Document:

EXHIBIT 10.52

 

FORM OF VGX PHARMACEUTICALS

 

NOTE PURCHASE AGREEMENT

 

THIS
NOTE PURCHASE AGREEMENT (the “Purchase Agreement”),
dated this          day of               ,
          , is by and between
[NAME OF HOLDER]., an individual (the “Buyer”), and VGX PHARMACEUTICALS, INC.,
a Delaware corporation (the “Company”).

 

WHEREAS, the
Buyer wishes to purchase from the Company and the Company wishes to sell to the
Buyer, upon the terms and subject to the conditions of this Purchase Agreement,
a convertible promissory note of the Company, in the principal amount of $###,###.

 

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

 

1.                                       Sale
and Issuance of Note.  Upon the terms
and subject to the conditions of this Purchase Agreement, the Buyer agrees to
purchase from the Company, and the Company agrees to sell and issue to the
Buyer, a convertible promissory note, in the form attached hereto as Exhibit A which is made a part of
this Purchase Agreement (the “Note”), in the principal amount of $###,### (the “Principal Sum”), subject
to the terms and conditions contained herein and in the Note.

 

2.                                       Representations
and Warranties of the Company.  By
executing this Purchase Agreement, the Company makes the following
representations and, warranties to the Buyer, with the intent and understanding
that the Buyer will rely thereon:

 

2.1                                 Organization
of the Company; Authorization; Good Standing.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and lease its
property, to carry on its business as presently conducted and as proposed to be
conducted (as previously disclosed to the Buyer) and to execute and deliver,
and to perform all of its obligations under, this Purchase Agreement and the
Note (collectively, the “Company Documents”).

 

2.2                                 Enforceability.  The creation and issue of the Note and the
execution and delivery by the Company of the Company Documents and the
consummation of the transactions contemplated thereby have been duly authorized
by all requisite corporate action on the part of the Company, and the Company
Documents have been duly executed and delivered by the Company and constitute
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms.

 

 

2.3                                 Complete
and Accurate Information. All information provided by the Company in
whatever form in connection with the transactions contemplated by the Company
Documents are complete and accurate and provide a true and fair view of the
financial position of the Company.

 

3.                                       Representations
and Warranties of the Buyer.  By
executing this Purchase Agreement, the Buyer makes the following
representations and warranties to the Company, with the intent and
understanding that the Company will rely thereon:

 

3.1                                 Investment
Representations.  The Buyer has
knowledge and experience in financial and business matters sufficient to enable
him to evaluate the merits and risks of an investment in the Note, the shares
of the Company’s Common stock issuable upon conversion of the Note (the “Shares”)
and the Company.  The Buyer has assets
sufficient to enable him to bear the economic risk of the Buyer’s investment in
the Note.  The Buyer is acquiring the
Note for investment purposes only, for his, her or its own account, and not
with a present view to, or for sale in connection with, any distribution
thereof.  The Buyer understands that the
Note and the Shares have not been registered under the Securities Act by reason
of their issuance in a transaction exempt from the registration requirements of
the Securities Act pursuant to the exemption provided in Section 4
thereof, that the Note and the Shares have not been registered under applicable
state securities laws by reason of their issuance in a transaction exempt from
such registration requirements, and that the Note and the Shares may not be
sold or otherwise disposed of unless registered under the Securities Act and
applicable state securities laws (the Company being under no obligation to
register such Note or the Shares) or exempted from registration.  The Buyer further acknowledges that the Note
and the Shares are subject to the restrictions on transfers set forth in the
Company Documents, and that each transferee of the Note or the Shares as a
condition to such transfer may be required to agree in writing to be bound by
such restrictions.

 

3.2                                 Buyer’s
Acknowledgment as to Information. 
The Buyer or representatives of the Buyer have received from the Company
such information (including exhibits to this Purchase Agreement and of such
documents referred to herein and therein as he or they have requested) with
respect to the Company as the Buyer has deemed necessary and relevant in
connection with the transactions contemplated by the Company Documents, and the
Buyer has had the opportunity, directly or through such representatives, to ask
questions of and receive answers from persons acting on behalf of the Company
necessary to verify the information so obtained.

 

4.                                       Legend.  Each certificate evidencing the Note and the
Company’s securities issuable upon conversion of the Note and Warrant, and each
certificate evidencing the Note and the Company’s securities issuable upon
conversion of the Note held by subsequent transferees of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:

 

THE SECURITIES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS. 
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO CERTAIN
CONDITIONS SPECIFIED IN THE NOTE PURCHASE AGREEMENT DATED AS OF           ,
       BETWEEN VGX PHARMACEUTICALS, INC.

 

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(THE “COMPANY”)
AND THE SIGNATORY THERETO.  NO TRANSFER
OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY. 
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS: (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS; OR (2) THE COMPANY RECEIVES
AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT
REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

 

5.                                       Miscellaneous.

 

5.1                                 Legal
Fees and Expenses.  Each party hereto
agrees to pay its own legal fees and expenses incurred in connection with the
transactions contemplated hereunder.

 

5.2                                 No
Waiver.  The failure of a party to
insist upon strict adherence to any term of this Purchase Agreement on any
occasion shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Purchase Agreement.  Any waiver of
any term of this Purchase Agreement must be in writing.

 

5.3                                 Entire
Agreement; Amendment.  This Purchase
Agreement and all Exhibits hereto, set forth the entire agreement of the
parties with respect to the subject matter hereof and supersede all prior
agreements relating thereto, written or oral. 
This Purchase Agreement may be amended or modified only by a written
instrument executed by the Company and the Buyer.

 

5.4                                 Parties
in Interest; Limitation on Assignment. 
This Purchase Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns; provided,
however, that this Purchase Agreement shall not be assigned or
assignable by either party without the prior written consent of the other
party.

 

5.5                                 Counterparts.  This Purchase Agreement may be executed in
any number of counterparts, each of which shall be considered an original, but
all of which together shall constitute one and the same instrument.

 

5.6                                 Governing
Law.  This Purchase Agreement shall
be governed by, construed, interpreted and enforced in accordance with the laws
of the Commonwealth of Pennsylvania as applied to contracts entered into and
performed entirely within the Commonwealth of Pennsylvania among Pennsylvania
residents without regard to conflicts of laws principles.

 

5.7                                 Notices.  All notices, consents and other
communications under this Purchase Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered by hand, (b) sent
by telex or telecopier (with receipt confirmed), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by

 

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Express Mail,
Federal Express or other express delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and telecopier numbers set
forth below (or to such other addresses, telex numbers and telecopier numbers
as a party may designate as to itself by notice to the other party ):

 

5.7.1                        If
to the Company:

 

 VGX Pharmaceuticals

 450 Sentry Parkway

 Blue Bell, PA 19422

 FAX:  267-440-4242

 Attention:  Corporate
Secretary

 

5.7.2                        If
to the Buyer:

 

5.8                                 Severability.  In the event that any court having
jurisdiction shall determine that any provision contained in this Purchase
Agreement shall be unreasonable or unenforceable in any respect, then such
covenant or other provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect.  In the event that
such court shall deem any such covenant or other provision wholly
unenforceable, the remaining covenants and other provisions of this Purchase
Agreement shall nevertheless remain in full force and effect.

 

5.9                                 Headings
and Captions.  The headings and
captions used herein to identify sections and subsections are for convenience
only and shall not be used for interpretation of any provisions herein.

 

5.10                           Indemnity.  The representations, warranties and
agreements made by the Company and the Buyer herein shall survive the execution
of this Purchase Agreement.  The Company
and the Buyer hereby agree to indemnify and hold harmless the other party from
and against any and all loss, liability, claim, damage and expense (including,
without limitation, attorneys’ fees and disbursements) suffered or incurred as
a result of a misrepresentation or breach of any warranty or agreement made by
the defaulting party in this Purchase Agreement.

 

[Signature Page Follows]

 

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IN
WITNESS WHEREOF, each of the parties has caused this
Purchase Agreement to be executed on its behalf with the intent to be legally
bound as of the day and year first above written.

 

	
   

  	
  VGX PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph
  Kim, Ph.D.

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  

 

 

	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  [HOLDER]

  

 

 

EXHIBIT A

 

FORM OF CONVERTIBLE PROMISSORY NOTE

 

(see attached)EXHIBIT 10.53

 

THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. 
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO CERTAIN
CONDITIONS SPECIFIED IN THE NOTE PURCHASE AGREEMENT DATED AS OF                           
BETWEEN VGX PHARMACEUTICALS, INC. 
(THE “COMPANY”) AND THE SIGNATORY THERETO.  NO TRANSFER OF THESE SECURITIES SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE COMPANY.  NEITHER
THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS: (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS; OR (2) THE COMPANY RECEIVES
AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT
REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

 

CONVERTIBLE SUBORDINATED PROMISSORY NOTE

 

	
  US $###,###

  	
  Blue Bell, Pennsylvania

  
	
   

  	
  [ENTER DATE]

  

 

FOR VALUE
RECEIVED, the undersigned, VGX PHARMACEUTICALS, INC., a DELAWARE corporation
(the “Borrower”), hereby promises to pay to the order of [HOLDER], an individual (hereinafter, with any subsequent
holder, the “Holder”), the principal sum of                                     
Dollars ($###,###) (the “Principal
Sum”), together with interest on the balance of the Principal Sum outstanding
at a per annum rate of five percent (5%), upon the terms set forth below.  Interest shall be calculated on the basis of
the actual number of days elapsed over a 360-day year and shall commence to
accrue on the date hereof.

 

1.                                       Note
Purchase Agreement.  This convertible
subordinated promissory note (the “Note”) is being issued pursuant to the terms
and conditions of the Note Purchase Agreement (the “Purchase Agreement”) dated
as of the date hereof to which the Borrower and the Holder are parties.  All notices with respect to this Note shall
be made in accordance with Section 5.7 of the Purchase Agreement

 

2.                                       Maturity.  Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, shall be due and
payable       months from the date hereof (the “Maturity
Date”).  No payments of principal or
interest are required hereunder until the Maturity Date.  The Maturity Date shall be automatically 

 

1

 

extended to another 12 months at an option of the
Holder.  If the Holder desires to extend
the Maturity Date, the Maturity Date will be automatically renewed for another
12 months after the first       months on terms and conditions to be informed by the
Holder and the Holder does not need to provide any advance notices.  However, if the Holder elects not to extend
the Maturity Date, the Holder will
provide a termination notice in writing sixty (60) days prior to the Maturity
Date to the Borrower.  Upon payment in full
of the Principal Sum and interest payable hereunder, or upon conversion of this
Note in accordance with Section 3 hereof, the Holder shall surrender this
Note to the Borrower for cancellation.

 

3.                                       Conversion.  If, prior to the Maturity Date or the repayment
by the Borrower of the Principal Sum, together with all accrued, but unpaid,
interest and all other fees, costs and charges, if any, the Borrower shall
issue shares of Common Stock to one or more investors, the Note shall be
convertible, at the option of the Holder, by written notice to the Borrower, in
whole but not in part, into that number of fully paid, validly issued and
non-assessable shares of Common Stock equal to the $      
price per share, as adjusted for any stock splits, reverse stock splits or
stock dividends occurring after the date hereof.  Notwithstanding the above, provided the value
of the Borrower’s Common Stock is equal or greater than $3.00 per share at the
time of conversion, the value of this Note shall automatically convert to
Common Stock of the Borrower upon occurrence of the following:  If, prior to the Maturity Date, the Borrower
enters into and performs its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering, or
enters into an agreement of purchase and sale with a public company; the Note
shall be automatically converted, in whole but not in part, into that number of
fully paid, validly issued and non-assessable shares of Common Stock equal to
the $3.00 price per share, as adjusted for any stock splits, reverse stock
splits or stock dividends occurring after the date hereof.  Upon such conversion of this Note, the value of the Note to be converted shall include
all accrued and outstanding interest, and all other fees, costs and charges, if
any, due or payable under this Note on the date of conversion, and all rights
of the Holder of this Note, except the right to receive such shares of Common
Stock in accordance with this Section 3, shall cease and this Note shall
no longer be deemed to be outstanding. 
In addition, no fractional shares of Common Stock shall be issued upon
the conversion of this Note.  With
respect to any fraction of a share of Common Stock called for upon the
conversion of this Note, a cash amount equal to such fraction shall be paid to
the Holder.

 

4.                                       Payment.  Any payment of principal, interest and all
other fees, costs and charges, if any, shall be in lawful money of the United
States of America by wire transfer of same day funds to the account of the
Holder at such banking institution as the Holder designates or, if requested by
the Holder, by certified or bank cashier’s check payable to the Holder mailed
to the Holder at the address of the Holder as set forth on the records of the
Borrower or such other address as shall be designated in writing by the Holder
to the Borrower.

 

5.                                       Credits.  The Borrower’s payments will be credited
first to any interest then due, and the remainder to the Principal Sum.  Interest will cease to accrue on any amount
credited to the Principal Sum as of the date any such amount is paid.

 

6.                                       Financial
Reports.      The Borrower shall furnish
Holder the following financial statements prepared in accordance with generally
accepted accounting principles consistently applied: (i) within thirty
(30) days after the end of each calendar quarter, the Company’s 

 

2

 

unaudited or if available, audited balance sheet and
statements of income and cash flows for the quarter just ended; and (ii) as
soon as possible after the end of each fiscal year of the Company, a balance
sheet as of the end of its fiscal year and the related statements of income and
cash flows for the fiscal year then ended, unaudited or if available, audited
by an independent certified public accounting firm that is acceptable to the
Holder in its reasonable judgment.

 

7.                                       Event
of Default.  Repayment of all
principal and interest under this Note will be accelerated and shall be
immediately due in full in the event of any of the following:

 

(a)                                  default
shall be made in the payment of the Principal Sum of this Note or any part
thereof when and as the same shall become due and payable, either on the
Maturity Date or at a date fixed by the parties in writing for prepayment or by
acceleration or otherwise and such default continues for a period of 10 days;

 

(b)                                 default
shall be made in the payment of interest on this Note when and as the same
shall become due and payable and such default continues for a period of 10
days;

 

(c)                                  the
Borrower shall (i) apply for or consent to the appointment of a receiver,
trustee or liquidator of the Borrower or any of its property, (ii) make a
general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws or file a petition or answer
seeking reorganization or an arrangement with creditors to take advantage of
any other bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or file an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or (iv) take corporate action for the purpose of effecting any
of the foregoing; or an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Borrower, or
of all or a substantial part of the assets of the Borrower and such order,
judgment or decree shall continue unstayed and in effect for a period of 60
days;

 

(d)                                 The
Borrower’s failure to observe and perform any of the material terms, covenants,
conditions or agreements required to be observed and performed by the Borrower
under this Note or the Purchase Agreement, and such failure shall remain
unremedied for 30 days after written notice shall have been provided to the
Borrower by the Holder of such default; or

 

(e)                                  Any
representation or warranty made by the Borrower under this Note or Purchase Agreement or in any other
loan document relating to this transaction, or in any certificate or writing
delivered pursuant to any loan document relating to this transaction, shall be
incorrect in any material respect.

 

Nothing
in this Section 7 shall, in any manner, be construed to prohibit or
otherwise affect the rights of the Holder to enforce payment of this Note in
accordance with its terms.

 

8.                                       Subordination.  All principal and accrued interest on this
Note shall be subordinate in right and time of payment to the payment in full
of all Senior Indebtedness.  Notwithstanding 

 

3

 

anything to the contrary set forth in this Note,
unless and until the Senior Indebtedness shall have been indefeasibly satisfied
and paid in full in cash and all lending commitments thereunder have
terminated: (a) the Holder may not demand payment of any of the Principal
Sum; (b) no accrued interest on this Note shall be payable to the Holder;
provided, however, that interest on this Note shall accrue in accordance with
the terms of this Note; (c) the indebtedness evidenced by this Note shall
be unsecured, and (d) the holder of this Note shall not, without the
written consent of the holders of the Senior Indebtedness, take any action with
respect to collection or enforcement or other like action hereunder or exercise
any remedies the Holder may have at law or equity in respect of any amounts
owing under this Note, regardless of whether an Event of Default exists
pursuant to Section 7 hereof and regardless of any remedies provision
contained in this Note.  The provisions of this Section 8 shall
continue in effect until all amounts under the Senior Indebtedness are
indefeasibly satisfied and paid in full in cash and all lending commitments of
the holders thereof under such Senior Indebtedness shall have terminated,
notwithstanding any delay or failure of such holder in the exercise of any
right or remedy with respect to the Senior Indebtedness.  For purposes
hereof, “Senior Indebtedness” shall mean all present and future obligations due
from the Borrower, its successors and assignees, arising in respect of borrowed
money, or from any bank or other financial institution, which obligations are
secured by any assets of the Borrower, including without limitation, any
principal and all interest thereon and all related fees and expenses.

 

9.                                       Co-Sale
Rights.  Upon the conversion of the
Note entered in connection herewith, the Company hereby covenants and agrees as
follows:

 

(a) 
If at any time, Dr. J. Joseph Kim (the “Founding Stockholder”) desires to
sell all or any of the capital stock beneficially owned by each of them
respectively (the “Take-Along Shares”) to any unrelated person or entity or any
affiliate of such unrelated person or entity (a “Proposed Transferee”) as part
of a bona fide written offer (a “Bona Fide Offer”), the Founding Stockholders
shall make effective arrangement on the terms of the Bona Fide Offer (which
shall be a condition to any sale by either of the Founding Stockholders) so
that the Purchaser shall have the right to sell to the Proposed Transferee, at
the same price per share and other terms and conditions as involved in such
sale by such selling Founding Stockholder, such number of shares of capital
stock equal to the Take-Along Shares multiplied by a fraction, (i) the
numerator of which is the number of shares of capital stock owned by the
Purchaser, and (ii) the denominator of which is the sum of all shares of
capital stock owned by the selling Founding Stockholder(s) and the Purchaser.

 

(b) 
Notice of Intent to Participate. 
If the Purchaser wishes to participate in any sale under this Section 9,
the Purchaser shall notify in writing the selling Founding Stockholder of such
intention as soon as practicable after the Purchaser’s receipt of the Notice,
and in any event within 15 days after the date the Notice was given.

 

(c)    Sale to Proposed Transferee.  The selling Founding Stockholder and the
Purchaser, if participating, shall sell to the Proposed Transferee all, or at
the option of the Proposed Transferee, any part of the shares proposed to be
sold by them at not less than the price and upon other terms and conditions, if
any, not more favorable to the Proposed Transferee than those in the Bona Fide
Offer; provided, however, that any purchase of less than all of such shares by
the Proposed Transferee shall be made from the selling Founding Stockholder and
the 

 

4

 

Purchaser pro rata based upon the relative amount of
the shares that each of them would otherwise be entitled to sell pursuant to Section 9(a).

 

(d)   Effect
of Failure to Provide Timely Notice. 
The failure of the Purchaser to provide notice within the specified
period under this Section 9 shall be deemed a rejection of the respective
right or option given to that Purchaser, provided, however, that such failure
shall be without prejudice to such Purchaser’s rights with respect to any
future sales of shares pursuant to a Bone Fide Offer.

 

10.                                 Transfer
of Securities.

 

(a)                                 Prior
to any sale, assignment, transfer, pledge, hypothecation or other disposition
of these Securities or of any legal or beneficial interest herein (a “Transfer”),
the Holder shall give written notice to the Borrower of the Holder’s intention
to effect such Transfer and to comply in all other respects with the provisions
of this Section 10.  Each such
notice shall contain (a) a statement setting forth the intention of the
Holder’s prospective transferee with respect to its retention or disposition of
the Securities, and (b) unless waived by the Borrower, an opinion of
counsel for the Holder, which opinion shall be reasonably acceptable to the
Borrower, addressed to the Borrower as to the necessity or non-necessity for
registration under the Securities Act of 1933, as amended (the “Securities Act”),
and applicable state securities laws in connection with such Transfer and
stating the factual and statutory bases relied upon by counsel.  The following provisions shall then apply:

 

(1)                                  
If in the opinion of counsel for the Borrower the proposed Transfer of the
Securities may be effected without registration or qualification under the
Securities Act and any applicable state securities laws, then the registered
holder of the Securities shall be entitled to Transfer [all or any portion
thereof in accordance with the intended method of disposition specified in the
statement delivered by such holder to the Borrower;

 

(2)                                  If
in the opinion of counsel for the Borrower the proposed Transfer of the
Securities may not be effected without registration under the Securities Act or
registration or qualification under any applicable state securities laws, the
registered holder of the Securities shall not be entitled to Transfer all or
any portion thereof until the requisite registration or qualification is
effective; and

 

(3)                                  No
Transfers shall be permitted hereunder unless the transferee agrees in writing
to be bound by the provisions of this Note.

 

(b)                                Each
instrument issued upon a Transfer of this Note [(and each instrument evidencing
any balance of such Securities not transferred)] shall bear the legend set
forth in the Purchase Agreement unless (1) in the opinion of counsel for
the Holder, addressed to the Borrower, the registration of future Transfers is
not required by the applicable provisions of the Securities Act and applicable
state securities laws, (2) the Borrower shall have waived the requirement
of such legend or (3) in the reasonable opinion of counsel to the
Borrower, such 

 

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Transfer shall have been made in connection with an
effective registration statement filed pursuant to the Securities Act or in
compliance with the requirements of Rule 144 or Rule 144A (or any
similar or successor rule) promulgated under the Securities Act, and in
compliance with applicable state securities laws.

 

11.                                 Collection.  Should the indebtedness evidenced by this
Note, or any part hereof, be collected at law or in equity or in bankruptcy,
receivership or other court proceedings, or this Note placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, due and payable
hereon, all costs of collection, including reasonable attorneys’ fees, incurred
by the Holder in collecting or enforcing this Note.

 

12.                                 Demand.  The Borrower hereby waives demand,
presentment, notice, notice of demand, notice for payment, protest and notice
of dishonor.

 

13.                                 Waiver.  Holder will not be deemed to waive any of his
rights under this Note unless his waiver is in writing.  No delay or omission by the Holder in
exercising any of his rights will operate as a waiver of his rights.  A waiver in writing on one occasion will not
be construed as a consent to or a waiver of any of the Holder’s right or remedy
on any future occasion.

 

14.                                 Governing
Law.  This Note shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania and will take effect as an instrument under seal.  Whenever possible, each provision of this
Note will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note will be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Note.

 

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IN WITNESS WHEREOF, the Company has caused this Note
to be issued this       
day of              .

 

	
   

  	
  VGX
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim,
  Ph.D.

  
	
   

  	
   

  	
  President and
  Chief Executive Officer

  

 

1

 

THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. 
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO CERTAIN
CONDITIONS SPECIFIED IN THE NOTE PURCHASE AGREEMENT DATED AS OF                           
BETWEEN VIRAL GENOMIX, INC.  (THE “COMPANY”)
AND THE SIGNATORY THERETO.  NO TRANSFER
OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY. 
NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS: (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS; OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT
REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

 

CONVERTIBLE SUBORDINATED PROMISSORY NOTE

 

	
  US $###,###

  	
  Philadelphia, Pennsylvania

  
	
   

  	
  [ENTER DATE]

  

 

FOR VALUE RECEIVED,
the undersigned, VIRAL GENOMIX, INC., a DELAWARE corporation (the “Borrower”),
hereby promises to pay to the order of [HOLDER]  , an individual 
(hereinafter, with any subsequent holder, the “Holder”), the
principal sum of                                                   
DOLLARS ($###,###) (the “Principal
Sum”), together with interest on the balance of the Principal Sum outstanding
at a per annum rate of five percent (5%), upon the terms set forth below.  Interest shall be calculated on the basis of
the actual number of days elapsed over a 360-day year and shall commence to
accrue on the date hereof.

 

15.                                 Note
Purchase Agreement.  This convertible
subordinated promissory note (the “Note”) is being issued pursuant to the terms
and conditions of the Note Purchase Agreement (the “Purchase Agreement”) dated
as of the date hereof to which the Borrower and the Holder are parties.  All notices with respect to this Note shall
be made in accordance with Section 5.7 of the Purchase Agreement

 

16.                                 Maturity.  Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, shall be due
and payable       months from the date hereof (the “Maturity
Date”).  No payments of principal or
interest are required hereunder until the Maturity Date.  The Maturity Date shall be automatically
extended to another 12 months at an option of the Holder.  If the Holder desires to extend the 

 

2

 

Maturity Date, the Maturity Date will be automatically
renewed for another 12 months after the first       months on terms and conditions to be informed by the
Holder and the Holder does not need to provide any advance notices.  However, if the Holder elects not to extend
the Maturity Date, the Holder will
provide a termination notice sixty (60) days prior to the Maturity Date to the
Borrower.  Upon payment in full of the
Principal Sum and interest payable hereunder, or upon conversion of this Note
in accordance with Section 3 hereof, the Holder shall surrender this Note
to the Borrower for cancellation.

 

17.                                 Conversion.  If, prior to the Maturity Date or the
repayment by the Borrower of the Principal Sum, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, the Borrower
shall issue shares of Common Stock to one or more investors, the Note shall be
convertible, at the option of the Holder, by written notice to the Borrower, in
whole but not in part, into that number of fully paid, validly issued and
non-assessable shares of Common Stock equal to the $         
price per share, as adjusted for any stock splits, reverse stock splits or
stock dividends occurring after the date hereof.  Upon such conversion of this Note, the value of the Note to be converted shall include
all accrued and outstanding interest, and all other fees, costs and charges, if
any, due or payable under this Note on the date of conversion, and all rights
of the Holder of this Note, except the right to receive such shares of Common
Stock in accordance with this Section 3, shall cease and this Note shall
no longer be deemed to be outstanding. 
In addition, no fractional shares of Common Stock shall be issued upon
the conversion of this Note.  With
respect to any fraction of a share of Common Stock called for upon the
conversion of this Note, a cash amount equal to such fraction shall be paid to
the Holder.

 

18.                                 Payment.  Any payment of principal, interest and all
other fees, costs and charges, if any, shall be in lawful money of the United
States of America by wire transfer of same day funds to the account of the
Holder at such banking institution as the Holder designates or, if requested by
the Holder, by certified or bank cashier’s check payable to the Holder mailed
to the Holder at the address of the Holder as set forth on the records of the
Borrower or such other address as shall be designated in writing by the Holder
to the Borrower.

 

19.                                 Credits.  The Borrower’s payments will be credited
first to any interest then due, and the remainder to the Principal Sum.  Interest will cease to accrue on any amount
credited to the Principal Sum as of the date any such amount is paid.

 

20.                                 Intentionally
Omitted

 

21.                                 Event
of Default.  Repayment of all
principal and interest under this Note will be accelerated and shall be
immediately due in full in the event of any of the following:

 

(a)                                  default
shall be made in the payment of the Principal Sum of this Note or any part
thereof when and as the same shall become due and payable, either on the
Maturity Date or at a date fixed by the parties in writing for prepayment or by
acceleration or otherwise and such default continues for a period of 10 days;

 

(b)                                 default
shall be made in the payment of interest on this Note when and as the same
shall become due and payable and such default continues for a period of 10
days;

 

3

 

(c)                                  the
Borrower shall (i) apply for or consent to the appointment of a receiver,
trustee or liquidator of the Borrower or any of its property, (ii) make a
general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws or file a petition or answer
seeking reorganization or an arrangement with creditors to take advantage of
any other bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or file an answer admitting the material
allegations of a petition filed against it in any proceeding under any such
law, or (iv) take corporate action for the purpose of effecting any of the
foregoing; or an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Borrower, or
of all or a substantial part of the assets of the Borrower and such order,
judgment or decree shall continue unstayed and in effect for a period of 60
days;

 

(d)                                 The
Borrower’s failure to observe and perform any of the material terms, covenants,
conditions or agreements required to be observed and performed by the Borrower
under this Note or the Purchase Agreement, and such failure shall remain
unremedied for 30 days after written notice shall have been provided to the
Borrower by the Holder of such default; or

 

(e)                                  any
representation or warranty made by the Borrower under this Note or Purchase Agreement or in any other
loan document relating to this transaction, or in any certificate or writing
delivered pursuant to any loan document relating to this transaction, shall be
incorrect in any material respect.

 

Nothing in this Section 7
shall, in any manner, be construed to prohibit or otherwise affect the rights
of the Holder to enforce payment of this Note in accordance with its terms.

 

 

22.                                 Subordination.  All principal and accrued interest on this
Note shall be subordinate in right and time of payment to the payment in full
of all Senior Indebtedness.  Notwithstanding anything to the contrary set
forth in this Note, unless and until the Senior Indebtedness shall have been
indefeasibly satisfied and paid in full in cash and all lending commitments
thereunder have terminated: (a) the Holder may not demand payment of any of the
Principal Sum; (b) no accrued interest on this Note shall be payable to
the Holder; provided, however, that interest on this Note shall accrue in
accordance with the terms of this Note; (c) the indebtedness evidenced by
this Note shall be unsecured, and (d) the holder of this Note shall not,
without the written consent of the holders of the Senior Indebtedness, take any
action with respect to collection or enforcement or other like action hereunder
or exercise any remedies the Holder may have at law or equity in respect of any
amounts owing under this Note, regardless of whether an Event of Default exists
pursuant to Section 7 hereof and regardless of any remedies provision
contained in this Note.  The provisions of this Section 8 shall
continue in effect until all amounts under the Senior Indebtedness are
indefeasibly satisfied and paid in full in cash and all lending commitments of
the holders thereof under such Senior Indebtedness shall have terminated,
notwithstanding any delay or failure of such holder in the exercise of any
right or remedy with respect to the Senior Indebtedness.  For purposes
hereof, “Senior Indebtedness” shall mean all present and future obligations due
from the Borrower, its successors and assignees, arising in respect of borrowed

 

4

 

money, or from any bank or other financial
institution, which obligations are secured by any assets of the Borrower,
including without limitation, any principal and all interest thereon and all
related fees and expenses.

 

 

23.                                 Transfer
of Securities.

 

(a)                                 Prior
to any sale, assignment, transfer, pledge, hypothecation or other disposition
of these Securities or of any legal or beneficial interest herein (a “Transfer”),
the Holder shall give written notice to the Borrower of the Holder’s intention
to effect such Transfer and to comply in all other respects with the provisions
of this Section 10.  Each such
notice shall contain (a) a statement setting forth the intention of the
Holder’s prospective transferee with respect to its retention or disposition of
the Securities, and (b) unless waived by the Borrower, an opinion of
counsel for the Holder, which opinion shall be reasonably acceptable to the
Borrower, addressed to the Borrower as to the necessity or non-necessity for
registration under the Securities Act of 1933, as amended (the “Securities Act”),
and applicable state securities laws in connection with such Transfer and
stating the factual and statutory bases relied upon by counsel.  The following provisions shall then apply:

 

(1)                                  
If in the opinion of counsel for the Borrower the proposed Transfer of the
Securities may be effected without registration or qualification under the
Securities Act and any applicable state securities laws, then the registered
holder of the Securities shall be entitled to Transfer [all or any portion
thereof in accordance with the intended method of disposition specified in the
statement delivered by such holder to the Borrower;

 

(2)                                  If
in the opinion of counsel for the Borrower the proposed Transfer of the
Securities may not be effected without registration under the Securities Act or
registration or qualification under any applicable state securities laws, the
registered holder of the Securities shall not be entitled to Transfer all or
any portion thereof until the requisite registration or qualification is
effective; and

 

(3)                                  No
Transfers shall be permitted hereunder unless the transferee agrees in writing
to be bound by the provisions of this Note.

 

(b)                                Each
instrument issued upon a Transfer of this Note [(and each instrument evidencing
any balance of such Securities not transferred)] shall bear the legend set
forth in the Purchase Agreement unless (1) in the opinion of counsel for
the Holder, addressed to the Borrower, the registration of future Transfers is
not required by the applicable provisions of the Securities Act and applicable
state securities laws, (2) the Borrower shall have waived the requirement
of such legend or (3) in the reasonable opinion of counsel to the
Borrower, such Transfer shall have been made in connection with an effective
registration statement filed pursuant to the Securities Act or in compliance
with the requirements of Rule 144 or Rule 144A (or any similar or successor
rule) promulgated under the Securities Act, and in compliance with applicable
state securities laws.

 

5

 

24.           Collection.  Should the indebtedness evidenced by this
Note, or any part hereof, be collected at law or in equity or in bankruptcy,
receivership or other court proceedings, or this Note placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, due and payable
hereon, all costs of collection, including reasonable attorneys’ fees, incurred
by the Holder in collecting or enforcing this Note.

 

25.           Demand.  The Borrower hereby waives demand,
presentment, notice, notice of demand, notice for payment, protest and notice
of dishonor.

 

26.           Waiver.  Holder will not be deemed to waive any of his
rights under this Note unless his waiver is in writing.  No delay or omission by the Holder in
exercising any of his rights will operate as a waiver of his rights.  A waiver in writing on one occasion will not
be construed as a consent to or a waiver of any of the Holder’s right or remedy
on any future occasion.

 

27.           Governing
Law.  This Note shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania and will take effect as an instrument under seal.  Whenever possible, each provision of this
Note will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note will be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Note.

 

6

 

IN WITNESS WHEREOF, the Company has caused this Note
to be issued this      day of                  .

 

	
   

  	
  VIRAL GENOMIX, INC.

  
	
   

  	
  (VGX PHARMACEUTICALS)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  

 

1

 

THE SECURITIES REPRESENTED HEREBY
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS.  ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO CERTAIN CONDITIONS SPECIFIED IN THE
NOTE PURCHASE AGREEMENT DATED AS OF                   
BETWEEN VIRAL GENOMIX, INC.  (THE “COMPANY”)
AND THE SIGNATORY THERETO.  NO TRANSFER
OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY. 
NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS: (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS; OR (2) THE COMPANY RECEIVES
AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE COMPANY, THAT
REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

 

CONVERTIBLE
SUBORDINATED PROMISSORY NOTE

 

	
  US $###,###

  	
   

  	
  Blue Bell,
  Pennsylvania

  
	
   

  	
   

  	
  [ENTER DATE]

  

 

FOR VALUE
RECEIVED, the undersigned, VIRAL GENOMIX, INC., a DELAWARE corporation (the “Borrower”),
hereby promises to pay to the order of [HOLDER]  (hereinafter, with
any subsequent holder, the “Holder”), the principal sum of                
Dollar ($###,###) (the “Principal
Sum”), together with interest on the balance of the Principal Sum outstanding
at a per annum rate of five percent (5%), upon the terms set forth below.  Interest shall be calculated on the basis of
the actual number of days elapsed over a 360-day year and shall commence to
accrue on the date hereof.

 

28.           Note
Purchase Agreement.  This convertible
subordinated promissory note (the “Note”) is being issued pursuant to the terms
and conditions of the Note Purchase Agreement (the “Purchase Agreement”) dated
as of the date hereof to which the Borrower and the Holder are parties.  All notices with respect to this Note shall
be made in accordance with Section 5.7 of the Purchase Agreement

 

29.           Maturity.  Unless this Note has been converted pursuant
to Section 3 or repaid pursuant to Section 7 below, the entire unpaid
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, shall be due
and payable       months from the date hereof (the “Maturity
Date”).  No payments of principal or
interest are required hereunder until the Maturity Date.  The Maturity Date shall be automatically
extended to another 12 months at an option of the Holder.  If the Holder desires to extend the 

 

2

 

Maturity Date, the Maturity Date will be automatically
renewed for another 12 months after the first      
months on terms and
conditions to be informed by the Holder and the Holder does not need to
provide any advance notices.  However, if
the Holder elects not to extend the Maturity Date, the Holder will provide a termination notice sixty
(60) days prior to the Maturity Date to the Borrower.  Upon payment in full of the Principal Sum and
interest payable hereunder, or upon conversion of this Note in accordance with Section 3
hereof, the Holder shall surrender this Note to the Borrower for cancellation.

 

30.           Conversion.  If, prior to the Maturity Date or the
repayment by the Borrower of the Principal Sum, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, the Borrower
shall issue shares of Common Stock to one or more investors, the Note shall be
convertible, at the option of the Holder, by written notice to the Borrower, in
whole but not in part, into that number of fully paid, validly issued and
non-assessable shares of Common Stock equal to the $     
price per share, as adjusted for any stock splits, reverse stock splits or
stock dividends occurring after the date hereof.  Upon such conversion of this Note, the value of the Note to be converted shall include
all accrued and outstanding interest, and all other fees, costs and charges, if
any, due or payable under this Note on the date of conversion, and all rights
of the Holder of this Note, except the right to receive such shares of Common
Stock in accordance with this Section 3, shall cease and this Note shall
no longer be deemed to be outstanding. 
In addition, no fractional shares of Common Stock shall be issued upon
the conversion of this Note.  With
respect to any fraction of a share of Common Stock called for upon the
conversion of this Note, a cash amount equal to such fraction shall be paid to
the Holder.

 

31.           Payment.  Any payment of principal, interest and all
other fees, costs and charges, if any, shall be in lawful money of the United
States of America by wire transfer of same day funds to the account of the
Holder at such banking institution as the Holder designates or, if requested by
the Holder, by certified or bank cashier’s check payable to the Holder mailed
to the Holder at the address of the Holder as set forth on the records of the
Borrower or such other address as shall be designated in writing by the Holder
to the Borrower.

 

32.           Credits.  The Borrower’s payments will be credited
first to any interest then due, and the remainder to the Principal Sum.  Interest will cease to accrue on any amount
credited to the Principal Sum as of the date any such amount is paid.

 

33.           Financial
Reports.  The Borrower shall furnish
Holder the following financial statements prepared in accordance with generally
accepted accounting principles consistently applied: (i) within thirty
(30) days after the end of each calendar quarter, the Company’s unaudited or if
available, audited balance sheet and statements of income and cash flows for
the quarter just ended; and (ii) as soon as possible after the end of each
fiscal year of the Company, a balance sheet as of the end of its fiscal year
and the related statements of income and cash flows for the fiscal year then
ended, unaudited or if available, audited by an independent certified public
accounting firm that is acceptable to the Holder in its reasonable judgment.

 

34.           Event
of Default.  Repayment of all
principal and interest under this Note will be accelerated and shall be immediately
due in full in the event of any of the following:

 

3

 

(a)           default shall be made in the payment
of the Principal Sum of this Note or any part thereof when and as the same
shall become due and payable, either on the Maturity Date or at a date fixed by
the parties in writing for prepayment or by acceleration or otherwise and such
default continues for a period of 10 days;

 

(b)           default shall be made in the payment
of interest on this Note when and as the same shall become due and payable and
such default continues for a period of 10 days;

 

(c)           the Borrower shall (i) apply for
or consent to the appointment of a receiver, trustee or liquidator of the
Borrower or any of its property, (ii) make a general assignment for the
benefit of creditors, (iii) commence a voluntary case under the federal
bankruptcy laws or file a petition or answer seeking reorganization or an
arrangement with creditors to take advantage of any other bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law or statute, or file an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or (iv) take
corporate action for the purpose of effecting any of the foregoing; or an
order, judgment or decree shall be entered, without the application, approval
or consent of the Borrower, by any court of competent jurisdiction, approving a
petition seeking reorganization of the Borrower, or of all or a substantial part
of the assets of the Borrower and such order, judgment or decree shall continue
unstayed and in effect for a period of 60 days;

 

(d)           The Borrower’s failure to observe and
perform any of the material terms, covenants, conditions or agreements required
to be observed and performed by the Borrower under this Note or the Purchase
Agreement, and such failure shall remain unremedied for 30 days after written
notice shall have been provided to the Borrower by the Holder of such default;
or

 

(e)           any representation or warranty made
by the Borrower under this Note or Purchase Agreement or in any other loan document relating to this
transaction, or in any certificate or writing delivered pursuant to any loan
document relating to this transaction, shall be incorrect in any material
respect.

 

Nothing
in this Section 7 shall, in any manner, be construed to prohibit or
otherwise affect the rights of the Holder to enforce payment of this Note in
accordance with its terms.

 

35.           Subordination.  All principal and accrued interest on this
Note shall be subordinate in right and time of payment to the payment in full
of all Senior Indebtedness.  Notwithstanding anything to the contrary set
forth in this Note, unless and until the Senior Indebtedness shall have been
indefeasibly satisfied and paid in full in cash and all lending commitments
thereunder have terminated: (a) the Holder may not demand payment of any
of the Principal Sum; (b) no accrued interest on this Note shall be
payable to the Holder; provided, however, that interest on this Note shall
accrue in accordance with the terms of this Note; (c) the indebtedness
evidenced by this Note shall be unsecured, and (d) the holder of this Note
shall not, without the written consent of the holders of the Senior
Indebtedness, take any action with respect to collection or enforcement or
other like action hereunder or exercise any remedies the Holder may have at law
or equity in respect of any amounts owing under this Note, regardless of
whether an Event of Default exists 

 

4

 

pursuant to Section 7 hereof and regardless of
any remedies provision contained in this Note.  The provisions of this Section 8
shall continue in effect until all amounts under the Senior Indebtedness are
indefeasibly satisfied and paid in full in cash and all lending commitments of
the holders thereof under such Senior Indebtedness shall have terminated,
notwithstanding any delay or failure of such holder in the exercise of any
right or remedy with respect to the Senior Indebtedness.  For purposes
hereof, “Senior Indebtedness” shall mean all present and future obligations due
from the Borrower, its successors and assignees, arising in respect of borrowed
money, or from any bank or other financial institution, which obligations are
secured by any assets of the Borrower, including without limitation, any
principal and all interest thereon and all related fees and expenses.

 

36.           Collateral.  The Borrower shall provide the Holder as collateral with      
shares of Common Stock of VGX International, Inc. (formerly Dong-Il
Fabrics Co., Ltd.) that the Borrower owns at the Closing.

 

37.           Co-Sale
Rights.  Upon the conversion of the
Note entered in connection herewith, the Company hereby covenants and agrees as
follows:

 

(a) 
If at any time, Dr. J. Joseph Kim (the “Founding Stockholder”) desires to
sell all or any of the capital stock beneficially owned by each of them
respectively (the “Take-Along Shares”) to any unrelated person or entity or any
affiliate of such unrelated person or entity (a “Proposed Transferee”) as part
of a bona fide written offer (a “Bona Fide Offer”), the Founding Stockholders
shall make effective arrangement on the terms of the Bona Fide Offer (which
shall be a condition to any sale by either of the Founding Stockholders) so
that the Purchaser shall have the right to sell to the Proposed Transferee, at
the same price per share and other terms and conditions as involved in such
sale by such selling Founding Stockholder, such number of shares of capital
stock equal to the Take-Along Shares multiplied by a fraction, (i) the
numerator of which is the number of shares of capital stock owned by the
Purchaser, and (ii) the denominator of which is the sum of all shares of
capital stock owned by the selling Founding Stockholder(s) and the
Purchaser.

 

(b) 
Notice of Intent to Participate. 
If the Purchaser wishes to participate in any sale under this Section 10, the Purchaser shall notify the
selling Founding Stockholder of such intention as soon as practicable after the
Purchaser’s receipt of the Notice, and in any event within 15 days after the
date the Notice was given.

 

(c) 
Sale to Proposed Transferee.  The
selling Founding Stockholder and the Purchaser, if participating, shall sell to
the Proposed Transferee all, or at the option of the Proposed Transferee, any
part of the shares proposed to be sold by them at not less than the price and
upon other terms and conditions, if any, not more favorable to the Proposed
Transferee than those in the Bona Fide Offer; provided, however, that any
purchase of less than all of such shares by the Proposed Transferee shall be
made from the selling Founding Stockholder and the Purchaser pro rata based
upon the relative amount of the shares that each of them would otherwise be
entitled to sell pursuant to Section 10(a).

 

5

 

(d)  Effect of Failure to Provide Timely
Notice.  The failure of the Purchaser
to provide notice within the specified period under this Section 10 shall be deemed a rejection of the
respective right or option given to that Purchaser, provided, however, that
such failure shall be without prejudice to such Purchaser’s rights with respect
to any future sales of shares pursuant to a Bone Fide Offer.

 

38.           Transfer
of Securities.

 

(a)          Prior
to any sale, assignment, transfer, pledge, hypothecation or other disposition
of these Securities or of any legal or beneficial interest herein (a “Transfer”),
the Holder shall give written notice to the Borrower of the Holder’s intention
to effect such Transfer and to comply in all other respects with the provisions
of this Section 11.  Each such
notice shall contain (a) a statement setting forth the intention of the
Holder’s prospective transferee with respect to its retention or disposition of
the Securities, and (b) unless waived by the Borrower, an opinion of
counsel for the Holder, which opinion shall be reasonably acceptable to the
Borrower, addressed to the Borrower as to the necessity or non-necessity for
registration under the Securities Act of 1933, as amended (the “Securities Act”),
and applicable state securities laws in connection with such Transfer and
stating the factual and statutory bases relied upon by counsel.  The following provisions shall then apply:

 

(1)           If in the opinion of counsel for the
Borrower the proposed Transfer of the Securities may be effected without
registration or qualification under the Securities Act and any applicable state
securities laws, then the registered holder of the Securities shall be entitled
to Transfer [all or any portion thereof in accordance with the intended method
of disposition specified in the statement delivered by such holder to the
Borrower;

 

(2)           If in the opinion of counsel for the
Borrower the proposed Transfer of the Securities may not be effected without
registration under the Securities Act or registration or qualification under
any applicable state securities laws, the registered holder of the Securities
shall not be entitled to Transfer all or any portion thereof until the requisite
registration or qualification is effective; and

 

(3)           No Transfers shall be permitted
hereunder unless the transferee agrees in writing to be bound by the provisions
of this Note.

 

(b)          Each
instrument issued upon a Transfer of this Note [(and each instrument evidencing
any balance of such Securities not transferred)] shall bear the legend set
forth in the Purchase Agreement unless (1) in the opinion of counsel for
the Holder, addressed to the Borrower, the registration of future Transfers is
not required by the applicable provisions of the Securities Act and applicable
state securities laws, (2) the Borrower shall have waived the requirement
of such legend or (3) in the reasonable opinion of counsel to the
Borrower, such Transfer shall have been made in connection with an effective
registration statement filed pursuant to the Securities Act or in compliance
with the requirements of Rule 144 or Rule 144A (or any similar or
successor rule) promulgated under the Securities Act, and in compliance with
applicable state securities laws.

 

6

 

39.           Collection.  Should the indebtedness evidenced by this
Note, or any part hereof, be collected at law or in equity or in bankruptcy,
receivership or other court proceedings, or this Note placed in the hands of
attorneys for collection, the Borrower agrees to pay, in addition to the
balance of the Principal Sum outstanding, together with all accrued, but
unpaid, interest and all other fees, costs and charges, if any, due and payable
hereon, all costs of collection, including reasonable attorneys’ fees, incurred
by the Holder in collecting or enforcing this Note.

 

40.           Demand.  The Borrower hereby waives demand,
presentment, notice, notice of demand, notice for payment, protest and notice
of dishonor.

 

41.           Waiver.  Holder will not be deemed to waive any of his
rights under this Note unless his waiver is in writing.  No delay or omission by the Holder in
exercising any of his rights will operate as a waiver of his rights.  A waiver in writing on one occasion will not
be construed as a consent to or a waiver of any of the Holder’s right or remedy
on any future occasion.

 

42.           Governing
Law.  This Note shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania and will take effect as an instrument under seal.  Whenever possible, each provision of this
Note will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note will be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Note.

 

7

 

IN WITNESS WHEREOF, the Company has caused this Note
to be issued this        day of               .

 

	
   

  	
  VIRAL GENOMIX, INC.

  
	
   

  	
  (VGX PHARMACETUICALS)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Joseph Kim, Ph.D.

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

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