EXHIBIT 4.1


 





 


Avtar Dhillon


President and CEO


Inovio Biomedical Corporation


11494 Sorrento Valley Rd.

San Diego, CA

92121-1318


 


July 18, 2006


 


Dear Sir:


 


This letter agreement (this “Agreement) will confirm
the understanding and agreement between P2 Partners, LLC (“P2”)
and Inovio Biomedical Corporation (the “Company”) as follows:


 


1.             The
Company hereby engages P2 on an exclusive basis for the purpose of
(a) identifying opportunities for the license/sale “License” (as defined below)
of all or part of one of the Company’s therapy programs (“Program”, as more
fully described on Exhibit B hereto); (b) advising the Company concerning
opportunities for such License, whether or not identified by P2; and
(c) as requested by the Company, participating on the Company’s behalf in
negotiations concerning such License. Upon execution of this Agreement, the
Company shall submit it to the American Stock Exchange (“AMEX”) for approval of
issuance of the Company Shares, as defined in Section 6(a) hereof. This
Agreement shall not become effective unless and until the AMEX gives notice to
the Company of its approval of issuance of the Company Shares. The date of the
Company’s receipt of such notice shall be the Agreement’s “Effective Date.”  In the event the AMEX refuses such approval,
the Company may decide, in its sole discretion, to pay in cash the retainer fee
referenced in Section 6(a), in which case the date of P2’s receipt of written notice
from the Company of such decision shall be deemed the Effective Date.


 

















 


2.             P2
hereby accepts the engagement described in paragraph 1 and, in that connection,
agrees to do the following, as requested by the Company:


 


(a)           prepare
with Inovio’s input and participation a descriptive memorandum concerning the
Program,  which memorandum shall not be
made available to or used in discussions with prospective Licensees until both
it and its use for that purpose have been approved by the Company;


 


(b)           develop,
update and review with the Company on an ongoing basis, a list of parties who
might be interested in Licensing the Program ( the “List”) and only contact
parties on the List as approved by the Company; and


 


(c)           consult
with and advise the Company concerning opportunities for the License of the
Program which have been identified P2 and, if so requested by the
Company, participate on the Company’s behalf in negotiations for such License.


 


3.             For
purposes of this Agreement:


 


(a)           A
“License” of the Program shall mean any transaction or series or combination of
transactions (regardless of the form or structure thereof) within the
Territory  whereby, directly or
indirectly, control of or a material interest in the Program, is transferred
for consideration. The Territory is defined herein as all countries in North
and South America, Europe, western Asia, including former Soviet Union
countries and the middle eastern countries, and Africa; however, countries in
eastern Asia, including but not limited to Japan, China, Taiwan, Hong Kong,
Thailand, Singapore, Australia, India, North and South Korea and Malaysia (the “Excluded
Territories”) shall not be included in this Agreement until such time as Inovio
elects in writing to have any or all such Excluded Territories included in this
agreement for the sole purpose of partnering of the Program. In the absence of
such notice to P2 with respect to an Excluded Territory, if during the term of
this Agreement the Company closes a transaction which would otherwise be deemed
a License and which relates solely to activities in an Excluded Territory, then
such transaction shall not be deemed a License hereunder; provided, however,
that in the event P2 identifies a possible opportunity to License
the Program in an Excluded Territory, it may inform the Company of such
opportunity. If the Company then provides P2 with explicit written
authorization to pursue such 


 

















 


opportunity, then the
resulting transaction shall be deemed a License hereunder.


 


(b)           “Consideration”
shall mean the realized gross monetary value of all cash, securities and other
property actually received by the Company (or its affiliates or shareholders,
as the case may be) in connection with a License of the Program including
without limitation upfront cash payments, success-based milestones paid for
development, regulatory and commercial accomplishments, equity investments and
royalties, but excluding research support, FTE salary support, and other
pass-through expense reimbursements. The Company shall have no obligation to
make payments in respect of any Consideration until the same is actually received
by it. All discounts, set-offs, or reductions to Consideration shall
correspondingly reduce the Company’s payment obligations to P2 Partners. In no case shall any
damages or costs paid to the Company in respect of matters as to which the
Company is indemnified by the Licensee be deemed Consideration for purposes of
this agreement.


 


4.          (a)              The
Company shall furnish to P2 the names of parties with whom it has
had active discussions or contacts concerning a License over the year preceding
the Effective Date, which parties shall comprise the initial List memorialized
on Exhibit A hereto.


 


Once P2 has begun the process of actively
contacting parties with regard to a potential License of the Program, it will
on a regular basis, but not less frequently than twice per month, provide


 

















 


written statements (“Periodic Reports”) to the Company
with respect to parties it has contacted and parties that have contacted it in
connection with the possible License of the Program. All such parties shall be
included on the List. In addition, during the term of P2’s
engagement, parties that contact the Company with regard to the possible
License of the Program shall be included on the List. Each Periodic Report will be deemed complete
and accurate as submitted, if within five business days after submission P2
has not submitted to the Company any corrections or addenda thereto.


 


The parties will amend the List from time to time to
add the names of parties as to which the Company has given P2 explicit, written, prior authorization
to approach on the Company’s behalf. (Such parties shall either have been named
by P2 on a Periodic
Report to the Company or shall have been identified by the Company to P2.)  P2
shall not approach any potential licensee on the Company’s behalf until it
receives explicit, written, prior authorization to do so from the Company.


 


(b)           The
Company covenants to make available to P2 all information concerning
the Program which P2 reasonably requests in connection with the
performance of its obligations hereunder. All such information provided by or
on behalf of the Company shall be complete and accurate and not misleading, and
P2 shall be entitled to rely upon the accuracy and completeness of
all such information without independent verification. The Company shall
continue to advise P2 regarding any material developments or matters
relating to the Program which occur during the term of P2’s
engagement hereunder.


 


5.             The
Company may refuse to discuss or negotiate a License with any party for any
reason whatsoever and may terminate negotiations with any party at any time.


 


6.             As
compensation for the services rendered by P2 hereunder, the Company
shall pay P2 as follows:


 


a)             Retainer
Fee — Non-refundable fee totaling $100,000 payable by the issuance and delivery
in two tranches of up to 100,000 shares of common stock of the Company (the “Company Shares”) having an aggregate
market value of $100,000.00, as follows:


 


(i)            The market value for the Company Shares shall
be the closing price per share of its common stock as reported on AMEX on the
day prior to the 


 

















 


Effective
Date (the “Market Price Per Share).”


 


(ii)           On
the third business day after the Effective Date (the “First Delivery Date”),
the Company shall deliver to P2
25,000 Company Shares.


 


(iii)          Ninety
days after the Effective Date (the “Second Delivery Date”), in the event that
the Company has not delivered a termination notice pursuant to subsection (iv)
below, then the Company shall calculate the number of Company Shares which,
when multiplied by the Market Price Per Share, equals $100,000, and the Company
shall deliver to P2 that number of Company Shares less 25,000; provided, however, that in no event shall such aggregate number
of Company Shares delivered on the First Delivery Date and the Second Delivery
Date exceed 100,000. In the event that
the aggregate number of Company Shares to be issued pursuant to this paragraph
would exceed 100,000, then the Company shall pay to P2 in cash the shortfall between $100,000 and
the aggregate market value of the Company Shares, which shall be determined by
multiplying 100,000 times the Market Price Per Share. In the event that the
calculation of the number of Company Shares to be issued pursuant to this
paragraph would result in a fraction, such fraction shall be rounded up or down
to the nearest whole share.


 


(iv)          The
Company shall only be required to deliver Company Shares on the Second Delivery
Date in the event that, by the 89th day after the Effective Date,
the Company has not provided to P2
written notice pursuant to Section 12 of termination of its relationship with P2. In the event the Company has
given such notice, then this Agreement shall terminate in accordance with
Section 12 thirty (30)


 


days from the date of P2’s receipt of such notice,
without liability or obligation of the Company or P2 (except as set forth in Section 12 and subsection (v)
below) and, among other things, the Company shall have no obligation to deliver
the balance of the Company Shares or otherwise pay the balance of the
non-refundable retainer.


 


(v)           Within
five days after the Second Delivery Date (the “Reconciliation Date”), P2 shall calculate its proceeds
from the Company Shares and report the same to the Company. In the event that
the gross proceeds from the Company Shares, on the Reconciliation Date is
greater or less than $100,000 (greater or less than $50,000 in the event there
has been 


 

















 


a termination under subsection (iii) above), then the
difference shall be paid to, or refunded by, P2, in cash.


 


(vi)          On
or before the date the Company Shares are first issued to P2 under this Agreement, the
Company shall file with the Securities and Exchange Commission (the “SEC”) a
prospectus supplement relating to the issuance and sale of the Company Shares
to be issued by it pursuant hereto and the Company shall deliver the same to P2 along with its prospectus
dated May 25, 2006 that the Company heretofore filed with the SEC and P2 shall acknowledge receipt
thereof in writing. P2
hereby represents and warrants to the Company that (i) it is acquiring the
Company Shares for its own account for investment and not with a present view
towards the distribution thereof; provided, however,
that by making the foregoing representation, P2 does not agree to hold the Company Shares for any minimum
or other specific term and reserves the right to dispose of the Company Shares
at any time; (ii) P2 does
not have any contract, understanding, or arrangement with any person to sell,
transfer, or grant participation to such person or any third person with respect
to the Company Shares; and (iii) from the date of this Agreement’s execution to
the Reconciliation Date, there will be no short selling of Inovio stock by P2 or by any of its principals,
managers, members, or affiliates.


 

















 


b)            Exhibit B sets forth specific terms
governing the compensation payable to P2 in connection with a License.


 


c)             If a
License is executed and at some subsequent point the Licensee, in agreement
with the Company and/or the Company’s shareholders, alters or negates the terms
of the License in such a way as to eliminate potential future contingent
payments to the Company and /or the Company’s shareholders, such as milestone
payments and/or royalties on product sales, then the Company and P2 shall negotiate in good faith
and shall agree in writing on terms that are fair and equitable to both
parties.


 


d)            Compensation
which is payable to P2 pursuant to Exhibit B shall be paid in cash
at the closing of a License; provided, however, that any compensation which is
payable to P2 pursuant to Exhibit B and based on Consideration to
the Company that is not received until greater than 30 days after the closing
of a License shall be due and payable within 10 business days of such later
date that such Consideration is received. In the event of any delay in such
payment, the compensation owed shall accrue interest at the rate of the lower
of 1.5% per month and the highest amount allowed by law. Except as described in
6c, the Company shall have no obligation to make payments to P2 with respect to any Consideration
unless and until such Consideration is actually received by the Company from a
Licensee. In the event that a License is structured such that part or all of
the Consideration is payable to the Company in any form other than cash, then
the Company may, at its discretion, arrange for payment directly by the
Licensee to P2 in cash on behalf of the Company, reducing
accordingly the remaining Consideration to be received by the Company from the
Licensee.


 


7.             The
Company shall reimburse P2 upon request for its reasonable expenses
(including, without limitation, professional and legal fees not to exceed
$5,000 and disbursements) incurred in connection with its engagement hereunder.
Members of P2 travel economy
class within the continental United States, where possible, but travel business
class on intercontinental trips and outside the continental United States.
Any single expense in excess of $3,000 shall require prior authorization of the
Company.


 


8.             The
Company shall:


 

















 


(a)           Indemnify
P2 and hold it harmless against any and all losses, claims, damages
or liabilities to which P2 may become subject arising in any manner
out of or in connection with the rendering of services by P2
hereunder (including any services rendered prior to the date hereof) or the
rendering of additional services by P2 as requested by the Company
that are related to the services rendered hereunder, unless it is finally
judicially determined that such losses, claims, damages or liabilities resulted
directly from the gross negligence or willful misconduct of P2; and


 


Reimburse P2 promptly for any legal or
other expenses reasonably  incurred by it
in connection with investigating, preparing to defend or defending, or
providing evidence in or preparing to serve or serving as a witness with
respect to, any lawsuits, investigations, claims or other proceedings arising           in
any manner out of or in connection with the rendering of services by P2
hereunder or the rendering of additional services by P2 as requested
by the Company that are related to the services rendered hereunder (expressly
excluding, however, any expenses incurred in connection with a dispute solely
between the parties in connection with any alleged breach by a party of its
obligations hereunder); provided, however, that in the event a final judicial
determination is made to the effect specified in subparagraph 8(a) above, P2
will remit to the Company any amounts reimbursed under this subparagraph 8(b).


 


The Company agrees that the indemnification and
reimbursement commitments set forth in this paragraph 8 shall apply whether or
not P2 is a formal party to any such lawsuits, investigations,
claims or other proceedings and that such commitments shall extend upon the
terms set forth in this paragraph to any controlling person, affiliate,
director, officer, employee or consultant of P2 (each, with P2,
an “Indemnified Person”). The Company further agrees that, without P2’s
prior written consent, it will not enter into any settlement of a lawsuit,
claim or other proceeding arising out of the transactions contemplated by this
Agreement, which consent will not unreasonably be withheld.


 

















 


In connection with the foregoing, the Company at its
own expense shall provide legal counsel for itself and the Indemnified Persons,
which in the absence of irreconcilable conflict may be one and the same. The
Company further agrees that in the event that the rights and interests of the
Indemnified Persons are adverse to those of the Company in any of the matters
in respect of which indemnification, reimbursement or contribution may be
sought under this Agreement, then the Company shall pay the reasonable legal
expenses of one separate counsel of the Indemnified Persons’ choice in
connection therewith.


 


9.             Except
as contemplated by the terms hereof or as required by applicable law or
pursuant to an order entered or subpoena issued by a court of competent
jurisdiction, P2 shall keep confidential all material non-public
information provided to it by the Company, and shall not disclose such
information to any third party, other than such of its employees and advisors
as P2 determines to have a need to know. Other provisions relating to the access of P2 to the Company’s
proprietary information are found in Exhibit B.


 


10.           Except
as required by applicable law, any advice to be provided by P2 under
this Agreement shall not be disclosed publicly or made available to third
parties without the prior approval of P2, and accordingly such
advice shall not be relied upon by any person or entity other than the Company.


 


11.           The
Company agrees that P2 has the right following the closing of a
License, and subject to securities regulations governing the manner and timing
of material disclosures made in respect of the Company as a publicly traded
company, to place advertisements in financial and other newspapers and journals
at its own expense describing its services to the Company hereunder, provided
that P2 will submit a copy of any such advertisements to the Company
for its approval, which approval shall not be unreasonably withheld.


 


12.           The
term of P2’s engagement hereunder shall be indefinite until
terminated as set forth below. Subject to the provisions of paragraphs 4
through 12 and paragraphs 14 through 17, which shall survive any termination or


 

















 


expiration of this Agreement, either party may
terminate P2’s engagement hereunder at any time by giving the other
party at least 30 days’ prior written notice. Immediately upon receipt of such
notice, P2 shall cease all activity on the Company’s behalf, and shall neither
solicit nor accept any solicitations of interest in the Program from third
parties. Following termination, the Company shall owe P2 no further fees, retainer or
otherwise, except as set forth in paragraph 6 and Exhibit B.


 


13.           The
Company represents that there is no other person or entity that is entitled to
a finder’s fee or any type of commission in connection with the introduction of
possible Licensees as contemplated by this Agreement as a result of any
agreement or understanding with such persons or entities.


 


14.           Nothing
in this Agreement, expressed or implied, is intended to confer or does confer
on any person or entity other than the parties hereto or their respective
successors and assigns, and to the extent expressly set forth herein, the
Indemnified Persons, any rights or remedies under or by reason of this
Agreement or as a result of the services to be rendered by P2
hereunder. The parties acknowledge that P2 is not acting as an agent
of the Company or in a fiduciary capacity with respect to the Company and that
P2 is not assuming any duties or obligations other than those
expressly set forth in this Agreement. The Company further agrees that neither
P2 nor any of its controlling persons, affiliates, directors,
officers, employees or consultants shall have any liability to the Company or
any person asserting claims on behalf  of
or in right of the Company for any losses, claims, damages, liabilities or
expenses arising out of or relating to this Agreement or the services to be
rendered by P2 hereunder, unless it is finally judicially determined
that such losses, claims, damages, liabilities or expenses resulted directly
from the gross negligence or willful misconduct of P2.


 


15.           The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.


 


16.           This
Agreement may not be amended or modified except in writing signed by each of
the parties and shall be governed


 

















 


by and construed and enforced in accordance with the
laws of the State of California. Any right to trial by jury with respect to any
lawsuit, claim or other proceeding arising out of or relating to this Agreement
or the services to be rendered by P2 hereunder is expressly and
irrevocably waived.


 


17.           The
parties acknowledge that P2’s
duty to perform services hereunder is not transferable or assumable by any
third party, including any individual affiliated with or any successor entity
to P2; therefore, the
inability of P2 to
perform the services contemplated by this agreement, whether due to P2’s insolvency, bankruptcy,
dissolution, liquidation, or other reason, shall be reason for immediate
termination of this agreement, with no further payment or other obligations on
the Company.


 

















 


If the foregoing correctly sets forth the
understanding and agreement between P2 and the Company, please so
indicate in the space provided for that purpose below, whereupon this letter
shall constitute a binding agreement as of the date hereof.


 


	
   

  	
  P2 Partners, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Munro Pitt

  	
   

  	
   

  
	
   

  	
  Munro Pitt,
  Member

  
	
   

  	
   

  
	
  AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Inovio
  Biomedical Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Avtar
  Dhillon

  	
   

  	
   

  	
   

  
	
  Name: Avtar Dhillon, MD

  	
   

  
	
  Title: President and CEO

  	
   

  
								



 


 


[EXHIBITS, WHICH ARE NOT RELEVANT TO THE ISSUANCE AND SALE OF INOVIO
SHARES, THE CONSIDERATION THEREFOR OR THE TERMS THEREOF HAVE BEEN OMITTED]