Document:

Exhibit 10.16

 

THIRD AMENDMENT to the EXCLUSIVE LICENSE
BETWEEN 

BRIGHAM YOUNG UNIVERSITY AND CERAGENIX PHARMACEUTICALS, INC.

 

This Third Amendment is effective October 21,
2008, and amends the Exclusive License Agreement (hereinafter “Original
Agreement”) for Steroid-Derived Antibiotics technology that became effective May 1,
2004, by and between Brigham Young University, a Utah non-profit corporation
and institution of higher education, with its principal campus and place of
business located at Provo, Utah 84602 (referred to herein as “BYU”) and
Osmotics Corporation, who subsequently transferred responsibility for this
license to Ceragenix Pharmaceuticals, Inc., (a subsidiary of the
corporation formerly known as Osmotics Corporation) a Colorado corporation with
its principal place of business located at 1444 Wazee Street, Suite 210,
Denver, Colorado 80202 (referred to herein as “Ceragenix” or “LICENSEE”).

 

WHEREAS, the Original Agreement was modified by the parties via a FIRST
AMENDMENT, dated as of November 1, 2005 and by a SECOND AMENDMENT, dated
as of June 30, 2006 (the Original Agreement as amended by the FIRST
AMENDMENT and the SECOND AMENDMENT is referred to as the “Agreement”);

 

WHEREAS, Ceragenix has qualified for and requested a modification of
the field of application and addition of four new patent applications to the
license, as well as changes in sublicense royalty provisions; and

 

WHEREAS, BYU has agreed to grant said modifications;

 

NOW THEREFORE, the parties agree to amend the license Agreement as
follows:

 

1. The definition of “ADJUSTED GROSS SALES” in Section 1.1 shall
be amended by adding the following at the end of such definition:

 

In the event a LICENSED PRODUCT is sold as part of a combination
product containing at least one other technology or functional element of such
product, the ADJUSTED GROSS SALES from the combination product, for the
purposes of determining royalty payments, shall be determined by multiplying
the ADJUSTED GROSS SALES (as determined above) of the combination product,
during the applicable royalty reporting period, by the fraction, A/(A+B), where
A is the average sale price of the LICENSED PRODUCT when sold separately and B
is the average sale price of the other technology(ies) or functional element(s) included
in the combination product when sold separately, in each case during the
applicable royalty reporting period or, if sales of both the LICENSED PRODUCT
and the other technology(ies) or functional element(s) did not occur in
such period, then in the most recent royalty reporting period in which sales of
both occurred.

 

In the event that such average sale price cannot be determined for both
the LICENSED PRODUCT and the other technology(ies) or functional element(s) included
in such combination product, ADJUSTED GROSS SALES for the purposes of
determining

 

 

royalty payments shall be calculated by multiplying the ADJUSTED GROSS
SALES of the combination product by the fraction of C/(C+D) where C is the fair
market value of the LICENSED PRODUCT and D is the fair market value of all
other technology(ies) or functional element(s) included in the combination
product as determined by LICENSEE in good faith.

 

2.          Section 1.4 “FIELD OF APPLICATION” shall
be amended and simplified to mean all fields.

 

3.          Section 1.12 is hereby renumbered Section 1.13.

 

4.          A new Section 1.12 shall be added as
follows:

 

1.12   “SUBLICENSE INCOME” shall mean
consideration in any form other than royalties received by LICENSEE or an
AFFILIATE as consideration for a grant to any third party or parties of a
sublicense or other right, license, privilege or immunity to make, have made,
use, sell, have sold, distribute, import or export LICENSED PRODUCTS, LICENSED
PROCESSES or IMPROVEMENTS.

 

5.          Section 2.2 under “BYU Grant” discussing
allowance of sublicenses shall be amended and restated in its entirety as
follows:

 

2.2    The grants provided under this
Agreement shall specifically include the right for LICENSEE to sublicense to
SUBLICENSEES its rights under this Agreement to the LICENSED TECHNOLOGY with respect
to the TERRITORY and the FIELD OF APPLICATION. No sublicense shall relieve
LICENSEE of any of its obligations under this Agreement. LICENSEE agrees to
forward to BYU a fully executed copy of each sublicense agreement within thirty
(30) days of its execution, and to collect and transmit to BYU all royalties
due to BYU. All sublicenses granted by LICENSEE shall be subject to the terms
and conditions of this Agreement with the possible exception of fees and the
royalty rate (to be addressed below), and any sublicense agreement shall have
an express provision to this effect.

 

6.          Section 6.4 under “License Fees and
Royalties” discussing earned royalties shall be amended and restated in its
entirety as follows:

 

6.4                                 Earned
Royalties: Earned royalties shall be paid by LICENSEE to BYU quarterly in the
amount equal to five percent (5.0%) of the ADJUSTED GROSS SALES anywhere in the
TERRITORY and FIELD OF APPLICATION of the LICENSED PRODUCTS, LICENSED PROCESSES
or IMPROVEMENTS used, leased, licensed, sold or otherwise transferred to an END
USER by or for LICENSEE, its AFFILIATES or pursuant to any SUBLICENSE
agreement; provided, however, that if such ADJUSTED GROSS SALES are made by a
SUBLICENSEE, and the earned royalty received by LICENSEE on account of such ADJUSTED
GROSS SALES by such SUBLICENSEE is less than ten percent (10.0%), then the
earned royalty due BYU shall be reduced to one-half (1/2) of the total earned
royalty received by LICENSEE but not less than two percent (2%) of ADJUSTED
GROSS SALES.

 

2

 

7.          A new Section 6.7 under “License Fees
and Royalties” discussing SUBLICENSE INCOME payable to BYU under certain
circumstances shall be added as follows:

 

6.7                                 With
respect to any SUBLICENSE arrangement, LICENSEE shall pay to BYU ten percent
(10%) of any SUBLICENSE INCOME received by LICENSEE from such SUBLICENSEE.

 

8.          The parenthetical “(5.0%)” is hereby deleted
from the last sentence of Section 13.4.

 

9.          To the original Exhibit A, LICENSED
TECHNOLOGY, listing of included patent applications,
add the following:

 

“Cationic Steroid Antimicrobial Compositions
and Methods of Use” [Pox], U.S. Application #11/669,866 and PCT/US2007/002789

 

“Cationic Steroid Antimicrobial Compositions and Methods of Use”
[Influenza Virus], U.S. Application #11/669,854 and PCT/US2007/002787

 

“Cationic Steroid Antimicrobial Compositions and Methods of Use”
[Herpes], U.S. Application #11/669,803 and PCT/US2007/002793

 

“Cationic Steroid Antimicrobial Compositions and Methods of Use” [HIV],
U.S. Application #11/669,785 and PCT/US2007/002794

 

10.         By way of example and not of limitation, in
the event that the following commercialization scenarios arise, BYU will be
compensated as set forth below.

 

a.          If LICENSEE sells LICENSED PRODUCT itself, then
LICENSEE shall pay to BYU five percent (5%) of LICENSEE’s ADJUSTED GROSS SALES
of such LICENSED PRODUCT.

 

b.         If LICENSEE sublicenses the LICENSED
TECHNOLOGY to a third party and does not manufacture or supply material in bulk
or in final form, then LICENSEE shall pay to BYU ten percent of the SUBLICENSE
INCOME, if any, received by LICENSEE pursuant to Section 6.7 and fifty
percent (50%) of the earned royalty received from the SUBLICENSEE up to 5% of
the ADJUSTED GROSS SALES but not less than 2% of the ADJUSTED GROSS SALES.

 

c.          If LICENSEE sublicenses the LICENSED
TECHNOLOGY to a third party and manufactures or supplies material in bulk or in
final form, then LICENSEE shall pay to BYU ten percent of the SUBLICENSE
INCOME, if any, received by LICENSEE pursuant to Section 6.7 and five
percent (5%) of LICENSEE’s ADJUSTED GROSS SALES of such material. If in such
case LICENSEE also receives a royalty on SUBLICENSEE’s resale of such material
as a LICENSED PRODUCT, LICENSEE shall pay BYU fifty percent (50%) of such
royalty received from the SUBLICENSEE up to 5% of the ADJUSTED GROSS SALES of
SUBLICENSEE but not less than 2%
of the ADJUSTED GROSS SALES.

 

3

 

11. Except as expressly modified hereby, the Agreement remains in full
force and effect. All defined terms used but not defined in this THIRD
AMENDMENT have the meanings ascribed to them in the Agreement.

 

 

IN WITNESS WHEREOF, the parties have entered into this Third Amendment:

 

	
  BRIGHAM YOUNG UNIVERSITY

  	
   

  
	
   

  	
   

  
	
  /s/ Brent W. Webb

  	
   

  	
  2 Sep 08

  
	
  By:

  	
  Brent Webb

  	
  Date

  
	
   

  	
  Assoc. Academic Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CERAGENIX PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
  /s/ Steven Porter

  	
   

  	
  10/21/08

  
	
  By:

  	
  Steven Porter

  	
  Date

  
	
   

  	
  CEO

  	
   

  
				

 

4Exhibit 10.17

 

SECOND
AMENDMENT TO PATENT SUBLICENSE AGREEMENT

 

This agreement is entered into this     
day of March 2009 by and between Osmotics Corporation (“Osmotics”) and
Ceragenix Pharmaceuticals, Inc. (“Ceragenix”) (collectively the “Parties”).

 

WHEREAS, on August 15, 2006, the Parties
entered into a certain sublicense agreement (the “Sublicense Agreement”)
covering rights conveyed to Ceragenix from the Regents of the University of
California for Barrier Repair Technology;

 

WHEREAS, the Sublicense Agreement provided
Ceragenix with the option to acquire from Osmotics, Triceram®, a non
prescription product using the Barrier Repair Technology;

 

WHEREAS, in November 2007, Ceragenix
entered into an exclusive supply and distribution agreement with Dr. Reddy’s
Laboratories, Inc. (the “DRL Agreement”) for the commercialization of
EpicCeram®. Among other things, the DRL Agreement required Ceragenix to
exercise the purchase option for Triceram® by November 14, 2008;

 

WHEREAS, on January 11, 2008, Ceragenix
loaned to Osmotics $50,000 pursuant to a promissory note bearing interest at
9.5% per annum due no later than April 11, 2008 (the “Promissory Note”);

 

WHEREAS, the Promissory Note provided
Ceragenix the option to apply the unpaid Promissory Note balance to the purchase
price of Triceram®;

 

WHEREAS, on April 11, 2008, the
Promissory Note was amended to extend the maturity date of the note to November 16,
2008 and required that the outstanding principal and accrued interest balance
be applied to the purchase price of Triceram;

 

WHEREAS, on April 11, 2008, the Parties
amended the Sublicense Agreement (the “First Amendment”) to modify the payment
terms for Triceram® to a 12 month note bearing interest at 9.5% per annum with
accrued interest due and payable in a lump sum with the last principal payment;

 

WHEREAS, Ceragenix did not exercise its
purchase option for Triceram® by November 14, 2008, and as a result, the
Promissory Note remains unpaid with an outstanding principal and accrued
interest balance of $28,332 as of February 28, 2009; and

 

WHEREAS, Ceragenix wishes to revise the
payment terms for exercising the Triceram® purchase option.

 

NOW, THEREFORE, in exchange for full and fair
consideration, the Parties agree to make the following amendment to the
Sublicense Agreement.

 

 

Section 2.03(b) of the Sublicense Agreement shall now state
the following “The Exercise Price shall be $487,668 .” ($516,000 less the
outstanding balance of the Promissory Note of $28,332)

 

Section 2.03(c)(i) of the Sublicense Agreement shall now
state the following “On the Transfer Date, the balance owed for the Exercise
Price shall be converted into a note bearing interest at 9.5% per annum. The
first payment under the note shall be in the amount of $16,202 and due on March 15,
2009. Monthly installments of $10,000 per month shall commence on April 1,
2009, until such time that Ceragenix receives in aggregate $3,500,000 in Net
Proceeds. Net Proceeds are defined as proceeds received from a single (or
multiple) debt or equity financing transactions (gross proceeds less
commissions and any other capitalized offering costs) combined with any upfront
or milestone payments received from licensing or commercialization transactions
for its Ceragenin technology. For purposes of this agreement, Net Proceeds for
Ceragenin transactions shall exclude licensing fees payable to Brigham Young
University and mandatory payments required under Ceragenix’s convertible debt
agreements. After receiving $3,500,000 in Net Proceeds, the monthly installment
under the note shall be increased to $40,000. In the event of a change in
control of Ceragenix and either one half of the then existing Board members are
replaced or the Chief Executive Officer or Chief Financial Officer are
replaced, or Ceragenix receives at least $10,000,000 in Net Proceeds, then the
outstanding balance of the note shall become immediately due and payable.”

 

Section 2.03(c)(ii) of the Sublicense Agreement shall now
state “Osmotics shall cease all sales of Triceram® except for sales to Korea
which shall continue until such time that EpiCeram® becomes commercially
available in Korea.”

 

Section 2.03(c)(iii) of the Sublicense Agreement shall now
state “Osmotics shall be allowed to sell through existing Triceram® inventory
on hand to existing customers but shall be prohibited from any future
manufacture or marketing of Triceram® other than for sales in Korea.”

 

Section 3.01 (a) requiring Osmotics to pay Ceragenix 1⁄2 of the
License Maintenance Fee is deleted.

 

Section 3.01 (b) of the Sublicense Agreement shall now state
the following “Osmotics agrees to pay Ceragenix a royalty of 5% of net sales
(as defined in the UCSF Agreement).”

 

Section 4.04 requiring Osmotics to equally bear the cost of
maintenance of the patents is hereby deleted.

 

 

	
  OSMOTICS CORPORATION

  	
  CERAGENIX PHARMACEUTICALS

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
  Francine Porter, CEO

  	
  Jeffrey Sperber, Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  (On behalf of Board of Directors)

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