Document:

EXHIBIT 10

EXHIBIT 10.13

 

PALIGENT INC.

 

FOURTH EXTENSION TO THE BOARD OF DIRECTORS

CONSULTING AND CONFIDENTIALITY AGREEMENT

 

THIS FOURTH EXTENSION TO THE

BOARD OF DIRECTORS CONSULTING AND CONFIDENTIALITY AGREEMENT, AS AMENDED (the

“Fourth Extension”), is made as of this 2nd   day of January, 2002 (the “Effective Date”)

by and between PALIGENT INC., a Delaware corporation (the “Company”) and Zola

P. Horovitz, Ph.D. (the “Consultant”).

 

WHEREAS, the Company and the

Consultant have entered into a Board of Directors Consulting and

Confidentiality Agreement dated as of January 1, 1998 (the “Agreement”);

 

WHEREAS, the Company and the

Consultant have entered into an Extension to the Agreement dated December 3,

1998 (the “Extension”);

 

WHEREAS, the Company and the

Consultant have entered into an Extension to the Agreement dated February 9,

2001 (the “Second Extension”);

 

WHEREAS, the Company and the

Consultant have entered into an Extension to the Agreement dated May 16, 2001

(the “Third Extension”);

 

WHEREAS, the Company and the

Consultant wish to extend the Extension Term for an additional period of one

year commencing January 1, 2002 and ending on December 31, 2002 (the “Fourth

Extension Term”);

 

NOW, THEREFORE, the Company and

the Consultant, in consideration of the mutual promises contained herein,

hereby agree as follows:

 

25.                                 DEFINITIONS

Capitalized

terms used herein and not otherwise defined herein shall have the respective

meanings set forth in the Agreement, the Extension, the Second Extension and

the Third Extension.

 

26.                                 THIRD

EXTENSION

26.1    Engagement.  The Company hereby retains the Consultant

and the Consultant hereby agrees to perform the services described in Sections

2.1 and 2.2 of the Agreement for the Fourth Extension Term.

 

26.2    Incorporation

of Agreement Provisions.  Except as

modified herein, the Company and Consultant agree that all of the provisions of

the Agreement, the Extension, the Second Extension and the Third Extension are

incorporated herein and shall apply to the Consultancy during the Fourth Extension

Term with the same force and effect as if set forth herein.

 

27.                                 REPRESENTATION,

WARRANTIES AND COVENANTS

Consultant

hereby represents, warrants and covenants to the Company that the Consultant is

under no contractual or other restriction or obligation which is inconsistent

with his execution of this Fourth Extension or the performance of his duties

hereunder and that, during the Fourth Extension Term, Consultant did not enter

into any agreement either written or oral in conflict with this Fourth Extension.

 

The Consultant and the Company

have executed and delivered this Fourth Extension as a document under seal as

of the Effective Date.

 

	

  PALIGENT

  INC.

  	

  CONSULTANT:

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/

  Salvatore A. Bucci

  	

   

  	

  /s/ Zola P.

  Horovitz

  	

   

  
	

   

  	

  Salvatore A.

  Bucci

  	

  Zola P.

  Horovitz, Ph.D.

  	

   

  
	

   

  	

  President

  and Chief Executive OfficerPUBLIC HEALTH SERVICE

EXHIBIT

10.14

 

PUBLIC

HEALTH SERVICE

 

PATENT

LICENSE AGREEMENT—EXCLUSIVE

 

COVER PAGE

For PHS internal use only:

 

Patent License Number:

 

U.S. Application Serial No.

07/492,468 filed 3/13/90; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase Levels” Issued 2/25/92 U.S. Pat.

5,091,430

 

U.S. Application Serial No.

07/616,913 filed 11/21/90; “06-Benzylated Guanine, Guanosine and

2’-Deoxyguanosine Compounds Possessing 06-Alkylguanine-DNA Alkyltransferase

Depleting Activity” CIP of ‘468 issued 10/4/94 U.S. Pat. 5,352,669

 

U.S. Application Serial No.

07/805,634 filed 12/21/91; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase Levels” DIV of ‘468, issued

10/25/94 U.S. Pat. 5,358,952

 

U.S. Application Serial No.

07/875,438 filed 4/29/92; “06-Substituted Guanine Compounds and Methods for

Depleting Derivatives 06 Alkylguanine-DNA Alkyltransferase Levels” CIP of ‘634

Abandoned 8/19/94

 

U.S. Application Serial No.

08/255,190 filed 6/7/94; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase” CIP of ‘438, and ‘913 issued

11/25/97 U.S. Pat. 5691,307.

 

U.S. Application Serial No.

08/283,953 filed 8/1/94; “Substituted 06-Benzylguanines And 6(4) –

Benzyloxpyrimidines” issued 6/11/96 U.S. Pat. 5,525,606, and PCT/US95/09702

filed 7/31/95 (based on parent application 08/283.953.  National Stage filed in Europe (EPO

Application No. 9592837.7.  Validated in

all countries, except Finland, under the European Patent Convention), Canada

(Canadian Application No. 2,195,856), Japan (Japanese Application No.

506694/1996), Australia (Australian Serial No. 32079/95, Issued Patent No.

702711) and U.S. Application No. 08/849,223, Issued 9/28/99 as U.S. Patent No.

5,958,932).  Divisional of EP ‘837.7,

Application No. 01108585.9 filed 4/5/01.

 

U.S. Application

Serial No. 08/661,923 filed 6/11/96, issued 5/19/98 as 5,753,668;

“Substituted  Benzyloxpyrimidines and

Their Inactivation of 06-Alkylguanine-DNA Alkyltransferase” DIV of parent

application 08/283.953.

 

U.S. Application

Serial No. 08/927, 846 filed 9/11/97. Issued 6/29/99 as 5,916,894; “Substituted

O6-Benzylguanines And 6(4) – Benzyloxpyrimidines” DIV of parent application

08/283,953.

 

U.S. Application

Serial No. 08/318,238 filed 5/25/99. Issued 1/9/01 as 6,172,070; “Substituted

O6-Benzylguanines And 6(4) – Benzyloxpyrimidines” DIV of parent application

08/283.953.

 

U.S. Application

Serial No. 08/849,223 filed 7/31/95. Issued 

9/28/99 as 5,958,932; “Substituted O6-Benzylguanines And 6(4) –

Benzyloxpyrimidines” CIP of parent application 08/283,953.

 

U.S. Application

No. 09/590,187, filed 6/9/00, U.S Patent 6,303,604, issued 10/16/01U.S.

Application Serial No. 09/333,047 filed 6/15/99 (Allowed) “Pharmaceutical Composition

Comprising 2,4-Diamino-6-Benzyloxy-Triazine And Inactivation of

O6-Alkylguanine-DNA-Alkyltransferase.”

 

 

U.S. Application

No. 09/333,047, filed 6/15/99, U.S Patent 6,333,331, issued 12/25/01

“Substituted 06-Benzylguanines.”

 

U.S. Application No.

09/928,410; filed 8/14/01 “Substituted 06 Benzyl-8-Aza-Guanines” Pending.

 

Licensee:  Procept, Inc., (formerly named Pacific

Pharmaceuticals, Inc.)

 

Cooperative

Research and Development Agreement (CRADA) Number (if applicable): #0303

 

Additional Remarks:

 

PHS,

by executing interinstitutional agreements between the Milton S. Hershey

Medical Center of Pennsylvania State University (L-067-02/0), and the

University of Chicago (L-086-02/0), has obtained the exclusive license to,

including the right to sublicense, the Licensed

Patent

Rights listed in Appendix A. Once executed, the terms and conditions

of this

Agreement shall supersede, and thereby terminate, the terms and

conditions of the previous license agreement between the Licensee and the Pennsylvania State

University, made effective on February 6, 1998

 

Public Benefit(s):

 

Procept agrees

that subsequent to market approval by the Food and Drug Administration (FDA),

to make reasonable quantities of Licensed Product(s) or materials produced

through the use of Licensed Process(es) available on a

compassionate use basis, to patients, either through the patient’s physician(s)

and/or the medical center treating the patient; and Procept further agrees,

after their First Commercial Sale, and to develop written educational

materials (e.g., brochures, advertisements, etc.) directed to patients and

physicians detailing the Licensed Product(s) and/or medical aspects

of using 06-Benzylguanine and/or its derivatives as a therapeutic modality for

the treatment of human cancers.

 

This Patent License

Agreement, hereinafter referred to as the “Agreement”, consists of this Cover Page,

an attached Agreement, a Signature Page, Appendix A (List of

Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and

Territory), Appendix C (Royalties), Appendix D (Modifications),

Appendix E (Benchmarks), Appendix F (Commercial Development Plan),

Appendix G (Sublicense Agreement

), Appendix H (Amendment to said Sublicense

Agreement) and Appendix I (Release

Agreement and its Relevant Exhibits).  The Parties to this Agreement are:

 

1)             The National

Institutes of Health (“NIH”), the Centers for Disease Control and Prevention

(“CDC”), or the Food and Drug Administration (“FDA”), hereinafter singly or

collectively referred to as “PHS”, agencies of the United States Public

Health Service within the Department of Health and Human Services (“DHHS”);

and

 

2)             Procept, Inc., having offices at

the address indicated on the Signature Page, hereinafter referred to as “Licensee”.

 

PHS: Procept/AOI Patent License Agreement --

Exclusive CONFIDENTIAL (L-068-02/0)

Model 980611a Page 2 of 51 [Final] [02/28/02]

 

2

 

PHS PATENT

LICENSE AGREEMENT—EXCLUSIVE

 

PHS and Licensee agree as follows:

 

1.             BACKGROUND

 

1.01        In the course of fundamental research programs at the PHS,

Robert C. Moschel (PHS), Anthony Pegg (Milton S. Hershey

Medical Center of Pennsylvania State University, (PSU)), and Eileen Dolan (Milton S. Hershey Medical of

Pennsylvania State University Center and the University of Chicago (UC), whereas UC, under an agreement with

its affiliated corporation, ARCH Development Corporation has the right to

license Licensed Patents and other intellectual property owned by ARCH  ), made or reduced to

practice certain inventions which are included within the Licensed  Patent Rights, as defined in

Paragraph 2.06 below.

 

1.02         PHS, by executing interinstitutional

agreements with PSU (L-067-02/0), and UC (L-086-02/0), has obtained the exclusive

license, including the right to sublicense, the Licensed Patent Rights listed in Appendix A.  Once executed, the terms and conditions of

this

Agreement shall supersede, and thereby terminate the terms and

conditions of the previous license agreement between Pacific Pharmaceuticals,

Inc., (now Procept, Inc.) and PSU, made effective on February 6, 1998,

provided that, the sublicense agreement, including its associated  amendment, by and between AOI

Pharmaceuticals, Inc. (“Sublicensee”) and Licensee made effective on

October 13, 2000, and attached as Appendices G and H (such sublicense agreement

and its associated amendment, the “Sublicensee Agreement”), shall continue to

remain in full force and effect.

 

1.03         By assignment of

rights from PHS employees and other inventors, DHHS, on behalf of the United

States Government, owns intellectual property rights claimed in any United

States and/or foreign patent applications or patents corresponding to the

assigned inventions.  DHHS

also owns any tangible embodiments of these inventions actually reduced to

practice by PHS.

 

1.04         The Secretary of DHHS

has delegated to PHS the authority to enter into this Agreement for the licensing

of rights to these inventions.

 

1.05         PHS desires to

transfer these inventions to the private sector through commercialization

licenses to facilitate the commercial development of products and processes for

public use and benefit.

 

1.06         Licensee desires

to acquire commercialization rights to certain of these inventions in order to

develop processes, methods, and/or marketable products for public use and

benefit.

 

2.             DEFINITIONS

 

2.01         “Affiliate” means,

with respect to any organization that can exercise independent legal standing,

including a corporation, association, joint venture, partnership, trust,

university, business, individual, government or political subdivision

thereof  (any such organization, an “Entity”),

any Entity that directly or indirectly controls, is controlled by, or is under

common control with such Entity. 

“Control” for this purpose shall mean control of more than fifty percent

(50%) of the voting securities of an Entity.

 

2.02         “Benchmarks” mean the

performance milestones that are set forth in Appendix E.

 

2.03         “Commercial Development

Plan” means the written commercialization plan attached as Appendix

F.

 

2.04         “First Commercial Sale”

means the initial transfer by or on behalf of Licensee or its sublicensees

 

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of Licensed Products or the initial practice of a Licensed

Process by or on behalf of Licensee or its sublicensees in exchange

for cash or some equivalent to which value can be assigned for the purpose of

determining Net Sales.

 

2.05         “Government”

means the Government of the United States of America.

 

2.06         “Licensed Fields of Use”

means the fields of use identified in Appendix B.

 

2.07         “Licensed Patent Rights”

shall mean:

 

a)             Patent applications

(including provisional patent applications and PCT patent applications) and/or

patents listed in Appendix A, all divisions and continuations of these

applications, all patents issuing from such applications, divisions, and

continuations, and any reissues, reexaminations, and extensions of all such

patents;

 

b)            to the extent that

the following contain one or more claims directed to the invention or

inventions disclosed in a) above: i) continuations-in-part of a) above; ii) all

divisions and continuations of these continuations-in-part; iii) all patents

issuing from such continuations-in-part, divisions, and continuations; iv)

priority patent application(s) of a) above; and v) any reissues,

reexaminations, and extensions of all

such patents;

 

c)             to the extent that

the following contain one or more claims directed to the invention or

inventions disclosed in a) above: all counterpart foreign and U.S. patent

applications and patents to a) and b) above, including those listed in Appendix

A.

 

Licensed

Patent Rights shall not include b) or c) above to the extent

that they contain one or more claims directed to new matter which is not the

subject matter disclosed in a) above.

 

2.08         “Licensed Process(es)” means

processes which, in the course of being practiced would be within the scope of

one or more claims of the Licensed Patent Rights that have not been

held unpatentable, invalid or unenforceable by an unappealed or unappealable

judgment of a court of competent jurisdiction.

 

2.09         “Licensed Product(s)”

means tangible materials which, in the course of manufacture, use, sale, or

importation would be within the scope of one or more claims of the Licensed

Patent Rights that have not been held unpatentable, invalid or

unenforceable by an unappealed or unappealable judgment of a court of competent

jurisdiction.

 

2.10         “Licensed Territory”

means the geographical area identified in Appendix B.

 

2.11         “Net Sales”

means the total gross receipts actually received for sales of Licensed

Products or practice of Licensed Processes by Licensee, any of its Affiliates,

its

Sublicensee or any other

sublicensee(s), and from leasing, renting, or otherwise making Licensed

Products available to others without sale or other dispositions,

whether invoiced or not, less returns and allowances, packing costs, insurance

costs, freight out, taxes or excise duties imposed on the transaction (if

separately invoiced), and wholesaler and cash discounts in amounts customary in

the trade to the extent actually granted. 

No deductions shall be made for commissions paid to individuals, whether

they be with independent sales agencies or regularly employed by Licensee,

Sublicensee or

 

4

 

sublicensee(s), and on its payroll, or for

the cost of collections.

 

2.12         “Practical Application”

means to manufacture in the case of a composition or product, to practice in

the case of a process or method, or to operate in the case of a machine or

system; and in each case, under such conditions as to establish that the

invention is being utilized and that its benefits are to the extent permitted

by law or Government

regulations available to the public on reasonable terms.

 

2.13         “Research License”

means a nontransferable, nonexclusive license to make and to use the Licensed

Products or Licensed Processes as defined by the Licensed

Patent Rights for purposes of research and not for purposes of

commercial manufacture or distribution or in lieu of purchase.

 

3.             GRANT OF RIGHTS

 

3.01         PHS hereby

grants and Licensee accepts, subject to the terms and conditions of this Agreement,

an exclusive license under the Licensed Patent Rights in the Licensed

Territory to make and have made, to use and have used, to sell and

have sold, to offer to sell, and to import any Licensed Products in the Licensed

Fields of Use and to practice and have practiced any Licensed

Processes in the Licensed Fields of Use.

 

3.02         This Agreement

confers no license or rights by implication, estoppel, or otherwise under any

patent applications or patents of PHS other than Licensed Patent Rights

regardless of whether such patents are dominant or subordinate to Licensed

Patent Rights.

 

4.             SUBLICENSING

 

4.01         Upon written approval

by PHS,

Licensee and Sublicensee may enter into sublicensing

agreements under the Licensed Patent Rights.  Notwithstanding anything else stated herein,

PHS acknowledges

that this Agreement

does not terminate, alter or supersede the Sublicensee Agreement that

existed and continues to exist between Licensee and Sublicensee, and listed in

Appendices G and H respectively,  pursuant to Section 1.02 of this Agreement.  PHS hereby

approves the Sublicensee Agreement in the event of

termination of this Agreement under Article 13.

 

4.02         Licensee agrees

that any sublicenses granted by it shall provide that the obligations to PHS

of Paragraphs 5.01–5.04, 8.01, 9.02, 10.01, 10.02, 12.05, and 13.07-13.09

of this Agreement

shall be binding upon the sublicensee(s) as if it were a party to this Agreement.  Licensee further agrees to attach copies of

these Paragraphs to all sublicense agreements.

 

4.03         Any sublicenses granted

by Licensee

shall provide for the termination of the sublicense or the conversion to a

license directly between such sublicensee(s) and PHS, at the option of the

sublicensee, upon termination of this Agreement under Article 13, and shall be

under substantially similar terms of this Agreement, wherein  all  considerations are in cash.  Such conversion is subject to PHS

approval and contingent upon acceptance by the sublicensee of the remaining

provisions of this Agreement.

 

4.04         Licensee agrees

to forward to PHS a copy of each fully executed sublicense agreement

postmarked within thirty (30) days of the execution of such agreement.  To the extent permitted by law, PHS

agrees to maintain each such sublicense agreement in confidence.

 

5

 

5.             STATUTORY AND

PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

 

5.01         (a)           PHS reserves on behalf of

the Government an irrevocable, nonexclusive, nontransferable, royalty-free

license for the practice of all inventions licensed under the Licensed

Patent Rights throughout the world by or on behalf of the Government

and on behalf of any foreign government or international organization pursuant

to any existing or future treaty or agreement to which the Government is a

signatory.  Prior to the First

Commercial Sale, Licensee agrees to provide PHS

reasonable quantities of Licensed Products or materials made through

the Licensed

Processes for PHS research use.

 

(b)           In the event that Licensed

Patent Rights are Subject Inventions made under a Cooperative

Research and Development Agreement (CRADA), Licensee grants to the

Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive,

nontransferable, irrevocable, paid-up license to practice Licensed Patent Rights or

have Licensed

Patent Rights practiced throughout the world by or on behalf of the

Government.  In the exercise of such

license, the Government shall not publicly disclose trade secrets or commercial

or financial information that is privileged or confidential within the meaning

of 5 U.S.C. 552(b)(4) or which would be considered as such if it had been

obtained from a non-Federal party. 

Prior to the First Commercial Sale, Licensee agrees to provide PHS

reasonable quantities of Licensed Products or materials made through

the Licensed

Processes for PHS research use.

 

5.02         Licensee agrees

that products used or sold in the United States embodying Licensed Products or produced

through use of Licensed Processes shall be manufactured substantially in the

United States, unless a written waiver is obtained in advance from PHS.

 

5.03         Licensee

acknowledges that PHS may enter into future Cooperative

Research and Development Agreements (CRADAs) under the Federal Technology

Transfer Act of 1986 that relate to the subject matter of this Agreement.  Licensee agrees not to unreasonably deny requests

for a Research

License from such future collaborators with PHS when acquiring such

rights is necessary in order to make a Cooperative Research and Development

Agreement (CRADA) project feasible.  Licensee

may request an opportunity to join as a party to the proposed Cooperative

Research and Development Agreement (CRADA).

 

5.04         (a)           In addition to the reserved license

of Paragraph 5.01 above, PHS reserves the right to grant

nonexclusive Research Licenses directly or to require Licensee to grant nonexclusive

Research Licenses on reasonable terms. 

The purpose of this Research License is to encourage basic research,

whether conducted at an academic or corporate facility.  In order to safeguard the Licensed

Patent Rights, however, PHS shall consult with Licensee before granting to

commercial entities a Research License or providing to them research samples of

materials made through the Licensed Processes.

 

(b)           In exceptional

circumstances, and in the event that Licensed Patent Rights are Subject

Inventions made under a Cooperative Research and Development Agreement (CRADA),

the Government, pursuant to 15 U.S.C. 3710a(b)(1)(B), retains the right to

require the Licensee to grant to a responsible applicant a nonexclusive,

partially exclusive, or exclusive sublicense to use Licensed Patent Rights in Licensee’s field

 

6

 

of use on terms that are reasonable under the circumstances; or if Licensee

fails to grant such a license, the Government retains the right to grant the

license itself.  The exercise of such rights

by the Government shall only be in exceptional circumstances and only if the

Government determines (i) the action is necessary to meet health or safety

needs that are not reasonably satisfied by Licensee; (ii) the action is necessary to

meet requirements for public use specified by Federal regulations, and such

requirements are not reasonably satisfied by the Licensee; or (iii) the Licensee

has failed to comply with an agreement containing provisions described in 15

U.S.C. 3710a(c)(4)(B).  The determination

made by the Government under this Article is subject to administrative appeal

and judicial review under 35 U.S.C. 203(2).

 

6.             ROYALTIES AND

REIMBURSEMENT

 

6.01         Licensee agrees

to pay to PHS

a noncreditable, nonrefundable license issue royalty as set forth in Appendix C

within thirty (30) days from the date that this Agreement becomes effective.

 

6.02         Licensee agrees

to pay to PHS

a nonrefundable minimum annual royalty as set forth in Appendix C.  The minimum annual royalty is due and

payable on January 1 of each calendar year and may be credited against any

earned royalties due for sales made in that year.  The minimum annual royalty due for the first calendar year of

this Agreement

may be prorated according to the fraction of the calendar year remaining

between the effective date of this Agreement and the next subsequent January

1.

 

6.03         Licensee agrees

to pay PHS

earned royalties as set forth in Appendix C.

 

6.04         Licensee agrees

to pay PHS

benchmark royalties as set forth in Appendix C.

 

6.05         Licensee agrees

to pay PHS

sublicensing royalties as set forth in Appendix C.

 

6.06         A patent or patent

application licensed under this Agreement shall cease to fall within the Licensed

Patent Rights for the purpose of computing earned royalty payments

in any given country on the earliest of the dates that a) the application has

been abandoned and not continued, b) the patent expires or irrevocably lapses,

or c) the claim has been held to be invalid or unenforceable by an unappealed

or unappealable decision of a court of competent jurisdiction or administrative

agency.

 

6.07         No multiple royalties

shall be payable because any Licensed Products or Licensed Processes are

covered by more than one of the Licensed Patent Rights.

 

6.08         On sales of Licensed

Products by Licensee or on sales made in other than an

arm’s-length transaction, the value of the Net Sales attributed under this Article 6

to such a transaction shall be that which would have been received in an

arm’s-length transaction, based on sales of like quantity and quality products

on or about the time of such transaction.

 

6.09         With regard to

expenses associated with the preparation, filing, prosecution, and maintenance

of all patent applications and patents included within the Licensed Patent Rights

incurred by PHS prior to the effective date of this Agreement, Licensee

shall pay to PHS, as an additional royalty, within sixty (60) days of PHS’s

submission of a statement and request for payment to Licensee, an amount

equivalent to such patent expenses previously incurred by PHS unless such expenses are

disputed in good faith by Licensee, in which case the parties will

attempt to resolve amicably the dispute pursuant to paragraph 14.12.

 

7

 

6.10         With regard to

expenses associated with the preparation, filing, prosecution, and maintenance

of all patent applications and patents included within the Licensed Patent Rights

incurred by PHS on or after the effective date of this Agreement,

PHS,

at its sole option, may require Licensee:

 

(a) to pay PHS on an annual basis, within sixty (60)

days of PHS’s

submission of a statement and request for payment, a royalty amount equivalent

to all such patent expenses incurred during the previous calendar year(s); or

 

(b) to pay such expenses directly to the law firm employed by PHS

to handle such functions.  However, in

such event, PHS and not Licensee shall be the client of such law

firm.

 

In limited circumstances, Licensee may be given the right to assume

responsibility for the preparation, filing, prosecution, or maintenance of any

patent application or patent included with the Licensed Patent Rights.  In that event, Licensee shall directly pay

the attorneys or agents engaged to prepare, file, prosecute, or maintain such

patent applications or patents and shall provide to PHS copies of each invoice

associated with such services as well as documentation that such invoices have

been paid.

 

6.11         Licensee may

elect to surrender its rights in any country of the Licensed Territory under any Licensed

Patent Rights upon ninety (90) days written notice to PHS

and owe no payment obligation under Article 6.10 for patent-related expenses

incurred in that country after ninety (90) days of the effective date of such

written notice.

 

7.             PATENT FILING,

PROSECUTION, AND MAINTENANCE

 

7.01         Except as otherwise

provided in this Article 7, PHS agrees to take responsibility for, but

to consult with, the Licensee in the preparation, filing,

prosecution, and maintenance of any and all patent applications or patents

included in the Licensed Patent Rights and shall furnish copies of relevant

patent–related documents to Licensee.

 

7.02         Upon PHS’s

written request, Licensee shall assume the responsibility for the preparation,

filing, prosecution, and maintenance of any and all patent applications or

patents included in the Licensed Patent Rights and shall on an

ongoing basis promptly furnish copies of all patent-related documents to PHS.  In such event, Licensee shall, subject to

the prior approval of PHS, select registered patent attorneys or

patent agents to provide such services on behalf of Licensee and PHS.  PHS shall provide appropriate powers of

attorney and other documents necessary to undertake such actions to the patent

attorneys or patent agents providing such services.  Licensee and its attorneys or agents shall consult with PHS

in all aspects of the preparation, filing, prosecution and maintenance of

patent applications and patents included within the Licensed Patent Rights and

shall provide PHS sufficient opportunity to comment on any document that Licensee

intends to file or to cause to be filed with the relevant intellectual property

or patent office.

 

7.03         At any time, PHS

may provide Licensee with written notice that PHS wishes to assume control

of the preparation, filing, prosecution, and maintenance of any and all patent

applications or patents included in the Licensed Patent Rights.  If PHS elects to assume such responsibilities,

Licensee

agrees to cooperate fully with PHS, its attorneys, and agents in the

preparation, filing, prosecution, and maintenance of any and all patent

applications or patents included in the Licensed Patent Rights and to provide PHS

with complete copies of any and all documents or other materials that PHS

deems necessary to undertake such responsibilities.  Licensee shall be responsible for all costs associated with

transferring patent prosecution responsibilities to an attorney or agent of PHS’s

choice.

 

8

 

7.04         Each party shall

promptly inform the other as to all matters that come to its attention that may

affect the preparation, filing, prosecution, or maintenance of the Licensed

Patent Rights and permit each other to provide comments and

suggestions with respect to the preparation, filing, prosecution, and

maintenance of Licensed Patent Rights, which comments and suggestions shall

be considered by the other party.

 

8.             RECORD KEEPING

 

8.01         Licensee agrees

to keep accurate and correct records of Licensed Products made, used, sold, or

imported and Licensed Processes practiced under this Agreement appropriate to

determine the amount of royalties due PHS. 

Such records shall be retained for at least five (5) years following a

given reporting period and shall be available during normal business hours, and

upon reasonable written notice for inspection at the expense of PHS,

by an accountant or other designated auditor selected by PHS for the sole purpose of

verifying reports and payments hereunder. 

The accountant or auditor shall only disclose to PHS information relating to

the accuracy of reports and payments made under this Agreement.  If an inspection shows an underreporting or

underpayment in excess of five percent (5%) for any twelve (12) month period,

then Licensee

shall reimburse PHS for the cost of the inspection at the time Licensee

pays the unreported royalties, including any late charges as required by

Paragraph 9.08 of this Agreement. 

All payments required under this Paragraph shall be due within thirty

(30) days of the date PHS provides Licensee notice of the payment due.

 

8.02         Licensee agrees

to have an audit of sales and royalties conducted by an independent auditor at

least every two (2) years if annual sales of the Licensed Product or Licensed

Processes are over two (2) million dollars.  The audit shall address, at a minimum, the

amount of gross sales by or on behalf of Licensee during the audit period, terms of

the license as to percentage or fixed royalty to be remitted to the Government,

the amount of royalty funds owed to the Government under this Agreement, and whether the

royalty amount owed has been paid to the Government and is reflected in the records

of the Licensee.  The audit shall also indicate the PHS

license number, product, and the time period being audited.  A report certified by the auditor shall be

submitted promptly by the auditor directly to PHS on completion.  Licensee shall pay for the entire cost of

the audit.

 

9.             REPORTS ON

PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

 

9.01         Prior to signing this

Agreement,

Licensee

has provided to PHS the Commercial Development Plan at Appendix F,

under which Licensee intends to bring the subject matter of the Licensed

Patent Rights to the point of Practical Application.  This Commercial Development Plan is hereby

incorporated by reference into this Agreement. 

Based on this plan, performance Benchmarks are determined as specified in

Appendix E.

 

9.02         Licensee shall

provide written annual reports on its product development progress or efforts

to commercialize under the Commercial Development Plan for each of the

Licensed

Fields of Use within sixty (60) days after December 31 of each

calendar year.  These progress reports

shall include, but not be limited to: progress on research and development,

status of applications for regulatory approvals, manufacturing, sublicensing, marketing,

importing, and sales during the preceding calendar year, as well as plans for

the present calendar year.  PHS

also encourages these reports to include information on any of Licensee’s

public service activities that relate to the Licensed Patent Rights.  If reported progress differs from that

projected in the Commercial Development Plan and Benchmarks, Licensee

shall explain the reasons for such differences.  In any such annual report, Licensee may propose amendments to the Commercial

Development Plan, acceptance of which by PHS may not be denied

unreasonably.  Licensee agrees to provide

 

9

 

any additional information reasonably required by PHS to evaluate Licensee’s

performance under this Agreement. 

Licensee

may amend the Benchmarks at any time upon written consent by PHS.  PHS shall not unreasonably withhold

approval of any request of Licensee to extend the time periods of this

schedule if such request is supported by a reasonable showing by Licensee

of diligence in its performance under the Commercial Development Plan and toward bringing

the Licensed

Products to the point of Practical Application as defined in 37 CFR

404.3(d).  Licensee shall amend the Commercial

Development Plan and Benchmarks at the request of PHS

to address any Licensed Fields of Use not specifically addressed in the plan

originally submitted.

 

9.03         Licensee shall

report to PHS

the dates for achieving Benchmarks specified in Appendix E and the First

Commercial Sale in each country in the Licensed Territory within

thirty (30) days of such occurrences.

 

9.04         Licensee shall

submit to PHS

within sixty (60) days after each calendar half-year ending June 30 and

December 31 a royalty report setting forth for the preceding half-year period

the amount of the Licensed Products sold or Licensed

Processes practiced by or on behalf of Licensee in each country

within the Licensed Territory, the Net Sales, and the amount of royalty

accordingly due.  With each such royalty

report, Licensee

shall submit payment of the earned royalties due.  If no earned royalties are due to PHS for any reporting period,

the written report shall so state.  The

royalty report shall be certified as correct by an authorized officer of Licensee

and shall include a detailed listing of all deductions made under Paragraph

2.10 to determine Net Sales made under Article 6 to determine

royalties due.

 

9.05         Licensee agrees

to forward semi-annually to PHS a copy of such reports received by Licensee

from its sublicensees during the preceding half-year period as shall be

pertinent to a royalty accounting to PHS by Licensee for activities under the

sublicense.

 

9.06         Royalties due under

Article 6 shall be paid in U.S. dollars. 

For conversion of foreign currency to U.S. dollars, the conversion rate

shall be the New York foreign exchange rate quoted in The Wall Street Journal on

the day that the payment is due.  All

checks and bank drafts shall be drawn on United States banks and shall be

payable, as appropriate, to “NIH/Patent Licensing.”  All such payments shall be sent to the following address:  NIH, P.O. Box 360120, Pittsburgh,

PA 15251-6120.  Any loss of exchange,

value, taxes, or other expenses incurred in the transfer or conversion to U.S.

dollars shall be paid entirely by Licensee. 

The royalty report required by Paragraph 9.04 of this Agreement

shall accompany each such payment, and a copy of such report shall also be

mailed to PHS

at its address for notices indicated on the Signature Page of this Agreement.

 

9.07         Licensee shall

be solely responsible for determining if any tax on royalty income is owed

outside the United States and shall pay any such tax and be responsible for all

filings with appropriate agencies of foreign governments.

 

9.08         Interest and

penalties may be assessed by PHS on any overdue payments in accordance

with the Federal Debt Collection Act.  The

payment of such late charges shall not prevent PHS from exercising any other

rights it may have as a consequence of the lateness of any payment.

 

9.09         All plans and reports

required by this Article 9 and marked “confidential” by Licensee shall, to the extent

permitted by law, be treated by PHS as commercial and financial information

obtained from a person and as privileged and confidential, and any proposed

disclosure of such records by the PHS under the Freedom of Information Act

(FOIA), 5 U.S.C. § 552 shall be subject to the predisclosure notification

requirements of 45 CFR § 5.65(d).

 

10

 

10.           PERFORMANCE

 

10.01       Licensee shall use

its reasonable best efforts to bring the Licensed Products and Licensed Processes to Practical

Application.  “Reasonable best

efforts” for the purposes of this provision shall include commercially

reasonable best efforts to adhere to the Commercial Development Plan at Appendix F

and perform the Benchmarks at Appendix E. 

The efforts of a sublicensee shall be considered the efforts of Licensee.

 

10.02       Upon the First

Commercial Sale, until the expiration of this Agreement, Licensee

shall use its reasonable best efforts to make Licensed Products and Licensed

Processes reasonably accessible to the United States public.

 

11.           INFRINGEMENT AND

PATENT ENFORCEMENT

 

11.01       PHS and Licensee

agree to notify each other promptly of each infringement or possible

infringement of the Licensed Patent Rights, as well as any

facts which may affect the validity, scope, or enforceability of the Licensed

Patent Rights of which either Party becomes aware.

 

11.02       Pursuant to this Agreement

and the provisions of Chapter 29 of title 35, United States Code, Licensee

may: a) bring suit in its own name, at its own expense, and on its own behalf

for infringement of presumably valid claims in the Licensed Patent Rights; b) in

any such suit, enjoin infringement and collect for its use, damages, profits,

and awards of whatever nature recoverable for such infringement; and c) settle

any claim or suit for infringement of the Licensed Patent Rights provided, however,

that PHS

and appropriate Government authorities shall have the first right to take such

actions.  If Licensee desires to initiate

a suit for patent infringement, Licensee shall notify PHS in writing.  If PHS does not notify Licensee of its intent to

pursue legal action within ninety (90) days, Licensee will be free to

initiate suit.  PHS shall have a continuing

right to intervene in such suit at its own expense and may consult with Licensee in such litigation.  Licensee shall take no action to compel the

Government

either to initiate or to join in any such suit for patent infringement.  Licensee may request the Government

to initiate or join in any such suit if necessary to avoid dismissal of the

suit.  Should the Government be made a party to

any such suit, Licensee shall reimburse the Government for any costs,

expenses, or fees which the Government incurs as a result of such

motion or other action, including any and all costs incurred by the Government

in opposing any such motion or other action. 

In all cases, Licensee agrees to keep PHS

reasonably apprised of the status and progress of any litigation.  Before Licensee commences an infringement action, Licensee

shall notify PHS and give careful consideration to the views of PHS

and to any potential effects of the litigation on the public health in deciding

whether to bring suit.

 

11.03       In the event that a

declaratory judgment action alleging invalidity or non-infringement of any of

the Licensed

Patent Rights shall be brought against Licensee or raised by way of

counterclaim or affirmative defense in an infringement suit brought by Licensee

under Paragraph 11.02, pursuant to this Agreement and the provisions of Chapter 29

of Title 35, United States Code or other statutes, Licensee may: a) defend the

suit in its own name, at its own expense, and on its own behalf for presumably

valid claims in the Licensed Patent Rights; b) in any such

suit, ultimately enjoin infringement and collect for its use, damages, profits,

and awards of whatever nature recoverable for such infringement; and

c) settle any claim or suit for declaratory judgment involving the Licensed

Patent Rights-provided, however, that PHS and appropriate Government

authorities shall have the first right to take such actions and shall have a

continuing right to intervene in such suit. 

If PHS

does not notify Licensee of its intent to respond to the legal action within a

reasonable time, Licensee will be free to do so, and PHS and any appropriate

government authorities may only intervene at their own expense and may consult

with Licensee in such legal

action.  Licensee shall take no action

to compel the Government either to initiate or to join in any such

declaratory judgment action.  Licensee

may request the Government to initiate or to join any such suit if necessary

to avoid dismissal of the suit.  Should

the Government

be made a party to

 

11

 

any such suit by motion or any other action of Licensee, Licensee

shall reimburse the Government for any costs, expenses, or fees

which the Government

incurs as a result of such motion or other action.  If Licensee elects not to defend against such declaratory

judgment action, PHS, at its option, may do so at its own expense.  In all cases, Licensee agrees to keep PHS

reasonably apprised of the status and progress of any litigation.  Before Licensee commences an infringement action, Licensee

shall notify PHS and give careful consideration to the views of PHS

and to any potential effects of the litigation on the public health in deciding

whether to bring suit.

 

11.04       In any action under

Paragraphs 11.02 or 11.03, the expenses including costs, fees, attorney fees,

and disbursements, shall be paid by Licensee. 

The value of any recovery made by Licensee through court judgment or

settlement shall be treated as Net Sales and subject to earned royalties.

 

11.05       PHS shall

cooperate fully with Licensee in connection with any action

under Paragraphs 11.02 or 11.03.  PHS

agrees promptly to provide access to all necessary documents and to render

reasonable assistance in response to a request by Licensee.

 

12.           NEGATION OF

WARRANTIES AND INDEMNIFICATION

 

12.01       PHS offers no

warranties other than those specified in Articles 1 and 4.01.

 

12.02       PHS does not

warrant the validity of the Licensed Patent Rights and makes no

representations whatsoever with regard to the scope of the Licensed Patent Rights, or

that the Licensed

Patent Rights may be exploited without infringing other patents or

other intellectual property rights of third parties.

 

12.03       PHS MAKES NO

WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A

PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED

PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

 

12.04       PHS does not

represent that it will commence legal actions against third parties infringing

the Licensed

Patent Rights.

 

12.05       Licensee shall

indemnify and hold PHS, its employees, students, fellows,

agents, and consultants harmless from and against all liability, demands, damages,

expenses, and losses, including but not limited to death, personal injury,

illness, or property damage in connection with or arising out of: a) the use by

or on behalf of Licensee, its sublicensees, directors, employees, or third

parties of any Licensed Patent Rights; or b) the design, manufacture,

distribution, or use of any Licensed Products, Licensed Processes or

materials by Licensee, or other products or processes developed in

connection with or arising out of the Licensed Patent Rights.  Licensee agrees to maintain a liability

insurance program consistent with sound business practice.

 

13.           TERM,

TERMINATION, AND MODIFICATION OF RIGHTS

 

13.01       This Agreement

is effective when signed by the Parties,

except that the noncreditable, nonrefundable licensee issue royalty fee in the

amount of Eighty-Five Thousand Eight Hundred and Fifty-Eight Dollars and

Fifty-Four Cents ($85,858.54  U.S.

Dollars) for outstanding patent prosecution costs owed to PHS under this Agreement will be held in escrow by Licensee until the execution of a release agreement(s) by PSU and UC

that is substantially similar to the Release

Agreement attached hereto as Appendix I, and shall extend to the

expiration of the last to expire of the Licensed Patent Rights unless sooner

terminated as provided in this Article 13.

 

13.02       In the event that Licensee

is in default in the performance of any material obligations under this

 

12

 

Agreement, including but

not limited to the obligations listed in Article 13.05, and if the default has

not been remedied within ninety (90) days after the date on which License receives

notice in writing of such default, PHS may terminate this Agreement by written notice

and pursue outstanding amounts owed through procedures provided by the Federal

Debt Collection Act.

 

13.03       In the event that Licensee

becomes insolvent, files a petition in bankruptcy, has such a petition filed

against it, determines to file a petition in bankruptcy, or receives notice of

a third party’s intention to file an involuntary petition in bankruptcy, Licensee

shall immediately notify PHS in writing.  Furthermore, PHS shall have the right to terminate this Agreement

immediately upon Licensee’s receipt of written notice.

 

13.04       Licensee shall

have a unilateral right to terminate this Agreement and/or any licenses in any

country or territory by giving PHS sixty (60) days written notice to that

effect.

 

13.05       PHS shall

specifically have the right to terminate or modify, at its option, this Agreement,

if PHS

determines that the Licensee: 1) is not using its commercially

reasonable best efforts to execute the Commercial Development Plan submitted with

its request for a license and the Licensee cannot otherwise demonstrate to PHS’ reasonable satisfaction that the Licensee

has taken, or can be expected to take within a reasonable time, effective steps

to achieve Practical Application of the Licensed Products or Licensed

Processes; 2) has not used its commercially reasonable best efforts

to achieve the Benchmarks as may be modified under Paragraph 9.02; 3) has

willfully made a false statement of, or willfully omitted, a material fact in

the license application or in any report required by the license Agreement;

4) has committed a material breach of a covenant or agreement contained in the

license; 5) is not keeping Licensed Products or Licensed Processes reasonably

available to the public after commercial use commences; 6) cannot reasonably

satisfy unmet health and safety needs; or 7) cannot reasonably justify a

failure to comply with the domestic production requirement of Paragraph 5.02

unless waived.  In making this

determination, PHS will take into account the normal course of such

commercial development programs conducted with sound and reasonable business

practices and judgment and the annual reports submitted by Licensee under Paragraph

9.02.  Prior to invoking this right, PHS

shall give written notice to Licensee providing Licensee specific notice of,

and a ninety (90) day opportunity to respond to, PHS’ concerns as to the

previous items 1) to 7).  If Licensee

fails to alleviate PHS’ concerns as to the previous items 1)

to 7) or fails to initiate corrective action to PHS’ reasonable satisfaction,

PHS

may terminate this Agreement.

 

13.06       When the public health

and safety so require, and after written notice to Licensee providing Licensee

a sixty (60) day opportunity to respond, PHS shall have the right to require Licensee

to grant sublicenses to responsible applicants, on reasonable terms, in any Licensed

Fields of Use under the Licensed Patent Rights, unless Licensee

can reasonably demonstrate that the granting of the sublicense would not

materially increase the availability to the public of the subject matter of the

Licensed

Patent Rights.  PHS

will not require the granting of a sublicense unless the responsible applicant

has first negotiated in good faith with Licensee.

 

13.07       PHS reserves the

right according to 35 U.S.C. § 209(f)(4) to terminate or modify this Agreement

if it is determined that such action is necessary to meet requirements for public

use specified by federal regulations issued after the date of the license and

such requirements are not reasonably satisfied by Licensee.

 

13.08       Within thirty (30)

days of receipt of written notice of PHS’s unilateral decision to modify or

terminate this Agreement, Licensee may, consistent with the

provisions of 37 CFR 404.11, appeal the decision by written submission to the

designated PHS official.  The

decision of the designated PHS official shall be the final agency

decision.  Licensee may thereafter

exercise any and all administrative or judicial remedies that may be available.

 

13

 

13.09       Within ninety (90)

days of expiration or termination of this Agreement under this Article 13, a final

report shall be submitted by Licensee. 

Any royalty payments, including those incurred but not yet paid (such as

the full minimum annual royalty), and those related to patent expense, due to PHS

shall become immediately due and payable upon termination or expiration.  If terminated under this Article 13,

sublicensees may elect to convert their sublicenses to direct licenses with PHS

pursuant to Paragraph 4.03.  Unless

otherwise specifically provided for under this Agreement, upon termination

or expiration of this Agreement, Licensee shall return all Licensed

Products or other materials included within the Licensed Patent Rights to PHS

or provide PHS with certification of the destruction thereof.

 

14.           GENERAL

PROVISIONS

 

14.01       Neither Party may

waive or release any of its rights or interests in this Agreement except in

writing.  The failure of the Government

to assert a right hereunder or to insist upon compliance with any term or

condition of this Agreement shall not constitute a waiver of

that right by the Government or excuse a similar subsequent

failure to perform any such term or condition by Licensee.

 

14.02       This Agreement

constitutes the entire agreement between the Parties relating to the subject

matter of the Licensed Patent Rights, and all prior negotiations,

representations, agreements, and understandings are merged into, extinguished

by, and completely expressed by this Agreement. 

It is the mutual desire of the Licensee and the PHS that the terms of this Agreement,

shall become effective according to the conditions set forth in Section 13, and

once executed,  shall supersede, and thereby terminate the terms and

conditions of the following listed agreements, but not the Sublicense Agreement,  including:

 

	

  I.

  	

  The exclusive license

  agreement between the Licensee and PSU, executed February 6,

  1998;

  
	

  II.

  	

  The Interinstitutional

  agreement between PHS and PSU (L-094-91/0), executed

  on May 20, 1997, but not its replacement agreements between PHS

  and PSU

  executed January 29, 2002; and L-086-02/0 between PHS and UC executed

  January 30, 2002;

  
	

  III.

  	

  The agreement between PSU and  the

  UC,

  executed on May 16, 1997.

  

 

PHS acknowledges

the Release Agreement listed as

Appendix I and its relevant Exhibits, of this Agreement, entered into  by

and amongthe Licensee, the Sublicensee, PSU, UC and PHS.

 

14.03       The provisions of this

Agreement

are severable, and in the event that any provision of this Agreement shall be determined

to be invalid or unenforceable under any controlling body of law, such

determination shall not in any way affect the validity or enforceability of the

remaining provisions of this Agreement.

 

14.04       If either Party

desires a modification to this Agreement, the Parties shall, upon

reasonable notice of the proposed modification by the Party desiring the

change, confer in good faith to determine the desirability of such

modification.  No modification will be

effective until a written amendment is signed by the signatories to this Agreement

or their designees.

 

14.05       The construction,

validity, performance, and effect of this Agreement shall be governed by Federal law

as applied by the Federal courts in the District of Columbia.

 

14.06       All notices required

or permitted by this Agreement shall be given by prepaid, first

class, registered or certified mail or by an express/overnight delivery service

provided by a commercial carrier, properly addressed to the other Party at the

address designated on the following Signature

 

14

 

Page, or to such other address as may be designated in writing by such

other Party.  Notices shall be

considered timely if such notices are received on or before the established

deadline date or sent on or before the deadline date as verifiable by U.S.

Postal Service postmark or dated receipt from a commercial carrier.  Parties should request a legibly dated U.S.

Postal Service postmark or obtain a dated receipt from a commercial carrier or

the U.S. Postal Service.  Private

metered postmarks shall not be acceptable as proof of timely mailing.

 

14.07       This Agreement

shall not be assigned by Licensee except: a) with the prior written

consent of PHS, such consent not to be withheld unreasonably; or b) as

part of a sale or transfer of substantially the entire business of Licensee

relating to operations which concern this Agreement. 

Licensee

shall notify PHS within ten (10) days of any assignment of this Agreement

by Licensee,

and Licensee

shall pay PHS,

as an additional royalty, twenty thousand U.S. dollars ($20,000 U.S.) for an

assignment of this Agreement within thirty (30) days of such

assignment.

 

14.08       Licensee agrees in

its use of any PHS-supplied materials to comply with all applicable statutes,

regulations, and guidelines, including PHS and DHHS regulations and

guidelines.  Licensee agrees not to use

the materials for research involving human subjects or clinical trials in the

United States without complying with 21 CFR Part 50 and 45 CFR Part 46.  Licensee agrees not to use the materials

for research involving human subjects or clinical trials outside of the United

States without notifying PHS, in writing, of such research or trials

and complying with the applicable regulations of the appropriate national

control authorities.  Written

notification to PHS of research involving human subjects or clinical trials

outside of the United States shall be given no later than sixty (60) days prior

to commencement of such research or trials.

 

14.09       Licensee

acknowledges that it is subject to and agrees to abide by the United States

laws and regulations (including the Export Administration Act of 1979 and Arms

Export Control Act) controlling the export of technical data, computer

software, laboratory prototypes, biological material, and other

commodities.  The transfer of such items

may require a license from the cognizant Agency of the U.S. Government

or written assurances by Licensee that it shall not export such

items to certain foreign countries without prior approval of such agency.  PHS neither represents that a license is or

is not required or that, if required, it shall be issued.

 

14.10       Licensee agrees to

mark the Licensed

Products or their packaging sold in the United States with all

applicable U.S. patent numbers and similarly to indicate “Patent Pending”

status.  All Licensed Products

manufactured in, shipped to, or sold in other countries shall be marked in such

a manner as to preserve PHS patent rights in such countries.

 

14.11       By entering into this Agreement,

PHS

does not directly or indirectly endorse any product or service provided, or to

be provided, by Licensee whether directly or indirectly related to this Agreement.  Licensee shall not state or imply that this

Agreement

is an endorsement by the Government, PHS, any other Government

organizational unit, or any Government employee.  Additionally, Licensee shall not use the

names of NIH, CDC, PHS, or DHHS or the Government

or their employees in any advertising, promotional, or sales literature without

the prior written consent of PHS.

 

14.12       The Parties agree to

attempt to settle amicably any controversy or claim arising under this Agreement

or a breach of this Agreement, except for appeals of modifications

or termination decisions provided for in Article 13.  Licensee agrees first to appeal any such unsettled claims or

controversies to the designated PHS official, or designee, whose decision

shall be considered the final agency decision. 

Thereafter, Licensee may exercise any administrative or

judicial remedies that may be available.

 

14.13       Nothing relating to

the grant of a license, nor the grant itself, shall be construed to confer upon

any

 

15

 

person any immunity from or defenses under the antitrust laws or from a

charge of patent misuse, and the acquisition and use of rights pursuant to 37

CFR Part 404 shall not be immunized from the operation of state or Federal law

by reason of the source of the grant.

 

14.14       Paragraphs 4.03, 8.01,

9.05-9.07, 12.01–12.05, 13.08, 13.09, and 14.12 of this Agreement shall

survive termination of this Agreement.

 

14.15       Procept agrees that

subsequent to market approval by the Food and Drug Administration (FDA),

to make reasonable quantities of Licensed Product(s) or materials produced

through the use of Licensed Process(es) available on a

compassionate use basis, to patients, either through the patient’s physician(s)

and/or the medical center treating the patient; and Procept further agrees,

after their First Commercial Sale, and to develop written educational

materials (e.g., brochures, advertisements, etc.) directed to patients and

physicians detailing the Licensed Product(s) and/or medical aspects

of using 06-Benzylguanine and/or its derivatives as a therapeutic modality for

the treatment of human cancers.

 

SIGNATURES

BEGIN ON NEXT PAGE

 

16

 

PHS PATENT

LICENSE AGREEMENT—EXCLUSIVE

 

SIGNATURE

PAGE

 

For PHS:

 

	

  /s/ Jack Spiegel

  	

   

  	

  February 28, 2002

  	

   

  
	

  Jack Spiegel, Ph.D.

  	

  Date

  
	

  Director, Division of

  Technology Development and Transfer

  	

   

  
	

  Office of Technology

  Transfer

  	

   

  
	

  National Institutes of

  Health

  	

   

  
	

   

  	

   

  
	

  Mailing Address for

  Notices:

  	

   

  
	

   

  	

   

  
	

  Office of Technology

  Transfer

  	

   

  
	

  National Institutes of

  Health

  	

   

  
	

  6011 Executive Boulevard,

  Suite 325

  	

   

  
	

  Rockville, Maryland  20852-3804  U.S.A.

  	

   

  

 

For Licensee (Upon, information

and belief, the undersigned expressly certifies or affirms that the contents of

any statements of Licensee made or referred to in this

document are truthful and accurate.):

 

by: Procept, Inc.

 

	

  /s/ Salvatore A. Bucci

  	

   

  	

  February 28, 2002

  	

   

  
	

  Salvatore A. Bucci

  	

  Date

  
	

  President and Chief

  Executive Officer

  	

   

  
	

   

  	

   

  
	

  Official and Mailing

  Address for Notices:

  	

   

  
	

   

  	

   

  
	

  369 Lexington Avenue, 10th

  Floor

  	

   

  
	

  New York, New York 10017

  	

   

  

 

Any false or misleading

statements made, presented, or submitted to the Government, including any

relevant omissions, under this Agreement and during the course of

negotiation of this Agreement are subject to all applicable

civil and criminal statutes including Federal statutes 31 U.S.C. §§3801–3812

(civil liability) and 18 U.S.C. § 1001 (criminal liability including

fine(s) and/or imprisonment).

 

17

 

APPENDIX

A—Patent(s) or Patent Application(s)

 

Patent(s) or Patent Application(s):

 

U.S. Application Serial No.

07/492,468 filed 3/13/90; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase Levels” Issued 2/25/92 U.S. Pat.

5,091,430

 

U.S. Application Serial No.

07/616,913 filed 11/21/90; “06-Benzylated Guanine, Guanosine and

2’-Deoxyguanosine Compounds Possessing 06-Alkylguanine-DNA Alkyltransferase

Depleting Activity” CIP of ‘468 issued 10/4/94 U.S. Pat. 5,352,669

 

U.S. Application Serial No.

07/805,634 filed 12/21/91; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase Levels” DIV of ‘468, issued

10/25/94 U.S. Pat. 5,358,952

 

U.S. Application Serial No.

07/875,438 filed 4/29/92; “06-Substituted Guanine Compounds and Methods for

Depleting Derivatives 06 Alkylguanine-DNA Alkyltransferase Levels” CIP of ‘634

Abandoned 8/19/94

 

U.S. Application Serial No.

08/255,190 filed 6/7/94; “06-Substituted Guanine Compounds And Methods For

Depleting 06-Alkylguanine-DNA Alkyltransferase” CIP of ‘438, and ‘913 issued

11/25/97 U.S. Pat. 5691,307.

 

U.S. Application Serial No.

08/283,953 filed 8/1/94; “Substituted 06-Benzylguanines And 6(4) –

Benzyloxpyrimidines” issued 6/11/96 U.S. Pat. 5,525,606, and PCT/US95/09702

filed 7/31/95 (based on parent application 08/283.953.  National Stage filed in Europe (EPO Application

No. 9592837.7.  Validated in all

countries, except Finland, under the European Patent Convention), Canada

(Canadian Application No. 2,195,856), Japan (Japanese Application No.

506694/1996), Australia (Australian Serial No. 32079/95, Issued Patent No.

702711) and U.S. Application No. 08/849,223, Issued 9/28/99 as U.S. Patent No.

5,958,932).  Divisional of EP ‘837.7,

Application No. 01108585.9 filed 4/5/01.

 

U.S. Application

Serial No. 08/661,923 filed 6/11/96, issued 5/19/98 as 5,753,668;

“Substituted  Benzyloxpyrimidines and

Their Inactivation of 06-Alkylguanine-DNA Alkyltransferase” DIV of parent

application 08/283.953.

 

U.S. Application

Serial No. 08/927, 846 filed 9/11/97. Issued 6/29/99 as 5,916,894; “Substituted

O6-Benzylguanines And 6(4) – Benzyloxpyrimidines” DIV of parent application

08/283,953.

 

U.S. Application

Serial No. 08/318,238 filed 5/25/99. Issued 1/9/01 as 6,172,070; “Substituted

O6-Benzylguanines And 6(4) – Benzyloxpyrimidines” DIV of parent application

08/283.953.

 

U.S. Application

Serial No. 08/849,223 filed 7/31/95. Issued 

9/28/99 as 5,958,932; “Substituted O6-Benzylguanines And 6(4) –

Benzyloxpyrimidines” CIP of parent application 08/283,953.

 

U.S.

Application  No. 09/590,187, filed

6/9/00, U.S Patent 6,303,604, issued 10/16/01U.S. Application Serial No.

09/333,047 filed 6/15/99 (Allowed) “Pharmaceutical Composition Comprising

2,4-Diamino-6-Benzyloxy-Triazine And Inactivation of

O6-Alkylguanine-DNA-Alkyltransferase.”

 

U.S. Application

No. 09/333,047, filed 6/15/99, U.S Patent 6,333,331, issued 12/25/01

“Substituted 06-Benzylguanines.”

 

U.S. Application

No. 09/928,410; filed 8/14/01 “Substituted 06 Benzyl-8-Aza-Guanines” Pending.

 

18

 

 

19

 

                

 

20

 

APPENDIX B—Licensed Fields of Use and Territory

 

Licensed Fields of Use: Development and

administration of  06-Benzylated Guanine and Derivatives thereof to enhance

chemotherapy treatments of tumor cells.

 

Licensed Territory: Worldwide

 

21

 

APPENDIX

C—Royalties

 

Royalties:

 

Licensee agrees to pay

to PHS

a noncreditable, nonrefundable license issue royalty in the amount of:

 

Eighty Five Thousand Eight

Hundred and Fifty Eight Dollars and Fifty-Four Cents ($85,858.54 U.S. Dollars)

for outstanding patent prosecution costs.

 

Licensee agrees to pay

to PHS

a nonrefundable Minimum Annual Royalty, due and payable on January 1 of each

calendar year, in the amount of:

 

•      Seventy Five Thousand

Dollars ($75,000 U.S. Dollars) per year.

 

•      Prior to the first

commercial sale for a specific calendar year in which Licensee makes payments to PHS under the CRADA (NCI #0303, effective

August 7, 1998) that are greater than or equal to the Minimum Annual Royalty,

said Minimum Annual Royalty due and payable on January 1 of the subsequent

calendar year shall be waived; and

 

•      The Minimum Annual Royalty

shall also be fully creditable first against any earned royalties due for sales

made in that year; and

 

•      Any remaining Minimum Annual

Royalty due in that year, may then be creditable against Benchmark payments in that

same year.

 

Licensee agrees to pay PHS

earned royalties on Net Sales by Licensee or any of its Affiliates

as follows:

 

•      Six percent (6%) of Net Sales of

Licensed

Products or Licensed Processes, excluding Net Sales from

or by  the Sublicensee and/or  any  sublicensee(s), and excluding Net Sales for research applications.

 

Licensee agrees to pay PHS

benchmark royalties as follows:

 

•      Seventy Five Thousand

Dollars ($75,000 U.S. Dollars) upon approval of the first Licensee or sublicensee-sponsored

Investigational New Drug (IND) application for any Licensed Products with the  United

States Food and Drug Administration (FDA) or its foreign equivalent;

 

•      One Hundred and Fifty

Thousand Dollars ($150,000 U.S. Dollars) upon the date of initiation of the

first Licensee or

sublicensee-sponsored Phase III Clinical Trial in the United States for a Licensed

Product(s);

 

•      Two Hundred and Fifty

Thousand Dollars ($250,000 U.S. Dollars) upon filing of the first Licensee or sublicensee-sponsored New Drug

Application (NDA) for a Licensed Product(s) with the  FDA

or its foreign equivalent;

 

•      One Million Five Hundred

Thousand ($1,5000,00 U.S. Dollars) upon the first approval of a Licensee or sublicensee-sponsored NDA for a Licensed

Product/s by the  FDA or its equivalent in any Foreign Major

Market Country, i.e., The United Kingdom, France, Germany, Italy, or Japan.

 

22

 

Licensee agrees to pay PHS

sublicensing royalties as follows:

 

•      The greater of Twenty-Two and One-Half

Percent (22.5%) of the royalties received by Licensee or any of its Affiliates

from Net Sales by any sublicensee,

including Sublicensee,

of Licensed

Products or Licensed Processes or One and Four Fifths

Percent (1.8%) of Net Sales by any sublicensee(s).

 

•      Fifteen Percent (15%) of all sublicensing

fees or other lump sum payments or other compensation, royalties excluded,

received by the Licensee from its sublicensees, including Sublicensee, for the use,

lease or sale of Licensed Products and/or Licensed Processes.

 

Notwithstanding anything

else in this Appendix C, no amount shall be due and payable to PHS

on account of:  (a) payments made to Licensee for

future bona fide research and development, and (b) purchases of debt or equity

securities of Licensee.

 

23

 

APPENDIX

D—Modifications

 

PHS and Licensee agree to the

following modifications to the Articles and Paragraphs of this Agreement:

NONE

 

24

 

APPENDIX

E—Benchmarks and Performance

 

Licensee agrees to the

following Benchmarks

for its performance under this Agreement and, within thirty (30) days of

achieving a Benchmark, shall notify PHS that the Benchmark has been achieved.

 

Subject to the

foregoing, the company has established the following estimated timeline:

 

	

  Activity

  	

   

  	

  Timeframe

  
	

  First filing of a Licensee

  or sublicensee-sponsored Investigational New Drug Application with The United

  States Food and Drug Administration (FDA) or foreign equivalent in a Major

  Market Country

  	

   

  	

  2Q2002

  

  NB:  Extension into 3Q2002 is

  allowable, if filing date is in compliance with the CRADA.

  
	

  Completion of enrollment of the first Licensee or sublicensee-sponsored Phase II or III clinical

  trial with the FDA or its foreign equivalent in a Major Market Country

  	

   

  	

  2Q2004

  
	

  First filing of a Product License Application or foreign equivalent

  in a Major Market Country

  	

   

  	

  3Q2007

  
	

  First receipt of Approval Letter by the FDA or foreign equivalent in

  a Major Market Country

  	

   

  	

  1Q2008

  

 

The

Licensee

agrees to use their commercially reasonable best efforts to attain the

aforementioned milestones for its performance under this agreement and, within

sixty (60) days of achieving a milestone, shall notify the PHS that such milestone has been achieved.

 

25

 

APPENDIX

F—Commercial Development Plan

 

PLAN

FOR THE DEVELOPMENT OF O6-BENZYLGUANINE AND DERIVATIVES THEREOF

 

The following will

serve to outline AOI Pharmaceuticals, Inc.’s (the “Sublicensee”) plans for

development of O6-Benzylguanine (“BG”) as an intravenous chemotherapeutic

potentiating agent used in combination with alkylating agents such as BCNU or

Temozolomide (the “Agent” or “Agents”) for the treatment of cancer.

 

The Sublicensee

intends to establish a clinical development plan in order to obtain regulatory

approval for BG from the United Stated Food and Drug Administration as well as

from equivalent foreign regulatory authorities on a worldwide basis.  It is anticipated that with the information

currently available from the completed pre-clinical and clinical studies

conducted by the National Institutes of Health, the Cancer Therapy Evaluation

Program (“CTEP”), the National Cancer Institute (NCI) and various universities,

that the Company will be able to commence Phase II clinical trials.

 

The Sublicensee

plans to work with its medical advisors and NCI Investigators to explore Phase

II or Phase III clinical trials for BG in combination with Agents for the

treatment of a variety of cancer indications, such as melanoma, glioma, or

colorectal cancer.

 

Phase II studies

may involve therapy with a combination of BG and an Agent in previously

untreated cancer patients or in patients who have failed therapy with an

Agent.  Phase III would compare a BG

containing combination to a standard therapy without BG for a specified

disease.

 

Additionally, the

Sublicensee intends to do a comprehensive evaluation of all present and future

BG derivatives to evaluate their potential use in the treatment of cancer.  Development will be supported through

Sponsor Research Agreements or other means, and will begin as soon as

reasonably possible.  Once an agreed

development strategy is reached between the inventors and/or their designated

representative(s), the Sublicensee will develop an aggressive clinical trial

for those selected, related derivatives that show promise.

 

The Sublicensee

would caution that even the best intentioned development plans are subject to

many forces outside the Sublicensee’s control, including, without limitation,

access to current data from NCI sponsored trials and regulatory filings, any

additional pre-clinical or clinical studies required by the FDA, and the

completion of arrangements for commercial quality drug manufacturing.

 

26

 

APPENDIX G

 

SUBLICENSE AGREEMENT

 

This Sublicense Agreement

(“Agreement”), effective as of October 13, 2000 (the “Effective Date”) is

entered into by and between AOI Pharmaceuticals Inc., a subsidiary of

Access Oncology, Inc., a corporation having an office at 730 Fifth Avenue,

Ninth Floor, New York, NY 10019 (“AOI”) and Procept, Inc. (formerly

Pacific Pharmaceuticals, Inc.), a Delaware corporation having an office at 369

Lexington Avenue, Tenth Floor, New York, New York 10017 (“Procept”).

 

WHEREAS, Procept is party to

a License Agreement with The Penn State Research Foundation (“Penn”) dated

March      , 1998 (the “Penn License

Agreement”), a copy  of which is

attached hereto as Exhibit A, under which Procept is granted an

exclusive worldwide license to certain Patent Rights (as defined therein) and

Know-how (as defined therein) which are co-owned by Penn, the National

Institutes of Health, Case Western Reserve University and the University of

Chicago;

 

WHEREAS, Procept desires to

sublicense to AOI, and AOI desires to obtain a sublicense from Procept, of such

Patent Rights and Know-how in order to commercialize O6-Benzyl

guanine (“O6BG”) and related technologies for the treatment of cancer.

 

NOW, THEREFORE, in

consideration of the foregoing premises and the mutual covenants herein

contained, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties hereby agree as

follows:

 

1.             Definitions.

 

For purposes of this

Agreement, the following terms shall have the following meanings.  Any capitalized term used in this Agreement

that is not defined herein shall have the meaning set forth in the Penn License

Agreement.

 

1.1   “Affiliate”

means any corporation or other entity which controls, is controlled by, or is

under common control with a party to this Agreement.  A corporation or other entity shall be regarded as in control of

another corporation or entity if it directly or indirectly owns or controls

more than fifty percent (50%) of the voting stock or other ownership interest

of the other corporation or entity, or if it possesses, directly or indirectly,

the power to direct or cause the direction of the management and policies of

the corporation or other entity or the power to elect or appoint fifty percent

(50%) or more of the members of the governing body of the corporation or other

entity.

 

1.2   “CRADA”

means that certain Cooperative Research and Development Agreement between the

Public Health Service (“PHS”) and Procept dated August 7, 1998, a copy of which

is attached hereto as Exhibit B.

 

1.3   “IND”

means an Investigational New Drug application for a Licensed Product submitted

to the FDA or a comparable application submitted to another Regulatory Agency.

 

27

 

1.4   “NDA”

means a New Drug Application for a Licensed Product submitted to the FDA or a

comparable application submitted to another Regulatory Agency.

 

1.5   “Net

Sales” means the total gross receipts for sales of Licensed Products or

practice of Licensed Processes by or on behalf of AOI or any of its Affiliates

or sub-sublicensees to end-user customers, and from leasing, renting or

otherwise making Licensed Products available to others without sale or other

dispositions, whether invoiced or not, less only the sum of the following: (a)

usual trade discounts to customers; (b) sales, tariff duties and/or use taxes

directly imposed and with reference to particular sales; (c) outbound

transportation prepaid or allowed and transportation insurance; (d) amounts

allowed or credited on returns; (e) bad debt deductions actually written off

during the accounting period; (f) sales commissions; and (g) packaging and

freight charges.

 

1.6   “Phase

III Clinical Trial” means any investigational use of a Licensed Product in

humans that triggers a payment by Procept to Penn under Section 4.8.3 of the

Penn License Agreement.

 

1.7   “Regulatory

Agency” means the United States Food and Drug Administration (“FDA”) or any

successor agency with responsibilities comparable to those of the FDA or any

comparable agency in a country outside the United States.

 

1.8   “Sublicense

Revenue” means any payments that AOI receives from a sub-sublicensee in

consideration of the sub-sublicense of the rights granted AOI under Section 2.1

including, without limitation, milestone payments, sublicensing fees or other

lump sum payments, but excluding (a) royalties on Net Sales by the

sub-sublicensee, (b) payments made in consideration for the issuance of equity

or debt securities of AOI at fair market value, and (c) payments specifically

committed to the development of Licensed Products or Licensed Services.

 

2.             Sublicense

Grant.

 

2.1   Sublicense

to AOI.  Subject to the terms of the

Penn License Agreement and this Agreement, Procept hereby grants to AOI and its

Affiliates a sole and exclusive worldwide sublicense in all fields of use to

practice under the Patent Rights and to utilize the Know-how, and to make, have

made, use, lease and/or sell the Licensed Products and to practice the Licensed

Processes, to the full end of the term for which the Patent Rights are granted,

unless sooner terminated as hereinafter provided.

 

2.2   Right to

Grant Sub-sublicenses.  Procept

grants AOI the right to grant sub-sublicenses to third parties under the

sublicense granted hereunder, provided that AOI shall remain bound by the

provisions of Article 3.

 

28

 

3.             Payments.

 

3.1   Royalty.  In consideration of the rights granted AOI

under this Agreement, AOI shall pay to Procept a royalty of eight percent (8%)

of Net Sales of Licensed Products or Licensed Processes by AOI or its

Affiliates or sub-sublicensees.

 

(a)   On sales of

Licensed Products by AOI to Affiliates or related parties which are end users

of such Licensed Products the value of Net Sales attributed under this Article

3 shall be that which would have been received in an arms-length transaction,

based on sales of like quantity and quality products at or about the time of

such transaction.

 

(b)   No multiple

royalties shall be payable because the use, lease or sale of any Licensed

Product or Licensed Process is, or shall be, covered by more than one valid and

unexpired claim contained in the Patent Rights.

 

(c)   In the

event that a Licensed Product is sold in the form of a combination product

containing one or more products or technologies which are themselves not a

Licensed Product, the Net Sales for such combination product shall be

calculated by multiplying the sales price of such combination product by the

fraction A/(A+B) where A is the invoice price of the Licensed Product or the

fair market value of the Licensed Product if sold to an Affiliate and B is the

total invoice price of the other products or technologies or the fair market

value of the other products or technologies if purchased from an

Affiliate.  In the case of a

combination  product which includes one

or more Licensed Products, the Net Sales for such combination product upon

which the royalty due to Procept is based shall not be less than the normal

aggregate Net Sales for such Licensed Product.

 

(d)   To the

extent that AOI or an Affiliate is required, by order or judgement of any court

to obtain any license from a third party in order to practice the rights

purported to be granted AOI by Procept hereunder under issued patents in such

jurisdiction, then up to fifty percent (50%) of the royalties payable under

such license in such jurisdiction may be deducted from royalties otherwise

payable to Procept hereunder, provided that in no event shall the aggregate

royalties payable to Procept in any semi-annual period in such jurisdiction be

reduced by more than fifty percent (50%) as a result of any deduction, provided

further that any excess deduction remaining as a result of such limitation may

be carried forward to subsequent periods.

 

3.2   Sublicense

Revenue.  AOI shall pay Procept a

total of thirty-five percent (35%) of all Sublicense Revenue received by AOI

from any sub-sublicensee listed on Exhibit C or any successor

thereto.  Such payments shall be due and

payable within thirty (30) days after AOI receives the relevant payment from

the sub-sublicensee.

 

29

 

3.3   Milestone

Payments.

 

(a)   Payments

in Cash.  AOI shall pay Procept the

following payments upon the achievement by AOI, an Affiliate or sub-sublicensee

of each development milestone for each Licensed Product or Licensed Process:

 

	

  Milestone

  	

   

  	

  Payment

  
	

  1.  Approval of first IND with a Regulatory

  Agency

  	

   

  	

  US $75,000

  
	

  2.  Initiation of the first Phase III Clinical

  Trial for any disease indication in the United States

  	

   

  	

  US $150,000

  
	

  3.  Filing of first NDA with a Regulatory

  Agency

  	

   

  	

  US $250,000

  
	

  4.  Final approval of an NDA with a Regulatory

  Agency in the United States, France, Germany, Italy, the United Kingdom or

  Japan

  	

   

  	

  US $1,500,000

  

 

All

payments to be made by AOI to Procept pursuant to this Section 3.3(a) shall be

made within thirty (30) days after the achievement of the relevant

milestone.  Eighty-five percent (85%) of

each milestone payment made by AOI to Procept under this Section 3.3(a) shall

be credited against or deducted from future royalty, Sublicense Revenue or

minimum annual royalty payments otherwise owed or which may in the future be

owing by AOI to Procept under Section 3.1, 3.2 or 3.4(b).

 

(b)   Payments

in Equity.

 

(i)            Procept

has the right, but not the obligation, to fulfill its payment obligations to

Penn for the milestones set forth in Sections 4.8.2 and 4.8.5 of the Penn

License Agreement through the issuance of common stock of Procept.  AOI has the right, but not the obligation,

to fulfill a portion of its payment obligation to Procept for each milestone

pursuant to Section 3.3(a) above through the issuance of a number of shares of

common stock of AOI (the “Common Stock”) with a value equal to the cash value

of the such payment; provided, however, that in no event shall

the cash portion of any such payments be less than the lesser of (a)

twenty-five percent (25%) of the amount due and owing and (b) fifty thousand

dollars ($50,000), and; provided further that, AOI shall not have

the right to fulfill a portion of its payment obligation to Procept for any

such milestone payment pursuant to Section 3.3(a) above through the issuance of

Common Stock of AOI if Procept, in order to provide payment to Penn for such

milestone under the Penn

 

30

 

License

Agreement through the issuance of common stock of Procept, would be required to

issue to Penn common stock of Procept constituting twenty percent (20%) or more

of the common stock outstanding prior to such issuance to Penn.

 

(ii)           For

purposes of calculating the cash value of the Common Stock under this Section

3.3(b), the current market price of the Common Stock shall be deemed to be the

average closing price of the Common Stock on the ten (10) consecutive trading

days prior to the date of achievement of any milestone under Section 3.3(a) on

the principal national securities exchange on which the Common Stock is

admitted to trading or listed, or if not listed or admitted to trading on any

such exchange, the representative average closing bid price of the Common Stock

as reported by the National Association of Securities Dealers, Inc. Automated

Quotations System (“NASDAQ”), or other similar organization if NASDAQ is no

longer reporting such information, or, if the Common Stock is not reported on

NASDAQ, the average per share bid price for the Common Stock in the

over-the-counter market as reported by the National Quotation Bureau or similar

organization, or if not so available, the fair market price of the Common Stock

as determined by an independent third party accounting firm selected by AOI.

 

(iii)          All

certificates representing the Common Stock and, until such time as the Common

Stock is sold in an offering which is registered under the Securities Act or

AOI shall have received an opinion of counsel (including counsel for any

recipient of stock hereunder) that such registration is not required in

connection with a resale (or subsequent resale) of the Common Stock under all

applicable laws, regulations and rules, all certificates issued in transfer

thereof or substitution therefor, shall, where applicable, have endorsed

thereon the following (or substantially equivalent) legends:

 

(1)   THE

SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT

AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR

ANY STATE SECURITIES LAW.  SUCH

SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION

OR UNLESS AOI RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR TRANSFER

IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY

 

31

 

REQUIREMENTS

OF SAID ACT UNDER ALL APPLICABLE LAWS, RULES AND REGULATIONS OR IS OTHERWISE IN

COMPLIANCE WITH ALL APPLICABLE LAWS AND REGULATIONS.

 

(2)   Any legend

required to be placed thereon by any applicable state securities law.

 

(3)   A legend to

the effect that such shares of stock are subject to a Sublicense Agreement that

limits the transferability of the shares under certain conditions and applies

to any transferee of such shares.

 

(iv)          With

a view to making available to Procept the benefits of certain rules and

regulations of the SEC which at any time permit the sale of the Common Stock to

the public without registration, AOI shall use its reasonable efforts to:

 

(1)   make and

keep public information available, as those terms are understood and defined in

Rule 144 under the Act, at all times;

 

(2)   file with

the SEC in a timely manner all reports and other documents required of AOI

under the Securities Exchange Act of 1934 (the “Exchange Act”); and

 

(3)   so long as

Procept owns any unregistered Registrable Securities, furnish to Procept upon

any reasonable request a written statement by AOI as to its compliance with

Rule 144 under the Act, and of the Exchange Act, a copy of the most recent

annual or quarterly report of AOI, and such other reports and documents of AOI

as Procept may reasonably request in availing itself of any rule or regulation

of the Commission allowing Procept to sell any such securities without

registration.

 

(v)           If

the Common Stock is or becomes tradable pursuant to Rule 144 or a similar

exemption from registration then Procept shall have no right to the

registration rights described in Section 3.3(b)(vi).

 

(vi)          AOI

agrees that if, at any time, and from time to time, during the period

commencing two (2) years after the Effective Date hereof, or one (1) year after

AOI’s next public offering of Common Stock registered under the Securities Act

of 1933 (the “Act), whichever is later, and ending on the date which is five

(5) years from the Effective Date hereof, the Board of Directors of AOI shall

authorize the filing of a registration statement under the Act (other

 

32

 

than

the initial public offering of AOI’s Common Stock, or other than a registration

statement on Form S-8, Form S-4 or any other form which does not include

substantially the same information as would be required in a form for the

general registration of securities) in connection with the proposed offer of

any of its securities by it or any of its stockholders, AOI will, subject to

the limitations set forth in Section 3.3(b)(vii) below, (A)  promptly notify Procept that such

registration statement will be filed and that the Common Stock then held by

Procept will be included in such registration statement at Procept’s request,

(B) cause such registration statement to cover all of such Common Stock issued

to Procept requesting inclusion, (C) use its reasonable best efforts to cause

such registration statement to become effective as soon as practicable and (D)

take all other action necessary under any Federal or state law or regulation of

any governmental authority to permit all such Common Stock which has been

issued to Procept to be sold or otherwise disposed of, and will maintain such

compliance with each such Federal and state law and regulation of any

governmental authority for the period necessary for Procept to effect the

proposed sale or other disposition.

 

Procept

shall only twice have the right to request inclusion of any of their shares of

Common Stock in a registration statement as described above.

 

(vii)         Notwithstanding

Section 3.3(b)(vi) above, AOI may at any time abandon or delay any registration

commenced by AOI.  In the event of such

an abandonment by AOI, AOI shall not be required to continue registration of

shares requested by Procept for inclusion and Procept shall retain the right to

request inclusion of shares pursuant to Section 3.3(b)(vi).

 

(viii)        The

Common Stock will be acquired by Procept and/or its designees for investment

purposes only, for an indefinite period of time, for their own account, not as

a nominee or agent for any other Entity and not with a view to the sale or

distribution of all or any part thereof, and Procept has no present intention

of selling, granting any participation in, or otherwise distributing, any or

all of the Common Stock.

 

Procept

shall provide to AOI a list of names of individuals and/or entities at least

thirty (30) days prior to any sale, grant of participation in or other

distribution of any Common Stock by Procept. 

Any sale, grant of participation in or other distribution of any Common

Stock by Procept shall comply in all respects with the Securities Act and the

Exchange Act.

 

(ix)           The

parties agree to execute such further instruments and to take such further

action as may reasonably be necessary to carry out the

 

33

 

 intent of this Section 3.3(b), and Procept

specifically agrees to cooperate affirmatively with AOI, to the extent reasonably

requested by AOI, to enforce the rights of AOI and its successors and

assignees.

 

(x)            Procept

agrees that, in connection with each underwritten public offering registered

under the Act of shares of Common Stock or other equity securities of AOI by or

on behalf of AOI, it shall not sell, transfer or offer to sell or transfer, any

equity securities of AOI for such period (the “Lock-up Period”) as the managing

underwriter of such offering determines is necessary to effect the underwritten

public offering; provided, however, that Procept shall not be subject to a

Lock-up Period greater than that required of AOI’s officers and directors.  Procept further agrees that it will sign an

agreement as requested by the managing underwriter of such offering to effect the

foregoing.

 

(xi)           With

respect to any registration statement pursuant to which Procept participates as

a selling shareholder, to the extent permitted by law, AOI shall indemnify

Procept and each person controlling Procept within the meaning of Section 15 of

the Act, with respect to which any registration, qualification or compliance

has been effected, against all claims, losses, damages and liabilities (or

action in respect thereof), including any of the foregoing incurred in

settlement of any litigation, commenced or threatened, arising out of or based

on any untrue statement (or alleged untrue statement) of a material fact

contained in any registration statement, prospectus or offering circular, or

any amendment of supplement thereof, incident to any such registration,

qualification or compliance, or based on any omission (or alleged omission) to

state therein a material fact required to be stated therein or necessary to

make the statements therein not misleading, in light of the circumstances in

which they were made, and will reimburse Procept, and each person controlling

Procept, for legal and any other expenses reasonably incurred in connection

with investigating or defending any such claim, loss, damage, liability or

action as incurred; provided that AOI will not be liable in any such case to

the extent that any untrue statement or omission or allegation thereof is made

in reliance upon and in conformity with written information furnished to AOI by

or on behalf of Procept and stated to be specifically for use in preparation of

such registration statement, prospectus or offering circular; provided AOI will

not be liable in any such case where the claim, loss, damage or liability

arises out of or is related to the failure of Procept to comply with the covenants

and agreements contained in any agreement respecting sales of securities of

AOI, and except

 

34

 

that

the foregoing indemnity agreement is subject to the condition that, insofar as

it relates to any such untrue statement or alleged untrue statement or omission

or alleged omission made in the preliminary prospectus but eliminated or

remedied in the amended prospectus on file with the Commission at the time the

registration statement becomes effective or in the amended prospectus filed

with the Commission pursuant to Rule 424(b) or in the prospectus subject to

completion and term sheet under Rule 434 of the Act, which together meet the

requirements of Section 10(a) of the Act (the “Final Prospectus”), such

indemnity agreement shall not inure to the benefit of Procept or person

controlling Procept, if a copy of the Final Prospectus furnished by AOI to

Procept for delivery was not furnished to the person or entity asserting the

loss, liability, claim or damage at or prior to the time such furnishing is required

by the Act and the Final Prospectus would have cured the defect giving rise to

such loss, liability, claim or damage.

 

(xii)          Procept

will severally, if the Common Stock held by Procept are included in the

securities as to which such registration, qualification or compliance is being

effected, indemnify AOI, each of its directors and officers, each underwriter

and each person who controls AOI within the meaning of Section 15 of the

Securities Act, against all claims, losses, damages and liabilities (or actions

in respect thereof), including any of the foregoing incurred in settlement of

any litigation, commenced or threatened, arising out of or based on any untrue

statement (or alleged untrue statement) of a material fact contained in any

registration statement, prospectus or offering circular, or any amendment or

supplement thereof, incident to any such registration, qualification or

compliance, or based on any omission (or alleged omission) to state therein a

material fact required to be stated therein or necessary to make the statements

therein not misleading, in light of the circumstances in which they were made,

and will reimburse AOI, such directors and officers, each underwriter and each

person controlling AOI for reasonable legal and any other expenses reasonably

incurred in connection with investigating or defending any such claim, loss,

damage, liability or action as incurred, in each case to the extent, but only

to the extent, that such untrue statement or omission or allegation thereof is

made in reliance upon and in conformity with written information furnished to

AOI by or on behalf of Procept and stated to be specifically for use in

preparation of such registration statement, prospectus or offering circular;

provided that the indemnity shall not apply to the extent that such claim,

loss, damage or liability results from the fact that a current copy of the

prospectus was not made available to Procept and such

 

35

 

current

copy of the prospectus would have cured the defect giving rise to such loss,

claim, damage or liability.

 

3.4   Other

Expenses under Penn License Agreement and CRADA.  Commencing with the Effective Date of this Agreement, AOI shall

assume all financial obligations of Procept under the Penn License Agreement

and CRADA including, without limitation, the following:

 

(a)   Patent

Costs.  AOI shall upon request

provide payment to Procept for all reasonable out-of-pocket expenses which are

incurred by Penn in connection with the preparation, filing, prosecution and

maintenance of the Patent Rights after the Effective Date of this Agreement and

which Procept is obligated to reimburse Penn pursuant to Section 7.1 of the

Penn License Agreement.  In addition,

AOI shall provide payment to Procept in the amount of $85,858.54 for past

patent expenses upon the achievement of the milestone of Section 3.3(a)(4)

above, which amount Procept is obligated to pay to Penn pursuant to the Letter

Agreement between Procept and Penn dated October 5, 1999.

 

AOI

shall reimburse Procept for all of Procept’s expenses, if any, under Articles

6.4, 6.5 and 6.7 of the CRADA associated with filing and prosecuting patent

application(s) claiming Subject Inventions (as defined in the CRADA) which the

parties mutually agree to file and prosecute in accordance with Section 4.1

hereof.

 

(b)   Minimum

Annual Royalty.  In the event

Procept is obligated to pay the Minimum Annual Royalty to Penn under Section

4.7 of the Penn License Agreement, AOI shall reimburse Procept for all of

Procept’s expenses under Section 4.7 of the Penn License Agreement.

 

(c)   CRADA

Drug Requirements.  Commencing with

the Effective Date of this Agreement, AOI shall reimburse Procept for all costs

associated with Procept’s obligation to provide to the National Cancer

Institute (“NCI”), free of charge, formulated 06BG in sufficient quantities to

complete the clinical trials currently ongoing or anticipated or any other

studies sponsored by the NCI pursuant to the CRADA and with the materials

required to be provided to NCI under Section 3.6 of Appendix C to the CRADA.

 

(d)   CRADA

Research Funding.  From and after

the Effective Date of this Agreement, AOI shall be obligated to reimburse

Procept for the funding provided to the PHS by Procept for the studies

conducted under the CRADA in accordance with Appendix B of the CRADA.  Upon request from AOI, Procept shall seek

the consent of PHS to amend or revise Appendix B of the CRADA as directed by

AOI.  Unless mutually agreed upon by AOI

and Procept, Procept shall not incur additional costs under the CRADA by requesting

that PHS perform studies that are not included as part of the Research Plan

under the CRADA.  In the event of

 

36

 

termination

of the CRADA, AOI shall be responsible for any payments under Articles 10.3 and

10.5 of the CRADA.  Any excess funds returned

by PHS to Procept after termination or expiration of the CRADA, to the extent

paid by AOI, shall be returned to AOI.

 

(e)   AOI shall

make all payments under this Section 3.4 within thirty (30) days of invoicing

by Procept.

 

3.5   No

Payment.  Notwithstanding anything

in this Agreement to the contrary, no payment obligations shall be due with

respect to the sale or sub-sublicense covering any Licensed Product or Licensed

Process in a country if: (a) there are no issued Patent Rights underlying such

Licensed Product in such country; or (b) to the extent that a patent

application is pending, there is no claim within such patent application on

which a royalty can reasonably be based which has been pending for less than

seven (7) years since the initial filing date.

 

3.6   Payment

by AOI.  In the event Procept fails

to make a payment due and payable to Penn under the Penn License Agreement and

receives notice of such default from Penn under Section 8.2 or 8.3 of the Penn

License Agreement, then AOI shall have the right, but not the obligation, to

pay directly to Penn the amount due and payable and to seek reimbursement of

such amount from Procept or to set-off such amount against any amount AOI owes

or may in the future be obligated to pay to Procept.

 

3.7   Royalty

Reports.  Royalties payable to

Procept shall be paid quarterly within thirty (30) days after March 31, June

30, September 30 and December 31 of each year during the term of this

Agreement.

 

3.8   Payments

in US Dollars.  All payments due

under this Article 3 shall be payable in United States dollars.  Conversion of foreign currency to U.S.

dollars shall be made at the conversion rate existing in the United States (as

reported in the Wall Street Journal) on the last working day of the calendar

quarter to which the payment relates. 

Such payments shall be without deduction of exchange, collection or

other charges.  Any withholding taxes

which AOI, its Affiliates or any sub-sublicensee shall be required to law to

withhold on remittance of the royalty payments shall be deduced from such

royalty payment to Procept.  AOI shall

furnish Procept with the original copies of all official receipts for such

taxes.

 

3.9   Reports

and Records.  During the term of

this Agreement, following the First Commercial Sale, AOI shall deliver to

Procept a report containing the following information: (i) all Licensed

Products or Licensed Processes used, leased or sold by or for AOI or its

Affiliates or sub-sublicensees; (ii) total amounts invoiced for Licensed

Product and Licensed Processes used, leased or sold by or for AOI or its

Affiliates or sub-sublicensees; (iii) deductions applicable in computed “Net

Sales” as defined in Section 1.5 hereof; (iv) total royalties due based on Net

Sales by or for AOI or its Affiliates or sub-sublicensees; (v) names and

addresses of sublicensees and Affiliates of AOI; (vi) the amount of Sublicense

Revenue

 

37

 

received

by AOI from any sub-sublicensee listed on Exhibit C, and (vii) on an

annual basis, AOI’s year-end financial statements.

 

AOI

shall maintain, and shall cause its sub-sublicensees to maintain, complete and

accurate records of (i) Licensed Products or Licensed Processes used, leased or

sold and (ii) any royalties payable to Procept, which records shall contain

sufficient information to permit Procept to confirm the accuracy of any reports

delivered pursuant to this Section 3.9. 

AOI and its sub-sublicensees shall retain such records relating to a

given quarter for at least three (3) years after the conclusion of that

quarter, during which time Procept shall have the right, at its expense, to

cause an independent, certified public accountant to inspect such records

during normal business hours for the sole purpose of verifying any reports and

payments delivered under this Agreement. 

The parties shall reconcile any underpayment or overpayment within

thirty (30) days after the accountant delivers the results of the audit.  In the event that any audit performed under

this Section reveals an underpayment in excess of the greater of (i) fifty

thousand dollars ($50,000) and (ii) five percent (5%) of royalties payable for

any twelve (12) month period, AOI shall bear the full cost of such audit.  Procept may exercise its rights under this

Section only once every year and only with reasonable prior notice to AOI.  Procept agrees that all such records and

audits are the confidential information of AOI and Procept shall maintain the

confidentiality of such records and audits.

 

3.10                Late

Payments.  Any payments by AOI that

are not paid on or before the date such payments are due under this Agreement

shall bear interest, to the extent permitted by law, at two percentage points

above the Prime Rate of interest as reported in the Wall Street Journal on the

date payment is due, with interest calculated based on the number of days that

payment is delinquent.

 

4.             Inventions

under the CRADA.

 

4.1   Notice

to AOI.  Procept shall promptly

report to AOI any Subject Invention (as defined in the CRADA) and shall discuss

with AOI whether to retain IP rights to such Subject Invention and whether to

file patent application(s) on such Subject Invention.  AOI shall treat any Subject Invention (as defined in the CRADA)

as Confidential 0Information.

 

4.2   License

to Subject Invention.  In the event

a Subject Invention (as defined in the CRADA) is solely owned by Procept,

Procept hereby agrees that such Subject Invention shall automatically be added

to the Patent Rights licensed to AOI under Section 2.1 of this Agreement;

provided that AOI shall be responsible for reimbursing Procept for any and all

fees paid by Procept to PHS under the CRADA associated with such Subject

Invention.

 

4.3   Sublicense

to Subject Invention.  In the event

a Subject Invention (as defined in the CRADA) is not solely owned by Procept,

Procept shall discuss with AOI whether to exercise its exclusive option to

elect an exclusive or nonexclusive commercialization license in accordance with

Article 7 of the CRADA.  In the event

that AOI is interested in obtaining a sublicense to any such Subject Invention

(as defined in the CRADA), Procept shall exercise its option under

 

38

 

Article

7 of the CRADA and Procept hereby agrees that such Subject Invention shall

automatically be added to the Patent Rights licensed to AOI under Section 2.1

of this Agreement; provided that AOI shall be responsible for reimbursing

Procept for any and all fees paid by Procept to PHS under the CRADA associated

with such Subject Invention.

 

4.4   Assignment

of CRADA.  Procept shall use its

reasonable best efforts obtain the written consent of PHS under Section 13.7 of

the CRADA to assign the CRADA to AOI.

 

5.             Obligations

of AOI.

 

5.1   Diligence.  AOI shall use its reasonable best efforts to

bring Licensed Products or Licensed Processes to market in accordance with

Section 3.1 and Section 6.6 of the Penn License Agreement.

 

5.2   Indemnification.  AOI agrees to defend, indemnify and hold

Penn and Procept harmless from and against all liability, demands, damages,

including without limitation, expenses or losses including death, personal

injury, illness or property damage arising directly or indirectly (a) out of

use by AOI or its transferees of inventions licensed or information furnished

under this Agreement or (b) out of any use, sale or other disposition by AOI or

its transferees of Patent Rights, Licensed Product or Licensed Processes, in

each case which are not judicially determined to be the result of Penn’s or

Procept’s negligence or willful misconduct.

 

5.3   Insurance.  Prior to the First Commercial Sale, AOI

shall obtain and maintain products liability insurance covering the risk of

claims, liabilities, expenses and judgments for which is has agreed to

indemnify Penn and Procept pursuant to Section 5.2 hereof.  Coverage shall be in an amount which is not

less than one million dollars ($1,000,000) per occurrence.

 

5.4   Infringement.  Each party shall promptly provide written

notice to the other party of any alleged infringement by a third party of the

Patent Rights and provide the other party with any available evidence of such

infringement.  In the event of

infringement of, or challenge to, the Patent Rights by a third party, AOI and

Procept shall discuss whether Procept should exercise its right under Section

10.2 of the Penn License Agreement to prosecute and/or defend such infringement

and/or challenge.  In the event AOI

requests in writing that Procept proceed with the prosecution and/or defense,

Procept shall proceed as directed by AOI and in accordance with the Penn

License Agreement, at AOI’s expense, and AOI shall retain any recovery that would

have been retained by Procept if Procept had brought such suit under the Penn

License Agreement.  AOI shall indemnify

and hold Procept harmless against any costs, expenses or liability that may be

found or assessed against Procept in any such suit other than resulting from

Procept’s negligence or wilful misconduct. 

AOI may credit up to fifty percent (50%) of any litigation costs

incurred by Procept at AOI’s request and reimbursed by AOI

 

39

 

hereunder

in any country pursuant to Article 10 of the Penn License Agreement and up to

50% of all amounts paid in judgement or settlement of litigation pursuant to

Article 10 of the Penn License Agreement against royalties thereafter payable

to Procept hereunder in such country. 

If one-half of such litigation costs in such country exceeds 50% of

royalties payable to Procept in any year in which such costs are incurred then

the amount of such costs, expenses and amounts paid in judgement or settlement

in excess of such 50% of the royalties payable shall be carried over and

credited against royalty payments in future years for such country.

 

6.             Representations

and Warranties.

 

6.1   Representations

by Procept.  Procept represents that

it shall comply with the terms and conditions of the Penn License Agreement

including, without limitation, Procept’s obligation to provide certain payments

to Penn under Article 4 of the Penn License Agreement and to give Penn notices

of sublicenses under Section 2.7.1 of the Penn License Agreement.

 

6.2   Warranty

Disclaimer.  PROCEPT MAKES NO

WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PATENT RIGHTS, KNOW-HOW OR

OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF

MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH

RESPECT TO ANY AND ALL OF THE FOREGOING.

 

7.             Termination.

 

7.1   Term.  Unless terminated sooner in accordance with

this Article 7, this Agreement shall terminate on the date of the last to

expire Valid Claim contained in the Patent Rights.

 

7.2   Termination.  This Agreement may be terminated in the

following circumstances:

 

(a)   Material

Breach.  By either party, upon

written notice of any material breach or default by the other party that the

breaching party fails to remedy within sixty (60) days after the written notice

thereof by the non-breaching party.

 

(b)   By AOI.  By AOI, at its sole discretion, upon ninety

(90) days written notice to Procept.

 

7.3   Effect

of Termination.

 

(a)   Existing

Obligations.  Termination of this

Agreement for any reason shall not relieve the parties of any obligation that

accrued prior to such termination.

 

40

 

(b)   Disposition

of Inventory.  AOI may, after the

effective date of termination and continuing for a period of six (6) months

thereafter, sell all completed Licensed Products, as well as any Licensed

Products in the process of manufacture at the time of such termination,

provided that AOI shall pay to Procept the fees thereon as required by Article

3 of this Agreement and shall submit the reports required by Section 3.9 hereof

on the sales of Licensed Product.

 

(c)   Survival.  The provisions of Sections 3.3(b), 3.9, 5.2

and 5.3 and Articles 7, 8 and 9 shall survive any termination or expiration of

this Agreement.

 

(d)   Sub-sublicenses.  Upon termination of this Agreement by

Procept due to breach or default by AOI, any existing sub-sublicenses of AOI

shall be automatically assigned to Procept, and Procept shall be bound by the

terms of such sub-sublicenses provided that the sub-sublicensees continue to

perform in accordance with their respective sub-sublicense agreements.  Notwithstanding the foregoing, Procept’s

obligations to any such sub-sublicensee shall not be interpreted to extend

beyond any obligations to AOI hereunder with respect to the subject matter of

the sub-sublicense.

 

7.4   Effect

of Termination of Penn License Agreement. 

Section 2.7.4 of the Penn License Agreement provides that, in the event

of the termination of the Penn License Agreement for any reason other than

termination upon the date of the last to expire claim contained in the Patent

Rights, this Agreement shall survive.

 

8.             Confidentiality.

 

8.1   Designation.  Confidential Information that is disclosed

in writing shall be marked with a legend indicating its confidential status

(such as “Confidential” or “Proprietary”). 

Confidential Information that is disclosed by one party (the “Disclosing

Party”) to the other party (the “Receiving Party”) orally or visually shall be

documented in a written notice prepared by the Disclosing Party and delivered

to the Receiving Party within thirty (30) days of the date of disclosure; such

notice shall summarize the Confidential Information disclosed to the Receiving

Party and reference the time and place of disclosure.

 

8.2   Obligations.  For a period of five (5) years after

termination of this Agreement, the Receiving Party shall (i) maintain such

Confidential Information in strict confidence, except that the Receiving Party

may disclose or permit the disclosure of any Confidential Information to its

directors, officers, employees, consultants, and advisors who are obligated to

maintain the confidential nature of such Confidential Information and who need

to know such Confidential Information for the purposes of this Agreement; and

(ii) use such Confidential Information solely for the purposes of this

Agreement.

 

8.3   Exceptions.  The obligations of the Receiving Party under

Section 8.2 above shall not apply to the extent that the Receiving Party can

demonstrate that certain

 

41

 

Confidential

Information (i) was in the public domain prior to the time of its disclosure

under this Agreement; (ii) entered the public domain after the time of its

disclosure under this Agreement through means other than an unauthorized

disclosure resulting from an act or omission by the Receiving Party; (iii) was

independently developed or discovered by the Receiving Party without use of the

Confidential Information; (iv) is or was disclosed to the Receiving Party at

any time, whether prior to or after the time of its disclosure under this

Agreement, by a third party having no fiduciary relationship with the

Disclosing Party and having no obligation of confidentiality with respect to

such Confidential Information; or (v) is required to be disclosed to comply

with applicable laws or regulations, or with a court or administrative order,

provided that the Disclosing Party receives reasonable prior written notice of

such disclosure.

 

8.4   Ownership

and Return.  The Receiving Party

acknowledges that the Disclosing Party (or any third party entrusting its own

information to the Disclosing Party) claims ownership of its Confidential

Information in the possession of the Receiving Party.  Upon the expiration or termination of this Agreement, and at the

request of the Disclosing Party, the Receiving Party shall return to the

Disclosing Party all originals, copies, and summaries of documents, materials,

and other tangible manifestations of Confidential Information in the possession

or control of the Receiving Party, except that the Receiving Party may retain

one copy of the Confidential Information in the possession of its legal counsel

solely for the purpose of monitoring its obligations under this Agreement.

 

9.             Miscellaneous.

 

9.1   Notice.  Any notice required or permitted to be given

or made under this Agreement by one party to the other shall be in writing,

delivered personally or by facsimile (and promptly confirmed by personal

delivery or courier) or courier, postage prepaid (where applicable), addressed

to the other party at its address indicated below, or to such other address as the

addressee shall have last furnished in writing to the addressor and shall be

effective upon receipt by the addressee.

 

If to Procept:                         Procept,

Inc.

369 Lexington Avenue, Tenth Floor

New York, New York 10017

Attn: 

President

Facsimile: 

(212) 983-2379

 

If to AOI:                               AOI

Pharmaceuticals Inc.

730 Fifth Avenue, Ninth Floor

New York, NY 10019

Attn:  Chief

Executive Officer

Facsimile: (212) 333-8631

 

42

 

9.2   Notice

to Penn and PHS.  Promptly after the

Effective Date, Procept will provide written notice to Penn under Article 15 of

the Penn License Agreement and to PHS under the CRADA requesting that Penn and

PHS provide a copy of all notices under Article 15 of the Penn License

Agreement and Section 13.8 of the CRADA to AOI.  In the event Procept receives a notice from Penn under Article 15

of the Penn License Agreement or from PHS under Section 13.8 of the CRADA,

Procept shall promptly provide a copy of such notice to AOI and shall copy AOI

on any response thereto by Procept.

 

9.3   Governing

Law.  This Agreement shall be

construed, governed, interpreted and applied in accordance with the laws of the

State of New York, without regard to principles of conflicts of laws.

 

9.4   Force

Majeure.  Neither party will be

responsible for delays resulting from acts beyond the control of such party; provided,

that the non-performing party uses commercially reasonable efforts to avoid or

remove such causes of nonperformance and continues performance hereunder with

reasonable dispatch whenever such causes are removed.

 

9.5   No Agency.  Nothing in this Agreement shall be construed

as authorization for either party to act as agent or representative of the

other party.

 

9.6   Assignment.  This Agreement may not be assigned or

otherwise transferred by either party without the written consent of the other

party, except AOI and Procept may assign this Agreement without the consent of

the other party to its Affiliates or in connection with the transfer or sale of

all or substantially all of the portion of its business to which this Agreement

relates, or in the event of its merger or consolidation or change in control or

similar transaction.  Any purported

assignment in violation of this Section shall be void.  Any permitted assignee shall assume all

obligations of its assignor under this Agreement in writing.

 

9.7   Use of

Names.  Neither party shall use the

name of the other party or its Affiliates in any publicity or advertising

without the prior written approval of the other party; provided however that

Procept acknowledges and agrees that AOI may use the name of Procept in various

documents used by AOI for capital raising and financing without such written

consent but only to the extent that such use of name may be reasonably required

by law.

 

9.8   Dispute

Resolution. Except for the right of either party to apply to a court of

competent jurisdiction for a temporary restraining order, a preliminary

injunction or other equitable relief to preserve the status quo or prevent

irreparable harm, any and all claims, disputes or controversies arising under,

out of, or in connection with this Agreement, including any dispute relating to

patent validity or infringement, which the parties shall be unable to resolve

within sixty (60) days, shall be mediated in good faith.  The party raising such dispute shall

promptly advise the other party of such claim, dispute or controversy in a

writing

 

43

 

which

describes in reasonable detail the nature of such dispute.  By not later than five (5) business days

after the recipient has received such notice of dispute, each party shall have

selected for itself a representative who shall have the authority to bind such

party, and shall additionally have advised the other party in writing of the

name and title of such representative. 

Such representatives shall schedule a date for a mediation hearing with

a mutually agreeable mediator in New York, New York on a date not later than

ten (10) business days after the date of such notice of dispute, or if no dates

are available in such period, then the first available date thereafter.  The parties shall enter into good faith

mediation and shall share the costs equally. 

If the representatives of the parties have not been able to resolve the

dispute within fifteen (15) business days after such mediation hearing, then

either party may refer the dispute for final and binding resolution by

arbitration to be conducted in New York, New York under the Commercial

Arbitration Rules of the American Arbitration Association.  Judgment upon the award rendered in such

arbitration proceeding may be entered in, and enforced by, any court of

competent jurisdiction.

 

9.9   Export

Controls.  AOI acknowledges that it

is subject to and agrees to abide by the United States laws and regulations

(including the Export Administration Act of 1979 and Arms Export Control Act)

controlling the export of technical data, computer software, laboratory

prototypes, biological material and other commodities.  The transfer of such items may require a

license from the cognizant agency of the U.S. government or written assurances

by AOI that it shall not export such items to certain foreign countries without

the prior approval of such agency. 

Procept neither represents that a license shall not be required nor

that, if required, it shall be issued.

 

9.10                Amendments.  Any amendment of this Agreement shall be

effective only if in writing and signed by both parties.

 

9.11                Severability.  In the event that any provision of this

Agreement shall, for any reason, be held to be invalid or unenforceable in any

respect, such invalidity or unenforceability shall not affect any other

provision hereof, and this Agreement shall be construed as if such invalid or

unenforceable provision had not been included herein.

 

9.12                Waiver.  Any waiver of any rights or failure to act

in a specific instance shall relate only to such instance and shall not be

construed as an agreement to waive any rights or fail to act in any other

instance, whether or not similar.

 

9.13                Binding

Effect.  This Agreement shall inure

to the benefit of and be binding upon the parties and their respective

permitted successors and assigns.

 

IN

WITNESS WHEREOF, the parties have executed this Agreement as of the date first

set forth above.

 

44

 

	

  AOI

  PHARMACEUTICALS, INC.

  	

   

  	

  PROCEPT, INC

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/  Michael S. Weiss

  	

   

  	

   

  	

  By:

  	

  /s/  John F. Dee

  	

   

  
	

  Name:

  	

  Michael S. Weiss

  	

   

  	

   

  	

  Name:

  	

  John F. Dee

  	

   

  
	

  Title:

  	

  Chairman and

  Chief Executive Officer

  	

   

  	

   

  	

  Title:

  	

  Vice Chairman

  	

   

  

 

45

 

Exhibit

A

Penn

License Agreement

(Attached)

 

Exhibit

C

List of

Certain Sub-sublicensees

 

1.             Cyclacel Limited

2.             Therapeutic Developments Limited

(TDL)

3.             British Biotech Pharmaceuticals

Limited

 

46

 

APPENDIX H

 

AMENDMENT

TO SUBLICENSE AGREEMENT

 

This Amendment to

Sublicense Agreement (this “Amendment”) is entered into on this

28th day of February, 2002 (“Effective Date”), by and between

Procept, Inc. (formerly Pacific Pharmaceuticals, Inc.), a Delaware corporation

with offices at 369 Lexington Avenue, 10th Floor, New York, New York 10017 (“Procept”), and AOI

Pharmaceuticals, Inc., a subsidiary of Access Oncology, Inc., a Delaware

corporation with offices at 750 Lexington Avenue, 26th Floor, New York, New York 10022 (“AOIP”) (Procept and

AOIP sometimes collectively referred to as “Parties”).

 

WHEREAS, Procept entered into a license

agreement (the “License Agreement”) on or about March

17, 1998 with The Penn State Research Foundation (“Foundation”), pursuant

to which Procept received an exclusive worldwide license to certain Patent

Rights (as defined therein) and Know-how (as defined therein);

 

WHEREAS, Procept has sub-licensed certain

of its interests, rights and obligations under the License Agreement to AOIP

pursuant to a sublicense agreement entered into by and between Procept and AOIP

on or about October 13, 2000 (such sublicense agreement, the “Sublicense

Agreement”);

 

WHEREAS, Foundation and the United States

Public Health Service have agreed to enter into an interinstitutional agreement

(the “Interinstitutional

Agreement”), a copy of which is attached hereto as Exhibit A,

pursuant to which Foundation shall exclusively license its rights under the

License Agreement to PHS, such Interinstitutional Agreement to become effective

upon execution of the Revised License Agreement (as defined below);

 

WHEREAS, Procept and PHS have agreed to

enter into a revised license agreement, a copy of which is attached hereto as

Exhibit B, regarding the Patent Rights (such revised license agreement, the “Revised

License Agreement”), which Revised License Agreement shall

supercede and terminate the terms and conditions of the License Agreement;

 

WHEREAS, as a condition to executing the

Revised License Agreement, PHS has requested that Procept amend the Sublicense

Agreement to secure certain obligations from AOIP;

 

WHEREAS, Procept and AOIP wish to

facilitate the development and commercialization of the Licensed Product(s) and

Licensed Process(es) (as such terms are defined in the Revised License

Agreement);

 

NOW, THEREFORE, in consideration of the

foregoing premises and the mutual covenants herein contained, and for other

good and valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, the Parties agree to the following:

 

1.             AOIP

shall be bound by the terms of Section 4.02 of the Revised License Agreement.

 

47

 

2.             AOIP

shall not sublicense its rights under the Sublicense Agreement without the

consent of PHS, which consent shall not be unreasonably withheld, and without

reasonable notice to Procept.

 

3.             This

Amendment will be governed by and construed in accordance with the laws of the

State of New York without regard to its conflict of law rules.

 

4.             This

Amendment may be signed in one or more counterparts, each of which is to be

considered an original, and taken together as one and the same document.

 

IN WITNESS WHEREOF, the Parties acknowledge

by the signatures below of their authorized representatives that they have read

this Amendment and understand and agree to be bound by its terms and

conditions.

 

	

  PROCEPT, INC.

  	

  AOI

  PHARMACEUTICALS, INC.

  	

   

  
	

   

  	

   

  	

   

  
	

  369 Lexington

  Avenue

  	

  An Access

  Oncology Company

  	

   

  
	

  10th Floor

  	

  750 Lexington

  Avenue

  	

   

  
	

  New York, NY

  10017

  	

  26th Floor

  	

   

  
	

   

  	

  New York, NY

  10022

  	

   

  
	

   

  	

   

  	

   

  
	

  By: 

  	

  /s/ Salvatore A.

  Bucci

  	

   

  	

  By: 

  	

  /s/ I. Craig

  Henderson

  	

   

  	

   

  
	

   

  	

  Salvatore A.

  Bucci

  	

   

  	

  I. Craig

  Henderson, M.D.

  	

   

  
	

   

  	

  President and

  Chief Executive Officer

  	

   

  	

  Chief Executive

  Officer

  	

   

  
								

 

48

 

APPENDIX I

 

RELEASE AGREEMENT

 

This agreement (this “Agreement”) dated as

of February 28, 2002 is entered into by and among Procept, Inc.

(formerly Pacific Pharmaceuticals, Inc.) (“Procept”), AOI Pharmaceuticals, Inc. (a

subsidiary of Access Oncology, Inc.) (“AOIP”) and the United States Public

Health Services (“PHS”) (Procept, AOIP and

PHS, collectively, the “Parties”).

 

WHEREAS, The Penn State Research

Foundation (“Foundation”), the University of Chicago (“UC”) and PHS

are owners of certain patent rights associated with O6-Benzylguanine and/or its derivatives;

 

WHEREAS, Foundation executed the following

interinstitutional agreements with PHS:

L-094-91/0, executed May 20, 1997 (attached as Exhibit A); and with UC (Arch Foundation) executed (May 16,

1997) (attached as Exhibit B) whereby UC  and  the Foundation received full power and

authority to enter into a license

agreement with Procept on or about February 6, 1998 (such license

agreement, the “License Agreement” attached as Exhibit

C), pursuant to which Procept received an exclusive worldwide license to

certain Patent Rights (as defined

therein);

 

WHEREAS, UC under an agreement with its affiliated

corporation, ARCH Development Corporation 

has the right to license the Licensed Patents and other intellectual

property owned by ARCH;

 

WHEREAS, Procept has sub-licensed certain

of its interests, rights and obligations under the License Agreement to AOIP

pursuant to a sublicense agreement entered into by and between Procept and AOIP on or about October 13, 2000 (such sublicense agreement,

the “Sublicense

Agreement” attached as Appendix D);

 

WHEREAS, UC,

Foundation and the PHS have agreed to enter into the following

interinstitutional agreements (“Interinstitutional Agreements”): L-086-02/0, executed January 30, 2002;

and L-067-02/0, executed January 29, 2002, copies of which are attached

hereto as Exhibits E and F and pursuant

to which PHS has exclusive licensing rights associated with the Patent

Rights;

 

WHEREAS, Procept

and PHS have executed a revised

license agreement dated February 28, 2002, L-068-02/0 (“Revised License Agreement”), to which this Release Agreement is attached regarding the Patent Rights licensed to PHS which Revised License Agreement shall supercede

and terminate the terms and conditions of the License

Agreement;

 

WHEREAS, all of the Parties acknowledge

that they will each derive substantial benefit from the Revised License Agreement, the Sublicense Agreement and AOIP’s development efforts thereunder;

 

49

 

NOW, THEREFORE, in consideration of the

foregoing premises and the mutual covenants herein contained, and for other

good and valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, the Parties agree as follows:

 

1.             PHS hereby irrevocably and absolutely

releases and forever discharges both Procept and AOIP,  as well as their affiliates, and their

respective successors, predecessors, assigns, beneficiaries, executors,

trustees, administrators, subrogees, agents, representatives, employees,

officers, directors, shareholders, partners, parent corporations, subsidiaries

and affiliates (collectively, “Released Parties”), of and from any and

all claims, demands, obligations, debts, actions, and causes of action of every

nature, character, and description, known or unknown, pursuant to, arising out

of, or related to the License Agreement,

which PHS now owns or holds, or

has at any time heretofore owned or held, or may at any time own or hold

against the Released Parties,

arising prior to and including the date of this Agreement.

 

2.             In the event the Revised License Agreement is terminated

owing to a breach by Procept (as

determined by a court of competent jurisdiction or specific reference in a

settlement of litigation) and AOIP

is in good standing under the Sublicense

Agreement, PHS will

grant a license directly to AOIP

on substantially similar terms and conditions as those contained in the Revised License Agreement (such newly

granted license, the “New AOIP License”).  It is understood and agreed that unless and

until such New AOIP License is

executed, AOIP shall maintain its

exclusive sublicense to the Patent Rights

(as defined in the Sublicense Agreement)

in accordance with the Sublicense Agreement.  It is further understood and agreed that the

Sublicense Agreement shall terminate

upon execution of the New AOIP License.  It is further understood and agreed to by PHS and AOIP

that the royalty consideration to be paid to PHS

under the terms and conditions of the New AOIP License shall be the same as those terms contained in

Appendix C of the Revised  License Agreement.

 

3.             The

construction, validity, performance, and effect of this Agreement shall be governed

by Federal law as applied by the Federal courts in the District of Columbia.

 

4.             This

Agreement may be signed in one or more counterparts, each of which is to be

considered an original, and taken together as one and the same document.

 

[the

rest of this page is intentionally left blank]

 

50

 

IN WITNESS WHEREOF, the Parties acknowledge

by the signatures below of their authorized representatives that they have read

this Agreement and understand and agree to be bound by its terms and

conditions.

 

	

  PROCEPT, INC.

  	

  AOI

  PHARMACEUTICALS, INC.

  
	

   

  	

   

  
	

  369 Lexington

  Avenue

  	

  An Access

  Oncology Company

  
	

  10th Floor

  	

  750 Lexington

  Avenue

  
	

  New York, NY

  10017

  	

  26th Floor

  
	

   

  	

  New York, NY

  10022

  
	

   

  	

   

  	

   

  
	

  By:

  	

   /s/ Salvatore A. Bucci

  	

   

  	

  By: 

  	

  /s/ I. Craig

  Henderson

  	

   

  
	

   

  	

  Salvatore A.

  Bucci

  	

   

  	

  I. Craig

  Henderson, M.D.

  
	

   

  	

  President and

  Chief Executive Officer

  	

   

  	

  Chief Executive

  Officer

  
						

 

UNITED STATES

PUBLIC HEALTH SERVICE

 

	

  By:

  	

   /s/ Jack Spiegel

  	

   

  
	

   

  	

  Jack Spiegel, Ph.D.

  
	

   

  	

  Director, Division of

  Technology Development and Transfer

  
	

   

  	

  Office of Technology

  Transfer

  
	

   

  	

  National Institutes of

  Health

  

 

51

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