EXHIBIT 10.37


 


Portions
Subject to Confidential Treatment Request Under Rule 406


 


LICENSE AGREEMENT


 


 


BETWEEN


 


 


VGX ANIMAL HEALTH


 


(VGXAH)


 


 


AND


 


 


VGX PHARMACEUTICALS


 


(VGXP)


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LICENSE GRANT

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  FEES AND ROYALTIES

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CONFIDENTIALITY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  TERM AND TERMINATION

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  IMPROVEMENTS
  TO INVENTION 

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  PATENT MAINTENANCE and
  REIMBURSEMENT

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  INFRINGEMENT AND
  LITIGATION

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  REPRESENTATIONS AND WARRANTIES
  OF VGXP; DISCLAIMER OF ADDITIONAL WARRANTIES; INDEMNIFICATION

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  USE OF VGXP’S NAME

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  ADDITIONAL PROVISIONS

  	
   

  	
  15

  



 


1

















 


LICENSE AGREEMENT


 


This License Agreement (“AGREEMENT”) is between
VGX Animal Health Inc. (“VGXAH”), a Delaware corporation, with offices located
at 2700 Research Forest Drive, The Woodlands, TX 77381, and VGX Pharmaceuticals, Inc.,
a Delaware corporation organized (“VGXP”), having a place of business at 450
Sentry Parkway, Blue Bell, PA 19422.


 


1.       DEFINITIONS


 


1.1   CALENDAR QUARTER means each three-month
period, or any portion thereof, beginning on January 1, April 1, July 1
and October 1.


 


1.2   CALENDAR YEAR means each 12-month period
beginning on January 1.


 


1.3   DEVELOPMENT PLAN means the plan, as it may be amended from time to
time, for the development and/or marketing of the VGXP LICENSED PRODUCTS that
demonstrates VGXAH’s commitment
to bring the VGXP PATENT RIGHTS
to practical application.  The initial
DEVELOPMENT PLAN will be attached hereto, as Attachment 2, within 60 days of
the EFFECTIVE DATE.


 


1.4   EFFECTIVE DATE means the date on which VGXAH
and VGXP have both fully executed this AGREEMENT.


 


1.5   EXCLUDED PROCEEDS means all proceeds
reasonably and fairly attributable to bona fide (i) debt financing; (ii) equity
(and conditional equity, such as warrants, convertible debt and the like (iii) investments
in VGXAH at fair market value; (iv) reimbursements of patent prosecution
costs and patent maintenance expenses; (v) reimbursement for the cost of
research and/or development services provided on the basis of full-time
equivalent efforts of personnel not in excess of commercially reasonable
full-time equivalent rates.


 


1.6   FAIR MARKET VALUE means the cash consideration
which VGXAH or a sublicensee thereof would realize from an unaffiliated,
unrelated buyer in an arm’s length sale of an identical item sold in the same
quantity and at the same time and place of the transaction.


 


1.7   INAD APPLICATION means an Investigational New
Animal Drug Application filed with the United States Food & Drug
Administration prior to administration of a pharmaceutical product to animals.


 


1.8   NADA means a New Animal Drug Application
filed with the United States Food & Drug Administration or its foreign
equivalents prior to sale of a pharmaceutical product to animal.


 


1

















 


1.9
PATENT MAINTENANCE PAYMENT means an annual charge from VGXP to VGXAH to cover
the estimated cost of maintaining the patents related to the field of animal
health (“FIELD”) under the VGXP PATENT RIGHTS.


 


1.10
VGXP LICENSED PRODUCT(S) means product(s) which is/are made, made
for, used by, imported by or for, sold by or offered for sale by VGXAH and/or
any sublicensee(s) of VGXAH to unrelated third parties which fall under
the scope of the VGXP PATENT RIGHTS.


 


1.11
VGXP PATENT RIGHTS means all of VGXP’s interest in the rights represented by or
issuing from (including all claims referenced within) those United States
patents and patent applications listed in Attachment 1, including, in each
case, any continuations, continuations-in-part, divisions, provisionals,
substitute applications, and any patent issuing therefrom, and any reissues,
reexaminations, renewals and/or extensions (including any supplemental patent
certificate) based thereon, and any confirmation patent or registration patent
or patent of addition based on any such patent, and all foreign counterparts of
any of the foregoing.


 


1.12
SALE means any bona fide transaction for which consideration is received or
promised for the sale, use, lease, transfer or other disposition of VGXP
LICENSED PRODUCT(S) to an unrelated third party.  A SALE of VGXP LICENSED PRODUCT(S) shall
be deemed completed at the time VGXAH or its sublicensee invoices, ships or
receives payment for such VGXP LICENSED PRODUCT(S), whichever occurs first.


 


1.13
NET SALES means the gross amount invoiced for SALES, less qualifying costs
directly attributable to such SALES and actually identified on the invoice and
borne by VGXAH or its sublicensee(s). 
Such qualifying costs shall be limited to the following:


 


1.13.1 Discounts and rebates, in amounts
customary in the trade, for quantity purchases, prompt payments, for
wholesalers and distributors;


 


1.13.2 Credits, allowances and/or refunds, not
exceeding the original invoice amount, for rejections, claims and/or returns;


 


1.13.3 Prepaid outbound transportation expenses
and transportation insurance premiums;


 


1.13.4 Sales and use taxes, tariffs, duties,
surcharges and other fees imposed by a governmental agency; and


 


1.13.5 Retroactive price reductions actually
applied in an invoice.


 


NET
SALES of a commercial product comprising one or more VGXP LICENSED PRODUCTS and
one or more other active ingredients (a “COMBINATION PRODUCT”) shall be
calculated as set forth above, subject to the provisions of Section 3.1.4.


 


2

















 


1.14
TERRITORY A shall mean the United States of America.  TERRITORY B shall mean any country that is a
part of the European Union.  TERRITORY C
shall mean any country that is not the United States of America or a part of
the European Union.


 


1.15 FIELD or FIELD OF
USE is used interchangeably and means the practice, including the making,
using, selling, or offering to sell any product or services, in the field of
animal health.  Such practice contemplates application of any product or
services to an end user that is an animal that is non-human.  One example
of such end use is the treatment of a farm animal with a DNA product for
therapeutic purposes.


 


1.16 DEVICE PATENT RIGHTS
means all of VGXP’s interest in the rights represented by United States Patent
Number 7,245,963 and United States patent application Serial Number 60/852,149,
including, in each case, any continuations, continuations-in-part, divisions,
provisionals, substitute applications, and any patent issuing therefrom, and
any reissues, reexaminations, renewals and/or extensions (including any
supplemental patent certificate) based thereon, and any confirmation patent or
registration patent or patent of addition based on any such patent, and all
foreign counterparts of any of the foregoing.


 


1.17 PATENTED DEVICES means any and all devices and use of same that is
covered by the DEVICE PATENT RIGHTS, and in particular, the devices are those
used for the electroporation of DNA to animals or cells of an animal.


 


1.18 DEVICE FACILITATED PRODUCT means any product that is delivered to
an animal, or made for the purposes of delivering to an animal, using the
PATENTED DEVICES.


 


1.19  PRODUCT IMPROVEMENTS shall
mean all inventions for which patent applications are or may be filed, whether
ultimately patentable or not, that are conceived or first reduced to practice
by VGXAH and/or any sublicense(s) that incorporate or otherwise expand on
inventions that are subject to VGXP PATENT RIGHTS and that relate to the make,
use, import, sale, or offer of sale of VGXP LICENSED PRODUCT(S).


 


1.20.  AFFILIATE means any
corporation, firm, limited liability company, partnership, or other entity that
directly or indirectly controls, or is controlled by, or is under common
control with a Party to this Agreement. For the purpose of this definition,
control means ownership, directly or through one or more Affiliates, of fifty
percent (50%) (or such lesser percentage which is the maximum allowed to be
owned by a foreign entity in a particular jurisdiction) or more of the shares
of stock entitled to vote for the election of directors in the case of a
corporation, or fifty percent (50%) (or such lesser percentage which is the
maximum allowed to be owned by a foreign entity in a particular jurisdiction)
or more of the equity interests in the case of any other type of legal entity,
or status as a general partner in any partnership, or any other arrangement
whereby a Party controls or has the right to control the board of directors or
equivalent governing body of a corporation or other entity.


 


3

















 


2.             LICENSE GRANT


 


2.1 Subject to the terms and conditions of this AGREEMENT, VGXP grants
to VGXAH for the term of this AGREEMENT an exclusive, world-wide right and
license under the VGXP PATENT RIGHTS, with the right to grant sublicenses, to
make, have made, use, import, sell and offer for sale VGXP LICENSED PRODUCT(S) in
the FIELD OF USE.


 


2.2 VGXP agrees to provide VGXAH with limited rights under the DEVICE
PATENT RIGHTS to the extent needed in order to enable the use of the VGXP
LICENSED PRODUCT(S), and such agreement is provided in the NONEXCLUSIVE DEVICE
AGREEMENT, executed by the parties on August 15, 2007, attached hereto as
Attachment 3, and incorporated to this AGREEMENT in its entirety.


 


3.             FEES AND ROYALTIES


 


3.1   License Initiation Fee and Royalties


 


3.1.1        As
part of the consideration for the bundle of rights granted to VGXAH hereunder,
VGXAH shall pay to VGXP, on a quarterly basis: a) a royalty of ******   of
the NET SALES of each VGXP LICENSED PRODUCT which is sold by VGXAH, including
any sold by independent contractor(s) or agent(s) of VGXAH, and b) ******  of any royalties paid by a sublicensee(s) of
VGXP PATENT RIGHTS to VGXAH.  In
determining the earned royalty payment, if any, such payment shall be made by
VGXAH at the end of any CALENDAR QUARTER following first SALE of a VGXP
LICENSED PRODUCT.  Such royalty payments
shall terminate on a product-by-product and country-by-country basis upon the
later of (a) the date which is ten (10) years after the date of the
first SALE of such VGXP LICENSED PRODUCT in such country, or (b) in any
country in which patent rights exist for any VGXP LICENSED PRODUCT, the date of
expiration of the last-to-expire patent in such country, within the definition
of VGXP PATENT RIGHTS, with a valid claim covering the VGXP LICENSED PRODUCT.


 


3.1.2        In the event
that a sold product is both a DEVICE FACILITATED PRODUCT and a VGXP LICENSED
PRODUCT, royalty payment by VGXAH to VGXP shall include only one ******  royalty
obligation for each sale event of such product.


 


3.1.3        Within
thirty (30) days after the end of each of the periods specified below, VGXAH
shall pay to VGXP the specified percentage of any sublicense initiation fee and
any other non-royalty payment(s), net of all EXCLUDED PROCEEDS,
including those resulting from co-marketing, strategic alliance, joint venture and
other similar arrangement(s), actually received during such period by VGXAH
from a sublicensee resulting from activities with VGXP LICENSED
PRODUCT(S).  Any non-cash consideration
received by VGXAH from such 


 


4

















 


sublicensee shall be valued at its FAIR
MARKET VALUE as of the date of receipt by VGXAH.


 


	
  Period

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EFFECTIVE DATE to 12 months after the EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12 months and one day after EFFECTIVE DATE to 24 months after the
  EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  24 months and one day after EFFECTIVE DATE to 36 months after the
  EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  



 


3.1.4        In
the event one or more VGXP LICENSED PRODUCTS are sold in a COMBINATION PRODUCT,
the amount of royalties and sublicense revenues paid to VGXP pursuant to this Section 3.1
shall be based on the portion of the FAIR MARKET VALUE of such combination of
products reasonably attributable to the VGXP LICENSED PRODUCT(S).


 


3.1.5        VGXAH
acknowledges and agrees to assume from VGXP all of the payment obligations from
VGXP to Ronald O. Bergan and Mary Alice Bergan (collectively referred to as “BERGANS”),
which have been stipulated in the Asset Purchase Agreement, section
2.1(a)(vii), made between VGXP and ADViSYS, dated February 21, 2007, such
payments being related to the FIELD OF USE.


 


3.1.6        Upon the
occurrence of the conditions in section 2.1(a)(iv) of the Asset Purchase
Agreement, the parties agree to perform the following:


 


                (a) VGXP
shall deliver ***** shares of VGXP stock to the BERGANS,


 


                (b) VGXAH
shall deliver a number of shares of VGXAH stock that equals a fair market value
of ******  at the time
of VGXP’s delivery of the ******  shares of
VGXP stock, and


 


                (c) Parties
agree that the valuation of VGXAH stock shall be based on the per share price
of the next round of financing, such round occurring within 6 months from date
of VGXP delivering shares to BERGANS, provided that such round raised greater
than ******.


 


5

















 


3.2   Diligence and Milestone Fees


 


3.2.1        VGXAH
shall use commercially-reasonable efforts to develop for SALE and to market
VGXP LICENSED PRODUCTS in a manner consistent with the DEVELOPMENT PLAN.


 


3.2.2        For
the term of the Agreement, VGXAH shall provide VGXP on each January 30th, written progress reports, setting forth
in such detail as VGXP may reasonably request, the progress of the development,
evaluation, testing and commercialization of each VGXP LICENSED PRODUCT.  VGXAH shall also notify VGXP in writing
within thirty (30) days of the first SALE of each VGXP LICENSED PRODUCT.


 


3.2.3        VGXAH
shall provide VGXP with a written, current DEVELOPMENT PLAN once every twelve
months, beginning upon attachment of the initial DEVELOPMENT PLAN, attached
hereto as ATTACHMENT 2.


 


3.2.4        Any of the
events listed below that occur after the EFFECTIVE DATE shall require that the
following milestone payments be paid by VGXAH to VGXP within sixty (60) days
after the achievement of the respective milestone event. The aforementioned
notwithstanding, VGXAH shall not be obligated to remit a milestone payment to
VGXP until it has raised five million dollars ($ 5,000,000) in total capital.
Any milestone payment obligation arising prior to raising five million dollars
($ 5,000,000) in total capital shall be accrued and become immediately payable
upon reaching or surpassing this threshold. The milestone payments shall be
made for each VGXP LICENSED PRODUCT for each animal species.


 


	
  Event

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  
	
  Filing of an INAD
  APPLICATION

  	
   

  	
  $

  	
  250,000

  
	
   

  	
   

  	
   

  
	
  Initiating of a Phase III
  or pivotal trial

  	
   

  	
  $

  	
  500,000

  
	
   

  	
   

  	
   

  
	
  Receipt of an NADA
  approval letter for the first VGXP LICENSED PRODUCT in TERRITORY A

  	
   

  	
  $

  	
  1,000,000

  
	
   

  	
   

  	
   

  
	
  Receipt of an NADA
  approval letter for the first VGXP LICENSED PRODUCT in TERRITORY B

  	
   

  	
  $

  	
  1,000,000

  
	
   

  	
   

  	
   

  
	
  Receipt of an NADA
  approval letter for the first VGXP LICENSED PRODUCT in TERRITORY C excluding
  LifetideTM SW 5 in Australia

  	
   

  	
  $

  	
  1,000,000

  



 


6

















 


3.3   Reports  and
Records


 


3.3.1        VGXAH
shall deliver to VGXP within forty-five (45) days after the end of each
CALENDAR QUARTER following the first SALE of VGXP
LICENSED PRODUCTS, a written
report, certified by the chief financial officer or treasurer of VGXAH (or an
officer of VGXAH charged with the duties typically entrusted to the chief
financial officer or treasurer of a Delaware corporation), setting forth the
calculation of the royalties due to VGXP under Section 3.1.1 and 3.1.2
herein for such CALENDAR QUARTER, including, without limitation:


 


3.3.1.1             Gross
consideration for SALES of VGXP LICENSED PRODUCTS, including all amounts
invoiced, billed or received;


 


3.3.1.2             NET
SALES of VGXP LICENSED PRODUCTS listed by country;


 


3.3.1.3             Royalties
owed to VGXP, listed by category, including, without limitation, earned,
sublicensee-derived, and minimum royalty categories.


 


3.3.2        VGXAH
shall pay the royalties due under Section 3.1.1 and 3.1.2 within
forty-five (45) days following the last day of each CALENDAR QUARTER in which
the royalties accrue.  With royalties,
VGXAH shall send the report described in Section 3.3.


 


3.3.3        VGXAH
shall maintain, and cause its sublicensees to maintain, complete and accurate
books and records which enable the royalties payable under this AGREEMENT to be
verified.  The records for each CALENDAR
QUARTER shall be maintained for three years after the submission of the report
covering such period.  Upon reasonable
prior notice to VGXAH, VGXAH shall provide VGXP (or an independent, certified
public accounting firm selected by VGXP and reasonably acceptable to VGXAH)
with access, during normal business hours, to all books and records relating to
the SALES of VGXP LICENSED PRODUCTS by VGXAH and its sublicensees to conduct a
review or audit of those books and records solely for purposes of verifying
royalties paid or due under this AGREEMENT. 
Access to VGXAH’s and sublicensee’s books and records for the applicable
period(s) shall be available at least once each CALENDAR YEAR, during
normal business hours, during the term of this AGREEMENT and for three years after
the expiration or termination of this AGREEMENT.  If the audit is performed by an independent,
certified public accounting firm selected by VGXP and reasonably acceptable to
VGXAH and such auditor determines that VGXAH has underpaid royalties by five percent
(5%) or more, then VGXAH shall pay the costs and expenses of VGXP and its accountants
in connection with their review or audit, in addition to such underpayment.


 


7

















 


3.3.4        VGXP
is entitled to only one copy of any reports under this Section 3.3, and
shall distribute such reports or audit results only to such persons as may
reasonably require such reports or audit results in order for VGXP to fulfill
its obligations, or enforce its rights, under this AGREEMENT.


 


3.4   Currency, Payment Method.


 


3.4.1        All
dollar amounts referred to in this AGREEMENT are United States dollars.  All payments to VGXP under this AGREEMENT
shall be made in United States dollars by check payable to “VGX
Pharmaceuticals.”  If VGXAH receives
revenues from SALES of VGXP LICENSED PRODUCTS in currency other than United
States dollars, revenues shall be converted into United States dollars at the
conversion rate for the foreign currency as published in the eastern edition of
The Wall Street Journal as of the last business day of the applicable CALENDAR
QUARTER.


 


3.4.2        Amounts
that are not paid when due shall accrue interest from the due date until paid,
at a rate equal to one and one-half percent (1.5%) per month (or maximum
allowed by law, if less).


 


4.             CONFIDENTIALITY


 


4.1   CONFIDENTIAL INFORMATION means and includes
all technical and business information, plans, inventions, developments,
discoveries, improvements, software, know-how, procedures, methods, techniques,
formulae, data, processes, studies, and other proprietary ideas, whether or not
patentable or copyrightable, that a party hereto identifies as confidential or
proprietary at the time it is delivered or communicated to the other party
hereto, or any other information that should reasonably be recognizable by its
nature to be confidential or trade secret information of a party (including,
without limitation, information respecting such party’s business plans, sales
and sales methods, customers and prospective customers). CONFIDENTIAL
INFORMATION should be in writing and marked confidential or, if oral, should be
reduced to writing within two weeks of disclosure and marked confidential.


 


4.2   Each party shall maintain in confidence and
not disclose to any third party any CONFIDENTIAL INFORMATION of the other party
for the term of this Agreement and for five (5) years thereafter.  Each party shall ensure that its employees
have access to CONFIDENTIAL INFORMATION of the other party only on a
need-to-know basis, and are obligated to abide by such party’s obligations
under this AGREEMENT.  The foregoing
obligation shall not apply to the below exceptions:


 


4.2.1        information
that is known to the receiving party prior to the time of disclosure, and was
not received directly or indirectly from the disclosing party hereunder in
violation of a confidentiality obligation, unless received subject to non-disclosure
and non-use obligations, or independently developed by or for the receiving
party, without exposure to or benefit of the disclosing party’s 


 


8

















 


CONFIDENTIAL INFORMATION, in each case,
to the extent evidenced by written records;


 


4.2.2        information
disclosed to the receiving party, without restriction, by a third party that
has a right to make such disclosure;


 


4.2.3        information
that was or becomes patented, published or otherwise part of the public domain
as a result of acts by the disclosing party or a third person developing or
obtaining such information as a matter of right; and


 


4.2.4        information
which the disclosing party permits, in writing, the receiving party to publicly
disclose.


 


4.3 If a receiving
party is required to disclose any of the disclosing party’s CONFIDENTIAL
INFORMATION by order of a governmental authority or a court of competent
jurisdiction; the receiving party shall timely inform its disclosing party,
reasonably cooperate at the disclosing parties expense with any reasonable
action the disclosing party takes to attempt to obtain confidential treatment
of such information by the authority or court, and limit its disclosure of such
information to the extent practical.


 


4.4 VGXP shall not
be obligated to maintain any CONFIDENTIAL INFORMATION of VGXAH except for the
reports required in Section 3.3. 
VGXP shall use reasonable efforts not to disclose those reports to any
third party (subject to the exceptions of Section 4.2).  VGXP bears no institutional responsibility
for maintaining the confidentiality of any other CONFIDENTIAL INFORMATION of
VGXAH.


 


5.             TERM AND TERMINATION


 


5.1   This AGREEMENT, unless sooner terminated as
provided in this AGREEMENT, shall terminate upon the later of: (a) the
expiration or abandonment of the last patent that is a component of the VGXP
PATENT RIGHTS; or (b) twenty-five (25) years after the EFFECTIVE DATE.


 


5.2   VGXAH may terminate this Agreement upon: (a) thirty
(30)-days written notice to VGXP, if the sale or other exploitation of the VGXP
LICENSED PRODUCT(s) becomes technologically or commercially unfeasible, or
(b) thirty (30)-days written notice to VGXP; and by completing all the
following:


 


5.2.1        ceasing
to make, have made, use, import, sell and offer for sale all VGXP LICENSED
PRODUCTS;


 


5.2.2        terminating
all sublicenses relating to VGXP LICENSED PRODUCTS, and causing all
sublicensees to cease making, having made, using, importing, selling and
offering for sale all VGXP LICENSED PRODUCTS; and


 


5.2.3        paying
all monies owed to VGXP under this AGREEMENT.


 


9














 


5.3   VGXP may terminate this
AGREEMENT, upon ten (10)-days written notice to VGXAH, if any of the following
events of default (“Default”) occur:


 


5.3.1       VGXAH
is more than sixty (60) days late in paying either VGXP or BERGANS (see Section 3.1.5,
above) any royalties, expenses or any other monies due under this AGREEMENT and
VGXAH does not immediately pay VGXP or BERGANS in full any amounts due upon
demand; or


 


5.3.2       VGXAH
experiences a Trigger Event (defined in Section 5.4, below);


 


5.3.3       VGXAH
materially breaches this AGREEMENT and does not cure the material breach within
thirty (30) days after written notice of such material breach.


 


5.4   “Trigger Event” means any of
the following:


 


5.4.1        If
VGXAH:


 


5.4.1.1     becomes
insolvent, bankrupt or generally fails to pay its material debts as such debts
become due;


 


5.4.1.2     is
adjudicated insolvent or bankrupt; admits in writing its inability to pay its
debts; or shall suffer a custodian, receiver or trustee for it or substantially
all of its property to be appointed and, if appointed without its consent, is
not discharged within thirty (30) days of such appointment; or


 


5.4.1.3     makes
an assignment for the benefit of creditors; or suffers proceedings under any
law related to bankruptcy, insolvency, liquidation or the reorganization,
readjustment or the release of debtors to be instituted against it and, if
contested by it, not dismissed or stayed within thirty (30) days;


 


5.4.2       If
proceedings under any United States law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release of debtors are
instituted or commenced by VGXAH;


 


5.4.3       If
any order for relief is entered relating to any of the proceedings described in
Section 5.4.;


 


5.4.4       If
VGXAH shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or


 


5.4.5       If
VGXAH shall, by any act or failure to act, indicate its consent to, approval of
or acquiescence in any of the proceedings described in Section 5.4.


 


5.5   The provisions of Sections
5.3 and 5.4 shall apply to a Default of, or a Trigger Event experienced by, any
sublicensee of VGXAH’s rights hereunder if and to the extent that 


 


10

















 


such Default of, or Trigger Event experienced by, the sublicensee
causes VGXAH to fail to meet its diligence obligations under Section 3.2.


 


5.6   Upon and after any
termination of this AGREEMENT, VGXAH and any sublicensee thereof shall refrain
from further manufacture, sale, marketing, importation and/or distribution of VGXP
LICENSED PRODUCT(s).


 


5.7   Upon termination of this
AGREEMENT, each (receiving) party shall, at the other (disclosing) party’s
request, return to the other party all CONFIDENTIAL INFORMATION (except for one
copy for archival purposes) of the other party provided hereunder.


 


5.8   Upon termination of this
AGREEMENT, VGXAH shall inventory in writing as soon as commercially practicable
and in any event no later than sixty (60) days after termination: (a) all
completed VGXP LICENSED PRODUCT(s) on hand, under the control of VGXAH or
sublicensee(s) thereof; and (b) all VGXP LICENSED PRODUCT(s) in
the process of manufacture and component parts thereof.  VGXAH shall deliver copies of such written
inventories, verified by an officer of VGXAH, forthwith to VGXP.  VGXP shall have forty five (45) days after
receipt of such verified inventories within which to challenge the inventory
and request an audit thereof.  Upon five
(5)-days written notice to VGXAH, VGXP and its agents shall be given access
during normal business hours to the premises of VGXAH, and/or sublicensees
thereof for the purpose of conducting an audit.


 


5.9   Upon the termination of this
AGREEMENT, VGXAH shall at its own expense forthwith remove, efface or destroy
all references to VGXP from all advertising or other materials used in the
promotion of VGXAH’s business or the business of any sublicensee of VGXAH and
VGXAH and any sublicensee thereof shall not thereafter represent in any manner
that it has rights in or to the VGXP PATENT RIGHTS or VGXP LICENSED PRODUCT(s).


 


5.10 Notwithstanding the
foregoing, if this AGREEMENT terminates other than for reasons of default, Section 5.3,
VGXAH shall have a period of six (6) months to sell off its inventory of VGXP
LICENSED PRODUCT(s) existing on the date of termination of this AGREEMENT
and shall pay royalties to VGXP with respect to such VGXP LICENSED PRODUCT(s) within
thirty (30) days following the expiration of such six-month period.


 


5.11 Each party’s obligation to
pay all monies owed and accruing as of the date of termination under this
AGREEMENT shall survive termination of this AGREEMENT.


 


6.             IMPROVEMENTS
TO INVENTIONS COVERED BY VGXP PATENT RIGHTS


 


                When a PRODUCT IMPROVEMENT is conceived or reduced to
practice by VGXAH and/or its sublicensee(s), and such PRODUCT IMPROVEMENT
incorporates or otherwise expands on invention(s) that are covered by VGXP
PATENT RIGHTS 


 


11

















 


and/or relate to the
make, use, import, sale, or offer of sale of VGXP LICENSED PRODUCT(S), VGXAH
and/or its sublicense(s) hereby assign their entire right, title and
interest in such PRODUCT IMPROVEMENT to VGXP. 
Furthermore, VGXAH and/or sublicense(s) agree to cooperate with
VGXP in obtaining patent protection to such PRODUCT IMPROVEMENT at VGXP’s cost,
including but not limited to the execution of any and all lawful papers in the
U.S. and foreign patent offices.  VGXP
hereby grants VGXAH a license in the FIELD OF USE under any resulting patents
related to same PRODUCT IMPROVEMENT under similar terms as that provided for
VGXP PATENT RIGHTS under this AGREEMENT.


 


7.             PATENT
MAINTENANCE AND REIMBURSEMENT


 


7.1   VGXP shall solely control,
prosecute and maintain the VGXP PATENT RIGHTS during the term of this
AGREEMENT.


 


7.2   VGXAH shall remit a PATENT
MAINTENANCE PAYMENT to VGXP on each anniversary of this AGREEMENT. The initial
PATENT MAINTENANCE PAYMENT shall be ****** and such amount shall be
reviewed by the parties after the second anniversary of this AGREEMENT and from
time to time. After each review the parties may in good faith adjust the PATENT
MAINTENANCE PAYMENT upon mutual agreement in writing between VGXP and VGXAH.


 


8.             INFRINGEMENT
AND LITIGATION


 


8.1   VGXP and VGXAH are
responsible for notifying each other promptly of any known or suspected
infringement of VGXP PATENT RIGHTS, which may come to their attention after the
EFFECTIVE DATE.  VGXP and VGXAH shall
consult one another in a timely manner concerning an appropriate response to
the infringement.


 


8.2   VGXAH may prosecute such infringement
at its own expense.  VGXAH shall not
settle or compromise any such suit in a manner that imposes any obligations or
restrictions on VGXP or grants any rights to the VGXP PATENT RIGHTS, without
VGXP’s prior written permission. 
Financial recoveries from any such litigation will first be applied to
reimburse VGXAH for its litigation expenditures with additional recoveries
being paid to VGXAH, subject to lost royalty due VGXP based on such
infringement.


 


8.3   VGXAH’s rights under Section 8.2
are subject to the continuing right of VGXP to intervene at VGXP’s own expense
and join VGXAH in any claim or suit for infringement of the VGXP PATENT
RIGHTS.  Any consideration received by
VGXP or VGXAH in settlement of any claim or suit shall be shared between VGXP
and VGXAH in proportion with each party’s share of the litigation expenses
reasonably incurred in such infringement action.


 


8.4   If VGXAH fails to prosecute
any material infringement of VGXP PATENT RIGHTS, VGXP may prosecute such
material infringement at its own expense. 
In such event, financial recoveries will be entirely retained by VGXP.


 


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8.5   In any action to enforce any
of the VGXP PATENT RIGHTS, either party, at the request and reasonable expense of
the other party, shall cooperate to the fullest extent reasonably
possible.  This provision shall not be
construed to require either party to undertake any activities, including legal
discovery, at the request of any third party except as may be required by
lawful process of a court of competent jurisdiction.


 


	
  9.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF VGXP; DISCLAIMER OF ADDITIONAL WARRANTIES; INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.1    VGXP represents and
  warrants to VGXAH that to its KNOWLEDGE as of the date hereof:

  



 


9.1.1        VGXP
has the full authority to execute and deliver this AGREEMENT.


 


9.1.2        No
material claim by any third party contesting the validity, enforceability,
licensability, use or ownership of any of such VGXP PATENT RIGHTS has been
made, is currently outstanding or is threatened against VGXP.


 


9.1.3        No
loss or expiration of any part of the VGXP PATENT RIGHTS is currently pending.


 


9.2   EXCEPT AS SET FORTH IN SECTION 9.1,
THE VGXP PATENT RIGHTS,  VGXP LICENSED
PRODUCTS AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON
AN “AS IS” BASIS AND VGXP MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT THERETO.  BY WAY OF
EXAMPLE, BUT NOT OF LIMITATION, VGXP MAKES NO REPRESENTATIONS OR WARRANTIES (i) OF
COMMERCIAL UTILITY; (ii) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE; OR (iii) THAT THE USE OF THE VGXP PATENT RIGHTS, VGXP LICENSED
PRODUCTS OR ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT WILL NOT
INFRINGE ANY PATENT, COPYRIGHT, TRADE SECRET OR TRADEMARK OR OTHER PROPRIETARY
RIGHTS OF OTHERS.  VGXP SHALL NOT BE
LIABLE TO VGXAH, VGXAH’S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT
TO: ANY CLAIM ARISING FROM USE OF THE VGXP PATENT RIGHTS, VGXP LICENSED
PRODUCTS AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT OR FROM THE
MANUFACTURE, USE OR SALE OF VGXP LICENSED PRODUCTS; OR ANY CLAIM FOR LOSS OF
PROFITS, LOSS OR INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND.


 


9.3   VGXAH shall defend,
indemnify and hold harmless VGXP, its trustees, officers, agents and employees
(individually, an “Indemnified Party”, and collectively, the “Indemnified
Parties”), from and against any and all liability, loss, damage, action, claim
or expense suffered or incurred by the Indemnified Parties (including attorney’s
fees and expenses) (individually, a “Liability”, and collectively, the “Liabilities”)
that results from or arises out of:  (a) the
development, use, manufacture, promotion, sale or other disposition of any VGXP
PATENT RIGHTS or VGXP LICENSED PRODUCTS by 


 


13

















 


VGXAH, its assignees, sublicensees, vendors or other third parties; (b) any
breach by VGXAH of this AGREEMENT; and (c) the enforcement by an
Indemnified Party of this Section. 
Without limiting the foregoing, VGXAH shall defend, indemnify and hold
harmless the Indemnified Parties from and against any Liabilities resulting
from:


 


9.3.1     any
product liability or other claim of any kind related to the use by a third
party of a VGXP LICENSED PRODUCT that was manufactured, sold or otherwise
disposed by VGXAH, its assignees, sublicensees, or agents, other than such
Liabilities arising from or related to the inaccuracy of any representation or
warranty of VGXP in Section 9.1 of this AGREEMENT; and


 


9.3.2     a
claim by a third party that the VGXP PATENT RIGHTS or the design, composition,
manufacture, use, sale, or other disposition of any VGXP LICENSED PRODUCT
infringes or violates any patent, copyright, trademark or other intellectual property
rights of such third party, except to the extent that any such claim may relate
to the inaccuracy of any representation or warranty in Section 9.1; and


 


9.3.3     clinical
trials or studies conducted by or on behalf of VGXAH and/or its sublicensees
relating to the VGXP LICENSED PRODUCTS, including, without limitation, any
claim by or on behalf of a human subject of any such clinical trial or study.


 


9.4   VGXAH is not permitted to
settle or compromise any claim or action giving rise to Liabilities in a manner
that imposes any restrictions or obligations on VGXP or grants any rights to
the VGXP PATENT RIGHTS or VGXP LICENSED PRODUCTS without VGXP’s prior written
consent.  If VGXAH fails or declines to
assume the defense of any such claim or action within thirty (30) days after
notice thereof, VGXP may assume the defense of such claim or action for the
account and at the risk of VGXAH, and any Liabilities related thereto shall be
conclusively deemed a liability of VGXAH. 
The indemnification rights of the parties or any other Indemnified Party
contained herein are in addition to all other rights which the parties or such
Indemnified Party may have at law or in equity or otherwise.


 


9.5   Insurance


 


9.5.1     VGXAH
shall procure and maintain a policy or policies of comprehensive general
liability insurance, including broad form and contractual liability, in a
minimum amount of $2,000,000 combined single limit per occurrence and in the
aggregate, as respects personal injury, bodily injury and property damage
arising out of VGXAH’s performance under this AGREEMENT.


 


9.5.2     VGXAH
shall, upon commencement of clinical trials involving VGXP LICENSED PRODUCTS,
procure and maintain a policy or policies of product liability insurance in a
minimum amount of $3,000,000 combined single limit per occurrence and in the
aggregate as respects bodily injury and property damage arising out of VGXAH’s
performance of this AGREEMENT.


 


14

















 


9.5.3     The
policy or policies of insurance described in this Section 8.5 shall be
issued by a recognized insurance carrier with an A.M. Best rating of “A”
or better and shall name VGXP as an additional insured with respect to VGXAH’s
performance of this AGREEMENT.  VGXAH
shall provide VGXP with certificates evidencing the insurance coverage required
herein and all subsequent renewals thereof. 
Such certificates shall provide that VGXAH’s insurance carrier(s) notify
VGXP in writing at least 30 days prior to cancellation or material change in
coverage.


 


9.6        VGXP may periodically
review the adequacy of the minimum limits of liability insurance specified in Section 9.5
and VGXP reserves the right to require VGXAH to adjust the liability insurance
coverages. The specified minimum insurance amounts do not constitute a limitation
on VGXAH’s obligation to indemnify VGXP under this AGREEMENT.


 


10.           USE
OF VGXP’S NAME


 


                VGXAH and its employees and
agents shall not use, and VGXAH shall not permit its sublicensees to use, VGXP’s
name or any adaptation thereof, or any VGXP seal, logotype, trademark, or
service mark, or the name, mark, or logotype of any VGXP representative or
organization in any way without the prior written consent of VGXP.


 


11.           ADDITIONAL
PROVISIONS


 


11.1      Nothing in this
AGREEMENT shall be deemed to establish a relationship of principal and agent
between VGXP and VGXAH, or between or among any of either party’s agents or
employees for any purpose whatsoever, nor shall this AGREEMENT be construed as
creating any other form of legal association or arrangement which would impose
liability upon one party for the act or failure to act of the other party.


 


11.2      VGXAH is not permitted
to assign this AGREEMENT or any part of it to any person or entity other than
an AFFILIATE of VGXAH, either directly or by operation of law, without the
prior written consent of VGXP in its sole discretion.  Any prohibited assignment of this AGREEMENT
or the rights hereunder shall be null and void. 
No assignment relieves VGXAH of responsibility for the performance of
any accrued obligations, which it has prior to such assignment.


 


11.3      A waiver by either party
of a breach of any provision of this AGREEMENT will not constitute a waiver of
any subsequent breach of that provision or a waiver of any breach of any other
provision of this AGREEMENT.


 


11.4      Notices, payments,
statements, reports and other communications under this AGREEMENT shall be in
writing and shall be deemed to have been received as of the day after the date
sent if sent by public courier (e.g., Federal Express) or by Express Mail,
receipt requested, and addressed as follows:


 


15

















 


	
  If for VGXP:

  	
  VGX Pharmaceuticals

  
	
   

  	
  450 Sentry Parkway

  
	
   

  	
  Blue Bell, PA 19422

  
	
   

  	
   

  
	
   

  	
  Attention: J. Joseph Kim

  
	
   

  	
   

  
	
  If for VGXAH:

  	
  VGX Animal Health

  
	
   

  	
  2700 Research Forest Drive

  
	
   

  	
  Suite 180

  
	
   

  	
  The Woodlands, TX 77381

  
	
   

  	
   

  
	
   

  	
  Attention: Douglas R. Kern

  



 


Either party may change its official address upon written notice to the
other party and allow for ten (10) business days for the change to be
effective.


 


11.5      This AGREEMENT shall be
construed and governed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to conflict of law provisions.  In the event that a party to this AGREEMENT
perceives the existence of a dispute with the other party concerning any right
or duty provided for herein, the parties will, as soon as practicable, confer
in an attempt to resolve the dispute.  If
the parties are unable to resolve such dispute amicably, then the parties
hereby submit to the exclusive jurisdiction of and venue in the courts located
in the Eastern District of the Commonwealth of Pennsylvania with respect to any
and all disputes concerning the subject of this AGREEMENT.


 


11.6      VGXP and VGXAH shall not
discriminate against any employee or applicant for employment because of race,
color, sex, sexual or affectional preference, age, religion, national or ethnic
origin, handicap, or because he or she is a disabled veteran or a veteran of
the Vietnam Era.


 


11.7      VGXAH shall comply with
all prevailing laws, rules and regulations that apply to its activities or
obligations under this AGREEMENT. 
Without limiting the foregoing, it is understood that this AGREEMENT may
be subject to United States laws and regulations controlling the export of
technical data, computer software, laboratory prototypes and other commodities,
articles and information, including the Arms Export Control Act as amended in
the Export Administration Act of 1979, and that the parties’ obligations are
contingent upon compliance with applicable United States export laws and
regulations.  The transfer of certain
technical data and commodities may require a license from the cognizant agency
of the United States Government and/or written assurances by VGXAH that VGXAH
shall not export data or commodities to certain foreign countries without prior
approval of such agency.  VGXP neither
represents that a license is not required nor that, if required, it will issue.


 


11.8      If any provision of this
AGREEMENT shall be held to be illegal, invalid or unenforceable, then such
illegality, invalidity or unenforceability shall attach only to such 


 


16

















 


provision, and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this AGREEMENT, and this AGREEMENT
shall be carried out as if any such illegal, invalid or unenforceable provision
were not contained herein.


 


11.9      This AGREEMENT,
including the attachments expressly referred to herein and attached, embody the
entire agreement and understanding among the parties hereto and thereto and
supersede all prior agreements and understandings relating to the subject
matter.  This AGREEMENT may not be
changed, modified, extended or terminated except by written amendment executed
by an authorized representative of each party.


 


11.10    All agreements,
covenants, indemnities, obligations, rights, licenses, options,
representations, and warranties set forth in this Agreement or accrued prior to
Termination or Expiration of this Agreement will survive the execution,
delivery, Termination, or Expiration of this Agreement and remain in full
effect, unless expressly provided otherwise herein.


 


[SIGNATURES BY PARTIES ON
FOLLOWING PAGE]


 


17

















 


IN WITNESS WHEREOF, the parties, intending to
be legally bound, have caused this AGREEMENT to be executed by their
duly-authorized representatives.


 


 


	
  VGX PHARMACEUTICALS, INC.

  	
  VGX ANIMAL HEALTH, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: J. Joseph Kim

  	
   

  	
  By: Douglas R. Kern

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  /s/ J. Joseph Kim

  	
   

  	
  Name:

  	
   /s/ Douglas R. Kern

  
	
   

  	
   

  	
   

  
	
  Title: President and CEO

  	
   

  	
  Title: Vice President,
  Business Development

  
	
   

  	
   

  	
   

  
	
  Date: September 1,
  2007

  	
   

  	
  Date: September 1,
  2007

  
					



 


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