Exhibit 10.1
 
Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.  A complete copy of this document has been filed separately
with the Securities and Exchange Commission.
 
Exclusive Channel Partner Agreement
 
This Exclusive Channel Partner Agreement (the “Agreement”) is made and entered
into effective as of January 6, 2011 (the “Effective Date”) by and between
Intrexon Corporation, a Virginia corporation with offices at 20358 Seneca
Meadows Parkway, Germantown, MD 20876 (“Intrexon”), and ZIOPHARM Oncology, Inc.,
a Delaware corporation having its principal place of business at 1180 Avenue of
the Americas, 19th Floor, New York, NY 10036 (“ZIOPHARM”).  Intrexon and
ZIOPHARM may be referred to herein individually as a “Party”, and collectively
as the “Parties.”
 
Recitals
 
Whereas, Intrexon has expertise in and owns or controls proprietary technology
relating to the design and production of DNA vectors or their in vivo
expression; and
 
Whereas, ZIOPHARM now desires to become Intrexon’s exclusive channel
partner  with respect to such technology for the purpose of developing the
Cancer Program (as defined herein), and Intrexon is willing to appoint ZIOPHARM
as a channel partner in such field under the terms and conditions of this
Agreement.
 
Now Therefore, in consideration of the foregoing and the covenants and promises
contained herein, the Parties agree as follows:
 
ARTICLE 1
 
Definitions
 
As used in this Agreement, the following capitalized terms shall have the
following meanings:
 
1.1             “Affiliate” means, with respect to a particular Party, any other
person or entity that directly or indirectly controls, is controlled by, or is
in common control with such Party.  As used in this Section 1.1, the term
“controls” (with correlative meanings for the terms “controlled by” and “under
common control with”) means the ownership, directly or indirectly, of more than
fifty percent (50%) of the voting securities or other ownership interest of an
entity, or the possession, directly or indirectly, of the power to direct the
management or policies of an entity, whether through the ownership of voting
securities, by contract, or otherwise.  Notwithstanding the foregoing, except as
set forth in Section 2.3(a), Third Security shall be deemed not to be an
Affiliate of Intrexon, and any other person, corporation, partnership, or other
entity that would be an Affiliate of Intrexon solely because it and Intrexon are
under common control by Randal J. Kirk or by investment funds managed by Third
Security or an affiliate of Third Security shall also be deemed not to be an
Affiliate of Intrexon.
 

 
 

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1.2             “Allowable Expenses” means any of the following expenses
incurred by ZIOPHARM or an Affiliate of ZIOPHARM after the First Commercial Sale
in the Territory of a ZIOPHARM Product, in each case to the extent specifically
attributable to such ZIOPHARM Product and specifically attributable to the
Commercialization of such ZIOPHARM Product:  (a) Cost of Goods Sold, (b)
Marketing Expenses, (c) Distribution Expenses, (d) Post-Launch Product R&D
Expenses, and (e) Additional Commercialization Expenses, in each case as such
terms are defined and calculated in this Article 1 and in Exhibit A.
 
1.3             “Applicable Laws” has the meaning set forth in Section
8.2(d)(xiii).
 
1.4             “Authorizations” has the meaning set forth in Section
8.2(d)(xiii).
 
1.5             [*****].
 
1.6             “Cancer Program” has the meaning set forth in Section 2.1.
 
1.7             “CC” has the meaning set forth in Section 2.2(b).
 
1.8             “Channel-Related Program IP” has the meaning set forth in
Section 6.1(c).
 
1.9             “Claims” has the meaning set forth in Section 9.1.
 
1.10           “CMCC” has the meaning set forth in Section 2.2(b).
 
1.11           “Committees” has the meaning set forth in Section 2.2(a).
 
1.12           “Commercialize” or “Commercialization” means any activities
directed to marketing, promoting, distributing, importing for sale, offering to
sell and/or selling ZIOPHARM Products.
 
1.13           “Confidential Information” means each Party’s confidential
information, inventions, non-public know-how or non-public data disclosed
pursuant to this Agreement or any other confidentiality agreement between the
Parties and shall include, without limitation, manufacturing, marketing,
financial, personnel and other business information and plans, whether in oral,
written, graphic or electronic form.
 
1.14           “Control” means, with respect to a Patent or other intellectual
property right, that a Party owns or has a license to such right and has the
ability to grant a license or sublicense as provided for in this Agreement under
such right without violating the terms of any agreement or other arrangement
with any Third Party.
 
1.15           “CRC” has the meaning set forth in Section 2.2(b).
 
1.16           “Diligent Efforts” means, with respect to a Party’s obligation
under this Agreement, the level of efforts and resources reasonably required to
diligently develop, manufacture, and/or commercialize (as applicable) a ZIOPHARM
Product in a sustained manner, consistent with the efforts and resources a
similarly situated company working in the Field would typically devote to a
product of similar market potential, profit potential, strategic value and/or
proprietary protection, based on market conditions then prevailing.  With
respect to a particular task or obligation, Diligent Efforts requires that the
applicable Party promptly assign responsibility for such task and consistently
make and implement decisions and allocate resources designed to advance progress
with respect to such task or obligation.
 

 
2

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1.17           “Equity Agreements” has the meaning set forth in Section 5.1.
 
1.18           “Excess Product Liability Costs” has the meaning set forth in
Section 9.3.
 
1.19           “Executive Officer” means the Chief Executive Officer of the
applicable Party, or another senior executive officer of such Party who has been
duly appointed by the Chief Executive Officer to act as the representative of
the Party to resolve, as the case may be, (a) a Committee dispute, provided that
such officer is not a member of the applicable Committee and occupies a position
senior to the positions occupied by the applicable Party’s members of the
applicable Committee, or (b) a dispute described in Section 11.1.
 
1.20           “Existing Cancer Programs” has the meaning set forth in Section
2.1.
 
1.21           “FDA” has the meaning set forth in Section 8.2(d)(xiii).
 
1.22           [*****].
 
1.23           “Field” means the use of DNA administered to humans for
expression of anti-cancer effectors for the purpose of treatment or prophylaxis
of cancer; provided, however, that the Field does not include any therapies or
other medical interventions that are directed toward the treatment or
prophylaxis of a non-cancer disease or condition (e.g., infectious disease)
unless the primary reason for such treatment or prophylaxis is to prevent
cancer.  For the avoidance of doubt, the Field excludes (a) the treatment or
prophylaxis of cancer in non-human animals and (b) the amelioration of symptoms
or complications of cancer, including side effects of other cancer treatments
(as opposed to the treatment of the cancer itself).
 
1.24           “First Commercial Sale” means, with respect to a ZIOPHARM Product
and country, the first sale to a Third Party of such ZIOPHARM Product in such
country after regulatory approval (and any pricing or reimbursement approvals,
if necessary) has been obtained in such country.
 
1.25           “Fully Loaded Cost” means the direct cost of the applicable good,
product or service plus indirect charges and overheads reasonably allocable to
the provision of such good, product or service in accordance with US GAAP.
 
1.26           “Information” means information, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, inventions, practices, methods, techniques,
specifications, formulations, formulae, knowledge, know-how, skill, experience,
test data including pharmacological, biological, chemical, biochemical,
toxicological and clinical test data, analytical and quality control data,
stability data, studies and procedures, and patent and other legal information
or descriptions.
 
1.27           “Infringement” has the meaning set forth in Section 6.3(a).
 

 
3

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1.28           “Intrexon Channel Technology” means Intrexon’s technology
directed towards in vivo expression of effectors, including without limitation
the technology embodied in the Intrexon Materials and the Intrexon IP.
 
1.29           “Intrexon Indemnitees” has the meaning set forth in Section 9.2.
 
1.30           “Intrexon IP” means the Intrexon Patents and Intrexon Know-How.
 
1.31           “Intrexon Know-How” means all Information (other than Intrexon
Patents) that (a) is Controlled by Intrexon as of the Effective Date or during
the Term and (b) is reasonably required or useful for ZIOPHARM to conduct the
Cancer Program.  For the avoidance of doubt, the Intrexon Know-How shall include
any Information (other than Intrexon Patents) in the Channel-Related Program IP.
 
1.32           “Intrexon Materials” means the genetic code and associated gene
constructs used alone or in combination and such other proprietary reagents
including but not limited to plasmid vectors, virus stocks, and cells and cell
lines (e.g., natural killer cells and dendritic cells), in each case that are
reasonably required or provided to ZIOPHARM to conduct the Cancer Program.
 
1.33           “Intrexon Patents” means all Patents that (a) are Controlled by
Intrexon as of the Effective Date or during the Term; and (b) are reasonably
required or useful for ZIOPHARM to conduct the Cancer Program.  For the
avoidance of doubt, the Intrexon Patents shall include any Patent in the
Channel-Related Program IP.
 
1.34           “Intrexon Trademarks” means those trademarks related to the
Intrexon Channel Technology that are established from time to time by Intrexon
for use across its channel partnerships.
 
1.35           “Inventions” has the meaning set forth in Section 6.1(b).
 
1.36           “IPC” has the meaning set forth in Section 2.2(b).
 
1.37           “JSC” has the meaning set forth in Section 2.2(b).
 
1.38           “Losses” has the meaning set forth in Section 9.1.
 
1.39           “Net Sales” means, with respect to any ZIOPHARM Product, the net
sales of such ZIOPHARM Product by ZIOPHARM or an Affiliate of ZIOPHARM
(including without limitation net sales of ZIOPHARM Product to a non-Affiliate
sublicensee but not including net sales by such non-Affiliate sublicensee), as
determined in accordance with US GAAP.
 
1.40           “Patents” means (a) all patents and patent applications
(including provisional applications), (b) any substitutions, divisions,
continuations, continuations-in-part, reissues, renewals, registrations,
requests for continued examination, confirmations, re-examinations, extensions,
supplementary protection certificates and the like of the foregoing, and (c) any
foreign or international equivalents of any of the foregoing.
 

 
4

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1.41           “Product Profit” means Net Sales less Allowable Expenses.
 
1.42           “Product-Specific Program Patent” means any issued Intrexon
Patent where all the claims are directed to Inventions that relate solely and
specifically to ZIOPHARM Products.  [*****].
 
1.43           “Proposed Terms” has the meaning set forth in Section 11.2.
 
1.44           “Prosecuting Party” has the meaning set forth in Section 6.2(c).
 
1.45           [*****].
 
1.46           [*****].
 
1.47           “Retained Product” has the meaning set forth in Section 10.4(a).
 
1.48           “Reverted Product” has the meaning set forth in Section 10.4(c).
 
1.49           “SEC” means the United States Securities and Exchange Commission.
 
1.50           “Sublicensing Revenue” means any cash consideration (including
upfront payments, milestone payments, and royalties), and the cash equivalent of
all other consideration, actually received by ZIOPHARM or its Affiliate from a
Third Party in consideration for a grant of a sublicense under the Intrexon IP
or any rights to develop or commercialize ZIOPHARM Products, but excluding: (a)
any amounts paid as bona fide reimbursement for research and development costs
to the extent incurred following such grant; (b) bona fide loans or any payments
in consideration for a grant of equity of ZIOPHARM to the extent that such
consideration is equal to or less than fair market value (i.e. any amounts in
excess of fair market value shall be Sublicensing Revenue); or (c) amounts
received from sublicensees in respect of any ZIOPHARM Product sales that are
included in Net Sales.
 
1.51           “Superior Therapy” means a cancer therapy in the Field that,
based on the data then available, (a) demonstrably appears to offer superior
efficacy, safety or cost, as compared with both (i) those therapies that are
marketed (either by ZIOPHARM or others) at such time for a given cancer
indication and (ii) those therapies that are being actively developed by
ZIOPHARM for such cancer indication; (b) demonstrably appears to represent a
substantial improvement over such existing therapies; and (c) has intellectual
property protection and a regulatory approval pathway that, in each case, would
not present a significant barrier to commercial development.
 
1.52           “Support Memorandum” has the meaning set forth in Section 11.2.
 
1.53           “Third Party” means any individual or entity other than the
Parties or their respective Affiliates.
 
1.54           [*****].
 
1.55           “Third Security” means Third Security, LLC.
 

 
5

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1.56        “Territory” means the entire world.
 
1.57        “US GAAP” means generally accepted accounting principles in the
United States.
 
1.58        “Working Group” has the meaning set forth in Section 2.3(d).
 
1.59        “ZIOPHARM Indemnitees” has the meaning set forth in Section 9.1.
 
1.60        “ZIOPHARM Product” means any product in the Field that is created,
produced, developed, or identified directly or indirectly by or on behalf of
ZIOPHARM during the term of this Agreement, whether through use or practice of
Intrexon Channel Technology or the Intrexon Materials or otherwise, including,
without limitation, any products that are the subject of the Existing Cancer
Programs.
 
1.61        “ZIOPHARM Program Patent” has the meaning set forth in Section
6.2(b).
 
1.62        “ZIOPHARM Termination IP” means all Patents or other intellectual
property that ZIOPHARM or any of its Affiliates Controls as of the Effective
Date or during the Term that Cover, or is otherwise necessary or useful for, the
development, manufacture or commercialization of a Reverted Product or necessary
or useful for Intrexon to operate in the Field.
 
ARTICLE 2
 
Scope of Channel Partnership; Management
 
2.1          General.  The general purpose of the channel partnership described
in this Agreement will be to use the Intrexon Channel Technology (a) in
connection with the following currently existing Intrexon programs in the
Field:  DC-RTS IL-12 Phase Ib clinical cancer program (IND #13565) and the AdV
RTS-IL-12 cancer program (the “Existing Cancer Programs”) and (b) generally to
research, develop and commercialize products for use in the Field (collectively,
the “Cancer Program”).  As provided below, the JSC shall establish projects for
the Cancer Program.  Either Party may propose potential projects in the Field
for review and consideration by the JSC.
 
2.2          Committees.
 
(a)           Generally.  The Parties desire to establish several committees
(collectively, “Committees”) to oversee the Cancer Program and to facilitate
communications between the Parties with respect thereto.  Each of such
Committees shall have the responsibilities and authority allocated to it in this
Article 2.  Each of the Committees shall have the obligation to exercise its
authority consistent with the respective purpose for such Committee as stated
herein and any such decisions shall be made in good faith.
 
(b)           Formation and Purpose.  Promptly following the Effective Date, the
Parties shall create the Committees listed in the chart below, each of which
shall have the purpose indicated in the chart.
 

 
6

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Committee
 
Purpose
     
Joint Steering Committee (“JSC”)
 
Establish projects for the Cancer Program and establish the priorities for such
projects.
     
Chemistry, Manufacturing and Controls Committee (“CMCC”)
 
Establish project plans and review and approve activities and budgets for
chemistry, manufacturing, and controls under the Cancer Program.
     
Clinical/Regulatory Committee (“CRC”)
 
Review and approve all research and development plans, clinical projects and
publications, and regulatory filings and correspondence under the Cancer
Program; review and approve itemized budgets with respect to the foregoing.
     
Commercialization Committee (“CC”)
 
Establish project plans and review and approve activities and budgets for
commercialization activities under the Cancer Program.
     
Intellectual Property Committee (“IPC”)
  
Evaluate intellectual property issues in connection with the Cancer Program;
review and approve itemized budgets with respect to the foregoing.

2.3          General Committee Membership and Procedure.
 
(a)           Membership.  For each Committee, each Party shall designate an
equal number of representatives who are employees of such Party or an Affiliate
of such Party (not to exceed three (3) for each Party) with appropriate
expertise to serve as members of such Committee (and Third Security shall be
deemed to be an Affiliate of Intrexon solely for purposes of this Section
2.3).  Each representative may serve on more than one Committee as appropriate
in view of the individual’s expertise.  Each Party may replace its Committee
representatives at any time upon written notice to the other Party.  Each
Committee shall have a chairperson; the chairperson of each committee shall
serve for a two-year term and the right to designate which representative to the
Committee will act as chairperson shall alternate between the Parties, with
ZIOPHARM selecting the chairperson first for the JSC, CRC and CC, and Intrexon
selecting the chairperson first for the CMCC and IPC. The chairperson of each
Committee shall be responsible for calling meetings, preparing and circulating
an agenda in advance of each meeting of such Committee, and preparing and
issuing minutes of each meeting within thirty (30) days thereafter.
 

 
7

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(b)           Meetings.  Each Committee shall hold meetings at such times as it
elects to do so, but in no event shall such meetings be held less frequently
than once every six (6) months. Meetings of any Committee may be held in person
or by means of telecommunication (telephone, video, or web conferences).  To the
extent that a Committee holds any meetings in person, the Parties will alternate
in designating the location for such in-person meetings, with ZIOPHARM selecting
the first meeting location for each Committee.  A reasonable number of
additional representatives of a Party may attend meetings of a Committee in a
non-voting capacity.  Each Party shall be responsible for all of its own
expenses of participating in any Committee (including without limitation in any
Working Group).
 
(c)           Meeting Agendas.  Each Party will disclose to the other proposed
agenda items along with appropriate information at least seven (7) business days
in advance of each meeting of the applicable Committee; provided, that a Party
may provide its agenda items to the other Party within a lesser period of time
in advance of the meeting, or may propose that there not be a specific agenda
for a particular meeting, so long as such other Party consents to such later
addition of such agenda items or the absence of a specific agenda for such
Committee meeting.
 
(d)           Working Groups.  From time to time, each Committee may establish
and delegate duties to other committees, sub-committees or directed teams (each,
a “Working Group”) on an “as-needed” basis to oversee particular projects or
activities.  Each such Working Group shall be constituted and shall operate as
the applicable Committee determines; provided, that each Working Group shall
have equal representation from each Party.  Each Working Group and its
activities shall be subject to the oversight, review and approval of, and shall
report to, the Committee that established such Working Group.  In no event shall
the authority of the Working Group exceed that specified for the relevant
Committee in this Article 2.
 
(e)           Limitations of Committee Powers.  Each Committee shall have only
such powers as are specifically delegated to it hereunder or from time to time
as agreed to by the mutual consent of the Parties and shall not be a substitute
for the rights of the Parties.  Without limiting the generality of the
foregoing, no Committee shall have any power to amend this Agreement.  Any
amendment to the terms and conditions of this Agreement shall be implemented
pursuant to Section 12.7 below.
 
2.4          Committee Decision-Making.  If a Committee is unable to reach
unanimous consent on a particular matter within thirty (30) days of its initial
consideration of such matter, then either Party may provide written notice of
such dispute to the Executive Officer of the other Party.  The Executive
Officers of each of the Parties will meet at least once in person or by means of
telecommunication (telephone, video, or web conferences) to discuss the dispute
and use their good faith efforts to resolve the dispute within thirty (30) days
after submission of such dispute to the Executive Officers.  If any such dispute
is not resolved by the Executive Officers within thirty (30) days after
submission of such dispute to such officers, then the Executive Officer of the
Party specified in the applicable subsection below shall have the authority to
finally resolve such dispute acting in good faith.
 
(a)           Casting Vote at JSC.  If a dispute at the JSC is not resolved
pursuant to Section 2.4 above, then the Executive Officer of ZIOPHARM shall have
the authority to finally resolve such dispute

 
8

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(b)           Casting Vote at CMCC.  If a dispute at the CMCC is not resolved
pursuant to Section 2.4 above, then (i) in the case of any disputes relating to
the Intrexon Materials, the manufacture of a ZIOPHARM Product active
pharmaceutical ingredient, or the manufacturing  of other components of ZIOPHARM
Products contracted for or manufactured by Intrexon, the Executive Officer of
Intrexon shall have the authority to finally resolve such dispute; and (ii) in
the case of any other disputes, the Executive Officer of ZIOPHARM shall have the
authority to finally resolve such dispute.
 
(c)           Casting Vote at CRC.  If a dispute at the CRC is not resolved
pursuant to Section 2.4 above, then the Executive Officer of ZIOPHARM shall have
the authority to finally resolve such dispute.
 
(d)           Casting Vote at CC.  If a dispute at the CC is not resolved
pursuant to Section 2.4 above, then the Executive Officer of ZIOPHARM shall have
the authority to finally resolve such dispute.
 
(e)           Casting Vote at IPC.  If a dispute at the IPC is not resolved
pursuant to Section 2.4 above, then the Executive Officer of Intrexon shall have
the authority to finally resolve such dispute, [*****].
 
(f)           Other Committees.  If any additional Committee is formed, then the
Parties shall, at the time of such formation, agree on which Party shall have
the authority to finally resolve a dispute that is not resolved pursuant to
Section 2.4 above.
 
(g)           Restrictions.  Neither Party shall exercise its right to finally
resolve a dispute at a committee in accordance with this Section 2.4 in a manner
that (i) excuses such Party from any of its obligations specifically enumerated
under this Agreement; (ii) expands the obligations of the other Party under this
Agreement; (iii) negates any consent rights or other rights specifically
allocated to the other Party under this Agreement; (iv) purports to resolve any
dispute involving the breach or alleged breach of this Agreement; (v) resolves a
matter if the provisions of this Agreement specify that mutual agreement is
required for such matter; or (vi) would require the other Party to perform any
act that is inconsistent with applicable law.
 
ARTICLE 3
 
License Grants
 
3.1          Licenses to ZIOPHARM.
 
(a)           Subject to the terms and conditions of this Agreement, Intrexon
hereby grants to ZIOPHARM a license under the Intrexon IP to research, develop,
use, import, make, have made, sell, and offer for sale ZIOPHARM Products in the
Field in the Territory.  Such license shall be exclusive (even as to Intrexon)
with respect to any clinical development, selling, offering for sale or other
Commercialization of ZIOPHARM Products in the Field, and shall be otherwise
non-exclusive.
 

 
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(b)           Subject to the terms and conditions of this Agreement, Intrexon
hereby grants to ZIOPHARM a non-exclusive, royalty-free license to use and
display the Intrexon Trademarks, solely in connection with the Commercialization
of ZIOPHARM Products, in the promotional materials, packaging, and labeling for
ZIOPHARM Products, as provided under and in accordance with Section 4.9.
 
3.2          Sublicensing.  Except as provided below, ZIOPHARM shall not
sublicense the rights granted under Section 3.1 to any Third Party, or transfer
the Intrexon Materials to any Third Party, or otherwise grant any Third Party
the right to research, develop, use, or commercialize ZIOPHARM Products, in each
case except with Intrexon’s written consent, which written consent may be
withheld in Intrexon’s sole discretion.  Notwithstanding the foregoing, ZIOPHARM
may transfer, to the extent reasonably necessary, Intrexon Materials to a Third
Party contractor performing post-API fill/finish responsibilities for ZIOPHARM
Products, and may grant any sublicenses necessary to enable such Third Party to
perform such activities.  In addition, ZIOPHARM shall not sublicense the rights
granted under Section 3.1 to an Affiliate, or transfer the Intrexon Materials to
any Affiliate, or otherwise grant any Affiliate the right to research, develop,
use, or commercialize ZIOPHARM Products, in each case except with Intrexon’s
written consent, which written consent shall not be unreasonably withheld or
delayed.  In the event that Intrexon consents to any such grant or transfer to
an Affiliate, ZIOPHARM shall remain responsible for, and be guarantor of, the
performance by any such Affiliate and shall cause such Affiliate to comply with
the provisions of this Agreement in connection with such performance (as though
such Affiliate were ZIOPHARM), including any payment obligations owed to
Intrexon hereunder.  None of the enforcement rights under the Intrexon Patents
that are granted to ZIOPHARM pursuant to Section 6.3 shall be transferred to, or
exercised by, a sublicensee except with Intrexon’s prior written consent, which
may be withheld in Intrexon’s sole discretion.
 
3.3          No Non-Permitted Use.  ZIOPHARM hereby covenants that it shall not,
nor shall it permit any Affiliate or, if applicable, (sub)licensee, to use or
practice, directly or indirectly, any Intrexon IP, Intrexon Channel Technology,
or Intrexon Materials for any purposes other than those expressly permitted by
this Agreement.
 
3.4          Exclusivity.  Intrexon and ZIOPHARM mutually agree that, under the
channel partnership established by this Agreement, it is intended that the
Parties will be exclusive to each other in the Field.  To this end, neither
Intrexon nor its Affiliates shall make the Intrexon Channel Technology or
Intrexon Materials available to any Third Party for the purpose of developing or
commercializing products in the Field, and neither Intrexon nor any Affiliate
shall pursue (either by itself or with a Third Party or Affiliate) the research,
development or commercialization of any product for purpose of sale in the
Field, outside of the Cancer Program.  Further, neither ZIOPHARM nor its
Affiliates shall pursue (either by itself or with a Third Party or Affiliate)
the research, development or commercialization of any product for purpose of
sale in the Field, outside of the Cancer Program.
 
3.5          [*****].
 

 
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3.6          No Prohibition on Intrexon.  Except as explicitly set forth in
Sections 3.1 and 3.4, nothing in this Agreement shall prevent Intrexon from
practicing or using the Intrexon Materials, Intrexon Channel Technology, and
Intrexon IP for any purpose, and to grant to Third Parties the right to do the
same.  Without limiting the generality of the foregoing, ZIOPHARM acknowledges
that Intrexon has all rights, in Intrexon’s sole discretion, to make the
Intrexon Materials, Intrexon Channel Technology (including any active
pharmaceutical ingredient used in a ZIOPHARM Product), and Intrexon IP available
to Third Party channel partners for use in fields outside the Field.
 
3.7          [*****].
 
(a)           [*****]
 
(b)           [*****]
 
(c)           [*****]
 
(d)           For any Third Party license under which ZIOPHARM or its Affiliates
obtain a license under Patents claiming inventions or know-how specific to or
used or incorporated into the development, manufacture, and/or commercialization
of ZIOPHARM Products, ZIOPHARM shall use commercially reasonable efforts to
ensure that ZIOPHARM will have the ability, pursuant to Section 10.4(h), to
assign such agreement to Intrexon or grant a sublicense to Intrexon thereunder
(having the scope set forth in Section 10.4(h)).
 
(e)           The licenses granted to ZIOPHARM under Section 3.1 may include
sublicenses under Intrexon IP that has been licensed to Intrexon by one or more
Third Parties.  Any such sublicenses are subject to the terms and conditions set
forth in the applicable upstream license agreement, subject to the cost
allocation set forth in Section 3.7(c), provided that Intrexon shall either
provide unredacted copies of such upstream license agreements to ZIOPHARM or
shall disclose in writing to ZIOPHARM all of such terms and conditions that are
applicable to ZIOPHARM.  ZIOPHARM shall not be responsible for complying with
any provisions of such upstream license agreements unless, and to the extent
that, such provisions have been disclosed to ZIOPHARM as provided in the
preceding sentence.
 
3.8          Licenses to Intrexon.  Subject to the terms and conditions of this
Agreement, ZIOPHARM hereby grants to Intrexon a non-exclusive, worldwide,
fully-paid, royalty-free license, under any applicable Patents or other
intellectual property Controlled by ZIOPHARM or its Affiliates, solely to the
extent necessary for Intrexon to conduct those responsibilities assigned to it
under this Agreement, which license shall be sublicensable solely to Intrexon’s
Affiliates or to any of Intrexon’s subcontractors.
 
3.9          Restrictions Relating to Intrexon Materials.  ZIOPHARM shall use
the Intrexon Materials solely for purposes of the Cancer Program and not for any
other purpose without the prior written consent of Intrexon.  With respect to
the Intrexon Materials comprising Intrexon’s vector assembly technology,
ZIOPHARM shall not, and shall ensure that ZIOPHARM personnel do not (a)
distribute, sell, lend or otherwise transfer such Intrexon Materials to any
Third Party; (b) co-mingle such Intrexon Materials with any other proprietary
biological or chemical materials without Intrexon’s written consent; or (c)
analyze such Intrexon Materials or in any way attempt to reverse engineer or
sequence such Intrexon Materials.
 

 
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ARTICLE 4
 
Other Rights and Obligations
 
4.1             Development and Commercialization. Subject to Sections 4.6 and
4.7,  ZIOPHARM shall be solely responsible for the performance of the Cancer
Program and the development and commercialization of ZIOPHARM Products in the
Field.  ZIOPHARM shall be responsible for all costs incurred in connection with
the Cancer Program except that Intrexon shall be responsible for the
following:  (a) costs of establishing manufacturing capabilities and facilities
in connection with Intrexon’s manufacturing obligation under Section 4.6
(provided, however, that Intrexon may include an allocable portion of such
costs, through depreciation and amortization, when calculating the Fully Loaded
Cost of manufacturing ZIOPHARM Product, to the extent such allocation,
depreciation, and amortization is permitted by US GAAP, it being recognized that
the majority of non-facilities scale-up costs cannot be capitalized and
amortized under US GAAP); (b) costs of discovery-stage research with respect to
the Intrexon Channel Technology and Intrexon Materials (i.e., platform
improvements) (but, for clarity, excluding research described in Section 4.7);
(c) [*****]; and (d) costs of filing, prosecution and maintenance of Intrexon
Patents.  The costs encompassed within subsection (a) above shall include the
scale-up of Intrexon Materials and API for clinical trials and commercialization
of ZIOPHARM Products undertaken pursuant to Section 4.6, which shall be at
Intrexon’s cost whether it elects to conduct such efforts internally or through
Third Party contractors retained by either Intrexon or ZIOPHARM (with Intrexon’s
consent).
 
4.2             Transfer of Existing Cancer Programs.  Promptly following the
Effective Date, Intrexon shall promptly assign to ZIOPHARM, and will provide
full copies of, all regulatory approvals and regulatory filings that relate to
the Existing Cancer Programs.  Intrexon shall also (a) make available to
ZIOPHARM all Intrexon Materials associated with the conduct of the Existing
Cancer Programs, and (b) take such actions and execute such other instruments,
assignments and documents as may be necessary to effect the transfer of rights
thereunder to ZIOPHARM.  No later than sixty (60) days after the Effective Date
(or as soon thereafter as practicable), Intrexon shall provide to ZIOPHARM
copies of the relevant portions of all material reports and data, including
clinical and non-clinical data and reports, obtained or generated by or on
behalf of Intrexon or its Affiliates in connection with the Existing Cancer
Programs.  Thereafter, as additional projects are included in the Cancer
Program, the JSC shall develop a plan and protocol for each such project
relating to the transfer of relevant data and Intrexon Materials.
 
4.3             Information and Reporting.  ZIOPHARM will keep Intrexon informed
about ZIOPHARM’s efforts to develop and commercialize ZIOPHARM Products,
including reasonable and accurate summaries of ZIOPHARM’s (and its Affiliates’
and, if applicable, (sub)licensees’) global development plans (as updated),
global marketing plans (as updated), progress towards meeting the goals and
milestones in such plans and explanations of any material deviations, and
significant developments in the development and/or commercialization of the
ZIOPHARM Products, including initiation or completion of a clinical trial,
submission of a United States or international regulatory filing, receipt of a
response to such United States or international regulatory filing, clinical
safety event, receipt of Regulatory Approval, or commercial launch.  Intrexon
will keep ZIOPHARM informed about Intrexon’s efforts (a) to establish
manufacturing capabilities and facilities for ZIOPHARM Products (and Intrexon
Materials relevant thereto) and otherwise perform its manufacturing
responsibilities under Section 4.6 and (b) to undertake discovery-stage research
for the Cancer Program with respect to the Intrexon Channel Technology and
Intrexon Materials.  Such disclosures by ZIOPHARM and Intrexon will be made in
the course of JSC meetings at least once every six (6) months while ZIOPHARM
Products are being developed or commercialized anywhere in the world, and shall
be reflected in the minutes of such meetings.
 
 
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4.4          Regulatory Matters.  At all times after the Effective Date,
ZIOPHARM shall own and maintain, at its own cost, all regulatory filings and
Regulatory Approvals for ZIOPHARM Products that ZIOPHARM is developing or
Commercializing pursuant to this Agreement.  As such, ZIOPHARM shall be
responsible for reporting all adverse events related to such ZIOPHARM Products
to the appropriate regulatory authorities in the relevant countries, in
accordance with the applicable laws and regulations of such countries.  The
decision to list or not list Patents in any regulatory filing for a ZIOPHARM
Product (for example, as required by 21 C.F.R. § 314.53(b)), or add or delete a
Patent from a regulatory filing shall be determined by Intrexon, after
consultation with ZIOPHARM, except with respect to Product Specific Program
Patents, which will be mutually determined by the Parties.
 
4.5          Diligence.
 
(a)           ZIOPHARM shall use Diligent Efforts to develop and commercialize
ZIOPHARM Products.
 
(b)           Without limiting the generality of the foregoing, Intrexon may,
from time to time, notify ZIOPHARM that it believes it has identified a Superior
Therapy, and in such case shall provide to ZIOPHARM its then-available
information about such therapy.  ZIOPHARM shall have the following obligations
with respect to such proposed Superior Therapy:  (i) within sixty (60) days
after such notification, ZIOPHARM shall prepare and deliver to the JSC for
review and approval a development plan detailing how ZIOPHARM will pursue the
Superior Therapy (including a proposed budget); (ii) ZIOPHARM shall revise the
development plan as directed by the JSC; and (iii) following approval of the
development plan by the JSC, ZIOPHARM shall use Diligent Efforts to pursue the
development of the Superior Therapy under the Cancer Program in accordance with
such development plan.  If ZIOPHARM fails to comply with the foregoing
obligations, or if ZIOPHARM exercises its casting vote at the JSC to either (x)
prevent the approval of a development plan for a Superior Therapy; (y) delay
such approval more than sixty (60) days after delivery of the development plan
to the JSC; or (z) approve a development plan that is insufficient in view of
the nature and magnitude of the opportunity presented by the Superior Therapy,
then Intrexon shall have the termination right set forth in Section 10.2(b)
(subject to the limitation set forth therein).  For clarity, any dispute arising
under this 4.5, including any dispute as to whether a proposed project
constitutes a Superior Therapy (as with any other dispute under this Agreement)
shall be subject to dispute resolution in accordance with Article 11.
 
(c)           The activities of ZIOPHARM’s Affiliates and any permitted
sublicensees shall be attributed to ZIOPHARM for the purposes of evaluating
ZIOPHARM’s fulfillment of the obligations set forth in this Section 4.5.
 

 
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4.6             Manufacturing.  Intrexon shall use Diligent Efforts to perform
any manufacturing activities in connection with the Cancer Program that relate
to the Intrexon Materials, the manufacture of bulk drug product, the
manufacturing of bulk quantities of other components of ZIOPHARM Products, or
any earlier steps in the manufacturing process for ZIOPHARM Products.  Except as
provided in Section 4.1, any manufacturing undertaken by Intrexon pursuant to
the preceding sentence shall be performed in exchange for cash payments equal to
Intrexon’s Fully Loaded Cost in connection with such manufacturing, on terms to
be negotiated by the Parties in good faith.  In the event that Intrexon does not
manufacture Intrexon Materials, bulk drug product or bulk qualities of other
components of ZIOPHARM Products, then Intrexon shall provide to ZIOPHARM or a
contract manufacturer selected by ZIOPHARM and approved by Intrexon all
Information Controlled by Intrexon that is related to the manufacturing of such
Intrexon Materials, bulk drug product or bulk qualities of other components of
ZIOPHARM Products, for use in the Field and is reasonably necessary to enable
ZIOPHARM or such contract manufacturer (as appropriate) for the sole purpose of
manufacturing such Intrexon Materials, bulk drug product or bulk quantities of
other components of ZIOPHARM Products, in each case as manufactured by
Intrexon.  The costs and expenses incurred by Intrexon in carrying out such
transfer shall be borne by Intrexon.  Any manufacturing Information transferred
hereunder to ZIOPHARM or its contract manufacturer shall not be further
transferred to any Third Party or ZIOPHARM Affiliate without the prior written
consent of Intrexon; provided, however, that Intrexon shall not unreasonably
withhold such consent if necessary to permit ZIOPHARM to switch manufacturers.
 
4.7             Support Services.  From time to time, on an ongoing basis,
ZIOPHARM shall request, or Intrexon may propose, that Intrexon perform certain
support services with respect to the Cancer Program, such services including but
not limited to, pre-clinical or clinical activities relating to transition of
the Cancer Program to ZIOPHARM.  To the extent that the Parties mutually agree
that Intrexon should perform such services, the Parties shall negotiate in good
faith the terms under which services would be performed, it being understood
that Intrexon would be compensated for such services by cash payments equal to
Intrexon’s Fully Loaded Cost in connection with such services.
 
4.8             Compliance with Law.  Each Party shall comply, and shall ensure
that its Affiliates, (sub)licensees and Third Party contractors comply, with all
applicable laws, regulations, and guidelines applicable to the Cancer Program,
including without limitation those relating to the transport, storage, and
handling of Intrexon Materials and ZIOPHARM Products.
 
4.9             Trademarks.  To the extent permitted by applicable law and
regulations, ZIOPHARM shall, and shall ensure that the packaging, promotional
materials, and labeling for ZIOPHARM Products shall carry, in a conspicuous
location, the applicable Intrexon Trademark(s), subject to ZIOPHARM’s reasonable
approval of the size, position, and location thereof.  ZIOPHARM shall provide
Intrexon with copies of any materials containing the Intrexon Trademarks prior
to using or disseminating such materials, in order to obtain ZIOPHARM’s approval
thereof.  ZIOPHARM’s use of the Intrexon Trademarks shall be subject to prior
review and approval of the IPC.  ZIOPHARM acknowledges Intrexon’s sole ownership
of the Intrexon Trademarks and agrees not to take any action inconsistent with
such ownership.  ZIOPHARM covenants that it shall not use any trademark
confusingly similar to any Intrexon Trademarks in connection with any products
(including any ZIOPHARM Product).  From time to time during the Term, Intrexon
shall have the right to obtain from ZIOPHARM samples of ZIOPHARM Product sold by
ZIOPHARM or its Affiliates or sublicensees for the purpose of inspecting the
quality of such ZIOPHARM Products and use of the Intrexon Trademark(s).  In the
event that Intrexon inspects the quality of such ZIOPHARM Products and use of
the Intrexon Trademark, Intrexon shall notify the result of such inspection to
ZIOPHARM in writing thereafter.  ZIOPHARM shall comply with reasonable policies
provided by Intrexon from time-to-time to maintain the goodwill and value of the
Intrexon Trademarks.

 
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ARTICLE 5
 
Compensation
 
5.1          Equity.  In partial consideration for ZIOPHARM’s appointment as an
exclusive channel partner and the other rights granted to ZIOPHARM hereunder,
ZIOPHARM has agreed to issue to Intrexon certain shares of ZIOPHARM’s common
stock, in accordance with the terms and conditions of that certain Stock
Purchase Agreement and Registration Rights Agreement, each of even date herewith
(the “Equity Agreements”).  Pursuant to the Equity Agreements, Intrexon has also
agreed to purchase certain shares of the Company’s common stock for cash
consideration, subject to the terms and conditions therein.  Provided that all
closing conditions for the First Tranche Closing (as defined in the Equity
Agreements) that are within the reasonable control of Intrexon have been
satisfied or waived, the issuance of the First Tranche Shares (as defined in the
Equity Agreements) is a condition subsequent to the effectiveness of this
Agreement.
 
5.2          Profit-Share.
 
(a)           No later than thirty (30) days after each calendar quarter in
which there is positive Product Profit arising from the sale of ZIOPHARM Product
in the Field in the Territory, ZIOPHARM shall pay to Intrexon fifty percent
(50%) of such Product Profit, on a ZIOPHARM Product-by-ZIOPHARM Product
basis.  In the event of negative Product Profit for a particular ZIOPHARM
Product in any calendar quarter, neither ZIOPHARM nor Intrexon shall owe any
payments hereunder with respect to such ZIOPHARM Product.  [*****].  Except as
set forth in the preceding sentence, ZIOPHARM shall not be permitted to carry
forward any negative Product Profits to subsequent quarters.
 
(b)           No later than thirty (30) days after each calendar quarter in
which ZIOPHARM or any ZIOPHARM Affiliate receives Sublicensing Revenue, ZIOPHARM
shall pay to Intrexon fifty percent (50%) of such Sublicensing Revenue.  As set
forth in Section 3.2, sublicensing shall require Intrexon’s prior written
consent.  Nevertheless, this Section 5.2(b) shall apply to Sublicensing Revenue
received by ZIOPHARM or any ZIOPHARM Affiliate, even if rights were granted to
the applicable sublicensee in violation of this Agreement.  For purposes of
clarity, sales of ZIOPHARM Products by approved sublicensees shall not
constitute Net Sales.
 
5.3          Method of Payment.  All payments due to Intrexon under this
Agreement shall be paid in United States dollars by wire transfer to a bank in
the United States designated in writing by Intrexon.  All references to
“dollars” or “$” herein shall refer to United States dollars.
 

 
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5.4          Payment Reports and Records Retention.  Within thirty (30) days
after the end of each calendar quarter during which Net Sales have been
generated or Allowable Expenses been incurred, ZIOPHARM shall deliver to
Intrexon a written report that shall contain at a minimum for the applicable
calendar quarter:
 
(a)           gross sales of each ZIOPHARM Product (on a country-by-country
basis);
 
(b)           itemized calculation of Net Sales, showing all applicable
deductions;
 
(c)           itemized calculation of Allowable Expenses and Sublicensing
Revenue;
 
(d)           the amount of the payment (if any) due pursuant to Section 5.2(a)
and/or 5.2(b);
 
(e)           the amount of taxes, if any, withheld to comply with any
applicable law; and
 
(f)           the exchange rates used in any of the foregoing calculations.
 
For three (3) years after each sale of ZIOPHARM Product or the incurring of an
item included in Allowable Expenses, ZIOPHARM shall keep (and shall ensure that
its Affiliates and, if applicable, (sub)licensees shall keep) complete and
accurate records of such sales or Allowable Expenses (as the case may be) in
sufficient detail to confirm the accuracy of the payment calculations hereunder.
 
5.5          Audits.
 
(a)           Upon the written request of Intrexon, ZIOPHARM shall permit an
independent certified public accounting firm of internationally recognized
standing selected by Intrexon, and reasonably acceptable to ZIOPHARM, to have
access to and to review, during normal business hours and upon no less than
thirty (30) days prior written notice, the applicable records of ZIOPHARM and
its Affiliates to verify the accuracy and timeliness of the reports and payments
made by ZIOPHARM under this Agreement.  Such review may cover the records for
sales made in any calendar year ending not more than three (3) years prior to
the date of such request.  The accounting firm shall disclose to both Parties
whether the royalty reports and/or know-how reports conform to the provisions of
this Agreement and/or US GAAP, as applicable, and the specific details
concerning any discrepancies.  Such audit may not be conducted more than once in
any calendar year.
 
(b)           If such accounting firm concludes that additional amounts were
owed during such period, ZIOPHARM shall pay additional amounts, with interest
from the date originally due as set forth in Section 5.7, within thirty (30)
days of receipt of the accounting firm’s written report.  If the amount of the
underpayment is greater than five percent (5%) of the total amount actually owed
for the period audited, then ZIOPHARM shall in addition reimburse Intrexon for
all costs related to such audit; otherwise, Intrexon shall pay all costs of the
audit.  In the event of overpayment, any amount of such overpayment shall be
fully creditable against amounts payable for the immediately succeeding calendar
quarter(s); provided, however, that such credit cannot be applied to reduce the
amounts payable by ZIOPHARM to Intrexon for any particular calendar quarter by
more than [*****] of the amount otherwise due to Intrexon.
 

 
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(c)           Intrexon shall (i) treat all information that it receives under
this Section 5.5 in accordance with the confidentiality provisions of Article 7
and (ii) cause its accounting firm to enter into an acceptable confidentiality
agreement with ZIOPHARM obligating such firm to retain all such financial
information in confidence pursuant to such confidentiality agreement, in each
case except to the extent necessary for Intrexon to enforce its rights under
this Agreement.
 
5.6          Taxes.  The Parties will cooperate in good faith to obtain the
benefit of any relevant tax treaties to minimize as far as reasonably possible
any taxes which may be levied on any amounts payable hereunder.  ZIOPHARM shall
deduct or withhold from any payments any taxes that it is required by applicable
law to deduct or withhold.  Notwithstanding the foregoing, if Intrexon is
entitled under any applicable tax treaty to a reduction of the rate of, or the
elimination of, applicable withholding tax, it may deliver to ZIOPHARM or the
appropriate governmental authority (with the assistance of ZIOPHARM to the
extent that this is reasonably required and is expressly requested in writing)
the prescribed forms necessary to reduce the applicable rate of withholding or
to relieve ZIOPHARM of its obligation to withhold tax, and ZIOPHARM shall apply
the reduced rate of withholding tax, or dispense with withholding tax, as the
case may be, provided that ZIOPHARM has received evidence of Intrexon’s delivery
of all applicable forms (and, if necessary, its receipt of appropriate
governmental authorization) at least fifteen (15) days prior to the time that
the payment is due.  If, in accordance with the foregoing, ZIOPHARM withholds
any amount, it shall make timely payment to the proper taxing authority of the
withheld amount, and send to Intrexon proof of such payment within forty-five
(45) days following that latter payment.
 
5.7          Late Payments.  Any amount owed by ZIOPHARM to Intrexon under this
Agreement that is not paid within the applicable time period set forth herein
shall accrue interest at the lower of (a) two percent (2%) per month,
compounded, or (b) the highest rate permitted under applicable law.
 
ARTICLE 6
 
Intellectual Property
 
6.1          Ownership.
 
(a)           Subject to the license granted under Section 3.1, all rights in
the Intrexon IP shall remain with Intrexon.
 
(b)           ZIOPHARM and/or Intrexon may solely or jointly conceive, reduce to
practice or develop discoveries, inventions, processes, techniques, and other
technology, whether or not patentable, in the course of performing the Cancer
Program (collectively “Inventions”).  Each Party shall promptly provide the
other Party with a detailed written description of any such Inventions that
relate to the Field.  Inventorship shall be determined in accordance with United
States patent laws.

 
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(c)           Intrexon shall solely own all right, title and interest in all
Inventions related to Intrexon Channel Technology, together with all Patent
rights and other intellectual property rights therein (the “Channel-Related
Program IP”).  ZIOPHARM hereby assigns all of its right, title and interest in
and to the Channel-Related Program IP to Intrexon.  ZIOPHARM agrees to execute
such documents and perform such other acts as Intrexon may reasonably request to
obtain, perfect and enforce its rights to the Channel-Related Program IP and the
assignment thereof.
 
(d)           Notwithstanding anything to the contrary in this Agreement, any
discovery, invention, process, technique, or other technology, whether or not
patentable, that is conceived, reduced to practice or developed by ZIOPHARM
solely or jointly through the use of the Intrexon Channel Technology, Intrexon
IP, or Intrexon Materials in breach of the terms and conditions of this
Agreement, together with all patent rights and other intellectual property
rights therein, shall be solely owned by Intrexon and shall be included in the
Channel-Related Program IP.
 
(e)           All information regarding Channel-Related Program IP shall be
Confidential Information of Intrexon.  ZIOPHARM shall be under appropriate
written agreements with each of its employees or agents working on the Cancer
Program, pursuant to which such person shall grant all rights in the Inventions
to ZIOPHARM (so that ZIOPHARM may convey certain of such rights to Intrexon, as
provided herein).
 
6.2          Patent Prosecution.
 
(a)           Intrexon shall have the sole right, but not the obligation, to
conduct and control the filing, prosecution and maintenance of the Intrexon
Patents.  At the reasonable request of Intrexon, ZIOPHARM shall cooperate with
Intrexon in connection with such filing, prosecution, and maintenance, at
Intrexon’s expense.  Under no circumstances shall ZIOPHARM (a) file, attempt to
file, or assist anyone else in filing, or attempting to file, any Patent
application, either in the United States or elsewhere, that claims or uses or
purports to claim or use or relies for support upon an Invention owned by
Intrexon or use, attempt to use, or assist anyone else in using or attempting to
use, the Intrexon Know-How, Intrexon Materials, or any Confidential Information
of Intrexon to support the filing of a Patent application, either in the United
States or elsewhere, that contains claims directed to the Intrexon IP, Intrexon
Materials, or the Intrexon Channel Technology.
 
(b)           ZIOPHARM shall have the sole right, but not the obligation, to
conduct and control the filing, prosecution and maintenance of any Patents
claiming Inventions that are owned by ZIOPHARM or its Affiliates and not
assigned to Intrexon under Section 6.1(c) ( “ZIOPHARM Program Patents”).  At the
reasonable request of ZIOPHARM, Intrexon shall cooperate with ZIOPHARM in
connection with such filing, prosecution, and maintenance, at ZIOPHARM’s
expense.
 
(c)           The Prosecuting Party shall be entitled to use patent counsel
selected by it and reasonably acceptable to the non-Prosecuting Party (including
in-house patent counsel as well as outside patent counsel) for the prosecution
of the Intrexon Patents and ZIOPHARM Program Patents, as applicable.  The
Prosecuting Party shall:
 

 
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(i)           regularly provide the other Party in advance with reasonable
information relating to the Prosecuting Party’s prosecution of Patents
hereunder, including by providing copies of substantive communications, notices
and actions submitted to or received from the relevant patent authorities and
copies of drafts of filings and correspondence that the Prosecuting Party
proposes to submit to such patent authorities (it being understood that, to the
extent that any such information is readily accessible to the public, the
Prosecuting Party may, in lieu of directly providing copies of such information
to such other Party, provide such other Party with sufficient information that
will permit such other Party to access such information itself directly);
 
(ii)           consider in good faith and consult with the non-Prosecuting Party
regarding its timely comments with respect to the same; provided, however, that
if, within fifteen (15) days after providing any documents to the
non-Prosecuting Party for comment, the Prosecuting Party does not receive any
written communication from the non-Prosecuting Party indicating that it has or
may have comments on such document, the Prosecuting Party shall be entitled to
assume that the non-Prosecuting Party has no comments thereon;
 
(iii)           consult with the non-Prosecuting Party before taking any action
that would reasonably be expected to have a material adverse impact on the scope
of claims within the Intrexon Patents and ZIOPHARM Program Patents, as
applicable.
 
As used above “Prosecuting Party” means Intrexon in the case of Intrexon Patents
and ZIOPHARM in the case of ZIOPHARM Program Patents.
 
6.3          Infringement of Patents by Third Parties.
 
(a)           Except as expressly provided in the remainder of this Section 6.3,
Intrexon shall have the sole right to take appropriate action against any person
or entity directly or indirectly infringing any Intrexon Patent (or asserting
that a Intrexon Patent is invalid or unenforceable) (collectively,
“Infringement”), either by settlement or lawsuit or other appropriate action.
 
(b)           Notwithstanding the foregoing, [*****] shall have the [*****]
right, but not the obligation, to take appropriate action to enforce [*****]
against any Infringement that involves a [*****] of allegedly infringing
activities in the Field (“[*****]”), either by settlement or lawsuit or other
appropriate action.  If [*****] fails to take the appropriate steps to enforce
[*****] against any [*****] within [*****] days of the date one Party has
provided notice to the other Party pursuant to Section 6.3(g) of such [*****],
then [*****] shall have the right (but not the obligation), at its own expense,
to enforce [*****] against such [*****], either by settlement or lawsuit or
other appropriate action.
 
(c)           With respect to any [*****] that cannot reasonably be abated
through the enforcement of [*****] pursuant to Section 6.3(b) but can reasonable
be abated through the enforcement of [*****] (other than the [*****]),[*****]
shall be obligated to choose one of the following courses of action:
[*****].  The determination of which [*****] to assert shall be made by [*****]
in its sole discretion; provided, however, that [*****] shall consult in good
faith with [*****] on such determination.  For the avoidance of doubt, [*****]
has no obligations under this Agreement to enforce any [*****] against, or
otherwise abate, any Infringement that is not a [*****].
 

 
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(d)           In the event a Party pursues an action under this Section 6.3, the
other Party shall reasonably cooperate with the enforcing Party with respect to
the investigation and prosecution of any alleged, threatened, or actual
Infringement, at the enforcing Party’s expense (except with respect to an action
under Section 6.3(c), where all costs and expenses will be shared equally in
accordance with terms thereof).
 
(e)           [*****] shall not settle or otherwise compromise any action under
this Section 6.3 in a way that diminishes the rights or interests of [*****] or
adversely affects any [*****] without [*****]’s prior written consent, which
consent shall not be unreasonably withheld.  [*****] shall not settle or
otherwise compromise any action under this Section 6.3 in a way that diminishes
the rights or interests of [*****] in the [*****] or adversely affects any
[*****] with respect to the [*****] without [*****]’s prior written consent,
which consent shall not be unreasonably withheld.
 
(f)           Except as otherwise agreed to by the Parties in writing, any
settlements, damages or other monetary awards recovered pursuant to a suit,
proceeding, or action brought pursuant to Section 6.3 will be allocated first to
the costs and expenses of the Party controlling such action, and second, to the
costs and expenses (if any) of the other Party (to the extent not otherwise
reimbursed), and any remaining amounts (the “[*****]”) will be shared by the
Parties as follows:  [*****].  In any action initiated by [*****] pursuant to
Section 6.3(c), the Parties shall share the [*****] equally, and such [*****]
shall not be deemed to constitute [*****].
 
(g)           ZIOPHARM shall promptly notify Intrexon in writing of any alleged,
threatened, or actual Infringement of which it becomes aware, and Intrexon shall
promptly notify ZIOPHARM in writing of any alleged, threatened, or actual
[*****] of which it becomes aware.
 
ARTICLE 7
 
Confidentiality
 
7.1          Confidentiality.  Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, each Party agrees that
it shall keep confidential and shall not publish or otherwise disclose and shall
not use for any purpose other than as provided for in this Agreement any
Confidential Information disclosed to it by the other Party pursuant to this
Agreement, except to the extent that the receiving Party can demonstrate by
competent evidence that specific Confidential Information:
 
(a)           was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;
 
(b)           was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;
 

 
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(c)           became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving Party in breach of this Agreement;
 
(d)           was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others;
or
 
(e)           was independently discovered or developed by the receiving Party
without the use of Confidential Information belonging to the disclosing Party,
as documented by the receiving Party’s written records.
 
The foregoing non-use and non-disclosure obligation shall continue (i)
indefinitely, for all Confidential Information that qualifies as a trade secret
under applicable law; or (ii) for the Term of this Agreement and for [*****]
years thereafter, in all other cases.
 
7.2          Authorized Disclosure.  Notwithstanding the limitations in this
Article 7, either Party may disclose the Confidential Information belonging to
the other Party to the extent such disclosure is reasonably necessary in the
following instances:
 
(a)           complying with applicable laws or regulations or valid court
orders, provided that the Party making such disclosure provides the other Party
with reasonable prior written notice of such disclosure and makes a reasonable
effort to obtain, or to assist the other Party in obtaining, a protective order
preventing or limiting the disclosure and/or requiring that the terms and
conditions of this Agreement be used only for the purposes for which the law or
regulation required, or for which the order was issued;
 
(b)           to regulatory authorities in order to seek or obtain approval to
conduct clinical trials, or to gain regulatory approval, of ZIOPHARM Products or
any products being developed by Intrexon or its other licensees and/or channel
partners, provided that the Party making such disclosure (i) provides the other
Party with reasonable opportunity to review any such disclosure in advance and
to suggest redactions or other means of limiting the disclosure of such other
Party’s Confidential Information and (ii) does not unreasonably reject any such
suggestions;
 
(c)           disclosure to investors and potential investors, acquirers, or
merger candidates who agree to maintain the confidentiality of such information,
provided that such disclosure is used solely for the purpose of evaluating such
investment, acquisition, or merger (as the case may be);
 
(d)           disclosure on a need-to-know basis to Affiliates, licensees,
sublicensees, employees, consultants or agents (such as CROs and clinical
investigators) who agree to be bound by obligations of confidentiality and
non-use at least equivalent in scope to those set forth in this Article 7; and
 
(e)           disclosure of the terms of this Agreement by Intrexon to
collaborators and other channel partners who agree to be bound by obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Article 7.
 

 
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7.3          Publicity.  The Parties agree that the public announcement of the
execution of this Agreement shall be substantially in the form of the press
release attached as Exhibit B.
 
7.4          Terms of the Agreement.  Each Party shall treat the terms of this
Agreement as the Confidential Information of other Party, subject to the
exceptions set forth in Section 7.2.  Notwithstanding the foregoing, each Party
acknowledges that the other Party may be obligated to file a copy of this
Agreement with the SEC, either as of the Effective Date or at some point during
the Term.  Each Party shall be entitled to make such a required filing, provided
that it requests confidential treatment of certain commercial terms and
sensitive technical terms hereof to the extent such confidential treatment is
reasonably available to it.  In the event of any such filing, the filing Party
shall provide the other Party with a copy of the Agreement marked to show
provisions for which the filing Party intends to seek confidential treatment and
shall reasonably consider and incorporate the other Party’s comments thereon to
the extent consistent with the legal requirements governing redaction of
information from material agreements that must be publicly filed.  The other
Party shall promptly provide any such comments.
 
7.5          Proprietary Information Audits.
 
(a)           For the purpose of confirming compliance with the Field-limited
licenses granted in Article 3 and the confidentiality obligations under Article
7, ZIOPHARM acknowledges that Intrexon’s authorized representative(s), during
regular business hours may (i) examine and inspect ZIOPHARM’s facilities and
(ii) inspect all data and work products relating to this Agreement.  Any
examination or inspection hereunder shall require five (5) business days written
notice from Intrexon to ZIOPHARM.  ZIOPHARM will make itself and the pertinent
employees and/or agents available, on a reasonable basis, to Intrexon for the
aforementioned compliance review.
 
(b)           In view of the Intrexon Confidential Information, Intrexon
Know-How, and Intrexon Materials transferred to ZIOPHARM hereunder, Intrexon
from time-to-time, but no more than quarterly, may request that ZIOPHARM confirm
the status of the Intrexon Materials at Company (i.e. how much used, how much
shipped, to whom and any unused amounts destroyed (by whom, when) as well as any
amounts returned to Intrexon or destroyed).  Within ten (10) business days of
ZIOPHARM’s receipt of any such written request, ZIOPHARM shall provide the
written report to Intrexon.
 
7.6          Intrexon Commitment.  Intrexon shall use reasonable efforts to
obtain an agreement with its other licensees and channel partners to enable
ZIOPHARM to disclose confidential information of such licensees and channel
partners to regulatory authorities in order to seek or obtain approval to
conduct clinical trials, or to gain regulatory approval of, ZIOPHARM Products,
in a manner consistent with the provisions of Section 7.2(b).
 
ARTICLE 8
 
Representations And Warranties
 
8.1          Representations and Warranties of ZIOPHARM.  ZIOPHARM hereby
represents and warrants to Intrexon that, as of the Effective Date:
 

 
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(a)           Corporate Power.  ZIOPHARM is duly organized and validly existing
under the laws of Delaware and has corporate full power and authority to enter
into this Agreement and to carry out the provisions hereof.
 
(b)           Due Authorization.  ZIOPHARM is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
executing this Agreement on ZIOPHARM’s behalf has been duly authorized to do so
by all requisite corporate action.
 
(c)           Binding Agreement.  This Agreement is a legal and valid obligation
binding upon ZIOPHARM and enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors’ rights, and subject to general equity principles and to limitations
on availability of equitable relief, including specific performance.  The
execution, delivery and performance of this Agreement by ZIOPHARM does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound.  ZIOPHARM is aware of no
action, suit or inquiry or investigation instituted by any governmental agency
which questions or threatens the validity of this Agreement.
 
8.2          Representations and Warranties of Intrexon.  Intrexon hereby
represents and warrants to ZIOPHARM that, as of the Effective Date:
 
(a)           Corporate Power.  Intrexon is duly organized and validly existing
under the laws of Virginia and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof.
 
(b)           Due Authorization.  Intrexon is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder, and the person
executing this Agreement on Intrexon’s behalf has been duly authorized to do so
by all requisite corporate action.
 
(c)           Binding Agreement.  This Agreement is a legal and valid obligation
binding upon Intrexon and enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors’ rights, and subject to general equity principles and to limitations
on availability of equitable relief, including specific performance.  The
execution, delivery and performance of this Agreement by Intrexon does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound.  Intrexon is aware of no
action, suit or inquiry or investigation instituted by any governmental agency
which questions or threatens the validity of this Agreement.
 
(d)           Additional Intellectual Property Representations.
 
(i)           Intrexon possesses sufficient rights to enable Intrexon to grant
all rights and licenses it purports to grant to ZIOPHARM with respect to the
Intrexon Patents under this Agreement;
 

 
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(ii)           The Intrexon Patents existing as of the Effective Date constitute
all of the Patents Controlled by Intrexon as of such date that are necessary for
the development, manufacture or Commercialization of ZIOPHARM Products;
 
(iii)          Intrexon has not granted, and during the Term Intrexon will not
grant, any right or license, to any Third Party under the Intrexon IP that
conflicts with the rights or licenses granted or to be granted to ZIOPHARM
hereunder;
 
(iv)          There is no pending litigation, and Intrexon has not received any
written notice of any claims or litigation, seeking to invalidate or otherwise
challenge the Intrexon Patents or Intrexon’s rights therein;
 
(v)           To Intrexon’s knowledge, [*****], the use of the Intrexon
Materials in connection with the Existing Cancer Programs as of the Effective
Date and the conduct of the Existing Cancer Programs as contemplated as of the
Effective Date, does not (A) infringe any claims of any Patents of any Third
Party, or (b) misappropriate any Information of any Third Party;
 
(vi)          None of the Intrexon Patents is subject to any pending
re-examination, opposition, interference or litigation proceedings;
 
(vii)         All of the Intrexon Patents have been filed and prosecuted in
accordance with all applicable laws and have been maintained, with all
applicable fees with respect thereto (to the extent such fees have come due)
having been paid;
 
(viii)        Intrexon has entered into agreements with each of its current and
former officers, employees and consultants involved in research and development
work, including development of the Intrexon’s products and technology providing
Intrexon, to the extent permitted by law, with title and ownership to patents,
patent applications, trade secrets and inventions conceived, developed, reduced
to practice by such person, solely or jointly with other of such persons, during
the period of employment by Intrexon (except where the failure to have entered
into such an agreement would not have a material adverse effect on the rights
granted to ZIOPHARM herein), and Intrexon is not aware that any of its employees
or consultants is in material violation thereof;
 
(ix)           To Intrexon’s knowledge, there is no infringement,
misappropriation or violation by third parties of any Intrexon Channel
Technology in the Field;
 
(x)           There is no pending or, to Intrexon’s knowledge, threatened
action, suit, proceeding or claim by others against Intrexon that Intrexon
infringes, misappropriates or otherwise violates any intellectual property or
other proprietary rights of others in connection with the use of the Intrexon
Channel Technology, and Intrexon has not received any written notice of such
claim;
 
(xi)           To Intrexon’s knowledge, no employee of Intrexon is the subject
of any claim or proceeding involving a violation of any term of any employment
contract, patent disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement, non-disclosure agreement
or any restrictive covenant to or with a former employer (A) where the basis of
such violation relates to such employee’s employment with Intrexon or actions
undertaken by the employee while employed with Intrexon and (B) where such
violation is relevant to the use of the Intrexon Channel Technology in the
Field;
 

 
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(xii)          None of the Intrexon Patents owned by Intrexon or its Affiliates,
and, to Intrexon’s knowledge, the Intrexon Patents licensed to Intrexon or its
Affiliates, have been adjudged invalid or unenforceable by a court of competent
jurisdiction or applicable government agency, in whole or in part, and there is
no pending or, to Intrexon’s knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intrexon Patents;
and
 
(xiii)         Except as otherwise disclosed in writing to ZIOPHARM,
Intrexon:  (A) is in material compliance with all statutes, rules or regulations
applicable to the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion, sale, offer for
sale, storage, import, export or disposal of any product that is under
development, manufactured or distributed by Intrexon in the Field (“Applicable
Laws”); (B) has not received any FDA Form 483, notice of adverse finding,
warning letter, untitled letter or other correspondence or notice from the
United States Food and Drug Administration (the “FDA”) or any other federal,
state, local or foreign governmental or regulatory authority alleging or
asserting material noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and supplements or
amendments thereto required by any such Applicable Laws (“Authorizations”),
which would not, individually or in the aggregate, result in a material adverse
effect; (C) possesses all material Authorizations necessary for the operation of
its business as described in the Field and such Authorizations are valid and in
full force and effect and Intrexon is not in material violation of any term of
any such Authorizations; and (D) since January 1, 2008, (1) has not received
notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from the FDA or any other federal,
state, local or foreign governmental or regulatory authority or third party
alleging that any product operation or activity is in material violation of any
Applicable Laws or Authorizations and has no knowledge that the FDA or any other
federal, state, local or foreign governmental or regulatory authority or third
party is considering any such claim, litigation, arbitration, action, suit
investigation or proceeding; (2) has not received notice that the FDA or any
other federal, state, local or foreign governmental or regulatory authority has
taken, is taking or intends to take action to limit, suspend, modify or revoke
any material Authorizations and has no knowledge that the FDA or any other
federal, state, local or foreign governmental or regulatory authority is
considering such action; (3) has filed, obtained, maintained or submitted all
material reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
materially complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission); and (4) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be initiated,
conducted or issued, any recall, market withdrawal or replacement, safety alert,
post sale warning, “dear doctor” letter, or other notice or action relating to
the alleged lack of safety or efficacy of any product or any alleged product
defect or violation and, to Intrexon’s knowledge, no third party has initiated,
conducted or intends to initiate any such notice or action.  Except to the
extent disclosed in writing to ZIOPHARM, since January 1, 2008, Intrexon has not
received any notices or correspondence from the FDA or any other federal, state,
local or foreign governmental or regulatory authority requiring the termination,
suspension or material modification of any studies, tests or preclinical or
clinical trials conducted by or on behalf of Intrexon.
 

 
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except, in each of (ix) through (xiii), for any instances which would not,
individually or in the aggregate, result in a material adverse effect on the
rights granted to ZIOPHARM hereunder or Intrexon’s ability to perform its
obligations hereunder.
 
8.3          Warranty Disclaimer.  EXCEPT FOR THE EXPRESS WARRANTIES PROVIDED IN
THIS ARTICLE 8 OR IN THE EQUITY AGREEMENTS, EACH PARTY HEREBY DISCLAIMS ANY AND
ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
ANY WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
 
ARTICLE 9
 
Indemnification
 
9.1          Indemnification by Intrexon.  Intrexon agrees to indemnify, hold
harmless, and defend ZIOPHARM and its Affiliates and their respective directors,
officers, employees, and agents (collectively, the “ZIOPHARM Indemnitees”) from
and against any and all liabilities, damages, costs, expenses, or losses
(including reasonable legal expenses and attorneys’ fees) (collectively,
“Losses”) resulting from any claims, suits, actions, demands, or other
proceedings brought by a Third Party (collectively, “Claims”) to the extent
arising from (a) the gross negligence or willful misconduct of Intrexon or any
of its Affiliates, or their respective employees or agents, (b) the use,
handling, storage or transport of Intrexon Materials by or on behalf of Intrexon
or its Affiliates, licensees (other than ZIOPHARM) or sublicensees; or (c)
breach by Intrexon of any representation, warranty or covenant in this
Agreement.  Notwithstanding the foregoing, Intrexon shall not have any
obligation to indemnify the ZIOPHARM Indemnitees to the extent that a Claim
arises from (i) the gross negligence or willful misconduct of ZIOPHARM or any of
its Affiliates, licensees, or sublicensees, or their respective employees or
agents; or (ii) a breach by ZIOPHARM of a representation, warranty, or covenant
of this Agreement.
 
9.2          Indemnification by ZIOPHARM.  ZIOPHARM agrees to indemnify, hold
harmless, and defend Intrexon, its Affiliates and Third Security, and their
respective directors, officers, employees, and agents (and any Third Parties
which have licensed to Intrexon intellectual property rights within Intrexon IP
on or prior to the Effective Date, to the extent required by the relevant
upstream license agreement) (collectively, the “Intrexon Indemnitees”) from and
against any Losses resulting from Claims, to the extent arising from any of the
following:  (a) the gross negligence or willful misconduct of ZIOPHARM or any of
its Affiliates or their respective employees or agents; (b) the use, handling,
storage, or transport of Intrexon Materials by or on behalf of ZIOPHARM or its
Affiliates, licensees, or sublicensees; (c) breach by ZIOPHARM or any
representation, warranty or covenant in this Agreement; or (d) the design,
development, manufacture, regulatory approval, handling, storage, transport,
distribution, sale or other disposition of any ZIOPHARM Product by or on behalf
of ZIOPHARM or its Affiliates, licensees, or sublicensees.  Notwithstanding the
foregoing, ZIOPHARM shall not have any obligation to indemnify the Intrexon
Indemnitees to the extent that a Claim arises from (i) the gross negligence or
willful misconduct of Intrexon or any of its Affiliates, or their respective
employees or agents; or (ii) a breach by Intrexon of a representation, warranty,
or covenant of this Agreement.
 
 
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9.3          Product Liability Claims.  Notwithstanding the provisions of
Section 9.2, any Losses arising out of any Third Party claim, suit, action,
proceeding, liability or obligation involving any actual or alleged death or
bodily injury arising out of or resulting from the development, manufacture or
commercialization of any ZIOPHARM Products for use or sale in the Field, to the
extent that such Losses exceed the amount (if any) covered by the applicable
Party’s product liability insurance (“Excess Product Liability Costs”), shall be
paid by [*****], except to the extent such Losses arise out of any Third-Party
Claim based on the gross negligence or willful misconduct of a Party, its
Affiliates, its or its Affiliates’ Sublicensees, or any of the respective
officers, directors, employees and agents of each of the foregoing entities, in
the performance of obligations or exercise of rights under this Agreement.
 
9.4          Control of Defense.  As a condition precedent to any
indemnification obligations hereunder, any entity entitled to indemnification
under this Article 9 shall give written notice to the indemnifying Party of any
Claims that may be subject to indemnification, promptly after learning of such
Claim.  If such Claim falls within the scope of the indemnification obligations
of this Article 9, then the indemnifying Party shall assume the defense of such
Claim with counsel reasonably satisfactory to the indemnified Party.  The
indemnified Party shall cooperate with the indemnifying Party in such
defense.  The indemnified Party may, at its option and expense, be represented
by counsel of its choice in any action or proceeding with respect to such
Claim.  The indemnifying Party shall not be liable for any litigation costs or
expenses incurred by the indemnified Party without the indemnifying Party’s
written consent, such consent not to be unreasonably withheld.  The indemnifying
Party shall not settle any such Claim if such settlement (a) does not fully and
unconditionally release the indemnified Party from all liability relating
thereto or (b) adversely impacts the exercise of the rights granted to the
indemnified Party under this Agreement, unless the indemnified Party otherwise
agrees in writing.
 
9.5          Insurance.  During the term of this Agreement, ZIOPHARM shall
maintain in effect and good standing a product liability insurance policy issued
by a reputable insurance company in amounts considered standard for the
industry.  At Intrexon’s reasonable request, ZIOPHARM shall provide Intrexon
with all details regarding such policy, including without limitation copies of
the applicable liability insurance contracts.  ZIOPHARM shall use reasonable
efforts to  include Intrexon as an additional insured on any such policy.
 
ARTICLE 10

 
Term; Termination
 
10.1        Term.  The term of this Agreement shall commence upon the Effective
Date and shall continue until terminated pursuant to Section 10.2 or 10.3.

 
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10.2        Termination for Material Breach; Termination Under Section 4.5(b)
 
(a)           Either Party shall have the right to terminate this Agreement upon
written notice to the other Party if the other Party commits any material breach
of this Agreement that such breaching Party fails to cure within sixty (60) days
following written notice from the nonbreaching Party specifying such breach.
 
(b)           Intrexon shall have the right to terminate this Agreement under
the circumstances set forth in Section 4.5(b) upon written notice to ZIOPHARM,
such termination to become effective sixty (60) days following such written
notice unless ZIOPHARM remedies the circumstances giving rise to such
termination within such sixty (60) day period.
 
(c)           Intrexon shall have the right to terminate this Agreement under
the circumstances set forth in Section 12.8 upon written notice to ZIOPHARM,
such termination to become effective immediately upon such written notice.
 
(d)           Notwithstanding the foregoing, during the twenty-four (24) month
period commencing on the Effective Date, neither Party shall have the right to
terminate this Agreement under Section 10.2(a) based on the failure of the other
Party to use Diligent Efforts or to comply with any other diligence obligations
hereunder (including Section 4.5), nor shall Intrexon have the right to
terminate this Agreement under Section 4.5(b).
 
10.3        Termination by ZIOPHARM.  ZIOPHARM shall have the right to
voluntarily terminate this Agreement in its entirety upon ninety (90) days
written notice to Intrexon at any time, provided that such notice may not be
given during the twenty four (24) month period commencing on the Effective Date.
 
10.4        Effect of Termination.  In the event of termination of this
Agreement pursuant to Section 10.2 or Section 10.3, the following shall apply:
 
(a)         Retained Products.  ZIOPHARM shall be permitted to continue the
development and commercialization of any ZIOPHARM Product that, at the time of
termination, satisfies at least one of the following criteria (a “Retained
Product”):
 
(i)            is being Commercialized by ZIOPHARM,
 
(ii)           has received regulatory approval,
 
(iii)          is a subject of an application for regulatory approval in the
Field that is pending before the applicable regulatory authority, or
 
(iv)         is the subject of at least
 
(A) an ongoing Phase 2 clinical trial in the Field (in the case of a termination
by Intrexon due to a ZIOPHARM uncured breach pursuant to Section 10.2(a) or a
termination by ZIOPHARM pursuant to Section 10.3), or

 
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(B) an ongoing Phase 1 clinical trial in the Field (in the case of a termination
by ZIOPHARM due to an Intrexon uncured breach pursuant to Section 10.2(a) or a
termination by Intrexon pursuant to Section 10.2(b) or 10.2(c)).
 
Such right to continue development and commercialization shall be subject to
ZIOPHARM’s full compliance with the payment provisions in Article 5 and all
other provisions of this Agreement that survive termination.
 
(b)           Termination of Licenses.  Except as necessary for ZIOPHARM to
continue to develop and commercialize the Retained Products as permitted by
Section 10.4(a), all rights and licenses granted by Intrexon to ZIOPHARM under
this Agreement shall terminate and shall revert to Intrexon without further
action by either Intrexon or ZIOPHARM.  ZIOPHARM’s license with respect to
Retained Products shall be exclusive or non-exclusive, as the case may be, on
the same terms as set forth in Section 3.1.
 
(c)           Reverted Products.  All ZIOPHARM Products other than the Retained
Products shall be referred to herein as the “Reverted Products.”  ZIOPHARM shall
immediately cease, and shall cause its Affiliates and, if applicable,
(sub)licensees to immediately cease, all development and commercialization of
the Reverted Products, and ZIOPHARM shall not use or practice, nor shall it
cause or permit any of its Affiliates or, if applicable, (sub)licensees to use
or practice, directly or indirectly, any Intrexon IP with respect to the
Reverted Products.  ZIOPHARM shall immediately discontinue making any
representation regarding its status as a licensee or channel partner of Intrexon
with respect to the Reverted Products.
 
(d)           Intrexon Materials.  ZIOPHARM shall promptly return, or at
Intrexon’s request, destroy, any Intrexon Materials in ZIOPHARM’s possession or
control at the time of termination, or other than any Intrexon Materials
necessary for the continued development and commercialization of the Retained
Products.
 
(e)           Licenses to Intrexon.  ZIOPHARM is automatically deemed to grant
to Intrexon a worldwide, fully paid, royalty-free, exclusive (even as to
ZIOPHARM and its Affiliates), irrevocable, license (with full rights to
sublicense) under the ZIOPHARM Termination IP, to make, have made, import, use,
offer for sale and sell Reverted Products and to use the Intrexon Channel
Technology, the Intrexon Materials, and/or the Intrexon IP in the Field, subject
to any exclusive rights held by ZIOPHARM in Reverted Products pursuant to
Section 10.4(c).  ZIOPHARM shall also take such actions and execute such other
instruments and documents as may be necessary to document such license to
Intrexon.
 
(f)           Regulatory Filings.  ZIOPHARM shall promptly assign to Intrexon,
and will provide full copies of, all regulatory approvals and regulatory filings
that relate specifically and solely to Reverted Products.  ZIOPHARM shall also
take such actions and execute such other instruments, assignments and documents
as may be necessary to effect the transfer of rights thereunder to Intrexon.  To
the extent that there exist any regulatory approvals and regulatory filings that
relate both to Reverted Products and other products, ZIOPHARM shall provide
copies of the portions of such regulatory filings that relate to Reverted
Products and shall reasonably cooperate to assist Intrexon in obtaining the
benefits of such regulatory approvals with respect to the Reverted Products.

 
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(g)          Data Disclosure.  ZIOPHARM shall provide to Intrexon copies of the
relevant portions of all material reports and data, including clinical and
non-clinical data and reports, obtained or generated by or on behalf of ZIOPHARM
or its Affiliates to the extent that they relate to Reverted Products, within
sixty (60) days of such termination unless otherwise agreed, and Intrexon shall
have the right to use any such Information in developing and commercializing
Reverted Products and to license any Third Parties to do so.
 
(h)          Third-Party Licenses.  At Intrexon’s request, ZIOPHARM shall
promptly provide to Intrexon copies of all Third-Party agreements under which
ZIOPHARM or its Affiliates obtained a license under Patents claiming inventions
or know-how specific to or used or incorporated into the development,
manufacture and/or commercialization of the Reverted Products.  At Intrexon’s
request, ZIOPHARM shall promptly:  (x) with respect to such Third Party licenses
relating solely to the applicable Reverted Products, immediately assign (or
cause to be assigned), such agreements to Intrexon, and (y) with respect to all
other Third Party licenses, at ZIOPHARM’s option either assign the agreement or
grant (or cause to be granted) to Intrexon a sublicense thereunder of a scope
equivalent to that described in Section 10.4(e), provided ZIOPHARM has the
ability to assign such agreement to Intrexon or grant a sublicense to Intrexon
thereunder.  In any case, thereafter Intrexon shall be fully responsible for all
obligations due for its actions under the Third Party
agreements.  Notwithstanding the above, if Intrexon does not wish to assume any
financial or other obligations associated with a particular assignment or
sublicense, then Intrexon shall so notify ZIOPHARM and ZIOPHARM shall not make
such assignment or grant such sublicense (or cause it to be made or granted).
 
(i)           Remaining Materials.  At the request of Intrexon, ZIOPHARM shall
transfer to Intrexon, all quantities of Reverted Product (including API or
work-in-process) in the possession of ZIOPHARM or its Affiliates.  ZIOPHARM
shall transfer to Intrexon all such quantities of Reverted Products without
charge, except that Intrexon shall pay the reasonable costs of shipping.
 
(j)           Third Party Vendors.  At Intrexon’s request, ZIOPHARM shall
promptly provide to Intrexon copies of all agreements between ZIOPHARM or its
Affiliates and Third Party suppliers, vendors, or distributors that relate to
the supply, sale, or distribution of Reverted Products in the Territory.  At
Intrexon’s request, ZIOPHARM shall promptly:  (x) with respect to such Third
Party agreements relating solely to the applicable Reverted Products,
immediately assign (or cause to be assigned), such agreements to Intrexon, and
(y) with respect to all other such Third Party agreements, ZIOPHARM shall
reasonably cooperate to assist Intrexon in obtaining the benefits of such
agreements.  ZIOPHARM shall be liable for any costs associated with assigning a
Third Party agreement to Intrexon or otherwise obtaining the benefits of such
agreement for Intrexon, to the extent such costs are directly related to
ZIOPHARM’s breach.  For the avoidance of doubt, Intrexon shall have no
obligation to assume any of ZIOPHARM’s obligations under any Third Party
agreement.
 
(k)         Commercialization.  Intrexon shall have the right to develop and
commercialize the Reverted Products itself or with one or more Third Parties,
and shall have the right, without obligation to ZIOPHARM, to take any such
actions in connection with such activities as Intrexon (or its designee), at its
discretion, deems appropriate.

 
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(l)           Confidential Information.  Each Party shall promptly return, or at
the other Party’s request destroy, any Confidential Information of the other
Party in such Party’s possession or control at the time of termination;
provided, however, that each Party shall be permitted to retain (i) a single
copy of each item of Confidential Information of the other Party in its
confidential legal files for the sole purpose of monitoring and enforcing its
compliance with Article 7, (ii) Confidential Information of the other Party that
is maintained as archive copies on the recipient Party’s disaster recovery
and/or information technology backup systems, or (iii) Confidential Information
of the other Party necessary to exercise such Party’s rights in Retained
Products (in the case of ZIOPHARM) or Reverted Products (in the case of
Intrexon). The recipient of Confidential Information shall continue to be bound
by the terms and conditions of this Agreement with respect to any such
Confidential Information retained in accordance with this Section 10.4(l).
 
10.5        Surviving Obligations.  Termination or expiration of this Agreement
shall not affect any rights of either Party arising out of any event or
occurrence prior to termination, including, without limitation, any obligation
of ZIOPHARM to pay any amount which became due and payable under the terms and
conditions of this Agreement prior to expiration or such termination.  The
following portions of this Agreement shall survive termination or expiration of
this Agreement:  Sections 5.5, 5.7, 6.1, 6.2 (with subsection (c) surviving only
to the extent relating to Intrexon Patents that are relevant to Retained
Products that, to Intrexon’s knowledge, are being developed or commercialized at
such time, if any), 10.4, and 10.5; Articles 7, 9, 11, and 12; and any relevant
definitions in Article 1.
 
ARTICLE 11
 
Dispute Resolution
 
11.1        Disputes.  It is the objective of the Parties to establish
procedures to facilitate the resolution of disputes arising under this Agreement
in an expedient manner by mutual cooperation and without resort to
litigation.  In the event of any disputes, controversies or differences which
may arise between the Parties out of or in relation to or in connection with
this Agreement (other than disputes arising from a Committee), including,
without limitation, any alleged failure to perform, or breach, of this
Agreement, or any issue relating to the interpretation or application of this
Agreement, then upon the request of either Party by written notice, the Parties
agree to meet and discuss in good faith a possible resolution thereof, which
good faith efforts shall include at least one in-person meeting between the
Executive Officers of each Party.  If the matter is not resolved within thirty
(30) days following the written request for discussions, either Party may then
invoke the provisions of Section 11.2.  For the avoidance of doubt, any
disputes, controversies or differences arising from a Committee pursuant to
Article 2 shall be resolved solely in accordance with Section 2.4.

 
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11.2        Arbitration.  Any dispute, controversy, difference or claim which
may arise between the Parties and not from a Committee, out of or in relation to
or in connection with this Agreement (including, without limitation, arising out
of or relating to the validity, construction, interpretation, enforceability,
breach, performance, application or termination of this Agreement) that is not
resolved pursuant to Section 11.1 shall, subject to Section 11.10, be settled by
binding “baseball arbitration” as follows.  Either Party, following the end of
the thirty (30) day period referenced in Section 11.1, may refer such issue to
arbitration by submitting a written notice of such request to the other
Party.  Promptly following receipt of such notice, the Parties shall meet and
discuss in good faith and seek to agree on an arbitrator to resolve the issue,
which arbitrator shall be neutral and independent of both Parties and all of
their respective Affiliates, shall have significant experience and expertise in
licensing and partnering agreements in the pharmaceutical and biotechnology
industries, and shall have some experience in mediating or arbitrating issues
relating to such agreements.  If the Parties cannot agree on a single arbitrator
within fifteen (15) days of request by a Party for arbitration, then each Party
shall select an arbitrator meeting the foregoing criteria and the two (2)
arbitrators so selected shall select a third arbitrator meeting the foregoing
criteria.  Within fifteen (15) days after an arbitrator(s) is selected (in the
case of the three-person panel, when the third arbitrator is selected), each
Party will deliver to both the arbitrator(s) and the other Party a detailed
written proposal setting forth its proposed terms for the resolution for the
matter at issue (the “Proposed Terms” of the Party) and a memorandum (the
“Support Memorandum”) in support thereof.  The Parties will also provide the
arbitrator(s) a copy of this Agreement, as it may be amended at such
time.  Within fifteen (15) days after receipt of the other Party’s Proposed
Terms and Support Memorandum, each Party may submit to the arbitrator(s) (with a
copy to the other Party) a response to the other Party’s Support
Memorandum.  Neither Party may have any other communications (either written or
oral) with the arbitrator(s) other than for the sole purpose of engaging the
arbitrator or as expressly permitted in this Section 11.2; provided that, the
arbitrator(s) may convene a hearing if the arbitrator(s) so chooses to ask
questions of the Parties and hear oral argument and discussion regarding each
Party’s Proposed Terms.  Within sixty (60) days after the arbitrator’s
appointment, the arbitrator(s) will select one of the two Proposed Terms
(without modification) provided by the Parties that he or she believes is most
consistent with the intention underlying and agreed principles set forth in this
Agreement.  The decision of the arbitrator(s) shall be final, binding, and
unappealable.  For clarity, the arbitrator(s) must select as the only method to
resolve the matter at issue one of the two sets of Proposed Terms, and may not
combine elements of both Proposed Terms or award any other relief or take any
other action.
 
11.3        Governing Law.  This Agreement shall be governed by and construed
under the substantive laws of the State of New York, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.
 
11.4        Award.  Any award to be paid by one Party to the other Party as
determined by the arbitrator(s) as set forth above under Section 11.2 shall be
promptly paid in United States dollars free of any tax, deduction or offset; and
any costs, fees or taxes incident to enforcing the award shall, to the maximum
extent permitted by law, be charged against the losing Party.  Each Party agrees
to abide by the award rendered in any arbitration conducted pursuant to this
Article 11, and agrees that, subject to the United States Federal Arbitration
Act, 9 U.S.C. §§ 1-16, judgment may be entered upon the final award in any
United States District Court located in New York and that other courts may award
full faith and credit to such judgment in order to enforce such award.  The
award shall include interest from the date of any damages incurred for breach of
the Agreement, and from the date of the award until paid in full, at a rate
fixed by the arbitrator(s).  With respect to money damages, nothing contained
herein shall be construed to permit the arbitrator(s) or any court or any other
forum to award consequential, incidental, special, punitive or exemplary
damages.  By entering into this agreement to arbitrate, the Parties expressly
waive any claim for consequential, incidental, special, punitive or exemplary
damages.  The only damages recoverable under this Agreement are direct
compensatory damages.

 
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11.5        Costs.  Each Party shall bear its own legal fees.  The arbitrator(s)
shall assess his or her costs, fees and expenses against the Party losing the
arbitration.
 
11.6        Injunctive Relief.  Nothing in this Article 11 will preclude either
Party from seeking equitable relief or interim or provisional relief from a
court of competent jurisdiction, including a temporary restraining order,
preliminary injunction or other interim equitable relief, concerning a dispute
either prior to or during any arbitration if necessary to protect the interests
of such Party or to preserve the status quo pending the arbitration
proceeding.  Specifically, the Parties agree that a material breach by either
Party of its obligations in 3.4 of this Agreement may cause irreparable harm to
the other Party, for which damages may not be an adequate remedy.  Therefore, in
addition to its rights and remedies otherwise available at law, including,
without limitation, the recovery of damages for breach of this Agreement, upon
an adequate showing of material breach of such Section 3.4, and without further
proof of irreparable harm other than this acknowledgement, such non-breaching
Party shall be entitled to seek (a) immediate equitable relief, specifically
including, but not limited to, both interim and permanent restraining orders and
injunctions, and (b) such other and further equitable relief as the court may
deem proper under the circumstances.  For the avoidance of doubt, nothing in
this Section 11.6 shall otherwise limit a breaching Party’s opportunity to cure
a material breach as permitted in accordance with Section 10.2.
 
11.7        Confidentiality.  The arbitration proceeding shall be confidential
and the arbitrator(s) shall issue appropriate protective orders to safeguard
each Party’s Confidential Information.  Except as required by law, no Party
shall make (or instruct the arbitrator(s) to make) any public announcement with
respect to the proceedings or decision of the arbitrator(s) without prior
written consent of the other Party.  The existence of any dispute submitted to
arbitration, and the award, shall be kept in confidence by the Parties and the
arbitrator(s), except as required in connection with the enforcement of such
award or as otherwise required by applicable law.
 
11.8        Survivability.  Any duty to arbitrate under this Agreement shall
remain in effect and be enforceable after termination of this Agreement for any
reason.
 
11.9        Jurisdiction.  For the purposes of this Article 11, the Parties
acknowledge their diversity and agree to accept the jurisdiction of any United
States District Court located in New York for the purposes of enforcing or
appealing any awards entered pursuant to this Article 11 and for enforcing the
agreements reflected in this Article 11 and agree not to commence any action,
suit or proceeding related thereto except in such courts.
 
11.10     Patent Disputes.  Notwithstanding any other provisions of this Article
11, and subject to the provisions of Section 6.2, any dispute, controversy or
claim relating to the scope, validity, enforceability or infringement of any
Intrexon Patents shall be submitted to a court of competent jurisdiction in the
country in which such Patent was filed or granted.

 
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ARTICLE 12
 
General Provisions
 
12.1        Use of Name.  No right, express or implied, is granted by this
Agreement to either Party to use in any manner the name of the other or any
other trade name or trademark of the other in connection with the performance of
this Agreement.
 
12.2        LIMITATION OF LIABILITY.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES
ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY
NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING,
NOTHING IN THIS PARAGRAPH IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION
RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER ARTICLE 9, OR DAMAGES AVAILABLE FOR
BREACHES OF THE OBLIGATIONS SET FORTH IN ARTICLE 7.
 
12.3        Independent Parties.  The Parties are not employees or legal
representatives of the other Party for any purpose.  Neither Party shall have
the authority to enter into any contracts in the name of or on behalf of the
other Party.  This Agreement shall not constitute, create, or in any way be
interpreted as a joint venture, partnership, or business organization of any
kind.
 
12.4        Notice.  All notices, including notices of address change, required
or permitted to be given under this Agreement shall be in writing and deemed to
have been given when delivered if personally delivered or sent by facsimile
(provided that the party providing such notice promptly confirms receipt of such
transmission with the other party by telephone), on the business day after
dispatch if sent by a nationally-recognized overnight courier and on the third
business day following the date of mailing if sent by certified mail, postage
prepaid, return receipt requested. All such communications shall be sent to the
address or facsimile number set forth below (or any updated addresses or
facsimile number communicated to the other Party in writing):
 
If to Intrexon:
Intrexon Corporation
20358 Seneca Meadows Parkway
Germantown, MD  20876
Attention:  Legal Department
Fax:  (301) 556-9902
   
with a copy to:
Cooley LLP
3175 Hanover St.
Palo Alto, CA  94304
Attention:  Robert Jones
Fax:  (650) 849-7400

 
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If to ZIOPHARM:
ZIOPHARM Oncology, Inc.
One First Avenue
Parris Building, 34
Navy Yard Plaza
Boston, MA 02129
Attention:  Chief Executive Officer
Fax:  (617) 241-2855
   
with a copy to:
WilmerHale
60 State Street
Boston, MA  02109
Attention:  Stuart Falber
Fax:  (617) 526-5000

 
12.5        Severability.  In the event any provision of this Agreement is held
to be invalid or unenforceable, the valid or enforceable portion thereof and the
remaining provisions of this Agreement will remain in full force and effect.
 
12.6        Waiver.  Any waiver (express or implied) by either Party of any
breach of this Agreement shall not constitute a waiver of any other or
subsequent breach.
 
12.7        Entire Agreement; Amendment.  This Agreement and the exhibits
attached hereto constitute the entire, final, complete and exclusive agreement
between the Parties and supersede all previous agreements or representations,
written or oral, with respect to the subject matter of this Agreement (including
any prior confidentiality agreement between the Parties).  All information of
Intrexon or ZIOPHARM to be kept confidential by the other Party under any prior
confidentiality agreement, as of the Effective Date, shall be maintained as
Confidential Information by such other Party under the obligations set forth in
Article 7 of this Agreement.  This Agreement may not be modified or amended
except in a writing signed by a duly authorized representative of each Party.
 
12.8        Nonassignability; Binding on Successors.  Any attempted assignment
of the rights or delegation of the obligations under this Agreement shall be
void without the prior written consent of the nonassigning or nondelegating
Party; provided, however, that either Party  may assign its rights or delegate
its obligations under this Agreement without such consent (a) to an Affiliate of
such Party or (b) to its successor in interest in connection with any merger,
acquisition, consolidation, corporate reorganization, or similar transaction, or
sale of all or substantially all of its assets, provided that such assignee
agrees in writing to assume and be bound by the assignor’s obligations under
this Agreement.  This Agreement shall be binding upon, and inure to the benefit
of, the successors, executors, heirs, representatives, administrators and
permitted assigns of the Parties hereto.  Notwithstanding the foregoing, in the
event that either Party assigns this Agreement to its successor in interest by
way of merger, acquisition, or sale of all or substantially all of its assets
(whether this Agreement is actually assigned or is assumed by such successor in
interest or its affiliate by operation of law (e.g., in the context of a reverse
triangular merger)), (a) the intellectual property rights of such successor in
interest or any of its affiliates shall be automatically excluded from the
rights licensed to the other Party under this Agreement, and (b) such successor
in interest may elect by written notice to have the restrictions set forth in
Section 3.4 not apply to the activities of such successor in interest (but, for
purposes of clarity, such restriction shall in any event continue to apply to
the applicable Party and all other Affiliates of such Party not related to such
successor in interest).  In the event that a successor in interest to ZIOPHARM
elects to have the restrictions set forth in Section 3.4 not apply to the
activities of such successor in interest, Intrexon shall have the termination
right set forth in Section 10.2(c).

 
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12.9        Force Majeure.  Neither Party shall be liable to the other for its
failure to perform any of its obligations under this Agreement, except for
payment obligations, during any period in which such performance is delayed
because rendered impracticable or impossible due to circumstances beyond its
reasonable control, including without limitation earthquakes, governmental
regulation, fire, flood, labor difficulties, civil disorder, acts of terrorism
and acts of God, provided that the Party experiencing the delay promptly
notifies the other Party of the delay.
 
12.10     No Other Licenses.  Neither Party grants to the other Party any rights
or licenses in or to any intellectual property, whether by implication,
estoppel, or otherwise, except to the extent expressly provided for under this
Agreement.
 
12.11     Legal Compliance.  The Parties shall review in good faith and
cooperate in taking such actions to ensure compliance of this Agreement with all
applicable laws.
 
12.12     Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute together the same instrument.
 
[Remainder of page intentionally left blank.]

 
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In Witness Whereof, the Parties hereto have duly executed this Exclusive Channel
Partner Agreement.
 
Intrexon Corporation
Ziopharm Oncology, Inc.
   
By:
/s/ Randal J. Kirk
 
By:
/S/ Jonathan Lewis
         
Name: 
Randal J. Kirk
 
Name: 
Jonathan Lewis
         
Title:
Chief Executive Officer
 
Title:
Chief Executive Officer

 
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EXHIBIT A
 
Financial Terms for Calculating Allowable Expenses
 
As used herein, the term “operating unit” shall mean the smallest operating unit
in which an operating profit and loss statement is prepared for management
accounting purposes in the applicable Party’s normal accounting procedures,
consistently applied within and across its operating units.  To the extent
certain cost or expense items below are incurred with respect to multiple
products and some of such products are not ZIOPHARM Products, then such cost or
expense items shall be allocated on a pro rata basis based upon net sales of
each respective product by the applicable operating unit during the most recent
quarter.
 
1.           Cost of Goods Sold
 
“Cost of Goods Sold” means all Manufacturing Costs that are directly and
reasonably attributable to manufacturing of ZIOPHARM Product for commercial sale
in the countries where such ZIOPHARM Product has been launched.
 
1.1          “Manufacturing Costs” means, with respect to ZIOPHARM Products, the
FTE costs (under a reasonable accounting mechanism to be agreed upon by the
Parties and out-of-pocket costs of a Party or any of its Affiliates incurred in
manufacturing such ZIOPHARM Products, including costs and expenses incurred in
connection with (1) the development or validation of any manufacturing process,
formulations or delivery systems, or improvements to the foregoing; (2)
manufacturing scale-up; (3) in-process testing, stability testing and release
testing; (4) quality assurance/quality control development; (5) internal and
Third Party costs and expenses incurred in connection with qualification and
validation of Third Party contract manufacturers, including scale up, process
and equipment validation, and initial manufacturing licenses, approvals and
inspections; (6) packaging development and final packaging and labeling; (7)
shipping configurations and shipping studies; and (8) overseeing the conduct of
any of the foregoing.  “Manufacturing Costs” shall further include:
 
(a)           to the extent that any such ZIOPHARM Product is Manufactured by a
Third Party manufacturer, the out-of-pocket costs incurred by such Party or any
of its Affiliates to the Third Party for the manufacture and supply (including
packaging and labeling) thereof, and any reasonable out-of-pocket costs and
direct labor costs incurred by such Party or any of its Affiliates in managing
or overseeing the Third Party relationship determined in accordance with the
books and records of such Party or its Affiliates maintained in accordance with
US GAAP; and
 
(b)           to the extent that any such ZIOPHARM Product is manufactured by
such Party or any of its Affiliates, direct material and direct labor costs
attributable to such ZIOPHARM Product, as well as reasonably allocable overhead
expenses, determined in accordance with the books and records of such Party or
its Affiliates maintained in accordance with US GAAP.

 

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2.           Marketing Expenses.
 
“Marketing Expenses” means the sum of Selling Expenses, Marketing Management
Expenses, Market and Consumer Research Expenses, Advertising Expenses, Trade
Promotion Expenses, and Consumer Promotion Expenses, each of which is specified
below, in each case to the extent directly and reasonably attributable to the
sale, promotion or marketing of the applicable ZIOPHARM Products in the
countries where such ZIOPHARM Product has been launched.
 
2.1           “Selling Expenses” shall mean all reasonable costs and expenses
directly associated with the efforts of field sales representatives with respect
to ZIOPHARM Products in the Territory.  The costs of detailing sales calls shall
be allocated based on field force time at an accounting charge rate reasonably
and consistently applied within and across its operating units and which is no
less favorable to the ZIOPHARM Products than the internal charge rate used by
ZIOPHARM for its own internal cost accounting purposes for products other than
ZIOPHARM Products (excluding internal profit margins and markups).
 
2.2           “Marketing Management Expenses” means all reasonable product
management and sales promotion management compensation (including customary
bonuses and benefits but excluding stock-based compensation) and departmental
expenses, including product related public relations, relationships with opinion
leaders and professional societies, health care economics studies, contract
pricing and administration, market information systems, governmental affairs
activities for reimbursement, formulary acceptance and other activities directly
related to the ZIOPHARM Products in the Territory, management and administration
of managed care and national accounts and other activities associated with
developing overall sales and marketing strategies and planning for ZIOPHARM
Products in the Territory.
 
2.3           “Market and Consumer Research Expenses” means all reasonable
compensation (including customary bonuses and benefits but excluding stock-based
compensation) and departmental expenses for market and consumer research
personnel and payments to Third Parties related to and to the extent use for
conducting and monitoring professional and consumer appraisals of existing, new
or proposed ZIOPHARM Products in the Territory such as market share services
(e.g., IMS data), special research testing and focus groups.
 
2.4           “Advertising Expenses” shall mean all reasonable costs reasonably
incurred for the advertising and promotion of ZIOPHARM Products in the
Territory.
 
2.5           “Trade Promotion Expenses” means the actual and reasonable
allowances given to retailers, brokers, distributors, hospital buying groups,
etc. for purchasing, promoting, and distribution of ZIOPHARM Products in the
Territory.  This shall include purchasing, advertising, new distribution, and
display allowances as well as free goods, wholesale allowances and reasonable
field sales samples (at the out of pocket cost).
 
2.6           “Consumer Promotion Expenses” means all reasonable expenses
associated with programs to promote ZIOPHARM Products directly to the end user
in the Territory.  This category shall include expenses associated with
promoting products directly to the professional community such as professional
samples, professional literature, promotional material costs, patient aids and
detailing aids.

 

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3.           Distribution Expenses.
 
“Distribution Expenses” means the reasonable costs, excluding overhead, incurred
by ZIOPHARM that are directly and reasonably allocable to the distribution of a
ZIOPHARM Product with respect to a particular country where such ZIOPHARM
Product has been launched, excluding any costs included as a deduction in
calculating Net Sales.
 
4.           Additional Commercialization Expenses.
 
“Additional Commercialization Expenses” means the sum of Regulatory and Related
Costs, Third Party Blocking IP Costs, Patent and Trademark Costs, Product
Liability Costs, and Additional Approved Expenses, each of which is specified
below, in each case to the extent directly and reasonably attributable to the
commercialization of the applicable ZIOPHARM Products.
 
4.1           “Regulatory and Related Costs” means all reasonable costs and
expenses associated with the preparation and filing of marketing and pricing
approval applications, and the maintenance of marketing approvals, for ZIOPHARM
Products, including (i) fees paid to regulatory authorities directly related to
NDAs and Marketing Approvals in the Field, (ii) costs of any regulatory
interactions with respect to ZIOPHARM Products, (iii) costs incurred in securing
reimbursement approvals from public and private payers, and (iv) costs to
establish and maintain a global safety database.
 
4.2           [*****].
 
4.3           “Patent and Trademark Costs” means all reasonable costs and
expenses incurred by ZIOPHARM or its Affiliates in connection with (i) the
preparation, filing, prosecution, maintenance and enforcement of ZIOPHARM
Program Patents, and (ii) establishing, maintaining and enforcing the Patents
and trademarks for ZIOPHARM Products in the Territory.
 
4.4           “Product Liability Costs” means the reasonable costs associated
with (i) any recall in the Territory, including the cost of any investigations
or corrective actions, (ii) any Excess Product Liability Costs, and (iii)
product liability insurance premiums for policies covering the development,
manufacture or Commercialization of ZIOPHARM Products (as described in Section
9.5).
 
4.5           “Additional Approved Expenses” means any additional costs and/or
expenses that are incurred in connection with the commercialization of ZIOPHARM
Products and that are approved in advance, in writing, by the Intrexon
representatives on the CC.
 
5.           Post-Launch Product R&D Expenses.
 
“Post-Launch Product R&D Expenses” means the reasonable costs, excluding
administrative expenses and costs that are included within Costs of Goods Sold,
of Phase 4 clinical trials and ongoing product support (including manufacturing
and quality assurance technical support, and laboratory and clinical efforts
directed toward the further understanding of product safety and efficacy) and
medical affairs (including regulatory support necessary for product
maintenance), in each case that are (a) specifically attributable to a ZIOPHARM
Product in the countries of the Territory where such ZIOPHARM Product has been
launched and (b) approved by both Parties in writing.

 

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6.           No Duplication.  No item of cost shall be duplicated in any of the
categories comprising Allowable Expenses or in the deductions permitted under
Net Sales or Sublicensing Revenue.

 

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EXHIBIT B
 
Press Release

[logo.jpg]
[logo1.jpg]

ZIOPHARM Oncology and Intrexon Announce Worldwide Partnership for
Synthetic Biology DNA-based Oncology Therapeutics

RJ Kirk, CEO and Chairman of Intrexon, to Join ZIOPHARM Board of Directors

NEW YORK, NY and GERMANTOWN, MD (January 6, 2011) – ZIOPHARM Oncology, Inc.
(Nasdaq: ZIOP), a small molecule late-stage oncology drug development company,
and Intrexon Corporation, a next generation synthetic biology company, announced
today a global exclusive channel partnership in oncology where ZIOPHARM will
develop and commercialize DNA-based therapeutics using Intrexon’s UltraVector®
Technology. Under the partnership, ZIOPHARM will utilize Intrexon’s advanced
transgene engineering platform for the controlled and precise cellular
production of anti-cancer effectors. ZIOPHARM will have rights to Intrexon’s
entire human in vivo effector platform within the field of oncology which
includes two lead clinical-stage product candidates, one which is in an advanced
phase I study and another which will be the subject of an Investigational New
Drug (“IND”) filing during the first half of 2011. Ziopharm and Intrexon will
host a conference call and audio webcast today, Thursday, January 6th at 5:00
p.m. ET to discuss the global exclusive channel partnership.

Intrexon employs its modular genetic engineering platform in the areas of
therapeutics, protein production, industrial, and agriculture products. The
exclusive channel partnership between Intrexon and ZIOPHARM has been established
specifically for the field of human oncologic therapeutics. Under the
partnership, Intrexon remains responsible for technology discovery efforts and
managing the patent estate as well as for certain aspects of manufacturing.
ZIOPHARM will be responsible for conducting preclinical and clinical development
of candidates, as well as for other aspects of manufacturing and the
commercialization of the candidates.

Intrexon’s core synthetic biology technology is designed to create Better DNA™
at industrial scale, enabling unprecedented control over the function and output
of living cells by providing external control over in vivo activation and
regulation of potent effectors. This platform, called UltraVector®, provides
speed, flexibility, consistency and precision to the design, production and
testing of rationally designed complex transgenes and their encoded genetic
circuits.  These qualities allow an iterative and rational approach to transgene
design, which can be continually engineered until their performance is
optimized. Through this process, Intrexon is able to overcome the challenges
inherent in current therapeutic strategies, including recombinant protein
therapies and constitutive gene therapies, thereby enhancing capabilities,
improving safety and lowering cost for human therapeutics. The lead oncology
product candidate developed using Intrexon’s technologies is currently in Phase
Ib clinical study for metastatic melanoma. ZIOPHARM expects to submit an
Investigational New Drug (IND) application with U.S. Food and Drug
Administration for a second oncology product candidate in the first half of this
year.

 

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“Controllable, scalable synthetic biology, the tightly regulated delivery of
therapeutic proteins from within the body, is an aspirational and disruptive
technology which Intrexon has brought from scientific theory to medical
application,” said Jonathan Lewis, M.D., Ph.D., Chief Executive Officer and
Chief Medical Officer of ZIOPHARM. “As the sole channel partner for in vivo
therapeutic candidates for human oncology, ZIOPHARM plans to leverage this
technology for next-generation products targeting key pathways used by cancers
to grow and metastasize.  Intrexon has developed a technology that is uniquely
flexible, scalable and controllable, adding significantly to our small molecule
drug development capabilities and our ability to translate science to the
patient using our world-class global team.”

“We are very pleased to collaborate with ZIOPHARM, which, under the leadership
of Jonathan Lewis, is building an industry leading oncology company with a
strategic vision regarding cancer medicine. ZIOPHARM’s oncology expertise,
development capabilities, as well as its excellent reputation within the
oncology community make ZIOPHARM an exceptional investment for Intrexon and
ideal partner to rapidly achieve the full therapeutic benefit and commercial
potential of Intrexon’s disruptive technologies,” stated RJ Kirk, Intrexon’s
Chairman and CEO. “This collaboration leverages the capabilities and strengths
of each partner and has the potential to create significant value for
shareholders.”

Under terms of the agreement:
 
·
Intrexon will purchase 2,422,542 shares of ZIOPHARM ‘s common stock
(representing 5% of ZIOPHARM’s currently outstanding shares) in a private
placement for a total purchase price of $11,464,438, or $4.7324 per share, which
is the trailing 10-day volume-weighted average price per share of ZIOPHARM’s
common stock;

 
·
ZIOPHARM will simultaneously issue to Intrexon for no additional consideration
an additional 3,631,391 shares  of its common stock, representing 7.495% of
ZIOPHARM’s currently outstanding shares; ZIOPHARM has agreed to issue to
Intrexon additional shares of its common stock for no additional consideration,
representing an additional 7.495% under certain conditions upon dosing of the
first patient in a ZIOPHARM-conducted U.S. Phase II clinical trial of a product
candidate created, produced or developed by ZIOPHARM using Intrexon technology;

 
·
Intrexon has agreed to purchase up to $50 million in conjunction with securities
offerings that may be conducted by ZIOPHARM in the future, subject to certain
conditions and limitations;

 
·
Subject to certain expense allocations, ZIOPHARM will pay Intrexon 50% of the
cumulative net quarterly profits derived from the sale of products developed
from the channel partnership.

 

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Pursuant to the agreement, Mr. Kirk has agreed to join the ZIOPHARM board of
directors. In addition to his responsibilities at Intrexon, Mr. Kirk has served,
since March 1999, as Senior Managing Director and Chief Executive Officer of
Third Security, LLC, an investment management firm founded by Mr. Kirk.
Additionally, Mr. Kirk founded and became Chairman of the Board of New River
Pharmaceuticals Inc. in 1996, and was President and Chief Executive Officer
between October 2001 and April 2007. New River was acquired by Shire plc in
2007.  Mr. Kirk also currently serves as a member of the Board of Directors of
Halozyme Therapeutics, Inc. (Nasdaq: HALO), and as Chairman of the Board for
Clinical Data, Inc. (Nasdaq: CLDA). Previously, Mr. Kirk served as a member of
the Board of Directors of Scios, Inc. (acquired by Johnson & Johnson) between
February 2000 and May 2002. Mr. Kirk served on the Board of Visitors of Radford
University from July 2003 to June 2009, was Rector of the Board from September
2006 to September 2008, and has served on the Board of Directors of the Radford
University Foundation, Inc. since September 1998. He has served on the Board of
Visitors of the University of Virginia and Affiliated Schools since July 2009,
on the Virginia Advisory Council on Revenue Estimates since July 2006, on the
Governor’s Economic Development and Jobs Creation Commission since April 2010,
and served as a member of the Board of Directors of the Virginia University
Research Partnership from July 2007 to November 2010. Mr. Kirk received a B.A.
in Business from Radford University and a J.D. from the University of Virginia.

Regarding Mr. Kirk’s appointment, Dr. Lewis added: “RJ is a visionary and a
winner with a long record of success and value creation in the life sciences.
His addition to the ZIOPHARM Board of Directors will be invaluable, and we look
forward to his many contributions in this role.”

Griffin Securities, Inc. acted as an advisor to Intrexon on this transaction.

Conference Call and Webcast January 6, 2011 at 5pm ET

ZIOPHARM and Intrexon will host a conference call and live audio webcast on
January 6, 2011 at 5:00pm ET to discuss their global exclusive channel
partnership. The call can be accessed by dialing (877) 375-9144 (U.S. and
Canada) or (253) 237-1150 (international).  The passcode for the conference call
is ‘ZIOPHARM.’ To access the live audio webcast, or the subsequent archived
recording, visit the "Investors - Events & Presentations" section of the
ZIOPHARM website at www.ziopharm.com. The webcast will be recorded and available
for replay on the company's website for two (2) weeks.

About ZIOPHARM Oncology, Inc.:

ZIOPHARM Oncology is a biopharmaceutical company engaged in the development and
commercialization of a diverse portfolio of cancer drugs. The Company is
currently focused on three clinical programs.

 

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Palifosfamide (ZymafosTM or ZIO-201) is a novel DNA cross-linker in class with
bendamustine, ifosfamide, and cyclophosphamide. ZIOPHARM is currently enrolling
patients in a randomized, double-blinded, placebo-controlled Phase III trial
with palifosfamide administered intravenously for the treatment of metastatic
soft tissue sarcoma in the front-line setting.  The Company is also currently
conducting a Phase I intravenous study of palifosfamide in combination with
standard of care addressing small cell lung cancer and expects to initiate an
additional study with drug in the oral form treating solid tumors.

Darinaparsin (ZinaparTM or ZIO-101) is a novel mitochondrial-targeted agent
(organic arsenic) being developed intravenously for the treatment of peripheral
T-cell lymphoma with a pivotal study expected to begin in late 2011. An oral
form is in a Phase I trial in solid tumors.

Indibulin (ZybulinTM or ZIO-301) is a novel, oral tubulin binding agent that is
expected to have several potential benefits including oral dosing, application
in multi-drug resistant tumors, no neuropathy and minimal overall toxicity. It
is currently being studied in Phase I/II in metastatic breast cancer.

ZIOPHARM's operations are located in Boston, MA with an executive office in New
York City. Further information about ZIOPHARM may be found at www.ziopharm.com.

ZIOP-G

About Intrexon Corporation:

Intrexon Corporation is a privately held synthetic biology company that employs
modular DNA control systems to enhance capabilities, improve safety and lower
cost in human therapeutics, protein production, industrial products and
agricultural biotechnology. The company’s advanced transgene engineering
platform enables Better DNA™ by combining breakthroughs in DNA control systems
with corresponding advancements in modular transgene design, assembly and
optimization. The company is currently using these advanced capabilities to
undertake foremost challenges across the spectrum for biological applications.
More information about the company is available at www.DNA.com.

 

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Forward-Looking Safe Harbor Statement:
This press release contains forward-looking statements for ZIOPHARM Oncology,
Inc. that involve risks and uncertainties that could cause ZIOPHARM Oncology’s
actual results to differ materially from the anticipated results and
expectations expressed in these forward-looking statements. These statements are
based on current expectations, forecasts and assumptions that are subject to
risks and uncertainties, which could cause actual outcomes and results to differ
materially from these statements. Among other things, there can be no assurance
that any of ZIOPHARM Oncology’s development efforts relating to its product
candidates will be successful, or such product candidates will be successfully
commercialized. Other risks that affect forward-looking information contained in
this press release include the possibility of being unable to obtain regulatory
approval of ZIOPHARM Oncology’s product candidates, the risk that the results of
clinical trials may not support ZIOPHARM Oncology’s claims, the risk that
pre-clinical or clinical trials will proceed on schedules that are consistent
with ZIOPHARM Oncology’s current expectations or at all, risks related to
ZIOPHARM Oncology’s ability to protect its intellectual property and its
reliance on third parties to develop its product candidates, risks related to
the sufficiency of existing capital reserves to fund continued operations for a
particular amount of time and uncertainties regarding ZIOPHARM Oncology’s
ability to obtain additional financing to support its operations thereafter, as
well as other risks regarding ZIOPHARM Oncology’s that are discussed under the
heading "Risk Factors" in ZIOPHARM Oncology’s filings with the United States
Securities and Exchange Commission. Forward-looking statements can be identified
by the use of words such as "may," "will," "intend," " should," "could," "can,"
"would," "expect," "believe," "estimate," " predict," "potential," "plan," "is
designed to," "target" and similar expressions. ZIOPHARM Oncology assumes no
obligation to update these forward-looking statements, except as required by
law.
 
Contacts:

For ZIOPHARM:
Tyler Cook
ZIOPHARM Oncology, Inc.
617-259-1982
tcook@ziopharm.com

Media:
David Pitts
Argot Partners
212-600-1902
david@argotpartners.com

For Intrexon:
Robert Beech
Intrexon Corporation
Phone: 301.556.9812
rbeech@intrexon.com

 

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