Cooperative Antiviral Research Activity Agreement

Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.


CO-OPERATIVE


ANTIVIRAL RESEARCH ACTIVITY AGREEMENT


THIS AGREEMENT IS MADE BETWEEN:


- NOVIRIO SARL, a French pharmaceutical company located 23 - 25 rue de
Berri, 75008 Paris France, on behalf and for the benefit of NOVIRIO
Pharmaceuticals Limited, a company organized in the Cayman Islands, and
represented by Bruno Lucidi, President and CEO.


- The Dipartimento di Biologia Sperimentale "Bernardo Loddo" dell'Universita
di Cagliari, located Cittadella Universitaria, SS 554 KM 4.5, 09133
Monserrato, Cagliari, represented by Prof. Giovanni Biggio, Director.


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1. PURPOSE


The purpose of this agreement is to define the terms of the co-operative activity to be undertaken by or for the benefit of each of the parties hereto and Novirio Pharmaceuticals Limited in connection with research in the field of antiviral substances, hereafter referred to as `Co-operative activity.' This agreement covers two entities and in no way creates a corporate, joint venture or partnership structure or arrangement. It excludes the `affectio societatis' and any other direct or indirect association with any corporation whatever its structure may be. Specifically with regard to third parties, each of the parties will act in its own name and on its own account and will have no authority to bind the other party hereto.


2. SCOPE


This agreement is applicable to research in the field of antiviral substances, the main field of interest of the Section of Microbiology of Dipartimento di Biologia Sperimentale dell'Universita di Cagliari, and includes without limitation all research activities directly or indirectly related to the development of antiviral substances, tests or analytic procedures relating thereto and all other research activity made necessary by the main activity which will constitute a part of the co-operative activity.


The initial research program which will constitute a part of the Co-operative activity is attached (annex 1). In case of inconsistency between annex 1 and present agreement, the latter shall prevail.


3. CO-OPERATIVE ACTIVITIES


3.1 PERSONNEL


The Co-operative activity will be carried out by NOVIRIO SARL personnel with the support of personnel of the Section of Microbiology of the Dipartimento di Biologia Sperimentale. Temporary personnel may be hired, when necessary, with funds provided by NOVIRIO SARL. Any employee assigned to the Co-operative activity by a party hereto shall remain an employee of such party. Such party shall be responsible for satisfaction of the obligations it owes to the employees it has assigned to the Co-operative activity, including civil duties, such as insurance, social security, taxes, accidents at work and illnesses due to activity. Each party shall be responsible for its own staff administration and shall be free to evaluate all needs related to its own staff. Each party is responsible for acts committed by its staff assigned to the Co-operative activity. It is understood and agreed that every staff member shall follow the general rules of discipline and security of the Section of Microbiology of the Dipartimento di Biologia Sperimentale. Each party shall inform its staff, at the time of assignment to the Co-operative activity, of necessary measures as regards to the terms of this agreement.


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3.2 LOCATION / FACILITIES


The Co-operative activity will take place at and within the facilities of the Section of Microbiology of the Dipartimento di Biologia Sperimentale. The NOVIRIO SARL personnel assigned to the Co-operative activity will have access to main services, such as documentation centre, general public services from the Universita di Cagliari on the same conditions as the personnel of the Dipartimento di Biologia Sperimentale, under the responsibility of the Director of the Co-operative activity.


3.3 MEANS


Each party agrees to provide the resources to the Co-operative activity in accordance with the plan attached hereto in annex 2.


NOVIRIO SARL will retain sole ownership of the basic means which it has supplied to or paid for the Co-operative activity and shall have the right to remove such means from the facilities of the Dipartimento di Biologia Sperimentale at the termination of this agreement.


4. PARTNERSHIPS AND OTHER AGREEMENTS


Public laboratories or third party entities may collaborate with the parties hereto in connection with the Co-operative activity, provided, that such collaboration is regulated by a written agreement with third parties signed by NOVIRIO SARL and a representative of the Dipartimento di Biologia Sperimentale specifying the purpose, the duration and the party's contributions and shall not affect the rights and obligations of the parties arising in connection with or pursuant to Articles 8, 9 and 10 of this agreement. The present agreement shall prevail should inconsistencies occur between agreements.


5. STEERING COMMITTEE


5.1 ESTABLISHMENT AND MEMBERS


Pursuant to this agreement, a steering committee is hereby established
for the purpose of determining the detailed objectives for and research
programs to be undertaken by the Co-operative activity and for the
other purposes set forth in Article 5.2 of this agreement. The Steering
Committee will include at least one representative designated from time
to time by each party hereto and will consist of not more than 5
members. The members of the Steering Committee will appoint a chairman.
The initial members of the Steering Committee are:


Prof. Jean-Pierre Sommadossi, Chairman of the Board of Novirio
Pharmaceuticals Limited;
Mr. Bruno Lucidi, President and CEO of Novirio Pharmaceuticals
Limited; and
Prof. Paolo La Colla, Dipartimento di Biologia Sperimentale.


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The initial Chairman of the Steering Committee is Prof. Jean-Pierre
Sommadossi.


5.2 MEETINGS AND RESPONSIBILITIES


The chairman of the Steering Committee shall call a meeting of such committee at least once a year. Additional meetings of the Steering Committee may be called by the Chairman as often as the Chairman deems necessary or appropriate. The Steering Committee shall be responsible for the following matters:


(i) the annual determination and establishment of the detailed
objectives for and the research programs to be undertaken by
the Co-operative activity;
(ii) appointment of a Co-operative activity Director and the
Steering Committee Chairman;
(iii) approval, prior to implementation, of any material
modifications proposed by the Co-operative activity director
to previously established detailed objectives or research
programs;
(iv) oversight, monitoring and modification of the operations of
the Co-operative activity and the budget attached hereto as
annex 2, which oversight shall include but not be limited to
decisions regarding staffing, publications and communications
in accordance with Article 8 of this agreement and licensing
in accordance with Article 10 of this agreement.


5.3 CO-OPERATIVE ACTIVITY DIRECTOR


Subject to the authority vested in the Steering Committee, the operations of the Co-operative activity will be managed by the Co-operative Director who will be a member of Dipartimento di Biologia Sperimentale. In addition to general management of the Co-operative activity and implementation of the decisions of the Steering Committee, the Co-operative activity Director will prepare and deliver to the Steering Committee research program proposals and co-operative activity objectives and proposals for modification of any previously approved detailed objectives and research programs. The initial Co-operative Activity Director is Prof. Paolo La Colla.


6. CONFIDENTIALITY


Each party agrees to keep confidential and not disclose or use, except for purposes permitted for performance under the agreement, any information whatsoever including without limitation proprietary or confidential business, technical or scientific information owned by or related to either one of the involved parties which has been obtained from or derived from information provided by the other party in connection with the negotiation and execution of this agreement or the Co-operative activity. Each party agrees to inform its staff of the terms of this article and ensure that said staff respect these terms.


This clause shall remain active for as long as the information is not of ...