Document:

EXHIBIT 10.11

    ADDENDUM TO CONVERTIBLE DEBENTURE AND WARRANT TO PURCHASE COMMON STOCK

This Addendum to Convertible Debenture and Warrant to Purchase Common Stock
("Addendum") is entered into as of the 26th  day of June 2008 by and between
Invicta Group, Inc., a Nevada corporation, and any successor or resulting
corporation by way of merger, consolidation, sale or exchange of all or
substantially all of the assets of Invicta Group, Inc. or otherwise
("Invicta"), City Book Savings a division of IMAGE Wolrdwide, Inc.,  a
Colorado corporation ("IMAGE"), Golden Gate Investors, Inc., a California
corporation ("GGI"), Paul Sorkin, an individual ("Sorkin"), David Scott, an
individual ("Scott") and Bill Forhan, an individual ("Forhan").  Invicta,
IMAGE, GGI, Sorkin, Scott and Forhan will sometimes be referred to
individually as a "Party," or collectively as the "Parties" in this Addendum.

WHEREAS, GGI and Invicta are parties to that certain 7 3/4 % Convertible
Debenture dated as of April 27, 2004, as amended ("Debenture");

WHEREAS, GGI and Invicta are parties to that certain Warrant to Purchase
Common Stock dated as of April 27, 2004, as amended ("Warrant");

WHEREAS, GGI has previously advanced a sum equal to $208,034 (the "Prior
Advance") to Invicta as a prepayment towards the exercise of the Warrant
Shares (as defined in the Warrant) under the Warrant;

WHEREAS, $151,295 of the principal balance of the Debenture remains
outstanding (the "Outstanding Principal Balance");

WHEREAS, each of Scott and Forhan have previously entered into certain
personal guarantees issued to GGI in connection with the Transaction Documents
(as defined below) (the "Prior Guarantees"); and

WHEREAS, the parties desire to amend the Debenture and Warrant in certain
respects.

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Invicta and GGI agree as
follows:

1.	The Recitals set forth above are an integral part of this Agreement, and
shall be used in any interpretation of this Agreement.  All capitalized terms
used and not defined herein have the respective meanings assigned to them in
the Debenture.

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2.	The Maturity Date of the Debenture is hereby extended to July 1, 2010.

3.	The Expiration Date (as defined in the Warrant) of the Warrant is hereby
extended to July 1, 2010.
4.	Each of the Parties acknowledge and agree that (i) the amount of the
Prior Advance previously advanced by GGI to Invicta as a prepayment towards
the exercise of the Warrant Shares under the Warrant and currently outstanding
is equal to $208,034, and (ii) the Outstanding Principal Balance of the
Debenture is equal to $151,295, and that accrued and unpaid interest thereon
to date equals $36,800, with the aggregate amount currently owed under the
Debenture to GGI equal to $188,095.

5.	Upon receipt of a fully executed copy of each of this Addendum and the
Guaranty (as defined below), GGI shall deliver an aggregate of $75,000 in cash
to Invicta (such amount referred to herein as the "First GGI Prepayment").  In
addition, 30 calendar days after the date hereof (provided that if such date
falls on a weekend or national holiday, such payment shall be made on the
following business day) GGI shall prepay to Invicta the aggregate sum of
$37,000 in cash (the "Second GGI Prepayment," collectively with the Prior
Advance and the First GGI Prepayment, to the extent any such payments are
actually delivered by GGI to Invicta, the "GGI Prepayments").  The GGI
Prepayments shall represent a prepayment towards the future exercise of
Warrant Shares under the Warrant.  The timing of the application of the
prepaid funds represented by the GGI Prepayments to any exercise of Warrant
Shares under the Warrant shall be at GGI's sole and absolute discretion.  The
application of any portion of the GGI Prepayments to the exercise of Warrant
Shares under the Warrant shall be applied in the order that the GGI
Prepayments were paid by GGI to Invicta, such that the first exercises of the
Warrant Shares shall be applied against the Prior Advance until all of the
Prior Advance is so accounted for, thereafter, exercises of the Warrant Shares
shall be applied against the First GGI Prepayment until all of the First GGI
Prepayment is so accounted for, and thereafter exercises of the Warrant Shares
shall be applied against the Second GGI Prepayment until all of the Second GGI
Prepayment is so accounted for.  Notwithstanding the foregoing, no more than
75% of the aggregate exercise price of any exercise effected by GGI under the
Warrant after the date hereof shall be paid for by the application of the GGI
Prepayments to such exercise (the exact amount of the GGI Prepayments, up to
such 75% amount, shall be determined in the sole and absolute discretion of
GGI); the remainder of the exercise price of any exercise under the Warrant so
effected by GGI after the date hereof shall be paid for by the payment
therefor in cash or other readily available funds by GGI.

6.	In the event that any portion of the GGI Prepayments remain outstanding
and not applied to the exercise of Warrant Shares by GGI under the Warrant
(including any portion of the GGI Prepayments for which Warrant Shares have
not been delivered to GGI upon an

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                                       14
<page>
exercise by GGI under the Warrant) upon or after the date that is six months
from the date of this Addendum, Invicta shall, upon written request from GGI,
refund all such outstanding amounts of the GGI Prepayments to GGI via wire
transfer within three days from the date of GGI's delivery to Invicta of the
written request of such refund.

7.	For so long as any portion of the GGI Prepayments remains outstanding
and not otherwise applied to the purchase of Warrant Shares by GGI, Invicta
shall not prepay or otherwise redeem or cancel the Debenture without the prior
written consent of GGI.

8.	As a condition precedent to GGI's obligation to deliver the GGI
Prepayments set forth in Section 5 of this Addendum to Invicta, Paul Sorkin
shall execute and deliver to GGI the Continuing Personal Guaranty (the
"Guaranty") attached hereto as Exhibit A.

9.	This Addendum may be executed in counterparts, each of which when so
executed and delivered shall be an original, but both of which counterparts
shall together constitute one and the same instrument.  A facsimile
transmission of this signed Addendum shall be legal and binding on both
parties hereto.

10.	Invicta hereby covenants and agrees to not refuse or prepay any
Conversion (as defined in the Debenture) submitted by GGI to Invicta pursuant
to a Conversion Notice (as defined in the Debenture) under the Debenture
associated with the corresponding exercise of Warrant Shares through the
application of the applicable amount of the GGI Prepayments due to the then
current value of the Volume Weighted Average Price (as defined below), as set
forth in Section 3.1 of the Debenture, or for any other reason,.  Without
limiting, and in addition to, any other remedy or claim for damages that may
be available to GGI, in the event that Invicta does not honor such Conversion
Notice within five (5) Business Days after Invicta's receipt of such
Conversion Notice, the amount of the GGI Prepayments that has not previously
been applied to the exercise of Warrant Shares by GGI shall become immediately
due and payable by Invicta to GGI.  As used in the Debenture, the Warrant and
in this Addendum, "Volume Weighted Average Price" per Common Share means the
volume weighted average price of the Common Shares during any Trading Day as
reported on the NASDAQ OTCBB; provided that, if such security is not listed or
admitted to trading on the NASDAQ OTCBB, as reported on the principal national
security exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the volume
weighted average price of the Common Shares during any Trading Day on the
over-the-counter market as reported by Bloomberg LP or a similar generally
accepted reporting service, as the case may be.

11.	In the event that each of Invicta, Scott, Forhan and Sorkin have timely
fulfilled their respective obligations under this Addendum and the Transaction
Documents (as defined below) through the date that is the 45 day anniversary
from the date hereof, then each of

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GGI, Forhan and Scott shall each release each other from any duties,
liabilities or obligations under the Prior Guarantees.

12.	Section 2.5 of the Warrant is hereby added to read as follows:

"2.5	Certain Exercise Limits.	The Company shall not effect any exercise
of this Warrant, and Holder shall not have the right to exercise any portion
of this Warrant, to the extent that after giving effect to the exercise, as
set forth on the applicable Warrant Notice of Exercise, such Holder (together
with such Holder's Affiliates, and any other person or entity acting as a
group together with such Holder or any of such Holder's Affiliates) would
beneficially own in excess of the Beneficial Ownership Limitation (as defined
below).  For purposes of the foregoing sentence, the number of shares of the
Company's Common Stock (the "Common Stock") beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock which are
issuable upon (A) exercise of the remaining, unexercised amount of this
Warrant beneficially owned by such Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including, without limitation,
any other debentures or warrants to purchase shares of the Company's Common
Stock) beneficially owned by such Holder or any of its Affiliates.  Except as
set forth in the preceding sentence, for purposes of this Section 2.5,
beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act").  To the extent that the
limitation contained in this Section 2.5 applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by such
Holder together with any Affiliates) and of which amount of this Warrant is
exercisable shall be in the sole discretion of such Holder, and the submission
of a Warrant Notice of Exercise shall be deemed to be such Holder's
determination of whether this Warrant may be exercised (in relation to other
securities owned by such Holder together with any Affiliates) and which amount
of this Warrant is exercisable, in each case subject to such aggregate
percentage limitations.  To ensure compliance with this restriction, Holder
will be deemed to represent to the Company each time it delivers a Warrant
Notice of Exercise that such Warrant Notice of Exercise has not violated the
restrictions set forth in this paragraph and the Company shall have no
obligation to verify or confirm the accuracy of such determination.  In
addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder.  For purposes of this Section
2.5, in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock provided to the
Holder in writing by the Company after Holder makes such request or in the
event that

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Initials   Initials
                                       16
<page>
the Company files, any of the following with the United States Securities and
Exchange Commission, the most recent of the following: (A) the Company's most
recent Form 10-QSB or Form 10-KSB, as the case may be, or such successor
filings of the Company (B) a more recent public announcement by the Company;
or (C) a more recent notice by the Company or the Company's transfer agent
setting forth the number of shares of Common Stock outstanding.  Upon the
written or oral request of a Holder, the Company shall within two Trading Days
(as defined below) confirm orally and in writing to such Holder the number of
shares of Common Stock then outstanding on the records of the Company as of
the date of the request.  In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Warrant, by such Holder
or its Affiliates since the date as of which such number of outstanding shares
of Common Stock was reported.  The "Beneficial Ownership Limitation" shall be
4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant held by the Holder.  The Beneficial Ownership
Limitation provisions of this Section 2.5 may be waived by such Holder, at the
election of such Holder, upon not less than 61 days' prior notice to the
Company, to, at the sole discretion of the Holder, either change the
Beneficial Ownership Limitation to (i) 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of the Warrant held by the Holder and the
provisions of this Section 2.5 shall continue to apply, or (ii) remove any
Beneficial Ownership Limitation under this Warrant.  The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2.5 to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such
limitation.  If any court of competent jurisdiction shall determine that the
foregoing limitation is ineffective to prevent a Holder from being deemed the
beneficial owner of more than 9.99% of the then outstanding shares of Common
Stock, then the Holder shall not have the right to exercise such portion of
this Warrant as shall cause such Holder not to be deemed the beneficial owner
of more than 9.99% of the then outstanding shares of Common Stock.  Upon such
determination by a court of competent jurisdiction, the Holder shall have no
interest in or rights under such portion of the Warrant.  The limitations
contained in this paragraph shall apply to a successor holder of this Warrant.
For purposes of this Section, "Affiliate" means any individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind (a "Person") that, directly
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with a Person, as such terms are used in and
construed under Rule 144 under the Securities Act of 1933, as amended.  For
purposes of this Section, "Trading Day" means any day on which (i) purchases
and sales of securities on the principal national security

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                                       17
<page>
exchange or quotation system on which the Common Stock are traded are reported
thereon, or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, as reported by Bloomberg LP or a
similar generally accepted reporting service, as the case may be, (ii) at
least one bid for the trading of Common Stock is reported and (iii) no event
that results in a material suspension or limitation of trading of the Common
Stock occurs."

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

If to GGI, to:
Golden Gate Investors, Inc.
1150 Silverado Street, Suite 220
La Jolla, California 92037
Telephone:	858-551-8789
Facsimile:	858-551-8779

If to Invicta, to:
2400 East Commercial Blvd. Suite 618
Ft. Lauderdale, FL 33308
Telephone:	954-771-0650
Facsimile:	954-771-1115

If to IMAGE, to:
111 West Maple Street, Suite 1101
Chicago, IL 60610
Telephone:	866-210-4671
Facsimile:	312-202-0991

If to Sorkin, to
Paul Sorkin
111 W. Maple St # 1102
Chicago, IL 60610
Telephone:	312-498-7780
Facsimile:	312-202-0991

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                                       18
<page>
If to Scott, to
David Scott

__________________________

__________________________

Telephone:	_______________

Facsimile:	_______________

If to Forhan, to
Bill Forhan

__________________________

__________________________

Telephone:	_______________

Facsimile:	_______________

Any of the Parties may change their foregoing address by notice given pursuant
to this Section 13.

14.	This Addendum, the Debenture, the Warrant and the Securities Purchase
Agreement dated as of April 27, 2004 between GGI and Invicta (the "Purchase
Agreement," collectively with the Debenture and the Warrant, each as amended,
the "Transaction Documents") each constitute a legal, valid and binding
obligation of Invicta and any successor or resulting corporation by way of
merger, consolidation, sale or exchange of all or substantially all of the
assets of Invicta or otherwise, each enforceable in accordance with its
respective terms.

                 [Remainder of Page Intentionally Left Blank]

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15.	Except as specifically amended herein, all other terms and conditions of
the Transaction Documents shall remain in full force and effect.

IN WITNESS WHEREOF, Invicta and GGI have caused this Addendum to be signed by
its duly authorized officers on the date first set forth above.

Invicta Group, Inc.			Golden Gate Investors,
Inc.

By: __________________________		By: __________________________

Name: _______________________		Name: ________________________

Title: ________________________		Title: ________________________

IMAGE

By: __________________________

Name: _______________________

Title: ________________________

_____________________________
Paul Sorkin

_____________________________
David Scott

_____________________________
Bill Forhan

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<page>
                                   EXHIBIT A

                         CONTINUING PERSONAL GUARANTY

THIS CONTINUING GUARANTY ("Guaranty") is entered into as of June 26th, 2008,
by Paul Sorkin (the "Guarantor") in favor of Golden Gate Investors, Inc.
("GGI") with reference to the following:

WHEREAS, Guarantor is a shareholder and/or officer of Invicta Group, Inc., a
Nevada corporation ("Invicta");

WHEREAS, as used in this Guaranty, the term "Invicta" shall mean Invicta
Group, Inc. and any successor or resulting corporation by way of merger,
consolidation, sale or exchange of all or substantially all of the assets of
Invicta Group, Inc. or otherwise;

WHEREAS, GGI, Invicta and the parties listed on the signature pages thereto
are parties to that certain Addendum to Convertible Debenture and Warrant to
Purchase Common Stock dated as of June 26th, 2008, (the "Addendum") pursuant
to which GGI advanced certain sums as prepayment of potential warrant
exercises under the Warrant (as defined in the Addendum); and

WHEREAS, a material inducement to GGI in entering into the Addendum was the
issuance of a satisfactory guaranty of Invicta's obligations under the
Agreements.

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, in consideration of GGI entering into the Addendum, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantor agrees to guaranty the Guarantied
Obligations (as hereinafter defined) in accordance with the following terms
and conditions:

Guarantor hereby unconditionally and irrevocably guaranties the performance of
Invicta's obligations under the Addendum in connection with Invicta's
obligation to repay any of the First GGI Prepayment and the Second GGI
Prepayment (each as defined in the Addendum) up to a maximum amount of
$112,000, in favor of GGI, each of its affiliates, assigns and successors in
interest, and each of their respective shareholders, directors, officers,
employees, agents, attorneys and representative, arising under or with respect
to the Agreements (the "Guarantied Obligations"), when the same shall become
due (including amounts that would become due but for the operation of the
automatic stay under section 362(a) of the Bankruptcy Code, 11 U.S.C. Sec 101
et seq.) and agrees to pay any and all costs and expenses (including
attorneys' fees and disbursements) incurred by GGI in enforcing any rights
under this Guaranty.  This Guaranty shall terminate upon the application of
all of each of the First GGI Prepayment and the Second GGI Prepayment towards
the exercise of Warrant Shares (as defined in the Warrant) and the delivery to
GGI of such Warrant Shares under the Warrant, the exercise and timing of which
shall be at GGI's sole discretion and subject to the terms of the Addendum.

In furtherance of the foregoing and not in limitation of any other right which
GGI may have at law or in equity against Guarantor by virtue hereof, upon the
failure of Invicta to perform any of the Guarantied Obligations when and as
the same become due, as aforesaid, Guarantor will, within ten (10) days after
written demand therefor, perform all Guarantied Obligations then

<page>
due to GGI, including, without limitation, the payment to GGI of the lesser of
(i) $112,000, or (ii) such portion of the First GGI Prepayment and the Second
GGI Prepayment that has been paid by GGI to Invicta but has not been applied
to the exercise by GGI of the Warrant Shares under the Warrant (provided that
GGI has actually received such Warrant Shares), the exercise and timing of
which shall be at GGI's sole discretion.

Guarantor further agrees that this Guaranty constitutes a guaranty of
performance and payment when due and not merely of collection.  The
obligations of Guarantor under this Guaranty shall not be subject to any
reduction, limitation, defense, setoff, recoupment, impairment or termination
for any reason, including, without limitation, by reason of the invalidity,
illegality or unenforceability of any of the Guarantied Obligations or any
discharge of Invicta from any of the Guarantied Obligations in a bankruptcy or
similar proceeding or otherwise.  Without limiting the generality of the
foregoing, the obligations of Guarantor under this Guaranty shall not be
discharged or impaired or otherwise affected by any default, failure or delay
or by any other act or thing or omission or delay to do any other act or thing
that may or might in any manner or to any extent vary the risk of Guarantor or
which would otherwise operate as a discharge of Guarantor as a matter of law
or equity.  This Guaranty shall remain in full force and effect without regard
to any future event, including, without limitation, the bankruptcy,
insolvency, reorganization, dissolution or liquidation of Invicta.

Guarantor agrees that the Guarantied Obligations may be rescinded, waived,
extended, renewed or altered, in whole or in part, without notice or further
assent from Guarantor, and that Guarantor will remain bound by this Guaranty
notwithstanding any such rescission, waiver, extension, renewal or alteration
of any Guarantied Obligation.

Guarantor hereby waives (i) all presentments, demands for performance, notices
of nonperformance, protest, notices of protest, notices of dishonor, notices
of acceptance of this Guaranty, and notices of nonpayment; and (ii) any and
all rights, defenses and benefits arising under California Civil Code Sections
2809, 2810, 2819, 2839, 2845, 2847, 2848, 2849, 2850, 2899 and 3433, and all
other rights, defenses and benefits limiting the liability of or exonerating
guarantors or sureties offered by law as well as the benefits of Sections
580a-580d and 726 of the California Code of Civil Procedure.  The obligations
of Guarantor under this Guaranty shall not be affected by (i) the failure of
GGI to assert any claim or demand or to enforce any right or remedy against
Invicta under the provisions of the Addendum or any agreements between GGI and
Invicta, including, without limitation, the failure of GGI to proceed first
against Invicta or to pursue any other remedy in GGI's power; (ii) GGI
settling, releasing, compromising, collecting or otherwise liquidating the
Guarantied Obligations in any manner, as GGI may determine; (iii) the failure
of GGI to assert or take advantage of the defense of the statute of
limitations in any action hereunder; (iv) the failure of GGI to exercise any
right or remedy against Invicta with respect to the Guarantied Obligations or
any provision of the Addendum or any agreements between GGI and Invicta.

Guarantor acknowledges that all of the waivers and consents set forth herein
are freely granted, after consultation with competent counsel, since it is
Guarantor's purpose and intent that

                                       2
<page>
all of Guarantor's obligations hereunder be absolute, independent and
unconditional under any and all circumstances.  Guarantor hereby represents
and warrants to GGI that Guarantor has the power, right and authority to enter
into this Guaranty.  This Guaranty shall be binding upon Guarantor and each of
his personal representatives, successors and assigns and shall inure to the
benefit of GGI and its successors and assigns.  This Guaranty may be executed
by facsimile, with such facsimile copy to serve as a duly executed original
and as conclusive evidence of the consent and ratification of the matters
contained herein by Guarantor.

This Guaranty shall be governed by, and construed and enforced in accordance
with, the laws of the State of California.

All judicial proceedings brought against Guarantor with respect to this
Guaranty may be brought in any state or federal court of competent
jurisdiction in San Diego, California, and by execution and delivery of this
Guaranty, Guarantor accepts the nonexclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Guaranty.

All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given (i) upon personal delivery to the party notified,
(ii) three days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, return receipt requested, (iii)
one day after deposit with a nationally recognized overnight courier service
such as Federal Express or (iv) on the day of facsimile transmission, with
confirmed transmission; in any case addressed to the party to be notified at
the address indicated below for that party, or at such other address as that
party may indicate by providing ten (10) days' advance written notice to the
other parties:

(a)	If to Golden Gate Investors, Inc., to:

Golden Gate Investors, Inc.
1150 Silverado Street, Suite 220
La Jolla, California 92037
Facsimile:  858-551-8779

(b)	If to Guarantor:

Paul Sorkin
111 W. Maple St # 1102
Chicago, IL 60610
Facsimile:  312-202-0991

                                       3
<page>
GUARANTOR HEREBY WAIVES AND COVENANTS THAT GUARANTOR WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT
OF OR BASED UPON THIS GUARANTY OR ANY GUARANTEED OBLIGATION, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR IN TORT OR
OTHERWISE.

IN WITNESS WHEREOF, the undersigned has duly executed this Guaranty as of the
day and year first written above.

					____________________________________
 					Paul Sorkin

                                       4
<page>ex10_1.htm

    

    

    RESEARCH
AGREEMENT

    BETWEEN

    OREGON
HEALTH &SCIENCE UNIVERSITY AND ZNOMICS, INC.

    

    

    This
Agreement (“AGREEMENT”),
dated and effective as of July 1, 2008 (the “Effective
Date”), is between the Oregon Health and Science University, having
offices at 2525 SW 1st Ave,
Suite 120 Portland, Oregon 97201-4753 (“UNIVERSITY”), and Znomics, Inc., having
offices at 2611 SW 3rd Ave.,
Suite 200 Portland, Oregon 97201 (“SPONSOR”).

    

    
      	
              1.  

            	
              BACKGROUND

            

    

     

    
      	
              1.1  

            	
              SPONSOR
      desires research in accordance with the scope of work outlined per
      Attachment A, and

            

    

     

    
      	
              1.2  

            	
              The
      performance of such research is consistent, compatible, and beneficial to
      the academic role and mission of UNIVERSITY as an institution of higher
      education;

            

    

    

    
      	
              1.3  

            	
              UNIVERSITY
      is qualified to provide such research services;
  and

            

    

    

    
      	
              1.4  

            	
              As
      a benefit of funding such research, UNIVERSITY is willing to grant to
      SPONSOR an exclusive option to license inventions made during the course
      of such research in accordance with Section 13
  below.

            

    

    

    NOW,
THEREFORE, for and in consideration of the mutual covenants, conditions and
undertakings herein set forth, the parties agree as follows:

    

    
      	
              2.  

            	
              SCOPE
      OF WORK

            

    

    

    
      	
              2.1  

            	
              UNIVERSITY
      agrees to use all reasonable best efforts to perform for SPONSOR the
      research activities (“RESEARCH”) described in Attachment A, hereinafter
      the SCOPE OF WORK, under the direction and supervision of Dr. Thomas
      Scanlan, PRINCIPAL INVESTIGATOR. The Scope of Work may be modified from
      time to time by mutual Agreement of the PRINCIPAL INVESTIGATOR, UNIVERSITY
      and SPONSOR.

            

    

    

    
      	
              2.2  

            	
              UNIVERSITY
      will use all reasonable best efforts to ensure that the PRINCIPAL
      INVESTIGATOR and other personnel assisting in the RESEARCH will keep
      accurate financial and scientific records relating to the RESEARCH and
      will make such records available to SPONSOR or SPONSOR’S authorized
      representative throughout the term of this Agreement during normal
      business hours upon reasonable notice. It is understood that such records
      shall include detailed, witnessed laboratory notebooks sufficient to
      document any inventions made in the course of the RESEARCH. Upon request
      by SPONSOR, in whatever condition maintained by the PRINCIPAL INVESTIGATOR
      and his staff. Any such records, materials and copies made available to
      SPONSOR or SPONSOR’s authorized representative shall be held in confidence
      by SPONSOR.

            

    

    

    
      	
              2.3  

            	
              SPONSOR
      understands that UNIVERSITY may be involved in similar research through
      faculty other than PRINCIPAL INVESTIGATOR, on behalf of itself and others.
      UNIVERSITY shall be free to continue such similar research, provided that
      such research is conducted separate from the RESEARCH by investigators
      other than the PRINCIPAL INVESTIGATOR, or by investigators who are not
      under the supervision of the PRINCIPAL INVESTIGATOR and who are not
      participating in the RESEARCH. UNIVERSITY shall not, during the term of
      this Agreement, enter into any agreement with any other commercial party
      for support of work by the PRINCIPAL INVESTIGATOR relating to the
      RESEARCH; provided, however, it is understood that UNIVERSITY and
      PRINCIPAL INVESTIGATOR may accept funding for
    research

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    relating
to the RESEARCH from the U.S. Government and non-profit sources so long as
UNIVERSTIY does not grant any rights that conflict with the rights of SPONSOR
under Section 13 below.

    

    3.           TERM

    

    3.1           This
AGREEMENT shall be effective for a period of twelve (12) months unless mutually
agreed upon in writing between the parties or terminated early in accordance
with Section 15 below.

    

    4.           COMPENSATION

    

    
      	
              4.1

            	
              SPONSOR
      agrees to reimburse UNIVERSITY for services performed under the AGREEMENT
      in accordance with the budget itemized in Attachment A, payable as set
      forth on Attachment A. Checks to UNIVERSITY shall be made payable to
      OREGON HEALTH & SCIENCE UNIVERSITY and mailed
  to:

            

    

    

    OREGON
HEALTH & SCIENCE UNIVERSITY

    Sponsored
Projects Administration

    2525 SW
1st
Avenue, Suite 220

    Portland,
OR 97201

    Tax ID
No.:93-1176109

    

    
      	
              5.

            	
              REPORTING
      REQUIREMENTS

            

    

    

    
      	
              5.1

            	
              UNIVERSITY
      will provide reports on the progress of the RESEARCH as outlined or
      required in the SCOPE OF WORK. A final written report shall be furnished
      to SPONSOR upon completion of the RESEARCH within 60 days of the last day
      of the project period and after the final payment has been
      received.

            

    

    

    
      	
              6.

            	
              TECHNICAL
      SUPERVISION

            

    

    

    
      	
              6.1

            	
              The
      person with primary responsibility for supervision of the performance of
      the RESEARCH on behalf the SPONSOR shall be Dr. Bruce Beutel, or such
      other person as may be designated by SPONSOR, who shall have primary
      responsibility for technical supervision of the
  Project.

            

    

    

    
      	
              6.2

            	
              The
      person with primary responsibility for supervision of the performance of
      the RESEARCH on behalf of UNVIERSITY shall be the PRINCIPAL INVESTIGATOR.
      No other person shall replace or substitute for him/her in the supervisory
      responsibilities hereunder without the prior written approval of both
      UNIVERSITY and SPONSOR, which may be granted or withheld at each party’s
      sole discretion.

            

    

    

    
      	
              7.

            	
              CONFIDENTIALITY
      AND PUBLICATION

            

    

    

    
      	
              7.1

            	
              UNIVERSITY
      and PRINCIPAL INVESTIGATOR agree to keep confidential and SPONSOR
      confidential and proprietary information supplied to it in writing by
      SPONSOR and marked CONFIDENTIAL during the course of research performed by
      UNVERSITY (Confidential Information). This obligation extends for a period
      of five (5) years after the term of this AGREEMENT. Such Confidential
      Information will not be included in any published material without prior
      approval by SPONSOR. The obligations of this Section shall not apply
      to:

            

    

    

    
      	
              (a)  

            	
              Information
      which is or becomes known publicly through no fault of the UNIVERSITY or
      PRINCIPAL INVESTIGATOR;

            

    

    

    
      	
              (b)  

            	
              Information
      learned by UNIVERSITY or PRINCIPAL INVESTIGATOR through a third party
      entitled to disclose it;

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              (c)  

            	
              Information
      developed by UNIVERSITY or PRINCIPAL INVESTIGATOR independently of
      information obtained from SPONSOR as shown by written
    records;

            

    

    

    
      	
              (d)  

            	
              Information
      already known to UNIVERSITY or PRINCIPAL INVESTIGATOR before SPONSOR’s
      disclosure as shown by witnessed prior written records;
  or

            

    

    

    
      	
              (e)  

            	
              Information
      required to be disclosed to by law, including the Oregon Public Records
      Law, to comply with government regulation, subpoenas or court orders
      provided SPONSOR receives adequate notice of such demand and provided
      UNIVERSITY or PRINCIPAL INVESTIGATOR makes any such disclosure under an
      order protecting the confidential nature of proprietary
      information.

            

    

    

    
      	
              7.2

            	
              UNIVERSITY
      agrees to provide any proposed publication to SPONSOR forty-five (45) days
      prior to submission, for confidential review for the inclusion of SPONSOR
      Confidential Information, and to determine whether patentable inventions
      of discoveries are disclosed therein. SPONSOR has the right to edit or
      remove SPONSOR Confidential Information, prior to submission for
      publication. Should the documents contain any patentable information at
      SPONSOR’s request UNIVERSITY shall withhold submission and/or publication
      for an additional forty-five (45) days to allow U.S. patent filings. In
      addition, in the event that the document includes data, information or
      material generated by SPONSOR’s scientists, and professional standards for
      authorship would be consistent with including SPONSOR’s scientists as
      co-authors of the document, the names of SPONSOR’s scientists will be
      included as co-authors.

            

    

    

    
      	
              8.

            	
              EQUIPMENT;
      MATERIAL TRANSFER

            

    

    

    
      	
              8.1

            	
              All
      equipment purchased under the terms of this AGREEMENT becomes the property
      of UNIVERSITY unless otherwise specified herein. In order for each party
      to conduct its activities and research related to the research, the
      parties may transfer to each other certain biological materials from time
      to time during the RESEARCH as set forth in Attachment A. In the case of
      the UNIVERSITY transfer of materials to SPONSOR, SPONSOR agrees that all
      materials obtained from UNIVERSITY shall be used solely for the purpose of
      conducting RESEARCH and any intellectual property arising from SPONSOR’s
      activities shall be subject to the terms of this agreement, including,
      without limitation the Option provisions set forth in Section
      13.

            

    

    

    
      	
              9.

            	
              INDEMNIFICATION

            

    

    

    
      	
              9.1

            	
              Each
      party hereto agrees to be responsible and assume liability for its own
      wrongful or negligent acts or omissions, or those of its officers, agents
      or employees to the full extent required by law, including the Oregon Tort
      Claims, ORS Sections 30.260 through
30.300.

            

    

    

    
      	
              10.

            	
              COMPLIANCE
      WITH LAWS

            

    

    

    
      	
              10.1

            	
              UNIVERSITY
      and PRINCIPAL INVESTIGATOR agree to comply with all applicable federal,
      state and local laws, codes, regulations, rules and
  orders.

            

    

    

    
      	
              11.

            	
              ASSIGNMENT

            

    

    

    
      	
              11.1

            	
              Neither
      party shall assign or transfer any interest in this AGREEMENT, nor assign
      any claims for money due for to become due during this AGREEMENT, without
      the prior written approval of the other party, provided that, SPONSOR may
      assign this Agreement in connection with the sale or transfer of
      substantially all the assets to which this Agreement relates in which case
      SPONSOR 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    shall notify
UNIVERSITY of such assignment.

    

    
      	
              12.

            	
              PATENTS
      AND INVENTIONS

            

    

    

    
      	
              12.1

            	
              UNIVERSITY
      agrees to take appropriate steps to cause all personnel assigned to the
      RESEARCH to disclose any and all inventions and improvements conceived or
      reduced to practice by any of such personnel in the performance of the
      RESEARCH and relating to the subject matter thereof (Inventions). Within
      thirty (30) days of receiving a written inventions disclosure, UNIVERSITY
      will provide SPONSOR with a copy of the disclosure. UNIVERSITY shall
      retain all right, title, and interest in and to such inventions and
      improvements and all patent applications therefore which it may file at
      its election. Additionally, SPONSOR shall promptly disclose to UNIVERSITY
      in writing any invention of which it may become aware in the performance
      of the RESEARCH, including any derivatives developed by SPONSOR which are
      based upon compounds or compound structures transferred by UNVERSITY to
      SPONSOR.

            

    

    

    
      	
              (a)  

            	
              Inventorship
      will be determined in accordance with applicable U.S. patent laws
      regarding inventorship. Any Invention conceived and reduced to practice:
      (i) solely by UNVERSITY’s personnel shall be owned by UNVERSITY
      (“UNIVERSITY Inventions”); (ii) jointly by UNVERSITY’s and SPONSOR’s
      personnel shall by jointly owned by UNVERSITY and SPONSOR (“Joint
      Inventions”).

            

    

    

    
      	
              (b)  

            	
              UNIVERSITY
      shall be responsible for preparing, filing, prosecuting and maintaining
      patent applications for UNIVERSITY Inventions. SPONSOR shall be
      responsible for preparing, filing, prosecuting and maintaining patent
      applications for Joint Inventions. Prior to filing a patent application or
      filing or responding to any outstanding communication in connection with a
      patent application directed to an Invention as defined herein, the filing
      party will provide the other with thirty (30)days notice to review and
      provide comment thereon.

            

    

    

    
      	
              (c)  

            	
              UNVERSITY
      shall obtain appropriate written agreements from all personnel involved in
      the RESEARCH on UNIVERSITY’s behalf, including without limitation the
      PRINCIPAL INVESTIGATOR, such agreements shall require that all discoveries
      and inventions first conceived or reduced to practice using UNIVERSITY’s
      facilities, personnel, information or other resources shall be reported
      promptly and assigned to UNVERSITY, PRINCIPAL INVESTIGATOR and other
      UNIVERSITY faculty, staff and students performing the RESEARCH, agree that
      they will not collaborate with others not employed by UNVERSITY (other
      than SPONSOR) in performing the RESEARCH, without SPONSOR’s prior written
      consent.

            

    

    

    
      	
              13.

            	
              LICENSE

            

    

    

    
      	
              13.1

            	
              UNIVERSITY
      hereby grants SPONSOR an exclusive option (hereafter the “Option”) to
      negotiate an exclusive worldwide license for UNIVERSITY’s right in
      UNIVERSITY Invention(s) or Joint Invention(s). SPONSOR may exercise this
      Option at any time on or prior to sixty (60) days from disclosure of the
      Invention to SPONSOR (the “Option
Period”).

            

    

    

    
      	
              13.2

            	
              The
      parties shall have one hundred fifty (150) days (which period of time
      shall be extendible upon mutual agreement of the parties) from the date
      SPONSOR elects to negotiate for terms for an exclusive license to conclude
      a licensing agreement (the “LICENSE AGREEMENT”). Attached as Exhibit C is
      a non-binding term sheet which the parties agree represents a reasonable
      example of financial terms for compounds in an early stage of development.
      The parties shall use their good faith efforts to consider similar
      financial terms in the License Agreement. SPONSOR shall pay all patent
      costs for UNVERSITY Inventions during the one hundred fifty (150) day
      negotiation period, or any extension thereof. If at the end of such one
      hundred fifty (150) day 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    period or any
extension thereof, the parties are unable to agree upon licensing terms, SPONSOR
shall have no further obligation to pay patent costs for the UNIVERSITY
Invention(s) for which negotiations have terminated. If SPONSOR terminates the
negotiation in writing prior to the end of the one hundred fifty (150) day
negotiation period, SPONSOR shall have no further obligation to pay patent costs
incurred after the termination date. In the even SPONSOR does not exercise its
Option rights or SPONSOR and UNVERSITY  are unable to agree to
mutually acceptable licensing terms, UNIVERSITY has the right to license its
rights to a third party on terms no more favorable than those set forth on
Appendix C for a period of eighteen (18) months. Thereafter, UNIVERSITY may
license its rights in any Invention to a third party without further obligation
to SPONSOR. UNIVERSITY shall not abandon its rights to any such Invention prior
to exercise of said Option or expiration of the Option Period.

    
      	
              14.

            	
              PUBLICITY

            

    

    

    
      	
              14.1

            	
              SPONSOR
      will not include the name of the UNIVERSITY in any advertising, sales,
      promotion, or other publicity matter without prior written approval of
      UNIVERSITY. Provided however that SPONSOR shall be permitted to issue a
      press release describing the general nature of the collaboration with
      UNIVERSITY which is substantially similar to the draft press release in
      Appendix B.

            

    

    

    
      	
              15.

            	
              TERMINATION

            

    

    

    
      	
              15.1

            	
              Either
      party may terminate this AGREEMENT at any time
  if:

            

    

    
      	
               
      

            	
              (a)

            	
              The
      other party materially breaches the terms of this AGREEMENT, provided that
      the non-breaching party shall have given the breaching party written
      notice of such breach and the breaching party shall have failed to cure
      the same within thirty (30) days after receipt of such
    notice.

            

    

    

    
      	
               
      

            	
              (b)

            	
              The
      loss or departure of PRINCIPAL INVESTIGATOR, and a mutually acceptable
      replacement cannot be found within sixty (60) days of PRINCIPAL
      INVESTIGATOR’s loss or departure.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Performance
      of any part of this AGREEMENT by a party is prevented or delayed by reason
      of Force Majeure and cannot be overcome by reasonable diligence to the
      satisfaction of either party.

            

    

    

    
      	
              (d)  

            	
              The
      other party cease, discontinues or indefinitely suspends its business
      activities related to the services to be provided under this AGREEMENT, or
      the other party voluntarily or involuntarily files for
      bankruptcy.

            

    

    

    
      	
              (e)  

            	
              The
      party has given ninety (90) days notice to the other
  party.

            

    

    

    
      	
              15.2

            	
              The
      party requesting termination will provide the other party with written
      notice specifying both the reason and the effective date of termination.
      Upon the giving of such notice of termination by either party, the
      UNIVERSITY will use its reasonable best efforts to limit or terminate any
      outstanding commitments. .

            

    

    

    
      	
              15.3

            	
              Upon
      termination, UNIVERSITY shall deliver to SPONSOR in the state they exist
      as of the date of termination of all work product, and Confidential
      Information belonging to SPONSOR. SPONSOR shall within thirty (30) days
      after termination pay UNIVERSITY all payments due as of the effective date
      of the termination.

            

    

     

    
      	
              16.

            	
              NOTICES

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      16.1    
All
notices or communications given hereunder shall be in writing and shall be
delivered by hand, or by overnight courier by facsimile with confirmation by
mail, with all
delivery charges prepaid and addressed to the parties as
follows:

    

    
    

    

    
      	
              TO
      SPONSOR:

            	
              Mr.
      Richard Sessions

              Znomics,
      Inc.

              2525
      SW 1st
      Ave, Suite 120 Portland,

               Oregon
      97201-4753

            
	 	 
	
              TO
      UNIVERSITY:

            	
              Director,
      Technology & Research Collaborations

              Oregon
      Health & Science University, AD120

              2525
      SW First Avenue, Suite 120

              Portland,
      OR 97201-4753

              Telephone:
      503-494-8200

              Facsimile:   503-494-4729

               

              with
      copy

            
	 	 
	
              TO
      PRINCIPAL INVESTIGATOR:

            	
              Dr.
      Thomas Scanlan

              Professor,
      Physiology and Pharmacology

              Oregon
      Health & Science University

              3181
      SW Sam Jackson Park Road, L334

              Portland,
      OR 97239-3098

              Telephone:
      503-494-9292

              Facsimile:  503-494-4352

            

    

    

    
      	
              17.

            	
              DISPUTE
      RESOLUTION AND GOVERNING LAW

            

    

    

    
      	
              17.1

            	
              The
      Parties agree to attempt to settle amicably any controversy or claim
      arising under this AGREEMENT or a beach of this AGREEMENT. Thereafter,
      both parties agree that all disputes between them arising out of or
      relating to this AGREEMENT, will be submitted to non-binding mediation
      unless the parties mutually agree otherwise. All parties agree to exercise
      their best effort in good faith to resolve all disputes in
      mediation.

            

    

    

    
      	
              17.2

            	
              This
      AGREEMENT will be governed by and construed in accordance with the laws of
      the State of Oregon without reference to its choice of law provisions, the
      International Convention on the Sale of Goods or any other international
      treaty. Any claim, action or suit between OHSU and SPONSOR that arises out
      of or relates to performance of this AGREEMENT will be brought and
      conducted solely and exclusively within the Circuit Court for Multnomah
      County, Oregon. However, if any such claim, action or suit may be brought
      only in a federal forum, it will be brought and conducted solely and
      exclusively within the United States District Court of
    Oregon.

            

    

    

    
      	
              18.

            	
              CHANGES
      AND AMENDMENTS

            

    

    

    
      	
              18.1

            	
              THIS
      AGREEMENT CONSTITUES THE ENTIRE AGREEMENT BETWEEN THE PARTIES. THERE ARE
      NO UNDERSTANDINGS, AGREEMENTS, OR REPRESENTATIONS, ORAL OR WRITTEN, NOT
      SPECIFIED HEREIN REGARDING THIS AGREEMENT. NO AMENDMENT, CONSENT, OR
      WAIVER OR TERMS OF THIS AGREEMENT SHALL BIND EITHER PARTY UNLESS IN
      WRITING AND SIGNED BY ALL PARTIES. ANY SUCH AMENDMENT, CONSENT, OR WAIVER
      SHALL BE 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EFFECTIVE ONLY
IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE GIVEN. SPONSOR, BY THE
SIGNATURE BELOW OF ITS AUTHORIZED REPRESENTATIVE, ACKNOWLEDGES HAVING READ AND
UNDERSTOOD THE AGREEMENT AND SPONSOR AGREES TO BE BOUND BY ITS TERMS AND
CONDITIONS.

    In
Witness Whereof, the parties hereto have caused this AGREEMENT to be executed as
of the date set forth herein by their duly authorized
representatives.

     

    
      	
              OREGON
      HEALTH & SCIENCE UNIVERSITY

               

              By:
      /s/Arundeep S.
      Pradhan

              Arundeep
      S. Pradhan,
      Director                   Date

              Technology
      & Research Collaborations

            	
              SPONSOR

               

              By:
      ____________________________________

              Name:                                                                      
      Date

              Title:

            

    

     

    Acknowledged
By: _____________________________________

    PRINCIPAL
INVESTIGATOR                                                            Date

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Attachment
A: Scope of Work/Budget

    

    I.
Project

    OHSU and
Znomics, Inc. (“Znomics”) will enter into a collaborative research agreement
with the laboratory of Dr. Thomas Scanlan of OHSU (“Scanlan lab”) to synthesize
and test small molecules that may be useful in the treatment of human disease
conditions involving chronic inflammation such as rheumatoid arthritis, asthma,
and inflammatory bowel syndrome.

    II.
Work Plan

    The
Scanlan lab will synthesize small molecules based on an aryl-pyrazole backbone
as non-steroidal dissociating glucocorticoids. Znomics will work in
collaboration with Dr. Scanlan to develop these compounds by characterizing
their efficacy and side effect profiles. The Scanlan lab and Znomics will
exchange research data and frequent progress updates.

    

    The
Scanlan lab will provide the following deliverables and research
services:

    
      	
              1)  

            	
              Dr.
      Scanlan will design novel non-steroidal dissociating glucocorticoids based
      on an aryl-pyrazole backbone.

            

    

    
      	
              2)  

            	
              The
      Scanlan lab will synthesize compounds as mutually agreed by the parties,
      anticipating two new synthetic routes will be explored to produce an
      initial panel of 15-30 analogs that carry an array of different steric and
      electronic substituted anilines, followed by an additional 15-30 compounds
      in a lead optimization program.

            

    

    
      	
              3)  

            	
              The
      structures of newly synthesized compounds will be validated by mass
      spectrometry in the Scanlan lab.

            

    

    
      	
              4)  

            	
              The
      Scanlan lab will determine the binding affinity of synthesized compounds
      for the glucocorticoid and other receptors as mutually agreed by the
      parties.

            

    

    
      	
              5)  

            	
              The
      compound structures will be transmitted to Znomics by the Scanlan lab for
      further development in consultation with Dr. Scanlan. Any and all
      derivatives of such compounds and compound structures developed by Znomics
      shall fall under the terms of the attached collaborative research
      agreement.

            

    

    
      	
              6)  

            	
              The
      Scanlan lab will transfer compounds to Znomics for efficacy testing in
      rodent and zebrafish models.

            

    

    

    III.
Effort

    Dr.
Scanlan will allocate the following effort to accomplish the deliverables
described in section II above:

    
      	
              1)  

            	
              Dr.
      Scanlan at 10% effort for supervision and management of
      project.

            

    

    
      	
              2)  

            	
              One
      (1) FTE at the postdoctoral level supervised by Dr.
    Scanlan.

            

    

    

    IV.
Timing/Payments

    Dr.
Scanlan will accomplish the deliverables in Section II above with the personnel
and supplies outlined in section III above in 6-12 months of the effective date.
All payments will be made quarterly and will be due within thirty (30) days of
the end of each quarter.

    

    V.
Research Budget

    First
year budget:

    Salaries & benefits

    
      	

                                           
      T.
      Scanlan         

            	10%	
              $20,000

            
	

                                           
      Postdoc             

            	100%	
              40,000

            
	
              Supplies 

            	 	
              15,000

            
	Total
      Direct Costs 	 	
              75,000

            
	
                                          
      MTDC 54%

            	 	
              40,500

            
	

                                          
      Total

            	 	
              115,500

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Attachment
B: Draft Press Release

    

    Scanlan
Program Draft PR- 7/1/08

    

    Znomics
and Leading Chemist at Oregon Health & Science University Launch Drug
Discovery Program for Treatment of Inflammatory Diseases Without Steroidal Side
Effects

    

    Company
Funds Laboratory of Professor Thomas Scanlan, Ph.D.; Acquires Exclusive Option
to License Small Molecule Compounds from the Discovery Program

    

    Portland,
Ore., July__, 2008 (PrimeNewswire via COMTEX News Network)- Znomics, Inc.
(OTCBB:ZNOM), a pioneer in the development of the zebrafish as a vertebrate
genetic platform to accelerate drug discovery, announced today a collaborative
research program with Oregon Health & Science University (OHSU) and Thomas
Scanlan, Ph.D., Directors of its Chemical Biology Program, to design and develop
pre-clinical compounds to treat diseases such as rheumatoid arthritis, asthma
and inflammatory bowel syndrome.

    

    “This is
an important new therapeutic program for Znomics,” said Richard Sessions, Chief
Executive Officer. “Dr. Scanlan has a proven record of designing new compounds
that have progressed from the university setting into commercial development and
clinical studies. We’re extremely pleased to have a research chemist of Tom’s
caliber collaborating with us.”

    

    Under the
research agreement, Znomics will fund the program and shall have the option to
exclusively license the rights to the discoveries. Dr. Scanlan, a professor of
physiology and pharmacology at OHSU, has done leading work in biological
research and small molecule discovery in “dissociating glucocorticoid” compounds
that retain the desired anti-inflammatory action but without having the serious
side effects of steroids. His work has been recognized by the American Chemical
Society which awarded him the prestigious Arthur C. Cope Scholar Award in July
2007. Prior to his appointment at OHSU, Dr. Scanlan was a faculty member of the
University of California, San Francisco. He has been a member of Znomics’
Scientific Advisory Board since December 2007.

    

    “I’m
excited about this project and about having Tom more involved with Znomics,”
said Bruce Beutel, Chief Scientific Officer. “The factors involved in
glucocorticoid activity represent the kind of complex biology--involving
different side effects on multiple genes and organs--where our zebrafish whole
animal approach can make a difference in successful drug
discovery.”

    

    “Having
the talented Znomics group nearby for this project will be just great,” said Dr.
Scanlan. “Nothing would please me more than to find a drug that could lead to
improved long term treatment for patients suffering from debilitating
inflammation-related diseases, which is a large unmet medical
need.”

    

    //About
Znomics//

    //Forward
Looking Statements//

    //Release
contact info, etc.//

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Attachment
C: Non-Binding example of reasonable market terms for an exclusive license
for

     compounds
that have a) composition of matter claims b) have preliminary in vitro date, and
c) may

    have
some preliminary in-vivo data.

    

    

    This
Term sheet is for illustration purposes only and is non-binding to the
parties.

    
      	
              Financial

            	 
      
	
              Option

              Exercise

               

            	
              Within
      thirty (30) days of execution of an exclusive license, ZNOMICS shall pay
      OHSU a one-time non-refundable fee of $75,000

            
	
              Milestones

            	
              The
      following milestone payments shall be paid by ZNOMICS to OHSU once the
      first time such milestone is reached for a Licensed Product:

               

            
	 
      	
              Issuance
      of US patent - $75,000

            
	 
      	
              Issuance
      of EU patent - $75,000

            
	 
      	
              Initiation
      of first phase I trial - $100,000

            
	 
      	
              Initiation
      of first phase II trial - $150,000

            
	 
      	
              Initiation
      of first phase III trial - $200,000

            
	 
      	
              First
      sale - $250,000

            
	 
      	 
      
	
              Maintenance

              Fee

            	
              ZNOMICS
      shall pay an annual maintenance fee of $5,000 on each anniversary of the
      effective date of the license agreement.

               

            
	
              Royalty

            	
              ZNOMICS
      will pay OHSU 1-2% of net sales of Licensed Product, the specific rate to
      be negotiated with the definitive license agreement. The royalty rate will
      be reduced for payments made for third party IP required for freedom to
      operate, with a floor at 1%.

               

              In
      the event of a sublicense, the ZNOMICS will pay OHSU 10% of the royalty
      received from its sublicense. In the event that the Licensed Product is
      sold in combination with other products or services that are not
      separately covered by a valid claim within the Licensed Patents, the net
      sales from the Licensed Product will be reasonably allocated between such
      Licensed Product and such other product or compound based upon the
      individual fair market values of the Licensed Product and such other
      product or component.

               

            
	
              Sublicensing

            	
              ZNOMICS
      shall pay to OHSU a percentage of the Sublicense Consideration (all
      upfront milestone payments and other consideration received by ZNOMICS
      from a bone fide sublicensee, but specifically excluding any
      reimbursements received for ZNOMIC’s R&D expenses associated with the
      Licensed Products) it receives from its sublicensee according to the
      following schedule:

              · 40%
      of all Sublicense Consideration received by ZNOMICS within first year
      after Effective Date of the license agreement

               

              · 20%
      of all Sublicense Consideration received by ZNOMICS within second year
      after Effective Date of the license agreement

               

              · 10%
      of all Sublicense Consideration received by ZNOMICS
thereafter

               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              Provided
      that the percentage of Sublicensing Consideration paid to OHSU shall be
      reduced by 50% when, in addition to the patents licensed from OHSU,
      ZNOMICS also sublicenses additional patents or patent applications owned
      or controlled by ZNOMICS (other than OHSU licensed IP) which are required
      by the sublicensee for freedom to operate and the sale of products covered
      by the patents licensed to ZNOMICS by
OHSU

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]