Exhibit 10.36

 

[    ] = Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and
240.24b-2; Text Omitted and Filed Separately with the Securities and Exchange
Commission

 

Agreement No. 91-1022A

 

AMENDMENT TO LICENSE AGREEMENT

 

This Amendment made effective the 20th day of May, 2004, is by and between the
Wisconsin Alumni Research Foundation (hereinafter called “WARF”), having an
address at 614 Walnut Street, Madison, Wisconsin 53726; and Vical Incorporated
(hereinafter called “Vical”), having an address at 10390 Pacific Center Court,
San Diego, CA 92121-4340.

 

WITNESSETH

 

WHEREAS, WARF and Vical entered into a License Agreement made effective
January 1, 1991 (the “Agreement”); and

 

WHEREAS, WARF and Vical would each like to amend the Agreement to clarify their
rights and obligations under the Agreement as it pertains to the sublicensing
activities of Vical.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
below and in the Agreement, the parties covenant and agree as follows:

 

1.             Section 2C of the Agreement is hereby deleted and replaced with
the following:

 

“(i)          WARF hereby grants to Vical the exclusive right to grant
sublicenses under this Agreement.  Such sublicense agreements shall be in
writing.  Any such sublicense shall fully protect WARF’s income stream, product
liability and other rights consistent with the terms of this Agreement,
including, without limitation, Section 10.  Such sublicenses under this
Agreement shall continue only for as long as this Agreement remains in force,
and Vical shall state that fact prominently and unambiguously in any sublicense
agreement.  Notwithstanding the foregoing, Vical may grant exclusive sublicenses
under this Agreement which extend beyond the termination of this Agreement with
the prior written consent of WARF.  Such consent shall not be unreasonably
withheld.  Such exclusive sublicenses shall contain terms obligating the
sublicensee to WARF and to the terms of this Agreement (including royalty rates,
product liability and other rights owing WARF hereunder) as if such sublicensee
were Vical in the event of such termination.  During the term of this Agreement,
Vical shall have the same responsibility for the activities of a sublicensee as
if the activities were directly those of Vical; provided, however, that WARF
shall be paid by Vical with regard to the activities of its sublicensee as if
those activities were Vical’s at the royalty rate set forth in the chart below:

 

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Royalty Rate to be Paid
by Vical to WARF

 

Royalty Rate Received by
Vical from its Sublicensees

 

[…***…]%

 

[…***…]%

 

[…***…]%

 

[…***…]%

 

[…***…]%

 

[…***…]%

 

 

(ii)           In addition to the royalties described in Section 2C(i) above,
Vical agrees to pay to WARF […***…] percent ([…***…]%) of all monetary fees and
consideration received by Vical (including equity, which shall be held in trust
to WARF’s benefit pending liquidity and subject to compliance with applicable
securities laws, and option exercise fees received upon the exercise of an
option to obtain a sublicense under the Licensed Patent) in exchange for rights
granted under the Licensed Patents, except for earned royalties as prescribed by
Section 2C(i) and the following:

 

(1)           Payments received solely for the achievement of clinical
milestones;

 

(2)           Payments received as a reimbursement or remittance for the actual
documented cost of research and development activities performed by Vical (or
its subcontractors) under an agreement with a sublicensee under which Vical
(including its subcontractors) is obligated to undertake the research and
development and Vical receives specified payment for said research and
development activities or the specified payment is made to reimburse Vical for
past research and development activities actually performed by Vical (or its
subcontractors) specifically on behalf of the sublicense making such payment;

 

(3)           Payments received as a reimbursement or remittance for the actual
documented costs associated with preparing, prosecuting and maintaining the
Licensed Patents; and

 

(4)           Bona fide loans if Vical repays the loan in full.

 

Notwithstanding the foregoing, Vical shall be obligated to pay to WARF […***…]
percent ([…***…]%) of any payments received solely for the achievement of either
time-based or combination time-based/clinical milestones (but excluding payments
received solely for the achievement of clinical milestones) under (a) any
sublicense of rights under the Licensed Patents granted under any new agreement
that is entered into by Vical after […***…]; or (b) any amendment of an
agreement existing before […***…] that is entered into by Vical after […***…]
(subject to the last sentence of paragraph 2 of this Amendment), which amends
such agreement to include either time-based or combination time-based/clinical
milestones.  Vical shall not owe any payment to WARF with respect to any
payments received by Vical solely for the achievement of either time-based or
combination time-based/clinical milestones under any agreement existing before
[…***…], unless an amendment to that agreement as described in subsection (b) of
the preceding sentence is entered into by Vical after […***…].

 

[    ] = Confidential Treatment Requested; Text Filed Separately with the
Securities and Exchange Commission

 

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(iii)          Vical shall have the right to include in any sublicenses granted
pursuant to this Agreement other technology licensed, developed and/or patented
by Vical and not within the Licensed Patents.  In the event of such sublicense,
Vical shall make a good faith allocation regarding the percentage of
consideration provided under said sublicense attributed to Licensed Patents and
that attributed to such other technology.  Within sixty (60) days of execution
of said sublicense, or any amendment providing such a sublicense, Vical shall
forward to WARF a summary of the technology included under said agreement, a
summary of the financial consideration to be paid, and a description of Vical’s
proposed allocation.  In the event that WARF desires to challenge any such
allocation, Vical shall provide to WARF reasonably available documents in
support of Vical’s proposed allocation.  If the parties disagree as to a fair
allocation of such consideration, the parties agree that the Chief Executive
Officer of Vical and the Managing Director of WARF shall meet and confer in good
faith in an attempt to resolve the dispute.  If a dispute remains after thirty
(30) days following the initial meeting of such representatives of Vical and
WARF, the parties agree to submit the issue to binding arbitration to be
conducted in Chicago, Illinois under the auspices of Judicial Arbitration and
Mediation Services, Inc. (“JAMS”).  The parties agree that they shall mutually
select a single JAMS representative to preside over the arbitration proceeding. 
If the parties are unable to agree to the appointment of such representative,
then JAMS shall appoint one from its prevailing roster of Chicago based
representatives.  The parties agree that the determination of the issues of the
dispute and the procedures for resolving the dispute shall be conclusively and
finally resolved by the JAMS representative, with the express understanding that
the parties desire a very efficient and expeditious resolution.

 

(iv)          Vical agrees to provide to WARF within sixty (60) days of the
execution of each agreement or amendment granting rights under the Licensed
Patents a written summary of the financial terms of such agreement or
amendment.”

 

2.             Vical and WARF agree that the foregoing revisions to Section 2C
of the Agreement shall apply to (1) agreements and amendments entered into by
Vical after […***…], granting new or additional rights under the Licensed
Patents; (2) any amendments entered into by Vical after […***…], amending the
financial terms associated with any rights granted under the Licensed Patents
prior to […***…]; and (3) monetary fees and consideration received by Vical
after […***…], in exchange for rights granted under the Licensed Patents prior
to […***…].  The parties acknowledge and agree that any consideration received
by Vical solely in exchange for its right to co-promote products under the 1991
Merck agreement, as amended, shall not be subject to the revised revenue sharing
provisions of Section 2C above.

 

3.             Section 2 of the Agreement is amended to include the following
new Section 2D:

 

“Vical hereby grants to the University of Wisconsin, and hereby agrees to grant
to other academic institutions and other non-profit research institutions upon
request, without payment of any initial monetary consideration, a fully paid-up,
royalty-free, nontransferable, nonexclusive license to use the inventions of the
Licensed Patents for non-commercial research purposes.  As used herein,
“non-commercial research purposes” shall specifically exclude research sponsored
by a for-profit entity in which such entity

 

[    ] = Confidential Treatment Requested; Text Filed Separately with the
Securities and Exchange Commission

 

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receives rights, direct or indirect, actual or contingent, to the results of the
research.  For clarification, under no circumstances will Vical be deemed to
have granted, or agreed to grant, any license or rights to the Licensed Patents
for any commercial purposes to the University of Wisconsin, any academic
institution or other non-profit research institution or any other non-profit or
for-profit person or entity under this Agreement.”

 

4.             Section 3A of the Agreement is hereby deleted and replaced with
the following:

 

“Vical warrants that it or its sublicensees will diligently pursue
commercialization of the inventions of the Licensed Patents.  Within one (1)
month following the end of each calendar year until the Date of First Commercial
Sale of Products, Vical will provide to WARF a written Development Report
summarizing Vical’s product development activities since the last Development
Report, and the known and non-confidential development activities of its
sublicensees.  Within one (1) month following the end of each calendar year,
Vical will provide to WARF a written report summarizing Vical’s sublicensing
activities under this Agreement and the sublicensing payments received during
the preceding year.  All development activities, strategies and aspects of
Product design and the like are entirely at the discretion of Vical and its
sublicensees, and Vical and its sublicensees shall rely entirely on their own
expertise with respect thereto.  WARF’s review of Vical’s Development Reports
and sublicensing reports is solely to verify Vical’s compliance with its
obligations under this Agreement.  All Development Reports and sublicensing
reports provided to WARF under this Section 3A shall be deemed confidential and
maintained in confidence by WARF.”

 

5.             The first sentence of Section 3E of the Agreement is hereby
amended by replacing “Section 3C” with “Sections 2C and 3C”.

 

6.             Section 8 of the Agreement is hereby deleted and replaced with
the following:

 

“A.          Patent Prosecution.

 

(i)            WARF hereby grants to Vical the exclusive right to file,
prosecute and maintain the Licensed Patents and will provide reasonable
cooperation to Vical, at Vical’s expense, in connection with Vical’s exercise of
such rights.  Vical shall provide to WARF a copy all significant prosecution
actions and correspondence received from and provided to the United States
Patent and Trademark Office as part of the filing, prosecution and maintenance
of the Licensed Patents.  Vical shall provide such actions and correspondence to
WARF within thirty (30) days of their receipt by Vical; provided that any such
information shall be kept confidential and made available only to WARF’s patent
attorneys, patent agents and WARF employees who work with those patent attorneys
and patent agents, in each case who have a need to know such information, unless
otherwise agreed by the parties.  WARF shall hold such actions and
correspondences in confidence until made public, whether by Vical or through the
issuance or publication of the corresponding patent or patent application.

 

(ii)           WARF and Vical acknowledge that either party may pursue, or be
pursuing, patent protection for technologies having some relation to the
inventions of the Licensed

 

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Patents, and that under certain patent laws, they may be required to disclose
certain aspects of the prosecution history of the Licensed Patents as part of
the patent prosecution for such other technologies.  In such event, WARF and
Vical shall be entitled to disclose its files pertaining to the Licensed Patents
to their respective patent counsel, and the relevant aspects of the prosecution
history to the relevant patent office.

 

B.            Enforcement.

 

(i)            It is the intent of WARF and Vical to protect the Licensed
Patents under this Agreement from infringement and to prosecute infringers or
otherwise to act to eliminate infringement when such action may be reasonably
necessary, proper and justified.  However, Vical shall retain the sole and final
right to decide on the enforcement strategy for the Licensed Patents.

 

(ii)           Vical shall have the right, in its sole discretion, to bring an
action to enforce the Licensed Patents; provided that Vical shall indemnify and
defend WARF for any claims, fees, judgments and any reasonable costs and
expenses arising out of any action, counteraction or other activities resulting
as a consequence of Vical bringing such action, unless WARF decides to join in
such action as permitted below.  WARF will provide reasonable cooperation to
Vical, at Vical’s expense, in connection with any such action.  WARF shall have
the right to join in any action in its sole discretion.  In the event WARF joins
an action, WARF and Vical agree to meet to discuss a fair and equitable sharing
arrangement of the costs and revenues generated through such action.  If the
parties disagree as to a fair allocation, then WARF and Viral will each bear its
own expenses in proceeding with such action throughout the course of such action
and share any revenues generated through such action pro rata based upon the
respective costs borne by each of them.  In such case, after the conclusion of
such action (or such earlier time as mutually agreed by WARF and Vical), the
parties shall follow the same procedure as set forth in Section 2C(iii) above,
starting with the meet and confer step between the Chief Executive Officer of
Vical and the Managing Director of WARF, to determine whether a different
allocation of costs and any revenues generated through such action is
appropriate.  In the event that WARF does not join in any such action, Viral
shall be entitled to retain all revenues resulting from a judgment therein.  Any
agreement granting rights under the Licensed Patents and entered into as a
result of enforcement activities pursuant to this Section 8B shall be deemed to
be a sublicense granted pursuant to Section 2C above such that any revenues
generated therefrom shall be distributed in accordance with Section 2C.”

 

7.             Except as otherwise provided in this Amendment, all terms and
conditions previously set forth in the Agreement shall remain in effect as set
forth therein.  In the event that this Amendment and the Agreement are
inconsistent, the terms and provisions of this Amendment shall supercede the
terms and provisions of the Agreement, but only to the extent necessary to
satisfy the purpose of this Amendment.  Each party hereto represents to the
other that it has the full authority to execute, deliver and perform this
Amendment in accordance with its terms.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment on the
dates indicated below.

 

WISCONSIN ALUMNI RESEARCH FOUNDATION

 

 

 

By:

/s/ Carl E. Gulbrandsen

 

Date: May 20, 2004

 

Carl E. Gulbrandsen, Managing Director

 

 

 

VICAL INCORPORATED

 

 

 

By:

/s/ Vijay B. Samant by David C. Kaslow, M.D.

 

Date: May 24, 2004

 

Vijay B. Samant, President and CEO

 

 

 

By:

/s/ David C. Kaslow

 

 

 

David C. Kaslow, Chief Scientific Officer

 

 

 

 

 

Reviewed by WARF’s General Counsel:

 

 

 

/s/ Elizabeth L.R. Donley

 

 

Elizabeth L.R. Donley, Esq.

 

 

 

(WARF’s attorney shall not be deemed a signatory to this Agreement.)

 

 

 

WARF Ref. No.: Felgner – P90042US

 

 

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