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Exhibit 10.10    
  

 
  SPONSORED RESEARCH AGREEMENT BETWEEN THE UNIVERSITY OF
  MELBOURNE (the "University")
  AND AXONYX INC. (the "Sponsor")    
  

RECITALS:  

	A.
	The
Sponsor wishes to conduct research in the field of the development of diagnostic tests for Alzheimer's Disease

	B.
	The
Sponsor has requested the University to conduct the research on its behalf and the University has agreed to conduct the research on the terms and conditions of this Agreement. 

    On
the 1st day of October 1999, the parties agree as follows. 

	1.
	Definitions

    "Approved Purposes"

	(a)
	in
relation to the University, means the purposes of conducting the Research Project and

	(b)
	in
relation to the Sponsor means the purposes of determining whether to exercise the Option. 

    "Commencement Date" October 1, 1999, or such other date as the parties agree in writing. 

    "Confidential Information" means all information of or generated by or on behalf of one party (the "disclosing party") disclosed to or
accessed by the receiving party and their respective personnel in connection with the Research Project or through visiting the disclosing party's sites and which is regarded by the disclosing party as
confidential to it. 

    "Department" means the University's Department of Pathology 

    "Force Majeure" means an event or cause beyond the reasonable control of the party claiming force majeure including, without
limitation: 

	(a)
	act
of God, lightning, storm, flood, fire, earthquake, explosion, cyclone. Tidal wave, landslide, adverse weather conditions;

	(b)
	strike,
lockout or other labour difficulty;

	(c)
	act
of public enemy, war (declared or undeclared), sabotage, blockade, revolution, riot, insurrection, civil commotion, epidemic;

	(d)
	the
effect of any applicable laws, orders, rules or regulations of any government or other competent authority;

	(e)
	embargo,
inability to obtain any necessary materials, equipment, facilities or qualified employees, power or water shortage, lack of transportation; and

	(f)
	breakage
or accident or other damage to machinery or equipment. 

    "Generated Intellectual Property" means all Intellectual Property which is developed by or on behalf of the University in connection
with the Research Project. 

    "GST" means any tax on, or on the supply or importation of, goods, real property, services or any other thing, or similar tax (other
than stamp duty) including any interest, fine, penalty, charge, fee or other amount imposed on or in respect of that tax levied, imposed or assessed by any competent authority (whether or not in
Australia) which may operate at any time during the term or further term of this Agreement. 

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    "Intellectual Property" means industrial and intellectual property whether protected at common law or under statute and includes
(without limitation) all inventions (both patentable and unpatentable), designs, copyrights, circuit layouts, plant variety nights, trade marks and Confidential Information. 

    "License Agreements" means the license agreements provided for in clause 8. 

    "Material Form" in relation to information includes any form (whether visible or not) of storage from which the information or any part
of it can be reproduced, and any form in which the information or any part of it is recorded, embodied or encoded. 

    "Option" means the option provided for in clause 8. 

    "Option Period" means the period commencing on the Commencement Date and ending at either: (i) the expiration of 60 days
after receipt by the Sponsor of the final report provided for in Schedule 2, (ii) or at such other date as may be agreed upon by the parties in writing. 

    "Personnel" means all officers and employees of the University or the Sponsor and additionally, in the case of the University, includes
students, academic staff, supervisors, examiners and researchers. 

    "Project Term" means the term of the Research Project, being the period commencing on the Commencement Date and ending on the third
anniversary of the Commencement Date or such longer period as the parties agree in writing. 

    "Related Body Corporate" has the same meaning as in the Corporations Law (as that Law is defined in section 13(2) of the
Corporations (Victoria) Act 1990). 

    "Research Project" means the research project to be undertaken by the University, more particularly described in Schedule I as
it may be altered or amended from time to time by agreement between the parties in writing. 

    "Sponsor" means Axonyx Inc., a United States Corporation with offices at 750 Lexington Avenue, New York N.Y. 10022 USA. 

    "Supervisor" means Professor David Small or such other person as nominated by the University from time to time and approved by the
Sponsor. 

    "University" means The University of Melbourne of Grattan Street, Parkville, Victoria, Australia. 

    "University Intellectual Property" means all Intellectual Property which is the property of, claimed by, or licensed to the University
prior to the Commencement Date or which is developed by or on behalf of the University independently of the Research Project and includes but is not limited to University Patent. 

    "University Patent" means: 

	(a)
	the
patent application number PCT/AU98/00809 filed on 24 September 1998 and titled "Diagnostic Test for Alzheimer's Disease";

	(b)
	any
patent resulting from the patent application referred to in paragraph (a); and

	(c)
	any
continuation, continuation in part, division, re-issue or substitution of any of the foregoing patents. 

    "Year 2000 Event" means any failure of a party's equipment or information technology (including computer software and hardware and data
stored in electronic form and embedded integrated circuits), or the equipment or information technology of any person on whom the party is relying directly or 

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indirectly (for example in relation to the provision of goods or services) in complying with its obligations in this Agreement, to provide full functionality and operate without adverse effect as a
result of the problem commonly referred to as the "Year 2000 problem" and includes, without limitation, any such failure as a result of. 

	(a)
	the
equipment or information technology not complying with Standards Australia Publication "SAA/SNZ MP77:1998:A Definition of Year 2000 conformity requirements (revised
November 1998);

	(b)
	the
equipment or information technology not being fully and effectively able (without any adverse effect on operation) to:

	(i)
	deal
properly with the transition from 31 December 1999 to 1 January 2000;

	(ii)
	distinguish
properly (including when comparing or sequencing) between dates occurring before I January 2000 and dates occurring after 31
December 1999;

	(iii)
	where
relevant, calculate correctly the number of days between a date occurring before 1 January 2000 and a date occurring after 31
December 1999;

	(iv)
	distinguish
properly between leap years and non-leap years;

	(v)
	behave
consistently for dates prior to, during and after Year 2000: or

	(vi)
	specify
in all interfaces and data storage the century in any date either explicitly or by unambiguous algorithims or inferencing rules. 

	2.
	SETTING-UP AND MANAGEMENT OF THE RESEARCH PROJECT

	2.1
	Subject
to Clause 2.2, this Agreement commences on the date it is executed by both parties and continues until expiration of the Option Period, subject to earlier termination
in accordance with this Agreement.

	2.2
	The
University, through the Department must carry out the Research Project during the Project Term under the supervision of the Supervisor and in accordance with any requirements
specified in Schedule 2.2.

	3.
	SPONSOR'S OBLIGATIONS

	3.1
	The
Sponsor must provide financial support for the Research Project for a three year period commencing on the Commencement Date as specified in schedule 3. Payment for any
given year must be paid in full at the commencement of that year.

	3.2
	If
the Sponsor is liable to make an indemnity payment to the University in accordance with any provision of this Agreement:

	(a)
	when
deterinining the amount of the indemnity payment payable by the Sponsor, the amount of any liability, cost and/or expense incurred by the University means the actual amount
incurred less the amount of any GST input tax credit or similar rebate which can be claimed by the University in respect of liability, cost and/or expense; and

	(b)
	if
the University is liable to GST by virtue of the receipt of the indemnity amount, the Sponsor shall, in addition to the indemnity amount, pay to the University an amount equal to
the GST incurred by the University." 

	3.3
	Subject
to clause 3.2, the Sponsor is solely responsible for, and must pay, all taxes, duties, assessments or governmental charges (other than GST imposed on the University)
imposed or levied by or on behalf of the Commonwealth of Australia or determined to be payable in 

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connection
with this Agreement or in respect of any transaction or payment in respect of the Research Project conducted pursuant to or contemplated by this Agreement. 

	4.
	CONFIDENTIAL INFORMATION

	4.1
	Rights to and disclosure of Confidential Information

	(a)
	Subject
to the right of the University to develop, own, exploit or use University Intellectual Property and the rights of the parties to Generated Intellectual Property pursuant to
this agreement, each party reserves all rights in its Confidential Information and no rights or obligations other than those expressly contained in this Agreement are granted or to be implied from
this Agreement.

	(b)
	Confidential
Information of a party may be used or disclosed by the other party for the Approved Purposes or:

	(i)
	subject
to clause 4.1(c), on a confidential basis and for the Approved Purposes to any Related Body Corporate of either party;

	(ii)
	to
the extend required pursuant to any necessarily applicable law or legally binding order of any court, government, semi-government
authority or administrative or Judicial body, provided that prior to any disclosure in reliance on this clause, the party required to make disclosure must:

	(A)
	give
notice to the other party with full details of the circumstances of the proposed disclosure and of the information to be disclosed; and

	(B)
	to
the maximum extent permitted by law give the other party a reasonable opportunity to challenge in a court of law or other appropriate body whether such disclosure is in
accordance with this clause and also to there challenge the obligation of the party to make the disclosure. 

	(iii)
	on
a confidential basis to professional advisers (including legal advisers) whose duties in relation to the party making the disclosure
necessarily require the disclosure;

	(iv)
	subject
to clause 4.1(c), to personnel of that other party or of its Related Body Corporate whose duties in relation to that party or that
Related Body Corporate necessarily require the disclosure;

	(v)
	in
the case of the University, for the purpose of the making or prosecution of any application for registered Intellectual Property rights as
provided in clause 6 and for exercising its rights to the Generated Intellectual Property and University Intellectual Property;

	(vi)
	n
the case of Sponsor, on a confidential basis to potential sublicensees, partners, or in connection with any merger or acquisition discussions. 

	(c)
	Each
party must use its best endeavours to procure that each of its personnel or Related Body Corporate to whom Confidential Information of the other party is or has been disclosed
or by whom Confidential Information is or has been observed (each of whom is in this clause referred to as a Disclosee) will not disclose or use any Confidential Information of the other party
contrary to the requirements of this clause, either during or after the termination of the Disclosee's employment, office, agency or other relationship with that party or with that Related Body
Corporate. Any breach by a Disclosee of any undertaking made by a party as to non-disclosure or non-user or any obligation of confidence to which the Disclosee has become
subject in relation to any Confidential Information of the other party, will be deemed to be a breach by that party of that undertaking or obligation and in any event that party must use its 

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best
endeavours to enforce or procure the enforcement of that undertaking or obligation. In performing any of its obligations pursuant to this clause, each party may reasonably determine whether
litigation to procure compliance by any current or past personnel of that party or that party's Related Body Corporate is warranted. 

	4.2
	Confidential Information not to be disclosed

	(a)
	Each
party undertakes and agrees:

	(i)
	to
hold the Confidential Information of the other party in strict confidence and not to use it in any way, except as permitted in this Agreement or,
in any other case, upon receiving the prior written approval of that party; 

except
as permitted in this Agreement or, in any other case, without the prior written approval of that party, 

	(ii)
	not
to disclose to any person or allow or assist or make it possible for any person to observe any Confidential Information of the other party,
except as permitted in this Agreement or, in any other case, without the prior written approval of that party;

	(iii)
	not
to disclose any Confidential Information which is prohibited from disclosure by any necessarily applicable law (including privacy
legislation). 

	4.3
	Confidentiality obligations to survive termination, etc.

    The
provisions of this clause will survive and continue to bind the parties following termination of this Agreement. 

	4.4
	Return of Confidential Information in Material Form

    Upon
termination of the Research Project and/or the Licensing Agreement contemplated hereunder, each party will promptly return to the other party upon demand all Confidential
Information of that party in Material Form (including without limitation all copies of the Confidential Information and all analyses and summaries of any of it), provided that where any of the
Confidential Information is required by the University for the purposes of pursuing any Intellectual Property registration as provided for in Clause 6 or for exercising its rights to the
Generated Intellectual Property, the University may retain the information solely for that purpose. Subject to the foregoing, if any Confidential Information of either party is stored in data
processing machines or on the data carriers thereof, such Confidential Information must be deleted at that party's request and the deletion promptly confirmed in writing. Notwithstanding the above,
each party may keep one copy of any such Confidential Information solely for the purpose of obtaining legal advice in relation to a party's rights and obligations under this agreement. 

	4.5
	Restrictions not to apply.

    The
restrictions on disclosure, use, publication and return or destruction of Confidential Information provided for in this Agreement do not apply to: 

	(a)
	information
which at the time of its first disclosure to or observation by the relevant party or any of its personnel, was already in the lawful possession of the relevant party in
written form;

	(b)
	information
after it comes into the public domain otherwise than by disclosure in breach of the terms of this Agreement;

	(c)
	the
use or disclosure of information after it is received from a third person legally entitled to possess such information and provide it to the relevant party where such use or
disclosure accords with the rights or permission lawfully granted to the receiving party by that third person and provided that the information was not acquired directly or indirectly from the other
party; 

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	(d)
	information
which is independently generated by a party or on its behalf without reliance upon, and not as a consequence of the acquisition of information as a result of this
Agreement.

	5.
	GENERATED INTELLECTUAL PROPERTY

	5.1
	Subject
to the terms of this Agreement, Generated Intellectual Property will be owned by the parties as tenants in common in equal shares.

	5.2
	Except
as otherwise agreed in writing by the parties and subject to the terms of this Agreement the University retains all rights in and to and in respect of University Intellectual
Property and the Sponsor retains all rights in and to and in respect of its Confidential Information.

	5.3
	The
Sponsor grants the University a nonexclusive, perpetual, irrevocable, royalty free, worldwide license to use the Generated Intellectual Property for non-commercial
research and education purposes.

	5.4
	Subject
to clauses 5.3, 8 and 9, neither party may commercially exploit, assign or grant any third party any rights (including by way of license) in respect of any Generated
Intellectual Property without first obtaining the consent in writing of the other party (such consent not to be unreasonably withheld.

	5.5
	Subject
to Clause 9, the rights and obligations of the parties in respect of Generated Intellectual Property survive termination of the Research Project and this Agreement. 

	6.	REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS TO GENERATED INTELLECTUAL PROPERTY AND UNIVERSITY PATENT
	

6.1	

Where either party is or becomes aware that any part of the Generated Intellectual Property or is or may become patentable or the subject of other registrable Intellectual Property rights, it will forthwith discuss with the other party the
desirability of seeking Intellectual Property protection.
	

6.2	

(a)	

Where both parties agree to seek registrable Intellectual Property rights n respect of any Generated Intellectual Property, the Sponsor shall apply for such Intellectual Property protection in such countries as it considers appropriate and as are
approved by the University, in the joint names of Sponsor and University.
	

 	

(b)	

Where both parties agree to seek registration in accordance with paragraph (a), the Sponsor will be responsible for and must take all reasonable actions in the preparation, filing and prosecution of applications to register title to the relevant
Generated Intellectual Property, including the payment of fees necessary to obtain and maintain the registration of the relevant Generated Intellectual Property. The Sponsor must keep the University informed of progress and development (including
lapsing or abandonment) in this regard prior to making a decision in relation to the Generated Intellectual Property, including providing a status report at least once every twelve months.
	

 	

(c)	

Sponsor must pay, on a going forward basis, all expenses and fees related to any of the actions referred to under paragraph (b). If the Sponsor fails to do so in relation to Generated Intellectual Property in a particular country, it must assign
its rights in respect of the particular item or items of Generated Intellectual Property in that country to the University, or at the University's direction, free of any license rights, obligations or securities in favour of third
parties.
	
	

 	

 

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(d)	

If the parties do not agree to register Intellectual Property rights in relation to any right to proceed to seek registration and to own independently of the other party and may require the assignment of that other party's rights (free of any license,
 rights, obligations or securities in favour of third parties) in respect of the particular item of Generated Intellectual Property in that place, and nothing in this Agreement will operate to confer any right or license on that other party in
respect of that item of General Intellectual Property in that place.
	

 	

(e)	

Without limiting clause 11.7, each party agrees to execute any forms or other documents necessary to register or maintain title to registered Intellectual Property rights in relation to any item of Generated Intellectual Property. Where a
request for execution of a form or document is made by a party, then that party must pay the costs of the other party.
	

6.3	

(a)	

Where the Sponsor agrees to make any application for registrable Intellectual Property protection, the Sponsor must pay all reasonable costs in connection with the making of the application and registering and maintaining the Intellectual Property
rights (including the cost of filing, prosecution and renewal) during the Option Period and (if the Option is exercised) thereafter pursuant to the provisions of the License Agreement contemplated hereunder.
	

 	

(e)	

Where the University has applied for any registrable Intellectual Property fights in respect of any item of Generated Intellectual Property pursuant to clause 6.2(d), that application or fight shall not be subject to the Option or the License
Agreement unless and until the Sponsor requests the University, during the Option Period, to include the application or fight and pays to the University all reasonable costs incurred by the University in connection with the making of the relevant
application and registering and maintaining the Intellectual Property right (including the cost of filing, prosecution and renewal) during the Option Period and (if the Option is exercised) thereafter pursuant to the provisions of the License
Agreement contemplated hereunder.
	

6.4	

(a)	

The University will be responsible for and must take all reasonable actions in the preparation, filing and prosecution of applications to register title to University Patent including the payment of pre-approved expenses and fees necessary to obtain
and maintain the registration of the University Patent, such expenses and fees to be reimbursed to the University by the Sponsor within 30 days of receiving an invoice from the University in relation to such expenses and fees until the later of
termination of this agreement or the License Agreement. The University must keep the Sponsor informed of progress and development (including lapsing or abandonment) in this regard, including providing a status report at least once every twelve
months.
	

 	

(b)	

The University will obtain the prior approval of the Sponsor in relation to actions referred to under paragraph (a) and follow all reasonable directions of the Sponsor until the later of termination of this agreement or the License
Agreement.

	6.5
	Subject
to amendment of this clause by the parties entering into a License Agreement:

	(a)
	Each
party must immediately give notice in writing to the other of.

	(i)
	any
infringement or threatened infringement of either party's rights to or relating to any of the Generated Intellectual Property.

	(ii)
	any
claim by the third party that the use of any of the Generated Intellectual Property infringes the rights of that or any other third party; and 

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	(iii)
	any
claim, challenge or attack or threatened attack in relation to the grant or validity of any patent or other Intellectual Property right in
respect of the Generated Intellectual Property, which may at any time come to its knowledge. 

    Where
the item of Generated Intellectual Property involved is jointly owned by the parties in accordance with this Agreement, the parties must determine what action, if any, is to be
taken in relation to the infringement, claims, attack or challenge. Where the parties agree to act jointly then each party will be liable for its own costs (including legal costs) and no settlement or
agreement with third parties may be reached without the consent of both parties and each party will, as between themselves, be liable for 50% of any
costs, damages or other compensation or payment ordered or agreed to be paid to a third party or received from a third party, whether as a result of a court order, settlement or other legally binding
arrangement. 

	(b)
	Where
any item of Generated Intellectual Property is jointly owned and the parties do not agree to proceed jointly in respect of any relevant action, then either party may
independently proceed to take action in relation to that item of Generated Intellectual Property.

	(c)
	Where
any item of Generated Intellectual Property or University Patent is not owned by the parties jointly, the owner of that item of Generated Intellectual Property may, in its
sole discretion, decide whether and what action will be taken in relation to the infringement, claims, attack or challenge. If, in connection with such matters, an order is obtained by or against a
third party, a settlement is reached or the party taking the action enters into an agreement with a third party, the other party shall have no interest in or rights in respect of those matters. 

	7.
	PUBLICATIONS

	7.1
	If
any University personnel connected with the Research Project wish to publish (whether in writing or orally) any Confidential Information disclosed by the Sponsor to the
University or any Confidential Information forming part of the Generated Intellectual Property and being, at the time it is proposed to be published, the subject of the Option or the License Agreement
contemplated then subject to clause 4:

	(a)
	the
University must give the Sponsor details of the information proposed to be published. The Sponsor must reply in writing within two months of receipt of proofs of the publication
stating whether it approves or does not approve the publication. Where the Sponsor disapproves the publication, the Sponsor must specify in writing its reasons for that disapproval. If the Sponsor
does not reply within the time specified, the Sponsor is deemed to have approved the publication.

	(b)
	The Sponsor must not withhold approval unless it reasonably believes that such GO
	(i)
	the
interests which the Sponsor has in its Confidential Information

	(ii)
	the
validity of any rights granted or to be granted by the License Agreement; or

	(iii)
	the
potential for the registration of any Intellectual Property rights in respect of Generated Intellectual Property which is, at the time it is
proposed to be published, the subject of the Option or the License Agreement. 

	7.2
	Nothing
in this Agreement prevents any student involved in the Research Project from submitting any thesis or work to examiners for assessment, or the Registrar of the University
depositing in the library of the University a copy of the thesis or work, which has satisfied the examiner, in accordance with section 5 of Statute12.5 of the University Statutes; provided
however that where the work or thesis contains Confidential Information as specified in clause 7. 1, the Sponsor may require the work or thesis to be submitted to the examiners in confidence
and to then be withheld from access to library users for a maximum period of twelve months. Where the thesis or work is 

8

 

altered
in a material way in relation to the relevant Confidential Information after the initial date of submission to the examiner, the University must submit a copy of the amended version to the
Sponsor, who must review it in accordance with the procedure set out in subclause 7.1 above, but under no circumstances will the Sponsor be entitled to require the work or thesis to be withheld from
access to library users for a period of more than twelve months from the date the work or thesis satisfied the examiner. 

	8.
	OPTION TO TAKE A LICENSE

    The
University grants to the Sponsor (and the Sponsor accepts) an option (the "Option") to acquire from the University a world wide exclusive license to use such of the Generated
Intellectual Property and the University Patent as is the subject of the Option (having regard to clause 6), on the terms of the License Agreement annexed to this Agreement as
Schedule 4. Provided that the Sponsor is not at the time of exercising the Option in breach of this Agreement, the Option may be exercised by the Sponsor giving notice in writing to the
University at any time during the Option Period. Upon receipt by the University of the written notice properly exercising the Option: 

	(a)
	the
University must grant, and will be deemed to have granted, to the Sponsor, with effect from the date of receipt of the notice, a license on the terms set forth in
Schedule 4 provided such other terms and conditions as are referred to in Articles 11, V and VI of Schedule 4 are agreed to by the parties in writing, and the parties shall negotiate in
good faith.

	(b)
	the
parties must promptly complete and execute the License Agreement, the effective date of which will be specified as the date of receipt of the notice as aforesaid. 

	9.
	TERMINATION OF AGREEMENT

	9.1
	Either
party may terminate this Agreement immediately by notice to the other party if that other party:

	(a)
	commits
a breach of this Agreement (unless the breach is capable of remedy, in which case if the other party fails to remedy the breach within forty-five
(45) days after being required in writing to do so);

	(b)
	fails
to pay when due any sum under this Agreement and such default continues for a period of twenty one (21) days after receipt of a notice requiring payment;

	(c)
	is
unable to pay its debts as they fall due, or makes or commences negotiations with a view to making a general rescheduling of its indebtedness;

	(d)
	makes
a general assignment, scheme of arrangement or composition with its creditors;

	(e)
	stops
or suspends or threatens to stop or suspend payment of all or a class of its debts;

	(f)
	takes
any corporate action or any steps are taken or legal proceedings are started for:

	(i)
	its
winding up, dissolution, liquidation or reorganization, other than to reconstruct or amalgamate while solvent on terms approved by the other
party (which approval will not be unreasonably withheld); or

	(ii)
	the
appointment of a controller, receiver, administrator, official manager, trustee or similar officer of it or any of its revenues and assets; or 

	(g)
	seeks
protection or is granted protection from its creditors, under any applicable 

    Termination
of this agreement does not affect any accrued rights or remedies of either party. 

9

 
	9.2
	Upon
termination of this Agreement pursuant to Clause 9.1 or 9.3:

	(a)
	if
termination takes place prior to completion of the Research Project, the University has no further obligation to complete the Research Project and the Sponsor is not required to
make any further payments except as is necessary, to meet contractual obligations incurred by the University prior to the date of service of the notice of termination, provided that the University has
provided Sponsor with notice of any such obligation and that the University has taken all reasonable steps to minimize any such obligation;

	(b)
	if
the Sponsor has not prior to the date of service of the notice of termination exercised the Option the right to exercise the Option ceases;

	(c)
	without
limiting the parties' obligations pursuant to clause 4.4 in respect of Confidential Information, and subject to paragraphs (d) and (e), each party must, upon
written request received from the other, return to the other party within 45 days from the date of receiving the request, all samples and information in Material Form provided to that party by
the other party pursuant to this

	(d)
	the
provisions of this Agreement as to ownership of Generated Intellectual Property so far as it was generated prior to termination will not be affected, and the rights and
obligations in paragraph (c) are subject to those ownership provisions and the consequences of such ownership; and

	(f)
	the
parties' rights, obligations and warranties under Clauses 3.2, 3.3, 4, 5, 9 and 10 continue and remain in full force and effect, notwithstanding termination of this Agreement
and the Option. 

	9.3
	Sponsor
shall have the right to terminate this agreement by 30 days notice in writing in the event that University replaces Dr. Small as Supervisor without Sponsor's
approval, such approval not to be unreasonably withheld.

	9.4
	If
the University is entitled to terminate this Agreement under clause 9.1, the University's license in clause 5.3 is expanded to include commercial exploitation of
the Generated Intellectual Property (including the right to sublicense) on an exclusive royalty free, perpetual, worldwide basis.

	10.
	LIMITATION OF LIABILITY AND INDEMNITY

	10.1
	The
University warrants that the final report provided for in Schedule 2 will be prepared using all due skill and care and
will be based on the results of the Research Project. The University makes no other representations or warranties in respect of any matter and, in particular, does not warrant or represent:

	(a)
	that
any Generated Intellectual Property or any University Patent will arise out of the Research Project;

	(b)
	that
any Generated Intellectual Property or University Patent will be registrable or valuable;

	(c)
	that
any registered or unregistered Intellectual Property rights derived from any Generated Intellectual Property or University Patent will be valid or enforceable;

	(d)
	that
the use and exploitation (by whatever means in and in whatever place) of any Generated Intellectual Property or University Patent will not infringe the rights (including
Intellectual Property and any moral rights and similar rights) of any person or give rise to an obligation to pay compensation or a royalty to any person;

	(e)
	that
the Sponsor or any person is or will be entitled to any taxation benefit or other benefit whether in respect of the Research Project, the Option or howsoever otherwise; 

10

 

	(f)
	that
any decisions made or actions taken by the Sponsor as a result of the Sponsor's review of any Generated Intellectual Property or University Patent or any report provided to
the Sponsor in connection with the Research Project will be of commercial or other benefit to the Sponsor or to any other person. 

	10.2
	The
Sponsor acknowledges that in entering this Agreement it has not relied on any representation of warranty as to the subject
matter of this agreement except as provided in the agreement and undertakes that it will not rely on any representation or warranty in exercising the Option, or not to exercise the Option, except as
provided in this Agreement.

	10.3
	To
the maximum extent permitted by law, all conditions, warranties, duties and obligations of or by the University implied or
other-wise imposed by law, custom, trade usage or otherwise in any way relating to the Confidential Information, the University Intellectual Property, the Generated Confidential
Information, the Generated Intellectual Property, the use and exploitation of any of these matters, the performance of the University's obligations under this Agreement, or of any goods or services
supplied, or to be supplied, by the University hereunder, are hereby wholly excluded.

	10.4
	To
the maximum extent permitted by law, the Sponsor releases the University and its personnel and all persons authorized by the
University from and against any and all claims, actions, losses, injury or damage (whether or not personal or to property, and including but not limited to any loss arising from infringement of any
Intellectual Property rights or other rights of any other person, and including but not limited to all consequential financial loss or other indirect loss), differences, demands, proceedings,
accounts, interest, costs (whether or not the subject of a Court order), expenses and liabilities of whatever nature and however arising which the Sponsor may now have or at any time hereafter might
have or, but for the execution of this clause, might have had against the University or any of its personnel arising out of or in any way connected with or incidental to the exercise by the Sponsor of
its rights under this Agreement or the undertaking by the Sponsor of its obligations under this Agreement.

	10.5
	The
Sponsor indemnifies and will keep indemnified the University and all personnel of the University and all persons authorized by
the University from and against all losses, injury, damages (whether or not personal or to property and including but not limited to any loss arising from infringement of any Intellectual Property
rights or other rights of any other person, and including but not limited to all consequential financial loss or other indirect loss), actions, claims, proceedings or demands which may be suffered by
or brought against it or them arising out of or in any way connected with or incidental to:

	(a)
	any
act, matter or thing done or permitted to be done by the Sponsor or any of its personnel or any person authorized by the Sponsor; or

	(b)
	any
omission by the Sponsor or any of its personnel or any person authorized by the Sponsor, 

arising
out of or in any way connected with or incidental to the exercise by the Sponsor of its rights under this Agreement or the undertaking by the Sponsor of its obligations under this Agreement. 

	10.6
	Statutory Warranties

	(a)
	If
any legislation implies in this Agreement any term or warranty and also prohibits provisions in a contract excluding or modifying the application of or exercise of, or liability
under, that term or warranty, that term or warranty is deemed to be included in this Agreement.

	(b)
	If
any legislation implies in this Agreement any term or warranty and also prohibits provisions in a contract excluding the application of or exercise of that the University for a
breach of 

11

 

such
a term or warranty will be limited, at the option of the University, to any one or more of the following: 

	(i)
	if
the breach relates to goods:

	(A)
	the
replacement of the goods or the supply of equivalent goods;

	(B)
	the
repair of such goods;

	(C)
	the
payment of the cost of replacing the goods or of acquiring equivalent goods; or

	(D)
	payment
of the cost of having the goods repaid; and 

	(ii)
	if
the breach relates to services:

	(A)
	the
supplying of the services again; or

	(B)
	the
payment of the cost of having the services supplied again. 

	11.
	GENERAL

	11.1
	Interpretation

    Headings
are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise. 

	(a)
	The
singular includes the plural and conversely.

	(b)
	A
gender includes all genders.

	(c)
	If
a word or phrase is defined, its other grammatical forms have a corresponding meaning.

	(d)
	A
reference to a person, corporation, trust, partnership, unincorporated body or other entity includes any of them.

	(e)
	a
reference to a clause or schedule is a reference to a clause of, or a schedule to, this Agreement.

	(f)
	A
reference to an agreement or document (including, without limitation, a reference to this Agreement) is to the agreement or document as amended, varied, supplemented, novated or
replaced, except to the extent prohibited by this Agreement or that other agreement or document.

	(g)
	A
reference to a party to this Agreement or another agreement or document includes the party's successors and permitted substitutes or assigns (and, where applicable, the party's
legal personal representatives).

	(h)
	A
reference to legislation or to a provision of legislation includes a modification

	(i)
	A
reference to conduct includes, without limitation, an omission, statement and undertaking, whether or not in writing.

	(j)
	A
reference to an agreement includes any undertaking, deed, agreement and legally enforceable arrangement, whether or not in writing, and a reference to a document includes an
agreement (as so defined) in writing and any certificate, notice, instrument and document of any kind.

	(k)
	A
reference to dollars and $      is to Australian currency.

	(l)
	A
reference to a right or obligation of any two or more persons confers that right, or imposes that obligation, as the case may be, jointly and severally. 

12

 

	(m)
	A
reference to writing includes a facsimile transmission and any means of reproducing words in a tangible and permanently visible form.

	(n)
	A
reference to an asset includes any real or personal, present or future, tangible or intangible, property or asset (including
without limitation, Intellectual Property) and any right, interest, revenue or benefit in, under or derived, from the property or asset.

	(o)
	A
limited partnership will be regarded as a corporation.

	(p)
	A
reference to an amount for which a person is contingently liable includes, without limitation, an amount that that person may become actually or contingently liable to pay if a
contingency occurs, whether or not that liability actually arises.

	(q)
	The
meaning of general words is not limited by specific examples introduced by including, or for
example, or similar expressions.

	(r)
	Nothing
in this Agreement is to be interpreted against a party solely on the ground that the party put forward this Agreement or any part of it.

	(s)
	In
this Agreement, a reference to "registrable" or "registered" Intellectual Property rights is a reference to rights that may be recorded on officially or legislatively sanctioned
registers in any jurisdiction and does not include a reference to unofficial registers. 

	11.2
	Each
Schedule to this Agreement is incorporated by reference in this Agreement provided that if there is any inconsistency between
the provision of this Agreement and the provisions of any schedule, then the provisions of this Agreement will prevail to the extent of the inconsistency.

	11.3
	Entire Agreement

    This
Agreement contains the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings between the parties in
connection with it. 

	11.4
	Amendment

    No
amendment or variation of this Agreement is valid or binding on a party unless made in writing executed by all parties. 

	11.5
	Assignment

    The
rights and obligations of the Sponsor under this Agreement are personal. They cannot be assigned, encumbered or otherwise dealt with and the Sponsor may not attempt or purport to
do so without the prior written consent of the University. For the purposes of this clause, it is deemed an assignment of rights under this Agreement by the Sponsor if there occurs: 

	(a)
	a
change of shareholding so that a change occurs in the control of the Sponsor as existed at the date of this Agreement (whether such change occurs at the one time or through a
series or succession of transfers or issues); or

	(b)
	a
change or alteration occurs in the corporate structure of the Sponsor during the term of this Agreement or any extension of that term, 

which
change or alteration results in a person other than the shareholders of the Sponsor at the date of this Agreement; 

	(i)
	controlling
the composition of the board of directors;

	(ii)
	controlling
the voting power of the board of directors or any class of shareholders or both; or

	(iii)
	holding
more than one half of the issued share capital (either beneficially or otherwise). 

13

 

	11.6	 	No Waiver

    No failure to exercise nor any delay in exercising any right, power or remedy by a party operates as a waiver. A single or partial exercise of any right, power
or remedy does not preclude any other or further exercise of that or any other right, power or remedy. A waiver is not valid or binding on the party granting that waiver unless made in writing. 

	11.7	 	Further Assurances

    Each party agrees to do all things and execute all deeds, instruments, transfers or other documents whatsoever as may be necessary or desirable to give full
effect to the provisions of this Agreement and the transactions contemplated by it and where necessary must procure its personnel (including persons previously its personnel) to similarly do all
things and execute all deeds, instruments, transfers or other documents whatsoever as may be so necessary. Without limitation, each party must (and where necessary must procure its present and past
personnel) to do all things, execute all deeds, instruments, transfers or other documents necessary or desirable to enable the University perfect its title to all or any part of the Generated
Intellectual Property. 

	11.8	 	No Partnership

    The relationship between the parties to this Agreement is that of independent contractors the parties. None of the parties may pledge or purport to pledge the
credit of the other party or make or purport to make any representation, warranty or undertaking for the other party. 

	11.9	 	Governing Law and Jurisdiction

    This Agreement is governed by the laws of Victoria, Australia. Each party submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with all matters concerning this Agreement. 

	11.10	 	Notices

    Any notice, demand, consent or other communication (a "Notice") given or made under this Agreement: 

	(a)
	must
be in writing and signed by a person duly authorized by the sender;

	(b)
	must
either be delivered to the intended recipient by prepaid post (if posted to an address in another country, by registered airmail) or by hand or fax to the address or fax number
below or the address or fax number last notified by the intended recipient to the sender: 

	(i)	 	to the University:	 	The University of Melbourne

Grattan St, Parkville, Victoria

Australia 3052

Attention:

Vice Chancellor

Fax No. 613-934759904
	

(ii)	
 	

to the Sponsor:	
 	

Axonyx Inc.

750 Lexington Ave., NY NY 10022

Attention: Dr. Marvin Hausman

Fax No. 212-688-4843

	(c)
	will
be taken to be duly given or made:

	(i)
	in
the case of delivery in person, when delivered; 

14

 

	(ii)
	in
the case of delivery by post two business days after the date of posting (if posted to an address in the same country) or seven business days
after the date of posting (if posted to an address in another country);

	(iii)
	in
the case of telex, on receipt by the sender of the answer back code of the recipient at the end of transmission; and 

but
if the result id that a Notice would be taken to be given or made on a day which is not a business day in the place to which the Notice is sent or is later than 4.00 pm (local time) it will be
taken to have been duly given or made at the commencement of business on the next business day in that place. 

	11.11	 	Mediation and Arbitration

	(a)
	Any
dispute or difference arising in connection with this Agreement or its breach, termination or invalidity will first be the subject of discussions between the head of the
Department and a representative appointed by the Sponsor who must promptly meet in person, or by telephone conference, upon the dispute or difference arising and seek to resolve the dispute or
difference, each person acting in good faith.

	(b)
	If
the dispute or difference is not resolved within 28 days (or any other period agreed to in writing between the parties) after the initial meeting between the head of the
Department and the representative of the Sponsor, the dispute or difference will be the subject of mediation administered by the Australian Commercial Disputes Centre Limited ("ACDC").

	(c)
	If
the dispute or difference is not then resolved within 28 days (or any other period agreed to in writing between the parties) after the appointment of the mediator by the
parties, the dispute, controversy or claim will be submitted to arbitration, administered by the ACDC. The arbitrator will be agreed between the parties from a panel suggested by ACDC or failing
agreement, an arbitrator will be appointed by the Secretary General of ACDC. Subject to the foregoing, the arbitration will be conducted and held in accordance with the laws of Victoria and subject to
the Institute of Arbitrators Australia Rules for the conduct of Commercial Arbitrations.

	(d)
	The
Arbitrator will not be the same person as the mediator. Any mediation or arbitration meetings and proceedings must be held in Melbourne.

	(e)
	Nothing
in this clause will prevent either party proceeding to seek injunctive interlocutory relief in respect of any dispute or difference. 

	11.12	 	Force Majeure

	(a)
	If
a party is prevented in whole or in part from carrying out its obligations under this Agreement (other than an obligation to pay money) as a result of Force Majeure, it must
promptly notify the other party accordingly. The notice must:

	(i)
	specify
the obligations it cannot perform;

	(ii)
	fully
describe the event of Force Majeure;

	(iii)
	estimate
the time during which the Force Majeure will continue; and

	(iv)
	specify
the measures proposed to be adopted to remedy or abate the Force Majeure. 

Following
this notice, and while the Force Majeure continues, the obligations which cannot be performed (other than an obligation to pay money) because of the Force Majeure will be suspended. 

15

 

	(b)
	The
party that is prevented from carrying out its obligations under this Agreement as a result of Force Majeure must remedy the Force Majeure to the extent reasonably practicable
and resume performance of its obligations as soon as reasonably possible

	(c)
	The
party that is prevented from carrying out its obligations under this Agreement as a result of Force Majeure must take all action reasonably practicable to mitigate any loss
suffered by a party or a third party as a result of its failure to carry out its obligations under this Agreement.

	(d)
	A
party is not required, under Clause 11.12(b) or 11.12(c), to settle any labour dispute against its will or to test the validity or refrain from testing the validity of
Federal, State or local law, order, rule or regulation.

	(e)
	If
a party is prevented from carrying out its obligations under this Agreement as a result of Force Majeure for a period of three ("3") months the other party may terminate this
Agreement by giving 30 days notice to the party claiming Force Majeure, without prejudice to any of the rights of either party accrued prior to the date of termination.

	(f)
	The
term of this Agreement and of the Project Term will not be extended by the period of Force Majeure. 

	11.13	 	Severability

    Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction is ineffective as to that jurisdiction to the extent of the prohibition
or unenforceability. That does not invalidate the remaining provisions of this Agreement nor affect the validity or enforceability of that provision in any other jurisdiction. 

	11.14	 	Calculation of Payments

	(a)
	The
following principles apply when determining the amount payable (the Payment) for anything supplied pursuant to this Agreement.

	(i)
	If
GST is payable in relation to the supply the amount payable will be the consideration specified herein plus GST (if any).

	(ii)
	If
the Payment is determined by reference to any liability incurred by a party (the Payee), the relevant amount is the actual amount incurred by
the Payee less the amount of any GST input tax credit the Payee is entitled to claim in respect of that liability.

	(iii)
	If
the payment is a reimbursement or indemnification of a loss determined by reference to revenue earned and liabilities incurred, the revenue
will be the revenue earned net of GST and the liabilities will be determined in accordance with paragraph (b). 

	(b)
	The
parties must provide each other with all documentation required to claim any GST input tax credit, set off, rebate or refund for or in relation to any GST included in any
payment made under this Agreement. 

16

  

 
 
 

SCHEDULE 1
  
    Research Project    
  

    See attached proposal entitled: "Development of a diagnostic test for Alzheimer's disease: analysis of cholinesterase gylcosylation and expresssion." 

    The
University, under supervision of Dr. Small shall diligently conduct the Research in accordance with the terms and conditions of this Agreement, in compliance with
applicable good laboratory practices. 

17

 
 
 
 

SCHEDULE 2
  
    Supervision and Reporting Requirements    
  

    The parties will organize a management committee (the "MC") to undertake the management of the Research Project, comprising at least one representative from
the Sponsor and one representative from the University and/or the Supervisor. The powers of the MC to manage the Research Project include power to oversee preservation of confidentiality and
protection of Intellectual Property and Generated Intellectual Property and oversee and guide the direction of the Research Project. 

    The
University shall provide Sponsor and the MC with information relative to the conduct and results I of the Research through quarterly written reports (the "Reports") that wi11
include a description of the status and progress of the Research including all relevant findings and a summary of all relevant data developed to date. The Reports shall also include a statement
itemizing the use of the research funding during the prior quarter. The University shall provide Sponsor with a final report within 60 days of completion of the Research Project. 

    In
person meetings of the MC, or telephone conferences shall be held at Sponsor's reasonable discretion during the University's business hours, on no less than fifteen days notice to
the University, to discuss the progress of the Research Project and any related topic. 

18

 
 
 
 

SCHEDULE 3
  
    Financial Support to be provided by Sponsor    
  

	 
	 	Year I
	 	Year 2
	 	Year 3
	 	Total

	Post doctorate Fellow	 	13,840	 	14,349	 	14,857	 	 
	Indirect Costs	 	21,854	 	22,657	 	23,458	 	 
	Consumables	 	56,722	 	58,248	 	59,771	 	 
	 	 	
	 	
	 	
	 	

	TOTAL (AUS$)	 	92,416	 	95,254	 	98,086	 	285,756
	US $ equivalent'	 	57,298	 	59,057	 	60,813	 	177,168

19

 
 
 
 

SCHEDULE 4
  
    Basic License Terms for Each License Agreement    
  

    Each License shall include the following basic license terms, and such other terms and conditions as are customarily included in such license agreements, and
that the parties shall negotiate in good faith. 

Article I

Definitions  

    1.1  The relevant definitions in Clause I of the Sponsored Research Agreement are incorporated herein by
reference.  

    1.1.1  "Net Sales" shall mean with respect to each country and subject to the Deeming Sales Provision the amounts
received by Sponsor, a Related Body Corporate or affiliate of the Sponsor or its sublicensees for all sales of any Product to an unaffiliated third party (whether an end-user, a
distributor or otherwise), and exclusive of sales or transfers to affiliates, less the reasonable and customary deductions from such gross amounts including:  

	(a)
	trade,
cash and quantity discounts, rebates, reimbursements, allowances and credits;

	(b)
	credits
or allowances actually granted for damaged goods, returns or rejections of a Product;

	(c)
	sales
taxes levied on the sale or use of a Product

	(d)
	freight,
postage, shipping, customs duties and insurance charges directly related to the sale of a Product; and

	(e)
	commissions
paid to third parties other than sales personnel and sale representatives or sales agents. 

    For
purposes of calculating Net Sales under this Agreement, all sales of any Product hereunder, whether made for cash or otherwise, shall be deemed to be made for cash, at the
applicable fair market value of such Product ("Deeming Sales Provision"). 

    "First
Commercial Sale" shall mean, with respect to a Product, the first sale by Sponsor, a Related Body Corporate of the Sponsor or its licensees for end use or consumption of such
Product in a country after all required approvals, including without limitation Health Registrations, have been granted by the governing Regulatory Authority of such country. 

    "Health
Registrations" shall mean the technical, medical and scientific licenses, registrations, authorizations and/or approvals of a Product (including any prerequisite manufacturing
approvals or authorizations related thereto) that are required or deemed necessary by any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state
or local regulatory agency, department, bureau or other governmental entity, and any pricing, third party reimbursement approvals and labeling approvals required or deemed necessary for the
manufacture, 

    "Product"
means any good or product (or any part of a good or product) which applies or is made according to, all or any part of the University Patent or Generated Intellectual
Property 

    "Valid
Claim" means a claim of an issued and unexpired patent or patent application included within the scope of protection afforded by University Patent or Generated Intellectual
Property that has not lapsed, been revoked or abandoned or held unenforceable or invalid by a final decision of a court or other appropriate body of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and that has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise. 

20

 
Article II

License  

    2.1  License Grant.  The University agrees to grant to Sponsor an exclusive, worldwide license to the
Generated Intellectual Property and/or the University Patent to make, have made, import, use, offer for sale and sell Products, (each a "License Agreement"). Each License Agreement shall include the
right to sublicense any and all rights covered by this License Grant, and on such other terms and conditions as are customarily included in such license agreements, and that the parties shall
negotiate in good faith. 

Article III

Payments and Royalties for each License  

    3.1  License Issuance Fee.  In consideration for the grant of each License, Sponsor shall pay to
University within thirty (30) days of the signature of each License Agreement Twenty Five Thousand Dollars ($25,000.00) for each License. 

    3.2  Method of Payment.  Payments by Sponsor to University under the License Agreement shall be made by
bank wire transfer in immediately available funds to such bank account as University designates in writing to Sponsor. 

    3.3  Royalties.  Subject to the terms and conditions of the License Agreement and in consideration for
the grant of an exclusive world wide license thereunder, Sponsor shall pay, or cause to be paid, to University royalties on in an amount equal to the following 

    3.3.1  Basic Royalty means the aggregate of  

	(a)
	with
respect to total annual aggregate Net Sales of all Products for a License at or below Ten Million Dollars ($10,000,000.00), three percent (3%) of such Net Sales; and

	(b)
	with
respect to total annual aggregate Net Sales of all Products for a License in between Ten Million Dollars ($10,000,000.00) and Twenty-Five Million Dollars
($25,000,000), two percent (2%) of such Net Sales; and,

	(c)
	with
respect to total annual aggregate Net Sales of all Products for a License above Twenty Five Million Dollars ($25,000,000) one percent (1%) of such Net Sales. 

    3.3.2  Minimum Annual Royalty.  After the third anniversary of the exercise of the Option Sponsor shall
pay to University a minimum of Twenty Five Thousand Dollars (S25.000) per year for each License. 

    3.3.3  3.3.3 Adjusted Annual Royalty.  In the event that Sponsor licenses all or part of the rights
conveyed hereunder to a third party, University shall receive an Adjusted Annual Royalty equal to the lesser of- (i) the Basic Royalty, (ii) 50% of the annual revenue
received by Sponsor with respect to any revenues from a license of rights covered by University Patent or 40% of the revenue received by Sponsor with respect to any revenues from a license of rights
covered by Generated Intellectual Property. 

    In
the event that a product with a mechanism of action substantially equivalent to that of any Product, which has an approved Health Registration in a given country for an indication
for which such Product also has an approved Health Registration in such country and which has a market share of twenty five percent (25%) or more in such country as measured by sales or other similar
information for such country, University agrees to discuss in good faith with the Sponsor the renegotiation of Annual Royalty. The University is under no obligation to amend the Annual Royalty. 

21

 

    3.4  Term of the Royalty Obligation.  Sponsor's obligation to pay royalties (other than a Minimum Annual
Royalty) under each License Agreement with respect to any country shall extend from the date of the First Commercial Sale of a Product in such country to the date of expiration or invalidation of the
patent under which such Product is protected. 

ARTICLE IV

Patent Protection, Enforcement, Infringement, Consent and Competitive Products  

    The License Agreement shall contain the following terms and conditions on patent enforcement, infringement, consent and competitive products. 

    4.1  Patent Support and Protection.  

    As
set forth in the Sponsored Research Agreement, Sponsor shall have the right and the duty to provide funds for all appropriate patent protection and support related expenses,
including the cost of retaining patent counsel with respect to both University Patent and Generated Intellectual Property and the cost of making all necessary patent filings, so long as the License
Agreement shall remain in force and effect with respect to such patent. Sponsor shall have the right and duty to select primary patent counsel with the advice of University for Generated Intellectual
Property and to consult with the University with respect to University Patent. The University will obtain the prior approval of the Sponsor in relation to the actions referred to herein with respect
to the University Patent and will follow all reasonable directions of the Sponsor so long as a Licensing Agreement covering the University Patent shall be in effect. 

    4.2  Enforcement.  

    4.2.1  Notice and Discontinuance of Infringement.  In the event that either party becomes aware of any
third-party infringement of any Valid Claim under University Patent or Generated Intellectual Property, such party will notify the other party to that effect, including within such notice evidence to
support an allegation of infringement by such third party. Sponsor shall have the right but not the obligation, ninety (90) days from the date of such notice to obtain a discontinuance of such
infringement or to bring suit against the third-party infringer and shall notify University thirty (30) days prior to bringing such suit. Sponsor shall bear all the expenses of any suit brought
by it. University shall have the right, prior to commencement of the suit brought by Sponsor, to join any such suit, and in such event shall pay one-half of the costs of such suit. In the
event that University has joined the suit and shared the costs thereof as set forth above, no settlement, consent judgment or other voluntary final disposition of the suit may be entered into without
the consent of University, and any recovery or damages derived from such suit shall be used first to reimburse each of Sponsor and University for its reasonable documented
out-of-pocket legal expenses relating to the suit, with any remaining amounts to be shared by the parties in equal shares. In the event that University has not joined the suit,
University shall reasonably cooperate with Sponsor in any such suit and shall have the right to consult with Sponsor and be represented by independent counsel at its own expense,  provided, however, that
Sponsor shall reimburse University for its out-of-pocket costs (excluding the costs of retaining its
independent counsel) incurred in cooperating with Sponsor. Sponsor shall keep University informed of the status of any such
suit and shall provide University with copies of all pleadings filed in such suit. Any recovery or damages derived from such suit or the settlement thereof shall be retained by Sponsor. 

    4.2.2  Continuance of Infringement.  If, after the expiration of ninety (90) days from the date of
the notice specified in Subsection 4. 1. 1, Sponsor has not overcome the allegation of infringement, obtained a discontinuance of such infringement, or brought suit against the third-party infringer,
University shall have the right, but not the obligation, to bring suit against such infringer, and join Sponsor as a party plaintiff, provided that University shall bear all the expenses of the suit
and shall control the prosecution of such suit. Sponsor shall cooperate with University in any suit brought by University and shall have the right to consult with University and be represented by
independent 

22

 

counsel at its own expense, provided, however, that University shall reimburse Sponsor for its out-of-pocket costs (excluding
the costs of retaining independent counsel) incurred in cooperating with University. University shall keep Sponsor informed of the status of any such suit and shall provide Sponsor with copies of all
pleadings filed in such suit. University shall incur no liability to Sponsor as a consequence of such suit or any unfavorable decision resulting therefrom, including any decision holding any of the
rights under University Patent or Generated Intellectual Property invalid or unenforceable. Any recovery or damages derived from such suit or the settlement thereof shall be retained by University. 

    4.3  Infringement and Third-Party Licenses.  

    4.3.1  Course of Action.  In the event that Sponsor, its Related Body Corporate or affiliate or its
licensees making, having made, importing, using, offering for sale or selling a Product infringes, will infringe or is alleged by a third party to infringe a third party's patent, the party becoming
aware of same shall promptly notify the other party. The parties shall thereafter attempt to agree upon a course of action that may include: (a) modification of the Product or its use and
manufacture so as to be non-infringing; or (b) obtaining a license or assignment of such third-party patent from such third party, the cost of which assignment or license shall be
offset against the royalty owed to University in a manner consistent with Section 3.3.3 above. Article V Term and Termination 

Article V

Term and Termination  

    5.1  Term and Expiration.  A License Agreement shall be effective as of the date of execution and
delivery thereof, and unless terminated earlier pursuant to Section 5.2 below, a License Agreement shall continue in effect until the expiration of Sponsor's royalty obligation. Upon expiration
of a License Agreement due to expiration of the royalty obligation, Sponsor's licenses shall become fully paid-up, perpetual licenses. 

    5.2 Either
party may terminate a License Agreement immediately by notice to the other party if that other arty: (a) commits a breach of the License Agreement
(unless breach is capable of remedy, in which case if the other party falls to remedy the breach within forty-five (45) days after being required in writing to do so)-,
(b) falls to pay when due any sum under the License Agreement and such default continues for a period of twenty one days after receipt of a notice requiring payment; (c) is unable to pay
its debts as they fall due, or makes or commences negotiations with a view to making a general rescheduling of its indebtedness; (d) makes a general assignment, scheme of arrangement or
composition with its creditors; (e) stops or suspends or threatens to stop or suspend payment of all or a class of its debts; (f) takes any corporate action or any steps are taken or
legal proceedings are started for: (i) its winding up, dissolution, liquidation or reorganization, other than to reconstruct or amalgamate while solvent on terms approved by the other party
(which approval will not be unreasonably withheld); or (ii) the appointment of a controller, receiver, administrator, official manager, trustee or similar officer of it or any of its revenues
and assets; or (g) seeks protection or is granted protection from its creditors, under any applicable legislation. 

    Termination
of the License Agreement does not affect any accrued rights or remedies of either party. 

    5.3  Consequences of Termination.  

    To
be agreed by the parties. 

23

 
Article VI

Other Provisions  

    The License Agreement will also contain such further customary representations, warranties, covenants and conditions as are necessary or appropriate for
transactions of this type and are satisfactory in form and substance to the parties and their legal advisors, including without limitation terms and conditions relating to royalty reports, maintenance
of royalty records, withholding tax, and audit rights of the
University, and will adopt confidentiality, publicity, publication, patent filing, prosecution and maintenance, representations and warranties, indemnification by Sponsor to University, limitation of
liability by University, a commitment by Sponsor to employ its reasonable best efforts to commercialize the subject technology, and miscellaneous provisions relating to assignment, governing law,
dispute resolution, force majeure and notices comparable to those in the Sponsorship Agreement. 

EXECUTED in Melbourne and New York.  

	SIGNED by          as authorized	 	)	 	 
	representative for The University of	 	)	 	 
	Melbourne in the presence of:	 	)	 	 

	

/s/ F.P. LARKINS   
 Authorized Representative	
 	

F. Shrezenel
 Witness
	

F.P. Larkins
 Print Name	
 	

F. Shrezenel
 Print Name
	

THE COMMON SEAL of Axonyx Inc.was

duly affixed in the presence of:	

 	

)

)
	

/s/ MARVIN HAUSMAN   
 Director	

 	

/s/ MICHAEL STRAGE   
 Director/Secretary
	

Marvin Hausman
 Print Name	
 	

Michael Strage
 Print Name

24

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Exhibit 10.10

SPONSORED RESEARCH AGREEMENT BETWEEN THE UNIVERSITY OF MELBOURNE (the "University") AND AXONYX INC. (the "Sponsor")

SCHEDULE 1

SCHEDULE 2

SCHEDULE 3

SCHEDULE 4Prepared by MERRILL CORPORATION www.edgaradvantage.com

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Exhibit 10.11    
  

 
  COMMON STOCK UNDERWRITING AGREEMENT    
  

    COMMON STOCK UNDERWRITING AGREEMENT dated as of October 25, 2000 (the "Agreement"), between Ramius
Securities, LLC, a limited liability company organized and existing under the laws of the State of Delaware (the "Underwriter"), and Axonyx Inc.,
a corporation organized and existing under the laws of the State of Nevada (the "Company"). 

W I T N E S S E T H:  

    WHEREAS, upon the terms and subject to the conditions of this Agreement, the Company may elect from time to time to issue and sell through the Underwriter up
to $25 million of the Company's Common Stock, $.001 par value per share (the "Common Stock"); 

    NOW,
THEREFORE, the parties hereto agree as follows: 

I.  DEFINITIONS.  

    As used in this Agreement, the following terms shall have the following meanings: 

    "Affiliate"
shall mean, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, such specified Person. 

    "Agreement"
shall mean this Common Stock Underwriting Agreement dated as of October 25, 2000 between the Underwriter and the Company. 

    "Block
Trades" shall mean block trades greater than 50,000 shares. 

    "Blocking
Event" shall mean an event described in Subsection 2.5(a)(i),(ii),(iii),(iv),(v) or (vi). 

    "Business
Intellectual Property" shall mean the Owned Intellectual Property and the Licensed Intellectual Property. 

    "Capital
Demand Notice" shall mean the written notice, in the form attached hereto as Exhibit 2.3(a), delivered by a Designated Officer of the Company to the Underwriter on any
Trading Day during the Commitment Period pursuant to Section 2.3. 

    "Capital
Stock" shall mean any and all shares, interests, participations or other equivalents (however designated) of corporate stock or any and all equivalent ownership interests in
a Person (other than a corporation). 

    "Closing
Date" shall mean, with respect to each sale of Common Stock subject to the conditions contained herein, each Trading Day that the Underwriter delivers an Underwriter Sales
Notice to the Company and the date on which the Underwriter delivers a Purchase Option Notice to the Company. 

    "Commission"
shall have the meaning set forth in Section 2.4(d). 

    "Commitment
Period" shall mean the period commencing on the date hereof and expiring on the earliest to occur of (a) the election by the Company or the Underwriter to terminate
the Underwriter's obligation to sell, as the Company's Underwriter, on a best efforts basis, Common Stock pursuant to Section 7.4 herein, (b) the date occurring on the two year
anniversary of the date hereof or (c) the date that the Underwriter has sold an aggregate of $25 million of Common Stock pursuant to Capital Demand Notices (without regard to the
Purchase Option). 

    "Common
Stock" shall mean the common stock of the Company, $.001 par value per share. 

1

 

    "Company" shall mean Axonyx Inc., a corporation organized and existing under the laws of the State of Nevada. 

    "Designated
Officer" shall mean the Chief Executive Officer, the President, the General Counsel or the Treasurer of the Company or such other person as designated by any of them in
writing. 

    "DTC"
shall mean The Depository Trust Company. 

    "Due
Diligence Period" shall mean (i) with respect to the first Capital Demand Notice delivered by the Company hereunder, the period commencing on the Trading Day that the
Company delivers or makes available all of the Due Diligence Materials and ending on the seventh (7th) Trading Day thereafter or (ii) with respect to each subsequent Capital Demand Notice, the
period commencing on the Trading Day that the Company delivers or makes available the Due Diligence Materials and ending on the later of (x) the second (2nd) Trading Day thereafter or
(y) if there have been more than forty-five (45) days since the end of the immediately preceding Selling Period, the fifth (5th) Trading Day after the beginning of such Due
Diligence Period. 

    "Due
Diligence Request List" shall mean, (i) with respect to the initial due diligence review conducted by the Underwriter, its advisors and representatives, the form of
initial due diligence request list previously delivered to the Company by the Underwriter or (ii) with respect to subsequent due diligence reviews conducted by the Underwriter, its advisors and
representatives, the form of subsequent due diligence request lists previously delivered to the Company by the Underwriter. 

    "DWAC"
shall mean the Deposit and Withdrawal At Custodian system. 

    "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder. 

    "Governmental
Entity" shall mean any federal, state, local or foreign legislative body, court, government, department or instrumentality, or governmental, administrative or regulatory
authority or agency. 

    "Hard
Floor Price" shall be set by the Company in its sole discretion in each Capital Demand Notice and such Hard Floor Price may be different in each Capital Demand Notice,  provided, however, that the Hard
Floor Price may not be less than $8.00 per share unless the product of the Hard Floor Price multiplied by the number of
shares of Common Stock outstanding on the date the Hard Floor Price is set by the Company is equal to or greater than $100 million, in which case the Hard Floor Price shall not be less than the
greater of (i) the quotient determined by dividing $100 million by the number of shares of Common Stock outstanding on the date the Hard Floor Price is set by the Company and
(ii) $4.00 per share. 

    "Intellectual
Property" shall mean all foreign and domestic (i) trademarks, service marks, brand names, certification marks, collective marks, d/b/a's, Internet domain names,
logos, symbols, trade dress, assumed names, fictitious names, trade names, and other indicia of origin, all applications and registration for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all extensions, modifications and renewals of same (collectively, "Trademarks"); (ii) inventions, discoveries and ideas, whether patentable or not, and all
patents, registrations, and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and
reissues (collectively, "Patents"); (iii) confidential and proprietary information, trade secrets and know-how, including processes, schematics, formulae, drawings, prototypes,
models, designs and customer lists (collectively, "Trade Secrets"); (iv) published and unpublished works of authorship, whether copyrightable or not (including without limitation databases and
other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof (collectively,
"Copyrights"); and (v) all other intellectual property or proprietary rights and claims or causes of 

2

 

action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including rights to recover for past, present and future violations thereof
(collectively, "Other Proprietary Rights"). 

    "Intellectual
Property Contracts" shall mean all agreements concerning the Business Intellectual Property, including without limitation agreements granting the Company rights to use
the Licensed Intellectual Property, agreements granting rights to use Owned Intellectual Property, confidentiality agreements, Trademark coexistence agreements, Trademark consent agreements and
nonassertion agreements. 

    "Knowledge"
shall mean the actual or deemed awareness or understanding of the executive officers of the Company or the Underwriter after diligent inquiry. 

    "Licensed
Intellectual Property" shall mean the Intellectual Property rights that the Company is licensed or otherwise permitted by other Persons to use. 

    "Material
Adverse Effect" shall mean any material adverse effect on (i) the business, operations, properties, conditions (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole, or (ii) the ability of the Company to enter into and perform its obligations under this Agreement and under the agreements or instruments to
be entered into or filed in connection herewith or therewith. 

    "Maximum
Draw Down Amount" shall mean the maximum dollar amount the Underwriter may sell, as the Company's Underwriter, on a best efforts basis, of shares of Common Stock pursuant to
a Capital Demand Notice, which number shall be equal to 120% of the Minimum Draw Down Amount specified in such Capital Demand Notice. 

    "Minimum
Draw Down Amount" shall mean the minimum dollar amount the Underwriter is obligated to sell in shares of Common Stock pursuant to a Capital Demand Notice;  provided, however, that the Minimum Draw Down
Amount shall be subject to the limitations in Sections 2.1 and 2.2; provided
further, that the Minimum Draw Down Amount shall not be more than 10% of the aggregate number of shares of Common Stock traded on each Trading Day during the Selling Period, as
reported by Bloomberg Financial LP using the AQR function multiplied by the volume weighted average of the VWAP on each Trading Day during such ten Trading Day period;  provided, that the number of
shares traded on each Trading Day, as used pursuant to the above proviso, shall be zero for any Trading Day that the VWAP
is below the Hard Floor Price. 

    "Minimum
Share Amount" shall mean the quotient of the Minimum Draw Down Amount divided by the Underwriting Price. 

    "Notice
of Blocking Period" shall mean the notice delivered by the Company to the Underwriter pursuant to Section 3.3, in the form attached hereto as Exhibit 3.3. 

    "Owned
Intellectual Property" shall mean Intellectual Property owned by the Company. 

    "Person"
shall mean an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or subdivision thereof. 

    "Plans"
means every employee benefit plan (whether or not subject to ERISA), including, but not limited to, each retirement, pension, savings, bonus, stock purchase, profit sharing,
stock option, deferred compensation, severance or termination pay, insurance, death, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, vacation, incentive or
other compensation plan or arrangement or other employee benefit for the benefit of employees or former employees (or dependents or beneficiaries thereof) of the Company (or as to which the Company
may otherwise have any liability (whether actual or contingent), whether funded, insured or self-funded or whether written 

3

 

or oral, maintained, contributed to or required to be contributed to by the Company or any of member of its controlled group (determined in accordance with Section 4001(a)(14) of ERISA). 

    "Principal
Market" shall mean the New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market, whichever is at the time or becomes
the principal trading exchange or market for the Common Stock. 

    "Prospectus"
shall mean the prospectus included in any Registration Statement, as amended or supplemented by any Prospectus supplement, including post-effective
amendments, and all material incorporated by reference in such Prospectus. 

    "Purchase
Option Issuance Date" shall mean the date hereof. 

    "Purchase
Option Exercise Price" shall mean $12.34, subject to adjustment pursuant to Section 2.6(b). 

    "Purchase
Option Expiration Date" shall mean the earliest to occur of (i) the third anniversary of the Purchase Option Issuance Date and (ii) the exercise in full of the
Purchase Option. 

    "Purchase
Option Share Amount" shall mean 50,000 shares, subject to adjustment pursuant to Section 2.6(b). 

    "Qualified
Daily Trading Limit" shall mean the lesser of (a) the Minimum Draw Down Amount divided by the Hard Floor Price, the result of which is divided by the number of
trading days in the Selling Period, and (b) 10% of the aggregate number of shares of Common Stock (excluding Block Trades) traded on each Trading Day of any Selling Period, as reported by
Bloomberg Financial LP using the AQR function; provided, that the Qualified Daily Trading Limit shall be zero for any Trading Day that the VWAP is below the Hard Floor Price. 

    The
terms "register," "registered" and "registration" shall refer to a registration effected by preparing and filing an appropriate registration statement in compliance with the
Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement. 

    "Registration
Statement" shall mean a registration statement of the Company relating to Common Stock issuable pursuant to this Agreement (including shares of Common Stock issuable in
connection with the exercise of the Purchase Option). 

    "Registered"
shall mean issued, registered, renewed or the subject of a pending application. 

    "Registrable
Securities" shall mean any shares of Common Stock issued or issuable pursuant to this Agreement (including shares of Common Stock issuable in connection with the exercise
of the Purchase Option). 

    "SEC"
shall mean the Securities and Exchange Commission. 

    "SEC
Filings" shall mean the Company's Form 10-KSB for the fiscal year ended December 31, 1999, its Form 10-QSB for the fiscal quarters
ended March 31, 2000 and June 30, 2000 and all other filings made by the Company after the date hereof pursuant to the Exchange Act. 

    "Securities
Act" shall mean the Securities Act of 1933, as amended. 

    "Selling
Period" shall mean the period commencing at the opening of the first (1st) Trading Day following the expiration of the Due Diligence Period and ending at the closing of the
(10th) Trading Day thereafter. 

    "Selling
Period Obligation" shall mean, during any Selling Period, the lesser of (i) the Minimum Share Amount and (ii) the sum of the Qualified Daily Trading Limit for
each Trading Day during such Selling Period; provided, however, that the Selling Period Obligation may be deemed to be zero, at the 

4

 

Underwriter's sole option, if the VWAP shall be below the Hard Floor Price for five consecutive Trading Days during such Selling Period; provided
further, that the Underwriter's obligation to sell shares of Common Stock pursuant to a Capital Demand Notice shall be null and void if the Selling Period Obligation multiplied
by the Underwriting Price is less than $100,000. 

    "Settlement"
shall mean the delivery, on the Settlement Date, of the shares of the Company's Common Stock into the Company's DTC account. 

    "Settlement
Date" shall mean, with respect to each purchase and sale of Common Stock, subject to the conditions contained herein, the Trading Day no later than three days (or such
lesser time period as is mandated under "regular ways" settlement on the Principal Market) following each Closing Date. 

    "Significant
Subsidiaries" means any subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. 

    "Tax
Return" shall mean any report, return, information statement or other information required to be supplied to any federal, state, local or foreign taxing authority, or any
election permitted to be made, in connection with Taxes. 

    "Taxes"
shall mean all taxes, charges, fees, levies, duties or other assessments, including without limitation all net income, gross income, gross receipts, franchise, value added,
sales, use, property, ad valorem, transfer, withholding, profits, license, employee, payroll, social security, unemployment, excise, estimated, severance and any other taxes, duties, withholdings,
fees, assessments or charges of any kind
whatsoever, including any interest, penalties or additional amounts attributable thereto, imposed by any federal, state, local or foreign taxing authority. 

    "Trading
Day" shall mean any day (from 9:30 a.m. to 4:00 p.m., Eastern time) during which the Principal Market shall be open for business and on which trading of the
Common Stock on the Principal Market shall not have been suspended or limited. 

    "Transfer
Agent" shall mean Nevada Agency & Trust Company. 

    "Triggering
Amount" shall mean, for any Capital Demand Notice, the product of (i) 10% of the aggregate number of shares of Common Stock traded on each Trading Day of the ten
(10) Trading Day period ending on the Trading Day immediately prior to the first Trading Day of the Selling Period, as reported by Bloomberg Financial LP using the AQR function, multiplied by
(ii) the volume weighted average of the VWAP on each Trading Day during such ten Trading Day period. 

    "Underwriter"
shall mean Ramius Securities, LLC, a limited liability company organized and existing under the laws of the State of Delaware. 

    "Underwriter's
Clearing Broker" shall mean Bear Stearns Securities Corp. 

    "Underwriter
Sales Notice" shall mean the notice delivered by the Underwriter to the Company and to the Transfer Agent pursuant to Section 2.3(b) in the form attached hereto as
Exhibit 2.3(b). 

    "Underwriting
Price" shall mean 97% of the five (5) lowest VWAP's during the Selling Period provided, that if the VWAP for any Trading Day during the Selling Period is at or
below the Hard Floor Price, the VWAP for such day shall be deemed to be the Hard Floor Price. 

    "VWAP"
shall mean the daily volume weighted average price per share (based on a trading day from 9:30 a.m. to 4:00 p.m., Eastern time) of the Common Stock on the
Principal Market (or any successor thereto) as reported by Bloomberg Financial LP using the AQR function and eliminating any Block Trades. 

5

 

II.  SALE OF COMMON STOCK.  

    2.1  Underwriting and Greenshoe.  

    (a)  Underwritings.  Subject to the terms and conditions set forth herein, during the Commitment Period
the Company may elect to deliver a Capital Demand Notice. Upon the Company's delivery of such Capital Demand Notice, the Underwriter, subject to the limitations of Section 2.2(a), agrees,
during the Selling Period corresponding to such Capital Demand Notice, to sell, on behalf of the Company and on a best efforts basis, the number of shares of the Company's Common Stock equal to the
Minimum Share Amount. The Minimum Draw Down Amount specified in any Capital Demand Notice shall not be less than $1,000,000 nor more than $5,000,000. 

    (b)  Greenshoe.  The Underwriter shall be entitled, but not obligated, to sell, as the Company's
Underwriter, on a best efforts basis, the number of shares of Common Stock equal to (A) the quotient of (x) the difference between the Maximum Draw Down Amount and (y) the Minimum
Draw Down Amount divided by (B) the Underwriting Price. 

    2.2  Limitations on Investment Amount.  

    (a)  Selling Period Obligations.  The Underwriter shall only be obligated during any Selling Period to
sell a number of shares equal to the Selling Period Obligation. If during any Selling Period the Company shall issue any shares of Common Stock (other than shares of Common Stock issued under this
Agreement, and other than the exercise of stock options granted pursuant to the Company's approved stock option plans, the exercise of warrants outstanding as of the date hereof or the conversion of
preferred stock outstanding as of the date hereof) the Underwriter may in its sole discretion elect to eliminate any obligation of the Underwriter during such Selling Period. The Underwriter shall
notify the Company of such election, if any, on the Trading Day immediately preceding the Closing Date relating to the last Trading Day of the Selling Period. 

    (b) In
addition, if the Triggering Amount prior to any Selling Period is less than $500,000, the Underwriter shall have no obligation to sell shares of the Company's
Common Stock during the Selling
Period, unless the Company undertakes to pay the Underwriter's due diligence fees for the calendar quarter in which the Selling Period occurs (up to $4,000 for such quarter);  provided, however, that the
Underwriter shall have no obligation to sell shares of the Company's Common Stock during the Selling Period if the
Triggering Amount is less than $300,000 (regardless of whether the Company undertakes to pay the Underwriter's due diligence fees). 

    2.3  Mechanics of Notification.  

    (a)  Capital Demand Notice.  On any Trading Day during the Commitment Period, the Designated Officer may
deliver a written notice, in the form attached hereto as Exhibit 2.3(a), by facsimile and electronic mail, to the Underwriter (a "Capital Demand Notice"). The Capital Demand Notice must specify
each of the Minimum Draw Down Amount, the Maximum Draw Down Amount and the Hard Floor Price. A Capital Demand Notice shall be irrevocable. The Company may issue as many Capital Demand Notices as it
may elect during the Commitment Period but may not deliver a new Capital Demand Notice during an existing Selling Period. 

    (b)  Underwriter Sales Notice.  Prior to 8:00 p.m. Eastern time on each Trading Day during the
Selling Period when the Underwriter has sold shares of Common Stock, the Underwriter shall deliver a notice to the Company and to the Transfer Agent in the form of Exhibit 2.3(b) attached
hereto (an "Underwriter Sales Notice") setting forth the number of shares of Common Stock that the Underwriter has sold and the Underwriting Price on such Trading Day. 

6

 

    (c)  Date of Delivery of Notices.  Except as otherwise provided herein, any notices delivered by the
Company to the Underwriter or by the Underwriter to the Company hereunder shall be in accordance with the terms set forth in Section 8.1. 

    2.4  Closings and Settlements.  

    (a)  Brokerage Account.  The Company must have a brokerage account with the Underwriter prior to the date
on which the Company delivers a Capital Demand Notice, into which account the proceeds of any sale of Common Stock, net of any amounts payable under Section 2.4(d), shall be deposited. 

    (b)  Deliveries.  The Company shall credit the number of shares of Common Stock set forth in the
Underwriter Sales Notice by the Settlement Date to the Company's or its designee's balance account with The Depository Trust Company ("DTC") through its Deposit and Withdrawal At Custodian ("DWAC")
system or deliver such shares by such other means as may be mutually agreed upon by the parties. In addition to the requirements of Article III, prior to each Closing Date, each of the Company
and the Underwriter shall deliver all other documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and
effect the transactions contemplated herein. 

    (c)  Company's Failure to Deliver Shares.  If the Company shall fail to issue the shares of Common Stock
by the fifth Business Day after the Settlement Date for such shares, the Company shall pay damages to the Underwriter equal to any actual damages, to "unwind" any and all sales of the Company's Common
Stock made during the Selling Period and to reimburse any and all purchasers for their completed purchases of the Company's Common Stock. Moreover, if the shares have not been delivered by such date,
the Underwriter will not be obligated to pay the Company (unless the Company has already paid the Underwriter's actual damages, if any, incurred during such Selling Period) for any shares sold by the
Underwriter or that the Underwriter agreed to sell or was obligated to sell during the Selling Period nor will the Underwriter be obligated to engage in any further efforts to sell the Company's
Common Stock during the remainder of the Selling Period. In addition, if the shares have not been delivered by the Company by the fifth Business Day after the Settlement Date, at the Underwriter's
sole option, it may terminate this Agreement. 

    (d)  Underwriter's Commission.  During the Selling Period, the Company will pay the Underwriter, at the
end of each Trading Day, a commission equal to 3% of the sales proceeds for such Trading Day. On the last Trading Day of the Selling Period, the Company will pay the Underwriter a commission (the
"Commission") equal to the difference, if any, between (i) the gross proceeds from sales of shares during the Selling Period minus (ii) the aggregate number of shares sold during the
Selling Period multiplied by the Underwriting Price minus (iii) any commissions paid during such Selling Period. However, if, on the last Trading Day of the Selling Period, the Commission shall
equal a negative amount, then on such day, the Underwriter shall pay such amount to the Company. In addition, on the last Trading Day of the Selling Period, the Underwriter shall furnish to the
Company a detailed calculation of the Commission. 

    2.5  Termination, Suspension and Modification of Underwriting Obligation.  

    (a)  Blocking Events.  The Underwriter shall not be obligated to sell any shares of Common Stock from the
Company pursuant to any Capital Demand Notice, nor shall a Capital Demand Notice be delivered at any time during the Commitment Period, when there shall exist any one or more of the following: 

     (i) the
withdrawal or suspension of the effectiveness of a registration statement (the "Registration Statement") for the registration of not less than the number of
shares of Common Stock equal to, for any Capital Demand Notice, the Maximum Draw Down Amount 

7

 

divided by the Hard Floor Price, plus the maximum number of shares of Common Stock issuable pursuant to the Purchase Option, which Registration Statement shall have been declared effective by the
Securities and Exchange Commission (the "SEC"); 

    (ii) the
failure of the Common Stock issuable hereunder to be validly listed on the Principal Market; 

    (iii) the
Company's failure to satisfy the requirements of Section 3.1 or 3.2; 

    (iv) any
failure or interruption in the compliance by the Company with any of the covenants provided in Article VI; 

    (v) any
merger or consolidation of the Company with or into, or a transfer of all or substantially all of the assets of the Company to, another entity; or 

    (vi) receipt
or Deemed Receipt (as provided in Section 3.3) by the Underwriter of a Notice of Blocking Period (each of (i), (ii), (iii), (iv), (v) or
(vi) a "Blocking Event"). 

The
Company shall be obligated to notify the Underwriter in writing using the form attached hereto as Exhibit 3.3 immediately upon the occurrence of a Blocking Event. 

    (b)  Reduction or Elimination of Underwriter Obligation to Sell During Any Selling Period or Extension of Selling
Period.  In the event that a Blocking Event occurs during a Selling Period, at the option of the Underwriter, (i) the Selling Period, and therefore the
Underwriter's obligations, shall be extended by the number of Trading Days that such Blocking Event exists or (ii) unless such Blocking Event is waived in writing by the Underwriter, the
obligation of the Underwriter to sell shares of Common Stock during such Selling Period shall be canceled for such Selling Period and the Underwriter shall be entitled to rescind any sales made during
such Selling Period, whether or not the Settlement of such sales has
occurred prior to such Blocking Event, and the Company shall be liable for all actual damages incurred by the Underwriter caused by the occurrence of the Blocking Event. 

    If
the Underwriter desires not to rescind the sale of any or all shares of Common Stock that it had made earlier in the Selling Period and the Settlement of such sales has occurred
prior to the occurrence of a Blocking Event, the Underwriting Price for such shares shall be equal to 97% of the volume weighted average of the five (or less than five, as applicable) Trading Days
with the lowest VWAP beginning on the first Trading Day of the Selling Period and ending on the Trading Day that relates to the last Settlement Date before the date of the Blocking Event; provided
further, that if the Underwriter has sold shares of Common Stock during the Selling Period and the Settlement of such sales has not occurred prior to the occurrence of a Blocking Event, the Company
shall use its reasonable best efforts to take all actions necessary to cure such Blocking Event, if curable, within 24 hours; provided, however,
that the Company shall not be required to disclose any material information relating to a proposed transaction or event prior to such time as the Company would generally, based on advice from counsel,
disclose such transaction or event. 

    2.6  Purchase Option.  

    (a)  Purchase Option.  

     (i) The
Company hereby grants to the Underwriter the right to purchase, on the terms and conditions set forth in this Section 2.6, that number of shares of
Common Stock equal to the Purchase Option Share Amount (the "Purchase Option"). 

    (ii) The
Purchase Option may be exercised at any time and from time to time by the Underwriter on or after the Purchase Option Issuance Date but prior to the Purchase
Option Expiration Date by written notice to the Company of its desire to so exercise (a "Purchase Option Notice"), accompanied by payment therefor in the amount of the Purchase Option 

8

 

Exercise Price multiplied by the number of shares of Common Stock for which the Purchase Option is then being exercised. Payment of the Purchase Option Exercise Price may be made as follows (or by any
combination of the following): (A) in United States currency by cash or delivery of a certified or official bank check payable to the order of the Company or wire transfer to its account,
(B) by cancellation of such number of shares of Common Stock specified by the Underwriter otherwise issuable to the Underwriter upon such exercise, such that the excess of the aggregate closing
price on the Trading Day immediately prior to date of exercise of such specified number of shares over the
portion of the Purchase Option Exercise Price attributable to such shares shall equal the Purchase Option Exercise Price attributable to such shares of Common Stock to be issued upon such exercise, in
which case such amount shall be deemed to have been paid to the Company and the number of shares issuable upon such exercise shall be reduced by such specified number, or (C) by surrender to
the Company for cancellation by delivery through DWAC of shares of Common Stock of the Company owned by the Underwriter (or delivery of certificates representing the shares of Common Stock of the
Company properly endorsed for transfer in blank) having an aggregate closing price on the Trading Day immediately prior to the date of exercise equal to the Purchase Option Exercise Price. In the
event that the Purchase Option is exercised in part, the Purchase Option Share Amount shall be reduced by that number of shares of Common Stock that the Underwriter has exercised and the Purchase
Option relating to the remainder of the Purchase Option Share Amount shall remain in full force and effect. 

    (b)  Adjustment to Purchase Option Exercise Price, Dilution and Other Events.  In order to prevent
dilution of the rights granted under the Purchase Option, the Purchase Option Share Amount and the Purchase Option Exercise Price will be subject to adjustment from time to time as provided in this
Section 2.6(b). Any such adjustments will be applicable to the Purchase Option if not yet exercised. 

     (i)  Dividends and Distributions.  If the Company shall declare or pay to the holders of
the Common Stock a dividend or other distribution payable in shares of Common Stock or any other security convertible into or exchangeable for shares of Common Stock, the Underwriter shall be entitled
to receive the number of shares of Common Stock or other securities exercisable for shares of Common Stock, as applicable, which the Underwriter would have been entitled to after the declaration and
payment of such dividend or other distribution as if the Purchase Option then held by the Underwriter had been exercised immediately prior to the record date for the determination of stockholders
entitled to receive such dividend or other distribution. 

     (ii)  Stock Splits and Combinations.  If the Company shall subdivide (by means of any
stock split, stock dividend, recapitalization or otherwise) the outstanding shares of Common Stock into a greater number of shares of Common Stock, or combine (by means of any combination, reverse
stock split or otherwise) the outstanding shares of Common Stock into a lesser number of shares, or issue by reclassification of shares of Common Stock any shares of the Company, the Purchase Option
Share Amount and the Purchase Option Exercise Price in effect immediately prior thereto shall be adjusted so that the Underwriter shall receive the number of shares of Common Stock at the exercise
price which the Underwriter would have been entitled after the happening of any and each of the events described above if the Underwriter had exercised the Purchase Option held by the Underwriter
immediately prior to the happening of each such event on the day upon which such subdivision or combination, as the case may be, becomes effective. Additional shares of Common Stock deemed to have
been issued pursuant to this Section 2.6(b) shall be deemed to have been issued for no consideration. 

9

 

    (iii)  Organic Changes.  Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets (in one or a series of related transactions) to another person or entity or other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "Organic
Change". In case the Company shall effect an Organic Change, then the Company will make appropriate provision (in form and substance reasonably satisfactory to the Underwriter) to insure that the
provisions of this Section 2.6(b)(iii) will thereafter be applicable to the Purchase Option (including, in the case of any such Organic Change in which the successor entity or purchasing
entity is other than the Company, an immediate adjustment of the Purchase Option Share Amount and the Purchase Option Exercise Price to the value for the Common Stock reflected by the terms of such
Organic Change, if the value so reflected would result in the Purchase Option Share Amount or the Purchase Option Exercise Price being adversely effected compared to the Purchase Option Share Amount
and the Purchase Option Exercise Price in effect immediately prior to such Organic Change). The Company will not effect any such Organic Change unless prior to the consummation thereof, the successor
entity (if other than the Company) resulting from such Organic Change assumes, by written instrument (in form and substance satisfactory to the Underwriter), the obligation to deliver to the
Underwriter such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Underwriter may be entitled to acquire or receive. The provisions of this subparagraph
(iii) shall similarly apply to successive Organic Changes. 

     (iv)  No Dilution or Impairment.  The Company shall not, by amendment of its certificate
of incorporation or through any Organic Change or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Section 2.6(b). Without limiting
the generality of the foregoing, the Company (A) shall not take any action which results in any adjustment of the Purchase Option Exercise Price or the Purchase Option Share Amount if the total
number of shares of Common Stock issuable after the action upon the exercise of the Purchase Option would exceed the total number of shares of Common Stock then authorized by the Company's certificate
of incorporation and available for the purpose of issue upon such exercise and (B) shall not permit the par value of any shares of stock receivable upon the exercise of the Purchase Option to
exceed the amount payable therefor upon such exercise. 

III.  CONDITIONS PRECEDENT.  

    3.1  Conditions Precedent to the Obligation of the Underwriter to Sell Common Stock Pursuant to a Capital Demand
Notice.  The obligation of the Underwriter to sell Common Stock, as the Company's Underwriter, on a best efforts basis, pursuant to a Capital Demand Notice is
subject to the satisfaction, on the date of delivery of a Capital Demand Notice, and on each applicable Closing Date (each a
"Condition Precedent Date") of each of the following conditions, which conditions cannot be waived without the prior written consent of the Underwriter: 

    (a)  Effective Registration Statement.  The Registration Statement shall be in effect and shall remain
effective on each Condition Precedent Date and (i) neither the Company nor the Underwriter 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, and (ii) no other suspension of the use of the Registration Statement or related Prospectus shall exist. 

10

 

    (b)  Accuracy of the Company's Representations and Warranties.  The representations and warranties of the
Company, as set forth in this Agreement, without taking into account any materiality qualifications therein, shall be true and correct in all material respects as of each Condition Precedent Date as
though made at each such time (except for representations and warranties made as of a specific date). 

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

    (d)  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 Entity of competent jurisdiction which prohibits or adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced which may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement. 

    (e)  Adverse Changes.  Except as disclosed pursuant to public filings under the Exchange Act, since the
date through which the most recent quarterly report of the Company on Form 10-QSB (or annual report on Form 10-KSB if more recent) has been prepared and filed
with the SEC, no event which had or is reasonably likely to have a Material Adverse Effect has occurred. 

    (f)  No Suspension of Trading In or Delisting of Common Stock.  The trading of the Common Stock shall not
have been suspended by the SEC, the Principal Market or the National Association of Securities Dealers, Inc. ("NASD"), and the Common Stock to be issued hereunder (including the Common Stock
issuable upon exercise of the Purchase Option) shall have been approved for listing or quotation on
and shall not have been delisted from the Principal Market. The issuance of shares of Common Stock with respect to the applicable Closing Date (including the Common Stock issuable upon exercise of the
Purchase Option), if any, shall not violate the shareholder approval requirements of the Principal Market. 

    (g)  Legal Opinions.  The Company shall have caused to be delivered to the Underwriter, on the Trading
Day immediately prior to the first Trading Day of each Selling Period, a legal opinion of the Company's one or more outside counsel, containing the opinions set forth in
Exhibit 3.1(g)(i) hereto. In addition, the Company shall have caused to be delivered to the Underwriter on the Trading Day immediately prior to the first Trading Day of the first Selling
Period following the filing of any SEC Filings to be incorporated by reference into the Registration Statement or any amendment thereto (including, but not limited to, any filings on
Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB or Form 8-K), a legal opinion of the Company's one or more
outside counsel containing the opinions set forth in Exhibit 3.1(g)(ii) hereto, but modified as necessary to relate to the Registration Statement and the Prospectus, as amended and
supplemented to the time of delivery of such opinion. 

    (h)  Accountant's Letter.  On the Trading Day immediately prior to the first Trading Day of the first
Selling Period following the filing of any SEC Filings to be incorporated by reference into the Registration Statement or any amendment thereto (including, but not limited to, any filings on
Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, or Form 8-K), the Company shall have furnished to the
Underwriter a comfort letter of its independent auditors in customary form, including a statement to the effect that they have performed the procedures in accordance with the provisions of Statement
on Auditing Standards No. 71, as amended, as agreed to by the parties hereto, and reports thereon as shall have been reasonably requested by the Underwriter with respect to certain financial
information contained in the Registration Statement. 

11

 

    (i)  Officer's Certificate.  The Company shall have delivered to the Underwriter, on the first Closing
Date of each Selling Period, a certificate in the form of Exhibit 3.1(i) hereto, executed by an executive officer of the Company and to the effect that all the conditions to such Closing
shall have been satisfied as at the date of each such certificate. 

    (j)  Due Diligence.  The Underwriter shall have been reasonably satisfied with the Due Diligence
Materials pursuant to Section 3.2 and to the adequacy of the disclosure contained in the Registration Statement. 

    (k)  [Intentionally Omitted].  

    (l)  Clearing Broker Instructions.  The Company shall have issued instructions to the Underwriter's
Clearing Broker (in the form attached hereto as Exhibit 3.1(l)) to release the Commission at the Underwriter's request. The Company shall also cooperate with the Underwriter to provide the
Underwriter's Clearing Broker with any additional documentation requested thereby in connection with payment of Commissions to the Underwriter. 

    (m)  Transfer Agent Instructions.  The Company shall have issued instructions to its Transfer Agent (in
the form attached hereto as Exhibit 3.1(m)) to issue certificates, or at the Underwriter's request, to electronically issue such shares (e.g., through DWAC or DTC) (such electronic issuance to
be made only if such shares have been registered under the 1933 Act), registered in the name of the Underwriter or its respective nominee(s), for the Common Stock issuable under this Agreement. 

    (n)  Account.  The Company must have an account open with the Underwriter. 

    3.2  Due Diligence Review.  

    (a) Upon
delivery of a Capital Demand Notice, the Company shall also deliver or make available, during normal business hours, for inspection and review by the
Underwriter, advisors to and representatives of the Underwriter (who may or may not be affiliated with the Underwriter), all such information reasonably requested in the applicable Due Diligence
Request List (the "Due Diligence Materials") (including, without limitation, responses to all questions and other inquiries reasonably made or submitted therein), for the sole purpose of enabling the
Underwriter and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy
of the Registration Statement. 

    (b) Prior
to disclosure of material non-public information to the Underwriter, advisors to or representatives of the Underwriter, the Company shall identify
such information as being material nonpublic information and provide the Underwriter, such advisors and representatives with the opportunity to accept or refuse to accept such nonpublic information
for review. If the Company discloses material nonpublic information to the Underwriter, advisors to or representatives of the Underwriter prior to disclosure of such information in a registration
statement, prospectus or amendment thereto, such event shall constitute a Blocking Event pursuant to Section 2.5(a). 

    3.3  Occurrence of Material Events.  If the Company's management determines in its good faith judgment
(i) that it is required or advisable to do so or (ii) that any fact exists or any event has occurred that
makes any statement of a material fact made in the Registration Statement, the prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue in any material
respect, or that requires the making of any additions to or changes in the Registration Statement or the prospectus, in order to make the statements therein not misleading in any material respect, the
Company shall notify the Underwriter using the form attached hereto as Exhibit 3.3 (a "Notice of Blocking Period") that it may not sell the Registrable Securities pursuant to any Registration
Statement or prospectus; provided, that if the Underwriter reasonably believes, after 

12

 

advice from its attorneys and notice to and consultation with the Company, that a fact exists or an event has occurred that makes any statement of a material fact made in the Registration Statement,
the prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue in any material respect, or that requires the making of any additions to or changes in the
Registration Statement or the prospectus, in order to make the statements therein not misleading in any material respect, then the Company shall have been deemed to have delivered a Notice of Blocking
Period to the Underwriter ("Deemed Receipt"). The Underwriter agrees by sale of the Registrable Securities that, upon receipt of a Notice of Blocking Period from the Company of the existence of any
fact of the kind described in the immediately preceding sentence, the Underwriter shall not dispose of, sell or offer for sale the Registrable Securities pursuant to the Registration Statement until
such Underwriter receives (i) copies of the supplemented or amended prospectus, or until counsel for the Company shall have determined that such disclosure is not required due to subsequent
events, (ii) notice in writing (the "Advice") from the Company that the use of the prospectus may be resumed and (iii) copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by the Company in connection with any such notice, each Underwriter will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Underwriter's possession, of the prospectus covering such Registrable Securities that was current immediately prior to the time of receipt of such notice. 

IV.  REPRESENTATIONS AND WARRANTIES OF UNDERWRITER.  

    The Underwriter represents and warrants to the Company as follows: 

    4.1  Authorization; Enforcement.  The Underwriter has full power and authority to execute and deliver
this Agreement, and to consummate the transactions contemplated hereby in accordance with the terms hereof. The execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Underwriter. No other proceedings on the part of Underwriter are necessary to approve and authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby in accordance with the terms hereof. This Agreement has been validly executed and delivered by the Underwriter and is a valid and binding
agreement of the Underwriter enforceable against it in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and similar laws relating to, or affecting generally the enforcement of, applicable creditors' rights and remedies. 

    4.2  Not an Affiliate.  The Underwriter is not an officer, director or Affiliate of the Company. 

    4.3  Organization and Standing.  The Underwriter is duly organized, validly existing, and in good
standing under the laws of Delaware, and has all requisite power and authority to carry on its business as now being conducted, and is duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by it makes such qualifications necessary, except where the failure to be so qualified or in good standing would not have a material adverse
effect. 

    4.4  Absence of Conflicts.  The execution and delivery of this Agreement and any other document or
instrument executed in connection herewith, and the consummation of the transactions contemplated hereby and thereby, and compliance with the requirements hereof and thereof, will not violate the
provision of any indenture, instrument or agreement to which the Underwriter is a party or is subject, or by which the Underwriter or any of its assets is bound, or conflict with or constitute a
material default thereunder, or result in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed
by the Underwriter to any third party. 

    4.5  Broker-Dealer.  The Underwriter is a registered broker-dealer under the Exchange Act and is a member
in good standing of the NASD. 

13

 

V.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  

    Except as disclosed in the Schedules delivered by the Company to the Underwriter on the date hereof, the Company represents and warrants to the Underwriter as
follows: 

    5.1  Corporate Organization.  Except as disclosed on Schedule 5.3(a), each of the Company and its
Subsidiaries (as defined in Section 5.3(a)) (a complete list of which is set forth in Schedule 5.3(a)) is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which they are incorporated, and have the requisite corporate power and authority to own or lease and
operate its properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the property owned, leased, or operated by it or 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, individually or in the aggregate, a Material Adverse Effect and all of which jurisdictions in which either the Company or its Subsidiaries are or
believes they should be duly qualified is set forth on Schedule 5.1 hereto. 

    5.2  Capitalization and Indebtedness.  

    (a) As
of the date hereof, the authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, of which as of the date hereof, 15,277,371 shares
are issued and outstanding, and 15,000,000 shares of preferred stock (the "Preferred Stock") of the Company, of which as of the date hereof no shares
are issued or outstanding. All of the outstanding shares have been validly issued and are fully paid and nonassessable. No shares of Common Stock or Preferred Stock are subject to preemptive rights or
any other similar rights or any liens suffered or permitted by the Company. Except as disclosed in the SEC Filings, as of the date hereof, (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, (ii) there are no outstanding debt securities, notes, credit agreements, or other agreements, documents or instruments evidencing indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound and (iii) 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 as provided in this Agreement). There are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of any of the Common Stock as described in this Agreement. The Company has furnished to the Underwriter 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. 

    (b) Upon
issuance of the Common Stock issuable upon exercise of the Purchase Option, and payment of the Purchase Option Exercise Price therefor, pursuant to a purchase
and sale in accordance with the terms of this Agreement, the Company will transfer to the Underwriter good and valid title to the Common Stock, free and clear of any liens, other than liens created by
the Underwriter, and such Common Stock will be duly authorized, fully paid and nonassessable. 

    5.3  Subsidiaries.  

    (a) The
Company does not have any Subsidiaries that own material assets or are subject to material liabilities, other than those listed on Schedule 5.3(a) (the
"Subsidiaries"). Each Subsidiary is, directly or indirectly, wholly owned by the Company. 

14

 

    (b) i. All the outstanding stock or other equity or ownership interests of each Subsidiary is owned free and clear of all material liens and is validly issued and
(ii) there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which any Subsidiary is a party or otherwise obligating any Subsidiary to issue
or sell, or entitling any Person to acquire from any Subsidiary, and no Subsidiary is a party to any agreement, arrangement or commitment obligating it to repurchase, redeem or otherwise acquire, any
shares of the Capital Stock or any securities convertible into or exchangeable for the Capital Stock of any such Subsidiary. 

    5.4  Authorization; Enforcement; Compliance with Other Instruments.  (i) The Company has the
requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue, sell and perform its obligations with respect to the Common Stock in accordance
with the terms hereof (including the Common Stock issuable upon exercise of the Purchase Option), (ii) the execution and delivery of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby, including, without limitation, the reservation for issuance and the issuance of the Common Stock (including the Common Stock issuable upon exercise of the
Purchase Option), 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, and
(iii) this Agreement has been duly executed and delivered by the Company. To the Knowledge of the Company, no other corporate proceedings on the part of the Company are necessary to approve and
authorize the execution and delivery of this Agreement and the issuance of the Common Stock issuable upon each Closing, and the consummation of the transactions contemplated hereby in accordance with
the terms hereof. The Common Stock issuable in accordance with the terms of this Agreement (including the Common Stock issuable upon exercise of the Purchase Option), upon the issuance thereof and the
payment of the Underwriting Price or Purchase Option Exercise Price therefor, as applicable, in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable, and
this Agreement, when executed and delivered, constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its 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. 

    5.5  No Conflicts.  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 of the Company or its Subsidiaries or their respective
By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, 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, or result in the creation of any lien
on or against any of the properties of the Company or any of its Subsidiaries, any note, bond, mortgage, agreement, license indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any statute, law, rule, regulation, writ, injunction, order, judgment or decree (including U.S. federal and state securities laws and regulations and the rules and
regulations of the Principal Market on which the Common Stock is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except where such violation, conflict, breach or other consequence would not have a Material Adverse Effect. Except as disclosed in the SEC Filings, neither the
Company nor its Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, or By-laws or its organizational charter or by-laws,
respectively, or in violation of any material term of or in default under 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. Except as specifically contemplated by this Agreement and as required under the Securities Act, the Company is not required to obtain
any consent, authorization or order of, 

15

 

or make any filing or registration with, any court or governmental or regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof. 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. The Company is not in violation of the listing requirements of the Principal Market and, to its knowledge, is not aware of any
facts that would cause it to be delisted by the Principal Market. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. 

    5.6  Compliance with Applicable Law; Regulatory Permits.  The businesses of the Company are not being
conducted in violation of any law, ordinance, rule, regulation, judgment, decree or order of any Governmental Entity, except for possible violations which, individually or in the aggregate, would not
have a Material Adverse Effect. The Company and its Subsidiaries possess all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders necessary to
own, lease and operate its properties and to conduct their respective businesses as currently being conducted (collectively, the "Company Permits"),
except where failure to possess any of such Company Permits would not have a Material Adverse Effect. There is no action pending or, to the Knowledge of the Company, threatened regarding the
suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits. 

    5.7  Absence of Litigation.  Except as disclosed in the SEC Filings, there is no action, suit,
proceeding, inquiry or investigation before or by any Governmental Entity or arbitrator pending or, to the Knowledge of the Company or any of its Subsidiaries, threatened against or affecting the
Company or its Subsidiaries or their respective directors or officers, or the Common Stock, wherein an unfavorable
decision, ruling or finding would have, individually or in the aggregate, a Material Adverse Effect. There are no pending, or to the Knowledge of the Company, threatened proceedings against or, to the
Company's knowledge, affecting the Company or any of its Subsidiaries, without regard to whether it would have, individually or in the aggregate, a Material Adverse Effect. There is no judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries that has had, or would reasonably be expected in the future to
have, a Material Adverse Effect or which reasonably could be expected to materially adversely affect the transactions contemplated by this Agreement. 

    5.8  SEC Documents, Financial Statements.  

    (a) The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act and the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act, (all of the foregoing, and all other documents and registration statements, whether
heretofore or hereafter filed by the Company with the SEC, and the Registration Statement, when declared effective, and all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the "SEC Documents"). The Common Stock is currently listed or quoted on the
Principal Market which is, as of the date hereof, the Nasdaq SmallCap Market. The Company (i) has delivered or made available to the Underwriter or its advisor or representative true and
complete copies of the SEC Documents as the Underwriter or its advisor or representative has requested from the Company and (ii) agrees to deliver or make available to the Underwriter or its
advisor or representative true and complete copies of any additional SEC Documents, upon request. As of their respective dates, the SEC Documents (except for the Registration Statement and the
Prospectus, which are discussed below) complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC (except 

16

 

those SEC Documents that were subsequently amended), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were made, not misleading. Each Prospectus included as part of the Registration Statement as originally filed or as part of any
amendment or supplement thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the provisions of the Securities Act. The
Registration Statement in the form in which it became effective and also in such form as it may be when any post-effective amendment thereto became effective and the Prospectus and any
supplement or amendment thereto when filed with the SEC under Rule 424(b) under the Securities Act complied as to form in all material respects with the provisions of the Securities Act and did
not at any such times contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not misleading, except that this representation and warranty does not apply to statements in or omissions from the
Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to the Underwriter furnished to the Company in writing by or on behalf of the Underwriter expressly for use therein. As of
the date of delivery by the Underwriter of the Prospectus contained in the Registration Statement in connection with sales of Common Stock by the Underwriter, such Prospectus will comply as to form in
all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and other federal, state and local laws, rules and regulations
applicable to such Prospectus. As of their respective dates, the financial statements of the Company included (or incorporated by reference) in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis 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 and its Subsidiaries 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). 

    (b) During
the three (3) years preceding the date hereof, the SEC has not issued an order preventing or suspending the use of any prospectus relating to the
offering of any shares of Common Stock or instituted proceedings for that purpose. 

    5.9  No Undisclosed or Contingent Liabilities.  Neither the Company nor any of its Subsidiaries has any
claims, liabilities or obligations of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due) that would be required to be reflected or reserved
against on a consolidated balance sheet of the Company and its consolidated Subsidiaries under GAAP, except for claims, liabilities or obligations (i) disclosed in the Company's most recent
Form 10-KSB or any SEC Document filed subsequent to such Form 10-KSB or (ii) incurred by the Company or any of its Subsidiaries since the date of filing
the most recent SEC Document, which are in the ordinary course of business and which are consistent with past practice and that, individually or in the aggregate, would not have a Material Adverse
Effect. 

    5.10  [Intentionally Omitted].  

    5.11  Employment Matters; ERISA Matters  The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours except where failure to be in compliance
would not have, individually or in the aggregate, a Material Adverse Effect. To the 

17

 
Knowledge of the Company, there are no pending investigations involving, or any unfair labor practice charges or complaints against, the Company or any of its Subsidiaries by, or before, any
Governmental Entity responsible for the enforcement of such federal, state, local or foreign laws and regulations. Neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement and no labor organization or group of employees of the Company or any of its Subsidiaries had made a pending demand for recognition or certification. 

    Neither
the Company nor any of its Subsidiaries has any liability pursuant to the Worker Adjustment and Retraining Notification Act ("WARN"), except for such liability that would not,
individually or in the aggregate, have a Material Adverse Effect. Except for such failures that would not have, individually or in the aggregate, a Material Adverse Effect, each of the Plans has been
maintained and administered in accordance with its terms and applicable laws, including, without limitation, the Employment Retirement Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "Code"). None of the Plans is subject to Title IV of ERISA and no Plan is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
There is no pending or, to the Knowledge of the Company or any of its Subsidiaries, threatened legal action, suit or claim relating to the Plans or the administration of the investment of the assets
of any such Plan (other than routine claims for benefits). All contributions and other payments required to be made by the Company or any of its Subsidiaries to any Plan as of the Closing Date, or
with respect to any period ending prior to the Closing Date, have been made or will be made on or prior to the Closing Date or have been properly reflected on the Company's financial statements
included in the SEC Filings. 

    The
consummation of the transactions contemplated by this Agreement will not (i) entitle any employee to severance pay or (ii) accelerate the time of payment, vesting,
or increase the amount of any compensation or benefits to any employee of the Company or any of its Subsidiaries. 

    Neither
the Company nor any of its Subsidiaries has any obligation to provide post-retirement health or life benefits, except as required by law. 

    The
Company has heretofore delivered or made available to the Underwriter correct and complete copies of each of the written Plans and summaries of any unwritten Plans. No Plan is
intended to qualify under Section 401(a) or 501(c)(9) of the Code. 

    5.12  Absence of Certain Changes.  

    (a) Since
June 30, 2000 or the end of the most recent fiscal quarter before the delivery of each Capital Demand Notice, as the case may be, the business of the
Company and its Subsidiaries has been conducted in the ordinary course consistent with past practices and except in the ordinary course of business consistent with past practice there has not been: 

     (i) any
event, occurrence, development or state of circumstances or facts which, individually or in the aggregate, has had or would have a Material Adverse Effect; 

    (ii) any
declaration, setting aside or payment of any dividend or other distribution with respect to any shares of Capital Stock of the Company or any repurchase,
redemption or other acquisition by the Company or any Subsidiary of any outstanding shares of Capital Stock or other securities of, or other ownership interests in, the Company or any Subsidiary; 

    (iii) any
amendment of any material term of any outstanding security of the Company or any Subsidiary; 

    (iv) any
incurrence, assumption or guarantee by the Company or any Subsidiary of any indebtedness for borrowed money, other than (i) working lines of credit or
borrowings under existing lines of credit or floor plan financing arrangements, (ii) any license fees and royalties and (iii) pursuant to any lease; 

18

 

    (v) any creation or assumption by the Company or any Subsidiary of any lien on any material asset other than in the ordinary course of business consistent with past
practice; 

    (vi) any
making of any loan, advance or capital contributions to or investment in any Person in excess of $500,000 other than loans, advances or capital contributions
to or investments in wholly-owned Subsidiaries made in the ordinary course of business consistent with past practice; 

   (vii) any
damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any Subsidiary which,
individually or in the aggregate, has had or would have a Material Adverse Effect; 

   (viii) any
transaction or commitment made, or any contract or agreement entered into, by the Company or any Subsidiary relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company or any Subsidiary of any contract or other right, in any such case, material to the Company and the Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of business consistent with past practice and those contemplated by this Agreement; or 

    (ix) any
material change in any method of accounting or accounting practice by the Company or any Subsidiary. 

    (b) None
of the Company or its Subsidiaries have taken any steps, and do not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or its Subsidiaries have any Knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. 

    5.13  Environmental Matters.  The Company and each of its Subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any
Environmental Laws. "Environmental Laws" shall mean all applicable laws relating to the protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating Releases of Hazardous Substances into the air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances. "Hazardous Substance" shall
include any element, compound or chemical that is defined, listed or otherwise classified as a contaminant, pollutant, toxic or hazardous substance, hazardous waste, medical waste, special waste or
solid waste under Environmental Laws, including, but not limited to petroleum, PCBs or asbestos containing materials. "Releases" shall mean any
escaping, leaking, spilling, leaking, pumping, emitting, emptying, discharging, injecting, dumping or disposing of Hazardous Substances into the environment. To the best of the Company's Knowledge,
there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its Subsidiaries that violate or could reasonably be
expected to violate any Environmental Law or that could reasonably be expected to give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without
limitation underground storage tanks), disposal, transport or handling or Release of any Hazardous Substance. 

    5.14  Material Contracts.  

    (a) Other
than as disclosed in the Registration Statement and the Prospectus and except for that which could be required to be so disclosed under the Securities Act or
the Exchange Act, neither the Company nor any Subsidiary is a party to or bound by any agreement or arrangement material to the Company and its Subsidiaries taken as a whole
("Material Contracts"). 

19

 

    (b) Each Material Contract is in full force and effect and constitutes a legal, valid and binding obligation of the Company or the Subsidiary party thereto and, to the
Knowledge of the Company, each other party thereto, and is enforceable against the Company or its Subsidiaries and, to the Knowledge of the Company, each other party thereto in accordance with its
terms, except to the extent that such enforceability is limited by (i) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity, and neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any other party thereto
is in conflict therewith or in violation or breach thereof or default thereunder, except for such conflicts, violations, breaches and defaults which, individually or in the aggregate, would not have a
Material Adverse Effect. 

    5.15  Properties; Encumbrances.  Except as disclosed in the SEC Filings, each of the Company and its
Subsidiaries has good and valid title, and in the case of real property, insurable title, to all material properties and assets which it purports to own (real, personal and mixed, tangible and
intangible, including all forms of goodwill, rights, intellectual property and intellectual property rights) (collectively, the "Company Assets").
Except as disclosed in the SEC Filings, all Company Assets are free and clear of all liens, mortgages, claims, interests, charges, security interests or other encumbrances or adverse interests of any
nature whatsoever and other title or interest retention arrangements ("liens"). 

    5.16  Insurance.  All current primary, excess and umbrella policies of insurance owned or held by or on
behalf of or providing insurance coverage to the Company or any of its Subsidiaries are in full force and effect. With respect to all such insurance policies purchased by the Company or any of its
Subsidiaries, no premiums are in arrears and no notice of cancellation or termination has been received with respect to any such policy, other than notices of cancellation or termination routinely
sent at the end of a policy term. 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 is
prudent and customarily maintained by corporations of similar size and engaged in similar lines of businesses as the Company and its Subsidiaries are engaged. 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 have, individually or in the aggregate, a Material Adverse Effect. 

    5.17  Material Disclosure.  There is no fact, transaction or development which the Company has not
disclosed to the Underwriter in writing (including pursuant to the SEC Documents filed prior to the date hereof) which would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. This Agreement (including any Exhibit or Schedule hereto) and any written statements, documents or certificates furnished to the Underwriter by the Company or its Subsidiaries
prior to the date hereof in connection with the transactions contemplated hereby, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact required to
be stated herein or therein or necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. Except with respect to transactions
contemplated by this Agreement, no event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for
this purpose that the Company's reports filed under the Exchange Act are being incorporated into an effective registration statement filed by the Company under the Securities Act). 

20

 

    5.18  Intellectual Property.  

    (a) Schedule 5.18(a)
sets forth a true and complete list and summary description of all (i) Registered or material Patents, Trademarks or Copyrights owned
by or licensed to the Company and (ii) Intellectual Property Contracts. 

    (b) To
the Company's Knowledge, all Business Intellectual Property is valid, subsisting and enforceable. No Owned Intellectual Property has been canceled or adjudicated
invalid (excepting any expirations in the ordinary course), or is subject to any outstanding order, judgment or decree restricting its use or adversely affecting or reflecting the Company's rights
thereto. To the Company's Knowledge, no Licensed Intellectual Property has been canceled or adjudicated invalid (excepting any expirations in the ordinary course), or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting or reflecting the Company's rights thereto. The Owned Intellectual Property has been used with all patent, trademark, copyright,
confidential, proprietary, and other Intellectual Property notices and legends required by law. 

    (c) No
suit, action, reissue, reexamination, public protest, interference, opposition, cancellation or other proceeding (collectively,
"Suit") is pending concerning any claim that the Company has violated any Intellectual Property rights of a third party. To the Knowledge of the
Company, no claim has been threatened or asserted against the Company or its Subsidiaries or any of their indemnitees for violation of any Intellectual Property rights of a third party. To the
Company's Knowledge, the Company is not violating and has not violated any Intellectual Property rights of a third party. 

    (d) No
Suit is pending concerning any claim that the Company, or to the Knowledge of the Company another Person, has breached any Intellectual Property Contract. No
claim has been threatened or asserted that the Company, or to the Knowledge of the Company, another Person has breached any Intellectual Property Contract. There exists no event, condition or
occurrence which, with the giving of notice or lapse of time, or both, would constitute a material breach or default by the Company, or to the Knowledge of the Company another Person, under any
Intellectual Property Contract. No party to any Intellectual Property Contract has given the Company notice of its intention to cancel, terminate or fail to renew any Intellectual Property Contract. 

    (e) No
Suit to which the Company or its Subsidiaries or, to the Knowledge of the Company, its Indemnitees is a party, is pending concerning the Owned Intellectual
Property including any Suit concerning a claim or position that the Owned Intellectual Property has been violated or is invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned or
not owned exclusively by the Company. To the Company's Knowledge, no such claim has been threatened or asserted. To the Company's Knowledge, no valid basis for any such Suits or claims exists. 

    (f)  To
the Company's Knowledge, no Suit is pending concerning the Licensed Intellectual Property, including any concerning a claim or position that the Licensed
Intellectual Property has been violated or is invalid, unenforceable, unpatentable, unregisterable, cancelable, not duly licensed or duly licensed exclusively to the Company. To the Company's
Knowledge, no such claim has been threatened or asserted and no valid basis for any such Suits or claims exists. 

    (g) To
the Company's Knowledge, no Person is violating any Business Intellectual Property. 

    (h) To
the Company's Knowledge, it owns or otherwise holds valid rights to use all Intellectual Property used in the Business as currently conducted and described in
the Company's most recent 10-KSB. All such rights are free of all liens. 

    (i)  To
the Company's Knowledge, the Company has timely made all filings and payments with the appropriate foreign and domestic agencies required to maintain in
subsistence all 

21

 

Registered Owned Intellectual Property. Except as indicated on Schedule 5.18(a), no due dates for filings or payments concerning the Owned Intellectual Property (including without limitation
office action responses, affidavits of use, affidavits of continuing use, renewals, requests for extension of time, maintenance fees, application fees and foreign convention priority filings) fall due
within ninety (90) days of the Closing Date, whether or not such due dates are extendable. To the Company's Knowledge, the Company is in compliance with all applicable rules and regulations of
such agencies with respect to Business Intellectual Property. All documentation necessary to confirm and effect the Company's ownership of Owned Intellectual Property, if acquired from other Persons,
has been recorded in the United States Patent and Trademark Office, the United States Copyright Office and all other appropriate offices. 

    (j)  The
Company has taken reasonable measures to protect the secrecy, confidentiality and value of all Trade Secrets used in the business (collectively,
"Business Trade Secrets") (including without limitation entering into appropriate confidentiality agreements with all officers, directors, employees,
and other persons and entities with access to the Business Trade Secrets). To the Company's Knowledge, the Business Trade Secrets has not been disclosed to any persons or entities other than Company
employees and contractors who had a need to know and use such Business Trade Secrets in the ordinary course of employment or contract performance and who executed appropriate confidentiality
agreements. 

    (k) To
the Company's Knowledge, no current or former Company employee or contractor is or was a party to any confidentiality agreement and/or agreement not to compete
that restricts or forbids, or restricted or forbade at any time during such employee's employment or contractor's engagement such employee's or contractor's performance of the Company's business, or
any other activity that such employee or contractor performed on behalf of the Company or in connection with such employment or engagement by the Company. 

    5.19  Compliance With Food and Drug Act.  

    (a)  FDA Permits.  The Company and each of its Subsidiaries have all material licenses, permits,
consents, approvals and authorizations that are required under the Food and Drug Act and any similar foreign law, rule or regulation (collectively, the "FDA Permits") in connection with the conduct of
the businesses of the Company and each of its Subsidiaries. The Company has obtained and owns or has the right to use the FDA Permits in accordance with the terms thereof. Each FDA Permit is valid and
in full force and effect. All information supplied by or on behalf of the Company and each of its Subsidiaries to obtain or maintain each FDA Permit was, as of the date given, true and complete in all
material respects. The Company and each of its Subsidiaries has complied in all material respects with all conditions and requirements imposed by the FDA Permits and the Company or its Subsidiaries
has
not received any notice of cancellation, suspension or termination of any of the FDA Permits and to the Knowledge of the Company no Governmental Entity intends to cancel, suspend or terminate any of
the FDA Permits or that valid grounds for such cancellation, suspension or termination exist. 

    (b)  Food and Drug Act.  (i) The Company and each of its Subsidiaries are in compliance in all
material respects with all applicable requirements of the Food and Drug Act and any similar foreign law, rule or regulation, (ii) neither the Company nor any of its Subsidiaries has any
products held for sale that are subject to the requirements of the Food and Drug Act and (iii) to the Knowledge of the Company there are no circumstances, activities, practices, actions or
plans of the Company or any Subsidiary which is likely to interfere with or prevent the Company's or any of its Subsidiaries continued compliance with all applicable requirements of the Food and Drug
Act or any similar foreign law, rule or regulation, or which may give rise to any liability of the Company or any Subsidiary under, or otherwise form the basis of any lien or any claim, action, suit,
arbitration, inquiry, proceeding or investigation by or before any Governmental Entity based 

22

 

on or related to, the Food and Drug Act or any similar foreign law, rule or regulation, other than those the outcome of which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. 

    5.20  Subsidiaries.  None of the Subsidiaries are Significant Subsidiaries. 

    5.21  Brokers.  Except as previously disclosed to the Underwriter, the Company has taken no action which
would give rise to any claim by any Person for brokerage commissions, finder's fees or similar payments by the Underwriter relating to this Agreement for the transactions contemplated hereby. 

    5.22  Acknowledgment Regarding the Underwriter's Sale of the Common Stock.  The Company acknowledges and
agrees that the Underwriter is acting solely as the Company's Underwriter with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Underwriter
is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the
Underwriter or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Underwriter's sale of the Common
Stock hereunder. The Company further represents to the Underwriter that the Company's decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its
representatives. The Company has not provided to the Underwriter any nonpublic information that, in the opinion of the Company, is material to a decision to sell Common Stock. 

    5.23  Certain Transactions.  Except as disclosed in the SEC Filings and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties, none of the officers,
directors or employees of the Company is 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. 

    5.24  Securities Act of 1933.  The Company has complied in all material respects with all applicable
federal and state securities laws in connection with the offer, issuance and sale of the shares of Common Stock hereunder. 

    The
SEC has not issued any order preventing or suspending the effectiveness of the Registration Statement. The Company is currently (i) eligible to register securities,
including a primary offering of, and the resale of, the Common Stock purchased pursuant to this Agreement on a Registration Statement on Form S-3 under the Securities Act and
(ii) in compliance with Rule 415(a)(1)(x) and Rule 415(a)(4). The Company has not distributed and, prior to the completion of the sale of the shares of Common Stock by the
Underwriter, will not distribute any offering material in connection with the offer and sale of the Common Stock other than the Registration Statement, the Prospectus or other materials, if any,
permitted by the Securities Act. 

    5.25  Foreign Corrupt Practices.  Neither the Company nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices 

23

 

Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 

    5.26  Investment Company Status.  The Company is not, and upon consummation of the sale of the Common
Stock will not be, an "investment company," a company controlled by an "investment company" or an
"affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. 

VI.  COVENANTS.  

    6.1  [Intentionally Omitted].  

    6.2  Reservation of Common Stock.  The Company shall reserve, prior to the commencement of any Selling
Period, such number of shares of Common Stock, free of preemptive rights, equal to the number of shares of Common Stock equal to (i) the quotient of the Maximum Draw Down Amount divided by the
Hard Floor Price plus (ii) the maximum number of shares issuable upon full exercise of the Purchase Option. The number of shares so reserved from time to time, as theretofore increased or
reduced as hereinafter provided, may be reduced by the number of shares actually delivered hereunder and the number of shares so reserved shall be increased to reflect (a) potential increases
in the Common Stock which the Company may be obligated to issue by reason of adjustments to the Purchase Option and (b) stock splits and stock dividends and distributions. 

    6.3  Listing of Common Stock.  During the term of this Agreement, the Company hereby agrees to maintain
the listing of the Common Stock, including the shares to be issued hereunder, on a Principal Market, and as soon as reasonably practicable, but in any event prior to the commencement of the initial
Selling Period, to list any additional shares of Common Stock issuable under this Agreement. The Company further agrees that, if the Company applies to have the Common Stock traded on any other
Principal Market, it will include in such application the Common Stock issuable under this Agreement, and will take such other action as is necessary or desirable to cause the Common Stock issued or
issuable hereunder to be listed on such other Principal Market as promptly as possible. 

    6.4  Exchange Act Registration.  During the term of this Agreement, the Company will cause its Common
Stock to continue to be registered under Section 12(g) of the Exchange Act, will comply in all respects with its reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Exchange Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act. If required, the Company will take all action to continue the listing and trading of its Common Stock on the Principal Market and will comply in all material
respects with the Company's reporting, filing and other obligations under the bylaws or rules of the NASD and the Principal Market. 

    6.5  Legends.  The shares evidencing the Common Stock to be issued at each Closing and upon exercise of
the Purchase Option shall be free of legends or stop transfer or other restrictions. 

    6.6  Corporate Existence.  During the term of this Agreement, the Company will take all steps necessary
to preserve and continue the corporate existence of the Company; provided, however, that nothing herein shall be construed to limit the ability of the Company to partake in any merger, asset sale or
acquisition transaction involving the Company, subject to the Company complying with the terms of this Agreement. 

    6.7  Additional SEC Documents.  During the term of this Agreement, the Company will notify the
Underwriter each time that an SEC Document is submitted to the SEC for filing. 

24

 

    6.8  Registration Requirements.  The Company shall use its best efforts to effect the registration of the
Registrable Securities (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable United States state
securities and takeover laws ("Blue Sky Laws") or other state laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the sale or
distribution of all the Registrable Securities in the manner (including manner of sale) and in all states reasonably requested by the Underwriter for purposes of maximizing the proceeds realizable by
the Underwriter from such sale or distribution. The Company shall cooperate with the Underwriter and take all such other reasonable actions in connection therewith in order to expedite or facilitate
the disposition of the Registrable Securities. Prior to the thirtieth day from the date hereof, the Company shall register the maximum number of shares of Common Stock issuable upon full exercise of
the Purchase Option by filing with the SEC a post-effective amendment to the Registration Statement pursuant to the Securities Act. The Company shall keep such Registration Statement
effective until the Purchase Option Expiration Date with regard to at least the maximum number of shares of Common Stock issuable pursuant to the Purchase Option, except to the extent a Blocking Event
occurs pursuant to Section 3.3. If a Blocking Event occurs pursuant to Section 3.3 which shall affect the Underwriter's ability to sell shares of Common Stock issuable pursuant to the
Purchase Option, the Company shall use its reasonable best efforts to remove such Blocking Event as soon as possible, including the filing with the SEC of a Prospectus supplement or
post-effective amendment to the Registration Statement or related Prospectus, as applicable; provided, however, that the Company shall not
be required to disclose any material information relating to a proposed transaction or event prior to such time as the Company would generally, based on advice from counsel, disclose such transaction
or event. 

    6.9  Registration Procedures.  The Company will keep the Underwriter advised in writing as to the
initiation of each registration and as to the completion thereof. At its expense, the Company will use its reasonable best efforts to: 

    (a) Permit
the Underwriter and a single firm of counsel, initially Schulte Roth & Zabel LLP or such other counsel as thereafter designated as Underwriter's
counsel by the Underwriter, to review and comment upon the Registration Statement and all amendments and supplements thereto at least five (5) days prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or
supplement thereto that relates to the transactions contemplated by this Agreement without the prior approval of such counsel, which approval shall not be unreasonably withheld; 

    (b) The
Company shall provide a CUSIP number, a transfer agent and registrar for all such Registrable Securities; 

    (c) If
requested by the Underwriter, the Company shall immediately incorporate in a prospectus supplement or post-effective amendment such information as
the Underwriter requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable
Securities being issued, the Underwriting Price being paid therefor and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; make all
required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective
amendment; and in connection therewith supplement or make amendments to any Registration Statement if requested by the Underwriter; 

    (d) Furnish
such number of Prospectuses and amendments and supplements thereto, and other documents incident thereto, as the Underwriter from time to time may
reasonably request; and 

25

 

    (e) Notify the Underwriter and its counsel (as designated in writing by the Underwriter) promptly, and confirm such notice (a "Notice") in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the
same has become effective, and (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related Prospectus or for additional information. 

    6.10  Information by Underwriter.  The Underwriter shall promptly furnish to the Company such information
regarding the Underwriter and the distribution proposed by such Underwriter as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in Sections 6.8 and 6.9. All information provided to
the Company by the Underwriter shall be accurate and complete in all material respects and the Underwriter shall promptly notify the Company if any such information becomes incorrect or incomplete. 

    6.11  No Other Similar Agreements.  The Company shall refrain from entering into any other similar
agreements, arrangements or understandings granting to the Company the right to issue shares of its securities to one or more underwriters through an equity line or similar transaction. 

    6.12  No Short Selling.  The Underwriter and its Affiliates shall not engage in any short selling
activities with respect to the Company's Common Stock. 

VII.  ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION.  

    7.1  Successors and Assigns.  Neither this Agreement nor any rights of the Underwriter or the Company
hereunder may be assigned by either party to any other Person. Notwithstanding the foregoing, the Underwriter's rights and obligations under this Agreement may be assigned at any time, in whole, with
the prior written consent of the Company (which consent shall not be unreasonably withheld) to any Affiliate of the Underwriter (a "Permitted Transferee"). The rights and obligations of the
Underwriter under this Agreement shall inure to the benefit of, and be enforceable by and against, any such Permitted Transferee. 

    7.2  Entire Agreement; Amendment.  This Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and supercedes all other prior oral or written agreements between the
parties, their Affiliates, or persons acting on their behalf. No party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically
set forth in this Agreement or therein. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 

    7.3  Publicity.  Each of the Company and the Underwriter agrees that they will not disclose, and will not
include in any public announcement, the name of the other without its prior consent, unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such
requirement. Except as may be required by law, each of the Company and the Underwriter shall consult with the other before issuing any press release or otherwise making any public statements with
respect to this Agreement and shall not issue any such press release or make any such public statement prior to such consultation. 

    7.4  Termination.  

    (a) The
Company may, in its sole discretion, terminate the Agreement or the Underwriter's obligation to sell, as the Company's Underwriter, on a best efforts basis, any
Common Stock for 

26

 

the remainder of the Commitment Period; provided, however, such termination shall not effect the continuing obligations as set forth in this Agreement, including the survival of representations,
warranties, covenants and indemnification rights of the Underwriter and obligations relating to the Purchase Option. 

    (b) The
Underwriter may (in its sole and absolute discretion) terminate this Agreement and its obligation to sell, as the Company's Underwriter, on a best efforts
basis, any shares of Common Stock pursuant to a Capital Demand Notice as a result of (i) a breach by the Company of any material representation, warranty, covenant or other obligation in
connection with this Agreement, (ii) failure by the Company to comply with the requirements of Section 6.2, 6.3, 6.4, 6.5 or 6.6, (iii) the Company, at any date after the date
hereof, effecting any merger or consolidation of the Company with or into, or transferring all or substantially all of the assets of the Company to, another entity, or (iv) the Underwriter
reasonably determining, at any time that the adoption of, or change in, or any change in the interpretation or application of, any law, regulation, rule, guideline or treaty (including, but not
limited to, changes of capital adequacy) makes it illegal or materially impracticable for the Underwriter to fulfill its commitment pursuant to this Agreement, but in the case of (i) or
(iv) above, the Underwriter may terminate this Agreement only after a 30-day period beginning when the Underwriter gives the Company notice of its intentions to terminate this
Agreement (but the Underwriter's right to terminate its obligation to purchase any shares of Common Stock pursuant to a Capital Demand Notice shall not be subject to any delay or contingency) in
which, in the case of (i), the Company has not cured such breach as provided above, or, in the case of (iv), the parties negotiate in good faith a reasonable alternative manner not illegal or
impracticable for the Underwriter to fulfill its commitment pursuant to this Agreement; provided, however, that such termination shall not affect the continuing obligations of the Company as set forth
in this Agreement, including the survival of representations, warranties, covenants and indemnification rights of the Underwriter and obligations relating to the Purchase Option, except that if the
Underwriter reasonably determines at any time that the adoption of, or change in, or any change in the interpretation or application of, any law, regulation, rule, guideline or treaty (including, but
not limited to, changes of capital adequacy) makes it illegal or materially impracticable for the Underwriter to fulfill its commitment pursuant to this Agreement pursuant to clause (iv) above
and (A) the Underwriter terminates this Agreement pursuant to such
clause prior to the 180 day anniversary from the date hereof and (B) no Capital Demand Notice has been delivered by the Company, then on the date of such termination, the Purchase Option
Share Amount shall be reduced by 277 shares multiplied by the number of days determined by subtracting the number of days that have elapsed from the date hereof from 180. If the Company shall fail to
comply with the requirements under Section 6.2, 6.3, 6.4, 6.5 or 6.6 pursuant to clause (ii) above, the Company shall notify the Underwriter within two (2) days of the time it
becomes aware of its failure to comply with any such covenants. If the Underwriter elects to terminate this Agreement pursuant to clause (ii) above, it must first give the Company notice of
such election and then may terminate this Agreement only after a 10-day period in which the Company has not cured its failure to comply with such covenants;  provided, however, that such termination
shall not affect the continuing obligations of the Company as set forth in this Agreement, including the
survival of representations, warranties, covenants and indemnification rights of the Underwriter and obligations relating to the Purchase Option. If a Capital Demand Notice has been delivered by the
Company to the Underwriter prior to the date that the Underwriter terminates this Agreement pursuant to clause (iii) above, regardless of the number of days that have elapsed from the date
hereof, no reduction to the Purchase Option Share Amount shall take place and the Purchase Option shall remain in full force and effect. The Underwriter may also, in its sole and absolute discretion,
terminate this Agreement if the Company shall fail to maintain the listing of the Common Stock on a Principal Market, or if trading of the Common Stock on a Principal Market shall have been suspended
for a period of ten (10) consecutive 

27

 

Trading Days; provided, however, that such termination shall not affect the continuing obligations of the Company set forth in this Agreement, including the survival of representations, warranties,
covenants and indemnification rights of the Underwriter and obligations relating to the Purchase Option. The Underwriter may waive, in its sole and absolute discretion, in whole or in part, any of the
termination events contained in this Section 7.4. 

VIII.  NOTICES; COSTS AND EXPENSES.  

    8.1  Notices.  All notices, demands, requests, consents, approvals or other communications required or
permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, (iv) transmitted by hand delivery, or (v) transmitted
by facsimile and electronic mail, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice: 

If
to the Company, to:

Axonyx Inc.

825 Third Avenue,

40th Floor

New York, NY 10022

Attention: Michael R. Espey, Esq.

Facsimile No.: (212) 688-4843

E-mail: mespey@axonyx.com 

With
a copy (which shall not constitute notice) to:

Brobeck, Phleger & Harrison LLP

1633 Broadway 47th Floor

New York, New York 10019

Attention: Ellen Corenswet, Esq.

Facsimile No.: (212) 586-7878

E-mail: ecorenswet@brobeck.com 

If
to the Underwriter, to

Ramius Securities, LLC

666 Third Avenue,

26th Floor

New York, NY 10017

Attention: Jeffrey M. Solomon

Facsimile No.: (212) 845-7999 

With
a copy (which shall not constitute notice) to:

Schulte Roth & Zabel LLP

900 Third Avenue

New York, NY 10022

Attention: Eleazer N. Klein, Esq.

Facsimile No.: (212) 593-5955

E-mail: eleazer.klein@srz.com 

    Any
notice (including, without limitation, a Capital Demand Notice, but excluding any Underwriter Sales Notice, which Underwriter Sales Notice shall be deemed to be delivered on the
Trading Day it is
delivered, if delivered via facsimile prior to 8:00 p.m.) sent by one party to another with confirmation of acceptance or otherwise received in writing via courier, hand delivery or first-class
mail (return 

28

 

receipt requested) by the Company, or, if received on any day which is not a Trading Day or after 12:00 noon on a Trading Day, shall be deemed to be delivered on the immediately succeeding Trading
Day. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by facsimile or electronic mail during normal business hours of the recipient; provided,
that such transmission by facsimile or electronic mail shall have been confirmed received. Notice otherwise sent as provided herein shall be deemed given on the third (3rd) business day following the
date mailed or on the second business day following the date of deposit for delivery of such notice with a reputable air courier service. 

    8.2  Costs and Expenses.  The Company shall be responsible for the Underwriter's reasonable
(a) legal fees and related expenses incurred in entering into this Agreement and all legal fees and expenses related to filings with regulatory authorities, including the SEC and the NASD, up
to a maximum amount of $25,000, and (b) reasonable out-of-pocket costs and expenses in connection with the performance of its obligations hereunder, up to a maximum
amount of $5,000. All such fees, costs and expenses set forth in the previous sentence, that have been incurred prior to the date hereof, shall be payable upon execution and delivery of this
Agreement. In the event the Underwriter sells Common Stock during a Selling Period and the Triggering Amount is under $500,000, the Company shall be responsible for
out-of-pocket costs and expenses incurred by the Underwriter while conducting due diligence prior to such Selling Period up to a maximum amount of $4,000 per calendar quarter.
Notwithstanding anything contained in this Section 8.2 to the contrary, the Company shall not be responsible for any costs and expenses pursuant to this Section 8.2 in any calendar
quarter in which there were no Capital Demand Notices delivered. The Company agrees to pay the Underwriter the amounts due under this Section 8.2 (including expenses for due diligence) that
have not yet been paid within thirty (30) days following the Underwriter's request therefor. In the event payment is not received within such thirty (30) day period, Underwriter shall
have the right to deduct any such amounts owed by the Company to the Underwriter from any amounts owed by the Underwriter to the Company pursuant hereto. 

IX.  INDEMNIFICATION AND CONTRIBUTION.  

    9.1  Indemnification.  

    (a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Underwriter, the directors, officers, partners,
employees and agents of the Underwriter and each Person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several (collectively, "Claims"), incurred in
investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC or NASD, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the
securities or other Blue Sky Laws of any jurisdiction in which Registrable Securities are offered, or the omission or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which the statements therein were made, not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the
Company files any 

29

 

amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement, or
(iv) any breach of any representation, warranty, covenant or agreement contained in this Agreement or any document delivered in connection with this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, "Violations"). The Company shall reimburse the Underwriters and each such controlling person, promptly as such expenses are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 9.1(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made available by the Company; (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company, and the
Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and such Indemnified Person, notwithstanding such advice, used it;
and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably
withheld. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the
Underwriter. 

    (b) In
connection with any Registration Statement or any amendment or supplement thereto in which the Underwriter is participating, the Underwriter agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner as is set forth in Section 9.1(a), the Company, each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages (i) arise
out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the
Company by such Underwriter expressly for use in connection with any Registration Statement covering Registrable Securities or (ii) arise out of or are based upon the sale of Common Stock by
the Underwriter to any third party pursuant to the Registration Statement despite the fact that the Underwriter has received a Notice of Blocking Period from the Company and has not received the
Advice from the Company signaling the end of such Blocking Period; and, subject to Section 9.1(c), such Underwriter will reimburse such Indemnified Parties promptly as such expenses are
incurred and are due and payable for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 9.1(b) and the agreement with respect to contribution contained in Section 9.2 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Underwriter, which consent 

30

 

shall not be unreasonably withheld; provided, further, however, that the Underwriter shall be liable under this Section 9.1(b) for only that amount of a Claim or Indemnified Damages as does not
exceed the Commission to such Underwriter as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Underwriter. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 9.1(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. 

    (c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 9.1 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party
under this Section 9.1, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right (at its expense) to participate in, and,
to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that such indemnifying party shall diligently pursue such defense and
that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, as the case may be, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Company shall
pay reasonable fees for only one separate legal counsel for the Underwriter. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified
Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 9.1, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. 

    (d) The
indemnification required by this Section 9.1 shall be made by periodic payments of the amount thereof during the course of the investigation or defense,
as and when bills are received or Indemnified Damages are incurred. 

31

 

    (e) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law. 

    9.2  Contribution.  To the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 9.1 to the fullest extent permitted by
law; provided, however, that: (i) no contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section 9.1; (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 

X.  GOVERNING LAW; MISCELLANEOUS.  

    10.1  Governing Law.  This Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York without regard to the principles of conflict of laws. 

    10.2  Counterparts.  This Agreement may be executed in any number of 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. 

    10.3  Headings.  The headings of this Agreement are for convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement. 

    10.4  Severability.  If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. 

    10.5  Survival.  The representations, warranties, covenants and agreements of the parties hereto shall
survive each Closing hereunder. The indemnity and contribution agreements contained in Sections 9.1 and 9.2 hereof shall survive and remain operative and in full force and effect regardless of
(i) any termination of this Agreement or of the Commitment Period, (ii) any investigation made by or on behalf of any indemnified party or by or on behalf of the Company, and
(iii) the consummation of the sale or successive resales of the Common Stock. 

    10.6  No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person, except as provided in Article IX. 

    10.7  Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 

    10.8  Construction.  The language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will be applied 

32

 

against any party. Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, the singular the plural and the part the whole and "or" has the
inclusive meaning represented by the phrase "and/or". Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (iv) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. 

    10.9  Equitable Relief.  The Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Underwriter. The Company therefore agrees that the Underwriter shall be
entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. 

    10.10  Consent to Jurisdiction.  The parties hereto expressly submit themselves to the exclusive
jurisdiction of the state and federal courts of New York, New York in any action or proceeding relating to this Agreement or any of the other documents contemplated hereby or any of the transactions
contemplated hereby or thereby. Each party hereby irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such action,
suit
or proceeding brought in such a court and any claim that any such action, suit or proceeding brought in such a court has been brought in an inconvenient forum. The parties hereto hereby irrevocably
waive any and all right to a trial by jury with respect to any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The parties hereto irrevocably and
unconditionally consent to the service of process of any of the aforementioned courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail, return
receipt requested, postage prepaid, at their respective addresses set forth or provided for herein, such service to become effective ten (10) days after such mailing. Nothing herein shall
affect the right of any party to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against the other parties in any other jurisdiction. 

33

 

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date hereof. 

	 	 	RAMIUS SECURITIES, LLC
	

 	
 	

By:	
 	

/s/ JEFFREY M. SOLOMON   
 Name: Jeffrey M. Solomon

Title: Principal
	

 	
 	

AXONYX INC.
	

 	
 	

By:	
 	

/s/ MARVIN S. HAUSMAN, M.D.   
 Marvin S. Hausman, M.D.

President & CEO

34

QuickLinks

Exhibit 10.11

COMMON STOCK UNDERWRITING AGREEMENT

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