventions”) (University Inventions and
Niigata Inventions hereinafter collectively referred to as “Inventions”); and

WHEREAS substantially concurrently with the execution and delivery of this
Agreement, (i) Licensee and Myriad Genetics, Inc. (“Myriad”) are entering into,
and effecting a closing under, an Asset Purchase Agreement and related
agreements whereby Panacos is assigning to Myriad Panacos’s share of the
ownership interest in certain inventions covered by certain Patents (not
including the Inventions) jointly owned by Panacos and University (the
“Bevirimat Patents”), and (ii) University and Myriad are entering into a License
Agreement dated as of the date hereof whereby University is granting to Myriad a
worldwide license to the Bevirimat Patents; and

WHEREAS, Licensee is desirous of producing, using and selling products which
include the use of Inventions and is willing to expend its commercially
reasonable efforts and resources to do so if it can obtain an exclusive license
to use the Inventions under the terms and conditions set forth herein; and

WHEREAS, University and Niigata desire to facilitate a timely transfer of their
information and technology concerning the Inventions for the ultimate benefit of
the public and this transfer is best accomplished by the grant of this license;
and

WHEREAS, in the opinion of the University and Niigata, this transfer can best be
accomplished consistent with their mission by affiliation with Licensee;

WHEREAS, University, Niigata, and Licensee entered into that certain License
Agreement dated as of February 28, 2003 (as amended) pursuant to which Licensee
obtained an exclusive license to certain Inventions (the “Original Agreement”);

WHEREAS, University, Niigata, and Licensee now wish to amend and restate the
Original Agreement in its entirety;

 

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NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:

I. DEFINITIONS

1.1. “UNIVERSITY TECHNOLOGY” means any unpublished (a) research and development
information, (b) unpatented inventions, and (c) technical data, owned by or in
the control of University prior to the Effective Date or during the Term of this
Agreement, which relates to and is necessary for: (i) the practice of the
Inventions, or (ii) the manufacture, use, sale, offer for sale or importation of
any compounds disclosed in the Patents or any analogs, derivatives,
modifications or improvements thereof, and which University has the right to
provide Licensee under this Agreement, and which Licensee does not otherwise own
or control.

1.2. “INVENTIONS” has the meaning set forth in the first Whereas clause above.

1.3. “NIIGATA INVENTIONS” has the meaning set forth in the first Whereas clause
above.

1.4. “UNIVERSITY INVENTIONS” has the meaning set forth in the first Whereas
clause above.

1.5. “LICENSED PRODUCTS” means (i) any method, procedure, or component part
thereof whose manufacture, use, sale, offer for sale or importation is covered
by any University Technology or Niigata Technology or by one or more Valid
Claims of the Patents, or (ii) any product containing at least one Licensed
Compound.

1.6. “LICENSED COMPOUNDS” means any individual compounds whose manufacture, use,
sale, offer for sale or importation is covered by any University Technology or
Niigata Technology or by one or more Valid Claims of the Patents.

1.7. “PATENTS” means any US patents and/or patent applications owned or
controlled in whole or in part by University or Niigata prior to or during the
Term of this Agreement and which University and/or Niigata has the right to
provide its share to Licensee and which are included in and limited to those
listed in Appendix A and Appendix B, as well as any continuations, continuations
in part, divisionals, provisionals, continued prosecution applications,
extensions, or reissues thereof, and any foreign counterpart of any of the
foregoing.

1.8. “NET SALES” means, subject to Article 3.4, the invoiced sales price of
Licensed Products sold by Licensee, less (a) any charges for sales taxes or
other taxes separately stated on the invoice, (b) shipping and insurance
charges, (c) actual credits and allowances for returned, rejected, recalled, or
defective goods, (d) trade discounts, but before cash discounts and
(e) government mandated rebates. Licensed Products will be considered sold when
billed out, or when delivered or paid for before delivery, whichever first
occurs. As used herein, “cash discounts” means discounts given on account of
payments made in cash or payments made early.

 

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1.9. “LICENSED TERRITORY” means the world, subject to any restrictions in
Article XI herein.

1.10. “LICENSED FIELD” means any and all human therapeutic and prophylactic
uses.

1.11. “SUBLICENSEE” means any person or organization to which Licensee has
granted a sublicense to the University Technology or Niigata Technology or
Patents for the purpose of development and/or commercialization of Licensed
Products in the Licensed Field.

1.12. “CONFIDENTIAL INFORMATION” means information considered proprietary to the
party disclosing the information, and may include information relating to:
research, development, patent prosecution and maintenance, manufacturing,
purchasing, accounting, engineering, marketing, merchandising or selling.

1.13. “SUBLICENSE INCOME” means all royalties, all other payments, and any
equity Licensee receives from Sublicensees, of which University and/or Niigata
is owed a percentage; provided, however, that Sublicense Income shall
specifically exclude (i) payments made in consideration for the issuance of
equity or debt securities of Licensee at fair market value (but shall
specifically include any payments received by Licensee from the issuance of
securities of Licensee to the extent such payments are in excess of fair market
value), (ii) equity or debt securities of a Sublicensee issued to Licensee if
acquired by Licensee at fair market value, and (iii) payments specifically
committed to research funding or development activities, or reimbursements of
the same. In the event of a sublicense as contemplated herein, such sublicense
shall state explicitly the consideration provided in exchange for University
Technology or Niigata Technology or Patents.

1.14. “IND” means an Investigational New Drug Application filed with the Food
and Drug Administration for authorization to initiate human clinical trials in
the United States, or any foreign equivalent document for authorization to
initiate human clinical trials outside the United States.

1.15. “AFFILIATE” means any corporation or other business entity which, directly
or indirectly, controls, is controlled by, or is under common control with, a
party. For purposes of this definition, “control” means ownership or beneficial
interest in 40% or more of the voting stock or other voting interest of the
corporation or other business entity.

1.16. “ANDA” means an Abbreviated New Drug Application, made in the form of a
Food and Drug Administration submission or package to the Food and Drug
Administration, for approval to market a Licensed Product in the United States,
or any foreign equivalent document for approval to market a Licensed Product
outside the United States.

 

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1.17. “CLASS OF LICENSED COMPOUNDS” means each subset of Licensed Compounds as
described in the Patents and identified in Appendix A and Appendix B as
(i) Class 1, (ii) Class 2, or (iii) Class 3.

1.18. “FIRST COMMERCIAL SALE” means the first sale of Licensed Product for use
in the Field by Licensee or its Sublicensee to any third party in a country.

1.19. “NDA” means an original New Drug Application, made in the form of a Food
and Drug Administration submission or package to the Food and Drug
Administration, for approval to market a Licensed Product in the United States,
or any foreign equivalent document.

1.20. “PERFORMANCE MILESTONE” means any milestone listed on Appendix C attached
hereto.

1.21. “PHASE II CLINICAL TRIAL” means a dosing range trial to evaluate efficacy
and safety in the targeted patient population and/or to define optimal dosing
regimen of Licensed Product, or any other trial required to be designated as a
Phase II clinical trial by the Food and Drug Administration.

1.22. “ROYALTY QUARTER” has the meaning set forth in Article 3.5.

1.23. “SPONSORED RESEARCH AGREEMENT” means that certain sponsored research
agreement by and between University and Licensee effective April 28, 1999,
including any amendments thereto.

1.24. “TERM” shall commence on the Effective Date and shall expire upon the
expiration of the last Valid Claim of the Patents, unless earlier terminated
pursuant to Article VII.

1.25. “VALID CLAIM” means either (a) a claim of an issued and unexpired patent
included within the Patents which has not been held permanently revoked,
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise or (b) a claim of a pending patent
application included within the Patents, which claim was filed in good faith and
has not been abandoned or finally disallowed without the possibility of appeal
or refiling of said application. Notwithstanding the foregoing (and subject to
Article 3.3(iii)), if a claim of a pending patent application has not issued as
a claim of an issued patent within ten (10) years after the filing date from
which such claim takes priority, such pending claim shall cease to be a Valid
Claim for purposes of this Agreement unless and until such claim becomes an
issued claim of an issued patent.

1.26. “PATENT COUNSEL” has the meaning set forth in Article 11.1.

 

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1.27. “NIIGATA TECHNOLOGY” means any unpublished (a) research and development
information, (b) unpatented inventions, and (c) technical data, owned by or in
the control of Niigata prior to the Effective Date or thereafter during the
Term, which relates to and is necessary for: (i) the practice of the Niigata
Inventions, or (ii) the manufacture, use, sale, offer for sale or importation of
any compounds disclosed in the Niigata Patents or any analogs, derivatives,
modifications or improvements thereof, and which Niigata has the right to
provide Licensee under this Agreement, and which Licensee does not otherwise own
or control.

II. TERMINATION OF ORIGINAL AGREEMENT; GRANT OF LICENSE; UNIVERSITY RESTRICTIONS

2.1. University, Niigata, and Licensee hereby acknowledge and agree that the
Original Agreement is terminated and superseded by this Agreement as of the
Effective Date of this Agreement. Notwithstanding any provision to the contrary
in the Original Agreement, no provision contained therein shall survive
termination of the Original Agreement. Notwithstanding the foregoing, each party
hereby agrees that all actions, suits, damages, claims and demands, in law or in
equity, which either of them has against the other under the terms of the
Original Agreement, upon, or by reason of any breach of the Original Agreement,
shall be enforceable under this Agreement.

2.2. (i) University grants to Licensee, to the extent of the Licensed Territory,
a non-exclusive right and license (with the right to grant sublicenses pursuant
to Article 2.3) to use University Technology in the Licensed Field, subject to
all the terms and conditions of this Agreement.

(ii) University grants to Licensee, to the extent of the Licensed Territory, an
exclusive right and license (with the right to grant sublicenses pursuant to
Article 2.3) under the Patents to make, have made, use, sell, offer for sale,
and import Licensed Products and Licensed Compounds embodying the Invention(s)
in the Licensed Field, upon the terms and conditions set forth herein.

(iii) Niigata grants to Licensee, to the extent of the Licensed Territory, a
non-exclusive right and license (with the right to grant sublicenses pursuant to
Article 2.3) to use Niigata Technology in the Licensed Field, subject to all the
terms and conditions of this Agreement.

(iv) Niigata grants to Licensee, to the extent of the Licensed Territory, an
exclusive right and license (with the right to grant sublicenses pursuant to
Article 2.3) under the Niigata Patents to make, have made, use, sell, offer for
sale, and import Licensed Products and Licensed Compounds embodying the Niigata
Inventions in the Licensed Field, upon the terms and conditions set forth
herein.

2.3. University and Niigata each grant to Licensee, to the extent of the
Licensed Territory, the right to sublicense. Sublicensees shall be subject to
provisions substantially similar to the following provisions of this Agreement:
Articles 2.5, 2.6, 2.7, 2.8, 2.9, VI, IX, 11.6, XIV, XV, XVI, XIX, XXI, and XXII
and this Article 2.3. Sublicensees may not further sublicense

 

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any rights they obtain herein without the written consent of University as to
the University Inventions and Niigata as to the Niigata Inventions. In the event
of early termination of this Agreement, any sublicense agreement with any
Sublicensee shall provide for the termination of the sublicense, or the
conversion to a license directly between such Sublicensee and University and/or
Niigata (as the case may be) on substantially the same terms as the sublicense
agreement, at the option of the Sublicensee, provided, however, that in no event
shall University or Niigata have greater obligations to such Sublicensee as it
has to Licensee hereunder.

2.4. Any license granted herein (excluding the grant in Article 2.2(i) above) is
exclusive for the Term of this Agreement.

2.5. Licensee shall not disclose any University Technology pursuant to Article
2.2(i) above to third parties during the Term or any time thereafter, provided,
however, that disclosure of University Technology may be made at any time
(1) with the prior written consent of University, or (2) pursuant to the
provisions of this Agreement, including Article 6 herein.

2.6. Licensee shall not disclose any Niigata Technology pursuant to Article
2.2(iii) above to third parties during the Term or any time thereafter,
provided, however, that disclosure of Niigata Technology may be made at any time
(1) with the prior written consent of Niigata, or (2) pursuant to the provisions
of this Agreement, including Article 6 herein.

2.7. Licensee is further granted the right to disclose and use any University
Technology, or other Confidential Information of University or Niigata
Technology, or other Confidential Information of Niigata pertaining to the
Patents, Licensed Products, or Licensed Compounds in any submission to local,
state, federal or foreign governmental agency, including, but not limited to,
the US Food and Drug Administration and the US Patent and Trademark Office,
notwithstanding any provisions to the contrary in Article VI.

2.8. Notwithstanding the foregoing, any and all licenses granted hereunder are
subject to the rights of the United States Government which may arise out of its
sponsorship of the research which led to the Inventions.

2.9. Subject to the licenses granted to Licensee pursuant to the foregoing
provisions of this Article II, each party retains all right, title, and interest
in such party’s inventions and intellectual property, including, without
limitation, its share of any joint inventions and jointly owned Patents.

III. LICENSE FEE AND ROYALTIES

3.1. [RESERVED].

3.2. The parties acknowledge that Licensee has paid University for all past
costs (including reasonable attorney’s fees) arising out of the filing,
prosecution, or maintenance of the Patents. Licensee will pay a further license
fee in the form of

 

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payment of future costs (including attorney’s fees) arising out of the filing
and prosecution of the Patents covering the Inventions pursuant to Article XI of
this Agreement. Payment of such costs shall be non-refundable and shall not be a
credit against any other amounts due hereunder.

3.3. (i) Beginning on the Effective Date of this Agreement and continuing, on a
country-by-country basis, until the last to expire Valid Claim of Patents
covering such Licensed Products, Licensee will pay University a running patent
royalty on all Net Sales of Licensed Products in the Licensed Field covered by a
Valid Claim of the Patents, in accordance with the chart below:

 

NET SALES OF

LICENSED PRODUCT(S)

   ROYALTY RATE  

<$100 million

   2.5 %

>$100 million

   3 %

Notwithstanding the foregoing provisions of this Article 3.3(i), (a) in the
event that the Licensed Product for which royalties are payable hereunder is
covered by a Valid Claim of the Niigata Patents but no other Patents, then
Licensee shall pay University one-half ( 1/2) of the royalties otherwise payable
to University under this Article 3.3(i), and Licensee shall pay Niigata the
remaining one-half ( 1/2) of such royalties; and (b) in the event that the
Licensed Product for which royalties are payable hereunder is covered by Valid
Claims of both the Niigata Patents and at least one other Patent, then Licensee
shall pay University two-third ( 2/3) of the royalties otherwise payable to
University under this Article 3.3(i), and Licensee shall pay Niigata the
remaining one-third ( 1/3) of such royalties.

(ii) During the Term of this Agreement, Licensee will pay University a running
technology royalty on all Net Sales of Licensed Products in the Licensed Field
not covered by a Valid Claim of the Patents but whose manufacture, use, sale,
offer for sale or importation is covered by University Technology, in accordance
with the chart below:

 

NET SALES OF

LICENSED PRODUCT(S)

   ROYALTY RATE  

<$100 million

   1.25 %

>$100 million

   1.5 %

Notwithstanding the foregoing provisions of this Article 3.3(ii), (a) in the
event that the Licensed Product for which royalties are payable hereunder is
covered by both University Technology and Niigata Technology, then Licensee
shall pay University

 

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one-half ( 1/2) of the royalties otherwise payable to University under this
Article 3.3(ii), and Licensee shall pay Niigata the remaining one-half ( 1/2) of
such royalties; and (b) in the event that the Licensed Product for which
royalties are payable hereunder is not covered by University Technology but is
covered by Niigata Technology, then Licensee shall pay Niigata one hundred
percent (100%) of the royalties otherwise payable to University under this
Article 3.3(ii).

(iii) In addition to the foregoing, the parties acknowledge and agree that in
the event a claim of a pending patent application ceases to be a Valid Claim
pursuant to the last sentence of Article 1.23, and such pending patent
application later issues during the Term of this Agreement, Licensee shall pay
University and/or Niigata the difference between any patent royalties that would
have been payable by Licensee under Article 3.3(i) if such claim of the pending
patent application had not ceased to be a Valid Claim in the first instance
pursuant to Article 1.23, and the technology royalty actually paid pursuant to
Article 3.3(ii).

(iv) No later than thirty (30) days before the First Commercial Sale of a
particular Licensed Product, Licensee retains the right to notify University and
Niigata in writing of its determination of the allocation of payments between
University and Niigata hereunder (if any). In such an event, University and
Niigata shall have thirty (30) days to respond in writing if they disagree with
Licensee’s determination. In the event Licensee does not receive written notice
of a disagreement within such 30 day period, then Licensee’s determination shall
be deemed acceptable to the parties. In the event Licensee receives written
notice of a disagreement within such 30 day period, Licensee retains the right
to make royalty payments into an escrow account until such time as University
and Niigata provide Licensee with written confirmation of their resolution of
such disagreement. In no event shall Licensee owe University and Niigata, in the
aggregate, royalties greater than the royalty rates set forth in this Article
3.3.

3.4. (i) In the event any Licensed Product in the Licensed Field is a
combination of one or more Licensed Compounds with one or more other active
ingredients not licensed hereunder, Net Sales for purposes of determining
royalty payments on such combination shall be calculated by multiplying the net
sales (i.e., the invoiced sales price of the combination less the deductions set
forth in Article 1.6) by the fraction A/(A+B) in which “A” is the total of the
gross selling prices of the Licensed Compounds, and “B” is the total of the
gross selling prices of the other active ingredients.

(ii) In the event that it is not possible to determine the gross selling price
for each ingredient, Net Sales shall be calculated by multiplying the net sales
(i.e., the invoiced sales price of the combination less the deductions set forth
in Article 1.6) of the combination by the fraction C/(C+D), in which “C” is the
total of the direct costs plus the direct overhead of the Licensed Compounds and
“D” that of the other active ingredients. The direct costs plus the direct
overhead of a component shall be determined in accordance with generally
acceptable cost accounting principles.

 

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3.5. Beginning with the date of First Commercial Sale of any Licensed Product in
the Licensed Field, Licensee agrees to make quarterly written reports to
University and Niigata (with respect to Licensed Products covered by a Valid
Claim of the Niigata Patents or by Niigata Technology) within thirty (30) days
after the first (1st) days of each January, April, July, and October during the
Term of this Agreement and as of such dates, stating in each such report the
number, description, and aggregate Net Sales of Licensed Products sold, used, or
otherwise disposed of during the preceding three calendar months (each such
three calendar months a “Royalty Quarter”) and upon which a royalty or
percentage of Sublicense Income is payable as provided in Articles 3.3 or IV
hereof, as appropriate. The first such report shall include all Net Sales of
Licensed Products made prior to the date of such report. Until Licensee has
achieved the First Commercial Sale of Licensed Product, a report shall be
submitted by Licensee at the end of each January after the Effective Date of
this Agreement and will include a full written report summarizing Licensee’s
technical and other efforts made towards such First Commercial Sale of a
Licensed Product.

3.6. In the event that it is necessary or required for Licensee to make royalty
or other payments to one or more third parties in order for Licensee or any
Sublicensee to make, use, or sell Licensed Products, Licensee may offset a total
of fifty percent (50%) of such third-party payments against any royalty payments
and/or percentage of Sublicense Income, as appropriate and in the Royalty
Quarter they are due, that are otherwise due University and/or Niigata
hereunder, provided that in no event shall the royalty payments or percentage of
Sublicense Income otherwise due University and/or Niigata be reduced by more
than fifty percent (50%) in any Royalty Quarter. Notwithstanding the foregoing,
in no event shall Licensee offset third-party payments against any royalty
payments and/or percentage of Sublicense Income that are otherwise due
University and/or Niigata hereunder if such third party payments relate solely
to other active ingredients to which the combination Product calculations in
Article 3.4 have been applied.

3.7. Concurrently with the making of each report pursuant to Article 3.5 above,
Licensee shall pay to the University and/or Niigata all payments due University
and/or Niigata under Articles 3.3, 3.8 or IV, as appropriate.

3.8. Licensee will make milestone payments upon the first of either Licensee or
a Sublicensee reaching the designated stages of development listed in the table
below, for each Licensed Product. Payment shall be the greater of the
compensation due University pursuant to Article IV (if applicable), or the
amount listed in the table below.

Notwithstanding the foregoing, (a) in the event that the Licensed Product for
which milestone payments are due hereunder is covered by a Valid Claim of the
Niigata Patents but no other Patents, or is not covered by a Valid Claim of any
Patents but is covered by the University Technology and Niigata Technology, then
Licensee shall pay University one-half ( 1/2) of the compensation otherwise
payable to University under this Article 3.8 (or Article IV as the case may be),
and Licensee shall pay Niigata the remaining one-half ( 1/2) of such
compensation; and (b) in the event that the Licensed Product for which milestone
payments are due hereunder is covered by Valid Claims of both the Niigata
Patents and at least one other Patent, then Licensee shall pay University
two-thirds ( 2/3) of the compensation otherwise payable to University under this
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the case may be), and Licensee shall pay Niigata the remaining one-third ( 1/3
) of such compensation; and (c) in the event that the Licensed Product for which
milestone payments are due hereunder is not covered by a Valid Claim of any
Patents but is covered by the Niigata Technology but not the University
Technology, then Licensee shall pay Niigata one hundred percent (100%) of the
compensation otherwise payable to University under this Article 3.8 (or Article
IV as the case may be).

No later than thirty (30) days before payments are due hereunder (or under
Article IV as the case may be), Licensee retains the right to notify University
and Niigata in writing of its determination of the allocation of payments
between University and Niigata hereunder (if any). In such an event, University
and Niigata shall have thirty (30) days to respond in writing if they disagree
with Licensee’s determination. In the event Licensee does not receive written
notice of a disagreement within such 30 day period, then Licensee’s
determination shall be deemed acceptable to the parties. In the event Licensee
receives written notice of a disagreement within such 30 day period, Licensee
retains the right to make milestone payments into an escrow account until such
time as University and Niigata provide Licensee with written confirmation of
their resolution of such disagreement. In no event shall Licensee owe University
and Niigata, in the aggregate, milestone payments greater than the amounts set
forth in the table herein or pursuant to Article IV (as applicable).

 

STAGE OF DEVELOPMENT

   MINIMUM
PAYMENT DUE upon filing the first IND for each Licensed Product with a distinct
Licensed Compound in the Licensed Field    $ 15,000 completion of a Phase II
Clinical Trial for each Licensed Product with a distinct Licensed Compound in
the Licensed Field    $ 50,000 upon filing an NDA (but not an ANDA) for each
Licensed Product with a distinct Licensed Compound in the Licensed Field    $
75,000 upon the First Commercial Sale for each Licensed Product with a distinct
Licensed Compound, based on an approved NDA (but not an ANDA) in the Licensed
Field.    $ 150,000

For the avoidance of doubt, the parties acknowledge and agree that in no event
shall Licensee owe University and/or Niigata payments under both this Article
3.8 and Article IV with respect to milestone payments received by Licensee from
Sublicensees for the milestones listed hereunder.

In the event of default of any payment owing to University and/or Niigata under
the terms of this Agreement, and if it becomes necessary for University and/or
Niigata to undertake legal action to collect said payment, Licensee shall pay
all reasonable legal fees and costs incurred by University and/or Niigata in
connection therewith.

 

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3.9. The parties recognize that different Licensed Products may contain the same
Licensed Compound. However, the parties agree that only one milestone shall be
payable pursuant to Section 3.8 or IV (as applicable) for each individual
Licensed Compound, regardless of the number of Licensed Products containing such
Licensed Compound. For purposes of this Agreement, substitution of halogens,
chalcogens, or differing lengths of a hydrocarbon backbone shall not be
considered distinct Licensed Compounds.

3.10. Nothing in this Agreement shall be construed to require the payment of
more than one royalty or percentage of Sublicense Income with regard to the Net
Sale of an individual Licensed Product in the Licensed Field. No multiple
royalties or percentages of Sublicense Income shall be payable because any
Licensed Product, or its manufacture, use, sale, offer for sale or importation
is covered by more than one Valid Claim in a given country.

IV. SUBLICENSES

In the case of income derived by Licensee from Sublicensees, Licensee shall pay
University a share of Sublicense Income, whose share shall be in accordance with
the following table, on a Sublicensee by Sublicensee basis and on a Class of
Licensed Compound by Class of Licensed Compound basis, subject to Article 3.8:

 

STAGE OF DEVELOPMENT AT THE TIME OF

EXECUTING A SUBLICENSE AGREEMENT WITH

THE APPLICABLE SUBLICENSEE WITH

RESPECT TO THE APPLICABLE CLASS OF

LICENSED COMPOUND:

  

% OF SUBLICENSE INCOME RECEIVED

FROM THE APPLICABLE SUBLICENSEE WITH

RESPECT TO THE APPLICABLE CLASS OF

LICENSED COMPOUND AND PAYABLE TO

UNIVERSITY:

Prior to completion of a Phase II Clinical Trial for at least one Licensed
Product in the Class of Licensed Compound in the Licensed Field    25% Following
completion of a Phase II Clinical Trial for at least one Licensed Product in the
Class of Licensed Compound in the Licensed Field    12.5%

For the avoidance of doubt, the parties acknowledge and agree that:

 

  (i)

In the event that Licensee executes a sublicense agreement with respect to Class
1 with a Sublicensee prior to completion of a Phase II Clinical Trial for at
least one Licensed Product in Class 1, and also sublicenses Class 2 to the same

 

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Sublicensee after completion of a Phase II Clinical Trial for a Licensed Product
in Class 2, Licensee shall pay University 25% of Sublicense Income received from
such Sublicensee with respect to any Licensed Products in Class 1, and 12.5 % of
Sublicense Income received from such Sublicensee with respect to any Licensed
Products in Class 2. By way of further example for the avoidance of doubt, in
the event that Licensee executes a sublicense agreement with respect to Class 2
with a Sublicensee prior to completion of a Phase II Clinical Trial for at least
one Licensed Product in Class 2, and also sublicenses Class 3 to the same
Sublicensee after completion of a Phase II Clinical Trial for a Licensed Product
in Class 3, Licensee shall pay University 25% of Sublicense Income received from
such Sublicensee with respect to any Licensed Products in Class 2, and 12.5 % of
Sublicense Income received from such Sublicensee with respect to any Licensed
Products in Class 3; and

 

  (ii) In the event that Licensee executes a sublicense agreement with respect
to Class 1 with a Sublicensee (“Sublicensee A”) prior to completion of a Phase
II Clinical Trial for at least one Licensed Product in Class 1, and later
sublicenses Class 1 to another Sublicensee (“Sublicensee B”) after completion of
a Phase II Clinical Trial for a Licensed Product in Class 1, Licensee shall pay
University 25% of Sublicense Income received from Sublicensee A with respect to
any Licensed Products in Class 1, and 12.5 % of Sublicense Income received from
Sublicensee B with respect to any Licensed Products in Class 1. By way of
further example for the avoidance of doubt, in the event that Licensee executes
a sublicense agreement with respect to Class 2 with a Sublicensee (“Sublicensee
C”) prior to completion of a Phase II Clinical Trial for at least one Licensed
Product in Class 2, and later sublicenses Class 2 to another Sublicensee
(“Sublicensee D”) after completion of a Phase II Clinical Trial for a Licensed
Product in Class 2, Licensee shall pay University 25% of Sublicense Income
received from Sublicensee C with respect to any Licensed Products in Class 2,
and 12.5 % of Sublicense Income received from Sublicensee D with respect to any
Licensed Products in Class 2.

Notwithstanding the foregoing, in the event that Licensee executes a sublicense
agreement with respect to Class 2, Licensee shall pay University two-third
( 2/3) of the Sublicense Income otherwise payable to University under this
Article IV, and Licensee shall pay Niigata the remaining one-third ( 1/3) of
such Sublicense Income, provided, however, that (a) in the event any such
Sublicense Income is compensation specifically and solely for the sublicensing
of the Niigata Patents (as opposed to the Niigata Patents and the other Patents
within Class 2), then Licensee shall pay University one-half ( 1/2) of the
Sublicense Income otherwise payable to University under this Article IV, and
Licensee shall pay Niigata the remaining one-half ( 1/2) of such Sublicense
Income; (b) in the event any such Sublicense Income is compensation specifically
and solely for the sublicensing of the Niigata Technology, then Licensee shall
pay Niigata one hundred percent (100%) of such Sublicense Income; and (c) in the
event any such Sublicense Income is compensation specifically and solely for the
sublicensing of (i) Patents other than the Niigata Patents or (ii) University
Technology, then Licensee shall pay University one hundred percent (100%) of
such Sublicense Income.

 

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No later than thirty (30) days before payments are due hereunder, Licensee
retains the right to notify University and Niigata in writing of its
determination of the allocation of payments between University and Niigata
hereunder (if any). In such an event, University and Niigata shall have thirty
(30) days to respond in writing if they disagree with Licensee’s determination.
In the event Licensee does not receive written notice of a disagreement within
such 30 day period, then Licensee’s determination shall be deemed acceptable to
the parties. In the event Licensee receives written notice of a disagreement
within such 30 day period, Licensee retains the right to make Sublicense Income
payments into an escrow account until such time as University and Niigata
provide Licensee with written confirmation of their resolution of such
disagreement. In no event shall Licensee owe University and Niigata, in the
aggregate, Sublicense Income payments greater than the amounts set forth in the
table herein.

V. COMMERCIALLY REASONABLE EFFORTS

5.1. Licensee shall use commercially reasonable efforts to proceed diligently
with the development, manufacture and sale of at least one (1) Licensed Product
either directly or through a Sublicensee in each Class of Licensed Compounds,
and shall earnestly and diligently offer and continue to offer for sale upon NDA
approval, at least one (1) Licensed Product in each Class of Licensed Compounds
under reasonable conditions during the Term of this Agreement either directly or
through a Sublicensee.

In particular, Licensee or its Sublicensee(s) will use commercially reasonable
efforts to meet the Performance Milestones, which such achievement shall be
conclusive evidence that Licensee has used commercially reasonable efforts as
required in the preceding paragraph. In the event that Licensee fails to meet a
particular Performance Milestone for a particular Class of Licensed Compounds
during the timeframe set forth in Appendix C, University shall have the right to
terminate the licenses granted hereunder to University’s rights for that
particular Class of Licensed Compounds, upon thirty (30) days advance written
notice to Licensee, unless Licensee either (i) cures such breach within such
thirty (30) day period, or (ii) elects to extend the Performance Milestone
deadline pursuant to the provisions of Section 5.2 below.

5.2. Licensee may have an additional six (6) months to reach a Performance
Milestone upon payment of $20,000 to University, and in addition, if the
Performance Milestone is not met with respect to a Class 2 Licensed Compound,
$10,000 to Niigata. In such an event, the timeframes for the applicable
Performance Milestone and all remaining outstanding Performance Milestones set
forth in Appendix C shall be extended by six (6) months. Up to two
(2) extensions, each requiring payment, may be obtained for any individual
Performance Milestone for each Class of Licensed Compounds, however, and
notwithstanding the provisions of Section 7.1 only three (3) total extensions
may be obtained under Appendix C for each Class of Licensed Compounds.

If Licensee exhausts all extensions as set forth in the preceding paragraph of
this Article 5.2, and still has not met the obligations outlined in Appendix C
(as extended), University may terminate this Agreement with respect to such
Class of Licensed Compounds upon thirty (30) days written notice to Licensee,
unless Licensee cures such breach within such thirty (30) day period.

 

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VI. DISCLOSURE AND CONFIDENTIALITY

6.1. Confidential Information disclosed by one party (“Disclosing Party”) to the
other party (“Receiving Party”) may be oral or in writing, provided that any
information disclosed orally shall be reduced to writing within thirty (30) days
of disclosure and all such information shall be clearly marked “CONFIDENTIAL” on
the first page of such written disclosure.

6.2. Receiving Party agrees that all Confidential Information received under
this Agreement or the Original Agreement shall be maintained in confidence
during the Term and for a period of five (5) years from the expiration or
termination date of this Agreement and further agrees not to use such
Confidential Information for any purpose other than fulfilling the purposes and
upholding the obligations of this Agreement without the prior written consent of
Disclosing Party. Receiving Party shall use the same standard of care to protect
the confidentiality of Confidential Information received under this Agreement as
it uses to protect its own Confidential Information, and shall limit disclosure
of Disclosing Party’s Confidential Information to those of its employees,
agents, consultants, investors and potential investors, Sublicensees, potential
sublicensees and collaborators who have an actual need to know such information
and who have a written obligation, or are subject to applicable University
policies, to protect the confidentiality of such Confidential Information which
is at least as protective of such information as the agreement contained herein.

6.3. Notwithstanding Articles 2 or 6.2, the obligations of the Receiving Party
regarding confidentiality and use of University Technology or Niigata Technology
or Confidential Information disclosed hereunder shall not include:

(i) information which, at the time of disclosure, was published, known publicly,
or otherwise in the public domain;

(ii) information which, after disclosure, is published, becomes known publicly,
or otherwise becomes part of the public domain through no fault of the Receiving
Party;

(iii) information which the Receiving Party can establish was in its possession
prior to the time of disclosure;

(iv) information which, after disclosure, is made available to Receiving Party
in good faith by a third party under no obligation of confidentiality to the
Disclosing Party; or information which either party is required to disclose to
comply with applicable laws or regulations, or with a court or administrative
order, provided that the Disclosing Party receives prior written notice of such
disclosure and that the Receiving Party takes all reasonable and lawful actions
to obtain confidential treatment for such disclosure and, if possible, to
minimize the extent of such disclose.

 

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6.4 For the avoidance of doubt, the parties acknowledge and agree that Niigata
is bound by the provisions of this Article VI with respect to disclosures made
by Licensee and/or University prior to the Effective Date and thereafter during
the term of the License Agreement, including without limitation, discussions
relating to the Niigata Patents and their prosecution, and the negotiation of
this Agreement.

VII. CANCELLATION OR TERMINATION

7.1. It is expressly agreed that, if Licensee should fail to deliver to
University any payment, royalty, or equity at the time or times that the same
should be due to University or if Licensee should in any material respect
violate or fail to keep or perform any covenant, condition, or undertaking of
this Agreement on its part to be kept or performed hereunder (but specifically
excluding any diligence obligations under Article V), then the University, by
written notice to Licensee, shall have the right to terminate this Agreement,
provided, however, that Licensee shall have the opportunity to cure any such
breach described in University’s written notice within thirty (30) days of
receipt. Licensee’s right to cure a breach after the first two breaches of
Licensee properly noticed by University under the terms of this Agreement
(regardless of the nature of those breaches) shall be conditioned upon Licensee
paying the reasonable costs and expenses of University directly relating to such
breach by Licensee. If University should in any material respect violate or fail
to keep or perform any material covenant, condition, or undertaking of this
Agreement on its part to be kept or performed hereunder, then Licensee, by
written notice to University, shall have the right to terminate this Agreement,
provided, however, that University shall have the opportunity to cure any such
breach described in Licensee’s notice within thirty (30) days of receipt.

7.2. University may terminate this Agreement with respect to a Class of Licensed
Compounds or in whole for Licensee’s lack of diligence, pursuant to the
provisions of Articles 5.1, 5.2 or 5.3 of this Agreement, as the case may be.

7.3. If Licensee should be adjudged bankrupt or enter into a composition with or
assignment to its creditors, then in such event University shall have the right
to cancel and terminate this Agreement, and the license herein provided for, by
written notice to Licensee.

7.4. Any termination or cancellation under any provision of this Agreement shall
not relieve either party of any obligation which accrued prior to the effective
date of such termination, including, in the case of Licensee, its obligation to
pay any royalty or other fees (including attorney’s fees pursuant to Article 3.2
hereof) due or owing at the time of such cancellation or termination.

7.5. Licensee may terminate this Agreement at any time by providing University
and Niigata with thirty (30) days advance written notice.

VIII. RIGHTS UPON CANCELLATION OR TERMINATION

The parties acknowledge and agree that upon the termination or expiration of
this Agreement for any reason: (i) each party retains all right, title, and
interest in such party’s inventions and intellectual property, including,
without limitation, its share of

 

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any joint inventions and jointly owned Patents, and (ii) each of the owning
parties may commercially exploit any jointly owned inventions and jointly owned
Patents in any countries without any further accounting to the other party(ies).

IX. USE OF OTHER PARTY’S NAME

The use of the name of a party by any other party, or any contraction thereof,
in any manner in connection with this license is expressly prohibited except
with the prior written consent of such party.

X. UNIVERSITY USE

It is expressly agreed that, notwithstanding any other provisions herein,
University is free to use University Technology, Patents and Licensed Compounds
for its own non-commercial research, and clinical, teaching and educational
purposes (including distribution of any compounds covered under the Patents to
academic collaborators provided that the academic collaborators receiving
Licensed Compounds shall be obligated to not transfer the Licensed Compounds to
third party commercial entities and to not use the Licensed Compounds in
research sponsored by third party commercial entities) without payment of
royalties. In no event shall University transfer the Patents or Licensed
Compounds for sale or other distribution to third parties other than non-profit
research or educational institutions, or to such institutions in contravention
of the foregoing provisions. Furthermore, except as otherwise set forth in the
Sponsored Research Agreement, University shall be free to publish University
Technology as it sees fit. Notwithstanding the foregoing, in no event shall
University use, or grant any third party a right to use, any Patents and/or
Licensed Compounds in the Licensed Field for commercial purposes during the
Term, including, without limitation, conducting sponsored research with any
for-profit entity during the Term.

It is expressly agreed that, notwithstanding any other provisions herein,
Niigata is free to use Niigata Technology, Niigata Patents and Licensed
Compounds covered by such Niigata Technology or Niigata Patents solely for its
own non-commercial research, and clinical, teaching and educational purposes
(including distribution of any compounds covered under the Niigata Patents to
academic collaborators provided that the academic collaborators receiving such
Licensed Compounds shall be obligated to not transfer such Licensed Compounds to
third party commercial entities and to not use such Licensed Compounds in
research sponsored by third party commercial entities) without payment of
royalties. In no event shall Niigata transfer the Niigata Patents or Licensed
Compounds covered by the Niigata Patents or Niigata Technology for sale or other
distribution to third parties other than non-profit research or educational
institutions, or to such institutions in contravention of the foregoing
provisions. Notwithstanding the foregoing, in no event shall Niigata use, or
grant any third party a right to use, any Niigata Patents and/or Licensed
Compounds covered by the Niigata Patents or Niigata Technology in the Licensed
Field for commercial purposes during the Term, including, without limitation,
conducting sponsored research with any for-profit entity during the Term.

 

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XI. PATENTS

11.1. Licensee shall bear the cost of preparing, filing, prosecuting, and
maintaining all United States and foreign patent applications and issued patents
included within the Patents, and any interferences related to the Patents, at
its sole cost and expense. Such preparation, filing, prosecution, and
maintenance shall be by patent counsel mutually agreeable to both University and
Licensee (and Niigata with respect to the Niigata Patents) (“Patent Counsel”).
As of the Effective Date, Patent Counsel has been designated as Sterne, Kessler,
Goldstein & Fox P.L.L.C. Patents claiming joint inventions (as determined by
inventorship under U.S. patent laws) shall be filed in the name of University
and Licensee (and Niigata with respect to the Niigata Patents). Patent Counsel
will keep University and Licensee advised of the prosecution of such Patents by
forwarding copies of all official correspondence, (including, but not limited
to, applications, office actions, responses, etc.) relating thereto to
University and Licensee.

11.2. University and Niigata (with respect to the Niigata Patents) will provide
Patent Counsel and Licensee, in a timely manner, all information in its
possession or control which is subject to the terms and conditions of this
Agreement necessary or useful for the preparation, filing and maintenance of the
Patents. University and Niigata (with respect to the Niigata Patents) agrees to
cooperate with Licensee and Patent Counsel to whatever extent is reasonable and
necessary to prepare, file, prosecute, and maintain the Patents, including
agreeing to execute any and all documents to provide Licensee the benefits of
the licenses granted herein.

11.3. If the production, sale or use of Licensed Products under this Agreement
by Licensee results in any claim for patent infringement against Licensee,
Licensee shall promptly notify the University thereof in writing, setting forth
the facts of such claim in reasonable detail. As between the parties to this
Agreement, Licensee shall have the first and primary right and responsibility,
at its own expense, to defend and control the defense of any such claim against
Licensee or its Sublicensees, by counsel of its own choice. It is understood
that any settlement of such actions which will have a material adverse effect on
the rights of University hereunder must be approved by University. Such approval
shall not be unreasonably withheld. University agrees to cooperate with Licensee
in any reasonable manner deemed by Licensee to be necessary in defending any
such action. Licensee shall reimburse University and Niigata each for any out of
pocket expenses incurred in providing such assistance.

11.4. In the event that any Patents are infringed or appear to be infringed by a
third party, Licensee shall have the primary right, but not the obligation, to
institute, prosecute and control any action or proceeding with respect to such
infringement, by counsel of its choice, including any declaratory judgment
action arising from such infringement or apparent infringement.

11.5. Notwithstanding the foregoing, and in University’s sole discretion,
University shall be entitled to participate, through counsel of its own choosing
and at its sole cost and expense, in any legal action described in Articles 11.4
and 11.5 involving the Inventions, provided that Licensee shall retain the right
to control such actions unless Licensee has previously abandoned or

 

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elected not to proceed with such legal action. Nothing in the foregoing sections
shall be construed in any way which would limit the authority of the Attorney
General of North Carolina.

XII. REPRESENTATIONS, WARRANTIES AND COVENANTS; WAIVER

12.1. The University and Niigata each represents, and covenants as follows:

(i) It has the full right, power, and authority to enter into this Agreement and
to perform all of its obligations hereunder.

(ii) The execution and delivery of this Agreement and the consummation of the
transaction contemplated by this Agreement do not violate, conflict with, or
constitute a default under its Charter or the terms and provisions of any
agreement or other instrument to which it is a party or by which it is bound, or
any material order, award, judgment or decree to which it is a party or by which
it is bound, or any state or federal law governing its activities.

(iii) Upon execution and delivery, this Agreement will constitute the legal,
valid and binding obligation of such party, enforceable against such party in
accordance with its terms.

(iv) Subject in the case of the University to the rights held by the U.S.
Government under Public Law 96-517, as amended, and the implementing
regulations, and to any rights as may be held by the other parties to this
Agreement, it is the owner of all rights to the Niigata Technology or the
University Technology (as applicable), and its share of the title and interest
in the Niigata Patents and Licensed Compounds covered by the Niigata Patents,
Niigata Technology, and/or University Technology (as applicable). Subject to the
aforementioned rights of the U.S. Government in the case of the University, it
has the sole and complete authority to issue and grant to Licensee the exclusive
license granted hereunder, free and clear of any claims, liens, encumbrances or
charges of any third party.

(v) As of the Effective Date, it has no knowledge of any potential infringement
action or claim relating to the Niigata Technology or Niigata Patents, or
Licensed Compounds and Licensed Products covered by the Niigata Technology or
Niigata Patents, and has no knowledge of any infringement, or breach of any
agreement or of any facts that might reasonably lead to any claim of
infringement or breach of any agreement relating to any patent, patent right,
patentable invention, patent application, trade secret or other proprietary
right of any third party relating to its use or ownership of the foregoing, or
Licensee’s licenses hereunder. However, neither University nor Niigata has done
any searching regarding possible or potential infringement actions or claims.

(vi) It will promptly disclose, and cause its inventors to disclose, to
designated patent counsel of Licensee all information known to University,
Niigata or their respective inventors (as the case may be) which is or could be
material to the patentability, enforceability or validity of any application or
patent included in the Niigata Patents and Licensed Compounds and/or Licensed
Products covered by the Niigata Patents. However, University or Niigata shall
not be required to actively search for any potential prior art.

 

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12.2. To the extent that rights granted by the University to Licensee under this
Agreement are subject to the requirements of Public Law 96-517, as amended, and
its implementing regulations, the University agrees that it will take all steps
within its power to retain title, to the fullest extent permitted by law, to the
University Technology and its share of the title to the Patents and Licensed
Compounds in the United States and in any foreign country designated by Licensee
for the duration of this license.

12.3. It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.

XIII. LICENSE RESTRICTIONS

It is agreed that, as set forth in and subject to Articles 7.1 and 7.2, the
rights and privileges granted to Licensee are each and all expressly conditioned
upon the faithful performance on the part of the Licensee of every requirement
herein contained, and that each of such conditions and requirements may be and
the same are specific license restrictions.

XIV. ASSIGNMENTS

This Agreement is binding upon and shall inure to the benefit of the parties and
their successors and permitted assigns. This Agreement may not be assigned or
otherwise transferred by Licensee to any entity without the written consent of
University, which consent shall not be unreasonably withheld; provided, however,
that Licensee, without such consent, may assign its rights and obligations under
this Agreement in connection with a merger, consolidation, or sale of
substantially all of Licensee’s assets.

XV. INDEMNITY

15.1. Licensee agrees to indemnify, hold harmless and defend University, its
officers, employees, and agents and Niigata and its officers, employees and
agents (the “Indemnitees”), against any and all claims, suits, losses, damage,
costs, fees, and expenses asserted by third parties, both government and private
(collectively, “Claims”), resulting from or arising out of the exercise of this
license provided, however, that such indemnification shall not apply to any
Claims to the extent directly attributable to (i) the negligent activities or
intentional misconduct of any Indemnitee or (ii) the settlement of a claim,
suit, action, or demand by the Indemnitees without the prior written approval of
Licensee.

15.2. Any Indemnitee seeking indemnification hereunder shall provide Licensee
with prompt written notice of any Claim for which indemnification is sought
under this Agreement. Licensee agrees, at its own expense, to provide attorneys
reasonably acceptable to the Indemnitee(s) to defend against any such Claim. The
Indemnitee seeking indemnification hereunder shall cooperate fully with Licensee
in such defense and will permit Licensee to conduct and control such defense and
the disposition

 

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of such Claim (including all decisions relative to litigation, appeal, and
settlement); provided, however, that such Indemnitee shall have the right to
retain its own counsel reasonably acceptable to Licensee, at the expense of
Licensee, if representation of such Indemnitee by the counsel retained by
Licensee would be inappropriate because of actual or potential differences in
the interests of such Indemnitee and any other party represented by such
counsel. Nothing herein should be construed to abrogate the authority of the
Attorney General of the State of North Carolina.

XVI. INSURANCE

Prior to initiating clinical trials, Licensee shall obtain, at its sole cost and
expense, with reputable insurance companies, general liability insurance and
products liability insurance coverage in an amount reasonably sufficient to
protect against liability under Article XV, above. The University shall have the
right to ascertain from time to time that such coverage exists.

XVII. INDEPENDENT CONTRACTOR STATUS

Neither party hereto is an agent of the other for any purpose.

XVIII. LATE PAYMENTS

In the event that any payment due hereunder is not made when due, the payment
shall accrue interest beginning on the tenth (10th) day following the due date
thereof, calculated at the annual rate of the sum of (a) two and one-half
percent (2.5%) plus (b) the prime interest rate quoted by The Wall Street
Journal on the date said payment was due. The interest shall be compounded on
the last day of each calendar quarter provided, however, that in no event shall
said annual interest rate exceed the maximum legal interest rate for
corporations. Each such royalty payment, when paid, shall be accompanied by all
accrued interest.

XIX. WARRANTY DISCLAIMER

University and Niigata makes no warranties that any patent will issue on
University Technology or patent applications within the Patents. University and
Niigata further makes no warranties, express or implied, as to any matter
whatsoever, including, without limitation, the condition of any Inventions,
Patents, Licensed Compounds or Licensed Products that are the subject of this
Agreement; or the merchantability or fitness for a particular purpose of any
such Inventions, Licensed Compounds or Licensed Products. University and Niigata
shall not be liable for any direct, consequential, or other damages suffered by
Licensee or any others resulting from the use of the Licensed Compounds,
Licensed Products, or Patents.

 

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XX. ACCOUNTING AND RECORDS

20.1. Licensee will keep complete, true and accurate books of account and
records for the purpose of showing the derivation of all amounts payable to
University and Niigata under this Agreement. Such books and records will be kept
at Licensee’s principal place of business for at least three (3) years following
the end of the calendar quarter to which they pertain, and will be open at all
reasonable times for inspection by an independent accounting firm reasonably
acceptable to Licensee for the purpose of verifying Licensee’s royalty
statements, or Licensee’s compliance in other respects with this Agreement. Such
accountant shall disclose to the University only information relating to the
accuracy of the records kept and the payments made, and shall be under a duty to
keep confidential any other information obtained from such accounts and records.

20.2. Such inspections shall be at the expense of University, unless a variation
or error resulting from an underpayment to University exceeding the lesser of
(i) US $5,000, or (ii) 1% for any consecutive twelve (12) month period is
discovered in the course of any such inspection, whereupon all costs relating
thereto would be paid by Licensee.

20.3. Licensee will promptly pay to University and Niigata the full amount of
any underpayment, along with interest calculated at the annual rate of the sum
of (a) two and one-half percent (2.5%) plus (b) the prime interest rate quoted
by The Wall Street Journal on the date said payment was due. The interest shall
be compounded on the last day of each calendar quarter provided, however, that
in no event shall said annual interest rate exceed the maximum legal interest
rate for corporations.

XXI. COMPLIANCE WITH LAWS

In exercising its rights under this license, Licensee shall fully comply with
the requirements of any and all applicable laws, regulations, rules and orders
of any governmental body having jurisdiction over the exercise of rights under
this license. Licensee further agrees to indemnify and hold University and
Niigata harmless from and against any Claims which might be imposed by reason of
any asserted or established violation of any such laws, order, rules, and/or
regulations, pursuant to the provisions of Article XV.

XXII. US MANUFACTURE

It is agreed that any Licensed Products sold in the United States shall be
substantially manufactured in the United States to the extent required by Public
Law 96-517, as amended, and the implementing regulations.

 

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XXIII. NOTICES

Any notice required or permitted to be given to the parties hereto shall be
deemed to have been properly given if delivered in person or mailed by
first-class certified mail to the other party at the appropriate address as set
forth below or to such other addresses as may be designated in writing by the
parties from time to time during the Term of this Agreement.

 

UNIVERSITY

  

LICENSEE

  

NIIGATA

Director

Office of Technology Development

The University of North Carolina at

Chapel Hill

CB #4105, 308 Bynum Hall

Chapel Hill, NC 27599-4105

  

Alan W. Dunton, M.D.

President and Chief

Executive Officer

Panacos Pharmaceuticals, Inc.

209 Perry Parkway

Gaithersburg, MD 20877

  

President

Niigata University of

Pharmacy and Applied

Life Sciences

5-13-2 Kamishin’Ei-cho

Niigata 950-2081, Japan

XXIV. GOVERNING LAW

This Agreement shall be interpreted and construed in accordance with the laws of
the United States and of the State of North Carolina, without regard to
principles of conflicts of law. All disputes, controversies and claims arising
out of or related to this Agreement not settled by the dispute resolutions
procedures pursuant to Article XXVIII of this Agreement will be subject to the
exclusive jurisdiction of the state or federal courts of North Carolina.

XXV. COMPLETE AGREEMENT

It is understood and agreed between University and Niigata and Licensee that
this Agreement, together with the Appendixes constitutes the entire agreement,
both written and oral, between the parties respecting the subject matter hereof,
and that all prior agreements respecting the subject matter hereof (including,
without limitation, the Original Agreement pursuant to Article II), either
written or oral, expressed or implied, shall be abrogated, cancelled, and are
null and void and of no effect.

XXVI. SEVERABILITY

In the event that a court of competent jurisdiction holds any provision of this
Agreement to be invalid, such holding shall have no effect on the remaining
provisions of this Agreement, and they shall continue in full force and effect.

 

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XXVII. SURVIVAL OF TERMS

The provisions of Articles 2.1, III and IV (in each case, with respect to
payment obligations accruing prior to the date of expiration or termination),
2.5, VI, 7.4, VIII, IX, XII, XV, XVI, XVII, XVIII (with respect to payment
obligations accruing prior to the date of expiration or termination), XIX, XX
(with respect to payment obligations accruing prior to the date of expiration or
termination), XXI, XXIII, XXIV and this Article XXVII shall survive the
expiration or termination of this Agreement.

XXVIII. DISPUTE RESOLUTION

All disputes between Licensee and Niigata (but not University) arising out of or
related to this Agreement, whether before or after termination of this Agreement
shall be resolved as follows:

(a) The parties shall, through their duly authorized representatives, attempt in
good faith for thirty (30) days to resolve the dispute.

(b) If the dispute can not be resolved by the parties within 30 days, the Chief
Operating Officer of Licensee and the President of Niigata (the “Appointed
Representatives”) shall meet in person at a mutually acceptable time and
location or by means of telephone or video conference within thirty (30) days to
attempt to resolve the dispute.

(c) If the matter remains unresolved within thirty (30) days after the meeting
of the Appointed Representatives or if the Appointed Representatives fail to
meet within thirty (30) days, either party may initiate arbitration upon written
notice to the other party, whereupon the parties agree to settle their dispute
by binding arbitration under the Rules of the International Chamber of Commerce.
If the arbitration is initiated by Niigata, the legal place of arbitration shall
be in North Carolina. If the arbitration is initiated by Licensee, the legal
place of arbitration shall be in Japan. The language used in the arbitral
proceedings shall be English. The party against whom such binding arbitration is
found shall bear all costs of such binding arbitration.

Notwithstanding the foregoing, Licensee and Niigata acknowledge and agree that
the provisions of this Article shall not apply to any dispute, controversy or
claim: (i) seeking a temporary restraining order, preliminary injunction,
permanent injunction or other equitable relief where such relief is reasonably
required to protect its interests; (ii) for the collection of undisputed
amounts; and/or (iii) which can not be finally and completely resolved without
the participation of University or any third party who is not bound by the
provisions of this Article. Any such dispute, controversy or claim discussed in
the previous sentence shall be subject to Article XXIV of this Agreement.

[The remainder of this page is intentionally left blank.]

 

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EXECUTION COPY

 

IN WITNESS WHEREOF, both University and Licensee have executed this Agreement,
in duplicate originals, by their respective officers hereunto duly authorized,
the day and year of last signature below.

 

THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL      PANACOS PHARMACEUTICALS,
INC.

/s/ Catherine Innes

    

/s/ Alan W. Dunton

Cathy Innes      Alan W. Dunton, M.D. Director      President and Chief
Executive Officer

NIIGATA UNIVERSITY OF PHARMACY AND

APPLIED LIFE SCIENCES

    

/s/ Mikio Yamazaki

     Mikio Yamazaki      President     

 

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