Document:

EXHIBIT
10.63

 

VGX ANIMAL HEALTH, INC.

 

EQUITY
COMPENSATION PLAN

 

The purpose of the VGX
Animal Health, Inc. Equity Compensation Plan (the “Plan”) is to provide (i) designated
employees of VGX Animal Health, Inc. (the “Company”) and its subsidiaries,
(ii) certain consultants and advisors who perform services for the Company
or its subsidiaries and (iii) non-employee members of the Board of
Directors of the Company (the “Board”) with the opportunity to receive grants
of incentive stock options, nonqualified stock options, and stock awards.  The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the
Company, thereby benefiting the Company’s stockholders, and will align the
economic interests of the participants with those of the stockholders.

 

1.                                      Administration

 

(a)                                  Committee.  The Plan shall be administered and
interpreted by the Board or by a committee or individual appointed by the Board
(the “Committee”).  After an initial
public offering of the Company’s stock as described in Section 18(b) (a
“Public Offering”), the Plan shall be administered by a Committee, which may
consist of two or more persons who are “outside directors” as defined under
section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
and related Treasury regulations and “non-employee directors” as defined under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  However, the Board may ratify or approve any
grants as it deems appropriate.  If the
Board or an individual administers the Plan, references in the Plan to the “Committee”
shall be deemed to refer to the Board or individual.

 

(b)                                 Committee
Authority.  The Committee shall have
the sole authority to (i) determine the individuals to whom grants shall
be made under the Plan, (ii) determine the type, size and terms of the
grants to be made to each such individual, (iii) determine the time when
the grants will be made and the duration of any applicable exercise or
restriction period, including the criteria for exercisability and the
acceleration of exercisability, (iv) amend the terms of any previously
issued grant, and (v) deal with any other matters arising under the Plan.

 

(c)                                  Committee
Determinations.  The Committee shall
have full power and authority to administer and interpret the Plan, to make
factual determinations and to adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan and for the conduct of its
business as it deems necessary or advisable, in its sole discretion.  The Committee’s interpretations of the Plan
and all determinations made by the Committee pursuant to the powers vested in
it hereunder shall be conclusive and binding on all persons having any interest
in the Plan or in any awards granted hereunder. 
All powers of the Committee shall be executed in its sole discretion, in
the best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated individuals.

 

 

2.                                      Grants

 

Awards under the Plan may
consist of grants of incentive stock options as described in Section 5 (“Incentive
Stock Options”), nonqualified stock options as described in Section 5 (“Nonqualified
Stock Options”) (Incentive Stock Options and Nonqualified Stock Options are
collectively referred to as “Options”), and stock awards as described in Section 6
(“Stock Awards”) (hereinafter collectively referred to as “Grants”).  All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions consistent
with this Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument or an
amendment to the grant instrument (the “Grant Instrument”).  The Committee shall approve the form and
provisions of each Grant Instrument. 
Grants under a particular Section of the Plan need not be uniform
as among the grantees.

 

3.                                      Shares
Subject to the Plan

 

(a)                                  Shares
Authorized.  Subject to adjustment as
described below, the aggregate number of shares of common stock of the Company
(“Company Stock”) that may be issued or transferred under the Plan is 1,500,000
shares.  After a Public Offering, the
maximum aggregate number of shares of Company Stock that shall be subject to
Grants made under the Plan to any individual during any calendar year shall be
500,000 shares, subject to adjustment as described below.  The shares may be authorized but unissued
shares of Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan.  If and to the extent Options granted under
the Plan terminate, expire, or are canceled, forfeited, exchanged or
surrendered without having been exercised or if any Stock Awards are forfeited,
the shares subject to such Grants shall again be available for purposes of the
Plan.

 

(b)                                 Adjustments.  If there is any change in the number or kind
of shares of Company Stock outstanding (i) by reason of a stock dividend,
spin-off, recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation, (iii) by reason of a
reclassification or change in par value, or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company’s receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a result of a
spin-off or the Company’s payment of an extraordinary dividend or distribution,
the maximum number of shares of Company Stock available for Grants, the maximum
number of shares of Company Stock that any individual participating in the Plan
may be granted in any year, the number of shares covered by outstanding Grants,
the kind of shares issued under the Plan, and the price per share or the
applicable market value of such Grants may be appropriately adjusted by the
Committee to reflect any increase or decrease in the number of, or change in
the kind or value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.  Any
adjustments determined by the Committee shall be final, binding and conclusive.

 

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4.                                      Eligibility
for Participation

 

(a)                                 Eligible
Persons.  All employees of the
Company and its subsidiaries (“Employees”), including Employees who are
officers or members of the Board, and members of the Board who are not
Employees (“Non-Employee Directors”) shall be eligible to participate in the
Plan.  Consultants and advisors who
perform services for the Company or any of its subsidiaries (“Key Advisors”)
shall be eligible to participate in the Plan if the Key Advisors render bona
fide services to the Company or its subsidiaries, the services are not in
connection with the offer and sale of securities in a capital-raising
transaction and the Key Advisors do not directly or indirectly promote or
maintain a market for the Company’s securities.

 

(b)                                Selection
of Grantees.  The Committee shall
select the Employees, Non-Employee Directors and Key Advisors to receive Grants
and shall determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee determines.  Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to
as “Grantees.”

 

5.                                      Granting
of Options

 

(a)                                 Number
of Shares.  The Committee shall
determine the number of shares of Company Stock that will be subject to each
Grant of Options to Employees, Non-Employee Directors and Key Advisors.

 

(b)                                Type
of Option and Price.

 

(i)                                     The
Committee may grant Incentive Stock Options that are intended to qualify as “incentive
stock options” within the meaning of section 422 of the Code or Nonqualified
Stock Options that are not intended to qualify or any combination of Incentive
Stock Options and Nonqualified Stock Options, all in accordance with the terms
and conditions set forth herein. 
Incentive Stock Options may be granted only to Employees.  Nonqualified Stock Options may be granted to
Employees, Non-Employee Directors and Key Advisors.

 

(ii)                                  The
purchase price (the “Exercise Price”) of Company Stock subject to an Option
shall be determined by the Committee and may be equal to, greater than, or less
than the Fair Market Value (as defined below) of a share of Company Stock on
the date the Option is granted; provided, however, that (x) the Exercise
Price of an Incentive Stock Option shall be equal to, or greater than, the Fair
Market Value of a share of Company Stock on the date the Incentive Stock Option
is granted and (y) an Incentive Stock Option may not be granted to an
Employee who, at the time of grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary of the Company, unless the Exercise Price per share is not
less than 110% of the Fair Market Value of Company Stock on the date of grant.

 

(iii)                               If the Company Stock is
publicly traded, then the Fair Market Value per share shall be determined as
follows: (x) if the principal trading market for the Company Stock is a
national securities exchange or the Nasdaq National Market, the last reported
sale price thereof on the relevant date or (if there were no trades on that
date) the latest preceding date upon which a sale was reported, or (y) if
the Company Stock is not principally traded on such exchange or 

 

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market, the mean
between the last reported “bid” and “asked” prices of Company Stock on the
relevant date, as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee
determines.  If the Company Stock is not
publicly traded or, if publicly traded, is not subject to reported transactions
or “bid” or “asked” quotations as set forth above, the Fair Market Value per
share shall be as determined by the Committee.

 

(c)                                 Option
Term.  The Committee shall determine
the term of each Option.  The term of any
Option shall not exceed 10 years from the date of grant.  However, an Incentive Stock Option that is
granted to an Employee who, at the time of grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, or any parent or subsidiary of the Company, may not have a term that
exceeds five years from the date of grant.

 

(d)                                Exercisability
of Options.

 

(i)                                     Options
shall become exercisable in accordance with such terms and conditions,
consistent with the Plan, as may be determined by the Committee and specified
in the Grant Instrument.  The Committee
may accelerate the exercisability of any or all outstanding Options at any time
for any reason.

 

(ii)                                  The
Committee may provide in a Grant Instrument that the Grantee may elect to
exercise part or all of an Option before it otherwise has become
exercisable.  Any shares so purchased
shall be restricted shares and shall be subject to a repurchase right in favor
of the Company during a specified restriction period, with the repurchase price
equal to the Exercise Price, or such other restrictions as the Committee deems
appropriate.

 

(e)                                 Grants
to Non-Exempt Employees. 
Notwithstanding the foregoing, Options granted to persons who are
non-exempt employees under the Fair Labor Standards Act of 1938, as amended,
shall have an Exercise Price not less than 100% of the Fair Market Value of the
Company Stock on the date of grant, and may not be exercisable for at least six
months after the date of grant (except that such Options may become
exercisable, as determined by the Committee, upon the Grantee’s death,
Disability or retirement, or upon a Change in Control or other circumstances
permitted by applicable regulations).

 

(f)                                   Termination
of Employment, Disability or Death.

 

(i)                                     Except
as provided below, an Option may only be exercised while the Grantee is
employed by, or providing service to, the Company as an Employee, Key Advisor
or member of the Board.  In the event
that a Grantee ceases to be employed by, or provide service to, the Company for
any reason other than Disability, death, or termination for Cause (as defined
below), any Option which is otherwise exercisable by the Grantee shall
terminate unless exercised within 90 days after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term.  Except as otherwise provided by the Committee,
any of the Grantee’s Options that are not otherwise exercisable as of the date
on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.

 

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(ii)                                In
the event the Grantee ceases to be employed by, or provide service to, the
Company on account of a termination for Cause by the Company (as defined
below), any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or provide service to, the Company.  In addition, notwithstanding any other
provisions of this Section 5, if the Committee determines that the Grantee
has engaged in conduct that constitutes Cause at any time while the Grantee is
employed by, or providing service to, the Company or after the Grantee’s
termination of employment or service, any Option held by the Grantee shall
immediately terminate and the Grantee shall automatically forfeit all shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates, upon refund by the Company of the Exercise
Price paid by the Grantee for such shares. 
Upon any exercise of an Option, the Company may withhold delivery of
share certificates pending resolution of an inquiry that could lead to a
finding resulting in a forfeiture.

 

(iii)                             In
the event the Grantee ceases to be employed by, or provide service to, the
Company because the Grantee is Disabled, any Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within one year
after the date on which the Grantee ceases to be employed by, or provide
service to, the Company (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of
expiration of the Option term.  Except as
otherwise provided by the Committee, any of the Grantee’s Options which are not
otherwise exercisable as of the date on which the Grantee ceases to be employed
by, or provide service to, the Company shall terminate as of such date.

 

(iv)                            If
the Grantee dies while employed by, or providing service to, the Company or
within 90 days after the date on which the Grantee ceases to be employed or
provide service on account of a termination specified in Section 5(f)(i) above
(or within such other period of time as may be specified by the Committee), any
Option that is otherwise exercisable by the Grantee shall terminate unless
exercised within one year after the date on which the Grantee ceases to be
employed by, or provide service to, the Company (or within such other period of
time as may be specified by the Committee), but in any event no later than the
date of expiration of the Option term. 
Except as otherwise provided by the Committee, any of the Grantee’s
Options that are not otherwise exercisable as of the date on which the Grantee
ceases to be employed by, or provide service to, the Company shall terminate as
of such date.

 

(v)                               For
purposes of this Section 5(f) and Section 6:

 

(1)                                  “Company”
shall mean the Company and its parent and subsidiary corporations or other
entities, as determined by the Committee.

 

(2)                                  “Employed
by, or provide service to, the Company” shall mean employment or service as an
Employee, Key Advisor or member of the Board (so that, for purposes of
exercising Options and satisfying conditions with respect to Stock Awards, a
Grantee shall not be considered to have terminated employment or service until
the Grantee ceases to be an Employee, Key Advisor and member of the Board),
unless the Committee determines otherwise.

 

(3)                                  
“Disability” shall mean a Grantee’s becoming disabled within the meaning of
section 22(e)(3) of the Code.

 

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(4)                                  “Cause”
shall mean, except to the extent specified otherwise by the Committee, a
finding by the Committee of the following: 
(i) conviction of Grantee of any felony; (ii) participation by
Grantee in any fraud or act of dishonesty against the Company; (iii) material
violation by Grantee of (a) any contract between the Company and Grantee
or (b) any statutory duty of Grantee to the Company; (iv) conduct of
Grantee that, based upon a good faith and reasonable factual investigation and
determination by the Board, demonstrates Grantee’s gross unfitness to serve in
the capacity as an employee, director or consultant; or (v) the continued,
willful refusal or failure by Grantee to perform any material duties reasonably
requested by the Board; provided, however, that in the case of conduct
described in clauses (iii), (iv) and (v) hereof, such conduct shall
not constitute “Cause” unless:  (a) the
Board shall have given Grantee written notice setting forth with specificity (1) the
conduct deemed to constitute “Cause,” (2) reasonable action that would
remedy the objectionable conduct and (3) a reasonable time (not less than
10 days) within which Grantee may take such remedial action; and (b) Grantee
shall not have taken such specified remedial action within such specified
reasonable time.

 

(g)                                 Exercise
of Options.  A Grantee may exercise
an Option that has become exercisable, in whole or in part, by delivering a
notice of exercise to the Company with payment of the Exercise Price.  The Grantee shall pay the Exercise Price for
an Option as specified by the Committee (i) in cash, (ii) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee (including Company Stock acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the Exercise Price
or by attestation (on a form prescribed by the Committee) to ownership of
shares of Company Stock having a Fair Market Value on the date of exercise
equal to the Exercise Price, (iii) after a Public Offering, payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board, or (iv) by such other method as the Committee may
approve.  The Committee may authorize
loans by the Company to Grantees in connection with the exercise of an Option,
upon such terms and conditions as the Committee, in its sole discretion, deems
appropriate.  Shares of Company Stock
used to exercise an Option shall have been held by the Grantee for the
requisite period of time to avoid adverse accounting consequences to the
Company with respect to the Option.  The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 7) at the time of exercise.

 

(h)                                 Limits
on Incentive Stock Options.  Each
Incentive Stock Option shall provide that, if the aggregate Fair Market Value
of the stock on the date of the grant with respect to which Incentive Stock
Options are exercisable for the first time by a Grantee during any calendar
year, under the Plan or any other stock option plan of the Company or a parent
or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be
treated as a Nonqualified Stock Option. 
An Incentive Stock Option shall not be granted to any person who is not
an Employee of the Company or a parent or subsidiary (within the meaning of
section 424(f) of the Code).

 

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6.                                      Stock
Awards

 

The Committee may issue
or transfer shares of Company Stock to an Employee, Non-Employee Director or
Key Advisor under a Stock Award, upon such terms as the Committee deems
appropriate.  The following provisions
are applicable to Stock Awards:

 

(a)                                  General
Requirements.  Shares of Company
Stock issued or transferred pursuant to Stock Awards may be issued or
transferred for consideration or for no consideration, and subject to
restrictions or no restrictions, as determined by the Committee.  The Committee may establish conditions under
which restrictions on Stock Awards shall lapse over a period of time or
according to such other criteria as the Committee deems appropriate.  The period of time during which the Stock
Awards will remain subject to restrictions will be designated in the Grant
Instrument as the “Restriction Period.”

 

(b)                                 Number
of Shares.  The Committee shall
determine the number of shares of Company Stock to be issued or transferred
pursuant to a Stock Award and the restrictions applicable to such shares.

 

(c)                                  Requirement
of Employment or Service.  If the
Grantee ceases to be employed by, or provide service to, the Company (as defined
in Section 5(f)) during a period designated in the Grant Instrument as the
Restriction Period, or if other specified conditions are not met, the Stock
Award shall terminate as to all shares covered by the Grant as to which the
restrictions have not lapsed, and those shares of Company Stock must be
immediately returned to the Company.  The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.

 

(d)                                 Restrictions
on Transfer and Legend on Stock Certificate.  During the Restriction Period, a Grantee may
not sell, assign, transfer, pledge or otherwise dispose of the shares of a
Stock Award except to a Successor Grantee under Section 8(a).  Each certificate for a share of a Stock Award
shall contain a legend giving appropriate notice of the restrictions in the
Grant.  The Grantee shall be entitled to
have the legend removed from the stock certificate covering the shares subject
to restrictions when all restrictions on such shares have lapsed.  The Committee may determine that the Company
will not issue certificates for Stock Awards until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Stock Awards until all restrictions on such shares have lapsed.

 

(e)                                  Right
to Vote and to Receive Dividends. 
Unless the Committee determines otherwise, during the Restriction
Period, the Grantee shall have the right to vote shares of Stock Awards and to
receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee.

 

(f)                                    Lapse
of Restrictions.  All restrictions
imposed on Stock Awards shall lapse upon the expiration of the applicable
Restriction Period and the satisfaction of all conditions imposed by the
Committee.  The Committee may determine,
as to any or all Stock Awards, that the restrictions shall lapse without regard
to any Restriction Period.

 

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7.                                      Withholding
of Taxes

 

(a)                                  Required
Withholding.  All Grants under the
Plan shall be subject to applicable federal (including FICA), state and local
tax withholding requirements.  The
Company may require that the Grantee or other person receiving or exercising
Grants pay to the Company the amount of any federal, state or local taxes that
the Company is required to withhold with respect to such Grants, or the Company
may deduct from other wages paid by the Company the amount of any withholding
taxes due with respect to such Grants.

 

(b)                                 Election
to Withhold Shares.  If the Committee
so permits, a Grantee may elect to satisfy the Company’s income tax withholding
obligation with respect to Options or Stock Awards paid in Company Stock by
having shares withheld up to an amount that does not exceed the Grantee’s
minimum applicable withholding tax rate for federal (including FICA), state and
local tax liabilities.  The election must
be in a form and manner prescribed by the Committee and may be subject to the
prior approval of the Committee.

 

8.                                      Transferability
of Grants

 

(a)                                  Nontransferability
of Grants.  Except as provided below,
only the Grantee may exercise rights under a Grant during the Grantee’s
lifetime.  A Grantee may not transfer
those rights except (i) by will or by the laws of descent and distribution
or (ii) with respect to Grants other than Incentive Stock Options, if
permitted in any specific case by the Committee, pursuant to a domestic
relations order or otherwise as permitted by the Committee.  When a Grantee dies, the personal representative
or other person entitled to succeed to the rights of the Grantee (“Successor
Grantee”) may exercise such rights.  A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee’s will or under the applicable
laws of descent and distribution.

 

(b)                                 Transfer
of Nonqualified Stock Options. 
Notwithstanding the foregoing, the Committee may provide, in a Grant
Instrument, that a Grantee may transfer Nonqualified Stock Options to family
members, or one or more trusts or other entities for the benefit of or owned by
family members, consistent with the applicable securities laws, according to
such terms as the Committee may determine; provided that the Grantee receives
no consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.

 

9.                                      Right
of First Refusal; Repurchase Right

 

(a)                                  Offer.  Prior to a Public Offering, if at any time an
individual desires to sell, encumber, or otherwise dispose of shares of Company
Stock that were issued or distributed to him or her under this Plan and that
are transferable, the individual may do so only pursuant to a bona fide written
offer, and the individual shall first offer the shares to the Company by giving
the Company written notice disclosing: (i) the name of the proposed
transferee of the Company Stock; (ii) the certificate number and number of
shares of Company Stock proposed to be transferred or encumbered; (iii) the
proposed price; (iv) all other terms of the proposed transfer; and (v) a
written copy of the proposed offer. 
Within 60 days after receipt of such notice, the Company shall have the
option to purchase all or part of such Company Stock at the then current Fair
Market Value (as defined in Section 5(b)) and may pay such price in
installments over a period not to exceed four years, at the discretion of the
Committee.

 

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(b)                                 Sale.  In the event the Company (or a stockholder,
as described below) does not exercise the option to purchase Company Stock, as
provided above, the individual shall have the right to sell, encumber, or
otherwise dispose of the shares of Company Stock described in Subsection (a) on
the terms of the transfer set forth in the written notice to the Company,
provided such transfer is effected within 15 days after the expiration of the
option period.  If the transfer is not
effected within such period, the Company must again be given an option to
purchase, as provided above.

 

(c)                                  Assignment
of Rights.  The Board, in its sole
discretion, may waive the Company’s right of first refusal and repurchase right
under this Section 9.  If the
Company’s right of first refusal or repurchase right is so waived, the Board
may, in its sole discretion, assign such right to the remaining stockholders of
the Company in the same proportion that each stockholder’s stock ownership
bears to the stock ownership of all the stockholders of the Company, as
determined by the Board.  To the extent
that a stockholder has been given such right and does not purchase his or her
allotment, the other stockholders shall have the right to purchase such allotment
on the same basis.

 

(d)                                 Purchase
by the Company.  Prior to a Public
Offering, if a Grantee ceases to be employed by, or provide service to, the
Company, the Company shall have the right to purchase all or part of any
Company Stock issued or distributed to him or her under this Plan at its then
current Fair Market Value (as defined in Section 5(b)) (or at such other
price as may be established in the Grant Instrument); provided, however, that
such repurchase shall be made in accordance with applicable accounting rules to
avoid adverse accounting treatment.

 

(e)                                  Public
Offering.  On and after a Public
Offering, the Company shall have no further right to purchase shares of Company
Stock under this Section 9.

 

(f)                                    Stockholders’
Agreement.  Notwithstanding the
provisions of this Section 9, if the Board requires that a Grantee execute
a stockholders’ agreement with respect to any Company Stock issued or
distributed pursuant to this Plan, which contains a right of first refusal or
repurchase right, the provisions of this Section 9 shall not apply to such
Company Stock, unless the Board determines otherwise.

 

10.                                Change
in Control of the Company

 

For purposes of this
Agreement, a “Change in Control” shall be deemed to have occurred upon:

 

(a)                                  an
acquisition subsequent to the date hereof by any person, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either (i) the then
outstanding shares of Company Stock or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors; excluding, however, the following:  (1)  any acquisition directly from the
Company, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company; (2) any acquisition by the Company; and (3) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company;

 

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(b)                                 a
change in the composition of the Board such that during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in Subsections 10(a), 10(c) or 10(d)) whose election by the
Board or nomination for election by the Company’s stockholders was approved by
a vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute at
least a majority of the members thereof;

 

(c)                                  the
approval by the stockholders of the Company of a merger, consolidation,
reorganization or similar corporate transaction, whether or not the Company is
the surviving corporation in such transaction, in which outstanding shares of
Company Stock are converted into (i) shares of stock of another company,
other than a conversion into shares of voting common stock of the successor
corporation (or a holding company thereof) representing 51% or more of the
voting power of all capital stock thereof outstanding immediately after the
merger or consolidation or (ii) other securities (of either the Company or
another company) or cash or other property;

 

(d)                                 the
approval by stockholders of the Company of the issuance of shares of Company
Stock in connection with a merger, consolidation, reorganization or similar
corporate transaction in an amount in excess of 49% of the number of shares of
Company Stock outstanding immediately prior to the consummation of such
transaction; or the approval by the stockholders of the Company of (i) the
sale or other disposition of all or substantially all of the assets of the
Company or (ii) a complete liquidation or dissolution of the Company.

 

11.                                Consequences
of a Change in Control

 

(a)                                  Assumption
of Grants.  Upon a Change in Control
where the Company is not the surviving corporation (or survives only as a
subsidiary of another corporation), unless the Committee determines otherwise,
all outstanding Options that are not exercised shall be assumed by, or replaced
with comparable options by the surviving corporation (or a parent or subsidiary
of the surviving corporation), and other outstanding Grants shall be converted
to similar grants of the surviving corporation (or a parent or subsidiary of
the surviving corporation).

 

(b)                                 Other
Alternatives.  Notwithstanding the
foregoing, subject to Subsection 11(c) below, in the event of a Change in
Control, the Committee may take any of the following actions with respect to
any or all outstanding Grants: the Committee may (i) determine that
outstanding Options shall automatically accelerate and become fully exercisable
and that the restrictions and conditions on outstanding Stock Awards shall
immediately lapse, (ii) require that Grantees surrender their outstanding
Options in exchange for a payment by the Company, in cash or Company Stock as
determined by the Committee, in an amount equal to the amount by which the then
Fair Market Value of the shares of Company Stock subject to the Grantee’s
unexercised Options exceeds the Exercise Price of the Options, as applicable or
(iii) after giving Grantees an opportunity to exercise their outstanding
Options, terminate any or all unexercised Options at such time as the Committee
deems appropriate.  Such surrender,
termination or settlement shall take place as of the date of the Change in
Control or such other date as the Committee may specify.  The Committee shall have no obligation to
take any of the foregoing actions, and, in the 

 

10

 

absence of any
such actions, outstanding Grants shall continue in effect according to their
terms (subject to any assumption pursuant to Subsection 11(a)).

 

(c)                                  Limitations.  Notwithstanding anything in the Plan to the
contrary, in the event of a Change in Control, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection 11(b), above, that would make the Change in
Control ineligible for pooling of interests accounting treatment or that would
make the Change in Control ineligible for desired tax treatment if, in the
absence of such right, the Change in Control would qualify for such treatment
and the Company intends to use such treatment with respect to the Change in
Control.

 

12.                                Requirements
for Issuance or Transfer of Shares

 

(a)                                  Stockholders’
Agreement.  The Committee may require
that a Grantee execute a stockholders’ agreement, with such terms as the
Committee deems appropriate, with respect to any Company Stock issued or
distributed pursuant to this Plan.

 

(b)                                 Limitations
on Issuance or Transfer of Shares. 
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee.  The
Committee shall have the right to condition any Grant made to any Grantee hereunder
on such Grantee’s undertaking in writing to comply with such restrictions on
his or her subsequent disposition of such shares of Company Stock as the
Committee shall deem necessary or advisable, and certificates representing such
shares may be legended to reflect any such restrictions.  Certificates representing shares of Company
Stock issued or transferred under the Plan will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon.

 

(c)                                  Lock-Up
Period.  If so requested by the
Company or any representative of the underwriters (the “Managing Underwriter”)
in connection with any underwritten offering of securities of the Company under
the Securities Act of 1933, as amended (the “Securities Act”), a Grantee
(including any successors or assigns) shall not sell or otherwise transfer any
shares or other securities of the Company during the 30-day period preceding
and the 180-day period following the effective date of a registration statement
of the Company filed under the Securities Act for such underwriting (or such
shorter period as may be requested by the Managing Underwriter and agreed to by
the Company) (the “Market Standoff Period”). 
The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Standoff Period.

 

13.                                Amendment
and Termination of the Plan

 

(a)                                  Amendment.  The Board may amend or terminate the Plan at
any time; provided, however, that the Board shall not amend the Plan without
stockholder approval if such approval 

 

11

 

is required in
order to comply with the Code or other applicable laws, or to comply with
applicable stock exchange requirements.

 

(b)                                 Termination
of Plan.  The Plan shall terminate on
the day immediately preceding the tenth anniversary of its effective date,
unless the Plan is terminated earlier by the Board or is extended by the Board
with the approval of the stockholders.

 

(c)                                  Termination
and Amendment of Outstanding Grants. 
A termination or amendment of the Plan that occurs after a Grant is made
shall not materially impair the rights of a Grantee unless the Grantee consents
or unless the Committee acts under Section 19(b).  The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding
Grant.  Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended under Section 19(b) or
may be amended by agreement of the Company and the Grantee consistent with the
Plan.

 

(d)                                 Governing
Document.  The Plan shall be the
controlling document.  No other
statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. 
The Plan shall be binding upon and enforceable against the Company and
its successors and assigns.

 

14.                                Funding
of the Plan

 

This Plan shall be
unfunded.  The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Grants under this Plan.  In no event shall interest be paid or accrued
on any Grant, including unpaid installments of Grants.

 

15.                                Rights
of Participants

 

Nothing in this Plan shall
entitle any Employee, Key Advisor, Non-Employee Director or other person to any
claim or right to be granted a Grant under this Plan.  Neither this Plan nor any action taken
hereunder shall be construed as giving any individual any rights to be retained
by or in the employ of the Company or any other employment rights.

 

16.                                No
Fractional Shares

 

No fractional shares of
Company Stock shall be issued or delivered pursuant to the Plan or any
Grant.  The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

 

12

 

17.                                Headings

 

Section headings are
for reference only.  In the event of a
conflict between a title and the content of a Section, the content of the Section shall
control.

 

18.                                Effective
Date of the Plan

 

(a)                                  Effective
Date.  Subject to approval by the
Company’s stockholders, the Plan shall be effective on June 1, 2007.

 

(b)                                 Public
Offering.  The provisions of the Plan
that refer to a Public Offering, or that refer to, or are applicable to persons
subject to, section 16 of the Exchange Act or section 162(m) of the Code,
shall be effective, if at all, upon the initial registration of the Company
Stock under section 12(g) of the Exchange Act, and shall remain effective
thereafter for so long as such stock is so registered.

 

19.                                Miscellaneous

 

(a)                                  Grants
in Connection with Corporate Transactions and Otherwise.  Nothing contained in this Plan shall be
construed to (i) limit the right of the Committee to make Grants under
this Plan in connection with the acquisition, by purchase, lease, merger,
consolidation or otherwise, of the business or assets of any corporation, firm
or association, including Grants to employees thereof who become Employees of
the Company, or for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other awards outside of
this Plan.  Without limiting the
foregoing, the Committee may make a Grant to an employee of another corporation
who becomes an Employee by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the
Company or any of its subsidiaries in substitution for a stock option or stock
awards grant made by such corporation. 
The terms and conditions of the substitute grants may vary from the
terms and conditions required by the Plan and from those of the substituted
stock incentives.  The Committee shall
prescribe the provisions of the substitute grants.

 

(b)                                 Compliance
with Law.  The Plan, the exercise of
Options and the obligations of the Company to issue or transfer shares of
Company Stock under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required.  With respect to persons subject to section 16
of the Exchange Act, after a Public Offering it is the intent of the Company
that the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act.  In addition, it is the intent of the Company
that the Plan and applicable Grants under the Plan comply with the applicable
provisions of section 162(m) of the Code, after a Public Offering, and
section 422 of the Code.  To the extent
that any legal requirement of section 16 of the Exchange Act or section 162(m) or
422 of the Code as set forth in the Plan ceases to be required under section 16
of the Exchange Act or section 162(m) or 422 of the Code, that Plan
provision shall cease to apply.  The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government
regulation.  The Committee may also 

 

13

 

adopt rules regarding
the withholding of taxes on payments to Grantees.  The Committee may, in its sole discretion,
agree to limit its authority under this Section.

 

(c)                                  Employees
Subject to Taxation Outside the United States.  With respect to Grantees who are subject to
taxation in countries other than the United States, the Committee may make
Grants on such terms and conditions as the Committee deems appropriate to
comply with the laws of the applicable countries, and the Committee may create
such procedures, addenda and subplans and make such modifications as may be
necessary or advisable to comply with such laws.

 

(d)                                 Governing
Law.  The validity, construction,
interpretation and effect of the Plan and Grant Instruments issued under the
Plan shall be governed and construed by and determined in accordance with the
laws of Delaware, without giving effect to the conflict of laws provisions
thereof.

 

14EXHIBIT
10.64

 

ALLONGE

 

	
  Note:

  	
   

  	
  Convertible
  Subordinated Promissory Note dated [ORIGINAL DATE OF NOTE] (the “Note”)

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  VGX
  Pharmaceuticals, Inc. (the “Borrower”)

  
	
   

  	
   

  	
   

  
	
  Holder:

  	
   

  	
  [NAME OF HOLDER] (the “Holder”)

  
	
   

  	
   

  	
   

  
	
  Principal
  Sum:

  	
   

  	
  $[PRINCIPAL]

  

 

THIS ALLONGE TO CONVERTIBLE SUBORDINATED PROMISSORY
NOTE (this “Allonge”) is
made as of November        ,
2008, between the Borrower and the Holder. 
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Note.

 

WHEREAS, on [ORIGINAL DATE OF NOTE], the Borrower issued the Note to the Holder in an aggregate principal amount equal to
the Principal Sum (as defined in the Note), all which remains outstanding as of
the date hereof;

 

WHEREAS, on  [AMENDMENT DATE], the Borrower and the Holder entered into an amendment pursuant to which certain provisions of the
Note were amended;

 

WHEREAS, on [FIRST ALLONGE DATE], the Borrower and the Holder entered into an
Allonge WHEREAS, the Borrower and the Holder now wish to
amend further certain provisions of the Note, as set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:

 

1.             The
first sentence of Section 2 of the Note (titled “Maturity”) is hereby
amended and restated in its entirety to read as follows:  “Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, shall be due
and payable on December 30, 2009; provided, however, that such date shall be extended
one additional year, upon written notice of extension given either by the
Borrower to the Holder or by the Holder to the Borrower at any time prior to December 31,
2009 (such maturity date is hereafter referred to as the “Maturity Date”).

 

2.             Section 3
of the Note (titled “Conversion”) is hereby amended by deleting the additional
paragraphs thereto that were added pursuant to Section 1 of Allonge No. 1
and by adding the following additional paragraphs to such Section 3:

 

 

“Notwithstanding
any provision to the contrary contained herein, if the Merger (as defined
below) is consummated, at any time from and after such consummation until the
Maturity Date or the repayment by the Borrower of the Principal Sum, together
with all accrued but unpaid interest thereon and all other fees, costs and
charges, if any (such period of time, the “Conversion Period”), this Note shall
be converted into shares of Acquiror Common Stock as follows:

 

(i)            At the option of the Holder,
one-half (1/2) of the Principal Sum outstanding hereunder, together with all
accrued but unpaid interest on such portion of the Principal Sum, and one-half
(1/2) of all other fees, costs and charges, if any, shall be converted into
that number of fully paid, validly issued and non-assessable shares of Acquiror
Common Stock (as defined below) as determined by the application of a
conversion price equal to $1.05 per share (as adjusted for any stock splits,
stock dividends, recapitalizations or the like with respect to such shares)
(the “Conversion Price”).  Such option shall be exercisable by
the Holder by providing written notice of conversion to the Company at any time
prior to the expiration of the Conversion Period.

 

(ii)           In the event that, at any time during
the Conversion Period, the average of the closing sales prices for one share of
Acquiror Common Stock as reported on the exchange on which Acquiror Common
Stock is traded for the five consecutive Trading Days (as defined below) at a
price per share equal to or greater than $2.10 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or the like with respect to
such shares), one-half (1/2) of the Principal Sum outstanding hereunder,
together with all accrued but unpaid interest on such portion of the Principal
Sum and one-half (1/2) of all other fees, costs and charges, if any, under this
Note shall be converted into that number of fully paid, validly issued and
non-assessable shares of Acquiror Common Stock as determined by the application
of a conversion price per share equal to the Conversion Price.

 

No fractional
shares of Acquiror Common Stock shall be issued upon the conversion of this
Note.  With respect to any fraction of a
share of Acquiror Common Stock called for upon the conversion of this Note, a
cash amount equal to such fraction shall be paid to the Holder.

 

With respect to
any shares of Acquiror Common Stock issued in a conversion pursuant to clauses (i) or
(ii) above at any time from the date of the occurrence of the Merger through
the date that is 180 days after the such date, the Holder shall not (A) sell,
assign, exchange, transfer, pledge, hypothecate, distribute or otherwise
dispose of (other than by operation of law where the transferee remains subject
to and bound by the provisions of this paragraph) any such shares of Acquiror
Common Stock or any interest (including, without limitation, an option to buy
or sell) in any such shares, in whole or in part, and no such attempted
transfer shall be treated as effective for any purpose, or (B) engage in
any transaction with respect to such shares or any interest therein, the intent
or effect of which is the effective economic disposition of such shares
(including, but not limited to, engaging in put, call, short-sale, straddle or
similar market transactions), for a 

 

2

 

period of time commencing
on the date of conversion through the date that is 180 days after the
occurrence of the Merger, provided, however, that such restrictions in the
foregoing clauses (A) and (B) shall lapse as to 50% of such shares 90
days after the date of the occurrence of the Merger.  The Holder agrees, promptly after the Company’s
or the Acquiror’s request, to enter into a written agreement to memorialize in
further detail the restrictions contained in this paragraph.

 

For purposes of
this Note, the “Merger” shall mean the merger transaction involving the
Borrower and Inovio Biomedical Corporation (the “Acquiror”), pursuant to an
Agreement and Plan of Merger dated as of July 7, 2008 by and among the
Borrower, the Acquiror and the other parties listed therein, as the same may be
amended and/or restated from time to time; “Acquiror Common Stock” shall mean
the common stock of the Acquiror; and “Trading Day” shall mean a day on which
trades occur on the exchange on which Acquiror Common Stock is traded and for
which a last sale price is reported for Acquiror Common Stock.”

 

3.             Effective
as of the time of the Merger, the conversion provisions set forth in Section 3
of the Note shall be deleted in their entirety. 
For the avoidance of doubt, the conversion provisions added to such Section 3
pursuant to this Allonge shall remain in full force and effect in the event of
such deletion.

 

4.             Effective at the time of the
Merger, the delivery dates for the financial statements contained in Section 6
of the Note (titled “Financial Reports”) are hereby modified so as to provide
that such financial statements shall be deliverable by the Company promptly
after they are required to be filed with the Securities and Exchange Commission
(and not before such date), notwithstanding anything to the contrary contained
in such Section 6.

 

5.             Effective as of the effective time
of the Merger, Section 9 of the Note (“Co-Sale Rights”) shall be deleted
in its entirety.

 

This Allonge is intended to be and shall remain
attached to, and shall constitute an integral part of, the Note from and after
the date hereof.  Except as modified
hereby, all of the terms and provisions of the Note are hereby ratified and
confirmed and, as amended by this Allonge, shall continue in full force and
effect.

 

3

 

Intending to be legally bound hereby, each of the
undersigned have duly executed this Allonge as of the     day of
            , 2008.

 

 

	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  

 

4

 

ADDENDUM
TO ALLONGE TO NOTE

 

	
  Note:

  	
   

  	
  Convertible
  Subordinated Promissory Note dated [ORIGINAL DATE OF NOTE] (the “Note”)

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  VGX
  Pharmaceuticals, Inc. (the “Borrower”)

  
	
   

  	
   

  	
   

  
	
  Holder:

  	
   

  	
  [NAME OF HOLDER] (the “Holder”)

  
	
   

  	
   

  	
   

  
	
  Principal
  Sum:

  	
   

  	
  $[PRINCIPAL]

  

 

The Borrower and the Holder previously executed an
Allonge dated November             ,
2008 relating to the Note.  Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Note.

 

The Borrower and the Holder agree, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to supplement the Allonge as follows:

 

1.             In the event that
the Holder elects to convert one-half (1/2) of the entire Principal Sum,
together with all accrued but unpaid interest on such portion of the Principal
Sum and one-half (1/2) of all other fees, costs and charges, if any, relating
to the Note, as provided in paragraph (i) of Section 3 of the Note
(titled “Conversion”), as amended by Section 2 of the Allonge, at the
Holder’s option, all remaining amounts of the Principal Sum, interest and other
fees, costs and charges, if any, relating to the Note shall, simultaneously
with such optional conversion, be converted into a number of fully paid,
validly issued and non-assessable shares of Acquiror Common Stock determined by
application of a conversion price per share equal to the Conversion Price.  Such option shall be exercisable by the
Holder by providing written notice of conversion to the Company of such
conversion elected pursuant to this paragraph 1 at the same time that the
notice of optional conversion required by the Note is provided by the Holder to
the Borrower.

 

2.             In the event that, at any time
during the Conversion Period, the average of the closing sales prices for one
share of Acquiror Common Stock as reported on the exchange on which Acquiror
Common Stock is traded for the five consecutive Trading Days (as defined below)
at a price per share equal to or greater than $2.10 per share (as adjusted for
any stock splits, stock dividends, recapitalizations or the like with respect
to such shares), all remaining amounts of the Principal Sum, interest and other
fees, costs and charges, if any, relating to the Note shall, simultaneously
with the automatic conversion provided in paragraph (ii) of Section 3
of the Note (titled “Conversion”), as amended by Section 2 of the Allonge,
be automatically converted into a number of fully paid, validly issued and
non-assessable shares of Acquiror Common Stock determined by application of a
conversion price per share equal to the Conversion Price.

 

5

 

The provisions in the
Allonge regarding limitations on transfer of shares of Acquiror Common Stock
acquired upon conversion of the Note shall likewise apply to all shares of
Acquiror Common Stock acquired upon any conversion pursuant to this Addendum.

 

This Addendum is intended to
be and shall remain attached to, and shall constitute an integral part of, the
Allonge and the Note from and after the date hereof.  Except as modified hereby, all of the terms
and provisions of the Note and the Allonge are hereby ratified and confirmed
and, as supplemented by this Addendum, shall continue in full force and effect.

 

6

 

Intending to be legally
bound hereby, each of the undersigned have duly executed this Addendum to
Allonge as of the      day of
                  ,
2008.

 

 

	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

ALLONGE

 

	
  Note:

  	
   

  	
  Convertible
  Subordinated Promissory Note dated [ORIGINAL DATE OF NOTE] (the “Note”)

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  VGX
  Pharmaceuticals, Inc. (the “Borrower”)

  
	
   

  	
   

  	
   

  
	
  Holder:

  	
   

  	
  [NAME OF HOLDER] (the “Holder”)

  
	
   

  	
   

  	
   

  
	
  Principal
  Sum:

  	
   

  	
  $[PRINCIPAL]

  
	
   

  	
   

  	
   

  
	
  Coupon Rate:

  	
   

  	
  5%

  

 

THIS ALLONGE TO CONVERTIBLE SUBORDINATED PROMISSORY
NOTE (this “Allonge”) is
made as of November       , 2008, between the Borrower and the
Holder.  Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Note.

 

WHEREAS, [ORIGINAL DATE OF NOTE], the Borrower issued the Note to the Holder
in an aggregate principal amount equal to the Principal Sum (as defined in the
Note), all which remains outstanding as of the date hereof;

 

WHEREAS, on  [FIRST ALLONGE DATE], the Borrower and the Holder entered into an
Allonge (“Allonge No. 1”), pursuant to which certain provisions of the
Note were amended; and

 

7

 

WHEREAS, the Borrower and the Holder now wish to amend further certain
provisions of the Note, as set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound,
hereby agree as follows:

 

1.             The
first sentence of Section 2 of the Note (titled “Maturity”) is hereby
amended and restated in its entirety to read as follows:  “Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid balance of the Principal
Sum outstanding, together with all accrued, but unpaid, interest and all other
fees, costs and charges, if any, shall be due and payable on July 10, 2010
(the “Maturity Date”).

 

2.             Section 3
of the Note (titled “Conversion”) is hereby amended by deleting the additional
paragraphs thereto that were added pursuant to Section 1 of Allonge No. 1
and by adding the following additional paragraphs to such Section 3:

 

“Notwithstanding
any provision to the contrary contained herein, if the Merger (as defined
below) is consummated, at any time from and after such consummation until the
Maturity Date or the repayment by the Borrower of the Principal Sum (such
period of time, the “Conversion Period”), the entire Principal Sum, shall be converted into shares of
Acquiror Common Stock as follows:

 

(i)            At the option of the Holder, all of
the Principal Sum outstanding hereunder shall be converted into that number of fully paid, validly issued
and non-assessable shares of Acquiror Common Stock (as defined below) as
determined by the application of a conversion price equal to $1.05 per share
(as adjusted for any stock splits, stock dividends, recapitalizations or the like
with respect to such shares) (the “Conversion Price”).  Such option shall be exercisable by
the Holder by providing written notice of conversion to the Company at any time
prior to the expiration of the Conversion Period.

 

(ii)           In the event that, at any time during
the Conversion Period, the average of the closing sales prices for one share of
Acquiror Common Stock as reported on the exchange on which Acquiror Common
Stock is traded for the five consecutive Trading Days (as defined below) at a
price per share equal to or greater than $2.10 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or the like with respect to
such shares), this Note shall be converted into that number of fully paid,
validly issued and non-assessable shares of Acquiror Common Stock at a
conversion price per share equal to the Conversion Price.

 

No fractional
shares of Acquiror Common Stock shall be issued upon the conversion of this
Note.  With respect to any fraction of a
share of Acquiror Common 

 

8

 

Stock called for upon the
conversion of this Note, a cash amount equal to such fraction shall be paid to
the Holder.

 

With respect to
any shares of Acquiror Common Stock issued in a conversion pursuant to clauses (i) or
(ii) above at any time from the date of the occurrence of the Merger
through the date that is 180 days after the such date, the Holder shall not (A) sell,
assign, exchange, transfer, pledge, hypothecate, distribute or otherwise
dispose of (other than by operation of law where the transferee remains subject
to and bound by the provisions of this paragraph) any such shares of Acquiror
Common Stock or any interest (including, without limitation, an option to buy
or sell) in any such shares, in whole or in part, and no such attempted
transfer shall be treated as effective for any purpose, or (B) engage in
any transaction with respect to such shares or any interest therein, the intent
or effect of which is the effective economic disposition of such shares
(including, but not limited to, engaging in put, call, short-sale, straddle or
similar market transactions), for a period of time commencing on the date of
conversion through the date that is 180 days after the occurrence of the
Merger, provided, however, that such restrictions in the foregoing clauses (A) and
(B) shall lapse as to 50% of such shares 90 days after the date of the
occurrence of the Merger.  The Holder
agrees, promptly after the Company’s or the Acquiror’s request, to enter into a
written agreement to memorialize in further detail the restrictions contained
in this paragraph.

 

For purposes of
this Note, the “Merger” shall mean the merger transaction involving the
Borrower and Inovio Biomedical Corporation (the “Acquiror”), pursuant to an Agreement
and Plan of Merger dated as of July 7, 2008 by and among the Borrower, the
Acquiror and the other parties listed therein, as the same may be amended
and/or restated from time to time; “Acquiror Common Stock” shall mean the
common stock of the Acquiror; and “Trading Day” shall mean a day on which
trades occur on the exchange on which Acquiror Common Stock is traded and for
which a last sale price is reported for Acquiror Common Stock.”

 

3.             Effective
as of the time of the Merger, the conversion provisions set forth in Section 3
of the Note shall be deleted in their entirety. 
For the avoidance of doubt, the conversion provisions added to such Section 3
pursuant to this Allonge shall remain in full force and effect in the event of
such deletion.

 

4.             Effective at the time of the
Merger, the delivery dates for the financial statements contained in Section 6
of the Note (titled “Financial Reports”) are hereby modified so as to provide
that such financial statements shall be deliverable by the Company promptly
after they are required to be filed with the Securities and Exchange Commission
(and not before such date), notwithstanding anything to the contrary contained
in such Section 6.

 

5.             Effective as of the effective time
of the Merger, Section 9 of the Note (“Co-Sale Rights”) shall be deleted
in its entirety.

 

9

 

This Allonge is intended to be and shall remain
attached to, and shall constitute an integral part of, the Note from and after
the date hereof.  Except as modified
hereby, all of the terms and provisions of the Note are hereby ratified and
confirmed and, as amended by this Allonge, shall continue in full force and
effect.

 

10

 

Intending to be legally bound hereby, each of the
undersigned have duly executed this Allonge as of the         
day of                               ,
2008.

 

 

	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  

 

11

 

ALLONGE

 

	
  Note:

  	
   

  	
  Convertible
  Subordinated Promissory Note dated
  [ORIGINAL DATE OF NOTE] (the “Note”)

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  VGX
  Pharmaceuticals, Inc. (the “Borrower”)

  
	
   

  	
   

  	
   

  
	
  Holder:

  	
   

  	
  [NAME OF HOLDER] (the
  “Holder”)

  
	
   

  	
   

  	
   

  
	
  Principal

  	
   

  	
   

  
	
  Sum:

  	
   

  	
  $[PRINCIPAL]

  

 

THIS ALLONGE TO CONVERTIBLE SUBORDINATED PROMISSORY
NOTE (this “Allonge”) is made as of October       ,
2008, between the Borrower and the Holder. 
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Note.

 

WHEREAS, on [ORIGINAL DATE OF NOTE] the Borrower issued the Note
to the Holder in an aggregate principal
amount equal to the Principal Sum (as defined in the Note), all which remains
outstanding as of the date hereof;

 

WHEREAS, on [FIRST ALLONGE DATE], the Borrower and the
Holder entered into an Allonge (“Allonge No. 1”), pursuant to which
certain provisions of the Note were amended; and

 

WHEREAS, the Borrower and the
Holder now wish to amend further certain provisions of the Note, as set forth
herein.

 

NOW THEREFORE, in consideration of the
premises and the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:

 

1.             The
first sentence of Section 2 of the Note (titled “Maturity”) is hereby
amended and restated in its entirety to read as follows:  “Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, shall be due
and payable on October 24, 2010 (the “Maturity Date”).

 

2.             Section 3
of the Note (titled “Conversion”) is hereby amended by deleting the additional
paragraphs thereto that were added pursuant to Section 1 of Allonge No. 1
and by adding the following additional paragraphs to such Section 3:

 

“Notwithstanding
any provision to the contrary contained herein, if the Merger (as defined
below) is consummated, at any time from and after such consummation until the
Maturity Date or the repayment by the Borrower of the Principal Sum, together
with all accrued but unpaid interest thereon and all other fees, costs and
charges, if any (such 

 

12

 

period of time, the “Conversion
Period”), the entire Principal Sum, together with all accrued but unpaid
interest thereon and all other fees, costs and charges, if any, shall be
converted into shares of Acquiror Common Stock as follows:

 

(i)            At the option of the Holder, all of
the Principal Sum outstanding hereunder, together with all accrued but unpaid
interest thereon and all other fees, costs and charges, if any, shall be
converted into that number of fully paid, validly issued and non-assessable
shares of Acquiror Common Stock (as defined below) as determined by the
application of a conversion price equal to $1.05 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or the like with respect to
such shares) (the “Conversion Price”).  Such option shall be exercisable by
the Holder by providing written notice of conversion to the Company at any time
prior to the expiration of the Conversion Period.

 

(ii)           In the event that, at any time during
the Conversion Period, the average of the closing sales prices for one share of
Acquiror Common Stock as reported on the exchange on which Acquiror Common
Stock is traded for the five consecutive Trading Days (as defined below) at a
price per share equal to or greater than $2.10 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or the like with respect to
such shares), this Note shall be converted into that number of fully paid,
validly issued and non-assessable shares of Acquiror Common Stock at a
conversion price per share equal to the Conversion Price.

 

No fractional
shares of Acquiror Common Stock shall be issued upon the conversion of this
Note.  With respect to any fraction of a
share of Acquiror Common Stock called for upon the conversion of this Note, a
cash amount equal to such fraction shall be paid to the Holder.

 

With respect to
any shares of Acquiror Common Stock issued in a conversion pursuant to clauses (i) or
(ii) above at any time from the date of the occurrence of the Merger
through the date that is 180 days after the such date, the Holder shall not (A) sell,
assign, exchange, transfer, pledge, hypothecate, distribute or otherwise
dispose of (other than by operation of law where the transferee remains subject
to and bound by the provisions of this paragraph) any such shares of Acquiror
Common Stock or any interest (including, without limitation, an option to buy or
sell) in any such shares, in whole or in part, and no such attempted transfer
shall be treated as effective for any purpose, or (B) engage in any
transaction with respect to such shares or any interest therein, the intent or
effect of which is the effective economic disposition of such shares
(including, but not limited to, engaging in put, call, short-sale, straddle or
similar market transactions), for a period of time commencing on the date of
conversion through the date that is 180 days after the occurrence of the
Merger, provided, however, that such restrictions in the foregoing clauses (A) and
(B) shall lapse as to 50% of such shares 90 days after the date of the
occurrence of the Merger.  The Holder
agrees, promptly after the Company’s or the Acquiror’s request, to enter into a
written agreement to memorialize in further detail the restrictions contained
in this paragraph.

 

13

 

For purposes of
this Note, the “Merger” shall mean the merger transaction involving the
Borrower and Inovio Biomedical Corporation (the “Acquiror”), pursuant to an
Agreement and Plan of Merger dated as of July 7, 2008 by and among the
Borrower, the Acquiror and the other parties listed therein, as the same may be
amended and/or restated from time to time; “Acquiror Common Stock” shall mean
the common stock of the Acquiror; and “Trading Day” shall mean a day on which
trades occur on the exchange on which Acquiror Common Stock is traded and for
which a last sale price is reported for Acquiror Common Stock.”

 

3.             Effective as of the time of the Merger, the conversion provisions set forth in Section 3
of the Note shall be deleted in their entirety. 
For the avoidance of doubt, the conversion provisions added to such Section 3
pursuant to this Allonge shall remain in full force and effect in the event of
such deletion.

 

4.             Effective at the time of the
Merger, the delivery dates for the financial statements contained in Section 6
of the Note (titled “Financial Reports”) are hereby modified so as to provide
that such financial statements shall be deliverable by the Company promptly
after they are required to be filed with the Securities and Exchange Commission
(and not before such date), notwithstanding anything to the contrary contained
in such Section 6.

 

This Allonge is intended to be and shall remain
attached to, and shall constitute an integral part of, the Note from and after
the date hereof.  Except as modified
hereby, all of the terms and provisions of the Note are hereby ratified and confirmed
and, as amended by this Allonge, shall continue in full force and effect.

 

14

 

Intending to be legally bound hereby, each of the
undersigned have duly executed this Allonge as of the         
day of                               ,
2008.

 

 

	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  

 

15

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