Document:

Cyplasin Biomedical Ltd.: Exhibit 10.4 - Filed by newsfilecorp.com

SECURITIES PURCHASE AGREEMENT

     THIS AGREEMENT dated as of
the 19th day of July 2010 (the “Agreement”) between TANGIERS
INVESTORS, LP, a Delaware limited partnership (the “Investor”), and
CYPLASIN BIOMEDICAL LTD., a corporation organized and existing under the
laws of the State of Nevada the “Company”).

     WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the
Company shall issue and sell to the Investor, as provided herein, and the
Investor shall purchase from the Company up to Ten Million Dollars ($10,000,000)
of the Company’s common stock, par value $0.001 per share (the “Common
Stock”); and

     WHEREAS, such investments
will be made in reliance upon the provisions of Regulation D (“Regulation
D”) of the Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the “Securities Act”), and or upon such other
exemption from the registration requirements of the Securities Act as may be
available with respect to any or all of the investments to be made
hereunder.

     NOW, THEREFORE, the
parties hereto agree as follows:

ARTICLE I. 
Certain Definitions

     Section 1.1. “Advance”
shall mean the portion of the Commitment Amount requested by the Company in the
Advance Notice.

     Section 1.2. “Advance
Date” shall mean the first (1st) Trading Day after expiration of
the applicable Pricing Period for each Advance.

     Section 1.3. “Advance
Notice” shall mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the Investor.

     Section 1.4. “Advance Notice
Date” shall mean each date the Company delivers (in accordance with Section
2.2(b) of this Agreement) to the Investor an Advance Notice requiring the
Investor to advance funds to the Company, subject to the terms of this
Agreement. No Advance Notice Date shall be less than ten (10) Trading Days after
the prior Advance Notice Date.

     Section 1.5. “Bid Price”
shall mean, on any date, the closing bid price (as reported by Bloomberg L.P.)
of the Common Stock on the Principal Market or if the Common Stock is not traded
on a Principal Market, the highest reported bid price for the Common Stock, as
furnished by the Financial Industry Regulatory Authority.

     Section 1.6. “Closing”
shall mean one of the closings of a purchase and sale of Common Stock pursuant
to Section 2.3.

     Section 1.7. “Commitment
Amount” shall mean the aggregate amount of up to Ten Million Dollars
($10,000,000) that the Investor has agreed to provide to the Company in order to
purchase the Company’s Common Stock pursuant to the terms and conditions of this
Agreement.

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     Section 1.8. “Commitment
Period” shall mean the period commencing on the Effective Date, and expiring
on the earliest to occur of (x) the date on which the Investor shall have made
payment of Advances pursuant to this Agreement in the aggregate amount of the
Commitment Amount, (y) the date this Agreement is terminated pursuant to Section
10.2 or (z) the date occurring twenty-four (24) months after the Effective
Date.

     Section 1.9. “Common
Stock” shall mean the Company’s common stock, par value $0.001per share
whether issued to the Investor directly or underlying warrants issued to the
Investor.

     Section 1.10. “Condition
Satisfaction Date” shall have the meaning set forth in Section 7.2.

     Section 1.11. “Damages”
shall mean any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorney’s fees and disbursements and costs and
expenses of expert witnesses and investigation).

     Section 1.12. “Effective
Date” shall mean the date on which the SEC first declares effective a
Registration Statement registering the resale of the Registrable Securities as
set forth in Section 7.2(a) .

     Section 1.13. “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     Section 1.14. “Material
Adverse Effect” shall mean any condition, circumstance, or situation that
would prohibit or otherwise materially interfere with the ability of the Company
to enter into and perform any of its obligations under this Agreement or the
Registration Rights Agreement in any material respect.

     Section 1.15. “Market
Price” shall mean the lowest daily volume weighted average price of the
Common Stock during the Pricing Period.

     Section 1.16. “Maximum Advance
Amount” The maximum dollar amount of each Advance will be equal to the
average daily trading volume in dollar amount during the ten (10) trading days
preceding the Advance Date. No Advance will be made in an amount lower than the
Minimum Advance Amount (defined below) or higher than Two Hundred Fifty Thousand
Dollars ($250,000).

     Section 1.17. “Minimum Advance
Amount” shall be Five Thousand Dollars ($5,000) per Advance Notice.

     Section 1.18. “FINRA” shall
mean the Financial Industry Regulatory Authority.

     Section 1.19. “Person”
shall mean an individual, a corporation, a partnership, an association, a trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

     Section 1.20. “Pricing
Period” shall mean the five (5) consecutive Trading Days after the Advance
Notice Date subject to the terms and conditions provided herein.

     Section 1.21. “Principal
Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the American Stock Exchange, the OTC Bulletin
Board or the New York Stock Exchange, or whichever is at the time the principal
trading exchange or market for the Common Stock.

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     Section 1.22. “Purchase
Price” shall be set at eighty-five percent (85%) of the Market Price during
the Pricing Period.

     Section 1.23. “Registrable
Securities” shall mean the shares of Common Stock to be issued hereunder and
underlying any warrants that may be issued by the Company to the Investor from
time to time pursuant to this Agreement; (i) in respect of which the
Registration Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule 144”) or (iii) which have not been otherwise transferred to a
holder who may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of ownership
for such securities not bearing a restrictive legend.

     Section 1.24. “Registration
Rights Agreement” shall mean the Registration Rights Agreement dated the
date hereof, regarding the filing of the Registration Statement for the resale
of the Registrable Securities, entered into between the Company and the
Investor.

     Section 1.25. “Registration
Statement” shall mean a registration statement on Form S-1 (if use of such
form is then available to the Company pursuant to the rules of the SEC and, if
not, on such other form promulgated by the SEC for which the Company then
qualifies and which counsel for the Company shall deem appropriate, and which
form shall be available for the resale of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement and
the Registration Rights Agreement, and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.

     Section 1.26. “Regulation
D” shall have the meaning set forth in the recitals of this Agreement.

     Section 1.27. “SEC” shall mean
the United States Securities and Exchange Commission.

     Section 1.28. “Securities
Act” shall have the meaning set forth in the recitals of this Agreement.

     Section 1.29. “SEC
Documents” shall mean Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and Proxy Statements of the Company as
supplemented to the date hereof, filed by the Company for a period of at least
twelve (12) months immediately preceding the date hereof or the Advance Date, as
the case may be, until such time as the Company no longer has an obligation to
maintain the effectiveness of a Registration Statement as set forth in the
Registration Rights Agreement.

     Section 1.30. “Trading
Day” shall mean any day during which the New York Stock Exchange shall be
open for business.

     Section 1.31. “VWAP” shall
mean the volume weighted average price of the Company’s Common Stock as quoted
by Bloomberg, LP.

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ARTICLE II.

Advances

     Section 2.1. Advances.

     Subject to the terms and
conditions of this Agreement (including, without limitation, the provisions of
Article VII hereof), the Company, at its sole and exclusive option, may issue
and sell to the Investor, and the Investor shall purchase from the Company,
shares of the Company’s Common Stock by the delivery, in the Company’s sole
discretion, of Advance Notices. The number of shares of Common Stock that the
Investor shall purchase pursuant to each Advance shall be determined by dividing
the amount of the Advance by the Purchase Price. No fractional shares shall be
issued. Fractional shares shall be rounded to the next higher whole number of
shares. The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment
Amount.

     Section 2.2. Mechanics.

     (a) Advance Notice. At any
time during the Commitment Period, the Company may require the Investor to
purchase shares of Common Stock by delivering an Advance Notice to the Investor,
subject to the conditions set forth in Section 7.2; provided, however, the
amount for each Advance as designated by the Company in the applicable Advance
Notice shall not be less than the Minimum Advance Amount, nor more than the
Maximum Advance Amount and the aggregate amount of the Advances pursuant to this
Agreement shall not exceed the Commitment Amount. The Company acknowledges that
the Investor may sell shares of the Company’s Common Stock corresponding with a
particular Advance Notice after the Advance Notice is received by the Investor.
There shall be a minimum of ten (10) Trading Days between each Advance Notice
Date.

     (b) Date of Delivery of
Advance Notice. An Advance Notice shall be deemed delivered on (i) the
Trading Day it is received by facsimile or otherwise by the Investor if such
notice is received prior to 5:00 pm Eastern Time, or (ii) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after 5:00 pm
Eastern Time on a Trading Day or at any time on a day which is not a Trading
Day. No Advance Notice may be deemed delivered on a day that is not a Trading
Day.

     Section 2.3. Closings. On
each Advance Date (i) the Company shall deliver to the Investor such number of
shares of the Common Stock registered in the name of the Investor as shall equal
(x) the amount of the Advance specified in such Advance Notice pursuant to
Section 2.1 herein, divided by (y) the Purchase Price and (ii) upon receipt of
such shares, the Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately available funds.
Provided, however, that if the Company is not DWAC eligible, then the Investor
shall be allowed to deliver the amount of any Advance specified in the Advance
Notice within three (3) to five (5) business days after the Pricing Period. The
parties understand that the Company’s DWAC eligibility will not affect their
ability to obtain Advances under this Agreement, but may extend the timing of an
Advance Date. In addition, on or prior to the Advance Date, each of the Company
and the Investor shall deliver to the other all documents, instruments and
writings required to be delivered by either of them pursuant to this Agreement
in order to implement and effect the transactions contemplated herein. To the
extent the Company has not paid the fees, expenses, and disbursements in
accordance with Section 12.4, the undisputed amount of such fees, expenses, and
disbursements may be deducted by the Investor (and shall be paid to the relevant
party) directly out of the proceeds of the Advance with no reduction in the
amount of shares of the Company’s Common Stock to be delivered on such Advance
Date.

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     (a) Company’s Obligations Upon
Closing. 

          On each
Advance Date:

          (i) The
Company shall deliver to the Investor the shares of Common Stock applicable to
the Advance in accordance with Section 2.3. The certificates evidencing such
shares shall be free of restrictive legends, provided such shares are registered
pursuant to an effective registration statement.

          (ii) the
Company’s Registration Statement with respect to the resale of the shares of
Common Stock delivered in connection with the Advance shall have been declared
effective by the SEC;

          (iii)
the Company shall have obtained all material permits and qualifications required
by any applicable state for the offer and sale of the Registrable Securities, or
shall have the availability of exemptions therefrom. The sale and issuance of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject;

          (iv) the
Company shall have filed with the SEC in a timely manner all reports, notices
and other documents required of a “reporting company” under the Exchange Act and
applicable Commission regulations; and

          (v) the
fees as set forth in Section 12.4 below shall have been paid or can be withheld
as provided in Section 2.3.

     (b) Investor’s Obligations
Upon Closing. Upon receipt of the shares referenced in Section 2.3(a)(i)
above and provided the Company is in compliance with its obligations in Section
2.3, the Investor shall deliver to the Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately available
funds.

     Section 2.5. Hardship. In
the event the Investor sells shares of the Company’s Common Stock after receipt
of an Advance Notice and the Company fails to perform its obligations as
mandated in Section 2.3, and specifically the Company fails to deliver to the
Investor on the Advance Date the shares of Common Stock corresponding to the
applicable Advance pursuant to Section 2.3(a)(i), the Company acknowledges that
the Investor shall suffer financial hardship and, provided that the Investor has
performed its obligations pursuant to Section 2.3, and therefore the Company
shall be liable for any and all losses, commissions, fees, or financial hardship
caused to the Investor, provided, however that the amount of any such losses
shall not in any event exceed the applicable Advance.

ARTICLE III. 
Representations and Warranties of
Investor

     Investor hereby represents and
warrants to, and agrees with, the Company that the following are true and
correct as of the date hereof and as of each Advance Date:

     Section 3.1. Organization and
Authorization. The Investor is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite power and authority to purchase and hold the securities issuable
hereunder. The decision to invest and the execution and delivery of this
Agreement by such Investor, the performance by such Investor of its obligations
hereunder and the consummation by such Investor of the transactions contemplated
hereby have been duly authorized and requires no other proceedings on the part
of the Investor. The undersigned has the right, power and authority to execute
and deliver this Agreement and all other instruments (including, without limitations, the Registration Rights Agreement), on behalf of
the Investor. This Agreement has been duly executed and delivered by the
Investor and, assuming the execution and delivery hereof and acceptance thereof
by the Company, will constitute the legal, valid and binding obligations of the
Investor, enforceable against the Investor in accordance with its terms.

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     Section 3.2. Evaluation of
Risks. The Investor has such knowledge and experience in financial, tax and
business matters as to be capable of evaluating the merits and risks of, and
bearing the economic risks entailed by, an investment in the Company and of
protecting its interests in connection with this transaction. It recognizes that
its investment in the Company involves a high degree of risk.

     Section 3.3. No Legal Advice
From the Company. The Investor acknowledges that it had the opportunity to
review this Agreement and the transactions contemplated by this Agreement with
his or its own legal counsel and investment and tax advisors. The Investor is
relying solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

     Section 3.4. Investment
Purpose. The securities are being purchased by the Investor for its own
account, and for investment purposes. The Investor agrees not to assign or in
any way transfer the Investor’s rights to the securities or any interest therein
and acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable Federal and state securities laws.
No other person has or will have a direct or indirect beneficial interest in the
securities. The Investor agrees not to sell, hypothecate or otherwise transfer
the Investor’s securities unless the securities are registered under Federal and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is available.

     Section 3.5. Accredited
Investor. The Investor is and shall be on each Advance Date, an
“Accredited Investor” as that term is defined in Rule 501(a)(3) of
Regulation D of the Securities Act. The Company may seek any written reasonable
assurances from the Investor of the Investor’s status as an “accredited
investor” on or prior to any Advance Date.

     Section 3.6. Information.
The Investor and its advisors (and its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information it deemed material to making an informed investment
decision. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management. Neither such
inquiries nor any other due diligence investigations conducted by such Investor
or its advisors, if any, or its representatives shall modify, amend or affect
the Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement. The Investor understands that its investment
involves a high degree of risk. The Investor has sought such accounting, legal
and tax advice, as it has considered necessary to make an informed investment
decision with respect to this transaction.

     Section 3.7. Receipt of
Documents. The Investor and its counsel have received and read in their
entirety: (i) this Agreement and the Exhibits annexed hereto; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; (iii) the
Company’s most recent periodic filings filed with the SEC; and (iv) answers to
all questions the Investor submitted to the Company regarding an investment in
the Company; and the Investor has relied on the information contained therein
and has not been furnished any other documents, literature, memorandum or
prospectus.

     Section 3.8. Registration
Rights Agreement. The Investor has entered into the Registration Rights
Agreement dated the date hereof.

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     Section 3.9. Not an
Affiliate. The Investor is not an officer, director or a person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with the Company or any
“Affiliate” of the Company (as that term is defined in Rule 405 of the
Securities Act).

     Section 3.10. Trading
Activities. The Investor’s trading activities with respect to the Company’s
Common Stock shall be in compliance with all applicable federal and state
securities laws, rules and regulations and the rules and regulations of the
Principal Market on which the Company’s Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock of the Company, the Investor agrees that it shall not, and that it will
cause its affiliates not to, engage in any short sales of or hedging
transactions with respect to the Common Stock, 

     Section 3.11 Reliance on
  Exemptions. The Investor understands that the Common Stock is being offered
  and sold to it in reliance on specific exemptions from the registration
  requirements of United States federal and state securities laws and that the
  Company is relying in part upon the truth and accuracy of, and such Investor’
  compliance with, the representations, warranties, agreements, acknowledgements
  and understandings of such Investor set forth here in order to determine the
  availability of such exemptions and the eligibility of such Investor to acquire
the Common Stock.

     Section 3.12 No Governmental
Review. The Investor understands that no United States, federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Common Stock issuable pursuant to this
Agreement or the fairness or suitability of the investment in the Common Stock
nor have such authorities passed upon or endorsed the merits of the offering of
the Common Stock.

ARTICLE IV. 
Representations and Warranties of the
Company

     Except as stated below, on the
disclosure schedules attached hereto or in the SEC Documents (as defined
herein), the Company hereby represents and warrants to, and covenants with, the
Investor that the following are true and correct as of the date hereof:

     Section 4.1. Organization and
Qualification. The Company is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite corporate power to own its properties and to carry on its business as
now being conducted. Each of the Company and its subsidiaries (if any) is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

     Section 4.2. Authorization,
Enforcement, Compliance with Other Instruments. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and any related agreements by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement, the Registration Rights
Agreement and any related agreements have been duly executed and delivered by
the Company, (iv) this Agreement, the Registration Rights Agreement and assuming
the execution and delivery thereof and acceptance by the Investor and any
related agreements constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.

7

     Section 4.3. Capitalization. The authorized capital stock of the Company consists of
_100,000,000 shares of Common Stock and _100,000,000shares of Preferred Stock
(with various series), $0.001 par value per share (“Preferred Stock”), of
which approximately 12 million shares of Common Stock and zero shares of
Preferred Stock are issued and outstanding. All of such outstanding shares have
been validly issued and are fully paid and nonassessable. No shares of Common
Stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company. As of the date hereof,
except for the financing transactions and acquisitions previously disclosed to
the Investor and as set forth in Schedule 4.3; (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there are no outstanding registration statements other
than on Form S-8 and (iv) there are no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to register the sale of any
of their securities under the Securities Act (except pursuant to the
Registration Rights Agreement). There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by this
Agreement or any related agreement or the consummation of the transactions
described herein or therein. The Company has furnished to the Investor true and
correct copies of the Company’s Certificate of Incorporation, as amended and as
in effect on the date hereof (the “Certificate of Incorporation”), and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
and the terms of all securities convertible into or exercisable for Common Stock
and the material rights of the holders thereof in respect thereto.

     Section 4.4. No Conflict.
Subject to the Company’s Certificate of Incorporation, the execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby will not (i) result in a
violation of the Certificate of Incorporation, any certificate of designations
of any outstanding series of preferred stock of the Company or By-laws or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market on which the Common Stock is
quoted) applicable to the Company or any of its subsidiaries or by which any
material property or asset of the Company or any of its subsidiaries is bound or
affected and which would cause a Material Adverse Effect. Neither the Company
nor its subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any material
law, ordinance, and regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.

     Section 4.5. SEC Documents;
Financial Statements. As of their respective dates, the financial statements
of the Company disclosed on the Company’s website and disclosed to the Investor
(the “Financial Statements”) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations with
respect thereto. Such Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

8

     Section 4.6. 10b-5. None
of the documents provided to the Investor include any untrue statements of
material fact, nor do they omit to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.

     Section 4.7. No Default.
The Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it is or its property is bound (which has not been waived)
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement or any of the exhibits or
attachments hereto will conflict with or result in the breach or violation
(which has not been waived) of any of the terms or provisions of, or constitute
a default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under its Certificate of Incorporation,
By-Laws, any material indenture, mortgage, deed of trust or other material
agreement applicable to the Company or instrument to which the Company is a
party or by which it is bound, or any statute, or any decree, judgment, order,
rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company’s
business or financial condition.

     Section 4.8. Absence of Events
of Default. No Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse Effect on
the Company’s business, properties, prospects, financial condition or results of
operations.

     Section 4.9. Intellectual
Property Rights. The Company and its subsidiaries own or possess adequate
rights or licenses to use all material trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted. The
Company and its subsidiaries do not have any knowledge of any infringement by
the Company or its subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

     Section 4.10. Employee
Relations. Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s or its
subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.

9

     Section 4.11. Environmental
Laws. The Company and its subsidiaries are (i) in compliance with any and
all applicable material foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.

     Section 4.12. Title. The
Company has good and marketable title to its properties and material assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.

     Section 4.13. Insurance.
The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the Company nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

     Section 4.14. Regulatory
Permits. The Company and its subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.

     Section 4.15. No Material
Adverse Breaches, etc. Neither the Company nor any of its subsidiaries is
subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which in the judgment of the Company’s
officers has or is expected in the future to have a Material Adverse Effect on
the business, properties, operations, financial condition, results of operations
or prospects of the Company or its subsidiaries. Neither the Company nor any of
its subsidiaries is in breach of any contract or agreement which breach, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.

     Section 4.16. Absence of
Litigation. Except as disclosed in Schedule 4.16, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or any of the Company’s subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a Material
Adverse Effect on the transactions contemplated hereby (ii) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) have a Material Adverse Effect on the business,
operations, properties, financial condition or results of operation of the
Company and its subsidiaries taken as a whole.

     Section 4.17.
Subsidiaries. The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership, association or
other business entity other than what is reported in the Company’s SEC
filings.

10

     Section 4.18. Tax Status.
Except as disclosed in Schedule 4.18, the Company and each of its subsidiaries
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject and
(unless and only to the extent that the Company and each of its subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

     Section 4.19. Certain
Transactions. Except as disclosed in Schedule 4.19, the Company is not
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

     Section 4.20. Fees and Rights
of First Refusal. The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.

     Section 4.21. Use of
Proceeds. The Company shall use the net proceeds from this offering for
general corporate purposes, including, without limitation, the payment of loans
incurred by the Company. However, in no event shall the Company use the net
proceeds from this offering for the payment (or loan to any such person for the
payment) of any judgment, or other liability, incurred by any executive officer,
officer, director or employee of the Company, except for any liability owed to
such person for services rendered, expense reimbursement or if any judgment or
other liability is incurred by such person originating from services rendered to
the Company, or the Company has indemnified such person from liability.

     Section 4.22. Further
Representation and Warranties of the Company. For so long as any securities
issuable hereunder held by the Investor remain outstanding, the Company
acknowledges, represents, warrants and agrees that it will use its best efforts
to maintain the listing of its Common Stock on the Principal Market.

     Section 4.23. Opinion of
Counsel. The Company will obtain, subject to applicable securities laws, for
the Investor, at the Company’s expense, any and all opinions of counsel which
may be reasonably required in order to sell the securities issuable hereunder
without restriction.

     Section 4.24. Dilution.
The Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock.

ARTICLE V. 
Indemnification

     The Investor and the Company represent
to the other the following with respect to itself:

11

     Section 5.1.
Indemnification.

     (a) In consideration of the
Investor’s execution and delivery of this Agreement, and in addition to all of
the Company’s other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Investor, and all of its officers,
directors, partners, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Investor Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Investor Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified Liabilities”), incurred by the
Investor Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any material misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any material breach of any covenant, agreement or obligation of
the Company contained in this Agreement or the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnity, or (d) any failure
(whether purposeful or not) on the part of the transfer agent to effectuate the
transfer of shares or any of the transactions contemplated hereunder. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under
applicable law.

     (b) In consideration of the
Company’s execution and delivery of this Agreement, and in addition to all of
the Investor’s other obligations under this Agreement, the Investor shall
defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, shareholders, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Company Indemnitees”) from and
against any and all Indemnified Liabilities incurred by the Company Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
material misrepresentation or breach of any representation or warranty made by
the Investor in this Agreement, the Registration Rights Agreement, or any
instrument or document contemplated hereby or thereby executed by the Investor,
(b) any material breach of any covenant, agreement or obligation of the
Investor(s) contained in this Agreement, the Registration Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby
executed by the Investor, or (c) any cause of action, suit or claim brought or
made against such Company Indemnitee based on misrepresentations or due to a
breach by the Investor and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason, the Investor shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

     (c) The obligations of the
parties to indemnify or make contribution under this Section 5.1 shall survive
termination.

ARTICLE VI. 
Covenants of the Company

     Section 6.1. RESERVED.

12

     Section 6.2. Listing of Common
Stock. the Company shall maintain the Common Stock’s authorization for
quotation on the Over-the-Counter Bulletin Board during the term of the
Commitment Period.

     Section 6.3. Exchange Act
Registration. During the term of the Commitment Period, the Company will
cause its Common Stock to continue to be registered under Section 12(g) of the
Exchange Act, will file in a timely manner all reports and other documents
required of it as a reporting company under the Exchange Act and will not take
any action or file any document (whether or not permitted by Exchange Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Exchange Act.

     Section 6.4. Transfer Agent
Instructions. Upon effectiveness of the Registration Statement the Company
shall deliver instructions to its transfer agent to issue shares of Common Stock
to the Investor free of restrictive legends on or before each Advance Date.

     Section 6.5. Corporate
Existence. During the Commitment period, the Company will take all steps
necessary to preserve and continue the corporate existence of the Company.

     Section 6.6. Notice of Certain
Events Affecting Registration; Suspension of Right to Make an
Advance. The Company will immediately notify the Investor upon its becoming
aware of the occurrence of any of the following events in respect of a
registration statement or related prospectus relating to an offering of
Registrable Securities: (i) receipt of any request for additional information by
the SEC or any other Federal or state governmental authority during the period
of effectiveness of the Registration Statement for amendments or supplements to
the registration statement or related prospectus; (ii) the issuance by the SEC
or any other Federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events. The Investor understands and
acknowledges that receipt of any of the information requested herein may, at the
time provided to the Investor, constitute material, non-public inside
information, and the Investor agrees to conduct itself accordingly based on
applicable law,

     Section 6.7. Restriction on
Sale of Capital Stock. Following the effectiveness of the Registration
Statement, the Company shall not, without the prior written consent of the
Investor, (i) issue or sell any Common Stock or Preferred Stock without
consideration or for a consideration per share less than the Bid Price of the
Common Stock determined immediately prior to its issuance, or (ii) issue or sell
any Preferred Stock warrant, option, right, contract, call, or other security or
instrument granting the holder thereof the right to acquire Common Stock without
consideration or for a consideration per share less than the Bid Price of the
Common Stock determined immediately prior to its issuance. 

13

Notwithstanding the
foregoing this Section shall not apply in respect of an Exempt Issuance or an
underwritten public offering of Common Stock. For purposes of this Agreement “Exempt Issuance” means the issuance of (a) shares of Common Stock or
options to employees, officers, directors or consultants of the Company pursuant
to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors or a majority of
the members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to
decrease the exercise, exchange or conversion price of such securities, (c) any
financing that the Company has in place prior to the date of this Agreement, (d)
a private placement(s) of the Company’s stock in an amount equal to $ 6,000,000
and (e) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business synergistic with the business
of the Company and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities. In no event may the Investor
withhold approval of additional financing to the Company from third parties
except as such financing is an equity line of credit financing. In the event the
Company elects to obtain additional financing during the term of this Agreement,
the Company shall immediately provide the Investor written notice of such intent
(the “Financing Notice”). The Financing Notice shall contain all of the terms,
and parties related to the financing.

     Section 6.8. Consolidation;
Merger. During the Commitment Period, the Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all the assets of the Company to
another entity (a “Consolidation Event”) unless the resulting successor
or acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investor such shares of stock and/or securities as
the Investor is entitled to receive pursuant to this Agreement.

     Section 6.9. Issuance of the
Company’s Common Stock. The sale of the shares of Common Stock shall be made
in accordance with the provisions and requirements of Regulation D and any
applicable state securities law.

     Section 6.10. Review of Public
Disclosures. All SEC filings (including, without limitation, all filings
required under the Exchange Act, which include Forms 10-Q and 10-QSB, 10-K and
10K-SB, 8-K, etc) and other public disclosures made by the Company, including,
without limitation, all press releases, investor relations materials, and
scripts of analysts meetings and calls, shall be reviewed and approved for
release by the Company’s attorneys and, if containing financial information, the
Company’s independent certified public accountants.

     Section 6.11. Market
Activities. The Company will not, directly or indirectly, (i) take any
action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common Stock or
(ii) sell, bid for or purchase the Common Stock, or pay anyone any compensation
for soliciting purchases of the Common Stock.

ARTICLE VII. 
Conditions Precedent

     Section 7.1. Conditions
Precedent to the Obligations of the Company. The obligation hereunder of the
Company to issue and sell the shares of Common Stock to the Investor incident to
each Closing is subject to the satisfaction, or waiver by the Company, at or
before each such Closing, of each of the conditions set forth below.

14

     (a) Accuracy of the Investor’s
Representations and Warranties. The representations and warranties of the
Investor shall be true and correct in all material respects.

     (b) Performance by the
Investor. The Investor shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Investor at or prior to such Closing.

     Section 7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice. The
right of the Company to deliver an Advance Notice is subject to the fulfillment
by the Company, on such Advance Notice (a “Condition Satisfaction Date”),
of each of the following conditions:

     (a) Registration of the Common
Stock with the SEC. The Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registrable Securities in accordance
with the terms of the Registration Rights Agreement. As set forth in the
Registration Rights Agreement, the Registration Statement shall have previously
become effective and shall remain effective on each Condition Satisfaction Date
and (i) neither the Company nor the Investor shall have received notice that the
SEC has issued or intends to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or permanently, or intends or
has threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.

     (b) Authority. The Company
shall have obtained all permits and qualifications required by any applicable
state in accordance with the Registration Rights Agreement for the offer and
sale of the shares of Common Stock, or shall have the availability of exemptions
therefrom. The sale and issuance of the shares of Common Stock shall be legally
permitted by all laws and regulations to which the Company is subject.

     (c) Fundamental Changes.
There shall not exist any fundamental changes to the information set forth in
the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.

     (d) Performance by the
Company. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.

     (e) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly and adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting or
adversely affecting any of the transactions contemplated by this Agreement.

     (f) No Suspension of Trading
in or Delisting of Common Stock. The trading of the Common Stock is not
suspended by the SEC or the Principal Market (if the Common Stock is traded on a
Principal Market). The issuance of shares of Common Stock with respect to the
applicable Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market (if the Common Stock is traded on a
Principal Market). The Company shall not have received any notice threatening
the continued listing of the Common Stock on the Principal Market (if the
Common Stock is traded on a Principal Market).

15

     (g) Maximum Advance
Amount. The amount of an Advance requested by the Company shall not exceed
the Maximum Advance Amount. In addition, in no event shall the number of shares
issuable to the Investor pursuant to an Advance cause the aggregate number of
shares of Common Stock beneficially owned by the Investor and its affiliates to
exceed nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
Company. For the purposes of this section beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act.

     (h) No Knowledge. The
Company has no knowledge of any event which would be more likely than not to
have the effect of causing such Registration Statement to be suspended or
otherwise ineffective.

     (i) Executed Advance
Notice. The Investor shall have received the Advance Notice executed by an
officer of the Company and the representations contained in such Advance Notice
shall be true and correct as of each Condition Satisfaction Date.

ARTICLE VIII.
Due Diligence Review; Non-Disclosure
of Non-Public Information

     Section 8.1. Non-Disclosure of
Non-Public Information.

     (a) Except as may be required by
the Investor herein, the Company covenants and agrees that it shall refrain from
disclosing, and shall cause its officers, directors, employees and agents to
refrain from disclosing, any material non-public information to the Investor
without also disseminating such information to the public, unless prior to
disclosure of such information the Company identifies such information as being
material non-public information and provides the Investor with the opportunity
to accept or refuse to accept such material non-public information for
review.

     (b) Except as provided herein,
nothing herein shall require the Company to disclose non-public information to
the Investor or its advisors or representatives, and the Company represents that
it does not disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

16

ARTICLE IX. 
Choice of Law/Jurisdiction

     Section 9.1. Governing
Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California without regard to the principles of conflict
of laws. The parties further agree that any action between them shall be heard
in the State of California, and expressly consent to the jurisdiction and venue
of the courts, sitting in California and the United States District Court of
California for the adjudication of any civil action asserted pursuant to this
paragraph.

ARTICLE X.
Assignment; Termination

     Section 10.1. Assignment.
Neither this Agreement nor any rights of the Company hereunder may be assigned
to any other Person.

     Section 10.2. Termination.

     (a) The obligations of the
Investor to make Advances under Article II hereof shall terminate twenty-four
(24) months after the Effective Date or 

     (b) The obligation of the Investor to
make an Advance to the Company pursuant to this Agreement shall terminate
permanently (including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of ninety
(80) Trading Days, other than due to the acts of the Investor, during the
Commitment Period, or (ii) the Company shall at any time fail materially to
comply with the requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written notice from the Investor, provided,
however, that this termination provision shall not apply to any period
commencing upon the filing of a post-effective amendment to such Registration
Statement and ending upon the date on which such post effective amendment is
declared effective by the SEC.

ARTICLE XI. 
Notices

     Section 11.1. Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

	If to the Company, to: 	Cyplasin Biomedical Ltd. 
	  	9650-20 Avenue, 
	  	Edmonton, Alberta, Canada TGN 1G1 
	  	c/o Garth Likes 
	  	Telephone: (780) 469-2975 
	  	Facsimile: 780.669.3971 
	  	  
	  	  
	  	Tangiers Investors, LP 

17

	If to the Investor(s): 	Michael Sobeck 
	  	402 West Broadway 
	  	Suite 400 
	  	San Diego, California 92101 
	  	Telephone: 619-615-4255 
	  	Facsimile: 619-566-2011 

Each party shall provide five (5) days’ prior written notice to
the other party of any change in address or facsimile number.

ARTICLE XII.
 Miscellaneous

     Section 12.1.
Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof,
though failure to deliver such copies shall not affect the validity of this
Agreement.

     Section 12.2. Entire
Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

     Section 12.3. Reporting Entity
for the Common Stock. The reporting entity relied upon for the determination
of the trading price or trading volume of the Common Stock on any given Trading
Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor
thereto. The written mutual consent of the Investor and the Company shall be
required to employ any other reporting entity.

     Section 12.4. Commitment
Fee. Upon the date of execution of the Securities Purchase Agreement, the
Company shall be required to issue the Purchaser three hundred thousand dollars
($300,000) worth of restricted Common Stock as a commitment fee. The commitment
fee shares shall have piggyback registration rights and shall be issued in
tranches in accordance with the following schedule:

a) $150,000 worth of Common Stock shall
be issued 25 days after the execution of the Securities Purchase Agreement
(“Tranche #1”);

b) $150,000 worth of Common Stock shall
be issued to the Investor upon the earlier of the Company’s S-1 Registration
Statement being declared effective by the SEC or 90 days following the execution
of this Agreement (“Tranche #2”).

The amount of the Investor Shares issued to the Investor in
each of aforementioned Tranches shall be calculated by dividing the dollar
amount of each such Tranche by the lowest VWAP of the Company’s Common Stock
during the ten (10) business days immediately preceding the date on which such
Tranche is issued, as quoted on Bloomberg, LP.

18

It is the Company’s full intention that the Investor receives
the full value of the Commitment Fee. Therefore, in the event that the Investor
is unable to obtain at least $250,000 of value through the sale of the Shares
underlying the Commitment Fee, whether because of a decline in the Company’s
stock price or for whatever reason, then the Company shall issue to the Company
that number of shares to the Investor that would allow the Investor to obtain a
minimum of $250,000 through the sale of such Shares. The Investor shall provide
the Company any and all documentation necessary to confirm to the Company that
it has received or not received at least $250,000 worth of value from the sale
of the Shares underlying the Commitment Fee.

     Section 12.5. Brokerage.
Each of the parties hereto represents that it has had no dealings in connection
with this transaction with any finder or broker who will demand payment of any
fee or commission from the other party. The Company on the one hand, and the
Investor, on the other hand, agree to indemnify the other against and hold the
other harmless from any and all liabilities to any person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.

     Section 12.6.
Confidentiality. If for any reason the transactions contemplated by this
Agreement are not consummated, each of the parties hereto shall keep
confidential any information obtained from any other party (except information
publicly available or in such party’s domain prior to the date hereof, and
except as required by court order) and shall promptly return to the other
parties all schedules, documents, instruments, work papers or other written
information without retaining copies thereof, previously furnished by it as a
result of this Agreement or in connection herein.

[SIGNATURE PAGE TO FOLLOW]

19

     IN WITNESS WHEREOF, the
parties hereto have caused this Securities Purchase Agreement to be executed by
the undersigned, thereunto duly authorized, as of the date first set forth
above.

	 	 COMPANY: 
	 	 CYPLASIN BIOMEDICAL LTD.
    
	 	  	  
	 	  	  
	 	  /s/
      Garth Likes	  
	 	Name:Garth Likes 
	 	Title: Chief Executive Officer 
	 	  	  
	 	  	  
	 	INVESTOR: 
	 	TANGIERS INVESTORS, LP 
	 	  	  
	 	  	  
	 	By: Tangiers Capital, LLC 
	 	Its: General Partner 	

20

EXHIBIT A

ADVANCE NOTICE

CYPLASIN BIOMEDICAL LTD

     The undersigned,
__________________________ hereby certifies, with respect to the sale of shares
of Common Stock of CYPLASIN BIOMEDICAL LTD. (the “Company”)
issuable in connection with this Advance Notice, delivered pursuant to the
Securities Purchase Agreement (the “Agreement”), as follows:

     1. The undersigned is the duly elected
_______of the Company.

     2. There are no fundamental
changes to the information set forth in the Registration Statement which would
require the Company to file a post effective amendment to the Registration
Statement.

     3. The Company has performed in
all material respects all covenants and agreements to be performed by the
Company and has complied in all material respects with all obligations and
conditions contained in the Agreement on or prior to the Advance Notice Date,
and shall continue to perform in all material respects all covenants and
agreements to be performed by the Company through the applicable Advance Date.
All conditions to the delivery of this Advance Notice are satisfied as of the
date hereof.

     4. The undersigned hereby
represents, warrants and covenants that it has made all filings (“SEC
Filings”) required to be made by it pursuant to applicable securities laws
(including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q, 10-K or 8-K, etc.). All SEC
Filings and other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the “Public Disclosures”), have been reviewed and approved for release by
the Company’s attorneys and, if containing financial information, the Company’s
independent certified public accountants. None of the Company’s Public
Disclosures contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     5. The Advance requested is
___________.

     The undersigned has executed this
Certificate this ____ day of .

	 	CYPLASIN BIOMEDICAL LTD. 
	 	 
	 	
      By: 

	 	 
	 	 
	 	Name: 
	 	 
	 	Title: 

If Returning This Advance Notice via Facsimile Please Send
To:

If by Mail, via Federal Express Tangiers Investors, LP To:

402 West Broadway Suite 400, Suite 400, San Diego, CA 92101

21Cyplasin Biomedical Ltd.: Exhibit 10.5 - Filed by newsfilecorp.com

ASSET ASSIGNMENT AGREEMENT

THIS AGREEMENT dated for reference the 27th day of December,
2009.

BETWEEN:

  
    
      
        Dr Joseph Sinkule a resident of Scottsdale, Arizona
          and C- Virionics Corporation. whose principle address is 42191 N. 111th
          Place, Scottsdale, Arizona, 85262 (herein collectively the Assignor);
        

      

    

  

AND:

  
    
      
        Cyplasin Biomedical Ltd. a corporation existing under
          the laws of the State of Nevada whose principle place of business is
          located at Suite 131, Advanced Technology Center, 9650-20th avenue.,
          Edmonton, Alberta Canada (herein called “Assignee) and where together
          the Assignee and the Assignor are referred to as the "Parties" 

      

    

  

WHEREAS: 

A.     The Assignor carries on the business
of developing therapeutic products under a License identified as L-075-2004
14.07, L-232-2002 14.07, L-154-2004 8.05 (hereinafter the "License") from the
Public Health Services of the National Institute of Health (NIH) located in
Bethesda, Maryland (the “Business”) and; 

B.     The Assignor has agreed to assign
all of its rights related to said License and the Assignee has agreed to acquire
and be bound by all conditions of said License (attached as Appendix 1) and
thereby does acquire the exclusive world-wide rights to commercialize and
further develop such Intellectual Property under said License L-075-2004/0, on
the terms and conditions herein provided and; 

C.     The Assignee has trademarks,
proprietary knowledge and other related information’s including but not limited
to the technical, developmental and commercialization data and information (for
the Business) which the Parties have agreed will also be assigned to and or
otherwise acquired by the Assignor such that going forward Dr. Sinkule will
contribute all of his experience, personal IP relative to hepatitis C product
development, prior plans and strategies, manufacturing agreements and assets
related to the License and to Ribavirin and interferon generic projects, other
and related ongoing business development activities, etc. as needed in order for
us to make hepatitis C products and; 

D.     Where the Assignor owes to the NIH
an amount of $97,290.93 in back royalty and other associated legal costs and
whereby the Assignee hereby agrees to pay this amount (partially completed) in
exchange for assignment of the License directly to the Assignee and further;

E.     The Assignee in order to further
compensate the Assignor for the License assignment will issue 3,680,000 common
shares of Cyplasin Biomedical Ltd's to the three shareholders of Virionics (3
million to Dr. Joseph Sinkule, 500,000 to Dr. Jake Liang, and 180,000 to Robert
Kennedy) at a value of US$0.17 per share such that Articles D & E taken
together are the Remuneration for said License Assignment. 

	1. 	
      DEFINED TERMS

	 	 	 	 
	1.1 	
      For the purposes of this Agreement, unless the context
      otherwise requires, the following terms will have the respective meanings
      set out below and grammatical variations of such terms will have
      corresponding meanings:

	 	 	 	 
		(a) 	
      “Business” means the business carried on by the Assignor
      as described in Recital A of this Agreement; which shall include but not
      be limited to:

	 	 	 	 
			(i) 	
      all material samples, production materials,( including
      but not limited to the cell lines), experimental records, accounting and
      other books and records, and all other
proprietary and technical information,
correspondence, documents, lab records & notes and material relating to the
Business; 

- 2 -

	 	(ii) 	
      all right, title, and interest of the Assignor in and to
      the Licensed Property described in Appendix 1 attached hereto;
  and

	 	 	 
	 	(iii) 	
      all permits, licenses, consents, authorizations, and
      approvals pertaining to the Business including without limitation those
      described in Appendix 2 NIH consent to transfer and related Permits and
      Licenses attached hereto, to the extent such permits licenses, consents,
      authorizations and approvals are transferable by the execution of this
      Agreement.

	 	(b) 	
      “Business Day” means any day which is not a Saturday,
      Sunday or statutory holiday in British Columbia;

	 	 	 
	 	(c) 	
      “Closing” means the completion of the transactions
      contemplated in this Agreement;

	 	 	 
	 	(d) 	
      “Closing Date” means December 31, 2009, or such other
      date as the Assignor and the Assignee may mutually determine;

	 	 	 
	 	(e) 	
      “Contract” means any agreement, indenture, contract,
      lease, deed of trust, license, option, instrument or other commitment,
      whether written or oral;

	 	 	 
	 	(f) 	
      “Encumbrance” means any encumbrance, lien, charge,
      hypothec, pledge, mortgage, title retention agreement, security interest
      of any nature, adverse claim, exception, reservation, easement, right of
      occupation, any matter capable of registration against title, option,
      right of pre-emption, privilege or any Contract to create any of the
      foregoing;

	 	 	 
	 	(g) 	
      “Environmental Laws” means all applicable federal, state,
      municipal and local laws, statutes, ordinances, by-laws and regulations,
      and orders, directives and decisions rendered by any ministry, department
      or administrative or regulatory agency relating to the protection of the
      environment, occupational health and safety or the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport or
      handling of any Hazardous Substances;

	 	 	 
	 	(h) 	
      “Environmental Permits” means any licenses, permits,
      approvals, consents, certificates, registrations and other authorizations
      under Environmental Laws required for the operation of the
  Business;

	 	 	 
	 	(i) 	
      “Goodwill” means the goodwill of the Business, together
      with the exclusive right of the Assignee to represent itself as carrying
      on the Business in continuation of and in succession to the Assignor, and
      the right to the “Cyplasin” or any other future to be determined name or
      any variation thereof as part of, or in connection with the
    Business;

	 	 	 
	 	(j) 	
      “Hazardous Substances” means any pollutants,
      contaminants, chemical or industrial toxic, or hazardous waste or
      substances;

	 	 	 
	 	(k) 	
      “Intellectual Property” means all registered and
      unregistered patents (issued or pending, continuances and PCTs thereof),
      patent rights, trade or brand names, business names, trade-marks,
      trade-mark registrations, copyrights, and applications thereof; drawings,
      logos, designs, trade secrets, restrictive covenants, processes,
      technology, registered user agreements, research data, inventions,
      instruction manuals, formulae, and other industrial or intellectual
      property respecting the Business, including, without limitation, the
      intellectual property

	 	 	 
	 	(l) 	
      ”Licenses” means all licenses, permits, approvals,
      consents, certificates, registrations and authorizations (whether
      governmental, regulatory, or otherwise) required for the conduct in
    the ordinary course of the operations of
the Business and the uses to which the Business Assets have been put; 

- 3 - 

	 	(m) 	
      “Losses” means, in respect of any matter, all claims,
      demands, proceedings, losses, damages, liabilities, deficiencies, costs
      and expenses (including, without limitation, all legal and other
      professional fees and disbursements, interest, penalties and amounts paid
      in settlement) arising directly or indirectly as a consequence of such
      matter and actually incurred by a party entitled to be indemnified
      hereunder, net of (i) any tax adjustments, benefits, savings or reductions
      to which such indemnified party is entitled resulting from such matter,
      and (ii) any insurance proceeds, in either case to which such indemnified
      party is entitled by virtue of such claims, demands, proceedings, losses,
      damages, liabilities, deficiencies, costs and expenses;

	 	 	 	 
	 	(n) 	
      "NIH" means the National Institute of Health of Bethesda,
      Maryland which collectively encompasses for this agreement the Public
      Health Service and the Office of Technology Transfer thereof.

	 	 	 	 
	 	(o) 	
      “Permitted Encumbrances” means:

	 	 	 	 
	 		(i) 	
      liens for taxes, assessments, levies and other
      governmental charges either not yet due and payable or due but for which
      notice of assessment has not been given;

	 	 	 	 
	 		(ii) 	
      undetermined or inchoate liens, charges and privileges
      incidental to current construction or current operations and statutory
      liens, charges, adverse claims, security interests or encumbrances of any
      nature whatsoever claimed or held by any governmental authority that have
      not at the time been filed or registered against the title to the asset or
      served upon the Assignor pursuant to law or that relate to obligations not
      due or delinquent;

	 	 	 	 
	 		(iii) 	
      assignments of insurance provided to landlords (or their
      mortgagees) pursuant to the terms of any lease, and liens or rights
      reserved in any lease for rent or for compliance with the terms of such
      lease; and

	 	 	 	 
	 		(iv) 	
      security given in the ordinary course of the Business to
      any public utility, municipality or government or to any statutory or
      public authority in connection with the operations of the Business, other
      than security for borrowed money;

	 	 	 	 
	 	(p) 	
      “Remuneration” means the aggregate sum payable by the
      Assignee to the Assignor for the Business Assets which shall be comprised
      of a Cash Component and an Equity Component consisting of common class A
      shares of the Assignee.

	1.2 	
      Currency. Unless otherwise indicated, all dollar
      amounts in this Agreement are expressed in United States funds.

	 	 
	1.3 	
      Sections and Headings. The division of this
      Agreement into Articles, sections and subsections and the insertion of
      headings are for convenience of reference only and will not affect the
      interpretation of this Agreement. Unless otherwise indicated, any
      reference in this Agreement to an Article, section, subsection or Schedule
      refers to the specified Article, section or subsection of or Schedule to
      this Agreement.

	 	 
	1.4 	
      Number, Gender and Persons. In this Agreement,
      words importing the singular number only will include the plural and vice
      versa, words importing gender will include all genders and words importing
      persons will include individuals, corporations, partnerships,
      associations, trusts, unincorporated organizations, governmental bodies
      and other legal or business entities of any kind whatsoever.

	 	 
	1.5 	
      Entire Agreement. This Agreement constitutes the
      entire agreement between the parties with respect to the subject matter
      hereof and supersedes all prior agreements, understandings, negotiations
      and discussions, whether written or oral. There are no conditions,
      covenants, agreements, representations, warranties
or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except
as herein provided. 

- 4 -

	1.6 	
      Time of Essence. Time will be of the essence of
      this Agreement.

	 	 
	1.7 	
      Applicable Law. This Agreement will be construed,
      interpreted and enforced in accordance with, and the respective rights and
      obligations of the parties will be governed by, the laws of the State of
      Nevada the federal laws of the United States of America applicable
      therein, and each party irrevocably and unconditionally submits to the
      non-exclusive jurisdiction of the courts of such state and all courts
      competent to hear appeals there from and waives, so far as is legally
      possible, its right to have any legal action relating to this Agreement
      tried by a jury.

	 	 
	1.8 	
      Amendments and Waivers. No amendment or waiver of
      any provision of this Agreement will be binding on either party unless
      consented to in writing by such party. No waiver of any provision of this
      Agreement will constitute a waiver of any other provision, nor will any
      waiver constitute a continuing waiver unless otherwise provided.

	 	 
	2. 	
      ASSIGNMENT

	 	 
	2.1 	
      Subject to the terms and conditions of this Agreement,
      effective as at the Closing Date the Assignor will assign and transfer to
      the Assignee and the Assignee agrees to acquire from the Assignor, free
      and clear of all Encumbrances except as may be otherwise specifically
      provided for herein as Permitted Encumbrances, the Business as a going
      concern and related Business Assets, but not including the Excluded
      Assets. The Assignee also agrees that it will comply in total with all
      requirements as given and or defined within the NIH license which shall
      include but not be limited to all owed payments, milestone payments and
      any eventual royalty schedules and any termination effects thereof.
      Further the Assignee shall comply with all due written reports and other
      such requirements as to the product development of the technology
      therein.

	 	 
	3. 	
      PURCHASE PRICE AND ALLOCATION

	 	 
	3.1 	
      The Remuneration payable by the Assignee to the Assignor
      for the Business Assets shall consist of $97,2190.93( the Cash Component)
      due to the NIH for previously owed royalty payments and associated legal
      costs plus and Equity Component consisting of 3,680,000 shares of the
      Assignee's class A common stock. On or prior to the Closing Date, the
      Assignee and the Assignor shall enter into a form of subscription
      agreement in regards to the Equity Component.

	 	 
	4. 	
      PAYMENT OF THE CASH COMPONENT

	 	 
	4.1 	
      The Cash Component will be paid in full by the issuance
      by the Assignee to the NIH instalments to be completed on the Closing
      Date. The parties agree to treat the payment of the Cash Component as an
      instalment under Section 453 of the Internal Revenue Code

	 	 
	5. 	
      CLOSING, POSSESSION, AND NO
  ADJUSTMENTS

	 	 
	5.1 	
      The Closing will take place December 31st, 2009 at 5:00
      p.m. local time, on the Closing Date at the offices of Cyplasin Biomedical
      Ltd, Suite 131 Advanced Technology Center, 9650-20th ave, Edmonton Alberta
      Canada T6N 1G1, or at such other place, date, and time as may be mutually
      agreed upon by the parties hereto.

	 	 
	5.2 	
      The Assignor will deliver possession of the Business
      Assets, free of any other claim to possession and any tenancies, to the
      Assignee on the Closing Date.

	 	 
	5.3 	
      Provided that there has been no material
      misrepresentation on the part of the parties to this agreement and all of
      their respective obligations under this Agreement have been fulfilled,
      there will be no adjustment of the Purchase Price for any reason
      whatsoever.

- 5 -

	6. 	
      ASSUMPTION OF LIABILITY

	 	 	 
	6.1 	
      Subject to the provisions of this Agreement, the Assignor
      agrees to assume, pay, satisfy, discharge, perform and fulfill, from and
      after the Closing Date, all obligations and liabilities of the Assignor in
      respect of:

	 	 	 
		(a) 	
      assignment of Intellectual Property;

	 	 	 
		(b) 	
      all of the required licenses, permits, approvals,
      consents, registrations, certificates and other authorizations described
      in Schedule 2 - Permits and Licenses;

	 	 	 
		(c) 	
      the agreements entered into by the Assignor in the
      ordinary course of the Business for the provision of services or goods to
      the Assignor; and

	 	 	 
	7. 	
      REPRESENTATIONS AND WARRANTIES OF THE
      ASSIGNOR

	 	 	 
	7.1 	
      The Assignor represents and warrants to the Assignee,
      with the intent that the Assignee will rely thereon in entering into this
      Agreement and in concluding the transactions contemplated hereby, as
      follows:

	 	(a) 	
      the execution and delivery of this Agreement and the
      completion of the transaction contemplated hereby have been duly and
      validly authorized by all necessary limited liability company action on
      the part of the Assignor and this Agreement constitutes a valid and
      binding obligation of the Assignor enforceable against the Assignor in
      accordance with its terms; except as enforcement may be limited by
      bankruptcy, insolvency and other laws affecting the rights of creditors
      generally and except that equitable remedies may be granted only in the
      discretion of a court of competent jurisdiction;

	 	 	 	 
	 	(b) 	
      except as will be remedied by the consents, approvals,
      releases, and discharges described in this agreement and or attached
      hereto, neither the execution and delivery of this Agreement nor the
      performance of the Assignor’s obligations hereunder will:

	 	 	 	 
	 		(i) 	
      violate or constitute default under any order, decree,
      judgment, statute, by-law, rule, regulation, or restriction applicable to
      the Assignor, the Business or any of the Business Assets, or any contract,
      agreement, instrument, covenant, mortgage, or security, to which the
      Assignor is a party or which are binding upon the Assignor,

	 	 	 	 
	 		(ii) 	
      to the knowledge of the Assignor, result in any fees,
      duties, taxes, assessments, penalties or other amounts becoming due or
      payable by the Assignee under any tax legislation.

	 	 	 	 
	 		(iii) 	
      give rise to the creation or imposition of any
      Encumbrance on any of the related Business Assets,

	 	 	 	 
	 		(iv) 	
      violate or constitute default under any license, permit,
      approval, consent or authorization held by the Assignor or necessary to
      the operation of the Business, or

	 	 	 	 
	 		(v) 	
      violate or trigger any liability on behalf of the
      Assignee pursuant to any legislation governing the sale of assets in bulk
      by the Assignor.

	 	 	 	 
	 	(c) 	
      the Assignor owns and possesses and has good and
      marketable title to the Business Assets free and clear of all Encumbrances
      of every kind and nature whatsoever;

	 	 	 	 
	 	(d) 	
      to the knowledge of the Assignor, the Business Assets are
      in good working order and in a functional state of repair and to the best
      of the knowledge of the Assignor there are no latent defects
    thereto;

- 6 -

	 	(e) 	
      the Business Assets comprise all property and assets used
      by the Assignor in connection with the Business;

	 	 	 
	 	(f) 	
      except for the NIH, the Assignor does not have any
      indebtedness which might by operation of law or otherwise now or hereafter
      constitute an Encumbrance upon any of the Business Assets;

	 	 	 
	 	(g) 	
      no person other than the Assignee has any written or oral
      agreement or option or any right or privilege (whether by law, pre-emptive
      or contractual) capable of becoming an agreement or option for the
      assignment or acquisition from the Assignor of any of the Business
      Assets;

	 	 	 
	 	(h) 	
      except as otherwise provided herein, discloses all
      contracts, engagements, and commitments, whether oral or written, relating
      to the Business or the Business Assets including in particular contracts,
      engagements, and commitments:

	 	(i) 	
      out of the ordinary course of
Business,

	 	(ii) 	
      respecting ownership of or title to any interest or claim
      in or to any real or personal property making up the Business
    Assets,

	 	 	 
	 	(iii) 	
      respecting Intellectual Property;

	 	 	 
	 	(iv) 	
      respecting any agreement of guarantee, support,
      indemnification, assumption or endorsement of, or any similar commitment
      with respect to, the obligations, liabilities (whether accrued, absolute,
      contingent or otherwise) or indebtedness of any other person;

	 	 	 
	 	(v) 	
      any employment or consulting contracts or any other
      contract with any officer, employee or consultant, other than oral
      contracts of indefinite hire terminable by the Assignor without cause on
      reasonable notice;

	 	 	 
	 	(vi) 	
      any trust indenture, mortgage, promissory note, loan
      agreement, guarantee or other contracts for the borrowing of money or a
      leasing transaction of the type required to be capitalized using the
      License as collateral in accordance with generally accepted accounting
      principles;

	 	 	 
	 	(vii) 	
      any confidentiality, secrecy or non-disclosure contract,
      (whether the Assignor is a beneficiary or obliging there under) relating
      to any proprietary or confidential information or any non-competition or
      similar contract;.

	 	 	 
	 	(viii) 	
      there are no material contracts that create any default
      in any obligation or liability in respect of said contracts, engagements,
      or commitments by the Assignor and the Assignor has performed all of the
      material obligations required to be performed by it and is entitled to all
      benefits under the License;

	 	 	 
	 	(ix) 	
      there has not been any undisclosed amendment,
      modification, variation, surrender, or release of said License
  and

	 	(i) 	
      all material Licenses required for the conduct in the
      ordinary course of the operations of the Business and the uses to which
      the Business Assets have been put have been obtained and are in good
      standing and such conduct and uses are in compliance in all material
      respects with such licenses and permits and with all laws, zoning and
      other bylaws, building and other restrictions, rules, regulations, and
      ordinances applicable to the Business and the Business Assets and neither
      the execution and delivery of this Agreement nor the completion of the
      assignment hereby contemplated will give any person the right to terminate
      or cancel the said licenses or permits or affect such
  compliance;

- 7 -

	 	(j) 	
      except as disclosed in Legal and Regulatory Proceedings,
      there are no actions, suits, proceedings, investigations, complaints,
      orders, directives, or notices of defect or noncompliance by or before any
      court, governmental or domestic commission, department, board, tribunal,
      or authority, or administrative, licensing, or regulatory agency, body, or
      officer issued, pending, or to the best of the Assignor’s knowledge
      threatened against or affecting the Assignor or in respect of the Business
      or any of the Business Assets;

	 	 	 
	 	(k) 	
      Other then with the NIH there is no requirement
      applicable to the Assignor to make any filing with, give any notice to or
      to obtain any license, permit, certificate, registration, authorization,
      consent or approval of, any governmental or regulatory authority as a
      condition to the lawful consummation of the transactions contemplated by
      this Agreement, except for the filings, notifications, licenses, permits,
      certificates, registrations, consents and approvals described in Consents,
      or that relate solely to the identity of the Assignee or the nature of any
      business carried on by the Assignee except for the notifications, consents
      and approvals described in Consents;

	 	 	 
	 	(l) 	
      the Assignor has not caused or permitted, nor does it
      have any knowledge of, the release, in any manner whatsoever, of any
      Hazardous Substance on or from any of its properties or assets (including
      any of the Leased Property) utilized in the Business, or any such release
      on or from a facility owned or operated by third parties, but with respect
      to which the Assignor in connection with the Business is or may reasonably
      be alleged to have liability. All Hazardous Substances and all other
      wastes and other materials and substances used in whole or in part by the
      Assignor in connection with the Business or resulting from the Business
      have been disposed of, treated and stored in compliance with all
      Environmental Laws;

	 	 	 
	 	(m) 	
      The Assignor is not aware of any state of facts that
      casts doubt on the validity or enforceability of any of the Intellectual
      Property. The Assignor has provided to the Assignee a true and complete
      copy of all contracts and amendments thereto that comprise or relate to
      the License;

	8. 	
      REPRESENTATIONS OF THE ASSIGNEE

	 	 	 
	8.1 	
      The Assignee represents and warrants to the Assignor as
      follows, with the intent that the Assignor will rely thereon in entering
      into this Agreement and in concluding the purchase and sale contemplated
      hereby, that:

	 	 	 
		(a) 	
      the Assignee is a corporation duly incorporated, validly
      existing, and in good standing under the laws of the State of Nevada and
      has the power, authority, and capacity to enter into this Agreement and to
      carry out its terms;

	 	 	 
		(b) 	
      the execution and delivery of this Agreement and the
      completion of the transactions contemplated hereby has been duly and
      validly authorized by all necessary corporate action on the part of the
      Assignee, and this Agreement constitutes a valid and binding obligation of
      the Assignee enforceable against the Assignee in accordance with its
      terms; except as enforcement may be limited by bankruptcy, insolvency and
      other laws affecting the rights of creditors generally and except that
      equitable remedies may be granted only in the discretion of a court of
      competent jurisdiction;

	 	 	 
		(c) 	
      there is no requirement for the Assignee to make any
      filing with, give any notice to or obtain any license, permit,
      certificate, registration, authorization, consent or approval of, any
      government or regulatory authority as a condition to the lawful
      consummation of the transactions contemplated by this Agreement except as
      might be required from the NIH.

	 	 	 
		(d) 	
      Neither the execution and delivery of this Agreement nor
      the performance of the Assignee’s obligations hereunder will violate or
      constitute a default under the constating documents, by-laws, or articles
      of the Assignee, any order, decree, judgment, statute, by-law, rule,
      regulation, or restriction applicable to the Assignee, or any contract,
      agreement, instrument, covenant, mortgage or security to which the
      Assignee is a party or which are binding upon the
  Assignee;

- 8 -

	 	(e) 	
      The Equity Component to be issued to the Assignor under
      this Agreement will, when so issued, be duly authorized, validly issued,
      fully paid, non-assessable, free of any Encumbrances except for SEC
      restrictions and not subject to any pre-emptive rights or rights of first
      refusal created by statute or the charter documents or Bylaws of Assignee
      or any agreement to which Assignee is a party or is bound and will be
      issued in compliance with federal and state securities laws; and

	 	 	 
	 	(f) 	
      except as disclosed in the Assignee SEC Documents, (i)
      there are no actions, suits, proceedings, investigations, complaints,
      orders, directives, or notices of defect or non-compliance by or before
      any court, governmental or domestic commission, department, board,
      tribunal, or authority, or administrative, licensing, or regulatory
      agency, body, or officer issued, pending, or to the best of the Assignee’s
      knowledge threatened against or affecting the Assignee; and (ii) the
      Assignee is in compliance in all material respects with all applicable
      laws applicable to Assignee and its business.

	9. 	
      COVENANTS OF THE ASSIGNOR

	 	 	 
	9.1 	
      Between the date of this Agreement and the Closing Date,
      the Assignor covenants and agrees that the Assignor:

	 	 	 
		(a) 	
      will not sell or dispose of any of the Business Assets,
      will conduct the Business diligently and only in the ordinary course
      consistent with past practice, keep the Business Assets in their present
      state, and endeavour to preserve the organization of the Business intact
      and the goodwill of the suppliers and customers and others having business
      relations with the Assignor relating to the Business;

	 	 	 
		(b) 	
      will afford the Assignee and its authorized
      representatives full access during normal business hours to the Business
      Assets and all other property and assets utilized in the Business and
      without limitation all title documents, abstracts of title, deeds, leases,
      contracts, financial statements, policies, reports, licenses, books,
      records, and other such material relating to the Business, and furnish
      such copies thereof and other information, as the Assignee may reasonably
      request;

	 	 	 
		(c) 	
      will use its best efforts to procure and obtain at or
      prior to the Closing Date all such consents, approvals, releases, and
      discharges as may be required to effect the transactions contemplated
      hereby from all federal, state, municipal or other governmental or
      regulatory bodies and from all other third parties as necessary;

	 	 	 
		(d) 	
      at the request of the Assignee, the Assignor will execute
      such consents, authorizations and directions as may be necessary to permit
      any inspection of the Business or any of the Business Assets or to enable
      the Assignee or its authorized representatives to obtain full access to
      all files and records relating to the Business or the Business Assets
      maintained by governmental or other public authorities;

	 	 	 
		(e) 	
      the Assignor will use its best efforts to take or cause
      to be taken all necessary corporate action, steps and proceedings to
      approve and authorize validly and effectively the assign and transfer the
      Business Assets to the Assignee and the execution and delivery of this
      Agreement and any other Agreements or documents contemplated hereby and to
      cause all necessary meetings of members or managers of the Assignor to be
      held for such purpose; and

	 	 	 
		(f) 	
      will not, without the prior written consent of the
      Assignee, enter into any transaction or refrain from doing any action
      that, if effected before the date of this Agreement, would constitute a
      breach of any representation, warranty, covenant or other obligation of
      the Assignor contained herein, and the Assignor will not enter into any
      material supply agreements relating to the Business or make any material
      decisions or enter into any material contracts with respect to the
      Business without the consent of the Assignee, which consent will not be
      unreasonably withheld.

	 	 	 
	9.2 	
      Subject to the limitations set forth below, the Assignor
      covenants and agrees to indemnify and hold harmless the Assignee from and
      against:

- 9 -

	 	(a) 	
      any and all debts, obligations, and liabilities, whether
      accrued, absolute, contingent, or otherwise, existing at the time of
      Closing, respecting the Business or the Business Assets; and the Assignee
      may, but will not be bound to, pay or perform same and all moneys so paid
      by the Assignee in doing so will constitute indebtedness of the Assignor
      to the Assignee hereunder;

	 	 	 
	 	(b) 	
      any and all Losses resulting from any misrepresentation,
      misstatement, breach of warranty, or the non-fulfillment of any covenant
      on the part of the Assignor under this Agreement or under any document or
      instrument delivered pursuant hereto or in connection herewith;
  and

	 	 	 
	 	(c) 	
      any and all Losses which arise or are made or claimed
      against or are suffered or incurred reasonably by the Assignee in respect
      of any of the foregoing; and

	 	 	 
	 	(d) 	
      any and all Losses suffered or incurred by the Assignee
      as a result of or arising directly or indirectly out of or in connection
      with any liability incurred by the Assignor in respect of the operation of
      the Business up to the Closing Date, except for liabilities specifically
      assumed hereunder.

	10. 	
      COVENANTS OF THE ASSIGNEE

	 	 	 
	10.1 	
      Between the date of this Agreement and the Closing Date,
      the Assignee will make all reasonable efforts to obtain and procure in
      co-operation with the Assignor all consents, approvals, releases, and
      discharges required to effect the transactions contemplated
  hereby.

	 	 	 
	11. 	
      CONDITIONS PRECEDENT

	 	 	 
	11.1 	
      The obligation of the Assignee to consummate the
      transactions herein contemplated is subject to the fulfillment of each of
      the following conditions precedent at the times stipulated:

	 	 	 
		(a) 	
      that the representations and warranties of the Assignor
      contained herein are true and correct on and as at the Closing Date with
      the same force and effect as if such representations and warranties were
      made as at the Closing Date, except as may be in writing disclosed to and
      approved by the Assignee;

	 	 	 
		(b) 	
      that all the terms, covenants, conditions, agreements,
      and obligations hereunder on the part of the Assignor to be performed or
      complied with at or prior to the Closing Date, including in particular the
      Assignor’s obligation to deliver the documents and instruments herein
      provided for in Clause 12, have been performed and complied with as at the
      Closing Date;

	 	 	 
		(c) 	
      that between the date hereof and the Closing Date no
      change, event, or circumstance has occurred which materially adversely
      affects the Business Assets or the prospects, operation, or condition of
      the Business or which, significantly reduces the value of the Business or
      the Business Assets to the Assignee;

	 	 	 
		(d) 	
      no legal or regulatory action or proceeding will be
      pending or threatened by any person to enjoin, restrict or prohibit the
      purchase and sale of the Business Assets contemplated hereby;

	 	 	 
		(e) 	
      that at the Closing Date, there will have been obtained
      from all appropriate federal, state, municipal or other governmental or
      administrative bodies such licenses, permits, consents, approvals,
      certificates, registrations and authorizations as are required to be
      obtained by the Assignor to permit the change of ownership of the Business
      Assets contemplated hereby, and all notices, consents and approvals with
      respect to the transfer or assignment of the Material Contracts,
      including, without limitation those described in 0 hereof have been
      obtained;;

	 	 	 
	11.2 	
      The obligation of the Assignor to consummate the
      transactions herein contemplated is subject to the fulfillment of each of
      the following conditions precedent at the times
  stipulated:

- 10 -

	 	(a) 	
      that the representations and warranties of the Assignee
      contained herein are true and correct on and as of the Closing Date with
      the same force and effect as if such representations and warranties were
      made as at the Closing Date, except as may be in writing disclosed to and
      approved by the Assignor;

	 	 	 
	 	(b) 	
      that the Cash Component payment should have been
      completed on or before the Closing Date;

	 	 	 
	 	(c) 	
      that all terms, covenants, conditions, agreements, and
      obligations hereunder on the part of the Assignee to be performed or
      complied with at or prior to the Closing, including in particular the
      Assignee’s obligation to deliver the documents and
  instruments

	12. 	
      TRANSACTIONS OF THE ASSIGNOR AT THE
    CLOSING

	 	 
	13. 	
      FURTHER ASSURANCES

	 	 
	13.1 	
      From time to time subsequent to the Closing Date, the
      parties covenant and agree, at the expense of the requesting party, to
      promptly execute and deliver all such further documents and instruments
      and do all such further acts and things as may be required to carry out
      the full intent and meaning of this Agreement and to effect the
      transactions contemplated hereby.

	 	 
	14. 	
      ASSIGNMENT

	 	 
	14.1 	
      Other than if the Assignees Corporate Assets are acquired
      by another business entity which acquires 100% of the Assignees business
      assets this agreement may not be assigned by any party hereto without the
      prior written consent of the NIH hereto.

	 	 
	15. 	
      SUCCESSORS AND ASSIGNS

	 	 
	15.1 	
      This Agreement will inure to the benefit of and be
      binding upon the parties hereto and their respective successors and
      permitted assigns.

	 	 
	16. 	
      COUNTERPARTS

	 	 
	16.1 	
      This Agreement may be executed in several counterparts,
      each of which will be deemed to be an original and all of which will
      together constitute one and the same instrument.

	 	 
	17. 	
      NOTICES

	 	 
	17.1 	
      Any notice required or permitted to be given under this
      Agreement will be in writing and may be given by personal service or by
      prepaid registered mail, and addressed to the proper party or transmitted
      by electronic facsimile generating proof of receipt of transmission at the
      address or facsimile number stated below:

	 	(a) 	
      if to the Assignor: 
Dr. Joseph Sinkule

	 		
      42191 N. 111th Place, Scottsdale, Arizona,
      85262 
Facsimile No.: 480-348-9709

	 	 	 
	 	(b) 	
      if to the Assignee:

	 	 	 
	 		
      President CEO 
Cyplasin Biomedical Ltd

	 		
      Suite 131, Advanced Technology Center,

	 		
      9650-20th avenue, Edmonton Alberta T6N 1G1
  Canada

- 11 -

or to such other address or
facsimile number as any party may specify by notice. Any notice sent by
registered mail as aforesaid will be deemed conclusively to have been
effectively given on the fifth business day after posting; but if at the time of
posting or between the time of posting and the third business day thereafter
there is a strike, lockout or other labour disturbance affecting postal service,
then such notice will not be effectively given until actually received. Any
notice transmitted by electronic facsimile will be deem conclusively to have
been effectively given if evidence of receipt is obtained before 5:00 p.m.
(recipient’s time) on a Business Day, and otherwise on the Business Day next
following the date evidence of receipt of transmission is obtained by the
sender. 

	18. 	
      REFERENCE DATE

	 	 
	18.1 	
      This Agreement is dated for reference as of the date
      first above written, but will become binding as of the date of execution
      and delivery by all parties hereto and subject to compliance with the
      terms and conditions hereof, the transfer and possession of the Business
      Assets will be deemed to take effect as at the close of business on
      the Closing Date. References herein to the date of the Agreement or to
      the date hereof shall be deemed to mean the date set forth in the preamble
      to this Agreement.

	 	 
	19. 	
      REFERENCES TO AGREEMENT

	 	 
	19.1 	
      The terms “this Agreement”, “hereof’, “herein”,
      “hereby”, “hereto”, and similar terms refer to this Agreement and not to
      any particular clause, paragraph or other part of this Agreement.
      References to particular clauses are to clauses of this Agreement unless
      another document is specified.

IN WITNESS WHEREOF the parties have executed and delivered
these presents on the dates indicated below.

	WITNESSED BY:	)	C-VIRIONICS CORPORATION.
		 	
	Nancy Sinkule 	)	
	Name	 	
	42191 N. 111th  Place 	)	
	Address	 	/s/ Dr. Joseph Sinkule
		)	per Dr. JOSEPH SINKULE
	Scottsdale, AZ 85262 USA	 	
		)	
	Assistant to the President	 	
	Occupation	 	
		 	
	Dated: 29 December, 2009	 	
		 	
	 	 	
	CYPLASIN BIOMEDICAL LTD.	 	
		 	
	Per: /s/ Garth Likes	 	
	             Garth Likes	 	
		 	
	Authorized Signatory	 	
		 	
	Dated: December 29, 2009	 	

- 12 -

Schedule 1

PUBLIC HEALTH SERVICE 
PATENT LICENSE
AGREEMENT—EXCLUSIVE
COVER PAGE 

For PHS internal use only: Patent License Number: 

A-027-2003

Serial Number(s) of Licensed Patent(s)
and/or Patent Application(s): 

U.S. Patent No. 6,387,662 (U.S. S/N
09/246,441), issued May 14, 2002, entitled "Synthesis and Purification of
Hepatitis C Virus-Like particles" (E-009-1997/0) (Inventors: T. Jake Liang
(NIDDK), Thomas F. Baumert (NIDDK)). This application is a continuation of and
claims the benefit of priority of International Application No. PCT/US97/05096
designating the U.S. having International filing date of Mar. 25, 1997,
abandoned, claims the benefit of priority of U.S. S/N 60/030,238, filed Nov. 8,
1996. 

PCT/US97/05096 filed March 25, 1997,
entitled "Synthesis and Purification of Hepatitis C Virus-Like particles in
vitro" (related to E-009-1997/0) (Inventors: T. Jake Liang (NIDDK), Thomas F.
Baumert (NIDDK)). National Stage filed March 25, 1997: in Australia Patent No.
738585, issued Jan. 03, 2002, in EPO patent application No. 9791652.6, in Canada
patent application No. 2269097, in Japan patent application No. 10-522521. 

Licensee:

VIRIONICS CORPORATION
(VIRIONICS)

	 	          	Cooperative Research and Development Agreement  (CRADA) Number (if applicable): 
	 	 	 
	 	  	 
	 	            	Additional
    Remarks: 
	 	  	 
	 	  	 
	 	            	Public Benefit(s): 
	 	  	 
	 	 	Vaccines for the prevention and treatment of
    chronic Hepatitis C Virus (HCV) infections. 

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), and Appendix F (Commercial Development Plan). 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) 	
      The person, corporation, or institution identified above
      and/or on the Signature Page, having offices at the address indicated on
      the Signature Page, hereinafter referred to as
  "Licensee".PHS

- 13 -

PHS PATENT LICENSE AGREEMENT—EXCLUSIVE

PHS and Licensee agree as follows: 

	1. 	
      BACKGROUND

	 	 	 	 
		1.01 	
      In the course of conducting biomedical and behavioral
      research, PHS investigators made inventions that may have commercial
      applicability.

	 	 	 	 
		1.02 	
      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.

	 	 	 	 
		1.03 	
      The Secretary of DHHS has delegated to PHS the authority
      to enter into this Agreement for the licensing of rights to these
      inventions.

	 	 	 	 
		1.04 	
      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.

	 	 	 	 
		1.05 	
      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 	
      "Benchmarks" mean the performance milestones that
      are set forth in Appendix E.

	 	 	 	 
		2.02 	
      "Commercial Development Plan" means the written
      commercialization plan attached as Appendix F.

	 	 	 	 
		2.03 	
      "First Commercial Sale" means the initial transfer
      by or on behalf of Licensee or its sublicensees 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.

	 	 	 	 
		2.04 	
      "Government" means the Government of the United
      States of America.

	 	 	 	 
		2.05 	
      "Licensed Fields of Use" means the fields of use
      identified in Appendix B.

	 	 	 	 
		2.06 	
      "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; 

- 14 -

	 	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. 

	 	 	 
	 	2.07 	
      "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.

	 	 	 
	 	2.08 	
      "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.

	 	 	 
	 	2.09 	
      "Licensed Territory" means the geographical area
      identified in Appendix B.

	 	 	 
	 	2.10 	
      "Net Sales" means the total gross receipts for sales of
      Licensed Products or practice of Licensed Processes by or on behalf of
      Licensee or its sublicensees, 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, or sublicensees, and on its payroll, or for the cost of
      collections.

	 	 	 
	 	2.11 	
      "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.

	 	 	 
	 	2.12 	
      "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.

- 15 -

	4. 	
  SUBLICENSING

	 	 	 
		4.01 	
      Upon written approval by PHS, which approval will not be
      unreasonably withheld, Licensee may enter into sublicensing agreements
      under the Licensed Patent Rights.

	 	 	 
		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, 10.01,
      10.02, 12.05, and 13.07-13.09 of this Agreement shall be binding upon the
      sublicensee 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 sublicensees and PHS, at the option of the sublicensee, upon
      termination of this Agreement under Article 13. 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. 	
      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.

- 16 -

	 	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 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 beginning
      January 1, 2006 and may be credited against any earned royalties due for
      sales made in that year.

	 	 	 
		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.

- 17 -

	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.

	 	 	 
		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 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.

- 18 -

	 	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, SALES1 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 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. 

- 19 -

	 	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.	
      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 adherence to the Commercial Development Plan
      at Appendix F and performance of 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. 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. 

- 20 -

	 	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 to enjoin
      infringement and to 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. 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 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 Article
      1.

- 21 -

	 	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; orb) 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 all parties
      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 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 of
      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: I) is not executing the Commercial Development Plan
      submitted with its request for a license and the Licensee cannot
      otherwise demonstrate to PHS's 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 achieved 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's concerns as to the previous items 1) to 7). If Licensee fails
to alleviate PHS's concerns as to the previous items 1) to 7) or fails to
initiate corrective action to PHS's satisfaction, PHS may terminate this
Agreement. 

- 22 -

	 	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(0(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.

	 	 	 
	 	13.09 	
      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.

- 23 -

	 	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 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; orb) 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,

	 	 	 
	 	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.
      PITS 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. 

- 24 -

	 	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 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.

SIGNATURES BEGIN ON NEXT PAGE

- 25 -

PHS PATENT LICENSE AGREEMENT--EXCLUSIVE

SIGNATURE PAGE

For PH

M. Ferguson 
Director, Division of Technology 
Office of
Technology Trans 
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.

____________________________ 

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). 

- 26 -

APPENDIX A—Patent(s) or Patent Application(s) 

Patent(s) or Patent Application(s): 

	Serial Number 	Country 	Filing Date 	Issue Date 	Status 	Patent Number 
	  	  	  	  	  	  
	09/296,441 	U.S.A. 	04/21/1999 	05/14/2002 	Issued 	6,387,662 
	PCTTUS97/05096 	PCT 	03/25/1997 	  	Expired 	  
	23479/97 	Australia 	03/25/1997 	01/03/2002 	Issued 	738585 
	9791652.6 	EPO 	03/25/1997 	  	Pending 	  
	10-522521 	Japan 	03/25/1997 	  	Pending 	  
	2269097 	Canada 	03/25/1997 	  	Pending 	  

entitled "Synthesis and Purification of Hepatitis C Virus-Like
particles" (PHS Ref. E-009-1997/0). 

- 27 -

APPENDIX B--Licensed Fields of Use and Territory

Licensed Fields of Use: Exclusive 

Vaccines for the prevention and treatment of chronic Hepatitis
C Virus (HCV) infections. 

Licensed Territory: 

Worldwide. 

- 28-

APPENDIX C--Royalties 

Royalties: 

Licensee agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty in the amount of Seventy-Five Thousand Dollars, payable
according to the following schedule: 

Twenty-Five Thousand Dollars ($25,000) within Thirty (30) days
of this Agreement becoming effective; 
Twenty-Five Thousand Dollars ($25,000)
on August 1, 2004 

  Twenty-Five Thousand Dollars ($25,000) on November 1, 2004. 

Licensee agrees to pay to PHS a nonrefundable minimum annual
royalty in the amount of Five Thousand Dollars ($ 5,000), with payments
beginning January 1, 2006. 

Licensee agrees to pay PHS earned royalties on Net Sales by or
on behalf of Licensee and its sublicensees as follows: 

Five Percent (5 %). 

Licensee or its sublicensee agrees to pay PHS benchmark
royalties as follows for each Licensed Product therapeutically or
prophylactically active in humans arising from the Licensed Patent Rights: 

	1. 	Initiation of Phase I Clinical
      Trials 	$ 25,000 
	2. 	Initiation of Phase II Clinical
      Trials 	$ 100,000 
	3. 	Initiation of Phase III Clinical
      Trials 	$ 250,000 
	4. 	Biologics License Application
      (BLA) submission 	$ 500,000 
	5. 	BLA (or its foreign equivalent)
      approval 	$ 3,000,000 

Licensee agrees to pay PHS additional sublicensing royalties as
follows, based on the fair market value of any consideration received for
granting each sublicense or option to sublicense: 

	1. Pre-Phase I 	25% 
	2. Pre-Phase II 	20% 
	3. Pre-Phase III 	17.5% 
	4. Pre-BLA approval 	15% 
	5. Post-BLA approval 	12.5% 

- 29-

APPENDIX D—Modifications

PHS and Licensee agree to the following modifications to the
Articles and Paragraphs of this Agreement:

Modifications to this Agreement shall be incorporated into this
Agreement. 

- 30 -

APPENDIX E--Benchmarks and Performance

- 31 -

APPENDIX F--Commercial Development Plan

Attached below: Licensee's PHS License Application.

APPLICATION FOR LICENSE TO

PUBLIC HEALTH SERVICE INVENTIONS 

Thank you for your interest in the
technology transfer activities of the U.S. Public Health Service. Your answers
to the following questions will provide the foundation for licensing decisions.
Please return this form and the required attachments to: Office of Technology
Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325,
Rockville, MD 20852. 

IDENTIFICATION OF INVENTIONS(S) FOR WHICH LICENSE IS SOUGHT
(Complete all relevant sections) 

U.S. Patent Application(s) Serial
Number(s), Filing Date(s), and Patent Number(s) (if issued): 

U.S. Patent No. 6,387,662, issued
May 14, 2002 

Title of Patent Application(s): 

  Synthesis and Purification of
Hepatitis C Virus-Like Particle 

Biological Material(s): N/A

 Inventor(s): 

  T. Jake Liang and Thomas F. Baumert

Source from which you learned of
  availability of a license to the present invention(s):

  Internet search 

INFORMATION ABOUT APPLICANT 

	1.	
      Name & Address of Applicant:

	 	 
		
      VIRIONICS CORPORATION 
2638 Cedar Elm
      Drive

		
      Odenton, MD 21113

	 	 
	2.	
      Name, title, address, phone and FAX numbers of
      Applicant's licensing representative:

	 	 
		
      Dr. Joseph Sinkule 
President 
2638 Cedar Elm
      Drive 
Odenton, MD 21113 
Phone/Fax: (410) 695-2359

	 	 
	3.	
      Is Applicant a U.S.
      Corporation?   X     yes
      ___no
If no, state country of origin:
      _________________________________
State of incorporation or citizenship
      (if an individual): ______Delaware

	 	 
	4. 	
      Is Applicant a Small Business Firm?
        X     yes
___no

- 33 -

TYPE OF LICENSE SOUGHT 

	 X   Exclusive Commercialization
      License 	___ Coexciusive Commercialization License
    
	  	  
	___ Nonexclusive Commercialization License 	___ Nonexclusive Internal Commercial Use 
	  	  
	___ License
      (internal use only—no right to sell or otherwise distribute materials)    
	___ Nonexclusive Biological Materials License 	___ Commercial Evaluation License 
	           (for materials not
      covered under a 	             
           (for a limited-term evaluation) 
	           patent or patent application)
    	  

PROPOSED FIELD(S) OF USE: 

Vaccines for prevention and treatment of Hepatitis C.

	I. 	
      DESCRIPTION OF APPLICANT

	 	 
		
      VIRIONICS CORPORATION (VIRIONICS) is a developmental
      stage biotechnology company with offices in Odenton, Maryland. The company
      currently has three employees and has operating to date as a virtual
      company. The company obtained initial "seed" financing and, with the
      conclusion of this license arrangement, will close a Series A financing of
      at least $5,000,000 to fund initial R&D and support a CRADA with NIH.
      VIRIONICS is totally focused on the development of a broad and enabling
      virus-like particle ("VLP") technology platform using recombinant
      virus-like particles as the core technology for the R&D of
      prophylactic and therapeutic vaccines for cancer, infectious diseases, and
      chronic inflammatory diseases. The company will develop a close
      relationship with the inventor's laboratories at NIH through a CRADA to
      facilitate research and development activities. The staff of VIRIONICS and
      its consultants and advisors, are extremely experienced in the development
      and commercialization of vaccines for the treatment of cancer, infectious
      diseases and chronic inflammatory diseases. The hepatitis C technology
      will be one of the two lead candidate vaccines brought into the clinic by
      the Company in 2003.

	II. 	
      OTHER LICENSES AND USE OF 1111,
INVENTION

	 	 
		
      VIRIONICS has been focused on putting together a
      portfolio of antigen delivery technology using VLPs. VIRIONICS has applied
      for exclusive and non-exclusive licenses to the following patents and
      patent applications from PHS. These applications pertain to
      papillomavirus-like particles (inventors Lowy and
  Schiller).

	 	1).	
      USPA SNO8/319, 467, filed 10/06/94, now USPN
      5,618,536, issued 04/08/97

	 	2).	
      USPA SN 08/781,084, filed 01/09/97, now USPN
      5,855,891, issued 01/05/99

	 	3).	
      USPA SN 09/878,840, filed 06/11/01. pending,
      PCT/US95/12914, filed 10/06/95

and background rights to
"Self-Assemblying Recombinant Papillomavirus Capsid Proteins. To the best of our
knowledge, there are no known licensees of this particular hepatitis C VLP
technology working in our proposed fields-of-use, we believe primarily due to
the Chiron Corporation patent issues. When these patents are combined with the
intellectual property requested for licensing in this application, VIRIONICS
will possess a protected, broad and enabling position in the field of VLPs as
antigen delivery systems for preventative and therapeutic vaccines. 

- 34 -

Intended products include
recombinant hepatitis C virus-like particles to be used as prophylactic and
therapeutic vaccines for hepatitis C and hepatitis B. Licensed products and
methods are those described or proposed in the relevant granted patents and/or
patent applications, those conceived through the company's R&D efforts, and
all relevant background rights related to self-assemblying recombinant hepatitis
C virus capsid and envelope proteins described in other referenced and enabling
patents by Liang and Baumert. The intent is for an exclusive, worldwide license
of rights under all claims of the patents and patent applications (including
divisionals and their foreign counterparts) for vaccines against, hepatitis C,
and antigen carriers for vaccines against cancer, other chronic viral disease,
and chronic inflammatory disease fields-of-use for the term of the patent's
lifecycle (to expiration of last issued licensed patent). 

The license will be royalty-bearing
with a minimal up-front fee in return for a higher proposed royalty payment to
PHS. The proposed up-front payment is $20,000 with a $500,000 milestone payment
to PHS when each candidate product is first used in a randomized Phase III
study, and a $5 million milestone payment upon FDA market approval of each
immunotherapy product derived from the core technology, excluding Orphan
products; PHS will receive a $2.5 million milestone payment upon market approval
of all products with Orphan designation). The proposed royalty to PHS is 4% of
all direct net revenue received by VIRIONICS from this technology. If any
candidate product is sublicensed to third party, PHS will receive sublicensing
fees according to the following schedule, which are creditable against milestone
fees paid in same year (i.e. if sublicense fee is for a milestone cited above,
then company does not pay milestone fee to PHS and the percentage of sublicense
fee described below): 

	 	Licensing
      Event 	 Paid to PHS by VIRIONICS 
	 	* Products sublicensed before Phase
      I 	30% of
      sublicense payments received 
	 	* Products sublicensed before Phase II 	25% of sublicense payment
      received 
	 	* Products sublicensed before Phase
      III 	15% of
      sublicense payment received 
	 	* Products sublicensed before market
      approval 	10% of sublicense payment
      received 
	 	* Products sublicensed after market
    	5% of
      sublicense payment received 

	IV. 	
      RESEARCH, DEVELOPMENT AND MARKETING
  PLAN

Using the licensed technology,
VIRIONICS is planning to research and develop vaccine products in
the prevention and treatment of chronic hepatitis C infections. A lead product
candidate has been identified and will serve as the company's initial product
pipeline. As the initial product pipeline is created and moved forward into
manufacturing, GLP pre-clinical and clinical testing, new candidate products
will be created by the ongoing research program within the company and/or by our
NIH collaborators through a CRADA relationship. 

VIRIONICS' overall
development plan is focused to move the proof of principle data already achieved
in animals into human clinical trials as quickly as possible. Pre-clinical
proof-of-concept efficacy data has already been generated and published. The
R&D program, the estimated costs, and development timeline for the lead
product is proposed below. 

A contract manufacturer will be
contracted to produce a GMP clincial lot of material ($250,000; 6 months). A GLP
contractor will be engaged to perform a repeat-dose GLP toxicology study in rats
to support the proposed clinical dosing schedule ($150,000; 6 months).
Immunology assays and product release assays must be developed and applied
($100,000; 3 months). An "opinion leader" clinical researcher experienced with
hepatitis C will be sought to conduct the PhaseI and Phase II protocols. A
pre-IND meeting will take place with FDA to discuss the clinical plan and any
remaining issues. If requested, appropriate in vitro and
animal models (chimpanzee hepatitis C challenge model) will be utilized for
additional proof-of-concept testing and screening prior to human safety and
efficacy studies ($500,000 chimp challenge study). 

Initial PhaseI clinical trials will
be conducted in normal healthy volunteers evaluating safety and immunology
($300,000; 6 months). At this point, the company will plan two different Phase
II studies as a prophylacitic vaccine (randomized and controlled study in high
risk volunteers) and as a therapeutic vaccine (randomized and controlled study
in chronically-infected volunteers with measurable viral load). These
studies of 60 subjects each are projected to cost $500,000 and $650,00,
respectively and last 12-18 months duration. The Company anticipates entry into
advanced, randomized Phase II-III clinical trials in both patient populations
over 18 months and a Biologic License Application within 36 months of beginning
a Phase III pivotal trial (based on Orphan Drug designation, Expedited Review
and Fast-Track Approval). 

It is the company's intention to
out-license the preventative vaccine development efforts to Chiron Corporation
while retaining the therapeutic vaccine rights in all markets. The company will
either use a contract marketing organization to market to sell the therapeutic
vaccine product for the company, or assemble our own marketing and sales force
for the U.S., while licensing in all other areas. Product launch costs in the
U.S and Europe are estimated to cost around $3 million. We will partner with
Asian partners for marketing and sales in that market area. 

V. MARKET ANALYSIS

The Vaccine Market

VIRIONICS plans to research,
develop, and manufacture this entirely new class of immunotherapy, targeting
diseases with tremendous market potential and for which no effective vaccines
currently exist. These markets include chronic infectious diseases (like HIV,
hepatitis B, hepatitis C, etc.), cancers (breast, prostate, colon, cervical,
etc.), and chronic inflammatory diseases (arthritis, Crohn's, and allergy).

The current global market for
infectious disease preventative vaccines surpass $7 Billion and is expected to
grow at a compounded annual rate exceeding 10% throughout the license period,
reaching —$30 Billion by 2015. VIRIONICS cummulative revenue
expectations approach $1 Billion within five years of its initial product
launches for products in these large markets. There are no approved and marketed
vaccines for treatment of chronic infectious diseases, nor for treatment or
prevention of cancers or chronic inflammatory diseases. 

VIRIONICS therapeutic vaccine
platform is unique in its ability to directly activate antigen-presenting cells
of the body's immune system, especially dendritic cells. The Company has
identified chronic infectious diseases (HIV, HBV, HCV, HPV), cancer (breast
cancer, prostate cancer, and cervical cancer) and chronic inflammatory diseases
(allergy, Crohn's, and arthritis) as its initial target market indications for
therapy. The company's market research validates our believe that products for
these conditions could generate total annual sales revenue in excess of $1
billion for many of the product indications. 

The Hepatitis C Market

There are no effective preventative
vaccines or therapeutic agents that are active against hepatitis C. It is
suspected that there are over 5 million people in the U.S. that are infected
with hepatitis C and perhaps as many as 200-400 million around the world. This
patient population would be the target market for a therapeutic vaccine.
According to 1996 statistics, there are an estimated 36,000 new cases of
hepatitis C diagnosed in the U.S. each year; 66% of those infected are
baby-boomers between the ages of 30-49 years old. Hepatitis C causes chronic
lever disease in 20% of those infected. 

This often leads to cirrhosis of the
liver, cancer of the liver and liver failure. Each year hepatitis C causes
8,000-10,000 deaths. It is estimated that hepatitis C costs the U.S. over $600
million in medical costs and lost work (excluding liver transplants). For
patients who do not undergo liver transplants, the average lifetime cost of
hepatitis C is over $100,000, a staggering $500 billion total patient cost in
today's dollars (5 million patients x $100,000). 

For a safe and effective new
immunotherapy product used in the treatment of hepatitis C chronic infection,
the annual U.S. sales based on a very conservative 20% market share, would be
estimated at $1 Billion (20% of 5 million = 1,000,000 x $1,000 per course of
therapy). 

OTHER INFORMATION WHICH YOU BELIEVE WILL SUPPORT A

DETERMINATION TO GRANT THE REQUESTED LICENSE 

VIRIONICS is totally focused
on the development and commercialization of this core platform technology. We
are building a company around this core technology and strongly believe we can
raise the capital and fund the research and development of several products from
this baseline vaccine platform technology. Because of limited interest by other
companies to date in an exclusive license to develop therapeutic and
preventative vaccine products in the field of hepatitis C prevention and
treatment, we request your consideration of granting us the requested license.
Also because of close location of our corporate offices and research labs to the
NIH campus, our intent to support continued R&D efforts in the labs of the
NIH inventors, we suggest this clearly justifies our interest and dedication to
this technology license and its medical applications. 

VI.    FOR APPLICANTS FOREXCLUSIVE OR
PARTIALLY EXCLUSIVE LICENSES ONLY 

It is important that this particular
technology become commercialized and VIRIONICS is dedicated to its comprehensive
development for hepatitis C treatment and prevention. As U.S. taxpayers, we
believe the Federal and public interests will best be served by a small
entrepreneureal U.S. company, VIRIONICS, obtaining an exclusive license to this
invention. It is a major dis-incentive for the company and our private and
institutional investors to invest a tremendous amount of capital on a
proprietary technology if several other companies are allowed to practice the
same inventions. The protection and market exclusivity granted by an exclusive
license is fundamental to the company's success at raising the money needed to
commercialize the products envisioned from this enabling technology. The
granting of non-exclusive licenses to this important technology, or the division
into much smaller and limited fields-of-use, will not provide proper incentives
for investment of risk capital. A non-exclusive license is just not practical
nowdays as a platform for building a successful company. There is already
tremendous market concentration in the fields of infectious disease vaccines and
immunotherapies, and the exclusive licensing of these inventions will certainly
not lessen competition in these markets. The proposed license terms and scope of
exclusivity are not that different than other license agreements concluded in
the past by the Federal government, or by other academic or industrial
organizations for other similar technology. We feel the proposed terms are
reasonable and just, but the final terms of the license proposal can be modified
as negotiated in the final license agreement. 

I certify, to the best of my knowledge, that all of the
information provided on this application and on attachments to this application
is true and accurate. 

		
	x                 Joseph
      Sinkule                                                                 
       	 
      October 22, 2002 
	Signature of Applicant or Authorized Representative Date
	  
	  	  
	  	  
	  	  
	Dr. Joseph A. Sinkule, President VIRIONICS
      CORPORATION 	  

- 2 -

SCHEDULE 2- PERMITS AND LICENSES

SCHEDULE 3

Form of Consulting Agreement Dr. Joseph
Sinkule

To be drawn up and attached

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