Exhibit 10.1

LICENSE AND SUBLICENSE AGREEMENT

by and between

CPEC L.L.C. and

ARCA DISCOVERY, INC.

--------------------------------------------------------------------------------

LICENSE AGREEMENT (this “Agreement”) effective as of October 28, 2003
(“Effective Date”), by and between CPEC, L.L.C., a Delaware limited liability
company (“CPEC”) having an office at 99 Hayden Avenue, Suite 200, Lexington, MA
02421 (“CPEC”) and ARCA Discovery, Inc., a corporation organized and existing
under the laws of the State of Colorado and having its principal office at 12635
East Montview Boulevard, Suite 100, Aurora, CO 80010 (“ARCA”).

WITNESSETH:

WHEREAS, CPEC is the owner or licensee of the CPEC Intellectual Property, as
defined herein and;

WHEREAS, ARCA desires to obtain exclusive license rights under the CPEC
Intellectual Property, and CPEC desires to grant such license to ARCA, upon the
terms and conditions set forth herein; and

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

Article I

DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms, where
used in the singular or plural, shall have the respective meanings set forth
below:

 

1.1. “Affiliate” shall mean (i) any corporation or business entity of which more
than fifty percent (50%) of the securities or other ownership interests
representing the equity, the voting stock or general partnership interest are
owned, controlled or held, directly or indirectly, by a Party; (ii) any
corporation or business entity which, directly or indirectly, owns, controls or
holds more than fifty percent (50%) (or the maximum ownership interest permitted
by law) of the securities or other ownership interests representing the equity,
voting stock or general partnership interest of a Party or (iii) any corporation
or business entity of which a Party has the right to acquire, directly or
indirectly, at least fifty percent (50%) of the securities or other ownership
interests representing the equity, voting stock or general partnership interest
thereof.

 

1.2. “BMS Intellectual Property” means any Patent Assets and Know-How included
in the CPEC Intellectual Property that arise from CPEC’s rights under the BMS
License and are subject to the BMS License.

 

1.3. “BMS License” means the Agreement dated as of December 6, 1991, as amended,
between Bristol-Myers Squibb Company (“BMS”) and Cardiovascular Pharmacology and
Engineering Consultants, Inc., a predecessor-in-interest of CPEC, a copy of
which is attached as Exhibit 1.3.

--------------------------------------------------------------------------------

1.4. “BMS Option” shall have the same meaning as such term is defined in the BMS
License.

 

1.5. “Calendar Quarter” shall mean the respective periods of three
(3) consecutive calendar months ending on March 31, June 30, September 30 and
December 31.

 

1.6. “Calendar Year” shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.

 

1.7. “Centralized Procedure” shall mean the European Union Centralized Procedure
for marketing authorization in accordance with Council Regulation no. 2309/93 of
July 22, 1993 or any successor regulations.

 

1.8. “Compound” shall mean the chemical compound known as “Bucindolol” or
Benzonitrile,
2-[2-hydroxy-3-[[2-(1H-indol-3-yl)-1,1-dimethylethyl]amino]propoxy]-,
monohydrochloride.

 

1.9. “CPEC/Incara” Agreement” shall mean the Assignment and Termination
Agreement by and between CPEC and Incara Pharmaceuticals Corporation (“Incara”),
effective as of the effective Date.

 

1.10.  “CPEC Intellectual Property” shall mean the Patent Assets and CPEC
Know-How.

 

1.11.  “CPEC Know-How” shall mean any and all information and materials,
including but not limited to, discoveries, improvements, information, processes,
formulae, data, inventions, invention disclosures, know-how and trade secrets,
patentable or otherwise, that relate to Compound or Product, including without
limitation, all chemical, pharmaceutical, toxicological, biochemical, and
biological, technical and nontechnical data, and information relating to the
results of tests, assays, methods, and processes, and specifications and/or
other documents containing information and related data, and any preclinical,
clinical, assay control, manufacturing, regulatory, and any other data or
information used or useful for the development, manufacturing and/or regulatory
approval of Compound or Product that are owned or controlled by CPEC and as to
which CPEC has the right to license or sublicense to another party including any
data included in or generated as a result of or under an IND.

 

1.12.  “End of Phase 2 Meeting” shall mean the first end of Phase 2 meeting with
the FDA, as defined in 21 CFR Section 312.47, intended to determine the safety
of proceeding to Phase 3, evaluate the Phase 3 plan and protocols and identify
any additional information necessary to support an NDA for Product.

 

1.13.  “Europe” shall mean any of the United Kingdom, France, Germany, Spain or
Italy.

 

1.14.  “FDA” shall mean the United States Food and Drug Administration and any
successor agency having substantially the same functions, and any corresponding
or successor regulatory authority in Europe or having jurisdiction over the
Centralized Procedure if the context so indicates.

--------------------------------------------------------------------------------

1.15.  “Field” shall mean all human and animal health uses and indications,
whether therapeutic or diagnostic.

 

1.16.  “First Commercial Sale” shall mean the first sale of Product in any
country by ARCA, its Affiliate or its sublicensee(s), for end use or
consumption, after all required Regulatory Approvals have been granted by the
governing health authority of such country.

 

1.17.  “GAAP” shall mean generally accepted accounting principles in the United
States.

 

1.18.  “IND” shall mean an investigational new drug application and any
amendments thereto relating to the use of Compound or Product in the United
States or the equivalent application in any other regulatory jurisdiction in the
Territory, the filing of which is necessary to commence clinical testing of
pharmaceutical products in humans.

 

1.19.  “NDA” shall mean a new drug application filed with the FDA for marketing
authorization of a Product in the United States, or a corresponding submission
in Europe or under the Centralized Procedure or with the Japanese Ministry of
Health, Labour and Welfare if the context so indicates, and any amendments and
supplements thereto.

 

1.20.  “Net Sales” shall mean the [ * ] for commercial [ * ], commencing upon
the date of First Commercial Sale, [ * ]

(i) [ * ]

(ii) [ * ]

(iii) [ * ]

(iv) [ * ]

(v) [ * ]

(vi) [ * ]

Sales or other transfers between ARCA and its Affiliates shall be [ * ] of Net
Sales and [ * ]

 

1.21.  “Party” shall mean CPEC or ARCA.

 

1.22.  “Patent Assets” shall mean the United States patents and patent
applications which as of the Effective Date are owned by CPEC or to which CPEC
has rights from a Third Party, and relate to Compound or Product, including but
not limited to methods of their development, manufacture, or use, or otherwise
relate to CPEC Know-How, including all

 

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

--------------------------------------------------------------------------------

  certificates of invention and applications for certificates of invention,
substitutions, divisions, continuations, continuations-in-part, patents issuing
thereon or reissues or reexaminations thereof and any and all foreign patents
and patent applications corresponding thereto, supplementary protection
certificates or the like of any such patents and current and future patent
applications, including but not limited to any counterparts thereof which have
been or may be filed in other countries.

 

1.23.  “Product” shall mean any product in final form for commercial sale by
prescription, over-the-counter, or by any other method (or, where the context so
indicates, the product being tested in clinical trials), which contains Compound
as the therapeutically active ingredient in all dosage forms and package
configurations.

 

1.24.  “Proprietary Information” shall mean any and all scientific, clinical,
regulatory, marketing, financial and commercial information or data, whether
communicated in writing, orally or by any other means, which is owned and under
the protection of one Party and is being provided by that Party to the other
Party in connection with this Agreement.

 

1.25.  “Regulatory Approval” shall mean all approvals (including pricing
approvals where required), product and/or establishment licenses, registrations
or authorizations of all regional, federal, state or local regulatory agencies,
necessary for the manufacture and sale of Product in a regulatory jurisdiction.

 

1.26.  “Royalty Year” shall mean, (i) for the year in which the First Commercial
Sale occurs, the 12 month period commencing with first day of the month in which
the date of First Commercial Sale occurs and (ii) for each subsequent year, each
successive twelve (12) month period.

 

1.27.  “SEC” shall mean the United States Securities and Exchange Commission or
any successor agency.

 

1.28.  “Territory” shall mean all of the countries in the world.

 

1.29.  “Third Party(ies)” shall mean a person or entity who or which is neither
a Party nor an Affiliate of a Party.

Article II

LICENSE; SUBLICENSES

 

2.1. License Grant. In consideration of and subject to the terms and conditions
of this Agreement, CPEC hereby grants to ARCA an exclusive (even as to CPEC)
(i) sublicense in the Territory under the BMS Intellectual Property to develop,
make, have made, use, import, offer for sale, market, commercialize, distribute
and sell and otherwise dispose of Compound and Product in the Territory for use
in the Field and (ii) license in the Territory under the CPEC Intellectual
Property (other than the BMS Intellectual Property), to develop, make, have
made, use, import, offer for sale, market, commercialize, distribute and sell
and otherwise dispose of Compound and Product in the Territory for use in the
Field. The sublicense hereunder is intended to convey to ARCA all of CPEC’s
rights as licensee under the BMS License.

--------------------------------------------------------------------------------

2.2. Sublicenses. ARCA shall have the right to grant sublicenses in the Field to
Affiliates or to any Third Party to develop, make, have made, use, import, offer
for sale, market, commercialize, distribute and sell and otherwise dispose of
Compound or Product in the Territory, with the prior written consent of CPEC
which consent shall not be unreasonably withheld.

Article III

DEVELOPMENT AND COMMERCIALIZATION

 

3.1. Exchange of Information. As soon as reasonably practicable after the
Effective Date, CPEC shall disclose to ARCA all CPEC Intellectual Property not
previously available or made available to ARCA, including copies of all patent
files in CPEC’s possession or control, and shall also provide to ARCA all
correspondence in CPEC’s possession or control relating to the BMS License. ARCA
shall pay or reimburse CPEC for all reasonable costs associated with the
transfer to ARCA of any data, including any regulatory filings (including the
IND), or any other information or filings.

 

3.2. Diligence; Development and Commercialization.

 

  3.2.1  ARCA shall use commercially reasonable efforts to develop and
commercialize Product. As used herein, “commercially reasonable efforts” shall
mean efforts and resources normally used by a pharmaceutical company for a
product to which it has rights similar to those granted hereunder, which is of
similar market potential at a similar stage in its development or product life,
taking into account issues of safety and efficacy, product profile, the
competitiveness of the marketplace, the proprietary position of the compound or
product, the regulatory and reimbursement structure involved, the profitability
of the applicable products, and other relevant factors.

 

  3.2.2  In addition to the diligence obligations set forth in Section 3.2.1
above, ARCA shall also:

 

  (a) [ * ] within [ * ] of the Effective Date; and

 

  (b) Receive an Institutional Review Board (“IRB”) approval of the protocol for
a Phase 3 clinical trial with Product (after an End of Phase 2 Meeting) in
patients with congestive heart failure within [ * ] after the Effective Date and
commence such Phase 3 clinical trial within [ * ] after such IRB approval, and
have raised sufficient financing to complete such trial prior to its
commencement.

 

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

--------------------------------------------------------------------------------

3.3. Regulatory Matters.

(a) ARCA shall own, control, retain primary legal responsibility and shall pay
all costs for the preparation, filing and prosecution of all filings and
regulatory applications required to obtain authorization to commercially
develop, sell and use Product in the Territory. ARCA shall promptly notify CPEC
upon the receipt of Regulatory Approvals and of the date of First Commercial
Sale.

(b) CPEC shall transfer to ARCA, at ARCA’s expense, as soon as practicable after
the Effective Date, any IND or other regulatory filings relating to Compound or
Product owned or controlled by CPEC. If requested by ARCA, CPEC will permit ARCA
to cross reference any active Drug Master File relating to Compound or Product.

 

3.4. Trademark. ARCA shall select, own and maintain trademarks for Product in
the Territory.

 

3.5. BMS License. CPEC will take no action to cause termination of, or otherwise
impair CPEC’s rights under the BMS License and shall reasonably cooperate (at
ARCA’s request and at no cost to CPEC) to protect ARCA’s sublicense under the
BMS License, provided, however, that CPEC shall not be required to incur any
obligations under the BMS License.

Article IV

CONFIDENTIALITY AND PUBLICITY

 

4.1. Non-Disclosure and Non-Use Obligations. All Proprietary Information
disclosed by one Party to the other Party hereunder shall be maintained in
confidence and shall not be disclosed to any Third Party or used for any purpose
except as expressly permitted herein without the prior written consent of the
Party that disclosed the Proprietary Information to the other Party during the
term of this Agreement and for a period of five years thereafter. The foregoing
non-disclosure and non-use obligations shall not apply to the extent that such
Proprietary Information:

 

  (a) is known by the receiving Party at the time of its receipt, and not
through a prior disclosure by the disclosing Party, as documented by business
records;

 

  (b) is or becomes properly in the public domain or knowledge;

 

  (c) is subsequently disclosed to a receiving Party by a Third Party who may
lawfully do so and is not under an obligation of confidentiality to the
disclosing Party; or

 

  (d) is developed by the receiving Party independently of Proprietary
Information received from the other Party, as documented by research and
development records.

--------------------------------------------------------------------------------

4.2. Permitted Disclosure of Proprietary Information. Notwithstanding
Section 4.1, a Party receiving Proprietary Information of another Party may
disclose such Proprietary Information:

 

  (a) to governmental or other regulatory agencies in order to obtain patents
pursuant to this Agreement, or to gain approval to conduct clinical trials or to
market Product, but such disclosure may be only to the extent reasonably
necessary to obtain such patents or authorizations;

 

  (b) by each of ARCA or CPEC to its respective agents, consultants, Affiliates,
ARCA sublicensees and/or other Third Parties for the research and development,
manufacturing and/or marketing of the Compound and/or Product (or for such
parties to determine their interests in performing such activities) on the
condition that such Third Parties agree to be bound by the confidentiality
obligations consistent with this Agreement; or

 

  (c) if required to be disclosed by law or court order, provided that notice is
promptly delivered to the non-disclosing Party in order to provide an
opportunity to challenge or limit the disclosure obligations; provided, however,
without limiting any of the foregoing, it is understood that the Parties or
their Affiliates may make disclosure of this Agreement and the terms hereof in
any filings required by the SEC, may file this Agreement as an exhibit to any
filing with the SEC and may distribute any such filing in the ordinary course of
its business, provided, however, that to the maximum extent allowable by SEC
rules and regulations (as interpreted by SEC staff), the Parties shall be
obligated to maintain the confidentiality obligations set forth herein and shall
redact any confidential information set forth in such filings; and further
provided that the Parties shall reasonably agree on the timing and content of
any disclosure of this Agreement or its terms (other than disclosure required by
law), and shall in any case give notice prior to such disclosure.

Notwithstanding the above, ARCA shall also have the right to publish the results
of clinical trials, and other Proprietary Information concerning the Compound
and the Product, for the purpose of marketing and promoting the Compound and the
Product, provided, however, that any issues relating to patent protection,
including the filing of a patent application if applicable, shall be resolved
prior to any such results being submitted for publication.

Article V

PAYMENTS; ROYALTIES AND REPORTS

 

  5.1. Milestone Payments. Subject to the terms and conditions contained in this
Agreement, and in consideration of the rights granted by CPEC hereunder, ARCA
shall pay CPEC the following milestone payments, contingent upon occurrence of
the specified event for Product:

(a) US $2,500,000 upon the submission of an NDA with the FDA;

--------------------------------------------------------------------------------

(b) US $500,000 upon [ * ];

(c) US $500,000 upon [ * ];

(d) US $5,500,000 upon obtaining Regulatory Approval for marketing in the United
States by the FDA;

(e) US $2,500,000 upon [ * ]; and

(f) US $1,500,000 upon [ * ].

ARCA shall notify CPEC in writing within ten (10) days after the achievement of
each milestone and such notice shall be accompanied by the appropriate milestone
payment.

 

5.2. Royalties.

5.2.1. Royalties Payable By ARCA.

(i) Subject to the terms and conditions of this Agreement, and in further
consideration of the rights granted by CPEC hereunder, ARCA shall pay to CPEC
royalties in the applicable percentage set forth below for Net Sales in each
Royalty Year of Products by ARCA, its Affiliates or sublicensees:

 

Annual Net Sales:

   Royalty Rate:   Up to the first [ * ]:    8 % Over [ * ] but less than [ * ]:
   10 % Over [ * ] but less than [ * ]:    15 % Over [ * ]:    20 %

(ii) Royalties on Net Sales at the rates set forth above shall accrue as of the
date of First Commercial Sale of Product in the applicable country and shall
continue and accrue on Net Sales in such country until the later of (a) 10 years
from First Commercial Sale of Product or (b) termination of ARCA’s commercial
exclusivity in that country.

(iii) The payment of royalties set forth above shall be subject to the following
conditions:

(a) only one payment shall be due with respect to the same unit of Product;

 

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

--------------------------------------------------------------------------------

(b) no royalties shall accrue on the disposition of Product by ARCA, Affiliates
or sublicensees as samples (promotion or otherwise) or as donations (for
example, to non-profit institutions or government agencies) or to clinical
trials; and

(c) ARCA shall be responsible for payment of and shall pay (i) any royalties or
other obligations owed by ARCA to any Third Party in connection with Compound or
Product or relating to the Patent Assets, and (ii) to CPEC, the royalty owed by
CPEC to BMS under the BMS License; provided, that ARCA’s obligation with respect
to the BMS royalty shall be satisfied by payment of such royalty to CPEC at the
same time and under the same procedure as royalties are paid hereunder.

(d) Subject to the last sentence of this Subsection 5.2.1(iii)(d), in the event
that Incara notifies ARCA in writing that CPEC is in breach of the CPEC/Incara
Agreement as a result of CPEC’s failure to pay the royalty payable to Incara
thereunder (the “Incara Royalty”), and specifies the amount of the unpaid Incara
Royalty, ARCA shall be entitled (but shall have no obligation) within sixty
(60) days after such notice from Incara, to (i) cure such breach by CPEC by
paying such unpaid Incara Royalty and (ii) if it cures such breach, assume
CPEC’s rights and obligations under and pursuant to the terms and conditions of
the CPEC/Incara Agreement, provided that ARCA shall enter into a written
agreement with Incara to such effect and shall have a good faith expectation
that it has the intention and capability to perform such obligations, all in
accordance with the terms of the Side Agreement entered into as of the Effective
Date by and among CPEC, ARCA and Incara. Any such royalties paid directly by
ARCA to Incara shall be credited or offset against the royalties paid or payable
from ARCA to CPEC hereunder, and the accuracy of such credits or offsets shall
be subject to Section 5.4 of this Agreement. In the event that ARCA shall assume
CPEC’s rights and obligations under the CPEC/Incara Agreement, CPEC shall have
no further obligations to Incara with respect to such agreement. ARCA shall not
have the right to cure any CPEC breach of the CPEC/Incara Agreement or to assume
CPEC’s obligations thereunder if ARCA is in breach of this Agreement or if ARCA
has otherwise improperly caused the breach of the CPEC/Incara Agreement.

5.2.2. Affiliate Sales. In the event that ARCA transfers Compound (for
conversion to Product) or Product to one of its Affiliates, there shall be no
royalty due at the time of transfer. Subsequent sales of Product by the
Affiliate to end users such as patients, hospitals, medical institutions, health
plans or funds, wholesalers (which are not sublicensees), pharmacies or other
retailers, shall be reported as Net Sales hereunder by ARCA.

5.2.3. Combination Product. Notwithstanding the provisions of Section 5.3.1, in
the event a Product is sold as a combination product with other biologically
active components, Net Sales, for purposes of royalty payments on the
combination product, shall be calculated by [ * ]. If no such separate sales are
made by ARCA or its Affiliates, Net Sales for royalty determination shall be
calculated by [ * ].

 

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

--------------------------------------------------------------------------------

5.3.

Reports; Payment of Royalty. During the term of the Agreement for so long as
royalty or other payments are due, ARCA shall furnish to CPEC a quarterly
written report for the Calendar Quarter showing the Net Sales of all Products
subject to royalty payments sold by ARCA and its Affiliates during the reporting
period, the countries in which such Net Sales occurred, the royalties or other
payments payable to CPEC under this Agreement and, in the case of sales outside
the United States, the calculation of the conversion to United States dollars.
Reports shall be due on the forty-fifth (45th) day following the close of each
Calendar Quarter. Royalties or other payments shown to have accrued by each
royalty report, if any, shall be due and payable on the date such report is due.
ARCA shall keep complete and accurate records in sufficient detail to enable the
royalties or other payments hereunder to be determined.

 

5.4. Audits. Upon the written request of CPEC and not more than once in each
Calendar Year, ARCA shall permit an independent certified public accounting firm
selected by CPEC and reasonably acceptable to ARCA to have access during normal
business hours, upon ten-days notice to ARCA, to such of the records of ARCA as
may be reasonably necessary to verify the accuracy of the royalty reports
hereunder for any Royalty Year ending not more than twenty-four (24) months
prior to the date of such request (provided that such accounting firm first
agrees to a nondisclosure agreement acceptable to ARCA). The accounting firm
shall disclose to CPEC only whether the royalty reports are correct or incorrect
and the specific details concerning any discrepancies.

5.4.1. If such accounting firm concludes that additional royalties were owed
during such Royalty Year, ARCA shall pay the additional royalties within thirty
(30) days of the date CPEC delivers to ARCA such accounting firm’s written
report so concluding. In the event such accounting firm concludes that amounts
were overpaid by ARCA during such period, CPEC shall repay ARCA the amount of
such overpayment within thirty (30) days of the date CPEC receives such
accounting firm’s written report so concluding. The fees charged by such
accounting firm shall be paid by CPEC; provided, however, that if an error in
favor of CPEC of more than the greater of (i) $100,000 or (ii) five percent
(5%) of the royalties due hereunder for the period being reviewed is discovered,
then the fees and expenses of the accounting firm shall be paid by ARCA.

5.4.2. Upon the expiration of twenty-four (24) months following the end of any
Royalty Year the calculation of royalties payable with respect to such year
shall be binding and conclusive upon CPEC, and ARCA shall be released from any
liability or accountability with respect to royalties for such year.

 

--------------------------------------------------------------------------------

5.4.3. CPEC shall treat all financial information subject to review under this
Section 5.5 in accordance with the confidentiality provisions of this Agreement.

 

5.5. Payment Exchange Rate. All payments to CPEC under this Agreement shall be
made in United States dollars. In the case of sales outside the United States,
the rate of exchange to be used in computing Net Sales shall be calculated
monthly in accordance with GAAP and based on the conversion rates published in
the Wall Street Journal, Eastern edition (if available).

 

5.6. Tax Withholding. If laws, rules or regulations require withholding of
income taxes or other taxes imposed upon payments set forth in this Article V,
CPEC shall provide ARCA, prior to any such payment, once each Royalty Year or
more frequently if required, with all forms or documentation required by any
applicable taxation laws, treaties or agreements to such withholding or as
necessary to claim a benefit thereunder (including, but not limited to Form
W-8BEN or any successor forms) and ARCA shall make such withholding payments as
required and subtract such withholding payments from the payments set forth in
this Article V. ARCA will use commercially reasonable efforts consistent with
its usual business practices and cooperate with CPEC to ensure that any
withholding taxes imposed are reduced as far as possible under the provisions of
the current or any future taxation treaties or agreements between foreign
countries.

 

5.7. Exchange Controls. Notwithstanding any other provision of this Agreement,
if at any time legal restrictions prevent the prompt remittance of part or all
of the royalties with respect to Net Sales in any country, payment shall be made
through such lawful means or methods as ARCA may determine. If the royalty rate
specified in this Agreement should exceed the permissible rate established in
any country, the royalty rate for sales in such country shall be adjusted to the
highest legally permissible or government-approved rate.

Article VI

REPRESENTATIONS AND WARRANTIES

 

6.1. CPEC Representations and Warranties. CPEC represents and warrants to ARCA
that as of the Effective Date:

 

  (a) this Agreement has been duly executed and delivered by CPEC and
constitutes legal, valid, and binding obligations enforceable against CPEC in
accordance with its terms, except as enforceability is limited by (A) any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor’s rights generally, or (B) general principles of equity,
whether considered in a proceeding in equity or at law;

 

  (b) no approval, authorization, consent, or other order or action of or filing
with any court, administrative agency or other governmental authority is
required for the execution and delivery by CPEC of this Agreement or the
consummation by CPEC of the transactions contemplated hereby;

--------------------------------------------------------------------------------

  (c) CPEC has the full corporate power and authority to enter into and deliver
this Agreement, to perform and to grant the licenses granted under Article II
hereof and to consummate the transactions contemplated hereby; all corporate
acts and other proceedings required to be taken to authorize such execution,
delivery, and consummation have been duly and properly taken and obtained; and

 

  (d) CPEC owns or possesses an exclusive license in and to the CPEC
Intellectual Property and has the right to grant the licenses granted in this
Agreement. CPEC has not previously assigned, and shall not assign, transfer,
convey or otherwise encumber its right, title and interest in the CPEC
Intellectual Property or enter into any agreement with any Third Party which is
in conflict with the rights granted to ARCA pursuant to this Agreement. The BMS
License is in full force and effect, CPEC is in compliance in all material
respects with the BMS License and, to CPEC’s knowledge, no defaults have
occurred and no notices of defaults have been received under the BMS License.
The BMS Option has terminated and BMS has consented to the license grant in
Article II.

 

6.2. ARCA Representations and Warranties. ARCA represents and warrants to CPEC
that as of the Effective Date:

 

  (a) this Agreement has been duly executed and delivered by ARCA and
constitutes legal, valid, and binding obligations enforceable against ARCA in
accordance with its terms, except as enforceability is limited by (A) any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor’s rights generally, or (B) general principles of equity,
whether considered in a proceeding in equity or at law;

 

  (b) it has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All corporate
acts and other proceedings required to be taken to authorize such execution,
delivery, and consummation have been duly and properly taken and obtained; and

 

  (c) no approval, authorization, consent, or other order or action of or filing
with any court, administrative agency or other governmental authority is
required for the execution and delivery by it of this Agreement or the
consummation by it of the transactions contemplated hereby.

--------------------------------------------------------------------------------

Article VII

PATENT MATTERS

 

7.1. Filing, Prosecution and Maintenance of Patent Applications or Patents. ARCA
shall have the first right to file, prosecute and maintain the Patent Assets in
CPEC’s name and shall be responsible for the payment of all patent prosecution
and maintenance costs, subject to the next sentence. Upon ARCA’s request, CPEC
shall reasonably cooperate in the filing, prosecution or maintenance of any
patent application or patent included in the Patent Assets. If ARCA elects not
to file, prosecute or maintain a patent application or patent included in the
Patent Assets in any particular country, it shall provide CPEC with written
advance notice sufficient to avoid any loss or forfeiture, and CPEC shall have
the right, but not the obligation, at its sole expense, to file, prosecute or
maintain such patent application or patent in such country in CPEC’s name. If
CPEC elects to file, prosecute or maintain such patent application or patent
then, at CPEC’s option, either (a) such patent or patent application in such
country shall no longer be deemed a Patent Asset under this Agreement or
(b) ARCA shall reimburse CPEC for all fees, costs and expenses incurred by CPEC
in filing, prosecuting or maintaining such patent application or patent upon
invoice therefor.

 

7.2. Patent Office and Court Proceedings. Each Party shall inform the other
Party of any request for, filing, or declaration of any proceeding before a
patent office seeking to protest, oppose, cancel, reexamine, declare an
interference proceeding, initiate a conflicts proceeding, or analogous process
involving a patent application or patent included in the Patent Assets, or of
the filing of an action in a court of competent jurisdiction seeking a judgment
that a patent included in the Patent Assets is either invalid or unenforceable
or both. Each Party thereafter shall cooperate fully with the other with respect
to any such patent office or court proceeding. Each Party will provide the other
with any information or assistance that is reasonable.

 

7.3. Enforcement and Defense.

(a) Each Party shall promptly give the other Party notice of any infringement in
the Territory of any patent application or patent included in the Patent Assets
that comes to such Party’s attention. The Parties will thereafter consult and
cooperate fully to determine a course of action, including, without limitation,
the commencement of legal action by any Party. However, ARCA shall have the
first right to initiate and prosecute such legal action at its own expense and
in the name of CPEC and ARCA, or to control the defense of any declaratory
judgment action relating to Patent Assets. ARCA shall promptly inform CPEC if
ARCA elects not to exercise such first right, and CPEC thereafter shall have the
right either to initiate and prosecute such action or to control the defense of
such declaratory judgment action in the name of CPEC and, if necessary, ARCA. In
no event shall CPEC be obligated to enforce or defend any of the Patent Assets.

(b) If ARCA elects not to initiate and prosecute an infringement or defend a
declaratory judgment action in any country in the Territory as provided in
Subsection 7.3(a), and CPEC elects to do so, the cost of any agreed-upon course
of action, including the costs of any legal action commenced or any declaratory
judgment action defended, shall be borne solely by CPEC.

--------------------------------------------------------------------------------

(c) For any such legal action or defense, in the event that any Party is unable
to initiate, prosecute, or defend such action solely in its own name, the other
Party will join such action voluntarily and will execute all documents necessary
for the Party to prosecute, defend and maintain such action. In connection with
any such action, the Parties will cooperate fully and will provide each other
with any information or assistance that either reasonably may request.

(d) Any recovery obtained by ARCA or CPEC shall be shared as follows:

 

  (i) the Party that initiated and prosecuted, or maintained the defense of, the
action shall recoup all of its costs and expenses (including attorneys’ fees)
incurred in connection with the action, whether the recovery is by settlement or
otherwise;

 

  (ii) the other Party then shall, to the extent possible, recover its costs and
expenses (including attorneys’ fees) incurred in connection with the action;

 

  (iii) if CPEC initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining then shall be retained by CPEC; and

 

  (iv) if ARCA initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining shall be retained by ARCA, except
that CPEC shall receive a portion equivalent to the royalties it would have
received in accordance with the terms of this Agreement if the infringing sales
were deemed Net Sales but limited to not more than 20% of any such remaining
recovery.

 

7.4. Patent Term Extensions or Restorations and Supplemental Protection
Certificates. The Parties shall cooperate with each other in obtaining patent
term extensions or restorations or supplemental protection certificates or their
equivalents in any country in the Territory where applicable and where desired
by ARCA. If elections with respect to obtaining such extension or supplemental
protection certificates are to be made, ARCA shall have the right to make the
election and CPEC shall abide by such election. CPEC shall notify ARCA of
(a) the issuance of each U.S. patent included within the Patent Assets, giving
the date of issue and patent number for each such patent, and (b) each notice
pertaining to any patent included within the Patent Assets pursuant to the
United States Drug Price Competition and Patent Term Restoration Act of 1984
(hereinafter called the “ 1984 Act”), including notices pursuant to §§ 101 and
103 of the 1984 Act from persons who have filed an abbreviated NDA (“ANDA”).
Such notices shall be given promptly, but in any event within five (5) calendar
days of each such patent’s date of issue or receipt of each such notice pursuant
to the Act, whichever is applicable. CPEC shall notify ARCA of each filing for
patent term extension or restoration under the 1984 Act, any allegations of
failure to show due diligence and all awards of patent term restoration
(extensions) with respect to the Patent Assets.

--------------------------------------------------------------------------------

Article VIII

TERM AND TERMINATION

 

8.1. Term and Expiration. This Agreement shall be effective as of the Effective
Date and unless terminated earlier pursuant to Section 8.2 below, the term of
this Agreement shall continue in effect on a country-by-country basis until the
expiration of the royalty obligations contained in this Agreement (as provided
for in Section 5.3.1 (ii)), at which time the Agreement shall automatically
terminate in such country.

 

8.2. Termination.

8.2.1. Termination for Cause. Either Party may terminate this Agreement by
notice to the other Party at any time during the term of this Agreement as
follows:

(a) if the other Party is in breach of any material obligation hereunder by
causes and reasons within its control, or has breached, in any material respect,
any representations or warranties set forth in Article VI, and has not cured
such breach within ninety (90) days after notice requesting cure of the breach,
provided, however, that if the breach is not capable of being cured within
ninety (90) days of such written notice, the Agreement may not be terminated
sooner than one hundred twenty (120) days of such written notice so long as the
breaching Party commences and is taking commercially reasonable actions to cure
such breach as promptly as practicable;

(b) upon the filing or institution of bankruptcy, reorganization, liquidation or
receivership proceedings, or upon an assignment of a substantial portion of the
assets for the benefit of creditors by the other Party; provided, however, in
the case of any involuntary bankruptcy, reorganization, liquidation,
receivership or assignment proceeding such right to terminate shall only become
effective if the Party consents to the involuntary proceeding or such proceeding
is not dismissed within ninety (90) days after the filing thereof; or

(c) by ARCA, (i) if ARCA reasonably concludes, based on clinical trial results,
that a significant safety or efficacy issue exists relating to Product, or
(ii) if ARCA’s sublicense under the BMS License is impaired in any material
respect by any action of CPEC or any successor in interest to CPEC.

8.2.2. Licensee Rights Not Affected.

(a) All rights and licenses granted pursuant to this Agreement are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of 11 U.S.C. §101 et
seq. (the “Bankruptcy Code”), licenses of rights to “intellectual property” as
defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that
ARCA and CPEC shall retain and may fully exercise all of their respective
rights, remedies and elections under the Bankruptcy Code.

--------------------------------------------------------------------------------

(b) The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against CPEC under the Bankruptcy Code, ARCA shall
be entitled to all applicable rights under Section 365 (including Section 365
(n)) of the Bankruptcy Code. Upon rejection of this Agreement by CPEC or a
trustee in bankruptcy for CPEC, pursuant to Section 365(n), ARCA may elect
(i) to treat this Agreement as terminated by such rejection or (ii) to retain
its rights (including any right to enforce any exclusivity provision of this
Agreement) to intellectual property (including any embodiment of such
intellectual property) under this Agreement and under any agreement
supplementary to this Agreement for the duration of this Agreement and any
period for which this Agreement could have been extended by CPEC. Upon written
request to the trustee in bankruptcy or CPEC, the trustee or CPEC, as
applicable, shall (A) provide to ARCA any intellectual property (including such
embodiment) held by the trustee or CPEC and shall provide to ARCA a complete
duplicate of (or complete access to, as appropriate) any such intellectual
property and all embodiments of such intellectual property and (B) not interfere
with the rights of ARCA to such intellectual property as provided in this
Agreement or any agreement supplementary to this Agreement, including any right
to obtain such intellectual property (or such embodiment or duplicates thereof)
from a third party.

(c) In the event ARCA is a debtor in a bankruptcy proceeding, whether voluntary
or involuntary, all rights and licenses granted pursuant to this Agreement are,
and shall otherwise be deemed to be, for purposes of Section 365 of the
Bankruptcy Code, executory contracts (subject to the Bankruptcy Court’s
approval). The Parties agree that applicable law does not excuse CPEC from
accepting performance by, or rendering performance under this Agreement and all
rights and licenses granted hereunder to, a person or entity other than ARCA.

 

8.3. Effect of Expiration or Termination.

(a) Except as set forth in this Agreement, in the event of termination of this
Agreement, the rights and obligations hereunder, excluding any payment
obligation that has accrued as of the termination date and excluding rights and
obligations relating to confidentiality, shall terminate immediately, except
that ARCA and its Affiliates and sublicensees shall have the right to sell or
otherwise dispose of the stock of any Product subject to this Agreement then on
hand or in process of manufacture. Expiration or termination of this Agreement
shall not relieve the Parties of any obligation accruing prior to such
expiration or termination. In addition to any other provisions of this Agreement
which by their terms continue after the expiration of this Agreement, the
provisions of Article IV shall survive the expiration or termination of this
Agreement and shall continue in effect for five (5) years from the date of
expiration or termination. In addition, any other provision required to
interpret and enforce the Parties’ rights and obligations under this Agreement
shall also survive, but only to the extent required for the full observation and
performance of this Agreement. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of any Party against the
other accrued or accruing under this Agreement prior to termination. Except as
expressly set forth herein, the rights to terminate as set forth herein shall be
in addition to all other rights and remedies available under this Agreement, at
law, or in equity, or otherwise.

--------------------------------------------------------------------------------

(b) Upon termination of this Agreement by CPEC pursuant to Section 8.2.1(a) or
by ARCA pursuant to Section 8.2.1(c), ARCA shall return to CPEC all CPEC
Intellectual Property provided to ARCA prior to such termination and, if
requested to do so by CPEC (except if such termination is pursuant to
Section 8.2.1 (c) (ii)), shall provide an exclusive license to CPEC for all
know-how and intellectual property relating to Compound or Product that was
developed by ARCA during the Term of this Agreement and as to which ARCA has the
right to license, provided that ARCA shall retain the rights for such
intellectual property for any fields and uses that do not involve the Compound
or Product.

Article IX

MISCELLANEOUS

 

9.1 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached the Agreement for
failure or delay in fulfilling or performing any term of the Agreement during
the period of time when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected Party including, but not
limited to, fire, flood, embargo, war, acts of war (whether war be declared or
not), insurrection, riot, civil commotion, strike, lockout or other labor
disturbance, act of God or act, omission or delay in acting by any governmental
authority or the other Party. The affected Party shall notify the other Party of
such force majeure circumstances as soon as reasonably practicable.

 

9.2 Assignment. The Agreement may not be assigned or otherwise transferred
without the prior written consent of the other Party; provided, however, that
either Party may assign this Agreement without consent of the other Party to an
Affiliate or in connection with the transfer or sale of its business or all or
substantially all of its assets related to Compound or Product or in the event
of a merger, consolidation, change in control or similar corporate transaction.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement.

 

9.3 Severability. In the event that any of the provisions contained in this
Agreement are held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affect the substantive rights of the
Parties. In such event, the Parties shall replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s) which,
insofar as practical, implement the purposes of this Agreement.

 

9.4 Notices. All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, sent by
facsimile (and promptly confirmed by personal delivery, registered or certified
mail or overnight courier), sent by nationally-recognized overnight courier or
sent by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

if to ARCA to:

ARCA Discovery, Inc.

12635 East Montview Boulevard

Suite 100

Aurora, CO 80010

Attention: President

Fax No.: 303-315-5082

--------------------------------------------------------------------------------

if to CPEC to:

CPEC LLC

99 Hayden Avenue

Suite 200

Lexington, MA 02421

Attention: Chief Executive Officer

Fax No.: 781-862-3859

or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered if personally
delivered or sent by facsimile on a Business Day, upon confirmed delivery by
nationally-recognized overnight courier if so delivered and on the third
Business Day following the date of mailing if sent by registered or certified
mail.

 

9.5. Applicable Law and Dispute Resolution. The Agreement shall be governed by
and construed in accordance with the laws of the United States of America and
State of New York without reference to any rules of conflict of laws.

(a) The Parties agree to attempt initially to solve all claims, disputes, or
controversies arising under, out of, or in connection with this Agreement (a
“Dispute”) by conducting good faith negotiations. Any Disputes which cannot be
resolved by good faith negotiation within twenty (20) Business Days, shall be
referred, by written notice from either Party to the other, to the Chief
Executive Officer or President of each Party. Such officers shall negotiate in
good faith to achieve a resolution of the Dispute referred to them within twenty
(20) business days after such notice is received by the Party to whom the notice
was sent. If the officers are unable to settle the Dispute between themselves
within twenty (20) business days, they shall so report to the Parties in
writing. The Dispute shall then be referred to mediation as set forth in the
following Subsection 9.5 (b).

(b) Upon the Parties receiving the officers’ report that the Dispute referred to
them pursuant to Subsection 9.5 (a) has not been resolved, the Dispute shall be
referred to mediation by written notice from either Party to the other. The
mediation shall be conducted pursuant to the American Arbitration Association
(“AAA”) procedures. The place of the mediation shall be New York, New York. If
the Parties have not reached a settlement within twenty (20) business days of
the date of the notice of mediation, the Dispute shall be referred to
arbitration pursuant to Subsection 9.5 (c) below.

--------------------------------------------------------------------------------

(c) If after the procedures set forth in Subsections 9.5 (a) and (b) above, the
Dispute has not been resolved, a Party shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other Party. The
Parties shall refrain from instituting the arbitration proceedings for a period
of sixty (60) days following such notice. During such period, the Parties shall
continue to make good faith efforts to amicably resolve the dispute without
arbitration. If the Parties have not reached a settlement during that period the
arbitration proceedings shall go forward and be governed by the AAA rules then
in force. Each such arbitration shall be conducted by a panel of three
arbitrators having experience in the pharmaceutical industry: one arbitrator
shall be appointed by each of CPEC and ARCA and the third arbitrator, who shall
be the Chairman of the tribunal, shall be appointed by the two Party-appointed
arbitrators. Any such arbitration shall be held in New York, New York, USA.

The arbitrators shall have the authority to grant specific performance. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award and
an order of enforcement, as the case may be. In no event shall a demand for
arbitration be made after the date when institution of a legal or equitable
proceeding based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations. Each Party shall bear its own
costs and expenses incurred in connection with any arbitration proceeding and
the Parties shall equally share the cost of the mediation and arbitration levied
by the AAA.

Any mediation or arbitration proceeding entered into pursuant to this
Section 9.5 shall be conducted in the English language. Subject to the
foregoing, for purposes of this Agreement, each Party consents, for itself and
its Affiliates, to the jurisdiction of the courts of the State of New York,
county of New York and the U.S. District Court for the Southern District of New
York.

 

9.6. Entire Agreement. This Agreement, including the exhibits and schedules
hereto, contains the entire understanding of the Parties with respect to the
subject matter hereof and supersedes all previous writings and understandings.
This Agreement may be amended, or any term hereof modified, only by a written
instrument duly executed by all Parties hereto.

 

9.7. Independent Contractors. It is expressly agreed that the Parties shall be
independent contractors and that the relationship between the Parties shall not
constitute a partnership, joint venture or agency. Neither Party shall have the
authority to make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on the other Party, without the prior
consent of such other Party.

 

9.8. Waiver. The waiver by a Party hereto of any right hereunder or the failure
to perform or of a breach by another Party shall not be deemed a waiver of any
other right hereunder or of any other breach or failure by said other Party
whether of a similar nature or otherwise.

--------------------------------------------------------------------------------

9.9. Headings. The captions to the several Articles and Sections hereof are not
a part of the Agreement, but are merely guides or labels to assist in locating
and reading the several Articles and Sections hereof.

 

9.10. Counterparts. The Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

9.11. Use of Names. Except as otherwise provided in this Agreement, neither
Party shall use the name of the other Party in relation to this transaction in
any public announcement, press release or other public document without the
consent of such other Party, which consent shall not be unreasonably withheld or
delayed; provided, however, that either Party may use the name of the other
Party in any document required to be filed to obtain Regulatory Approval or to
comply with applicable laws, rules or regulations.

 

9.12. LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THIS
AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

[Remainder of page intentionally left blank]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.

 

CPEC L.L.C. By:   /s/ G L Cooper   Name:   G L Cooper   Title:   President ARCA
DISCOVERY, INC. By:   /s/ Michael R. Bristow   Name:   Michael R. Bristow  
Title:   President