Exclusive License Agreement between ActivBiotics, Inc. and University of Washington (May 16, 2003)

Summary

This agreement grants ActivBiotics, Inc. an exclusive worldwide license from the University of Washington to use certain patented technology related to the diagnosis and treatment of arterial chlamydial granuloma. ActivBiotics is authorized to develop, manufacture, and sell products based on this technology, and may also sublicense these rights to third parties. The agreement outlines the parties’ obligations, including confidentiality, payment of royalties, and reporting requirements. The license is intended to ensure the technology is commercially developed and made available to the public.

EX-10.8 11 a2173987zex-10_8.txt EXHIBIT 10.8 Exhibit 10.8 "CONFIDENTIAL TREATMENT REQUESTED BY ACTIVBIOTICS, INC." CONFIDENTIAL INFORMATION EXCLUSIVE LICENSE AGREEMENT BETWEEN ACTIVBIOTICS, INC. AND UNIVERSITY OF WASHINGTON THIS EXCLUSIVE LICENSE AGREEMENT ("Agreement") is entered into on May 16, 2003 ("Effective Date") by and between ActivBiotics, Inc, a Delaware corporation with its principal place of business at 128 Spring Street, Lexington, MA ("Licensee") and the University of Washington, a public institution of higher education and an agency of the state of Washington, acting through its Office of Technology Licensing ("OTL"), with administrative offices at 4311 11th Avenue NE, Suite 500, Seattle, WA 98105 ("University") (individually the "Party" or collectively the "Parties"). RECITALS Whereas, University has developed and owns or is in possession of certain technology relating to diagnosis and treatment of arterial chlamydial granuloma, described in OTL# 1168-1291129DL ("UW Technology" as defined below) and developed by Dr(s) Cho Cho Kuo, Allan Shor, Dorothy L. Patton, Lee Ann Campbell and J Thomas Grayston; Whereas, University and Licensee entered into an Exclusive Option Agreement dated June 13, 2002 ("Exclusive Option Agreement Between ActivBiotics, Inc. and the University of Washington" attached hereto as Exhibit A and incorporated herein by reference), which remains in full force and effect; Whereas, University desires that UW Technology be used as broadly and as soon as possible in the public interest, and to this end desires to exclusively license UW Technology to a company capable of commercially exploiting UW Patent Rights (as defined below); Whereas, Licensee wishes to obtain a license to UW Patent Rights and Licensee is under no contractual or other obligation which encumber, restrict, or limit any of the rights granted by University under this Agreement, and is committed to commercially exploiting UW Patent Rights; and Whereas, University is willing to grant such a license to Licensee in order that Licensed Product(s) (as defined below) be made available on the commercial market. Now Therefore, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows: 1.0 DEFINITIONS [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 1 CONFIDENTIAL INFORMATION 1.1 All capitalized terms used in this Agreement have the respective meanings ascribed to them in this Agreement and, unless indicated otherwise, are intended to include all derivative forms of the terms. 1.2 "Affiliate" means any entity that directly or indirectly controls, is controlled by, or is under common control with Licensee. For the purposes of this Paragraph 1.2 "control" means either the right to exercise more than 50% of the voting rights of an entity, including but not limited to, a controlled corporation or limited liability company or the power to direct or cause the direction of the management or policies of any other controlled entity. Affiliates shall mean only those companies listed on Exhibit 1.2, attached hereto and incorporated herein by reference, which may be amended from time to time only with prior written consent of an authorized representative of the University. 1.3 "Combination Product" shall mean any subject matter sold at a single price, including but not limited to, products and processes, containing both a component that constitutes a Licensed Product and one or more other active components that do not constitute Licensed Product. 1.4 "Confidential Information" means any information and materials of the University (biological, chemical, or otherwise) not generally known to the public. Confidential Information may be conveyed in written, graphic, oral, physical, or electronic form. Confidential Information shall include, without limitation, UW Technology Rights. Notwithstanding the foregoing, Licensee shall have no obligation of confidentiality relating to: 1.4.1 any information of the University that is required to be disclosed by judicial or legislative action or government regulation; 1.4.2 any information that is or becomes part of the public domain through no fault of Licensee; 1.4.3 any information that is known to Licensee prior to the disclosure by University, as evidenced by documentation; 1.4.4 any information that is publicly released as authorized under this Agreement by University, its employees or agents; 1.4.5 any information that is subsequently obtained by Licensee from a duly authorized Third Party; or 1.4.6 any information that is independently developed by Licensee without reliance on any portion of the Confidential Information received from University and without any breach of this Agreement as evidenced by documentation. 1.5 "Field of Use" means diagnosis and treatment of arterial chlamydial granuloma, which includes related arterial and coronary diseases or disorders caused by or influenced by arterial chlamydia granuloma lesions and infections. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 2 1.6 "Licensed Product" means a product or service, including but not limited to products, services and processes, which are covered within UW Patent Rights and/or UW Technology Rights. 1.7 "Licensed Territory" means worldwide. 1.8 "Net Sales" means the gross billed or invoiced amounts for Licensed Product(s) or Combination Product(s) less discounts and allowances given and actually taken and which are customary in Licensee's trade, other than those which permit a reduction in payment by the customer in exchange for early payment. Notwithstanding the foregoing, Net Sales will not be less than [***]% of gross billed or invoiced amounts. In the event that Licensed Product(s) or Combination Product(s) are sold to an Affiliate, then Net Sales shall be the price which would have been charged if the Licensed Product(s) or Combination Product(s) in question had been sold on normal terms and conditions to a purchaser dealing at arm's length with Licensee. Licensed Product(s) and/or Combination Product(s) shall be deemed "sold" when billed or invoiced, whichever occurs first. 1.9 "Semi-Annual Period" means a period of six consecutive calendar months beginning on the first day of either January or July. 1.10 "Sublicense" means the present, future or contingent transfer by Licensee to a Third Party of any license, right, option, first right to negotiate or other right granted under the UW Patent Rights and/or UW Technology Rights, in whole or in part. Sublicense shall include, without limitation, such transfer to strategic partners and marketing collaborators. 1.11 "Sublicensee" means a Third Party holding a Sublicense under the UW Patent Rights and/or UW Technology Rights. 1.12 "Sublicensing Fee" means any license fee or non-royalty consideration, including equity, received by Licensee from a Sublicensee for the grant of a license to make, have made, use or distribute Licensed Products or Combination Products and that is not included in Net Sales. 1.13 "Sublicensing Consideration" means cash or non-cash consideration of any kind received by Licensee or Affiliate from a Sublicensee(s) for the grant of a Sublicense under this Agreement, including, but not limited to, upfront fees or milestone fees and including any premium paid by the Sublicensee(s) over Fair Market Value (hereinafter defined) for stock of the Licensee or an Affiliate in consideration for such Sublicense. However, not included in such Sublicensing Consideration are amounts paid to the Licensee or an Affiliate by the Sublicensee(s) for earned royalties on Licensed Product(s), product development, research work, clinical studies, and regulatory approvals performed by or for the Licensee or Affiliate, or third parties on their behalf pursuant to a specific agreement including a performance plan and commensurate budget "Fair Market Value" means the average price that the stock in question is publicly trading at for twenty (20) days prior to the announcement of its purchase by the Sublicensee(s), or, if the stock is not publicly traded, the value of such stock as determined by the most recent private financing through a financial investor (an entity whose sole interest in the Licensee or Affiliate is financial) of the Licensee or Affiliate that issue the shares [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 3 1.14 "Technical Information" means any technical facts, data, or advice, oral or written (in the form of information contained in patents and patent applications, reports, letters, drawings, specifications, testing procedures, training and operational manuals, bills of materials, photographs and related materials), and/or any tangible material(s), not covered by but reasonably necessary for practicing UW Patent Rights and developed by UW Researchers before the Effective Date which is owned by and in possession of University and is not covered by Third Party rights that would prevent delivery to Licensee. 1.15 "Third Party" means all individuals or entities other than University, Licensee and Affiliates. 1.16 "UW Researchers" means Dr(s) Cho Cho Kuo, Allan Shor, Dorothy L Patton, Lee Ann Campbell and J. Thomas Grayston. 1.17 "UW Patent Rights" shall mean the United States issued patents, United States or international patent application(s) listed in Exhibit 1.16 and any corresponding patent issued therefrom, including all reissues, divisionals, continuations, reexaminations and extensions thereof, together with all corresponding foreign patents, extensions, supplemental protection certificates and applications corresponding thereto now issued or issued during the term of this Agreement and which directly relate to UW Technology. Continuations-in-Part ("CIP") Patent Applications will be included with UW Patent Rights only if Licensee substantially funds the research that results in the filing of a CIP. A patent or patent application shall cease to be a UW Patent Right when any of the following occur: a) it expires; b) it is abandoned; or c) it is held to be invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken. 1.18 "UW Technology" means the technology as developed in the University laboratories of UW Researchers and as described in OTL File # 1168-1291129DL. 1.19 "UW Technology Rights" means UW Technology and Technical Information all of which is the proprietary information of the University. 2.0 GRANT OF RIGHTS 2.1 Grant. Subject to Licensee's fulfillment of its obligations under this Agreement, University hereby grants to Licensee an exclusive, royalty-bearing license, with the right to Sublicense as further set forth in Article 3.0 (Sublicensing), under the UW Patent Rights and/or UW Technology Rights to import, make, have made, use, sell, offer for sale and have sold Licensed Product(s) and Combination Product(s) in the Licensed Territory in the Field of Use. 2.2 University Reserved Rights. The license granted above is subject to a reserved non exclusive license by University to make, have made, and use products, processes, or other subject matter covered by the UW Patent Rights and/or the UW Technology Rights for research, instructional, and/or other academic purposes University has the right to use the UW Patent Rights and/or UW Technology Rights for its own sponsored and collaborative research during the term of this Agreement and to grant material transfer agreements to Third Party non-profit [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 4 entities. University also has the right to publish any information included in the UW Patent Rights and/or UW Technology Rights or any information that may result from University's research in this area. 2.3 Federal Government Rights. Licensee acknowledges and understands that UW Patent Rights may be the result of federal research funding and that such funding imposes certain obligations on the University. Actions taken by University to fulfill such obligations shall not be deemed inconsistent with University's obligations under this Agreement. Licensee acknowledges that such obligations under federal law include, without limitation, the following: a) University's granting of a worldwide, non-exclusive, royalty-free license under any UW Patent Rights by University to the United States government; and b) a requirement that all United States patents and patent applications within the UW Patent Rights include a statement of United States government patent rights. Licensee acknowledges that any and all determinations of federal funding shall be made solely by University and University's reasonable determination shall be honored by Licensee. Licensee further acknowledges and agrees that, pursuant to 35 USC 200, the University's grant of an exclusive license to use or sell UW Patent Rights in the United States are contingent on Licensee's agreement that any products embodying UW Patent Rights or produced through the use of UW Patent Rights must be manufactured substantially in the United States, unless Licensee obtains a waiver from the appropriate federal agency. 3.0 SUBLICENSING 3.1 Right to Sublicense. During the term of this Agreement, Licensee shall have the right to grant non-exclusive and exclusive Sublicenses to UW Patent Rights and/or UW Technology Rights within the Field of Use and within the Licensed Territory at royalty rates and with terms and conditions not less favorable to University than those required of Licensee by this Agreement. 3.2 Sublicense Subject to this Agreement. Any and all proposed Sublicenses in and to UW Patent Rights and/or UW Technology Rights granted by Licensee shall be subject to prior approval of University, which shall not be unreasonably denied, and shall be subject to the terms of this Agreement. 3.3 Copies to University. Licensee shall give the University written notification and copies of any Sublicense it may grant under this Article 3.0. Licensee agrees to provide such written notification indicating the effective date of execution, effective period and operative provisions, within thirty (30) days of its execution.. Such documents shall be held in confidence by the University to the extent permitted by law or regulation. 3.4 Licensee agrees to consider in good faith any potential sublicensees that University may suggest or recommend. 4.0 DELIVERY OF INFORMATION 4.1 UW Patent Rights. University agrees to disclose to Licensee copies of all existing patents and patent applications comprising UW Patent Rights and University shall continue [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 5 throughout the term of this Agreement to keep Licensee informed of all material patent decisions and of all other patents and patent applications, pursuant to Paragraph 9.1, that may later fall within the scope of UW Patent Rights. 4.2 Technical Information. University agrees to disclose to Licensee any Technical Information that is in University's judgment reasonably necessary or valuable to the commercial exploitation of the UW Patent Rights. 5.0 CONFIDENTIALITY 5.1 Confidentiality. Beginning on the Effective Date and continuing throughout the term of this Agreement and thereafter for a period of three (3) years ("Confidentiality Period"), Licensee shall not disclose or otherwise make known or available to any Third Party or Affiliate any Confidential Information, without the express prior written consent of University. During the Confidentiality Period, Licensee shall maintain the UW Patent Rights and UW Technology Rights in confidence and refrain from disclosing information related to UW Patent Rights or UW Technology Rights to a Third Party. In no event shall Licensee incorporate or otherwise use UW Patent Rights or UW Technology Rights in connection with any patent application filed by or on behalf of the Licensee. Licensee agrees to restrict the use of UW Patent Rights and UW Technology Rights exclusively to the terms of this Agreement. Licensee shall utilize reasonable procedures to safeguard the Confidential Information. Licensee agrees that its confidentiality obligations apply to Affiliates. 5.2 Public Records Act. The University of Washington is an agency of the state of Washington and is subject to the Washington Public Records Act, RCW 42.17.250 et seq, and no obligation assumed by University under this Agreement shall be deemed to be inconsistent with University's obligations defined under RCW 42.17. In the event University receives a request for public records under the Public Records Act for documents containing Confidential Information, and if University concludes that the documents are not otherwise exempt from public disclosure, University will provide Licensee notice of the request before releasing such documents. Such notice shall be provided in a timely manner to afford Licensee sufficient time to review such documents and/or seek a protective order, at Licensee's expense. The responsibility for(1) protecting the Confidential Information shall reside exclusively with Licensee utilizing the procedures described in RCW 42.17.330. 6.0 DILIGENCE AND DEVELOPMENT MILESTONES 6.1 Development and Commercialization. During the term of this Agreement, Licensee shall use, and shall compel its Sublicensee to use, at least the same level of effort and diligence as Licensee uses or has used in proceeding with its own product development, testing, manufacturing, sales and, where applicable, initiating clinical trials and obtaining regulatory approval to develop and commercialize at least one Licensed Product(s) or Combination Product(s) Specifically, Licensee shall use such level of effort and diligence in: 6.1.1 developing Licensed Product(s) or Combination Product(s); [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 6 6.1.2 filing for or seeking regulatory approvals in accordance with the business plan; and 6.1.3 marketing and selling Licensed Product(s) or Combination Product(s) 6.2 Milestones. With regard to each of the Licensed Product(s) or Combination Product(s), Licensee shall use at least the same level of effort and diligence as Licensee uses or has used in proceeding with its own product development, testing, manufacturing, sales and, where applicable, initiating clinical trials and obtaining regulatory approval to meet all of the following diligence milestones. Licensee agrees to provide, upon University's request, tangible evidence of achieving the milestones. 6.2.1 Assemble a scientific committee containing a multidisciplinary group of scientists (including, but not limited to, pathologists, microbiologists and cardiologists) for the design and oversight of a study that demonstrates the effective use of an antibacterial drug for the therapy of arterial chlamydia granuloma ("Study") by July 1st 2004. 6.2.2 Initiate Study by September 30, 2004. 6.2.3 Prepare and send to UW Researchers for review a pre-submission manuscript prepared by Licensee describing the outcomes of Study by December 31, 2005. 6.2.4 First publication by Licensee or others in a peer reviewed international journal of Study by June 31, 2007. 6.2.5 First publication by Licensee or others in a peer reviewed international journal of a study that demonstrates the effective use of an antibacterial drug for the therapy of acute or chronic coronary arterial chlamydia granuloma by December 31, 2009. 6.2.6 First publication by Licensee or others in a peer reviewed international journal of a study conducted by a multidisciplinary group of scientists (including, but not limited to, pathologists, microbiologists and cardiologists) establishing that atherosclerosis is an arterial chlamydia granuloma or that chlamydia granuloma of the arteries is associated pathologically with atherosclerosis by December 31, 2006; 6.2.7 Execute a strategic partnership and/or a Sublicense agreement for the development of Licensed Product(s) or Combination Product(s) with a Third Party by December 31, 2008. 6.2.8 Filing by Licensee or Sublicensee of an NDA with the U.S. Food and Drug Administration for the use of antibacterial drugs to treat atherosclerosis and/or Chlamydia granuloma by December 31, 2010. 6.2.9 Licensee or Sublicensee to apply for regulatory approval for Licensed Product(s) or Combination Product(s) from the U.S. Food and Drug Administration or a foreign equivalent governmental authority by December 31, 2011. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 7 6.2.10 Licensee or Sublicensee to receive regulatory approval from the U.S. Food and Drug Administration or foreign equivalent governmental authorities for Licensed Product(s) or Combination Product(s) by December 31, 2012. 6.3 Milestone Payments. Licensee shall pay to University the following non-creditable, non-cumulative, non-refundable fees within thirty (30) days of the following milestones: 6.3.1 [***] dollars ($[***] US) upon the second publication by Licensee or others in a peer reviewed international journal of a study establishing that atherosclerosis is an arterial Chlamydia granuloma and/or that Chlamydia granuloma of the arteries is the constant lesion associated pathologically with atherosclerosis; 6.3.2 [***] dollars ($[***] US) upon Licensee's execution of a strategic partnership agreement and/or a Sublicense agreement for the development of antibacterial drugs for use in Chlamydia granuloma indications; 6.3.3 [***] dollars ($[***] US) upon filing by Licensee, strategic partner or Sublicensee of an NDA with the U.S. Food and Drug Administration for the use of antibacterial drugs for treating Chlamydia granuloma 6.3.4 [***] dollars ($[***] US) upon first commercial sale of Licensed Product(s) or Combination Product(s) anywhere in the Licensed Territory; and 6.3.5 [***] dollars ($[***] US) after Licensee's or Sublicensee(s)'s gross revenues of Licensed Product(s) or Combination Product(s), reaches [***] Dollars [***] ($[***]) in any twelve (12)-month period 6.4 Pre-Commercialization Progress Reports. Until Licensee or any Sublicensees engage in commercial use or sale of Licensed Product(s) or Combination Product(s), Licensee shall prepare and submit to University within thirty (30) days of December 31 of each year a report regarding the progress of Licensee and any Sublicensee in developing the Licensed Product(s) or Combination Product(s) for commercial exploitation. Such report shall include such particulars as are necessary to demonstrate compliance with Licensee's diligence obligations set forth in this Article 6.0 6.5 Failure to Meet Milestones. If Licensee fails to adhere to the diligence requirements set forth in this Article 6.0 with respect to Licensed Product(s) or Combination Product(s), University may terminate the license grants of this Agreement with respect to such Licensed Product(s) or Combination Product(s) in accordance with Article 18.0 (Term and Termination). 7.0 LICENSING FEES AND ROYALTIES 7.1 License Issue Fee. As partial consideration for the rights, privileges and licenses granted hereunder, Licensee shall pay to University a one-time non-refundable non-creditable license issue fee of [***] dollars ($[***] US) due and payable according to the following schedule: [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 8 - [***] dollars (USD $[***] US) within fifteen (15) days of the Effective Date, and - [***] dollars (USD $[***] US) within one hundred and eighty (180) days of the Effective Date. 7.2 License Maintenance Fee. Licensee shall pay to University [***] dollars ($[***] US) per year, creditable against milestone payments in the corresponding year, until Licensee makes its first royalty payment. In years with more than one milestone payment, the license maintenance fee will be waived for the subsequent year. This license maintenance fee is due and payable at the end of the quarter that includes the Effective Date of this Agreement. 7.3 Earned Royalty. Licensee shall pay to University an earned royalty of: 7.3.1 [***] ([***]%) of Net Sales of Licensed Product(s), whether Licensed Product(s) is/are sold by Licensee or its Sublicensees; due and payable within thirty (30) days of the end of each calendar quarter during the term of this Agreement. 7.3.2 Licensee shall pay earned royalties to University on a quarterly basis within thirty (30) days of each of the following dates: March 31, June 30, September 30, and December 31 of each year. 7.4 Earned Royalty for Combination Product(s). Where Combination Product(s) is/are sold, Licensee shall pay an earned royalty based on the following modification of Net Sales. When the component constituting a Licensed Product(s) and each component not constituting a Licensed Product(s) have established market prices in a particular country when sold separately, Net Sales in that country shall be determined by multiplying the net sales for each such Combination Product(s) by a fraction, the numerator of which shall be the established market price for the Licensed Product(s) contained in the Combination Product(s) and the denominator of which shall be the sum of the established market price for the Licensed Product(s) plus the established market price of the other components contained in the Combination Product(s). When such separate market prices are not established in that particular country, the Parties shall negotiate in good faith to determine a fair and equitable method of calculating Net Sales in that country for the Combination Product(s) in question. 7.5 Minimum Annual Royalties. Regardless of Net Sales, Licensee shall pay minimum annual royalties to be creditable against earned royalties on a non-cumulative basis and to be due in full and payable as shown below during the term of this Agreement according to the following schedule: - Due the first year in which a sale of Licensed Product occurs: [***] dollars ($[***] US) - Due the first quarter of the every year thereafter: [***] dollars ($[***] US). Nothing contained in this Paragraph 7.5 shall be construed to in any way alter or reduce Licensee's obligations under Paragraph 7.3. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 9 7.6 No Duplicative Royalties. Except as set forth in this Article 7.0, no multiple royalties shall be payable to University where any Licensed Product(s) or Combination Product(s), its manufacture, use, and/or sale is or will be covered by more than one patent application or issued patent licensed under this Agreement as part of UW Patent Rights. 7.7 Third Party Royalties. If Licensee is required to pay royalties to a Third Party based on Licensee's manufacture, use, or sale of Licensed Product(s) and/or Combination Product(s) subject to one or more patents of such Third Party, the royalty rate specified in Paragraphs 7.3 and 7.4 shall be reduced by an equitable amount to be determined through good faith negotiations between University and Licensee, provided that use of any Third Party patent is required in connection with such manufacture, use, or sale of Licensed Product(s) and/or Combination Product(s), and provided that the royalty to University shall not fall below fifty percent (50%) of that otherwise payable under this Agreement. 7.8 Currency and Exchange Rate. All payments required under this Agreement shall be made in United States dollars by check, money order or wire transfer to a bank account as designated by University. All such payments must include the University invoice number or the contract number [***] on the check or cover letter. The royalties on sales in currencies other than United States dollars shall be calculated using the appropriate foreign exchange rate for such currency as published in The Wall Street Journal (Western edition) on the last business day of each calendar quarter in which the sales occurred. All non-U.S. taxes related to royalty payments shall be paid by Licensee and are not deductible from the payments due University. 7.9 Wire Transfers. If payment is made by wire transfer, such wire transfer must contain the following information: [***], Office of Technology Licensing, ATTN: Financial Manager. The wire transfer should be directed towards [***], ABA# [***], and University budget number ([***]) Bank of America, University Branch, 4701 University Way NE, Seattle, WA 98105-4412, and a copy must be sent via fax to University OTL Financial Manager and a copy to University OTL Technology Manager at ###-###-####. International wires must be paid in United States dollars and must also include the reference "[***]". In the case of payment made by wire transfer to fulfill any financial obligation of Licensee under this Agreement any and all requirements of Article 7 must be met. 7.10 Late Fee. Licensee agrees to pay a late fee for any overdue (i.e., more than thirty (30) days past due) licensing fee, royalty payment or other payment due to University under terms of this Agreement. The late fee shall be computed as the United States prime rate plus two percent (2%), compounded monthly, as set forth by The Wall Street Journal (Western edition) on the date on which such payment is due, of the outstanding, unpaid balance. The payment of such a late fee shall not foreclose or limit University from exercising any other rights it may have as a consequence of the lateness of any payment. 8.0 SUBLICENSING PAYMENTS AND FEES. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 10 8.1 Sublicense Fees. Within sixty (60) days after the end of each Semi-Annual Period during the term of this Agreement, Licensee shall pay to University an amount based on any Sublicensing Consideration received by Licensee during such Semi-Annual Period as follows: 8.1.1 [***] of any Sublicensing Consideration received from any Sublicensee for the grant of a Sublicense of UW Patent Rights and/or UW Technology Rights if the Sublicense is executed before publication by Licensee or others in a peer reviewed journal of a study that demonstrates the effective use of an antibacterial drug for the therapy of arterial Chlamydia granuloma; or 8.1.2 [***] of any Sublicensing Consideration received from any Sublicensee for the grant of a Sublicense of UW Patent Rights and/or UW Technology Rights if the Sublicense is executed after a first sale of the Licensed Product(s) or Combination Product(s) by Licensee. 8.2 Equity. 8.2.1 Publicly Traded Equity. If Licensee receives consideration in the form of publicly traded equity from a Sublicense, all provisions of Article 8.0 (Sublicensing Payments and Fees) shall apply, except that University may, at its sole discretion, elect to receive University's share of such equity as either equity or the Fair Market Cash Value (hereinafter defined) equivalent of such equity at the time of issuance to Licensee. "Fair Market Cash Value" means the average price that the stock in question is publicly trading at for twenty (20) days prior to the transfer of the equity to Licensee or Affiliate from the Sublicensee. 8.2.2 Non-publicly Traded Equity. If Licensee receives consideration in the form of equity that is not publicly traded from a Sublicense, all provisions of Article 8.0 (Sublicensing Payments and Fees) shall apply University shall have the right to sell such equity at any time after a public or private market for such equity is created. 8.2.3 If under the provisions of this Paragraph 8.2 University elects to receive the equity, such equity shall be in the name "University of Washington". 8.2.4 Notwithstanding the above, it is understood and agreed that University shall not be entitled to any portion of amounts received by Licensee from Sublicensee(s) for the purchase of equity in Licensee, debt financing, research and development, the license or Sublicense(s) of any intellectual property other than the UW Patent Rights and/or UW Technology Rights, or reimbursement for patent or other expenses. 9.0 PATENT PROSECUTION AND COST RECOVERY. 9.1 University Control of Prosecution. Subject to Paragraph 18.6 University, or its designees shall have exclusive control over the filing, prosecution and maintenance of any and all patent applications included in UW Patent Rights, whether pending or not yet filed as of the Effective [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 11 Date of this Agreement, and of the maintenance and other management of any and all issued patents included in UW Patent Rights during the term of this Agreement. 9.2 Licensee Role in Prosecution. University shall keep Licensee informed of the status of any and all new patents and/or patent applications that are part of UW Patent Rights Licensee may provide comments to University on courses of action with respect to the filing of new patent applications relating to UW Patent Rights, prosecution of patent applications within UW Patent Rights, and/or maintenance of patents within UW Patent Rights, provided University has exclusive authority to prosecute and maintain UW Patent Rights. 9.3 University Cost Recovery from Licensee. Licensee agrees to reimburse University for all fees and costs for those actions related to the filing, prosecution and maintenance of patent applications, including, without limitation, interference, oppositions, and reexaminations, and maintenance and defense of patents, in UW Patent Rights, whether incurred prior to the execution of this Agreement or during the term of this Agreement. Such fees and costs shall not include costs incurred by the University in the use of its own resources, such as employee time Licensee agrees to pay invoices for such fees and costs submitted by University upon receipt of any such invoices. In any case where Licensee fails to pay fees and costs invoiced to Licensee by University within sixty (60) days of the date of such invoice, University may file, prosecute and/or maintain a patent application or patent at its own expense and for its own exclusive benefit. Licensee shall thereupon forfeit any license related to the filing, prosecution, and maintenance of patent applications under such patent or patent application. 9.3.1 University Cost Recovery from Licensee for Past Costs. Licensee is hereby required to pay no later than June 13, 2003 the sum of Twenty Thousand Four Hundred Twenty Four Dollars and Fifty One Cents ($20,424.51 US) to cover the past fees and costs as described above in Paragraph 9.3 9.3.2 University Cost Recovery from Licensee for Future Costs. Licensee is hereby required to pay within thirty (30) days of the Effective Date the sum of One Thousand Seven Hundred Sixty Five dollars ($1,765.00) ("Advanced Payment") to cover the future fees and costs as described above in Paragraph 9.3. The Advanced Payment will be placed in a non-interest bearing account to be deposited in a University Advanced Payment account University will submit the following documents to Licensee on a quarterly basis: 1) an invoice which will summarize all costs and fees that have been paid by University in support of the UW Patent Rights for the immediately preceding quarter; 2) copies of all legal invoices paid by the University during the immediately preceding quarter; and 3) either a report identifying any unused portion of the Advanced Payment to be applied to the next quarter's fees and costs or, if the Advanced Payment has been depleted, a request for additional funds to replenish the Advanced Payment account. The determination of the amount of additional funds necessary for the Advanced Payment account will be made solely by the University and will be based on the patent attorney's estimate for the upcoming year's fees and costs. Upon termination of this Agreement, any unexpended balance of the Advanced Payment will be held by University to pay outstanding fees and costs as described in Paragraph 9.3, and the unused portion refunded to Licensee within ninety (90) days after University's final accounting University may, at University's sole discretion, apply any such unused [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 12 portion of the Advanced Payment toward the payment of other monies Licensee owes University under this Agreement. The Parties agree that in establishing the Advance Payment account no fiduciary relationship between them is created, and that University's duties with regard to the Advance Payment are limited to those explicitly stated herein. 10.0 REPORTS 10.1 Quarterly Report. With each payment to University, Licensee shall include a report setting forth the relevant details of the business conducted by Licensee and each Sublicensee, if applicable, during the preceding calendar quarter pursuant to their obligations under Paragraph 7.3 of this Agreement. This report, for Licensee and each Sublicensee, shall include, at a minimum, the following: 10.1.1 the number of units of Licensed Product(s) and Combination Product(s) manufactured, used, or sold and by country within the Licensed Territory; 10.1.2 the gross amounts invoiced for Licensed Product(s) and Combination Product(s); 10.1.3 any and all discounts or allowances, and description of same, granted to Third Parties; and 10.1.4 the calculation of total amounts due University 11.0 RECORD KEEPING 11.1 Records Retained. Licensee shall keep complete and accurate records and books of account containing all information necessary for the computation and verification of the amounts to be paid hereunder. Licensee shall keep these records and books for a period of five (5) years, or longer if required by law, following the end of the accounting period to which the information pertains. 11.2 Auditing Rights. Licensee agrees, at the request of University, to permit one or more accountants selected exclusively by the University ("Accountants") to have access to Licensee's records and books of account pertaining to this Agreement during ordinary working hours to audit with respect to any payment period ending prior to such request, the correctness of any report or payment made under this Agreement, or to obtain information as to the payments due for any such period in the case of failure of Licensee to report or make payment pursuant to the terms of this Agreement. 11.3 Scope of Disclosure. The Accountant shall not disclose to University any information relating to the business of Licensee except that which is necessary to inform University of: 11.3.1 the accuracy or inaccuracy of Licensee's reports and payments; [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 13 11.3.2 compliance or noncompliance by Licensee with the terms and conditions of this Agreement; and 11.3.3 the extent of any inaccuracy or noncompliance. 11.4 Accountant Copies. Should the Accountant believe there is an inaccuracy in any of Licensee's payments or noncompliance by Licensee with any of such terms and conditions, the Accountant shall have the right to make and retain copies (including photocopies) of any pertinent portions of the records and books of account. 11.5 Costs of Audit. In the event that Licensee's royalties calculated for any quarterly period are under reported by more than three percent (3%), the costs of any audit and review initiated by University will be borne by Licensee; otherwise, University shall bear the costs of any audit initiated by University. 12.0 PATENT INFRINGEMENT 12.1 Mutual Notice. Each Party shall promptly inform the other Party of any alleged infringement of UW Patent Rights by a Third Party of which it becomes aware, and provide to the other Party with any available evidence thereof 12.2 Licensee First Right to Settle During Term of Exclusivity. During the term of exclusivity of the license granted hereunder, Licensee shall have the first right to respond to, defend, and prosecute in its own name actions or suits relating to UW Patent Rights. Licensee shall not settle any suits or actions in any manner relating to the UW Patent Rights, however, where the settlement adversely and materially affects the validity, enforceability, or existence of UW Patent Rights without obtaining the prior written consent of University, which consent shall not be unreasonably withheld or delayed. To enjoy said first right, Licensee must initiate bona fide action to respond to any alleged infringement within ninety (90) days of learning of said infringement. In the event that University consents to settlement by Licensee, the proceeds from such settlement will be distributed as follows: after Licensee has recovered its reasonable attorneys' fees and other out-of-pocket expenses directly related to any action, suit, or settlement for infringement of UW Patent Rights in the Field of Use, University and Licensee shall divide any remaining damages, awards, or settlement proceeds in the following manner: University: Twenty Percent (20%) Licensee: Eighty Percent (80%) Any payment by an alleged infringer that constitutes consideration for Net Sales, however, shall be handled according to the payment provisions of Article 7.0 (Licensing Fees and Royalties). Any payment by an alleged infringer that constitutes consideration for the grant of a Sublicense, however, shall be handled according to the applicable payment provisions for Sublicenses set forth in this Agreement. 12.3 Voluntary Participation by University. In the event Licensee institutes suit against an alleged infringer during the term of exclusivity as provided in this Agreement, then University [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 14 may agree to voluntarily participate as a named party at its sole discretion. If University decides not to voluntarily participate in such suit, then University agrees to be bound by any final judgment rendered by the court. Further, if University chooses not to voluntarily participate but the court determines University is a necessary or indispensable party, then Licensee agrees to pay all University's reasonable attorneys' fees and other out-of-pocket direct associated expenses, and University agrees to make reasonable efforts to cooperate and assist Licensee in connection with the suit. 12.4 University Right to Institute Action. If Licensee fails, within ninety (90) days of learning of an alleged infringement, to secure cessation of the infringement, institute suit against the infringer, or provide to University satisfactory evidence that Licensee is engaged in bona fide negotiation for the acceptance by infringer of a Sublicense in and to relevant patents in UW Patent Rights for the Field of Use, University may then, upon written notice to Licensee, assume full right and responsibility to secure cessation of the infringement, institute suit against the infringer, or secure acceptance of a Sublicense from Licensee in and to relevant patents in UW Patent Rights, approval for which Sublicense Licensee shall not unreasonably withhold. If University in accordance with the terms and conditions of this Agreement chooses to institute suit against an alleged infringer, University may bring such suit in its own name (or, if required by law, in its and Licensee's name) and at its own expense, and Licensee shall, but at University's expense for Licensee's direct associated expenses, fully and promptly cooperate and assist University in connection with any such suit. Any and all damages, awards, or settlement proceeds arising from such a University initiated action shall be University's. 12.5 No Obligation to Institute Action. Neither Licensee nor University is obligated under this Agreement to institute a suit against an alleged infringer of UW Patent Rights. 13.0 PATENT VALIDITY 13.1 Licensee Notice to University of Third Party Actions. If any claim challenging the validity or enforceability of any of the UW Patent Rights shall be brought against Licensee, Licensee shall promptly notify University. University, at its sole discretion, shall have the right, within thirty (30) days after notification by Licensee of such action, to intervene and take over the sole defense of the claim at University's expense. If University opts not to intervene and take over the sole defense of the claim within thirty (30) days after notification by Licensee, Licensee shall have the right to control the defense of the claim at its own expense. 13.2 Covenant Not to Challenge UW Patent Rights. Licensee agrees during the term of this Agreement not to challenge the validity or enforceability of any of the UW Patent Rights. 14.0 PATENT MARKING. Licensee shall mark any and all material forms of Licensed Product(s), Combination Product(s) or packaging pertaining thereto made and sold by Licensee in the United States with an appropriate patent marking identifying the pendency of any US patent application and/or any issued U.S. or foreign patent forming any part of the UW Patent Rights. All product(s) shipped or sold in other countries shall be marked in such a manner as to provide [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 15 notice to potential infringers pursuant to the patent law and practice of the country of manufacture or sale. 15.0 USE OF NAMES. Nothing contained in this Agreement shall be construed as conferring any right to use in advertising, publicity or other promotional activities any name, trade name, trademark, or other designation of University without the express written permission of University, unless such listing is required under local laws or regulations, provided that Licensee may state the existence of this Agreement and the fact that both Parties entered into it For any use other than the foregoing, Licensee hereby expressly agrees not to use the name "University of Washington" or any contraction, abbreviation, or simulation thereof without prior written approval from an authorized representative of University If University or Licensee wishes to issue a press release or make any other public announcement relating to the Agreement, the Parties will consult with one another in advance on the content to ensure the medical and scientific accuracy of the announcement and to ensure that such press release or other public announcement does not contain Confidential Information. In any event, no press release or other public announcement shall be issued without the express written authorization of the Parties, and the Parties agree to expedite the approval of each other's press releases 16.0 REPRESENTATIONS AND WARRANTIES 16.1 Right to Grant License. University represents and warrants that it has the right to grant the license in and to the UW Patent Rights and disclose the UW Technology Rights set forth in this Agreement. 16.2 DISCLAIMER OF WARRANTY. UNIVERSITY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, PERTAINING TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE UW PATENT RIGHTS, UW TECHNOLOGY RIGHTS, LICENSED PRODUCT(S), OR ANYTHING ELSE LICENSED, DISCLOSED, OR OTHERWISE PROVIDED TO LICENSEE UNDER THIS AGREEMENT Nothing in this Agreement shall be construed as: 16.2.1 A representation or warranty by University as to the patentability, validity, scope, or usefulness of the UW Patent Rights; or 16.2.2 A representation or warranty by University that anything made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents or other proprietary rights not included in the UW Patent Rights 16.3 LIMITATION OF LIABILITY OF UNIVERSITY. UNIVERSITY'S MAXIMUM LIABILITY UNDER THIS AGREEMENT IS LIMITED TO THE COSTS AND FEES PAID TO UNIVERSITY UNDER THIS AGREEMENT. UNIVERSITY WILL NOT BE LIABLE DIRECTLY OR INDIRECTLY FOR ANY PROPERTY DAMAGE, PERSONAL INJURY [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 16 LOSS OF USE, INTERRUPTION OF BUSINESS, LOSS OF PROFITS, OR OTHER SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH OF WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE 16.4 Representations by Licensee, Licensee represents that it has the right and authority to enter into this Agreement and that it has listed all Affiliates as of the Effective Date in Exhibit 1.2 17.0 INDEMNIFICATION AND INSURANCE 17.1 Licensee Indemnification of University. Licensee agrees to indemnify, hold harmless, and defend University, its regents, officers, inventors, employees, students, and agents ("Indemnified Parties") against any and all claims, causes of action, lawsuits, or other proceedings ("Claims") and losses, damages, costs, fees, and expenses ("Costs") filed, instituted, resulting from, or arising out of the design, process, manufacture, use, possession, or operation by any person or party (including Sublicensees) of UW Patent Rights, UW Technology Rights, any products based on or incorporating UW Patent Rights or UW Technology Rights, or any other embodiment of UW Patent Rights or UW Technology Rights Licensee agrees to such indemnification even though such Claims or Costs related thereto are based upon doctrines of strict liability or product liability Such indemnity shall not, however, apply to Claims arising from the gross negligence or intentional misconduct of any Indemnified Party This indemnification clause shall survive the termination of this Agreement 17.2 Licensee Liability Insurance. Licensee shall maintain general liability insurance including, but not limited to, product liability and contractual liability coverage at an amount customary to Licensee's business for activities and/or products of a similar nature that shall be in effect no later than the date of the first human clinical testing of Licensed Product(s) and/or Combined Product(s), Licensee's general liability insurance shall name University as an additional insured Licensee shall declare whether the insurance is provided on a "claims-made" form and must notify University within three (3) business days if coverage is canceled 17.3 Human Clinical Trials. Licensee shall provide to University within thirty (30) days prior to the initiation of human clinical trials with respect to Licensed Product(s), certificates evidencing the existence and amount of the insurance required under Article 18.0 (Term and Termination). Licensee shall issue irrevocable instructions to its insurance agent and to the issuing insurance company to notify University of any discontinuance or lapse of such insurance not less than thirty (30) days prior to the time that any such discontinuance is due to become effective Licensee shall provide University a copy of such instructions upon their transmittal to the insurance agent and issuing insurance company Licensee shall further provide University, at least semi-annually, proof of continued coverage 18.0 TERM AND TERMINATION [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 17 18.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until the last of UW Patent Rights expires, unless sooner terminated in accordance with the provisions set forth under this Article 18.0. 18.2 Material Breach By Licensee. University may terminate this Agreement effective upon thirty (30) days prior written notice of termination to Licensee, if Licensee materially breaches this Agreement and does not cure such breach within sixty (60) days after receiving such notice. Licensee agrees that any and all commercialization diligence requirements and required payments are material license terms according to Articles 6.0 (Diligence and Development Milestones), 7.0 (Licensing Fees and Royalties), 8.0 (Sublicensing Payments and Fees) and 9.0 (Patent Prosecution and Cost Recovery). In the event that Licensee has breached any such obligation with respect to Licensed Product(s) or Combination Product(s), the University may, in its sole discretion, terminate the license granted herein with respect to the UW Patent Rights and/or UW Technology Rights relating to such Licensed Product(s) or Combination Product(s), while retaining the remainder of this Agreement in full force and effect. 18.3 At-Will Termination By Licensee. Licensee may terminate this Agreement effective upon sixty (60) days prior written notice if in Licensee's reasonable opinion it will not commercialize the UW Patent Rights. 18.4 Insolvency. This Agreement, and the license granted to Licensee hereunder, shall terminate immediately in the event that: 18.4.1 Licensee seeks liquidation, reorganization, dissolution or is insolvent or evidence exists as to its insolvency or winding up of itself, or makes any general assignment for the benefit of its creditors; 18.4.2 a petition is filed by or against Licensee, or any proceeding against Licensee as a debtor, under any bankruptcy or insolvency law, unless the laws then in effect void the effectiveness of this provision; 18.4.3 a receiver, trustee, or any similar officer, under bankruptcy law, is appointed to take possession, custody or control of all or part of Licensee's assets or property; or 18.4.4 Licensee adopts any resolution of its Board of Directors or stockholders for the purpose of effecting any of the foregoing 18.5 No Further Rights. Upon termination, Licensee shall have no further rights under either the UW Patent Rights or the UW Technology Rights 18.6 Financial Obligations. Termination by University or Licensee under the options set forth in this Agreement shall not relieve Licensee from any financial obligation to University accruing prior to termination or from performing according to any and all other provisions of this Agreement that survive termination 18.7 Other Remedies. The provisions under which this Agreement may be terminated shall be in addition to any and all other legal remedies which either Party may have for the enforcement [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 18 of any and all terms hereof, and do not in any way limit any other legal remedy such Party may have 19.0 ASSIGNMENT 19.1 University Consent Required. This Agreement may not be assigned by Licensee without the express written consent of University except that Licensee may assign or otherwise transfer this Agreement and the license granted hereby and the rights acquired by it hereunder so long as such assignment or transfer shall be accompanied by a sale or other transfer of Licensee's entire business or of the entirety of that part of Licensee's business to which the license granted hereby relates, including a change of control Licensee shall give University thirty (30) days prior notice of such assignment and transfer. Upon such assignment or transfer, the term "Licensee" as used in this Agreement shall include such assignee or transferee and this Agreement shall be binding upon Licensee's permitted successors and assigns 19.2 University Assignment. University may assign or otherwise transfer this Agreement and the license granted hereby and the rights acquired by it hereunder. University shall give Licensee thirty (30) days prior notice of such assignment and transfer. Upon such assignment or transfer by such assignee or transferee, the term University herein shall include such assignee or transferee and this Agreement shall be binding upon University's permitted successors and assigns. 20.0 NOTICE OR DEMAND 20.1 Written Notice Required. All notices, requests, and other communications required or permitted under this Agreement shall be in writing, shall refer specifically to this Agreement and the OTL # 1168-1291129DL, and shall be deemed delivered upon receipt. If delivered by United States mail, postage should be prepaid by certified return receipt. If sent by facsimile (provided that a transmittal sheet indicates confirmation), or other electronic transmission, a confirmation copy will be forwarded. Any such notices, requests, and other communications shall be addressed as follows: LICENSEE: ActivBiotics, Inc. 128 Spring Street Lexington, MA Attn : Chalom Sayada, MD Ph.D. Chief Executive Officer, ActivBiotics Inc Main: 781 ###-###-#### Direct: 781 ###-###-#### Fax: 781 ###-###-#### UNIVERSITY: University of Washington Office of Technology Licensing Attn: Director 4311 11th Avenue NE, Suite 500 [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 19 Seattle, WA 98105 Fax: 206 ###-###-#### 20.2 Change of Address. Either Party, by notice, may change the address to which notice will be sent and unless so notified of a change of address all notices mailed to Licensee or University at the above stated address will be deemed sufficient 21.0 EXPORT CONTROLS. Licensee acknowledges and agrees that University is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes, and other commodities (including without limitation the Arms Export Control Act, the Export Administration Act of 1979 and the U.S., Patriot Act, and including all amendments thereof), 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 valid export 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 University does not represent that an export license shall be required, nor does it represent that such an export license shall be issued Licensee hereby agrees that Licensee shall not export or re-export, directly or indirectly, any Licensed Product(s) and/or UW Patent Rights and/or UW Technology Rights to any country for which the United States Government or other competent authority at the time of export requires an export license or other approval, without first obtaining such license or approval from the appropriate governmental authority; obtaining such permission will be the sole responsibility of Licensee 22.0 DISPUTE RESOLUTION. The Parties shall attempt to resolve through good faith discussions any dispute, which arises under this Agreement. Any dispute may, at the election of either Party, be referred to the Licensee's Chief Executive Officer and University's Director of Technology Licensing, or their authorized representatives 23.0 ATTORNEYS' FEES. The substantially prevailing party in arbitration or in any judicial or administrative action or proceeding arising under or in connection with this Agreement shall be entitled to reimbursement from the other party for its reasonable costs and attorneys' fees, including those on appeal, and including without limitation, the cost at the hourly charges routinely charged by the person providing the services, the time of legal assistants, secretarial and clerical overtime, and fees and expenses of experts retained by counsel 24.0 PROPRIETARY RIGHTS. Licensee will not, by performance under this Agreement, obtain any ownership interest in the UW Patent Rights and/or UW Technology Rights or any other proprietary rights or information of University, its officers, inventors, employees, students, or agents. 25.0 SEVERABILITY. If any provision of this Agreement is determined to be unenforceable or otherwise unlawful, then such provision will be without effect, and the remaining terms and conditions of this Agreement will survive, as if such provision had not been included herein. The [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 20 Parties will promptly meet to agree upon further terms which will, within the confines of the law, most substantially satisfy the intention of the Parties as reflected by the ineffective provision 26.0 HEADINGS AND CAPTIONS. The headings and captions of the Articles of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any Article of this Agreement 27.0 SURVIVAL. Article 17.0 (Indemnification and Insurance), Article 23.0 (Attorneys' Fees), and Paragraph 28.1 (Choice of Law/Venue), and other provisions that by their context would survive, shall survive the termination of this Agreement. 28.0 MISCELLANEOUS 28.1 Choice of Law/Venue. Because University is a public institution with its central administrative offices in Seattle, Washington, and because of the critical role played by University in administrating terms of this Agreement, the Parties agree this Agreement shall be governed by and interpreted in accordance with the laws of the state of Washington, regardless of its conflict of law provisions. The Parties further agree that any claim related in any manner to the Agreement shall be instituted and commenced in, and venue shall be either King County, Washington or the United Stated District Court for the Western District of Washington 28.2 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and their respective successors and assigns, including any corporation or entity with which or into which either Party may be merged or which may succeed to its assets or business 28.3 Non-Agency. With respect to the subject matter of this Agreement, Licensee and University are independent contractors and neither shall be deemed to be an agent, employee, partner, nor joint-venturer of the other for any purpose 28.4 Waiver. No delay or omission by either Party in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by either Party on any one occasion is effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion 28.5 Entire Agreement. The Parties hereto acknowledge that this Agreement, together with the Exclusive Option Agreement Between ActivBiotics, Inc. and the University of Washington, dated June 13, 2002, sets forth the entire Agreement and understanding of the Parties hereto as to the subject matter hereof, supersedes any and all prior written and oral agreements, understandings or offers. This Agreement shall be operative in the event of inconsistencies with any other agreement. This Agreement may not be modified, changed or discharged in whole or in part, except by an agreement in writing signed by authorized representatives of both Licensee and University IN WITNESS WHEREOF, THE PARTIES HAVE EACH READ AND BY SIGNATURE OF THIS AGREEMENT AGREE TO BE LEGALLY BOUND BY ALL OF THE ATTACHED [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 21 TERMS AND CONDITIONS, ALL OF WHICH ARE INCORPORATED FULLY INTO THIS AGREEMENT, AND HAVE CAUSED THIS AGREEMENT TO BE EXECUTED BY THEIR DULY AUTHORIZED REPRESENTATIVES. ACTIVBIOTICS INC. UNIVERSITY OF WASHINGTON By: /s/ Chalom B. Sayada By: /s/ James A. Severson --------------------------------- ------------------------------------ Name: Chalom B. Sayada, M.D., Ph.D. Name: James A. Severson Title: CEO Title: Vice Provost, Intellectual Property and Technology Transfer Date: June 2, 2003 Date: May 19, 2003 [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 22 EXHIBIT A Exclusive Option Agreement Between ActivBiotics, Inc. and the University of Washington [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 23 EXCLUSIVE OPTION AGREEMENT BETWEEN ACTIVBIOTICS, INC. AND THE UNIVERSITY OF WASHINGTON THIS EXCLUSIVE OPTION AGREEMENT ("Agreement") is entered into on June 13th, 2002 ("Effective Date") by and between ActivBiotics, Inc., a Delaware corporation with its principal place of business at Broadway Street 198, Cambridge, MA 02139 ("Company") and the University of Washington, a public institution of higher education and an agency of the state of Washington acting through its Office of Technology Licensing, with administrative offices at 1107 NE 45th Street, Suite 200, Seattle, WA 98105 ("University"). 1. Recitals. 1.1 Whereas, University has developed and owns or is in possession of certain technology ("UW Technology" defined below) relating to Diagnosis and Treatment of Arterial Chlamydial Granuloma; 1.2 Whereas, Company is an early stage pharmaceutical company focusing on the development of cures for chronic and infectious diseases; 1.3 Whereas, Company is willing to support the preparation, filing, prosecution and maintenance of certain patent applications or issued patents covering all or part of UW Technology and is willing to devote corporate resources directed towards the support and development of UW Technology; 1.4 Whereas, University is willing to grant Company an option to obtain an exclusive, worldwide, royalty bearing license to UW Patent Rights in the Field of Use under the terms and conditions of this Agreement; Now, therefore, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the University and Company (collectively "the Parties") hereby agree as follows: 2. Definitions. 2.1 "UW Technology" shall mean technology related to Diagnosis and Treatment of Arterial Chlamydial Granuloma as developed in the University laboratory by Dr(s) Cho Cho Kuo, Allan Shor, Dorothy L. Patton, Lee Ann Campbell and I Thomas Grayston and as recorded in OTL file # 1169-1291129DL 2.2 "UW Inventors" shall mean Drs Cho Chuo Kuo and Dr Allan Shor. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 2.3 "UW Patent Rights" shall mean the United States Patents listed below and any corresponding US patent issued therefrom, including all reissues, divisionals, continuations, reexaminations and extensions thereof, together with all corresponding foreign patents, extensions, supplemental protection certificates and applications corresponding thereto now issued or issued during the term of the license agreement and which directly relate to UW Technology. A patent or patent application shall cease to be a UW Patent Right when any of the following occur: a) it expires; b) it is abandoned; or c) it is held to be unenforceable by a court of competent jurisdiction from which no appeal can be taken. Issued patents as of the Effective Date are: United States Patent Number: US6,043,225 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 3/28/2000 Assignee: University of Washington and Allan Shor* United States Patent Number: US5,830,874 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 11/3/1998 Assignee: University of Washington and Allan Shor* United States Patent Number: US5,424,187 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 6/13/1995 Assignee: University of Washington and Allan Shor* * Exclusively controlled by University of Washington under separate agreement with Shor evidence of which is given in Appendix B. 2.4 "Technical Information" shall mean any technical facts, data, or advice, written or oral (in the form of information contained in patents and patent applications, reports, letters, drawings, specifications, testing procedures, training and operational manuals, bills of materials, photographs and other materials) directly related to UW Technology and which is owned or in the possession of University, delivered to Company by University and not subject to third party rights. 2.5 "Field of Use" shall mean Diagnosis and Treatment of Arterial Chlamydial Granuloma, which includes related arterial and coronary diseases or disorders caused or influenced by chlamydial infections. 3. Grant of Option, Exercise of Option, and Option Period. 3.1 Grant. Provided that Company complies with obligations set forth under this Agreement, University hereby grants to Company a time-limited option to negotiate a royalty-bearing, [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 limited-term, worldwide exclusive license on commercially reasonable terms under the UW Patent Rights in the Field of Use to make, have made, use, sell, and offer to sell products that use or are derived from the UW Patent Rights in the Field of Use. 3.1.1 The option granted above, and any license granted pursuant thereto, is subject to a reserved right by the University, with the right to non-exclusively sublicense to non-profit institutions, to make, have made, and use products, processes, or other subject matter covered by the UW Patent Rights, UW Technology or Technical Information for internal research, instructional and/or other academic purposes. University shall have the right to use the UW Patent Rights, UW Technology or Technical Information for its own internal, research, including sponsored research and academic collaborations during the term of this Agreement. University shall also have the right to publish any information included in the UW Patent Rights, UW Technology or Technical Information or any information that may result from their research in this area. 3.1.2 Article 3.1 notwithstanding, Company acknowledges that UW Patent Rights involve federal research funding. Company acknowledges that University has obligations ("Obligations") under federal law, and actions taken by University to fulfill such obligations shall not be deemed inconsistent with University's obligations under this Agreement nor any license agreement granted pursuant thereto. Company acknowledges that Obligations include, without limitation, the granting of a worldwide non-exclusive, royalty-free license for any such UW Patent Rights, by University to the United States Government, and a statement of United States Government patent rights on all the patents and patent applications within the UW Patent Rights. Company acknowledges that any and all determinations of federal funding involvement shall be made solely by University and University's determination shall be honored by Company. 3.2 Option Period/Option Period Extension. The option shall expire on the earlier of either (a) execution of a license or (b) 1 year from the Effective Date of the Agreement. If at the one (1) year anniversary of the Effective Date of the Agreement the option has not been exercised, the Company shall have the right to extend the option period ("Option Period Extension") for a fee of [***] dollars ([***]USD) for an additional year. The Option Period Extension shall expire the earlier of either (a) execution of a license or (b) one (1) years from the Effective Date of the extension. 3.3 Commercialization Prohibited During the term of this Agreement. Company shall have the right to use the UW Patent Rights and Technical Information for research only. Company is expressly prohibited from selling any products or services or developing any salable product or service based on the UW Patent Rights or Technical Information until such time as a license agreement has been fully executed between the parties. 3.4 Mutual Confidentiality. During the Option Period, Company shall maintain the UW Technology, UW Patent Rights and Technical Information in confidence and refrain from disclosing information related to UW Technology, UW Patent Rights or Technical Information to a third party. In no event shall Company disclose, or otherwise use UW Technology, UW Patent Rights or Technical Information in connection with any patent application filed or on behalf of the Company. Company agrees to restrict the use of UW Technology, UW Patent Rights and Technical Information exclusively to the terms of this Agreement, provided that such restriction does not include information that is in the public domain or which company can show as derived prior to or independently from information received from University. University's OTL (Office [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 Technology of Licensing) shall maintain in confidence and refrain from disclosing proprietary Company information, including strategic business plans, information regarding research, research plans, experimental results or other proprietary information regarding the business of the Company to the extent permitted by law. The University of Washington is a governmental agency of the state of Washington and is subject to the Washington Public records Act, RCW 42.17.250 et seq., and no obligation assumed by University under this Agreement shall be deemed to be inconsistent with University's obligations defined under RCW 42.17. University shall provide notice to Company in a timely manner such that Company is afforded sufficient time to review such documents and/or seek a protective order, at Company's expense. The responsibility for protecting the Confidential Information shall reside exclusively with Company utilizing the procedures described in RCW 42.17.330 3.5 Exercise of Option. If Company wants to exercise the option hereunder it must provide written notice to University within the term of this Agreement and provide the University with an acceptable development plan that is similar in scope and substance to that outlined in Exhibit A attached hereto. The Parties agree to negotiate the terms of a license in good faith. 4. Option Fee and Payments. 4.1 Fee. As consideration for the option granted by University to Company for the Option Period, Company agrees to pay to University a non-refundable, non-creditable option fee of [***] Dollars (US$[***]), due within thirty (30) days of the Effective Date of this Agreement. 4.2 Patent Prosecution and Cost Recovery 4.2.1 During the Option Period, University, or its designee, shall have sole control over the filing, prosecution and maintenance of any and all patent applications included in UW Patent Rights, whether pending or not yet filed as of the Effective Date of this Agreement, and of the maintenance and other management of any and all issued patents included in UW Patent Rights 4.2.2 During the Option Period, University shall keep Company informed of the status of any and all new patents and/or patent applications that are part of UW Patent Rights Company may provide comments to University on courses of action with respect to the filing of new patent applications relating to UW Technology, prosecution of patent applications, and/or management of patents in UW Patent Rights, provided University shall have exclusive authority to prosecute and maintain UW Patent Rights 4.2.3 Company agrees to reimburse University for all fees and costs related to the filing, prosecution and maintenance of patent applications, including, without limitation, interference, oppositions, and reexaminations, and maintenance and defense of patents, in patent fees and costs relating to UW Patent Rights, whether incurred prior to the execution of this Agreement or during the term of this Agreement. Such fees and costs shall not include costs incurred by the University in the use of its own resources, such as employee time, and shall not extend to patenting fees and costs incurred by University after termination of this Agreement. Company agrees to pay invoices for previously incurred fees and costs submitted by University in the amount of Forty Thousand Eight Hundred and Forty-nine Dollars and Two cents ($40,849.02USD) according to the following schedule: [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 - Six (6) Months after the Effective date of this Agreement: Twenty Thousand Four Hundred and Twenty-five Dollars and Fifty-two Cents ($20,425 52USD); - Twelve (12) Months after the Effective Date of this Agreement: Twenty Thousand Four Hundred and Twenty-five Dollars and Fifty-two Cents ($20,425 52USD) 5. Termination 5.1 Termination by Company. Company has the right to terminate this Agreement provided that Company gives University sixty (60) days prior written notice of termination. Termination will be effective sixty (60) days from the date University receives such notice. 5.2 Termination by University. University shall have the right to terminate this Agreement, including the option granted to Company in Article 3.1, effective immediately upon written notice of termination to Company in the event that Company fails to meet the obligations of Articles 3.3, 3.4, 4.1, or 4.2.3 under this Agreement and such failure or breach continues unremedied for a period of sixty (60) days after receipt by Company of written notice thereof from University. Termination will be effective sixty (60) days after the date Company receives such notice and only in the event that Company does not cure the failure or breach within that sixty (60) day period; 5.3 Automatic Termination. This Agreement, and the option granted to Company hereinabove, shall terminate immediately in the event that (a) Company seeks liquidation, reorganization, dissolution or winding-up of itself, is insolvent or evidence exists as to its insolvency, or Company makes any general assignment for the benefit of its creditors; (b) a petition is filed by or against Company, or any proceeding is initiated by or against Company, or any proceeding is initiated against Company as debtor, under any bankruptcy or insolvency law; or (c) receiver, trustee, or any similar officer is appointed to take possession, custody, or control of all or any part of Company's assets or property. 6. License Terms. Upon University's receipt of notice and a development plan reasonably acceptable to University pursuant to Article 3.5, University and Company shall enter into good faith negotiations regarding the terms of a license agreement. 7. Miscellaneous Provisions. 7.1 Limitation of Liability of University. No term or provision of this Agreement shall be construed as a warranty or representation by University concerning the validity, scope or value of UW Technology, UW Patent Rights or Technical Information. With respect to the subject matter of this Agreement, Company and University are independent contractors and neither shall be deemed to be an agent, employee, partner, nor joint-venturer of the other for any purpose. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 7.2 Indemnification. Company agrees to indemnify, hold harmless and defend University, its regents, officers, inventors, employees, students, and agents ("Indemnified Parties") against any and all claims, causes of action, lawsuits, or other proceedings ("Claims") and losses, damages, costs, fees and expenses ("Costs") filed, instituted, resulting from or arising out of the design, process, manufacture or use by any person or party, of any Company Products based on UW Patent Rights, UW Technology or Technical Information. Company agrees to such indemnification even though such Claims or Costs related thereto result in whole or in part from the negligence of any of the Indemnified Parties or are based upon doctrines of strict liability or products liability. Such indemnity shall not, however, apply to Claims arising from the gross negligence or intentional misconduct of any Indemnified Party. This indemnification clause shall survive the termination of this Agreement. 7.3 Entire Agreement. 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 supersedes any and all prior written and oral agreements, understandings or offers. This Agreement may not be modified, changed or discharged in whole or in part, except by an agreement in writing signed by authorized representatives of both Company and University. 7.4 Choice of Law/Venue. Because University is an agency of the state of Washington, the Parties agree that this Agreement shall be governed by and interpreted in accordance with the laws of the state of Washington, regardless of choice of law provisions. The parties further agree that any claim related in any manner to the Agreement shall be instituted and commenced in, and venue shall be King County, Washington or the United States District Court for the Western District of Washington. 7.5 Severability. Should any provision of this Agreement be determined to be unenforceable or otherwise unlawful, then such provision shall be without effect, and the remaining terms of this Agreement will survive, as if such provision had not been included herein; and the Parties shall promptly meet to agree upon further terms which shall, within the confines of the law, most substantially satisfy the intention of the Parties as reflected by the ineffective provision. 7.6 Waiver. No delay or omission by either Party in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by either Party on any one occasion is effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion. 7.7 Notices and Reports. All notices, requests and other communications to Company or University hereunder shall be in writing (including fax only if transmittal sheet indicates confirmation), shall refer specifically to this Agreement and shall be personally delivered or sent by fax or other electronic transmission or by registered mail, or certified mail, return receipt requested, postage prepaid, in each case to the respective addresses listed below (or to such address as may be specified in writing to the other party hereto): If to Company: Active Biotics, Inc. 198 Broadway Street Cambridge, MA 02139 Attn: Chief Executive Officer [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 Fax: 1 ###-###-#### If to University: University of Washington Office of Technology Licensing 1107 NE 45th St. Suite 200 Seattle, WA 98105 Attn: Director Fax: (206 ###-###-#### 7.8 Attorney's Fees. If any dispute shall arise under this Agreement, the prevailing party shall be entitled to its reasonable attorneys' fees and costs of litigation from the other party. 7.9 No License. This Agreement does not grant Company a license to UW Technology, UW Patent Rights or Technical Information. 7.10 Use of Names, Trade Names and Trademarks. Nothing in this Agreement confers the right upon a party to use the trade name, trademark, or name of the other party in any advertising, publicity or other promotional activities, unless the express, written permission of the other party has been obtained. The use of the name "University of Washington," or any contraction, abbreviation, or simulation thereof, by Company is expressly prohibited without prior written approval. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the Effective Date. Company: By: /s/ Chalom Sayada ------------------------------ Name: Chalom Sayada, M.D, Ph.D Title: CEO Date: June 13th, 2002 University of Washington: By: /s/ Anthony Claiborne ------------------------------ Name: Anthony Claiborne Title: Director OTL Date: June 17, 2002 [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 EXHIBIT A DEVELOPMENT PLAN A Development Plan of the scope outlined below shall be submitted to the University of Washington ("University") within thirty (30) days of the execution of this Agreement. In general, the Development Plan should provide the University with a summary overview of the activities that Company believes are necessary to bring products based on either UW Technology or UW Patent Rights to the marketplace. Development Program Development Activities to be Undertaken (please break activities into sub-units where appropriate with the anticipated date of completion of major milestones.) Estimated Total Development Time Governmental Approval (if applicable) Types of submissions required Government Agency (e.g. FDA, EPA, etc) Proposed Market Research Competitive Information Potential Competitors Potential Competitive Devices/Compositions Known Competitor's plans, developments, technical achievements D. Perceived Advantage Over Competitors Anticipated Date of Product Launch Total Length: approximately 2-3 pages. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED UW-ActiveBiotics OTL#1169-1291129DL 6/13/2002 EXHIBIT B AGREEMENT BETWEEN UNIVERSITY OF WASHINGTON AND A SHOR COMMERCIALIZATION AGREEMENT This Commercialization Agreement ("Commercialization Agreement") is entered into on 5-13-03 ("Effective Date") by and between the University of Washington, a public institution of higher education and an agency of the state of Washington, acting through its Office of Technology Licensing ("OTL"), with administrative offices at 1107 NE 45th Street, Suite 200, Seattle, WA 98105, ("University"), and Dr. Allan Shor, having residency at 170 Hazelwood, 7 George Avenue, Glensan, 2192 ("SHOR") (collectively the "Parties"). 1. BACKGROUND 1.1 SHOR conceived of certain technology relating to the detection of bacteria in the cornoratry artery atheroma plaque and South African patent applications were filed in respect of this technology by SHOR (SA 91/4565 and SA 92/3699). SHOR made the technology available to University for further research and development and, together with Drs. Kuo, Patton, Grayston and Campbell ("Developers"), the technology was developed, culminating in the filing of a patent application, entitled "Detection of Bacteria in Cornatory Artery Atheroma Plaque", which was subsequently granted as US 5,424,187 ("Invention"), and as described in University docket 1168-1291129DL. 1.2 The Inventions were made in the course of research supported by the National Cancer Institute (Grant#: NIH AI21885). Pursuant to 37 CFR Section 401, the United States Government shall have rights to the Inventions by virtue of funding provided to Drs. Kuo, Patton, Grayston, and Campbell as described above. 1.3 University and SHOR entered into an Inter Institutional Agreement on May 15, 1996 ("Management Agreement"), attached hereto as Exhibit 1, for the Invention and the technology described in University docket 1168-1291129DL; 1.4 Subsequently, two divisional patent applications were filed, with SHOR and University recorded as assignees. However, University declined any interest in pursuing the divisional applications to grant. SHOR prosecuted these applications at his own cost and they were subsequently granted as US 5,830,874 and US 6,043,225. University offered its undivided rights and interest in the patents US 5,830,874 and US 6,043,225 back to the National Institute of Health ("NIH"). 1.5 University, with the assistance of Developers, petitioned the NIH for the return of these rights to University. NIH returned these rights to University in May 2002. 1.6 The Parties now wish to terminate the Management Agreement and thereby assign the rights acquired by University in the Management Agreement in and to US 5,424,187 back to SHOR. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 1 1.7 The Parties further wish to replace in its entirety, the Management Agreement with this Commercialization Agreement. 1.8 In addition University and SHOR desire that their respective undivided interests in the said Invention(s) be administered by University. 1.9 To give effect to this intention, SHOR further desires to license his undivided interest in the Patent Rights to University on an exclusive basis. Now Therefore, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the Parties hereto, intending to be legally bound, agree as follows: 2. DEFINITIONS 2.1 All capitalized terms used in this Commercialization Agreement have the respective meanings ascribed to them in this Commercialization Agreement and, unless indicated otherwise, are intended to include all derivative forms of the terms. 2.2 "Confidential Information" means information that is/are clearly marked "Confidential Information" or if transmitted orally, that is reduced to writing within thirty (30) days and clearly marked "Confidential Information." Confidential Information shall include, without limitation, Invention and license agreements and business information related to Invention(s) exchanged between Parties. Notwithstanding the foregoing, the receiving party shall have no obligation of confidentiality relating to: 2.2.1 any information of the disclosing party that is required to be disclosed by judicial or legislative action or government regulation; 2.2.2 any information that is or becomes part of the public domain through no fault of the receiving party; 2.2.3 any information that is known to the receiving party prior to the disclosure by the disclosing party, as evidenced by documentation; 2.2.4 any information that is publicly released as authorized under this Commercialization Agreement by the disclosing party, its employees or agents; 2.2.5 any information that is subsequently obtained by the receiving party from a duly authorized third party; or 2.2.6 any information that is independently developed by the receiving party without any breach of this Commercialization Agreement as evidenced by documentation. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 2 2.3 "Expenses" mean: 2.3.1 all reasonable and actual out-of-pocket costs incurred by SHOR and University, for the preparation, filing, prosecution and maintenance of patent applications, including, without limitation, interferences, oppositions, and reexaminations, and maintenance and defense of patents and litigation (except those litigation costs covered by Article 9), and the maintenance of resulting patents; 2.3.2 all reasonable and actual out-of-pocket legal costs incurred by SHOR and University for negotiating and managing assignments, waivers, licenses; 2.3.3 any other reasonable direct cost incurred by SHOR and University and reasonably associated with obtaining and maintaining patent or other legal protection for the Inventions, or negotiating and managing assignments, waivers, licenses and other contracts associated with acquiring and transferring the Inventions; and 2.3.4 Expenses includes all costs accrued after the Effective Date by University and/or SHOR for the filing, prosecution and maintenance of the Patent Rights. 2.3.5 Costs 2.3.1, 2.3.2 and 2.3.3 shall be exclusive of any salaries, administrative, management fees related to the invention paid to a third party technology firm or other indirect costs. 2.4 "Invention" shall mean the technology as developed by SHOR and Dr. Kuo and as recorded in University docket 1168-1291129DL. 2.5 "Inventors" shall mean Dr. Kuo, who was an employee of University at the time of development the Invention and SHOR. 2.6 "Net Revenues" shall mean gross proceeds including equity and other cash or non-cash considerations received by University from the licensing of said Invention(s) pursuant to this Commercialization Agreement, less: 2.6.1 [***] of such proceeds for the management of the technologies; 2.6.2 Pro rata reimbursement of unreimbursed Expenses as defined above and including all costs accrued prior to the Effective Date by University and SHOR for the filing, prosecution and maintenance of the Patent Rights. 2.7 "Patent Rights" shall mean any and all matter claimed in or disclosed by U.S. Patents listed below, including all patents, reissues, divisionals, continuations, reexaminations, substitutions and extensions thereof, subject matter claimed in any continuation-in-part on which claims issuing obtain the benefit of a priority date of any of the foregoing applications, and all corresponding foreign patent applications, extensions, supplemental protection certificates and patents corresponding thereto issued during the terms of this Commercialization Agreement. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 3 Issued patents as of the Effective Date are: - ------------------------------------------------------------------------------ United States Patent Number: US6,043,225 - ------------------------------------------------------------------------------ Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma - ------------------------------------------------------------------------------ Application Date: 3/28/2000 - ------------------------------------------------------------------------------ Assignee: University of Washington and Allan Shor - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ United States Patent Number: US5,830,874 - ------------------------------------------------------------------------------ Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma - ------------------------------------------------------------------------------ Application Date: 11/3/1998 - ------------------------------------------------------------------------------ Assignee: University of Washington and Allan Shor - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ United States Patent Number: US5,424,187 - ------------------------------------------------------------------------------ Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma - ------------------------------------------------------------------------------ Application Date: 6/13/1995 - ------------------------------------------------------------------------------ Assignee: University of Washington and Allan Shor - ------------------------------------------------------------------------------ 2.9 "Royalties" mean proceeds received from separate licensing arrangements for Inventions entered into after either party has terminated this Commercialization Agreement pursuant to Article 14. 3. TERMINATION OF MANAGEMENT AGREEMENT AND ASSIGNMENT BACK TO SHOR 3.1 By entering into this Commercialization Agreement, the Parties hereby agree to terminate the Management Agreement and replace it with this Commercialization Agreement as of the Effective Date; 3.2 University hereby assigns back to SHOR all the patent rights acquired by University in and to US 5,424,187 as provided in the Management Agreement. 4. LICENSE TO UNIVERSITY SHOR hereby grants to University an exclusive license to use his undivided interest in the Patent Rights for the purpose of commercializing the Inventions. 5. PATENT PROSECUTION AND PROTECTION 5.1 University shall maintain and otherwise protect the Patent Rights and shall keep SHOR apprised of the status of the Patent Rights. University shall be responsible for all Expenses [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 4 associated with the Patent Rights incurred after the Effective Date of this Commercialization Agreement. 5.2 University agrees that all actions regarding Patent Rights require the written approval of SHOR being the co-owner of the Patent Rights, which approval will not be unreasonably withheld. 5.3 University agrees to copy SHOR on all correspondence between University and patent counsel regarding Patent Rights and to forward to University any decisions regarding Patent Rights. University will notify the SHOR of all patent management matters within fifteen (15) business days of University's receipt of such notifications. 5.4 University acknowledges and agrees that it will confer in good faith with SHOR regarding any decisions regarding patent prosecution or maintenance. 5.5 University agrees that all actions regarding Patent Rights require the written approval of SHOR, which will not be unreasonably withheld. SHOR will submit to University such written approval within ten (10) business days after receiving University's notification of patent management matters. 6. LICENSING: DISTRIBUTION OF NET REVENUES 6.1 University shall have sole responsibility to seek licensee(s) and execute licenses for the commercial development of said Inventions and the Patent Rights, and shall administer the Inventions and the Patent Rights for the mutual benefit of the parties and in the best public interest. SHOR shall have the opportunity to approve all license agreements prior to final execution, which approval shall not be unreasonably withheld or delayed and SHOR will submit to University any comments within ten (10) business days after receiving the agreements, and University will promptly respond to SHOR's comments. If no comments are received within the ten (10) business days time period, approval of the proposed license agreement will be implied, and University shall proceed with execution of the license agreement. 6.2 University agrees to confer with SHOR regarding licensing strategies and milestones in any negotiations concerning potential licensing of Patent Rights, and to seek from a licensee reimbursement of all Expenses associate with Patent Rights including costs accrued prior to the Effective Date of this Commercialization Agreement. 6.3 University shall provide SHOR copies of all licenses conveying rights in respect of the Patent Rights. 6.4 University agrees to consider in good faith any potential licensees that SHOR may suggest or recommend. 6.5 University shall not assign the licenses to the Patent Rights to any third party, notwithstanding any other provision of this Commercialization Agreement or governmental consent, without the prior written consent of SHOR. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 5 6.6 University shall make reasonable efforts to recover Expenses incurred by both Shor and University prior to the Effective Date of this Commercialization Agreement. 6.7 University shall distribute Net Revenues concurrently with distributions it makes under University's patent policy, but in any case not later than six months following the close of the preceding fiscal year, on the following basis: (a) [***] of the Net Revenues to University; and (b) [***] of the Net Revenues to SHOR. 6.8 In the event of any litigation, actual or imminent, or any other action to protect the Patent Rights, University may withhold all distribution and impound Net Revenues and/or Royalties until resolution of the matter, provided that University shall not withhold in total a greater amount received by it than can reasonably be expected to compensate University for its legal costs and damages arising out of such action. 6.9 SHOR agrees that any licensing of such rights is subject to any and all rights of the U.S. government under Bayh Dole (35 USC 200 et seq. and 37 CFR S. 401 et seq.) arising from federal funding of the Inventors' research which led to the creation or discovery of the Inventions. 7. CONFIDENTIALITY 7.1 COMMERCIALIZATION AGREEMENT. Beginning on the Effective Date and continuing throughout the term of this Commercialization Agreement and thereafter for a period of Five (5) Years, neither party shall at any time, without the express prior written consent of the other, disclose or otherwise make known or available to any third party, any Confidential Information of the other party. The receiving party shall utilize reasonable procedures to safeguard the Confidential Information of the disclosing party, including releasing such Confidential Information only on a "need-to-know" basis. 7.2 PUBLIC DISCLOSURE ACT. The University of Washington is a governmental agency of the state of Washington and is subject to the Washington Public Records Act, RCW 42.17 et seq., and no obligation assumed by University under this Commercialization Agreement shall be deemed to be inconsistent with University's obligations defined under RCW 42.17. In the event University receives a request for public records under the Public Records Act for documents containing Confidential Information, and if University concludes that the documents are not otherwise exempt from public disclosure, University will provide SHOR notice of the request before releasing such documents. The responsibility for protecting the Confidential Information shall reside exclusively with SHOR utilizing the procedures described in RCW 42.17.330. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 6 8. RECORDS AND REPORTS University shall keep complete true and accurate accounts of all Expenses and of all proceeds received by it from each licensee of the Inventions and/or Patent Rights, and shall permit SHOR to allow a certified public accounting firm, reasonably acceptable to University, to examine University's books and records in order to verify the accuracy of any reports or payments due or owing under this Commercialization Agreement. 9. PATENT INFRINGEMENT 9.1 If SHOR or University shall learn of the substantial infringement of the Patent Rights, the party who learned of the infringement shall promptly call the other party's attention thereto in writing and shall provide the other party with evidence of such infringement. University, in cooperation with SHOR, shall use its reasonable best efforts to terminate such infringement without litigation. If the efforts of the parties are not successful in abating the infringement within ninety (90) days after the infringer has been formally notified of the infringement by University after consulting with SHOR, University shall have the right to: 9.1.1 Permit its licensee(s) to bring suit on its own account; 9.1.2 Commence a patent infringement suit on it own account after giving SHOR the opportunity to participate in the suit; 9.1.3 Join with SHOR in such suit; 9.1.4 Join with SHOR and any licensee in such suit; or 9.1.5 Refuse to participate in such suit, and University shall give written notice to SHOR within thirty (30) days after such ninety (90)-day period of its election. 9.2 The parties agree that if one party to this Commercialization Agreement brings a patent infringement action pursuant to Paragraph 8.1, then: 9.2.1 only the party bringing the action shall be entitled to whatever damages may he recovered in such action; 9.2.2 the party bringing the action, and that party alone, shall bear all costs and expenses associated with the action; and 9.2.3 the party bringing the action shall indemnify and hold harmless the non-participating party from all costs, expenses, claims, causes of action, and damages arising from or in any way related to such action. 9.3 If the parties jointly prosecute a patent infringement action, then the action shall be at the joint expense of the parties (in shares to be mutually agreed upon) and all recoveries shall be shared jointly by them in direct proportion to the share of expenses paid by each party. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 7 9.4 Each party agrees to cooperate with the other in litigation proceedings instituted hereunder but at the expense of the party on account of whom suit is brought if brought solely for one party's account. Such litigation (including the settlement thereof) shall be controlled by the party bringing the suit, except that University shall control the suit if brought jointly, unless University joins only as nominal party plaintiff. SHOR may be represented at his expense by counsel of his choice in any suit brought solely by SHOR. 9.5 If the parties agree that SHOR shall commence suit on his own behalf or join with University or any of its licensees in any legal action pursuant to this Article 9 while SHOR maintains title to any patents contemplated by this Commercialization Agreement, SHOR shall execute whatever papers are necessary to permit such suit. 10. GOVERNING LAWS AND VENUE Choice of Law/Venue. The Parties agree this Commercialization Agreement shall be governed by and interpreted in accordance with the laws of the State of Washington, regardless of its choice of law provisions. The Parties further agree that any claim related in any manner to the Commercialization Agreement shall be instituted and commenced in, and venue shall be, either King or Thurston County, Washington or the United Stated District Court for the Western District of Washington. 11. NOTICES AND PAYMENTS Any notice and/or payment required or permitted to be given to the parties hereto shall be deemed to have been properly given if delivered, in writing, in person or mailed by first-class certified mail to the following addresses, or such other addresses as may designated in writing by the parties from time to time during the term of this Commercialization Agreement: To University: Office of Technology Licensing University of Washington 1107 NE 45th St, Suite 200 Seattle, WA 98105-4631 Attention: Health Sciences Manager To SHOR: Allan Shor 170 Hazelwood 7 George Avenue Glensan 2192 PO Box 29111 Sandringham 2131 South Africa [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 8 12. 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. 13. ASSIGNABILITY This Commercialization Agreement may not be assigned by either party without the prior written consent of the other party and consent of the government, to the extent consent of the latter may be required. 14. LIFE OF AGREEMENT This Commercialization Agreement shall be in full force and effect from the Effective Date and shall remain in effect for the life of the last to expire of patents contemplated by this Commercialization Agreement, unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of this Commercialization Agreement or Sponsor's requirements. 15. TERMINATION 15.1 Either party may terminate this Commercialization Agreement ("Terminating Party") upon sixty (60) days written notice to the other party ("Non-terminating Party") but not less than sixty (60) days before any pending Patent Office actions necessary to preserve patent rights. 15.2 The termination of this Commercialization Agreement will not affect any of the rights granted to any licensee prior to termination. 15.3 The Non-terminating party may elect to request assignment of any or all licenses issued by Terminating Party and will administer existing licenses without accounting to the Terminating Party, except that Non-terminating Party shall: (a) Retain [***] of future gross proceeds for administrative overhead provided for in Paragraph 2.6 hereof; and (b) Distribute to Terminating Party in accordance with Paragraph 2.6 Net Revenues accruing under continuing licenses negotiated prior to termination, but such distribution shall be made in accordance with Non-terminating Party's policy. 15.4 Non-terminating Party shall make its election and shall advise Terminating Party in writing within thirty (30) days after receipt of notice of termination, and Terminating Party shall [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 9 thereupon convey to Non-terminating Party assignment of the licenses and shall do all things necessary to transfer all files related to such licenses to Non-terminating Party or its designee. 15.5 After termination, each party will have the right to license their respective rights in the Inventions without accounting to the other party, subject to any rights previously granted in license agreements entered into prior to termination. 15.6 Upon termination of this Commercialization Agreement by either party (Terminating Party), the Terminating Party will still be responsible for its portion of Recoverable Costs incurred prior to termination. 16. SEVERABILITY If any provision of this Commercialization Agreement or the application thereof to any person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Commercialization Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law. 17. HEIRS, SUCCESSORS, AND ASSIGNS Each of the terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Commercialization Agreement, their respective heirs, legal representatives, successors and assigns. 18. AMENDMENTS This Commercialization Agreement may not be amended except by the unanimous written agreement of both of the parties. 19. COMPLETE AGREEMENT It is understood and agreed between SHOR and University that this Commercialization Agreement constitutes the entire 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. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 10 In WITNESS WHEREOF, the parties hereto have executed this Commercialization Agreement in duplicate originals by their duly authorized officers or representatives. UNIVERSITY OF WASHINGTON DR. ALLAN SHOR By /s/ Anthony Claiborne By /s/ Allan Shor ------------------------------------- ---------------------------------- Date 5-13-2002 Date 5-20-2002 [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED 11 [UNIVERSITY OF WASHINGTON LOGO] UNIVERSITY OF WASHINGT0N OFFICE OF TECHNOLOGY LICENSING June 18, 2002 SENT VIA UPS INTERNATIONAL Dr. Allan Shor 170 Hazelwood 7 George Avenue Glensan 2192 South Africa Re: Commercialization Agreement between University of Washington and Dr. Allan Shor UW OTL 1168-1291129-I2167CA Relating to Issued US Patents: 6,043,225; 5,830,874 and 5,424,187 Dear Allan, It has come to our attention that the effective date for the above referenced Commercialization Agreement was incorrectly listed as May 13, 2003 on the originals sent to you for execution. It was our mutual intention that the effective date for the Commercialization Agreement be May 13, 2002. Please attach this letter to your copy of the Agreement to confirm our intention. If you could also draft a similar letter and return it to us confirming your intention that the Agreement's effective date is May 13, 2002 it would be most helpful. We are grateful for Michael Pettit's help and advice in this matter. Please do not hesitate to contact us if you require further information. Sincerely, /s/ Annette Kleiser - ------------------------------------- Annette Kleiser, PhD Manager of Technology Licensing Office of Technology Licensing CC: Michael Pettit, Spoor & Fisher Johannesburg AK/1gm [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED EXHIBIT 1.2 Affiliates As of the Effective Date, there are no Affiliates. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED EXHIBIT 1.17 Issued patents as of the Effective Date United States Patent Number: 6,043,225 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 3/28/2000 Assignee: University of Washington and Allan Shor* United States Patent Number: 5,830,874 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 11/3/1998 Assignee: University of Washington and Allan Shor* United States Patent Number: 5,424,187 Title: Diagnosis and Treatment of Arterial Chlamydial Granuloma Application Date: 6/13/1995 Assignee: University of Washington and Allan Shor* * Exclusively controlled by University of Washington under separate agreement with Allan Shor [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED