Document:

EXHIBIT 10.38

 

ASSIGNMENT OF CONTINGENT PAYMENTS

 

This Agreement is made this 20th Day of October 2007 (“Effective Date”),
by and between  VGX Pharmaceuticals, Inc.,  a Delaware  Corporation  (hereinafter
referred to as  “VGXP”), VGX Animal Health, Inc.,  a Delaware corporation  (hereinafter referred to as  “VGXAH”), and Ronald O. Bergan  and Mary
Alice Bergan(hereinafter collectively 
referred to as “BERGANS”).

 

WHEREAS, under the
Asset Purchase Agreement by and among VGX Pharmaceuticals, Inc., Advisys, Inc.,   and 
BERGANS, dated February 21, 2007 (hereinafter referred to as
the  “Purchase Agreement”),  VGXP promised to the BERGANS, among other
things, certain contingent monetary payments under Article II paragraph
2.1 a(vii) in the Purchase Agreement. (hereinafter the above mentioned
monetary obligations shall be referred to as “Bergan Payments”); and

 

WHEREAS, in addition
to the licensing of some of VGXP’s technologies, VGXP desires to grant and
VGXAH desires to assume the obligations for Bergan Payments; and

 

WHEREAS, the parties
does not desire to disturb Bergan Payments and the right of BERGANS to Bergan
Payments;

 

NOW, THEREFORE, in
consideration of the mutual promises and conditions hereinafter set forth and
intending to be legally bound, the parties hereto agree as follows:

 

1.             DEFINITIONS:

 

1.1.
FIELD or FIELD OF USE is used interchangeably and means the practice, including
the making, using, selling, or offering to sell any product or services, in the
field of animal health.  Such practice contemplates application of any
product or services to an end user that is an animal that is non-human. 
One example of such end use is the treatment of a farm animal with a DNA
product for therapeutic purposes.

 

1.2. GHRH means growth hormone releasing
hormone.

 

1.3.
“Bergan Payments” is used herein to mean the contingent payment obligations of
VGXP as agreed to in the Purchase Agreement, Article II paragraph 2.1
a(vii), which relates to payments owed and payable to  BERGANS by VGX based on royalty and upfront
and milestone payments made by a licensee of VGX that is a Nonrelated Party and
VGX.

 

1.4 “Other Party” or “Nonrelated Party” is used herein interchangeably
and means a third party that is not VGX, the BERGANS, or any entity that is
wholly owned, majority controlled, or commonly controlled by VGX and/or the
BERGANS.

 

 

2.             ASSUMPTION
OF PAYMENT OBLIGATION.   VGXAH hereby assumes VGXP’s obligations
for Bergan Payments that relate to the FIELD OF USE.   VGXAH assumes and agrees to perform and be
bound by, all of the terms, covenants and conditions of the Bergan Payments,
commencing as of the date of full execution of this Agreement, with the same
force and effect as though VGXAH was originally obligated in the Purchase
Agreement.

 

3.             BERGAN
PAYMENTS

 

3.1   METHOD OF CALCULATING
BERGAN PAYMENTS.  The terms agreed by
VGXP and the BERGANS under the Purchase Agreement shall be applicable as though
VGXAH is in the place of VGXP.

 

3.2.  Payment of
Bergan Payments by VGXAH.  The Bergan
Payments that relate to the FIELD OF USE shall be directly paid by VGXAH.

 

3.3.  VGXAH
Default.  VGXP agrees to reassume the
payment obligations assigned to VGXAH as a result of this Agreement should
VGXAH be in default of Bergan Payments.

 

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

 

	
  If for VGXP:

  	
  VGX Pharmaceuticals

  	
   

  	
   

  
	
   

  	
  450 Sentry Parkway

  	
   

  	
   

  
	
   

  	
  Blue Bell, PA 19422.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If for VGXAH:

  	
  VGX Animal Health

  	
   

  	
   

  
	
   

  	
  2700 Research Forest Drive,

  	
   

  	
   

  
	
   

  	
  The Woodlands, TX 77381

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If for Ronald O. Bergen and Mary Alice Bergen:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3300 North 7th Avenue

  	
   

  	
   

  
	
   

  	
  Fargo, ND 58108

  	
   

  	
   

  

 

Any party may change its official address
upon written notice to the other party.

 

 

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

 

[SIGNATURES ON FOLLOWING PAGE]

 

3

 

IN WITNESS WHEREOF, the
parties have executed this AGREEMENT on the Effective Date.

 

 

	
  VGX
  PHARMACEUTICALS, INC.

  	
  VGX
  ANIMAL HEALTH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  J. Joseph Kim

  	
   

  	
  By:

  	
  /s/
  Douglas R. Kern

  
	
   

  	
   

  
	
  Name:
   J. Joseph Kim

  	
   

  	
  Name:
  Douglas R. Kern

  
	
   

  	
   

  
	
  Title:
  President and CEO

  	
  Title:
  Vice President, Business Development

  
	
   

  	
   

  
	
  Date:
  October 20, 2007

  	
  Date:
  October 20, 2007

  
	
   

  	
   

  
	
   

  	
   

  
	
  RONALD O. BERGAN

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald O . Bergan

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  11-9-07

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MARY ALICE BERGAN

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mary Alice Bergan

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  11-9-07

  	
   

  	
   

  
						

 

4EXHIBIT
10.39

 

Portions Subject to
Confidential Treatment Request Under Rule 406

 

R&D
COLLABORATION AND LICENSE AGREEMENT

 

 

BETWEEN

 

VGX
PHARMACEUTICALS, INC.

 

(VGX)

 

 

AND

 

 

VGX
INTERNATIONAL

 

(VI)

 

 

R&D
COLLABORATION AND LICENSE AGREEMENT

 

This R&D Collaboration and License Agreement (“AGREEMENT”)
is between VGX Pharmaceuticals, Inc. (“VGX”),
a Delaware corporation, with offices located at 450 Sentry Parkway East, Blue
Bell, Pennsylvania 19422, and VGX
International (“VI”), a corporation having an address of Jung-Hun
Building, #701, 944-1 Daechi
3-Dong, Gangnam-gu, Seoul, Korea.

 

A. Whereas VGX controls certain intellectual property
related to VGX-1027 (3-phenyl-4,5-dihydro-5-isoxazoleacetic acid) (hereinafter
referred to as “VGX-1027”) a drug for treating all and any disease indications
in humans and animals, including but not limited to those listed in Attachment
I; and

 

B. Whereas VGX and VI desire to enter into an agreement for exclusive worldwide rights to
conduct research, development activities, sales, licensing, and marketing of
VGX-1027 for Type 1 Diabetes (hereinafter referred to as “T1D”).

 

NOW, THEREFORE, in consideration of the promises and
covenants contained in this AGREEMENT and intending to be legally bound, the
parties hereby agree as follows:

 

1.             DEFINITIONS

 

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

 

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

 

1.3 EFFECTIVE DATE
means the date on which VI and VGX have both fully executed this AGREEMENT.

 

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

 

1.5 NET SALES is
defined as the gross amount of monies or cash equivalent or other consideration
which is paid by unrelated third parties to VGX or VI for VGX-1027 by sale or
other mode of transfer, less all qualifying costs directly attributable to such
sales, which are made, made for, used or sold by VI, its agents, employees
and/or independent contractors.

 

NET SALES of a commercial
product comprising one or more VGX R&D PRODUCTS and one or more other
active ingredients (a “COMBINATION PRODUCT”) shall be calculated as set forth
above, subject to the provisions of Section 3.1.3.

 

1

 

1.6 VGX R&D
PRODUCT(S) means product(s) which is/are made, made for, used by,
imported by or for, sold by or offered for sale for each indication and/or any
agents and contractors(s) to unrelated third parties which (1) in the
absence of this AGREEMENT would infringe at least one claim of VGX PATENT
RIGHTS described in patents listed in Attachment I, or (2) use a process
and/or machine covered by at least one claim of VGX PATENT RIGHTS described in
patents listed in Attachment I.

 

1.7 SALE means any
bona fide transaction for which consideration payment is received or expected
for the sale, use, lease, transfer or other disposition of VGX R&D PRODUCT(S) to
an unrelated third party.  A SALE of VGX
R&D PRODUCT (S) shall be deemed completed at the time VGX or VI, their
agents, or their contractors receive payment for such VGX R&D PRODUCT (S).

 

1.8 VGX PATENT
RIGHTS means all of VGX’s interest in the rights represented by or issuing from
(including all claims referenced within) those patent applications listed in
ATTACHMENT I and all future interests in such rights anywhere in the world of
the VGX-1027 intellectual property.

 

2.             R&D COLLABORATION

 

Subject to the terms and
conditions of this AGREEMENT, VGX and VI shall collaborate to research, develop
and market VGX R&D PRODUCTS for T1D. No other rights are granted by either
party hereunder.  This agreement shall
not impair VI’s freedom (without any restriction or any obligation to VGX) to
research, develop, and market products for T1D, except for the restrictions in
this Agreement.

 

2.1           VGX shall provide
VGX-1027 (3-phenyl-4,5-dihydro-5-isoxazoleacetic acid) necessary for the
production or intended for production of VGX R&D PRODUCT(S) upon VI’s
request. VI shall reimburse VGX for the costs of such VGX 1027 at a price to be
mutually agreed. VGX and VI shall share pre-clinical testing data, and clinical
results for product development and clinical development.

 

3.             COST SHARING, FEES, AND ROYALTIES

 

3.1  Cost
Sharing, Fees and Royalties.

 

3.1.1        VGX agrees
to waive upfront fees.

 

3.1.2        Research and
Development Costs.   VI and VGX agree to
share the Research and Development costs on a mutually agreeable basis.

 

3.1.3        In
consideration of the exclusive worldwide rights granted to
VI, VI shall pay to VGX, on a quarterly basis, a royalty of ****** of the NET
SALES of each VGX R&D PRODUCT(S), which is sold by VI, its agent(s), and/or
independent contractor(s) of VI for a period of ten (10) years from
the date of the first SALE of VGX R&D PRODUCT(S) in any country
covered by such patent issuance or until

 

2

 

such
time as the related patent protection on expires in such country, whichever is
the later to occur.

 

3.1.4        In further
consideration of the exclusive worldwide rights granted to
VI by Ganial Immunotherapeutics, Inc. (hereinafter referred to as “GIT”)
through VGX, VI shall pay to GIT, on a quarterly basis, a royalty of ****** of
the NET SALES of each VGX R&D PRODUCT(S), which is sold by VI and any agent(s) and/or
independent contractor(s) of VI for a period of ten (10) years from
the date of the first SALE of VGX R&D PRODUCT(S) in any country
covered by such patent issuance or until such time as the related patent
protection  expires in such country,
whichever is the later to occur.

 

3.1.5        In the event
one or more VGX R&D PRODUCT(S) are sold in a COMBINATION PRODUCT, the
amount of royalties and agents’ and/or contractors’ revenues paid to VGX
pursuant to this Section 3.1 shall be based on the portion of the FAIR
MARKET VALUE of such combination of products reasonably attributable to the VGX
R&D PRODUCT(S).

 

3.2  Diligence
and Milestone Fees.

 

3.2.1        VI shall use
commercially reasonable efforts to develop for SALE and to market VGX R&D
PRODUCT(S) as drugs for treating T1D indication.  VI and VGX agree to the following R&D
milestones.  The amount of the Milestone
payments shall be determined within 6 months prior to the scheduled initiation
of a Phase II clinical trial for VGX 1027. 
The amount shall be determined based on the industry benchmark as
described below, and  said payments are
payable by VI to VGX within sixty (60) days after the achievement of the
respective milestone event.  The data on
industry benchmark on such license terms shall be based on the benchmark data
gathered by firms such as Recombinant Capital (http://www.recap.com) or other similar
data gathering or consulting firms.  If
the parties cannot agree on the payment amount, the parties agree to hire two
or more internationally reputable investment banks or accounting firms to
determine  said amount based on the firms’
own experience and expertise, or on the recommendation of an expert hired by
them.

 

	
  Due Date

  	
   

  	
  Payment

  
	
  Upon completion
  of Phase I safety and dose-escalation studies 

  	
   

  	
  TBD

  
	
  Upon completion
  of patient accrual for T1D Phase II clinical trial for VGX-1027

  	
   

  	
   TBD

  
	
  Upon completion of patient 

  	
   

  	
  TBD

  

 

3

 

	
  accrual for T1D Phase
  III clinical trial for VGX-1027

  	
   

  	
   

  
	
  Upon NDA
  submission for VGX-1027 for T1D

  	
   

  	
  TBD

  
	
  Upon NDA
  approval for VGX-1027 for T1D

  	
   

  	
  TBD

  

 

3.3  Currency,
Payment Method.

 

All
dollar amounts referred to in this AGREEMENT are United States dollars.  All payments to VGX under this AGREEMENT
shall be made in United States dollars by check or wire-transfer.  If VI receives revenues from SALES of VGX
R&D PRODUCTS in currency other than United States Dollars, revenues shall
be converted into United States dollars at the conversion rate for the foreign
currency as published in the eastern edition of The Wall Street Journal as of
the last business day of the applicable CALENDAR QUARTER.

 

3.4  Option
to Co-Development and Co-Marketing Rights.

 

3.4.1
Upon successful completion of Phase II 
for T1D, VGX shall have an option to develop and market VGX-1027 for T1D
in the United States.  Once the option is
exercised, VGX shall assume all costs for development and filings in the U.S.
for T1D.  In return, VGX shall pay to VI,
on a quarterly basis, a royalty of ****** of the NET SALES of each VGX R&D
PRODUCT for T1D only, which is sold by VGX, its agent(s), and/or independent
contractor(s) of VGX in the U.S. 
VGX shall exercise the said option by providing a written notice to VI
anytime during the effective term of this Agreement.

 

3.4.2  If VI, its agents, or contractors fails to
lead VGX-1027 to an initiation of Phase II Clinical trial for T1D within 5
years from the effective date, VI shall return all rights specified in this
Agreement back to VGX.

 

4.             CONFIDENTIALITY

 

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

 

4

 

marked confidential or,
if oral, should be reduced to writing within thirty (30) days of disclosure and
marked confidential.

 

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

 

4.2.1        information
that is known to the receiving party prior to the time of disclosure, and was
not received directly or indirectly from the disclosing party hereunder in
violation of a confidentiality obligation, unless  independently developed by or for the
receiving party, without exposure to or benefit of the disclosing party’s
CONFIDENTIAL INFORMATION, in each case, to the extent evidenced by written
records; and

 

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

 

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

 

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

 

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

 

Note: Confidential
information shall not be disclosed to third party and this rule shall apply
to both VGX and VI. This is particularly true for process development data.

 

5.             TERM AND TERMINATION

 

5.1 This AGREEMENT,
unless sooner terminated as provided in this AGREEMENT, shall terminate upon
the earlier of: (a) expiration of the last-to-expire patent or (b) twenty
(20) years after the EFFECTIVE DATE.

 

5

 

5.2 VI may terminate
this Agreement (a) upon thirty (30) days written notice to VGX, if the
sale or other exploitation of the VGX R&D PRODUCT(s) becomes
technologically or commercially unfeasible; or (b) upon sixty (60)-days
written notice to VGX, and by doing all of the following:

 

5.2.1        ceasing to
make, have made, use, import, sell and offer for sale all VGX R&D PRODUCTS;
and

 

5.2.2        paying all
monies owed to VGX up to the date of the termination excluding any future
obligation under this AGREEMENT.

 

5.3 VGX may
terminate this AGREEMENT, upon sixty (60)-days written notice to VI, if any of
the following events of default (“Default”) occur:

 

5.3.1        VI is more
than ninety (90) days late in paying to VGX royalties, expenses or any other
monies due under this AGREEMENT and VI does not immediately pay VGX in full any
amounts due upon demand; or

 

5.3.2        VI
experiences a Trigger Event (defined below);

 

5.3.3        VI
materially breaches this AGREEMENT and does not cure the material breach within
ninety (90) days after the receipt of the written notice of such  breach.

 

5.4 “Trigger Event”
means any of the following:

 

If
VI:

 

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

 

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

 

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

 

6

 

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

 

5.4.3     If
any order for relief is entered relating to any of the proceedings described in
Sections 5.4.2 ;

 

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

 

5.4.5     If
VI shall, by any act or failure to act, indicate its consent to, approval of or
acquiescence in any of the proceedings described in Sections 5.4.2, 5.4.3,
5.4.4.

 

5.4.6     In
the event of a “change in control” of VI, VI shall promptly notify VGX of such
change in control and VGX shall be permitted to terminate this Agreement at VGX’s
option.  A “change of control” means a
change in the direct or indirect power to direct or cause the direction of the
management and policies of VI, whether through ownership or voting securities,
by contract or otherwise

 

5.5 The
provisions of Sections 5.3 and 5.4 shall apply to a Default of, or a Trigger
Event experienced by, any agents and/or contractors of VI ’s rights hereunder
if and to the extent that such Default of, or Trigger Event experienced by, the
agents and/or contractors(s) cause VI to fail to meet its diligence
obligations under Section 3.2.

 

5.6 In the
event of a termination under Section 5.1 or 5.3, all duties of VGX (other
than under Sections 5.11) and all rights (but not duties) of VI (other than
under Section 5.11) under this AGREEMENT immediately terminate without the
necessity of any action being taken either by VI or by VGX, provided, however,
that in no event shall the foregoing be construed to obligate VI to pay any
amounts accruing under Sections 3.1 
after the date of termination except under Section 5.10.  Upon and after any termination of this
AGREEMENT, the rights covered by this agreement for VI and any agents and/or
contractors thereof to manufacture, sale, marketing, importation and/or
distribution of VGX R&DPRODUCT(s) shall terminate on the same date of
the termination of the agreement, except otherwise specified in this agreement
or agreed upon by both parties.

 

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

 

5.8 Upon
termination of this AGREEMENT under section 5.2 and 5.3, VI shall cause
physical inventories to be taken as soon as commercially practicable and in any
event no later than sixty (60) days after termination of: (a) all
completed VGX R&D PRODUCT(s) on hand, under the control of VI, its
agents, or contractors thereof; and (b) such VGX R&D PRODUCT(s) as
are in the process of manufacture and component parts thereof as of the date of
termination of this AGREEMENT, which inventories shall be recorded in
writing.  VI shall deliver copies of such
written inventories, verified by an officer of VI,

 

7

 

forthwith to VGX.  VGX shall have forty five (45) days after
receipt of such verified inventories within which to challenge the physical
inventory and request an audit thereof.

 

5.9 Upon
termination of this agreement under section 5.1, VI shall pay all monies owed
to VGX up to the date of the termination.

 

5.10 Notwithstanding
the foregoing, if this AGREEMENT terminates other than pursuant to Section 5.3.1
or 5.3.2, VI shall have a period of six (6) months to sell off its
inventory of VGX R&D PRODUCT(S) existing on the date of termination of
this AGREEMENT and shall pay royalties to VGX with respect to such VGX R&D
PRODUCT(S) within thirty (30) days following the expiration of such
six-month period.

 

5.11 Each party’s
obligation to pay all monies owed and accruing as of the date of termination
under this AGREEMENT shall survive termination of this AGREEMENT.  In addition, the provisions of Articles 4, 5,
6, 7 and 8 shall survive such termination.

 

6.                                       REPRESENTATIONS
AND WARRANTIES OF VGX AND VI; DISCLAIMER OF ADDITIONAL WARRANTIES;
INDEMNIFICATION

 

6.1   VGX represents and warrants to
VI that:

 

6.1.1        VGX has the
full authority to execute and deliver this AGREEMENT.

 

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

 

6.2 VI
acknowledges that VGX holds world-wide exclusive rights, granted by GIT to VGX,
to develop VGX-1027 for the treatment of any human and animal indications.  VI agrees to assume all royalty obligations
to GIT with regards to the T1D indication as outlined in Section 3.1.3.

 

6.3 VGX and
VI will work together to file the patents and/or patent applications listed in
ATTACHMENT I before the deadline permitted by the relevant international and US
patent laws.

 

6.4 VGX shall
defend and indemnify and hold VI (and its respective officers, directors and
employees) harmless against any and all Losses, arising out of, relating to,
based on, or caused by (A) the breach by VGX of any representation or
warranty contained in this Agreement, (B) a claim that the formulation or
manufacture of the VGX-1027 by VGX for VI or other activities of VGX under this
Agreement infringe on the patent or other intellectual property rights of a
third party, (C) any governmental or regulatory action arising out of VGX,
or (D) any negligence or intentional misconduct by VGX in connection with
performing its obligations under this Agreement, in each case except to the
extent that such Losses arise from or are aggravated in any substantial respect
by the

 

8

 

negligent acts of
or failure to act by VI or its agents and/or contractors.  VI will promptly notify VGX of any such
Losses which come to VI’s attention, but failure to do so will not relieve VGX
of its indemnification obligations under this Section 6.3 except to the
extent any such delay results in a material prejudice to VGX.  Notwithstanding anything to the contrary in
this Agreement, VGX shall not be liable for any Losses to the extent that the
Losses suffered by VI (and its officers, directors and employees) are the
result of or in consequence of any failure by the indemnified party to take
reasonable and prudent action to mitigate any Losses.

 

6.5 VI shall
defend and indemnify and hold VGX (and its affiliates, including its agents
and/or contractors, and their respective officers, directors and employees)
harmless against any Losses, arising out of, relating to, based on, or caused
by (A) the breach by VI of any representation or warranty contained in
this Agreement or (B) any negligence or intentional misconduct by VI in
connection with performing its obligations under this Agreement, in each case
except to the extent that such Losses arise from or are aggravated by the
negligent acts of or failure to act by VGX, its agents and/or contractors.  VGX will promptly notify VI of any such
Losses which come to VGX’s attention, but failure to do so will not relieve VI
of its indemnification obligations under this Section 6.4 except to the
extent any such delay results in a material prejudice to VI.  Notwithstanding anything to the contrary in
this Agreement, VI shall not be liable for any Losses where the Losses suffered
by VGX (and its affiliates, including its agents and/or contractors, and their
respective officers, directors and employees) are the result of or in
consequence of any failure by the indemnified party to take reasonable and
prudent action to mitigate any Losses.

 

6.6 To best
of VGX’s knowledge, there are no pending or threatened suits, claims, or
actions of any type whatsoever against VGX with respect to the VGX-1027.

 

6.7 All
necessary corporate authorizations, consents and approvals which are necessary
or required for VGX to enter into this Agreement have been duly obtained;

 

6.8 To the
best of its knowledge, the entering into of this Agreement by VGX will not (i) violate
any Applicable Law or(ii) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of VGX, under its organizational documents, as amended
to date, or any material note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or agreement
to which VGX is a party or by which it or any of its properties or assets is
bound or affected.

 

7.             ADDITIONAL PROVISIONS

 

7.1 Nothing
in this AGREEMENT shall be deemed to establish a relationship of principal and
agent between VGX and VI, or between or among any of either party’s agents or
employees for any purpose whatsoever, nor shall this AGREEMENT be 

 

9

 

construed as
creating any other form of legal association or arrangement which would impose
liability upon one party for the act or failure to act of the other party.

 

7.2 INTENTIONALLY
LEFT BLANK

 

7.3 VI is not
permitted to assign this AGREEMENT or any part of it to any person or entity,
either directly or by operation of law, without the prior written consent of
VGX in its sole discretion.  However, VI
has the rights to contract out the manufacturing of the products covered in
this agreement and rights to establish collaboration, development, and
marketing partnership with a third party. In case any products covered in this
agreement is sold by a marketing partnership, VI shall have the responsibility
to pay royalty that is calculated on the bases of the combined net sales of VI
and its marketing partners. No assignment relieves VI of responsibility for the
performance of any accrued obligations, which it has prior to such assignment.

 

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

 

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

 

If for VGX:

 

VGX Pharmaceutical, Inc.

450 Sentry Parkway East

Blue Bell, PA 19422

Attention: Chief Executive Officer

 

 

If for VI:

 

VGX International

Jung-Hun Building, #701

944-1 Daechi 3-Dong

Gangnam-gu, Seoul, Korea

Attention: Vice President

 

Either party may change its official address upon written notice to the
other party.

 

7.6 This
AGREEMENT shall be construed and governed in accordance with the laws of the Commonwealth
of Pennsylvania in the United States of America, without giving

 

10

 

effect to conflict
of law provisions.  In the event that a
party to this AGREEMENT perceives the existence of a dispute with the other
party concerning any right or duty provided for herein, the parties will, as
soon as practicable, confer in an attempt to resolve the dispute.  If the parties are unable to resolve such
dispute amicably, then the parties hereby submit to the exclusive jurisdiction
of and venue in the either federal or state courts located in the Eastern
District of the Commonwealth of Pennsylvania with respect to any and all
disputes concerning the subject of this AGREEMENT.  The parties agree to accept original service
of complaint via internationally recognized courier with receipt
confirmation.  Also, the parties agree to
waive the Hague Convention requirements relating to translation of certain
documents to applicable foreign language which in this case is Korean.

 

7.7 VI shall
comply with all prevailing laws, rules and regulations that apply to its
activities or obligations under this AGREEMENT. 
Without limiting the foregoing, it is understood that this AGREEMENT may
be subject to United States laws and regulations controlling the export of
technical data, computer software, laboratory prototypes and other commodities,
articles and information, including the Arms Export Control Act as amended in
the Export Administration Act of 1979, and that the parties’ obligations are
contingent upon compliance with applicable United States export laws and
regulations.

 

7.8 If any
provision of this AGREEMENT shall be held to be illegal, invalid or
unenforceable, then such illegality, invalidity or unenforceability shall
attach only to such provision, and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this AGREEMENT, and
this AGREEMENT shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.

 

7.9 This AGREEMENT
may not be changed, modified, extended or terminated except by written
amendment executed by an authorized representative of each party.

 

[SIGNATURE PAGE FOLLOWS]

 

11

 

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

 

 

	
  VGX INTERNATIONAL, INC.

  	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Harry Chung

  	
   

  	
  By:

  	
   

  	
  /s/ Kevin W. Rassas

  
							

 

	
  Name:

  	
  Harry Chung

  	
   

  	
  Name:

  	
  Kevin W. Rassas

  

 

	
  Title:

  	
   

  	
  Vice President

  	
   

  	
  Title:

  	
   

  	
  Senior Vice President

  

 

	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  

 

12

 

ATTACHMENT I

 

List
of the PCT Patents filed and filings planned:

 

Patent
Application Title:

 

13

 

FIRST AMENDMENT TO THE R&D
COLLABORATION AND LICENSE AGREEMENT BETWEEN VGX PHARMACEUTICALS, INC. AND VGX
INTERNATIONAL DATED DECEMBER, 18, 2006

 

This is the First Amendment (“Amendment”) to the
R&D Collaboration and License Agreement Between VGX Pharmaceuticals, Inc.
(“VGX”)  and VGX International (“VGXI”)
dated as of 29th day of October, 2007 (the “Effective Date”), amending the
R&D Collaboration and License Agreement (“Agreement”)  dated December 18, 2006 between VGX and
VGXI.  All undefined terms contained
herein shall have the meaning set forth in the Agreement.

 

WHEREAS, both parties wishes to amend the Agreement as
follows:

 

NOW, THEREFORE, for good and valuable consideration
and intending to be legally bound, the parties hereby agree as follows:

 

1.                                       Research
and Development costs to be borne by VGXI include all costs incurred and
charged by third-party organizations or persons providing services to properly
initiate and complete Phase I clinical trials for VGX-1027.  These development costs include preclinical
toxicity tests, completion of lab work, payments for non-VGX personnel at
clinical study sites working on the trial, and creation of case report forms,
IND preparation and filing and support costs, API and placebo manufacturing
costs, fill/finish/encapsulation/packing/labeling and shipment costs,
statistical analysis and data management, and pharmacokinetic analysis of drug
levels.  In return, VGX will be responsible
for all direct internal costs (including salaries. supplies, and overhead
costs) of program managers, R&D scientists, clinical scientists and other
support staff involved in the overseeing and management of product and clinical
development processes for VGX-1027.

 

	
  VGX International

  	
  VGX Pharmaceuticals

  
	
  Jung-Hun Bldg, #701

  	
  450 Sentry Parkway

  
	
  944-1 Daechi 3-Dong

  	
  Blue Bell, PA 19422

  
	
  Gangnam-Gu, Seoul, Korea

  	
  Telephone: 267-440-4201

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Bryan Byong Jin Kim

  	
   

  	
  /s/ Gene J. Kim

  
	
  Bryan Byong Jin Kim, DMD

  	
  Gene J. Kim

  
	
  Vice President

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  10/29/07

  	
   

  	
  Date:

  	
  10/31/07

  
					

 

 

SECOND AMENDMENT
TO THE R&D COLLABORATION AND LICENSE AGREEMENT BETWEEN VGX PHARMACEUTICALS,
INC. AND VGX INTERNATIONAL DATED DECEMBER, 18, 2006

 

This is the Second Amendment (“Amendment”) to the R&D Collaboration and
License Agreement Between VGX Pharmaceuticals, Inc. (“VGX”)  and VGX International (“VGXI”) dated as of
4th day of August, 2008 (the “Effective
Date”), amending the R&D Collaboration and License Agreement dated December 18,
2006 between VGX and VGXI and the First
Amendment to the R&D Collaboration and License Agreement Between VGX
Pharmaceuticals, Inc. (“VGX”) and VGX International (“VGXI”) dated October 31,
2007. (Both the license agreement and the First Amendment shall be collectively
referred to as “the Agreement”) All undefined terms contained herein
shall have the meaning set forth in the Agreement.

 

WHEREAS, both parties wishes to amend the Agreement as
follows:

 

NOW, THEREFORE, for good and valuable consideration
and intending to be legally bound, the parties hereby agree as follows:

 

1.                                       The
parties are amending certain terms in the Agreement.  Specifically, the parties are amending the terms of payment relating to the 3rd party
costs associated with the VGX-1027 MAD study, which is expected to begin in 3rd quarter
of 2008. (hereinafter referred to as “the 3rd party
costs”)  The total estimated 3rd party
cost is currently expected to be approximately 1.2 million USD.  The
study is critical to successfully completing the Phase I trial of
VGX-1027.  By way of this Amendment, VGX
agrees to pay for the 3rd party costs with the understanding
that such costs shall be reimbursed by VGXI at the conculusion of the MAD
study.  Therefore, VGXI agrees to
reimburse VGX for all 3rd party costs of the MAD study paid by
VGX within 60 days of the conclusion of the study. All other terms in
the Agreement shall remain the same.

 

	
  VGX International

  	
  VGX Pharmaceuticals

  
	
  Jung-Hun Bldg, #701

  	
  450 Sentry Parkway

  
	
  944-1 Daechi 3-Dong

  	
  Blue Bell, PA 19422

  
	
  Gangnam-Gu, Seoul, Korea

  	
  Telephone: 267-440-4201

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Bryan Byong Jin Kim

  	
   

  	
  /s/ Gene J. Kim

  
	
  Bryan Byong Jin Kim, DMD

  	
  Gene J. Kim

  
	
  Vice President

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  08/04/08

  	
   

  	
  Date:

  	
  08/04/08

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