Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

  EXHIBIT 10.28    
    

 EMPLOYMENT AGREEMENT  

        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective the 14th day of November, 2001 between ADViSYS, Inc.
("ADViSYS"), a Delaware corporation, with its place of business at 2700 Research Forest Drive, Suite 180, The Woodlands, Texas, 77381and Ruxandra Draghia-Akli ("Employee") whose
residence address is 5215 Starkridge Drive, Houston, Texas, 77035. 

        WHEREAS,
ADViSYS is a Delaware corporation and is engaged in the research and marketing of services relating to animals and animal care; and 

        WHEREAS,
ADViSYS is a start-up company, with a limited number of employees, with limited resources and without any assurances of its ability to raise additional funds; and 

        WHEREAS,
ADViSYS does not have any existing products and is engaged in a high risk research program to develop one or more commercial products, and ADViSYS cannot assure Employee of the
successful development of any product; and 

        WHEREAS,
ADViSYS has its principal place of business at Houston, Texas; and 

        WHEREAS,
ADViSYS wishes to retain the services of Employee, and Employee wishes to be employed by ADViSYS in the capacity and under the terms and conditions as set forth in this
Agreement; and 

        WHEREAS,
this Agreement represents the employment terms, conditions and agreements reached between the parties. 

        NOW
THEREFORE, in consideration of the mutual covenants hereinafter set forth, it is hereby agreed between the parties as follows: 

1.    Employment Period.    ADViSYS agrees to employ Employee and Employee agrees to be employed by ADViSYS
on the terms and conditions herein. This Agreement will have a term commencing on February 1, 2002 and will be terminable as provided in Section 4 herein. 

2.    Position.    

2.1    Position and Duties.    During the employment period, Employee shall serve as Research Team Leader of ADViSYS under the
President of ADViSYS, with such duties and responsibilities that are customarily assigned to such position and such other duties and responsibilities as may be from time to time assigned to him by the
President of ADViSYS. 

2.2    Time.    During the employment period, and excluding any periods of vacation and sick leave to which Employee is entitled,
Employee shall devote all of his business time and attention to the business and affairs of ADViSYS. Employee shall use his best efforts to carry out such responsibilities. Employee understands that
ADViSYS is a start-up company with limited resources and consequently Employee may be required to devote time significantly in excess of normal business hours to his obligations hereunder.
Employee may not serve as a consultant to, or on any board of, any other company or engage actively in any other business without the consent of the Board of Directors, which it may withhold in its
sole discretion. 

2.3    Annual Review.    At the end of each year during the employment period, the President shall review and evaluate Employee's
performance. 

3.    Compensation and Benefits.    

3.1    Base Salary.    ADViSYS will pay Employee at a rate of Twelve Thousand Nine Hundred Seventeen Dollars ($12,917) per month.
Any increases in Employee's monthly base compensation will be subject to the mutual agreement of ADViSYS and Employee, which agreement either party may withhold in their sole discretion. 

3.2    Incentive Compensation.    As incentive compensation, ADViSYS will grant Employee an option to acquire 130,000 shares of
ADViSYS common stock at the purchase price of $1.00 per share pursuant to the terms of the Option Agreement executed concurrently herewith. 

3.3    Benefits.    Employee shall receive the following: 

        (1)   Reimbursement
of all usual, customary and normal business expenses reasonably incurred by Employee in the performance of his duties. 

        (2)   Automobile
expense reimbursement for Employee's business travel using his vehicle at the rates established by the Internal Revenue Service from time to time for such
reimbursement. 

        (3)   Three
weeks paid vacation per year, or as otherwise agreed in writing between Employee and ADViSYS. 

        (4)   Medical
health insurance as provided generally to employees in ADViSYS' company policies and procedures 

        (5)   Retirement
benefits as provided generally to employees in ADViSYS' company policies and procedures 

        (6)   Any
additional benefits provided generally to employees in ADViSYS' company policies and procedures, as may be applicable from time to time to Employee. 

        (7)   Any
additional benefits provided to all employees with the same supervisory responsibilities as Employee. 

4.    Termination.    

4.1    Death.    Employee's employment hereunder shall terminate upon his death. 

4.2    At Will Employee Termination Without Cause.    Employee agrees that he is an employee terminable "at will" and that ADViSYS
may terminate Employee for any reason or no reason, at any time, including during a period of disability, by giving Employee written notice of termination, subject to the terms of Section 5.1
hereof. Employee may terminate this Agreement at any time by giving ADViSYS thirty (30) days advance written notice. Termination of this Agreement will not terminate Employee's obligations
under the Proprietary Information, Assignment of Inventions and Noncompetition Agreement which by their terms survive termination of employment. 

5.    Compensation Upon Termination.    

5.1    Termination By ADViSYS Without Cause.    If Employee's employment is terminated by ADViSYS without "Cause" as defined below,
then so long as Employee complies with the terms of this Agreement and the Proprietary Information, Assignment of Inventions and Noncompetition Agreement dated the date hereof, ADViSYS shall until six
months after the date of termination (l) continue to pay to Employee his then current salary, on the usual schedule for payment of the salary, and (2) pay Employee monthly an amount
equal to the amount contributed by ADViSYS for his health insurance for the month prior to termination. Provided, however, that payments so made to Employee shall be reduced by the sum of the amounts,
if any, payable to Employee at or prior to the time of any such payment under any disability benefit plans of ADViSYS. 

        Employee
agrees that the receipt of all of the salary payments and benefits under this Section 5.1 shall constitute and act as liquidated damages and not as a penalty and as the
exclusive remedy for any such termination. 

5.2    Termination for Cause.    Upon termination for "Cause," Employee shall not be entitled to any payments, other than unpaid
salary for past services. "Cause" shall mean: 

        (l)    conviction
of, or a plea of non contendere to a charge of, the commission of a felony; or 

        (2)   willful
and continuing failure to substantially perform his duties hereunder after demand for substantial performance is delivered by ADViSYS in writing that
specifically identifies the manner in 

which
ADViSYS believes Employee has not substantially performed his duties and Employee does not remedy such failure within ten (10) days following receipt of such written notice; 

        (3)   commission
of fraud by Employee against ADViSYS, its affiliates or customers, including any misrepresentation on Employee's resume or regarding the terms of separation
from any prior employer; 

        (4)   misappropriation
of any funds or property of ADViSYS by Employee; 

        (5)   breach
of any provision of this Agreement or of the Proprietary Information, Assignment of Inventions and Noncompetition Agreement dated the date hereof between ADViSYS
and Employee; 

        (6)   grossly
negligent or intentional commission of any act that results in, or Employee's failure to act so as to prevent, material injury to the business of ADViSYS, or 

        (7)   engagement
(including investment in a nonpublic company), without the written approval of the Board of Directors of ADViSYS, in any activity which competes with the
business of ADViSYS. 

6.    Other Agreements.    

6.1    Proprietary Information.    Inventions and Noncompetition Agreement. Employee shall execute and comply with the Proprietary
Information, Assignment of Inventions and Noncompetition Agreement in the form attached as Exhibit A hereto and incorporated herein by reference. Employee acknowledges that the terms of such
Proprietary Information, Assignment of Inventions and Noncompetition Agreement are agreed to in consideration of ADViSYS's agreement to employ Employee and the consideration set out in this Agreement. 

6.2    Standstill Agreements.    So long as Employee is employed by ADViSYS or receives payments pursuant to Section 5.1
above, Employee agrees that he will sign any lock-up letters, standstill agreements, or other similar documentation required by an underwriter in connection with an offering of securities
by ADViSYS. Such agreements shall be on terms substantially the same as those applicable to other officers or directors of ADViSYS. Failure to take any such action shall cause Employee to forfeit any
further rights to the salary continuation payments in Section 5.1. In addition, Employee agrees that in such event ADViSYS can seek and obtain specific performance of such covenant, including
any injunction requiring execution thereof, and Employee hereby appoints the then current president of ADViSYS to sign any such documents on his behalf. 

7.    Assignment and Successors.    

7.1    No Assignment By Employee.    This Agreement is personal to Employee and shall not be assignable by Employee. This Agreement
shall inure to the benefit of and be enforceable by Employee's legal representatives. 

7.2    Assignment by ADViSYS.    This Agreement shall inure to the benefit of and be binding upon ADViSYS and its successors and
assigns. 

8.    Miscellaneous.    

8.1    Arbitration.    Except with respect to injunctive relief which may be sought by the parties if the necessary legal and
equitable requirements under applicable law are met pending the institution of proceedings in accordance with this paragraph, the parties agree to resolve any and all claims or controversies arising
out of or relating to this Agreement, Employee's employment and/or termination of employment with ADViSYS, including but not limited to claims for breach of contract, misappropriation of trade
secrets, defamation or other torts, wrongful termination of employment, and claims under Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment
Act, the Family Medical Leave Act, the Equal Pay Act, the Texas Commission on Human Rights Act, retaliatory discharge under the Texas Worker's Compensation Act, the Texas Pay Day Act, and any similar
state law or local ordinance by binding arbitration under the Federal Arbitration Act before one arbitrator in the city of Houston, State of Texas, administered by the American Arbitration Association
("AAA") under its National Rules for the Resolution of Employment Disputes. The arbitrator shall have at least 10 years of experience in labor relations and 

employment
agreements. If the parties cannot agree upon an arbitrator within three weeks of the commencement of arbitration, the arbitrator shall be appointed by AAA. The parties further agree that
the work of Employee involves interstate commerce, the award rendered by the arbitrator is final and binding, and judgment thereon may be entered in any court having jurisdiction thereof. The
arbitrator shall deliver to the parties a written decision describing in detail the basis for each of his decisions. The
fees and expenses of the arbitrator shall be equally shared by the parties unless Employee can establish that paying his share of the costs would preclude him from enforcing his rights under this
Agreement. The invalidity or unenforceability of any provision of this paragraph shall not affect the validity or enforceability of any other provision of this Agreement which shall remain in full
force and effect. Nothing in this paragraph shall limit the remedies available to a party asserting a claim pursuant to the statutes listed herein. 

8.2    Damage Limitation.    In no event shall either party be entitled to exemplary, punitive, consequential, indirect or similar
damages from the other party except as may be permitted pursuant to any of the statutes or ordinances referred to in Section 8.1. 

8.3    Notice.    All notices and other communications under this Agreement shall be in writing and sent to the addresses as
provided on the signature page hereto. Notice shall be deemed given and effective on the earlier of five (5) days after the deposit in the U.S. mail of a writing addressed as above and sent
first-class mail, certified, return receipt requested, or when actually received. Either party may change the address for notice by notifying the other party of such change in accordance with this
paragraph. 

8.4    Governing Law.    This agreement shall in all respects be construed according to the laws of the State of Texas without
regard to its conflicts of law provisions. 

8.5    Counsel.    Each party hereto acknowledges that they have obtained the advice of their own counsel in connection with this
Agreement and the agreements referenced herein. 

8.6    Severability and Headings.    The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with allover provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law. The paragraph headings herein
are for reference purposes only and are not intended in any way to describe, interpret, define or limit the extent or intent of the Agreement or of any part hereof. 

8.7    No Waiver.    The failure of a party to insist upon strict compliance with any provision of, or to assert any right under,
this Agreement shall not be deemed to be a waiver of such provision or right, or of any other provision of or right under this Agreement. 

8.8    Entire Agreement.    The parties acknowledge that this Agreement supersedes any other agreement, written or oral, between
them concerning the subject matter hereof. 

8.9    Amendment.    This Agreement may be amended only in writing signed by both parties. 

8.10    Counterparts.    This Agreement and amendments may be executed in counterparts, each of which shall be deemed an original
and such counterparts shall constitute but one and the same instrument. 

        IN
WITNESS WHEREOF the parties hereto Agreement as of the date written above. 

					
	ADViSYS, INC.	 	EMPLOYEE
	
 By	
 	
/s/ Douglas R. Kern

  Douglas R. Kern

President	
 	
/s/ Ruxandra Draghia-Akli

  Ruxandra Draghia-Akli
	

Address for Notices:

2700 Research Forest Drive

Suite 180

The Woodlands, TX 77381	
 	
Address for Notices:

5215 Starkridge Drive

Houston. TX 77035
	

With a copy of all notices to:

Michael C. Blaney

Vinson & Elkins LLP

1001 Fannin St, Suite 2300

Houston, TX 77002	
 	

 

 FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT DATED

NOVEMBER 14, 2001  

        This is the First Amendment ("Amendment") to the Employment Agreement between ADViSYS, Inc. ("ADVISYS") and Ruxandra
Draghia-Akli ("Executive") dated as of 2 day of September, 2008 (the "Effective Date"), amending the Employment
Agreement ("Agreement") dated November 14, 2001 between ADViSYS and Executive. All undefined terms contained herein shall have the meaning set forth in the Agreement. 

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

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

	1.
	The
current base annual salary the Executive is entitled to receive for his employment is $189,571.00 per annum.

	2.
	Executive
is entitled to 20 business days (4 weeks) as a Company paid vacation days annually. 

							
	Dr. Ruxandra Draghia-Akli

5215 Starkridge Drive

Houston, Texas 77035

Telephone: 713-557-5434	 	VGX Pharmaceuticals

450 Sentry Parkway

Blue Bell, PA 19422

Telephone: 267-440-4205
	 	 	 	 	 	 	 
	/s/ Ruxandra Draghia-Akli

  Ruxandra Draghia-Akli

Vice President, Research	 	/s/ Gene J. Kim

  Gene J. Kim

Chief Financial Officer
	
 Date:	
 	
September 2, 2008

 	
 	
Date:	
 	
September 2, 2008

 

QuickLinks

EXHIBIT 10.28EXHIBIT 10.29

 

Portions Subject to
Confidential Treatment Request Under Rule 406

 

 

LICENSE
AGREEMENT

 

 

BETWEEN

 

 

VIRAL
GENOMIX, INC.

 

(COMPANY)

 

 

AND

 

 

THE
TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA

 

(PENN)

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LICENSE GRANT

  	
  4

  
	
   

  	
   

  	
   

  
	
  3.

  	
  FEES AND ROYALTIES

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  CONFIDENTIALITY

  	
  10

  
	
   

  	
   

  	
   

  
	
  5.

  	
  TERM AND TERMINATION

  	
  11

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PATENT MAINTENANCE and
  REIMBURSEMENT

  	
  14

  
	
   

  	
   

  	
   

  
	
  7.

  	
  INFRINGEMENT AND
  LITIGATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  8.

  	
  REPRESENTATIONS AND
  WARRANTIES OF PENN; DISCLAIMER OF ADDITIONAL WARRANTIES; INDEMNIFICATION

  	
  15

  
	
   

  	
   

  	
   

  
	
  9.

  	
  USE OF PENN’S NAME

  	
  17

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ADDITIONAL PROVISIONS

  	
  18

  

 

1

 

LICENSE
AGREEMENT

 

This License Agreement (“AGREEMENT”) is between The Trustees of the
University of Pennsylvania (“PENN”), a Pennsylvania nonprofit corporation, with
offices located at 3700 Market Street, Suite 300, Philadelphia,
Pennsylvania 19104-3147, and Viral Genomix, Inc., a corporation organized
and existing under the laws of the State of Delaware (“COMPANY”), having a
place of business at 3600 Market Street, Suite 100, Philadelphia, PA
19104-2642.

 

BACKGROUND

 

A. PENN controls certain intellectual property
developed by Dr. David B. Weiner (“Dr. Weiner”) of PENN’s School of
Medicine related to pathogenic viral proteins which control host cell
functions;

 

B. PENN (and in the case of U.S. Patent #5,874,225,
PENN and the Wistar Institute) controls United States letters patent and patent
applications listed in Attachment 1 to this AGREEMENT, and foreign counterparts
thereof, all relating to pathogenic viral proteins which control host cell
functions;

 

C. COMPANY may fund further research in the laboratory
of Dr. Weiner relating to pathogenic viral proteins which control host
cell functions under a separate sponsored research agreement between PENN and
COMPANY (“SPONSORED RESEARCH AGREEMENT”);

 

D. COMPANY desires to obtain the exclusive right and
license to use and exploit PENN’s rights to intellectual property developed by Dr. Weiner
described in Attachment 1 relating to pathogenic viral proteins which control
host cell functions, in accordance with the DEVELOPMENT PLAN (as defined
below); and

 

E. PENN has determined that the exploitation hereunder
of intellectual property developed by Dr. Weiner relating to pathogenic
viral proteins which control host cell functions is in the best interest of
PENN and is consistent with its educational and research missions and goals.

 

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

 

1.             DEFINITIONS

 

1.1   AFFILIATE means any legal entity directly or
indirectly controlling, controlled by or under common control with COMPANY that
has executed (a) this AGREEMENT, or (b) a written joinder agreement,
in a form reasonably satisfactory to PENN, agreeing to be bound by all of the
terms and conditions of this AGREEMENT, as if such AFFILIATE were an original
party to this AGREEMENT.  For purposes of
this AGREEMENT, “control” means the direct or indirect ownership of more than
fifty percent (50%) of the outstanding voting securities of a legal entity,
and/or the right to receive more than fifty

 

1

 

percent (50%) of
the profits or earnings of a legal entity, and/or the right to control the
policy decisions of a legal entity.

 

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

 

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

 

1.4   DEVELOPMENT PLAN means the plan, as it may be
amended from time to time, for the development and/or marketing of the PENN
LICENSED PRODUCTS that demonstrates COMPANY’s commitment to bring the PENN
PATENT RIGHTS to practical application. 
The initial DEVELOPMENT PLAN will be attached hereto, as Attachment 2,
within 60 days of the EFFECTIVE DATE.

 

1.5   EFFECTIVE DATE means the date on which
COMPANY and PENN have both fully executed this AGREEMENT.

 

1.6   FAIR MARKET VALUE means the cash
consideration which COMPANY or a sublicensee 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.

 

1.7   IND APPLICATION means an Investigational New
Drug Application filed with the United States Food & Drug
Administration prior to administration of a pharmaceutical product to humans.

 

1.8   KNOWLEDGE means, with respect to any
representation or warranty of PENN, the actual knowledge of any employee or
agent of PENN’s Center for Technology Transfer.

 

1.9   NDA means an New Drug Application filed with
the United States Food & Drug Administration prior to sale of a
pharmaceutical product to humans.

 

1.10 NET SALES means the gross amount invoiced for
SALES, less qualifying costs directly attributable to such SALES and actually
identified on the invoice and borne by COMPANY or its sublicensee(s).  Such qualifying costs shall be limited to the
following:

 

1.10.1      Discounts and rebates, in amounts
customary in the trade, for quantity purchases, prompt payments, for
wholesalers and distributors;

 

1.10.2      Credits, allowances and/or refunds, not
exceeding the original invoice amount, for rejections, claims and/or returns;

 

1.10.3      Prepaid outbound transportation expenses
and transportation insurance premiums;

 

1.10.4      Sales and use taxes, tariffs, duties,
surcharges and other fees imposed by a governmental agency; and

 

2

 

1.10.5      Retroactive price reductions actually
applied in an invoice.

 

NET SALES of a commercial
product comprising one or more PENN LICENSED PRODUCTS and one or more other
active ingredients (a “COMBINATION PRODUCT”) shall be calculated as set forth
above, subject to the provisions of Section 3.1.6.

 

1.11 PENN LICENSED PRODUCT(S) means product(s) which
is/are made, made for, used by, imported by or for, sold by or offered for sale
by COMPANY and/or any sublicensee(s) of COMPANY to unrelated third parties
which (1) in the absence of this AGREEMENT would infringe at least one
claim of PENN PATENT RIGHTS, or (2) use a process and/or machine covered
by at least one claim of PENN PATENT RIGHTS.

 

1.12 PENN PATENT RIGHTS means all of PENN’s interest
in the rights represented by or issuing from (including all claims referenced
within) those United States patents and patent applications listed in
Attachment 1, including, in each case, any continuations, continuations-in-part
(only to the extent that the subject matter of the first patent application is
continued in the second patent application, and expressly excluding any claims
directed to new subject matter not included in the first application),
divisions, provisionals, substitute applications, and any patent issuing
therefrom, and any reissues, reexaminations, renewals and/or extensions
(including any supplemental patent certificate) based thereon, and any
confirmation patent or registration patent or patent of addition based on any
such patent, and all foreign counterparts of any of the foregoing.

 

1.13 PHASE II CLINICAL TRIALS means a clinical study
comprising patients with the disease or condition of interest, to whom a PENN
LICENSED PRODUCT is administered in order to preliminarily assess the
effectiveness of the product for the intended indication, the optimal dose
thereof and regimen therefor, and the side effects associated with the product.

 

1.14 PHASE III CLINICAL TRIALS means a series of
expanded controlled and uncontrolled, pivotal, multi-center (generally)
clinical studies, after adequate completion of preliminary efficacy and
dose-ranging studies, and after safety data has been established for a PENN
LICENSED PRODUCT, comprising patients with the disease or condition of
interest, to whom the PENN LICENSED PRODUCT is administered in order to obtain
sufficient efficacy and safety data (and better understand drug-related adverse
effects) to support regulatory submissions and labeling of the PENN LICENSED
PRODUCT.

 

1.15 SALE means any bona fide transaction for which
consideration is received or expected for the sale, use, lease, transfer or
other disposition of PENN LICENSED PRODUCT(S) to an unrelated third
party.  A SALE of PENN LICENSED PRODUCT(S) shall
be deemed completed at the time COMPANY or its sublicensee invoices, ships or
receives payment for such PENN LICENSED PRODUCT(S), whichever occurs first.

 

3

 

2.             LICENSE
GRANT

 

2.1   Subject to the terms and conditions of this
AGREEMENT, PENN grants to COMPANY for the term of this AGREEMENT an exclusive
(with respect to PENN’s rights), world-wide right and license, with the right
to grant sublicenses, to make, have made, use, import, sell and offer for sale
PENN LICENSED PRODUCT(S).  No other
rights or licenses are granted by either party hereunder.  Intellectual property created or conceived
during the performance of the SPONSORED RESEARCH AGREEMENT, if any, shall be
governed by the SPONSORED RESEARCH AGREEMENT, and not this AGREEMENT.

 

2.2   This license grant is exclusive with respect
to PENN’s rights, except that PENN may use and permit other nonprofit
organizations to use the PENN PATENT RIGHTS for educational and research
purposes and not for sale or offer of sale.

 

2.3   COMPANY acknowledges that pursuant to Public
Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, the United
States government retains certain rights in intellectual property funded in
whole or part under any contract, grant or similar agreement with a Federal
agency.  Pursuant to these laws, the
government may impose certain requirements regarding such intellectual
property, including but not limited to the requirement that products resulting
from such intellectual property sold in the United States shall be
substantially manufactured in the United States.  This license grant is expressly subject to
all applicable United States government rights as provided in the
above-mentioned laws and any regulations issued under those laws, as those laws
or regulations may be amended from time to time.

 

2.4   The right to sublicense granted to COMPANY
under this AGREEMENT is subject to the following conditions:

 

2.4.1        COMPANY may sublicense the rights
granted in this AGREEMENT by written sublicense agreement, in a form reasonably
acceptable to PENN, which form shall, unless otherwise agreed to by PENN, (a) prohibit
the sublicensee from further sublicensing to more than one additional
sublicensee in any jurisdiction, and (b) require that the sublicensee be
subject to the terms and conditions of the license granted to COMPANY under
this AGREEMENT;

 

2.4.2        Within thirty (30) days after COMPANY
enters into any sublicense, COMPANY shall deliver to PENN a complete copy of
the sublicense written in the English language (PENN’s receipt of the
sublicense shall not constitute an approval of the sublicense or a waiver of
any of PENN’s rights or COMPANY’s obligations under this AGREEMENT);

 

2.4.3        In the event of a Default under Section 3.1
hereof, all payments then or thereafter due to COMPANY from its sublicensees
shall, upon notice from PENN to COMPANY and any such sublicensees, become owed
directly to PENN for the account of COMPANY; provided, however,
that PENN shall promptly remit to COMPANY the amount by which such payments in
the aggregate exceed the amounts owed by COMPANY to PENN; and

 

4

 

2.4.4        Even if COMPANY enters into sublicenses,
COMPANY remains primarily liable to PENN for all of COMPANY’s duties and
obligations contained in this AGREEMENT, and any act or omission of a
sublicensee which would be a breach of this AGREEMENT if performed by COMPANY
shall be deemed to be a breach by COMPANY of this AGREEMENT.

 

3.             FEES
AND ROYALTIES

 

3.1   License Initiation Fee and Royalties

 

3.1.1        In partial consideration for the exclusive
license granted to COMPANY, COMPANY shall issue to PENN within thirty (30) days
of the EFFECTIVE DATE such number of shares of COMPANY Common Stock, par value
$.0001 per share (“Common Stock”), as will cause PENN to own shares of Common
Stock representing twenty percent 
(20.0%) of the outstanding shares of the capital stock of COMPANY on a
fully-diluted basis, assuming the exercise, conversion and/or exchange of all
outstanding securities of COMPANY for or into shares of Common Stock, all on
the terms and conditions as set forth in a stock purchase agreement, negotiated
in good faith, between COMPANY and PENN (“STOCK PURCHASE AGREEMENT”) in
substantially the form  attached as
Attachment 3.

 

3.1.2        Until COMPANY has achieved a
capitalization of Three million dollars ($3,000,000), COMPANY shall issue to PENN,
at no additional consideration, from time to time, such number of additional
shares of Common Stock (collectively, the “Additional Purchased Shares”) as
will cause PENN to continue to hold shares of Common Stock representing twenty
percent  (20.0%) of the outstanding
capital stock of COMPANY on a fully-diluted basis, assuming the exercise,
conversion and/or exchange of all outstanding securities of COMPANY for or into
shares of Common Stock, all on the terms and conditions as set forth in the
STOCK PURCHASE AGREEMENT.  Each transfer
to PENN of any Additional Purchased Shares shall occur at a time and place as
mutually agreed and COMPANY shall deliver to PENN within thirty (30) days of
the increase of shares a stock certificate or certificates representing such
Additional Purchased Shares.

 

3.1.3        In further consideration of the
exclusive license granted to COMPANY, COMPANY shall pay to PENN, on a quarterly
basis, a royalty of ****** of the NET SALES of each PENN LICENSED PRODUCT which
is sold by COMPANY and any sublicensee(s), agent(s), and/or independent
contractor(s) of COMPANY.  In
determining the earned royalty payment, if any, to be made by COMPANY at the
end of any CALENDAR QUARTER following first SALE of a PENN LICENSED PRODUCT,
one-quarter of the minimum royalty paid at the beginning of the CALENDAR YEAR
with respect to such PENN LICENSED PRODUCT shall be subtracted from the earned
royalties otherwise payable for the CALENDAR QUARTER, and COMPANY shall owe
only the difference, if any.

 

5

 

Such
royalty payments shall terminate on a product-by-product and country-by-country
basis upon the later of (a) the date which is ten (10) years after
the date of the first SALE of such PENN LICENSED PRODUCT in such country, and (b) in
any country in which patent rights exist for any PENN LICENSED PRODUCT, the
date of expiration of the last-to-expire patent in such country, within the
definition of PENN PATENT RIGHTS, with a valid claim covering the PENN LICENSED
PRODUCT.

 

3.1.4        Within thirty (30) days after the end of
each of the periods specified below, the COMPANY shall pay to PENN the
specified percentage of any sublicense initiation fee and any other non-royalty
payment(s), including those resulting from co-marketing, strategic alliance,
joint venture and other similar arrangement(s), actually received during such
period by COMPANY from a sublicensee resulting from activities with PENN
LICENSED PRODUCT(S).  Any non-cash
consideration received by COMPANY from such sublicensee shall be valued at its
FAIR MARKET VALUE as of the date of receipt by COMPANY.

 

	
  Period

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EFFECTIVE DATE to 12 months after the EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12 months and one day after EFFECTIVE DATE to 24
  months after the EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  24 months and one day after EFFECTIVE DATE to 36
  months after the EFFECTIVE DATE

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  36 months and one day after the EFFECTIVE DATE and
  thereafter

  	
   

  	
  ******

  	
   

  

 

3.1.5        Monies paid to COMPANY to fund research
and development or clinical studies, or paid in the form of loans to, or as an
equity investment in, COMPANY are not subject to any payment to PENN, except to
the extent and only the extent such monies are paid to COMPANY as a substitute,
wholly or in part, for a royalty on SALES of PENN LICENSED PRODUCTS or for
license initiation, maintenance or other related fees and payments covered by
this AGREEMENT.

 

3.1.6        In the event one or more PENN LICENSED
PRODUCTS are sold in a COMBINATION PRODUCT, the amount of royalties and
sublicense revenues paid to PENN 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 PENN LICENSED PRODUCT(S).

 

6

 

3.2   Diligence and Milestone Fees

 

3.2.1        COMPANY shall use
commercially-reasonable efforts to develop for SALE and to market PENN LICENSED
PRODUCTS in a manner consistent with the DEVELOPMENT PLAN.

 

3.2.2        COMPANY shall provide PENN on each June 1
and December 1 for six years after the EFFECTIVE DATE (but excluding the December 1
first succeeding the EFFECTIVE DATE), written progress reports, setting forth
in such detail as PENN may reasonably request, the progress of the development,
evaluation, testing and commercialization of each PENN LICENSED PRODUCT.  After the date that is six years after the
EFFECTIVE DATE, COMPANY shall provide PENN the foregoing written progress
reports annually on May 1 of each year. PENN is entitled to only one copy
of any such progress report, and shall distribute such progress report only to
such persons as may reasonably require such report in order for PENN to fulfill
its obligations, or enforce its rights, under this AGREEMENT.  COMPANY shall also notify PENN in writing
within thirty (30) days of the first SALE of each PENN LICENSED PRODUCT.

 

3.2.3        COMPANY shall provide PENN with a
written, current DEVELOPMENT PLAN once every six months, beginning upon
attachment of the initial DEVELOPMENT PLAN, as provided in Section 1.4

 

3.2.4        COMPANY shall pay to PENN annual due
diligence fees in the following amounts, payable on each anniversary of the
EFFECTIVE DATE until, and only until, the first SALE as follows: first
anniversary, $250,000; second anniversary, $500,000; third anniversary,
$750,000; fourth and successive anniversaries, $1,000,000.  In addition, all monies spent directly for
development of PENN LICENSED PRODUCTS by COMPANY, its subsidiaries,
sublicensees, business partners and independent contractors in any given year
shall be applied as a credit against the due diligence fees due at the end of
that year.  Any part of such due
diligence fees not wholly satisfied by such credits must be paid by check on
the date due.

 

3.2.5        The following milestone payments are
payable by COMPANY to PENN within sixty (60) days after the achievement of the
respective milestone event:

 

	
  Event

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Filing of an IND APPLICATION for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Enrollment of the first patient in PHASE II CLINICAL
  TRIALS for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Enrollment of the first patient in PHASE III
  CLINICAL TRIALS for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  750,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Filing an NDA for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First
  anniversary of such filing

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Receipt of an NDA approval letter for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First
  anniversary of such receipt

  	
   

  	
  $

  	
  1,500,000

  	
   

  

 

7

 

3.3   Minimum Royalties

 

3.3.1        COMPANY shall pay to PENN a
non-refundable minimum royalty for each PENN LICENSED PRODUCT sold during the
following periods, in the corresponding amounts:

 

	
  Period

  	
   

  	
  Due Date

  	
   

  	
  Minimum

  Royalty

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First CALENDAR
  YEAR following the first SALE of such PENN LICENSED PRODUCT

  	
   

  	
  January 1st of the first CALENDAR YEAR

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Second CALENDAR
  YEAR following the first SALE of such PENN LICENSED PRODUCT

  	
   

  	
  January 1st of the second CALENDAR YEAR

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Third
  CALENDAR YEAR following the first SALE of such PENN LICENSED PRODUCT

  	
   

  	
  January 1st of the third CALENDAR YEAR

  	
   

  	
  ******

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourth and successive CALENDAR YEARS following the
  first SALE of such PENN LICENSED PRODUCT

  	
   

  	
  January 1st of the fourth and successive CALENDAR YEARS,
  respectively

  	
   

  	
  ******

  	
   

  

 

8

 

3.4   Reports  and
Records

 

3.4.1        COMPANY shall deliver to PENN within
forty-five (45) days after the end of each CALENDAR QUARTER following the first
SALE, a written report, certified by the chief financial officer or treasurer
of COMPANY (or an officer of COMPANY charged with the duties typically
entrusted to the chief financial officer or treasurer of a Delaware
corporation), setting forth the calculation of the royalties due to PENN under Section 3.1.3
hereof for such CALENDAR QUARTER, including, without limitation:

 

3.4.1.1             Gross consideration for SALES of
PENN LICENSED PRODUCTS, including all amounts invoiced, billed or received;

 

3.4.1.2             NET SALES of PENN LICENSED PRODUCTS
listed by country;

 

3.4.1.3             Monies spent directly for
development of PENN LICENSED PRODUCTS by COMPANY, its subsidiaries,
sublicensees, business partners and independent contractors in any given year
to be applied as a credit against the due diligence fees in Section 3.2.4;

 

3.4.1.4             Royalties owed to PENN, listed by
category, including, without limitation, earned, sublicensee-derived, and
minimum royalty categories; and

 

3.4.1.5             Minimum royalty amounts credited
against earned royalty payments.

 

3.4.2        COMPANY shall pay the royalties due
under Section 3.1.3 within forty-five (45) days following the last day of
each CALENDAR QUARTER in which the royalties accrue.  With royalties, COMPANY shall send the report
described in Section 3.4.1.

 

3.4.3        COMPANY shall maintain, and cause its
sublicensees to maintain, complete and accurate books and records which enable
the royalties payable under this AGREEMENT to be verified.  The records for each CALENDAR QUARTER shall
be maintained for three years after the submission of the report covering such
period, under Section 3.4.  Upon
reasonable prior notice to COMPANY, COMPANY shall provide PENN (or an
independent, certified public accounting firm selected by PENN and reasonably
acceptable to COMPANY) with access, during normal business hours, to all books
and records relating to the SALES of PENN LICENSED PRODUCTS by COMPANY and its
sublicensees to conduct a review or audit of those books and records solely for
purposes of verifying royalties paid or due under this AGREEMENT.  Access to COMPANY’s and sublicensee’s books
and records for the applicable period(s) shall be available at least once
each CALENDAR YEAR, during normal business hours, during the term of this
AGREEMENT and for three years after the expiration or termination of this
AGREEMENT.  If the audit is performed by
an independent, certified public accounting firm selected by PENN and
reasonably

 

9

 

acceptable
to COMPANY and such auditor determines that COMPANY has underpaid royalties by
five percent (5%) or more, then COMPANY shall pay the costs and expenses of
PENN and its accountants in connection with their review or audit, in addition
to such underpayment.

 

3.4.4                        PENN is
entitled to only one copy of any reports under this Section 3.4, and shall
distribute such reports or audit results only to such persons as may reasonably
require such reports or audit results in order for PENN to fulfill its obligations,
or enforce its rights, under this AGREEMENT.

 

3.5         Currency, Payment Method.

 

3.5.1                        All dollar
amounts referred to in this AGREEMENT are United States dollars.  All payments to PENN under this AGREEMENT
shall be made in United States dollars by check payable to “The Trustees of the
University of Pennsylvania.”  If COMPANY
receives revenues from SALES of PENN LICENSED 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.

 

3.5.2                        Amounts that
are not paid when due shall accrue interest from the due date until paid, at a
rate equal to one and one-half percent (1.5%) per month (or maximum allowed by
law, if less).

 

3.5.3                        COMPANY
shall pay all reasonable documented out-of-pocket expenses of PENN incurred
prior to November 1, 2001, including legal fees and expenses, in
connection with the negotiation of this AGREEMENT, the STOCK PURCHASE
AGREEMENT; provided, however, that the total amount of such out-of-pocket
expenses shall not exceed $5,000. 
COMPANY shall pay such expenses directly, within thirty (30) days of
presentment of invoices by PENN.  In the
event that COMPANY requests PENN to enter into additional agreements or
amendments related to the above documents, PENN and COMPANY shall agree upon
appropriate reimbursement before PENN incurs any out-of-pocket expenses.

 

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 

 

10

 

marked
confidential or, if oral, should be reduced to writing within two weeks 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 for the term of this Agreement and for five (5) years
thereafter.  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 received subject to
non-disclosure and non-use obligations, or 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;

 

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

 

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.

 

4.3         PENN shall not be
obligated to maintain any CONFIDENTIAL INFORMATION of COMPANY except for the
reports required in Sections 3.2.2, 3.2.3 and 3.4.  PENN shall use reasonable efforts not to
disclose those reports to any third party (subject to the exceptions of Section 4.2).  PENN bears no institutional responsibility
for maintaining the confidentiality of any other CONFIDENTIAL INFORMATION of
COMPANY.

 

5.                                       TERM AND
TERMINATION

 

5.1         This AGREEMENT, unless
sooner terminated as provided in this AGREEMENT, shall terminate upon the later
of: (a) expiration of the last-to-expire or become abandoned of the PENN
PATENT RIGHTS; or (b) twenty-five (25) years after the EFFECTIVE DATE.

 

11

 

5.2         COMPANY may terminate
this Agreement (a) upon ten (10)-days written notice to PENN, if PENN is
more than sixty (60) days late in paying any amounts payable to COMPANY under Section 2.4.3,
or if PENN breaches this AGREEMENT and does not cure the breach within sixty
(60) days after written notice of breach; (b) upon thirty (30)-days
written notice to PENN, if the sale or other exploitation of the PENN LICENSED
PRODUCT(s) becomes technologically or commercially unfeasible; or (c) upon
thirty (30)-days written notice to PENN, and by doing all of the following:

 

5.2.1                        ceasing to
make, have made, use, import, sell and offer for sale all PENN LICENSED
PRODUCTS; and

 

5.2.2                        terminating
all sublicenses relating to PENN LICENSED PRODUCTS, and causing all
sublicensees to cease making, having made, using, importing, selling and
offering for sale all PENN LICENSED PRODUCTS; and

 

5.2.3                        paying all
monies owed to PENN under this AGREEMENT.

 

5.3         PENN may terminate this
AGREEMENT, upon ten (10)-days written notice to COMPANY, if any of the
following events of default (“Default”) occur:

 

5.3.1                        COMPANY is
more than sixty (60) days late in paying to PENN royalties, expenses or any
other monies due under this AGREEMENT and COMPANY does not immediately pay PENN
in full any amounts due upon demand; or

 

5.3.2                        COMPANY
experiences a Trigger Event (defined below);

 

5.3.3                        COMPANY
materially breaches this AGREEMENT and does not cure the material breach within
sixty (60) days after written notice such material of the breach.

 

5.4         “Trigger Event” means any
of the following:

 

5.4.1                        An event of
default by COMPANY under the STOCK PURCHASE AGREEMENT or the SPONSORED RESEARCH
AGREEMENT (if any);

 

5.4.2                        If COMPANY:

 

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

 

5.4.2.2                         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

 

12

 

5.4.2.3                         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;

 

5.4.3                        If
proceedings under any United States law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release of debtors are
instituted or commenced by COMPANY;

 

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

 

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

 

5.4.6                        If COMPANY
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, or 5.4.5.

 

5.5         The provisions of
Sections 5.3 and 5.4 shall apply to a Default of, or a Trigger Event
experienced by, any sublicensee of COMPANY’s rights hereunder if and to the
extent that such Default of, or Trigger Event experienced by, the sublicensee
causes COMPANY 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 PENN (other than under
Sections 2.4.3 or 5.10) and all rights (but not duties) of COMPANY (other than
under Section 2.4.3 or 5.10) under this AGREEMENT immediately terminate
without the necessity of any action being taken either by PENN or by COMPANY,
provided, however, that in no event shall the foregoing be construed to
obligate COMPANY to pay any amounts accruing under Sections 3.1 or 3.3 after
the date of termination except under Section 5.9.  Upon and after any termination of this
AGREEMENT, COMPANY and any sublicensee thereof shall refrain from further
manufacture, sale, marketing, importation and/or distribution of PENN LICENSED
PRODUCT(s).

 

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, COMPANY 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 PENN LICENSED PRODUCT(s) on hand,
under the control of COMPANY or sublicensee(s) thereof; and (b) such PENN
LICENSED 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 reduced to writing. 
COMPANY shall deliver copies of such written inventories, verified 

 

13

 

by an officer of
COMPANY, forthwith to PENN.  PENN shall
have 45 days after receipt of such verified inventories within which to
challenge the inventory and request an audit thereof.  Upon five (5)-days written notice to COMPANY,
PENN and its agents shall be given access during normal business hours to the
premises of COMPANY, and/or sublicensees thereof for the purpose of conducting
an audit.  Upon the termination of this
AGREEMENT, COMPANY shall at its own expense forthwith remove, efface or destroy
all references to PENN from all advertising or other materials used in the
promotion of COMPANY’s business or the business of any sublicensee of COMPANY
and COMPANY and any sublicensee thereof shall not thereafter represent in any
manner that it has rights in or to the PENN PATENT RIGHTS or PENN LICENSED PRODUCT(s).

 

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

 

5.10  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, 8, 9 and 10 shall survive such termination.

 

6.                                       PATENT
MAINTENANCE AND REIMBURSEMENT

 

6.1         PENN and COMPANY shall
jointly control, prosecute and maintain the PENN PATENT RIGHTS during the term
of this AGREEMENT pursuant to the terms of a Client and Billing Agreement to be
(the “BILLING AGREEMENT”) appended hereto as Attachment 4 and to be entered
into promptly after the EFFECTIVE DATE hereof by COMPANY, PENN and the law firm
party thereto.

 

6.2         Unless otherwise
indicated in the Client and Billing Agreement, COMPANY shall reimburse PENN for
all reasonable documented attorneys fees, expenses, official fees and other
charges incident to the preparation, prosecution and maintenance of PENN PATENT
RIGHTS incurred by PENN after the EFFECTIVE DATE within thirty (30) days after
COMPANY’S receipt of invoices for such fees, expenses and charges.

 

6.3         Effective on the earlier
of the date on which COMPANY has raised equity investment capital of one
million dollars ($1,000,000) or June 30, 2002, COMPANY shall promptly
reimburse PENN for all documented attorneys fees, expenses, official fees and
other charges incident to the preparation, prosecution, and maintenance of PENN
PATENT RIGHTS incurred by PENN (either directly or by way of invoice from a
third party) prior to the EFFECTIVE DATE and not previously reimbursed to PENN
by COMPANY or a third party.

 

7.                                       INFRINGEMENT AND
LITIGATION

 

7.1         PENN and COMPANY are
responsible for notifying each other promptly of any known or suspected
infringement of PENN PATENT RIGHTS, which may come to their 

 

14

 

attention after
the EFFECTIVE DATE.  PENN and COMPANY
shall consult one another in a timely manner concerning an appropriate response
to the infringement.

 

7.2         COMPANY may prosecute
such infringement at its own expense. 
COMPANY shall not settle or compromise any such suit in a manner that
imposes any obligations or restrictions on PENN or grants any rights to the
PENN PATENT RIGHTS, without PENN’s prior written permission.  Financial recoveries from any such litigation
will first be applied to reimburse COMPANY for its litigation expenditures with
additional recoveries being paid to COMPANY, subject to lost royalty due PENN
based on such infringement.

 

7.3         COMPANY’s rights under Section 7.2
are subject to the continuing right of PENN to intervene at PENN’s own expense
and join COMPANY in any claim or suit for infringement of the PENN PATENT
RIGHTS.  Any consideration received by
PENN or COMPANY in settlement of any claim or suit shall be shared between PENN
and COMPANY in proportion with each party’s share of the litigation expenses
reasonably incurred in such infringement action.

 

7.4         If COMPANY fails to
prosecute any material infringement of PENN PATENT RIGHTS, PENN may prosecute
such material infringement at its own expense. 
In such event, financial recoveries will be entirely retained by PENN.

 

7.5         In any action to enforce
any of the PENN PATENT RIGHTS, either party, at the request and reasonable
expense of the other party, shall cooperate to the fullest extent reasonably
possible.  This provision shall not be
construed to require either party to undertake any activities, including legal
discovery, at the request of any third party except as may be required by
lawful process of a court of competent jurisdiction.

 

8.                                       REPRESENTATIONS
AND WARRANTIES OF PENN; DISCLAIMER OF ADDITIONAL WARRANTIES; INDEMNIFICATION

 

8.1         PENN represents and
warrants to COMPANY that to its KNOWLEDGE as of the date hereof:

 

8.1.1                        PENN has the
full authority to execute and deliver this AGREEMENT.

 

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

 

8.1.3                        No loss or
expiration of any part of the PENN PATENT RIGHTS is currently pending.

 

8.2         EXCEPT AS SET FORTH IN SECTION 8.1,
THE PENN PATENT RIGHTS,  PENN LICENSED
PRODUCTS AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT ARE PROVIDED ON
AN “AS IS” BASIS AND PENN MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, 

 

15

 

WITH RESPECT
THERETO.  BY WAY OF EXAMPLE, BUT NOT OF
LIMITATION, PENN MAKES NO REPRESENTATIONS OR WARRANTIES (i) OF COMMERCIAL
UTILITY; (ii) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; OR (iii) THAT
THE USE OF THE PENN PATENT RIGHTS, PENN LICENSED PRODUCTS OR ALL OTHER
TECHNOLOGY LICENSED UNDER THIS AGREEMENT WILL NOT INFRINGE ANY PATENT,
COPYRIGHT, TRADE SECRET OR TRADEMARK OR OTHER PROPRIETARY RIGHTS OF
OTHERS.  PENN SHALL NOT BE LIABLE TO
COMPANY, COMPANY’S SUCCESSORS OR ASSIGNS OR ANY THIRD PARTY WITH RESPECT TO:
ANY CLAIM ARISING FROM USE OF THE PENN PATENT RIGHTS, PENN LICENSED PRODUCTS
AND ALL OTHER TECHNOLOGY LICENSED UNDER THIS AGREEMENT OR FROM THE MANUFACTURE,
USE OR SALE OF PENN LICENSED PRODUCTS; OR ANY CLAIM FOR LOSS OF PROFITS, LOSS
OR INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES
OF ANY KIND.

 

8.3         COMPANY shall defend,
indemnify and hold harmless PENN, its trustees, officers, agents and employees
(individually, an “Indemnified Party”, and collectively, the “Indemnified
Parties”), from and against any and all liability, loss, damage, action, claim
or expense suffered or incurred by the Indemnified Parties (including attorney’s
fees and expenses) (individually, a “Liability”, and collectively, the “Liabilities”)
that results from or arises out of:  (a) the
development, use, manufacture, promotion, sale or other disposition of any PENN
PATENT RIGHTS or PENN LICENSED PRODUCTS by COMPANY, its assignees,
sublicensees, vendors or other third parties; (b) any breach by COMPANY of
this AGREEMENT; and (c) the enforcement by an Indemnified Party of this
Section.  Without limiting the foregoing,
COMPANY shall defend, indemnify and hold harmless the Indemnified Parties from
and against any Liabilities resulting from:

 

8.3.1                        any product
liability or other claim of any kind related to the use by a third party of a
PENN LICENSED PRODUCT that was manufactured, sold or otherwise disposed by
COMPANY, its assignees, sublicensees, or agents, other than such Liabilities
arising from or related to the inaccuracy of any representation or warranty of
PENN in Section 8.1 of this AGREEMENT; and

 

8.3.2                        a claim by a
third party that the PENN PATENT RIGHTS or the design, composition,
manufacture, use, sale, or other disposition of any PENN LICENSED PRODUCT
infringes or violates any patent, copyright, trademark or other intellectual
property rights of such third party, except to the extent that any such claim
may relate to the inaccuracy of any representation or warranty in Section 8.1;
and

 

8.3.3                        clinical
trials or studies conducted by or on behalf of COMPANY and/or its sublicensees
relating to the PENN LICENSED PRODUCTS, including, without limitation, any
claim by or on behalf of a human subject of any such clinical trial or study.

 

16

 

8.4         COMPANY is not permitted
to settle or compromise any claim or action giving rise to Liabilities in a
manner that imposes any restrictions or obligations on PENN or grants any
rights to the PENN PATENT RIGHTS or PENN LICENSED PRODUCTS without PENN’s prior
written consent.  If COMPANY fails or
declines to assume the defense of any such claim or action within thirty (30)
days after notice thereof, PENN may assume the defense of such claim or action
for the account and at the risk of COMPANY, and any Liabilities related thereto
shall be conclusively deemed a liability of COMPANY.  The indemnification rights of the parties or
any other Indemnified Party contained herein are in addition to all other
rights which the parties or such Indemnified Party may have at law or in equity
or otherwise.

 

8.5         Insurance

 

8.5.1                        COMPANY
shall procure and maintain a policy or policies of comprehensive general
liability insurance, including broad form and contractual liability, in a
minimum amount of $2,000,000 combined single limit per occurrence and in the
aggregate, as respects personal injury, bodily injury and property damage
arising out of COMPANY’s performance under this AGREEMENT.

 

8.5.2                        COMPANY
shall, upon commencement of clinical trials involving PENN LICENSED PRODUCTS,
procure and maintain a policy or policies of product liability insurance in a
minimum amount of $3,000,000 combined single limit per occurrence and in the
aggregate as respects bodily injury and property damage arising out of COMPANY’s
performance of this AGREEMENT.

 

8.5.3                        The policy
or policies of insurance described in this Section 8.5 shall be issued by
a recognized insurance carrier with an A.M. Best rating of “A” or better
and shall name PENN as an additional insured with respect to COMPANY’s
performance of this AGREEMENT.  COMPANY
shall provide PENN with certificates evidencing the insurance coverage required
herein and all subsequent renewals thereof. 
Such certificates shall provide that COMPANY’s insurance carrier(s) notify
PENN in writing at least 30 days prior to cancellation or material change in
coverage.

 

8.6         PENN may periodically
review the adequacy of the minimum limits of liability insurance specified in Section 8.5
and PENN reserves the right to require COMPANY to adjust the liability
insurance coverages. The specified minimum insurance amounts do not constitute
a limitation on COMPANY’s obligation to indemnify PENN under this AGREEMENT.

 

9.                                       USE OF PENN’S
NAME

 

9.1         COMPANY and its employees
and agents shall not use and COMPANY shall not permit its sublicensees to use
PENN’s name or any adaptation thereof, or any PENN seal, logotype, trademark,
or service mark, or the name, mark, or logotype of any PENN representative or
organization in any way without the prior written consent of PENN.

 

17

 

10.                                 ADDITIONAL PROVISIONS

 

10.1                 Nothing in this
AGREEMENT shall be deemed to establish a relationship of principal and agent
between PENN and COMPANY, 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.

 

10.2                 COMPANY is not
permitted to assign this AGREEMENT or any part of it to any person or entity
other than an AFFILIATE of COMPANY, either directly or by operation of law,
without the prior written consent of PENN in its sole discretion.  Any prohibited assignment of this AGREEMENT
or the rights hereunder shall be null and void. 
No assignment relieves COMPANY of responsibility for the performance of
any accrued obligations, which it has prior to such assignment.

 

10.3                 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.

 

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

 

	
  If for PENN:

  	
  with a copy to:

  
	
   

  	
   

  
	
  University of
  Pennsylvania

  	
  Office of General
  Counsel

  
	
  Center for Technology Transfer

  	
  University of Pennsylvania

  
	
  3700 Market Street, Suite 300

  	
  133 South 36th Street, Suite 300

  
	
  Philadelphia, PA 19104-3147

  	
  Philadelphia, PA 19104-3246

  
	
  Attention: Managing Director

  	
  Attention: General Counsel

  
	
   

  	
   

  
	
  If for COMPANY:

  	
  with a copy to:

  
	
   

  	
   

  
	
  Viral Genomix, Inc.

  	
  Morgan, Lewis & Bockius LLP

  
	
  3600 Market Street, Suite 100

  	
  1701 Market Street

  
	
  Philadelphia, PA 19104-2642

  	
  Philadelphia, PA 19103-2921

  
	
  Attention: Chief Executive Officer

  	
  Attention:Gary Smith

  

 

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

 

10.5                 This AGREEMENT
shall be construed and governed in accordance with the laws of the Commonwealth
of Pennsylvania, 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 

 

18

 

jurisdiction of
and venue in the courts located in the Eastern District of the Commonwealth of
Pennsylvania with respect to any and all disputes concerning the subject of
this AGREEMENT.

 

10.6                 PENN and COMPANY
shall not discriminate against any employee or applicant for employment because
of race, color, sex, sexual or affectional preference, age, religion, national
or ethnic origin, handicap, or because he or she is a disabled veteran or a
veteran of the Vietnam Era.

 

10.7                 COMPANY 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.  The transfer of certain
technical data and commodities may require a license from the cognizant agency
of the United States Government and/or written assurances by COMPANY that
COMPANY shall not export data or commodities to certain foreign countries without
prior approval of such agency.  PENN
neither represents that a license is not required nor that, if required, it
will issue.

 

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

 

10.9                 This AGREEMENT,
the STOCK PURCHASE AGREEMENT, and the CLIENT BILLING AGREEMENT embody the
entire agreement and understanding among the parties hereto and thereto and
supersede all prior agreements and understandings relating to the subject
matter.  This AGREEMENT may not be
changed, modified, extended or terminated except by written amendment executed
by an authorized representative of each party. 
The EXCLUSIVE NEGOTIATION AGREEMENT, effective as of May 1, 2001,
by and between PENN and COMPANY is hereby terminated as of the EFFECTIVE DATE
referenced above, and shall be of no further force or effect.

 

19

 

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

 

	
  THE TRUSTEES OF THE UNIVERSITY

  	
   

  	
   

  
	
  OF PENNSYLVANIA

  	
   

  	
  VIRAL GENOMIX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Louis P. Berneman

  	
   

  	
  By:

  	
   /s/ J. Joseph Kim

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   Louis P. Berneman

  	
   

  	
  Name:

  	
   J. Joseph Kim

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   Managing Director, CTT

  	
   

  	
  Title:

  	
   CEO/President

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   11/5/01

  	
   

  	
  Date:

  	
    Nov 5, 2001

  
										

 

 

20

 

First Amendment

to the License Agreement
between

Viral Genomix, Inc.

and

The Trustees of the
University of Pennsylvania

 

This First
Amendment (this “AMENDMENT A”) to the License Agreement between Viral Genomix, Inc.
(“COMPANY”) and The Trustees of the University of Pennsylvania (“PENN”) is made
effective by the parties on August 15, 2005 (the “AMENDMENT A EFFECTIVE
DATE”).

 

RECITALS

 

WHEREAS, PENN and
COMPANY entered into a License Agreement (the “AGREEMENT”) effective as of November 5,
2001.  Pursuant to the terms and conditions
of the AGREEMENT, PENN granted to COMPANY an exclusive, worldwide right and
license, with the right to grant sublicenses, to make, have made, use and sell
PENN LICENSED PRODUCT(S).  In
consideration of this exclusive license granted, COMPANY issued to PENN stock of COMPANY, and agreed to pay to
PENN royalties based on the NET SALES of PENN LICENSED PRODUCTS.

 

WHEREAS PENN and
COMPANY desire to amend certain provisions of the AGREEMENT.

 

NOW, THEREFORE,
the parties agree as follows:

 

1.                                       Unless
otherwise defined in this AMENDMENT A, all capitalized terms shall have the
same meaning as set forth in the AGREEMENT.

 

2.                                       As of the AMENDMENT A EFFECTIVE DATE, Section 3.1.3
of the AGREEMENT is superceded with a new Section 3.1.3 to read in full as
follows:

 

3.1.3                        In further consideration of the
exclusive license granted to COMPANY, COMPANY shall pay to PENN, on a quarterly
basis, a royalty on the NET SALES of each PENN LICENSED PRODUCT which is sold
by COMPANY and any sublicensee(s), agent(s), and/or independent contractor(s) of
COMPANY.  If the PENN LICENSED PRODUCT is
Mifepristone
for the treatment and/or prevention of HIV , then COMPANY shall pay to
PENN a royalty of ****** on the NET SALES of such PENN LICENSED PRODUCT.  COMPANY shall pay to PENN a royalty of ******
on the NET SALES of all other PENN LICENSED PRODUCTS.  In determining the earned royalty payment, if
any, to be made by COMPANY at the end of any CALENDAR QUARTER following first
SALE of a PENN LICENSED PRODUCT, one-quarter of the minimum royalty paid at the
beginning of the CALENDAR YEAR with respect to such PENN LICENSED PRODUCT shall
be subtracted from the earned royalties otherwise payable for the CALENDAR
QUARTER, and COMPANY shall owe the difference, if any.  Such royalty payments shall terminate on a
product-by-product and country-by-country basis upon the later of (a) the
date which is ten (10) years after the date of the first 

 

 

SALE of such PENN LICENSED PRODUCT in such country,
and (b) in any country in which patent rights exist for any PENN LICENSED
PRODUCT, the date of expiration of the last-to-expire patent in such country,
within the definition of PENN PATENT RIGHTS, with a valid claim covering the
PENN LICENSED PRODUCT.

 

3.                                       As of the AMENDMENT A EFFECTIVE DATE, Section 3.2.5
of the AGREEMENT is superceded with a new Section 3.2.5 to read in full as
follows:

 

3.2.5                        The following milestone
payments are payable by COMPANY to PENN within sixty (60) days after the
achievement of the respective milestone event:

 

	
  Event

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Filing of an IND APPLICATION for the first PENN
  LICENSED PRODUCT

  	
   

  	
  $

  	
  250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Enrollment of
  the first patient in PHASE III CLINICAL TRIALS for the first PENN LICENSED
  PRODUCT

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Filing of an NDA for the first PENN LICENSED PRODUCT

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First anniversary of such filing

  	
   

  	
  $

  	
  500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Receipt of an NDA approval letter for the first PENN
  LICENSED PRODUCT

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First anniversary of such receipt

  	
   

  	
  $

  	
  1,500,000

  	
   

  

 

4.                                       As of the AMENDMENT A EFFECTIVE DATE, Section 10.4
of the AGREEMENT is superceded with a new Section 10.4 to read in full as
follows:

 

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

 

	
  If for PENN:

  	
  with a copy to:

  
	
   

  	
   

  
	
  University of Pennsylvania

  	
  Office of General Counsel

  
	
  Center for Technology Transfer

  	
  University of Pennsylvania

  
	
  3160 Chestnut Street, Suite 200

  	
  133 South 36th Street, Suite 300

  
	
  Philadelphia, PA 19104-6283

  	
  Philadelphia, PA 19104-3246

  
	
  Attention: Managing Director

  	
  Attention: General Counsel

  

 

 

	
  If for COMPANY:

  	
  with a copy to:

  
	
   

  	
   

  
	
  Viral Genomix, Inc.

  	
  Duane Morris LLP

  
	
  450 Sentry Parkway

  	
  One Liberty Place

  
	
  Blue Bell, PA 19422

  	
  Philadelphia, PA 19103-7396

  
	
  Attention: 
  Chief Executive Officer

  	
  Attention: 
  Kathleen M. Shay

  

 

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

 

5. As of
the AMENDMENT A EFFECTIVE DATE, Section 10.9 of the AGREEMENT is
superceded with a new Section 10.9 to read in full as follows:

 

10.9                           This
AGREEMENT, AMENDMENT A, the STOCK PURCHASE AGREEMENT, and the CLIENT BILLING
AGREEMENT embody the entire agreement and understanding among the parties
hereto and thereto and supersede all prior agreements and understandings
related to the subject matter.  This
AGREEMENT may not be changed, modified, extended or terminated except by
written amendment executed by an authorized representative of each party.  The EXCLUSIVE NEGOTIATION AGREEMENT,
effective as of May 1, 2001, by and between PENN and COMPANY is hereby
terminated as of the EFFECTIVE DATE referenced above, and shall be of no
further force or effect.

 

IN WITNESS THEREOF, the parties have executed this
AMENDMENT A through their duly authorized representatives as set forth below,
and this AMENDMENT A shall be attached to, and shall become a part of, the
AGREEMENT between the parties.

 

 

	
  THE TRUSTEES OF THE

  	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
  UNIVERSITY OF PENNSYLVANIA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
      /s/ Perry B. Molinoff

  	
   

  	
  By:

  	
      /s/ J. Joseph Kim

  
	
  Perry B. Molinoff, M.D.

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
  Vice Provost for Research

  	
   

  	
  President & Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Date:

  	
      11 OCT 2005

  	
   

  	
  Date:

  	
      8/4/05

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]