CONFIDENTIAL TREATMENT REQUESTED

Exhibit 10.7
 
EXCLUSIVE LICENSE AGREEMENT
 
THIS AGREEMENT (“Agreement”) by and among DR. CESARE CASAGRANDE, having an
address at Via Campogallo, 21/67, 20020 Arese, Milan, Italy and NILE
THERAPEUTICS, INC., a corporation organized and existing under the laws of the
State of Delaware, with principal offices located at 2850 Telegraph Avenue,
Suite 310, Berkeley, CA 94705 (“LICENSEE”) is effective as of the date of final
execution below (“EFFECTIVE DATE”).
 
ARTICLE 1 BACKGROUND
 
1.1. In the course of research conducted by the LICENSOR (as defined below), the
LICENSOR has produced certain inventions referred to a medicinal product
designated as 2-NTX-99 (the “INVENTION”), which is owned by the LICENSOR and
described in the LICENSED PATENTS (as defined below).
 
1.2. The LICENSOR and LICENSEE wish to have the INVENTION and any LICENSED
PATENTS (as defined below) developed and commercialized. 
 
1.3. LICENSEE has represented to LICENSOR in order to induce LICENSOR to enter
into this Agreement that it is experienced in developing and commercializing
products similar to the LICENSED PRODUCTS (as defined below) and that it shall
act diligently to develop and commercialize the LICENSED PRODUCTS for public use
throughout the LICENSED TERRITORY (as defined below).
 
1.4. The LICENSOR is willing to grant a license to LICENSEE, subject to the
terms and conditions of this Agreement.
 
1.5. In consideration of these statements and the mutual promises herein made
and exchanged, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the LICENSOR and LICENSEE agree to
the terms of this Agreement.
 
ARTICLE 2 DEFINITIONS
 
The following terms used in this Agreement shall be defined as set forth below:
 
2.1. “AFFILIATE” shall mean any entity or person that directly or indirectly
controls, is controlled by or is under common control with LICENSEE or a
SUBLICENSEE as applicable. For purposes of this definition, “control” means
possession of the power to direct the management of such entity or person,
whether through ownership of more than fifty percent (50%) of voting securities,
by contract or otherwise.
____________

1 Confidential treatment has been requested for certain portions of this
Exhibit. The confidential portions of this Exhibit have been omitted and filed
separately with the Securities and Exchange Commission. Such portions have been
marked with “***” at the exact place where material has been omitted.

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2.2. “CHANGE OF CONTROL” shall mean a merger, consolidation, acquisition or the
transfer of all, or substantially all, of the business interests of LICENSEE to
which this Agreement relates to which LICENSEE is a party where the shareholders
of LICENSEE immediately prior to effective date of such transaction beneficially
own, immediately following the effective date of such transaction, securities
representing less than fifty percent (50%) of the combined voting power of the
surviving corporation’s then outstanding voting securities.
 
2.3. “COMMON STOCK” shall mean the shares of common stock of the LICNESEE, par
value $0.001 per share.
 
2.4. “CONFIDENTIAL INFORMATION” shall mean all information disclosed by one
party to the other during the negotiation of or under this Agreement in any
manner, whether orally, visually or in tangible form, that relates to LICENSED
PATENTS, LICENSED INFORMATION, IMPROVEMENT PROJECT or the Agreement itself,
unless such information is subject to an exception described in Article 9.2.
CONFIDENTIAL INFORMATION that is disclosed in tangible form shall be marked
“Confidential” at the time of disclosure and CONFIDENTIAL INFORMATION that is
disclosed orally or visually shall be identified as confidential at the time of
disclosure and subsequently reduced to writing, marked confidential and
delivered to the other party within thirty (30) days of such disclosure.
 
2.5. “EARNED ROYALTY” is defined in Article 7.1.
 
2.6. “EFFECTIVE DATE” is defined in the introductory paragraph of this
Agreement.
 
2.7. “EMEA” shall mean the European Medicines Agency or successor entity.
 
2.8. “EUROPEAN UNION” shall mean the European organisation of member states
first established by the Treaty of the European Union in 1992 (otherwise known
as the Maastricht Treaty) as it may be constituted from time to time, which, as
of the date of this Agreement, consists of Austria, Belgium, Bulgaria, Cyprus,
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
 
2.9. “FAIR MARKET VALUE” shall mean the last sale price of the COMMON STOCK on
the trading day on which the value is being determined or, in case no such
reported sales take place on such day, the average of the last reported bid and
asked prices of the COMMON STOCK on such day, in either case on the principal
national securities exchange on which the COMMON STOCK is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the
representative closing sale price of the COMMON STOCK as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ"), or other similar organization if NASDAQ is no longer reporting such
information, or, if the COMMON STOCK is not reported on NASDAQ, the per share
sale price for the COMMON STOCK in the over-the-counter market as reported by
the National Quotation Bureau or similar organization, or if not so available,
the fair market value of the COMMON STOCK as determined by the price per share
in the most recent private financing round wherein (a) the total shares in the
financing represent no less than five percent (5%) of the COMMON STOCK following
such financing, and (b) greater than fifty percent (50%) of the shares were
purchased by parties unaffiliated with LICENSEE management or directors.
 
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2.10. “FDA” shall mean the United States Food and Drug Administration or
successor entity.
 
2.11. “FIELD” shall mean all therapeutic uses in humans and animals.
 
2.12. “FIRST SALE” shall mean the first commercial sale to a third party of any
LICENSED PRODUCT in the LICENSED TERRITORY (as defined below).
 
2.13. “IMPROVEMENT PROJECT” shall mean any and all projects conceived by the
LICENSOR intended to find and/or develop any novel intellectual property
relating to the LICENSED PRODUCTS, including, without limitation, improved
methods of manufacture and production techniques, new or additional analogs,
therapeutic indications and developments intended to enhance the safety and
efficacy, or broaden the intended use of the LICENSED PRODUCTS.
 
2.14. “IND” shall mean an investigational new drug application filed with the
FDA prior to the commencement of human clinical trials in the United States.
 
2.15. “INVENTION” is defined in Article 1.1.
 
2.16. “LICENSE” refers to the license granted under Article 3.1.
 
2.17. “LICENSED INFORMATION” shall mean all technical information and data,
whether or not patented, that is known , learned, invented, or developed by the
LICENSOR as of the EFFECTIVE DATE, as demonstrated by the written records of the
LICENSOR to the extent that:
 
(a) such technical skills, information and data are useful for the use or
practice of the LICENSED PATENTS as permitted herein; and
 
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(b) the LICENSOR possess the right to license the use of such information to
LICENSEE for commercial purposes under the terms of this Agreement.
 
2.18. “LICENSED PATENTS” shall mean the United States or foreign patent
application(s) and patents(s) listed in Appendix A owned or assigned to LICENSOR
during the term of this Agreement, together with any continuations, divisionals,
and continuations-in-part, to the extent the claims of any such patent or patent
application are directed to subject matter specifically described in the patent
applications listed on Appendix A; any reissues, re-examinations, or extensions
thereof, or substitutes therefore; and the relevant international equivalents of
any of the foregoing. Appendix A is incorporated into this Agreement. LICENSED
PATENTS shall also include any results of the IMPROVEMENT PROJECTS added to the
LICENSE pursuant to Article 3.2.
 
2.19. “LICENSED PRODUCTS” shall mean any product, apparatus, kit, or component
part thereof;
 
(a) the manufacture, use or sale of which without a license from LICENSOR, would
infringe a VALID CLAIM of a LICENSED PATENT;
 
(b) incorporates, uses, or is derived from the LICENSED PATENTS; or
 
(c) is developed by using a process or composition which is covered in whole or
in part by a VALID CLAIM of a LICENSED PATENT.
 
2.20. “LICENSED TERRITORY” shall mean the entire world.
 
2.21. “MAJOR MARKET COUNTRY” shall mean Canada, the United Kingdom, France,
Germany, Spain, Italy, or Japan.
 
2.22. “LICENSOR” shall mean Dr. Cesare Casagrande or any immediate family member
of Dr. Casagrande, or any trust, all of the beneficiaries of which are such Dr.
Casagrande or his immediate family members, or the guardian, conservator, heir
or estate of Dr. Casagrande, or any corporation, partnership, limited liability
company or other entity all or substantially all of the outstanding securities
and other beneficial interests of which are owned by Dr. Casagrande or his
immediate family members.
 
2.23. “NDA” shall mean a new drug application filed with the FDA to obtain
marketing approval for a LICENSED PRODUCT in the United States.
 
2.24. “NET SALES” shall mean:
 
(a) the total gross receipts from the sale, leasing, renting of, or otherwise
making LICENSED PRODUCTS available by the LICENSEE, SUBLICENSEES or AFFILIATES
to THIRD PARTIES (defined below) for profit without sale or other dispositions,
whether invoiced or not, less the following deductions, provided they actually
pertain to the disposition of LICENSED PRODUCTS and are separately invoiced: 

(i) all reasonable and customary discounts, returns, credits and allowances on
account of returns, bad debt deductions actually written off during the calendar
quarter in which sales occurred, provided, however, that deductions taken for
bad debt shall not exceed in aggregate one percent (1.0%) of gross sales of
LICENSED PRODUCT during the calendar quarter;  
 
(ii) reasonable and customary arms length negotiated commissions actually paid
to independent and unaffiliated third-party distributors and third party sales
agencies not to exceed in aggregate one and one quarter percent (1.25%) per
calendar quarter;
 
(iii) reasonable and customary outbound transportation and transportation
insurance, packaging (for shipping purposes only) and freight charges; and
 
(iv) reasonable and customary duties, taxes (but not income taxes) and other
governmental charges levied on the sale, transportation or delivery of LICENSED
PRODUCTS, but not including income taxes of the LICENSEE.
 
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(b) No deductions shall be made for any other costs or expenses, including but
not limited to commissions to any person or entity on LICENSEE’S, SUBLICENSEE'S
or an AFFILIATE’S payroll or for the cost of collection.
 
(c) Notwithstanding any provision in this Agreement to the contrary, NET SALES
shall not include the gross invoice price for LICENSED PRODUCTS sold to, or
services performed using LICENSED PRODUCTS for, any AFFILIATE unless such
AFFILIATE is an end-user of any LICENSED PRODUCT, in which case that transaction
shall be included in NET SALES at the average selling price charged to a
THIRD-PARTY (as defined below) during the same quarter.
 
2.25. “PHASE I CLINICAL TRIAL” shall mean a human clinical trial, the principal
purpose of which is to determine toxicity, absorption, metabolism and/or safe
dosage range in patients with the disease target being studied as required in 21
C.F.R. §312(a). 
 
2.26. “PHASE II CLINICAL TRIAL” shall mean a human clinical trial, the principal
purpose of which is to evaluate the effectiveness of a drug for a particular
indication in patients with the disease and to determine the common short-term
side effects and risks associated with the drug as required in 21 C.F.R.
§312(b).
 
2.27. “PHASE III CLINICAL TRIAL” shall mean expanded controlled and uncontrolled
human clinical trials pursuant to a randomized study with endpoints agreed upon
by regulatory bodies for regulatory approval performed after PHASE II CLINICAL
TRIALS evidence suggesting effectiveness of a LICENSED PRODUCT has been
obtained, and is intended to gather the additional information about
effectiveness and safety that is needed to evaluate the overall benefit-risk
relationship of a LICENSED PRODUCT and to provide an adequate basis for
physician labeling, as required in 21 C.F.R. §312.
 
2.28. “PMA” shall mean an application for marketing authorization of a LICENSED
PRODUCT filed with the EMEA. 
 
2.29. “REASONABLE COMMERCIAL EFFORTS” shall mean those efforts consistent with
those used by comparable companies in the United States in research and
development projects for therapeutic methods or compositions deemed to have
commercial value comparable to the LICENSED PRODUCTS.
 
2.30. “SUBLICENSING ROYALTIES” shall mean royalty consideration received by
LICENSEE as a result of NET SALES of LICENSED PRODUCTS by a SUBLICENSEE.
 
2.31. “SUBLICENSEE” shall mean any third party sublicensed by LICENSEE to make,
have made, use, sell, have sold, import or export any LICENSED PRODUCT.
 
2.32. “TERM” is defined in Article 3.2.
 
2.33. “THIRD PARTY(IES)” shall mean any person or entity that is not party to
this Agreement but does not include SUBLICENSEES or any AFFILIATE of LICENSEE or
any SUBLICENSEE under the terms herein.
 
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2.34. “VALID CLAIM” shall mean an issued claim of any unexpired patent included
among the PATENT RIGHTS, which has not been held unenforceable, unpatentable or
invalid by a decision of a court or governmental body of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, which has not
been rendered unenforceable through disclaimer or otherwise, and which has not
been lost through an interference proceeding or abandoned.
 
ARTICLE 3 LICENSE GRANT AND TERM
 
3.1. Subject to all the terms and conditions of this Agreement, the LICENSOR
hereby grants to LICENSEE an exclusive license to practice under the LICENSED
PATENTS and use the LICENSED INFORMATION, with the right to grant sublicenses,
to make, have made, use, sell, have sold, offer to sell, import or export
LICENSED PRODUCTS within the FIELD in the LICENSED TERRITORY (the “LICENSE”). 
 
3.2. LICENSOR grants to LICENSEE a right of first refusal to financially support
any IMPROVEMENT PROJECT and to include the results of any such IMPROVEMENT
PROJECT under the terms of this Agreement as LICENSED PATENTS or LICENSED
INFORMATION. LICENSOR shall disclose any proposed IMPROVEMENT PROJECT to
LICENSEE in writing prior to disclosing to any THIRD PARTIES. Following such
written disclosure to LICENSEE, LICENSEE shall have ninety (90) days to
determine its interest in financially supporting such IMPROVEMENT PROJECT. In
the event that LICENSEE desires to financially support the IMPROVEMENT PROJECT,
LICENSEE shall inform LICENSOR in writing and the parties shall negotiate in
good faith the terms and conditions of a sponsored research agreement upon
commercially reasonable terms. In the event that LICENSEE determines not to
financially support such IMPROVEMENT PROJECT, or if the parties are unable to
agree upon commercial terms, then LICENSOR shall be free to negotiate with a
THIRD PARTY relating to the funding of such IMPROVEMENT PROJECT, provided
however, that the LICENSOR may not enter into an agreement with a THIRD PARTYon
terms more favorable to such THIRD PARTY than those proposed by LICENSOR to
LICENSEE. Nothing in this Agreement shall be construed as a license, sublicense
or grant to such THIRD PARTY of rights to the LICENSED PATENTS or LICENSED
INFORMATION, or as an exception to the rights granted pursuant to Section 3.1 of
this Agreement.
 
3.3. Unless terminated earlier as provided in ARTICLE 15, the term of the
LICENSE (the “TERM”) shall commence on the EFFECTIVE DATE and shall
automatically expire on the later of: 
 
(a) the date on which the last VALID CLAIM described in the LICENSED PATENTS
expires, lapses or is declared to be invalid by a non-appealable decision of a
court of competent jurisdiction; or
 
(b) twenty (20) years after the EFFECTIVE DATE. 
 
3.4. Nothing in this Agreement shall be construed to grant by implication,
estoppel or otherwise any licenses under patents of the LICENSOR other than the
LICENSED PATENTS. Except as expressly provided in this Agreement, under no
circumstances will the LICENSEE, as a result of this Agreement, obtain any
interest in or any other right to any technology, know-how, patents, patent
applications, materials or other intellectual or proprietary property of the
LICENSOR. Subject to Article 14.1, nothing in this Agreement shall be construed
as preventing LICENSOR from using the LICENSED PATENTS and the LICENSED
INFORMATION for academic research and non-commercial purposes.
 
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3.5. The LICENSE granted in Article 3.1 shall automatically convert to a
paid-up, non-exclusive license, on a country-by-country basis, upon the
expiration of the TERM as described in Article 3.3.
 
3.6. Articles 2, 6.2(b), 9, 10.2, 13, 15, 16, 18, and 20 shall survive
expiration of this Agreement pursuant to Article 3.2 or termination pursuant to
ARTICLE 15.
 
ARTICLE 4 SUBLICENSES
 
4.1. The LICENSOR hereby grants to the LICENSEE the right to sublicense its
right to make, have made, use, sell, have sold, import or export LICENSED
PRODUCTS within the FIELD in the LICENSED TERRITORY following the dosing of the
first subject in a PHASE I CLINICAL TRIAL of a LICENSED PRODUCT, provided this
Agreement is in effect and the LICENSEE is not in breach of its obligations
hereunder.
 
4.2. Any sublicense granted by LICENSEE shall comply with all the terms of this
LICENSE and shall include substantially the same definitions and provisions set
forth in the following Articles of this Agreement ARTICLES 2, 3, 8, 10.2, 13, 16
and 18. LICENSEE shall require any SUBLICENSEE to actively pursue the
achievement of a proof of concept in humans in U.S. and/or in the EUROPEAN
UNION. Any agreement between the LICENSEE and any SUBLICENSEE (a “SUBLICENSE
AGREEMENT”) shall expressly provide that the provisions of this Agreement shall
be directly enforceable against such SUBLICENSEE by the LICENSOR. LICENSEE will
promptly provide the LICENSOR with a copy of each SUBLICENSE AGREEMENT no later
than 30 days after execution.
 
4.3. The LICENSEE agrees that it shall promptly:
 
(a) provide the LICENSOR with a copy of any amendments to any SUBLICENSE
AGREEMENT entered into by the LICENSEE under this Agreement and to notify the
LICENSOR of termination of any SUBLICENSE AGREEMENT; and
 
(b)  deliver copies of all reports provided to the LICENSEE by SUBLICENSEES of a
similar nature to those described in ARTICLE 10;

(c) exert its best efforts in order to cause the SUBLICENSEES to perform the
obligations provided for in the SUBLICENSE AGREEMENTS.

ARTICLE 5 LICENSE FEE AND MILESTONE PAYMENTS
 
5.1. The LICENSEE shall pay to LICENSOR, on the EFFECTIVE DATE, a non refundable
license fee equal to [***].
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5.2. The LICENSEE shall also pay to LICENSOR on the EFFECTIVE DATE the amount of
[***] for past patent expenses incurred by the LICENSOR prior to EFFECTIVE DATE
as required under ARTICLE 11.
 
5.3. The LICENSEE shall pay the following one-time non-refundable milestone
payments (the “MILESTONE PAYMETS”) to LICENSOR, whether accomplished by the
LICENSEE, a SUBLICENSEE or any of their respective AFFILIATES:
 
(a) [***] upon the dosing of the first subject in the first PHASE I CLINICAL
TRIAL of a LICENSED PRODUCT in the United States conducted by the LICENSEE
pursuant to a corporate sponsored IND;
 
(b) [***] upon the dosing of the first subject in the first PHASE I CLINICAL
TRIAL (or its foreign equivalent) of a LICENSED PRODUCT conducted by the
LICENSEE in the EUROPEAN UNION;
 
(c) [***] upon the dosing of the first patient in the first PHASE II CLINICAL
TRIAL of a LICENSED PRODUCT conducted by the LICENSEE in the United States;
 
(d) [***] upon the dosing of the first subject in the first PHASE II CLINICAL
TRIAL (or its foreign equivalent) of a LICENSED PRODUCT conducted by the
LICENSEE in the EUROPEAN UNION; 
 
(e) [***] upon the dosing of the first patient in the first PHASE III CLINICAL
TRIAL of a LICENSED PRODUCT conducted by the LICENSEE in the United States;
 
(f) [***] upon the dosing of the first subject in the first PHASE III CLINICAL
TRIAL (or its foreign equivalent) of a LICENSED PRODUCT conducted by the
LICENSEE in the EUROPEAN UNION;
 
(g) [***] upon the approval by the FDA of the first NDA for a LICENSED PRODUCT;
 
(h) [***] upon approval by the FDA of an NDA for a second human therapeutic
indication of the LICENSED PRODUCT described in 5.3(g); 
 
(i) [***] upon the approval by the EMEA of the first PMA submitted by the
LICENSEE resulting in the granting of a marketing authorization for a LICENSED
PRODUCT;
 
(j) [***] upon the approval by the EMEA of the first PMA submitted by the
LICENSEE resulting in the granting of a marketing authorization for a LICENSED
PRODUCT for a second human therapeutic indication than the one described in
5.3(i);
 
(k) [***] upon receipt by the LICENSEE of marketing approval in Japan for the
first LICENSED PRODUCT;
 
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(l) [***] following the first calendar year in which annual NET SALES of
LICENSED PRODUCTS equal Two Hundred Fifty Million Dollars ($250,000,000.00);
 
(m) [***] following the first calendar year in which annual NET SALES of
LICENSED PRODUCTS equal Five Hundred Million Dollars ($500,000,000.00); and
 
(n) [***] following the first calendar year in which annual NET SALES of
LICENSED PRODUCTS equal One Billion Dollars ($1,000,000,000.00).
 
5.4. No MILESTONE PAYMENT shall be paid more than once for any LICENSED PRODUCT.
In the event that the LICENSEE is permitted to advance the clinical development
by the FDA or EMEA without conducting one or more activities described in
Article 5.3 above, then the LICENSEE shall pay to the LICENSOR all milestone
payments owed pursuant to Article 5.3 that would otherwise have been paid to the
LICENSOR had the LICENSEE been required to conduct such activity. By way of
example, if the EMEA permits the LICENSEE to commence PHASE III CLINICAL TRIALS
in the EUROPEAN UNION without first conducting a PHASE II CLINICAL TRIAL in the
EUROPEAN UNION, then the LICENSEE will immediately pay to the LICENSOR the
amount owed pursuant to Article 5.3(d).
 
5.5. The LICENSEE shall promptly notify the LICENSOR as soon as each of the
milestones described in Article 5.3 has been achieved, whether it is achieved by
the LICENSEE, a SUBLICENSEE or any of their respective AFFILIATES. 
 
5.6. Article 7.4 shall apply to MILESTONES PAYMENTS.

ARTICLE 6 EQUITY
 
6.1. Upon the EFFECTIVE DATE, LICENSEE shall issue to LICENSOR a number of
shares of COMMON STOCK having a FAIR MARKET VALUE as of the EFFECTIVE DATE equal
to One Million Dollars ($1,000,000.00). LICENSEE shall deliver, or caused to be
delivered, to LICENSOR a stock certificate, duly signed by appropriate officers
of LICENSEE and issued in LICENSOR’S name, representing all of the shares of
COMMON STOCK required to be issued to LICENSOR under this Article 6.1.
 
6.2. By accepting the shares of COMMON STOCK, the LICENSOR hereby:
 
(a) consents to the placement of a legend on any certificate or other document
evidencing the shares of COMMON STOCK that such shares of COMMON STOCK have not
been registered under the Securities Act of 1933 or any state securities or
“blue sky” laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The LICENSOR is
aware that the LICENSEE will make a notation in its appropriate records with
respect to the restrictions on the transferability of such shares of COMMON
STOCK. The legend to be placed on each certificate shall be in form
substantially similar to the following:
 
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES OR
"BLUE SKY LAWS", AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
 
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(b) agrees it will not, without the prior written consent of the LICESEE, offer,
pledge, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, the shares of COMMON STOCK for a period of
180 days following the initial public offering of the COMMON STOCK of the
LICENSEE. In order to enforce the foregoing covenant, the LICENSEE may impose
stop-transfer instructions with re-spect to the shares of COMMON STOCK until the
end of such period.
 
ARTICLE 7 EARNED ROYALTIES
 
7.1. Subject to provisions of this ARTICLE 7, during the TERM of this Agreement,
as partial consideration for the LICENSE, LICENSEE shall pay to LICENSOR an
earned royalty on worldwide cumulative NET SALES of LICENSED PRODUCTS by
LICENSEE or its AFFILIATES (“EARNED ROYALTIES”) determined as a percentage of
NET SALES by LICENSEE or its AFFILIATES as set forth below: 

ANNUAL NET SALES
 
ROYALTY
$0 to $250,000,000
 
[***]
$250,000,001 to $500,000,000
 
[***]
$500,000,001 and above
 
[***]

7.2. In the event that the LICENSEE enters into a SUBLICENCE AGREEMENT during
the TERM of this Agreement, LICENSEE shall pay to LICENSOR the greater of:
 
(a) [***] of the SUBLICENSING ROYALTIES received by the LICENSEE from a
SUBLICENSEE; and
 
(b) [***] of the NET SALES by such SUBLICENSEE.
 
7.3. LICENSEE shall pay all EARNED ROYALTIES accruing to the LICENSOR within
thirty (30) days from the end of each calendar quarter (March 31, June 30,
September 30 and December 31), beginning in the first calendar quarter in which
NET SALES occur.
 
7.4. All EARNED ROYALTIES and other payments due under this Agreement shall be
paid directly to LICENSOR in United States Dollars. In the event that conversion
from foreign currency is required in calculating a payment under this Agreement,
the exchange rate used shall be the Interbank rate quoted by Citibank at the end
of the last business day of the quarter in which the royalty was earned. If
overdue, the royalties and any other payments due under this Agreement shall
bear interest until payment at a per annum rate two percent (2%) above the prime
rate in effect at Citibank on the due date and the LICENSOR shall be entitled to
recover reasonable attorneys’ fees and costs related to the administration or
enforcement of this Agreement, including collection of royalties or other
payments, following such failure to pay. The payment of such interest shall not
foreclose the LICENSOR from exercising any other right it may have as a
consequence of the failure of LICENSEE to make any payment when due.
 
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7.5. In the event that LICENSEE’S outside patent counsel together with
LICENSOR’S outside patent counsel agree (which discussion and agreement shall be
in good faith) that patent licenses from third parties are reasonably required
by LICENSEE, its AFFILIATES or its SUBLICENSEE to make, use, offer for sale,
sell or import any LICENSED PRODUCT in any given country, LICENSOR and LICENSEE
shall negotiate in good faith with the intention of reaching a fair and
equitable formula on how any amount paid by LICENSEE to such third parties shall
be shared by LICENSEE and LICENSOR, except that EARNED ROYALTY payable to
LICENSOR on NET SALES of such LICENSED PRODUCTS shall not be reduced by more
than fifty percent (50%).
 
7.6. No multiple royalties shall be payable because the use, lease or sale of
any LICENSED PRODUCT is, or shall be, covered by more than one VALID CLAIM
contained in the LICENSED PATENTS.
 
7.7. In the event that a LICENSED PRODUCT is sold in the form of a combination
package together with companion products that are not themselves a LICESED
PRODUCT, the NET SALES for such combination package upon which the Earned
Royalty due to LICENSOR is based shall be calculated by multiplying the total
sales price of such combination package by the fraction A/(A+B), where A is the
invoice price of the LICENSED PRODUCT if sold separately, and B is the total
invoice price of each of the other companion products included in the
combination package if sold separately.

ARTICLE 8 DUE DILIGENCE
 
8.1. LICENSEE, its SUBLICENSEES, or its AFFILIATES shall use all REASONABLE
COMMERCIAL EFFORTS to conduct a research program designed to result in the
regulatory approval and commercialization of the LICENSED PRODUCTS. LICENSEE
shall demonstrate such efforts by performing any of the following activities:
 
(a) File an IND within [***] of the EFFECTIVE DATE of this Agreement;
 
(b) Upon IND filing, LICENSEE, its’ SUBLICENSEES, or their AFFILIATES, shall
demonstrate ongoing engagement of clinical development for LICENSED PRODUCTS,
which shall be evidenced by conducting at least one of the following activities
in any given year starting from the date of IND filing:

 
(i)
having expended at least [***] for development of LICENSED PRODUCT;

 
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(ii)
having manufactured LICENSED PRODUCT suitable for clinical trials under an
approved IND;

 
(iii)
having actively engaged in study preparation, implementation or reporting of a
PHASE I, PHASE II (proof-of-concept), or PHASE III CLINICAL TRIAL with respect
to a LICENSED PRODUCT or the construction of regulatory documents for filing;

 
(iv)
having responded to regulatory requests/issues relating to a PHASE I, PHASE II,
or PHASE III CLINICAL TRIAL of a LICENSED PRODUCT;

 
(v)
having prepared documents for NDA filing with respect to a LICENSED PRODUCT;

 
(vi)
having filed an NDA for a LICENSED PRODUCT;

 
(vii)
following NDA filing, having actively pursued NDA approval for a LICENSED
PRODUCT; or

 
(viii)
following NDA approval of a LICENSED PRODUCT, having launched or sold a LICENSED
PRODUCT in the United States or another MAJOR MARKET COUNTRY.

8.2. Failure to comply with development activities described in Article 8.1
above within the prescribed time frame shall be considered a material breach of
the LICENSE under 15.1(a), unless such failure is through no fault of the
LICENSEE, including without limitation, a change in regulatory guidelines,
generally accepted opinions or standards; the introduction of a new standard of
care during the development of LICENSED PRODUCTS which affects the development
strategy for LICENSED PRODUCTS; or unexpected findings (safety or efficacy) in
clinical studies, pre-clinical studies or chemistry, manufacturing and control
that delays clinical development or that requires that phase to be repeated. In
such an instance, the parties shall amend the timelines accordingly.
 
8.3. Within 30 days of the end of the calendar quarters ending 30 June and 31
December, LICENSEE shall provide the LICENSOR with a report on the status of the
development and marketing of each LICENSED PRODUCT of LICENSEE, SUBLICENSEES and
their respective AFFILIATES and shall promptly provide the LICENSOR with such
additional details of such development and marketing as the LICENSOR may from
time to time reasonably request.
 
8.4. The parties shall establish an advisory board or other similar body
consisting of Dr. Casagrande and other persons designated by LICENSEE (“PROJECT
TEAM”). The PROJECT TEAM shall meet in person or by telephone or other mutually
agreed upon method to provide guidance to the LICENSEE in the pre-clinical and
clinical development of the LICENSED PRODUCTS. The LICENSEE shall reimburse Dr.
Casagrande for the normal travel and other expenses incurred for the
participation in person to the PROJECT TEAM meetings.
 
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ARTICLE 9 CONFIDENTIALITY AND PUBLICITY
 
9.1. Subject to the parties’ rights and obligations pursuant to this Agreement,
the LICENSOR and LICENSEE agree that during the term of this Agreement and for
five (5) years thereafter, each of them:
 
(a) will keep confidential and will cause their AFFILIATES and, in the case of
LICENSEE, its SUBLICENSEES, to keep confidential, CONFIDENTIAL INFORMATION
disclosed to it by the other party, by taking whatever action the party
receiving the CONFIDENTIAL INFORMATION would take to preserve the
confidentiality of its own CONFIDENTIAL INFORMATION, which in no event shall be
less than reasonable care; and
 
(b) will only disclose that part of the other’s CONFIDENTIAL INFORMATION to its
officers, employees, agents, or independent contractors that is necessary for
those officers, employees, agents, or independent contractors who need to know
to carry out its responsibilities under this Agreement; and
 
(c) will not use the other party’s CONFIDENTIAL INFORMATION other than as
expressly set forth in this Agreement or disclose the other’s CONFIDENTIAL
INFORMATION to any third parties under any circumstance without advance written
permission from the other party; and
 
(d) will, within sixty (60) days of termination or expiration of this Agreement,
return all the CONFIDENTIAL INFORMATION disclosed to it by the other party
pursuant to this Agreement except for one copy which may be retained by the
recipient for monitoring compliance with this ARTICLE 9.
 
9.2. The obligations of confidentiality described above shall not pertain to
that part of the CONFIDENTIAL INFORMATION that:
 
(a) was known to the recipient prior to the disclosure by the disclosing party;
or
 
(b) is at the time of disclosure or has become thereafter publicly known through
no fault or omission attributable to the recipient; or
 
(c) is rightfully given to the recipient from sources independent of the
disclosing party; or
 
(d) is independently developed by the receiving party without use of or
reference to the CONFIDENTIAL INFORMATION of the other party; or
 
(e) is required to be disclosed by law in the opinion of recipient’s attorney,
but only after the disclosing party is given prompt written notice and an
opportunity to seek a protective order.
 
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9.3. Except as required by law, neither party may disclose the financial terms
of this Agreement without the prior written consent of the other party.
 
9.4. The terms of this Agreement shall be deemed confidential to the extent
permitted by law, rule or regulation.
 
ARTICLE 10 REPORTS, RECORDS AND INSPECTIONS
 
10.1. Following FIRST SALE, LICENSEE shall, within sixty (60) days after the
calendar year in which NET SALES first occurs, and within sixty (60) days after
each calendar quarter (March 31, June 30, September 30 and December 31)
thereafter, provide the LICENSOR with a written report detailing the NET SALES,
if any, made by LICENSEE, its SUBLICENSEES and AFFILIATES of LICENSED PRODUCTS
during the preceding calendar quarter and calculating the payments due pursuant
to ARTICLE 7. NET SALES of LICENSED PRODUCTS shall be deemed to have occurred on
the date of invoice for such LICENSED PRODUCTS. Each such report shall be signed
by an officer of LICENSEE (or the officer's designee), and must include:
 
(a) the number of LICENSED PRODUCTS manufactured, sold, leased or otherwise
transferred or disposed of by LICENSEE, SUBLICENSEES and AFFILIATES;
 
(b) a calculation of NET SALES for the applicable reporting period in each
country, including the gross invoice prices charged for the LICENSED PRODUCTS
and any permitted deductions made pursuant to Article 2.24;
 
(c) a calculation of total royalties or other payment due, including any
exchange rates used for conversion;
 
(d) names and addresses of all SUBLICENSEES and the type and amount of any
SUBLICENSE INCOME received from each SUBLICENSEE.
 
10.2. LICENSEE and its SUBLICENSEES shall keep, maintain complete and accurate
records and books containing an accurate accounting of all data in sufficient
detail to enable verification of EARNED ROYALTIES and other payments under this
Agreement. LICENSEE shall preserve such books and records for three (3) years
after the calendar year to which they pertain, or, in case of any dispute, until
such dispute is finally decided or settled. Such books and records shall be open
to inspection by the LICENSOR or an independent certified public accountant
selected by the LICENSOR, at the LICENSOR’s expense, during normal business
hours upon ten (10) days' prior written notice, for the purpose of verifying the
accuracy of the reports and computations rendered by LICENSEE. In the event
LICENSEE underpaid the amounts due to the LICENSOR with respect to the audited
period by more than [***]), LICENSEE shall pay the reasonable cost of such
examination, together with the deficiency not previously paid, and accrued
interest on the underpayment at the lesser of the maximum rate allowed by law or
[***] per month, all within thirty (30) days of receiving notice thereof from
the LICENSOR. If the LICENSEE underpays by more than [***] in any calendar
quarter, then the LICENSEE shall from that date forward deliver at LICENSEE’S
cost and expense an annual audit within 90 days after the end of each annual
period.
 
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10.3. On or before the 90th day following the close of LICENSEE’S fiscal year,
LICENSEE shall provide the LICENSOR with LICENSEE’S certified financial
statements for the preceding fiscal year including, at a minimum, a balance
sheet and an income statement, including notes relating to the License
Agreement. LICENSEE shall also require that any SUBLICENSEE provide the LICENSEE
and the LICENSOR with annual audited financial statements for within ninety (90)
days following the date of the closing of the SUBLICENSEE’s preceding fiscal
year.
 
ARTICLE 11 PATENT PROSECUTION
 
11.1. LICENSEE shall be responsible for all past, present and future costs of
filing, prosecution and maintenance of any and all United States and foreign
patent applications contained in the LICENSED PATENTS. Any and all such United
States and foreign patent applications, and resulting issued patents, shall
remain the property of the LICENSOR. 
 
11.2. The costs described in Article 11.1 shall include, but are not limited to,
any past, present and future taxes, government fees, patent attorney fees,
annuities, working fees, maintenance fees, renewal and extension charges.
Payment of such costs shall be made, at the LICENSOR'S option, either directly
to patent counsel or by reimbursement to the LICENSOR.
 
11.3. The activities provided for in Article 11.1 shall be performed and all new
and existing patent applications under the LICENSED PATENTS shall be prepared,
prosecuted, filed and maintained by patent counsel selected by LICENSEE and
which is reasonably acceptable to the LICENSOR. LICENSEE shall be responsible
for directing prosecution. With respect to any LICENSED PATENTS, LICENSEE and
patent counsel shall:
 
(a) consult with the LICENSOR and keep the LICENSOR fully and timely informed of
the performance of the activities provided for in Article 11.1 and the progress
of all patent applications and patents, including all issues relating to the
preparation, filing, prosecution and maintenance of LICENSED PATENTS;
 
(b) consult with the LICENSOR and keep the LICENSOR fully informed about
LICENSEE’s patent strategy with respect to the LICENSED PATENTS;
 
(c) provide to the LICENSOR advance copies of documents relevant to preparation,
filing, prosecution and maintenance of the LICENSED PATENTS sufficiently in
advance of filing to allow the LICENSOR a reasonable opportunity to review and
comment on such documents; and
 
(d) provide the LICENSOR with final copies of such documents. LICENSEE agrees to
use commercially reasonable efforts to obtain broad and strong patent protection
in the best interest of the LICENSOR and LICENSEE. LICENSEE will not finally
abandon any patent application, or make decisions that would have a material
impact on the nature or scope of any claims without the LICENSOR’ consent.
 
11.4. LICENSEE shall apply, and shall require SUBLICENSEES to apply, the patent
marking notices required by the law of any country where such LICENSED PRODUCTS
are made, sold, used or shipped, including, but not limited to, the applicable
patent laws of that country.
 
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ARTICLE 12 INFRINGEMENT AND LITIGATION
 
12.1. Each party shall promptly notify the other in writing in the event that it
obtains knowledge of infringing activity by third parties, or is sued or
threatened with an infringement suit, in any country in the LICENSED TERRITORY
as a result of activities that concern the LICENSED PATENTS and shall supply the
other party with documentation of the infringing activities that it possesses.
 
12.2. During the TERM of this Agreement:
 
(a) LICENSEE shall have the first right and obligation to defend the LICENSED
PATENTS against infringement or interference in the FIELD and in the LICENSED
TERRITORY by third parties. This right and obligation includes bringing any
legal action for infringement and defending any counter claim of invalidity or
action of a third party for declaratory judgment for non-infringement or
non-interference. If, in the reasonable opinion of LICENSEE’S and the LICENSOR’
respective counsel, the LICENSOR are required to be a named party to any such
suit for standing purposes, LICENSEE may join the LICENSOR as a party; provided,
however, that (i) the LICENSOR shall not be the first named party in any such
action, (ii) the pleadings and any public statements about the action shall
state that the action is being pursued by LICENSEE and that LICENSEE has joined
the LICENSOR as a party; and (iii) LICENSEE shall keep the LICENSOR reasonably
apprised of all developments in any such action. LICENSEE may settle such suits
solely in its own name and solely at its own expense and through counsel of its
own selection; provided, however, that no settlement shall be entered without
the LICENSOR’ prior written consent. LICENSEE shall bear the expense of such
legal actions. Except for providing reasonable assistance, at the request and
expense of LICENSEE, the LICENSOR shall have no obligation regarding the legal
actions described in Article 12.2 unless required to participate by law.
However, the LICENSOR shall have the right to participate in any such action
through its own counsel and at its own expense. Any recovery shall first be
applied to LICENSEE’S out of pocket expenses and second shall be applied to the
LICENSOR’S out of pocket expenses, including legal fees. Any excess recovery
over LICENSEE’S out of pocket expenses and LICENSOR’ out of pocket expenses, if
any, shall be deemed NET SALES and shared in accordance with Article 7.1. 
 
(b) In the event LICENSEE fails to initiate and pursue or participate in the
actions described in Article 12.2(a) within sixty (60) days of (a) notification
of infringement from the LICENSOR or (b) the date LICENSEE otherwise first
becomes aware of an infringement, whichever is earlier, the LICENSOR shall have
the right to initiate such legal action at its own expense and the LICENSOR may
use the name of LICENSEE as party plaintiff to uphold the LICENSED PATENTS. In
such case, LICENSEE shall provide reasonable assistance to the LICENSOR if
requested to do so. The LICENSOR may settle such actions solely through its own
counsel. Any recovery shall be the sole property of LICENSOR.
 
12.3. In the event LICENSEE is permanently enjoined from exercising its LICENSE
under this Agreement pursuant to an infringement action brought by a third
party, or if both LICENSEE and the LICENSOR elect not to undertake the defense
or settlement of a suit alleging infringement for a period of six (6) months
from notice of such suit, then either party shall have the right to terminate
this Agreement in the country where the suit was filed with respect to the
licensed patent following thirty (30) days’ written notice to the other party in
accordance with the terms of ARTICLE 17.
 
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ARTICLE 13 USE OF LICENSOR’S NAME
 
Each party shall obtain the prior written approval of the other prior to making
use of the name of the other party nor any variation or adaptation thereof for
any commercial purpose, except as required to comply with law, regulation or
court order.
 
ARTICLE 14 PUBLICATION
 
14.1. In the event that LICENSOR desires to publish or disclose, by written,
oral or other presentation, any material information related to the INVENTION,
the LICENSED PATENTS, a NEW INVENTION or any LICENSED PRODUCT, or results
relating to the clinical or non-clinical testing of any of the foregoing,
LICENSOR shall notify LICENSEE and LICENSOR in writing pursuant to ARTICLE 17 of
their intention no less than 60 days prior to any speech, lecture or other oral
presentation, or any written or other publication or disclosure.
 
14.2. The LICENSOR shall include with any such notice pursuant to Article 14.1 a
description of any proposed oral presentation or, in any proposed written or
other disclosure, a current draft of such proposed disclosure or abstract.
 
14.3. LICENSEE may request that the LICENSOR, no later than 30 days following
the receipt of such notice, delay such publication or disclosure in order to
enable LICENSEE to file, or have filed on its behalf, a patent application,
copyright or other appropriate form of intellectual property protection related
to the information to be disclosed. Upon receipt of such notice, LICENSOR shall
arrange for a delay in publication or disclosure until such time as LICENSEE has
filed on LICENSOR’s name and behalf such patent application, copyright or other
appropriate form of intellectual property protection that LICENSEE agrees to
file as soon as is reasonably practicable provided, however that said deferral
shall not exceed 90 days from the receipt of such notice. 
 
14.4. If the LICENSOR does not receive any request to delay publication or
disclosure pursuant to Article 14.3, LICENSOR may submit such material for
publication or presentation or make such other publication or disclosure.
 
ARTICLE 15 TERMINATION
 
15.1. LICENSOR shall have the right to terminate this Agreement pursuant to the
provisions below, provided that LICENSOR has given LICENSEE the notice required
in accordance Article 15.2 and LICENSEE has failed to cure the breach described
in such notice: 
 
(a) breach by LICENSEE of a material term of the Agreement;
 
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(b) the institution of any proceeding by LICENSEE under any bankruptcy,
insolvency, or moratorium law;
 
(c) any assignment by LICENSEE of substantially all of its assets for the
benefit of creditors;
 
(d) placement of LICENSEE’S assets in the hands of a trustee or a receiver
unless the receivership or trust is dissolved within 30 days thereafter and
provided that in the case of an involuntary bankruptcy proceeding, which is
contested by LICENSEE, such termination shall not become effective until the
bankruptcy court of jurisdiction has entered an order upholding the petition; or
 
(e) a decision by LICENSEE or LICENSEE’S licensee or assignee of rights under
this Agreement to quit the business of developing or selling Licensed Products.
 
15.2. LICENSOR may exercise its rights pursuant to Article 15.1 above by giving
LICENSEE ninety (90) days' prior written notice (the “Written Notice”) of
LICENSOR'S intention to terminate. Such notice shall include the basis for such
termination. Upon the expiration of such period, LICENSOR shall provide written
notice of termination to LICENSEE (the “Termination Notice”), effective upon
receipt, unless LICENSEE has cured the material breach or the other basis for
such proposed termination during such ninety (90) day period. Such notice and
termination shall not prejudice LICENSOR'S right to receive Earned Royalties
accrued prior to termination, or other sums due hereunder and shall not
prejudice any cause of action or claim of LICENSOR accrued or to accrue on
account of any breach or default by LICENSEE. 
 
15.3. LICENSEE shall have the right to terminate this Agreement pursuant to the
provisions below, provided that LICENSEE has given LICENSOR the notice required
in accordance with Article 15.4:
 
(a) LICENSEE may terminate this Agreement upon breach by LICENSOR of a material
term of the Agreement; or
 
(b) LICENSEE may terminate this Agreement in its reasonable commercial business
judgment by providing written notice of such termination given to LICENSOR at
least ninety (90) days prior to the date of such termination. Such notice of
termination shall include an explanation for termination, which may include, but
is not limited to, pre-clinical or clinical safety or efficacy results,
formulation or manufacturing issues, a change in legal or regulatory rules or
scientific opinion, changes in the competitive environment, pipeline
prioritization or other reorganization or redirection of LICENSEE’s business.
 
15.4. LICENSEE may exercise its right of termination pursuant to Article
15.3(a), by giving LICENSOR ninety (90) days' prior written notice of LICENSEE’S
intention to terminate and by providing in its termination notice the basis for
such termination. Upon the expiration of the ninety (90) day period, LICENSEE
shall provide written notice of termination to LICENSOR, effective upon receipt,
unless LICENSOR has cured the breach or the other basis for such proposed
termination during such ninety (90) day period. Such notice of termination shall
not prejudice any cause of action or claim of LICENSEE accrued or to accrue on
account of any breach or default by LICENSOR. 
 
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15.5. If this Agreement is terminated pursuant to the provisions of Article
15.1, then all of LICENSEE’s rights under LICENSED PATENTS shall terminate and
LICENSEE shall return to LICENSOR, or at LICENSOR'S direction, destroy all data,
writings and other documents and tangible materials supplied to LICENSEE by
LICENSOR hereunder. Any SUBLICENSES will remain in full force and effect and
will be assigned to the LICENSOR.
 
15.6. If this Agreement is terminated pursuant to Section 15.2 or 15.3(b):
 
(a) LICENSEE shall further, upon LICENSOR's request and with no need for
additional consideration, grant to LICENSOR an exclusive, worldwide, fully paid,
perpetual license, with full rights to sublicense, under all of LICENSEE’s
rights in any LICENSED PATENTS and LICENSED INFORMATION. Further, at LICENSOR’s
request, LICENSEE agrees to negotiate in good faith for an agreement (the “Data
License”), which shall be on commercially reasonable terms, under which LICENSEE
would provide to LICENSOR the rights to use full and complete copies of all
toxicity, efficacy, and other data generated or owned by LICENSEE or LICENSEE’s
Affiliates, (including by contractors or agents on their behalf) in the course
of LICENSEE’s efforts to develop LICENSED PRODUCTS or obtain governmental
approval for the SALE of LICENSED PRODUCTS, for use in connection with the
development and commercialization of LICENSED PRODUCTS with right to provide
such data pertaining to the LICENSED PATENTS and LICENSED INFORMATION to any
THIRD PARTY with a bona fide interest in licensing such technology. Under the
terms of such a Data Agreement, in the event a THIRD PARTY concludes a license
with LICENSOR, such THIRD PARTY would be free to use such data for all purposes,
including to obtain government approvals to sell products.
 
(b) In furtherance of Section 15.6(a), the LICENSEE agrees that, within 60 days
of written request by the LICENSOR, LICENSEE shall make available for review by
LICENSOR, or any THIRD PARTY identified by the LICENSOR with a bona fide
interest in licensing the LICENSED PATENTS, copies of such data and information
pertaining to LICENSED PATENTS and LICENSED INFORMATION in a mutually convenient
location. Any such data would be provided on a confidential basis pursuant to a
mutually agreeable confidentiality agreement.
 
(c) LICENSOR or such THIRD PARTY shall bear the costs incurred by LICENSEE in
connection with providing information pursuant to this Section.
 
(d) Any Sublicense entered into by the LICENSEE shall contain provisions
substantially similar to the ones contained herein with respect to data and
information generated by the SUBLICENSEE. 
 
15.7. The failure of either Party, at any time, or for any period of time, to
enforce any of the provisions of this Agreement, shall not be construed as a
waiver of such provisions or as a waiver of the right of either Party’s
thereafter to enforce each and every such provision of this Agreement.
 
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15.8. The rights provided in this ARTICLE 15 shall be in addition and without
prejudice to any other rights which the parties may have with respect to any
default or breach of the provisions of this Agreement.
 
ARTICLE 16 INDEMNIFICATION; INSURANCE; NO WARRANTIES
 
16.1. LICENSEE shall defend, indemnify and hold harmless the LICENSOR, its
trustees, directors, officers, employees, and agents and their respective
successors, heirs and assigns against any and all liabilities, claims, demands,
damages, judgments, losses and expenses of any nature, including without
limitation legal expenses and attorneys' fees (a “CLAIM”), arising out of any
theory of liability (including without limitation tort, warranty, or strict
liability) or the death, personal injury, or illness of any person or out of
damage to any property related in any way to the rights granted under this
Agreement; or resulting from the production, manufacture, sale, use, lease, or
other disposition or consumption or advertisement of the LICENSED PRODUCTS by
LICENSEE, its AFFILIATES, SUBLICENSEES or any other transferees; or in
connection with any statement, representation or warranty of LICENSEE, its
AFFILIATES, SUBLICENSEES or any other transferees with respect to the LICENSED
PRODUCTS; provided, however, that the LICENSEE shall not be responsible to
indemnify the LICENSOR pursuant to this Article 16.1 to the extent any CLAIM
arises out of the LICENSOR’S gross negligence or willful misconduct and LICENSEE
shall not be responsible to indemnify LICENSOR pursuant to this Article 16.1 to
the extent any CLAIM arises out of LICENSOR’S gross negligence or willful
misconduct. 
 
16.2. LICENSEE shall purchase and maintain in effect and shall require its
SUBLICENSEES to purchase and maintain in effect a policy of commercial, general
liability insurance to protect the LICENSOR with respect to events described in
Article 16.1. Such insurance shall:
 
(a) list LICENSOR as an additional insured under the policy;
 
(b) provide that such policy is primary and not excess or contributory with
regard to other insurance the LICENSOR may have;
 
(c) be endorsed to include product liability coverage in amounts no less than
[***] per incident and [***] annual aggregate; and
 
(d) be endorsed to include contractual liability coverage for LICENSEE’S
indemnification under Article 16.1; and
 
(e) by virtue of the minimum amount of insurance coverage required under Article
16.2(c) , not be construed to create a limit of LICENSEE’S liability with
respect to its indemnification under Article 16.1.
 
16.3. By signing this Agreement, LICENSEE certifies that the requirements of
Article 16.2 will be met on or before the earlier of (a) the date of FIRST SALE
of any LICENSED PRODUCT or (b) the date any LICENSED PRODUCT is tested or used
on humans, and will continue to be met thereafter. Upon the LICENSOR’ request,
LICENSEE shall furnish a Certificate of Insurance and a copy of the current
Insurance Policy to the LICENSOR. LICENSEE shall give thirty (30) days’ written
notice to the LICENSOR prior to any cancellation of or material change to the
policy.
 
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16.4. THE LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES THAT ANY CLAIMS OF THE
LICENSED PATENTS, ISSUED OR PENDING, ARE VALID, OR THAT THE MANUFACTURE, USE,
SALE OR OTHER DISPOSAL OF THE LICENSED PRODUCTS OR USE OF THE LICENSED
INFORMATION DOES NOT OR WILL NOT INFRINGE ANY PATENT OR OTHER RIGHTS NOT VESTED
IN THE LICENSOR.
 
16.5. THE LICENSOR DISCLAIMS ALL WARRANTIES WHATSOEVER WITH RESPECT TO THE
LICENSED PATENTS, LICENSED INFORMATION, LICENSED PRODUCTS, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. LICENSEE SHALL MAKE NO STATEMENTS, REPRESENTATION OR
WARRANTIES WHATSOEVER TO ANY THIRD PARTIES WHICH ARE INCONSISTENT WITH SUCH
DISCLAIMER BY THE LICENSOR. IN NO EVENT SHALL THE LICENSOR, OR ITS TRUSTEES,
DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES, BE LIABLE FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OF ANY KIND, INCLUDING ECONOMIC
DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER THE
LICENSOR SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL
KNOW OF THE POSSIBILITY OF THE FOREGOING.
 
16.6. IN NO EVENT SHALL THE LICENSOR, OR ITS TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES AND AFFILIATES, BE LIABLE FOR DAMAGES IN EXCESS OF AMOUNTS THE
LICENSOR HAVE RECEIVED FROM LICENSEE UNDER THIS LICENSE.
 
ARTICLE 17 NOTICES, PAYMENTS
 
17.1. Any payment, notice or other communication required by this Agreement (a)
shall be in writing, (b) may be delivered personally or sent by reputable
overnight courier with written verification of receipt or by registered or
certified first class United States Mail, postage prepaid, return receipt
requested, (c) shall be sent to the following addresses or to such other address
as such party shall designate by written notice to the other party, and (d)
shall be effective upon receipt:
 
FOR LICENSOR:
 
Dr. Cesare Casagrande
Via Campogallo, 21/67
20020 Arese, Milan
Italy
Tel:
Fax:
E-mail:
FOR LICENSEE:
 
Chief Executive Officer
Nile Therapeutics, Inc.
2850 Telegraph Avenue, Suite 310
Berkeley, CA 94705
Tel: (510) 281-7701
Fax: (510) 288-1310
E-mail: info@nilethera.com

 
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ARTICLE 18 LAWS, FORUM AND REGULATIONS
 
18.1. Any dispute arising out of or in connection with this Agreement, including
any question regarding their existence, validity or termination, shall be
finally solved under the Rules of Arbitration of the International Chamber of
Commerce, which Rules are deemed to be incorporated by reference into this
clause. The number of arbitrators shall be three. The seat, or legal place, of
arbitration shall be London, England. The language to be used in the arbitration
shall be English. The arbitrators shall decide ex bono et aequo.
 
18.2. LICENSEE shall comply, and shall cause its AFFILIATES and SUBLICENSEES to
comply, with all foreign and United States federal, state, and local laws,
regulations, rules and orders applicable to the testing, production,
transportation, packaging, labeling, export, sale and use of the LICENSED
PRODUCTS. In particular, LICENSEE shall be responsible for assuring compliance
with all United States export laws and regulations applicable to this LICENSE
and LICENSEE’S activities under this Agreement.
 
ARTICLE 19 REPRESENTATIONS AND WARRANTIES
 
19.1. LICENSEE represents and warrants to LICENSOR that:
 
(a) LICENSEE is a duly organized and validly existing corporation under the laws
of the State of Delaware with adequate power and authority to conduct the
business in which it is now engaged or currently proposed to be engaged, and
LICENSEE is duly qualified to do business as a foreign corporation and is in
good standing in such other states or jurisdictions as is necessary to enable it
to carry on its business or own its properties.
 
(b) To the best of LICENSEE’S knowledge, there are no actions, suits, or
proceedings pending or threatened against or affecting LICENSEE, its officers or
directors in their capacity as such, its properties, or its patents in any court
or before any governmental or administrative agency, which can have any material
adverse effect on the business as now conducted or as currently proposed to be
conducted, on the properties, the financial condition, or income of LICENSEE, or
the transactions contemplated by this Agreement and LICENSEE is not in default
under any order or judgment of any court or governmental or administrative
agency.
 
(c) LICENSEE has full power and lawful authority to issue and sell the shares of
COMMON STOCK on the terms and conditions contained herein.
 
(d) Consummation of the transactions contemplated by this Agreement in
compliance with provisions of this Agreement will not result in any breach of
any of the terms, conditions, or provisions of, or constitute a default under,
or result in the creation of any lien, charge, or encumbrance on, any property
or assets of LICENSEE pursuant to any indenture, mortgage, deed of trust,
agreement, corporate charter, bylaws, contract, or other instrument to which
LICENSEE is a party or by which Licensee may be bound or any law, rule,
regulation, qualification, license, order or judgment applicable to Licensee or
any of its property.
 
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(e) LICENSEE is run by a management team that is experienced in operating
companies in the business of commercial drug development.
 
19.2. LICENSOR represents and warrants to LICENSEE that as of the EFFECTIVE
DATE:
 
(a) LICENSOR has the full right and power to perform the obligations and grant
the LICENSE set forth in this Agreement;
 
(b) There are no outstanding agreements, assignments or encumbrances in
existence inconsistent with the provisions of this Agreement;
 
(c) LICENSOR has not authorized in any manner any Third Party to practice the
LICENSED PATENTS;
 
(d)  LICENSOR owns or possesses all right, title, and interest in and to the
LICENSED PATENTS, including exclusive, absolute, irrevocable right, title and
interest thereto, free and clear of all liens, charges, encumbrances or other
restrictions or limitations of any kind whatsoever;
 
(e) There are no licenses, options, restrictions, liens, rights of third
parties, disputes, proceedings or claims relating to, affecting, or limiting its
rights or the rights of LICENSEE under this Agreement with respect to, or which
(i) may lead to a claim of infringement or invalidity regarding, any part or all
of the LICENSED PATENTS and their use as contemplated in the underlying patent
applications as presently drafted or (ii) imposes obligations upon LICENSOR or
gives any rights to LICENSOR which, in either case, would adversely affect the
rights of LICENSEE or the obligations of LICENSOR under this Agreement;
 
(f) To the best of LICENSOR’S knowledge and belief there is no claim, pending or
threatened, of infringement, interference or invalidity regarding, any part or
all of the LICENSED PATENTS and their use as contemplated in the underlying
patent applications as presently drafted or as contemplated under this
Agreement;
 
(g) Appendix A lists all patents issued and patent applications filed on or
before the Effective Date of this Agreement within the scope of the LICENSED
PATENTS and therefore subject to this Agreement and all of the inventors named
in the patents and patent applications listed in Appendix A have assigned, or
are under an obligation to assign, to LICENSOR all of their right, title an
interest in the inventions claimed; and
 
(h) LICENSOR understand that the shares of COMMON STOCK have not been registered
under the Securities Act by reason of a claimed exemption under the provisions
of the Securities Act that depends, in part, upon the LICENSOR’ investment
intention. In this connection, LICENSOR hereby represent that LICENSOR are
acquiring the shares of COMMON STOCK for the LICENSOR own account for investment
and not with a view toward the resale or distribution to others.
 
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ARTICLE 20 MISCELLANEOUS
 
20.1. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors and permitted
assigns.
 
20.2. This Agreement constitutes the entire agreement of the parties relating to
the LICENSED PATENTS and LICENSED INFORMATION, and all prior representations,
agreements and understandings, written or oral, are merged into it and are
superseded by this Agreement.
 
20.3. The provisions of this Agreement shall be deemed separable. If any part of
this Agreement is rendered void, invalid, or unenforceable, such determination
shall not affect the validity or enforceability of the remainder of this
Agreement unless the part or parts which are void, invalid or unenforceable
shall substantially impair the value of the entire Agreement as to either party.
 
20.4. Paragraph headings are inserted for convenience of reference only and do
not form a part of this Agreement.
 
20.5. No person not a party to this Agreement, including any employee of any
party to this Agreement, shall have or acquire any rights by reason of this
Agreement. Nothing contained in this Agreement shall be deemed to constitute the
parties partners with each other or any third party.
 
20.6. This Agreement may not be amended or modified except by written agreement
executed by each of the parties. Other than in the event of a CHANGE OF CONTROL
(as defined herein) LICENSOR'S prior written consent, which shall not be
unreasonably withheld, shall be required prior to any other assignment of
LICENSEE’S rights or obligations under this Agreement. Following any such
assignment or CHANGE OF CONTROL, the surviving corporation shall assume all of
the rights and obligations included in this Agreement. Any attempted assignment
in contravention of this Article 20.6 shall be null and void and shall
constitute a material breach of this Agreement. LICENSOR'S prior written
consent, which shall not be unreasonably withheld, shall be required prior to
any other assignment of LICENSEE’S rights or obligations under this Agreement. 
 
20.7. LICENSEE, or any SUBLICENSEE or assignee, will not create, assume or
permit to exist any lien, pledge, security interest or other encumbrance on this
Agreement or any SUBLICENSE AGREEMENT.
 
20.8. The failure of any party hereto to enforce at any time, or for any period
of time, any provision of this Agreement shall not be construed as a waiver of
either such provision or of the right of such party thereafter to enforce each
and every provision of this Agreement.
 
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20.9. LICENSEE acknowledges that it is subject to and agrees to abide by the
United States laws and regulations (including the Export Administration Act of
1979 and Arms Export Contract Act) controlling the export of technical data,
computer software, laboratory prototypes, biological material, and other
commodities. The transfer of such items may require a license from the cognizant
agency of the U.S. Government or written assurances by LICENSEE that it shall
not export such items to certain foreign countries without prior approval of
such agency. LICENSOR neither represents that a license is or is not required or
that, if required, it shall be issued.
 
20.10. LICENSEE is responsible for any and all wire/bank fees associated with
all payments due to the LICENSOR pursuant to this Agreement.
 
 
[Signatures On Following Page]
 

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IN WITNESS to their Agreement, the parties have caused this Agreement to be
executed in duplicate originals by their duly authorized representatives.
 

DR. CESARE CASAGRANDE
NILE THERAPEUTICS, INC.
 
 
By: /s/ Cesare Casagrande       
Name: Dr. Cesare Casagrande
Date: August 6, 2007
 
 
By: /s/ Peter M. Strumph         
Name: Peter M. Strumph
Title: Chief Executive Officer
Date: August 6, 2007

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APPENDIX A
 
1. U.S. Patent 6,525,078 B1 dated February 24, 2003 entitled “Compound for the
Treatment of Athreosclerotic-Thrombotic Pathological Conditions.”2. Canadian
Patent Application No. 2,390,966 filed on June 19, 2002
 
3.
European Patent No. 1 270 558 granted April 25, 2007, including the validation
thereof in the following countries:

 

 
Country
 
 
Validation Date
 
 
Validation Number
 
Austria
 
 
July 25, 2007
 
 
E 360614
Belgium
 
n/a
 
n/a
France
 
July 20, 2007
 
n/a
Germany
 
July 20, 2007
 
601 28 077.6-08
Great Britain
 
July 9, 2007
 
n/a
Greece
 
July 24, 2007
 
n/a
Ireland
 
July 13, 2007
 
n/a
Italy
 
July 18, 2007
 
28416BE/2007
Spain
 
July 19, 2007
 
n/a
Switzerland & Lichtenstein
 
July 19, 2007
 
n/a
The Netherlands
 
July 24, 2007
 
n/a
Turkey
 
July 24, 2007
 
n/a

 
Japanese Patent Application No. 181343/2002 filed on June 21, 2002.
 
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