Document:

exv10w38

 

Exhibit 10.38

MASTER SERVICES AGREEMENT

     THIS MASTER SERVICES AGREEMENT (“Agreement”) is made and entered into effective January
27th, 2005 (the “Effective Date”), by and between NURA, Inc. (hereinafter “Nura”),
having a place of business at 1124 Columbia Street, Seattle WA, 98104, USA, and ComGenex, Inc.
(hereinafter “ComGenex” or “CGX), having a place of business at Zahony u 7, H-1031 Budapest,
Hungary, altogether referred to as Parties.

     WHEREAS, Nura is engaged in the discovery and development of active substances against
diseases of the central nervous system and is planning to outsource a specific project that
involves the molecular target of Phosphodiesterase enzyme 10 (“PDE10” or “PDE10a”) as described in
Appendix A, and

     WHEREAS, ComGenex is engaged in the business of providing complex drug discovery services
including but not limited to molecular biology, protein expression, assay development and high
throughput screening, chemical research and analysis, chemistry consulting, chemical synthesis,
manufacturing of specialty chemical products, chemoinformatics and related services, and undertakes
such as an independent company, understanding that neither ComGenex nor its employees or agents
shall be considered an employee of Nura; nor a participant in any programs, insurance or other
benefits extended to Nura’s employees; and,

     NOW, THEREFORE, in consideration of the mutual covenants set forth below, the Parties hereby
agree as follows:

     A. ComGenex Services: ComGenex shall provide to Nura complex drug discovery research
services (“Services”), including as detailed above and as agreed upon in writing from time to time
by the parties and set forth in Appendix B for each such project (the “Projects”). The parties
acknowledge and accept that successful completion of all projects is not guaranteed but shall be
completed by ComGenex on a best efforts basis. Nura and ComGenex shall agree upon, and specify in
the Appendix B the parameters of the Projects, the compensation to be paid for the Services, and
the time frame in which the Services are to be provided, subject to the terms of this Agreement.
Such Services may include, but are not limited to, the following:

          1. Molecular Biology Services: ComGenex shall provide to Nura at Nura’s request and as
described in Appendix B, cloning and protein expression, assay development, high throughput
screening, and protein structure determination.

          2. Medicinal Chemistry Research Services: ComGenex shall provide to Nura at Nura’s
request advice on design and synthesis of organic compounds, and for the completion of the
manufacture of such organic compounds.

          3. Technical Assistance: ComGenex shall provide to Nura, at Nura’s request synthetic
chemical research, chemical library preparation, hit/lead evolution and/or optimization chemistry,
analysis and analytical method development, process development and process optimization studies,
and manufacturing of specialty chemicals.

 

			
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          4. Technical Consultations: ComGenex shall be available to Nura via telephone at such
times as are requested by Nura and are mutually agreeable to ComGenex for technical consultations
with Nura’s research and development personnel.

     B. Specific Duties of ComGenex:

          1. In assuming responsibility for undertaking this Agreement, ComGenex will, on a best efforts
basis:

               a) Perform molecular biology, chemistry and complex drug discovery services including protein
expression, assay development, high throughput screening, medicinal chemistry, chemistry
consulting, synthetic chemical research, combinatorial chemical synthesis, hit/lead evolution and
optimization chemistry, process development and process optimization studies, and manufacturing of
specialty chemicals for any Projects entered into, as described in Appendix B attached hereto.

               b) Provide technical consultation, technical assistance and product development assistance, as
defined, for any Projects entered into.

               c) Develop or utilize existing analytical methods that will allow determination of the
identity and quantification of the purity of any compounds delivered.

               d) Provide compounds in the time frame set forth in Appendix B attached hereto, and
immediately notify Nura if any delays are encountered.

          2. In assuming responsibility for undertaking this Agreement, ComGenex will:

               a) Interact with Nura’s scientists as is deemed by ComGenex reasonably necessary and
appropriate in the conduct of the Projects outlined in Appendix B.

               b) Provide as part of the Project research reports to Nura describing the results upon the
completion of individual Projects.

     C. Specific Duties of Nura: Nura will:

          1. Provide assistance such as is deemed reasonable and appropriate by Nura in the conduct of a
fully integrated research project team effort.

          2. Interact with and communicate with ComGenex reasonably and respond to all reasonable
requests to provide necessary and appropriate Project guidance.

          3. Agree to pay ComGenex for the Services to be performed by ComGenex as set forth in the
schedule of payments as shown in Appendix C.

 

			
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     D. Term and Termination:

          1. This Agreement shall commence on the Effective Date and shall terminate eighteen months
after the Effective Date; provided however that Nura may elect to extend this Agreement for up to
an additional 18 months by written notification to ComGenex. Extension of this Agreement shall be
subject to future written Agreement.

          2. The representations and warranties contained in this Agreement, as well as those rights
and/or obligations contained in the terms of this Agreement which by their intent or meaning have
validity beyond the term hereof, including without limitation Sections D, E, H, and I hereof, shall
survive the expiration or termination of this Agreement.

     E. Financials:

          1. Nura will pay to ComGenex the amount set forth, and at the indicated times set forth in
Appendix C. Nura will pay to ComGenex a first installment to help to cover the running cost of
Projects (“Cost Coverage”), and Nura will pay a milestone fee (“Milestone Fee’) upon completion of
each individual subprojects — both as described in Appendix C.

          2. The Cost Coverage component in each Project will be paid in monthly installments as listed
in the Appendix C. Unless otherwise agreed in writing by the parties, Nura will not be obliged to
pay any Cost Coverage beyond that specified in Appendix C, including those cases in which a project
is not completed within the period shown in Appendix B. However once a milestone is reached and
achieved, Nura shall pay the milestone fee (“Milestone Fee”) as set forth in Appendix C.

          3. To cover the start and initiation of the Projects, Nura will pay a down-payment of [†]
within 15 days of the Effective Date. This down-payment will be credited using the following
payment schedule: Each invoice issued by ComGenex will be reduced by 25% until the down-payment is
fully eliminated, as described in Appendix C.

          4. In addition to the above payment obligations Nura or any of its licensees will pay to
ComGenex the following development related milestone fees for any and each compounds, chemical
entity or active substance, specifically developed under this Agreement that enters preclinical or
clinical development or any of the above representing the therapeutically active part of an
experimental pharmaceutical product developed under this Agreement that enters preclinical or
clinical development. For clarity, for any single compound, chemical entity or active substance
that reaches the listed milestone below, the associated fee shall be paid only once to ComGenex, by
either Nura or a licensee of Nura, whichever shall achieve such milestone first.

	 	 	 
	[†]

	 	[†]
	[†]

	 	[†]
	[†]

	 	[†]
	[†]

	 	[†]
	[†]

	 	[†]
	[†]

	 	[†]

 

			
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     Royalty payment by Nura or any of its licensees will be due to ComGenex in the event of any
and each compound, chemical entity or active substance specifically developed under this Agreement
representing the therapeutically active part of a product is marketed by Nura and/or a licensee or
any other third party. The resulting royalty rate will be [†].

          5. Outsourced projects that are outlined in Appendix D will be reimbursed to ComGenex by Nura.
These payments are in addition to the payments detailed in Appendix C.

          6. Except as set otherwise all payments will be 15 days from the date of invoice.

     Notices:

     All notices associated with this Agreement shall be by first class mail or courier, addressed
to the respective parties as follows:

To ComGenex:

ComGenex, Inc.

Attn: Laszlo Urge, Ph.D. CEO

Zahony u. 7.

Budapest, Hungary H-1031

To Nura:

Nura, Inc.

Attn: Patrick W. Gray, Ph.D., CEO

1124 Columbia Street

Seattle WA, 98104

     The above named persons are acting on behalf of their respective organizations and may be
changed on an as needed basis.

     F. Assignment: This Agreement may not be assigned or otherwise transferred by either
party without the prior written consent of the other party, with such consent not to be
unreasonably withheld; provided, however, that Nura or ComGenex may, without such consent, assign
this Agreement and its rights and obligations hereunder to its Affiliates and parent corporations,
or in connection with the transfer or sale of all or substantially all of the business to which
this Agreement pertains, or in the event of its merger or consolidation or change in control or
similar transaction. Any purported assignment in violation of the preceding sentences shall be
void. Any permitted assignee shall assume all obligations of its assignee under this Agreement.
“Affiliate” shall mean any company which directly or indirectly controls or is controlled by or is
under common control with a party hereto by means of ownership of more than fifty percent (50%) of
the voting stock or similar interest in said company.

     G. Safety: Each of the parties agrees that if it becomes aware of any safety hazard
relating to any compound supplied or developed under this Agreement that it shall promptly notify

 

			
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the other party with all information in its possession or control concerning such safety
hazard. Nura recognizes that the toxic effect of the compounds supplied or developed under this
Agreement is not known and it may be toxic or harmful to human health. Nura agrees to take
reasonably necessary precautions when handling such compounds. ComGenex will not be held
responsible in any form if after delivery of such compounds to Nura the compounds cause harmful
effects to any of Nura’s employees, contractors, consultants or any other parties.

     H. Entire Agreement:

          1. Except as provided herein with respect to the Appendices affixed hereto and the obligations
provided in the CONFIDENTIAL DISCLOSURE AGREEMENT dated as of December 13, 2004 between parties,
this Agreement represents the entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior communications, understandings and agreements with respect thereto.

          2. No waiver, change or modification of the provisions of this Agreement shall be effective
unless it is in writing and signed by a duly authorized officer of ComGenex and Nura. Additional
Appendices describing Projects in writing and signed by a duly authorized officer of ComGenex and
Nura shall constitute part of this Agreement.

     I. Miscellaneous:

          1. The Parties agree that from time to time they may make public announcement relating to the
collaboration, where certain information pertaining to the collaboration is disclosed in the form
of a press release, press conference, an announcement associated with trade show, or reports for
television or other media. No such public announcements are permitted under this Agreement without
the express written approval of the other party.

          2. ComGenex represents and warrants that it will render the services hereunder in accordance
with prevailing high professional standards and will make all reasonable efforts to produce
consistently high levels of accuracy and expertise and to meet timetables set forth under this
Agreement, and as described in Appendices B and C for completion of services. ComGenex further
represents and warrants that ComGenex and any third party personnel assigned to perform services
under this Agreement shall, in the opinion of ComGenex, have the skills necessary to efficiently
perform such services and produce chemicals, data and/or reports, as the case may be, in a form and
of a quality reasonably suitable to Nura.

          3. ComGenex is an independent company and nothing in this Agreement shall be construed to
create a partnership, joint venture or employment relationship between the parties.

          4. If any provision hereof shall be determined to be invalid or unenforceable, such
determination shall not affect the validity of the other provisions of this Agreement.

          5. This Agreement shall be governed in accordance with the laws of the State of Washington,
USA, without regard to the conflicts of law provisions thereof.

 

			
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          6. Waiver by either party or the failure by either party to claim a breach of any provision of
this Agreement shall not be deemed to constitute a waiver or estoppel with respect to any
subsequent breach of any provision hereof.

          7. If any dispute arises with regard to the performance of this contract by either party, a
good faith effort will be made by the parties to resolve such dispute by negotiation. If the
parties fail to resolve the dispute through negotiation, each party shall have the right to pursue
any other remedies legally available to resolve the dispute. The substantially prevailing party in
any proceeding conducted to interpret or enforce this Agreement shall be entitled to be reimbursed
by the other party for its reasonable attorneys’ fees and costs.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	COMGENEX, INC.	 	 	 	NURA. INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Dr. Laszlo Urge
 

	 	 	 	By:
	 	/s/ Patrick W. Gray
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Laszlo Urge
 

	 	 	 	Name:
	 	Patrick W. Gray
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	CEO, Director
 

	 	 	 	Title:
	 	CEO
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	07 Feb 2005
 

	 	 	 	Date:
	 	27 Jan 2005
 

	 	 

 

			
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Appendix A

To that certain Master Services Agreement by and between Nura Inc., and ComGenex Inc.

Materials Provided by Nura to ComGenex

     [†]

 

			
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Appendix B

To that certain Master Services Agreement by and between Nura Inc., and ComGenex Inc.

     To the extent that any term or provision set forth in this Appendix B is inconsistent with any
term or provision set forth in the Master Services Agreement, the Master Agreement shall be
controlling.

 

			
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Table of Contents

	 	 	 	 	 
	MASTER SERVICES AGREEMENT
	 	 	1	 
	 
	 	 	 	 
	TABLE OF CONTENTS
	 	 	9	 
	 
	 	 	 	 
	OBJECTIVE
	 	 	11	 
	 
	 	 	 	 
	DEFINITIONS
	 	 	11	 
	BACKGROUND
	 	 	11	 
	 
	 	 	 	 
	PROJECT SUMMARY
	 	 	12	 
	 
	 	 	 	 
	MILESTONES
	 	 	12	 
	SUBPROJECT 1: LEAD CANDIDATE GENERATION
	 	 	12	 
	SUBPROJECT 2: PROVISION OF HUMAN PDE10A. CLONING AND EXPRESSION
	 	 	12	 
	SUBPROJECT 3: ASSAY DEVELOPMENT, HTS
	 	 	12	 
	SUBPROJECT 4: COMPOUND OPTIMIZATION
	 	 	12	 
	 
	 	 	 	 
	TERMS
	 	 	13	 
	 
	 	 	 	 
	INTELLECTUAL PROPERTY RIGHTS
	 	 	13	 
	 
	 	 	 	 
	ANNEXES
	 	 	14	 
	 
	 	 	 	 
	ANNEX 1: DETAILED PROJECT PLAN
	 	 	14	 
	[†]
	 	 	 	 
	 
	 	 	 	 
	Subproject 1: Lead Candidate Generation
	 	 	20	 
	[†]
	 	 	 	 
	 
	 	 	 	 
	Subproject 2: Provision of human PDE10a. Closing and expression
	 	 	23	 
	[†]
	 	 	 	 
	 
	 	 	 	 
	Subproject 3: Assay development, HTS
	 	 	25	 
	[†]
	 	 	 	 
	 
	 	 	 	 
	Subproject 4: Compound Optimization
	 	 	26	 
	[†]
	 	 	 	 
	 
	 	 	 	 
	PAYMENTS
	 	 	35	 
	 
	 	 	 	 
	DOWN PAYMENT
	 	 	35	 
	COST COVERAGE PAYMENTS
	 	 	35	 
	MILESTONE FEES
	 	 	36	 
	 
	 	 	 	 
	Milestone1
	 	 	36	 
	 
	 	 	 	 
	Milestone2
	 	 	37	 
	[†]
	 	 	38	 
	 
	 	 	 	 
	Milestone3
	 	 	39	 

 

			
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Objective

The objective is to create a potent, selective PDE10a inhibitor with drug-like properties that
crosses the blood brain barrier. Potency should be less than [†] and selectivity greater than [†]
fold against other PDEs.

Definitions

	  •	 	Patentable Lead Candidate

       Biologically active chemical entities, which are not covered by patent, and which may be
transformed into a clinically useful drug by subsequent modification/optimization.

	  •	 	Focused library

       A set of compounds in silico selected or screened for binding preferably to a specific
biological target. The compounds are prepared by individual or parallel synthesis where the
building blocks are connected to each other in many possible variations.

	  •	 	Advanced Lead

       Compounds that possess desired properties (potency, selectivity, physicochemical,
pharmacokinetic and toxicological characteristics) set by the Lead Criteria against the particular
target.

	  •	 	Lead Criteria

       A set of criteria, mutually agreed to by the parties and included as Annex 3.

	  •	 	Target

       The biological target (binding partner) of the lead compounds to be developed (PDE10a).

Background

Following the ongoing communication with Nura Inc., the above objectives were defined. In
order to achieve these objectives three parallel approaches were discussed:

     [†]

     According to the discussions the following division of responsibility was defined:

     Nura responsibility:

     [†]

     ComGenex:

     [†]

 

			
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Project Summary

Subproject 1: Lead Candidate Generation

     [†]

Subproject 2: Provision of human PDE1Oa. Cloning and expression

     [†]

Subproject 3: Assay development, HTS

     [†]

Subproject 4: Compound Optimization

     [†]

Terms

Intellectual Property Rights

     ComGenex shall retain no rights to any compound delivered to Nura. ComGenex shall have sole
ownership of all right, title, and interest in and to ComGenex patent rights and ComGenex
technology as well as any invention arising from ComGenex’ platform or technology that are not
specific to the compounds or the related chemistry applied under this project.

No conflict

     During the term of this Agreement, ComGenex will not participate in any program which has, as
its goal, the development of compounds which target PDE10.

     [†]

 

			
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Subproject 1: Lead Candidate Generation

     [†]

Subproject 2: Provision of human PDE10a. Cloning and expression

     [†]

Subproject 3: Assay development, HTS

     [†]

Subproject 4: Compound Optimization

     [†]

Annex 2: Definitions of the targeted Lead Criteria

     Potent, selective PDE10a inhibitors with drug-like properties that cross the blood brain
barrier. [†]

     The above definitions are subjected to change during the whole project upon agreement of the
Parties.

Annex 3: Initial Target information

     cAMP and cAMP-inhibited cGMP 3’,5’-cyclic phosphodiesterase 10A (PDE10a) belongs to the cyclic
nucleotide phosphodiesterase family. It plays a role in signal transduction by regulating the
intracellular concentration of cyclic nucleotides. This enzyme can hydrolyze both cAMP and cGMP,
having a higher affinity for cAMP.

     PDE10a is abundant in the putamen and caudate nucleus regions of brain and testis, it is
moderately expressed in the thyroid gland, pituitary gland, thalamus and cerebellum. The protein
is composed of a C-terminal catalytic domain containing two putative divalent metal sites and an
N-terminal regulatory domain, which contains one putative cGMP-binding region. Several members of
the PDE family were crystallized and a there is a wide range of known substrates and inhibitors.

Annex 4: CGX’ Know-how

     Genetic engineering, protein expression and renaturation.

     At ComGenex we have extensive experience in genetic engineering and expressing sequences
across various expression systems. We have developed unique protein renaturation capabilities for
high yielding expression of functional proteins of your choice. We are active in the field of
assay development and high-throughput screening.

 

			
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     RefoldAllTM is modular protein production service from subcloning and fermentation to protein
purification, where renaturation is the key element of the process. With the integration of a
combinatorial approach and sophisticated parameter optimization, we offer fast and efficient
renaturation screens for your proteins.

     XpressXpertTM is a comprehensive modular protein expression service which delivers purified
recombinant proteins according to client supplied DNA sequence data. We provide the following
discrete modules:

	  •	 	cloning, subcloning
	 
	  •	 	target oriented choice of expression system
	 
	  •	 	protein expression in: E. coli, insect cells, mammalian cells
	 
	  •	 	protein purification development
	 
	  •	 	production scale-up

     Darvas F., Dorman G., Papp A., Urge L., Molnár T., Borbola I., Lorincz Z. and Ambrus G.
Development of a High-throughput Cytotoxicity Screening Method for Early Compound Filtering. 2004.
Society for Biomolecular Screening 10th Anniversary Conference and Exhibition, Orlando,
USA (September 11-15, 2004)

     Narayan M., Welker E. and Scheraga H.A. 2003. Native Conformational Tendencies in Unfolded
Polypeptides: Development of a Novel Method To Assess Native Conformational Tendencies in the
Reduced Forms of Multiple Disulfide-Bonded Proteins. J. Am. Chem. Soc. 125 (8); 2036-2037.

     Ambrus G., Gal P., Kojima M., Szilagyi K., Balczer J., Antal J., Graf L., Laich A., Moffatt B.
E., Schwaeble W., Sim R. B. and Zavodszky P. 2003. Natural Substrates and Inhibitors of
Mannan-Binding Lectin-Associated Serine Protease-1 and -2: A Study on Recombinant Catalytic
Fragments. J. Immunol. 170, 1374-1382.

     Welker E., Narayan M., Wedemeyer W. J. and Scheraga H. A. 2001. Structural determinants of
oxidative folding in proteins. PNAS, 98, 2312-2316.

     Kardos J., Gal P., Szilagyi L., Thielens N. M., Szilagyi K., Lorincz Z., Kulcsar P., Graf L.,
Arlaud G. J. and Zavodszky P. 2001. The role of the individual domains in the structure and
function of the catalytic region of a modular serine protease, C1r J. Immunol 167, 5202-5208.

     Scheraga H. A., Wedemeyer, W. J. and Welker E. 2001. Bovine Pancreatic Ribonuclease A:
Oxidative and Conformational Folding Studies. Methods in Enyzmology, 341: 189-221.

     EMILTM -based analogue generation

     ComGenex has developed a knowledge base and software with Prof. Toshio Fujita (Kyoto) for
bioanalogous lead evolution. The entry structures (validated hits, initial leads) are first
imported into our EMIL software to create the bioanalogous expansion of the chemical space defined
by the original hit molecules.

 

			
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     EMIL (Example Mediated Innovation for Lead Evolution) incorporates a knowledge base
(collection of structural “evolution” examples) and an interactive search engine. By analyzing
large number of biologically active compounds, several thousand structural “evolution” examples
(from simple bioisosteric structural replacements to bioanalogous drastic skeletal changes) were
identified and collected from literature into the EMIL database as virtual transformation rules.
The resulting candidate lead structures could exhibit improved pharmacological/ pharmacokinetic
characteristics, and help to reach novel intellectual property (IP) position.

     Fujita T., Adachi M., Akamatsu M., Asao M. and Fukami H. Background and Features of EMIL, A
System for Database-aided Bioanalogous Structural Transformation of Bioactive Compounds. 1995.
QSAR and Drug Design: New Developments and Applications, Pharmacochemistry Library, Vol. 23 (Ed.
Fujita T), pp. 235-273. Elsevier, Amsterdam, 1995.

     Papp A., Fujita T. and Darvas F. The implementation of an expert system for evolving
pharmaceutical leads. Eurocombi 1, Budapest, July 1-5, 2001.

     Darvas F, Fujita T. and Papp A. A Web-based Tool for Building Bioanalogous Libraries, DDJ
Japan, Tokyo, Jan 28, 2002.

     EMILTM-SelectTM for target family-based drug design

     In the post-genomic drug discovery large enzyme families are investigated parallel in order
design selective inhibitors for many related isoforms in one combined research effort.
Chemogenomics is a bioinformatics-driven approach to explore the ligand-target knowledge space
based on the genetic (sequence homology) divergence of target family members.

     This design approach identifies the major molecular determinants of the target-family
(privileged structures/ special recognition features) and virtual transformations leading
selectivity within the family. Using the knowledge base, which is an extension of the original
EMILTM concept (EMIL-SelectTM) scaffolds or robust inhibitors can be transformed into selective
inhibitors (‘selectivity jumping’).

     Darvas F., Dorman G., Papp A., Szommer T., Ambrus G., Fujita T., Urge L. Novel chemogenomics
approach to design selective MMP inhibitors, Society for Biomolecular Screening 10th
Anniversary Conference and Exhibition, Orlando, USA (September 1115, 2004).

     Darvas F., Dorman G., Krajcsi P., Puskas L., Kovari Z., Lorincz Z. and Urge L. 2004. Recent
advances in chemical genomics. Curr. Med. Chem. (in press).

     Lead MultiplierTM technology

     ComGenex’ Lead MultiplierTM technology is designed to integrate proprietary chemoinformatics
tools in order to select, optimize and prioritize novel chemically distinct lead classes (de novo
focused libraries) against particular targets for hit validation and lead explosion.

 

			
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     The program utilizes a unique medicinal chemistry knowledge based expert system, a proprietary
similarity search tool, in silico pharmacokinetic filtering and diversity assessing methods. Lead
MultiplierTM Focused Library demonstrates pharmaceutically relevant structural complexity and at the
same time remains chemically distant from the original lead structures.

     Successful applications:

     Dorman G, Gulyas-Forro A, Darvas G, Urge L, Sasvari-Szekely M, Sziraki M. Bioanalogous
structure evolution for new lead generation. Design and discovery of novel dopamine transporter
inhibitors. ISMC2004, Copenhagen, August 15-1 9, 2004.

     Patents:

     Development of novel compounds for reversing Multi-Drug Resistance, (ComGenex with Solvo
Biotech), Hung Pat Appl. P01-05401; 2001.

     Compounds having inhibitive activity of phosphatidylinositol 3-kinase and methods of use
thereof. (ComGenex with Echelon Bioscience, Salt Lake City, UT, two joint patents filed in 2004
for two separate compound series, PCT 21958.PROV, PCT 21780.PROV).

     CMTTM (ComGenex Matrix Technology)

     ComGenex has developed its proprietary HT parallel chemistry platform, referred to as ComGenex
Matrix Technology (CMTTM). It utilizes manual and robotized parallel synthesis stations of
different size that reflects the cascading diversity building approach. CMTTM is practically a
technological line that also contains state-of-the-art selection methods database management,
reaction piloting, HT purification and analytics.

     Examples for successful application of CMTTM:

     Varga L, Nagy T, Kovesdi I, Benet-Buchholz J, Dorman D, Urge L. and Darvas F. 2003.
Solution-phase parallel synthesis of 4,6-diaryl-pyrimidine-2-ylamines and
2-amino-5,5-disubstituted-3,5-dihydro-imidazol-4-ones via a rearrangement, Tetrahedron, 59 (5)
655-662.

     Gerencser J., Panka G., Nagy T., Egyed O., Dorman G., Urge L. and Darvas F. 2004. A
versatile procedure for the parallel preparation of 3-imidazo[l,2-a]pyridin-3-yl-propionic acid
derivatives involving Meldrum’s acid, J. Comb. Chem. (in press).

     Innovative chemical technologies:

     —H-Cube: A microfluidics-based continuous flow hydrogenation device

     This novel device, which is co-developed with Thales Nanotechnologies, (www.thalesnano.com)
enables high-yield hydrogenation with improved selectivity.

     Darvas F., Godorhazy L., Panka G., Bucsai A. and Dorman G. Development and application of
microchannel flowreactor for parallel hydrogenation. ACS, Philadelphia, August 22-28, 2004.

 

			
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     Jones R., Godorhazy L., Panka G., Szalay D., Dorman G., Urge L. and Darvas F. A compact,
continuous flow device for high-pressure heterogeneous hydrogenation, J. Comb. Chem. (in press).

     —MW: microwave heating

     Integration of microwave heating into CMT enables to perform difficult chemical
transformations, multicomponent reactions that are typically carried out in low yield and long
reaction time.

     Urge L. Integration of Microwave assisted chemistry into high-throughput chemistry platform.
The Pros and Cons. Conference on Microwave-Assisted Organic Synthesis, Boston, Nov. 11-13, 2004.

     In silico ADME (BBB penetration, CNS likeness) prediction

     ComGenex together with CompuDrug has developed a software family (PallasTM), which helps to
filter out, compounds early in the drug discovery pipeline, practically in the design phase. The
software allows the prediction of physicochemical parameters (pKa, LogP, LogD), metabolism, and
toxicity.

     Darvas F., Keseru G., Papp A., Dorman G., Urge I., Krajcsi P. 2002. In silico and Ex Silico
ADME Approaches for Drug Discovery, Current Topics in Medicinal Chemistry, 2, 1269-1277.

     Dorman
G. and Darvas F. 2002. HT Prediction, Virtual and Experimental Screening of Drug
Absorption, In: HT ADMETox estimation based on in vitro and in silico approaches, F. Damas, G.
Dorrnan (Eds.), BioTechniques Press, Eaton Publishing, Westborough, MA, USA. 25-40pp.

     Molnar L.., Keseru G., Papp A., Gulyas Z. and Darvas F. 2004. A Neural Network Based
Prediction of Octanol-Water Partition Coefficients Using Atomic5 Fragmental Descriptors, Bioorg.
Med. Chem. Letters, 14(4), 851 -853

     ChemprobeTM tethering strategy

     ComGenex has developed a novel tethering strategy where a representative subset is designed
around the core structure of known active compounds or combinatorial compound libraries with
appropriate terminal functional groups.

     Dorman G., Reynolds D., Puskas L., Urge L. and Damas F. Immobilized surrogate compound
libraries for rapid affinity profiling Eurocombi-2, Copenhagen, Jun 29-July 3,2003

     Hackler L., Dorman G., Kele Z., Urge L., Damas F. and Puskas L. 2003. Development of chemicaly
modified glass surfaces for nucleic acid, protein and small molecule microarrays, Mol. Div. 7,
25-36

 

			
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     FlashTagTM covalent labeling strategy

     The major feature of covalent-bond forming libraries is a creation of a stable linkage between
small molecules and biopolymers targeted by the ligand or substrate toward the active site. As the
stable covalent linkage survives proteolysis, chemical fragmentation and sequencing, and the small
molecule trapped within the active site during the entire manipulation, this technique enables the
identification of the binding site. Combining with chemprobeTM combinatorial tethering approach the
architecture of the binding site can be investigated.

     Dorman G. and Prestwich G.D. 2000. Using Photolabile Ligands in Drug Discovery and
Development. Trends in Biotech. 18(2): 64-77

     Dorman G., Krajcsi P. and Damas F. 2001. Chemical Library Approaches to Target Validation in
the Post-Genomic Era. Current Drug Discovery (October 2001), pp 21-24

     Dorman G. and Damas F.2004. Utilizing small molecules in chemical genomics: toward HT
approaches, In: Chemical Genomics, Eds. Ferenc Darvas, Andras GutTM Gyogy Dorman, Marcel Dekker, New
York, Basel, 2004, pp. 137-197

     Diversity selection: the ED1 concept

     ComGenex developed and employ for selection and library characterization a novel diversity
assessing approach, the Explicit Diversity Index (EDI). It combines structural dissimilarity and
core representativeness.

     Gulyas-Forro A., Dorman G., Papp A., Gulyas Z., Urge L. and Darvas F. Explicit Diversity Index
(EDI): A Novel Measure for Assessing the Diversity of Compound Databases, J. Chem. Inf Comp. Sci.
(in press)

     Multiparametric QSAR approach

     Ferenc Darvas developed a multiparametric QSAR design approach and successfully employed in
the area of CNS active drug design which lead to the development of deramciclane (The compound is
presently in Phase-IV at Orion, Pfizer — Pharmacia Upjohn.)

     Darvas F., Lopata A., Budai Z. and Petocz L. 1984. Computer Assisted Design of a Novel Type of
Tranquillant. QSAR and Strategies in the Design of Bioactive Compounds, 5th European Symp. on QSAR,
Bad Segeberg,l984 (Ed. Seydal JK), pp. 324-327. VCH, Weinheim, Germany.

     Darvas F., Lopata A., Budai Z. and Petocz L. 1984. Prediction of Therapeutical lndex for a
Novel Type of Tranquillant. QSAR in Toxicology and Xenobiochemistry, Bad Segeberg, Germany,1985
(Ed. Tichy M), pp. 324-327. Elsevier, Amsterdam.

     Parallel Lead Optimization Approach

 

			
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     The core of the ComGenex’ Parallel Lead Optimization Program is HT medicinal chemistry
supported by QSAR modeling and EMILTM (example-Mediated Innovation for Lead Evolution). Other
supporting elements are: broad spectrum of in silico and in vitro ADMETox methods; complementing
with ADMETox prefiltered screening libraries; ActiVerseTM, prescreened targeted libraries;
FlashTagTM, a photomarker library for covalent protein tagging; HT Analytical services. ComGenex
integrated these approaches into a service package, allowing the R&D activities to proceed
simultaneously shortening the average preclinical development phase.

     Krajcsi P., Dorman G., Karancsi T., Papp A., Kalman F., Nagy T., Szabo I., Urge L. and Darvas
F. Parallel Lead Optimization Program Supported by EMlL Expert System — SBS, Den Haag, Sept
23-26, 2002

     Darvas F., Krajcsi P., Urge L., Dorman G., Karancsi T., Papp A., and Fujita T. Lead
Optimization Program with Parallel Design — DDJapan, Jan 28-31, 2002

 

			
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Confidential

Appendix C

To that certain Master Services Agreement by and between Nura Inc., and ComGenex Inc.

     To the extent that any term or provision set forth in this Appendix C is inconsistent with any
term or provision set forth in the Master Services Agreement, the Master Agreement shall be
controlling.

 

			
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Payments

Down Payment

	 	 	 
	Amount due	 	Amount to be paid
	January 27, 2005

	 	[†]

Cost Coverage Payments

	 	 	 	 	 
	Amount due	 	Amount billed	 	Amount to be paid
	Milestone 1
	 	 	 	 
	February 15, 2005

	 	[†]
	 	[†]
	March 15, 2005

	 	[†]
	 	[†]
	April 15, 2005

	 	[†]
	 	[†]
	Subtotal

	 	 	 	[†]
	Milestone 2
	 	 	 	 
	May 15, 2005

	 	[†]
	 	[†]
	June 15, 2005

	 	[†]
	 	[†]
	July 15, 2005

	 	[†]
	 	[†]
	August 15, 2005

	 	[†]
	 	[†]
	Subtotal

	 	 	 	[†]
	Milestone 3
	 	 	 	 
	September 15, 2005

	 	[†]
	 	[†]
	October 15, 2005

	 	[†]
	 	[†]
	November 15, 2005

	 	[†]
	 	[†]
	December 15, 2005

	 	[†]
	 	[†]
	Subtotal

	 	 	 	[†]
	Total

	 	[†]
	 	[†]

     Down Payment and Cost Coverage Payments are due within 15 days after receipt by Nura of the
appropriate invoice from ComGenex.

 

			
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Milestone fees

     Milestone Fee Payments are due within 15 days after receipt by Nura of the appropriate invoice
from ComGenex. Each invoice shall be accompanied by a report from ComGenex detailing the
particular tasks relating to the invoice and accomplished by ComGenex according to the “Project”
plan pursuant to Appendix B.

Milestone 1

	 	 	 	 	 
	Subproject 1	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

	 	 	 	 	 
	Subproject 2	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

 

			
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Milestone 2

	 	 	 	 	 
	Subproject 1	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

	 	 	 	 	 
	Subproject 2	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

	 	 	 	 	 
	Subproject 3	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

 

			
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Optional items to Milestone 2

     To be paid as Milestone Fee only (cost coverage is incorporated in the Milestone Fee).
Optional items to be performed only at the written request of Nura.

	 	 	 	 	 
	Optional	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

     The cost and the fee for the following optional items will be determined later

Preliminary biological screening

in vitro screening

	  •	 	[†]

 

			
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Milestone 3

	 	 	 	 	 
	Subproject 3	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

	 	 	 	 	 
	Subproject 4	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

 

			
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Optional items to Milestone 3

     To be paid as Milestone Fee only (costTo be paid as Milestone Fee only (cost coverage is
incorporated in the Milestone Fee).

Optional items to be performed only at the written request of Nura.

	 	 	 	 	 
	Optional	 	If CGX delivers to Nura	 	Fee Due
	[†]

	 	[†]
	 	[†]

 

			
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Appendix D

To that certain Master Services Agreement by and between Nura Inc.,

and ComGenex Inc.

Confidential

Parties agree that the following costs will be reimbursed to ComGenex by Nura Inc:

1, Reasonable costs for obtaining commercially available recombinant PDE10a that is supplied to
facilitate early stage assay development. This cost incurs until sufficient amounts of recombinant
PDE10a from internal sources become available for assay development and screening.

2, If Nura requests optional selectivity screening as described in Appendix B; the costs of
selectivity studies to be performed on various PDE isotypes with ComGenex compounds.

3, If Nura requests real time PCR experiments, or other cell based assays that are not detailed in
Appendix B, the cost of these studies are borne by Nura.

 

			
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-8-exv10w7

 

Exhibit 10.7

 EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement’) is entered into as of December 10, 2007 by
and between Smith Micro Software, Inc., a Delaware corporation (the “Company”), and Biju
Nair (“Executive”).

     WHEREAS, Executive is currently employed at-will by PCTEL, Inc. (“PCTEL”);

     WHEREAS, the Company and PCTEL have, concurrently with this Agreement, entered into an Asset
Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company has agreed to
acquire the business unit of PCTEL known as the “Mobility Solutions Group”, including the business
and operations in which the Executive is principally involved; and

     WHEREAS, the Company desires to employ the Executive, effective upon the date of consummation
of the acquisition of the “Mobility Solutions Group” under the Purchase Agreement (such date is
referred to as the “Effective Date”).

     NOW, THEREFORE, in consideration of the foregoing recitals and the respective covenants and
agreements of the parties contained in this Agreement, the Company and Executive agree as follows:

     1. Period of Employment. The Company will employ Executive to render services to the
Company, in the position and with the duties and responsibilities described in this Agreement, from
the Effective Date until Executive’s employment by the Company terminates.

     2. Place of Performance. During the term of his employment, Executive agrees to
render services at the Company’s offices located in the Greater Chicago area, except for reasonably
required travel in connection with the Company’s business as may be required from time-to-time to
perform Executive’s duties hereunder.

     3. At-Will Employment. The Company and the Executive each acknowledge that
Executive’s employment is at-will and may be terminated by either party at any time, with or
without cause or notice.

     4. Termination Upon Failure to Close. If the Purchase Agreement is terminated prior
to the Effective Date, this Agreement will terminate and be of no further force or effect, nor will
Executive be entitled to receive any payment or other compensation by the Company under this
Agreement or otherwise.

     5. Position, Duties, Responsibilities. Executive will be employed by the Company to
tender services to the Company in the position of Senior Vice President and General Manager in
charge of the Connectivity and Security business unit. Executive will report to the Chief
Executive Officer through the Executive Vice President of Business Operations.

     6. Base Salary. For services to be rendered by the Executive pursuant to this
Agreement following the Effective Date, the Company agrees to pay to Executive a base salary

-1-

 

(the “Base Salary”) at an annual rate of Two Hundred Thirty Five Thousand Dollars
($235,000). The Base Salary will be paid in periodic installments in accordance with the Company’s
regular payroll practices.

     7. Signing Bonus. As soon as practicable after the Effective Date, but in no event
later than January 31, 2008, the Company will pay to the Executive $240,000 (the “Signing
Bonus”) as consideration for entering into this Agreement.

     8. Annual Bonus. The Executive will be eligible to receive an annual bonus (the
“Bonus”) following the Effective Date at a rate of up to Sixty Thousand Dollars ($60,000),
based upon achievement of certain objectives to be determined by the Board of Directors of the
Company (or the Compensation Committee of the Board) and paid in accordance with the Company’s
customary practices and policies. The Bonus will be based 50% on attainment of revenue goals of
the business unit managed by Executive, and 50% based on attainment of profit goals of the Company.

     9. Restricted Stock. The Company will award to Executive on the Effective Date 50,000
shares of restricted stock 25% of which will vest upon the 6-month anniversary of the Effective
Date and the remaining 75% which will vest monthly over the succeeding 18-month period. In the
event that the grant of restricted stock is deemed to be taxable to the Executive for federal or
state income tax purposes, the Company agrees to “gross-up” such taxable amount (including tax on
the “gross-up” payment), using the highest marginal federal, state and local income tax rates for
individuals applicable to wages (but not for Social Security and Medicare taxes) in effect for the
tax year(s) in which the restricted stock vests or is otherwise no longer subject to a substantial
risk of forfeiture (the “Income Tax Gross-Up”). The Income Tax Gross-Up shall be reduced
by a deemed federal tax benefit equal to the maximum federal tax rate multiplied by the state and
local taxes as determined in the sentence above. For purposes of the determination of the Income
Tax Gross-Up, the Company will select the personal income tax rates for the state where the
Executive files tax returns as a resident. The Income Tax Gross-Up shall be paid to the Executive
when the restricted stock vests or is otherwise transferred without a substantial risk of
forfeiture. The Income Tax Gross-Up is not intended to exactly determine and cover the actual
taxes applicable to the grant of restricted stock. It ignores most deductions, credits, federal,
state and local alternative minimum taxes, and other states or jurisdictions where the Executive
may file returns and pay tax. It may result in a payment greater or less than the actual taxes
due. The formula for determining the Income Tax Gross-Up is as follows:

	 	 	 	 	 
	 

	 	Y =
	 	FMV of restricted stock award as of taxable event
	 

	 	 	 
	 

	 	 	1-(A + B)

Where:

     A = the highest marginal individual federal tax rate applicable to wages

     B = the sum of the highest applicable marginal individual state and local tax rates
applicable to wages multiplied by (1-A)

Income Tax Gross-Up = Y – Taxable Income of Restricted Stock Grant

-2-

 

     10. Management Retention Agreement. The Company and Executive will, upon the
Effective Date, enter into a “Management Retention Agreement” in the form attached hereto as
Exhibit A.

     11. Severance.

          (a) Termination Following a Change of Control. If Executive’s employment is
terminated within twelve (12) months following a Change of Control, the severance and other
benefits to which Executive is entitled, if any, shall be governed by the Management Retention
Agreement (which includes the definition of Change of Control).

          (b) Termination by Company Without Cause and Apart From Change of Control. If, within
twelve (12) months of the Effective Date and prior to the occurrence of a Change of Control,
Executive’s employment is terminated (i) involuntarily by the Company for reasons other than Cause,
death or Disability or (ii) by Executive pursuant to a Voluntary Termination for Good Reason (as
defined in the Management Retention Agreement), then Executive shall be entitled to receive the
following benefits from the Company:

               (i) Salary Continuation. Executive shall receive continuation of Executive’s then
current Base Salary for a period of twelve (12) months following Executive’s termination of
employment by the Company for reasons other than Cause. All such severance payments shall be paid
in accordance with the Company’s normal payroll practices. Such continuation of Executive’s Base
Salary shall be in lieu of any and all other benefits which Executive is entitled to receive on the
date of Executive’s termination of employment pursuant to any Company severance and benefit plans
and practices or pursuant to other agreements with the Company. Executive shall not be entitled to
pro-rated payment of an annual bonus.

               (ii) Benefits. Executive shall receive one hundred percent (100%) of Company-paid
health, dental and vision insurance benefits at the same level of coverage as was provided to
Executive immediately prior to Executive’s termination of employment by the Company for reasons
other than Cause (“Companv-Paid Coverage”). If such coverage included Executive’s
dependents immediately prior to Executive’s termination, such dependents shall also be covered at
the Company’s expense. Provided that Executive elects COBRA within the required period,
Company-Paid Coverage shall continue until the earlier of (i) twelve (12) months following the date
of Executive’s termination by the Company for reasons other than Cause (the “Termination Date”),
and (ii) the date upon which Executive or Executive’s dependents become covered under another
employer’s group health, dental and vision insurance benefit plans. If Executive has not become
covered under another employer’s group health, dental and vision insurance benefit plans on or by
18 months following the Termination Date, Executive may, for the period from and after the
Termination Date, independently obtain health, dental and vision insurance benefits comparable in
the aggregate in scope and coverage to that provided by the Company to Executive immediately prior
to the Termination Date. In such event the Company shall reimburse Executive for the cost of the
premiums paid for such benefits until the earlier of (i) 6 months following the termination of
Company-Paid Coverage, and (ii) the date upon which Executive or Executive’s dependents become
covered under another employer’s group health, dental and vision insurance benefit plans. For
purposes of Title X of the

-3-

 

Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the date of the qualifying event for
Executive and his or her dependents shall be the Termination Date.

               (iii) Partial Accelerated Vesting. All equity awards from the Company then held by
Executive shall partially accelerate, or if Executive is then holding unvested shares, Company’s
right to repurchase the then-unvested shares under each such equity award shall partially lapse,
with respect to the number of shares under each such award that would have become vested or been
released from such repurchase right under each respective equity award if Executive’s employment
with the Company had continued for an additional 12 months following Executive’s effective
termination date for reasons other than for Cause.

               (iv) Other. If not previously paid, Executive shall receive the incentive cash amount
payable to the Executive pursuant to Schedule 8.2 of the Asset Purchase Agreement by and between
the Company and PCTEL, Inc., a Delaware corporation dated December 10, 2007 (the “Asset Purchase
Agreement”).

          (c) Other Termination. If Executive’s employment is terminated by the Company for
Cause, or by Executive for any reason, including death or Disability but other than pursuant to a
Voluntary Termination for Good Reason, then Executive shall not be entitled to receive the
severance and other benefits discussed above, but may be eligible for those benefits (if any) as
may then be required by law or established under the Company’s severance and benefit plans and
policies existing at the time of such termination.

     12. Incentive Payments. The Company and Executive agree that Executive will receive
$200,000 (net of applicable taxes) from the cash incentive pool described in Schedule 8.2 of the
Asset Purchase Agreement ($100,000 to be provided by PCTEL and $100,000 to be provided by the
Company).

     13. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment, cell phone usage, mobile Internet usage and other expenses incurred by Executive in
the furtherance of or in connection with the performance of his duties hereunder.

     14. Vacations and Holidays. Executive will be entitled to paid vacation and paid
holidays in accordance with the Company’s customary practices and policies for executives of equal
seniority and service credit; provided that Executive shall be entitled to at least four (4) weeks
of paid vacation per year. Executive will receive credit for prior service with PCTEL to the
extent length of service is relevant for purposes of determining vacation time and other benefits.

     15. Other Benefits. The Executive will be entitled to participate in employee benefit
plans or programs of the Company, if any, to the extent that his position, tenure, salary, age,
health and other qualifications make him eligible to participate, subject to the rules and
regulations applicable thereto.

     16. Integration. This Agreement, the Management Retention Agreement and any stock
option or restricted stock agreements entered into between the Company and Executive represent the
entire agreement and understanding between the parties as to the subject matter
hereof and supersede all prior or contemporaneous agreements whether written or oral. No

-4-

 

waiver, alteration, or modification of any of the provisions of this Agreement shall be binding
unless in writing and signed by the parties or their duly authorized representatives.

     17. Waiver. Failure or delay on the part of either party hereto to enforce any right,
power, or privilege hereunder shall not be deemed to constitute a waiver thereof. Additionally, a
waiver by either party or a breach of any promise hereof by the other party shall not operate as or
be construed to constitute a waiver of any subsequent waiver by such other party.

     18. Severability. Whenever possible, each provision of this agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.

     19. Headings. The headings of the paragraphs contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or interpretation of any
provision of this Agreement.

     20. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois.

     21. Counterparts. This Agreement may be executed in one or more counterparts. none of
which need contain the signature of more, than one party hereto and each of which shall be deemed
to be an original, and all of which together shall constitute a single agreement.

[Signatures on following page]

-5-

 

     IN WITNESS WHEREOF each of the parties has executed this Agreement, in the case of the Company
by its duty authorized officer, as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	“Company”	 	 	 	“Executive”	 	 
	 
	 	 	 	 	 	 	 	 
	SMITH MICRO SOFTWARE, INC.	 	 	 	BIJU NAIR	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ William W. Smith, Jr.
	 	 	 	/s/ Biju Nair	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	Name:

	 	William W. Smith, Jr.	 	 	 	 	 	 
	 
	Title:

	 	Chief Executive Officer	 	 	 	 	 	 

-6-

 

EXHIBIT A

FORM OF

MANAGEMENT RETENTION AGREEMENT

Exhibit A

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