<PAGE>
PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT--EXCLUSIVE
COVER PAGE
For PHS internal use only:
Patent License Number:
L-180-97/0
----------
Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):
USSN 08/367,841 08/520,373; 07/894,215 and U.S. Patent 5,840,686
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Licensee:
Gen Vec, Inc.
-------------
Cooperative Research and Development Agreement (CRADA) Number (if
applicable):
None
----
Additional Remarks:
Subject to L-221-94/2 Interinstitutional Agreement with the University
of Southern
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California
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Public Benefit(s):
Licensee has agreed to set up an indigent access program or include
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Licensed Products in an existing indigent access program
--------------------------------------------------------
This Patent License Agreement, hereinafter referred to as the AGREEMENT consists
of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix A (List of
Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan). The Parties to this
AGREEMENT are:
1) The National Institutes of Health ("NIH"), the Centers for
Disease Control and Prevention ("CDC"), or the Food and Drug
Administration ("FDA"), hereinafter singly or collectively
referred to as PHS, agencies of the United States Public
Health Service within the Department of Health and Human
Services (DHHS); and
2) The person, corporation, or institution identified above
and/or on the Signature Page, having offices at the address
indicated on the Signature Page, and its AFFILIATES as defined
herein in Paragraph 2.15, hereinafter referred to as LICENSEE.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
Model 980611 Page 1 of 38 Final GenVec, Inc. January 7, 2000
[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS. OMITTED TEXT IS INDICATED BY A "*".
<PAGE>
PHS PATENT LICENSE AGREEMENT-EXCLUSIVE
PHS and LICENSEE agree as follows:
1 BACKGROUND
----------
1.01 In the course of conducting biomedical and behavioral
research, PHS investigators made inventions that may have
commercial applicability.
1.02 By assignment of rights from PHS employees and other
inventors, DHHS, on behalf of the United States Government,
owns intellectual property rights claimed in any United States
and/or foreign patent applications or patents corresponding to
the assigned inventions. DHHS also owns any tangible
embodiments of these inventions actually reduced to practice
by PHS.
1.03 The Secretary of DHHS has delegated to PHS the authority to
enter into this Agreement for the licensing of rights to these
inventions.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the
commercial development of products and processes for public
use and benefit.
1.05 LICENSEE desires to acquire commercialization rights to
certain of these inventions in order to develop processes,
methods, and/or marketable products for public use and
benefit.
2. DEFINITIONS
-----------
2.01 "BENCHMARKS" mean the performance milestones that are set
forth in Appendix E.
2.02 "COMMERCIAL DEVELOPMENT PLAN" means the written
commercialization plan attached as Appendix F.
2.03 "FIRST COMMERCIAL SALE" means the initial transfer by or on
behalf of LICENSEE or its sublicensees of LICENSED PRODUCTS or
the initial practice of a LICENSED PROCESS by or on behalf of
Licensee or its sublicensees in exchange for cash or some
equivalent to which value can be assigned for the purpose of
determining NET SALES.
2.04 "GOVERNMENT" means the Government of the United States of
America.
2.05 "LICENSED FIELDS OF USE" means the fields of use identified in
Appendix B.
2.06 "LICENSED PATENT RIGHTS" shall mean:
a) Patent applications (including provisional patent
applications and PCT patent applications) and/or
patents listed in Appendix A, all divisions and
continuations of these applications, all patents
issuing from such applications, divisions, and
continuations, and any reissues, reexaminations, and
extensions of all such patents;
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
b) to the extent that the following contain one or more
claims directed to the invention or inventions
disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these
continuations-in-part; iii) all patents issuing from
such continuations-in-part, divisions, and
continuations; iv) priority patent application(s) of
a) above; and v) any reissues, reexaminations, AND
EXTENSIONS OF ALL SUCH PATENTS,
c) to the extent that the following contain one or more
claims directed to the invention or inventions
disclosed in a) above: all counterpart foreign and
U.S. patent applications and patents to a) and b)
above, including those listed in Appendix A.
LICENSED PATENT RIGHTS shall not include b) or c) above to the
extent that they contain one or more claims directed to new
matter which is not the subject matter disclosed in a) above.
2.07 "LICENSED PROCESS(ES)" means processes which, in the course of
being practiced would, in the absence of this AGREEMENT,
infringe one or more claims of the Licensed Patent Rights that
have not been held invalid or unenforceable by an unappealed
or unappealable judgment of a court of competent jurisdiction.
2.08 "LICENSED PRODUCT(S)" means tangible materials which, in the
course of manufacture, use, offer to sell, sale, or
importation would, in the absence of this AGREEMENT, infringe
one or more claims of the LICENSED PATENT RIGHTS that have not
been held invalid or unenforceable by an unappealed or
unappealable judgment of a court of competent jurisdiction.
2.09 "LICENSED TERRITORY" means the geographical area identified in
Appendix B.
2.10 "NET SALES" means the total gross receipts for sales of
LICENSED PRODUCTS or practice of LICENSED PROCESSES by or on
behalf of LICENSEE or its sublicensees, and from leasing,
renting, or otherwise making LICENSED PRODUCTS available to
others without sale or other dispositions, whether invoiced or
not, less returns and allowances, packing costs, insurance
costs, freight out, taxes or excise duties imposed on the
transaction (if separately invoiced), and wholesaler and cash
discounts in amounts customary in the trade to the extent
actually granted. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales
agencies or regularly employed by LICENSEE, or sublicensees,
and on its payroll, or for the cost of collections.
2.11 "PRACTICAL APPLICATION" means to manufacture in the case of a
composition or product, to practice in the case of a process
or method, or to operate in the case of a machine or system;
and in each case, under such conditions as to establish that
the invention is being utilized and that its benefits are to
the extent permitted by law or GOVERNMENT regulations
available to the public on reasonable terms.
2.12 "RESEARCH LICENSE" means a nontransferable, nonexclusive
license to make and to use the LICENSED PRODUCTS or LICENSED
PROCESSES as defined by the LICENSED PATENT RIGHTS for
purposes of research and not for purposes of commercial
manufacture or distribution or in lieu of purchase.
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<PAGE>
3. GRANT OF RIGHTS
---------------
3.01 PHS hereby grants and LICENSEE accepts, subject to the terms
and conditions of this Agreement, an exclusive license under
the LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make
and have made, to use and have used, to sell and have sold, to
offer to sell, and to import any LICENSED PRODUCTS in the
LICENSED FIELDS OF USE and to practice and have practiced any
LICENSED PROCESSES in the LICENSED FIELDS OF USE.
3.02 This AGREEMENT confers no license or rights by implication,
estoppel, or otherwise under any patent applications or
patents of PHS other than LICENSED PATENT RIGHTS regardless of
whether such patents are dominant or subordinate to LICENSED
PATENT RIGHTS.
4. SUBLICENSING
------------
4.01 Upon written approval by PHS, which approval will not be
unreasonably withheld, LICENSEE may enter into sublicensing
agreements under the LICENSED PATENT RIGHTS.
4.02 LICENSEE agrees that any sublicenses granted by it shall
provide that the obligations to PHS of Paragraphs 5.01-5.04,
8.01, 10.01, 10.02, 12.05, and 13.07-13.09 of this AGREEMENT
shall be binding upon the sublicensee as if it were a party to
this AGREEMENT. LICENSEE further agrees to attach copies of
these Paragraphs to all sublicense agreements.
4.03 Any sublicenses granted by LICENSEE shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensees and PHS, at the option of
the sublicensee, upon termination of this AGREEMENT under
Article 13. Such conversion is subject to PHS approval and
contingent upon acceptance by the sublicensee of the remaining
provisions of this AGREEMENT.
4.04 LICENSEE agrees to forward to PHS a copy of each fully
executed sublicense agreement postmarked within thirty (30)
days of the execution of such agreement. To the extent
permitted by law, PHS agrees to maintain each such sublicense
agreement in confidence.
5. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
-------------------------------------------------------------
5.01 (a) PHS reserves on behalf of the Government an
irrevocable, nonexclusive, nontransferable,
royalty-free license for the practice of all
inventions licensed under the LICENSED PATENT RIGHTS
throughout the world by or on behalf of the
Government and on behalf of any foreign government or
international organization pursuant to any existing
or future treaty or agreement to which the Government
is a signatory. Prior to the FIRST COMMERCIAL SALE,
LICENSEE agrees to provide PHS reasonable quantities
of LICENSED PRODUCTS or materials made through the
LICENSED PROCESSES for PHS research use.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
(b) In the event that Licensed Patent Rights are Subject
Inventions made under a Cooperative Research and
Development Agreement (CRADA), LICENSEE grants to the
Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a
nonexclusive, nontransferable, irrevocable, paid-up
license to practice LICENSED PATENT RIGHTS OR HAVE
LICENSED PATENT RIGHTS practiced throughout the world
by or on behalf of the Government. In the exercise of
such license, the Government shall not publicly
disclose trade secrets or commercial or financial
information that is privileged or confidential within
the meaning of 5 U.S.C. 552(b)(4) or which would be
considered as such if it had been obtained from a
non-Federal party. Prior to the FIRST COMMERCIAL
SALE, LICENSEE agrees to provide PHS reasonable
quantities of LICENSED PRODUCTS or materials made
through the LICENSED PROCESSES for PHS research use.
5.02 LICENSEE agrees that products used or sold in the United
States embodying LICENSED PRODUCTS or produced through use of
LICENSED PROCESSES shall be manufactured substantially in the
United States, unless a written waiver is obtained in advance
from PHS.
5.03 LICENSEE acknowledges that PHS may enter into future
Cooperative Research and Development Agreements (CRADAs) under
the Federal Technology Transfer Act of 1986 that relate to the
subject matter of this AGREEMENT. LICENSEE agrees not to
unreasonably deny requests for a RESEARCH LICENSE from such
future collaborators with PHS when acquiring such rights is
necessary in order to make a Cooperative Research and
Development Agreement (CRADA) project feasible. LICENSEE may
request an opportunity to join as a party to the proposed
Cooperative Research and Development Agreement (CRADA).
5.04 (a) In addition to the reserved license of Paragraph
5.01 above, PHS reserves the right to grant
nonexclusive Research Licenses directly or to require
LICENSEE to grant nonexclusive Research Licenses on
reasonable terms. The purpose of this Research
License is to encourage basic research, whether
conducted at an academic or corporate facility. In
order to safeguard the LICENSED PATENT RIGHTS,
however, PHS shall consult with LICENSEE before
granting to commercial entities a Research License or
providing to them research samples of materials made
through the LICENSED PROCESSES.
PHS Patent License Agreement--Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
(b) In exceptional circumstances, and in the event that
LICENSED PATENT RIGHTS are Subject Inventions made
under a Cooperative Research and Development
Agreement (CRADA), the Government, pursuant to 15
U.S.C. 3710a(b)(1)(B), retains the right to require
the LICENSEE to grant to a responsible applicant a
nonexclusive, partially exclusive, or exclusive
sublicense to use LICENSED PATENT RIGHTS IN
LICENSEE'S field of use on terms that are reasonable
under the circumstances; or if Licensee fails to
grant such a license, the Government retains the
right to grant the license itself. The exercise of
such rights by the Government shall only be in
exceptional circumstances and only if the Government
determines (i) the action is necessary to meet health
or safety needs that are not reasonably satisfied by
LICENSEE; (ii) the action is necessary to meet
requirements for public use specified by Federal
regulations, and such requirements are not reasonably
satisfied by the Licensee; or (iii) the Licensee has
failed to comply with an agreement containing
provisions described in 15 U.S.C. 3710a(c)(4)(B). The
determination made by the Government under this
Article is subject to administrative appeal and
judicial review under 35 U.S.C. 203(2).
6. ROYALTIES AND REIMBURSEMENT
---------------------------
6.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C within thirty
(30) days from the date that this AGREEMENT becomes effective.
6.02 LICENSEE agrees to pay to PHS a nonrefundable minimum annual
royalty as set forth in Appendix C. The minimum annual royalty
is due and payable on January 1 of each calendar year and may
be credited against any earned royalties due for sales made in
that year. The minimum annual royalty due for the first
calendar year of this AGREEMENT may be prorated according to
the fraction of the calendar year remaining between the
effective date of this AGREEMENT and the next subsequent
January 1.
6.03 LICENSEE agrees to pay PHS earned royalties as set forth in
Appendix C.
6.04 LICENSEE agrees to pay PHS benchmark royalties as set forth in
Appendix C.
6.05 LICENSEE agrees to pay PHS sublicensing royalties as set forth
in Appendix C.
6.06 A patent or patent application licensed under this AGREEMENT
shall cease to fall within the LICENSED PATENT RIGHTS for the
purpose of computing earned royalty payments in any given
country on the earliest of the dates that a) the application
has been abandoned and not continued, b) the patent expires or
irrevocably lapses, or c) the claim has been held to be
invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or
administrative agency.
6.07 No multiple royalties shall be payable because any LICENSED
PRODUCTS OR LICENSED PROCESSES are covered by more than one of
the LICENSED PATENT RIGHTS.
6.08 On sales of LICENSED PRODUCTS by LICENSEE to sublicensees or
on sales made in other than an arm's-length transaction, the
value of the NET SALES attributed under this Article 6 to such
a transaction shall be that which would have been received in
an arm's-length transaction, based on sales of like quantity
and quality products on or about the time of such transaction.
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<PAGE>
6.09 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS prior to the effective date of this
AGREEMENT, LICENSEE shall pay to PHS, as an additional
royalty, within sixty (60) days of PHS's submission of a
statement and request for payment to LICENSEE, an amount
equivalent to such patent expenses previously incurred by PHS.
6.10 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS on or after the effective date of this
AGREEMENT, PHS, at its sole option, may require LICENSEE:
(a) to pay PHS on an annual basis, within sixty (60) days of
PHS's submission of a statement and request for payment, a
royalty amount equivalent to all such patent expenses incurred
during the previous calendar year(s); or
(b) to pay such expenses directly to the law firm employed by
PHS to handle such functions. However, in such event, PHS and
not LICENSEE shall be the client of such law firm.
In limited circumstances, LICENSEE may be given the right to
assume responsibility for the preparation, filing,
prosecution, or maintenance of any patent application or
patent included with the LICENSED PATENT RIGHTS. In that
event, LICENSEE shall directly pay the attorneys or agents
engaged to prepare, file, prosecute, or maintain such patent
applications or patents and shall provide to PHS copies of
each invoice associated with such services as well as
documentation that such invoices have been paid.
6.11 LICENSEE may elect to surrender its rights in any country of
the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
ninety (90) days written notice to PHS and owe no payment
obligation under Article 6.10 for patent-related expenses
incurred in that country after ninety (90) days of the
effective date of such written notice.
7. PATENT FILING, PROSECUTION, AND MAINTENANCE
-------------------------------------------
7.01 Except as otherwise provided in this Article 7, PHS agrees to
take responsibility for, but to consult with, the LICENSEE in
the preparation, filing, prosecution, and maintenance of any
and all patent applications or patents included in the
LICENSED PATENT RIGHTS and shall furnish copies of relevant
patent-related documents to LICENSEE.
7.02 Upon PHS's written request, LICENSEE shall assume the
responsibility for the preparation, filing, prosecution, and
maintenance of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS and shall on an ongoing
basis promptly furnish copies of all patent-related documents
to PHS. In such event, LICENSEE shall, subject to the prior
approval of PHS, select registered patent attorneys or patent
agents to provide such services on behalf of Licensee and PHS.
PHS shall provide appropriate powers of attorney and other
documents necessary to undertake such actions to the patent
attorneys or patent agents providing such services. LICENSEE
and its attorneys or agents shall consult with PHS in all
aspects of the preparation, filing, prosecution and
maintenance of patent applications and patents included within
the LICENSED PATENT RIGHTS and shall provide PHS sufficient
opportunity to comment on any document that LICENSEE intends
to file or to cause to be filed with the relevant intellectual
property or patent office.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
7.03 At any time, PHS may provide LICENSEE with written notice that
PHS wishes to assume control of the preparation, filing,
prosecution, and maintenance of any and all patent
applications or patents included in the LICENSED PATENT
RIGHTS. If PHS elects to assume such responsibilities,
LICENSEE agrees to cooperate fully with PHS, its attorneys,
and agents in the preparation, filing, prosecution, and
maintenance of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS and to provide PHS with
complete copies of any and all documents or other materials
that PHS deems necessary to undertake such responsibilities.
LICENSEE shall be responsible for all costs associated with
transferring patent prosecution responsibilities to an
attorney or agent of PHS's choice.
7.04 Each party shall promptly inform the other as to all matters
that come to its attention that may affect the preparation,
filing, prosecution, or maintenance of the LICENSED PATENT
RIGHTS and permit each other to provide comments and
suggestions with respect to the preparation, filing,
prosecution, and maintenance of LICENSED PATENT RIGHTS, which
comments and suggestions shall be considered by the other
party.
8. RECORD KEEPING
--------------
8.01 LICENSEE agrees to keep accurate and correct records of
LICENSED PRODUCTS made, used, sold, or imported and LICENSED
PROCESSES practiced under this AGREEMENT appropriate to
determine the amount of royalties due PHS. Such records shall
be retained for at least five (5) years following a given
reporting period and shall be available during normal business
hours for inspection at the expense of PHS by an accountant or
other designated auditor selected by PHS for the sole purpose
of verifying reports and payments hereunder. The accountant or
auditor shall only disclose to PHS information relating to the
accuracy of reports and payments made under this AGREEMENT. If
an inspection shows an underreporting or underpayment in
excess of five percent (5%) for any twelve (12) month period,
then LICENSEE shall reimburse PHS for the cost of the
inspection at the time LICENSEE pays the unreported royalties,
including any late charges as required by Paragraph 9.08 of
this AGREEMENT. All payments required under this Paragraph
shall be due within thirty (30) days of the date PHS provides
LICENSEE notice of the payment due.
8.02 LICENSEE agrees to have an audit of sales and royalties
conducted by an independent auditor at least every two (2)
years if annual sales of the LICENSED PRODUCT or LICENSED
PROCESSES are over two (2) million dollars. The audit shall
address, at a minimum, the amount of gross sales by or on
behalf of LICENSEE during the audit period, terms of the
license as to percentage or fixed royalty to be remitted to
the GOVERNMENT, the amount of royalty funds owed to the
GOVERNMENT under this AGREEMENT, and whether the royalty
amount owed has been paid to the GOVERNMENT and is reflected
in the records of the LICENSEE. The audit shall also indicate
the PHS license number, product, and the time period being
audited. A report certified by the auditor shall be submitted
promptly by the auditor directly to PHS on completion.
LICENSEE shall pay for the entire cost of the audit.
9. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
----------------------------------------------------
9.01 Prior to signing this AGREEMENT, LICENSEE has provided to PHS
the COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which
LICENSEE intends to bring the subject matter of the LICENSED
PATENT RIGHTS to the point of PRACTICAL APPLICATION. This
COMMERCIAL DEVELOPMENT PLAN is hereby incorporated by
reference into this AGREEMENT. Based on this plan, performance
BENCHMARKS are determined as specified in Appendix E.
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<PAGE>
9.02 LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the
COMMERCIAL DEVELOPMENT PLAN for each of the LICENSED FIELDS OF
USE within sixty (60) days after December 31 of each calendar
year. These progress reports shall include, but not be limited
to: progress on research and development, status of
applications for regulatory approvals, manufacturing,
sublicensing, marketing, importing, and sales during the
preceding calendar year, as well as plans for the present
calendar year. PHS also encourages these reports to include
information on any of LICENSEE's public service activities
that relate to the LICENSED PATENT RIGHTS. If reported
progress differs from that projected in the COMMERCIAL
DEVELOPMENT PLAN and BENCHMARKS, LINCENSEE shall explain the
reasons for such differences. In any such annual report,
LICENSEE may propose amendments to the COMMERCIAL DEVELOPMENT
PLAN, acceptance of which by PHS may not be denied
unreasonably. LICENSEE agrees to provide any additional
information reasonably required by PHS to evaluate Licensee's
performance under this AGREEMENT. LICENSEE may amend the
BENCHMARKS at any time upon written consent by PHS. PHS shall
not unreasonably withhold approval of any request of LICENSEE
to extend the time periods of this schedule if such request is
supported by a reasonable showing by LICENSEE of diligence in
its performance under the COMMERCIAL DEVELOPMENT PLAN and
toward bringing the LICENSED PRODUCTS to the point of
PRACTICAL APPLICATION as defined in 37 CFR 404.3(d). LICENSEE
shall amend the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS at
the request of PHS to address any LICENSED FIELDS OF USE not
specifically addressed in the plan originally submitted.
9.03 LICENSEE shall report to PHS the dates for achieving
BENCHMARKS specified in Appendix E and the FIRST COMMERCIAL
SALE in each country in the LICENSED TERRITORY within thirty
(30) days of such occurrences.
9.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty
report setting forth for the preceding half-year period the
amount of the LICENSED PRODUCTS sold or LICENSED PROCESSES
practiced by or on behalf of LICENSEE in each country within
the LICENSED TERRITORY, the NET SALES, and the amount of
royalty accordingly due. With each such royalty report,
LICENSEE shall submit payment of the earned royalties due. If
no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be
certified as correct by an authorized officer of LICENSEE and
shall include a detailed listing of all deductions made under
Paragraph 2.10 to determine Net Sales made under Article 6 to
determine royalties due.
9.05 LICENSEE agrees to forward semi-annually to PHS a copy of such
reports received by LICENSEE from its sublicensees during the
preceding half-year period as shall be pertinent to a royalty
accounting to PHS by LICENSEE for activities under the
sublicense.
9.06 Royalties due under Article 6 shall be paid in U.S. dollars.
For conversion of foreign currency to U.S. dollars, the
conversion rate shall be the New York foreign exchange rate
quoted in THE WALL STREET JOURNAL on the day that the payment
is due. All checks and bank drafts shall be drawn on United
States banks and shall be payable, as appropriate, to
"NIH/Patent Licensing." All such payments shall be sent to the
following address: NIH, P.O. Box 360120, Pittsburgh, PA
152516120. Any loss of exchange, value, taxes, or other
expenses incurred in the transfer or conversion to U.S.
dollars shall be paid entirely by LICENSEE. The royalty report
required by Paragraph 9.04 of this Agreement shall accompany
each such payment, and a copy of such report shall also be
mailed to PHS at its address for notices indicated on the
Signature Page of this AGREEMENT.
9.07 LICENSEE shall be solely responsible for determining if any
tax on royalty income is owed outside the United States and
shall pay any such tax and be responsible for all filings with
appropriate agencies of foreign governments.
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<PAGE>
9.08 Interest and penalties may be assessed by PHS on any overdue
payments in accordance with the Federal Debt Collection Act.
The payment of such late charges shall not prevent PHS from
exercising any other rights it may have as a consequence of
the lateness of any payment.
9.09 All plans and reports required by this Article 9 and marked
"confidential" by LICENSEE shall, to the extent permitted by
law, be treated by PHS as commercial and financial information
obtained from a person and as privileged and confidential, and
any proposed disclosure of such records by the PHS under the
Freedom of Information Act (FOIA), 5 U.S.C. section 552 shall
be subject to the predisclosure notification requirements of
45 CFR section 5.65(d).
10. PERFORMANCE
-----------
10.01 LICENSEE shall use its reasonable best efforts to bring the
LICENSED PRODUCTS and LICENSED PROCESSES to PRACTICAL
APPLICATION. "Reasonable best efforts" for the purposes of
this provision shall include adherence to the COMMERCIAL
DEVELOPMENT PLAN at Appendix F and performance of the
BENCHMARKS at Appendix E. The efforts of a sublicensee shall
be considered the efforts of LICENSEE.
10.02 Upon the FIRST COMMERCIAL SALE, until the expiration of this
AGREEMENT, LICENSEE shall use its reasonable best efforts to
make LICENSED PRODUCTS and LICENSED PROCESSES reasonably
accessible to the United States public.
11. INFRINGEMENT AND PATENT ENFORCEMENT
-----------------------------------
11.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT
RIGHTS, as well as any facts which may affect the validity,
scope, or enforceability of the LICENSED PATENT RIGHTS of
which either Party becomes aware.
11.02 Pursuant to this AGREEMENT and the provisions of Chapter 29 of
title 35, United States Code, LICENSEE may: a) bring suit in
its own name, at its own expense, and on its own behalf for
infringement of presumably valid claims in the LICENSED PATENT
RIGHTS; b) in any such suit, enjoin infringement and collect
for its use, damages, profits, and awards of whatever nature
recoverable for such infringement; and (c) settle any claim or
suit for infringement of the Licensed Patent Rights provided,
however, that PHS and appropriate GOVERNMENT authorities shall
have the first right to take such actions. If LICENSEE desires
to initiate a suit for patent infringement, LICENSEE shall
notify PHS in writing. If PHS does not notify LICENSEE of its
intent to pursue legal action within ninety (90) days,
LICENSEE will be free to initiate suit. PHS shall have a
continuing right to intervene in such suit. LICENSEE shall
take no action to compel the GOVERNMENT either to initiate or
to join in any such suit for patent infringement. LICENSEE may
request the GOVERNMENT to initiate or join in any such suit if
necessary to avoid dismissal of the suit. Should the
GOVERNMENT be made a party to any such suit, LICENSEE shall
reimburse the GOVERNMENT for any costs, expenses, or fees
which the GOVERNMENT incurs as a result of such motion or
other action, including any and all costs incurred by the
GOVERNMENT in opposing any such motion or other action. In all
cases, LICENSEE agrees to keep PHS reasonably apprised of the
status and progress of any litigation. Before LICENSEE
commences an infringement action, LICENSEE shall notify PHS
and give careful consideration to the views of PHS and to any
potential effects of the litigation on the public health in
deciding whether to bring suit.
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<PAGE>
11.03 In the event that a declaratory judgment action alleging
invalidity or non-infringement of any of the LICENSED PATENT
RIGHTS shall be brought against LICENSEE or raised by way of
counterclaim or affirmative defense in an infringement suit
brought by LICENSEE under Paragraph 11.02, pursuant to this
AGREEMENT and the provisions of Chapter 29 of Title 35, United
States Code or other statutes, LICENSEE may: a) defend the
suit in its own name, at its own expense, and on its own
behalf for presumably valid claims in the LICENSED PATENT
RIGHTS; b) in any such suit, ultimately to enjoin infringement
and to collect for its use, damages, profits, and awards of
whatever nature recoverable for such infringement; and c)
settle any claim or suit for declaratory judgment involving
the LICENSED PATENT RIGHTS-provided, however, that PHS and
appropriate GOVERNMENT authorities shall have the first right
to take such actions and shall have a continuing right to
intervene in such suit. If PHS does not notify LICENSEE of its
intent to respond to the legal action within a reasonable
time, LICENSEE will be free to do so. LICENSEE shall take no
action to compel the GOVERNMENT either to initiate or to join
in any such declaratory judgment action. LICENSEE may request
the GOVERNMENT to initiate or to join any such suit if
necessary to avoid dismissal of the suit. Should the
GOVERNMENT be made a party to any such suit by motion or any
other action of LICENSEE, LICENSEE shall reimburse the
GOVERNMENT for any costs, expenses, or fees which the
GOVERNMENT incurs as a result of such motion or other action.
If LICENSEE elects not to defend against such declaratory
judgment action, PHS, at its option, may do so at its own
expense. In all cases, LICENSEE agrees to keep PHS reasonably
apprised of the status and progress of any litigation. Before
LICENSEE commences an infringement action, LICENSEE shall
notify PHS and give careful consideration to the views of PHS
and to any potential effects of the litigation on the public
health in deciding whether to bring suit.
11.04 In any action under Paragraphs 11.02 or 11.03, the expenses
including costs, fees, attorney fees, and disbursements, shall
be paid by LICENSEE. The value of any recovery made by
LICENSEE through court judgment or settlement shall be treated
as NET SALES and subject to earned royalties.
11.05 PHS shall cooperate fully with LICENSEE in connection with any
action under Paragraphs 11.02 or 11.03. PHS agrees promptly to
provide access to all necessary documents and to render
reasonable assistance in response to a request by LICENSEE.
12. NEGATION OF WARRANTIES AND INDEMNIFICATION
------------------------------------------
12.01 PHS offers no warranties other than those specified in Article 1.
12.02 PHS does not warrant the validity of the LICENSED PATENT
RIGHTS and makes no representations whatsoever with regard to
the scope of the LICENSED PATENT RIGHTS, or that the LICENSED
PATENT RIGHTS may be exploited without infringing other
patents or other intellectual property rights of third
parties.
12.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANT
ABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT
MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR
TANGIBLE MATERIALS RELATED THERETO.
12.04 PHS does not represent that it will commence legal actions
against third parties infringing the LICENSED PATENT RIGHTS.
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<PAGE>
12.05 LICENSEE shall indemnify and hold PHS, its employees,
students, fellows, agents, and consultants harmless from and
against all liability, demands, damages, expenses, and losses,
including but not limited to death, personal injury, illness,
or property damage in connection with or arising out of: a)
the use by or on behalf of LICENSEE, its sublicensees,
directors, employees, or third parties of any LICENSED PATENT
RIGHTS; or b) the design, manufacture, distribution, or use of
any LICENSED PRODUCTS, LICENSED PROCESSES or materials by
LICENSEE, or other products or processes developed in
connection with or arising out of the LICENSED PATENT RIGHTS.
LICENSEE agrees to maintain a liability insurance program
consistent with sound business practice.
13. TERM, TERMINATION, AND MODIFICATION OF RIGHTS
13.01 This AGREEMENT is effective when signed by all parties and
shall extend to the expiration of the last to expire of the
LICENSED PATENT RIGHTS unless sooner terminated as provided in
this Article 13.
13.02 In the event that LICENSEE is in default in the performance of
any material obligations under this AGREEMENT, including but
not limited to the obligations listed in Article 13.05, and if
the default has not been remedied within ninety (90) days
after the date of notice in writing of such default, PHS may
terminate this AGREEMENT by written notice and pursue
outstanding amounts owed through procedures provided by the
Federal Debt Collection Act.
13.03 In the event that LICENSEE becomes insolvent, files a petition
in bankruptcy, has such a petition filed against it,
determines to file a petition in bankruptcy, or receives
notice of a third party's intention to file an involuntary
petition in bankruptcy, LICENSEE shall immediately notify PHS
in writing. Furthermore, PHS shall have the right to terminate
this AGREEMENT immediately upon LICENSEE'S receipt of written
notice.
13.04 LICENSEE shall have a unilateral right to terminate this
AGREEMENT and/or any licenses in any country or territory by
giving PHS sixty (60) days written notice to that effect.
13.05 PHS shall specifically have the right to terminate or modify,
at its option, this AGREEMENT, if PHS determines that
the LICENSEE: 1) is not executing the COMMERCIAL DEVELOPMENT
PLAN submitted with its request for a license and the LICENSEE
cannot otherwise demonstrate to PHS's satisfaction that the
LICENSEE has taken, or can be expected to take within a
reasonable time, effective steps to achieve PRACTICAL
APPLICATION of the LICENSED PRODUCTS or LICENSED PROCESSES; 2)
has not achieved the BENCHMARKS as may be modified under
Paragraph 9.02; 3) has willfully made a false statement of, or
willfully omitted, a material fact in the license application
or in any report required by the license AGREEMENT; 4) has
committed a material breach of a covenant or agreement
contained in the license; 5) is not keeping LICENSED PRODUCTS
or LICENSED PROCESSES reasonably available to the public after
commercial use commences; 6) cannot reasonably satisfy unmet
health and safety needs; or 7) cannot reasonably justify a
failure to comply with the domestic production requirement of
Paragraph 5.02 unless waived. In making this determination,
PHS will take into account the normal course of such
commercial development programs conducted with sound and
reasonable business practices and judgment and the annual
reports submitted by LICENSEE under Paragraph 9.02. Prior to
invoking this right, PHS shall give written notice to LICENSEE
providing LICENSEE specific notice of, and a ninety (90) day
opportunity to respond to, PHS's concerns as to the previous
items 1) to 7). If LICENSEE fails to alleviate PHS's concerns
as to the previous items 1) to 7) or fails to initiate
corrective action to PHS's satisfaction, PHS may terminate
this AGREEMENT.
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<PAGE>
13.06 When the public health and safety so require, and after
written notice to LICENSEE providing LICENSEE a sixty (60) day
opportunity to respond, PHS shall have the right to require
LICENSEE to grant sublicenses to responsible applicants, on
reasonable terms, in any LICENSED FIELDS OF USE under the
LICENSED PATENT RIGHTS, unless LICENSEE can reasonably
demonstrate that the granting of the sublicense would not
materially increase the availability to the public of the
subject matter of the LICENSED PATENT RIGHTS. PHS will not
require the granting of a sublicense unless the responsible
applicant has first negotiated in good faith with LICENSEE.
13.07 PHS reserves the right according to 35 U.S.C. section
209(f)(4) to terminate or modify this AGREEMENT if it is
determined that such action is necessary to meet requirements
for public use specified by federal regulations issued after
the date of the license and such requirements are not
reasonably satisfied by LICENSEE.
13.08 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to modify or terminate this AGREEMENT,
LICENSEE may, consistent with the provisions of 37 CFR 404.11,
appeal the decision by written submission to the designated
PHS official. The decision of the designated PHS official
shall be the final agency decision. LICENSEE may thereafter
exercise any and all administrative or judicial remedies that
may be available.
13.09 Within ninety (90) days of expiration or termination of this
AGREEMENT under this Article 13, a final report shall be
submitted by LICENSEE. Any royalty payments, including those
incurred but not yet paid (such as the full minimum annual
royalty), and those related to patent expense, due to PHS
shall become immediately due and payable upon termination or
expiration. If terminated under this Article 13, sublicensees
may elect to convert their sublicenses to direct licenses with
PHS pursuant to Paragraph 4.03. Unless otherwise specifically
provided for under this AGREEMENT, upon termination or
expiration of this AGREEMENT, LICENSEE shall return all
LICENSED PRODUCTS or other materials included within the
LICENSED PATENT RIGHTS to PHS or provide PHS with
certification of the destruction thereof.
14. GENERAL PROVISIONS
------------------
14.01 Neither Party may waive or release any of its rights or
interests in this AGREEMENT except in writing. The failure of
the GOVERNMENT to assert a right hereunder or to insist upon
compliance with any term or condition of this AGREEMENT shall
not constitute a waiver of that right by the GOVERNMENT or
excuse a similar subsequent failure to perform any such term
or condition by LICENSEE.
14.02 This AGREEMENT constitutes the entire agreement between the
Parties relating to the subject matter of the LICENSED PATENT
RIGHTS, and all prior negotiations, representations,
agreements, and understandings are merged into, extinguished
by, and completely expressed by this AGREEMENT.
14.03 The provisions of this AGREEMENT are severable, and in the
event that any provision of this AGREEMENT shall be determined
to be invalid or unenforceable under any controlling body of
law, such determination shall not in any way affect the
validity or enforceability of the remaining provisions of this
AGREEMENT.
14.04 If either Party desires a modification to this AGREEMENT, the
Parties shall, upon reasonable notice of the proposed
modification by the Party desiring the change, confer in good
faith to determine the desirability of such modification. No
modification will be effective until a written amendment is
signed by the signatories to this AGREEMENT or their
designees.
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<PAGE>
14.05 The construction, validity, performance, and effect of this
AGREEMENT shall be governed by Federal law as applied by the
Federal courts in the District of Columbia.
14.06 All notices required or permitted by this AGREEMENT shall be
given by prepaid, first class, registered or certified mail or
by an express/overnight delivery service provided by a
commercial carrier, properly addressed to the other Party at
the address designated on the following Signature Page, or to
such other address as may be designated. In writing by such
other Party. Notices shall be considered timely if such
notices are received on or before the established deadline
date or sent on or before the deadline date as verifiable by
U.S. Postal Service postmark or dated receipt from a
commercial carrier. Parties should request a legibly dated
U.S. Postal Service postmark or obtain a dated receipt from a
commercial carrier or the U.S. Postal Service. Private metered
postmarks shall not be acceptable as proof of timely mailing.
14.07 This AGREEMENT shall not be assigned by LICENSEE except: a)
with the prior written consent of PHS, such consent not to be
withheld unreasonably; or b) as part of a sale or transfer of
substantially the entire business of LICENSEE relating to
operations which concern this AGREEMENT. LICENSEE shall notify
PHS within ten (10) days of any assignment of this AGREEMENT
by LICENSEE, and LICENSEE shall pay PHS, as an additional
royalty, one percent (1%) of the fair market value of any
consideration received for any assignment of this AGREEMENT
within thirty (30) days of such assignment.
14.08 LICENSEE agrees in its use of any PHS-supplied materials to
comply with all applicable statutes, regulations, and
guidelines, including PHS and DHHS regulations and guidelines.
LICENSEE agrees not to use the materials for research
involving human subjects or clinical trials in the United
States without complying with 21 CFR Part 50 and 45 CFR Part
46. LICENSEE agrees not to use the materials for research
involving human subjects or clinical trials outside of the
United States without notifying PHS, in writing, of such
research or trials and complying with the applicable
regulations of the appropriate national control authorities.
Written notification to PHS of research involving human
subjects or clinical trials outside of the United States shall
be given no later than sixty (60) days prior to commencement
of such research or trials.
14.09 LICENSEE acknowledges that it is subject to and agrees to
abide by the United States laws and regulations (including the
Export Administration Act of 1979 and Arms Export Control Act)
controlling the export of technical data, computer software,
laboratory prototypes, biological material, and other
commodities. The transfer of such items may require a license
from the cognizant Agency of the U.S. GOVERNMENT or written
assurances by LICENSEE that it shall not export such items to
certain foreign countries without prior approval of such
agency. PHS neither represents that a license is or is not
required or that, if required, it shall be issued.
14.10 LICENSEE agrees to mark the LICENSED PRODUCTS or their
packaging sold in the United States with all applicable U.S.
patent numbers and similarly to indicate "Patent Pending"
status. All LICENSED PRODUCTS manufactured in, shipped to, or
sold in other countries shall be marked in such a manner as to
preserve PHS patent rights in such countries.
14.11 By entering into this AGREEMENT, PHS does not directly or
indirectly endorse any product or service provided, or to be
provided, by LICENSEE whether directly or indirectly related
to this AGREEMENT. LICENSEE shall not state or imply that this
AGREEMENT is an endorsement by the GOVERNMENT, PHS, any other
GOVERNMENT organizational unit, or any GOVERNMENT employee.
Additionally, LICENSEE shall not use the names of NIH, CDC,
PHS, or DHHS or the GOVERNMENT or their employees in any
advertising, promotional, or sales literature without the
prior written consent of PHS.
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<PAGE>
14.12 The Parties agree to attempt to settle amicably any
controversy or claim arising under this AGREEMENT or a breach
of this AGREEMENT, except for appeals of modifications or
termination decisions provided for in Article 13. LICENSEE
agrees first to appeal any such unsettled claims or
controversies to the designated PHS official, or designee,
whose decision shall be considered the final agency decision.
Thereafter, LICENSEE may exercise any administrative or
judicial remedies that may be available.
14.13 Nothing relating to the grant of a license, nor the grant
itself, shall be construed to confer upon any person any
immunity from or defenses under the antitrust laws or from a
charge of patent misuse, and the acquisition and use of rights
pursuant to 37 CFR Part 404 shall not be immunized from the
operation of state or Federal law by reason of the source of
the grant.
14.14 Paragraphs 4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09,
and 14.12 of this Agreement shall survive termination of this
Agreement.
SIGNATURES BEGIN ON NEXT PAGE
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<PAGE>
PHS PATENT LICENSE AGREEMENT-EXCLUSIVE
SIGNATURE PAGE
For PHS:
/s/ Signature Illegible 01/07/00
--------
Jack Spiegel, Ph.D. Date
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852-3804 U.S.A.
For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):
by:
/s/ Signature Illegible 1/8/00
------
Signature of Authorized Official Date
Thomas E. Smart
---------------
Printed Name
Vice President, Corporate Development
-------------------------------------
Title
Official and Mailing Address for Notices:
GenVec, Inc
-----------
65 West Watkins Mill Road
-------------------------
Gaithersburg, MD 20878
----------------------
Attention: President
--------------------
Copies to: Vice President, Corporate Development
------------------------------------------------
Any false or misleading statements made, presented, or submitted to the
GOVERNMENT, including any relevant omissions, under this AGREEMENT and during
the course of negotiation of this AGREEMENT are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. sections 3801-3812
(civil liability) and 18 U.S.C. section 1001 (criminal liability including
fine(s) and/or imprisonment).
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<PAGE>
APPENDIX A--PATENT(S) OR PATENT APPLICATION(S)
PATENT(S) OR PATENT APPLICATION(S):
*
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<PAGE>
APPENDIX B-LICENSED FIELDS OF USE AND TERRITORY
LICENSED FIELDS OF USE:
Gene Therapy for Ocular Diseases, including but not limited to, macular
degeneration, cancer, diabetic retinopathy, ocular histoplasmosis syndrome, and
retinopathy associated with neovascularization in neonatals.
Licensed Territory:
Worldwide
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
APPENDIX C-Royalties
ROYALTIES:
I. License Issue/Execution Royalty pursuant to Paragraph 6.01:
-------------------------------
LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty in the amount of * which is due upon
execution of this AGREEMENT. This * is to be paid within
thirty (30) days of the EFFECTIVE DATE of this AGREEMENT.
II. Minimum Annual Royalty pursuant to Paragraph 6.02:
----------------------
LICENSEE agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of:
*
III. Earned Royalties pursuant to Paragraph 6.03.
----------------
LICENSEE agrees to pay PHS earned royalties on NET SALES of by or on behalf of
LICENSEE and its sublicensees as follows:
(A) * on NET SALES of LICENSED PRODUCTS manufactured or sold
in a country within the LICENSED TERRITORY, where a patent application or
patent, within the Licensed Patent Rights, exists pursuant to Article 6 and
while this AGREEMENT is in force.
For Earned Royalties on NET SALES due under this, Section III, in the event
there is no issued valid patent claim in the LICENSED PATENT RIGHTS covering
such LICENSED PRODUCTS in a given country but there is a pending claim within
the LICENSED PATENT RIGHTS covering such LICENSED PRODUCTS, the royalties set
forth in paragraph (A) of this Section shall be reduced by fifty percent (50.0%)
(hereinafter the "Patent Pending Reduction") until the date when such pending
claims are allowed for issuance by the appropriate authority of said given
country. The Patent Pending Reduction will not apply to royalties from a sale of
LICENSED PRODUCT(S) in a country where the LICENSED PRODUCT(S) are not covered
by a valid issued patent claim but where such LICENSED PRODUCTS were
manufactured in a country where the LICENSED PRODUCT(S) or LICENSED PROCESS(ES)
are covered by a valid issued patent claim.
IV. Benchmark Royalties pursuant to Paragraph 6.04:
-------------------
LICENSEE agrees to pay PHS Benchmark Royalties as follows:
(A) *
(B) *
(C) * and
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<PAGE>
(D) *
V. Sublicensing Royalties pursuant to Paragraph 6.05:
----------------------
LICENSEE agrees to pay PHS additional Sublicensing Royalties as follows:
(A) * of the following sublicensing royalties/fees
received by LICENSEE from the sublicensing of
the LICENSED PATENT RIGHTS: (i) execution/up front
royalties/fees; (ii) minimum annual royalties/fees; and (iii)
benchmark/milestone royalties; and
(B) In the event LICENSEE enters into a Corporate Partnership,
as defined in Paragraph 2.21 herein, PHS shall receive no less
than * as its share of the execution/up front royalties,
pursuant to Paragraph V(A), received by LICENSEE pursuant to
the CORPORATE PARTNERSHIP sublicense said royalties pursuant
to this paragraph (B) payable within thirty (30) days of the
Effective Date of such agreement establishing a CORPORATE
PARTNERSHIP.
Such sublicensing royalties/fees do not include royalties/fees received by
LICENSEE (i) for the purchase of equity, (ii) debt financing, (iii) funds for
future research and/or development, (iv) the license or sublicense of
intellectual property other than the LICENSED PRODUCT(S), or (v) reimbursement
for patent or other intellectual property expenses incurred by LICENSEE in
connection with LICENSED PRODUCTS, or (vi) reimbursement for other expenses
incurred by LICENSEE in connection with LICENSED PRODUCTS, said other expenses
being subject to the prior approval by PHS such approval not being reasonably
withheld. Additionally, payments by LICENSEE to PHS for Benchmark Royalties as
set forth above in this Appendix C, Section IV shall be fully creditable against
amounts due PHS, under this Section V, for the same benchmarks (for example, if
PHS is due a payment under Section IV, Paragraph (A) then this amount, *
may be deducted from (credited against) any payment received from a sublicensee
for this same benchmark prior to calculating the royalty due under this
Paragraph V(A)).
VI. Past Patent Expenses Royalty pursuant to Paragraph 6.09:
----------------------------
LICENSEE agrees to pay PHS an amount equal to one-quarter (1/4) of the total
amount of patent expenses previously incurred by PHS and which is due upon
execution of this AGREEMENT. This royalty for PAST PATENT EXPENSES is to be paid
in four (4) equal installments according to the following schedule:
(A) First Installment which is payable within thirty (30) days
of the Effective Date of this AGREEMENT;
(B) Second Installment which is payable on January 30, 2001;
(C) Third Installment which is payable on January 30, 2002;
and
(D) Fourth Installment which is payable on January 30, 2003.
VII. Materials Transfer Royalty pursuant to Paragraph 6.13:
--------------------------
LICENSEE agrees to pay PHS a materials transfer royalty in the
amount of * which is due upon the EFFECTIVE DATE of this
AGREEMENT and which is payable within thirty days (30) days of
the EFFECTIVE DATE of this AGREEMENT.
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<PAGE>
APPENDIX D-MODIFICATIONS
PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this AGREEMENT:
Article 1:
----------
Paragraph 1.02 is amended to read as follows:
1.02 By assignment of rights from PHS employees and other
inventors, DHHS, on behalf of the United States Government,
owns intellectual property rights claimed in any United States
and/or foreign patent applications or patents corresponding to
the assigned inventions. DHHS also owns any tangible
embodiments of these inventions actually reduced to practice
by PHS. In addition, PHS, through its Interinstitutional
Agreement with the University of Southern California ("USC"),
L-221-94/2, effective January 4, 1999, has an exclusive
license to certain intellectual property rights claimed in any
United States and/or foreign patent applications or patents
which are the subject of said Interinstitutional Agreement.
Article 2:
----------
Paragraph 2.03 is amended to read as follows:
2.03 "FIRST COMMERCIAL SALE" shall mean, with respect to any
LICENSED PRODUCT(S) on a country by country basis, the first
transfer of such LICENSED PRODUCT(S), by or on behalf of
LICENSEE or its sublicensees, for use or consumption of such
LICENSED PRODUCT(S) following approval by the United States
Food and Drug Administration (FDA) or comparable regulatory
authority in exchange for cash or some equivalent to which
value can be assigned for the purpose of determining NET
SALES. A transfer of the LICENSED PRODUCT(S) by LICENSEE or
its sublicensees (a) solely for research and development
purposes and for the purpose of directly enabling LICENSEE and
its sublicensees to research and develop LICENSED PRODUCT(S)
under this AGREEMENT and/or (b) prior to LICENSEE's receipt of
approval of a Biologics License Application (BLA), Product
License Application (PLA), New Drug Application (NDA) or
equivalent by the FDA or comparable regulatory authority of
any other country for the use of such LICENSED PRODUCT(S)
shall not be considered a FIRST COMMERCIAL SALE in the
applicable country.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE>
Paragraphs 2.06 through 2.08 are amended to read as follows:
2.06 "LICENSED PATENT RIGHTS" shall mean:
a) Patent applications (including provisional patent
applications and PCT patent applications) and/or
patents listed in Appendix A, all divisions and
continuations of these applications, all patents
issuing from such applications, divisions, and
continuations, and any reissues, reexaminations, and
extensions of all such patents;
b) to the extent that the following contain one or more
claims directed to the invention or inventions
disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these
continuations-in-part; iii) all patents issuing from
such continuations-in-part, divisions, and
continuations; iv) priority patent application(s) of
a) above; and v) any reissues, reexaminations, and
EXTENSIONS OF ALL SUCH PATENTS;
c) to the extent that the following contain one or more
claims directed to the invention or inventions
disclosed in a) above: all counterpart foreign and
U.S. patent applications and patents to a) and b)
above, including those listed in Appendix A.
LICENSED PATENT RIGHTS shall not include those claims in b) or
c) above that are directed to new matter which is not the
subject matter disclosed in a) above, unless the applicable
claims further characterize the subject matter disclosed in
a).
2.07 "LICENSED PROCESS(ES)" means processes which, in the course of
being practiced would, in the absence of this Agreement,
infringe one or more claims of the LICENSED PATENT RIGHTS that
have not been held invalid or unenforceable by an unappealed
or unappealable judgment of a court of competent jurisdiction
or is otherwise expired.
2.08 "LICENSED PRODUCT(S)" means (a) tangible materials which, in
the course of manufacture, use, offer to sell, sale, or
importation would, in the absence of this Agreement, infringe
one or more claims of the LICENSED PATENT RIGHTS that have not
been held invalid or unenforceable by an unappealed or
unappealable judgment of a court of competent jurisdiction or
is otherwise expired or (b) any tangible materials, including
all progeny, subclones, and derivatives or conjugates thereof,
as defined below in paragraph 2.19 as LICENSED MATERIALS.
Paragraph 2.10 is amended to read as follows:
2.10 "NET SALES" means the total gross amounts received by LICENSEE
and sublicensees for LICENSED PRODUCTS sold in the FIRST
COMMERCIAL SALE and subsequent commercial sales, less the
following amounts directly chargeable to such LICENSED
PRODUCTS: (a) customary trade, quantity or cash discounts and
rebates actually allowed and taken; (b) amounts repaid or
credited to customers on account of rejections; (c) freight
and other transportation costs, including insurance charges,
and duties, tariffs, sales and excise taxes and other
governmental charges based on sales, turnover or delivery of
such LICENSED PRODUCTS and actually paid or allowed by
LICENSEE or any sublicensee; and (d) amounts actually allowed
or credited due to returns or uncollectible amounts. No
deductions shall be made for commissions paid to individuals,
whether they be with independent sales agencies or regularly
employed by LICENSEE, or sublicensees, and on its payroll or
for the cost of collections.
PHS Patent License Agreement--Exclusive CONFIDENTIAL L-180-97/0 Model 980611
Page 22 of 38 Final GenVec, Inc. January 7, 2000
<PAGE>
The following new Paragraphs 2.13 through 2.22 are added to read as follows:
2.13 GENE THERAPY means the introduction of a gene and/or variants
of said gene into a person for therapeutic purposes (i) by in
vivo introduction for incorporation into cells of such person
or (ii) by ex vivo introduction into cells for transfer into a
person
2.14 "PERSON" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of
entity not specifically listed herein.
2.15 "AFFILIATE(S)" shall mean, with respect to LICENSEE, any other
Person which during the term of this AGREEMENT controls, is
controlled by or is under common control with LICENSEE, but
for only so long as such PERSON controls, is controlled by or
is under common control with LICENSEE. For this purpose,
control means the possession of the power to direct or cause
the direction of the management and the policies of an entity,
whether through ownership directly or indirectly of fifty
percent (50%) or more of the stock entitled to vote, and for
non-stock organizations, the right to receive fifty percent
(50%) or more of the profits by contract or otherwise, or
where control of fifty percent (50%) or more of such rights is
not permitted in the country where such Person exists, the
maximum permitted in such a country.
2.16 "ACTIVE THERAPEUTIC AGENT(S)" means DNA or other component,
which could or does directly or indirectly impart a separate
and distinct therapeutic benefit to the recipient.
2.17 "COMBINATION PRODUCT(S)" means LICENSED PRODUCT(S) that are
sold in combination with one or more, ACTIVE THERAPEUTIC
AGENT(S) which are not LICENSED PRODUCT(S).
2.18 "VALID CLAIM(S)" means either (a) a claim of an issued and
unexpired patent included within the LICENSED PATENT RIGHTS,
which has not been held invalid by an unappealable or
unappealed within the time limit allowed for appeal, decision
of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time limit
allowed for appeal or (b) a claim of a pending patent
application included within the LICENSED PATENT RIGHTS, which
claim has not been abandoned without the possibility of
revival or pursued through a timely filed continuation or
divisional application or finally disallowed without the
possibility of appeal.
2.19 "LICENSED MATERIALS" means the plasmid phiFS17, as described
in Steele, FR, et al., "Pigment epithelium-derived factor:
Neurotrophic activity and identification as a member of the
serine protease inhibitor gene family" PNAS, USA 90(4):
1526-1530 (Feb. 15, 1993) which contains the cDNA encoding
human Pigment Epithelium Derived Factor.
2.20 "EFFECTIVE DATE" means the date of the last signature of a
Party to this AGREEMENT.
2.21 "CORPORATE PARTNERSHIP" means an agreement entered into by
LICENSEE with a corporate entity pursuant to which Licensee
grants to such an entity a sublicense under the LICENSED
PATENT RIGHTS, which agreement provides that Licensee shall
receive in excess of * in payments from such entity within
a * period in exchange for such rights.
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<PAGE>
2.22 "TOTAL PRO RATA SHARE" means the total number of additional
licenses granted by PHS which include the LICENSED PATENT
RIGHTS and which have LICENSED FIELDS OF USE which include but
are not necessarily limited to therapeutic applications
divided by the total number of licenses granted by PHS which
include the LICENSED PATENT RIGHTS and which have LICENSED
FIELDS OF USE which include but are not necessarily limited to
therapeutic applications. For example, if PHS has granted 4
additional licenses which include the LICENSED PATENT RIGHTS
and which have LICENSED FIELDS OF USE which include, but are
not necessarily limited to therapeutic applications, then the
TOTAL PRO RATA SHARE would be four fifths (4/5).
Article 3:
----------
Paragraph 3.02 is amended to read as follows:
3.02 This AGREEMENT confers no license or rights by implication,
estoppel, or otherwise under any patent applications or
patents of PHS other than LICENSED PATENT RIGHTS regardless of
whether such patents are dominant or subordinate to LICENSED
PATENT RIGHTS, except as set forth in Paragraphs 12.01, 13.05,
and 13.07.
Article 4:
----------
Paragraphs 4.02 through 4.03 are amended to read as follows:
4.02 LICENSEE agrees that any sublicenses granted by it shall
provide that the obligations to PHS and USC of Paragraphs
5.01-5.04, 8.01, 9.07, 10.01, 10.02, 10.04, 12.05, and
13.07-13.09 of this AGREEMENT shall be binding upon the
sublicensee as if it were a Party to this AGREEMENT. LICENSEE
further agrees to attach copies of these Paragraphs to all
sublicense agreements.
4.03 Any sublicenses granted by LICENSEE shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensees and PHS, at the option of
the sublicensee, upon termination of this AGREEMENT under
Article 13. Such conversion is subject to PHS approval, which
shall not be withheld unless the sublicensee is in default
under this, or a separate agreement with the GOVERNMENT and
has not cured such default within ninety (90) days of
notification thereof or is debarred from doing business with
the GOVERNMENT, and contingent upon acceptance by the
sublicensee of the remaining provisions of this AGREEMENT.
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<PAGE>
Article 5:
----------
Paragraphs 5.01 through 5.02 are amended to read as follows:
5.01 (a) PHS reserves on behalf of the Government an
irrevocable, nonexclusive, nontransferable,
royalty-free license for the practice of all
inventions licensed under the LICENSED PATENT RIGHTS
throughout the world by or on behalf of the
GOVERNMENT and on behalf of any foreign government or
international organization pursuant to any existing
or future treaty or agreement to which the GOVERNMENT
is a signatory. Prior to the FIRST COMMERCIAL SALE,
and upon request, by the GOVERNMENT, LICENSEE agrees
to provide PHS reasonable quantities of LICENSED
PRODUCTS or materials made through the LICENSED
PROCESSES for PHS research use. LICENSEE shall be
obligated to provide such reasonable quantities only
if such quantities are already manufactured or plan
to be manufactured and are not committed, or
anticipated to be committed, to LICENSEE'S research
and development activities or to a third Party.
(b) In the event that LICENSED PATENT RIGHTS are Subject
Inventions made under a Cooperative Research and
Development Agreement (CRADA), LICENSEE grants to the
GOVERNMENT, pursuant to 15 U.S.C. 3710a(b)(1)(A), a
nonexclusive, nontransferable, irrevocable, paid-up
license to practice LICENSED PATENT RIGHTS or have
LICENSED PATENT RIGHTS practiced throughout the world
by or on behalf of the GOVERNMENT. In the exercise of
such license, the GOVERNMENT shall not publicly
disclose trade secrets or commercial or financial
information that is privileged or confidential within
the meaning of 5 U.S.C. 552(b)(4) or which would be
considered as such if it had been obtained from a
non-Federal Party. Prior to the FIRST COMMERCIAL
SALE, and upon request by the GOVERNMENT, LICENSEE
agrees to provide PHS reasonable quantities of
LICENSED PRODUCTS or materials made through the
LICENSED PROCESSES for PHS research use. LICENSEE
shall be obligated to provide such reasonable
quantities only if such quantities are already
manufactured or plan to be manufactured and are not
committed, or anticipated to be committed, to
LICENSEE'S research and development activities or to
a third Party.
5.02 LICENSEE agrees that components of LICENSED PRODUCTS or
LICENSED PRODUCTS used or sold in the United States embodying
LICENSED PATENT RIGHTS or produced through use of LICENSED
PROCESSES shall be manufactured substantially in the United
States, unless a written waiver is obtained in advance from
PHS.
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<PAGE>
Paragraph 5.04(a) is amended to read as follows:
5.04 (a) In addition to the reserved license of Paragraph
5.01 above, PHS reserves the right to grant
nonexclusive RESEARCH LICENSES to make and to use,
but not to sell or have sold, the inventions defined
by the LICENSED PATENT RIGHTS for purposes of
research involving the inventions themselves, and not
for purposes of commercial manufacture or use or in
lieu of purchase if the inventions are available as
commercial products for research purposes. The
purpose of this license is to encourage basic
research, whether conducted at an academic or
corporate facility. In order to safeguard the
LICENSED PATENT RIGHTS, however, PHS shall consult
with LICENSEE before granting to commercial entities
a RESEARCH LICENSE or providing to them research
samples of materials claimed in LICENSED PATENT
RIGHTS. In the event LICENSEE can provide convincing
written evidence to PHS that a commercial entity that
has been granted a RESEARCH LICENSE TO LICENSED
PATENT RIGHTS is developing the inventions for
commercial manufacture or use or in lieu of purchase
if the inventions are available as commercial
products, then LICENSEE can request that PHS
terminate its RESEARCH LICENSE with such commercial
entities, such request not to be unreasonably denied.
Paragraph 5.04(b) is deleted in its entirety.
Article 6:
----------
Paragraph 6.01 is amended to read as follows:
6.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C.
Paragraphs 6.06 through 6.11 are amended to read as follows:
6.06 A patent or patent application licensed under this AGREEMENT
shall cease to fall within the LICENSED PATENT RIGHTS for the
purpose of computing earned royalty payments in any given
country on the earliest of the dates that a) the application
has been abandoned and not continued, b) the patent expires or
irrevocably lapses, or c) all of the claims have been held to
be invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or
administrative agency.
6.07 No multiple royalties shall be payable because any LICENSED
PRODUCTS or LICENSED PROCESSES are covered by more than one
claim of the LICENSED PATENT RIGHTS.
6.08 On sales of LICENSED PRODUCTS by LICENSEE or sublicensees made
in other than an arm's-length transaction, the value of the
NET SALES attributed under this Article 6 to such a
transaction shall be that which would have been received in an
arm's-length transaction, based on sales of like quantity and
quality products on or about the time of such transaction.
6.09 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS or USC prior to the EFFECTIVE DATE of
this AGREEMENT, LICENSEE shall pay to PHS, as an additional
Past Patent Expenses Royalty, an amount as set forth in
Appendix C.
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<PAGE>
6.10 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance, including interferences,
opposition, reissues and reexaminations, of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS on or after the EFFECTIVE DATE of this
AGREEMENT PHS, at its sole option, may require LICENSEE:
(a) to pay PHS on an annual basis, within sixty (60) days of
PHS's submission of a statement and request for payment, and
subject to the provisions of Paragraph 6.12 herein, a royalty
amount equivalent to one quarter (1/4) of all such patent
expenses incurred during the previous calendar year(s) or, in
the event that PHS has granted more than three (3) additional
licenses which have LICENSED FIELDS OF USE which include but
are not necessarily limited to therapeutic applications,
LICENSEE shall pay a pro rata share of such patent expenses
where such pro rata share is determined by the number of
licensees to the LICENSED PATENT RIGHTS which have LICENSED
FIELD OF USE which include but are not necessarily limited to
therapeutic applications; or
(b) to pay such expenses, in the amounts set forth in (a)
above, directly to the law firm employed by PHS to handle such
functions. However, in such event, PHS and not LICENSEE shall
be the client of such law firm.
In limited circumstances, as provided for under Paragraph 7.02
below, LICENSEE may be given the right to assume
responsibility for the preparation, filing, prosecution, or
maintenance, including interferences, oppositions, reissues
and reexaminations, of any patent application or patent
included with the LICENSED PATENT RIGHTS. In that event,
LICENSEE shall directly pay the attorneys or agents engaged to
prepare, file, prosecute, or maintain such patent applications
or patents and shall provide to PHS copies of each invoice
associated with such services as well as documentation that
such invoices have been paid. In the event that LICENSEE is
given the right to assume responsibility for the preparation,
filing, prosecution, or maintenance of any patent application
or patent included within the LICENSED PATENT RIGHTS pursuant
to Paragraph 7.02 herein LICENSEE may (i) if PHS has granted
three (3) or fewer additional licenses which include the
LICENSED PATENT RIGHTS and which have LICENSED FIELDS OF USE
which include but are not necessarily limited to therapeutic
applications, credit an amount equal to three quarters (3/4)
of the expenses paid by LICENSEE under this Paragraph against
royalties due under Paragraphs 6.03 (Earned Royalties), 6.04
(Benchmark Royalties), and/or 6.05 (Sublicensing Royalties) of
this AGREEMENT or (ii) if PHS has granted more than three (3)
additional licenses which include the LICENSED PATENT RIGHTS
and which have LICENSED FIELDS OF USE which include but are
not necessarily limited to therapeutic applications, credit an
amount equal to the TOTAL PRO RATA SHARE of the expenses paid
by LICENSEE under this Paragraph, against royalties due under
Paragraph 6.03 (Earned Royalties), 6.04 (Benchmark Royalties),
and/or 6.05 (Sublicensing Royalties) of this Agreement. Prior
to taking this credit Licensee shall provide to PHS copies of
each invoice associated with such services as well as
documentation that such invoices have been paid.
6.11 LICENSEE may elect to surrender its rights in any country of
the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
sixty (60) days written notice to PHS and owe no payment
obligation under Article 6.10 for patent-related expenses
incurred in that country after sixty (60) days of the
effective date of such written notice.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0 Model 980611
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<PAGE>
New Paragraphs 6.12 through 6.14 are added to read as follows:
6.12 In the event that any of the patent applications or patents
within the LICENSED PATENT RIGHTS are subject to an
interference, reexamination, reissue, opposition proceeding,
or equivalent thereof LICENSEE agrees to pay a pro rata share
of the expenses incurred by PHS in such a proceeding where
said pro rata share is determined by the total number of
licenses granted by PHS which include the patent or patent
application subject to the interference, reexamination,
reissue, opposition proceeding, or equivalent thereof within
the LICENSED PATENT RIGHTS and where said license includes but
is not necessarily limited to therapeutic applications in its
LICENSED FIELD OF USE. In the event that at the time of the
interference, opposition, reexamination, reissue, opposition
proceeding PHS has granted less than a total of four (4)
licenses which include a therapeutic application in their
LICENSED FIELD OF USE LICENSEE may take, as a credit against
royalties due under Paragraph 6.03 (Earned Royalties),
Paragraph 6.04 (Benchmark Royalties) and/or Paragraph 6.05
(Sublicensing Royalties) their pro rata share of expenses
which shall be the amount in excess of one quarter (1/4) of
the expenses incurred under this Paragraph.
6.13 LICENSEE agrees to pay PHS a noncreditable, nonrefundable
Materials Transfer Royalty for providing LICENSED MATERIALS as
set forth in Appendix C.
6.14 In the event LICENSEE or sublicensee sells COMBINATION
PRODUCT(S), NET SALES from such sales for the purposes of
calculating the amount due under Paragraph 6.03 of this
AGREEMENT shall be calculated by multiplying the NET SALES of
that combination by the fraction A/(A+B), where A is the gross
selling price of the LICENSED PRODUCTS sold separately and B
is the gross selling price of the ACTIVE THERAPEUTIC AGENT(S)
of the LICENSED PRODUCT sold separately. In the event that no
such separate sales are made by LICENSEE or sublicensee, NET
SALES receipts for royalty determination pursuant to Paragraph
6.03 shall be reasonably allocated by LICENSEE or sublicensee
between the LICENSED PRODUCTS and the ACTIVE THERAPEUTIC
AGENTS of the LICENSED PRODUCT based upon their relative
importance to the efficacy of using the COMBINED PRODUCTS and
upon their contribution to the proprietary position of the
COMBINED PRODUCTS. In the event PHS believes such allocation
is inequitable and the parties are unable to resolve such
dispute, the matter may be resolved through Administrative
Dispute Resolution as required by the Administrative Dispute
Resolution Act.
Article 7:
----------
Paragraphs 7.01 through 7.04 are amended to read as follows:
7.01 Except as otherwise provided in this Article 7, PHS agrees to
take responsibility for, but to consult with, the LICENSEE in
the preparation, filing, prosecution, and maintenance,
including interferences, oppositions, reissues and
reexaminations, of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS and shall furnish
copies of relevant patent-related documents, including all
communications filed with or received from a competent
examining authority, for example, the USPTO, the EPO, or the
JPO, to LICENSEE.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0 Model 980611
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<PAGE>
7.02 Upon PHS's written request, LICENSEE may assume, but is not
obligated to assume, the responsibility for the preparation,
filing, prosecution, and maintenance, including interferences,
oppositions, reissues, and reexaminations of any and all
patent applications or patents included in the LICENSED PATENT
RIGHTS and shall on an ongoing basis promptly furnish copies
of all patent-related documents to PHS. In such event,
LICENSEE shall select registered patent attorneys or patent
agents to provide such services on behalf of LICENSEE and PHS.
PHS shall provide appropriate powers of attorney and other
documents necessary to undertake such actions to the patent
attorneys or patent agents providing such services. LICENSEE
and its attorneys or agents shall consult with PHS in all
aspects of the preparation, filing, prosecution and
maintenance, including interferences, oppositions, reissues,
and reexaminations of patent applications and patents included
within the LICENSED PATENT RIGHTS and shall provide PHS
sufficient opportunity to comment on any document that
LICENSEE intends to file or to cause to be filed with the
relevant intellectual property or patent office. In the event
that this AGREEMENT terminates for any reason, PHS shall take
and assume all responsibility for preparation and maintenance,
including interferences, oppositions, reissues, and
reexaminations of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS at its own expense
7.03 If LICENSEE exercises its rights pursuant to Paragraph 7.02
and assumes responsibilities pursuant to Paragraph 7.02 but
fails to exercise reasonable diligence, then PHS may provide
LICENSEE with written notice that PHS wishes to assume control
of the preparation, filing, prosecution and maintenance,
including interferences, oppositions, reissues and
reexaminations, of any and all patent applications or patents
included in the LICENSED PATENT RIGHTS. If PHS elects to
assume such responsibilities, LICENSEE agrees to cooperate
fully with PHS, its attorneys, and agents in the preparation,
filing, prosecution, and maintenance, including interferences,
oppositions, reissues, and reexaminations, of any and all
patent applications or patents included in the LICENSED PATENT
RIGHTS and to provide PHS with copies of any and all documents
or other materials that PHS deems necessary to undertake such
responsibilities. Licensee shall be responsible for all costs
associated with transferring patent prosecution
responsibilities to an attorney or agent of PHS's choice.
7.04 Each Party shall promptly inform the other as to all matters
that come to its attention that may affect the preparation,
filing, prosecution, or maintenance, including interferences,
oppositions, reissues, and reexaminations, of the LICENSED
PATENT RIGHTS and permit each other to provide comments and
suggestions with respect to the preparation, filing,
prosecution, and maintenance of LICENSED PATENT RIGHTS, which
comments and suggestions shall be considered by the other
Party.
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<PAGE>
Article 8:
----------
Paragraphs 8.01 through 8.02 are amended to read as follows:
8.01 LICENSEE agrees to keep accurate and correct records of
LICENSED PRODUCTS made, used, sold, or imported and LICENSED
PROCESSES practiced under this AGREEMENT appropriate to
determine the amount of royalties due PHS. Such records shall
be retained for at least three(3) years following a given
reporting period and shall be available during normal business
hours for inspection at the expense of PHS by an accountant or
other designated auditor selected by PHS for the sole purpose
of verifying reports and payments hereunder. The accountant or
auditors shall only disclose to PHS information relating to
the accuracy of reports and payments made under this
AGREEMENT. If an inspection shows an underreporting or
underpayment in excess of * for any twelve (12) month period,
then LICENSEE shall reimburse PHS for the cost of the
inspection at the time LICENSEE pays the unreported royalties,
including any late charges as required by Paragraph 9.08 of
this AGREEMENT. All payments required under this Paragraph
shall be due within thirty (30) days of the date PHS provides
LICENSEE notice of the payment due.
8.02 LICENSEE agrees to have an audit of sales and royalties
conducted, at the written request of PHS, by an independent
auditor selected by LICENSEE at least every two (2) years if
annual sales of the LICENSED PRODUCT or LICENSED PROCESSES are
over two (2) million dollars. The audit shall address, at a
minimum, the amount of gross sales by or on behalf of LICENSEE
during the audit period, terms of the license as to percentage
or fixed royalty to be remitted to the GOVERNMENT, the amount
of royalty funds owed to the GOVERNMENT under this AGREEMENT,
and whether the royalty amount owed has been paid to the
GOVERNMENT and is reflected in the records of the LICENSEE.
The audit shall also indicate the PHS license number, product,
and the time period being audited. A report certified by the
auditor shall be submitted promptly by the auditor directly to
PHS on completion. LICENSEE shall pay for the entire cost of
the audit.
Article 9:
----------
Paragraph 9.04 is amended to read as follows:
9.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty
report setting forth for the preceding half-year period the
amount of the LICENSED PRODUCTS sold or LICENSED PROCESSES
practiced by or on behalf of LICENSEE in each country within
the LICENSED TERRITORY on a product by product basis, the NET
SALES, and the amount of royalty accordingly due. With each
such royalty report, LICENSEE shall submit payment of the
earned royalties due. If no earned royalties are due to PHS
for any reporting period, the written report shall so state.
The royalty report shall be certified as correct by an
authorized officer of LICENSEE and shall include a detailed
listing of all deductions made under Paragraph 2.10 to
determine NET SALES made under Article 6 to determine
royalties due.
Paragraph 9.07 is amended to read as follows:
9.07 Either LICENSEE or sublicensee of LICENSEE shall be
responsible for determining if any tax on royalty income is
owned outside the United States and shall pay any such tax and
be responsible for all filings with appropriate agencies of
foreign governments.
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<PAGE>
Article 10:
-----------
Paragraphs 10.01 through 10.02 are amended to read as follows:
10.01 LICENSEE shall use its reasonable efforts to bring the
LICENSED PRODUCTS and LICENSED PROCESSES to PRACTICAL
APPLICATION. "Reasonable efforts" for the purposes of this
provision shall include adherence to the COMMERCIAL
DEVELOPMENT PLAN at Appendix F and performance of the
BENCHMARKS at Appendix E. The efforts of a sublicensee shall
be considered the efforts of LICENSEE for purposes of
Paragraph 10.01.
10.02 Upon the FIRST COMMERCIAL SALE, until the expiration of this
AGREEMENT, LICENSEE shall use its reasonable efforts to make
LICENSED PRODUCTS and LICENSED PROCESSES reasonably accessible
to the United States public.
New Paragraphs 10.03 through 10.04 are added to read as follows:
10.03 PHS agrees to provide LICENSEE with a sample of the LICENSED
MATERIALS within thirty (30) days after PHS receives the
payment of the Materials Transfer Royalty under Paragraph 6.13
and, at reasonable cost to Licensee, to replace them in the
event of their unintentional destruction by LICENSEE. LICENSEE
agrees to retain control over the LICENSED MATERIALS and shall
not distribute or release them to others, other than its
contract production facilities or in furtherance of reasonable
research and development activities to facilitate the ability
of LICENSEE to take advantage of the rights hereunder in a
manner which is not inconsistent with the practices and
procedures by which LICENSEE distributes their own proprietary
materials, without the prior written consent of PHS, except as
otherwise permitted by this AGREEMENT.
10.04 Because of the public investment in the research that
culminated in the LICENSED PATENT RIGHTS, LICENSEE
agrees, within a reasonable time after FIRST COMMERCIAL
SALE following regulatory approval for marketing LICENSED
PRODUCTS in the United States, to set pup an indigent
patient access program or to include in an existing
indigent patient access program LICENSED PRODUCTS. Under
the terms of LICENSEE'S indigent patient access program,
reasonable quantities in excess of commercially allocated
amounts of LICENSED PRODUCT(S) may be provided to qualified
indigent citizens of the United States who are not covered
under any public or private health plan. PHS encourages and
supports all contributions to the public good an thus
agrees that no earned royalties shall be due on such
donations of LICENSED PRODUCTS BY LICENSEE.
Article 11:
-----------
Paragraphs 11.01 through 11.04 are amended to read as follows:
11.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT
RIGHTS, as well as any facts which may affect the validity,
scope, or enforceability of the LICENSED PATENT RIGHTS of
which either Party becomes aware. PHS agrees to inform all
licensees about each infringement promptly upon receipt of
such information and to give the Licensee the opportunity to
confer with other licensees of LICENSED PATENT RIGHTS about
such infringement.
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<PAGE>
11.02 Pursuant to this AGREEMENT and the provisions of Chapter 29 of
title 35, United States Code, LICENSEE may, but is not obliged
to: a) bring suit in its own name, at its own expense, and on
its own behalf for infringement of presumably valid claims in
the LICENSED PATENT RIGHTS; b) in any such suit, enjoin
infringement and collect for its use, damages, profits, and
awards of whatever nature recoverable for such infringement;
and c) settle any claim or suit for infringement of the
LICENSED PATENT RIGHTS provided, however, that (1) PHS and
appropriate GOVERNMENT authorities shall have the first right
to take such actions and (2) that PHS has informed all other
licensees of LICENSED PATENT RIGHTS of the infringement
pursuant to Paragraph 11.01. If LICENSEE desires to initiate a
suit for patent infringement, LICENSEE shall notify PHS in
writing. If PHS does not notify LICENSEE of its intent to
pursue legal action within * days, LICENSEE will be free
to initiate suit. PHS shall have a continuing right to
intervene in such suit. LICENSEE shall take no action to
compel the GOVERNMENT either to initiate or to join in any
such suit for patent infringement. LICENSEE may request the
GOVERNMENT to initiate or join in any such suit if necessary
to avoid dismissal of the suit. Should the GOVERNMENT be made
a Party to any such suit, LICENSEE shall reimburse the
GOVERNMENT for any costs, expenses, or fees which the
GOVERNMENT incurs as a result of such motion or other action,
including any and all costs incurred by the GOVERNMENT in
opposing any such motion or other action. In all cases,
LICENSEE agrees to keep PHS reasonably apprised of the status
and progress of any litigation. Before LICENSEE commences an
infringement action, LICENSEE shall notify PHS and give
careful consideration to the views of PHS and to any potential
effects of the litigation on the public health in deciding
whether to bring suit. Notwithstanding the above, if LICENSEE
is not the sole claimant, excluding the GOVERNMENT, to a suit
for infringement, LICENSEE will bear only its pro rata share
as determined by the total number of claimants to such suit of
any such expenses incurred as a result of such suit.
11.03 In the event that a declaratory judgment action alleging
invalidity or non-infringement of any of the LICENSED PATENT
RIGHTS shall be brought against LICENSEE or raised by way of
counterclaim or affirmative defense in an infringement suit
brought by LICENSEE under Paragraph 11.02, pursuant to this
AGREEMENT and the provisions of Chapter 29 of Title 35, United
States Code or other statutes, LICENSEE may, but is not
obliged to: a) defend the suit in its own name, at its own
expense, and on its own behalf for presumably valid claims in
the LICENSED PATENT RIGHTS; b) in any such suit, ultimately to
enjoin infringement and to collect for its use, damages,
profits, and awards of whatever nature recoverable for such
infringement; and c) settle any claim or suit for declaratory
judgment involving the LICENSED PATENT RIGHTS-provided,
however, that PHS and appropriate GOVERNMENT authorities shall
have the first right to take such actions and shall have a
continuing right to intervene in such suit. If PHS does not
notify LICENSEE of its intent to respond to the legal action
within * days, LICENSEE will be free to do so. LICENSEE
shall take no action to compel the GOVERNMENT either to
initiate or to join in any such declaratory judgment
action. LICENSEE may request the GOVERNMENT to initiate or to
join any such suit if necessary to avoid dismissal of the
suit. Should the GOVERNMENT be made a Party to any such suit
by motion or any other action of LICENSEE, LICENSEE shall
reimburse the GOVERNMENT for any costs, expenses, or fees
which the GOVERNMENT incurs as a result of such motion or
other action. If LICENSEE elects not to defend against such
declaratory judgment action, PHS, at its option, may do so at
its own expense. In all cases, LICENSEE agrees to keep PHS
reasonably apprised of the status and progress of any
litigation. Before LICENSEE commences an infringement action,
LICENSEE shall notify PHS and give careful consideration to
the views of PHS and to any potential effects of the
litigation on the public health in deciding whether to bring
suit. Notwithstanding the above, if LICENSEE is not the sole
claimant, excluding the GOVERNMENT, to a suit for
infringement, LICENSEE will bear only its pro rata share, as
determined by the total number of claimants to such suit, of
any such expenses incurred as a result of such suit.
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<PAGE>
11.04 In any action under Paragraphs 11.02 or 11.03, except for
actions where the LICENSEE opts-out under Paragraph 11.07, the
expenses, including costs, fees, attorney fees, and
disbursements, shall be paid by LICENSEE in accordance with
Paragraphs 11.02 or 11.03. Up to * of such expenses may be
credited against the royalties payable to PHS under
Paragraph 6.03 of this AGREEMENT under the LICENSED
PATENT RIGHTS in the country where the suit is filed, except
where LICENSEE elects to opt-out pursuant to Paragraph 11.07
of this AGREEMENT. In the event that such expenses exceed the
amount of royalties payable by LICENSEE in any calendar year,
the expenses in excess may be carried over as a credit on the
same basis into succeeding calendar years. A credit against
litigation expenses, however, may not reduce the royalties due
in any calendar year to less than the minimum annual royalty.
Any recovery made by LICENSEE, through court judgment or
settlement, first shall be applied to reimburse LICENSEE for
its litigation expense and then to reimburse PHS for royalties
withheld as a credit against litigation expenses. Any
remaining recoveries shall be shared by LICENSEE and PHS as if
the recovery was a sublicensing royalty under Paragraph 6.05
of this AGREEMENT.
New Paragraphs 11.07 through 11.07 are added to read as follows:
11.06 No suit may be brought by any other Party involving the
LICENSED PATENT RIGHTS without express written consent of
LICENSEE. In the event that another Party having rights under
the LICENSED PATENT RIGHTS desires to initiate a suit
involving the LICENSED PATENT RIGHTS, LICENSEE shall be
immediately consulted. Appropriate procedures which provide
LICENSEE with adequate control of the litigation procedure
shall be implemented in the event that LICENSEE agrees to
permit such a suit to go forward. PHS shall notify any other
potential licensees of the LICENSED PATENT RIGHTS of this
provision and shall include this provision in all licenses
involving the LICENSED PATENT RIGHTS.
11.07 In any action under Article 11, LICENSEE has the right to
opt-out from bringing or being a Party to such suit by
notifying PHS within * or anytime thereafter of the date that
LICENSEE first becomes aware of an infringement to the
LICENSED PATENT RIGHTS. Such course of action will not
affect LICENSEE'S other rights under this AGREEMENT, except
that LICENSEE will not share in any recovery from such a suit.
LICENSEE does, however, agree to fully cooperate with PHS in
bringing such a suit, including access to, and testimonial
support from, employee of LICENSEE with any out of pocket
expense to be borne by PHS.
Article 12:
-----------
Paragraphs 12.01 through 12.05 are amended to read as follows:
12.01 PHS and USC offer no warranties other than those specified in
Article 1.
12.02 PHS and USC do not warrant the validity of the LICENSED PATENT
RIGHTS and make no representations whatsoever with regard to
the scope of the LICENSED PATENT RIGHTS, or that the LICENSED
PATENT RIGHTS may be exploited without infringing other
patents or other intellectual property rights of third
parties.
12.03 PHS and USC MAKE NO WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
12.04 PHS and USC do not represent that they will commence legal
actions against third parties infringing the LICENSED PATENT
RIGHTS or permit any other licensee of the LICENSED PATENT
RIGHTS to threaten or commence legal actions without prior
written notification to LICENSEE.
12.05 LICENSEE shall indemnify and hold PHS and USC, its employees,
students, fellows, agents, and consultants harmless from and
against all liability, demands, damages, expenses, and losses,
including but not limited to death, personal injury, illness,
or property damage in connection with or arising out of: a)
the use by or on behalf of LICENSEE, its sublicensees,
directors, employees, or third parties of any LICENSED PATENT
RIGHTS; or b) the use of a design, manufacture, distribution,
or use of any LICENSED PRODUCTS, LICENSED PROCESSES, LICENSED
MATERIALS or biological materials, or other products or
processes covered by LICENSED PATENT RIGHTS by LICENSEE.
LICENSEE agrees to maintain a liability insurance program
consistent with sound business practice.
Article 13:
-----------
Paragraph 13.01 is amended to read as follows:
13.01 The term of this AGREEMENT shall commence on the EFFECTIVE
DATE, and unless earlier terminated in a manner provided
herein, this AGREEMENT shall continue in full force and effect
on a country by country and LICENSED PRODUCT by LICENSED
PRODUCT basis until the expiration of the last to expire of
all VALID CLAIMS in such countries included in the LICENSED
PATENT RIGHTS. Notwithstanding the above, upon expiration, but
not termination of this AGREEMENT, and subject to the
provisions of Paragraph 13.09, PHS grants to LICENSEE a
non-exclusive, fully paid-up, irrevocable license to use or
otherwise exploit LICENSED MATERIALS.
Paragraphs 13.03 through 13.06 are amended to read as follows:
13.03 In the event that LICENSEE becomes insolvent, files a petition
in bankruptcy, or determines to file a petition in bankruptcy,
LICENSEE shall immediately notify PHS in writing. Furthermore,
PHS shall have the right to terminate this AGREEMENT
immediately upon PHS's receipt of a written petition for
bankruptcy of LICENSEE under this Paragraph.
13.04 LICENSEE shall have a unilateral right to terminate this
AGREEMENT and/or any licenses in any country or territory by
giving PHS thirty (30) days written notice to that effect.
13.05 PHS shall specifically have the right to terminate or
modify, at its option, this AGREEMENT, if PHS determines
that the LICENSEE: 1) is not executing the COMMERCIAL
DEVELOPMENT PLAN submitted with its request for a license
and the LICENSEE cannot otherwise demonstrate to PHS's
satisfaction that the LICENSEE has taken, or can be
expected to take within a reasonable time, effective steps
to achieve PRACTICAL APPLICATION of the LICENSED PRODUCTS
or LICENSED PROCESSES; 2) has not achieved the BENCHMARKS
as may be modified under Paragraph 9.02; 3) has willfully
made a false statement of, or willfully omitted, a material
fact in the license application or in any report required by
the license AGREEMENT; 4) has committed a material breach
of a covenant or agreement contained in the license; 5) is
not keeping LICENSED PRODUCTS or LICENSED PROCESSES
reasonably available to the public after commercial use
commences; 6) cannot reasonably satisfy unmet health and
safety needs; or 7) cannot reasonably justify a failure to
comply with the domestic production requirement of
Paragraph 5.02 unless waived. In making this determination,
PHS will take into account the normal course of such
commercial development programs conducted with sound and
reasonable business practices and judgment and the annual
reports submitted by LICENSEE under Paragraph 9.02. Prior
to invoking this right, PHS shall give written notice to
LICENSEE providing LICENSEE specific notice of, and a
ninety (90) day opportunity to respond to, PHS's concerns
as to the previous items 1) to 7).
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
13.06 When the public health and safety so require, and after
written notice to LICENSEE providing LICENSEE with a sixty
(60) day opportunity to respond, PHS shall have the right
to require LICENSEE to grant sublicenses to responsible
applicants, on reasonable terms, in LICENSED FIELD OF USE
under the LICENSED PATENT RIGHTS, unless (1) LICENSEE can
reasonably demonstrate that the granting of the sublicense
would not materially increase the availability to the
public of the subject matter of the LICENSED PATENT RIGHTS
or (2) submits a COMMERCIAL DEVELOPMENT PLAN for the
LICENSED PATENT RIGHTS and LICENSED PRODUCTS in such a
FIELD OF USE which PHS reasonably deems to moot concerns of
public health and safety. PHS will not require the granting
of a sublicense unless the responsible applicant has first
negotiated in good faith with LICENSEE.
Paragraph 13.09 is amended to read as follows:
13.09 Within ninety (90) days of expiration or termination of this
AGREEMENT under this Article 13, a final report shall be
submitted by LICENSEE. Any royalty payments, including those
incurred but not yet paid (such as the full minimum annual
royalty), and those related to patent expense, due to PHS
shall become immediately due and payable upon termination or
expiration. If terminated under this Article 13, sublicensees
may elect to convert their sublicenses to direct licenses with
PHS pursuant to Paragraph 4.03. Unless otherwise specifically
provided for under this AGREEMENT, upon termination, but not
upon expiration, of this AGREEMENT, LICENSEE shall return all
LICENSED PRODUCTS or other materials included within the
LICENSED PATENT RIGHTS to PHS or provide PHS with
certification of the destruction thereof.
Article 14:
-----------
Paragraphs 14.06 and 14.07 are amended to read as follows:
14.06 All notices required or permitted by this AGREEMENT shall be
given by prepaid, first class, registered or certified mail or
by an express/overnight delivery service provided by a
commercial carrier, or by facsimile with confirmation copy
sent by regular first class, prepaid mail, properly addressed
to the other Party at the address designated on the following
Signature Page, or to such other address as may be designated
in writing by such other Party. PHS notices to LICENSEE shall
be addressed: "Attention: President" with copies of such
notices sent to "Vice President, Corporate Development",
Notices shall be considered timely if such notices are
received on or before the established deadline date or sent on
or before the deadline date as verifiable by U.S. Postal
Service postmark or dated receipt from a commercial carrier.
Parties should request a legibly dated U.S. Postal Service
postmark or obtain a dated receipt from a commercial carrier
or the U.S. Postal Service. Private metered postmarks shall
not be acceptable as proof of timely mailing.
14.07 This AGREEMENT shall not be assigned by LICENSEE except: a)
with the prior written consent of PHS, such consent not to be
withheld unreasonably; or b) as part of a sale or transfer of
substantially the entire business of LICENSEE relating to
operations which concern this AGREEMENT. LICENSEE shall notify
PHS within ten (10) days of any assignment of this AGREEMENT
by LICENSEE.
Paragraphs 14.10 through 14.12 are amended to read as follows:
14.10 LICENSEE agrees to mark the LICENSED PRODUCTS or their
packaging sold in the United States with all applicable U.S.
patent numbers and similarly to indicate "Patent Pending"
status. ALL LICENSED PRODUCTS manufactured in, shipped to, or
sold in other countries shall be marked in such a manner as to
preserve PHS and USC patent rights in such countries.
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
14.11 By entering into this AGREEMENT, PHS and USC do not directly
or indirectly endorse any product or service provided, or to
be provided, by LICENSEE whether directly or indirectly
related to this AGREEMENT. LICENSEE shall not state or imply
that this AGREEMENT is an endorsement by the GOVERNMENT, PHS,
USC, any other GOVERNMENT organizational unit, or any
GOVERNMENT employee. Additionally, LICENSEE shall not use the
names of NIH, CDC, PHS, USC, or DHHS or the GOVERNMENT or
their employees in any advertising, promotional, or sales
literature without the prior written consent of PHS and USC.
14.12 The Parties agree to attempt to settle amicably any
controversy or claim arising under this AGREEMENT or a breach
of this AGREEMENT. LICENSEE agrees first to appeal any such
unsettled claims or controversies to the designated PHS
official, or designee, whose decision shall be considered the
final agency decision. Thereafter, LICENSEE may exercise any
administrative or judicial remedies that may be available.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
PHS Patent License Agreement-Exclusive CONFIDENTIAL L-180-97/0
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<PAGE>
APPENDIX E--BENCHMARKS AND PERFORMANCE
LICENSEE agrees to the following BENCHMARKS for its performance under this
AGREEMENT and, within thirty (30) days of achieving a BENCHMARK, shall notify
PHS that the BENCHMARK has been achieved.
It is understood that the following benchmarks are those that currently are
believed to represent the appropriate course of action for bringing a product to
market. It further is understood that changes in circumstances, including but
not limited to, changes in the applicable law, changes in the progress in the
development of a product, changes in the market for such ocular products or
changes in the type and nature of products pursued by LICENSEE, and/or delays in
the commercial or scientific progress of the product or LICENSEE'S business, may
necessitate following a different plan for commercialization of a product. In
such instances, LICENSEE may request that the schedule of BENCHMARKS be modified
and will so notify PHS in writing and submit a new schedule of BENCHMARKS
subject to the approval of PHS, such approval not unreasonably being withheld.
*
<PAGE>
APPENDIX F--COMMERCIAL DEVELOPMENT PLAN
Attached as Exhibit 1 (14 pages total including cover sheet and table of
contents), submitted to PHS by Licensee on September 20, 1999.
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<PAGE>
TABLE OF CONTENTS
I. SUMMARY..............................................................1
II. COMPANY PROFILE......................................................1
III. AGE-RELATED MACULAR DEGENERATION.....................................3
IV. PRODUCT DESCRIPTION..................................................4
V. DEVELOPMENT AND MANUFACTURING PLAN...................................5
VI. RESEARCH PLAN; ADENOVIRUS VECTOR DESIGN FOR OCULAR GENE THERAPY......8
VII. CLINICAL PLAN........................................................9
VIII. TIMELINES...........................................................10
SELECTED REFERENCES.........................................................12
APPENDIX-BENCHMARKS AND PERFORMANCE.........................................13
Confidential
<PAGE>
I. SUMMARY
GenVec is an emerging pharmaceutical company and a leader in the field of
gene therapy. The Company has a product-driven culture, and has demonstrated
the ability to rapidly create, evaluate and advance product candidates that
address important medical needs. GenVec also has a significant and expanding
technology base, with over 200 patents issued and pending throughout the
world. The Company is able to draw upon this technology to create technically
feasible products for initial introduction into the medical marketplace, as
well as second-generation products to extend its product franchise.
Importantly, GenVec possesses the resources and expertise to create
technically feasible gene therapy products utilizing the Pigment
Epithelium-Derived Factor (PEDF) technology, and is a strong partner for
rapidly advancing product candidates incorporating this PHS technology. These
resources and capabilities are described in more detail throughout the
Development Plan. In addition, the discovery that PEDF is an antiangiogenic
factor heightens our initial interest in this protein because of its
complementary nature with respect to our other product programs (see COMPANY
PROFILE for further details). Specifically, GenVec is a leader in the
development of therapeutic angiogenesis (proangiogenesis) agents such as
vascular endothilial growth factor for the treatment of coronary artery and
peripheral vascular diseases.
To create this leadership position, GenVec has established expertise and
capabilities pertaining to angiogenesis, gene delivery and expression systems
for such applications, and state-of-the-art process development and
manufacturing-related technologies. This expertise and our capabilities place
GenVec in the distinct position of being able to leverage not only
proangiogenic approaches in the treatment of diseases, but also antiangiogenic
strategies. We have been and are keenly interested in extending our current
angiogenic program to include a complementary antiangiogenic arm, and are
interested in pursuing the commercial development of PEDF gene therapy product
for both ocular and non-ocular indications, such as cancer. The Development
Plan submitted herein pertains to the field of ocular gene therapy
applications for which GenVec has been granted the right to pursue an
exclusive license.
II. COMPANY PROFILE
GenVec is a pioneer in the development of novel gene-based pharmaceuticals to
treat major illnesses such as cardiovascular disease and cancer. The Company
is a leader in the field of therapeutic angiogenesis (new blood vessel
formation) for the treatment of coronary artery disease (CAD) and peripheral
vascular disease (PVD). GenVec's lead investigational product for therapeutic
angiogenesis is AdovVEGF121.10 (also referred to as BIOBYPASS-Registered
Trademark- angiogen). BIOBYPASS-Registered Trademark- is a trademark of
GenVec, Inc. This is a novel, propietary compound that combines GenVec's gene
delivery technology and adenoviral manufacturing processes with the
patern-protected VEGFI21.10 gene, which GenVec exclusively licensed from
Scios, Inc. on a worldwide basis. BIOBYPASS-Registered Trademark- angiogen is
being developed presently under the terms of a collaboration with the
Parke-Davis pharmaceutical division of Warner-Lambert Company.
1
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<PAGE>
Poor blood flow, or ischemia, is typically the major problem associated with
both CAD and PVD. The goal is to induce the formation of new blood vessels in
tissues with inadequate blood flow such as in the heart and legs. Preclinical
and toxicological testing of BIOBYPASS-Registered Trademark- angiogen was
carried out successfully by GenVec in collaboration with its external
scientific advisors. BIOBYPASS-Registered Trademark- angiogen received IND
approval and multiple Phase I studies have been completed. Phase II studies
will be initiated this year.
GenVec's other product development programs include the treatment of vascular
damage such as arterial stenosis and restenosis which frequently occur
following vascular graft procedures and balloon angioplasty. The Company is
pursuing the treatment of cancer through a drug discovery partnership with
Fuso Pharmaceutical Industries, Ltd. of Japan, as well as an alliance with
Varian Biosynergy to develop products of use in radiation oncology.
Based on our experiences and accomplishments, GenVec has the capabilities
necessary to successfully develop Pigment Epithelium-Derived Factor (PEDF)
and/or its truncated variants for an ophthalmic application. GenVec has prior
experience in the manufacture of clinical grade material as well as experience
in preclinical and clinical drug development. As described above, we have
clinical experience at Cornell Medical Center and other institutions. GenVec
has a clinical research/regulatory infrastructure; this group is capable of
taking PEDF through the clinical development phase to registration. And GenVec
has experience with the CBER gene therapy group.
GenVec, a privately held corporation, was incorporated in 1992. It holds or
has licenses to over 200 issued, allowed or pending patents worldwide, of
which 28 are issued or allowed in the United States. The Company is located in
Rockville, Maryland, and has approximately 85 employees as of July 1999. The
Company will move to a new expanded facility in Gaithersburg, Maryland at the
end of 1999.
A. GENVEC'S GOALS
- To utilize molecular-based treatment strategies to develop innovative
products that significantly improve patient care
- To combine advances in molecular biology and gene transfer to achieve
medical and technological breakthroughs
- To focus on products that have a clear clinical development path and meet
patients' needs
B. CORPORATE EXECUTIVES
<TABLE>
<S> <C>
HERBERT J. CONRAD CHAIRMAN, BOARD OF DIRECTORS
PREVIOUSLY OF HOFFMAN-LAROCHE
RONALD G. CRYSTAL, M.D. CHAIRMAN, SCIENTIFIC ADVISORY BOARD
PRESENTLY OF CORNELL UNIVERSITY MEDICAL COLLEGE
PAUL H. FISCHER, PH.D. PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
PREVIOUSLY OF ONCOLOGIX, PFIZER
JEFFREY W. CHURCH CHIEF FINANCIAL OFFICER
PREVIOUSLY OF PRICE WATERHOUSE, MERIDIAN
2
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<PAGE>
HENRIK S. RASMUSSEN, M.D., PH.D. VICE PRESIDENT, CLINICAL RESEARCH AND REGULATORY AFFAIRS
PREVIOUSLY OF BRITISH BIOTECH, PFIZER
C. RICHTER KING, PH.D. VICE PRESIDENT, RESEARCH
PREVIOUSLY OF GEORGETOWN UNIVERSITY, ONCOLOGIX
IMRE KOVESDI, PH.D. CHIEF SCIENTIFIC OFFICER
PREVIOUSLY OF LEDERLE
THOMAS E. SMART VICE PRESIDENT, CORPORATE DEVELOPMENT
PREVIOUSLY OF CELL GENESYS, G.D. SEARLE
GRANT YONEHIRO VICE PRESIDENT, PRODUCT MANAGEMENT
PREVIOUSLY OF CELL GENESYS
</TABLE>
C. FACILITIES OVERVIEW
By the end of 1999, GenVec will have 44,000-sq. ft. of new laboratory and
corporate development space in Gaithersburg, Maryland. Research and
discovery laboratories, development/manufacturing scale-up facilities,
animal facilities and administrative offices will all be housed in a single
location. Future expansion space also is available.
III. AGE-RELATED MACULAR DEGENERATION
A. MEDICAL NEED AND MARKET FOR AGE-RELATED MACULAR DEGENERATION
The National Eye Institute (NEI) has published that age-related macular
degeneration (AMD) is now one of the major debilitating diseases of the
aging population. Concern has been raised so much so that research in this
area is now a high priority for the NEI and that at least $16 million is
dedicated to research directly related to AMD. This amount in 1997
represents an increase of 333% since 1989. As of 1997, it was estimated
that AMD caused visual impairment in approximately 1.7 million of the 34
million Americans age 65 and older (1). According to the Macular
Degeneration Foundation,the prevalence for AMD in the U.S. may actually be
higher, ranging between 4 to 13 million for individuals greater than 55 years
old.
AMD exists in two forms: the dry form and wet form. The dry form, though
more prevalent, is a progressive and slow disease. In contrast, the wet
form can very rapidly lead to severe visual impairment and blindness. The
wet form, also known as exudative macular degeneration, results from new
blood vessel formation as well as blood vessel leakage. Disruption of the
blood vessels distorts the central portion of the retina, the macula, which
is responsible for sharp, central vision. Eventually, scar tissue may form
and lead to further distortion in the macula that eventually can cause
severe vision loss. Approximately 10-15% of all AMD is due to that wet form.
At present, there are no FDA-approved products for the treatment of dry
macular degeneration and although there are several methods of treatment
for the wet form of AMD, none of these methods are considered satisfactory
(see Table 1). The newest technology, a photodynamic method, is considered
by many ophthalmologists as providing only palliative care. THUS, THERE IS
A GREAT UNMET MEDICAL NEED TO IDENTIFY NEW THERAPIES THAT CAN PROVIDE
TREATMENT FOR AMD PARTICULARLY FOR THE AGGRESSIVE FORM, WET MACULAR
DEGENERATION.
3
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<PAGE>
The present submission will focus on a gene therapy approach for the
treatment of wet macular degeneration.
Table 1-Estimated Cost per Procedure in the Treatment of Wet Macular
Degeneration
PROCEDURE COST/PROCEDURE
Radiation Therapy $1,000/visit X 8 visits = $8,000*
Laser Surgery $3,000*
Surgery (Retinal translocation) $45,000*
Photodynamic Therapy $1,200/visit x 6 visits = $7,200+
*Costs based on estimations provided by the Macular Degeneration Foundation,
1999
+Cost estimate as of BioWorld Today, August 17, 1999
B. MEDICAL NEED AND MARKET FOR DIABETIC RETINOPATHY
Diabetic retinopathy occurs to some extent in approximately 90% of the 8
million diagnosed diabetic patients in the United States. It is one of the
major complications of diabetes. Like exudative macular degeneration,
blurred vision and blindness in diabetic patients results from leaking
blood vessels and abnormal growth of new vessels in the retina. Subsequent
vitreous hemorrhaging and retinal detachment can lead to permanent
blindness. However, unlike exudative macular degeneration, where no
suitable treatments exist, laser treatment is considered an acceptable
treatment therapy for diabetic retinopathy. Therefore, the developmental
research, and clinical plan as stated for PEDF gene therapy product, though
focused primarily on exudative macular degeneration, is very likely
to be applicable to diabetic retinopathy (DR) and other ocular diseases
in which neovascularization is part of the pathogenesis. Our strategy will
be to initiate work on relevant model systems for macular degeneration and
based on preliminary results decide whether to expand the developmental
program to include diabetic retinopathy. If so, animal testing will be
expanded to include models more physiologically relevant to diabetic
retinopathy than macular degeneration. The cost to extend the development
program to include diabetic retinopathy would be approximately double of
that for macular degeneration alone. Similarly, GenVec will investigate
additional ocular indications as future data warrant.
IV. PRODUCT DESCRIPTION
GenVec intends to develop a gene therapy product that codes for the human
antiangiogenic protein, Pigment Epithelium-Derived Factor (PEDF). The
lead product will be delivered locally in the eye(s) of individuals with
wet macular degeneration.
A. MEDICAL RATIONALE
GenVec's approach *
4
Confidential
<PAGE>
*
[Pages 5-10 are redacted]
5
Confidential
<PAGE>
*
Conclusion: GenVec has identified that ophthalmic diseases, particularly wet
macular degeneration and diabetic retinopathy, as areas of high medical need as
well as promising commercial opportunities. Utility of
Pigment-Epithelium-Derived Factor (PEDF) and its distinctive biological
properties could provide potentially a major advancement toward the treatment of
blinding eye diseases resulting from aberrant neovascularization. GenVec has
identified a Project Team for this program, and has committed considerable time
and effort in evaluating this opportunity and are intent on moving this program
forward as quickly as possible.
FOR FURTHER QUESTIONS OR CONCERNS PLEASE CONTACT:
Diane Arrington, GenVec
Associate Director of Corporate Development
12111 Parklawn Drive
Rockville, MD 28852
(301)816-3016 x230 or [email protected]
11
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<PAGE>
SELECTED REFERENCES
1. http://www.nci.nih.gov.news/varmus.html
2. Hanahan D. and Polkman. S. (1996) Patents and emerging mechanisms of the
angiogenci switch during tumorigenesis. Cell 86, 353-364.
3. Auerbach, W., and Auerbach, R. (1994) Angiogenesis inhibition: a review.
Pharmacol Ther. 63, 265-311.
4. Dawson, D.W.; Volpen, O.V. Gillis, P.E., Crawford, S.E., Xu, H.J. Benedict,
W., and Bouck, N.P. (1999) Pigment epithelium-derived factor: A potent
inhibitor of angiogenesis. Science 285, 245-248.
5. Becern, S.P. Palmer, I. Kumar, A. Steele, E. Shilbach, J.; Notario, V., and
Chader, G.J. (1993) Overexpression of fetal human pigment
epithelium-derived factor in Escherichia coli. A functionally active
neurotrophic factor. J. Biol. Chern 268:23148-23156.
6. Steele, F.R. Chader, G.J. Johnson, L.V. and Tombran-Tinic, J. (1993)
Pigment eipthelium-derived factor: Neurotrophic activity and identification
as a member of the serine protease inhibitor gene family. Proc. Neti Acad
Sci USA 90: 1526-1530.
7. Kovesdi, I. Brough, D.E. Bruder, J.T. and Wickham, T.J. (1997) Adenoviral
vectors for genbe transfer, Curr. Opin. Biotechnol, 8, 583-589.
8. Brough, D.E. Lizonova, A, Han. C., Kulesa, V.A., and Kovesdi, I. (1995)
A gene transfer vector-cell line system for complete functional
complementation of adenovirus early regions E1 and E4. J.
Virology, 70, 6497-6501.
9. Brough, D.E. Han, C. Kules, V.A. Lee. G.M. Carolupo, L.J. Lizonova, A. and
Kovesdi. I. (1997) Activation of transgene expression by early egion 4 is
responsible for a high level of persistent transgene expression from
adenovirus vectors in vivo. J. Virology. 71. 9206-9233.
10. Polverini, P.J. Bouck N.P., and Rastinejad F. (1991) Assay and purification
of naturally occuring inhibitor of angiogenesis. Methods of Enzymol.
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11. Frank, R.N., Das, A, and Weber, M.L. (1989) A model of subretinal
neovascularization in the pigmented Curr. Eye Res. 8: 239-247.
12
Confidential
<PAGE>
CONFIDENTIAL
PUBLIC HEALTH SERVICE
AMENDMENT TO PATENT LICENSE AGREEMENTS EXCLUSIVE
COVER PAGE
For PHS internal use only:
Patent License Number:
L-180-97/1
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Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):
USSN 08/367,841 08/520,373; 07/894,215 and U.S. Patent 5,840,686
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Licensee:
GenVec, Inc.
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Cooperative Research and Development Agreement (CRADA) Number (if
applicable):
None
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Additional Remarks:
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Public Benefit(s):
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This Patent License Agreement, hereinafter referred to as the "Amendment",
consists of this Cover Page, an attached Amendment, and a Signature Page. The
Parties to this Amendment are:
1) The National Institutes of Health ("NIH"), the Centers for Disease
Control and Prevention ("CDC"), or the Food and Drug
Administration ("FDA"), hereinafter singly or collectively
referred to as "PHS", agencies of the United States Public Health
Service within the Department of Health and Human Services
("DHHS"); and
2) The person, corporation, or institution identified above and/or
on the Signature Page, having offices at the address indicated on
the Signature Page, hereinafter referred to as "Licensee".
<PAGE>
AMENDMENT TO PHS PATENT LICENSE-NONEXCLUSIVE
PHS and Licensee agree as follows:
Whereas, PHS and Licensee have previously entered into a certain Patent
License - Exclusive, L-180-97/0, (hereinafter, Agreement,), having an
Effective Date of January 8, 2000 ("L-180-97") which relates to certain
Licensed Materials, Licensed Product(s), and Licensed Process(es) as defined
therein (hereinafter, "Licensed Technology").
Whereas, Licensee desires L-180-97, which relates to certain Licensed
Technology, to be amended in order to facilitate the ability of Licensee to
further exploit the commercial potential of Licensed Technology; and
Whereas, PHS, in consideration of Licensee's willingness to develop new
products, and otherwise further commercially exploit the Licensed Technology
is willing to amend L-180-97 as set forth herein to provide Licensee with the
opportunity to further commercially exploit the Licensed Technology.
Unless otherwise amended herein all definitions included in this Amendment
have the same meaning as in L-180-97.
Unless otherwise amended herein all terms and conditions of L-180-97 remain
in force, the terms and conditions of this Amendment are explicitly
incorporated into L-180-97, and this Amendment, in conjunction with L-180-97,
will be constitute the entire Agreement between Licensee and PHS.
The "Effective Date" of this Amendment will be the date of the last signature
on the attached Signature Page.
Now therefore, PHS and Licensee, intending to be bound, hereby agree to amend
L-180-97 as follows:
1. ARTICLE 2:
Paragraph 2.19 is amended to read as follows:
2.19 "Licensed Materials" means (a) the plasmid piFS17, as described in
Steele, FR, et al., "Pigment epithelium-derived factor: Neurotrophic
activity and identification as a member of the serine protease
inhibitor gene family" PNAS, USA 90(4): 1526-1530 (Feb. 15, 1993)
which contains the eDNA encoding human Pigment Epithelium Derived
Factor; (b) approximately 10mul of polyclonal antisera which contains
polyclonal antibodies which specifically recognize Pigment Epithelium
Derived Factor (PEDF) and which is described in Wu YQ, et al. Protein
Expression Purification 6(4): 447-56 (Aug. 1995); and (c) a small
quantity, approximately 10 mug, of purified PEDF protein prepared as
described in Stratikos, E, et al. Protein Science 5(12): 2575-82
(Dec. 1996).
<PAGE>
2. ARTICLE 6;
Paragraph 6.02 is amended to read as follows:
6.02 Licensee agrees to pay to PHS a nonrefundable minimum annual royalty
as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year and may be credited against
any earned royalties due for sales made in that year. The minimum
annual royalty due for the first calendar year of this Agreement may
be prorated according to the fraction of the calendar year remaining
between the Effective Date of this Agreement and the next subsequent
January 1. The minimum annual royalty for the first calendar year
of this Agreement is due as of the Effective Date of this Agreement,
may be credited against any earned royalties due for sales made in the
first calendar year and is payable within thirty (30) days of the
Effective Date of this Agreement.
New Paragraphs 6.15 through 6.16 are added to read as follows:
6.15 Licensee agrees to pay PHS, as an additional royalty, a nonrefundable,
non-creditable Amendment Execution Royalty as set forth in Appendix C.
6.16 Licensee agrees to pay PHS, as an additional royalty, a nonrefundable,
non-creditable Subsequent Materials Transfer Royalty as set forth in
Appendix C.
3. ARTICLE 10;
A new Paragraph 10.05 is added to read as follows:
10.05 PHS agrees to provide to Licensee a copy of Interinstitutional
Agreement (hereinafter, IIA), L-221-94/2, between PHS and USC upon
execution of this Amendment. Licensee agrees not to disclose this IIA
to any third party, without the prior written approval of PHS, except
in conjunction with sublicensing activities carried out under
Paragraph 4.01 of this Agreement. Licensee shall use reasonable care
to maintain the confidentiality of the IIA, with at least the same
degree of care as is exercised in respect of Licensees own proprietary
information, and shall disclose the IIA, only to those of Licensees
employees who have a need to review the IIA, for the purposes of
complying with the terms of this Agreement.
4. APPENDIX C is amended to add the following new sections VIII and IX:
VIII. AMENDMENT EXECUTION ROYALTY according to Paragraph 6.15:
(A) For this, the first amendment of L-180-97, the Amendment
Execution Royalty is * due as of the Effective Date of the
Amendment and payable within thirty (30) day of the Effective
Date of the Amendment.
IX. SUBSEQUENT MATERIALS TRANSFER ROYALTY pursuant to Paragraph 6.16:
(A) For this, the first provision of additional Licensed Materials to
Licensee related to Licensed Technology, Licensee agrees to pay
PHS a Subsequent Materials Transfer Royalty in the total of *
with the royalty being apportioned as follows: * to item (b) of
Paragraph 2.19 as amended herein and * to item (c) of Paragraph
2.19 as amended herein. The Subsequent Materials Transfer Royalty
is due as of the Effective Date of this Amendment and is payable
within thirty (30) days of the Effective Date of this Amendment.
SIGNATURES BEGIN ON NEXT PAGE
Amendment to PHS Patent License Agreement-Non-Exclusive CONFIDENTIAL L-180-97/1
Model 980611 Page 3 of 4 FINAL GenVec, Inc. March 2, 2000
<PAGE>
AMENDMENT TO PHS PATENT LICENSEE AGREEMENT--NON-EXCLUSIVE
SIGNATURE PAGE
For PHS:
Jack Spiegel 3/9/2000
-------------------------------- ----------------
Jack Spiegel, Ph.D. Date
Director, Division of Technology
Development and Transfer
Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
6011 Executive Boulevard, Suite 325
Rockville, Maryland 20852-3804 U.S.A.
For Licensee (Upon, information and belief, the undersigned expressly
certifies of or affirms that the contents of any statements of Licensee made
or referred to in this document are truthful and accurate.):
by:
Thomas E. Smart March 2, 2000
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Signature of Authorized Official Date
Thomas E. Smart
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Printed Name
Senior Vice President, Corporate Development
---------------------------------------------
Title
Official and Mailing Address for Notices:
GenVec, Inc.
---------------------------------------------
65 West Watkins Mill Road
---------------------------------------------
Gaithersburg, MD 208878
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Attention: President
---------------------------------------------
Copies to: Vice President Corporate Development
---------------------------------------------
Any false or misleading statements made, presented, or submitted to the
Government, including any relevant omissions, under this Amendment and during
the course of negotiation of this Amendment are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fines(s) and/or imprisonment).
Amendment to PHS Patent License Agreement-Non-Exclusive CONFIDENTIAL L-180-97/1
Model 980611 Page 4 of 4 FINAL GenVec, Inc. March 2, 2000
