-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WR/szfGaXOE5hKeGRL8yqIQ90MpCvsmMoQJTmpZdtXdhSsdNM9YGLnUfmncqFHfi s89LZv2Q8+QGWSx+rkidNQ== 0000950123-96-002733.txt : 19960530 0000950123-96-002733.hdr.sgml : 19960530 ACCESSION NUMBER: 0000950123-96-002733 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960529 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRUS RESEARCH INSTITUTE INC CENTRAL INDEX KEY: 0000902010 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 223098869 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-03378 FILM NUMBER: 96573431 BUSINESS ADDRESS: STREET 1: 61 MOULTON ST CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6178646232 MAIL ADDRESS: STREET 1: 61 MOULTON ST CITY: CAMBRIDGE STATE: MA ZIP: 02138 S-1/A 1 VIRUS RESEARCH INSTITUTE, INC. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1996 REGISTRATION NO. 333-3378 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ VIRUS RESEARCH INSTITUTE, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 2836 22-3098869 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
61 MOULTON STREET CAMBRIDGE, MASSACHUSETTS 02138 (617) 864-6232 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ J. BARRIE WARD, PH.D. CHAIRMAN AND CHIEF EXECUTIVE OFFICER VIRUS RESEARCH INSTITUTE, INC. 61 MOULTON STREET CAMBRIDGE, MASSACHUSETTS 02138 (617) 864-6232 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: SHELDON E. MISHER, ESQ. DAVID E. REDLICK, ESQ. STEVEN A. FISHMAN, ESQ. HALE AND DORR BACHNER, TALLY, POLEVOY & MISHER LLP 60 STATE STREET 380 MADISON AVENUE BOSTON, MASSACHUSETTS 02109 NEW YORK, NEW YORK 10017 (617) 526-6000 (212) 687-7000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / _________________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / _________________________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS 1.1. Form of Underwriting Agreement* 3.1. Fifth Restated Certificate of Incorporation, as amended* 3.2 Form of Third Certificate of Amendment to Fifth Restated Certificate of Incorporation* 3.3. By-laws, as amended* 3.4. Form of Fourth Amendment to Fifth Restated Certificate of Incorporation* 3.5. Form of Amendment to By-laws* 5.1. Opinion of Bachner, Tally, Polevoy & Misher regarding legality of securities offered* 10.1 1992 Equity Incentive Plan, as amended* 10.2 Form of Stock Option Agreement* 10.3 Lease dated December 1, 1991, between the Registrant and Moulton Realty Company.* 10.4 Series D Convertible Preferred Stock Purchase Agreement dated December 20, 1994* 10.5 Series D Convertible Preferred Stock Purchase Agreement dated January 5, 1996* 10.5(a) Form of Modification Agreement to Series D Convertible Preferred Stock Purchase Agreements* 10.6 Second Amended and Restated Stockholders Agreement dated April 8, 1994 and amendments.* 10.6(a) Form of Consent and Agreement to Amend Second Amended and Restated Stockholders Agreement* 10.7 Form of Warrant Agreement dated as of February 10, 1994.* 10.8 Form of Warrant to purchase shares of Common Stock dated February 10, 1994 issued pursuant to Exhibit 10.7.* 10.9 Loan Agreement dated as of September 14, 1995 between the Registrant and certain stockholders, with forms of Convertible Promissory Note and Warrant Agreement attached.* 10.10 Form of Warrant to purchase shares of Common Stock dated December 14, 1995 issued pursuant to Exhibit 10.9.* 10.11 Warrants issued to Comdisco, Inc. ("Comdisco") to purchase shares of Series A Preferred Stock and Series C Preferred Stock.* 10.12 Master Lease Agreement dated as of August 31, 1992, between the Registrant and Comdisco.* 10.13 License Agreement, dated as of May 1, 1992, between the Registrant and the President and Fellows of Harvard College ("Harvard") as amended.+* 10.14 License and Clinical Trials Agreement, dated as of February 27, 1995, between the Registrant and The James N. Gamble Institute of Medical Research (assigned to Children's Hospital of Cincinnati).+* 10.15 License Agreement, dated as of March 12, 1995, between the Registrant, Harvard and Dana-Farber Cancer Institute.+* 10.16 License Agreement, dated December 6, 1991, between the Registrant and Massachusetts Institute of Technology.+ 10.17 License Agreement, dated March 8, 1995, between the Registrant and The Penn State Research Foundation.+* 10.18 License Agreement, dated as of December 13, 1994, between the Registrant and Pasteur Merieux Serums & Vaccins S.A. ("Pasteur Merieux").+ 10.19 License Agreement, dated as of August 2, 1995, between the Registrant and Pasteur Merieux.+ 10.20 Option Agreement, dated as of November 22, 1995, among the Registrant, Pasteur Merieux, OraVax, Inc., OraVax Merieux Co. and Merieux OraVax S.N.C. relating to PCPP.+* 10.21 Option Agreement dated as of November 22, 1995 among the Registrant, Pasteur Merieux, OraVax, Inc., OraVax Merieux Co. and Merieux OraVax S.N.C. relating to VibrioVec.+* 10.22 Research Agreement, dated January 10, 1996, between the Registrant and CSL Limited.+*
II-1 3 10.23 Collaborative Research and License Agreement, dated as of June 22, 1995, between the Registrant and SmithKline Beecham plc.+ 10.24 Research and Development License and Option for Commercial License Agreement, dated as of December 28, 1995, between the Registrant and Chiron Corporation.+* 10.25 Warrants to purchase Common Stock issued to Silicon Valley Bank.* 11.1 Computation of Pro Forma Loss Per Share* 24.1 Consent of Bachner, Tally, Polevoy & Misher LLP (to be included in its opinion filed as Exhibit 5.1 hereto)* 24.2 Consent of Richard A. Eisner & Company, LLP -- Included on Page II-6* 24.3 Consent of Carella, Byrne, Baine, Gilfillan, Cecchi, Stewart & Olstein -- Included on Page II-8* 24.4 Consent of Hyman, Phelps & McNamara, P.C.* 24.5 Consent of Fish & Richardson, P.C.* 24.6 Consent of Dr. Volker Vossius -- Included on Page II-7* 25.1 Power of Attorney* 27.1 Financial Data Schedule*
- --------------- * Previously filed + Subject to confidential treatment request II-2 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cambridge, Commonwealth of Massachusetts on the 28th day of May, 1996. VIRUS RESEARCH INSTITUTE, INC. By: J. BARRIE WARD, PH.D. --------------------------------- J. Barrie Ward, Ph.D. SIGNATURE Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------------------------ ----------------------------------- --------------- /s/ J. BARRIE WARD, PH.D. Chief Executive Officer and May 28, 1996 - ------------------------------------------ Chairman of the Board (principal J. Barrie Ward, Ph.D. executive officer) /s/ WILLIAM A. PACKER President, Chief Financial Officer May 28, 1996 - ------------------------------------------ and Director (principal financial William A. Packer officer) /s/ DAVID H. RAMSDELL Vice President-Finance May 28, 1996 - ------------------------------------------ (principal accounting officer) David H. Ramsdell /s/ * Director May 28, 1996 - ------------------------------------------ Costas E. Anagnostopoulos /s/ * Director May 28, 1996 - ------------------------------------------ John W. Littlechild /s/ * Director May 28, 1996 - ------------------------------------------ Alan M. Mendelson /s/ J. BARRIE WARD, PH.D. - ------------------------------------------ J. Barrie Ward, Ph.D. *As Attorney-in-fact
II-3 5 EXHIBIT INDEX
PAGE EXHIBIT NO. - ------- ---- 1.1. Form of Underwriting Agreement* 3.1. Fifth Restated Certificate of Incorporation, as amended* 3.2 Form of Third Certificate of Amendment to Fifth Restated Certificate of Incorporation* 3.3. By-laws, as amended* 3.4. Form of Fourth Amendment to Fifth Restated Certificate of Incorporation* 3.5. Form of Amendment to By-laws* 5.1. Opinion of Bachner, Tally, Polevoy & Misher regarding legality of securities offered* 10.1 1992 Equity Incentive Plan, as amended* 10.2 Form of Stock Option Agreement* 10.3 Lease dated December 1, 1991, between the Registrant and Moulton Realty Company.* 10.4 Series D Convertible Preferred Stock Purchase Agreement dated December 20, 1994* 10.5 Series D Convertible Preferred Stock Purchase Agreement dated January 5, 1996* 10.5(a) Form of Modification Agreement to Series D Convertible Preferred Stock Purchase Agreements* 10.6 Second Amended and Restated Stockholders Agreement dated April 8, 1994 and amendments.* 10.6(a) Form of Consent and Agreement to Amend Second Amended and Restated Stockholders Agreement* 10.7 Form of Warrant Agreement dated as of February 10, 1994.* 10.8 Form of Warrant to purchase shares of Common Stock dated February 10, 1994 issued pursuant to Exhibit 10.7.* 10.9 Loan Agreement dated as of September 14, 1995 between the Registrant and certain stockholders, with forms of Convertible Promissory Note and Warrant Agreement attached.* 10.10 Form of Warrant to purchase shares of Common Stock dated December 14, 1995 issued pursuant to Exhibit 10.9.* 10.11 Warrants issued to Comdisco, Inc. ("Comdisco") to purchase shares of Series A Preferred Stock and Series C Preferred Stock.* 10.12 Master Lease Agreement dated as of August 31, 1992, between the Registrant and Comdisco.* 10.13 License Agreement, dated as of May 1, 1992, between the Registrant and the President and Fellows of Harvard College ("Harvard") as amended.+* 10.14 License and Clinical Trials Agreement, dated as of February 27, 1995, between the Registrant and The James N. Gamble Institute of Medical Research (assigned to Children's Hospital of Cincinnati).+* 10.15 License Agreement, dated as of March 12, 1995, between the Registrant, Harvard and Dana-Farber Cancer Institute.+* 10.16 License Agreement, dated December 6, 1991, between the Registrant and Massachusetts Institute of Technology.+ 10.17 License Agreement, dated March 8, 1995, between the Registrant and The Penn State Research Foundation.+* 10.18 License Agreement, dated as of December 13, 1994, between the Registrant and Pasteur Merieux Serums & Vaccins S.A. ("Pasteur Merieux").+ 10.19 License Agreement, dated as of August 2, 1995, between the Registrant and Pasteur Merieux.+
6
PAGE EXHIBIT NO. - ------- ---- 10.20 Option Agreement, dated as of November 22, 1995, among the Registrant, Pasteur Merieux, OraVax, Inc., OraVax Merieux Co. and Merieux OraVax S.N.C. relating to PCPP.+* 10.21 Option Agreement dated as of November 22, 1995 among the Registrant, Pasteur Merieux, OraVax, Inc., OraVax Merieux Co. and Merieux OraVax S.N.C. relating to VibrioVec.+* 10.22 Research Agreement, dated January 10, 1996, between the Registrant and CSL Limited.+* 10.23 Collaborative Research and License Agreement, dated as of June 22, 1995, between the Registrant and SmithKline Beecham plc.+ 10.24 Research and Development License and Option for Commercial License Agreement, dated as of December 28, 1995, between the Registrant and Chiron Corporation.+* 10.25 Warrants to purchase Common Stock issued to Silicon Valley Bank.* 11.1 Computation of Pro Forma Loss Per Share* 24.1 Consent of Bachner, Tally, Polevoy & Misher LLP (to be included in its opinion filed as Exhibit 5.1 hereto)* 24.2 Consent of Richard A. Eisner & Company, LLP -- Included on Page II-6* 24.3 Consent of Carella, Byrne, Baine, Gilfillan, Cecchi, Stewart & Olstein -- Included on Page II-8 24.4 Consent of Hyman, Phelps & McNamara, P.C.* 24.5 Consent of Fish & Richardson, P.C.* 24.6 Consent of Dr. Volker Vossius -- Included on Page II-7* 25.1 Power of Attorney* 27.1 Financial Data Schedule*
- --------------- * Previously filed + Subject to confidential treatment request EX-10.16 2 LICENSE AGREEMENT 1 EXHIBIT 10.16 Portions of this Exhibit have been omitted pursuant to a request for confidential treatment. The omitted portions, marked by [****], have been separately filed with the Commission. MASSACHUSETTS INSTITUTE OF TECHNOLOGY LICENSE AGREEMENT (EXCLUSIVE) 2 TABLE OF CONTENTS
PAGE ---- P R E A M B L E ARTICLES 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 GRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4 ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 REPORTS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 6 PATENT PROSECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7 INFRINGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 8 PRODUCT LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 9 EXPORT CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 10 NON-USE OF NAMES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 11 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 12 DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 13 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 14 PAYMENTS, NOTICES AND OTHER COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 15 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3 This Agreement is made and entered into this _________ day of ___________, 199__, (the "Effective Date") by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a corporation duly organized and existing under the laws of the Commonwealth of Massachusetts and having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts 02139, U.S.A. (hereinafter referred to as "M.I.T."), and VIRUS RESEARCH INSTITUTE, INC., a corporation duly organized under the laws of Massachusetts and having its principal office at 840 Memorial Drive Cambridge, MA 02139 (hereinafter referred to as "LICENSEE"). W I T N E S S E T H WHEREAS, M.I.T. is the owner of certain PATENT RIGHTS (as later defined herein) and has the right to grant licenses under said PATENT RIGHTS, subject only to a royalty-free, nonexclusive license heretofore granted to the United States Government; WHEREAS, portions of the M.I.T. PATENT RIGHTS are jointly owned by M.I.T. and Pennsylvania Research Corporation (hereinafter referred to as "PRC") and PRC has granted M.I.T. exclusive rights to license PRC's rights in such PATENT RIGHTS in the medical fields of use according to the institutional agreement dated December 3, 1990 and appended hereto as Appendix C. WHEREAS, M.I.T. desires to have the PATENT RIGHTS utilized in the public interest and is willing to grant a license thereunder; WHEREAS, LICENSEE has represented to M.I.T., to induce M.I.T. to enter into this Agreement, that LICENSEE is experienced in the development of products similar to the LICENSED PRODUCT(s) (as later defined herein) and/or the use of the LICENSED PROCESS(es) (as later defined herein) and that it shall commit itself to a thorough, vigorous and diligent program of exploiting the PATENT RIGHTS so that public utilization shall result therefrom; and WHEREAS, LICENSEE desires to obtain a license under the PATENT RIGHTS upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 4 ARTICLE I - DEFINITIONS For the purposes of this Agreement, the following words and phrases shall have the following meanings: 1.1 "LICENSEE" shall include a related company of VIRUS RESEARCH INSTITUTE, INC., the voting stock of which is directly or indirectly at least fifty percent (50%) owned or controlled by VIRUS RESEARCH INSTITUTE, an organization which directly or indirectly controls more than fifty percent (50%) of the voting stock of VIRUS RESEARCH INSTITUTE and an organization, the majority ownership of which is directly or indirectly under common control with VIRUS RESEARCH INSTITUTE, INC. 1.2 "PATENT RIGHTS" shall mean all of the following M.I.T. intellectual property: (a) the United States and foreign patents and/or patent applications listed in Appendices A and B; (b) United States and foreign patents issued from the applications listed in Appendices A and B and from divisionals and continuations of these applications; (c) claims of U.S. and foreign continuation-in-part applications, and of the resulting patents, which are directed to subject matter specifically described in the U.S. and foreign applications listed in Appendices A and B; (d) claims of all foreign patent applications, and of the resulting patents, which are directed to subject matter specifically described in the United States patents and/or patent applications described in (a), (b) or (c) above; and (e) any reissues of United States patents described in (a), (b) or (c)above. 1.3 A "LICENSED PRODUCT" shall mean any product or part thereof which: (a) is covered in whole or in part by an issued, unexpired claim or a pending claim which has not been declared invalid by a court of Competent Jurisdiction from which there is no appeal or from which no appeal is taken contained in the PATENT RIGHTS in the country in which any such product or part thereof is made, used or sold; or -2- 5 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. (b) is manufactured by using a process or is employed to practice a process which is covered in whole or in part by an issued, unexpired claim or a pending claim which has not been declared invalid by a court of Competent Jurisdiction from which there is no appeal or from which no appeal is taken contained in the PATENT RIGHTS in the country in which any LICENSED PROCESS is used or in which such product or part thereof is used or sold. 1.4 A "LICENSED PROCESS" shall mean any process which is covered in whole or in part by an issued, unexpired claim or a pending claim which has not been declared invalid by a court of Competent Jurisdiction from which there is no appeal or from which no appeal is taken contained in the PATENT RIGHTS. 1.5 "NET SALES" shall mean LICENSEE's (and its sublicensees') billings for LICENSED PRODUCTS and LICENSED PROCESSES produced hereunder less the sum of the following: (a) discounts allowed in amounts customary in the trade; (b) sales, tariff duties and/or use taxes directly imposed and with reference to particular sales; (c) outbound transportation prepaid or allowed; and (d) amounts allowed or credited on returns. No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by LICENSEE and on its payroll, or for cost of collections. LICENSED PRODUCTS shall be considered "sold" when billed out or invoiced. 1.6 "TERRITORY" [****] 1.7 "FIELD OF USE" shall mean non-injected delivery of vaccines and immunotherapeutics to all mucosal surfaces (including oral delivery). -3- 6 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. ARTICLE 2 - GRANT 2.1 M.I.T. hereby grants to LICENSEE the right and license to make, have made, use, lease and sell the LICENSED PRODUCTS and to practice the LICENSED PROCESSES in the TERRITORY for the FIELD OF USE to the end of the term for which the PATENT RIGHTS are granted unless this Agreement shall be sooner terminated according to the terms hereof. 2.2 LICENSEE agrees that LICENSED PRODUCTS leased or sold in the United States shall be manufactured substantially in the United States. 2.3 [****] 2.4 M.I.T. reserves the right to practice under the PATENT RIGHTS for noncommercial research purposes. 2.5 In addition to the options granted in the Sponsored Research Agreement of Appendix C, M.I.T. further grants to LICENSEE a first option to an exclusive license in the Field of Use to other new inventions which: (a) [****] (b) [****] (c) [****] This option for any new invention shall be exercisable within six months after the date on which M.I.T. notifies LICENSEE that the new invention has been reported, under the following terms: (i) [****] (ii) [****] (iii) [****] (iv) [****] -4- 7 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 2.6 LICENSEE shall have the right to enter into sublicensing agreements for the rights, privileges and licenses granted hereunder. 2.7 LICENSEE agrees that any sublicenses granted by it shall provide that the obligations to M.I.T. of Articles 2, 5, 7, 8, 9, 10, 12, 13, and 15 of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. LICENSEE further agrees to attach copies of these Articles to sublicense agreements. 2.8 LICENSEE agrees to forward to M.I.T. a copy of any and all sublicense agreements promptly upon execution by the parties. 2.9 LICENSEE shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement, without the express prior written permission of M.I.T. 2.10 The license granted hereunder shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any technology not specifically set forth in Appendix A, Appendix B or Section 2.5 hereof. ARTICLE 3 - DUE DILIGENCE 3.1 LICENSEE shall use its best efforts to bring one or more LICENSED PRODUCTS or LICENSED PROCESSES to market through a thorough, vigorous and diligent program for exploitation of the PATENT RIGHTS and to thereafter continue active, diligent marketing efforts for one or more LICENSED PRODUCTS or LICENSED PROCESSES throughout the life of this Agreement. [****] to the bringing to market of a LICENSED PRODUCT or LICENSED PROCESS throughout the term of this Agreement until the first commercial sale of a LICENSED PRODUCT or commercial use of a LICENSED PROCESS. 3.2 In addition, LICENSEE shall adhere to the following milestones: (a) [****] (b) [****] -5- 8 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 3.3 LICENSEE's failure to perform in accordance with Paragraphs 3.1 and 3.2 above shall be grounds for M.I.T. to terminate this Agreement pursuant to Paragraph 13.3 hereof. ARTICLE 4 - ROYALTIES 4.1 For the rights, privileges and license ranted hereunder, LICENSEE shall pay royalties to M.I.T. in the manner hereinafter provided to the end of the term of the PATENT RIGHTS or until this Agreement shall be terminated: a) [****] b) [****] (c) [****] (d) [****] 4.2 [****] 4.3 [****] 4.4 If LICENSEE sells LICENSED PRODUCTS to or under arrangement with a governmental or non-profit organization (such as the World Health Organization), and if such sales [****] 4.5 No multiple royalties shall be payable because any LICENSED PRODUCT, its manufacture, use, lease or sale are or shall be covered by more than one PATENT RIGHTS patent application or PATENT RIGHTS patent licensed under this Agreement. 4.6 Except as provided in Section 4.7 below, royalty payments shall be paid in United States dollars in Cambridge, Massachusetts, or at such other place as M.I.T. may reasonably designate consistent with the laws and regulations controlling in any foreign country. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate prevailing at the Chase -6- 9 Manhattan Bank (N.A.) on the last business day of the calendar quarterly reporting period to which such royalty payments relate. 4.7 If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, LICENSEE shall give M.I.T. prompt notice in writing and shall pay the royalty and other amounts due through such means or methods as are lawful in such country as M.I.T. may reasonably designate. Failing the designation by M.I.T. of such lawful means or methods within thirty (30) days after such notice is given to M.I.T., LICENSEE shall deposit such royalty payment in local currency to the credit of M.I.T. in a recognized banking institution designated by M.I.T., or if none is designated by M.I.T. within the thirty (30) day period described above, in a recognized banking institution selected by LICENSEE and identified in a written notice to M.I.T. by LICENSEE, and such deposit shall fulfill all obligations of LICENSEE to M.I.T. with respect to such royalties. ARTICLE 5 - REPORTS AND RECORDS 5.1 LICENSEE shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amounts payable to M.I.T. hereunder. Said books of account shall be kept at LICENSEE's principal place of business or the principal place of business of the appropriate division of LICENSEE to which this Agreement relates. Said books and the supporting data shall be open at all reasonable times for five (5) years following the end of the calendar year to which they pertain, to the inspection of M.I.T. or its Agents for the purpose of verifying LICENSEE's royalty statement or compliance in other respects with this Agreement. Should such inspection lead to the discovery of a greater than ten percent (10%) discrepancy in reporting, LICENSEE agrees to pay the full cost of such inspection. 5.2 Prior to the first calendar quarter in which Net Sales occur, LICENSEE shall provide M.I.T. with an annual summary of LICENSEE's efforts during the preceding year to bring to market a LICENSED PRODUCT or LICENSED PROCESS. Beginning with the first calendar quarter in which Net Sales occur, LICENSEE, within ninety (90) days after March 31, June 30, September 30 and December 31, of each year, shall in place of such annual reports -7- 10 deliver to M.I.T. true and accurate reports, giving such particulars of the business conducted by LICENSEE and its sublicensees during the preceding three-month period under this Agreement as shall be pertinent to a royalty accounting hereunder. These quarterly reports shall include at least the following: (a) number of LICENSED PRODUCT manufactured and sold by LICENSEE and all sublicensees; (b) total billings for LICENSED PRODUCTS sold by LICENSEE and all sublicensees; (c) accounting for all LICENSED PROCESSES used or sold by LICENSEE and all sublicensees; (d) deductions applicable as provided in Paragraph 1.5; (e) total royalties due; and (f) names and addresses of all sublicensees of LICENSEE. 5.3 With each such report submitted, LICENSEE shall pay to M.I.T. the royalties due and payable under this Agreement. If no royalties shall be due, LICENSEE shall so report. 5.4 On or before the ninetieth (90th) day following the close of LICENSEE's fiscal year, LICENSEE shall provide M.I.T. with LICENSEE's certified financial statements for the preceding fiscal year including, at a minimum, a Balance Sheet and an Operating Statement. 5.5 The royalty payments set forth in this Agreement and amounts due under Article 6 shall, if overdue, bear interest until payment at a per annum rate two percent (2%) above the prime rate in effect at the Chase Manhattan Bank (N.A.) on the due date. The payment of such interest shall not foreclose M.I.T. from exercising any other rights it may have as a consequence of the lateness of any payment. ARTICLE 6 - PATENT PROSECUTION 6.1 Except as provided in Section 6.4, M.I.T. shall apply for, seek prompt issuance of, and maintain during the term of this Agreement the PATENT RIGHTS in the United States and in the foreign countries listed in Appendix B hereto. Appendix B may be amended by -8- 11 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. verbal agreement of both parties, such agreement to be confirmed in writing within ten (10) days. The prosecution, filing and maintenance of all PATENT RIGHTS patents and applications shall be the primary responsibility of M.I.T.; provided, however, that patent counsel selected by M.I.T. is reasonably acceptable to LICENSEE. M.I.T. (and by instruction its patent counsel) shall consult with LICENSEE and its patent counsel as to the preparation and filing, prosecution and maintenance of PATENT RIGHTS, and shall furnish to LICENSEE and its patent counsel copies of documents relevant to such preparation, filing, prosecution or maintenance sufficiently prior to filing such documents or making any payment due thereunder to allow for review and comment by LICENSEE and its patent counsel. If, as a result of any such consultation, LICENSEE shall elect not to pay the expenses of any patent application or patent included in PATENT RIGHTS (which election may be limited to a specific country or countries), LICENSEE shall so notify M.I.T. within thirty (30) days of such consultation and shall thereby surrender its rights under PATENT RIGHTS in the country or countries affected, provided, however, that LICENSEE shall remain obligated to reimburse M.I.T. for any costs incurred with respect to such patent application or patent prior to said election. M.I.T. agrees that it shall not abandon the prosecution of any patent applications under PATENT RIGHTS nor shall it fail to make any payment or fail to take any other action necessary to obtain or maintain a patent under PATENT RIGHTS unless it has notified LICENSEE in sufficient time for LICENSEE to assume such prosecution, make such payment or take such action, and LICENSEE shall thereafter have the right to prosecute and/or maintain such PATENT RIGHTS at its expense in M.I.T.'s name, and M.I.T. shall thereafter render to LICENSEE all necessary assistance in order to facilitate such prosecution and/or maintenance. 6.2 LICENSEE shall reimburse M.I.T. for payment of all fees and costs relating to the filing, prosecution, and maintenance of the PATENT RIGHTS incurred by M.I.T. after the Effective Date of this Agreement. 6.3 [****] -9- 12 6.4 If, pursuant to Section 8.B.2 of the Research Agreement, LICENSEE obtains an exclusive license to a new invention which is added to PATENT RIGHTS, and if such new invention is jointly owned pursuant to Section 8.F. of the Research Agreement ("JOINT PATENT RIGHTS"), LICENSEE shall apply for, seek prompt issuance of, and maintain during the term of this Agreement at its own expense such JOINT PATENT RIGHTS in the United States and in such other countries as LICENSEE shall have elected. The prosecution, filing and maintenance of JOINT PATENT RIGHTS shall be the primary responsibility of LICENSEE; provided, however that patent counsel selected by LICENSEE is reasonably acceptable to M.I.T. LICENSEE (and by instruction its patent counsel) shall consult with M.I.T. and its patent counsel as to the preparation and filing, prosecution and maintenance of JOINT PATENT RIGHTS, and shall furnish to M.I.T. and its patent counsel copies of documents relevant to such preparation, filing, prosecution or maintenance sufficiently prior to filing such documents or making any payment due thereunder to allow for review and comment by M.I.T. and its patent counsel. If, at any time, LICENSEE shall elect not to pay the expenses of any patent application or patent included in JOINT PATENT RIGHTS (which election may be limited to a specific country or countries), LICENSEE shall so notify M.I.T. within thirty (30) days of such consultation and shall thereby surrender its rights under JOINT PATENT RIGHTS in the country or countries affected, provided, however, that LICENSEE shall remain obligated for any COSTS incurred with respect to such patent application or patent prior to said election. LICENSEE agrees that it shall not abandon the prosecution of any patent applications under JOINT PATENT RIGHTS nor shall it fail to make any payment or fail to take any other action necessary to obtain or maintain, in a patent under JOINT PATENT RIGHTS unless it has notified M.I.T. in sufficient time for M.I.T. to assume such prosecution, make such payment or take such action, and M.I.T. shall thereafter have the right to prosecute and/or maintain such JOINT PATENT RIGHTS at its expense in LICENSEE's name, and LICENSEE shall thereafter render to M.I.T. all necessary assistance in order to facilitate such prosecution and/or maintenance. -10- 13 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. ARTICLE 7 - INFRINGEMENT 7.1 LICENSEE shall inform M.I.T. promptly in writing of any alleged infringement of the PATENT RIGHTS by a third party of which LICENSEE becomes aware and of any available evidence thereof. 7.2 During the term of this Agreement, M.I.T. shall have the right, but shall not be obligated to prosecute at its own expense all infringements of the PATENT RIGHTS and, in furtherance of such right, LICENSEE hereby agrees that M.I.T. may include LICENSEE as a party plaintiff in any such suit, without expense to LICENSEE. M.I.T.'s choice of counsel in any such suit shall be subject to LICENSEE's approval, providing that such approval shall not be unreasonably withheld. The total cost of any such infringement action commenced or defended [****] 7.3 If within six (6) months after having been notified of any alleged infringement, M.I.T. shall have been unsuccessful in persuading the alleged infringer to desist and shall not have brought and shall not be diligently prosecuting an infringement action, or if M.I.T. shall notify LICENSEE at any time prior thereto of its intention not to bring suit against any alleged infringer in the TERRITORY for the FIELD OF USE, then, and in those events only, LICENSEE shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the PATENT RIGHTS in the TERRITORY for the FIELD OF USE, and LICENSEE may, for such purposes, use the name of M.I.T. as party plaintiff; provided, however, that such right to bring such an infringement action shall remain in effect only for so long as the license granted herein remains exclusive. No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of M.I.T., which consent shall not unreasonably be withheld. LICENSEE shall indemnify M.I.T. against any order for costs that may be made against M.I.T. in such proceedings. 7.4 In the event that LICENSEE shall undertake the enforcement and/or defense of the PATENT RIGHTS by litigation, [****] Any recovery of damages by LICENSEE -11- 14 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. for each such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of LICENSEE relating to such suit, [****] 7.5 For any patent of the PATENT RIGHTS jointly owned by M.I.T. and LICENSEE, LICENSEE shall have the first right to enforce and/or defend the patent. Other provisions of such enforcement or defense by LICENSEE shall be in accordance with Paragraphs 7.3 and 7.4 above. If LICENSEE chooses not to enforce or defend such patent, M.I.T. shall then have the right to do so, in accordance with the provisions of Paragraph 7.2 above. 7.6 In the event that a declaratory judgment action alleging invalidity or noninfringement of any of the PATENT RIGHTS shall be brought against LICENSEE, M.I.T., at its option, shall have the right, within thirty (30) days after commencement of such action, to intervene and take over the sole defense of the action at its own expense. 7.7 In any infringement suit as either party may institute to enforce the PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the request and expense of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. ARTICLE 8 - PRODUCT LIABILITY 8.1 LICENSEE shall at all times during the term of this Agreement and thereafter, indemnify, defend and hold M.I.T. and PRC, their trustees, officers, employees and affiliates, harmless against all claims and expenses, including legal expenses and reasonable attorneys' fees, rising out of the death of or injury to any person or persons or out of any damage to property and against any other claim, proceeding, demand, expense and liability of any kind whatsoever resulting from the production, manufacture, sale, use, lease, consumption or advertisement of the LICENSED PRODUCT(s) and/or LICENSED PROCESS(es) or arising from any obligation of LICENSEE hereunder. -12- 15 8.2 Commencing not later than commencement of human trials of any LICENSED PRODUCT, LICENSEE shall obtain and carry in full force and effect liability insurance which shall protect LICENSEE and M.I.T. in regard to events covered by Paragraph 8.1 above, providing that such insurance is available at commercially acceptable rates. 8.3 M.I.T. warrants that it owns above or jointly with PRC the PATENT RIGHTS and that it has the right to grant the rights and licenses granted in this agreement. M.I.T.'s total liability under this warranty shall be limited to the amounts paid by LICENSEE to M.I.T. under this License Agreement. 8.4 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T. MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY M.I.T. THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY. ARTICLE 9 - EXPORT CONTROLS It is understood that M.I.T. is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency. M.I.T. neither represents that a license shall not be required nor that, if required, it shall be issued. -13- 16 ARTICLE 10 - NON-USE OF NAMES LICENSEE shall not use the names or trademarks of the Massachusetts Institute of Technology nor of Pennsylvania Research Corporation nor of Pennsylvania State University, nor any adaptation thereof, nor the names of any of their employees, in any advertising, promotional or sales literature without prior written consent obtained from M.I.T., PRC or said employee, in each case, except that LICENSEE may state that it is licensed by M.I.T. under one or more of the patents and/or applications comprising the PATENT RIGHTS. ARTICLE 11 - ASSIGNMENT This Agreement is not assignable except by LICENSEE in conjunction with substantially all of the assets of LICENSEE which relate to the business of vaccines and immunotherapeutics. Any other attempt to do so is void. ARTICLE 12- DISPUTE RESOLUTION 12.1 For any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement, including any dispute relating to patent validity or infringement, which the parties shall be unable to resolve within sixty (60) days, the party raising such dispute shall promptly advise the other party of such claim, dispute or controversy in a writing which describes in reasonable detail the nature of such dispute. By not later than five (5) business days after the recipient has received such notice of dispute, each party shall have selected for itself a representative who shall have the authority to bind such party, and shall additionally have advised the other party in writing of the name and title of such representative. By not later than ten (10) business days after the date of such notice of dispute, such representatives shall schedule a date for a mediation hearing with the Cambridge Dispute Settlement Center or Endispute Inc. in Cambridge, Massachusetts. If the representatives of the parties have not been able to resolve the dispute within fifteen (15) business days after such mediation hearing, the parties shall have the right to pursue any other remedies legally available to resolve such dispute in either the Courts of the Commonwealth of Massachusetts or in the United States District Court for the District of Massachusetts, to whose jurisdiction for such purposes M.I.T. and LICENSEE each hereby irrevocably consents and submits. -14- 17 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 12.2 Notwithstanding the foregoing, nothing in this Article shall be construed to waive any rights or timely performance of any obligations existing under this Agreement. ARTICLE 13 - TERMINATION 13.1 If LICENSEE shall cease to carry on its business, this Agreement shall terminate upon notice by M.I.T. 13.2 Should LICENSEE fail to make any payment whatsoever due and payable to M.I.T. hereunder, M.I.T. shall have the right to terminate this Agreement effective on thirty (30) days' notice, unless LICENSEE shall make all such payments to M.I.T. within said thirty (30) day period. Upon the expiration of the thirty (30) day period, if LICENSEE shall not have made all such payments to M.I.T., the rights, privileges and license granted hereunder shall automatically terminate. 13.3 Upon any material breach or default of this Agreement by LICENSEE, other than those occurrences set out in Paragraphs 13.1 and 13.2 hereinabove, which shall always take precedence in that order over any material breach or default referred to in this Paragraph 13.3, M.I.T. shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder effective on ninety (90) days' notice to LICENSEE. Such termination shall become automatically effective unless LICENSEE shall have cured any such material breach or default prior to the expiration of the ninety (90) day period. The above notwithstanding, if LICENSEE is in breach of Article 3, but otherwise in compliance with the terms of this Agreement [****] 13.4 [****] 13.5 LICENSEE shall have the right to terminate this Agreement at any time on six (6) months' notice to M.I.T., and upon payment of all amounts due M.I.T. through the effective date of the termination. 13.6 Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of -15- 18 such termination. LICENSEE and any sublicensee thereof may, however, after the effective date of such termination, sell all LICENSED PRODUCTS, and complete LICENSED PRODUCTS in the process of manufacture at the time of such termination and sell the same, provided that LICENSEE shall pay to M.I.T. the Running Royalties thereon as required by Article 4 of this Agreement and shall submit the reports required by Article 5 hereof on the sales of LICENSED PRODUCTS. 13.7 Upon termination of this Agreement for any reason, any sublicensee not then in default shall have the right to seek a license from M.I.T., M.I.T. agrees to negotiate such licenses in good faith under reasonable terms and conditions. ARTICLE 14- PAYMENTS, NOTICES AND OTHER COMMUNICATIONS Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such party by certified first class mail, postage prepaid, addressed to it at its address below or as it shall designate by written notice given to the other party: In the case of M.I.T.: Director Technology Licensing Office Massachusetts Institute of Technology Room E32-300 Cambridge, Massachusetts 02139 In the case of LICENSEE: President Virus Research Institute 840 Memorial Drive Cambridge, MA 02139 ARTICLE 15 - MISCELLANEOUS PROVISIONS 15.1 This Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts, U.S.A., except that questions -16- 19 affecting the construction and effect of any patent shall be determined by the law of the country in which the patent was granted. 15.2 The parties hereto acknowledge that this Agreement sets forth the entire Agreement and understanding of the parties hereto as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument subscribed to by the parties hereto. 15.3 The provisions of this Agreement are severable, in the event that any provisions of this Agreement shall be determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof. 15.4 LICENSEE agrees to mark the LICENSED PRODUCTS sold in the United States with all applicable United States patent numbers. All LICENSED PRODUCTS shipped to or sold in other countries shall be marked in such a manner as to conform with the patent laws and practice of the country of manufacture or sale. 15.5 The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party. IN WITNESS WHEREOF the parties have duly executed this Agreement the day and year set forth below. MASSACHUSETTS INSTITUTE OF VIRUS RESEARCH INSTITUTE TECHNOLOGY By /s/ John T. Preston By /s/ John W. Littlechild -------------------------------------- ------------------------- Title Director, Technology License Office Title President ----------------------------------- ---------------------- Date 12/5/91 Date 12/6/91 ----------------------------------- ---------------------- -17- 20 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX A [****] -18- 21 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX B [****] -19- 22 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX C MASSACHUSETTS INSTITUTE OF TECHNOLOGY OFFICE OF SPONSORED PROGRAMS RESEARCH AGREEMENT between the MASSACHUSETTS INSTITUTE OF TECHNOLOGY, hereinafter referred to as "the Institute" and the VIRUS RESEARCH INSTITUTE, hereinafter referred to as "the Sponsor". WHEREAS, the research program contemplated by this Agreement is of mutual interest and benefit to the Institute and to the Sponsor, and will further the instructional and research objectives of the Institute in a manner consistent with its status as a non-profit, tax-exempt, educational institution. NOW, THEREFORE, the parties hereto agree as follows: 1. STATEMENT OF WORK. [****] 2. PRINCIPAL INVESTIGATOR. [****] 3. PERIOD OF PERFORMANCE. [****] 4. REIMBURSEMENT OF COSTS. [****] -20- 23 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 5. PAYMENT. Payments shall be made to the Institute by the Sponsor in advance on the following basis: [****] 6. TERMINATION. Performance under this Agreement may be terminated by the Sponsor upon six months written notice; performance may be terminated by the Institute if circumstances beyond its control preclude continuation of the research. Upon termination, the Institute will be reimbursed as specified in Article 4 for all costs and non-cancelable commitments incurred in the performance of the research, such reimbursement not to exceed the total estimated project cost specified in Article 4. 7. PUBLICATIONS. The Institute will be free to publish the results of research under this Agreement; provided that a copy of each publication will be provided to the Sponsor at least thirty (30) days in advance of publication and, if the publication would disclose a patentable invention, the Institute will delay publication for an additional sixty (60) days to enable the Institute or Sponsor to file a patent application in accordance with Section 8. 8. INTELLECTUAL PROPERTY. A. Title to any invention conceived or first reduced to practice in the performance of the research program shall remain with the Institute which shall have the sole right to determine the disposition of any inventions or other rights resulting therefrom, including the right to determine whether or not a patent application will be filed, and shall so notify the Sponsor. -21- 24 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. B. In the event that a patent application on such an invention is filed by the Institute, the Sponsor (subject to third party rights, if any, in such invention) shall be entitled to elect one of the following alternatives by notice in writing to the Institute within six (6) months after notification to the Sponsor that a patent application has been filed: 1. [****] 2. [****] 3. [****] C. In the event that the Sponsor has not elected any of the foregoing alternatives within six (6) months after notification that a patent application has been filed, the Sponsor shall be deemed to have elected alterative 3. above. D. [****] E. In the event that the Institute declines to file a patent application, the Sponsor may file in the United States and/or elsewhere, in the name of the Institute, and shall be entitled to elect between the above alternatives no later than six (6) months after such filing date. F. Inventions made jointly by employees of the Institute and employees of the Sponsor shall be owned jointly by the Institute and the Sponsor and, in the absence of any further agreement, the Institute and the Sponsor shall -22- 25 each have the independent right to use and/or license the jointly owned invention(s). The Institute shall grant to Sponsor the same option and license rights to the Institute's rights in jointly owned invention(s) as are granted to the Sponsor in Paragraph 8B above. G. The Sponsor shall retain all invention disclosures submitted by the Institute in confidence and use its best efforts to prevent their disclosure to third parties. The Sponsor shall be relieved of this obligation only when this information becomes publicly available through no fault of the Sponsor. H. Title to and the right to determine the disposition of any copyrights or copyrightable material first produced or composed in the performance of this research shall remain with the Institute. The Institute shall grant to the Sponsor an irrevocable, royalty-free, non-transferable, non-exclusive right and license to use, reproduce, display, distribute, translate and perform, all such copyrightable materials other than computer software and its documentation. The Institute shall grant to the Sponsor an irrevocable, royalty-free, non- transferable, non-exclusive right and license to use, reproduce, display, translate and perform computer software and its documentation specified to be developed and delivered under the Statement of Work for Sponsor's internal (non-commercial) research purposes. Sponsor may elect to negotiate a non-exclusive (or exclusive subject to third party rights, if any) royalty-bearing license to use, reproduce, display, distribute, translate and perform such computer software and its documentation for commercial purposes (in a designated field of use, where appropriate). Computer software for which a patent application is filed shall be subject to paragraph B. above. -23- 26 I. In the event that the Institute elects to establish property rights other than patents to any tangible research property (TRP), e.g., biological materials, developed during the course of the research, the Institute and the Sponsor will determine disposition of rights to such property by separate agreement. The Institute will, at a minimum, reserve the right to use and distribute TRP for non-commercial research purposes. J. All licenses elected by Sponsor pursuant to this clause become effective as of the date the parties sign a subsequent license agreement, and shall survive termination or expiration of this Agreement. 9. USE OF NAMES. Neither party will use the name of the other in any advertising or other form of publicity without the written permission of the other, in the case of the Institute, that of the Director of the News Office. 10. NOTICES. Any notices required to be given or which shall be given under this Agreement shall be in writing delivered by first class air mail or telex addressed to the parties as follows: MASSACHUSETTS INSTITUTE SPONSOR OF TECHNOLOGY Mr. George H. Dummer, Director Virus Research Office of Sponsored Programs, E19-702 Institute, Inc. Massachusetts Institute of Technology 840 Memorial Drive 77 Massachusetts Avenue Cambridge, MA 02139 Cambridge, MA 02139 In the event notices, statements and payments required under this Agreement are sent by certified or registered mail by one party to the party entitled thereto at its -24- 27 above address, they shall be deemed to have been given or made as of the date so mailed. 11. ASSIGNMENT. This agreement shall be binding upon and inure to the benefit of the parties hereto and the successors to substantially the entire business and assets of the respective parties hereto. This Agreement shall not be assignable by either party without the prior written consent of the other party; any attempted assignment is void. 12. GOVERNING LAW. The validity and interpretation of this agreement and the legal relation of the parties to it shall be governed by the laws of the Commonwealth of Massachusetts. 13. ENTIRE AGREEMENT. Unless otherwise specified, this Agreement embodies the entire understanding between the Institute and the Sponsor for this project, and any prior or contemporaneous representations, either oral or written are hereby superseded. No amendments or changes to this Agreement including without limitation, changes in the statement of work, total estimated cost, and period of performance, shall be effective unless made in writing and signed by authorized representatives of the parties. MASSACHUSETTS INSTITUTE SPONSOR OF TECHNOLOGY By /s/ David J. Harrigan By /s/ John W. Littlechild ---------------------------- ------------------------- Associate Director/ Office of Sponsored Title Programs Title President ------------------------ --------------------- Date 12/5/91 Date 12/6/91 ------------------------ --------------------- -25- 28 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. FIRST AMENDMENT This Amendment is to the License Agreement with the Effective Date of December 6, 1991 between MASSACHUSETTS INSTITUTE OF TECHNOLOGY and VIRUS RESEARCH INSTITUTE, INC. The parties thereto now further agree as follows: 1. [****] 2. LICENSEE shall pay to M.I.T., in addition to the fees and royalties due under Article IV of the License Agreement, the following fees: a) [****] b) [****] 3. [****] 4. The effective date of this Amendment shall be the last date of the signatures below. Agreed to for: MASSACHUSETTS INSTITUTE OF VIRUS RESEARCH INSTITUTE, INC. TECHNOLOGY By /s/ John T. Preston By /s/ Bryan E. Roberts --------------------------------- ---------------------------------- Title Director, Technology Licensing Title V.P., Research & Development ------------------------------ ------------------------------- Date 9-17-92 Date 9-17-92 ------------------------------- -------------------------------- -26- EX-10.18 3 LICENSE AGREEMENT 1 EXHIBIT 10.18 Portions of this Exhibit have been omitted pursuant to a request for Confidential Treatment. The omitted portions, marked by [****], have been separately filed with the Commission. LICENSE AGREEMENT THIS LICENSE AGREEMENT ("Agreement") is made and entered into as of December 13, 1994 (the "Effective Date") between VIRUS RESEARCH INSTITUTE, INC., as its Delaware corporation having its principal place of business at 61 Moulton Street, Cambridge, Mass 02138 (hereinafter referred to as "VRI"), and PASTEUR MERIEUX SERUMS ET VACCINS, a French corporation having its registered head office at 58 Avenue Leclerc, Lyon, France (hereinafter referred to as "PMC"). RECITALS A. VRI has certain proprietary rights relating to the use of polyphosphazene as an immunoadjuvant for vaccines against human diseases. B. PMC desires to obtain a license to such rights and to research, develop, manufacture, market, sell and distribute certain vaccines which incorporate polyphosphazene, all under the terms and conditions set forth below. NOW THEREFORE, for and in consideration of the covenants, conditions and undertakings hereinafter set forth, it is agreed by and between the parties as follows: ARTICLE 1 DEFINITIONS 1.1 "Affiliate" shall mean, with respect to any Person, (i) any other Person of which securities or other ownership interests representing 50% or more of the voting interests (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) are, at the time such determination is being made, owned, controlled or held directly or indirectly, by such Person, or (ii) any other Person which, at the time such determination is being made, is Controlling, Controlled by or under common Control with, such Person. For the purpose of this section 1.1, "Control," whether used as a noun or verb, refers to the possession directly or indirectly, of the power to direct, or cause the direction of, the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and "Person" means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any 2 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. government, or any agency or political subdivision thereof. The Joint Venture companies known as Pasteur Merieux MSD Snc and MCM Vaccine Co. are Affiliates of PMC. 1.2 "Co-Exclusive Vaccine" shall mean a parenterally administered vaccine (other than a DNA vaccine) against one or more of the following diseases: Respiratory Syncytial Virus ("RSV"), Para Influenza, Cytomegalovirus ("CMV"), Pneumococcal Pneumonia ("Pneumo") (including S. pneumoniae, Branhamalla and non-typable Haemophilus Influenza), Rabies, each alone or in combination with each other, and specifically excluding a combination of (a) one or more of the vaccines specifically enumerated as a Co-Exclusive Vaccine or Exclusive Vaccine with (b) a vaccine which is not specifically enumerated as an Exclusive Vaccine or Co-Exclusive Vaccine. 1.3 "Exclusive Vaccine" shall mean a parenterally administered vaccine(s) (other than a DNA vaccine) against one or more of Lyme Disease, Meningococcus and Influenza, each alone or in combination with each other or in combination with a Co-Exclusive Vaccine and shall also include the combination [****] excluding a combination of (a) one or more of the vaccines specifically enumerated as a Co-Exclusive Vaccine or Exclusive Vaccine with (b) a vaccine which is not specifically enumerated as an Exclusive Vaccine or Co-Exclusive Vaccine. 1.4 "Field" shall mean the prevention of a disease in humans. 1.5 "Licensed Know-How" shall mean any biological materials, and any research and development information, inventions, know-how, pre-clinical, clinical and other technical data, in each case that are owned by VRI, or possessed by VRI with the right to provide the same to others, from and after the Effective Date and which is necessary or useful for the improving, making, using or selling of Licensed Products as provided in this Agreement. 1.7 "Licensed Product(s)" shall mean, individually and collectively, the Exclusive Vaccines and the Co-Exclusive Vaccines provided that polyphosphazene is used as an immunoadjuvant in the product containing such vaccine. 1.8 "Net Sales" shall mean the gross invoice price of Licensed Products sold or distributed by PMC or its Affiliates or any of their sublicensees, less: (i) normal and customary rebates, trade discounts, and credits for returns and allowances, all to the extent actually allowed, (ii) to the extent separately reported on the invoice, sales or other excise taxes or duties imposed upon and paid by PMC, its Affiliates or sublicensees with respect to such sales, and (iii) transportation charges and insurance for transportation to the extent separately invoiced or separately reported on the invoice and paid by the seller. 2 3 In the event that Licensed Product is sold in other than an arms length transaction, then Net Sales shall be the gross invoice price which would be received in an arms length transaction, taking account of any deductions for items referred to in clauses (i), (ii) and (iii) of the preceding paragraph. In the event that consideration in addition to or in lieu of money is received for Licensed Product such consideration shall be added to Net Sales. Notwithstanding the provisions of this Section, Net Sales shall not include sales to an Affiliate for resale by such Affiliate. 1.9 "Option Agreement" shall mean the Option Agreement of even date herewith entered into between the parties hereto. 1.10 "Patent Rights" shall mean the following patents and patent applications, and all subject matter claimed therein: (a) All patents and applications listed in Exhibit A; any continuations, continuations-in-part, divisions and substitutions thereof, or of which such an application or patent is a successor; patents which may issue upon any of the foregoing; and all renewals, reissues and extensions thereof; and (b) Any foreign patents and/or applications that are counterparts of a patent or application described in paragraph (a) above, including any patent or application that claims subject matter claimed in, or that takes priority from, a patent or application described in paragraph (a) above. (c) Any patent or application owned by VRI during the term of this Agreement which claims polyphosphazene and/or the use thereof in a parenteral vaccine. (d) Any patent or patent application as to which PMC exercises its option under the Option Agreement. 1.11 "PMC Immunoadjuvant Technology" shall mean any and all materials, information, data, improvements, patents and patent applications directed to polyphosphazene and/or its use as an immunoadjuvant including, but not limited to, data related to polymer safety (other than Drug Master Files or clinical data, and excluding that which is unique to the formulation of polyphosphazene with a specific PMC antigen) which are owned by PMC or in the possession of PMC with the right to provide same to others during the term of the Agreement. 1.12 "Significant Competition" with respect to each Licensed Product in each country for each calendar year shall mean that a third party sells a vaccine which competes with a Licensed Product as a given indication, whether in single antigen or multivalent form and such 3 4 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. third party vaccine has a commercially recognized advantage in safety, immunogenicity and/or therapeutic value over the competing Licensed Product and that such third party vaccine [****] of vaccines for the indication concerned. The sale of a Co-Exclusive Vaccine by a licensee of VRI shall not be a third party vaccine for the purpose of this definition. 1.13 "Territory" shall mean (i) all countries included in the continents of North and South America, including Central America and the islands of the Carribean, Europe, and Africa, including the dependencies and territories of such countries; (ii) Thailand, and (iii) all countries previously part of the U.S.S.R. [****] 1.14 "Valid Claim" shall mean a claim of an issued and unexpired patent or pending patent application included within the Patent Rights, which has not been held unenforceable, unpatentable or invalid by a court or other governmental agency of competent jurisdiction from which no appeal can be or is taken, and which is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise. ARTICLE 2 GRANT OF RIGHTS 2.1 License to PMC. (a) Subject to the terms and conditions of this Agreement, VRI hereby grants to PMC (i) a license under the Patent Rights and Licensed Know-How to make, have made, and use the Licensed Products which are Exclusive Vaccines outside of the Territory but only for sale in the Field in the Territory and to make, have made, use, sell and distribute the Licensed Products which are Exclusive Vaccines in the Field in the Territory, which license under this Section 2.1(a)(i) shall be exclusive with respect to sale of Exclusive Vaccines in the Field in the Territory and in all other respects the license granted under this Section 2.1(a)(i) is non-exclusive, and (ii) a license under the Patent Rights and Licensed Know-How to make, have made, and use the Licensed Products which are Co-Exclusive Vaccines outside of the Territory but only for sale in the Field in the Territory and to make, have made, use and sell a Licensed Product which is a Co-Exclusive Vaccine in the Field in the Territory which license under this Paragraph 2.1(a) shall be exclusive to PMC for use, sale and distribution of Co-Exclusive Vaccine in the Field in each country of the Territory but for one other entity which may, at VRI's option, be VRI or an entity licensed by VRI, and in all other respects the license granted under 4 5 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. this Section 2.1(a)(ii) is non-exclusive. It is expressly understood that only one entity other than PMC will be or be permitted to be licensed by VRI, to use or sell any Co-Exclusive Vaccine in the Field in any country of the Territory. (b) Subject to the terms and conditions of this Agreement, VRI hereby grants to PMC a non-exclusive license under the Patent Rights and Licensed Know-How (i) to use, sell and distribute the Licensed Products set forth in Exhibit B in the countries set forth in Exhibit B, but only to the extent that all of the antigens contained therein are covered by patent rights of PMC and/or its Affiliates which give PMC an exclusive position with respect to those antigens in those countries, and (ii) to make and have made and use Licensed Products set forth in Exhibit B in any country of the world but only for use, sale and distribution in the countries set forth in Exhibit B, and only to the extent that all of the antigens contained therein are covered by patent rights of PMC and/or its Affiliates, which give PMC an exclusive position with respect to all of the antigens contained in the Licensed Product of Exhibit B in those countries of Exhibit B. Exhibit B is intended to set forth the countries in which PMC holds exclusive rights in respect of a given antigen and the antigens as to which such exclusive rights are held in that country. Such Exhibit B shall be amended from time to time to take account of any additional countries and/or additional Licensed Products which contain only antigens as to which PMC obtains exclusive rights during the term of this Agreement but only to the extent that VRI is able to grant such a license and only to the extent VRI has nor previously granted to a third party rights which would prevent RI from granting such rights to PMC. (c) Upon written notice to VRI, PMC shall have the right to be granted a non- exclusive license to use, sell and distribute each Co-Exclusive Vaccine and each Exclusive Vaccine, in each country (other than Japan) ,where PMC and/or its Affiliates have patent rights (as an owner or exclusive licensee) which cover the antigen of such Exclusive Vaccine or CoExclusive Vaccine provided that VRI has not granted rights to a third party in such country which would prevent VRI from granting such license to PMC, which non-exclusive license extension shall be limited to a Co-Exclusive Vaccine or Exclusive Vaccine, as the case may be, which contains such antigen. The non-exclusive license shall include the right to make and have made each such Co-Exclusive Vaccine and Exclusive Vaccine but only for use and sale in the countries specified in this paragraph. 2.1(c). (d) [****] (e) In order to assure PMC of the exclusive rights granted in Paragraph 2.1(a)(i), VRI shall not grant to a third party or itself exercise any rights or licenses under Patent Rights and Licensed Know-How to use, sell or distribute a parenterally administered vaccine [****] against Lyme Disease, Meningococcus or Influenza in the Field in the Territory. In addition, except as permitted in Paragraph 2.1(a)(ii), VRI shall not grant to a third party or itself 5 6 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. exercise any rights or licenses under Patent Rights and Licensed Know-How to use, sell or distribute a parenterally administered vaccine [****] against RSV, Para Influenza, CMV Pneumo (including S. Pneumoniae, Branhamalla and non-typable Haemophilus Influenza) and Rabies in the Field in the Territory. 2.2 Licenses to VRI. Subject to the rights granted to and maintained by PMC and to any existing rights of third-parties, PMC hereby grants to VRI a worldwide, royalty free, license to use PMC Immunoadjuvant Technology to make, have made, use and sell vaccine products, including the right to sublicense such license to Affiliates. Such license of PMC Immunoadjuvant Technology may also be sublicensed to third parties with the prior written consent of PMC, which consent shall not be unreasonably withheld. 2.3 Sublicenses. With respect to the rights granted under Section 2.1 (a)(i) PMC shall have the right to grant sublicenses under this Agreement with the prior approval of VRI as to the sublicensee, which approval shall not be unreasonably denied. With respect to the rights granted under Section 2.1(a)(ii), PMC shall have the right (without the approval of VRI) to grant a sublicense to one other party in any country where PMC is not selling or does not intend to sell Licensed Product. PMC shall advise VRI of the name of such sublicensee when such sublicensee is selected. The rights granted under Section 2.1(b) and (c) are not sublicensable, except to Affiliates of PMC. 2.4 (a) In case of any sublicense by PMC or VRI of the rights and licenses granted in this Agreement, the sublicensee shall agree to be bound by the terms, obligations and conditions identical to those of Articles 6 and 10 and Sections 2.5 and 11.5 of this Agreement (substituting the name of the Sublicensee for that of the sublicensing party), with the other party being expressly made a third party beneficiary thereof, and the sublicensing party shall be responsible for the performance by the appointed sublicensee of such terms, obligations and conditions. (b) Each sublicense agreement concluded by PMC will include a requirement that the sublicensee maintain records and permit inspection on terms essentially identical to Article 9.4 of this Agreement. At VRI's request, PMC shall arrange for an independent certified accountant selected by VRI to inspect the records of its sublicensee(s) for the purpose of verifying royalties due to VRI and shall cause such accountant to report the results thereof to VRI. (c) All sublicenses granted for a Licensed Product or for the PMC immunoadjuvant Technology in a country shall terminate upon termination of the licenses granted hereunder with respect to such Licensed Product or to PMC Immunoadjuvant 6 7 Technology as the case may be, provided that upon expiration of the full term of this Agreement pursuant to Paragraph 4.1, all parties shall have fully paid-up, non-cancelable licenses. 2.5 To the extent Patent Rights are licensed to PMC under this Agreement by PMC exercising its option under the Option Agreement which Patent Rights VRI has licensed from another party under an agreement with another party ("Another Party Agreement(s)"), PMC understands and agrees as follows: (i) The rights licensed to PMC by VRI are subject to the terms, limitations, restrictions and obligations of the Another Party Agreement(s). (ii) PMC will comply with the terms, obligations, limitations and restrictions of the Another Party Agreement(s) to the extent PMC has been permitted to review such terms, obligations, limitations and restrictions. VRI will give PMC, upon request, a reasonable opportunity to review the same except to the extent that confidentiality or other obligations towards Another Party may prevent VRI from doing so. In any event VRI shall act reasonably in advising PMC of the scope of PMC's obligation pursuant to such Another Party Agreement. It is expressly understood that PMC may refuse to accept a license under one or more Another Party Agreements, in which case PMC will not be bound thereby. 2.6 Disclosure of Technology. Upon the execution of this Agreement, and periodically thereafter upon request by PMC, VRI shall provide to PMC copies of all available information in tangible form within the Licensed Know-How or related to the Patent Rights. 2.7 Subject to the terms and conditions of the Supply Agreement to be negotiated under this Section 2.7, PMC is hereby granted a non-exclusive right and license under the Patent Rights and Licensed Know-How to make and have made polyphosphazene for use by PMC, its Affiliates and its sublicensees as an immunoadjuvant in the manufacture of Licensed Product in accordance with and to the extent that PMC retains its license to Licensed Product under this Agreement. PMC shall have the right at any time during the term of this Agreement, but not the obligation, to exercise its right under the herein granted manufacturing license. In the event that PMC decides to exercise such rights, it shall so inform VRI in writing, and VRI shall promptly disclose to PMC all applicable manufacturing technology in the possession of VRI at the time of such disclosure. Subject to applicable confidentiality obligations, VRI and PMC shall share and exchange any technology and know-how they shall generate while establishing manufacturing processes and facilities. When either PMC or VRI achieves manufacture of polyphosphazene on a commercial basis, it shall have an obligation to use reasonable efforts in good faith to assist the other to satisfy its reasonable requirements of polyphosphazene for use as an immunoadjuvant on reasonable commercial terms, taking into account the respective investments made and risks incurred by the parties in connection with such manufacture. 7 8 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. PMC and VRI shall consult in good faith and in their mutual interest as to an arrangement for the manufacture and supply of polyphosphazene for clinical lots as well as in commercial quantities for use as an immunoadjuvant by PMC and its Affiliates and authorized sublicensees in the Licensed Products as licensed hereunder and for use by VRI, its Affiliates and licensees (other than PMC). VRI shall use commercially reasonable efforts to establish a process capable of yielding under GMP conditions consistent and validated supplies of polyphosphazene in accordance with agreed upon specifications, [****] Upon successful completion of such step, PMC shall pay to VRI the milestone payment provided for in Section 3.1(b) hereof. VRI shall use commercially reasonable efforts to obtain a manufacturer of polyphosphazene. Thereafter, under the terms and conditions of a supply agreement to be negotiated in good faith between the parties (the "Supply Agreement"), VRI shall be responsible for scaling-up the process in an efficient cost-effective GAP manufacturing facility for production or polyphosphazene according to agreed-upon specifications at industrial scale, which Supply Agreement shall provide that if VRI manufactures the polyphosphazene[****]. [****] PMC shall render all reasonable assistance to VRI in identifying and selecting a third-party manufacturer. In the event that VRI retains such manufacturer, VRI shall then, subject to appropriate confidentiality provisions, transfer to it all of VRI's technology for manufacture of polyphosphazene. ARTICLE 3 MILESTONES AND ROYALTIES 3.1 Milestone Fees. PMC shall pay to VRI the non-refundable and non-creditable amounts specified below within thirty (30) days following the accomplishment by PMC (or in the case of Paragraph 3.1(a) by PMC or VRI) its Affiliates or sublicensees of the corresponding event set forth below, or (ii) within thirty (30) days following receipt by PMC of written notice of accomplishment by VRI or a VRI's Affiliate of such other corresponding event set forth below: (a) The sum of two and one half million dollars, upon the earlier of (i) successful completion of toxicology work carried out by or on behalf of PMC or by VRI which 8 9 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. is suitable for use in the preparation of an IND in the United States (or the equivalent thereof in the European Union) for a Licensed Product(s) or (ii) initiation of a Phase I Clinical Trial by or on behalf of PMC anywhere in the world for a Licensed Product. (b) the sum of one million dollars upon establishment by VRI of a process capable of yielding under GMP, conditions consistent and validated supplies of polyphosphazene in accordance with agreed upon specifications [****] (c) Influenza milestone payments as follows: [****] (d) [****] (e) [****] 3.2 Royalties. [****] (a) [****] (b) [****] (c) Earned royalties [****] The Royalty obligations set forth above will be calculated for each calendar year by (a) first applying sales in countries for which there has been [****] up to the total sales of such products and (b) secondly applying sales in countries for which there has been [****] for which there was [****] and going up to the level of total sales of products for which there was [****]. An example of such calculation is as follows: [****] (d) In the case of the earned royalties set forth in paragraphs (a) and (b) above, the royalties would be adjusted in each country for each calendar year for each Licensed Product in the event PMC was required to pay royalties to a third party for use of a polyphosphazene immunoadjuvant in such Licensed Product in such a country for such year utilizing the following method, but in no event shall [****] (1) First determine the relationship between Net Sales in the applicable country for the year and the total worldwide Net Sales in that same category of sales for the year for the Licensed Product, i.e., divide Net Sales in a country for the applicable 9 10 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. Licensed Product, where, for example, [****] by worldwide Net Sales in all countries for such Licensed Product [****] (2) Apply this percentage to total royalties paid in all such countries for the Licensed Product for the year to determine the VRI royalties in a country against which a credit for third party royalties paid in such country may be taken. (3) Subtract the amount of third party royalties paid in the country in question [****] (e) Royalties shall be calculated and paid on a country-by-country and product-by-product basis [****] provided, however, that if at any time after the expiration [****], the making, using or selling of the product is covered by Patent Rights, the royalties shall be paid until the expiration of the last to expire of any such patent(s). (f) [****] 3.3 Single Royalty: Non-Royalty Sales. It is understood that in no event shall more than one royalty be payable under Sections 3.2 with respect to a particular unit of Licensed Product. No royalty shall be payable under this Article 3 with respect to sales of Licensed Products among PMC, its Affiliates and/or sublicensees, but royalty shall be due upon the subsequent sale of the Licensed Product to an entity who is not an Affiliate or sublicensee provided, however, that if there is no or is to be no subsequent sale of the Licensed Product to an entity who is not an Affiliate or a sublicensee, then the royalty shall be due and shall be based upon the higher of (i) the gross invoice price to such Affiliate or sublicensee or (ii) the average gross invoice price which PMC charges to its customers (other than Affiliates and sublicensees) for the Licensed Product for the relevant reporting period of Section 9.1 in the relevant country. No royalty shall be payable for (i) Licensed Product used in clinical trials, or (ii) Licensed Product used by PMC or its sublicensee for research, or (iii) customary quantities of Licensed Product distributed by PMC or its sublicensee as free samples. 3.4 Combination Products. In the event Licensed Products contain vaccines licensed hereunder in combination, the royalty rate applicable to said combination products shall be the [****] 10 11 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. ARTICLE 4 TERM AND TERMINATION 4.1 Term. This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this Article 4, shall continue in full force and effect as long as PMC is obligated to pay royalties under this Agreement. PMC's license under Section 2.1 with respect to the Licensed Know-How shall survive the expiration, but not an earlier termination, of this Agreement. 4.2 Termination for Breach. In the event of a material breach of this Agreement the nonbreaching party in addition to any other remedy which it may have shall be entitled to terminate this Agreement following written notice of such breach to the breaching party. If such breach is not cured within sixty (60) days after written notice is given by the nonbreaching party to the breaching party specifying the breach, the non-breaching party may terminate the Agreement forthwith upon written notice to, the breaching party after expiration of such sixty (60) day period. 4.3 Termination by PMC. (a) Any provision herein notwithstanding, PMC may terminate this Agreement at any time by giving VRI at least one hundred and eighty (180) days prior written notice. (b) PMC may terminate its license with respect to any Licensed Product by one-hundred and eighty (180) days prior written notice to VRI, and thereafter such Licensed Product(s) shall no longer be licensed under this agreement. (c) In the event of a termination under Article 4.3 (a) all rights granted herein to PMC shall forthwith revert to VRI and PMC shall provide VRI [****] developed during the term of this Agreement with respect thereto which may be used in accordance with [****] 4.4 Survival. 4.4.1 Termination of this Agreement for any reason shall not release either party hereto from any liability which at the time of such termination has already accrued to the other party. 4.4.2 In the event this Agreement is terminated for any reason, PMC and its Affiliates and sublicensees shall have the right to sell to otherwise dispose of the stock of any Licensed Product then on hand, all subject to the payment to VRI of fees and royalties pursuant to Article 3 hereof. 11 12 4.4.3 Articles 6, 10 and 11, and Sections 2.5, 4.43, 4.5, 5.5, 9.3, and 9.4, shall survive the expiration and any termination of this Agreement. Except as otherwise provided in Section 4.1 and Section 4.4.3, all rights and obligations of the parties under this Agreement shall terminate upon the expiration or termination of this Agreement. 4.5 In the event that PMC's right, and licenses under this Agreement are terminated, PMC agrees not to make, use or sell Licensed Products except as permitted by Article 4.4.2. 4.6 Either party may terminate this Agreement on notice if the other party makes a general assignment for the benefit of creditors, is the subject of proceedings in voluntary or involuntary bankruptcy or has a receiver or trustee appointed for substantially all of its property; provided that in the case of an involuntary bankruptcy proceeding such right to terminate shall only become effective if the other party consents thereto or such proceeding is not dismissed within ninety (90) days after the filing thereof. If, in connection with bankruptcy proceedings involving a party, an election is made by or on behalf of such party to reject the obligations of this Agreement and the other party elects to retain its rights to intellectual property hereunder pursuant to Section 365 n.1 of the Bankruptcy Code (USA), such other party shall be entitled to enforce any rights exclusively granted to it in respect of intellectual property hereunder by commencement of any action it deems necessary to that effect against third-party infringers and may do so in the name and stead of the bankrupt party. ARTICLE 5 PATENTS AND INFRINGEMENTS 5.1 Prosecution by VRI. VRI shall have the right, at PMC's expense, to control the filing for, prosecution and maintenance of the Patent Rights in the Territory. In the event that VRI grants any license in a country of the Territory with respect to any Patent Right, then thereafter PMC's obligation to pay patent costs for Patent Rights in such country shall be an amount equal to the total cost therefor multiplied by a fraction having as a numerator one and as a denominator the total number of licenses granted by VRI in respect of such Patent Rights in such country. VRI shall keep PMC reasonably informed as to the status of the Patent Rights in the Territory, and shall provide PMC with copies of all proposed filings and correspondence of a substantive nature with respect to patents or applications within the Patent Rights to be made with or sent to the United Sates Patent and Trademark Office or its counterpart in any country of the Territory (each, a "Patent Authority"). VRI shall also provide to PMC copies of all correspondence that it receives from a Patent Authority with respect to the Patent Rights and shall consider any comments of PMC with respect thereto. 5.2 Infringement Claims. If the production, sale or use of a Licensed Product result in any claim for infringement of a patent or other proprietary right of a third party against PMC, its Affiliates or sublicensees PMC shall promptly notify VRI thereof in writing. As between the 12 13 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. parties to this Agreement, PMC shall have the right at its own expense to defend and control the defense of any such claim against PMC, by counsel of PMC's own choice. 5.3 Enforcement of Patent Rights. (a) In the event that any Patent Rights are infringed by a third party with respect to an Exclusive Vaccine or Co-Exclusive Vaccine in the Field in the Territory, with the consent and approval of VRI (which shall not be unreasonably denied and shall be deemed to have been granted if VRI shall be in voluntary or involuntary bankruptcy proceedings, other than a proceeding such as Chapter II where the debtor continues to operate the business), PMC and/or its Affiliates or sublicensees shall have the right (except as provided below), but not the obligation, to institute, and prosecute any action or proceeding under the Patent Rights with respect to such infringement, by counsel of its choice, including any declaratory judgment action arising from such infringement. Any amounts recovered from third parties with respect to the Patent Rights in such action shall be applied first to reimburse the expenses of the action; then to the extent the award is [****] PMC shall not have the right to settle, compromise or take any action in such litigation which diminish, limit or inhibit the scope, validity or enforceability of the Patent Rights without the express written permission of VRI. PMC shall keep VRI advised of the progress of such proceedings. 5.4 In the event that a third party is infringing the Patent Rights with respect to an Exclusive Vaccine or Co-Exclusive Vaccine in the Territory in the Field and PMC does not elect to institute an action, VRI shall have the right, but not the obligation, to commence an infringement suit under the Patent Rights against such infringer and retain any recovery; provided that it so notifies PMC. If VRI commences a suit in accordance with this Section 5.4, PMC shall have the right to participate in such suit and [****] the out-of-pocket expenses thereof. If PMC elects to so participate, it shall share in any amounts recovered in respect of such suit [****]VRI shall have the right to control such action with counsel of its choice. 5.5 VRI Participation. In VRI's sole discretion, VRI shall be entitled to participate at its expense through counsel of its choosing in and control any legal action by or against PMC affecting the validity or enforceability of the patents on which Parent Rights are based, and PMC may elect to participate in any such action to the extent necessary to defend its own interests. 5.6 Each party agrees to cooperate with each other with respect to any litigation under Sections 5.2, 5.3 or 5.4. 13 14 ARTICLE 6 CONFIDENTIALITY 6.1 Nondisclosure. Except as otherwise provided in this Agreement, a party receiving (the "Receiving Party") any business or technical information ("Proprietary Information") that is disclosed to it by the other party the ("Disclosing Party") shall for a period beginning on the Effective Date and ending ten (10) years after the termination of this Agreement hold in confidence and not disclose to any third party the "Proprietary Information". In addition, the Receiving Party shall not use Proprietary Information that it receives from the Disclosing Party, except as is reasonably necessary to exercise the rights granted to the Receiving Party under Article 2 or Article 5 of this Agreement. Notwithstanding the foregoing, with the prior written permission of the Disclosing Party (which shall not be unreasonably withheld), the Receiving Party may disclose information concerning the Patent Rights and/or the Licensed Know-How to actual or prospective sublicensees or to other third parties with whom the Receiving Party is considering or has entered into a business relationship, all of whom are similarly bound in writing under a reasonable confidentiality agreement. Proprietary Information of a party shall not include: 6.1.1 Information which is or was published or has become generally available to the public through no fault of the Receiving Party; 6.1.2 Information which the Receiving Party can document is or was in its possession at the time of disclosure or was independently developed by the Receiving Party; or 6.1.3 Information which is rightfully acquired by the Receiving Party from a third party who is not under an obligations of confidentiality to the disclosing party, and to the best of the Receiving Party's knowledge and belief is entitled to rightfully make such disclosure, but only to the extent the Receiving Party complies with any restrictions imposed by the third party. 6.2 Exceptions. The Receiving Party may disclose Proprietary Information of the other, in connection with the order of a court of law or administrative or governmental authority provided that the Receiving Parry exerts reasonable efforts to preserve the confidentiality thereof and the disclosing party is given an opportunity to protect the confidentiality thereof, or as is reasonably necessary in connection with the labeling of its products that are otherwise sold in compliance with this Agreement or as required for obtaining regulatory approval of Licensed Product, provided that the Receiving Party protects the confidentiality thereof to the fullest extent possible. 14 15 6.3 Notwithstanding anything else to the contrary, PMC agrees that Licensed Know-How, or Proprietary Information received from VRI shall be used by PMC only in and for Licensed Products and their development for sale in the Territory in the Field, all in accordance with this Agreement, and can only be used by PMC for so long as and to the extent that PMC maintains a license under this Agreement. 6.4 Notwithstanding anything else to the contrary and subject to Section 4.1, in the event that PMC's rights and licenses under this Agreement are terminated, PMC agrees (a) not to use Licensed Know-How, or any Proprietary Information provided to PMC by VRI or any information developed by PMC which is derived from or is based on Licensed Know- How for the research, development, making, or using or selling of any product or process, including, but not limited to Licensed Products and (b) not to do any of the foregoing while this Agreement is in force for any product except as licensed under this Agreement. 6.5 Notwithstanding anything else to the contrary, VRI agrees that Licensed Know- How (including but not limited to PMC Immunoadjuvant Technology) licensed to it by PMC hereunder may be used only in a manner consistent with the provisions of this Agreement. VRl's licenses herein shall survive the expiration of the term hereof but not an earlier termination of this Agreement except as provided in Section 4.3(c). ARTICLE 7 REPRESENTATIONS AND WARRANTIES 7.1.1 VRI and PMC each represents and warrant to the other that each has the full right and authority to enter into this Agreement and grant the rights and licenses granted herein: 7.1.2 VRI represents and warrants to PMC that it has not previously granted and, prior to termination of this Agreement, will not grant any rights in the Patent Rights or the Licensed Know-How that are inconsistent with the rights and licenses granted to PMC herein; 7.1.3 To the best of VRl's knowledge, there is no pending or threatened claim or litigation to which VRI is a party contesting the validity or right to use any of the Patent Rights, and VRI has not received any notice of infringement with respect to Patent Rights. 7.2 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 7.1 ABOVE, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NO INFRINGEMENT, OR VALIDITY OF ANY PATENT RIGHTS ISSUED OR PENDING. 15 16 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. 7.3 Effect of Representations and Warranties. Subject to Section 7.4, it is understood that if the representations and warranties under this Article 7 are not true and accurate and PMC incurs liabilities, costs or other expenses as a result of such falsity, VRI shall indemnify and hold PMC harmless from and against any such liabilities, costs or expenses incurred, provided that VRI receives prompt notice of any claim against PMC resulting from or related to such falsity and the sole right to control the defense or settlement thereof. 7.4 Limitation of Liability. Notwithstanding anything else to the contrary, VRl's liability for any breach of this Agreement (including but not limited to any liability which results from any breach of any representation or warranty) is limited to the payments received or to be received from PMC under this Agreement. This Limitation on Liability shall not be applicable to intentional misconduct on the part of VRI or where PMC, as a result of such breach, is liable to a Third Party in excess of such Limitation on Liability. ARTICLE 8 DUE DILIGENCE 8.1 General. PMC shall use commercially reasonable efforts to research, develop, register, market and sell and to continue to market and sell each Licensed Product in each country of the Territory. Upon a failure by PMC to meet its obligations under this Section 8.1 with respect to any Licensed Product in any country (directly or through a sublicensee), VRI shall, among other remedies available to it, have the right to terminate the rights and licenses granted hereunder with respect to such Licensed Product in such country. 8.2 PMC shall promptly notify VRI, in writing, if at any time PMC does not intend to continue to research, develop and/or obtain regulatory approval for and/or market and sell any Licensed Product in any country of the Territory. 8.3 In the event that PMC provides VRI with notice pursuant to Section 8.2 with respect to any Licensed Product or with respect to any country(ies) the rights herein granted by VRI to PMC to such Licensed Product in such country(ies), upon written notice from VRI to PMC shall revert to VRI. 8.4 In the event that PMC does not meet any of the milestones set forth in Exhibit C (as the same may be extended as indicated herein) for any of the Licensed Products set forth in Exhibit C, VRI shall have the right [****] PMC shall have the right to [****] and the Parties shall agree on a reasonable period for such extension. Exhibit C shall be appropriately revised to reflect such extension. In addition, PMC shall have the right to extend each of the milestones of Exhibit C, if not achieved, as set forth therein by [****] The parties agree to set similar 16 17 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. milestones for [****] after [****] for one of the Licensed Products included in Exhibit C. Notwithstanding the preceding sentence, such milestone [****] 8.5 PMC shall provide written reports to VRI on June 30th and December 31st of each year concerning the efforts being made, in accordance with Section 8.1 with respect to the Licensed Product. PMC shall provide VRI with any additional information reasonably requested by VRI in this respect. Such reports shall be considered to be Proprietary Information of PMC. ARTICLE 9 ACCOUNTING AND RECORDS 9.1 Reports. PMC agrees to make quarterly written reports to VRI within sixty (60) days after the end of each calendar quarter in which royalties are due under this Agreement, stating in each such report the number, description, and aggregate Net Sales of Licensed Products sold during the calendar-quarter and upon which a fee or royalty is payable under Article 3 above. The report shall also include the calculation of Net Sales all on a country by country and Licensed Product by Licensed Product basis. The report shall be due with respect to sales of Licensed Product sold by PMC sixty (60) days after the end of the calendar quarter and with respect to sales of Licensed Product by sublicensees, ninety (90) days after the end of a calendar quarter. If no such sales have been made, by PMC, its Affiliates and sublicensees the report shall so state. 9.2 Payment. Concurrently with the making of each such report of Section 9.1, PMC shall pay to VRI the royalties at the rate specified in Article 3 above. All payments by PMC to VRI hereunder shall be made in U.S. Dollars. If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made by using the rate of exchange published in the Wall Street Journal for the last business day of the applicable calendar quarter. 9.3 Withholding Taxes. Any withholding or other tax that PMC or any of its Affiliates are required by statute to withhold and pay on behalf of VRI with respect to the royalties payable to VRI under this Agreement shall be deducted from said royalties and paid contemporaneously with the remittance to VRI; provided, however, that in regard to any tax so deducted PMC shall furnish VRI with proper evidence of the taxes paid on its behalf. VRI will furnish PMC with appropriate documents to secure application of the favorable rate of withholding tax under applicable tax treaties. 17 18 9.4 Records; Inspection. 9.4.1 PMC shall keep complete, true and accurate books of account and records for the purpose of determining the amounts payable to VRI under this Agreement. Such books and records shall be kept at PMC's principal place of business for at least three (3) years following the end of the calendar quarter to which they pertain, and will be open for inspection during such three (3) year period by a representative of VRI for the purpose of verifying PMC's royalty statements. Such inspections may be made no more than once each calendar year, during normal business hours and upon thirty (30)/days prior notice. Any such information shall be considered to be Proprietary Information of PMC. 9.4.2 Inspections conducted under this Section 9.4 shall be at the expense of VRI, unless an underpayment exceeding five percent (5%) of the amount paid for the period covered by the inspection is established in the course of any such inspection, whereupon all costs relating thereto will be paid by PMC, as well as any unpaid royalties within the thirty (30) days after requested by VRI. ARTICLE 10 INDEMNIFICATION AND INSURANCE 10.1 PMC shall defend, indemnify and hold harmless VRI, Affiliates of VRI and its licensors, and its respective directors, officers, shareholders, agents, consultants and employees (collectively, the Indemnitees) from and against any and all liability, loss, damages and expenses (including reasonable attorneys' fees) as the result of claims, demands, costs or judgments which may be made or instituted against any of the Indemnitees arising out of the manufacture, design, possession, distribution, use, testing, sale or other disposition by or through PMC and/or Affiliates of PMC and/or licensees of either PMC or Affiliates of PMC of any Licensed Product and/or any product or process in connection with or arising out of the Patent Rights or Licensed Know-How and/or any material provided by PMC or Affiliates of PMC under this Agreement (in each case, other than any claims, demands, costs or judgments arising out of, based upon or resulting from infringement of the intellectual property rights of a third party based upon the use of polyphosphazene as an immunoadjuvant. PMC's obligation to defend, indemnify and hold harmless shall include any and all such claims, demands, costs or judgments, including but not limited to money damages arising from alleged personal injury (including death) to any person or alleged property damage. PMC shall have the right to control the defense of any action which is to be indemnified in whole by PMC hereunder, including the right to select counsel (which shall be reasonably acceptable to VRI) to defend the Indemnitees and to settle any claim as to which the Indemnitees are fully indemnified by PMC. Notwithstanding the foregoing, PMC shall have no obligation to indemnify or hold any Indemnitee harmless with respect to any claim, demand, cost or judgment that results or is alleged to result from the willful misconduct or negligence of an Indemnitee nor to the extent that VRI has the obligation to indemnify under a 18 19 Supply Agreement entered into between the parties pursuant to Par. 2.7. If PMC does not provide counsel to defend the Indemnitees, VRI shall have the right to select counsel and PM shall pay the reasonable costs and expenses of said counsel. The provisions of this paragraph shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement and PMC's obligation hereunder shall apply whether or not such claims are rightfully brought. ARTICLE 11 MISCELLANEOUS 11.1 Publicity. VRI and PMC shall cooperate in the preparation of a mutually agreeable press release and other publicity disclosing the existence of this Agreement and their business relationship. Except for information disclosed in such a mutually agreed press release or publicity, neither PMC nor VRI shall disclose the existence or any terms of this Agreement without the prior written consent of the other party, except for such limited disclosure as may be reasonably necessary to either party's bankers, investors, attorneys or other professional advisors, or in connection with a merger or acquisition, or as may be required by law in the offering of securities or in securities regulatory filings or otherwise. 11.2 Waiver. It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a Waiver as to any subsequent and/or similar breach or default. 11.3 Independent Contractors. The relationship of the parties hereto is that of independent contractors. Neither party hereto is an agent, partner or joint venturer of the other for any purpose. 11.4 Compliance with Laws. In exercising its rights under this license, PMC shall fully comply with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction on over the exercise of rights under this license. 11.5 Notices. Any notice required or permitted to be given to the parties hereto shall be deemed to have been properly given if delivered in person or when received if mailed by first class certified mail or sent by facsimile to the other party at the appropriate address as set forth below or to such other addresses as may be designated in writing by the parties from time to time during the term of this Agreement. VRI: VIRUS RESEARCH INSTITUTE. INC.: 61 Moulton Street Cambridge, Mass. 02138 Attention: Chief Executive Officer 19 20 PMC: PASTEUR MERIEUX SERUMS ET VACCINS: 58 Avenue Leclerc Lyon, France Attention: V.P. Product Development with copy to V.P. Secretary & General Counsel 11.6 Complete Agreement. It is understood and agreed between VRI and PMC that this Agreement and the Option Agreement constitutes the entire agreement with respect to the subject matter of this Agreement, both written and oral, between the parties, and that all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, shall be abrogated, cancelled, and are null and void and of no effect. No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the parties hereto. 11.7 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision and the parties shall exert best efforts to amend this Agreement to include a provision which is valid, legal and enforceable and which carries out the original intent of the parties. In the event that such a provision cannot be included in the Agreement and the absence thereof materially changes a party's obligations or rights under this Agreement, such party shall have the right to terminate this Agreement. 11.8 Counterparts and Headings. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both together shall be deemed to be one and the same agreement. All headings and any cover page or table of contents are inserted for convenience of reference only and shall not affect its meaning or interpretation. 11.9 Governing Law. All matters affecting the interpretation, validity and performance under this Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts without regard for its conflict of laws principles. 11.10 Force Majeure. If and to the extent that either party hereto is prevented, by circumstances not now reasonably foreseeable and not within its reasonable ability to control, from performing any of its obligations under this Agreement (other than payment obligations) and promptly so notifies the other party giving full particulars of the circumstances in question, then the party affected shall be relieved of liability to the other for failure to perform such obligations, but shall nevertheless use its best efforts to resume full performance thereof without avoidable delay, and pending such resumption shall consult with the other party and shall permit and shall use its best efforts to facilitate any efforts the other party may make to effect the performance of such obligations by other means. If such failure to perform continues for a period of more than one (1) year, the other party may terminate this Agreement by written notice to the non-performing party with respect to the rights and licenses with respect to those Licensed 20 21 Products and with respect to those countries affected by such failure. The failure to achieve milestones under Article 8 and/or the failure to obtain regulatory approval for a Licensed Product shall not be considered to be circumstances within this Section 11.10. ARTICLE 12 ASSIGNMENT; SUCCESSORS 12.1 This Agreement shall not be assignable by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld), except that either party may assign this Agreement to an Affiliate or to a successor in interest or transferee of all or substantially all of the portion of the business to which this Agreement relates. 12.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of VRI and PMC. In order for such assignment to be effective any such successor or assignee of a party's interest shall expressly assume in writing the performance of all the terms and conditions of this Agreement to be performed by said party and such Assignment shall not relieve the Assignor of any of its obligations under this Agreement. IN WITNESS WHEREOF, both VRI and PMC have executed this Agreement, in duplicate originals, by their respective officers hereunto duly authorized, the day and year first above written. VIRUS RESEARCH INSTITUTE, INC. PASTEUR MERIEUX SERUMS ET VACCINS By: /s/ William A. Packer By: /s/ Jean-Jacques Bertrand ------------------------------ ----------------------------------- Print Name: William A. Packer Print Name: Jean-Jacques Bertrand Vice Chairman, President & Chief Title: President Title: Executive Officer --------------------------- -------------------------------- 21 22 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT A PATENT RIGHTS 1. United States [****] 2. PCT [****] 22 23 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT B PMC PROPRIETARY RIGHTS [****] 23 EX-10.19 4 LICENSE AGREEMENT 1 EXHIBIT 10. 19 Portions of this Exhibit have been omitted pursuant to a request for Confidential Treatment. The omitted portions, marked by [****], have been separately filed with the Commission. LICENSE AGREEMENT THIS LICENSE AGREEMENT ("Agreement") is made and entered into as of August 2, 1995 (the "Effective Date") between VIRUS RESEARCH INSTITUTE, INC., a Delaware corporation having its principal place of business at 61 Moulton Street, Cambridge, Mass 02138 (hereinafter referred to as "VRI"), and PASTEUR MERIEUX SERUMS ET VACCINS, a French corporation having its registered head office at 58 Avenue Leclerc, Lyon, France (hereinafter referred to as "PMC"). RECITALS A. VRI has certain proprietary rights relating to the use of polyphosphazene for the mucosal delivery of vaccines against human diseases. B. PMC desires to obtain a license to such rights and to research, develop, manufacture, market, sell and distribute certain vaccines which incorporate polyphosphazene, all under the terms and conditions set forth below. NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter sat forth, it is agreed by and between the parties as follows: ARTICLE 1 DEFINITIONS 1.1 "Affiliate" shall mean, with respect to any Person, (i) any other Person of which securities or other ownership interests representing 50% or more of the voting interests (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) are, at the time such determination is being made, owned, controlled or held directly or indirectly, by such Person, or (ii) any other Person which, at the time such determination is being made, is Controlling, Controlled by or under common Control with, such Person. For the purpose of this section 1.1, "Control," whether used as a noun or verb, refers to the possession directly or indirectly, of the power to direct, or cause the direction of, the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and "Person" means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or 2 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. any government, or any agency or political subdivision thereof. The Joint Venture companies known as Pasteur Merieux MSD Snc and MCM Vaccine Co. are Affiliates of PMC. 1.2 "Co-Exclusive Vaccine" shall mean a mucosally administered vaccine (other than a DNA vaccine) against one or more of the following diseases: Respiratory Syncytial Virus ("RSV"), Para Influenza, Cytomegalovirus ("CMV"), Pneumococcal Pneumonia ("Pneumo") (including S. pneumoniae, Branhamalla, non-typable Haemophilus Influenza and Otitis Media), Rabies, each alone or in combination with each other, and specifically excluding a combination of (a) one or more of the vaccines specifically enumerated as a Co-Exclusive Vaccine or Exclusive Vaccine with (b) a vaccine which is not specifically enumerated as an Exclusive Vaccine or Co-Exclusive Vaccine. 1.3 "Exclusive Vaccine" shall mean a mucosally administered vaccine(s) (other than a DNA vaccine) against one or more of Lyme Disease, Meningococcus and Influenza, each alone or in combination with each other or in combination with a Co-Exclusive Vaccine and shall also include [****] specifically excluding a combination of (a) one or more of the vaccines specifically enumerated as a Co-Exclusive Vaccine or Exclusive Vaccine with (b) a vaccine which is not specifically enumerated as an Exclusive Vaccine or Co-Exclusive Vaccine. 1.4 "Field" shall mean the prevention of a disease in humans. 1.5 "Licensed Know-How" shall mean any biological materials, and any research and development information, inventions, know-how, pre-clinical, clinical and other technical data, in each case that are owned by VRI, or possessed by VRI with the right to provide the same to others, from and after the Effective Date and which is necessary or useful for the improving, making, using or selling of Licensed Products as provided in this Agreement. 1.7 "Licensed Product(s)" shall mean, individually and collectively, the Exclusive Vaccines and the Co-Exclusive Vaccines provided that polyphosphazene is used for the mucosal administration of the product containing such vaccine. 1.8 "Net Sales" shall mean the gross invoice price of Licensed Products sold or distributed by PMC or its Affiliates or any of their sublicensees, less: (i) normal and customary rebates, trade discounts, and credits for returns and allowances, all to the extent actually allowed, (ii) to the extent separately reported on the invoice, sales or other excise taxes or duties imposed upon and paid by PMC, its Affiliates or sublicensees with respect to such sales, and (iii) transportation charges and insurance for transportation to the extent separately invoiced or separately reported on the invoice and paid by the seller. -2- 3 In the event that Licensed Product is sold in other than an arms length transaction, then Net Sales shall be the gross invoice price which would be received in an arms length transaction, taking account of any deductions for items referred to in clauses (i), (ii) and (iii) of the preceding paragraph. In the event that consideration in addition to or in lieu of money is received for Licensed Product such consideration shall be added to Net Sales. Notwithstanding the provisions of this Section, Net Sales shall not include sales to an Affiliate for resale by such Affiliate. 1.9 "Patent Rights" shall mean the following patents and patent applications, and all subject matter claimed therein: (a) All patents and applications listed in Exhibit A; any continuations, continuations-in-part, divisions and substitutions thereof, or of which such an application or patent is a successor; patents which may issue upon any of the foregoing; and all renewals, reissues and extensions thereof; and (b) Any foreign patents and/or applications that are counterparts of a patent or application described in paragraph (a) above, including any patent or application that claims subject matter claimed in, or that takes priority from, a patent or application described in paragraph (a) above; and (c) Any patent or application owned by VRI during the term of this Agreement which claims polyphosphazene and/or the use thereof in as part of a vehicle for the mucosal administration of vaccine. 1.10 "PMC Mucosal Delivery Technology" shall mean any and all materials, information, data, improvements, patents and patent applications directed to polyphosphazene and/or its use as part of a mucosal delivery system including, but not limited to, data related to polymer safety (other than Drug Master Files or clinical data, and excluding that which is unique to the formulation of polyphosphazene with a specific PMC antigen) which are owned by PMC or in the possession of PMC with the right to provide same to others during the term of the Agreement. 1.11 "Significant Competition" with respect to each Licensed Product in each country for each calendar year shall mean that a third party sells a mucosally delivered vaccine which competes with a Licensed Product as to a given indication, whether in single antigen or multivalent form and such third party vaccine has a commercially recognized advantage in safety, immunogenicity and/or therapeutic value over the competing Licensed -3- 4 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. Product and that such third party vaccine has [****] vaccines for the indication concerned. The sale of a Co-Exclusive Vaccine by a licensee of VRI or the sale of a polyphosphazene adjuvanted parenteral vaccine shall not be a third party vaccine for the purpose of this definition. 1.12 "Territory" shall mean (i) all countries included in the continents of North and South America, including Central America and the islands of the Caribbean, Europe, and Africa, including the dependencies and territories of such countries; (ii) Thailand, and (iii) all countries previously part of the U.S.S.R. [****] 1.13 "Valid Claim" shall mean a claim of an issued and unexpired patent or pending patent application included within the Patent Rights, which has not been held unenforceable, unpatentable or invalid by a court or other governmental agency of competent jurisdiction from which no appeal can be or is taken, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise. ARTICLE 2 GRANT OF RIGHTS 2.1 License to PMC. (a) Subject to the terms and conditions of this Agreement, VRI hereby grants to PMC (i) a license under the Patent Rights and Licensed Know-How to make, have made, and use the Licensed Products which are Exclusive Vaccines outside of the Territory but only for sale in the Field in the Territory and to make, have made, use, sell and distribute the Licensed Products which are Exclusive Vaccines in the Field in the Territory, which license under this Section 2.l(a)(i) shall be exclusive with respect to sale of Exclusive Vaccines in the Field in the Territory and in all other respects the license granted under this Section 2.1(a)(i) is non-exclusive, and (ii) a license under the Patent Rights and Licensed Know-How to make, have made, and use the Licensed Products which are Co-Exclusive Vaccines outside of the Territory but only for sale in the Field in the Territory and to make, have made, use and sell a Licensed Product which is a Co-Exclusive Vaccine in the Field in the Territory which license under this Paragraph 2.1(a) shall be exclusive to PMC for use, sale and distribution of Co-Exclusive Vaccine in the Field in each country of the Territory but for one other entity which may, at VRI's option, be VRI or an entity licensed by VRI, and in all other respects the license granted under this Section 2.l(a)(ii) is non-exclusive. It is expressly understood that only one entity other than PMC will be or be permitted to be licensed by VRI, to use or sell any Co-Exclusive Vaccine in the Field in any country of the Territory. -4- 5 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. (b) Subject to the terms and conditions of this Agreement, VRI hereby grants to PMC a non-exclusive license under the Patent Rights and Licensed Know-How (i) to use, sell and distribute the Licensed Products set forth in Exhibit B in the countries set forth in Exhibit B, but only to the extent that all of the antigens contained therein are covered by patent rights of PMC and/or its Affiliates which give PMC an exclusive position with respect to those antigens in those countries, and (ii) to make and have made and use Licensed Products set forth in Exhibit B in any country of the world but only for use, sale and distribution in the countries set forth in Exhibit B, and only to the extent that all of the antigens contained therein are covered by patent rights of PMC and/or its Affiliates, which give PMC an exclusive position with respect to all of the antigens contained in the Licensed Product of Exhibit B in those countries of Exhibit B. Exhibit B is intended to set forth the countries in which PMC holds exclusive rights in respect of a given antigen and the antigens as to which such exclusive rights are held in that country. Such Exhibit B shall be amended from time to time to take account of any additional countries and/or additional Licensed Products which contain only antigens as to which PMC obtains exclusive rights during the term of this Agreement but only to the extent that VRI is able to grant such a license and only to the extent VRI has not previously granted to a third party rights which would prevent VRI from granting such rights to PMC. (c) Upon written notice to VRI, PMC shall have the right to be granted a non-exclusive license to use, sell and distribute each Co-Exclusive Vaccine and each Exclusive Vaccine, in each country (other than Japan) where PMC and/or its Affiliates have patent rights (as an owner or exclusive licensee) which cover the antigen of such Exclusive Vaccine or Co-Exclusive Vaccine provided that VRI has not granted rights to a third party in such country which would prevent VRI from granting such license to PMC, which non-exclusive license extension shall be limited to a Co-Exclusive Vaccine or Exclusive Vaccine, as the case may be, which contains such antigen. The non-exclusive license shall include the right to make and have made each such Co-Exclusive Vaccine and Exclusive Vaccine but only for use and sale in the countries specified in this Paragraph 2.1(c). (d) [****] (e) In order to assure PMC of the exclusive rights granted in Section 2.1(a)(i), VRI shall not grant to a third party or itself exercise any rights or licenses under Patent Rights and Licensed Know-How to use, sell or distribute a mucosally administered vaccine [****] against Lyme Disease, Meningococcus or Influenza in the Field in the Territory. In addition, except as permitted in Section 2.1 (a (ii), VRI shall not grant to a third party or itself exercise any rights or licenses under Patent Rights and Licensed Know-How to use, sell or distribute a mucosally administered vaccine [****] against RSV, Para Influenza, CMV Pneumo (including S. Pneumoniae, Branhamalla, non-typable Haemophilus Influenza and Otitis Media) and Rabies in the Field in the Territory. -5- 6 2.2 Licenses to VRI. Subject to the rights granted to and maintained by PMC and to any existing rights of third-parties, PMC hereby grants to VRI a worldwide, royalty free, license to use PMC Mucosal Delivery Technology to make, have made, use and sell vaccine products, including the right to sublicense such license to Affiliates. Such license of PMC Mucosal Delivery Technology may also be sublicensed to third parties with the prior written consent of PMC, which consent shall not be unreasonably withheld. 2.3 Sublicenses. With respect to the rights granted under Section 2.1(a)(i) PMC shall have the right to grant sublicenses under this Agreement with the prior approval of VRI as to the sublicensee, which approval shall not be unreasonably denied. With respect to the rights granted under Section 2.1(a)(ii), PMC shall have the right (without the approval of VRI) to grant a sublicense to one other party in any country where PMC is not selling or does not intend to sell Licensed Product. PMC shall advise VRI of the name of such sublicensee when such sublicensee is selected. The rights granted under Section 2.1(b) and (c) are not sublicensable, except to Affiliates of PMC. 2.4 (a) In case of any sublicense by PMC or VRI of the rights and licenses granted in this Agreement, the sublicensee shall agree to be bound by the terms, obligations and conditions identical to those of Articles 7 and 10 and Sections 2.5 and 12.5 of this Agreement (substituting the name of the Sublicensee for that of the sublicensing party), with the other party being expressly made a third party beneficiary thereof, and the sublicensing party shall be responsible for the performance by the appointed sublicensee of such terms, obligations and conditions. (b) Each sublicense agreement concluded by PMC will include a requirement that the sublicensee maintain records and permit inspection on terms essentially identical to Article 10.4 of this Agreement. At VRI's request, PMC shall arrange for an independent certified accountant selected by VRI to inspect the records of its sublicensee(s) for the purpose of verifying royalties due to VRI and shall cause such accountant to report the results thereof to VRI. (c) All sublicenses granted for a Licensed Product or for the PMC Mucosal Delivery Technology in a country shall terminate upon termination of the licenses granted hereunder with respect to such Licensed Product or to PMC Mucosal Delivery Technology as the case may be, provided that upon expiration of the full term of this Agreement pursuant to Paragraph 5.1, all parties shall have fully paid-up, non-cancelable licenses. 2.5 To the extent Patent Rights licensed to PMC under this Agreement have been licensed by VRI from another party under an agreement with another party ("Another Party Agreement(s)"), PMC understands and agrees as follows: -6- 7 (i) The rights licensed to PMC by VRI are subject to the terms, limitations, restrictions and obligations of the Another Party Agreement(s). (ii) PMC will comply with the terms, obligations, limitations and restrictions of the Another Party Agreement(s) to the extent PMC has been permitted to review such terms, obligations, limitations and restrictions. VRI will give PMC, upon request, a reasonable opportunity to review the same except to the extent that confidentiality or other obligations towards Another Party may prevent VRI from doing so. In any event VRI shall act reasonably in advising PMC of the scope of PMC's obligation pursuant to such Another Party Agreement. It is expressly understood that PMC may refuse to accept a license under one or more Another Party Agreements, in which case PMC will not be bound thereby. 2.6 Disclosure of Technology. Upon the execution of this Agreement, and periodically thereafter upon request by PMC, VRI shall provide to PMC copies of all available information in tangible form within the Licensed Know-How or related to the Patent Rights. 2.7 Subject to the terms and conditions of the Supply Agreement to be negotiated under this Section 2.7, PMC is hereby granted a non-exclusive right and license under the Patent Rights and Licensed Know-How to make and have made polyphosphazene for use by PMC, its Affiliates and its sublicensees as part of a mucosal delivery system in the manufacture of Licensed Product in accordance with and to the extent that PMC retains its license to Licensed Product under this Agreement. PMC shall have the right at any time during the term of this Agreement, but not the obligation, to exercise its right under the herein granted manufacturing license. In the event that PMC decides to exercise such rights, it shall so inform VRI in writing, and VRI shall promptly disclose to PMC all applicable manufacturing technology in the possession of VRI at the time of such disclosure. Subject to applicable confidentiality obligations, VRI and PMC shall share and exchange any technology and know-how they shall generate while establishing manufacturing processes and facilities. When either PMC or VRI achieves manufacture of polyphosphazene on a commercial basis, it shall have an obligation to use reasonable efforts in good faith to assist the other to satisfy its reasonable requirements of polyphosphazene for use as part of a vehicle for a mucosal delivery system for vaccines on reasonable commercial terms, taking into account the respective investments made and risks incurred by the parties in connection with such manufacture. PMC and VRI shall consult in good faith and in their mutual interest as to an arrangement for the manufacture and supply of polyphosphazene for clinical lots as well as in -7- 8 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. commercial quantities for use as a part of a mucosal delivery system by PMC and its Affiliates and authorized sublicensees in the Licensed Products as licensed hereunder and for use by VRI, its Affiliates and licensees (other than PMC). VRI shall use commercially reasonable efforts to establish a process capable of yielding under GMP conditions consistent and validated supplies of polyphosphazene in accordance with agreed upon specifications, [****] VRI shall use commercially reasonable efforts to obtain a manufacturer of polyphosphazene. Thereafter, under the terms and conditions of a supply agreement to be negotiated in good faith between the parties (the "Supply Agreement"), VRI shall be The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. responsible for scaling-up the process in an efficient, cost-effective GMP manufacturing facility for production of polyphosphazene according to agreed-upon specifications at industrial scale, which Supply Agreement [****] PMC shall render all reasonable assistance to VRI in identifying and selecting a third-party manufacturer. In the event that VRI retains such manufacturer, VRI shall then, subject to appropriate confidentiality provisions, transfer to it all of VRI's technology for manufacture of polyphosphazene. ARTICLE 3 MILESTONES AND ROYALTIES 3.1 Milestone Fees. PMC shall pay to VRI the non-refundable and non-creditable amounts specified below within thirty (30) days following the accomplishment by PMC, its Affiliates or sublicensees of the corresponding event set forth below, or (ii) within thirty (30) days following receipt by PMC of written notice of accomplishment by VRI or a VRI's Affiliate of such other corresponding event set forth below: (a) [****] (b) [****] 3.2 Royalties. [****] -8- 9 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. (a) [****] (b) [****] (c) [****] (d) In the case of the earned royalties set forth in paragraphs (a) and (b) above, the royalties would be adjusted in each country for each calendar year for each Licensed Product in the event PMC was required to pay royalties to a third party for use of polyphosphazene as part of a mucosal delivery system in such Licensed Product in such a country for such year utilizing the following method, but in no event shall [****] (1) First determine the relationship between Net Sales in the applicable country for the year and the total worldwide Net Sales in that same category of sales for the year for the Licensed Product, i.e., divide Net Sales in a country for the applicable Licensed Product, where, [****] by worldwide Net Sales in all countries for such Licensed Product [****]. (2) Apply this percentage to total royalties paid in all such countries for the Licensed Product for the year to determine the VRI royalties in a country against which a credit for third party royalties paid in such country may be taken. (3) Subtract the amount of third party royalties paid in the country in question from [****]. (e) Royalties shall be calculated and paid on a country-by-country and product-by-product basis [****] provided, however, that if at any time after the expiration [****], the making, using or selling of the product is covered by Patent Rights, the royalties shall be paid until the expiration if the last to expire of any such patent(s). (f) [****] 3.3 Single Royalty: Non-Royalty Sales. It is understood that in no event shall more than one royalty be payable under Section 3.2 with respect to a particular unit of Licensed Product. No royalty be payable under Section 3 with respect to sales of Licensed Products among PMC, its Affiliates and/or sublicensees, but royalty shall be due upon the subsequent sale of the Licensed Product to an entity who is not an Affiliate or sublicensee provided, however, that if there is no or is to be no subsequent sale of the Licensed Product to an entity who is not an Affiliate or a sublicensee, then the royalty shall be due and shall be based upon the higher of (i) the gross invoice price to such Affiliate or sublicensee or (ii) the average gross invoice price with PMC charges to its customers (other than Affiliates and -9- 10 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. sublicensees) for the Licensed Product for the relevant reporting period of Section 9.1 in the relevant country. No royalty shall be payable for (i) Licensed Product used in clinical trials, or (ii) Licensed Product used by PMC or its sublicensee for research, or (iii) customary quantities of Licensed Product distributed by PMC or its sublicensee as free samples. 3.4 Combination Products. In the event Licensed Products contain vaccines licensed hereunder in combination, the royalty rate applicable to said combination products shall be the rate [****] ARTICLE 4 RESEARCH PROGRAM 4.1 Object. Pursuant to the mutually agreed upon research program attached hereto as Exhibit D (the "Research Program"), VRI agrees to conduct the research described therein and PMC agrees to support and fund such Research Program in accordance with the terms and conditions set forth below. 4.2 Oversight of the Research Program (a) Oversight. The Research Program will be overseen and monitored by the Research Steering Committee as described herein (the "Committee"). (b) Membership. [****] Such representatives will be qualified, by reason of background and experience, to assess the scientific progress of the Research Program. Each party will have the right to change its representation on the Committee upon written notice sent to the other. (c) Chair. [****] (d) Responsibilities. The Committee will have authority to: (i) review and approve the draft Research Program prepared by VRI and establish the definitive Research Program; -10- 11 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. (ii) make recommendations regarding the performance of the Research Program and the conduct of the research pursuant thereto, and monitor performance thereunder; (iii) modify the Research Program as it determines, for each twelve (12) month period during the term thereof; (iv) review any and all proposed publication[s] or communication[s] relating to the Research Program and the results therefrom, in accordance with the procedure set forth in this Article 4; (v) review any and all proposed filing of patent application[s] in connection with the Research Program. 4.3 Meetings. [****] Meetings in person will normally take place at VRI's premises or such other pace as may be mutually agreed upon. Meetings may be held by telephone. At such meetings, the Committee will discuss the Research Program and the status of performance by VRI under the program, evaluate the results thereof and set priorities therefor. [****] The Committee will prepare written minutes of each meeting and a written record of all decisions whether made at a formal meeting or not. Such minutes will incorporate semi-annual research reports prepared for the parties by VRI. A quorum for a meeting shall require [****] 4.4 Committee Deadlock. If there are issues on which the Committee cannot reach agreement because of a Deadlock (as hereinafter defined)[****] 4.5 The Principal Investigator. (a) Principal Investigator. [****] (b) Duties. The Principal Investigator will direct the Research Program and coordinate the efforts of other researchers involved in the performance of such Program. The Principal Investigator will sit with the Committee as provided in Section 4.2 hereof, will perform the duties set forth hereunder and will be afforded the opportunity to actively participate in all Committee deliberations. The Principal Investigator will provide reasonably detailed status reports of the Research Program to the Committee at six-month intervals, as well as at the earliest practicable time whenever, in the Principal Investigator's judgment, an invention is created or reduced to practice. The Principal Investigator will devote such time and efforts as may be required to fulfill his duties hereunder and to ensure the successful administration and coordination of the Research Program. -11- 12 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. (c) Replacement. The Principal Investigator may be replaced in the event the then existing Principal Investigator is no longer able or is unwilling to so serve or fails to perform the duties assigned. In such circumstances VRI, with the consent of PMC shall appoint a substitute Principal Investigator. PMC will not unreasonably withhold its consent to a substitute Principal Investigator proposed by VRI. [****] 4.6 (a) Conduct of Research Program. The Research Program will be conducted by VRI at VRI's laboratories. VRI will use all reasonable efforts to complete research in accordance with the said Research Program [****]. Any research work performed by VRI pursuant hereto will be in compliance with Good Laboratory Practices as applicable in the United States of America. [****] (b) Visitation. For the purpose of facilitating PMC's understanding of the research activities conducted by VRI hereunder, VRI will permit duly authorized employees or representatives of PMC to visit its facilities where the research is conducted, at reasonable times and with reasonable notice. 4.7 Financial Conditions. (a) Support Commitment. PMC will provide funding for and during the term of the Research Program up to a maximum of two million five hundred thousand United States dollars (2,500,000 US$) (the "Maximum Commitment"). The Maximum Commitment will be inclusive of all costs incurred by VRI implementing the Research Program. (b) Payment Schedule. Support payments will be made by PMC to VRI in four (4) equal half-year payments of six hundred twenty-five thousand United States dollars (625,000 US$) in advance with the first payment to be made within eight (8) days of the Effective Date hereof. 4.8 VRI will provide an annual budget for the research program and semi-annual financial reports of actual and budgeted expenditure. [****] [****] the records on which these reports are based shall be open, no more than once each year, for inspection by an independent certified accountant selected by PMC and acceptable to VRI, upon reasonable notice during normal business hours and at PMC's expense, for the sole purpose of verifying the accuracy of the reports. [****] -12- 13 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. 4.9 No Conflict With Research Program. VRI agrees that the Research Program funds provided by PMC will be applied to the Research Program and may not, without PMC prior written approval, be used in support of any other research at VRI. 4.10 Title to Equipment. VRI will retain title to any equipment purchased with funds provided by PMC under this Agreement, if such purchase is mutually agreed upon as part of the Research Program budget. 4.11 Term and termination. (a) The term of the Research Program will be two (2) years as from the Effective Date hereof. (b) In addition to any other remedy which it may have, PMC will be entitled to terminate the Research Program and cease funding thereof in the event of a material breach by VRI of any of VRI's obligations and covenants hereunder following written notice or such breach to VRI. If such breach is not cured within thirty (30) days after written notice is given by PMC to VRI specifying the breach, PMC may terminate the Research Program and cease funding hereunder forthwith upon written notice to VRI after expiration of such thirty (30) day period, and [****] (c) In the event that the Research Program is terminated pursuant to this Section 4.11, VRI's right to receive any unpaid balance otherwise committed by PMC as support commitment pursuant to Section 4.7 hereof will become forfeited and no further payments with respect to the Research Program will be due to VRI by PMC except to the extent that such funds are needed to pay actual and non-cancelable obligations of VRI accrued to that date. 4.12 Confidentiality. In order to facilitate the operation of the Research Program, either party may disclose confidential or proprietary information owned or controlled by it to the other. It is hereby understood and agreed that such information shall be deemed "Proprietary Information" and treated as such in accordance with Article 7. 4.13 Results of the Research Program (a) [****] (b) [****] (c) [****] (d) [****] -13- 14 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. (e) [****] (f) [****] (g) [****] (h) [****] 4.14 [****] ARTICLE 5 TERM AND TERMINATION 5.1 Term. This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this Article 5, shall continue in full force and effect as long as PMC is obligated to pay royalties under this Agreement. PMC's license under Section 2.1 with respect to the Licensed Know-How shall survive the expiration, but not an earlier termination, of this Agreement. 5.2 Termination for Breach. In the event of a material breach of this Agreement the nonbreaching party in addition to any other remedy which it may have shall be entitled to terminate this Agreement following written notice of such breach to the breaching party. If such breach is not cured within sixty (60) days after written notice is given by the non-breaching party to the breaching party specifying the breach, the non-breaching party may terminate the Agreement forthwith upon written notice to the breaching party after expiration of such sixty (60) day period. 5.3 Termination by PMC. (a) Any provision herein notwithstanding, after completing PMC's funding obligation under Article 4, PMC may terminate this Agreement at any time by giving VRI at least one hundred and eighty (180) days prior written notice. (b) PMC may terminate its license with respect to any Licensed Product by one hundred and eighty (180) days prior written notice to VRI, and thereafter such Licensed Product(s) shall no longer be licensed under this agreement. (c) In the event of a termination under Section 5.3 (a) all rights granted herein to PMC shall forthwith revert to VRI [****]. -14- 15 5.4 Survival. 5.4.1 Termination of this Agreement for any reason shall not release either party hereto from any liability which at the time of such termination has already accrued to the other party. 5.4.2 In the event this Agreement is terminated for any reason, PMC and its Affiliates and sublicensees shall have the right to sell or otherwise dispose of the stock of any Licensed Product then on hand, all subject to the payment to VRI of fees and royalties pursuant to Article 3 hereof. 5.4.3 Articles 7, 11 and 12, and Sections 2.5, 5., 5.5, 8.4, 10.3 and 10.4, shall survive the expiration and any termination of this Agreement. Except as otherwise provided in Section 5.1 and Section 5.4.3, all rights and obligations of the parties under this Agreement shall terminate upon the expiration or termination of this Agreement. 5.5 In the event that PMC's rights and licenses under this Agreement are terminated, PMC agrees not to make, use or sell Licensed Products except as permitted by Article 5.4.2. 5.6 Either party may terminate this Agreement on notice if the other party makes a general assignment for the benefit of creditors, is the subject of proceedings in voluntary or involuntary bankruptcy or has a receiver or trustee appointed for substantially all of its property; provided that in the case of an involuntary bankruptcy proceeding such right to terminate shall only become effective if the other party consents thereto or such proceeding is not dismissed within ninety (90) days after the filing thereof. If, in connection with bankruptcy proceedings involving a party, an election is made by or on behalf of such party to reject the obligations of this Agreement and the other party elects to retain its rights to intellectual property hereunder pursuant to Section 365 n.1 of the Bankruptcy Code (USA), such other party shall be entitled to enforce any rights exclusively granted to it in respect of intellectual property hereunder by commencement of any action it deems necessary to that effect against third-party infringers and may do so in the name and stead of the bankrupt party. ARTICLE 6 PATENTS AND INFRINGEMENTS 6.1 Prosecution by VRI. VRI shall have the right, at PMC's expense, to control the filing for, prosecution and maintenance of the Patent Rights in the Territory. In the event that VRI grants any license in a country of the Territory with respect to any Patent Right, then thereafter PMC's obligation to pay patent costs for Patent Rights in such country shall be an amount equal to the total cost therefor multiplied by a fraction having as a -15- 16 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. numerator one and as a denominator the total number of licenses granted by VRI in respect of such Patent Rights in such country. VRI hall keep PMC reasonably informed as to the status of the Patent Rights in the Territory, and shall provide PMC with copies of all proposed filings and correspondence of a substantive nature with respect to patents or applications within the Patent Rights to be made with or sent to the United Sates Patent and Trademark Office or its counterpart in any country of the Territory (each, a "Patent Authority"). VRI shall also provide to PMC copies of all correspondence that it receives from a Patent Authority with respect to the Patent Rights and shall consider any comments of PMC with respect thereto. 6.2 Infringement Claims. If the production, sale or use of a Licensed Product results in any claim for infringement of a patent or other proprietary right of a third party against PMC, its Affiliates or sublicensees, PMC shall promptly notify VRI thereof in writing. As between the parties to this Agreement, PMC shall have the right at its own expense to defend and control the defense of any such claim against PMC, by counsel of PMC's own choice. 6.3 Enforcement of Patent Rights. (a) In the event that any Patent Rights are infringed by a third party with respect to an Exclusive Vaccine or Co-Exclusive Vaccine in the Field in the Territory, with the consent and approval of VRI (which shall not be unreasonably denied and shall be deemed to have been granted if VRI shall be in voluntary or involuntary bankruptcy proceedings, other than a proceeding such as Chapter 11 where the debtor continues to operate the business), PMC and/or its Affiliates or sublicensees shall have the right (except as provided below), but not the obligation, to institute, and prosecute any action or proceeding under the Patent Rights with respect to such infringement, by counsel of its choice, including any declaratory judgment action arising from such infringement. Any amounts recovered from third parties with respect to the Patent Rights in such action shall be applied first to reimburse the expenses of the action; then to the extent the award [****]. PMC shall not have the right to settle, compromise or take any action in such litigation which diminish, limit or inhibit the scope, validity or enforceability of the Patent Rights without the express written permission of VRI. PMC shall keep VRI advised of the progress of such proceedings. 6.4 In the event that a third party is infringing the Patent Rights with respect to an Exclusive Vaccine or Co-Exclusive Vaccine in the Territory in the Field and PMC does not elect to institute an action, VRI shall have the right, but not the obligation, to commence an infringement suit under the Patent Rights against such infringer and retain any recovery; provided that it so notifies PMC. If VRI commences a suit in accordance with this Section 6.4, PMC shall have the [****] expenses thereof. If PMC elects to so participate,[****]. VRI shall have the right to control such action with counsel of its choice. -16- 17 6.5 VRI Participation. In VRI's sole discretion, VRI shall be entitled to participate at its expense through counsel of its choosing in and control any legal action by or against PMC affecting the validity or enforceability of the patents on which Patent Rights are based, and PMC may elect to participate in any such action to the extent necessary to defend its own interests. 6.6 Each party agrees to cooperate with each other with respect to any litigation under Sections 6.2, 6.3 or 6.4. ARTICLE 7 CONFIDENTIALITY 7.1 Nondisclosure. Except as otherwise provided in this Agreement, a party receiving (the "Receiving Party") any business or technical information ("Proprietary Information") that is disclosed to it by the other party the ("Disclosing Party") shall for a period beginning on the Effective Date and ending ten (10) years after the termination of this Agreement hold in confidence and not disclose to any third party the "Proprietary Information". In addition, the Receiving Party shall not use Proprietary Information that it receives from the Disclosing Party, except as is reasonably necessary to exercise the rights granted to the Receiving Party under Article 2 or Article 6 of this Agreement. Notwithstanding the foregoing, with the prior written permission of the Disclosing Party (which shall not be unreasonably withheld), the Receiving Party may disclose information concerning the Patent Rights and/or the Licensed Know-How to actual or prospective sublicensees or to other third parties with whom the Receiving Party is considering or has entered into a business relationship, all of whom are similarly bound in writing under a reasonable confidentiality agreement. Proprietary Information of a party shall not include: 7.1.1 Information which is or was published or has become generally available to the public through no fault of the Receiving Party; 7.1.2 Information which the Receiving Party can document is or was in its possession at the time of disclosure or was independently developed by the Receiving Party; or 7.1.3 Information which is rightfully acquired by the Receiving Party from a third party who is not under an obligation of confidentiality to the disclosing party, and to the best of the Receiving Party's knowledge and belief is entitled to rightfully make such disclosure, but only to the extent the Receiving Party complies with any restrictions imposed by the third party. 7.2 Exceptions. The Receiving Party may disclose Proprietary Information of the other, in connection with the order of a court of law or administrative or governmental authority provided that the Receiving Party exerts reasonable efforts to preserve the -17- 18 confidentiality thereof and the disclosing party is given an opportunity to protect the confidentiality thereof, or as is reasonably necessary in connection with the labeling of its products that are otherwise sold in compliance with this Agreement or as required for obtaining regulatory approval of Licensed Product, provided that the Receiving Party protects the confidentiality thereof to the fullest extent possible. 7.3 Notwithstanding anything else to the contrary, PMC agrees that Licensed Know-How, or Proprietary Information received from VRI shall be used by PMC only in and for Licensed Products and their development for sale in the Territory in the Field, all in accordance with this Agreement, and can only be used by PMC for so long as and to the extent that PMC maintains a license under this Agreement. 7.4 Notwithstanding anything else to the contrary and subject to Section 5.1, in the event that PMC's rights and licenses under this Agreement are terminated, PMC agrees a) not to use Licensed Know-How, or any Proprietary Information provided to PMC by VRI or any information developed by PMC which is derived from or is based on Licensed Know-How for the research, development, making, or using or selling of any product or process, including, but not limited to Licensed Products and (b) not to do any of the foregoing while this Agreement is in force for any product except as licensed under this Agreement. 7.5 Notwithstanding anything else to the contrary, VRI agrees that PMC Mucosal Delivery Technology licensed to it by PMC hereunder may be used only in a manner consistent with the provisions of this Agreement. VRI's licenses herein shall survive the expiration of the term hereof but not an earlier termination of this Agreement except as provided in Section 5.3(c). ARTICLE 8 REPRESENTATIONS AND WARRANTIES 8.1.1 VRI and PMC each represents and warrants to the other that each has the full right and authority to enter into this Agreement and grant the rights and licenses granted herein; 8.1.2 VRI represents and warrants to PMC that it has not previously granted and, prior to termination of this Agreement, will not grant any rights in the Patent Rights or the Licensed Know-How that are inconsistent with the rights and licenses granted to PMC herein; 8.1.3 To the best of VRI's knowledge, there is no pending or threatened claim or litigation to which VRI is a party contesting the validity or right to use any of the Patent Rights, and VRI has not received any notice of infringement with respect to Patent Rights. -18- 19 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. 8.2 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 8.1 ABOVE, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF ANY PATENT RIGHTS ISSUED OR PENDING. 8.3 Effect of Representations and Warranties. Subject to Section 8.4, it is understood that if the representations and warranties under this Article 8 are not true and accurate and PMC incurs liabilities, costs or other expenses as a result of such falsity, VRI shall indemnify and hold PMC harmless from and against any such liabilities, costs or expenses incurred, provided that VRI receives prompt notice of any claim against PMC resulting from or related to such falsity and the sole right to control the defense or settlement thereof. 8.4 Limitation of Liability. Notwithstanding anything else to the contrary, VRI's liability for any breach of this Agreement (including but not limited to any liability which results from any breach of any representation or warranty) is limited to the payments received or to be received from PMC under this Agreement. This Limitation on Liability shall not be applicable to intentional misconduct on the part of VRI or where PMC, as a result of such breach, is liable to a third party in excess of such Limitation on Liability. ARTICLE 9 DUE DILIGENCE 9.1 General. PMC shall use commercially reasonable efforts to research, develop, register, market and sell and to continue to market and sell each Licensed Product in each country of the Territory; [****]. Upon a failure by PMC to meet its obligations under this Section 9.1 with respect to any Licensed Product in any country (directly or through a sublicensee), VRI shall, among other remedies available to it, [****] 9.2 PMC shall promptly notify VRI, in writing, if at any time PMC does not intend to continue to research, develop and/or obtain regulatory approval for and/or market and sell any Licensed Product in any country of the Territory. 9.3 In the event that PMC provides VRI with notice pursuant to Section 9.2 with respect to any Licensed Product or with respect to any country(ies) the rights herein -19- 20 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. granted by VRI to PMC to such Licensed Product in such country(ies), upon written notice from VRI to PMC shall revert to VRI. 9.4 In the event that PMC does not meet any of the milestones set forth in Exhibit C (as the same may be extended as indicated herein) for any of the Licensed Products set forth in Exhibit C, VRI shall have the right to [****]. PMC shall have the right to a [****] and the Parties shall agree on a reasonable period for such extension. Exhibit C shall be appropriately revised to reflect such extension. In addition, PMC shall have the right to extend each of the milestones of Exhibit C, if not achieved, [****]. The parties agree to set similar milestones for [****] 9.5 PMC shall provide written reports to VRI on June 30th and December 31st of each year concerning the efforts being made in accordance with Section 9.1 with respect to the Licensed Product. PMC shall provide VRI with any additional information reasonably requested by VRI in this respect. Such reports shall be considered to be Proprietary Information of PMC. ARTICLE 10 ACCOUNTING AND RECORDS 10.1 Reports. PMC agrees to make quarterly written reports to VRI within sixty (60) days after the end of each calendar quarter in which royalties are due under this Agreement, stating in each such report the number, description, and aggregate Net Sales of Licensed Products sold during the calendar quarter and upon which a fee or royalty is payable under Article 3 above. The report shall also include the calculation of Net Sales all on a country by country and Licensed Product by Licensed Product basis. The report shall be due with respect to sales of Licensed Product sold by PMC sixty (60) days after the end of the calendar quarter and with respect to sales of Licensed Product by sublicensees, ninety (90) days after the end of a calendar quarter. If no such sales have been made, by PMC, its Affiliates and sublicensees, the report shall so state. 10.2 Payment. Concurrently with the making of each such report of Section 10.1, PMC shall pay to VRI the royalties at the rate specified in Article 3 above. All payments by PMC to VRI hereunder shall be made in U.S. Dollars. If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made by using the rate of exchange published in the Wall Street Journal for the last business day of the applicable calendar quarter. -20- 21 10.3 Withholding Taxes. Any withholding or other tax that PMC or any of its Affiliates are required by statute to withhold and pay on behalf of VRI with respect to the royalties payable to VRI under this Agreement shall be deducted from said royalties and paid contemporaneously with the remittance to VRI; provided, however, that in regard to any tax so deducted PMC shall furnish VRI with proper evidence of the taxes paid on its behalf. VRI will furnish PMC with appropriate documents to secure application of the favorable rate of withholding tax under applicable tax treaties. 10.4 Records; Inspection. 10.4.1 PMC shall keep complete, true and accurate books of account and records for the purpose of determining the amounts payable to VRI under this Agreement. Such books and records shall be kept at PMC's principal place of business for at least three (3) years following the end of the calendar quarter to which they pertain, and will be open for inspection during such three (3) year period by a representative of VRI for the purpose of verifying PMC's royalty statements. Such inspections may be made no more than once each calendar year, during normal business hours and upon thirty (30) days prior notice. Any such information shall be considered to be Proprietary Information of PMC. 10.4.2 Inspections conducted under this Section 10.4 shall be at the expense of VRI, unless an underpayment exceeding five percent (5%) of the amount paid for the period covered by the inspection is established in the course of any such inspection, whereupon all costs relating thereto will be paid by PMC, as well as any unpaid royalties within the thirty (30) days after requested by VRI. ARTICLE 11 INDEMNIFICATION AND INSURANCE 11.1 PMC shall defend, indemnify and hold harmless VRI, Affiliates or VRI and its licensors, and its respective directors, officers, shareholders, agents, consultants and employees (collectively, the "Indemnitees") from and against any and all liability, loss, damages and expenses (including reasonable attorneys' fees) as the result of claims, demands, costs or judgments which may be made or instituted against any of the Indemnitees arising out of the manufacture, design, possession, distribution, use, testing, sale or other disposition by or through PMC and/or Affiliates of PMC and/or licensees of either PMC or Affiliates of PMC of any Licensed Product and/or any product or process in connection with or arising out of the Patent Rights or Licensed Know-How and/or any material provided by PMC or Affiliates of PMC under this Agreement (in each case, other than any claims, demands, costs or judgments arising out of, based upon or resulting from infringement of the intellectual property rights of a third party based upon the use of polyphosphazene as a part of a mucosally delivered vaccine PMC's obligation to defend, indemnify and hold harmless shall include any and all such claims, demands, costs or judgments, including but not limited to -21- 22 money damages arising from alleged personal injury (including death) to any person or alleged property damage. PMC shall have the right to control the defense of any action which is to be indemnified in whole by PMC hereunder, including the right to select counsel (which shall be reasonably acceptable to VRI) to defend the Indemnitees and to settle any claim as to which the Indemnitees are fully indemnified by PMC. Notwithstanding the foregoing, PMC shall have no obligation to indemnify or hold any Indemnitee harmless with respect to any claim, demand, cost or judgment that results or is alleged to result from the willful misconduct or negligence of an Indemnitee nor to the extent that VRI has the obligation to indemnify under a Supply Agreement entered into between the parties pursuant to Section 2.7. If PMC does not provide counsel to defend the Indemnitees, VRI shall have the right to select counsel and PMC shall pay the reasonable costs and expenses of said counsel. The provisions of this paragraph shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement and PMC's obligation hereunder shall apply whether or not such claims are rightfully brought. ARTICLE 12 MISCELLANEOUS 12.1 Publicity. VRI and PMC shall cooperate in the preparation of a mutually agreeable press release and other publicity disclosing the existence of this Agreement and their business relationship. Except for information disclosed in such a mutually agreed press release or publicity, neither PMC nor VRI shall disclose the existence or any terms of this Agreement without the prior written consent of the other party, except for such limited disclosure as may be reasonably necessary to either party's bankers, investors, attorneys or other professional advisors, or in connection with a merger or acquisition, or as may be required by law in the offering of securities or in securities regulatory filings or otherwise. 12.2 Waiver. It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a Waiver as to any subsequent and/or similar breach or default. 12.3 Independent Contractors. The relationship of the parties hereto is that of independent contractors. Neither party hereto is an agent, partner or joint venturer of the other for any purpose. 12.4 Compliance with Laws. In exercising its rights under this license, PMC shall fully comply with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights under this license. 12.5 Notices. Any notice required or permitted to be given to the parties hereto shall be deemed to have been properly given if delivered in person or when received if -22- 23 mailed by first-class certified mail or sent by facsimile to the other party at the appropriate address as set forth below or to such other addresses as may be designated in writing by the parties from time to time during the term of this Agreement. VRI: VIRUS RESEARCH INSTITUTE, INC. 61 Moulton Street Cambridge, Mass. 02138 Attention: Chief Executive Officer PMC: PASTEUR MERIEUX SERUMS El VACCINS 58 Avenue Leclerc Lyon, France Attention: V.P. Product Development With Copy to: V.P. Secretary & General Counsel 12.6 Complete Agreement. It is understood and agreed between VRI and PMC that this Agreement constitutes the entire agreement with respect to the subject matter of this Agreement, both written and oral, between the parties, and that all prior agreements respecting the subject matter hereof, either written or oral, expressed or implied, shall be abrogated, cancelled, and are null and void and of no effect. No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the parties hereto. 12.7 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision and the parties shall exert best efforts to amend this Agreement to include a provision which is valid, legal and enforceable and which carries out the original intent of the parties. In the event that such a provision cannot be included in the Agreement and the absence thereof materially changes a party's obligations or rights under this Agreement, such party shall have the right to terminate this Agreement. 12.8 Counterparts and Headings. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both together shall be deemed to be one and the same agreement. All headings and any cover page or table of contents are inserted for convenience of reference only and shall not affect its meaning or interpretation. 12.9 Governing Law. All matters affecting the interpretation, validity and performance under this Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts without regard for its conflict of laws principles. -23- 24 12.10 Force Majeure. If and to the extent that either party hereto is prevented, by circumstances not now reasonably foreseeable and not within its reasonable ability to control, from performing any of its obligations under this Agreement (other than payment obligations) and promptly so notifies the other party giving full particulars of the circumstances in question, then the party affected shall be relieved of liability to the other for failure to perform such obligations, but shall nevertheless use its best efforts to resume full performance thereof without avoidable delay, and pending such resumption shall consult with the other party and shall permit and shall use its best efforts to facilitate any efforts the other party may make to effect the performance of such obligations by other means. If such failure to perform continues for a period of more than one (1) year, the other party may terminate this Agreement by written notice to the non-performing party with respect to the rights and licenses with respect to those Licensed Products and with respect to the failure to obtain regulatory approval for a Licensed Product shall not be considered to be circumstances within this Section 12.10. ARTICLE 13 ASSIGNMENT; SUCCESSORS 13.1 This Agreement shall not be assignable by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld), except that either party may assign this Agreement to an Affiliate or to a successor in interest or transferee of all or substantially all of the portion of the business to which this Agreement relates. 13.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of VRI and PMC. In order for such assignment to be effective any such successor or assignee of a party's interest shall expressly assume in writing the performance of all the terms and conditions of this Agreement to be performed by said party and such Assignment shall not relieve the Assignor of any of its obligations under this Agreement. IN WITNESS WHEREOF, both VRI and PMC have executed this Agreement, in duplicate originals, by their respective officers hereunto duly authorized, the day and year first above written. VIRUS RESEARCH INSTITUTE, INC. PASTEUR MERIEUX SERUMS ET VACCINS By: /s/ J. Barrie Ward By: /s/ Herve Tainturier --------------------------- -------------------------------------- Print Name: J. Barrie Ward Print Name: Herve Tainturier ------------------- ------------------------------ Corporate Vice President, Secretary Title: Chairman & CEO Title: and General Counsel ------------------------ ----------------------------------- -24- 25 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT A PATENT RIGHTS 1. [****] 2. [****] 3. U.S. PATENT NO. 5,053,451 licensed from The Pennsylvania Research Corporation 4. U.S. APPLICATION SERIAL NO. [****] I. M.I.T. Case No. 5400 U.S. Patent 5,149,543 "Ionically Cross-Linked Polymeric Mirocapsules" By Samdar Cohen, Carmen Bano, Karyn B. Visscher, Marie Chow, Harry B. Allcock and Robert S. Langer U.S. Patent 5,308,701 "Ionically Cross-Linked Polymeric Microcapsules" By Samdar Cohen, Carmen Bano, Karyn B. Visscher, Marie Chow, Harry B. Allcock and Robert S. Langer Foreign Patent Applications pending: [****] II. M.I.T. Case 5743 U.S. Patent 4,880,662 "Water-Soluble Phosphazene Polymers Having Pharmacological Applications" By Harry R. Allcock, Paul E. Austin and Sukky Kwon U.S.S.N.: 434,145 - ABANDONED "Water-Soluble Phosphazene Polymers Having Pharmacological Applications" By Harry K. Allcock, Paul E. Austin and Sukky Kwon Jointly owned with Pennsylvania Research Corporation. II. M.I.T. Case No. 3985 U.S. Patent No. 4,900,556 "Systems For Delayed And Pulsed Release of Biologically Active Substances" -25- 26 By Herman N. Eisen, Robert S. Langer, Jr. and Margaret A. Wheatley U.S. Patent No. 4,921,757 "System and Apparatus For Delayed And Pulsed Release of Biologically Active Substances" By Herman N. Eisen, Robert S. Langer, Jr. and Margaret A. Wheatley IV. M.I.T. Case No. 3986 U.S. Patent No. 4,933,185 "System For Controlled Release of Biologically Active Compounds" By Herman N. Eisen, Robert S. Langer, Jr. and Margaret A. Wheatley Explanatory Notes M.I.T. Case No. 4433 -- All patent rights abandoned. "Polyphosphazene Matrix System for Drug Delivery Applications" By Cato T. Laurencin, Robert S. Langer, Harry R. Allcock and Thomas X. Neenan U.S.S.N. 737,921 -26- 27 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT B PMC PROPRIETARY RIGHTS [****] -27- 28 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT C MILESTONES TO BE MET BY PMC [****] -28- 29 The information below marked by [****] has been omitted pursuant to a request for Confidential Treatment. The omitted portion has been separately filed with the Commission. EXHIBIT D RESEARCH PROGRAM [****] -29- EX-10.23 5 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT 1 EXHIBIT 10.23 Portions of this Exhibit have been omitted pursuant to a request for confidential treatment. The omitted portions, marked by [****], have been separately filed with the Commission. COLLABORATIVE RESEARCH AND LICENSE AGREEMENT BETWEEN VIRUS RESEARCH INSTITUTE Inc. AND SMITHKLINE BEECHAM plc 2 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE 2 RESEARCH PROGRAM . . . . . . . . . . . . . . . . . . 12 ARTICLE 3 MANAGEMENT OF THE RESEARCH PROGRAM . . . . . . . . . 24 ARTICLE 4 GRANTS COVENANTS . . . . . . . . . . . . . . . . . . 27 ARTICLE 5 ROYALTIES AND OTHER PAYMENTS . . . . . . . . . . . . 30 ARTICLE 6 ROYALTY REPORTS AND ACCOUNTING . . . . . . . . . . . 34 ARTICLE 7 DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE 8 EXCHANGE OF INFORMATION AND CONFIDENTIALITY . . . . . 37 ARTICLE 9 PATENTS AND TRADEMARKS . . . . . . . . . . . . . . . 41 ARTICLE 10 TERM AND TERMINATION . . . . . . . . . . . . . . . . 48 ARTICLE 11 RIGHTS AND DUTIES UPON TERMINATION . . . . . . . . . 50 ARTICLE 12 WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . 50 ARTICLE 13 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . 51 ARTICLE 14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 51 ARTICLE 15 WAIVER OR BREACH . . . . . . . . . . . . . . . . . . 52 ARTICLE 16 SEPARABILITY . . . . . . . . . . . . . . . . . . . . 52 ARTICLE 17 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . 52 ARTICLE 18 NOTICES . . . . . . . . . . . . . . . . . . . . . . . 53 ARTICLE 19 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . 53 ARTICLE 20 RECORDING . . . . . . . . . . . . . . . . . . . . . . 54 ARTICLE 21 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 54 APPENDIX A PATENTS . . . . . . . . . . . . . . . . . . . . . . . 58 APPENDIX B VRI/SB COLLABORATIVE [****] RESEARCH PLAN . . . . . . 59 APPENDIX C VRI THIRD PARTY AGREEMENTS . . . . . . . . . . . . . 53 APPENDIX D KNOWN [****] GENES AND SEQUENCES . . . . . . . . . . 54
i 3 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. COLLABORATIVE RESEARCH AND LICENSE AGREEMENT THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT, effective as of the 22nd day of June, 1995, between VIRUS RESEARCH INSTITUTE, Inc., a corporation of the state of Delaware, having a place of business at 61 Moulton Street, Cambridge MA 02139, and SMITHKLINE BEECHAM plc, a company organized under English law and having its registered office at New Horizons Court, Brentford, Middlesex TW8 9EP, England, registered in England No. 2337959. WITNESSETH THAT: WHEREAS, Virus Research Institute, Inc. has rights in and to certain In Vivo Expression Technologies (hereinafter "IVET" as defined below); WHEREAS, Virus Research Institute, Inc. is the owner of all right, title and interest in or is the licensee of VRI TECHNOLOGY (as defined below); WHEREAS, SmithKline Beecham plc desires that Virus Research Institute practice IVET on SmithKline Beecham's behalf; WHEREAS, SmithKline Beecham plc also desires to obtain worldwide licenses from Virus Research Institute, Inc. under the aforesaid VRI TECHNOLOGY and Virus Research Institute, Inc. is willing to grant to SmithKline Beecham plc such licenses; WHEREAS, SmithKline Beecham plc and Virus Research Institute, Inc. desire to engage in a research collaboration directed to the application of IVET to [****] and to the identification of novel in vivo expressed genes derived therefrom; and WHEREAS, SmithKline Beecham plc desires to use the information developed during the research collaboration, inter alia, to develop screens to identify useful antimicrobial products; NOW, THEREFORE, in consideration of the covenants and obligations expressed herein, and intending to be legally bound, and otherwise to be bound by proper and reasonable conduct, the parties agree as follows: 4 ARTICLE 1 DEFINITIONS The forms used in this Agreement have the following meanings: 1.01 "AFFILIATES" shall mean any corporation, film, partnership or other entity, whether de jure or de facto, which directly or indirectly owns, is owned by or is under common ownership with SB or VRI to the extent of at least fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs of the entity and any person, firm, partnership, corporation or other entity actually controlled by, controlling or under common control with SB or VRI. A corporation or other entity which is under the common control with VRI only as a result of equity investments by a common, independent venture capital entity is not an AFFILIATE of VRI and an independent venture capital entity which owns at least fifty percent of the equity of VRI is not an AFFILIATE of VRI. 1.02 "COMBINATION PRODUCT" shall mean a PRODUCT which is sold in combination with (i) one or more therapeutically or prophylactically active compounds derived independently of this Agreement, in the case of therapeutics or (ii) one or more diagnostic agents derived independently of this Agreement in the case of diagnostics. COMBINATION PRODUCTS are included in the term "PRODUCT". 1.03 "COMMENCEMENT DATE" shall mean 22 June 1995, which shall be the date of commencement of the RESEARCH PROGRAM. 1.04 "COMPETING PRODUCT" with respect to a particular PRODUCT sold by SB or VRI or a licensee of either, shall mean any product sold by a THIRD PARTY which is the same as such PRODUCT. 1.05 "COMPETING VACCINE PRODUCT" with respect to a particular VACCINE PRODUCT sold by VRI or SB or a licensee of either shall mean any product sold by a THIRD PARTY which is the same as such VACCINE PRODUCT. 1.06 "CONTRACT YEAR" shall mean the twelve (12) month period from the COMMENCEMENT DATE and each subsequent consecutive twelve (12) month period during the RESEARCH PROGRAM TERM. 1.07 "FDA" shall mean the United States Food and Drug Administration or any successor entity thereto. 2 5 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 1.08 "IVET" shall mean In Vivo Expression Technology and refers to technology originally described by Mahan et al. (Science 259:686-689 (1993)) and any and all improvements thereto made by or to which VRI has rights independent of this Agreement including but not [****] which technology identifies bacterial genes the expression of which is induced in the host environment. 1.09 [****] 1.10 [****] 1.11 "NDA" shall mean a New Drug Application or Product License Application filed by or on behalf of SB with the FDA. 1.12 "PATENT(S)" shall mean all patents and patent applications which are or become owned by VRI and/or SB, or to which VRI and/or SB otherwise has, now or in the future, the right to grant licenses, which generically or specifically claim VRI TECHNOLOGY, SB RP TECHNOLOGY, RESEARCH PROGRAM OUTPUT, PRODUCT, a process for manufacturing PRODUCT, a process for discovery of a PRODUCT or an intermediate used in such processes or a use of PRODUCT. Included within the definition of PATENTS are all continuations, continuations-in-part, divisions, patents of addition, provisionals, reissues, renewals or extensions thereof. Also included within the definition of PATENTS are any patents or patent applications which generically or specifically claim any improvements of PRODUCT, methods for discovering PRODUCT or intermediates or manufacturing processes required or useful for production of PRODUCT which are developed by SB and/or VRI, or which SB and/or VRI otherwise has the right to grant licenses, now or in the future, during the term of this Agreement. The current list of patent applications and patents encompassed within PATENTS is set forth in Appendix A attached hereto which shall be periodically updated. PATENTS specifically excludes patents and patent applications owned by VRI which are directed to IVET or as to which VRI has a right to grant a license and which are directed to IVET. PATENTS include SPCs. 1.13 "PHASE II" shall mean studies (as defined in 21 C.F.R. Section 312.21(b)) in human subjects designed to demonstrate the effectiveness of a compound. 1.14 "PHASE III" shall mean large scale, multi-center, pivotal efficacy studies (as defined in 21 C.F.R. Section 312.21(c)) in human subjects which are adequate, well-controlled (as those terms are defined in 21 C.F.R. Section 314.126) and which are intended to gather additional information about the effectiveness and safety of a compound including by comparing treatment with PRODUCT to treatment with a positive control agent and/or placebo. 3 6 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 1.15 "PRODUCT" shall mean: (a) any composition of matter (e.g., chemical compound (including polynucleotides)), diagnostic agent, or diagnostic service identified [****] which results in whole or in part from use of RESEARCH PROGRAM OUTPUT, for example, including but not limited to, by screening against a RESEARCH PROGRAM OUTPUT, and (b) chemical compounds which are based on or derived from the compositions of matter of 1.15(a) [****] provided that PRODUCT shall not include such compositions of matter which were published by others as having [****] prior to the COMMENCEMENT DATE. PRODUCT includes SB PRODUCT, SB VACCINE, VRI PRODUCT, VACCINE PRODUCT and COMBINATION PRODUCT. 1.16 "PSB" shall mean a Pharmaceutical Services Business and includes any present or future AFFILIATE of SB or its licensees which conducts pharmaceutical benefits management for THIRD PARTIES or conducts any of the following business activities for or on behalf of THIRD PARTIES: wholesaler distribution, pharmacy distribution, disease management services, hospital services, or mail order prescription pharmacy services. As of the COMMENCEMENT DATE, the only AFFILIATES of SB which are PSBs are Diversified Pharmaceutical Services, a corporation of the state of Minnesota, having a place of business at 3600 West 80th Street, Seventh Floor, Bloomington, Minnesota 55431-1085, and Prescription Delivery Systems, a corporation of the Commonwealth of Pennsylvania, having a place of business at 206 Welsh Road, Horsham, Pennsylvania 19044. 1.17 "RESEARCH COORDINATING COMMITTEE" or "RCC" shall mean the research management committee composed of representatives of VRI and SB described in Section 3.1 hereof. 1.18 "RESEARCH PROGRAM" shall mean the program of research with respect to the [****] performed in accordance with the research plan attached hereto as Appendix B. The RESEARCH PROGRAM may be modified as necessary from time to time by the RCC. 1.19 [****] 1.20 "RESEARCH PROGRAM TERM" shall mean the two (2) year period of the RESEARCH PROGRAM measured from the COMMENCEMENT DATE and any extensions thereof resulting from mutual agreement of the parties as set forth in Section 2.3 below. 1.21 "SB" shall mean SmithKline Beecham plc. In addition, for the purposes of Sections 1.12, 1.24 and 1.26, SB as used therein also includes AFFILIATES of SB. 4 7 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 1.22 "SB DEVELOPMENT STATUS" [****] 1.23 "SB FIELD OF USE" shall mean the prophylaxis, treatment or diagnosis of disease in humans with any PRODUCT other than a VACCINE PRODUCT. 1.24 "SB NET SALES" shall mean the gross receipts from sales of SB PRODUCT under this Agreement: (a) in finished product form (i.e., packaged for sale to the ultimate consumer) in the TERRITORY by SB and/or its licensees to THIRD PARTIES; or if not sold by SB and/or its licensees in finished form, then (b) in any product form other than finished product form in the TERRITORY by SB and/or its licensees to distributors or other entities who subsequently convert such into finished product form, provided that such distributors or other entities shall not be considered to be licensees for the purposes of this SB NET SALES definition because of such converting, however, in a country where SB sells other than finished product form to a distributor, in the event SB realizes additional income from said distributor other than SB NET SALES and such additional income is specifically related to the sale of SB PRODUCT, then SB shall pay royalties to VRI based on the said distributor's sales to THIRD PARTIES; less deductions actually invoiced and/or specifically allocated to SB PRODUCT by SB using generally accepted accounting standards for (i) transportation charges, including transportation insurance; (ii) sales and excise taxes and duties paid or allowed by a selling party and any other governmental charges imposed upon the production, importation, use or sale of such SB PRODUCT; (iii) trade and quantity discounts allowed; (iv) allowances or credits to customers on account of rejection or return of SB PRODUCT subject to royalty under this Agreement or on account of retroactive price reductions affecting such SB PRODUCT; and (v) rebates and chargebacks. Sales between or among SB and its AFFILIATES and/or their licensees shall be excluded from the computation of SB NET SALES, except where such AFFILIATES or licensees are end users or where such AFFILIATES or licensees are a PSB, but SB NET SALES shall include the subsequent sales to THIRD PARTES. 1.25 "SB PRODUCT" shall mean all PRODUCTS except VRI PRODUCT and VACCINE PRODUCT, [****] 1.26 "SB RESEARCH PROGRAM (RP) TECHNOLOGY" shall mean any and all data, substances, formulas, processes, information, materials, know-how, inventions, discoveries, (whether patentable or not) or other information which in whole or in part (i) results from use of VRI TECHNOLOGY or RESEARCH PROGRAM OUTPUT by or on behalf of SB or (ii) is developed by or on behalf of SB during and as a result of the 5 8 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. RESEARCH PROGRAM, provided, SB RP TECHNOLOGY shall not include such data, substances, formulas, processes, information, materials, know-how, inventions, discoveries, or other information which result only from an incidental or immaterial use of VRI TECHNOLOGY or RESEARCH PROGRAM OUTPUT or which does not relate to PRODUCT or RESEARCH PROGRAM OUTPUT. 1.27 [****] 1.28 "SB VACCINE" shall mean a VACCINE PRODUCT in the VRI FIELD OF USE which results from use of an SB VACCINE GENE. 1.29 "SB VACCINE GENE" shall have the meaning set forth in Section 2.5.3(c)(i). 1.30 "SPC" shall mean a right based upon a PATENT to exclude others from making, using or selling PRODUCT, such as a Supplementary Protection Certificate. 1.31 "TERRITORY" shall mean [****] 1.32 "THIRD PARTY" shall mean, as to SB an entity other than SB or an AFFILIATE of SB and as to VRI an entity other than VRI or an AFFILIATE of VRI. 1.33 "VACCINE" [****] 1.34 "VACCINE PRODUCT" shall mean a PRODUCT which is a prophylactic VACCINE, including a DNA vaccine product. 1.35 "VRI" shall mean Virus Research Institute, Inc. and AFFILIATES of VRI. 1.36 "VRI FIELD OF USE" shall mean the prevention of microbial infections in humans by the use of a VACCINE PRODUCT. 1.37 "VRI NET SALES" shall mean the gross receipts from sales of VRI PRODUCT by VRI, under this Agreement: (a) in finished product form (i.e., packaged for sale to the ultimate consumer) in the TERRITORY by VRI and/or its licensees to THIRD PARTIES; or if not sold by VRI, and/or its licensees in finished form, then (b) in any product form other than finished product form in the TERRITORY by VRI, and/or its licensees to distributors or other entities who subsequently 6 9 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. convert such into finished product form, provided that such distributors or other entities shall not be considered to be licensees for the purposes of this VRI NET SALES definition, however, in a country where VRI sells other than finished product form to a distributor, in the event VRI realizes additional income from said distributor other than VRI "NET SALES" and such additional income is specifically related to the sale of VRI PRODUCT, then VRI shall pay royalties to SB based on the said distributor's sales to THIRD PARTIES; less deductions actually invoiced and/or specifically allocated to VRI PRODUCT by VRI using generally accepted accounting standards for (i) transportation charges, including transportation insurance; (ii) sales and excise taxes and duties paid or allowed by a selling party and any other governmental charges imposed upon the production, importation, use or sale of such VRI PRODUCT; (iii) trade and quantity discounts allowed; (iv) allowances or credits to customers on account of rejection or return of VRI PRODUCT subject to royalty under this Agreement or on account of retroactive price reductions affecting such VRI PRODUCT; and (v) rebates and chargebacks. Sales between or among VRI and its AFFILIATES and/or their licensees shall be excluded from the computation of VRI NET SALES, except where such AFFILIATES or licensees are end users, but VRI NET SALES shall include the subsequent sales to THIRD PARTIES. 1.38 "VRI PRODUCT" shall mean a PRODUCT in the SB FIELD OF USE which results from use of a VRI TARGET GENE and shall also mean a VACCINE PRODUCT excluding SB VACCINE. 1.39 "VRI TARGET GENE" shall have the meaning set forth in Section 2.5.3(c)(i). 1.40 "VRI TECHNOLOGY" shall mean any data and all substances, formulas, processes, information, materials, know-how, inventions, discoveries, (whether patentable or not), [****] provided by VRI to SB, and/or which is useful in the SB FIELD OF USE or the VRI FIELD OF USE and/or (ii) developed by or on behalf of VRI as a result of the RESEARCH PROGRAM or use of RESEARCH PROGRAM OUTPUT, which In each of (i) or (ii) is owned by VRI and/or under which VRI has the right to grant licenses during the term of this Agreement. VRI TECHNOLOGY specifically excludes IVET. 1.41 "VRI VACCINE GENE" shall mean [****] The use herein of the plural shall include the singular. 7 10 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. ARTICLE 2 RESEARCH PROGRAM 2.1 Research Procedures. 2.1.1 Conduct of Research. VRI and SB each shall conduct the work assigned to it in the RESEARCH PROGRAM, as more particularly set forth in the research plan which is set forth in Appendix B hereto and as requested by the RCC, in good scientific manner, and in compliance in all material respects with all requirements of applicable laws and regulations and with all applicable good laboratory practices and good manufacturing practices to attempt to achieve its objectives efficiently and expeditiously. Vial SB each shall proceed diligently with the work set out in the RESEARCH PROGRAM assigned to it by using their respective reasonable efforts to provide, among others, the following resources: (a) [****] (b) in the case of SB, allocation of a reasonable amount of time and effort, using personnel with sufficient skills and experience, together with sufficient equipment and facilities, to carry out SB's obligations under the RESEARCH PROGRAM set forth in Appendix B hereto. 2.1.2 [****] 2.1.3 Use of Research Funding. VRI warrants and represents that it will apply the research funding it receives from SB under this Agreement directly and solely toward achieving the objectives of the RESEARCH PROGRAM pursuant to this Agreement. 2.1.4 Subcontracts. [****] VRI nor SB shall subcontract to THIRD PARTIES the whole or any portion of those aspects of the RESEARCH PROGRAM to be performed by it without the prior consent of the RCC, which consent shall not be unreasonably withheld; provided, however, that a party shall have the right to contract for custom synthesis and other routinely used outside services in accordance with its standard procurement practices. All subcontractors shall enter into confidentiality agreements with a party to this Agreement, and all subcontracted work shall be performed in compliance with applicable laws and regulations, together with all applicable good laboratory practices and good manufacturing practices. The contracting party shall supervise and be responsible under this Agreement for such subcontracted work. 8 11 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 2.2 Funding of the RESEARCH PROGRAM. (a) In consideration for VRI's performance of its obligations under the RESEARCH PROGRAM, SB will pay to VRI a research fee of Five Hundred and Fifty Thousand (U.S. $550,000) Dollars per year for a period of two (2) years, subject to SB's determination of VRI's satisfactory progress [****] The research fees shall be paid in advance in accordance with the following schedule, provided, however, that adjustments will be made as set forth in Section 2.2(b).
Within 30 days of: US $ ----------------- ---- COMMENCEMENT DATE 137,500.00* October 1, 1995 137,500.00* January 1, 1996 137,500.00 April 1, 1996 137,500.00 July 1, 1996 137,500.00 October 1, 1996 137,500.00 January 1, 1997 137,500.00 April 1, 1997 137,500.00
* The receipt by VRI of these payments is hereby acknowledged. (b) The payment of $550,000 per year is based on a payment rate [****] such that the total amount paid by SB shall not exceed U.S. $1,100,000 Dollars (assuming satisfactory progress and achievement by VRI of MILESTONE I). If at the end of an even numbered quarter there has been an overpayment by SB to VRI for that and the preceding quarter, then the overpayment may be credited by SB against the next quarterly payment due VRI after notice of the overage. (c) The annual research fee of $550,000 shall be the maximum amount SB shall be obligated to pay VRI for its services as part of the RESEARCH PROGRAM per year and as such represents the fully loaded costs of VRI of employing the requisite FTEs, including but not limited to salaries, travel, supplies and overheads. VRI shall be responsible for any additional costs incurred by VRI, unless SB has agreed in writing in advance to pay any amount beyond the annual research fee. (d) VRI shall not be obligated to perform any work beyond that funded by SB under this Section 2.2. 9 12 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 2.3 Extension of RESEARCH PROGRAM TERM. [****] 2.4 Additional Targets. The parties may mutually agree to increase the scope of the RESEARCH PROGRAM to include the discovery and development of gene targets in additional microbial species. If the increase in scope is mutually agreed [****]. The other terms of the agreement shall be substantially the same as the terms of this Agreement. 2.5 Exclusivity. 2.5.1 [****] 2.5.2 [****] 2.5.3 [****] 2.5.4 Subject to Section 2.5.3(c) and 2.5.3(d), after termination of the RESEARCH PROGRAM, SB shall have the right to continue to research and develop RESEARCH PROGRAM OUTPUTS in the SB FIELD OF USE and to the extent necessary shall have the right to use so much of VRI TECHNOLOGY (other than IVET) and RESEARCH PROGRAM OUTPUT, as has been provided to SB during the RESEARCH PROGRAM TERM for the purpose of, inter alia, continuing development of an SB PRODUCT in the SB FIELD OF USE [****] continuing discovery of new compounds, and continuing the identification and development of targets for eventual screening for SB PRODUCT in the SB FIELD OF USE and [****] 2.5.5 [****] 2.5.6 [****] 2.6 Records and Reports. 2.6.1 Records. VRI and SB each shall maintain records, in sufficient detail and in good scientific manner appropriate for patent purposes, and, in the case of VRI, to verify the calculation of the annual research fee and VRI's allocation of VRI scientists to the RESEARCH PROGRAM as required under Section 2.1.1(a). Such records shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of the RESEARCH PROGRAM (including all data in the form required under all applicable laws and regulations). Such records shall include books, records, reports, research notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, samples of 10 13 materials and other graphic or written data generated in connection with the RESEARCH PROGRAM including any data required to be maintained pursuant to all requirements of applicable laws and regulations. 2.6.2 Inspection of Records. Once each CONTRACT YEAR, VRI and SB, each at its own cost, shall have the right during normal business hours and upon reasonable notice, to inspect and copy all such records of the other party to the extent reasonably required for the performance of its obligations under this Agreement (with the party owning the records determining what is reasonably required). Each party shall maintain such records and the information of the other party contained therein in confidence in accordance with Article 8 below and shall not use such records or information except to the extent otherwise permitted by the Agreement. 2.6.3 Research Reports. VRI and SB each shall keep the other party fully informed as to all discoveries and technical developments made in the course of the RESEARCH PROGRAM. VRI and SB each shall prepare, and distribute to the other party, a reasonably detailed written summary report at such times, in such form and setting forth such information regarding the RESEARCH PROGRAM as determined from time to time by the RCC. Additionally, VRI may be required to make a formal presentation to the appropriate SB management committee at an SB location and at VRI's expense. Written notice of such presentation shall be given to VRI at least thirty (30) days in advance of the presentation. However, no more than two such presentations per year will be required and every effort will be made to schedule any such presentation(s) at the time of a regularly scheduled RCC meeting at an SB location. 2.7 Known Antimicrobial Targets and Compounds. From time to time SB may employ RESEARCH PROGRAM OUTPUT or an SB TARGET GENE or a screen derived therefrom for purposes of confirmation or further characterization of target genes or antimicrobial compounds identified by SB or on SB's behalf independently of the RESEARCH PROGRAM and not involving the use of VRI TECHNOLOGY or SB RP TECHNOLOGY or RESEARCH PROGRAM OUTPUT. (a) If SB merely confirms the activity of such target genes or antimicrobial compounds through use of such RESEARCH PROGRAM OUTPUT, SB TARGET GENE or screen derived therefrom and then subsequently develops and/or markets said genes or compounds without further use of such RESEARCH PROGRAM OUTPUT, SB TARGET GENE or screen derived therefrom, then no payments or royalties of any kind shall be due VRI. 11 14 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. (b) However, in the event that SB performs additional work using such RESEARCH PROGRAM OUTPUT, SB TARGET GENE or screen derived therefrom, and develops and markets said compound or gene or a derivative thereof, [****] ARTICLE 3 MANAGEMENT OF THE RESEARCH PROGRAM 3.1 Research Coordinating Committee. 3.1.1 Composition of the RCC. The RESEARCH PROGRAM shall be conducted under the direction of the RCC. [****] Each party may replace one or more of its representatives on the RCC at any time in its sole discretion. In addition, if a regular member of the RCC cannot attend a meeting of the committee, an alternate for that meeting shall be appointed by the missing member's employer. In order to ensure continuity of action, a party's designated alternate may attend RCC meetings as a non-voting observer, even if all representatives are present. 3.1.2 Responsibilities of the RCC. The purposes of the RCC shall be to oversee and coordinate the RESEARCH PROGRAM. As part of its responsibilities, the RCC shall (a) review the research by VRI and SB under the RESEARCH PROGRAM, (b) monitor the progress of the RESEARCH PROGRAM and evaluate the work performed and the results obtained in relation to the goals of the RESEARCH PROGRAM, (c) plan future activities under, and make any necessary or desirable modifications to the RESEARCH PROGRAM, (d) recommend targets for further evaluation by the parties under the RESEARCH PROGRAM and approve selection of VRI VACCINE GENES as provided in 2.5.2(b), (e) approve the VRI work plan for each quarter of a CONTRACT YEAR under which VRI scientists are deployed in the RESEARCH PROGRAM, (I) facilitate the exchange of information between SB and VRI relating to the RESEARCH PROGRAM, and (g) attempt resolution of disputes between the parties concerning the RESEARCH PROGRAM. Nothing herein shall be construed as limiting the discretion of SB management in allocating its human and other resources in accordance with priorities it assigns its various efforts and opportunities within and outside the scope of this Agreement. 3.1.3 Meetings Of the RCC. The RCC shall meet at least twice each year during the term of the RESEARCH PROGRAM, at such times and places as agreed to by VRI and SB, alternating between Cambridge, Massachusetts USA and SB facilities in the 12 15 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. Philadelphia; Pennsylvania area (including e.g., Upper Merion and Collegeville, Pennsylvania) or such other Locations as the parties may agree. The first such meeting will be held within five months of the COMMENCEMENT DATE. Meetings of the RCC may be attended by such other directors, officers, employees, consultants and other agents of VRI and SB as the parties from time to time reasonably agree. The party hosting each meeting of the RCC promptly shall prepare, and deliver to the other party within thirty (30) days after the date of such meeting, minutes of such meeting setting forth all decisions of the RCC relating to the RESEARCH PROGRAM in form and content reasonably acceptable to the other party. 3.1.4 Actions by the RCC. Any approval, determination or other action agreed to by a majority of the SB and VRI members of the RCC present at the relevant RCC meeting shall be the approval, determination or other actions of the RCC; provided, however, that at least two (2) representatives of each party shall be present at such meeting. In the event the RCC cannot arrive at a majority decision on a particular issue, the Chairman shall cast the deciding vote. 3.2 Project Leaders. VRI and SB each shall appoint a person (a "Project Leader") to coordinate its part of the RESEARCH PROGRAM. The Project Leaders shall be the primary contacts between the parties with respect to the RESEARCH PROGRAM. As of the COMMENCEMENT DATE the Project Leader for VRI [****] Each party shall notify the other party as soon as practicable upon changing these appointments. 3.3 Availability Of Employees. Each party shall make its employees engaged in the RESEARCH PROGRAM available, upon reasonable notice during normal business hours, at their respective places of employment to consult with the other party on issues arising during the RESEARCH PROGRAM and in connection with any request from any regulatory agency, including regulatory, scientific, technical and clinical testing issues. 3.4 Visits to Facilities. Representatives of VRI and SB may, upon reasonable notice during normal business hours, (a) visit VRI's facilities where the RESEARCH PROGRAM is being conducted, (b) consult informally, during such visits and by telephone, with personnel of the other party performing work on the RESEARCH PROGRAM, and (c) with the other party's prior approval, which approval shall not be unreasonably withheld, visit the sites of any experiments being conducted by such other party in connection with the RESEARCH PROGRAM, but only to the extent in each case such other experiments relate to PRODUCTS. On such visits, an employee of the party conducting the research or development shall accompany the employee(s) of the visiting party. If requested by the other party, VRI and SB shall cause appropriate individuals working on the RESEARCH PROGRAM to be available for meetings at the location of the facilities where such 13 16 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. individuals are employed at times reasonably convenient to the party responding to such request. ARTICLE 4 GRANTS & COVENANTS 4.1 Grant to SB. VRI hereby grants to SB a world-wide, exclusive license, with the right to grant sublicenses, under PATENTS of VRI whether solely owned or jointly owned with SB and VRI TECHNOLOGY [****] (i) to conduct research to discover SB PRODUCTS within the SB FIELD OF USE [****] (ii) to make, have made, use and sell SB PRODUCTS within the SB FIELD OF USE [****] and (iii) otherwise to exercise its rights under Article 2, [****] (It is understood that by "make, have made, use and sell" is meant all activities encompassed within the exclusionary right conferred by patents in a given jurisdiction). SB shall have the right to develop and sell outside of the SB FIELD OF USE, but not in the VRI FIELD OF USE, those SB PRODUCTS it has selected for development within the SB FIELD OF USE. 4.2 Grant to VRI. SB hereby grants to VRI a world-wide, exclusive license, with the right to grant sublicenses, under PATENTS of SB whether solely owned or jointly owned with VRI and SB RP TECHNOLOGY (i) to conduct research to discover VACCINE PRODUCTS [****] within the VRI FIELD OF USE and also VRI PRODUCTS, (ii) or make, have made, use and sell VACCINE PRODUCTS [****] within the VRI FIELD OF USE and also VRI PRODUCTS except those VRI PRODUCTS selected by SB for development under Section 2.5.6 and (iii) otherwise to exercise its rights under Article 2. (It is understood that by "make, have made, use and sell" is meant all activities encompassed within the exclusionary right conferred by patents in a given jurisdiction). 4.3. Third Parties. 4.3.1 To the extent VRI TECHNOLOGY and/or PATENTS of VRI licensed to SB under this Agreement are rights which VRI has licensed or will license from a THIRD PARTY ("THIRD PARTY Agreement(s)") the rights licensed to SB by VRI under this Agreement are subject to the terms, limitations and restrictions of the THIRD PARTY Agreement(s). 4.3.2 SB will be sublicensed under THIRD PARTY Agreements only if SB agrees to be bound by the terms and conditions thereof which are applicable to a sublicensee. In the event that SB does not agree to be bound by the terms and conditions of a THIRD PARTY Agreement under which SB is entitled to a sublicense pursuant to this Agreement, 14 17 then to the extent and for the period that SB is entitled to a sublicense under such THIRD PARTY Agreement, VRI shall not use itself or grant such rights to a THIRD PARTY. Prior to entering into a THIRD PARTY Agreement as to which SB is entitled to a sublicense under this Agreement, VRI shall notify SB as to the prospective terms and conditions thereof which are applicable to a sublicensee and if requested by SB to modify such terms, VRI will use its best efforts to obtain the requested modifications prior to entering into such THIRD PARTY Agreement. SB hereby agrees to be bound by the terms and conditions which are applicable to a sublicensee of the THIRD PARTY Agreement listed in Appendix C as of the date of execution of this Agreement. 4.3.3 To the extent it is necessary to license or otherwise acquire the rights of THIRD PARTY(IES) in order for VRI to practice IVET on behalf of SB hereunder, it shall be VRI's sole responsibility to acquire such rights at VRI's sole expense. 4.4 SB Use of Technology. To the extent the technologies identified in this section 4.4 are not in the public domain and are not claimed in granted PATENTS, SB agrees that VRI TECHNOLOGY will be used by SB only for research, developing, making, marketing and selling of SB PRODUCTS in accordance with the terms and conditions of this Agreement including without limitation Section 2.5. SB will not use SB RP TECHNOLOGY and/or VRI TECHNOLOGY for making, using or selling of SB PRODUCT or VRI PRODUCT in any and all countries in which SB's license under Section 4.1 has been rightfully terminated, except to the extent that VRI TECHNOLOGY is acquired from a source other than VRI. 4.5 VRI Use of Technology. To the extent the technologies identified in this Section 4.5 are not in the public domain and are not claimed in granted PATENTS, VRI agrees that SB RP TECHNOLOGY will be used by VRI only for research, developing, making, marketing and selling of VRI PRODUCT in accordance with the terms and conditions of this Agreement including without limitation Section 2.5. VRI will not use SB RP TECHNOLOGY for any purpose in any and all countries in which VRI's license under Section 4.2 has been rightfully terminated, except to the extent that SB RP TECHNOLOGY is acquired from a source other than SB. 4.6 AFFILIATES of SB. It is understood that the license rights granted to SB under this Agreement do not extend to AFFILIATES of SB and therefore any AFFILIATE of SB who engages in activities encompassed within the scope of this Agreement shall be regarded as a licensee of SB regardless of whether or not a formal license agreement has been entered into and shall be obligated to VRI as provided for in Section 4.8 below. 4.7 SB shall cause each of its AFFILIATES to comply with all terms, conditions and obligations of this Agreement as if each such AFFILIATE is a signatory to this Agreement and SB shall be liable and responsible to VRI for any failure of any AFFILIATE of SB to comply with the terms, conditions and obligations of this Agreement. 15 18 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 4.8 The parties hereby agree that no license or sublicense will be granted to a THIRD PARTY by either party hereto with respect to PRODUCT, VACCINE PRODUCT, SB VACCINE, SB PRODUCT or VRI PRODUCT without such THIRD PARTY agreeing with the licensing party to be bound by the terms, obligations and conditions [****] ARTICLE 5 ROYALTIES AND OTHER PAYMENTS 5.1 Milestone Payments. In addition to the funding of the RESEARCH PROGRAM as provided in Section 2.2 above, as consideration for the licenses granted to SB hereunder and VRI's participation in the RESEARCH PROGRAM in accordance with the terms of this Agreement, SB shall pay VRI up to three million, two hundred thousand U.S. dollars (U.S. $3,200,000) in installments according to the following milestones, within thirty (30) days after the occurrence of the key events listed below, provided that in no event (except as provided in Section 2.5.5) shall the total amount of such payments exceed three million, two hundred thousand U.S. dollars (U.S. $3,200,000). [****] (a) each payment which is owed in accordance with this Section 5.1 shall be made only one time regardless of the number of times a particular milestone is met, and no payment shall be owed for a milestone which is not reached; (b) [****] (c) [****] (d) fifty (50%) percent of the amounts of [****] shall be creditable against future royalties payable by SB to VRI. [****] 5.2 Royalties Payable by SB. 5.2.1 In consideration for the licenses to PATENTS of VRI granted to SB herein and for the enabling VRI TECHNOLOGY practiced by VRI on SB's behalf, SB will The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 16 19 pay to VRI a royalty of [****] of SB NET SALES of SB PRODUCT in the TERRITORY, except as expressly otherwise provided in this Agreement. 5.2.2 [****] 5.2.3 The royalty payable for SB PRODUCT in any calendar year shall be reduced to fifty (50%) percent of the royalties provided in Section 5.2.1 and 5.2.2 as regards SB NET SALES in any country in the TERRITORY in which one or more THIRD PARTY(IES) sells a COMPETING PRODUCT or a COMPETING VACCINE PRODUCT in such country in such calendar year in substantial competition with SB, by which is meant that the value of such COMPETING PRODUCT or COMPETING VACCINE PRODUCT in such country in such calendar year of any THIRD PARTY(IES) combined is at least fifteen percent (15%) of the SB NET SALES of the SB PRODUCT in such country in such calendar year. 5.3 Royalties payable by VRI. 5.3.1 In consideration for the licenses to PATENTS of SB, and access to SB RP TECHNOLOGY VRI will pay to SB royalties at the rate of [****] per VRI PRODUCT based on the VRI NET SALES of each VRI PRODUCT in any country in the TERRITORY, except as expressly otherwise provided in this Agreement. 5.3.2 [****] 5.4 COMBINATION PRODUCTS. The royalty payable on the SB NET SALES or VRI NET SALES of a COMBINATION PRODUCT by either party shall be downwardly adjusted by mutual agreement of the parties from the royalties provided above, taking into account the relative selling prices of the components of the COMBINATION PRODUCT derived independently to this Agreement if sold separately, or if not sold separately market value and costs of the components of the COMBINATION PRODUCT derived independently of this Agreement. ARTICLE 6 ROYALTY REPORTS AND ACCOUNTING 6.1 SB shall keep and require its licensees to keep complete and accurate records of all sales of SB PRODUCT under the licenses granted herein. VRI shall have the right, at VRI's expense, through a certified public accountant or like person reasonably acceptable to SB, to examine such records during regular business hours during the life of this Agreement and for six (6) months after its termination; provided, however, that such examination shall 17 20 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. not take place more than once a year and shall not cover such records for more than the preceding two (2) years and provided further that such accountant shall report to VRI only as to the accuracy of the royalty statements and payments. 6.2 Within sixty (60) days after the close of each calendar quarter, SB shall deliver to VRI a true accounting of all SB PRODUCT sold by SB and its licensees during such quarter and shall at the same time pay all royalties due. Such accounting shall show sales on a country-by country and SB PRODUCT-by-SB PRODUCT basis. 6.3 Any tax, duty or other levy on VRI paid or required to be withheld by SB for the benefit of VRI on account of royalties payable to VRI under this Agreement shall be deducted from the amount of royalties otherwise due. SB shall secure and send to VRI proof of any such taxes, duties or other levies withheld and paid by SB or its licensees for the benefit of VRI. 6.4 All royalties and other payments due under this Agreement shall be payable in U.S. Dollars. If governmental regulations prevent remittances from a foreign country with respect to sales made in that country, the obligation of SB to pay royalties on sales in that country shall be suspended until such remittances are possible. [****] 6.5 In the case of SB, monetary conversion from the currency of a foreign country, in which SB PRODUCT is sold, into U.S. currency shall be calculated at the actual average rates of exchange for the year to date as used by SB in producing its quarterly and annual accounts, as confirmed by SB's auditors. In the case of VRI, monetary conversions from the currency of a foreign country, in which VRI PRODUCT is sold, into U.S. currency shall be made at the of official exchange rate in force in that country for financial transactions on the last business day of the calendar quarter for which the royalties are being paid. If there is no such of official exchange rate, the conversion shall be made at the rate for such remittances on that date as certified by Citibank, N.A., New York, New York, U.S.A.. 6.6 In any situation where VRI incurs a royalty obligation to SB under this Agreement, unless otherwise agreed, the requirements of this Article 6 applicable to the reporting and payment of royalties by SB shall be applicable mutatus mutandis to the reporting and payment of royalties by VRI. 18 21 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. ARTICLE 7 DEVELOPMENT 7.1 SB Development. (a) SB agrees to use reasonable efforts: to select SB TARGET GENES; to develop screens based on SB TARGET GENES and to perform research to identify an SB PRODUCT in the SB FIELD OF USE and to have such SB PRODUCT achieve SB DEVELOPMENT STATUS. (b) SB shall have full control and authority over research, development, registration and commercialization of SB PRODUCT in the TERRITORY. SB will exercise its reasonable efforts and diligence in developing and commercializing such SB PRODUCT(S) in the SB FIELD OF USE in accordance with its reasonable business, legal, medical and scientific judgment and in undertaking investigations and actions required to obtain appropriate governmental approvals to market such SB PRODUCT in the SB FIELD OF USE in the TERRITORY. All such activity shall be undertaken at SB's expense. 7.2 Reporting. SB shall keep VRI informed of progress of SB's efforts to develop and commercialize such SB PRODUCT in the SB FIELD OF USE and shall provide half-yearly reports in this respect. 7.3 VRI Development. In any situation where VRI undertakes development of a VACCINE PRODUCT in the VRI FIELD OF USE under this Agreement, unless otherwise agreed, the requirements of sections 7.1(a), 7.1(b), and 7.2 applicable to SB PRODUCT development in the SB FIELD OF USE by SB shall be applicable mutatus mutandis to VACCINE PRODUCT development by VRI in the VRI FIELD OF USE. 7.4 Right of First Negotiation. [****] 19 22 ARTICLE 8 EXCHANGE OF INFORMATION AND CONFIDENTIALITY 8.1 Promptly after the COMMENCEMENT DATE, VRI shall disclose and supply to SB all VRI TECHNOLOGY necessary for SB to conduct its portion of the RESEARCH PROGRAM. Thereafter, each party shall promptly disclose and supply to the other any further VRI TECHNOLOGY or SB RP TECHNOLOGY respectively, as may be reasonably required for each party to fulfill its obligations and exercise its rights under this Agreement. 8.2 During the term of this Agreement and for ten (10) years thereafter, VRI and SB shall not use or reveal or disclose to THIRD PARTIES any confidential information received from the other party without first obtaining the written consent of the disclosing party, except as may be otherwise provided herein, or as may be required for purposes of investigating, developing, manufacturing or marketing PRODUCT or for securing essential or desirable authorizations, privileges or rights from governmental agencies, or as may be required to be disclosed to a governmental agency or as may be necessary to file or prosecute patent applications concerning PRODUCT or to carry out any litigation concerning PRODUCT or as may be necessary to exercise its rights under Article 2. This confidentiality obligation shall not apply to such information which is or becomes a matter of public knowledge, or is already in the possession of the receiving party, or is disclosed to the receiving party by a THIRD PARTY having the right to do so and without an obligation of confidentiality, or is subsequently and independently developed by employees of the receiving party or AFFILIATES thereof who had no knowledge of the confidential information disclosed, or is required by law to be disclosed. The parties shall take reasonable measures to assure that no unauthorized use or disclosure is made by others to whom access to such information is granted. 8.3 Nothing herein shall be construed as preventing either party from disclosing any information received from the other to an AFFILIATE, licensee or distributor of the party, provided, in the case of a licensee or distributor, such licensee or distributor has undertaken a similar obligation of confidentiality with respect to the confidential information. 8.4 All confidential information disclosed by one party to the other shall remain the intellectual property of the disclosing party. In the event that a court or other legal or administrative tribunal, directly or through an appointed master, trustee or receiver, assumes partial or complete control over the assets of a party to this Agreement based on the insolvency or bankruptcy of such party, the bankrupt or insolvent party shall promptly notify the court or other tribunal (i) that confidential information received from the other party under this Agreement remains the property of the other party and (ii) of the confidentiality obligations under this Agreement. In addition, the bankrupt or insolvent party shall, to the extent permitted by law, take all steps necessary or desirable to maintain the confidentiality of the other party's confidential information and to insure that the court, others tribunal or 20 23 appointee maintains such information in confidence in accordance with the terms of this Agreement. 8.5 No public announcement or other disclosure to THIRD PARTIES concerning the existence of or terms of this Agreement shall be made, either directly or indirectly, by any party to this Agreement without first obtaining the approval of the other party and agreement upon the nature and text of such announcement or disclosure. The party desiring to make any such public announcement or other disclosure shall inform the other party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other party with a written copy thereof, in order to allow such other party to comment upon such announcement or disclosure. The permission of the other party shall not be required with respect to a public announcement or disclosure of subject matter which has been disclosed in a previously approved announcement or disclosure. When such announcement or disclosure may be legally required or as may be required for recording purposes or as may be required for an offering of securities and/or to obtain financing and/or in connection with sublicensing and/or in connection, with an acquisition and/or transfer of assets and/or a merger or consolidation, a party may disclose information as required by applicable law, regulation or judicial process, provided that such party shall give the other party prior written notice thereof and adequate opportunity to object to, and/or to redact any such disclosure or to request confidential treatment thereof. To the extent that a party is required to disclose to or provide its licenser a copy of this Agreement as a result of granting to the other party a sublicense under this Agreement, such party shall have the right to disclose and/or provide a copy of this Agreement to such licenser. To the extent permissible, the nondisclosing party shall have the right to redact any such disclosure and to request confidential treatment thereof. 8.6 Neither VRI nor SB shall submit for written or oral publication any manuscript, abstract or the like which includes data or other information relating to RESEARCH PROGRAM OUTPUT, SB TARGET GENE, SB VACCINE GENE, VRI TARGET GENE or VRI VACCINE until 18 months after the filing date of a PATENT disclosing and claiming same without first obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld. The contribution of each party shall be noted in all publications or presentations by acknowledgment or coauthorship, whichever is appropriate. 8.7 Nothing in this Agreement shall be construed as preventing or in any way inhibiting either party from complying with statutory and regulatory requirements governing the development, manufacture, use and sale or other distribution of PRODUCT in any manner which it reasonably deems appropriate, including, for example, by disclosing to regulatory authorities confidential or other information received from the other party. 21 24 ARTICLE 9 PATENTS AND TRADEMARKS 9.1 Each party shall have and retain sole and exclusive title to all inventions, discoveries, designs, works of authorship and other know-how which are made, conceived, reduced to practice or generated by its employees, agents, or other persons acting under its authority including, but not limited to those directed to a RESEARCH PROGRAM OUTPUT or a PRODUCT, the discovery and screening of same and any process or use relating thereto made during and as a result of the RESEARCH PROGRAM. Each party shall own a fifty percent (50%) undivided interest in all such inventions, discoveries, designs, works of authorship and other know-how made, conceived, reduced to practice or generated jointly by employees, agents, or other persons acting under the authority of both parties. 9.2 VRI shall have the first right, using in-house or outside legal counsel selected at VRI's sole discretion, to prepare, file, prosecute, maintain and extend PATENTS owned by VRI ("VRI PATENT") in countries of VRI's choosing, and VRI shall bear all costs relating to such activities which occur at VRI's request or direction. If VRI, prior or subsequent to filing VRI PATENTS or applications for other forms of intellectual property, elects not to prepare, file, prosecute or maintain certain of such VRI PATENTS or certain claims encompassed within such VRI PATENTS, or such other forms of intellectual property, in one or more countries, VRI shall give SB notice thereof within a reasonable period prior to allowing such patents, claims or other forms of intellectual property, to lapse or become abandoned or unenforceable, and SB shall thereafter have the right, at its sole expense, to prepare, file, prosecute, and maintain such VRI PATENTS or divisional patent applications related to such certain claims, or such other forms of intellectual property to which SB is licensed under this Agreement, in such one or more countries. 9.3 SB shall have the first right, using in-house or outside legal counsel selected at SB's sole discretion, to prepare, file, prosecute, maintain and extend PATENTS owned by SB ("SB PATENTS") in countries of SB's choosing, and SB shall bear all costs relating to such activities which occur at SB's request or direction. If SB, prior or subsequent to filing SB PATENTS, or applications for other forms of intellectual property, elects not to prepare, file, prosecute or maintain certain of such SB PATENTS or certain claims encompassed within such SB PATENTS, or such other forms of intellectual property, in one or more countries, SB shall give VRI notice thereof within a reasonable period prior to allowing such patents, claims or other forms of intellectual property to lapse or become abandoned or unenforceable, and VRI shall thereafter have the right, at its sole expense, to prepare, file, prosecute, and maintain such SB PATENTS or divisional patent applications related to such certain claims, 22 25 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. or such other forms of intellectual property to which VRI is licensed under this Agreement, in such one or more countries. [****] 9.4 SB shall have the first right, using in-house or outside legal counsel selected at SB's sole discretion, to prepare, file, prosecute, maintain and extend patent applications and patents concerning all jointly owned SB and VRI inventions in countries throughout the world in accordance with the relevant legal requirements, for which SB shall bear the costs relating to such activities which occur at SB's request or direction. If SB, prior or subsequent to filing certain patent applications on any inventions or discoveries which are owned jointly by SB and VRI, elects not to file, prosecute or maintain such patent applications or ensuing patents or certain claims encompassed by such patent applications or ensuing patents in any country of the TERRITORY, SB shall give VRI notice thereof within a reasonable period prior to allowing such patent applications or patents or such certain claims encompassed by such patent applications or patents to lapse or become abandoned or unenforceable, and VRI shall thereafter have the right from the date of said notice, at its sole expense, to prepare, file, prosecute and maintain patent applications and patents or divisional applications related to such certain claims encompassed by such patent applications or patents concerning all such inventions and discoveries in countries of its choice throughout the world. The party filing, prosecuting or maintaining such patent application shall give the other party a reasonable advance opportunity to review and comment upon the text of the application before filing and important prosecution matters relating thereto, and in good faith shall consider and incorporate the reasonable requests and comments of the other party. The party filing the application shall supply the other party with a copy of the application as filed, together with notice of its filing date and serial number. 9.5 Each party, on behalf of itself and its directors, employees, officers, shareholders, agents, successors and assigns hereby waives any and all actions and causes of action, claims and demands whatsoever, in law or equity of any kind it or they may have against the other party, its officers, directors, employees, shareholders, agents, successors and assigns, which may arise in any way in the performance of patent activities under this Section, except as a result of gross negligence, recklessness or willful misconduct. 9.6 Each party, as the case may be, shall disclose to each other the complete texts of all SB PATENTS and VRI PATENTS to which they are licensed hereunder, as well as all information received concerning the institution or possible institution of any interference, opposition, re-examination, reissue, revocation, nullification or any official proceeding involving such VRI PATENT or SB PATENT anywhere in the world. Each party shall have the right to review all such pending applications and other proceedings and make recommendations concerning them and their conduct. Each party shall keep the other promptly and fully informed of the course of patent prosecution or other proceedings 23 26 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. including by providing the other party with copies of important, substantive communications, search reports and third party observations submitted to or received from patent offices throughout the world. The parties shall hold all information disclosed to it under this section as confidential subject to the provisions of Article 8. This Section does not pertain to SB PATENTS directed to SB PRODUCT. 9.7 In the event of the institution of any suit by a THIRD PARTY against VRI, SB or its sublicensees for patent infringement involving the manufacture, use, sale, distribution or marketing of PRODUCT, the party sued shall promptly notify the other party in writing. The other party shall have the right but not the obligation to defend or participate in the defense of such suit at its own expense. VRI and SB shall assist one another and cooperate in any such litigation at the other's request without expense to the requesting party. 9.8 In the event that VRI or SB becomes aware of actual or threatened infringement of a SB PATENT or VRI PATENT to which it is licensed by the other party anywhere in the TERRITORY, that party shall promptly notify the other party in writing. The owner of such SB PATENT or VRI PATENT or SB in the case of jointly owned PATENTS shall have the first right but not the obligation to bring, at its own expense, an infringement action against any THIRD PARTY and to use the other party's name in connection therewith. If the owner of the patent does not commence a particular infringement action within ninety (90) days, the other party, after notifying the owner in writing, shall be entitled to bring such infringement action at its own expense. The party conducting such action shall have full control over its conduct, including settlement thereof provided such settlement shall not be made without the prior written consent of the other party if it would adversely affect the patent rights of the other party. In any event, VRI and SB shall assist one another and cooperate in any such litigation at the other's request without expense to the requesting party. VRI shall have no right to bring an infringement action in respect of any SB PATENTS directed to a PRODUCT other than a VACCINE PRODUCT or a VRI PRODUCT. 9.9 VRI and SB shall recover their respective actual out-of-pocket expenses, or equitable proportions thereof, associated with any litigation or settlement thereof from any recovery made by any party. [****] 9.10 The parties shall keep one another informed of the status of and of their respective activities regarding any such litigation or settlement thereof. 9.11 A party who is developing, selling or planning to sell a PRODUCT covered by a patent licensed under this Agreement shall have the sole right to seek to obtain extensions of or SPCs based on such licensed patents. If a party exercises such right, then the other party 24 27 shall assist the party seeking the extensions including by authorizing the other party to act as its agent. 9.12 All rights and licensing granted under or pursuant to this Agreement by VRI to SB, or vice versa, are, and shall irrevocably be deemed to be, "intellectual property" as defined in Section 101(56) of the Bankruptcy Code. In the event of the commencement of a case by or against either party under any Chapter of the Bankruptcy Code, this Agreement shall be deemed an executory contract and all rights and obligations hereunder shall be determined in accordance with Section 365(n) thereof. Unless a party rejects this Agreement and the other party decides not to retain its rights hereunder, the other party shall be entitled to a complete duplicate of (or complete access to, as appropriate) all intellectual property and all embodiments of such intellectual property held by the party and the party shall not interfere with the rights of the other party, which are expressly granted hereunder, to such intellectual property and all embodiments of such intellectual property from another entity. Further, this Agreement shall be deemed, upon presentation to another entity, to be the same as an express instruction by the party to such other entity to provide such intellectual property and all embodiments of such intellectual property directly to the other party. Without limiting the foregoing provisions in this Section, the other party shall be entitled to all post-bankruptcy-petition improvements, updates, or developments of intellectual property created hereunder. If such intellectual property is not fully developed as of the commencement of any bankruptcy case, The other party shall have the right to complete development of the property. 9.13 Each party shall make available to the other party or its authorized attorneys, agents or representatives, its employees, agents or consultants necessary or appropriate to enable the appropriate party to file, prosecute and maintain VRI PATENTS and SB PATENTS for a period of time sufficient for such party to obtain the assistance it needs from such personnel. Where appropriate, each party shall sign or cause to have signed all documents relating to said patent applications or patents at no charge to the other. 9.14 In any action brought pursuant to Section 9.8, the party bringing the action shall indemnify the other party, its officers, directors, shareholders, employees, agents, successors and assigns from any loss, damage or liability, including for attorney's fees and costs, which may result from claims, counterclaims or crossclaims asserted by a defendant, except to the extent that such losses, damages or liabilities result from the negligence or willful misconduct of the other party. 25 28 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 9.15 Trademarks: 9.15.1 Each party shall be responsible for the selection of all trademarks and tradenames which are employed in connection with any PRODUCT sold by it under this Agreement. Nothing in this Agreement shall be construed as a grant of rights, by license or otherwise, to VRI or SB to use such trademarks and tradenames or any other trademarks and tradenames owned by SB or VRI, respectively, for any purpose. 9.15.2 Nothing in this Agreement shall be construed as a grant of rights, by license or otherwise, to either party, to use the name of the other party or any entity affiliated therewith for any purpose whatsoever except as may otherwise be expressly provided for in this Agreement. 9.15.3 Each party, at its expense, shall be responsible for the selection and registration of non-proprietary names for PRODUCT in the TERRITORY which it sells under this Agreement. ARTICLE 10 TERM AND TERMINATION 10.1 The RESEARCH PROGRAM shall terminate two (2) years from the COMMENCEMENT DATE unless extended pursuant to section 2.3 or earlier terminated pursuant to section 2.2. 10.2 Royalty obligations under Article 5 in each country of the TERRITORY shall expire with respect to each PRODUCT (a) with respect to SB, upon the later of: [****] (b) with respect to VRI, upon the later of: [****] Upon termination of a party's obligation to pay royalties with respect to a PRODUCT in a country under this Section 10.2, such party shall have a fully paid-up, non-exclusive license with respect to such PRODUCT in such country. 26 29 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. 10.3 Unless otherwise terminated, this Agreement shall remain in full force and effect until neither party is obligated to make any further payments to the other party under this Agreement. 10.4 (a) If either party fails or neglects to perform covenants or provisions of this Agreement and if such default is not corrected within sixty (60) days after receiving written notice from the other party with respect to such default, such other party shall have the right to terminate this Agreement by giving written notice to the party in default provided the notice of termination is given within six (6) months of the default and prior to correction of the default. (b) If this Agreement is properly terminated by VRI under this Section 10.4, then all amounts which would have been due to VRI under Section 2.2 for the two quarterly payments following the date of termination shall be immediately due and payable. 10.5 Either party may terminate this Agreement if, at any time, the other party shall file in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the party or of its assets, or if the other party proposes a written agreement of composition or extension of its debts, or if the other party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed with sixty (60) days after the filing thereof, or if the other party shall propose or be a party to any dissolution or liquidation, or if the other party shall make an assignment for the benefit of creditors. 10.6 Notwithstanding the bankruptcy of VRI or SB, or the impairment of performance by VRI or SB of its obligations under this Agreement as a result of bankruptcy or insolvency of VRI or SB, the other party shall be entitled to retain the licenses granted herein, subject to the rights of a party to terminate this Agreement for reasons other than bankruptcy or insolvency as expressly provided in this Agreement. ARTICLE 11 RIGHTS AND DUTIES UPON TERMINATION 11.1 Upon termination of this Agreement, each party shall have the right to retain any sums already paid by the other hereunder and each party shall pay to the other all sums accrued hereunder which are then due, [****] 27 30 11.2 Termination of this Agreement shall terminate all outstanding obligations and liabilities between the parties arising from this Agreement other than those previously accrued except those described in Sections 4.4, 4.5, 6.1, 9.5, 9.14 and 14.1 and Articles 8, 11 and 16 through 21. In addition, any other provision required to interpret and enforce the parties' rights and obligations under this Agreement shall also survive, but only to the extent required for the full observation and performance of this Agreement. 11.3 Termination of the Agreement in accordance with the provisions hereof shall not limit remedies which may be otherwise available in law or equity. ARTICLE 12 WARRANTIES AND REPRESENTATIONS 12.1 Each party warrants and represents that it has the right to enter into this Agreement and to perform in accordance therewith. 12.2 Nothing in this Agreement shall be construed as a warranty that PATENTS are valid or enforceable or that their exercise does not infringe any patent rights of THIRD PARTIES. 12.3 Each party further warrants and represents that it has not, up through and including the date of this Agreement, omitted to furnish the other with any information concerning the subject matter of this Agreement which would be material to its decision to enter into this Agreement and to undertake the commitments and obligations set forth herein. ARTICLE 13 FORCE MAJEURE 13.1 If the performance of any part of this Agreement by either party, or of any obligation under this Agreement other than a payment obligation, is prevented, restricted, interfered with or delayed by reason of any cause beyond the reasonable control of the party liable to perform, unless conclusive evidence to the contrary is provided, the party so affected shall, upon giving written notice to the other party, be excused from such performance to the extent of such prevention, restriction, interference or delay, provided that the affected party shall use its reasonable efforts to avoid or remove such causes of non-performance and shall continue performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution. 28 31 ARTICLE 14 GOVERNING LAW 14.1 This Agreement shall be deemed to have been made in the Commonwealth of Pennsylvania and its form, execution, validity, construction and effect shall be determined in accordance with the laws of the Commonwealth of Pennsylvania, USA. ARTICLE 15 WAIVER OR BREACH 15.1 The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect its rights at a later time to enforce the same. No waiver by either party of any condition or term in any one or more instances shall be construed as a further or continuing waiver of such condition or term or of another condition or term. ARTICLE 16 SEPARABILITY 16.1 In the event any portion of this Agreement shall be held illegal, void or ineffective, the remaining portions hereof shall remain in full force and effect. 16.2 If any of the terms or provisions of this Agreement are in conflict with any applicable statute or rule of law, then such terms or provisions shall be deemed inoperative to the extent that they may conflict therewith and shall be deemed to be modified to conform with such statute or rule of law. 16.3 In the event that the terms and conditions of this Agreement are materially altered as a result of Sections 16.1 or 16.2, the parties will renegotiate the terms and conditions of this Agreement to resolve any inequities. ARTICLE 17 ENTIRE AGREEMENT 17.1 This Agreement, into as of the date written above, constitutes the entire Agreement between the parties relating to the subject matter hereof and supersedes all previous writings and understandings. No terms or provisions of this Agreement shall be varied or modified by any prior or subsequent statement, conduct or act of either of the 29 32 parties, except that the parties may amend this Agreement by written instruments specifically referring to and executed in the same manner as this Agreement. ARTICLE 18 NOTICES 18.1 Any notice required or permitted under this Agreement shall be sent by air mail, postage pre-paid, to the following addresses of the parties: VRI: Virus Research Institute 61 Moulton Street Cambridge, MA 02138 Attn: Chief Executive Officer SB: SmithKline Beecham plc. New Horizons Court, Brentford, Middlesex TW8 9EP, England Attn: Director and Senior Vice President Worldwide Business Development copy to: SmithKline Beecham Corporation 709 Swedeland Road P.O. Box 1539 King of Prussia, PA 19406 Attention: Corporate Intellectual Property-US 18.2 Any notice required or permitted to be given concerning this Agreement shall be effective upon receipt by the party to whom it is addressed or within seven (7) days of dispatch whichever is earlier. ARTICLE 19 ASSIGNMENT 19.1 This Agreement and the licenses herein granted shall be binding upon and inure to the benefit of the successors in interest of the respective parties. Neither this Agreement nor any interest hereunder shall be assignable by either party without the written consent of the other provided, however, that either party may assign this Agreement and/or any part of its rights and obligations hereunder, and/or any PATENT owned by it, (i) to any AFFILIATE or (ii) to any corporation with which a party may merge or consolidate, or to which it may 30 33 transfer all or substantially all of its assets to which this Agreement relates, without obtaining the consent of the other party. ARTICLE 20 RECORDING 20.1 SB shall have the right, at any time, to record, register, or otherwise notify this Agreement in appropriate governmental or regulatory offices anywhere in the TERRITORY, and VRI shall provide reasonable assistance to SB in effecting such recording, registering or notifying. ARTICLE 21 INDEMNIFICATION 21.1 SB shall defend, indemnify and hold harmless VRI, AFFILIATES of VRI, licensees of VRI and their respective directors, officers, shareholders, agents and employees, from and against any and all liability, loss, damages and expenses (including reasonable attorneys' fees) as the result of claims, demands, costs or judgments which may be made or instituted against any of them arising out of any SB PRODUCT which was manufactured, possessed, distributed, used, tested, sold or otherwise disposed of by or through SB or its sublicensees. SB's obligation to defend, indemnify and hold harmless shall include claims, demands, costs or judgments, whether for money damages or equitable relief by reason of alleged personal injury (including death) to any person or alleged property damage, provided, however, the indemnity shall not extend to any clams against an indemnified party which result from the gross negligence or willful misconduct of such indemnified party. SB shall have the exclusive right to control the defense of any action which is to be indemnified in whole by SB hereunder, including the right to select counsel acceptable to VRI to defend VRI and to settle and claim, provided that, without the written consent of VRI (which shall not be unreasonably withheld or delayed), SB shall not agree to settle any claim against VRI to the extent such claim has a material adverse effect on VRI. The provisions of this Section shall be applicable whether or not such claim has been rightfully brought and shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement. 21.2 VRI shall defend, indemnify and hold harmless SB, AFFILIATES of SB, licensees of SB and their respective directors, officers, shareholders, agents and employees, from and against any and all liability, loss, damages and expenses (including reasonable attorneys' fees) as the result of claims, demand, costs or judgments which may be made or instituted against any of them arising out of any VRI PRODUCT which was manufactured, possessed, distributed, used, tested, sold or otherwise disposed of by or through VRI or its AFFILIATES or sublicensees. VRI's obligation to defend, indemnify and hold harmless shall include claims, demands, costs or judgments, whether for money damages or equitable relief 31 34 by reason of alleged personal injury (including death) to any person or alleged property damage, provided, however, the indemnity shall not extend to any claims against an indemnified party which results from the gross negligence or willful misconduct of such indemnified party. VRI shall have the exclusive right to control the defense of any action which if to be indemnified in whole by VRI hereunder, including the right to select counsel acceptable to SB to defend SB and to settle any claim, provided that, without written consent of SB (which shall not be unreasonably withheld or delayed), VRI shall not agree to settle any claim against SB to the extent such claim has a material adverse effect on SB. The provisions of this Section shall be applicable whether or not such claim has been rightfully brought and shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement. 21.3 A person or entity that intends to claim indemnification under this Section 21 (the "Indemnitee") shall promptly notify the other party (the "Indemnitor") of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor, after it determines that indemnification is required of it, shall assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume the defense; or, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The indemnity agreement in Section 21 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure to deliver notice to the Indemnitor with a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section 21, but the omission so to deliver to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Section 21. The Indemnitee under this Section 21, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigations of any action, claim or liability covered by this indemnification. In the event that each party claims indemnity from the other and one party is finally held liable to indemnify the other, the Indemnitor shall additionally be liable to pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing its claim for indemnity. 32 35 IN WITNESS WHEREOF, the parties, through their authorized officers, have executed this Agreement as of the date first written above. SMlTHKLINE BEECHAM plc BY: /s/ Jean Pierre Garnier --------------------------------------- Jean Pierre Garnier Title: Chairman. Pharmaceuticals ------------------------------------ VIRUS RESEARCH INSTITUTE INC. BY: /s/ J. Barrie Ward --------------------------------------- J. Barrie Ward Title: Chairman and Chief Executive Officer ------------------------------------ 33 36 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX A PATENTS [****] 34 37 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX B VRI/SB [****] RESEARCH PLAN [****] 35 38 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX C VRI THIRD PARTY AGREEMENTS [****] 36 39 The information below marked by [****] has been omitted pursuant to a request for confidential treatment. The omitted portion has been separately filed with the Commission. APPENDIX D KNOWN [****] GENES AND SEQUENCES [****] 37 -----END PRIVACY-ENHANCED MESSAGE-----