Document:

EXHIBIT 10.34

 

Portions Subject to Confidential Treatment
Request Under Rule 406

 

EXCLUSIVE LICENSE AGREEMENT

BAYLOR COLLEGE OF MEDICINE

VGX PHARMACEUTICALS, INC.

 

RE: OTA
92-14, 98-24, 98-25, 98-36, 02-001, 02-028, 02-080, 03-025, 03-065, 07-019, and
07-055.

 

This
Exclusive License Agreement (hereinafter called “Agreement”), to be effective
as of the 9th day of May, 2007 (hereinafter called “Agreement Date”), is
by and between Baylor College of Medicine (hereinafter called “BAYLOR”), a
Texas nonprofit corporation having its principal place of business at One
Baylor Plaza, Houston, Texas 77030, and VGX Pharmaceuticals, Inc., a
corporation organized under the laws of Delaware and having a principal place
of business at 455 Sentry Parkway, BlueBell, PA, 19422, and its Affiliates
(hereinafter, collectively referred to as “VGX”).

 

WITNESSETH:

 

WHEREAS,
BAYLOR is the owner of the Patent Rights as defined below; and

 

WHEREAS,
BAYLOR is willing to grant a royalty bearing, worldwide, exclusive license to
the Patent Rights to VGX on the terms set forth herein; and

 

WHEREAS,
VGX desires to obtain said exclusive license under the Patent Rights.

 

NOW,
THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto expressly agree as follows:

 

1.                                      DEFINITIONS AS USED HEREIN

 

1.1                               The term “Affiliates” shall mean any legal entity that is
controlling, controlled by, or under common control with VGX or a corporation,
partnership, joint venture or other entity of which the common stock or other
equity ownership thereof is twenty five percent (25%) or more owned by VGX.

 

1.2                               The term “Field” shall mean any and all applications in
humans.

 

1.3                               The
term “Legal Costs” shall mean all legal fees and expenses, filing or
maintenance fees, assessments and all other costs and expenses related to

 

1

 

prosecuting, obtaining and maintaining patent
protection on the Patent Rights in the United States and foreign countries.

 

1.4                               The
term “Licensed Product(s)” shall mean any product,
process or service that incorporates, utilizes or is made with the use of the
Patent Rights.

 

1.5                               The term “Net Sales” shall mean the gross amount of monies or cash
equivalent or other consideration which is billed, invoiced or received
(whichever occurs first) for sales, leases or other modes of transfer of
Licensed Products by VGX or sublicensees, less:

 

	
  (i)

  	
  customary
  trade, quantity or cash discounts and rebates to the extent actually allowed
  and taken;

  
	
   

  	
   

  
	
  (ii)

  	
  amounts
  repaid or credited to customers by reason of rejections or returns;

  
	
   

  	
   

  
	
  (iii)

  	
  to
  the extent separately stated on purchase orders, invoices or other documents
  of sale, taxes and/or other governmental charges which are actually paid by
  or on behalf of VGX or sublicensees for the production, sale, transportation,
  delivery or use of a Licensed Product; and

  
	
   

  	
   

  
	
  (iv)

  	
  reasonable
  charges for delivery or transportation provided by third parties, if separately
  stated.

  

 

The
term “Net Sales” in the case of non-cash sales, shall mean the fair market
value of all equivalent or other consideration received by VGX or sublicensees
for the sale, lease or transfer of Licensed Products.

 

1.7                               The term “Party” shall mean either VGX or BAYLOR, and “Parties”
shall mean VGX and BAYLOR.

 

1.8                               The
term “Patent Rights” shall mean the patents and/or patent applications
identified in Appendix A.

 

1.9                               The term “Sublicensing Revenue” shall mean all (i) cash, (ii) sublicensing
fees and (iii) all other payments and the cash equivalent thereof, which
are paid to VGX by the sublicensees of the Patent rights hereunder, but
excluding the following payments:

 

	
  (a)

  	
  payments
  made in consideration for the issuance of equity or debt securities of VGX to
  the extent not exceeding the fair market value thereof;

  
	
   

  	
   

  
	
  (b)

  	
  that
  portion of payments for direct or fully burdened expenses (collectively not
  to exceed one hundred fifty percent (150%) of direct expenses) associated
  with research or development as calculated in accordance with GAAP, to the
  extent that such expenses are separately listed and part of the sublicense;

  
	
   

  	
   

  
	
  (c)

  	
  royalties
  on sales of Licensed Products by the sublicensee (payment for which has been
  otherwise provided in Paragraph 4.2 herein); and

  

 

2

 

	
  (d)

  	
  payments
  for supply of Licensed Products for use in clinical trials by or on behalf
  of, or for resale by, the sublicensee.

  

 

2.                                      GRANT OF LICENSE

 

2.1                               License Grant. Subject to the reservations of rights set
forth in Paragraph 2.2, BAYLOR hereby grants to VGX an exclusive, worldwide,
sublicensable license under the Patent Rights to make, have made, use, market,
sell, offer to sell, lease and import Licensed Products in the Field.

 

2.2                               Restrictions on License. The grant in Section 2.1 shall be
further subject to, restricted by and non-exclusive with respect to:

 

(i)                       the making under or using of the Patent Rights by BAYLOR for
non-commercial research, patient care, teaching and other educationally related
purposes;

 

(ii)                    the making under or using of the Patent
Rights by the developers for non-commercial research purposes at academic or
research institutions;

 

(iii)                 any non-exclusive license of the Patent
Rights that BAYLOR grants to other academic or research institutions for
non-commercial research purposes;

 

(iv)                the making under or using of the Patent
Rights by academic and research institutions for non-commercial research
purposes; and

 

(v)                   any non-exclusive license of the Patent
Rights that BAYLOR is required by law or regulation to grant to the United
States of America or to a foreign state pursuant to an existing or future
treaty with the United States of America.

 

2.3                               Government Reservation. 
Rights under this Agreement are subject to rights required to be granted
to the Government of the United States of America pursuant to 35 USC Section 200-212,
including a nonexclusive, nontransferable, irrevocable, paid-up license to
practice or have practiced for or on behalf of the United States the subject
inventions throughout the world.

 

3.                                      MARKETING EFFORTS

 

VGX
shall use reasonable efforts, as defined herein, to effect assiduously the
introduction of Licensed Products into the commercial market as soon as
practicable.  VGX shall supply an annual
progress report as per the terms of Paragraph 5.1.

 

3

 

4.                                      PAYMENTS

 

4.1                               License Execution Fee. As partial consideration for the rights
conveyed by BAYLOR under this Agreement, VGX shall pay BAYLOR a license fee of
twenty five thousand dollars ($25,000) within ten (10) days of the
Agreement Date.

 

4.2                               Royalty on Net Sales.  In
addition to the foregoing, VGX or its sublicensee shall pay BAYLOR a royalty of
****** of Net Sales.  Such royalties shall be payable as provided
in Section 5.

 

4.3                               Annual Maintenance Fee. Beginning on the second (2nd) anniversary of the Agreement Date and up to the date upon which the
first milestone payment becomes due, VGX shall pay an Annual Maintenance Fee of
twenty five thousand dollars ($25,000), with the payment being due on the
anniversary of the Agreement Date. This Annual Maintenance Fee shall be
creditable against the milestone payment(s) stipulated in Paragraph 4.4,
such that the Annual Maintenance Fee shall be creditable against a Milestone
Payment paid to BAYLOR during the same calendar year. Only one (1) such
Annual Maintenance Fee credit per calendar year can be assessed against a
Milestone Payment.

 

4.4                               Milestone Payments. VGX shall also pay BAYLOR the following
milestone payments set forth below:

 

	
  (i) First
  Clinical Indication:

  	
   

  	
   

  
	
  Initiation
  of a Phase I Clinical Trial:

  	
   

  	
  Seventy five thousand
  dollars ($75,000)

  
	
  Initiation
  of a Phase II Clinical Trial:

  	
   

  	
  One hundred thousand
  dollars ($100,000)

  
	
  Initiation
  of a Phase III Clinical Trial:

  	
   

  	
  Two hundred fifty
  thousand dollars ($250,000)

  
	
  First
  Commercial Sale of Licensed Product:

  	
   

  	
  Five hundred thousand
  dollars ($500,000)

  
	
   

  	
   

  	
   

  
	
  (ii) Second
  Clinical Indication:

  	
   

  	
   

  
	
  Initiation
  of a Phase II Clinical Trial:

  	
   

  	
  ******

  
	
  Initiation
  of a Phase III Clinical Trial:

  	
   

  	
  ******

  
	
  First
  Commercial Sale of a Licensed Product:

  	
   

  	
  ******

  
	
   

  	
   

  	
   

  
	
  (iii) Third
  Clinical Indication:

  	
   

  	
   

  
	
  Initiation
  of a Phase II Clinical Trial:

  	
   

  	
  ******

  
	
  Initiation
  of a Phase III Clinical Trial:

  	
   

  	
  ******

  
	
  First
  Commercial Sale of Licensed Product:

  	
   

  	
  ******

  
									

 

VGX shall notify BAYLOR in writing within
thirty (30) days upon the achievement of each milestone, such notice to be
accompanied by payment of the appropriate milestone payment.  Milestones are to be paid regardless of
whether VGX or VGX’s sublicensee attains such milestone.

 

4.5                               Sublicensing Revenue. In addition to the foregoing fees and
royalties, VGX agrees to pay to BAYLOR the following percentage of all
Sublicensing Revenue for any sublicense of the Patent Rights signed during the
time intervals listed below:

 

4

 

	
  (i)

  	
  From
  the Agreement Date to twelve (12) months after the Agreement Date:  ******.

  
	
   

  	
   

  
	
  (ii)

  	
  From
  twelve (12) months and one day after the Agreement Date to twenty-four (24)
  months after the Agreement Date:  ******.

  
	
   

  	
   

  
	
  (iii)

  	
  From
  twenty-four (24) months and one day after the Agreement Date to thirty-six
  (36) months after the Agreement Date:  ******.

  
	
   

  	
   

  
	
  (iv)

  	
  From
  thirty-six (36) months and one day after the Agreement Date and thereafter:  ******.

  

 

Monies paid to VGX to
fund research and development or clinical studies, or paid in the form of loans
to, or as an equity investment in, VGX, or royalties based upon Sales or Net
Sales by the sublicensee (which are otherwise payable under Paragraph 4.2) are
not subject to any payment to Baylor, except to the extent and only to the
extent such monies are paid to VGX as a substitute, wholly or in part, for a
royalty on Sales of Licensed Products or for license initiation, maintenance or
other related fees and payments covered by this Agreement. Sublicensing Revenue that is a percentage of
milestone payments received by VGX from a sublicensee shall be fully creditable
against the milestone payments payable to BAYLOR by VGX under Paragraph 4.4 of
this Agreement.

 

4.6                               Failure to Make Payment. Should VGX fail to make any payment
whatsoever due and payable to BAYLOR hereunder, BAYLOR may, at its sole option,
terminate this Agreement as provided in Section 10.

 

5.                                      REPORTING

 

5.1                               Annual
Progress Report. No later than sixty (60) days after December 31
of each calendar year, VGX shall provide to BAYLOR a written annual progress
report describing progress on research and development, regulatory approvals,
manufacturing, sublicensing, marketing and sales during the most recent twelve
(12) month period ending December 31 and plans for the forthcoming year as
it relates to the technology covered by the Agreement.  If multiple technologies are covered by the
Agreement, the progress report shall provide the information set forth above
for each technology.  VGX shall also
provide any reasonable additional data BAYLOR requires to evaluate VGX’s
performance.

 

5.2                               Sale
of Licensed Product. VGX shall report to BAYLOR the date of first
sale of Licensed Products in each country within thirty (30) days of
occurrence.

 

5.3                               Royalty Report Format. VGX shall submit to BAYLOR within thirty
(30) days after March 31, June 30, September 30 and December 31,
a royalty report setting forth for such calendar quarter at least the following
information:

 

(i)                       the number of Licensed Products sold by VGX
and sublicensees in each country;

 

(ii)                    total billings for such Licensed Products;

 

(iii)                 deductions applicable to determine the Net
Sales thereof;

 

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(iv)                the amount of Sublicensing Revenue received
by VGX;

 

(v)                   the amount of royalty due thereon, or, if no
royalties are due to BAYLOR for any reporting period, the statement that no
royalties are due; and

 

(vi)                the amount of other payments due BAYLOR,
including but not limited to, milestone payments, minimum royalty payments and
maintenance fee payments.

 

Such report shall be
certified as correct by an officer of VGX and shall include a detailed listing
of all deductions from royalties and other payments.  After termination or expiration of this
Agreement, a final payment shall be made by VGX covering the whole or partial
calendar quarter.  VGX shall pay to BAYLOR
with each such royalty report the amount of royalties and other payments due
with respect to such calendar quarter. 
If multiple technologies are covered by the Agreement, VGX shall specify
which Patent Rights are utilized for each Licensed Product included in the
royalty report by citing the applicable BLG
number listed on the front page of the Agreement.

 

5.4                               Payment Terms. All payments due hereunder shall be deemed
received when funds are credited to BAYLOR’s bank account and shall be payable
by check or wire transfer in United States dollars.  For sales of Licensed Products in currencies
other than the United States, VGX shall use exchange rates published in The
Wall Street Journal on the last business day of the calendar quarter that
such payment is due.  No transfer,
exchange, collection or other charges, including
any wire transfer fees, shall be deducted from such payments.

 

5.5                               Late
Payments. Late payments shall be subject to a charge of one
and one-half percent (1.5%) per month, the interest being compounded annually,
or two hundred fifty dollars ($250.00), whichever is greater.  VGX shall calculate the correct late payment
charge, and shall add it to each such late payment.  Said late payment charge and the payment and
acceptance thereof shall not negate or waive the right of BAYLOR to seek any
other remedy, legal or equitable, to which it may be entitled because of the
delinquency of any subsequent payment.

 

5.6                               Address for Payments. If payments are sent by check, they shall be
sent to the address listed in Paragraph 15.1. 
If payments are sent by wire transfer, they shall be sent using the
wiring instructions sent by BAYLOR.

 

5.7                               Merger or Acquisition. In the event of acquisition, merger, change
of corporate name, or change of make-up, organization, or identity, VGX shall
notify BAYLOR in writing within thirty (30) days of such event.

 

5.8                               Small
Entity Status. If VGX or sublicensee (or optionee) does not
qualify as a “small entity” as provided by the United States Patent and
Trademark Office, VGX must notify BAYLOR immediately.

 

6

 

6.                                      RECORDS AND INSPECTION

 

VGX shall maintain or cause
to be maintained a true and correct set of records pertaining to the Net Sales
under this Agreement.  During the term of
this Agreement and for a period of two (2) years thereafter, VGX agrees to
permit an accountant selected and paid by BAYLOR and reasonably acceptable to
VGX to have access during ordinary business hours to such records as are
maintained by VGX as may be necessary, in the opinion of such accountant, to
determine the correctness of any report and/or payment made under this
Agreement.  In the event that the audit
reveals an underpayment of royalty by more than five percent (5%) for the
period being audited, the cost of the audit shall be paid by VGX.  If the underpayment is less than five percent
(5%) but more than two percent (2%) for the period being audited, VGX and
BAYLOR shall each pay fifty percent (50%) of the cost of the audit.  Such accountant shall maintain in confidence,
and shall not disclose to BAYLOR, any information concerning VGX or its
operations or properties other than information directly relating to the
correctness of such reports and payments.

 

7.                                      SUBLICENSES

 

All
sublicenses granted by VGX of the Patent Rights under this Agreement shall be
subject to the terms of this Agreement. 
VGX shall be responsible for its sublicensees and shall not grant any
rights which are inconsistent with the rights granted to and obligations of VGX
hereunder.  Any act or omission of a
sublicensee which would be a breach of this Agreement if performed by VGX shall
be deemed to be a breach by VGX of this Agreement.  Each sublicense agreement granted by VGX
shall include an audit right by BAYLOR of the same scope as provided in
Paragraph 6 hereof with respect to VGX. 
No such sublicense agreement shall contain any provision which would
cause it to extend beyond the term of this Agreement.  VGX shall give BAYLOR prompt notification of
the identity and address of each sublicensee with whom it concludes a
sublicense agreement and shall supply BAYLOR with a copy of each such
sublicense agreement.

 

8.                                      PATENTS AND INFRINGEMENT

 

8.1                               Patent Prosecution
Responsibility. For the
term of this Agreement, VGX shall be primarily responsible for filing, prosecuting and maintaining all
patent applications and patents included in the Patent Rights, and VGX
agrees to pay all Legal Costs.

 

8.2                               Notification of Intent Not to
Pursue. In the event
that VGX decides not to pay for the costs associated with either: (i) the
prosecution of the Patent Rights to issuance or (ii) maintenance of any
United States or foreign issued patent on the Patent Rights, VGX shall timely
notify BAYLOR in writing thereof with respect to the undesired patent. VGX’s
right under this Agreement to practice the invention according to the claim
scope of same undesired patent shall immediately terminate upon the giving of
such notice.  If VGX fails to notify
BAYLOR in sufficient time for BAYLOR to assume

 

7

 

said
costs prior to the abandonment or expiration of any Patent Rights, VGX shall be
considered in default of this Agreement.

 

8.3                               Obligation to Inform. VGX agrees to keep BAYLOR fully informed, at
VGX’s expense, of all prosecutions and other actions pursuant to this Section 8,
by submitting to Baylor an annual summary of such prosecutions and other
actions. In addition, VGX shall notify Baylor of a decision to abandon any
Patent covered by the Agreement, in a timely manner so that Baylor is
reasonably able to maintain the prosecution of said Patent.

 

8.4                               Obligation to Cooperate. BAYLOR agrees to reasonably cooperate with
VGX to whatever extent is reasonably necessary to provide VGX the full benefit
of the license granted to the Patent Rights under this Agreement.

 

8.5                               Infringement Procedures. During the term of this Agreement, each
Party shall promptly inform the other of any suspected infringement of any
claims in the Patent Rights or the misuse, misappropriation, theft or breach of
confidence of other proprietary rights in the Patent Rights by a third party,
and with respect to such activities as are suspected.  Any action or proceeding against such third
party shall be instituted as following:

 

(i)  BAYLOR and VGX may agree to
jointly institute an action for infringement, misuse, misappropriation, theft
or breach of confidence of the proprietary rights against such third
party.  Such joint action shall be
brought in the names of both BAYLOR and VGX. 
If BAYLOR or VGX decides to jointly prosecute an action or proceeding
after it has been instituted by one Party, the action shall be continued in the
name or names they both agree is expedient for efficient prosecution of such
action.  VGX and BAYLOR shall agree to
the manner in which they shall exercise control over any joint action or
proceeding. However, should the parties disagree on a particular decision,
BAYLOR may decide on such decision with input from VGX.  In such joint action or proceeding, the
out-of-pocket costs shall be borne equally, and any recovery or settlement
shall be shared equally.

 

(ii)  If VGX does not agree to
participate in a joint action or proceeding then BAYLOR shall have the right,
but not the obligation, to institute an action for infringement, misuse,
misappropriation, theft or breach of confidence of the proprietary rights
against such third party.  If BAYLOR
elects to institute action, it does so at its own cost.  If BAYLOR fails to bring such an action or
proceeding within a period of three (3) months after receiving notice or
otherwise having knowledge of such infringement, then VGX shall have the right,
but not the obligation, to prosecute the same at its own expense.  Should either BAYLOR or VGX commence action
under the provisions of this Paragraph 8.5 and thereafter elect to abandon the
same, it shall give timely notice to the other Party who may, if it so desires,
continue prosecution of such action or proceeding.  All recoveries, whether by judgment, award,
decree or settlement, from infringement or misuse of the Patent Rights shall be
apportioned as follows: (a) the Party bringing the action or proceeding
shall first recover an amount equal the costs and expenses incurred by such
Party directly related to the prosecution of such action or proceeding, 

 

8

 

(b) the Party cooperating in such action
or proceeding shall then recover costs and expenses incurred by such Party
directly related to its cooperation in the prosecution of such action or
proceeding and (c) the remainder shall be divided equally between VGX and
BAYLOR.

 

8.6                               Consent to Settle. Neither BAYLOR nor VGX shall settle any
action covered by Paragraph 8.5 without first obtaining the consent of the
other Party, which consent will not be unreasonably withheld.

 

8.7                               Liability for Losses. BAYLOR shall not be liable for any losses
incurred as the result of an action for infringement brought against VGX as the
result of VGX’s exercise of any right granted under this Agreement.  The decision to defend or not defend shall be
in VGX’s sole discretion.

 

9.                                      TERM AND EXPIRATION

 

Unless sooner terminated as otherwise provided in Section 10
herein below, the license to the Patent Rights granted to VGX shall expire on a
per country basis, on the later of (i) the date of expiration of the last
of the Patent Rights in the relevant country or (ii) in the event no
patents included within the Patent Rights issue in a country, the first date
following the tenth (10th) anniversary of the first commercial sale of
Licensed Products by VGX in such country. 
After such expiration, VGX shall have a perpetual, paid-in-full (i.e.,
royalty free) license in such country.

 

10.                               TERMINATION

 

10.1                        Termination
by BAYLOR: Default: In the event of default or failure by VGX to
perform any of the terms, covenants or provisions of this Agreement, VGX shall
have thirty (30) days after the receipt of written notice of such default by
BAYLOR to correct such default.  If such
default is not corrected within the said thirty (30) day period, BAYLOR shall
have the right, at its option, to cancel and terminate this Agreement.  The failure of BAYLOR to exercise such right
of termination, for non-payment of royalties/ fees or otherwise, shall not be
deemed to be a waiver of any right BAYLOR might have, nor shall such failure
preclude BAYLOR from exercising or enforcing said right upon any subsequent
failure by VGX.

 

10.2                        Termination by BAYLOR:
Insolvency. BAYLOR shall
have the right, at its option, to cancel and terminate this Agreement in the
event that VGX shall (i) become involved in insolvency, dissolution, bankruptcy
or receivership proceedings affecting the operation of its business or (ii) make
an assignment of all or substantially all of its assets for the benefit of
creditors, or in the event that (iii) a receiver or trustee is appointed
for VGX and VGX shall, after the expiration of thirty (30) days following any
of the events enumerated above, have been unable to secure a dismissal, stay or
other suspension of such proceedings.

 

9

 

10.3        Termination by VGX:
VGX shall have the right in its sole discretion to terminate this Agreement
upon sixty (60) days’ written notice to BAYLOR.

 

10.4        Effects of Termination.
In the event of termination of this Agreement, all rights to the Patent Rights
shall revert to BAYLOR.  At the date of
any termination of this Agreement, VGX shall immediately cease using any of the
Patent Rights; provided, however, that VGX may sell any Licensed Products
actually in the possession of VGX on the date of termination, provided that VGX
pays to BAYLOR royalties on all such sales in accordance with Paragraph 4.2
with respect thereto and otherwise complying with the terms of this Agreement.

 

10.5        Effect of Termination: Sublicenses.
VGX shall provide, in all sublicenses granted by it under this Agreement, that
VGX’s interest in such sublicenses shall, at BAYLOR’s option, terminate or be
assigned to BAYLOR upon termination of this Agreement.

 

10.6        No Refund. In the event this
Agreement is terminated pursuant to this Section 10, or expires as
provided for in Section 9, BAYLOR is under no obligation to refund any
payments made by VGX to BAYLOR prior to the effective date of such termination
or expiration.

 

10.7        Survival of Termination.
No termination of this Agreement shall constitute a termination or a waiver of
any rights of either Party against the other Party accruing at or prior to the
time of such termination.  The
obligations of Sections 13, 15 and 16 shall survive termination of this
Agreement.

 

11.          ASSIGNABILITY

 

Without
the prior written approval of BAYLOR, which will not be unreasonably withheld,
neither this Agreement nor the rights granted hereunder shall be transferred or
assigned in whole or in part by VGX to any person or entity whether voluntarily
or involuntarily, by operation of law or otherwise.  Notwithstanding the foregoing, VGX may assign
this Agreement and its rights and obligations hereunder without BAYLOR’s
consent, (i) in connection with the transfer or sale of all or
substantially all of its assets or the business of VGX to which this Agreement
relates or (ii) to any Affiliate; so long as VGX gives BAYLOR prompt
notice of such action and the successor entity or Affiliate, as the case may
be, acknowledges its consent and agreement to the terms of this Agreement in
writing before such assignment; and so long as such action is not entered into
solely to satisfy creditors of VGX.  This
Agreement shall be binding upon and shall inure to the benefit of the
respective successors, legal representatives and assignees of BAYLOR and VGX.

 

12.          GOVERNMENTAL COMPLIANCE

 

12.1        Compliance with
Applicable Laws.
VGX shall at all times during the term of this Agreement and for so long as it
shall use the Patent Rights, or sell Licensed Products, comply and cause its
sublicensees to comply with all laws that may control

 

10

 

the
import, export, manufacture, use, sale, marketing, distribution and other
commercial exploitation of the Patent Rights, Licensed Products or any other
activity undertaken pursuant to this Agreement.

 

12.2        Requirement for U.S.
Manufacture. VGX agrees that, to the extent it is commercially
practical, Licensed Products leased or sold in the United States shall be
manufactured substantially in the United States.

 

12.3        Export Control Regulations.  The Patent Rights are subject to, and VGX
agrees to comply in all respects with, U.S. law including but not limited to
U.S. export controls under the Export Administration Regulations (15 C.F.R. Part 734
et seq.) and U.S. economic sanctions and embargoes codified in 31 C.F.R.
Chapter V. VGX agrees that VGX bears sole responsibility for understanding and
complying with current U.S. trade controls laws and regulations as applicable
to its activities subject to this Agreement. 
Without limitation on the general agreement to comply set forth in the
first sentence of this Paragraph 12.3, VGX agrees not to sell any goods,
services, or technologies subject to this Agreement, or to re-export the same: (1) to
any destination prohibited by U.S. law, including any destination subject to
U.S. economic embargo; (2) to any end-user prohibited by U.S. law,
including any person or entity listed on the U.S. government’s Specially
Designated Nationals list, Denied Parties List, Debarred Persons List,
Unverified List, or Entities List. 
Furthermore, VGX agrees that any transfer of Patent Rights from BAYLOR
to VGX under this Agreement is subject to U.S. export license authorization as
may be required under U.S. law.

 

13.          ARBITRATION

 

13.1        Amicable Resolution.  The Parties shall attempt to settle any
controversy between them amicably.  To
this end, a senior executive from each Party shall consult and negotiate to
reach a solution.  The Parties agree that
the period of amicable resolution shall toll any otherwise applicable statute
of limitations.  However, nothing in this
clause shall preclude any Party from commencing mediation if said negotiations
do not result in a signed written settlement agreement within thirty (30) days
after written notice that these amicable resolution negotiations have
commenced.

 

13.2.       Mediation.  If a controversy arises out of
or relates to this Agreement, or the breach thereof, and if the controversy
cannot be settled through amicable resolution, the Parties agree to try in good
faith to settle the controversy by mediation before resorting to final and
binding arbitration.  The Party seeking
mediation shall propose five mediators, each of whom shall be a lawyer licensed
to practice by the state of Texas, having practiced actively in the field of
commercial law for at least fifteen (15) years, to the other Party who shall
select the mediator from the list. The Parties shall split the cost of the
mediator equally.  The Parties agree that
the period of mediation shall toll any otherwise applicable statute of
limitations.  However, nothing in this
clause shall preclude any Party from commencing arbitration if said
negotiations do not result in a signed written settlement agreement within
sixty (60) days after written notice that amicable resolution negotiations have
commenced.

 

11

 

13.3        Arbitration.  Any
dispute, controversy, or claim arising out of or relating to this Agreement, or
the breach, termination or invalidity thereof, including claims for tortious
interference or other tortious or statutory claims arising before, during or
after termination, providing only that such claim touches upon matters covered
by this Agreement shall be finally settled by arbitration administered by the
American Arbitration Association pursuant to the Commercial Arbitration Rules in
force at the time of the commencement of the arbitration, except as modified by
the specific provisions of this Agreement. It is the specific intent of the
Parties that this arbitration provision is intended to be the broadest form
allowed by law.

 

13.4        Parties to
Arbitration.  This agreement to arbitrate is intended to be
binding upon the signatories hereto, their principals, successors, assigns,
subsidiaries and affiliates. This agreement to arbitrate is also intended to
include any disputes, controversy or claims against any Party’s employees,
agents, representatives, or outside legal counsel arising out of or relating to
matters covered by this Agreement or any agreement in which this Agreement is
incorporated.

 

13.5        Consolidation
Permitted.  The Parties expressly agree that any court
with jurisdiction may order the consolidation of any arbitrable controversy
under this Agreement with any related arbitrable controversy not arising under
this Agreement, as the court may deem necessary in the interests of justice or
efficiency or on such other grounds as the court may deem appropriate.

 

13.6        Entry of Judgment.  The
Parties agree that a final judgment on the arbitration award may be entered by
any court having jurisdiction thereof.

 

13.7        Appointing
Arbitrators.   The American Arbitration Association shall
appoint the arbitrator(s) from its Large, Complex Claims Panel. If such
appointment cannot be made from the Large, Complex Claims Panel, then from its
Commercial Panel. The Parties hereby agree to and acquiesce in any appointment
of an arbitrator or arbitrators that may be made by such appointing authority.

 

13.8        Qualifications of
the Arbitrator(s).  The arbitrator(s) must be a lawyer,
having practiced actively in the field of commercial law for at least fifteen
(15) years.

 

13.9        Governing
Substantive Law.   The arbitrator(s) shall determine the
rights and obligations of the Parties according to the substantive laws of the
State of Texas (excluding conflicts of law principles) as though acting as a
court of the State of Texas.

 

13.10      Governing
Arbitration Law.  The law applicable to the validity of the
arbitration clause, the conduct of the arbitration, including any resort to a
court for provisional remedies, the enforcement of any award and any other
question of arbitration law or procedure shall be the Federal Arbitration Act.

 

12

 

13.11      Governing
Convention.  The Parties elect to have the New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10,
1958 (instead of the Inter-American New York Convention on International
Commercial Arbitration of August 15, 1990) govern any and all disputes
that may be the subject of arbitration pursuant to this Agreement.

 

13.12      Preliminary Issues
of Law.  The arbitrator(s) shall hear and
determine any preliminary issue of law asserted by a Party to be dispositive of
any claim, in whole or part, in the manner of a court hearing a motion to
dismiss for failure to state a claim or for summary judgment, pursuant to such
terms and procedures as the arbitrator(s) deems appropriate.

 

13.13      Confidentiality.  The
Parties and the arbitrator(s) shall treat all aspects of the arbitration
proceedings, including without limitation discovery, testimony and other
evidence, briefs and the award, as strictly confidential.  Further, except as may be required by law,
neither Party nor the arbitrator(s) may disclose the existence, content,
or results of any arbitration hereunder without the prior written consent of
both Parties.

 

13.14      Place of
Arbitration.  The seat of arbitration shall be Houston,
Texas, USA for actions or claims prosecuted by VGX, and the seat of arbitration
shall be Philadelphia, Pennsylvania, USA, for actions or claims prosecuted by
BAYLOR.

 

13.15      Language.  The
arbitration shall be conducted in the English language. All submissions shall
be made in English or with an English translation. Witnesses may provide
testimony in a language other than English, provided that a simultaneous
English translation is provided. Each Party shall bear its own translation
costs.

 

13.16      Punitive Damages
Prohibited.  The Parties hereby waive any claim to any
damages in the nature of punitive, exemplary, or statutory damages in excess of
compensatory damages, or any form of damages in excess of compensatory damages,
and the arbitrator(s) is/are specially divested of any power to award any
damages in the nature of punitive, exemplary, or statutory damages in excess of
compensatory damages, or any form of damages in excess of compensatory damages.

 

13.17      Costs.  The
Party prevailing on substantially all of its claims shall be entitled to
recover its costs, including attorneys’ fees, for the arbitration proceedings,
as well as for any ancillary proceeding, including a proceeding to compel or
enjoin arbitration, to request interim measures or to confirm or set aside an
award.

 

13.18      Survival.  The
provisions of this Section 13 shall survive expiration or termination of
this Agreement.

 

13

 

14.          ADDRESSES

 

14.1        Addresses: Payments. All payments shall be made payable to “Baylor
College of Medicine” and shall be sent to the address below, and shall
reference the applicable BLG numbers
listed on the front page of the Agreement.

 

BAYLOR
Tax ID #: 74-1613878

Director,
Baylor Licensing Group

Baylor
College of Medicine

One
Baylor Plaza, BCM210-600D

Houston,
TX 77030

 

	
  Telephone
  No.

  	
  713-798-6821

  	 

	
  Facsimile
  No.

  	
  713-798-1252

  	 

	
  E-Mail

  	
  blg@bcm.tmc.edu

  
				

 

14.2         For questions about payments, BAYLOR
can contact VGX at the address below:

 

	
  Title:

  	
  Chief Financial Officer

  
	
  Name:

  	
  Gene Kim

  
	
  Address:

  	
  450 Sentry Parkway

  
	
   

  	
  Blue Bell, PA 19422

  

 

	
  Telephone
  No.

  	
  267-440-4205

  	 

	
  Facsimile
  No.

  	
  267-440-4242

  	 

	
  E-Mail.

  	
  gene@vgxp.com

  
				

 

14.3         Addresses: Notices.
All notices, reports or other communication pursuant to this Agreement shall be
sent to such Party via (i) United States Postal Service postage prepaid, (ii) overnight
courier, or (iii) facsimile transmission, addressed to it at its address
set forth below or as it shall designate by written notice given to the other
Party.  Notice shall be sufficiently
made, or given and received (a) on the date of mailing or (b) when a
facsimile printer reflects transmission.

 

	
  In
  the case of BAYLOR:

  
	
  Patrick
  Turley

  
	
  Associate
  General Counsel

  
	
  Baylor
  College of Medicine

  
	
  One
  Baylor Plaza, BCM210-600D

  
	
  Houston,
  TX 77030

  

 

	
  Telephone
  No.

  	
  713-798-6821

  
	
  Facsimile
  No.

  	
  713-798-1252

  
	
  E-Mail

  	
  blg@bcm.tmc.edu

  

 

14

 

	
  In
  the case of VGX:

  
	
  J.
  Joseph Kim

  
	
  President
  and CEO

  
	
  450
  Sentry Parkway

  
	
  Blue
  Bell, PA 19422

  
	
   

  
	
  Telephone
  No.

  	
  267-440-4201

  
	
  Facsimile
  No.

  	
  267-440-4242

  
	
  E-Mail

  	
  kim@vgxp.com

  

 

14.4         Baylor Reference
Number. Each such report, notice or other communication shall
include the applicable BLG numbers
listed on the front page of the Agreement.

 

15.          INDEMNITY, INSURANCE &
WARRANTIES

 

15.1        INDEMNITY.

 

(I)  EACH PARTY SHALL NOTIFY THE OTHER OF ANY CLAIM,
LAWSUIT OR OTHER PROCEEDING RELATED TO THE PATENT RIGHTS.  VGX AGREES THAT IT WILL DEFEND, INDEMNIFY AND
HOLD HARMLESS BAYLOR, ITS FACULTY MEMBERS, SCIENTISTS, RESEARCHERS, EMPLOYEES,
STUDENTS, OFFICERS, TRUSTEES AND AGENTS AND EACH OF THEM (THE “INDEMNIFIED PARTIES”),
FROM AND AGAINST ANY AND ALL CLAIMS, CAUSES OF ACTION, LAWSUITS OR OTHER
PROCEEDINGS (THE “BAYLOR CLAIMS”) FILED OR OTHERWISE INSTITUTED AGAINST ANY OF
THE INDEMNIFIED PARTIES RELATED DIRECTLY OR INDIRECTLY TO OR ARISING OUT OF THE
DESIGN, PROCESS, MANUFACTURE OR USE BY ANY PERSON OR PARTY OF THE PATENT
RIGHTS, LICENSED PRODUCTS OR ANY OTHER EMBODIMENT OF THE PATENT RIGHTS EVEN
THOUGH SUCH BAYLOR CLAIMS AND THE COSTS (INCLUDING, BUT NOT LIMITED TO, THE
PAYMENT OF ALL REASONABLE ATTORNEYS’ FEES AND COSTS OF LITIGATION OR OTHER
DEFENSE) RELATED THERETO RESULT IN WHOLE OR IN PART FROM THE NEGLIGENCE OF
ANY OF THE INDEMNIFIED PARTIES OR ARE BASED UPON DOCTRINES OF STRICT LIABILITY
OR PRODUCT LIABILITY; PROVIDED, HOWEVER, THAT SUCH INDEMNITY SHALL NOT APPLY TO
ANY BAYLOR CLAIMS ARISING FROM THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT
OF ANY INDEMNIFIED PARTY.  VGX WILL ALSO
ASSUME RESPONSIBILITY FOR ALL COSTS AND EXPENSES RELATED TO SUCH BAYLOR CLAIMS
FOR WHICH IT IS OBLIGATED TO INDEMNIFY THE INDEMNIFIED PARTIES PURSUANT TO THIS
PARAGRAPH 16.1, INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF ALL REASONABLE
ATTORNEYS’ FEES AND COSTS OF LITIGATION OR OTHER DEFENSE.

 

(II)  VGX FURTHER AGREES NOT TO SETTLE ANY CLAIM AGAINST
AN INDEMNIFIED PARTY WITHOUT THE INDEMNIFIED PARTY’S WRITTEN CONSENT WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD. 
VGX FURTHER AGREES TO KEEP THE INDEMNIFIED PARTIES FULLY APPRISED OF THE
BAYLOR CLAIMS.

 

15

 

15.2        Insurance.

 

(i)  VGX shall for
so long as VGX manufactures, uses or sells any Licensed Product(s), maintain in
full force and effect policies of (a) worker’s compensation insurance
within statutory limits, (b) employers’ liability insurance with limits of
not less than one million dollars ($1,000,000) per occurrence, (c) general
liability insurance (with Broad Form General Liability endorsement) with
limits of not less than one million dollars ($1,000,000) per occurrence with an
annual aggregate of four million dollars ($4,000,000) and (d) product
liability insurance in the event that VGX sells any Licensed Products, with
limits of not less than two million dollars ($2,000,000) per occurrence with an
annual aggregate of five million dollars ($5,000,000).

 

(ii)  Such
coverage(s) shall be purchased from a carrier or carriers having an A. M.
Best rating of at least A- (A minus) and shall name BAYLOR as an additional
insured.  VGX shall provide to BAYLOR
copies of certificates of insurance within thirty (30) days after execution of
this Agreement.  Upon request by BAYLOR,
VGX shall provide to BAYLOR copies of said policies of insurance.  It is the intention of the Parties hereto
that VGX shall, throughout the term of this Agreement, continuously and without
interruption, maintain in force the required insurance coverages set forth in
this Paragraph 15.2.  Failure of VGX to
comply with this requirement shall constitute a default of VGX allowing BAYLOR,
at its option, to immediately terminate this Agreement.

 

(iii)  BAYLOR
reserves the right to request additional policies of insurance where
appropriate and reasonable in light of VGX’s business operations and
availability of coverage.

 

15.3        DISCLAIMER OF
WARRANTY.  BAYLOR REPRESENTS AND WARRANTS TO VGX THAT IT
HAS THE FULL AUTHORITY TO EXECUTE AND DELIVER THIS LICENSE AGREEMENT; AND HAS
RECEIVED NO MATERIAL CLAIM IN WRITING FROM ANY THIRD PARTY CONTESTING THE
VALIDITY, ENFORCEABILITY, LICENSEABLITY, USE OR OWNERSHIP OF ANY SUCH BAYLOR
PATENT RIGHTS. EXCEPT AS SET FORTH IN THE PREVIOUS SENTENCE, THE BAYLOR
PATENT RIGHTS, LICENSED PRODUCTS AND ANY OTHER TECHNOLOGY LICENSED UNDER THIS
AGREEMENT ARE PROVIDED ON AN “AS IS” BASIS. 
BAYLOR MAKES NO WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES
OF FITNESS OR MERCHANTABILITY, REGARDING OR WITH RESPECT TO THE PATENT RIGHTS
OR LICENSED PRODUCTS AND BAYLOR MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS
OR IMPLIED, OF THE PATENTABILITY OF THE PATENT RIGHTS OR LICENSED PRODUCTS OR
OF THE ENFORCEABILITY OF ANY PATENTS ISSUING THEREUPON, IF ANY, OR THAT THE
PATENT RIGHTS OR LICENSED PRODUCTS ARE OR SHALL BE FREE FROM INFRINGEMENT OF
ANY PATENT OR OTHER RIGHTS OF THIRD PARTIES. 
NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS CONFERRING BY
IMPLICATION, ESTOPPEL OR OTHERWISE ANY LICENSE OR RIGHTS UNDER ANY PATENTS OF
BAYLOR OTHER THAN THE PATENT RIGHTS; HOWEVER, BAYLOR AGREES IN GOOD FAITH TO
NEGOTIATE WITH VGX A LICENSE UNDER ANY EXISTING

 

16

 

PATENT
RIGHTS OWNED BY BAYLOR THAT MAY PREVENT VGX FROM PRACTICING UNDER THE
PATENT RIGHTS OF THIS AGREEMENT TO THE EXTENT THAT SAID PATENT RIGHTS ARE NOT
OTHERWISE OBLIGATED TO OR CONTROLLED BY A THIRD PARTY.

 

16.          ADDITIONAL PROVISIONS

 

16.1        Use of BAYLOR Name.  VGX
agrees that it shall not use in any way the name of “Baylor College of Medicine”
or any logotypes or symbols associated with BAYLOR or the names of any of the
scientists or other researchers at BAYLOR without the prior written consent of
BAYLOR.

 

16.2        Confidentiality.  VGX
agrees to maintain the Patent Rights in confidence, and to use the same only in
accordance with this Agreement.  Such
obligation of confidentiality shall not apply to information which VGX can
demonstrate: (i) was at the time of disclosure in the public domain; (ii) has
come into the public domain after disclosure through no fault of VGX; (iii) was
known to VGX prior to disclosure thereof by BAYLOR; (iv) was lawfully
disclosed to VGX by a third party which was not under an obligation of
confidence to BAYLOR with respect thereto; (v) which VGX can reasonably
demonstrate was independently developed by VGX without use of the Patent
Rights; or (vi) which VGX shall be compelled to disclose by law or legal
process.

 

16.3        BAYLOR’s
Disclaimers.  Neither BAYLOR, nor any of its faculty
members, scientists, researchers, employees, students, officers, trustees or
agents assume any responsibility for the manufacture, product specifications,
sale or use of the Patent Rights or Licensed Products which are manufactured by
or sold by VGX.

 

16.4        Independent
Contractors.  The Parties hereby acknowledge and agree that
each is an independent contractor and that neither Party shall be considered to
be the agent, representative, master or servant of the other Party for any
purpose whatsoever, and that neither Party has any authority to enter into a
contract, to assume any obligation or to give warranties or representations on
behalf of the other Party.  Nothing in
this relationship shall be construed to create a relationship of joint venture,
partnership, fiduciary or other similar relationship between the Parties.

 

16.5        Non-Waiver.  The Parties
covenant and agree that if a Party fails or neglects for any reason to take
advantage of any of the terms provided for the termination of this Agreement or
if a Party, having the right to declare this Agreement terminated, shall fail
to do so, any such failure or neglect by such Party shall not be a waiver or be
deemed or be construed to be a waiver of any separate cause for the termination
of this Agreement subsequently arising, or as a waiver of any of the terms,
covenants or conditions of this Agreement or of the performance thereof.  None of the terms, covenants and conditions
of this Agreement may be waived by a Party except by other Party’s written
consent.

 

16.6        Reformation.  The
Parties hereby agree that neither Party intends to violate any public policy,
statutory or common law, rule, regulation, treaty or decision of

 

17

 

any
government agency or executive body thereof of any country or community or
association of countries, and that if any word, sentence, paragraph or clause
or combination thereof of this Agreement is found, by a court or executive body
with judicial powers having jurisdiction over this Agreement or any of the
Parties hereto, in a final, unappealable order to be in violation of any such
provision in any country or community or association of countries, such words,
sentences, paragraphs or clauses or combination shall be inoperative in such
country or community or association of countries, and the remainder of this
Agreement shall remain binding upon the Parties hereto.

 

16.7        Force Majeure.  No
liability hereunder shall result to a Party by reason of delay in performance caused
by force majeure, that is circumstances beyond the reasonable control of the
Party, including, without limitation, acts of God, fire, flood, war, terrorism,
civil unrest, labor unrest, or shortage of or inability to obtain material or
equipment.

 

16.8        Entire Agreement.  The
terms and conditions herein constitute the entire agreement between the Parties
and shall supersede all previous agreements, either oral or written, between
the Parties hereto with respect to the subject matter hereof.  No agreement of understanding bearing on this
Agreement shall be binding upon either Party hereto unless it shall be in
writing and signed by the duly authorized officer or representative of each of
the Parties and shall expressly refer to this Agreement.

 

IN
WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement
in multiple originals by their duly authorized officers and representatives on
the respective dates shown below, but effective as of the Agreement Date.

 

 

	
  VGX

  	
   

  	
  PHARMACEUTICALS,
  INC.

  	
   

  	
   

  	
  BAYLOR
  COLLEGE OF MEDICINE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    /s/
  J. Joseph Kim

  	
   

  	
   

  	
  Name:

  	
    /s/
  Cyndi M. Baily

  
	
   

  	
  J.
  Joseph Kim

  	
   

  	
   

  	
   

  	
  Cyndi
  M. Baily

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  and CEO

  	
   

  	
  Title:

  	
  Senior
  Vice President &

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   General
  Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   5/9/07

  	
   

  	
   

  	
  Date:

  	
   5/7/07

  
									

 

18EXHIBIT 10.35

 

Portions Subject to
Confidential Treatment Request Under Rule 406

 

R&D
COLLABORATION AND LICENSE AGREEMENT

 

 

BETWEEN

 

VGX
PHARMACEUTICALS, INC.

 

(VGX)

 

 

AND

 

 

VGX
INTERNATIONAL

 

(VI)

 

 

R&D
COLLABORATION AND LICENSE AGREEMENT

 

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

 

A. Whereas VGX controls certain intellectual property
related to VGX-100 (Recombinant Viral Protein R (rVpr)) (hereinafter referred
to as “VGX-100”) a drug for treating all and any disease indications in humans
and animals, including but not limited to those listed in Attachment I; and

 

B. Whereas VGX and VI desire to enter into an agreement for exclusive worldwide rights to
conduct research, development activities, sale, licensing, and marketing of
VGX-100 for Gastric Cancer for humans.

 

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

 

1.             DEFINITIONS

 

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

 

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

 

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

 

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

 

1.5   NET SALES is defined as the
gross amount of monies or cash equivalent or other consideration which is paid
by unrelated third parties to VGX or VI for VGX-100 by sale or other mode of
transfer, less all qualifying costs directly attributable to such sales, which
are made, made for, used or sold by VI, its agents, employees and/or
independent contractors.

 

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

 

1

 

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

 

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

 

1.8   VGX KNOW-HOW TECHNOLOGY shall
mean VGX’s technical information and materials, including without limitation,
technology, preclinical or clinical data, bacterial strains, genetic
constructs, chemicals, inventions (patentable or otherwise), practices,
methods, knowledge, know-how, skill, and experience related directly or
indirectly to VGX-100.

 

1.9   VGX PATENT RIGHTS means all of
VGX’s interest in the rights represented by or issuing from (including all
claims referenced within) those patent applications listed in ATTACHMENT I and
all future interests in such rights anywhere in the world of the VGX-100
intellectual property.

 

2.             R&D COLLABORATION

 

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

 

2.1   VGX shall provide VGX-100
(Recombinant Vpr Protein) necessary for the production or intended for
production of VGX R&D PRODUCT(S) upon VI’s request. VI shall reimburse
VGX for the costs of such VGX 100 at a price to be mutually agreed. VGX and VI
shall share pre-clinical testing data, and clinical results for product
development and clinical development.

 

3.             COST SHARING, FEES,
AND ROYALTIES

 

3.1   Cost Sharing, Fees and
Royalties.

 

3.1.1        VGX agrees
to waive Upfront Fees.

 

3.1.2        Research and
Development Costs.

 

2

 

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

 

3.1.2.2     VI shall pay
to VGX the following R&D milestone cost reimbursements to cover the costs
of out-of-pocket, third-party expenses spent to conduct research and
development of VGX-100 prior to the Effective Date.

 

	
  Due Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
  Upon
  completion of IND-enabling Toxicology Studies

  	
   

  	
  ******

  
	
   

  	
   

  	
   

  
	
  Upon submission of an IND

  	
   

  	
  ******

  

 

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

 

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

 

3.2   Diligence and Milestone Fees.

 

3.2.1        VI shall use
commercially reasonable efforts to develop for SALE and to market VGX R&D
PRODUCT(S) as drugs for treating GASTRIC CANCER indication.  VI agrees to pay VGX the following Milestone
Payments.  The amount of the Milestone
Payments (except for the one of Phase I clinical testing) shall be determined
within 6 months prior to the scheduled initiation of a Phase II clinical trial
for VGX-100.  The amount shall be
determined based on the industry benchmark as described below, and  said payments are payable by VI to VGX within
sixty (60) days after the achievement of the respective milestone event.  The data on industry benchmark on such
license terms shall be based on the benchmark data gathered by firms such as
Recombinant Capital (http://www.recap.com) or other similar data gathering or
consulting firms.  If the parties cannot
agree on the payment amount, the parties agree to hire two or more
internationally reputable investment banks or accounting firms to determine
said amount based on the firms’ own experience and expertise, or on the
recommendation of an expert hired by them.

 

3

 

	
  Due Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
  Upon
  completion of Phase I safety and dose-escalation studies

  	
   

  	
  To be determined (TBD) prior to the initiation of
  Phase I Studies

  
	
   

  	
   

  	
   

  
	
  Upon
  completion of patient accrual for GASTRIC CANCER Phase II clinical trial for
  VGX-100

  	
   

  	
  TBD

  
	
   

  	
   

  	
   

  
	
  Upon
  completion of patient accrual for GASTRIC CANCER Phase III clinical trial for
  VGX-100

  	
   

  	
  TBD

  
	
   

  	
   

  	
   

  
	
  Upon
  NDA submission for VGX-100 for GASTRIC CANCER

  	
   

  	
  TBD

  
	
   

  	
   

  	
   

  
	
  Upon NDA
  approval for VGX-100 for GASTRIC CANCER

  	
   

  	
  TBD

  

 

3.3   Currency, Payment Method.

 

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

 

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

 

3.4.1
Upon completion of Phase II for GASTRIC CANCER, VGX shall have an option to
develop and market VGX-100 for GASTRIC CANCER in the United States and
Europe.  Once the option is exercised,
VGX shall assume all costs for development and filings in the U.S. and Europe for GASTRIC
CANCER.  In return, VGX shall pay to VI,
on a quarterly basis, a royalty of ****** of the NET SALES of each VGX R&D
PRODUCT for GASTRIC CANCER only, which is sold by VGX, its agent(s), and/or
independent contractor(s) of VGX in the U.S. and Europe,  VGX shall exercise the said option by
providing a written notice to VI anytime during the effective term of this
Agreement.

 

3.4.2  If VI, its agents, or contractors fails to
lead VGX-100 to an initiation of Phase II Clinical trial for GASTRIC CANCER
within 5 years from the effective date, VI shall return all rights specified in
this Agreement back to VGX.

 

4

 

4.             CONFIDENTIALITY

 

4.1   CONFIDENTIAL INFORMATION means
and includes all technical and business information, plans, inventions,
developments, discoveries, improvements, software, know-how, procedures,
methods, techniques, formulae, data, processes, studies, and other proprietary
ideas, whether or not patentable or copyrightable, that a party hereto
identifies as confidential or proprietary at the time it is delivered or
communicated to the other party hereto, or any other information that should
reasonably be recognizable by its nature to be confidential or trade secret
information of a party (including, without limitation, information respecting
such party’s business plans, sales and sales methods, customers and prospective
customers). CONFIDENTIAL INFORMATION should be in writing and marked
confidential or, if oral, should be reduced to writing within thirty (30) days
of disclosure and marked confidential.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

5.             TERM AND TERMINATION

 

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

 

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

 

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

 

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

 

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

 

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

 

5.3.2        VI
experiences a Trigger Event (defined below);

 

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

 

5.4   “Trigger Event” means any of
the following:

 

 If VI:

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

5.8   Upon termination of this
AGREEMENT under section 5.2 and 5.3, VI shall cause physical inventories to be
taken as soon as commercially practicable and in any event no later than sixty
(60) days after termination of: (a) all completed VGX R&D PRODUCT(s) on
hand, under the control of VI, its agents, or contractors thereof; and (b) such
VGX R&D PRODUCT(s) as are in the process of manufacture and component
parts thereof as of the date of termination of this AGREEMENT, which
inventories shall be recorded in writing. 
VI shall deliver copies of such written inventories, verified by an
officer of VI, forthwith to VGX.  VGX
shall have forty five (45) days after receipt of such verified inventories
within which to challenge the physical inventory and request an audit thereof.

 

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

 

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

 

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

 

	
  6.

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

  

 

6.1   VGX represents and warrants to
VI that VGX has the full authority to execute and deliver this AGREEMENT.

 

6.2   VI acknowledges that VGX holds
world-wide exclusive rights, granted by PENN to VGX, to develop VGX-100 for the
treatment of any indications.  VI agrees
to assume all royalty obligations to PENN with regards to the GASTRIC CANCER
indication as outlined in Section 3.1.3.

 

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

 

8

 

6.4   From the Effective Date, VI
agrees to pay a portion of the costs of maintaining and filing the patents
and/or patent applications listed in ATTACHMENT I.  To fulfill this requirement, VI will directly
pay IP maintenance payment of ****** to the Intellectual Property law firm (s) designated
by VGX within thirty (30) days from the Effective Date and ****** annually
thereafter.  A separate Client and
Billing Agreement may be signed by VGX, VI, and the designated law firm(s) to
facilitate these payments.

 

6.5   VGX shall defend and indemnify
and hold VI (and its respective officers, directors and employees) harmless
against any and all Losses, arising out of, relating to, based on, or caused by
(A) the breach by VGX of any representation or warranty contained in this
Agreement, (B) a claim that the formulation or manufacture of the VGX-100
by VGX for VI or other activities of VGX under this Agreement infringe on the
patent or other intellectual property rights of a third party, (C) any
governmental or regulatory action arising out of VGX, or (D) any
negligence or intentional misconduct by VGX in connection with performing its
obligations under this Agreement, in each case except to the extent that such
Losses arise from or are aggravated in any substantial respect by the negligent
acts of or failure to act by VI or its agents and/or  contractors. 
VI will promptly notify VGX of any such Losses which come to VI’s
attention, but failure to do so will not relieve VGX of its indemnification
obligations under this Section 6.3 except to the extent any such delay
results in a material prejudice to VGX. 
Notwithstanding anything to the contrary in this Agreement, VGX shall
not be liable for any Losses to the extent that the Losses suffered by VI (and
its officers, directors and employees) are the result of or in consequence of
any failure by the indemnified party to take reasonable and prudent action to
mitigate any Losses.

 

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

 

6.7   To best of VGX’s knowledge,
there are no pending or threatened suits, claims, or actions of any type
whatsoever against VGX with respect to the VGX-100.

 

9

 

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

 

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

 

7.             ADDITIONAL PROVISIONS

 

7.1   Nothing in this AGREEMENT shall
be deemed to establish a relationship of principal and agent between VGX and
VI, or between or among any of either party’s agents or employees for any
purpose whatsoever, nor shall this AGREEMENT be construed as creating any other
form of legal association or arrangement which would impose liability upon one
party for the act or failure to act of the other party.

 

7.2   VI is not permitted to assign
this AGREEMENT or any part of it to any person or entity, either directly or by
operation of law, without the prior written consent of VGX in its sole
discretion.

 

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

 

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

 

If for VGX:

 

VGX Pharmaceutical, Inc.

450 Sentry Parkway
East

Blue Bell, PA
19422

Attention: Senior
Vice President

 

10

 

If for
VI:

 

VGX
International

Jung-Hun
Building, #701

944-1 Daechi 3-Dong

Gangnam-gu, Seoul, Korea

Attention:
Vice President

 

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

 

7.5   This AGREEMENT shall be
construed and governed in accordance with the laws of the Commonwealth of
Pennsylvania in the United States of America, without giving effect to conflict
of law provisions.  In the event that a
party to this AGREEMENT perceives the existence of a dispute with the other
party concerning any right or duty provided for herein, the parties will, as
soon as practicable, confer in an attempt to resolve the dispute.  If the parties are unable to resolve such
dispute amicably, then the parties hereby submit to the exclusive jurisdiction of
and venue in the either federal or state courts located in the Eastern District
of the Commonwealth of Pennsylvania with respect to any and all disputes
concerning the subject of this AGREEMENT. 
The parties agree to accept original service of complaint via
internationally recognized courier with receipt confirmation.  Also, the parties agree to waive the Hague
Convention requirements relating to translation of certain documents to
applicable foreign language which in this case is  Korean.

 

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

 

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

 

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

 

11

 

[SIGNATURE PAGE FOLLOWS]

 

12

 

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

 

 

	
  VGX INTERNATIONAL, INC.

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
        /s/ Jay Surh

  	
   

  	
  By:

  	
        /s/ Kevin W.
  Rassas

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
     Jay Surh

  	
   

  	
  Name:

  	
    Kevin W. Rassas

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
       Executive Director

  	
   

  	
  Title:

  	
     Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
                6/19/2007

  	
   

  	
  Date:

  	
     6.27.07

  
												

 

13

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