Exhibit 10.1

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended. A complete copy of this document has been filed separately
with the Securities and Exchange Commission

 

PATENT LICENSE AGREEMENT

AGT. No. PM1300101

 

This Patent License Agreement is between the Licensor and the Licensee
identified below (collectively, “Parties”, or singly, “Party”).

 

No binding agreement between the Parties will exist until this Patent License
Agreement has been signed by both Parties. Unsigned drafts of this Patent
License Agreement shall not be considered offers.

 

Background

 

Licensor owns or controls Patent Rights. Licensee desires to secure the right
and license to use, develop, manufacture, market, and commercialize the Patent
Rights. Licensor has determined that such use, development, and
commercialization of the Patent Rights is in the public’s best interest and is
consistent with Licensor’s educational and research missions and goals. Licensor
desires to have the Patent Rights developed and used for the benefit of
Licensee, the inventors, Licensor, and the public.

 

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

 

The Terms and Conditions of Patent License attached hereto as Exhibit A are
incorporated herein by reference in their entirety (the “Terms and Conditions”).
In the event of a conflict between provisions of this Patent License Agreement
and the Terms and Conditions, the provisions in this Patent License Agreement
shall govern. Unless defined in this Patent License Agreement, capitalized terms
used in this Patent License Agreement shall have the meanings given to them in
the Terms and Conditions.

 

The section numbers used in the left hand column in the table below correspond
to the section numbers in the Terms and Conditions.

 

1. Definitions

 

  Effective Date               Licensor   The University of Texas at Austin, on
behalf of the Board of Regents of the University of Texas System, an agency of
the State of Texas, whose address is 3925 W. Braker Lane, Suite 1.9A (R3500),
Austin, Texas 78759.           

Licensee

 

  Synthetic Biologics, Inc., a Nevada corporation, with its principal place of
business at 617 Detroit Street, Suite 100, Ann Arbor, MI 48104         Contract
Year and Contract Quarters  

x Contract Year is 12-month period ending on December 31 and Contract Quarters
are 3-month periods ending on March 31, June 30, Sept. 30, Dec. 31

OR

¨ Other: Contract Year is 12-month period ending on (specify): [month and day];
Contract Quarters are 3-month periods ending on (specify): [month and day, Q1],
[month and day, Q2], [month and day, Q3], [month and day, Q4]

          Territory   Worldwide           Field   x All
fields       OR           ¨ Limited fields

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA The University of
Texas at Austin Page 1 Agreement No.: PM1300101

 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended. A complete copy of this document has been filed separately
with the Securities and Exchange Commission

 

  Patent Rights

 

  App. No./
Date of
Filing   Title   Inventor(s)   Jointly
Owned?
(Y/N; if Y,
with
whom?)   Prosecution Counsel  

13/236,530

September 19, 2011

  Pertussis Antibodies and Uses Thereof  

Jennifer A. Maynard

Jamie Sutherland

 

¨ Yes, w/[whom]

¨ No

  Kilpatrick Townsend & Stockton LLP

 

  USPTO Entity Status as of Effective Date

Check one box:

¨ Small                 x Large 

 

2.4. Diligence Milestones

 

  Milestones and deadlines   Milestone Events   Deadlines       1.  Begin Phase
I Clinical Trials           2.  Start Phase III Clinical Trials           3. 
First Regulatory Approval in the United States of America           4.  European
Medicines Agency (EMA) Approval           5.  Regulatory approval in an Asian
country    

 

3. Compensation

 

3.1(a) Patent expenses due
upon Effective Date   Amount   based on invoices
received as of:       $ 32,246.49   August 21, 2012

 

      Milestone Events   Milestone Fees 3.1(b) Milestone fees   1. Begin Phase I
Clinical Trials   $ 50,000.00       2. Start Phase III Clinical Trials   $
100,000.00       3. NDA submission in the United States of America   $
250,000.00       4. European Medicines Agency (EMA) Approval   $ 100,000.00    
  5. Regulatory approval in an Asian country   $ 100,000.00

 

3.1(c)

Scheduled license fee payments

 

 

$50,000.00 due on Effective Date

$50,000.00 due on December 31, 2013

$50,000.00 due on December 31, 2014

$25,000.00 due on December 31, 2015

        3.1(d) Sublicense Fees   22.5% of Non-Royalty Sublicensing Consideration
        3.1(e) Assignment fee   20% of consideration received by Licensee for
assignment of the Agreement, provided that such fee shall not apply in the case
of (i) a merger or sale of all or substantially all of the assets of the
Licensee or (ii) an assignment to an Affiliate.         3.2 Running royalty rate
(applies to Sales by
Licensee, Affiliates
and Sublicensees)   *****

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA The University of
Texas at Austin Page 2 Agreement No.: PM1300101

 

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended. A complete copy of this document has been filed separately
with the Securities and Exchange Commission

 

3.3 Minimum royalty
(includes Sublicense Fees paid)   N/A

 

18. Contact Information

 

  Licensee Contacts   Licensor Contacts  

Contact for Notice:

Attn: C. Evan Ballantyne

617 Detroit St., Suite 100

Ann Arbor, MI 48104

Fax: (734) 332-7878

Phone: (401) 215-6003

E-mail: EBallantyne@SyntheticBiologics.com

 

Accounting contact:

Attn: Julie Caudill

617 Detroit St., Suite 100

Ann Arbor, MI 48104

Fax: (734) 332-7878

Phone: (734) 332-7800 ext. 21

E-mail: JCaudill@SyntheticBiologics.com

 

Patent prosecution contact:

Attn: Dean Farmer, Ph.D., J.D.

Cooley LLP

500 Boylston Street

Boston, MA  02116-3736

Fax: (617) 937-2400

Phone: (617) 937-2370

 

 

Contact for Notice:

Attn: Contract Manager

3925 W. Braker Lane, Suite 1.9A (R3500)

Austin, TX 78759

Fax: 512.475.6894

Phone: 512.471.2995

E-mail: licensing@otc.utexas.edu

 

Payment and reporting contact:

Checks payable to “The University of Texas at Austin”

Attn: Accounting

3925 W. Braker Lane, Suite 1.9A (R3500)

Austin, TX 78759

Fax: 512.475.6894

Phone: 512.471.2995

E-mail: accounting@otc.utexas.edu

 

Patent prosecution contact:

Attn: Patents

3925 W. Braker Lane, Suite 1.9A (R3500)

Austin, TX 78759

Fax: 512.475.6894

Phone: 512.471.2995

E-mail: patents@otc.utexas.edu

 

For Licensor Administrative Purposes Only

 

Changes to Standard Form
Terms and Conditions 1 (definition of Licensed Product), 6.5, 7.2, 8.2, and 11.1

 

20. Special Provision. The Parties hereby agree to the following special
provisions set forth in this Section 20 with respect to this Patent License
Agreement.

 

20.1 New Inventions resulting from Sponsored Research. In addition to the
specific patent applications identified as Licensed Patents in Section 1 above,
“Licensed Patents” shall also include each new invention of the Licensor that
meets all of the following criteria (each, a “New Invention”):

 

(a) The invention results from the performance of a Sponsored Research Agreement
which is funded by Licensee, in accordance with a specific Sponsored Research
Agreement between Licensor and Licensee, for research in the Laboratory of Dr.
Jennifer A. Maynard; and

 

(b) The invention is within the “Field” of pertussis antibody and subunit
vaccine development; and

 

(c) Licensee gives written notice to Licensor of Licensee’s election to add the
invention (and related patent rights) to this Agreement, which notice is
received by Licensor within sixty (60) days after Licensee has received from
Licensor a written disclosure of such invention, which disclosure Licensor shall
be obligated to provide promptly following the receipt from the inventor; and

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA The University of
Texas at Austin Page 3 Agreement No.: PM1300101

  

 

 

 

Portions herein identified by [*****] have been omitted pursuant to a request
for confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended. A complete copy of this document has been filed separately
with the Securities and Exchange Commission

 

(d) Licensee pays an additional license fee of $10,000.00 at the time providing
the written notice in (c) above.

 

Notwithstanding anything in the foregoing, in the event that any new invention
results from the performance of a Sponsored Research Agreement which is funded
by Licensee, in accordance with a specific Sponsored Research Agreement between
Licensor and Licensee, for research in the Laboratory of Dr. Jennifer A.
Maynard, but such invention falls outside the “Field” (as defined in clause (ii)
above), Licensee’s ability to obtain a license to such invention shall be
governed by such Sponsored Research Agreement.

 

For the purposes of Section 7.3 of the Terms and Conditions, a breach by
Licensee of payment obligations under a Sponsored Research Agreement under which
invention disclosures are submitted to Licensor hereunder shall be considered a
breach of the Patent License Agreement and, if not cured in the time period in
Section 7.3, shall subject the Patent License Agreement to termination by
Licensor.

 

21. No Other Promises and Agreements; Representation by Counsel. Licensee
expressly warrants and represents and does hereby state and represent that no
promise or agreement which is not herein expressed has been made to Licensee in
executing this Patent License Agreement except those explicitly set forth herein
and in the Terms and Conditions, and that Licensee is not relying upon any
statement or representation of Licensor or its representatives. Licensee is
relying on Licensee’s own judgment and has had the opportunity to be represented
by legal counsel. Licensee hereby warrants and represents that Licensee
understands and agrees to all terms and conditions set forth in this Patent
License Agreement and said Terms and Conditions.

 

22. Deadline for Execution by Licensee. If this Patent License Agreement is
executed first by the Licensor and is not executed by the Licensee and received
by the Licensor at the address and in the manner set forth in Section 18 of the
Terms and Conditions within 30 days of the date of signature set forth under the
Licensor’s signature below, then this Patent License Agreement shall be null and
void and of no further effect.

 

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized
representatives to execute this Patent License Agreement.

 

 

LICENSOR: The University of Texas at Austin
on behalf of the Board of Regents
of the University of Texas System

 

By: /s/Daniel W. Sharp, J.D.

Daniel W. Sharp, J.D.

Interim Director

Office of Technology Commercialization

Date December 19, 2012

 

LICENSEE: SYNTHETIC BIOLOGICS, INC.

 

 

 

By: /s/ Jeffrey Riley

Jeffrey Riley

Chief Executive Officer

December 19, 2012

 

  

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA The University of
Texas at Austin Page 4 Agreement No.: PM1300101

 

 

 

 

EXHIBIT A

 Terms and Conditions of Patent License

 

These Terms and Conditions of Patent License (“Terms and Conditions”) are
incorporated by reference into the Patent License Agreement to which they are
attached. All Section references in these Terms and Conditions shall be
references to provisions in these Terms and Conditions unless explicitly stated
otherwise.

 

1.Definitions

 

“Affiliate” means any business entity more than 50% owned by Licensee, any
business entity which owns more than 50% of Licensee, or any business entity
that is more than 50% owned by a business entity that owns more than 50% of
Licensee.

 

“Agreement” means collectively (i) these Terms and Conditions, and (ii) the
Patent License Agreement.

 

“Contract Quarter” means the three-month periods indicated as the Contract
Quarter in Section 1 of the Patent License Agreement, or any stub period thereof
at the commencement of the Agreement or the expiration or termination of the
Agreement.

 

“Contract Year” means the 12-month periods indicated as the Contract Year in
Section 1 of the Patent License Agreement, or any stub period thereof at the
commencement of the Agreement or the expiration or termination of the Agreement.

 

“Effective Date” means the date indicated as the Effective Date in Section 1 of
the Patent License Agreement.

 

“Fair Market Value” means the cash consideration an unaffiliated, unrelated
buyer would pay in an arm’s length sale of a substantially identical item sold
in the same quantity, under the same terms, and at the same time and place.

 

“Field” means the field indicated as the Field identified in Section 1 of the
Patent License Agreement.

 

“Government” means any agency, department or other unit of the United States of
America or the State of Texas.

 

“Gross Consideration” means all cash and non-cash consideration (e.g.,
securities).

 

“Licensed Process” means a method or process whose practice or use is covered by
a Valid Claim.

 

“Licensed Product” means any product or component (i) whose manufacture, use,
sale, offer for sale or import is covered by any Valid Claim, or incorporates
non-patentable know how related to the Patent Rights (ii) which is made using a
Licensed Process or another Licensed Product.

 

“Licensed Service” means performance of a service for any consideration using a
Licensed Product, or the practice of a Licensed Process. For clarity, research
and development of Licensed Products by Licensee, its Affiliates, or a
Sublicensee does not constitute a Licensed Service.

 

“Licensee” means the Party identified as the Licensee in Section 1 of the Patent
License Agreement.

 

“Licensor” means the Party identified as the Licensor in Section 1 of the Patent
License Agreement.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-1

 

 

 

  

“Milestone Fees” means all fees identified as Milestone Fees in Section 3.1(b)
of the Patent License Agreement.

 

“Net Product Sales” means the Gross Consideration from the Sale of Licensed
Products less the following items directly attributable to the Sale of such
Licensed Products that are specifically identified on the invoice for such Sale
and borne by the Licensee, Affiliates, or Sublicensees as the seller: (a)
discounts and rebates actually granted; (b) sales, value added, use and other
taxes and government charges actually paid, excluding income taxes; (c) import
and export duties actually paid; (d) freight, transport, packing and transit
insurance charges actually paid or allowed; and (e) other amounts actually
refunded, allowed or credited due to rejections or returns, but not exceeding
the original invoiced amount.

 

Additionally, if Licensee, its Affiliates or Sublicensees use a Licensed Product
or a Licensed Process for its own internal purposes or otherwise in a situation
that does not involve a Sale for which a royalty is paid under Section 3.2, then
Net Product Sales shall also include an amount equal to the customary sale price
charged to a third party for the same Licensed Product or Licensed Process,
except for a reasonable quantity used internally solely for testing or quality
control purposes, marketing or demonstration purposes, or seeking governmental
approval (e.g., U.S. Food and Drug Administration clinical trial). If there is
no customary sale price, then the Net Product Sales shall be an amount equal to
the Fair Market Value.

 

“Net Service Sales” means the Gross Consideration received from the Sale of
Licensed Services less the following items, directly attributable to the Sale of
such Licensed Services that are specifically identified on the invoice for such
Sale and borne by the Licensee, Affiliates, or Sublicensees as the seller: (a)
discounts and rebates actually granted; (b) sales, value added, use and other
taxes and government charges actually paid, excluding income taxes; and (c)
other amounts actually refunded, allowed or credited due to rejections or
re-works, but not exceeding the original invoiced amount.

 

“Non-Royalty Sublicensing Consideration" means the Gross Consideration received
by the Licensee or its Affiliate from a Sublicensee in consideration of the
grant of a sublicense under the Patent Rights (including, without limitation,
license or option or distribution fees, fees to maintain license rights, and
bonus/milestone payments), but excluding amounts received as running royalties,
a profit share, or other revenue sharing based on Net Product Sales or Net
Service Sales for which Licensor receives a running royalty under Section 3.2.
For the avoidance of doubt, Non-Royalty Sublicensing Consideration shall not
include bona fide: (a) running royalties received by Licensee or an Affiliate
based on Net Product Sales or Net Service Sales that are royalty-bearing to
Licensor under Section 3.2, (b) purchase price for Licensee’s stock or other
securities not in excess of Fair Market Value, and (iii) amounts paid and used
exclusively for research and development of Licensed Products or Licensed
Services by Licensee.

 

“Patent License Agreement” means the particular Patent License Agreement to
which these Terms and Conditions are attached and incorporated into by
reference.

 

“Patent Rights” means the Licensor’s rights in (a) the patents and patent
applications listed in Section 1 of the Patent License Agreement; (b) all
non-provisional patent applications that claim priority to any provisional
application listed in Section 1 of the Patent License Agreement; and (c) all
divisionals, continuations, and such claims of continuations-in-part as are
entitled to claim priority to the aforesaid patents and/or patent applications,
and all reissues, reexaminations, extensions of, and foreign counterparts; and
(d) any patents that issue with respect to the aforesaid patent applications.
From time to time during the term of the Agreement, upon written agreement by
both parties, Licensee and Licensor shall update the list of all patent
applications and patents within the Patent Rights.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-2

 

 

 

 

“Prosecution Counsel” means the law firm or attorney who is handling the
prosecution of the Patent Rights. Prosecution Counsel as of the Effective Date
is identified in Section 1 of the Patent License Agreement.

 

“Quarterly Payment Deadline” means the day that is 30 days after the last day of
any particular Contract Quarter.

 

“Sell, Sale or Sold” means any transfer or other disposition of Licensed
Products or Licensed Services for which consideration is received by Licensee,
its Affiliates or Sublicensees. A Sale of Licensed Products or Licensed Services
will be deemed completed at the time Licensee or its Affiliate or its
Sublicensee receives such consideration.

 

“Sublicense Agreement” means any agreement or arrangement pursuant to which
Licensee (or an Affiliate or Sublicensee) grants to any third party any license
rights of Licensee under the Agreement.

 

“Sublicense Fee” means the fee specified in Section 3.1(d) of the Patent License
Agreement.

 

“Sublicensee” means any entity to whom an express sublicense has been granted
under the Patent Rights. For clarity, a third party wholesaler or distributor
who has no significant responsibility for marketing and promotion of the
Licensed Product or Licensed Services within its distribution territory or field
(i.e., the third party simply functions as a reseller), and who does not pay any
consideration to Licensee or an Affiliate for such wholesale or distributor
rights, shall not be deemed a Sublicensee; and the resale by such a wholesaler
or distributor shall not be treated as royalty bearing Net Sales by a
Sublicensee provided that a royalty is being paid by Licensee for the initial
transfer to the wholesaler or distributor pursuant to Section 3.2. This
definition does not limit Licensee’s rights to grant or authorize sublicenses
under the Agreement.

 

“Territory” means the territory so indicated as the Territory in Section 1 of
the Patent License Agreement.

 

“Valid Claim” means a claim of (i) an issued and unexpired patent included
within the Patent Rights unless the claim has been held unenforceable or invalid
by the final, un-reversed, and un-appealable decision of a court or other
government body of competent jurisdiction, has been irretrievably abandoned or
disclaimed, or has otherwise been finally admitted or determined to be invalid,
un-patentable or unenforceable, whether through reissue, reexamination,
disclaimer or otherwise, or (ii) a pending patent application within the Patent
Rights to the extent the claim continues to be prosecuted in good faith.

 

2.License Grant and Commercialization

 

2.1Grant

 

(a)Licensor grants to Licensee a royalty-bearing exclusive license under Patent
Rights to manufacture, have manufactured, distribute, have distributed, use,
offer for Sale, Sell, lease, loan and/or import Licensed Products in the Field
in the Territory and to perform Licensed Services in the Field in the Territory.

 

(b)This grant is subject to (i) the payment by Licensee to Licensor of all
consideration required under the Agreement, (ii) any rights of, or obligations
to, the Government as set forth in Section 11.2 (Government Rights), and (iii)
rights retained by Licensor to:

 

(1)Publish the scientific findings from research related to the Patent Rights;
and

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-3

  

 

 

 

(2)Manufacture, have manufactured, and use the Patent Rights for teaching,
research, patient care, education, and other educationally-related purposes; and

 

(3)Grant rights to, and transfer material embodiments of, the Patent Rights to
other academic institutions or non-profit research institutions for the purposes
identified in clauses (1) and (2) above.

 

(c)Licensor reserves all rights not expressly granted in the Agreement and
disclaims the grant of any implied rights to Licensee.

 

2.2Affiliates

Licensee may extend the license granted herein to any Affiliate provided that
the Affiliate agrees in writing to be bound by the Agreement to the same extent
as Licensee. Licensee agrees to deliver such written agreement to Licensor
within 30 calendar days following execution.

 

2.3Sublicensing

Licensee has the right to grant Sublicense Agreements under the Patent Rights
consistent with the terms of the Agreement, subject to the following:

    (a)A Sublicense Agreement shall not exceed the scope and rights granted to
Licensee hereunder. Sublicensee must agree in writing to be bound by the
applicable terms and conditions of the Agreement and shall indicate that
Licensor is a third party beneficiary and entitled to enforce the terms and
conditions of the Sublicense Agreement applicable to the Agreement. In the event
of termination of the Agreement, continued sublicense rights shall be governed
by Section 7.5(a) (Effect of Termination). Licensee may grant a Sublicensee the
right to grant further sub-Sublicense Agreements, in which case such
sub-Sublicense Agreements shall be treated as “Sublicense Agreements” and such
sub-Sublicensees shall be treated as “Sublicensees” for purposes of the
Agreement.

 

(b)Licensee shall deliver to Licensor a true, complete, and correct copy of each
Sublicense Agreement granted by Licensee, Affiliate or Sublicensee, and any
modification or termination thereof, within 30 days following the applicable
execution, modification, or termination of such Sublicense Agreement. If the
Sublicense Agreement is not in English, Licensee shall provide Licensor an
accurate English translation in addition to a copy of the original agreement.

 

(c)Notwithstanding any such Sublicense Agreement, Licensee will remain primarily
liable to Licensor for all of the Licensee’s duties and obligations contained in
the Agreement, including without limitation the payment of running royalties due
under Section 3.2 whether or not paid to Licensee by a Sublicensee. Any act or
omission of a Sublicensee that would be a breach of the Agreement if performed
by Licensee will be deemed to be a breach by Licensee unless Licensee complies
with the remaining provisions of this paragraph. Each Sublicense Agreement will
contain a right of termination by Licensee in the event that the Sublicensee
breaches the payment or reporting obligations affecting Licensor or any other
terms and conditions of the Sublicense Agreement that would constitute a breach
of the Agreement if such acts were performed by Licensee. In the event of a
Sublicensee breach, and if after a reasonable opportunity to cure as provided in
any such Sublicense Agreement (not to exceed 30 days for a payment breach and 60
days for a non-payment breach), such Sublicensee fails to cure such Sublicensee
breach, then the Licensee will terminate the Sublicense Agreement within 30 days
thereafter, with copy of such written notice of termination to Licensor, unless
agreed to in writing otherwise by Licensor.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-4

 

 

 

 

2.4Diligent Commercialization

Licensee by itself or through its Affiliates and Sublicensees will use diligent
efforts to make Licensed Products or Licensed Services commercially available in
the Field in the Territory. Without limiting the foregoing, Licensee will (a)
maintain a reasonably funded, ongoing and active research, development,
manufacturing, regulatory, marketing or sales program required to make License
Products or Licensed Services commercially available, and (b) fulfill the
milestone events specified in Section 2.4 of the Patent License Agreement by the
deadlines indicated therein and (c) use diligent and commercially reasonable
efforts to perform and complete the plans described in the annual report
submitted pursuant to Section 4.2 (Annual Written Progress Report). If the
obligations under this Section 2.4 are not fulfilled, Licensor may treat such
failure as a breach in accordance with Section 7.3(b).

 

3.Compensation

 

In consideration of rights granted to Licensee, Licensee will pay Licensor the
following fees and royalties. All fees and royalties are not refundable and are
not creditable against other fees and royalties. Each payment will reference the
Patent License Agreement number and will be sent to Licensor’s payment and
accounting contact in Section 18 (Notices) of the Patent License Agreement.

 

3.1Non-Royalty Payments due from Licensee

 

(a)Patent Expenses. Licensee will reimburse Licensor for the past patent
expenses stated in Section 3.1(a) of the Patent License Agreement within 15 days
after the Effective Date. The stated amount is the current estimate for past
patent expenses based on invoices received by the Licensor through the stated
date. Licensee’s obligations to pay all past and future patent expenses pursuant
to Section 6 (Patent Expenses and Prosecution) will not be limited by such
amount.

 

(b)Milestone Fees. Licensee will pay Milestone Fees indicated in Section 3.1(b)
of the Patent License Agreement by the Quarterly Payment Deadline for the
Contract Quarter in which the milestone events set forth in Section 3.1(b) of
the Patent License Agreement are achieved.

 

(c)Scheduled License Fees. Licensee will pay license fees in the amounts set
forth in Sections 3.1(c) of the Patent License Agreement in accordance with the
stated schedule.

 

(d)Sublicense Fees. Licensee will pay Sublicense Fees indicated in Section
3.1(d) of the Patent License Agreement on or before the Quarterly Payment
Deadline for the Contract Quarter.

 

(e)Assignment Fee. Licensee will pay the assignment fee set forth in Section
3.1(e) of the Patent License Agreement within 15 days of the assignment of the
Agreement.

 

3.2Royalties

Licensee will pay a running royalty at the rate set forth in Section 3.2 of the
Patent License Agreement on Net Product Sales and Net Service Sales in each
Contract Quarter, payable on or before the Quarterly Payment Deadline for such
Contract Quarter, subject to the following:

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-5

  

 

 

 

(a)No more than one royalty shall be paid to Licensor hereunder with respect to
the Sale of any one unit of Licensed Product or Licensed Service, whether or not
more than one patent or Valid Claim is applicable to the Licensed Product or
Licensed Service, or the development, manufacture, or performance thereof.

 

(b)No royalty shall be payable under this Section 3.2 with respect to (i) Sales
to an Affiliate or Sublicensee of a particular unit of Licensed Product that is
used by such Affiliate or Sublicensee to perform a Licensed Service if Licensor
is paid a royalty on the Sale of such Licensed Service, (ii) the Sale of
Licensed Products between or among Licensee, its Affiliates, and Sublicensees
for re-sale purposes, provided Licensor is paid a royalty with respect to the
re-sale, or (iii) payments that constitute Non-Royalty Sublicensing
Consideration.

 

3.3Minimum Royalties and Sublicense Fees

If royalties and Sublicense Fees paid to Licensor do not reach the minimum
royalty amounts stated in Section 3.3 of the Patent License Agreement for the
specified periods, Licensee will pay Licensor on or before the Quarterly Payment
Deadline for the last Contract Quarter in the stated period an additional amount
equal to the difference between the stated minimum royalty amount and the actual
royalties and Sublicense Fees paid to Licensor.

 

3.4Non-cash Consideration

If Licensee receives or anticipates receipt of non-cash consideration from Sales
or Sublicenses, the manner in which Licensor will receive its compensation under
the Agreement with respect to such non-cash consideration will be negotiated in
good faith and timely agreed to by the Parties.

 

4.Reports and Plans

 

The reports specified in this Section 4 will be sent to Licensor’s payment and
reporting contact identified in Section 18 (Notices) of the Patent License
Agreement. If Licensor requests to have information submitted in a particular
format, Licensee will use reasonable efforts to comply with such request.

 

4.1Quarterly Payment and Milestone Reports

On or before each Quarterly Payment Deadline, Licensee will deliver to Licensor
a true and accurate report, certified by an officer of Licensee, giving such
particulars of the business conducted by Licensee, its Affiliates and its
Sublicensees (including copies of reports provided by Sublicensees and
Affiliates to Licensee) during the preceding Contract Quarter under the
Agreement as necessary for Licensor to account for Licensee’s payments
hereunder, even if no payments are due. The reports shall continue to be
delivered after the termination or expiration of the Agreement until such time
as all Licensed Products permitted to be Sold after termination or expiration
have been Sold or destroyed. Licensee shall provide information in sufficient
detail to enable the royalties payable hereunder to be determined and to
calculate all of the amounts payable under the Agreement. The report shall
include:

 

(a)The name of the Licensee, the Patent License Agreement number, and the period
covered by the report;

 

(b)The name of any Affiliates and Sublicensees whose activities are also covered
by the report;

 

(c)Identification of each Licensed Product and Licensed Service for which any
royalty payments have become payable;

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-6

 

 

 

 

(d)Net Product Sales and Net Service Sales segregated on a product-by-product
basis, and a country-by-country basis, or an affirmative statement that no Sales
were made. The report shall also itemize the permitted deductions from the Gross
Consideration used to arrive at the resulting Net Product Sales and Net Service
Sales, on a product-by-product and country-by-country basis;

(e)The applicable royalty rate;

(f)An affirmative statement of whether any milestones with deadlines in that
Contract Quarter under Section 2.4 and any milestones under Section 3.1(b) were
met or not, and the resulting Milestone Fee payable;

(g)Non-Royalty Sublicensing Consideration received by Licensee segregated on a
Sublicense-by-Sublicense basis, or an affirmative statement that none was
received;

(h)If any consideration was received in currencies other than U.S. dollars, the
report shall describe the currency exchange calculations; and

(i)Any changes in accounting methodologies used to account for and calculate the
items included in the report since the previous report.

 

4.2Annual Written Progress Report and Commercialization Plan

Within 45 days following the end of each Contract Year, Licensee will deliver to
Licensor a true and accurate written progress report and commercialization plan,
certified by an officer of Licensee, that summarizes (i) Licensee’s efforts and
accomplishments during the Contract Year to diligently commercialize Licensed
Products and Licensed Services, and (ii) Licensee’s development and
commercialization plans with respect to Licensed Products and Licensed Services
for the next Contract Year. The report shall also cover such activities by
Affiliates and Sublicensees. The report shall contain the following information
to the extent relevant to the activities under the Agreement:

 

(a)The name of the Licensee, the Patent License Agreement number, the names of
any Affiliates and Sublicensees, and the products and services being developed
and/or commercialized;

(b)The progress toward completing and the plans for completing the applicable
milestone events pursuant to Sections 2.4 and 3.1(b);

 

(c)The research and development activities, including status and plans for
obtaining any necessary governmental approvals, performed during the past year,
and the plans for research and development activities for the next year; and

 

(d)The marketing activities for the past year and planned for the next year, and
Licensee’s internal estimate for Sales for the next year.

 

4.3Government and Economic Development Reporting

If Licensor requests, Licensee will provide information for Licensor’s
Government and economic development reporting purposes, including the following:

 

(a)Number and geographic location of new full-time employees created during the
past Contract Year; total number and geographic location of full-time employees
of Licensee at the end of such Contract Year;

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-7

 

 

 

(b)Dollar amount of new equity financing received by Licensee during the past
Contract Year, and current capitalization, including number and class of
outstanding securities;

(c)Location and square footage of facilities; and

(d)Other information required under Federal and state law.

 

This information shall be treated as Licensee’s Confidential Information;
provided that Licensor is entitled to combine such information with similar
information from other Licensor licensees and publicly report such combined
aggregate information, without identifying Licensee’s separate specific
applicable numbers. If and when Licensee has more than 200 full-time employees,
then no further economic development reports will be required from Licensee.

 

5.Payment, Records, and Audits

 

5.1Payments

All amounts referred to in the Patent License Agreement are expressed in U.S.
dollars without deductions for taxes, assessments, fees, or charges of any kind.
Each payment will reference the agreement number set forth at the beginning of
the Patent License Agreement. All payments to Licensor will be made in U.S.
dollars by check or wire transfer (Licensee to pay all wire transfer fees)
payable to the payee identified in Section 18 of the Patent License Agreement
and sent to the payment and reporting contact in Section 18 (Notices) of the
Patent License Agreement.

 

5.2Sales Outside the U.S.

If any currency conversion shall be required in connection with the calculation
of payments hereunder, such conversion shall be made using the rate used by
Licensee for its financial reporting purposes in accordance with Generally
Accepted Accounting Principles (or foreign equivalent) or, in the absence of
such rate, using the average of the buying and selling exchange rate for
conversion between the foreign currency and U.S. Dollars, for current
transactions as reported in The Wall Street Journal on the last business days of
the Contract Quarter to which such payment pertains. Licensee may not make any
tax withholdings from payments to Licensor, but Licensor agrees to supply to
Licensee, upon written request, appropriate evidence from appropriate U.S.
governmental agencies showing that Licensor is a resident of the United States
of America for purposes of the U.S. income tax laws and is tax-exempt under such
income tax laws.

 

5.3Late Payments

Amounts that are not paid when due will accrue a late charge from the due date
until paid, at a rate equal to 1.0% per month (or the maximum allowed by law, if
less).

 

5.4Records

For a period of six years after the Contract Quarter to which the records
pertain, Licensee agrees that it and its Affiliates and Sublicensees will each
keep complete and accurate records of their Sales, Net Product Sales, Net
Service Sales, Milestone Fees, and Non-Royalty Sublicensing Consideration in
sufficient detail to enable such payments to be determined and audited.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-8

 

 

 

 

5.5Auditing

Licensee and its Affiliates will permit Licensor or its representatives, at
Licensor’s expense, to periodically examine books, ledgers, and records during
regular business hours, at Licensee’s or its Affiliate’s place of business, on
at least 30 days advance notice, to the extent necessary to verify any payment
or report required under the Agreement. For each Sublicensee, Licensee shall
obtain such audit rights for Licensor or itself. If Licensee obtains such audit
rights for itself, it will promptly conduct an audit of the Sublicensee’s
records upon Licensor’s request, and Licensee will furnish to Licensor a copy of
the findings from such audit. No more than one audit of Licensee, each
Affiliate, and each Sublicensee shall be conducted under this Section 5.5 in any
calendar year. If any amounts due Licensor have been underpaid, then Licensee
shall immediately pay Licensor the amount of such underpayment plus accrued
interest due in accordance with Section 5.3. If the amount of underpayment is
equal to or greater than 5% of the total amount due for the records so examined,
Licensee will pay the cost of such audit. Such audits may, at Licensor’s sole
discretion, consist of a self-audit conducted by Licensee at Licensee’s expense
and certified in writing by an authorized officer of Licensee. All information
examined pursuant to this Section 5.5 shall be deemed to be the Confidential
Information of the Licensee. Further, whenever Licensee and/or its Affiliates
and Sublicensees has its books and records audited by an independent certified
public accountant, Licensee and/or its Affiliates and Sublicensees will, within
30 days of the conclusion of such audit, provide Licensor with a written
statement of said auditor, setting forth the calculation of amounts due to
Licensor over the time period audited, as determined from the books and records
of the Licensee, Affiliate or Sublicensee; but said auditor does not need to
give any audit opinion with said statement.

 

6.Patent Expenses and Prosecution

 

6.1Patent Expenses

Licensee shall pay for all past documented, out-of-pocket expenses incurred by
Licensor for filing, prosecuting, enforcing, defending and maintaining Patent
Rights and related patent searches through the Effective Date of the Agreement,
including those identified in Section 3.1(a) of the Patent License Agreement,
and all such future expenses incurred by Licensor, for so long as, and in such
countries as the Agreement remains in effect. Licensee will pay all patent
expenses (except for the payment called for under Section 3.1(a)), including
past expenses that have not been invoiced as of the date indicated in Section
3.1(a) of the Patent License Agreement and future expenses, within 30 days after
Licensee’s receipt of an invoice. At the election of Licensor, Licensee will
either pay Prosecution Counsel directly for patent expenses or will reimburse
Licensor for such patent expenses. Patent expense payment delinquencies (whether
owed directly to Prosecution Counsel or to Licensor) will be considered a
payment default under Section 7.3(a).

 

6.2Direction of Prosecution

Licensor will confer with Licensee to develop a strategy for the prosecution and
maintenance of Patent Rights. Licensor will request that copies of all documents
prepared by the Prosecution Counsel for submission to governmental patent
offices be provided to Licensee for review and comment prior to filing, to the
extent practicable under the circumstances. At its discretion, Licensor may
allow Licensee to instruct Prosecution Counsel directly, provided, that (a)
Licensor will maintain final authority in all decisions regarding the
prosecution and maintenance of the Patent Rights, (b) Licensor may revoke this
authorization to instruct Prosecution Counsel directly at any time, and (c) the
Prosecution Counsel remains counsel to the Licensor with an appropriate contract
(and shall not jointly represent Licensee unless requested by Licensee and
approved by Licensor, and an appropriate engagement letter and conflict waiver
are in effect). If Licensee wishes to instruct Prosecution Counsel directly or
change Prosecution Counsel, Licensee may request to do so by following the
Licensor’s procedures for such. Licensor reserves in its sole discretion the
ability to change Prosecution Counsel and to approve or disapprove any requested
changes by Licensee. The Parties agree that they share a common legal interest
to get valid enforceable patents and that Licensee will maintain as privileged
all information received pursuant to this Section.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-9

 

 

 

 

6.3Ownership

All patent applications and patents will be in the name of Licensor (and any
co-owner identified in Section 1 of the Patent License Agreement) and owned by
Licensor (and such co-owner, if any). No payments due under the Agreement will
be reduced as the result of co-ownership interests in the Patent Rights by
Licensee or any other party.

 

6.4Foreign Filings

In addition to the U.S., the Patent Rights shall, subject to applicable bar
dates, be pursued in such foreign countries as Licensee so designates in writing
to Licensor in sufficient time to reasonably enable the preparation of such
additional filings, and in those foreign countries in which Licensor has filed
applications prior to the Effective Date. If Licensee does not choose to pursue
patent rights in a particular foreign country and Licensor chooses to do so,
Licensor shall so notify Licensee and thereafter said patent application or
patent shall no longer be included in the Patent Rights and Licensee shall have
no further rights thereto. Licensor shall have the right to make alternative
arrangements with Licensee for upfront payment of foreign patent expenses.

 

6.5Withdrawal from Paying Patent Costs

If at any time Licensee wishes to cease paying for any costs for a particular
Patent Right or for patent prosecution in a particular jurisdiction, Licensee
must give Licensor at least 60 days prior written notice and Licensee will
continue to be obligated to pay for the patent costs which reasonably accrue
during said notice period. Thereafter, said patent application or patent shall
no longer be included in the Patent Rights and Licensee shall have no further
rights thereto.

 

6.6U.S. Patent and Trademark Office Entity Size Status

Licensee represents that as of the Effective Date the entity size status of
Licensee in accordance with the regulations of the U.S. Patent and Trademark
Office is as set forth in Section 1 of the Patent License Agreement. Licensee
will inform Licensor in writing on a timely basis of any change in its U.S.
Patent and Trademark Office entity size status.

 

7.Term and Termination

 

7.1Term

Unless earlier terminated as provided herein, the term of the Agreement will
commence on the Effective Date and continue until the last date of expiration or
termination of the Patent Rights.

 

7.2Termination by Licensee

Licensee, at its option, may terminate the Agreement by providing Licensor
written notice of intent to terminate, which such termination effective will be
60 days following receipt of such notice by Licensor.

 

7.3Termination by Licensor

Licensor, at its option, may immediately terminate the Agreement, or any part of
Patent Rights, or any part of Field, or any part of Territory, or the exclusive
nature of the license grant, upon delivery of written notice to Licensee of
Licensor’s decision to terminate, if any of the following occur:

 

(a)Licensee becomes in arrears in any payments due under the Agreement, and
Licensee fails to make the required payment within 30 days after delivery of
written notice from Licensor; or

 

(b)Licensee is in breach of any non-payment provision of the Agreement, and does
not cure such breach within 60 days after delivery of written notice from
Licensor; or

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-10  

 

 

 

 

(c)Licensor delivers notice to Licensee of three or more actual breaches of the
Agreement in any 12-month period, even in the event that Licensee cures such
breaches in the allowed period; or

 

(d)Licensee or its Affiliate or Sublicensee initiates any proceeding or action
to challenge the validity, enforceability, or scope of one or more of the Patent
Rights, or assist a third party in pursuing such a proceeding or action.

 

7.4Other Conditions of Termination

The Agreement will terminate:

 

(a)Immediately without the necessity of any action being taken by Licensor or
Licensee, (i) if Licensee becomes bankrupt or insolvent, or (ii) Licensee’s
Board of Directors elects to liquidate its assets or dissolve its business, or
(iii) Licensee ceases its business operations, or (iv) Licensee makes an
assignment for the benefit of creditors or (v) if the business or assets of
Licensee are otherwise placed in the hands of a receiver, assignee or trustee,
whether by voluntary act of Licensee or otherwise; or

 

(b) At any time by mutual written agreement between Licensee and Licensor.

 

7.5Effect of Termination

If the Agreement is terminated for any reason:

 

(a)All rights and licenses of Sublicensees shall terminate upon termination of
the Agreement; provided however, if the Sublicense Agreement is for all of the
Field for all of the Territory, and the Sublicensee is in good standing and
agrees in writing to assume all of the obligations of Licensee and provides
Licensor with written notice thereof within 30 days after termination of the
Agreement, then such Sublicense Agreement shall survive; and

 

(b)Licensee shall cease making, having made, distributing, having distributed,
using, selling, offering to sell, leasing, loaning and importing any Licensed
Products and performing Licensed Services by the effective date of termination;
and

 

(c)Licensee shall tender payment of all accrued royalties and other payments due
to Licensor as of the effective date of termination; and

 

(d)Nothing in the Agreement will be construed to release either Party from any
obligation that matured prior to the effective date of termination; and

 

(e)The provisions of Sections 8 (Confidentiality), 9 (Infringement and
Litigation), 11 (Representations and Disclaimers), 12 (Limit of Liability), 13
(Indemnification), 14 (Insurance), 17 (Use of Name), 18 (Notices), and 19
(General Provisions) will survive any termination or expiration of the
Agreement. In addition, the provisions of Sections 3 (Compensation), 4.1
(Quarterly Payment and Milestone Reports), 5 (Payment, Records and Audits), and
6.1 (Patent Expenses) shall survive with respect to all activities and payment
obligations accruing prior to the termination or expiration of the Agreement.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-11  

 

 

 

 

8.Confidentiality

 

8.1Definition

“Confidential Information” means all information that is of a confidential and
proprietary nature to Licensor or Licensee and provided by one Party to the
other Party under the Agreement.

 

8.2Protection and Marking

Licensor and Licensee each agree that all Confidential Information disclosed in
tangible form, and marked “confidential” and forwarded to one by the other, or
if disclosed orally, is designated as confidential at the time of disclosure and
within thirty (30) days after disclosure shall be furnished to recipient in
written or electronic form conspicuously marked as, “Confidential” by discloser:
(i) is to be held in strict confidence by the receiving Party, (ii) is to be
used by and under authority of the receiving Party only as authorized in the
Agreement, and (iii) shall not be disclosed by the receiving Party, its agents
or employees without the prior written consent of the disclosing Party or as
authorized in the Agreement. Licensee has the right to use and disclose
Confidential Information of Licensor reasonably in connection with the exercise
of its rights under the Agreement, including without limitation disclosing to
Affiliates, Sublicensees, potential investors, acquirers, and others on a need
to know basis, if such Confidential Information is provided under conditions
which reasonably protect the confidentiality thereof. Each Party’s obligation of
confidence hereunder includes, without limitation, using at least the same
degree of care with the disclosing Party’s Confidential Information as it uses
to protect its own Confidential Information, but always at least a reasonable
degree of care.

 

8.3Confidentiality of Terms of Agreement

Each Party agrees not to disclose to any third party the terms of the Agreement
without the prior written consent of the other Party hereto, except each Party
may disclose the terms of the Agreement: (a) to advisors, actual or potential
Sublicensees, acquirers or investors, and others on a need to know basis, in
each case, under appropriate confidentiality obligations substantially similar
to those of this Section 8; and (b) to the extent necessary to comply with
applicable laws and court orders (including, without limitation, The Texas
Public Information Act, as may be amended from time to time, other open records
laws, decisions and rulings, and securities laws, regulations and guidance). If
the Agreement is not for all fields of use, then Licensor may disclose the Field
to other potential third party licensees. Notwithstanding the foregoing, the
existence of the Agreement shall not be considered Confidential Information.

 

8.4Disclosure Required by Court Order or Law

If the receiving Party is required to disclose Confidential Information of
another Party hereto, or any terms of the Agreement, pursuant to the order or
requirement of a court, administrative agency, or other governmental body or
applicable law, the receiving Party may disclose such Confidential Information
or terms to the extent required, provided that the receiving Party shall use
reasonable efforts to provide the disclosing Party with reasonable advance
notice thereof to enable the disclosing Party to seek a protective order and
otherwise seek to prevent such disclosure. To the extent that Confidential
Information so disclosed does not become part of the public domain by virtue of
such disclosure, it shall remain Confidential Information protected pursuant to
Section 8.

 

8.5Copies

Each Party agrees not to copy or record any of the Confidential Information of
the other Party, except as reasonably necessary to exercise its rights or
perform its obligations under the Agreement, and for archival and legal
purposes.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-12  

 

 

 

 

8.6Continuing Obligations

Subject to the exclusions listed in Section 8.7, the Parties’ confidentiality
obligations under the Agreement will survive termination of the Agreement and
will continue for a period of five years thereafter.

 

8.7Exclusions

Information shall not be considered Confidential Information of a disclosing
Party under the Agreement to the extent that the receiving Party can establish
by competent written proof that such information:

 

(a)Was in the public domain at the time of disclosure; or

 

(b)Later became part of the public domain through no act or omission of the
recipient Party, its employees, agents, successors or assigns in breach of the
Agreement; or

 

(c)Was lawfully disclosed to the recipient Party by a third party having the
right to disclose it not under an obligation of confidentiality; or

 

(d)Was already known by the recipient Party at the time of disclosure; or

 

(e)Was independently developed by the recipient Party without use of the
disclosing Party’s Confidential Information.

 

8.8Copyright Notice

The placement of a copyright notice on any Confidential Information will not be
construed to mean that such information has been published and will not release
the other Party from its obligation of confidentiality hereunder

 

9.Infringement and Litigation

 

9.1Notification

If either Licensor’s designated office for technology commercialization or
Licensee becomes aware of any infringement or potential infringement of Patent
Rights, each Party shall promptly notify the other of such in writing.

 

9.2Licensee’s Enforcement Rights

Licensee shall enforce the Patent Rights against any infringement by a third
party. Licensee shall be responsible for payment of all fees and
expenses associated with such enforcement incurred by Licensee and incurred by
Licensor in providing cooperation or joining as a party as provided in Section
9.4. Licensee agrees to pay Licensor a percentage equivalent to the Sublicense
Fee rate set forth in Section 3.1(d) of the Patent License Agreement on any
monetary recovery, including any punitive damages, in excess of Licensee’s
documented, third-party expenses in enforcing the Patent Rights and amounts
reimbursed Licensor under this Section 9.2.

 

9.3Licensor’s Enforcement Rights

If Licensee does not file suit within six months after a written request by
Licensor to initiate an infringement action, then Licensor shall have the right,
at its sole discretion, to bring suit to enforce any Patent Right licensed
hereunder against the infringing activities, with Licensor retaining all
recoveries from such enforcement. If Licensor pursues such infringement action,
Licensor may, as part of the resolution of such efforts, grant non-exclusive
license rights to the alleged infringer notwithstanding Licensee’s exclusive
license rights.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-13  

 

 

 

 

9.4Cooperation between Licensor and Licensee

In any infringement suit or dispute, the Parties agree to cooperate fully with
each other. At the request of the Party bringing suit, the other Party will
permit reasonable access after reasonable advance notice to all relevant
personnel, records, papers, information, samples, specimens, etc., during
regular business hours.

 

If it is necessary to name Licensor as a party in such action, then Licensee
must first obtain Licensor’s prior written permission, which permission shall
not be unreasonably withheld, provided that Licensor shall have reasonable prior
input on choice of counsel on any matter where such counsel represents Licensor,
and Licensee and such counsel agree to follow all required procedures of the
Texas Attorney General regarding retention of outside counsel for state
entities.

 

10.Export Compliance

 

Licensee understands that the Arms Export Control Act (AECA), including its
implementing International Traffic In Arms Regulations (ITAR), and the Export
Administration Act (EAA), including its Export Administration Regulations (EAR),
are some (but not all) of the laws and regulations that comprise the U.S. export
laws and regulations. Licensee further understands that the U.S. export laws and
regulations include (but are not limited to): (a) ITAR and EAR
product/service/data-specific requirements; (b) ITAR and EAR ultimate
destination-specific requirements; (c) ITAR and EAR end user-specific
requirements; (d) Foreign Corrupt Practices Act; and (e) anti-boycott laws and
regulations. Licensee will comply with all then-current applicable export laws
and regulations of the U.S. Government (and other applicable U.S. laws and
regulations) pertaining to the Licensed Products and Licensed Services
(including any associated products, items, articles, computer software, media,
services, technical data, and other information). Licensee certifies that it
will not, directly or indirectly, export (including any deemed export), nor
re-export (including any deemed re-export) the Licensed Products and Licensed
Services (including any associated products, items, articles, computer software,
media, services, technical data, and other information) in violation of
applicable U.S. laws and regulations. Licensee will include a provision in its
agreements, substantially similar to this Section 10, with its Sublicensees,
third party wholesalers and distributors, and physicians, hospitals or other
healthcare providers who purchase a Licensed Product, requiring that these
parties comply with all then-current applicable U.S. export laws and regulations
and other applicable U.S. laws and regulations.

 

11.Representations and Disclaimers

 

11.1Licensor Representations

Except for the rights, if any, of the Government as set forth in Section 11.2,
Licensor represents and warrants to Licensee that to the knowledge of Licensor’s
designated office for technology commercialization (i) Licensor is the owner or
agent of the entire right, title, and interest in and to Patent Rights (other
than the right, title and interest of any joint owner identified in Section 1 of
the Patent License Agreement), (ii) Licensor has the right to grant licenses
hereunder, and (iii) Licensor has not knowingly granted and will not knowingly
grant licenses or other rights under the Patent Rights that are in conflict with
the terms and conditions in the Agreement and (iv) Licensor is not aware of any
infringement related to the Patent Rights.

 

11.2Government Rights

Licensee understands that Patent Rights may have been developed under a funding
agreement with Government and, if so, that Government may have certain rights
relative thereto. The Agreement is made subject to the Government’s rights under
any such agreement and under any applicable Government law or regulation. To the
extent that there is a conflict between any such agreement, such applicable law
or regulation and the Agreement, the terms of such Government agreement, and
applicable law or regulation, shall prevail. Licensee agrees that, to the extent
required by U.S. laws and regulations, Licensed Products used or Sold in the
U.S. will be manufactured substantially in the U.S., unless a written waiver is
obtained in advance from the U.S. Government.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-14  

 

 

 

 

11.3Licensor Disclaimers

EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 11.1, LICENSEE UNDERSTANDS AND
AGREES THAT LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE LICENSED PRODUCTS OR
LICENSED SERVICES, OR AS TO THE OPERABILITY OR FITNESS FOR ANY USE OR PARTICULAR
PURPOSE, MERCHANTABILITY, SAFETY, EFFICACY, APPROVABILITY BY REGULATORY
AUTHORITIES, TIME AND COST OF DEVELOPMENT, PATENTABILITY, AND/OR BREADTH OF
PATENT RIGHTS. LICENSOR MAKES NO REPRESENTATION AS TO WHETHER ANY PATENT WITHIN
PATENT RIGHTS IS VALID, OR AS TO WHETHER THERE ARE ANY PATENTS NOW HELD, OR
WHICH WILL BE HELD, BY OTHERS OR BY LICENSOR THAT MIGHT BE REQUIRED FOR USE OF
PATENT RIGHTS IN FIELD. NOTHING IN THE AGREEMENT WILL BE CONSTRUED AS CONFERRING
BY IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS TO ANY PATENTS OR
TECHNOLOGY OF LICENSOR OTHER THAN THE PATENT RIGHTS, WHETHER SUCH PATENTS ARE
DOMINANT OR SUBORDINATE TO THE PATENT RIGHTS. LICENSOR HAS NO OBLIGATION TO
FURNISH TO LICENSEE ANY KNOW-HOW, TECHNOLOGY OR TECHNOLOGICAL INFORMATION.

 

11.4Licensee Representation

By execution of the Agreement, Licensee represents, acknowledges, covenants and
agrees (a) that Licensee has not been induced in any way by Licensor or its
employees to enter into the Agreement, and (b) that Licensee has been given an
opportunity to conduct sufficient due diligence with respect to all items and
issues pertaining to this Section 11 (Representations and Disclaimers) and all
other matters pertaining to the Agreement; and (c) that Licensee has adequate
knowledge and expertise, or has utilized knowledgeable and expert consultants,
to adequately conduct the due diligence, and (c) that Licensee accepts all risks
inherent herein. Licensee represents that it is a duly organized, validly
existing entity of the form indicated in Section 1 of the Patent License
Agreement, and is in good standing under the laws of its jurisdiction of
organization as indicated in Section 1 of the Patent License Agreement, and has
all necessary corporate or other appropriate power and authority to execute,
deliver and perform its obligations hereunder.

 

12.Limit of Liability

 

IN NO EVENT SHALL LICENSOR, THE UNIVERSITY SYSTEM IT GOVERNS, ITS MEMBER
INSTITUTIONS, INVENTORS, REGENTS, OFFICERS, EMPLOYEES, STUDENTS, AGENTS OR
AFFILIATED ENTERPRISES, BE LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL,
INCIDENTAL, EXEMPLARY, OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOSS OF PROFITS OR REVENUE) ARISING OUT OF OR IN CONNECTION WITH THE
AGREEMENT OR ITS SUBJECT MATTER, REGARDLESS OF WHETHER ANY SUCH PARTY KNOWS OR
SHOULD KNOW OF THE POSSIBILITY OF SUCH DAMAGES. OTHER THAN FOR CLAIMS AGAINST
LICENSEE FOR INDEMNIFICATION (SECTION 13) OR FOR MISUSE OR MISAPPROPRIATION OR
INFRINGEMENT OF LICENSOR’S INTELLECTUAL PROPERTY RIGHTS, LICENSEE WILL NOT BE
LIABLE TO LICENSOR FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS OR REVENUE) ARISING
OUT OF OR IN CONNECTION WITH THE AGREEMENT OR ITS SUBJECT MATTER, REGARDLESS OF
WHETHER LICENSEE KNOWS OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-15  

 

 

 

 

 

13.Indemnification

 

13.1 Indemnification Obligation

Subject to Section 13.2, Licensee agrees to hold harmless, defend and indemnify
Licensor, the university system it governs, its member institutions, its
Regents, officers, employees, students and agents (“Indemnified Parties”) from
and against any liabilities, damages, causes of action, suits, judgments, liens,
penalties, fines, losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees and other expenses of litigation) (collectively
“Liabilities”) resulting from claims or demands brought by third parties against
an Indemnified Party on account of any injury or death of persons, damage to
property, or any other damage or loss arising out of or in connection with the
Agreement or the exercise or practice by or under authority of Licensee, its
Affiliates or their Sublicensees, or third party wholesalers or distributors, or
physicians, hospitals or other healthcare providers who purchase a Licensed
Product, of the rights granted hereunder.

13.2 Conditions of Indemnification

Licensee shall have no responsibility or obligation under Section 13.1 for any
Liabilities to the extent caused by the gross negligence or willful misconduct
by Licensor. Obligations to indemnify, and hold harmless under Section 13.1 are
subject to: (a) to the extent authorized by the Texas Constitution and the laws
of the State of Texas, and subject to the statutory duties of the Texas Attorney
General, the Indemnified Party giving Licensee control of the defense and
settlement of the claim and demand; and (b) to the extent authorized by the
Texas Constitution and the laws of the State of Texas and subject to statutory
duties of the Texas Attorney General, the Indemnified Party providing assistance
reasonably requested by Licensee, at Licensee’s expense.

 

14.Insurance

 

14.1Insurance Requirements

Prior to any Licensed Product being used or Sold (including for the purpose of
obtaining regulatory approvals), and prior to any Licensed Service being
performed by Licensee, an Affiliate, or by a Sublicensee, and for a period of
five years after the Agreement expires or is terminated, Licensee shall, at its
sole cost and expense, procure and maintain commercial general liability
insurance in commercially reasonable and appropriate amounts for the Licensed
Product being used or Sold or the Licensed Service being performed. Licensee
shall use commercially reasonable efforts to have Licensor, the university
system it governs, its member institutions, Regents, officers, employees,
students and agents named as additional insureds. Such commercial general
liability insurance shall provide, without limitation: (i) product liability
coverage; (ii) broad form contractual liability coverage for Licensee’s
indemnification under the Agreement; and (iii) coverage for litigation costs.

 

14.2Evidence of Insurance and Notice of Changes

Upon request by Licensor, Licensee shall provide Licensor with written evidence
of such insurance. Additionally, Licensee shall provide Licensor with written
notice of at least 60 days prior to Licensee cancelling, not renewing, or
materially changing such insurance.

 

15.Assignment

 

The Agreement may not be assigned by Licensee without the prior written consent
of Licensor, which consent will not be unreasonably withheld. A merger or other
transaction in which the equity holders of Licensee prior to such event hold
less than a majority of the equity of the surviving or acquiring entity shall be
considered an assignment of the Agreement. For any permitted assignment to be
effective, (a) Licensee must be in good standing under this Agreement, (b) the
Licensee must pay Licensor the assignment fee pursuant to Section 3.1(e), and
(c) the assignee must assume in writing (a copy of which shall be promptly
provided to Licensor) all of Licensee’s interests, rights, duties and
obligations under the Agreement and agree to comply with all terms and
conditions of the Agreement as if assignee were an original Party to the
Agreement.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-16  

 

 

 

 

16.Governmental Markings

 

16.1Patent Markings

Licensee agrees that all Licensed Products Sold by Licensee, Affiliates, or
Sublicensees will be legibly marked with the number of any applicable patent(s)
licensed hereunder as part of the Patent Rights in accordance with each
country’s patent marking laws, including Title 35, U.S. Code, or if such marking
is not practicable, shall so mark the accompanying outer box or product insert
for Licensed Products accordingly.

 

16.2Governmental Approvals and Marketing of Licensed Products and or Licensed
Services

Licensee will be responsible for obtaining all necessary governmental approvals
for the development, production, distribution, Sale, and use of any Licensed
Product or performance of any Licensed Service, at Licensee’s expense,
including, without limitation, any safety studies. Licensee will have sole
responsibility for any warning labels, packaging and instructions as to the use
and the quality control for any Licensed Product or Licensed Service.

 

16.3Foreign Registration and Laws

Licensee agrees to register the Agreement with any foreign governmental agency
that requires such registration; and Licensee will pay all costs and legal fees
in connection with such registration. Licensee is responsible for compliance
with all foreign laws affecting the Agreement or the Sale of Licensed Products
and Licensed Services to the extent there is no conflict with United States law,
in which case United States law will control.

 

17.Use of Name

 

Licensee will not use the name, trademarks or other marks of Licensor (or the
name of the university system it governs, its member institutions, any of its
Regents or employees) without the advance written consent of Licensor. Licensor
may use Licensee’s name and logo for annual reports, brochures, website, and
internal reports without prior consent.

 

18.Notices

 

Any notice or other communication of the Parties required or permitted to be
given or made under the Agreement will be in writing and will be deemed
effective when sent in a manner that provides confirmation or acknowledgement of
delivery and received at the address set forth in Section 18 of the Patent
License Agreement (or as changed by written notice pursuant to this Section 18).
Notices required under the Agreement may be delivered via E-mail provided such
notice is confirmed in writing as indicated.

 

Notices shall be provided to each Party as specified in the “Contact for Notice”
address set forth in Section 18 of the Patent License Agreement. Each Party
shall update the other Party in writing with any changes in such contact
information.

 

19.General Provisions

 

19.1Binding Effect

The Agreement is binding upon and inures to the benefit of the Parties hereto,
their respective executors, administrators, heirs, permitted assigns, and
permitted successors in interest.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-17  

 

 

 

 

19.2Construction of Agreement

Headings are included for convenience only and will not be used to construe the
Agreement. The Parties acknowledge and agree that both Parties substantially
participated in negotiating the provisions of the Agreement; therefore, both
Parties agree that any ambiguity in the Agreement shall not be construed more
favorably toward one Party than the other Party, regardless of which Party
primarily drafted the Agreement.

 

19.3Counterparts and Signatures

The Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument. A Party may evidence its execution and delivery of the
Agreement by transmission of a signed copy of the Agreement via facsimile or
email.

 

19.4Compliance with Laws

Licensee will comply with all applicable federal, state and local laws and
regulations, including, without limitation, all export laws and regulations.

 

19.5Governing Law

The Agreement will be construed and enforced in accordance with laws of the U.S.
and the State of Texas, without regard to choice of law and conflicts of law
principles.

 

19.6Modification

Any modification of the Agreement will be effective only if it is in writing and
signed by duly authorized representatives of both Parties. No modification will
be made by email communications.

 

19.7Severability

If any provision hereof is held to be invalid, illegal or unenforceable in any
jurisdiction, the Parties hereto shall negotiate in good faith a valid, legal
and enforceable substitute provision that most nearly reflects the original
intent of the Parties, and all other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be construed in order to carry
out the intentions of the Parties hereto as nearly as may be possible. Such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such other provisions in any other jurisdiction,
so long as the essential essence of the Agreement remains enforceable.

 

19.8Third Party Beneficiaries

Nothing in the Agreement, express or implied, is intended to confer any
benefits, rights or remedies on any entity, other than the Parties and their
permitted successors and assigns. However, if there is a joint owner of any
Patent Rights identified in Section 1 of the Patent License Agreement (other
than Licensee), then Licensee hereby agrees that the following provisions of
these Terms and Conditions extend to the benefit of the co-owner identified
therein (excluding the Licensee to the extent it is a co-owner) as if such
co-owner was identified in each reference to the Licensor: the retained rights
under clause (b) of Section 2.1; Section 11.3 (Licensor Disclaimers); Section 12
(Limitation of Liability); Section 13 (Indemnification); Section 14.1 (Insurance
Requirements); Section 17 (Use of Name); and Section 19.10 (Sovereign Immunity,
if applicable).

 

19.9Waiver

Neither Party will be deemed to have waived any of its rights under the
Agreement unless the waiver is in writing and signed by such Party. No delay or
omission of a Party in exercising or enforcing a right or remedy under the
Agreement shall operate as a waiver thereof.

 

19.10Sovereign Immunity

Nothing in the Agreement shall be deemed or treated as any waiver of Licensor’s
sovereign immunity.

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-18  

 

 

 

 

19.11Entire Agreement

The Agreement constitutes the entire Agreement between the Parties regarding the
subject matter hereof, and supersedes all prior written or verbal agreements,
representations and understandings relative to such matters.

 

19.12Claims Against Licensor for Breach of Agreement

Licensee acknowledges that any claim for breach of the Agreement asserted by
Licensee against Licensor shall be subject to Chapter 2260 of the Texas
Government Code and that the process provided therein shall be Licensee’s sole
and exclusive process for seeking a remedy for any and all alleged breaches of
the Agreement by Licensor or the State of Texas.

 

19.13Grant of Security Interest

Licensee hereby grants to Licensor a security interest in and to Licensee's
rights under the Patent License Agreement, as collateral security for the
payment by Licensee of any and all sums which may be owed from time to time by
Licensee to Licensor. Licensor shall have all rights of a secured party as
specified in the Texas Uniform Commercial Code relative to this security
interest and the enforcement thereof. Licensee hereby authorizes Licensor to
file with the appropriate governmental agencies appropriate UCC-1 financing
statements to evidence this security interest.

 

— END OF EXHIBIT A —

 

Licensee: Synthetic Biologics, Inc. CONFIDENTIAL Exclusive PLA Exhibit A The
University of Texas at Austin Page A-19