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ASSET ASSIGNMENT AGREEMENT

THIS AGREEMENT dated for reference the 27th day of December, 2009.

BETWEEN:

> > > > Dr Joseph Sinkule a resident of Scottsdale, Arizona and C- Virionics
> > > > Corporation. whose principle address is 42191 N. 111th Place,
> > > > Scottsdale, Arizona, 85262 (herein collectively the Assignor);

AND:

> > > > Cyplasin Biomedical Ltd. a corporation existing under the laws of the
> > > > State of Nevada whose principle place of business is located at Suite
> > > > 131, Advanced Technology Center, 9650-20th avenue., Edmonton, Alberta
> > > > Canada (herein called “Assignee) and where together the Assignee and the
> > > > Assignor are referred to as the "Parties"

WHEREAS:

A.     The Assignor carries on the business of developing therapeutic products
under a License identified as L-075-2004 14.07, L-232-2002 14.07, L-154-2004
8.05 (hereinafter the "License") from the Public Health Services of the National
Institute of Health (NIH) located in Bethesda, Maryland (the “Business”) and;

B.     The Assignor has agreed to assign all of its rights related to said
License and the Assignee has agreed to acquire and be bound by all conditions of
said License (attached as Appendix 1) and thereby does acquire the exclusive
world-wide rights to commercialize and further develop such Intellectual
Property under said License L-075-2004/0, on the terms and conditions herein
provided and;

C.     The Assignee has trademarks, proprietary knowledge and other related
information’s including but not limited to the technical, developmental and
commercialization data and information (for the Business) which the Parties have
agreed will also be assigned to and or otherwise acquired by the Assignor such
that going forward Dr. Sinkule will contribute all of his experience, personal
IP relative to hepatitis C product development, prior plans and strategies,
manufacturing agreements and assets related to the License and to Ribavirin and
interferon generic projects, other and related ongoing business development
activities, etc. as needed in order for us to make hepatitis C products and;

D.     Where the Assignor owes to the NIH an amount of $97,290.93 in back
royalty and other associated legal costs and whereby the Assignee hereby agrees
to pay this amount (partially completed) in exchange for assignment of the
License directly to the Assignee and further;

E.     The Assignee in order to further compensate the Assignor for the License
assignment will issue 3,680,000 common shares of Cyplasin Biomedical Ltd's to
the three shareholders of Virionics (3 million to Dr. Joseph Sinkule, 500,000 to
Dr. Jake Liang, and 180,000 to Robert Kennedy) at a value of US$0.17 per share
such that Articles D & E taken together are the Remuneration for said License
Assignment.

1.

DEFINED TERMS

        1.1

For the purposes of this Agreement, unless the context otherwise requires, the
following terms will have the respective meanings set out below and grammatical
variations of such terms will have corresponding meanings:

        (a)

“Business” means the business carried on by the Assignor as described in Recital
A of this Agreement; which shall include but not be limited to:

        (i)

all material samples, production materials,( including but not limited to the
cell lines), experimental records, accounting and other books and records, and
all other proprietary and technical information, correspondence, documents, lab
records & notes and material relating to the Business;

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  (ii)

all right, title, and interest of the Assignor in and to the Licensed Property
described in Appendix 1 attached hereto; and

        (iii)

all permits, licenses, consents, authorizations, and approvals pertaining to the
Business including without limitation those described in Appendix 2 NIH consent
to transfer and related Permits and Licenses attached hereto, to the extent such
permits licenses, consents, authorizations and approvals are transferable by the
execution of this Agreement.

  (b)

“Business Day” means any day which is not a Saturday, Sunday or statutory
holiday in British Columbia;

        (c)

“Closing” means the completion of the transactions contemplated in this
Agreement;

        (d)

“Closing Date” means December 31, 2009, or such other date as the Assignor and
the Assignee may mutually determine;

        (e)

“Contract” means any agreement, indenture, contract, lease, deed of trust,
license, option, instrument or other commitment, whether written or oral;

        (f)

“Encumbrance” means any encumbrance, lien, charge, hypothec, pledge, mortgage,
title retention agreement, security interest of any nature, adverse claim,
exception, reservation, easement, right of occupation, any matter capable of
registration against title, option, right of pre-emption, privilege or any
Contract to create any of the foregoing;

        (g)

“Environmental Laws” means all applicable federal, state, municipal and local
laws, statutes, ordinances, by-laws and regulations, and orders, directives and
decisions rendered by any ministry, department or administrative or regulatory
agency relating to the protection of the environment, occupational health and
safety or the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any Hazardous Substances;

        (h)

“Environmental Permits” means any licenses, permits, approvals, consents,
certificates, registrations and other authorizations under Environmental Laws
required for the operation of the Business;

        (i)

“Goodwill” means the goodwill of the Business, together with the exclusive right
of the Assignee to represent itself as carrying on the Business in continuation
of and in succession to the Assignor, and the right to the “Cyplasin” or any
other future to be determined name or any variation thereof as part of, or in
connection with the Business;

        (j)

“Hazardous Substances” means any pollutants, contaminants, chemical or
industrial toxic, or hazardous waste or substances;

        (k)

“Intellectual Property” means all registered and unregistered patents (issued or
pending, continuances and PCTs thereof), patent rights, trade or brand names,
business names, trade-marks, trade-mark registrations, copyrights, and
applications thereof; drawings, logos, designs, trade secrets, restrictive
covenants, processes, technology, registered user agreements, research data,
inventions, instruction manuals, formulae, and other industrial or intellectual
property respecting the Business, including, without limitation, the
intellectual property

        (l)

”Licenses” means all licenses, permits, approvals, consents, certificates,
registrations and authorizations (whether governmental, regulatory, or
otherwise) required for the conduct in the ordinary course of the operations of
the Business and the uses to which the Business Assets have been put;

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  (m)

“Losses” means, in respect of any matter, all claims, demands, proceedings,
losses, damages, liabilities, deficiencies, costs and expenses (including,
without limitation, all legal and other professional fees and disbursements,
interest, penalties and amounts paid in settlement) arising directly or
indirectly as a consequence of such matter and actually incurred by a party
entitled to be indemnified hereunder, net of (i) any tax adjustments, benefits,
savings or reductions to which such indemnified party is entitled resulting from
such matter, and (ii) any insurance proceeds, in either case to which such
indemnified party is entitled by virtue of such claims, demands, proceedings,
losses, damages, liabilities, deficiencies, costs and expenses;

          (n)

"NIH" means the National Institute of Health of Bethesda, Maryland which
collectively encompasses for this agreement the Public Health Service and the
Office of Technology Transfer thereof.

          (o)

“Permitted Encumbrances” means:

          (i)

liens for taxes, assessments, levies and other governmental charges either not
yet due and payable or due but for which notice of assessment has not been
given;

          (ii)

undetermined or inchoate liens, charges and privileges incidental to current
construction or current operations and statutory liens, charges, adverse claims,
security interests or encumbrances of any nature whatsoever claimed or held by
any governmental authority that have not at the time been filed or registered
against the title to the asset or served upon the Assignor pursuant to law or
that relate to obligations not due or delinquent;

          (iii)

assignments of insurance provided to landlords (or their mortgagees) pursuant to
the terms of any lease, and liens or rights reserved in any lease for rent or
for compliance with the terms of such lease; and

          (iv)

security given in the ordinary course of the Business to any public utility,
municipality or government or to any statutory or public authority in connection
with the operations of the Business, other than security for borrowed money;

          (p)

“Remuneration” means the aggregate sum payable by the Assignee to the Assignor
for the Business Assets which shall be comprised of a Cash Component and an
Equity Component consisting of common class A shares of the Assignee.

1.2

Currency. Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in United States funds.

    1.3

Sections and Headings. The division of this Agreement into Articles, sections
and subsections and the insertion of headings are for convenience of reference
only and will not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, section, subsection or
Schedule refers to the specified Article, section or subsection of or Schedule
to this Agreement.

    1.4

Number, Gender and Persons. In this Agreement, words importing the singular
number only will include the plural and vice versa, words importing gender will
include all genders and words importing persons will include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind whatsoever.

    1.5

Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided.

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1.6

Time of Essence. Time will be of the essence of this Agreement.

    1.7

Applicable Law. This Agreement will be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties will
be governed by, the laws of the State of Nevada the federal laws of the United
States of America applicable therein, and each party irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts of such
state and all courts competent to hear appeals there from and waives, so far as
is legally possible, its right to have any legal action relating to this
Agreement tried by a jury.

    1.8

Amendments and Waivers. No amendment or waiver of any provision of this
Agreement will be binding on either party unless consented to in writing by such
party. No waiver of any provision of this Agreement will constitute a waiver of
any other provision, nor will any waiver constitute a continuing waiver unless
otherwise provided.

    2.

ASSIGNMENT

    2.1

Subject to the terms and conditions of this Agreement, effective as at the
Closing Date the Assignor will assign and transfer to the Assignee and the
Assignee agrees to acquire from the Assignor, free and clear of all Encumbrances
except as may be otherwise specifically provided for herein as Permitted
Encumbrances, the Business as a going concern and related Business Assets, but
not including the Excluded Assets. The Assignee also agrees that it will comply
in total with all requirements as given and or defined within the NIH license
which shall include but not be limited to all owed payments, milestone payments
and any eventual royalty schedules and any termination effects thereof. Further
the Assignee shall comply with all due written reports and other such
requirements as to the product development of the technology therein.

    3.

PURCHASE PRICE AND ALLOCATION

    3.1

The Remuneration payable by the Assignee to the Assignor for the Business Assets
shall consist of $97,2190.93( the Cash Component) due to the NIH for previously
owed royalty payments and associated legal costs plus and Equity Component
consisting of 3,680,000 shares of the Assignee's class A common stock. On or
prior to the Closing Date, the Assignee and the Assignor shall enter into a form
of subscription agreement in regards to the Equity Component.

    4.

PAYMENT OF THE CASH COMPONENT

    4.1

The Cash Component will be paid in full by the issuance by the Assignee to the
NIH instalments to be completed on the Closing Date. The parties agree to treat
the payment of the Cash Component as an instalment under Section 453 of the
Internal Revenue Code

    5.

CLOSING, POSSESSION, AND NO ADJUSTMENTS

    5.1

The Closing will take place December 31st, 2009 at 5:00 p.m. local time, on the
Closing Date at the offices of Cyplasin Biomedical Ltd, Suite 131 Advanced
Technology Center, 9650-20th ave, Edmonton Alberta Canada T6N 1G1, or at such
other place, date, and time as may be mutually agreed upon by the parties
hereto.

    5.2

The Assignor will deliver possession of the Business Assets, free of any other
claim to possession and any tenancies, to the Assignee on the Closing Date.

    5.3

Provided that there has been no material misrepresentation on the part of the
parties to this agreement and all of their respective obligations under this
Agreement have been fulfilled, there will be no adjustment of the Purchase Price
for any reason whatsoever.

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6.

ASSUMPTION OF LIABILITY

      6.1

Subject to the provisions of this Agreement, the Assignor agrees to assume, pay,
satisfy, discharge, perform and fulfill, from and after the Closing Date, all
obligations and liabilities of the Assignor in respect of:

      (a)

assignment of Intellectual Property;

      (b)

all of the required licenses, permits, approvals, consents, registrations,
certificates and other authorizations described in Schedule 2 - Permits and
Licenses;

      (c)

the agreements entered into by the Assignor in the ordinary course of the
Business for the provision of services or goods to the Assignor; and

      7.

REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR

      7.1

The Assignor represents and warrants to the Assignee, with the intent that the
Assignee will rely thereon in entering into this Agreement and in concluding the
transactions contemplated hereby, as follows:

  (a)

the execution and delivery of this Agreement and the completion of the
transaction contemplated hereby have been duly and validly authorized by all
necessary limited liability company action on the part of the Assignor and this
Agreement constitutes a valid and binding obligation of the Assignor enforceable
against the Assignor in accordance with its terms; except as enforcement may be
limited by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction;

          (b)

except as will be remedied by the consents, approvals, releases, and discharges
described in this agreement and or attached hereto, neither the execution and
delivery of this Agreement nor the performance of the Assignor’s obligations
hereunder will:

          (i)

violate or constitute default under any order, decree, judgment, statute,
by-law, rule, regulation, or restriction applicable to the Assignor, the
Business or any of the Business Assets, or any contract, agreement, instrument,
covenant, mortgage, or security, to which the Assignor is a party or which are
binding upon the Assignor,

          (ii)

to the knowledge of the Assignor, result in any fees, duties, taxes,
assessments, penalties or other amounts becoming due or payable by the Assignee
under any tax legislation.

          (iii)

give rise to the creation or imposition of any Encumbrance on any of the related
Business Assets,

          (iv)

violate or constitute default under any license, permit, approval, consent or
authorization held by the Assignor or necessary to the operation of the
Business, or

          (v)

violate or trigger any liability on behalf of the Assignee pursuant to any
legislation governing the sale of assets in bulk by the Assignor.

          (c)

the Assignor owns and possesses and has good and marketable title to the
Business Assets free and clear of all Encumbrances of every kind and nature
whatsoever;

          (d)

to the knowledge of the Assignor, the Business Assets are in good working order
and in a functional state of repair and to the best of the knowledge of the
Assignor there are no latent defects thereto;

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  (e)

the Business Assets comprise all property and assets used by the Assignor in
connection with the Business;

        (f)

except for the NIH, the Assignor does not have any indebtedness which might by
operation of law or otherwise now or hereafter constitute an Encumbrance upon
any of the Business Assets;

        (g)

no person other than the Assignee has any written or oral agreement or option or
any right or privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement or option for the assignment or acquisition from the
Assignor of any of the Business Assets;

        (h)

except as otherwise provided herein, discloses all contracts, engagements, and
commitments, whether oral or written, relating to the Business or the Business
Assets including in particular contracts, engagements, and commitments:

  (i)

out of the ordinary course of Business,

  (ii)

respecting ownership of or title to any interest or claim in or to any real or
personal property making up the Business Assets,

        (iii)

respecting Intellectual Property;

        (iv)

respecting any agreement of guarantee, support, indemnification, assumption or
endorsement of, or any similar commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness
of any other person;

        (v)

any employment or consulting contracts or any other contract with any officer,
employee or consultant, other than oral contracts of indefinite hire terminable
by the Assignor without cause on reasonable notice;

        (vi)

any trust indenture, mortgage, promissory note, loan agreement, guarantee or
other contracts for the borrowing of money or a leasing transaction of the type
required to be capitalized using the License as collateral in accordance with
generally accepted accounting principles;

        (vii)

any confidentiality, secrecy or non-disclosure contract, (whether the Assignor
is a beneficiary or obliging there under) relating to any proprietary or
confidential information or any non-competition or similar contract;.

        (viii)

there are no material contracts that create any default in any obligation or
liability in respect of said contracts, engagements, or commitments by the
Assignor and the Assignor has performed all of the material obligations required
to be performed by it and is entitled to all benefits under the License;

        (ix)

there has not been any undisclosed amendment, modification, variation,
surrender, or release of said License and

  (i)

all material Licenses required for the conduct in the ordinary course of the
operations of the Business and the uses to which the Business Assets have been
put have been obtained and are in good standing and such conduct and uses are in
compliance in all material respects with such licenses and permits and with all
laws, zoning and other bylaws, building and other restrictions, rules,
regulations, and ordinances applicable to the Business and the Business Assets
and neither the execution and delivery of this Agreement nor the completion of
the assignment hereby contemplated will give any person the right to terminate
or cancel the said licenses or permits or affect such compliance;

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  (j)

except as disclosed in Legal and Regulatory Proceedings, there are no actions,
suits, proceedings, investigations, complaints, orders, directives, or notices
of defect or noncompliance by or before any court, governmental or domestic
commission, department, board, tribunal, or authority, or administrative,
licensing, or regulatory agency, body, or officer issued, pending, or to the
best of the Assignor’s knowledge threatened against or affecting the Assignor or
in respect of the Business or any of the Business Assets;

        (k)

Other then with the NIH there is no requirement applicable to the Assignor to
make any filing with, give any notice to or to obtain any license, permit,
certificate, registration, authorization, consent or approval of, any
governmental or regulatory authority as a condition to the lawful consummation
of the transactions contemplated by this Agreement, except for the filings,
notifications, licenses, permits, certificates, registrations, consents and
approvals described in Consents, or that relate solely to the identity of the
Assignee or the nature of any business carried on by the Assignee except for the
notifications, consents and approvals described in Consents;

        (l)

the Assignor has not caused or permitted, nor does it have any knowledge of, the
release, in any manner whatsoever, of any Hazardous Substance on or from any of
its properties or assets (including any of the Leased Property) utilized in the
Business, or any such release on or from a facility owned or operated by third
parties, but with respect to which the Assignor in connection with the Business
is or may reasonably be alleged to have liability. All Hazardous Substances and
all other wastes and other materials and substances used in whole or in part by
the Assignor in connection with the Business or resulting from the Business have
been disposed of, treated and stored in compliance with all Environmental Laws;

        (m)

The Assignor is not aware of any state of facts that casts doubt on the validity
or enforceability of any of the Intellectual Property. The Assignor has provided
to the Assignee a true and complete copy of all contracts and amendments thereto
that comprise or relate to the License;

8.

REPRESENTATIONS OF THE ASSIGNEE

      8.1

The Assignee represents and warrants to the Assignor as follows, with the intent
that the Assignor will rely thereon in entering into this Agreement and in
concluding the purchase and sale contemplated hereby, that:

      (a)

the Assignee is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Nevada and has the power, authority, and
capacity to enter into this Agreement and to carry out its terms;

      (b)

the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby has been duly and validly authorized by all
necessary corporate action on the part of the Assignee, and this Agreement
constitutes a valid and binding obligation of the Assignee enforceable against
the Assignee in accordance with its terms; except as enforcement may be limited
by bankruptcy, insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in the
discretion of a court of competent jurisdiction;

      (c)

there is no requirement for the Assignee to make any filing with, give any
notice to or obtain any license, permit, certificate, registration,
authorization, consent or approval of, any government or regulatory authority as
a condition to the lawful consummation of the transactions contemplated by this
Agreement except as might be required from the NIH.

      (d)

Neither the execution and delivery of this Agreement nor the performance of the
Assignee’s obligations hereunder will violate or constitute a default under the
constating documents, by-laws, or articles of the Assignee, any order, decree,
judgment, statute, by-law, rule, regulation, or restriction applicable to the
Assignee, or any contract, agreement, instrument, covenant, mortgage or security
to which the Assignee is a party or which are binding upon the Assignee;

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  (e)

The Equity Component to be issued to the Assignor under this Agreement will,
when so issued, be duly authorized, validly issued, fully paid, non-assessable,
free of any Encumbrances except for SEC restrictions and not subject to any
pre-emptive rights or rights of first refusal created by statute or the charter
documents or Bylaws of Assignee or any agreement to which Assignee is a party or
is bound and will be issued in compliance with federal and state securities
laws; and

        (f)

except as disclosed in the Assignee SEC Documents, (i) there are no actions,
suits, proceedings, investigations, complaints, orders, directives, or notices
of defect or non-compliance by or before any court, governmental or domestic
commission, department, board, tribunal, or authority, or administrative,
licensing, or regulatory agency, body, or officer issued, pending, or to the
best of the Assignee’s knowledge threatened against or affecting the Assignee;
and (ii) the Assignee is in compliance in all material respects with all
applicable laws applicable to Assignee and its business.

9.

COVENANTS OF THE ASSIGNOR

      9.1

Between the date of this Agreement and the Closing Date, the Assignor covenants
and agrees that the Assignor:

      (a)

will not sell or dispose of any of the Business Assets, will conduct the
Business diligently and only in the ordinary course consistent with past
practice, keep the Business Assets in their present state, and endeavour to
preserve the organization of the Business intact and the goodwill of the
suppliers and customers and others having business relations with the Assignor
relating to the Business;

      (b)

will afford the Assignee and its authorized representatives full access during
normal business hours to the Business Assets and all other property and assets
utilized in the Business and without limitation all title documents, abstracts
of title, deeds, leases, contracts, financial statements, policies, reports,
licenses, books, records, and other such material relating to the Business, and
furnish such copies thereof and other information, as the Assignee may
reasonably request;

      (c)

will use its best efforts to procure and obtain at or prior to the Closing Date
all such consents, approvals, releases, and discharges as may be required to
effect the transactions contemplated hereby from all federal, state, municipal
or other governmental or regulatory bodies and from all other third parties as
necessary;

      (d)

at the request of the Assignee, the Assignor will execute such consents,
authorizations and directions as may be necessary to permit any inspection of
the Business or any of the Business Assets or to enable the Assignee or its
authorized representatives to obtain full access to all files and records
relating to the Business or the Business Assets maintained by governmental or
other public authorities;

      (e)

the Assignor will use its best efforts to take or cause to be taken all
necessary corporate action, steps and proceedings to approve and authorize
validly and effectively the assign and transfer the Business Assets to the
Assignee and the execution and delivery of this Agreement and any other
Agreements or documents contemplated hereby and to cause all necessary meetings
of members or managers of the Assignor to be held for such purpose; and

      (f)

will not, without the prior written consent of the Assignee, enter into any
transaction or refrain from doing any action that, if effected before the date
of this Agreement, would constitute a breach of any representation, warranty,
covenant or other obligation of the Assignor contained herein, and the Assignor
will not enter into any material supply agreements relating to the Business or
make any material decisions or enter into any material contracts with respect to
the Business without the consent of the Assignee, which consent will not be
unreasonably withheld.

      9.2

Subject to the limitations set forth below, the Assignor covenants and agrees to
indemnify and hold harmless the Assignee from and against:

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  (a)

any and all debts, obligations, and liabilities, whether accrued, absolute,
contingent, or otherwise, existing at the time of Closing, respecting the
Business or the Business Assets; and the Assignee may, but will not be bound to,
pay or perform same and all moneys so paid by the Assignee in doing so will
constitute indebtedness of the Assignor to the Assignee hereunder;

        (b)

any and all Losses resulting from any misrepresentation, misstatement, breach of
warranty, or the non-fulfillment of any covenant on the part of the Assignor
under this Agreement or under any document or instrument delivered pursuant
hereto or in connection herewith; and

        (c)

any and all Losses which arise or are made or claimed against or are suffered or
incurred reasonably by the Assignee in respect of any of the foregoing; and

        (d)

any and all Losses suffered or incurred by the Assignee as a result of or
arising directly or indirectly out of or in connection with any liability
incurred by the Assignor in respect of the operation of the Business up to the
Closing Date, except for liabilities specifically assumed hereunder.

10.

COVENANTS OF THE ASSIGNEE

      10.1

Between the date of this Agreement and the Closing Date, the Assignee will make
all reasonable efforts to obtain and procure in co-operation with the Assignor
all consents, approvals, releases, and discharges required to effect the
transactions contemplated hereby.

      11.

CONDITIONS PRECEDENT

      11.1

The obligation of the Assignee to consummate the transactions herein
contemplated is subject to the fulfillment of each of the following conditions
precedent at the times stipulated:

      (a)

that the representations and warranties of the Assignor contained herein are
true and correct on and as at the Closing Date with the same force and effect as
if such representations and warranties were made as at the Closing Date, except
as may be in writing disclosed to and approved by the Assignee;

      (b)

that all the terms, covenants, conditions, agreements, and obligations hereunder
on the part of the Assignor to be performed or complied with at or prior to the
Closing Date, including in particular the Assignor’s obligation to deliver the
documents and instruments herein provided for in Clause 12, have been performed
and complied with as at the Closing Date;

      (c)

that between the date hereof and the Closing Date no change, event, or
circumstance has occurred which materially adversely affects the Business Assets
or the prospects, operation, or condition of the Business or which,
significantly reduces the value of the Business or the Business Assets to the
Assignee;

      (d)

no legal or regulatory action or proceeding will be pending or threatened by any
person to enjoin, restrict or prohibit the purchase and sale of the Business
Assets contemplated hereby;

      (e)

that at the Closing Date, there will have been obtained from all appropriate
federal, state, municipal or other governmental or administrative bodies such
licenses, permits, consents, approvals, certificates, registrations and
authorizations as are required to be obtained by the Assignor to permit the
change of ownership of the Business Assets contemplated hereby, and all notices,
consents and approvals with respect to the transfer or assignment of the
Material Contracts, including, without limitation those described in 0 hereof
have been obtained;;

      11.2

The obligation of the Assignor to consummate the transactions herein
contemplated is subject to the fulfillment of each of the following conditions
precedent at the times stipulated:

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- 10 -

  (a)

that the representations and warranties of the Assignee contained herein are
true and correct on and as of the Closing Date with the same force and effect as
if such representations and warranties were made as at the Closing Date, except
as may be in writing disclosed to and approved by the Assignor;

        (b)

that the Cash Component payment should have been completed on or before the
Closing Date;

        (c)

that all terms, covenants, conditions, agreements, and obligations hereunder on
the part of the Assignee to be performed or complied with at or prior to the
Closing, including in particular the Assignee’s obligation to deliver the
documents and instruments

12.

TRANSACTIONS OF THE ASSIGNOR AT THE CLOSING

    13.

FURTHER ASSURANCES

    13.1

From time to time subsequent to the Closing Date, the parties covenant and
agree, at the expense of the requesting party, to promptly execute and deliver
all such further documents and instruments and do all such further acts and
things as may be required to carry out the full intent and meaning of this
Agreement and to effect the transactions contemplated hereby.

    14.

ASSIGNMENT

    14.1

Other than if the Assignees Corporate Assets are acquired by another business
entity which acquires 100% of the Assignees business assets this agreement may
not be assigned by any party hereto without the prior written consent of the NIH
hereto.

    15.

SUCCESSORS AND ASSIGNS

    15.1

This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.

    16.

COUNTERPARTS

    16.1

This Agreement may be executed in several counterparts, each of which will be
deemed to be an original and all of which will together constitute one and the
same instrument.

    17.

NOTICES

    17.1

Any notice required or permitted to be given under this Agreement will be in
writing and may be given by personal service or by prepaid registered mail, and
addressed to the proper party or transmitted by electronic facsimile generating
proof of receipt of transmission at the address or facsimile number stated
below:

  (a)

if to the Assignor:
Dr. Joseph Sinkule

 

42191 N. 111th Place, Scottsdale, Arizona, 85262
Facsimile No.: 480-348-9709

        (b)

if to the Assignee:

       

President CEO
Cyplasin Biomedical Ltd

 

Suite 131, Advanced Technology Center,

 

9650-20th avenue, Edmonton Alberta T6N 1G1 Canada

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or to such other address or facsimile number as any party may specify by notice.
Any notice sent by registered mail as aforesaid will be deemed conclusively to
have been effectively given on the fifth business day after posting; but if at
the time of posting or between the time of posting and the third business day
thereafter there is a strike, lockout or other labour disturbance affecting
postal service, then such notice will not be effectively given until actually
received. Any notice transmitted by electronic facsimile will be deem
conclusively to have been effectively given if evidence of receipt is obtained
before 5:00 p.m. (recipient’s time) on a Business Day, and otherwise on the
Business Day next following the date evidence of receipt of transmission is
obtained by the sender.

18.

REFERENCE DATE

    18.1

This Agreement is dated for reference as of the date first above written, but
will become binding as of the date of execution and delivery by all parties
hereto and subject to compliance with the terms and conditions hereof, the
transfer and possession of the Business Assets will be deemed to take effect as
at the close of business on the Closing Date. References herein to the date of
the Agreement or to the date hereof shall be deemed to mean the date set forth
in the preamble to this Agreement.

    19.

REFERENCES TO AGREEMENT

    19.1

The terms “this Agreement”, “hereof’, “herein”, “hereby”, “hereto”, and similar
terms refer to this Agreement and not to any particular clause, paragraph or
other part of this Agreement. References to particular clauses are to clauses of
this Agreement unless another document is specified.

IN WITNESS WHEREOF the parties have executed and delivered these presents on the
dates indicated below.

WITNESSED BY: ) C-VIRIONICS CORPORATION.   Nancy Sinkule ) Name   42191 N. 111th
Place ) Address   /s/ Dr. Joseph Sinkule ) per Dr. JOSEPH SINKULE Scottsdale, AZ
85262 USA   ) Assistant to the President   Occupation     Dated: 29 December,
2009         CYPLASIN BIOMEDICAL LTD.     Per: /s/ Garth Likes  
             Garth Likes     Authorized Signatory     Dated: December 29, 2009  

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Schedule 1

PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT—EXCLUSIVE
COVER PAGE

For PHS internal use only: Patent License Number:

A-027-2003

Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):

U.S. Patent No. 6,387,662 (U.S. S/N 09/246,441), issued May 14, 2002, entitled
"Synthesis and Purification of Hepatitis C Virus-Like particles" (E-009-1997/0)
(Inventors: T. Jake Liang (NIDDK), Thomas F. Baumert (NIDDK)). This application
is a continuation of and claims the benefit of priority of International
Application No. PCT/US97/05096 designating the U.S. having International filing
date of Mar. 25, 1997, abandoned, claims the benefit of priority of U.S. S/N
60/030,238, filed Nov. 8, 1996.

PCT/US97/05096 filed March 25, 1997, entitled "Synthesis and Purification of
Hepatitis C Virus-Like particles in vitro" (related to E-009-1997/0) (Inventors:
T. Jake Liang (NIDDK), Thomas F. Baumert (NIDDK)). National Stage filed March
25, 1997: in Australia Patent No. 738585, issued Jan. 03, 2002, in EPO patent
application No. 9791652.6, in Canada patent application No. 2269097, in Japan
patent application No. 10-522521.

Licensee:

VIRIONICS CORPORATION (VIRIONICS)

             Cooperative Research and Development Agreement (CRADA) Number (if
applicable):                            Additional Remarks:              
             Public Benefit(s):           Vaccines for the prevention and
treatment of chronic Hepatitis C Virus (HCV) infections.

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

1)

The National Institutes of Health ("NIH"), the Centers for Disease Control and
Prevention ("CDC"), or the Food and Drug Administration ("FDA"), hereinafter
singly or collectively referred to as "PHS", agencies of the United States
Public Health Service within the Department of Health and Human Services
("DHHS"); and

    2)

The person, corporation, or institution identified above and/or on the Signature
Page, having offices at the address indicated on the Signature Page, hereinafter
referred to as "Licensee".PHS

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- 13 -

PHS PATENT LICENSE AGREEMENT—EXCLUSIVE

PHS and Licensee agree as follows:

1.

BACKGROUND

        1.01

In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.

        1.02

By assignment of rights from PHS employees and other inventors, DHHS, on behalf
of the United States Government, owns intellectual property rights claimed in
any United States and/or foreign patent applications or patents corresponding to
the assigned inventions. DHHS also owns any tangible embodiments of these
inventions actually reduced to practice by PHS.

        1.03

The Secretary of DHHS has delegated to PHS the authority to enter into this
Agreement for the licensing of rights to these inventions.

        1.04

PHS desires to transfer these inventions to the private sector through
commercialization licenses to facilitate the commercial development of products
and processes for public use and benefit.

        1.05

Licensee desires to acquire commercialization rights to certain of these
inventions in order to develop processes, methods, and/or marketable products
for public use and benefit.

        2.

DEFINITIONS.

        2.01

"Benchmarks" mean the performance milestones that are set forth in Appendix E.

        2.02

"Commercial Development Plan" means the written commercialization plan attached
as Appendix F.

        2.03

"First Commercial Sale" means the initial transfer by or on behalf of Licensee
or its sublicensees of Licensed Products or the initial practice of a Licensed
Process by or on behalf of Licensee or its sublicensees in exchange for cash or
some equivalent to which value can be assigned for the purpose of determining
Net Sales.

        2.04

"Government" means the Government of the United States of America.

        2.05

"Licensed Fields of Use" means the fields of use identified in Appendix B.

        2.06

"Licensed Patent Rights" shall mean:

        a)

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

        b)

to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these continuations-in-part; iii)
all patents issuing from such continuations-in-part, divisions, and
continuations; iv) priority patent application(s) of a) above; and v) any
reissues, reexaminations, and extensions of all such patents;

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- 14 -

  c)

to the extent that the following contain one or more claims directed to the
invention or inventions disclosed in a) above: all counterpart foreign and U.S.
patent applications and patents to a) and b) above, including those listed in
Appendix A.

         

Licensed Patent Rights shall not include b) or c) above to the extent that they
contain one or more claims directed to new matter which is not the subject
matter disclosed in a) above.

        2.07

"Licensed Process(es)" means processes which, in the course of being practiced
would be within the scope of one or more claims of the Licensed Patent Rights
that have not been held unpatentable, invalid or unenforceable by an unappealed
or unappealable judgment of a court of competent jurisdiction.

        2.08

"Licensed Product(s)" means tangible materials which, in the course of
manufacture, use, sale, or importation would be within the scope of one or more
claims of the Licensed Patent Rights that have not been held unpatentable,
invalid or unenforceable by an unappealed or unappealable judgment of a court of
competent jurisdiction.

        2.09

"Licensed Territory" means the geographical area identified in Appendix B.

        2.10

"Net Sales" means the total gross receipts for sales of Licensed Products or
practice of Licensed Processes by or on behalf of Licensee or its sublicensees,
and from leasing, renting, or otherwise making Licensed Products available to
others without sale or other dispositions, whether invoiced or not, less returns
and allowances, packing costs, insurance costs, freight out, taxes or excise
duties imposed on the transaction (if separately invoiced), and wholesaler and
cash discounts in amounts customary in the trade to the extent actually granted.
No deductions shall be made for commissions paid to individuals, whether they be
with independent sales agencies or regularly employed by Licensee, or
sublicensees, and on its payroll, or for the cost of collections.

        2.11

"Practical Application" means to manufacture in the case of a composition or
product, to practice in the case of a process or method, or to operate in the
case of a machine or system; and in each case, under such conditions as to
establish that the invention is being utilized and that its benefits are to the
extent permitted by law or Government regulations available to the public on
reasonable terms.

        2.12

"Research License" means a nontransferable, nonexclusive license to make and to
use the Licensed Products or Licensed Processes as defined by the Licensed
Patent Rights for purposes of research and not for purposes of commercial
manufacture or distribution or in lieu of purchase.

3.

GRANT OF RIGHTS

      3.01

PHS hereby grants and Licensee accepts, subject to the terms and conditions of
this Agreement, an exclusive license under the Licensed Patent Rights in the
Licensed Territory to make and have made, to use and have used, to sell and have
sold, to offer to sell, and to import any Licensed Products in the Licensed
Fields of Use and to practice and have practiced any Licensed Processes in the
Licensed Fields of Use.

      3.02

This Agreement confers no license or rights by implication, estoppel, or
otherwise under any patent applications or patents of PHS other than Licensed
Patent Rights regardless of whether such patents are dominant or subordinate to
Licensed Patent Rights.

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- 15 -

4.

SUBLICENSING

      4.01

Upon written approval by PHS, which approval will not be unreasonably withheld,
Licensee may enter into sublicensing agreements under the Licensed Patent
Rights.

      4.02

Licensee agrees that any sublicenses granted by it shall provide that the
obligations to PHS of Paragraphs 5.01-5.04, 8.01, 10.01, 10.02, 12.05, and
13.07-13.09 of this Agreement shall be binding upon the sublicensee as if it
were a party to this Agreement. Licensee further agrees to attach copies of
these Paragraphs to all sublicense agreements.

      4.03

Any sublicenses granted by Licensee shall provide for the termination of the
sublicense, or the conversion to a license directly between such sublicensees
and PHS, at the option of the sublicensee, upon termination of this Agreement
under Article 13. Such conversion is subject to PHS approval and contingent upon
acceptance by the sublicensee of the remaining provisions of this Agreement.

      4.04

Licensee agrees to forward to PHS a copy of each fully executed sublicense
agreement postmarked within thirty (30) days of the execution of such agreement.
To the extent permitted by law, PHS agrees to maintain each such sublicense
agreement in confidence.

      5.

STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

     

  5.01 (a) PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice of all
inventions licensed under the Licensed Patent Rights throughout the world by or
on behalf of the Government and on behalf of any foreign government or
international organization pursuant to any existing or future treaty or
agreement to which the Government is a signatory. Prior to the First Commercial
Sale, Licensee agrees to provide PHS reasonable quantities of Licensed Products
or materials made through the Licensed Processes for PHS research use.          
  (b)

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

  5.02

Licensee agrees that products used or sold in the United States embodying
Licensed Products or produced through use of Licensed Processes shall be
manufactured substantially in the United States, unless a written waiver is
obtained in advance from PHS.

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- 16 -

  5.03

Licensee acknowledges that PHS may enter into future Cooperative Research and
Development Agreements (CRADAs) under the Federal Technology Transfer Act of
1986 that relate to the subject matter of this Agreement. Licensee agrees not to
unreasonably deny requests for a Research License from such future collaborators
with PHS when acquiring such rights is necessary in order to make a Cooperative
Research and Development Agreement (CRADA) project feasible. Licensee may
request an opportunity to join as a party to the proposed Cooperative Research
and Development Agreement (CRADA).

          5.04 (a)

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

            (b)

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

6.

ROYALTIES AND REIMBURSEMENT

      6.01

Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty as set forth in Appendix C within thirty (30) days from the date that
this Agreement becomes effective.

      6.02

Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as set
forth in Appendix C. The minimum annual royalty is due and payable on January 1
of each calendar year beginning January 1, 2006 and may be credited against any
earned royalties due for sales made in that year.

      6.03

Licensee agrees to pay PHS earned royalties as set forth in Appendix C.

      6.04

Licensee agrees to pay PHS benchmark royalties as set forth in Appendix C.

      6.05

Licensee agrees to pay PHS sublicensing royalties as set forth in Appendix C.

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- 17 -

7.

PATENT FILING, PROSECUTION AND MAINTENANCE,

      7.01

Except as otherwise provided in this Article 7, PHS agrees to take
responsibility for, but to consult with, the Licensee in the preparation,
filing, prosecution, and maintenance of any and all patent applications or
patents included in the Licensed Patent Rights and shall furnish copies of
relevant patent-related documents to Licensee.

      7.02

Upon PHS's written request, Licensee shall assume the responsibility for the
preparation, filing, prosecution, and maintenance of any and all patent
applications or patents included in the Licensed Patent Rights and shall on an
ongoing basis promptly furnish copies of all patent- related documents to PHS.
In such event, Licensee shall, subject to the prior approval of PHS, select
registered patent attorneys or patent agents to provide such services on behalf
of Licensee and PHS. PHS shall provide appropriate powers of attorney and other
documents necessary to undertake such actions to the patent attorneys or patent
agents providing such services. Licensee and its attorneys or agents shall
consult with PHS in all aspects of the preparation, filing, prosecution and
maintenance of patent applications and patents included within the Licensed
Patent Rights and shall provide PHS sufficient opportunity to comment on any
document that Licensee intends to file or to cause to be filed with the relevant
intellectual property or patent office.

      7.03

At any time, PHS may provide Licensee with written notice that PHS wishes to
assume control of the preparation, filing, prosecution, and maintenance of any
and all patent applications or patents included in the Licensed Patent Rights.
If PHS elects to assume such responsibilities, Licensee agrees to cooperate
fully with PHS, its attorneys, and agents in the preparation, filing,
prosecution, and maintenance of any and all patent applications or patents
included in the Licensed Patent Rights and to provide PHS with complete copies
of any and all documents or other materials that PHS deems necessary to
undertake such responsibilities. Licensee shall be responsible for all costs
associated with transferring patent prosecution responsibilities to an attorney
or agent of PHS's choice.

      7.04

Each party shall promptly inform the other as to all matters that come to its
attention that may affect the preparation, filing, prosecution, or maintenance
of the Licensed Patent Rights and permit each other to provide comments and
suggestions with respect to the preparation, filing, prosecution, and
maintenance of Licensed Patent Rights, which comments and suggestions shall be
considered by the other party.

      8.

RECORD KEEPING.

      8.01

Licensee agrees to keep accurate and correct records of Licensed Products made,
used, sold, or imported and Licensed Processes practiced under this Agreement
appropriate to determine the amount of royalties due PHS. Such records shall be
retained for at least five (5) years following a given reporting period and
shall be available during normal business hours for inspection at the expense of
PHS by an accountant or other designated auditor selected by PHS for the sole
purpose of verifying reports and payments hereunder. The accountant or auditor
shall only disclose to PHS information relating to the accuracy of reports and
payments made under this Agreement. If an inspection shows an underreporting or
underpayment in excess of five percent (5%) for any twelve (12) month period,
then Licensee shall reimburse PHS for the cost of the inspection at the time
Licensee pays the unreported royalties, including any late charges as required
by Paragraph 9.08 of this Agreement. All payments required under this Paragraph
shall be due within thirty (30) days of the date PHS provides Licensee notice of
the payment due.

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- 18 -

  8.02

Licensee agrees to have an audit of sales and royalties conducted by an
independent auditor at least every two (2) years if annual sales of the Licensed
Product or Licensed Processes are over two (2) million dollars. The audit shall
address, at a minimum, the amount of gross sales by or on behalf of Licensee
during the audit period, terms of the license as to percentage or fixed royalty
to be remitted to the Government, the amount of royalty funds owed to the
Government under this Agreement, and whether the royalty amount owed has been
paid to the Government and is reflected in the records of the Licensee. The
audit shall also indicate the PHS license number, product, and the time period
being audited. A report certified by the auditor shall be submitted promptly by
the auditor directly to PHS on completion. Licensee shall pay for the entire
cost of the audit.

9.

REPORTS ON PROGRESS BENCHMARKS, SALES1 AND PAYMENTS

      9.01

Prior to signing this Agreement, Licensee has provided to PHS the Commercial
Development Plan at Appendix F, under which Licensee intends to bring the
subject matter of the Licensed Patent Rights to the point of Practical
Application. This Commercial Development Plan is hereby incorporated by
reference into this Agreement. Based on this plan, performance Benchmarks are
determined as specified in Appendix E.

     

9.02

Licensee shall provide written annual reports on its product development
progress or efforts to commercialize under the Commercial Development Plan for
each of the Licensed Fields of Use within sixty (60) days after December 31 of
each calendar year. These progress reports shall include, but not be limited to:
progress on research and development, status of applications for regulatory
approvals, manufacturing, sublicensing, marketing, importing, and sales during
the preceding calendar year, as well as plans for the present calendar year. PHS
also encourages these reports to include information on any of Licensee's public
service activities that relate to the Licensed Patent Rights. If reported
progress differs from that projected in the Commercial Development Plan and
Benchmarks, Licensee shall explain the reasons for such differences. In any such
annual report, Licensee may propose amendments to the Commercial Development
Plan, acceptance of which by PHS may not be denied unreasonably. Licensee agrees
to provide any additional information reasonably required by PHS to evaluate
Licensee's performance under this Agreement. Licensee may amend the Benchmarks
at any time upon written consent by PHS. PHS shall not unreasonably withhold
approval of any request of Licensee to extend the time periods of this schedule
if such request is supported by a reasonable showing by Licensee of diligence in
its performance under the Commercial Development Plan and toward bringing the
Licensed Products to the point of Practical Application as defined in 37 CFR
404.3(d). Licensee shall amend the Commercial Development Plan and Benchmarks at
the request of PHS to address any Licensed Fields of Use not specifically
addressed in the plan originally submitted.

      9.03

Licensee shall report to PHS the dates for achieving Benchmarks specified in
Appendix E and the First Commercial Sale in each country in the Licensed
Territory within thirty (30) days of such occurrences.

     

9.04

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

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- 19 -

  9.05

Licensee agrees to forward semi-annually to PHS a copy of such reports received
by Licensee from its sublicensees during the preceding half-year period as shall
be pertinent to a royalty accounting to PHS by Licensee for activities under the
sublicense.

        9.06

Royalties due under Article 6 shall be paid in U.S. dollars. For conversion of
foreign currency to U.S. dollars, the conversion rate shall be the New York
foreign exchange rate quoted in The Wall Street Journal on the day that the
payment is due. All checks and bank drafts shall be drawn on United States banks
and shall be payable, as appropriate, to "NIH/Patent Licensing." All such
payments shall be sent to the following address: NIH, P.O. Box 360120,
Pittsburgh, PA 15251- 6120. Any loss of exchange, value, taxes, or other
expenses incurred in the transfer or conversion to U.S. dollars shall be paid
entirely by Licensee. The royalty report required by Paragraph 9.04 of this
Agreement shall accompany each such payment, and a copy of such report shall
also be mailed to PHS at its address for notices indicated on the Signature Page
of this Agreement.

        9.07

Licensee shall be solely responsible for determining if any tax on royalty
income is owed outside the United States and shall pay any such tax and be
responsible for all filings with appropriate agencies of foreign governments.

        9.08

Interest and penalties may be assessed by PHS on any overdue payments in
accordance with the Federal Debt Collection Act. The payment of such late
charges shall not prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.

        9.09

All plans and reports required by this Article 9 and marked "confidential" by
Licensee shall, to the extent permitted by law, be treated by PHS as commercial
and financial information obtained from a person and as privileged and
confidential, and any proposed disclosure of such records by the PHS under the
Freedom of Information Act (FOIA), 5 U.S.C. § 552 shall be subject to the
predisclosure notification requirements of 45 CFR § 5.65(d).

10.

PERFORMANCE,

  10.01

Licensee shall use its reasonable best efforts to bring the Licensed Products
and Licensed Processes to Practical Application. "Reasonable best efforts" for
the purposes of this provision shall include adherence to the Commercial
Development Plan at Appendix F and performance of the Benchmarks at Appendix E.
The efforts of a sublicensee shall be considered the efforts of Licensee.

        10.02

Upon the First Commercial Sale, until the expiration of this Agreement, Licensee
shall use its reasonable best efforts to make Licensed Products and Licensed
Processes reasonably accessible to the United States public.

11.

INFRINGEMENT AND PATENT ENFORCEMENT

   

  11.01

PHS and Licensee agree to notify each other promptly of each infringement or
possible infringement of the Licensed Patent Rights, as well as any facts which
may affect the validity, scope, or enforceability of the Licensed Patent Rights
of which either Party becomes aware.

        11.02

Pursuant to this Agreement and the provisions of Chapter 29 of title 35, United
States Code, Licensee may: a) bring suit in its own name, at its own expense,
and on its own behalf for infringement of presumably valid claims in the
Licensed Patent Rights; b) in any such suit, enjoin infringement and collect for
its use, damages, profits, and awards of whatever nature recoverable for such
infringement; and c) settle any claim or suit for infringement of the Licensed
Patent Rights provided, however, that PHS and appropriate Government authorities
shall have the first right to take such actions. If Licensee desires to initiate
a suit for patent infringement, Licensee shall notify PHS in writing. If PHS
does not notify Licensee of its intent to pursue legal action within ninety (90)
days, Licensee will be free to initiate suit. PHS shall have a continuing right
to intervene in such suit. Licensee shall take no action to compel the
Government either to initiate or to join in any such suit for patent
infringement. Licensee may request the Government to initiate or join in any
such suit if necessary to avoid dismissal of the suit. Should the Government be
made a party to any such suit, Licensee shall reimburse the Government for any
costs, expenses, or fees which the Government incurs as a result of such motion
or other action, including any and all costs incurred by the Government in
opposing any such motion or other action. In all cases, Licensee agrees to keep
PHS reasonably apprised of the status and progress of any litigation. Before
Licensee commences an infringement action, Licensee shall notify PHS and give
careful consideration to the views of PHS and to any potential effects of the
litigation on the public health in deciding whether to bring suit.

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  11.03

In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the Licensed Patent Rights shall be brought against
Licensee or raised by way of counterclaim or affirmative defense in an
infringement suit brought by Licensee under Paragraph 11.02, pursuant to this
Agreement and the provisions of Chapter 29 of Title 35, United States Code or
other statutes, Licensee may: a) defend the suit in its own name, at its own
expense, and on its own behalf for presumably valid claims in the Licensed
Patent Rights; b) in any such suit, ultimately to enjoin infringement and to
collect for its use, damages, profits, and awards of whatever nature recoverable
for such infringement; and c) settle any claim or suit for declaratory judgment
involving the Licensed Patent Rights-provided, however, that PHS and appropriate
Government authorities shall have the first right to take such actions and shall
have a continuing right to intervene in such suit. If PHS does not notify
Licensee of its intent to respond to the legal action within a reasonable time,
Licensee will be free to do so. Licensee shall take no action to compel the
Government either to initiate or to join in any such declaratory judgment
action. Licensee may request the Government to initiate or to join any such suit
if necessary to avoid dismissal of the suit. Should the Government be made a
party to any such suit by motion or any other action of Licensee, Licensee shall
reimburse the Government for any costs, expenses, or fees which the Government
incurs as a result of such motion or other action. If Licensee elects not to
defend against such declaratory judgment action, PHS, at its option, may do so
at its own expense. In all cases, Licensee agrees to keep PHS reasonably
apprised of the status and progress of any litigation. Before Licensee commences
an infringement action, Licensee shall notify PHS and give careful consideration
to the views of PHS and to any potential effects of the litigation on the public
health in deciding whether to bring suit.

        11.04

In any action under Paragraphs 11.02 or 11.03, the expenses including costs,
fees, attorney fees, and disbursements, shall be paid by Licensee. The value of
any recovery made by Licensee through court judgment or settlement shall be
treated as Net Sales and subject to earned royalties.

     

11.05

PHS shall cooperate fully with Licensee in connection with any action under
Paragraphs 11.02 or 11.03. PHS agrees promptly to provide access to all
necessary documents and to render reasonable assistance in response to a request
by Licensee.

12.

NEGATION OF WARRANTIES AND INDEMNIFICATION

  12.01 PHS offers no warranties other than those specified in Article 1.

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  12.02

PHS does not warrant the validity of the Licensed Patent Rights and makes no
representations whatsoever with regard to the scope of the Licensed Patent
Rights, or that the Licensed Patent Rights may be exploited without infringing
other patents or other intellectual property rights of third parties.

        12.03

PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED
PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

        12.04

PHS does not represent that it will commence legal actions against third parties
infringing the Licensed Patent Rights.

  12.05

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

13.

TERM, TERMINATION, AND MODIFICATION OF RIGHTS,

     

13.01

This Agreement is effective when signed by all parties and shall extend to the
expiration of the last to expire of the Licensed Patent Rights unless sooner
terminated as provided in this Article 13.

      13.02

In the event that Licensee is in default in the performance of any material
obligations under this Agreement, including but not limited to the obligations
listed in Article 13.05, and if the default has not been remedied within ninety
(90) days after the date of notice in writing of such default, PHS may terminate
this Agreement by written notice and pursue outstanding amounts owed through
procedures provided by the Federal Debt Collection Act.

        13.03

In the event that Licensee becomes insolvent, files a petition in bankruptcy,
has such a petition filed against it, determines to file a petition in
bankruptcy, or receives notice of a third party's intention to file an
involuntary petition in bankruptcy, Licensee shall immediately notify PHS in
writing. Furthermore, PHS shall have the right to terminate this Agreement
immediately upon Licensee's receipt of written notice.

        13.04

Licensee shall have a unilateral right to terminate this Agreement and/or any
licenses in any country or territory by giving PHS sixty (60) days written
notice to that effect.

        13.05

PHS shall specifically have the right to terminate or modify, at its option,
this Agreement, if PHS determines that the Licensee: I) is not executing the
Commercial Development Plan submitted with its request for a license and the
Licensee cannot otherwise demonstrate to PHS's satisfaction that the Licensee
has taken, or can be expected to take within a reasonable time, effective steps
to achieve Practical Application of the Licensed Products or Licensed Processes;
2) has not achieved the Benchmarks as may be modified under Paragraph 9.02; 3)
has willfully made a false statement of, or willfully omitted, a material fact
in the license application or in any report required by the license Agreement;
4) has committed a material breach of a covenant or agreement contained in the
license; 5) is not keeping Licensed Products or Licensed Processes reasonably
available to the public after commercial use commences; 6) cannot reasonably
satisfy unmet health and safety needs; or 7) cannot reasonably justify a failure
to comply with the domestic production requirement of Paragraph 5.02 unless
waived. In making this determination, PHS will take into account the normal
course of such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual reports submitted by
Licensee under Paragraph 9.02. Prior to invoking this right, PHS shall give
written notice to Licensee providing Licensee specific notice of, and a ninety
(90) day opportunity to respond to, PHS's concerns as to the previous items 1)
to 7). If Licensee fails to alleviate PHS's concerns as to the previous items 1)
to 7) or fails to initiate corrective action to PHS's satisfaction, PHS may
terminate this Agreement.

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  13.06

When the public health and safety so require, and after written notice to
Licensee providing Licensee a sixty (60) day opportunity to respond, PHS shall
have the right to require Licensee to grant sublicenses to responsible
applicants, on reasonable terms, in any Licensed Fields of Use under the
Licensed Patent Rights, unless Licensee can reasonably demonstrate that the
granting of the sublicense would not materially increase the availability to the
public of the subject matter of the Licensed Patent Rights. PHS will not require
the granting of a sublicense unless the responsible applicant has first
negotiated in good faith with Licensee.

  13.07

PHS reserves the right according to 35 U.S.C. § 209(0(4) to terminate or modify
this Agreement if it is determined that such action is necessary to meet
requirements for public use specified by federal regulations issued after the
date of the license and such requirements are not reasonably satisfied by
Licensee.

  13.08

Within thirty (30) days of receipt of written notice of PHS's unilateral
decision to modify or terminate this Agreement, Licensee may, consistent with
the provisions of 37 CFR 404.11, appeal the decision by written submission to
the designated PHS official. The decision of the designated PHS official shall
be the final agency decision. Licensee may thereafter exercise any and all
administrative or judicial remedies that may be available.

        13.09

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

14.

GENERAL PROVISIONS

      14.01

Neither Party may waive or release any of its rights or interests in this
Agreement except in writing. The failure of the Government to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right by the Government or
excuse a similar subsequent failure to perform any such term or condition by
Licensee.

      14.02

This Agreement constitutes the entire agreement between the Parties relating to
the subject matter of the Licensed Patent Rights, and all prior negotiations,
representations, agreements, and understandings are merged into, extinguished
by, and completely expressed by this Agreement.

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  14.03

The provisions of this Agreement are severable, and in the event that any
provision of this Agreement shall be determined to be invalid or unenforceable
under any controlling body of law, such determination shall not in any way
affect the validity or enforceability of the remaining provisions of this
Agreement.

  14.04

If either Party desires a modification to this Agreement, the Parties shall,
upon reasonable notice of the proposed modification by the Party desiring the
change, confer in good faith to determine the desirability of such modification.
No modification will be effective until a written amendment is signed by the
signatories to this Agreement or their designees.

        14.05

The construction, validity, performance, and effect of this Agreement shall be
governed by Federal law as applied by the Federal courts in the District of
Columbia.

  14.06

All notices required or permitted by this Agreement shall be given by prepaid,
first class, registered or certified mail or by an express/overnight delivery
service provided by a commercial carrier, properly addressed to the other Party
at the address designated on the following Signature Page, or to such other
address as may be designated in writing by such other Party. Notices shall be
considered timely if such notices are received on or before the established
deadline date or sent on or before the deadline date as verifiable by U.S.
Postal Service postmark or dated receipt from a commercial carrier. Parties
should request a legibly dated U.S. Postal Service postmark or obtain a dated
receipt from a commercial carrier or the U.S. Postal Service. Private metered
postmarks shall not be acceptable as proof of timely mailing.

        14.07

This Agreement shall not be assigned by Licensee except: a) with the prior
written consent of PHS, such consent not to be withheld unreasonably; orb) as
part of a sale or transfer of substantially the entire business of Licensee
relating to operations which concern this Agreement. Licensee shall notify PHS
within ten (10) days of any assignment of this Agreement by Licensee,

        14.08

Licensee agrees in its use of any PHS-supplied materials to comply with all
applicable statutes, regulations, and guidelines, including PHS and DHHS
regulations and guidelines. Licensee agrees not to use the materials for
research involving human subjects or clinical trials in the United States
without complying with 21 CFR Part 50 and 45 CFR Part 46. Licensee agrees not to
use the materials for research involving human subjects or clinical trials
outside of the United States without notifying PHS, in writing, of such research
or trials and complying with the applicable regulations of the appropriate
national control authorities. Written notification to PHS of research involving
human subjects or clinical trials outside of the United States shall be given no
later than sixty (60) days prior to commencement of such research or trials.

  14.09

Licensee acknowledges that it is subject to and agrees to abide by the United
States laws and regulations (including the Export Administration Act of 1979 and
Arms Export Control Act) controlling the export of technical data, computer
software, laboratory prototypes, biological material, and other commodities. The
transfer of such items may require a license from the cognizant Agency of the
U.S. Government or written assurances by Licensee that it shall not export such
items to certain foreign countries without prior approval of such agency. PITS
neither represents that a license is or is not required or that, if required, it
shall be issued.

  14.10

Licensee agrees to mark the Licensed Products or their packaging sold in the
United States with all applicable U.S. patent numbers and similarly to indicate
"Patent Pending" status. All Licensed Products manufactured in, shipped to, or
sold in other countries shall be marked in such a manner as to preserve PHS
patent rights in such countries.

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  14.11

By entering into this Agreement, PHS does not directly or indirectly endorse any
product or service provided, or to be provided, by Licensee whether directly or
indirectly related to this Agreement. Licensee shall not state or imply that
this Agreement is an endorsement by the Government, PHS, any other Government
organizational unit, or any Government employee. Additionally, Licensee shall
not use the names of NIH, CDC, PHS, or DHHS or the Government or their employees
in any advertising, promotional, or sales literature without the prior written
consent of PHS.

  14.12

The Parties agree to attempt to settle amicably any controversy or claim arising
under this Agreement or a breach of this Agreement, except for appeals of
modifications or termination decisions provided for in Article 13. Licensee
agrees first to appeal any such unsettled claims or controversies to the
designated PHS official, or designee, whose decision shall be considered the
final agency decision. Thereafter, Licensee may exercise any administrative or
judicial remedies that may be available.

        14.13

Nothing relating to the grant of a license, nor the grant itself, shall be
construed to confer upon any person any immunity from or defenses under the
antitrust laws or from a charge of patent misuse, and the acquisition and use of
rights pursuant to 37 CFR Part 404 shall not be immunized from the operation of
state or Federal law by reason of the source of the grant.

        14.14

Paragraphs 4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09, and 14.12 of this
Agreement shall survive termination of this Agreement.

SIGNATURES BEGIN ON NEXT PAGE

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PHS PATENT LICENSE AGREEMENT--EXCLUSIVE

SIGNATURE PAGE

For PH

M. Ferguson
Director, Division of Technology
Office of Technology Trans
National Institutes of Health

Mailing Address for Notices:

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

____________________________

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

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- 26 -

APPENDIX A—Patent(s) or Patent Application(s)

Patent(s) or Patent Application(s):

Serial Number Country Filing Date Issue Date Status Patent Number            
09/296,441 U.S.A. 04/21/1999 05/14/2002 Issued 6,387,662 PCTTUS97/05096 PCT
03/25/1997   Expired   23479/97 Australia 03/25/1997 01/03/2002 Issued 738585
9791652.6 EPO 03/25/1997   Pending   10-522521 Japan 03/25/1997   Pending  
2269097 Canada 03/25/1997   Pending  

entitled "Synthesis and Purification of Hepatitis C Virus-Like particles" (PHS
Ref. E-009-1997/0).

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APPENDIX B--Licensed Fields of Use and Territory

Licensed Fields of Use: Exclusive

Vaccines for the prevention and treatment of chronic Hepatitis C Virus (HCV)
infections.

Licensed Territory:

Worldwide.

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APPENDIX C--Royalties

Royalties:

Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of Seventy-Five Thousand Dollars, payable according to the
following schedule:

Twenty-Five Thousand Dollars ($25,000) within Thirty (30) days of this Agreement
becoming effective;
Twenty-Five Thousand Dollars ($25,000) on August 1, 2004
Twenty-Five Thousand Dollars ($25,000) on November 1, 2004.

Licensee agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of Five Thousand Dollars ($ 5,000), with payments beginning January 1,
2006.

Licensee agrees to pay PHS earned royalties on Net Sales by or on behalf of
Licensee and its sublicensees as follows:

Five Percent (5 %).

Licensee or its sublicensee agrees to pay PHS benchmark royalties as follows for
each Licensed Product therapeutically or prophylactically active in humans
arising from the Licensed Patent Rights:

1. Initiation of Phase I Clinical Trials $ 25,000 2. Initiation of Phase II
Clinical Trials $ 100,000 3. Initiation of Phase III Clinical Trials $ 250,000
4. Biologics License Application (BLA) submission $ 500,000 5. BLA (or its
foreign equivalent) approval $ 3,000,000

Licensee agrees to pay PHS additional sublicensing royalties as follows, based
on the fair market value of any consideration received for granting each
sublicense or option to sublicense:

1. Pre-Phase I 25% 2. Pre-Phase II 20% 3. Pre-Phase III 17.5% 4. Pre-BLA
approval 15% 5. Post-BLA approval 12.5%

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APPENDIX D—Modifications

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

Modifications to this Agreement shall be incorporated into this Agreement.

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- 30 -

APPENDIX E--Benchmarks and Performance

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- 31 -

APPENDIX F--Commercial Development Plan

Attached below: Licensee's PHS License Application.

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APPLICATION FOR LICENSE TO
PUBLIC HEALTH SERVICE INVENTIONS

Thank you for your interest in the technology transfer activities of the U.S.
Public Health Service. Your answers to the following questions will provide the
foundation for licensing decisions. Please return this form and the required
attachments to: Office of Technology Transfer, National Institutes of Health,
6011 Executive Boulevard, Suite 325, Rockville, MD 20852.

IDENTIFICATION OF INVENTIONS(S) FOR WHICH LICENSE IS SOUGHT (Complete all
relevant sections)

U.S. Patent Application(s) Serial Number(s), Filing Date(s), and Patent
Number(s) (if issued):
U.S. Patent No. 6,387,662, issued May 14, 2002

Title of Patent Application(s):
Synthesis and Purification of Hepatitis C Virus-Like Particle

Biological Material(s): N/A

Inventor(s):
T. Jake Liang and Thomas F. Baumert

Source from which you learned of availability of a license to the present
invention(s):
Internet search

INFORMATION ABOUT APPLICANT

1.

Name & Address of Applicant:

   

VIRIONICS CORPORATION
2638 Cedar Elm Drive

Odenton, MD 21113

    2.

Name, title, address, phone and FAX numbers of Applicant's licensing
representative:

   

Dr. Joseph Sinkule
President
2638 Cedar Elm Drive
Odenton, MD 21113
Phone/Fax: (410) 695-2359

    3.

Is Applicant a U.S. Corporation?   X     yes ___no
If no, state country of origin: _________________________________
State of incorporation or citizenship (if an individual): ______Delaware

    4.

Is Applicant a Small Business Firm?   X     yes ___no

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TYPE OF LICENSE SOUGHT

 X   Exclusive Commercialization License ___ Coexciusive Commercialization
License     ___ Nonexclusive Commercialization License ___ Nonexclusive Internal
Commercial Use     ___ License (internal use only—no right to sell or otherwise
distribute materials) ___ Nonexclusive Biological Materials License
___ Commercial Evaluation License            (for materials not covered under a
                   (for a limited-term evaluation)            patent or patent
application)  

PROPOSED FIELD(S) OF USE:

Vaccines for prevention and treatment of Hepatitis C.

I.

DESCRIPTION OF APPLICANT

   

VIRIONICS CORPORATION (VIRIONICS) is a developmental stage biotechnology company
with offices in Odenton, Maryland. The company currently has three employees and
has operating to date as a virtual company. The company obtained initial "seed"
financing and, with the conclusion of this license arrangement, will close a
Series A financing of at least $5,000,000 to fund initial R&D and support a
CRADA with NIH. VIRIONICS is totally focused on the development of a broad and
enabling virus-like particle ("VLP") technology platform using recombinant
virus-like particles as the core technology for the R&D of prophylactic and
therapeutic vaccines for cancer, infectious diseases, and chronic inflammatory
diseases. The company will develop a close relationship with the inventor's
laboratories at NIH through a CRADA to facilitate research and development
activities. The staff of VIRIONICS and its consultants and advisors, are
extremely experienced in the development and commercialization of vaccines for
the treatment of cancer, infectious diseases and chronic inflammatory diseases.
The hepatitis C technology will be one of the two lead candidate vaccines
brought into the clinic by the Company in 2003.

II.

OTHER LICENSES AND USE OF 1111, INVENTION

   

VIRIONICS has been focused on putting together a portfolio of antigen delivery
technology using VLPs. VIRIONICS has applied for exclusive and non-exclusive
licenses to the following patents and patent applications from PHS. These
applications pertain to papillomavirus-like particles (inventors Lowy and
Schiller).

  1).

USPA SNO8/319, 467, filed 10/06/94, now USPN 5,618,536, issued 04/08/97

  2).

USPA SN 08/781,084, filed 01/09/97, now USPN 5,855,891, issued 01/05/99

  3).

USPA SN 09/878,840, filed 06/11/01. pending, PCT/US95/12914, filed 10/06/95

and background rights to "Self-Assemblying Recombinant Papillomavirus Capsid
Proteins. To the best of our knowledge, there are no known licensees of this
particular hepatitis C VLP technology working in our proposed fields-of-use, we
believe primarily due to the Chiron Corporation patent issues. When these
patents are combined with the intellectual property requested for licensing in
this application, VIRIONICS will possess a protected, broad and enabling
position in the field of VLPs as antigen delivery systems for preventative and
therapeutic vaccines.

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- 34 -

Intended products include recombinant hepatitis C virus-like particles to be
used as prophylactic and therapeutic vaccines for hepatitis C and hepatitis B.
Licensed products and methods are those described or proposed in the relevant
granted patents and/or patent applications, those conceived through the
company's R&D efforts, and all relevant background rights related to
self-assemblying recombinant hepatitis C virus capsid and envelope proteins
described in other referenced and enabling patents by Liang and Baumert. The
intent is for an exclusive, worldwide license of rights under all claims of the
patents and patent applications (including divisionals and their foreign
counterparts) for vaccines against, hepatitis C, and antigen carriers for
vaccines against cancer, other chronic viral disease, and chronic inflammatory
disease fields-of-use for the term of the patent's lifecycle (to expiration of
last issued licensed patent).

The license will be royalty-bearing with a minimal up-front fee in return for a
higher proposed royalty payment to PHS. The proposed up-front payment is $20,000
with a $500,000 milestone payment to PHS when each candidate product is first
used in a randomized Phase III study, and a $5 million milestone payment upon
FDA market approval of each immunotherapy product derived from the core
technology, excluding Orphan products; PHS will receive a $2.5 million milestone
payment upon market approval of all products with Orphan designation). The
proposed royalty to PHS is 4% of all direct net revenue received by VIRIONICS
from this technology. If any candidate product is sublicensed to third party,
PHS will receive sublicensing fees according to the following schedule, which
are creditable against milestone fees paid in same year (i.e. if sublicense fee
is for a milestone cited above, then company does not pay milestone fee to PHS
and the percentage of sublicense fee described below):

  Licensing Event  Paid to PHS by VIRIONICS   * Products sublicensed before
Phase I 30% of sublicense payments received   * Products sublicensed before
Phase II 25% of sublicense payment received   * Products sublicensed before
Phase III 15% of sublicense payment received   * Products sublicensed before
market approval 10% of sublicense payment received   * Products sublicensed
after market 5% of sublicense payment received

IV.

RESEARCH, DEVELOPMENT AND MARKETING PLAN

Using the licensed technology, VIRIONICS is planning to research and develop
vaccine products in the prevention and treatment of chronic hepatitis C
infections. A lead product candidate has been identified and will serve as the
company's initial product pipeline. As the initial product pipeline is created
and moved forward into manufacturing, GLP pre-clinical and clinical testing, new
candidate products will be created by the ongoing research program within the
company and/or by our NIH collaborators through a CRADA relationship.

VIRIONICS' overall development plan is focused to move the proof of principle
data already achieved in animals into human clinical trials as quickly as
possible. Pre-clinical proof-of-concept efficacy data has already been generated
and published. The R&D program, the estimated costs, and development timeline
for the lead product is proposed below.

A contract manufacturer will be contracted to produce a GMP clincial lot of
material ($250,000; 6 months). A GLP contractor will be engaged to perform a
repeat-dose GLP toxicology study in rats to support the proposed clinical dosing
schedule ($150,000; 6 months). Immunology assays and product release assays must
be developed and applied ($100,000; 3 months). An "opinion leader" clinical
researcher experienced with hepatitis C will be sought to conduct the PhaseI and
Phase II protocols. A pre-IND meeting will take place with FDA to discuss the
clinical plan and any remaining issues. If requested, appropriate in vitro and
animal models (chimpanzee hepatitis C challenge model) will be utilized for
additional proof-of-concept testing and screening prior to human safety and
efficacy studies ($500,000 chimp challenge study).

Initial PhaseI clinical trials will be conducted in normal healthy volunteers
evaluating safety and immunology ($300,000; 6 months). At this point, the
company will plan two different Phase II studies as a prophylacitic vaccine
(randomized and controlled study in high risk volunteers) and as a therapeutic
vaccine (randomized and controlled study in chronically-infected volunteers with
measurable viral load). These studies of 60 subjects each are projected to cost
$500,000 and $650,00, respectively and last 12-18 months duration. The Company
anticipates entry into advanced, randomized Phase II-III clinical trials in both
patient populations over 18 months and a Biologic License Application within 36
months of beginning a Phase III pivotal trial (based on Orphan Drug designation,
Expedited Review and Fast-Track Approval).

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

It is the company's intention to out-license the preventative vaccine
development efforts to Chiron Corporation while retaining the therapeutic
vaccine rights in all markets. The company will either use a contract marketing
organization to market to sell the therapeutic vaccine product for the company,
or assemble our own marketing and sales force for the U.S., while licensing in
all other areas. Product launch costs in the U.S and Europe are estimated to
cost around $3 million. We will partner with Asian partners for marketing and
sales in that market area.

V. MARKET ANALYSIS

The Vaccine Market

VIRIONICS plans to research, develop, and manufacture this entirely new class of
immunotherapy, targeting diseases with tremendous market potential and for which
no effective vaccines currently exist. These markets include chronic infectious
diseases (like HIV, hepatitis B, hepatitis C, etc.), cancers (breast, prostate,
colon, cervical, etc.), and chronic inflammatory diseases (arthritis, Crohn's,
and allergy).

The current global market for infectious disease preventative vaccines surpass
$7 Billion and is expected to grow at a compounded annual rate exceeding 10%
throughout the license period, reaching —$30 Billion by 2015. VIRIONICS
cummulative revenue expectations approach $1 Billion within five years of its
initial product launches for products in these large markets. There are no
approved and marketed vaccines for treatment of chronic infectious diseases, nor
for treatment or prevention of cancers or chronic inflammatory diseases.

VIRIONICS therapeutic vaccine platform is unique in its ability to directly
activate antigen-presenting cells of the body's immune system, especially
dendritic cells. The Company has identified chronic infectious diseases (HIV,
HBV, HCV, HPV), cancer (breast cancer, prostate cancer, and cervical cancer) and
chronic inflammatory diseases (allergy, Crohn's, and arthritis) as its initial
target market indications for therapy. The company's market research validates
our believe that products for these conditions could generate total annual sales
revenue in excess of $1 billion for many of the product indications.

The Hepatitis C Market

There are no effective preventative vaccines or therapeutic agents that are
active against hepatitis C. It is suspected that there are over 5 million people
in the U.S. that are infected with hepatitis C and perhaps as many as 200-400
million around the world. This patient population would be the target market for
a therapeutic vaccine. According to 1996 statistics, there are an estimated
36,000 new cases of hepatitis C diagnosed in the U.S. each year; 66% of those
infected are baby-boomers between the ages of 30-49 years old. Hepatitis C
causes chronic lever disease in 20% of those infected.

This often leads to cirrhosis of the liver, cancer of the liver and liver
failure. Each year hepatitis C causes 8,000-10,000 deaths. It is estimated that
hepatitis C costs the U.S. over $600 million in medical costs and lost work
(excluding liver transplants). For patients who do not undergo liver
transplants, the average lifetime cost of hepatitis C is over $100,000, a
staggering $500 billion total patient cost in today's dollars (5 million
patients x $100,000).

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For a safe and effective new immunotherapy product used in the treatment of
hepatitis C chronic infection, the annual U.S. sales based on a very
conservative 20% market share, would be estimated at $1 Billion (20% of 5
million = 1,000,000 x $1,000 per course of therapy).

OTHER INFORMATION WHICH YOU BELIEVE WILL SUPPORT A

DETERMINATION TO GRANT THE REQUESTED LICENSE

VIRIONICS is totally focused on the development and commercialization of this
core platform technology. We are building a company around this core technology
and strongly believe we can raise the capital and fund the research and
development of several products from this baseline vaccine platform technology.
Because of limited interest by other companies to date in an exclusive license
to develop therapeutic and preventative vaccine products in the field of
hepatitis C prevention and treatment, we request your consideration of granting
us the requested license. Also because of close location of our corporate
offices and research labs to the NIH campus, our intent to support continued R&D
efforts in the labs of the NIH inventors, we suggest this clearly justifies our
interest and dedication to this technology license and its medical applications.

VI.    FOR APPLICANTS FOREXCLUSIVE OR PARTIALLY EXCLUSIVE LICENSES ONLY

It is important that this particular technology become commercialized and
VIRIONICS is dedicated to its comprehensive development for hepatitis C
treatment and prevention. As U.S. taxpayers, we believe the Federal and public
interests will best be served by a small entrepreneureal U.S. company,
VIRIONICS, obtaining an exclusive license to this invention. It is a major
dis-incentive for the company and our private and institutional investors to
invest a tremendous amount of capital on a proprietary technology if several
other companies are allowed to practice the same inventions. The protection and
market exclusivity granted by an exclusive license is fundamental to the
company's success at raising the money needed to commercialize the products
envisioned from this enabling technology. The granting of non-exclusive licenses
to this important technology, or the division into much smaller and limited
fields-of-use, will not provide proper incentives for investment of risk
capital. A non-exclusive license is just not practical nowdays as a platform for
building a successful company. There is already tremendous market concentration
in the fields of infectious disease vaccines and immunotherapies, and the
exclusive licensing of these inventions will certainly not lessen competition in
these markets. The proposed license terms and scope of exclusivity are not that
different than other license agreements concluded in the past by the Federal
government, or by other academic or industrial organizations for other similar
technology. We feel the proposed terms are reasonable and just, but the final
terms of the license proposal can be modified as negotiated in the final license
agreement.

I certify, to the best of my knowledge, that all of the information provided on
this application and on attachments to this application is true and accurate.

x                 Joseph
Sinkule                                                                     
October 22, 2002 Signature of Applicant or Authorized Representative Date      
        Dr. Joseph A. Sinkule, President VIRIONICS CORPORATION  

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- 2 -

SCHEDULE 2- PERMITS AND LICENSES

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SCHEDULE 3

Form of Consulting Agreement Dr. Joseph Sinkule

To be drawn up and attached

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