EXCLUSIVE LICENSE AGREEMENT AMONG GEORGETOWN UNIVERSITY AND THE UNIVERSITY OF ARIZONA AND PROLX PHARMACEUTICALS CORPORATION

Exhibit 10.12

EXCLUSIVE LICENSE AGREEMENT
AMONG
GEORGETOWN UNIVERSITY
AND
THE UNIVERSITY OF ARIZONA
AND
PROLX PHARMACEUTICALS CORPORATION

        Effective as of 5 ^th day of July, 2001, GEORGETOWN UNIVERSITY ("GEORGETOWN"), a not-for-profit academic institution organized under the laws of the District of Columbia, having a principal address at 37 ^th  & O Streets, N.W., Washington, D. C. 20057, and The Arizona Board of Regents on behalf of THE UNIVERSITY OF ARIZONA ("ARIZONA"), with its principal offices in Tucson, Arizona 85721 (hereinafter collectively referred to as "LICENSOR"), and PROLX PHARMACEUTICALS CORPORATION, having a principal place of business at 1401 Forbes Avenue, Suite 231, Pittsburgh, Pennsylvania, 15219-5125 ("LICENSEE"), agree as follows:

1. BACKGROUND

         1.1  GEORGETOWN and ARIZONA through collaboration invented and discovered certain Technology as further defined herein.

         1.2  GEORGETOWN and ARIZONA are the owners by assignment or obligation of assignment to said Technology as further defined herein.

         1.3  GEORGETOWN and ARIZONA wish to have the Technology developed and marketed at the earliest possible time in order that products resulting therefrom may be available for public use and benefit. As a result, GEORGETOWN and ARIZONA have entered into an Interinstitutional Agreement (the "Interinstitutional Agreement") that sets forth the rights and obligations of each to the other.

         1.4  LICENSEE wishes to acquire an Exclusive license from LICENSOR under said Technology for the purpose of undertaking development, to manufacture, use, import and sell products incorporating said Technology.

2. DEFINITIONS

         2.1  " Exclusive " means LICENSOR has not granted and shall not grant further licenses under the Technology so long as this Agreement is in effect, and shall not make, have made, use, sell, or offer to sell Licensed Products.

         2.2  " Field of Use " means any and all fields of use, including the fields of drug design, drug discovery, pharmaceuticals, therapeutics, and diagnostics.

         2.3  " First Commercial Sale " means the first sale of a Licensed Product at an arms length transaction with a third party unaffiliated with any party to this Agreement.

         2.4  " Licensed Application(s) " means the applications identified in Appendix A, and all U.S. or foreign patent applications and equivalents thereto claiming Technology, and all divisionals, continuations, reissues, and reexaminations thereof, and continuations-in-part, and applications claiming priority therefrom.

         2.5  " Licensed Patent(s) " means the patents identified in Appendix A and any U.S. or foreign patents issued or granted from the Licensed Applications and any and all existing or future foreign counterparts of the patents listed in Appendix A or of patents issued or granted from the Licensed Applications, along with any continuations, divisions, continuations-in-part, confirmations, substitutions, registrations, revalidations, additions, extensions, re-examination certificates, supplementary protection certificates and reissues thereof.

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         2.6  " Licensed Product(s) " means any compound, product or part thereof, device, kit, method or service, the manufacture, use, import or sale of which is covered by a valid claim of an issued, unexpired Licensed Patent(s). A claim of an issued, unexpired Licensed Patent(s) shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken.

         2.7  " LICENSEE " is understood to include ProlX Pharmaceuticals Corporation and any and all of its Affiliates. An Affiliate of LICENSEE shall mean any corporation or other business entity controlled by, controlling, or under common control with LICENSEE during the term of this Agreement. For this purpose, "control" means direct or indirect beneficial ownership:

• • (a)

    of at least fifty percent (50%) of the voting stock; or
    
    

    (b)

    of at least fifty percent (50%) interest in the income of such corporation or other business.

         2.8  " Net Sales " means the gross revenue generated by sale or use of the Licensed Product(s) in the form in which it is sold or used, less the following items:

• • (a)

    Import, export, excise, value added and sales taxes, plus custom duties;
    
    

    (b)

    Costs of insurance, packing and transportation from the place of manufacture to the customer's premises or point of installation;
    
    

    (c)

    Normal and customary quantity and cash discounts; and
    
    

    (d)

    Credit for returns, allowances, or trades actually given.

        For Licensed Products sold or otherwise provided in combination with other products or services, or provided in other than a sale transaction, Net Sales shall be based on the quantity of products or services provided times the price for a similar product or service when sold or otherwise provided separately by LICENSEE in an arms-length transaction in similar quantities.

         2.9  " Regulatory Approval " means any approval or clearance by any governmental agency or agencies having authority to regulate the use or sale of any Licensed Product(s) in the pertinent jurisdiction or territory.

       2.10  " Technology " means the Licensed Application(s) and Licensed Patents as well as any technical data, know-how, material, research results and other information provided to LICENSEE by LICENSOR or its employees or contractors including, without limitation, any biochemical, preclinical, clinical, manufacturing, formulation, and scientific research information of a confidential nature whether patentable or unpatentable, relating to, but limited to the subject matter described or claimed in, the Licensed Application(s) and/or Licensed Patent(s) as listed in APPENDIX A.

3. GRANT

         3.1  LICENSOR hereby grants and LICENSEE hereby accepts an exclusive, even as to LICENSOR, worldwide license to make, have made, use, sell, have sold, offer for sale, import, and otherwise obtain or provide Licensed Product(s) and to use Technology in the Field of Use. Notwithstanding the preceding sentence, LICENSORS shall retain the right to use the Technology for internal educational and research purposes within each LICENSOR's respective institution.

         3.2  Said license is transferable and includes the right to sublicense. The terms and conditions of any transfer or sublicense shall be consistent with the terms and conditions of this Agreement and LICENSOR shall have the right to approve such transfer or sublicense, which approval shall not be withheld absent a clear potential to adversely affect the financial consideration anticipated under the

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license. The approval of LICENSOR shall also be required in connection with any transfer or sublicense to any Affiliate of LICENSEE, which approval shall not be unreasonably withheld.

4. ROYALTIES, PAYMENTS AND MILESTONES

         4.1  LICENSEE agrees to reimburse GEORGETOWN a total of [+] for costs incurred to date in connection with the preparation, filing and prosecution of the Licensed Applications. After the effective date, and during the term of this Agreement, LICENSEE agrees to assume responsibility for future patent prosecution and maintenance costs as provided in the following Article 7.1.

         4.2  LICENSEE shall pay to LICENSOR benchmark royalties relating to each Licensed Product as follows:

• • (1)

    [+]
    
    

    (2)

    [+]
    
    

    (3)

    [+]; and
    
    

    (4)

    [+].

        LICENSEE may investigate more than one Licensed Product through Phase II tests, without paying more than one set of benchmark royalties. If LICENSEE should choose to submit multiple NDAs or an NDA covering more than one Licensed Product, then the benchmark royalties relating to additional Licensed Products as set forth in 4.2 (3) and (4) above shall be reduced by [+]. If, after obtaining approval of an NDA, LICENSEE attempts to develop additional Licensed Products, benchmark royalties relating to such products will be reduced by [+].

         4.3  In addition, LICENSEE shall pay LICENSOR earned royalties on Net Sales of Licensed Product sold directly by LICENSEE in the country in which the Licensed Product is made, used or sold. The royalty shall be [+] for all Fields of Use. If the Licensed Product is sublicensed, LICENSEE shall pay to LICENSOR a sublicensing fee as a percentage of revenues received by LICENSEE. For pharmaceuticals and therapeutics, LICENSOR's share of sublicense revenues shall be [+] until [+] and [+] thereafter. For diagnostics, LICENSOR's share of sublicense revenues shall be [+] until [+], and [+] thereafter.

         4.4  The royalty on sales in currencies other than U.S. Dollars shall be calculated using the appropriate foreign exchange rate for such currency quoted by the Wall Street Journal, on the close of business on the last banking day of each calendar quarter. Royalty payments to LICENSOR shall be in U.S. Dollars.

5. REPORTS, PAYMENTS AND ACCOUNTING

        5.1     Quarterly Royalty Payment and Report .    LICENSEE shall make written reports and royalty payments to ARIZONA within [+] days after the end of each calendar quarter following the First Commercial Sale. This report shall state the number, description, and aggregate Net Sales of Licensed Product(s) during such completed calendar quarter, and resulting calculation of earned royalty payment due the LICENSORS for such completed calendar quarter. Concurrent with the making of each such report, LICENSEE shall include payment due LICENSORS of royalties for the calendar quarter covered by such report.

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        All Payments pursuant to the License shall be made and sent to the following address:

        5.2     Annual Progress Reports .    LICENSEE shall provide to ARIZONA annual written progress reports with the first Quarterly Report for each calendar year after the effective date of this agreement. The reports shall include sufficient detail to allow LICENSOR to determine progress on research and development, manufacturing, sublicensing, marketing and sales during the previous twelve (12) months as well as plans for the coming year.

        5.3     Accounting .    LICENSEE agrees to keep records for a period of two (2) years showing the manufacturing, sales, use, and other disposition of products sold or otherwise disposed of under the license herein granted in sufficient detail to enable the royalties payable hereunder by LICENSEE to be determined, and further agrees to permit its books and records to be examined from time to time by a certified public accountant of a nationally recognized accounting firm, who is selected and paid for by ARIZONA, but no more than once per calendar year to the extent necessary to verify reports provided for in Paragraph 5.1 and no later than two years after a particular Quarterly Report is made. Such examination is to be made by ARIZONA, at its expense and all such information obtained shall be treated as confidential information pursuant to Article 9. If ARIZONA determines that LICENSEE has, for any reason, failed to pay adequate royalties, LICENSEE shall immediately upon notice thereof pay to ARIZONA any owed royalties plus interest at the rate of [+] per annum, compounded daily, calculated from the date upon which such royalties should have been paid to the date of actual payment of ARIZONA.

6. REPRESENTATIONS

         6.1  Each LICENSOR represents and affirms that it has the right to grant LICENSEE the license granted herein and that it has not granted any license to the Licensed Patents or Licensed Applications or any rights in any Licensed Product(s) to any third party, except for United States government rights which may have been required by law.

         6.2  Each LICENSOR represents and affirms that, to such LICENSOR's knowledge, information and belief:

• • (a)

    there are no patents, applications, or invention disclosures owned or assigned to a LICENSOR relating to the Technology other than those listed on Appendix A;
    
    

    (b)

    there is no material prior art of which LICENSOR and its employees and contractors are aware that has not been provided to patent counsel; and
    
    

    (c)

    other than the Licensors, there are no co-owners of the Licensed Applications and Licensed Patents, except as set forth herein.

         6.3  Each LICENSOR represents to LICENSEE that such LICENSOR shall be liable for all claims, damages, or suits arising from the acts, omissions, or negligence of its respective officers, agents, and employees.

         6.4  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTY

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OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENTED RIGHTS CLAIMS, ISSUED OR PENDING.

         6.5  EXCEPT FOR ITS OBLIGATIONS OF COOPERATION AS SET FORTH IN SECTION 8 HEREOF, NOTHING IN THIS AGREEMENT, EITHER EXPRESS OR IMPLIED, OBLIGATES LICENSOR EITHER TO BRING OR TO PROSECUTE ACTIONS OR SUITS AGAINST THIRD PARTIES FOR PATENT INFRINGEMENT OR TO FURNISH ANY KNOW-HOW OR TRADE SECRETS NOT PROVIDED IN LICENSOR'S LICENSED PATENTS OR LICENSED APPLICATIONS.

         6.6  IN NO EVENT SHALL LICENSOR BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE EXERCISE OF THIS LICENSE OR THE USE OF THE LICENSED TECHNOLOGY OR LICENSED PRODUCTS.

         6.7  NO WARRANTY OR REPRESENTATION IS MADE THAT ANYTHING MADE, USED, OR SOLD UNDER THE TERMS OF THIS AGREEMENT WILL BE FREE FROM INFRINGEMENT OF ANY THIRD PARTY PATENTS.

         6.8  THIS AGREEMENT DOES NOT CONFER BY IMPLICATION, ESTOPPEL, OR OTHERWISE ANY LICENSE OR RIGHTS TO ANY OTHER PATENT OF LICENSOR OTHER THAN PATENT RIGHTS AS EXPRESSLY STATED HEREIN, REGARDLESS OF WHETHER SUCH PATENTS ARE DOMINANT OR SUBORDINATE TO PATENT RIGHTS.

7. PROSECUTION OF LICENSED PATENTS

         7.1  LICENSEE agrees to accept liaison and financial responsibilities, as hereinafter set forth, for the prosecution, by a patent lawyer in independent practice, who shall be nominated by LICENSEE and approved by LICENSOR, of the Licensed Applications listed on Appendix A, and additional applications as the parties may subsequently agree. Said financial responsibilities shall not only include the costs of prosecution but also the payment of maintenance fees, where required, to maintain said patent applications and patents, if issued, in force and effect for as long as possible. It is further agreed that the patent lawyer selected and paid by LICENSEE and approved by LICENSOR shall be required, if so desired by LICENSOR, to keep a patent lawyer selected by LICENSOR informed of all steps in the prosecution and maintenance of said Patent Rights. Notice of prosecution and maintenance of said Patent Rights shall be sent to:

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If, for any reason, prosecu