Portions of this document have been omitted as permitted by the rules of the
Securities and Exchange Commission. The information excluded is both (i) not
material and (ii) would be competitively harmful if publicly disclosed. [*]
designates the omitted information.

 

Exhibit 10.7

 

LICENSE AGREEMENT

 

BETWEEN

 

Cocrystal Pharma, Inc.

 

AND

 

KANSAS STATE UNIVERSITY RESEARCH FOUNDATION

 

 1 

 

 

LICENSE AGREEMENT

 

This LICENSE AGREEMENT (this “Agreement”), the effective date of which is
February 12, 2020 (hereinafter “Effective Date”) is made by and between Kansas
State University Research Foundation, a non-profit Kansas corporation having its
principal office at 2005 Research Park Circle, Manhattan, Kansas, USA, 66502
(hereinafter referred to as “Foundation”) and Cocrystal Pharma, Inc., a
corporation having its principal office at 19805 North Creek Parkway, Bothell,
WA 98011 (hereinafter referred to as “Licensee”)(each of Foundation and
Licensee, a “Party” and together the “Parties”).

 

RECITALS

 

  A. Foundation has been assigned the patent rights [*];   B. Foundation desires
to have products and services based on the inventions described in the Patent
Rights developed and commercialized to benefit the public; and   C. Licensee
desires to obtain a license under the Patent Rights and Know-How.

 

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

 

ARTICLE 1: DEFINITIONS

 

For the purposes of this Agreement, the following words and phrases shall have
the following meanings:

 

1.1 “Affiliate” means any individual or entity directly or indirectly
controlling, controlled by or under common control with, a Party to this
Agreement. For purposes of this Agreement, the direct or indirect ownership of
over fifty percent (50%) of the profits or earnings of an entity shall be deemed
to constitute control. Such other relationship as in fact results in actual
control over the management, business and affairs of an entity shall also be
deemed to constitute control. For the limited scope of this Agreement, Kansas
State University (hereinafter the “University”) is deemed to be an Affiliate of
Foundation.     1.2 “Confidential Information” as used in this Agreement means
all information in any form whatsoever disclosed in any manner by or on behalf
of one Party or its Affiliates to the other Party or any of its Affiliates
before or after the Effective Date and includes without limitation information
about products, raw materials, packaging, manufacturing processes, samples,
technical information, scientific information, financial information, business
information, customer and supplier lists, and the terms and conditions of this
Agreement.     1.3 “Control” means, with respect to any item of Know-How, Patent
Right, or other intellectual property right, a Party has the ability (whether by
sole, joint or other ownership interest, license, sublicense or otherwise, and
including any such abilities which are contingent) (other than by operation of
the licenses granted in this Agreement) to grant a license, sublicense, access
or right to use (as applicable) under such item of Know-How, Patent Right, or
other intellectual property right to the other Party on the terms and conditions
set forth herein at the time of such grant, in each case without breaching the
terms of any agreement with a third party.     1.4 Omitted

 

 2 

 

 

1.5 Omitted     1.6 “Field of Use” means the use of “Licensed Products” for
antiviral therapeutics for humans, as well as antiviral diagnostic and
prophylactic uses for humans. Excluded from the Field of Use is any use of
compound known as [*].     1.7 “Know-How” means any subject matter owned or
Controlled by Foundation relating to the subject matter of the Patent Rights but
not claimed in the Patent Rights and otherwise not known to the general public.
    1.8 “Licensed Products” means on a country-by-country basis, any product for
use in the Field of Use.     1.9 “Net Sales” means the gross amount of monies or
cash equivalent or other consideration which is paid by unaffiliated third
parties to Licensee, and its sublicensee’s billings for Licensed Products less
the sum of the following:

 

  a. discounts allowed in amounts customary in the trade;   b. sales, tariff
duties and/or use taxes directly imposed and with reference to particular sales;
  c. outbound transportation and insurance prepaid or allowed;   d. amounts
allowed or credited on returns, rebates, chargebacks and other allowances; and  
e. retroactive price reductions that are actually allowed or granted.

 

  No deductions shall be made for commissions paid to individuals whether they
are with independent sales agencies or regularly employed by Licensee and on its
payroll, or for cost of collections. Licensed Products shall be considered
“sold” when billed out or invoiced. For the purposes of calculating Net Sales,
transfers to a sublicensee or an Affiliate of Licensed Product under this
Agreement for (i) end use (but not resale) by the sublicensee or Affiliate shall
be treated as sales by Licensee at list price of Licensee and (ii) resale by a
sublicensee or an Affiliate shall not be treated as Net Sales, but the resale
thereof shall be treated as Net Sales; provided, however, Net Sales shall not
include any Licensed Products transferred for use in connection with clinical
trials or other development activity, pre-clinical research and trials,
promotional use (including samples), compassionate use or indigent programs.
[For “compassionate use”, see  
https://www.fda.gov/news-events/public-health-focus/expanded-access  
https://www.cancer.org/treatment/treatments-and-side-effects/clinical-trials/compassionate-drug-use.html]
    1.10 “Patent Rights” means any subject matter claimed in or disclosed by
[*].     1.11 “Term” the term of this Agreement shall commence on the Effective
Date and, unless earlier terminated as provided in Article 11, shall continue in
full force and effect until the expiration of the last to expire of the Patent
Rights.     1.12 “Territory” means worldwide.     1.13 “Valid Patent Claim”
means a claim in any issued and unexpired patent included in the Patent Rights,
which claim has not been held invalid or unenforceable by the decision of a
court or government agency or other appropriate body of competent jurisdiction
(which decision is not appealable or has not been appealed within the time
allowed for appeal), has not been abandoned or admitted to be invalid or
unenforceable through reissue, reexamination or disclaimer, and has not been
made unenforceable due to failure to pay maintenance fees.

 

 3 

 

 

ARTICLE 2: LICENSE GRANT

 

2.1 Subject to the terms and conditions set forth herein, Foundation hereby
grants to Licensee an exclusive, royalty-bearing right and license in the
Territory for the Field of Use to practice under the Patent Rights to make, have
made, use, lease, sell, offer to sell, and import Licensed Products in the
Territory until the end of the Term for which the Patent Rights are granted to
the Foundation by the responsible agencies, unless this Agreement shall be
sooner terminated according to the terms hereof.     2.2 Foundation also hereby
grants to Licensee a non-exclusive right and license in the Territory for the
Field of Use to practice under the Know-How to make, have made, use, lease,
sell, offer to sell, and import Licensed Products in the Territory until the end
of the Term for which the Patent Rights are granted to the Foundation by the
responsible agencies, unless this Agreement shall be sooner terminated according
to the terms hereof.     2.3 For clarity, Foundation shall be free to grant
commercial licenses to the Patent Rights to third parties in all fields outside
the Field of Use, which licenses shall not conflict with the terms of this
Agreement and shall expressly deny any license or right to commercialize
products within the Field of Use.     2.4 Foundation and the University have a
reserved right to practice under the Patent Rights for non-commercial research
and educational purposes within the mission of the University, adhering to the
confidentiality provisions of Article 13.     2.5 Licensee shall have the right
to enter into sublicensing agreements for the rights, privileges and licenses
granted hereunder, provided that Licensee shall give Foundation written notice
thereof within thirty (30) days after any such sublicense shall become
effective. No such sublicense shall relieve Licensee of its obligations
hereunder and Licensee and each such sublicensee shall execute documents to the
foregoing effect, a copy of which and any amendments thereto will be furnished
to Foundation promptly upon execution and delivery. Upon any termination of this
Agreement, all sublicensee’s rights shall also terminate, except as provided in
Section 11.7 hereof.     2.6 Licensee agrees that any sublicense granted by it
shall be subject in all respects to restrictions, provisions and obligations in
this Agreement and shall be binding upon the sublicensee as if it were a party
to this Agreement and include a provision prohibiting the sublicensee from
sublicensing its rights under such sublicense agreement.     2.7 Licensee shall
not receive from sublicensee(s) anything of value in lieu of cash payments in
consideration for any sublicense under this Agreement, without the express prior
written permission of Foundation.     2.8 The license granted shall not be
construed to confer any rights upon Licensee by implication, estoppel or
otherwise as to any technology not specifically set forth in Patent Rights or
Know-How.

 

 4 

 

 

2.9 Development of the invention was sponsored in part by the United States
Government, and as a consequence this Agreement, any license agreement and the
invention are subject to overriding obligations to the Federal Government
(including a non-exclusive, irrevocable license to use the invention by or on
behalf of the Government throughout the world), under 35 U.S.C. §§200-212 and
applicable regulations.

 

ARTICLE 3: DUE DILIGENCE

 

3.1 Licensee shall use commercially reasonable efforts and shall cause its
sublicensees to use commercially reasonable efforts: (a) to develop Licensed
Products; (b) to introduce Licensed Products into the commercial market; and (c)
to market Licensed Products following such introduction into the market; to the
extent such Licensed Products are covered by a Valid Patent Claim.     3.2
Omitted.     3.3 Omitted     3.4 Until reporting begins under Section 5.2,
Licensee shall, within sixty (60) days after the end of each calendar year
starting in year 2021, furnish Foundation with a written report summarizing its,
its Affiliates’ and its sublicensees’ efforts during the prior year to develop
and commercialize Licensed Products, including: (a) research and development
activities completed; (b) commercialization and/or other distribution efforts,
including significant corporate transactions involving Licensed Products; and
(c) marketing efforts. Each report must contain a sufficient level of detail for
Foundation to assess whether Licensee is in compliance with its obligations
under Section 3.1 and a discussion of intended efforts for the then current
year. Together with each report, Licensee shall provide Foundation with a copy
of the then current development plan for the current year, including an updated
schedule of anticipated events or milestones.     3.5 Licensee’s failure to
perform in accordance with Section 3.4 above shall be grounds for Foundation to
terminate this Agreement pursuant to Section 11.3 herein, providing such
deficiency is not remedied within ninety (90) days of notice by Foundation to
Licensee that such deficiency exists.

 

 5 

 

 

ARTICLE 4: CONSIDERATION FOR GRANT OF LICENSE

 

4.1 For the rights, privileges and license granted, Licensee agrees to reimburse
Foundation the sum of [*], payable thirty (30) days after the Effective Date,
for third-party fees and expenses paid by Foundation prior to the Effective Date
of this Agreement associated with the filing, prosecution and maintenance of the
Patent Rights. The details of these fees are set forth in Appendix A (“Patent
Fees”). Licensee shall also make the following payments to Foundation in the
manner hereinafter provided during the Term:

 

  (a) LICENSE INITIATION FEE: Licensee shall pay to Foundation a non-refundable
License Initiation Fee in the sum of eighty thousand dollars (USD $80,000),
payable thirty (30) days after the Effective Date. This License Initiation Fee
shall be separate from and unrelated to any other fees, such as, the Annual
License Maintenance Fees, and Royalty payments set forth in this Article 4.    
    (b) ANNUAL LICENSE MAINTENANCE FEE: Licensee shall pay the following annual
license maintenance fees (the “Annual License Maintenance Fees”):          
Twenty thousand dollars (USD $20,000) each year.           Such Annual License
Maintenance Fees shall be due on the anniversary date of the Effective Date and
are non-refundable. Royalty payments in a given license year shall be creditable
against these Annual License Maintenance Fees.         (c) RUNNING ROYALTIES:
During the Term, Licensee shall pay Foundation running royalties in an amount
equal to [*] of Net Sales of Licensed Products covered by a Valid Patent Claim
(such royalties, the “Running Royalties”); provided, however, that in the event
Licensee or its sublicensee or Affiliate is required to pay a third party in
consideration for a license under any patent rights claiming the composition,
use or manufacture of the Licensed Product, Licensee shall then be entitled to
credit fifty percent (50%) of such third party payments against the Running
Royalties with respect to the Net Sales of the Licensed Product, such credit not
to exceed fifty percent (50%) of the Running Royalties otherwise due for any
calendar quarter for the Licensed Product.         (d) DEVELOPMENT MILESTONE
PAYMENTS: Licensee will pay development milestone payments as set forth below
within thirty (30) days after the achievement of the relevant milestone by
Licensee, as applicable, or its affiliates or sublicensees.

 

“Major Country” means the United Kingdom, France, Germany, Italy, Spain or
Canada.       Dosing of the first patient with the first Licensed Product in a
Phase 1 clinical trial

[*]

Dosing of the first patient with the first Licensed Product in a Phase 2
clinical trial

[*]

Dosing of the first patient with the first Licensed Product in a Phase 3
clinical trial

[*]

Regulatory approval of the first Licensed Product in the United States [*] First
commercial sale of the first Licensed Product in the United States [*] First
commercial sale of the first Licensed Product in a Major Country outside North
America. [*]

 

 6 

 

 

  (e) In addition to Running Royalties, a percentage of any upfront payments
received by Licensee from sublicensees in consideration for sublicensing the
Patent Rights shall be paid to Foundation based on the following schedule:

 

  ● [*]   ● [*]   ● [*]   ● [*]

 

  (f) All payments made in accordance with subparagraphs 4.1(c) and 4.1(e) shall
be credited against the Annual License Maintenance Fee provided for in 4.1(b),
but only in the calendar year they are received by Foundation.

 

4.2 No multiple Running Royalties shall be payable because any Licensed Product,
its manufacture, use, lease, importation or sale are or shall be covered by more
than one Valid Patent Claim in one or more Patent Rights licensed under this
Agreement.     4.3 All Running Royalty payments due hereunder shall be paid in
full, without deduction of taxes or other fees which may be imposed by any
government and which shall be paid by Licensee. Non-royalty payments under
Section 4.1(e) shall be net of any transaction taxes or fees, not including
income tax on profits, which may be imposed by any government upon receipt by
Licensee.     4.4 A sale Running Royalties shall accrue when Licensed Products
are invoiced, or if not invoiced, when delivered to a third party, not an
Affiliate or sublicensee whose resale would constitute Net Sales. Licensee shall
within sixty (60) days after March 31, June 30, September 30 and December 31, of
each year, pay Running Royalties. Each payment shall be for Running Royalties
accrued within Licensee’s most recently completed calendar quarter.     4.5
Royalty payments shall be paid in United States dollars (“USD”) without
deduction of exchange, collection or other charges in Manhattan, Kansas, or at
such other place as Foundation may reasonably designate consistent with the laws
and regulations controlling in any foreign country. If any currency conversion
shall be required in connection with the payment of Running Royalties, such
conversion shall be made by using the exchange rate published in the Wall Street
Journal on the last business day of the calendar quarterly reporting period to
which such royalty payments relate.     4.6 All payments due Foundation shall be
made out to “Kansas State University Research Foundation.” Payment may be
remitted via bank wire transfer, at Licensee’s expense, in immediately available
funds to such bank account in the United States designated in writing by
Foundation from time to time.     4.7 The Running Royalty and other payments set
forth in this Agreement and amounts due under Article 6 shall, if overdue, bear
interest from and including the date payment is due until payment at a per annum
rate equal to [*]. The payment of such interest shall not foreclose Foundation
from exercising any other rights it may have as a consequence of the lateness of
any payment.

 

 7 

 

 

ARTICLE 5: REPORTS AND RECORDS

 

5.1 Licensee shall keep full, true and accurate books of account containing all
particulars that may be necessary for the purpose of showing the amounts payable
by Licensee to Foundation. Said books of account shall be kept at Licensee’s
principal place of business or the principal place of business of the
appropriate division of Licensee to which this Agreement relates. Said books and
the supporting data shall be open at all reasonable times for three (3) years
following the end of the calendar year to which they pertain, to the inspection
by an independent certified public accounting firm selected by Foundation and
reasonably acceptable to Licensee, at Foundation’s expense, for the sole purpose
of verifying Licensee’s royalty statements or compliance in other respects with
this Agreement. The accounting firm shall disclose to Foundation whether the
reports are correct or incorrect and the extent of any discrepancy. Should such
inspection lead to the discovery of a greater than five percent (5%) discrepancy
in reporting to Foundation’s detriment, Licensee agrees to pay the full cost of
such inspection. Foundation may exercise its rights under this Section 5.1 only
once every year per audited entity and only with reasonable prior notice to the
audited entity.     5.2 Before the first commercial sale of a Licensed Product,
Licensee shall submit the reports due under Section 3.4. After the first
commercial sale of a Licensed Product, Licensee, within sixty (60) days after
March 31, June 30, September 30 and December 31, of each year, shall deliver to
Foundation true and accurate reports of the business conducted by Licensee and
its sublicensee(s) during the preceding three-month period using a format
similar to the example shown in Appendix B (“Royalty Report Form”). These shall
include the following:

 

  (a) amount of Licensed Products manufactured and sold by Licensee and all
sublicensees;   (b) total billings for Licensed Products sold by Licensee and
all sublicensees;   (c) methods used to calculate the Running Royalty;   (d) the
exchange rate used;   (e) deductions applicable as provided in Section 1.9;  
(f) non-royalty sublicensing payments due under Section 4.1(e);   (g) total
Running Royalties due; and   (h) names and addresses of all sublicensees of
Licensee.

 

With each such report submitted, Licensee shall pay to Foundation the royalties
due and payable under this Agreement. Licensee shall provide such report even if
no royalties shall be due.

 

 8 

 

 

ARTICLE 6: PATENT PROSECUTION

 

6.1 Foundation will be responsible for the preparation, filing, prosecution,
protection, defense and maintenance of all Patent Rights, using independent
patent counsel reasonably acceptable to Licensee. However, Foundation shall give
Licensee the opportunity to provide comments on and make requests of Foundation
concerning the preparation, filing, prosecution, protection, defense and
maintenance of the Patent Rights, and shall seriously consider such comments and
requests; however, final decision-making authority shall vest in Foundation.    
6.2 Foundation, either directly or through its attorneys, shall keep Licensee or
its designated attorneys adequately informed with respect to the filing,
prosecution, and maintenance of all patent applications and patents licensed
under this Agreement. Licensee shall have the right to request and receive
additional information, as Licensee or its attorneys may require, including
copies of patent applications, patents, patent office actions, and replies
thereto.     6.3 Separate from the payments set forth in Article 4, Licensee
shall reimburse Foundation for all reasonable costs associated with the Patent
Rights incurred after the Effective Date and paid by Foundation or its Affiliate
without reimbursement by a third party. These reimbursements shall be due within
thirty (30) days after receipt of Foundation’s invoice by Licensee, and shall be
non-refundable and non-creditable. To the extent practicable, such expenses
shall be pre-approved by Licensee, and Foundation agrees to consult with
Licensee as to the preparation, filing, prosecution and maintenance of the
Patent Rights and shall furnish to Licensee copies of relevant documents in
Foundation’s or its counsel’s possession reasonably in advance of such
consultation. If Licensee fails to provide direction before two (2) weeks prior
to a deadline, Foundation will proceed on its own judgment and, provided that
Licensee has received two (2) months’ prior notice of the deadline, Licensee
shall be responsible for costs as if pre-approved. If, by two (2) weeks prior to
expiration of a filing deadline, Licensee elects not to make such payment,
Foundation may elect to make such payment at Foundation’s own cost, in which
case Licensee shall have no further rights with respect to said specific patent
action, any other Section of this Agreement notwithstanding.     6.4 If Licensee
decides that it does not wish to pay for the prosecution or maintenance of any
Patent Rights in a particular country, Licensee shall provide Foundation with
prompt written notice of such election. Upon receipt of such notice by
Foundation, Licensee shall be released from its obligation to reimburse
Foundation for such expenses incurred thereafter as to such Patent Rights;
provided, however, that expenses authorized prior to the receipt by Foundation
of such notice shall be deemed incurred prior to the notice. In the event of
Licensee’s election hereunder to no longer pay for prosecution or maintenance of
any Patent Rights, any license granted by Foundation to Licensee hereunder with
respect to such Patent Rights will terminate, and Licensee will have no rights
whatsoever to exploit such terminated Patent Rights. Foundation will then be
free, without further notice or obligation to Licensee, to grant rights in and
to such terminated Patent Rights to third parties in the Field of Use, while
Licensee shall retain full rights hereunder with respect to all other patent
rights then within the Patent Rights.

 

 9 

 

 

ARTICLE 7: INFRINGEMENT

 

7.1 Either Party shall promptly inform the other Party in writing of any alleged
infringement of the Patent Rights by a third party and shall provide the other
Party with any available evidence thereof. Neither Party shall notify a third
party of the infringement of Patent Rights without first consulting with the
other Party. Both Parties shall use reasonable efforts and cooperation to
terminate infringement without litigation.     7.2 During the Term, Licensee
shall have the first right, but not the obligation, to prosecute at its own
expense all infringements of the Patent Rights and, in furtherance of such
right, Foundation hereby agrees that Licensee may include Foundation as a party
plaintiff in any such suit, without expense to Foundation provided, however,
that such right to bring such an infringement action shall remain in effect only
for so long as the license granted herein remains exclusive. The total cost of
any such infringement action commenced or defended solely by Licensee shall be
borne by Licensee. No settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the consent of Foundation,
which consent shall not unreasonably be withheld. Licensee shall indemnify
Foundation against any order for costs that may be made against Foundation in
such proceedings.     7.3 In the event that Licensee shall undertake the
enforcement and/or defense of the Patent Rights by litigation, Licensee may
withhold up to fifty percent (50%) of the payments otherwise due Foundation
under Article 4 herein and apply the same toward reimbursement of up to half of
Licensee’s third-party litigation expenses, including reasonable attorneys’
fees, in connection therewith. Any recovery of damages by Licensee for each such
suit shall be applied first in satisfaction of any unreimbursed expenses and
legal fees of Licensee relating to such suit, and next toward reimbursement of
Foundation for any payments under Article 4 past due or withheld and applied
pursuant to this Article 7. Licensee shall receive sixty percent (60%), and
Foundation shall receive forty percent (40%) of the balance of any recovery,
damages, or settlement proceeds after the foregoing allocation is performed.    
7.4 If within six (6) months after having been notified of any alleged
infringement, Licensee shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought and shall not be diligently
prosecuting an infringement action, or if Licensee shall notify Foundation at
any time prior thereto of its intention not to bring suit against any alleged
infringer then, and in those events only, Foundation shall have the right, but
shall not be obligated, to prosecute at its own expense any infringement of the
Patent Rights, and Foundation may, for such purposes, use the name of Licensee
as party plaintiff.     7.5 In the event that Foundation shall undertake
enforcement and/or defense of the Patent Rights litigation, any recovery,
damages or settlement derived from such action shall be applied first in
satisfaction of any unreimbursed expenses and legal fees of Foundation.
Foundation shall receive sixty percent (60%), and Licensee shall receive forty
percent (40%) of the balance of any recovery, damages, or settlement proceeds
after the foregoing allocation is performed.     7.6 In the event that a
declaratory judgment action alleging invalidity or noninfringement of any of the
Patent Rights shall be brought against Licensee, Foundation, at its option,
shall have the right, within thirty (30) days after commencement of such action,
to intervene and take over the sole defense of the action at its own expense,
provided that Foundation consults with and keeps Licensee promptly informed
regarding such declaratory judgment action.     7.7 In any infringement suit as
either Party may institute to enforce the Patent Rights pursuant to this
Agreement, the other Party hereto shall, at the request and expense of the Party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees (and employees of University) testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.

 

 10 

 

 

7.8 Licensee shall have the sole right in accordance with the terms and
conditions herein to sublicense any alleged infringer for future use of the
Patent Rights. Any upfront fees as part of such a sublicense shall be first be
used to reimburse the costs of the Party bringing the infringement action
against the infringer and the balance will be shared with Foundation in
accordance with Section 4.1(e); other royalties shall be treated per Article 4.

 

ARTICLE 8: LIABILITIES AND WARRANTIES

 

8.1 Licensee represents and warrants that it will comply, and will require that
its Affiliates and sublicensees comply, with all applicable local, state,
federal and international laws and regulations relating to the development,
manufacture, use, sale and importation of Licensed Products. Without limiting
the foregoing, Licensee represents and warrants, that is shall comply, and will
require its Affiliates and sublicensees to comply, with all applicable United
States laws and regulations controlling the export of certain commodities and
technical data, including without limitation all applicable Export
Administration Regulations of the United States Department of Commerce. Among
other things, these laws and regulations prohibit or require a license for the
export of certain types of commodities and technical data to specified
countries. Licensee hereby gives written assurance that it will comply with, and
will require that its Affiliates and sublicensees comply with, all applicable
United States export control laws and regulations, that it bears sole
responsibility for any violation of such laws and regulations by itself or its
Affiliates or sublicensees, and that it will indemnify, defend, and hold the
Foundation Indemnitees harmless (in accordance with Section 8.2) for the
consequences of any such violation.     8.2 Licensee shall at all times during
the Term and thereafter, indemnify, defend and hold Foundation, the University,
and their trustees, agents, their directors, officers, employees,
inventors/assignors and Affiliates (collectively, the “Foundation Indemnitees”),
harmless against all third-party claims, proceedings, demands and liabilities of
any kind whatsoever, including legal expenses and reasonable attorneys’ fees
(collectively, “Foundation Claims”), arising out of the death of or injury to
any person or persons or out of any damage to property, resulting from the
production, manufacture, sale, use, lease, consumption or advertisement of the
Licensed Products by Licensee or its sublicensees or arising from any obligation
of Licensee hereunder. The rights and obligations of this section shall survive
termination or expiration of the Agreement with respect to Foundation Claims
arising during the Term. Notwithstanding the foregoing, each of Foundation
Indemnitees shall not be entitled to indemnification for any claim, liability,
loss, cost, damage, or expenses to the extent caused by the fraud or willful
misconduct of a Foundation Indemnitee or breach of this Agreement by Foundation.
    8.3 Foundation shall at all times during the Term and thereafter, indemnify,
defend and hold Licensee, and its, agents, their directors, officers, employees,
inventors/assignors and Affiliates (collectively, the “Licensee Indemnitees”),
harmless against all third-party claims, proceedings, demands and liabilities of
any kind whatsoever, including legal expenses and reasonable attorneys’ fees
(collectively, “Licensee Claims”), arising from any obligation of Foundation
Indemnitees hereunder. The rights and obligations of this section shall survive
termination or expiration of the Agreement with respect to Licensee Claims
arising during the Term. Notwithstanding the foregoing, each of Licensee
Indemnitees shall not be entitled to indemnification for any claim, liability,
loss, cost, damage, or expenses to the extent caused by the fraud or willful
misconduct of a Licensee Indemnitee or breach of this Agreement by Licensee.

 

 11 

 

 

8.4 Licensee acknowledges it has or can establish the skill, knowledge, and
capability to develop, produce, manufacture, market, and sell Licensed Products
and/or Services.     8.5 Foundation represents and warrants that:

 

  (a) Foundation Controls, and has been assigned all right, title and interest
in, the Patent Rights;   (b) Foundation has the right and authority to enter
into this Agreement and to grant the rights and licenses herein granted;   (c)
To the best of Foundation’s knowledge, there are no outstanding assignments,
grants, licenses, encumbrances, obligations or agreements, either written or
implied, inconsistent with the rights and licenses granted to Licensee under
this Agreement;   (d) Foundation has not executed and will not execute any
agreement in conflict herewith and has not granted and will not grant any
license rights to the Patent Rights and Know-How for the Field of Use;   (e) To
the best of Foundation’s knowledge, the Patent Rights do not infringe the rights
of third parties; and   (f) Foundation’s obligations undertaken under this
Agreement are valid and enforceable.

 

8.6 Nothing in this Agreement shall be construed as: (1) a warranty by
Foundation that it can or will be able to obtain patents on patent applications
included in the Patent Rights, or that any of the Patent Rights will afford
adequate or commercially worthwhile protection; (2) a warranty or representation
that any or all Patent Rights would be found valid by a court of competent
jurisdiction; (3) a warranty or representation that anything made, used, sold or
otherwise disposed of by Licensee under the rights and licenses or sublicenses
granted in this Agreement is or will be free from infringement of patents of
third parties (except as expressly provided in Section 8.4(e)); or (4)
conferring by implication or otherwise any license or rights under any patents
of Foundation other than the Patent Rights, provided, however, that Foundation
shall not invoke any dominant patent or patent application Controlled by the
Foundation to in any way restrict the rights and/or licenses granted to Licensee
under this Agreement.     8.7 Except as otherwise expressly set forth in this
agreement, Foundation, ITS trustees, agents, Directors, officers, employees,
inventors/assignors and affiliates make no representations and extend no
warranties of any kind, either express or implied, including but not limited to
warranties of merchantability, fitness for a particular purpose, validity of
Patent Rights, claims, issued or pending, and the absence of latent or other
defects, whether or not discoverable. Nothing in this agreement shall be
construed as a representation made or warranty given by Foundation that the
practice by Licensee of the License granted hereunder shall not infringe the
Patent Rights of any third party (EXCEPT AS EXPRESSLY PROVIDED IN SECTION
8.4(e)). In no event shall Foundation, its trustees, agents, directors,
officers, employees, inventors/assignors and affiliates OR LICENSEE AND ITS
AFFILIATES AND SUBLICENSEES be liable for incidental or consequential damages of
any kind, including economic damage or injury to property and lost profits,
regardless of whether Foundation OR LICENSEE shall be advised, shall have other
reason to know, or in fact shall know of the possibility.

 

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ARTICLE 9: NON-USE OF NAMES

 

9.1 Licensee shall not use the names or trademarks of the University or
Foundation, nor any adaptation thereof, nor the names of any of their employees,
unless said employee is or was also an employee of Licensee, in any advertising,
promotional or sales literature without prior written consent obtained from
University, Foundation or said employee, in each case; except that Licensee may
state that it is licensed by Foundation under one or more of the patents and/or
applications comprising the Patent Rights.     9.2 Foundation and University
shall not use the names or trademarks of Licensee, nor any adaptation thereof,
nor the names of any of its employees, in any advertising, promotional or sales
literature without prior written consent obtained from Licensee, in each case;
except that Foundation may state that it is has licensed Licensee under one or
more of the patents and/or applications comprising the Patent Rights, to the
extent required or affirmatively permitted under Foundation or University policy
or state statute or regulation.

 

ARTICLE 10: GOVERNMENTAL MATTERS

 

10.1. If this Agreement or any associated transaction is required by the law of
any nation to either be approved or registered with any governmental agency,
Licensee shall assume all legal obligations to do so. Licensee shall notify
Foundation if it becomes aware that this Agreement is subject to a United States
or foreign government reporting or approval requirement. Licensee shall make all
necessary filings and pay all costs including fees, penalties, and all other
out-of-pocket costs associated with such reporting or approval process.    
10.2. Licensee shall observe all applicable United States and foreign laws with
respect to the transfer of Licensed Products and related technical data to
foreign countries, including without limitation, the International Traffic in
Arms Regulations and the Export Administration Regulations.

 

ARTICLE 11: TERMINATION

 

11.1. Either Party may terminate this Agreement immediately upon filing or
institution by or against the other Party of bankruptcy, reorganization,
liquidation or receivership proceedings (unless any involuntary proceeding that
is filed or instituted against the other Party is not dismissed within ninety
(90) days), or upon an assignment of a substantial portion of the assets for the
benefit of creditors by either Party.     11.2. Should Licensee fail to make any
payment whatsoever due and payable to Foundation, Foundation shall have the
right to terminate this Agreement effective on thirty (30) days’ written notice,
unless Licensee shall make all such payments to Foundation within said thirty
(30) day period or unless Licensee is contesting in good faith the obligation to
make the payment. Upon the expiration of the thirty (30) day period, if Licensee
shall not have made all such payments to Foundation or is not contesting in good
faith the obligation to make the payment, the rights, privileges and license
granted shall automatically terminate. Obligations and payments due at the time
of termination shall survive termination.     11.3. Upon any material breach or
default of any of the provisions of this Agreement by Licensee other than those
occurrences set out in Sections 11.1 and 11.2 hereinabove, which shall always
take precedence in that order over any material breach or default referred to in
this Section 11.3, Foundation shall have the right to terminate this Agreement
and the rights, privileges and license granted hereunder effective on ninety
(90) days written notice to Licensee. Such termination shall become
automatically effective unless Licensee shall have cured any such material
breach or default prior to the expiration of the ninety (90) day period and
informed Foundation thereof in writing.

 

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11.4. Licensee shall have the right to terminate this Agreement at any time on
thirty (30) days’ notice for futility, or on ninety (90) days’ notice for any
reason to Foundation, and upon payment of all amounts due Foundation through the
Effective Date of the termination.     11.5. Upon any material breach or default
of any of the provisions of this Agreement by Foundation, Licensee shall have
the right to terminate this Agreement effective on sixty (60) days’ written
notice to Foundation. Such termination shall become automatically effective
unless Foundation shall have cured such breach prior to the expiration of the
sixty (60) day period and informed Licensee thereof.     11.6. Upon termination
of this Agreement for any reason, nothing herein shall be construed to release
either Party from any obligation that matured prior to the Effective Date of
such termination; and Articles 1, 8, 11, and 13 shall survive any such
termination. Licensee and any sublicensee thereof may, however, for up to six
(6) months after the effective date of such termination, sell all Licensed
Products, and complete Licensed Products in the process of manufacture at the
time of such termination and sell the same, provided that Licensee shall make
the payments to Foundation as required by Article 4 and Article 6 of this
Agreement and shall submit the reports required by Article 5 hereof.     11.7.
Upon termination of this Agreement for any reason other than by Licensee
pursuant to Section 11.4 or 11.5, any sublicensee not then in default shall have
the right to have its sublicense become a direct license from Foundation upon
the terms hereof, as further limited in scope, field and terms set forth in the
original sublicense, if the sublicensee pays Foundation all amounts Foundation
would have received from Licensee with respect to the sublicense if this
Agreement had not been terminated.

 

ARTICLE 12: NOTICES

 

Any notice, payments, or reporting required to be given under this Agreement
shall be deemed to have been sufficiently given, if mailed by Certified Mail,
postage prepaid, or by special courier, addressed to the Party to be notified at
its address shown below, or at such other address as may later be furnished in
writing to the notifying Party.

 

In the case of Foundation:

 

Attention: President

Kansas State University Research Foundation

2005 Research Park Circle

Manhattan, Kansas 66502

[*]

 

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In case of Licensee:

 

Attention: President

Cocrystal Pharma, Inc.

19805 North Creek Parkway

Bothell, WA 98011

[*]

 

ARTICLE 13. CONFIDENTIALITY

 

13.1. The Parties agree to hold in confidence all Confidential Information; to
not disclose any Confidential Information to any third party, to use
Confidential Information solely for the purposes of this Agreement, and to
disclose such Confidential Information only to individuals within receiving
Party’s organization that are directly involved with the Agreement on a
need-to-know basis, except as set forth in Sections 13.2 and 13.3.     13.2.
Each Party receiving or having access to Confidential Information from the other
Party, whether in oral, written, graphic, computer-generated, or any other form,
shall exercise due care to prevent its unauthorized disclosure. “Confidential
Information” hereunder shall not include or information that:

 

  (a) is or becomes publicly known through no wrongful act, omission or fault of
the receiving Party;   (b) the receiving Party can reasonably demonstrate is
already in the possession of the receiving Party as a matter of right;   (c) is
received after the date hereof from a third party without restriction and
without breach of this Agreement; or   (d) is independently developed by the
receiving Party as evidenced by its records kept in the ordinary course of
business.

 

  Nothing herein shall be interpreted to prohibit Licensee from publishing the
results of its studies with respect Licensed Products in accordance with
industry practices or from disclosing Foundation’s Confidential Information to
third parties that Licensee deems necessary or advisable in the ordinary course
of business on the condition that such third parties agree to be bound by
confidentiality and non-use obligations that substantially are no less stringent
than those confidentiality and non-use provisions contained in this Agreement.  
  13.3.  The receiving Party may disclose Confidential Information received from
the disclosing Party if it is required to be disclosed pursuant to law or
regulation or an order or requirement of a competent court, administrative
agency, or other governmental body, provided that the receiving Party: (i) uses
reasonable efforts to disclose no more of the received Confidential Information
than is necessary to comply with such requirement; and (ii) to the extent
permitted promptly notifies the disclosing Party of such requirement so that the
disclosing Party may seek a protective order or other remedy.     13.4. Unless
otherwise specified in writing, all Confidential Information remains the
disclosing Party’s property. Upon termination or expiration of this Agreement
and request of the disclosing Party, the receiving Party agrees to return or
destroy all Confidential Information received from the disclosing Party, except
for one copy, which the receiving Party may keep solely to monitor its
obligations under this Agreement.

 

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13.5. The secrecy obligations of Company with respect to Confidential
Information shall continue for a period ending five (5) years from the
termination date of this Agreement.     13.6. Foundation shall not, and shall
cause the University not to, publish any information pertaining to the Patent
Rights or Know-How that could constitute Confidential Information of Foundation
or the University without first providing Licensee a copy of the proposed
publication or any modification thereof at least thirty (30) days prior to the
proposed publication. Licensee may request a reasonable delay in publication or
presentation in order to protect patentable information. If Licensee requests a
delay to protect patentable information, Foundation or the University will delay
the proposed submission for publication for a period not to exceed thirty (30)
days to enable a filing with the patent office to protect such information. Upon
expiration of such thirty (30) days, Foundation or the University will be free
to proceed with submitting the proposed publication.

 

ARTICLE 14: MISCELLANEOUS PROVISIONS

 

14.1 This Agreement shall be construed, governed, interpreted and applied in
accordance with the laws of the State of Kansas, without giving effect to any
choice or conflict of law provision, except that questions affecting the
construction and effect of any patent shall be determined by the law of the
country in which the patent shall have been granted.     14.2 The Parties hereto
acknowledge that this Agreement sets forth the entire Agreement and
understanding of the Parties hereto as to the subject matter hereof, and shall
not be subject to any change or modification except by the execution of a
written instrument subscribed to by the Parties hereto.     14.3 This Agreement
may not be assigned by either Party without the written consent of the other,
which consent shall not be unreasonably withheld, except that each Party may,
without such consent, assign this Agreement and the rights, obligations and
interests of such Party to any purchaser of all or substantially all of its
assets or all of its equity, or to any successor corporation resulting from any
merger or consolidation of such Party with or into such corporation; provided,
in each case, that the assignee agrees in writing to be bound by the terms of
this Agreement. Any assignment purported or attempted to be made in violation of
the terms of this Section 14.3 shall be null and void and of no legal effect.  
  14.4 The provisions of this Agreement are severable, and in the event that any
provisions of this Agreement shall be determined to be invalid or unenforceable
under any controlling body of the law, such invalidity or unenforceability shall
not in any way affect the validity or enforceability of the remaining provisions
hereof.     14.5 The failure of either Party 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 or excuse a similar subsequent failure to
perform any such term or condition by the other Party.     14.6 This Agreement
is the joint product of the Parties hereto and their respective counsel. Each
provision hereof has been subject to the mutual consultation, negotiation, and
agreement of the Parties and shall not be construed for or against either Party
hereto on the basis of authorship thereof.

 

 16 

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by proper
persons thereunto duly authorized as of the Effective Date.

 

COCRYSTAL PHARMA, INC.:   KANSAS STATE UNIVERSITY     RESEARCH FOUNDATION:      
          By: Sam Lee   By: Kent Glasscock Title: President   Title: President
and CEO           Date:     Date:  

 

 17 

 

 

APPENDIX A – PATENT FEES

 

[*]

 

 18 

 

 

APPENDIX B - ROYALTY REPORT FORM

 

Please also complete a separate form for each Affiliate and sublicensee for each
product sold.

 

Submitted by: ______________________________(Cocrystal Pharma, Inc.) Submit to:
Kansas State University Research Foundation Report Period: Beginning date:
__________________             Ending date: __________________

 

 

 

Product Number and Description

 

 

 

Licensee submits the following royalty report for the period indicated above.

 

  A. Annual License Maintenance Fee due for this license year $____________

 

B. Less royalties previously paid this license year

 

  (1) January – March $____________     (2) April – June $____________     (3)
July – September $____________     (4) October - December $____________     (5)
Total payments to date               $(_____________)

 

C. REPORT PERIOD                 (1) Units of product sold  ____________     (2)
Sales price per unit $____________     (3) Gross sales of product (1 x 2)
$____________     (4) Less allowable deductions $( ___________)     (5) Net
Sales of product sold (3 – 4) $____________     (6) Running royalty rate
 ____________     (7) Royalty payment due this period (5 x 6) $____________
           $(______________)

 

(Enclose remittance made payable to Kansas State University Research Foundation)

 

  D. Remaining Annual License Maintenance Fee due: (A – B(5) –C(7)) $  

 

For Office Use Only         Authorized Signature           Printed Name, Title  
    Account no. – Disc. no. __________________________     Check number
                __________________________     Check date
                      __________________________    

 

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