Exhibit 10.4

FIRST AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into this 31st day of October, 2017, by and among SILICON VALLEY BANK, a
California corporation (“Bank”) and SAVARA INC. f/k/a MAST THERAPEUTICS, INC., a
Delaware corporation (“Parent”), and ARAVAS INC. f/k/a SAVARA INC. a Delaware
corporation (each a “Co-Borrower” and collectively “Co-Borrowers”).

Recitals

A. Bank and Co-Borrowers have entered into that certain Loan and Security
Agreement dated as of April 28, 2017 (as the same may from time to time be
further amended, modified, supplemented or restated, the “Loan Agreement”).  

B. Bank has extended credit to Co-Borrowers for the purposes permitted in the
Loan Agreement.

C. Co-Borrowers have requested that Bank amend the Loan Agreement to (i) permit
transactions contemplated by the LifeRaft Asset Purchase Agreement (as defined
below), and (ii) make certain other revisions to the Loan Agreement as more
fully set forth herein.

D. Bank has agreed to so amend certain provisions of the Loan Agreement, but
only to the extent, in accordance with the terms, subject to the conditions and
in reliance upon the representations and warranties set forth below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1. Definitions.  Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.

2. Amendments to Loan Agreement.  

2.1 Section 7.1 (Dispositions).  New subsection (k) is hereby added to the end
of Section 7.1 of the Loan Agreement to read as follows:

“and (k) made pursuant to the LifeRaft Asset Purchase Agreement.”

2.2 Section 13 (Definitions).  The following term and its respective definition
is hereby added in its entirety in Section 13.1 of the Loan Agreement, as
appropriate, as follows:

“LifeRaft Asset Purchase Agreement” means that certain Asset Purchase Agreement
by and among Co-Borrowers and LifeRaft Biosciences Inc., a South Carolina
corporation, in substantially the form attached hereto as Annex I.  

2.3 Exhibit A of the Loan Agreement is hereby replaced with Exhibit A attached
hereto.

3. Notice.  Pursuant to Section 7.2 of the Loan Agreement, the Co-Borrowers
hereby deliver notice of their intent to sign a new office lease for a new
office location on or about November 2017.

4. Limitation of Amendments.

4.1 The amendments set forth in Section 2, above, are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any other
term or condition of any Loan Document, or (b) otherwise prejudice any right or
remedy which Bank may now have or may have in the future under or in connection
with any Loan Document.

4.2 This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

 

--------------------------------------------------------------------------------

 

5. Representations and Warranties.  To induce Bank to enter into this Amendment,
each Co-Borrower hereby represents and warrants to Bank as follows:

5.1 Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default has occurred and
is continuing;

5.2 Co-Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;

5.3 The organizational documents of Co-Borrower delivered to Bank on April 28,
2017 remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;

5.4 The execution and delivery by Co-Borrower of this Amendment and the
performance by Co-Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, have been duly authorized;

5.5 The execution and delivery by Co-Borrower of this Amendment and the
performance by Co-Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, do not and will not contravene (a) any law or
regulation binding on or affecting Co-Borrower, (b) any contractual restriction
with a Person binding on Co-Borrower, (c) any order, judgment or decree of any
court or other governmental or public body or authority, or subdivision thereof,
binding on Co-Borrower, or (d) the organizational documents of Co-Borrower;

5.6 The execution and delivery by Co-Borrower of this Amendment and the
performance by Co-Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on either Co-Borrower, except as already has been obtained or
made; and

5.7 This Amendment has been duly executed and delivered by Co-Borrower and is
the binding obligation of Co-Borrower, enforceable against Co-Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.

6. Counterparts.  This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

7. Effectiveness.  This Amendment shall be deemed effective upon the due
execution and delivery to Bank of this Amendment by each party hereto.

8. Covenant.  As a covenant to this Amendment, no later than thirty (30) days
after Co-Borrowers move into the leased location at 6836 Bee Caves Road, the
Overlook at Rob Roy, Building III, Suite 200, Austin, TX 78746, Co-Borrowers
shall deliver to Bank, on a best efforts basis, a landlord’s consent in favor of
Bank for such location by the respective landlord thereof, together with the
duly executed signatures thereto.

[Balance of Page Intentionally Left Blank]

[Signature page follows.]

 

 

2

 

--------------------------------------------------------------------------------

 

In Witness Whereof, the parties hereof have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

BANK

 

 

  

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

 

/s/ Anthony Flores

 

 

 

 

 

Name:

 

Anthony Flores

 

 

 

 

 

Title:

 

Director

 

 

 

 

 

CO-BORROWER

 

 

 

 

 

SAVARA INC.

 

 

 

 

 

By:

 

/s/ David L. Lowrance

 

 

 

 

 

Name:

 

David L. Lowrance

 

 

 

 

 

Title:

 

CFO

 

 

 

 

 

CO-BORROWER

 

 

 

 

 

ARAVA INC.

 

 

 

 

 

By:

 

/s/ David L. Lowrance

 

 

 

 

 

Name:

 

David L. Lowrance

 

 

 

 

 

Title:

 

CFO

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

COLLATERAL DESCRIPTION

The Collateral consists of all of Co-Borrowers’ right, title and interest in and
to the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a
writing), securities, and all other investment property, supporting obligations,
and financial assets, whether now owned or hereafter acquired, wherever located;
and

all Co-Borrowers’ Books relating to the foregoing, and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include any of the
following: (a) Intellectual Property; provided, however, the Collateral shall
include all Accounts and all proceeds of Intellectual Property; provided that if
a judicial authority (including a U.S. Bankruptcy Court) would hold that a
security interest in the underlying Intellectual Property is necessary to have a
security interest in such Accounts and such property that are proceeds of
Intellectual Property, then the Collateral shall automatically, and effective as
of the Effective Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank’s security interest in such Accounts and such other
property of a Co-Borrower that are proceeds of the Intellectual Property; (b)
more than 65% of the presently existing and hereafter arising issued and
outstanding shares of capital stock owned by a Co-Borrower of any Foreign
Subsidiary or FSHCO which shares entitle the holder thereof to vote for
directors or any other matter; (c) any intent-to-use trademarks at all times
prior to the first use thereof, whether by the actual use thereof in commerce,
the recording of a statement of use with the United States Patent and Trademark
Office or otherwise; (d) any interest of a Co-Borrower as a lessee or sublessee
under a real property lease; (e) rights held under a license that are not
assignable by their terms without the consent of the licensor thereof (but only
to the extent such restriction on assignment is enforceable under applicable
law); (f) any interest of a Co-Borrower as a lessee under an Equipment lease if
a Co-Borrower is prohibited by the terms of such lease from granting a security
interest in such lease or under which such an assignment or Lien would cause a
default to occur under such lease; provided, however, that upon termination of
such prohibition, such interest shall immediately become Collateral without any
action by such Co-Borrower or Bank; (g) any Purchased Assets (as defined in the
LifeRaft Asset Purchase Agreement).

 

--------------------------------------------------------------------------------

 

Annex I

LifeRaft Asset Purchase Agreement

[to be attached]

 

 

 

 

 

--------------------------------------------------------------------------------

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is entered into and made
effective as of October ___, 2017 (the “Effective Date”), by and between
LifeRaft Biosciences Inc., a South Carolina corporation (“Buyer”), and Savara
Inc., a Delaware corporation (“Seller”).

WHEREAS, Seller by virtue of its merger with Mast Therapeutics, Inc. (“Mast
Therapeutics”) on or about April 27, 2017 (the “Seller Acquisition Date”) holds
certain rights to a discontinued vepoloxamer product candidate;

WHEREAS, Mast Therapeutics in September 2016 made the strategic decision to
discontinue clinical development of vepoloxamer and to wind down all of the
clinical studies of that asset after its Phase 3 clinical development for
treatment of vaso-occlusive crisis in patients with sickle cell disease and
failed to achieve its primary efficacy endpoint;

WHEREAS, Mast Therapeutics in turn discontinued such clinical development and
wound down all such clinical studies prior to its merger with Seller;

WHEREAS, Seller now desires to sell, transfer and assign to Buyer, and Buyer
desires to acquire and assume from Seller, certain assets related to the
vepoloxamer product candidate as set forth in Section 2.3 below (the “Purchased
Assets”), subject to the terms and conditions set forth in this Agreement;

NOW, THEREFORE, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. When used in this Agreement and not otherwise defined in this
Agreement, the following terms will have the meanings specified in this Section
1.1 and will be applicable equally to both the singular and plural forms.

1.1.1 “Affiliate” means an entity that directly or indirectly controls, is
controlled by, or is under common control by Buyer. Control means direct or
indirect ownership of, or other beneficial interest in, fifty percent (50%) or
more of the voting stock, other voting interest, or income of a corporation or
other entity, the power to direct or cause the direction of the management and
policies of the other entity, or the power to elect or appoint fifty percent
(50%) or more of the members of the governing body of the other entity.  An
entity shall only be deemed an Affiliate for the duration of such control.

1.1.2 “Net Sales” means the gross amounts received by Buyer or an Affiliate for
the sale of a Therapeutic Product (as defined in Section 1.1.11 below) or a
Storage Product (as defined in Section 1.1.10 below), as applicable, to a Third
Party (as defined in Section 1.1.12 below), after deduction of all the following
customary and normal amounts (to the extent applicable to such sales):

(a) trade, case and quantity credits, discounts, refunds or rebates, including
without limitation rebates accrued, incurred or paid to Federal Medicare and
State Medicaid and any other price reductions required by a United States or
foreign governmental agency;

(b) allowances or credits actually granted for returns, including without
limitation amounts received for sales that become the subject of a subsequent
temporary or partial recall by a regulatory agency for safety or efficacy
reasons outside the control of Buyer or an Affiliate, as applicable, and
retroactive price reductions (including Medicaid, managed care and similar types
of rebates) to the extent that each is included in Buyer’s or an Affiliate’s
billings, provided, however, that amounts set aside for temporary recalls are
added back to Net Sales in the event the temporary recall is cancelled;

(c) cost of freight, postage, and freight insurance, if actually paid by and to
the extent that each is included in Buyer’s or an Affiliate’s billings;

(d) taxes, value added taxes, excise taxes, and customs duties directly imposed
and with reference to particular sales, but specifically excluding taxes based
on net income of Buyer;

(e) sales commissions paid to non-employees of Buyer or an Affiliate; and

(f) cost of export licenses and any taxes, fees or other charges associated with
the exportation or importation of such Therapeutic Product or such Storage
Product, as applicable;

 

--------------------------------------------------------------------------------

 

provided that all of the foregoing deductions are calculated in accordance with
generally accepted accounting principles (GAAP) consistently applied.

For purposes of this definition, (x) a sale or transfer to an Affiliate  for
re-sale by such Affiliate will not be considered a sale, but the resale by such
Affiliate shall be considered a sale; and (y) any amounts received by Buyer or
an Affiliate in exchange for a Therapeutic Product or a Storage Product
transferred or provided to any person or entity for use in testing, clinical
trials, or as marketing samples to develop or promote such products, will not be
included in the definition of Net Sales.

If a Therapeutic Product or a Storage Product includes one or more components
(“Other Components”) not subject to a Valid Claim (as defined in Section 1.1.13
below) and Other Components contribute significant and material value to such
Therapeutic Product or such Storage Product (such a Therapeutic Product or a
Storage Product, a “Combination Product”), the Net Sales of such Combination
Product shall be determined as follows:

1. Buyer will determine the actual Net Sales of such Combination Product (using
the above provisions of this Section 1.1.2); then

2. Such amount shall be multiplied by the fraction “A/(A+B)”, where “A” is the
price of the applicable Therapeutic Product or Storage Product if sold
separately, and “B” is the aggregate price of all the Other Components, if sold
separately; but

3. If all the Other Components are not sold separately, Buyer shall determine
actual Net Sales of such Combination Product (using the above provisions of this
Section 1.1.2) and such amount shall be multiplied by the fraction “A/C”, where
“A” is the price of the applicable Therapeutic Product or Storage Product if
sold separately, and “C” is the price of such Combination Product; provided,
however, that the maximum value of the fraction “A/C” may not exceed one (1).

4. If neither the applicable Therapeutic Product or Storage Product nor all the
Other Components are sold separately, the adjustment to Net Sales will be
determined by Buyer in good faith to reasonably reflect the fair value of the
contribution of the components of the applicable Therapeutic Product or Storage
Product subject to Valid Claims to the total market value of such Combination
Product.

1.1.3 “Poloxamer Assets” means any ethoxylated surface active agents acquired by
Mast Therapeutics (then known as “Adventrx Pharmaceuticals”) from SynthRx Inc.,
or developed by Mast Therapeutics, including but not limited to (i) poloxamer
188, (ii) vepoloxamer or (iii) purified poloxamer 188.

1.1.4 “Product” means a product containing Vepoloxamer (as defined in Section
1.1.14 below) as an active ingredient where the manufacture, use, sale, offering
for sale or importation of which, in the absence of the purchase (and
assignment) contemplated by this Agreement, would infringe a Valid Claim.

1.1.5 “Program” means all of the activities directed to the development,
manufacture and commercialization of the Poloxamer Assets prior to the Seller
Acquisition Date.

1.1.6 “Program IP” means all intellectual property rights and other proprietary
rights related to the Poloxamer Assets (other than Program Patents) owned or
controlled by Seller.

1.1.7 “Program Know-How” means information not included in the Program Patents,
which information is: (a) Controlled by Seller immediately prior to the Closing;
and (b) directed to the development, manufacture (including synthesis,
characterization, control, formulation, storage, finishing or packaging), use,
commercialization, offer for sale, sale or import of any Poloxamer Assets.

1.1.8 “Program Patents” means:

(a) the patents and patent applications listed on Exhibit A;

(b) any and all divisionals, continuations and continuations-in-part of the
patents and patent applications referenced in the preceding subsection (a);

(c) the foreign patent applications associated with the patent applications
referenced in the preceding subsections (a) and (b);

(d) the patents issued or issuing from the patent applications referenced in the
preceding subsections (a) through (c); and

(e) reissues, reexaminations, restorations (including supplemental protection
certificates) and extensions of any patent or patent application referenced in
the preceding subsections (a) through (d).

2

 

--------------------------------------------------------------------------------

 

1.1.9 “Program Technology” means the Program IP, Program Know-How and Program
Patents.

1.1.10 “Storage Product” means a Product that is approved for marketing by the
U.S. Food and Drug Administration (or foreign equivalent) for use in the ex vivo
storage of cells intended for future transplant or transfusion into patients.

1.1.11 “Therapeutic Product” means a Product that is approved for marketing by
the U.S. Food and Drug Administration (or foreign equivalent) for direct
administration to a patient for the treatment of a medical condition.  

1.1.12 “Third Party” means any entity or person other than Buyer or an
Affiliate.

1.1.13 “Valid Claim” means any claim of United States Patent No. 9,403,941 (or
any foreign patent that claims priority thereto) that has not lapsed, been
canceled or become abandoned and has not been declared invalid or unenforceable
by an unreversed decision or judgment of a court or other appropriate body of
competent jurisdiction, and which has not been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.

1.1.14 “Vepoloxamer” means the purified poloxamer 188 described in United States
investigational new drug (IND) # 31,246 and claimed in United States Patent No.
9,403,941, and US IND # 121,764.

1.1.15 Additional definitions:

“Action” has the meaning set forth in Section 3.1.5 below.

“Assumed Liabilities” has the meaning set forth in Section 2.2 below.

“Cash Payment” has the meaning set forth in Section 2.7 below.

“Closing” has the meaning set forth in Section 2.10 below.

“Closing Date” has the meaning set forth in Section 2.10 below.

“Contingent Payment” has the meaning set forth in Section 2.7 below.

“Encumbrances” has the meaning set forth in Section 2.1 below.

“Excluded Assets” has the meaning set forth in Section 2.4 below.

“Excluded Liabilities” has the meaning set forth in Section 2.2 below.

“Liabilities” has the meaning set forth in Section 2.2 below.

“Payment Report” has the meaning set forth in Section 2.8(a) below.

“Royalties” has the meaning set forth in Section 2.7(b)(i) below.

“Sales Milestone Payments” has the meaning set forth in Section 2.7(b)(ii)
below.

“Seller Custody Period” has the meaning set forth in Section 2.1 below.

“Transferred Agreements” has the meaning set forth in Section 2.3(b) below.

3

 

--------------------------------------------------------------------------------

 

ARTICLE II

ASSET PURCHASE AND SALE

2.1 Purchase and Sale of Assets.  Subject to the terms and conditions set forth
in this Agreement, Seller shall sell, assign, transfer, convey and deliver to
Buyer (or its designee Affiliate as named in writing to Seller), and Buyer shall
purchase from Seller, all of Seller’s right, title and interest in and to the
Purchased Assets, free and clear of any mortgage, pledge, lien, charge, security
interest, claim or other encumbrance (“Encumbrances”) arising during and
attributable to the period between the Seller Acquisition Date and the Closing
Date (as defined in Section 2.10 below) (the “Seller Custody Period”).

2.2 Limitation of Assumed Liabilities. Buyer shall not assume or be liable for
any liabilities, debt or obligations, including any costs or expenses relating
thereto, of Seller of any kind, whether direct or indirect, known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
matured, due or to become due or otherwise related to Purchased Assets
(“Liabilities”) arising during and attributable to the Seller Custody Period
(the “Excluded Liabilities”).  For purposes of clarification, the Excluded
Liabilities includes all liabilities for taxes relating to the Purchased Assets
for all taxable periods ending on or prior to the Closing Date.  Buyer shall
assume and be liable for any Liabilities other than those Liabilities arising
during and attributable to the Seller Custody Period (the “Assumed
Liabilities”).  If and to the extent Seller continues to benefit from any
third-party indemnification granted to Seller for the period prior to the
Closing Date with respect to the Purchased Assets, then Seller agrees to use
reasonable efforts to assign such indemnification right to indemnification to
Buyer.

2.3 Purchased Assets. Subject to the terms and conditions of this Agreement, at
the Closing (as defined in Section 2.10 below), Seller shall sell, convey,
transfer, assign and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, free and clear of all Encumbrances other than the Assumed Liabilities,
all of Seller’s right, title and interest in and to all of the following
(collectively, the “Purchased Assets”):

(a) All Program Technology, and all rights to sue for or assert claims against
and remedies against past, present or future infringements of any or all of the
Program Technology and rights of priority and protection of interests therein
and to retain any and all amounts therefrom except any Excluded Assets;

(b) A copy of all contracts that are set forth on Exhibit A (the “Transferred
Agreements“);

(c) Seller’s interest in and to any Poloxamer Assets material, starting
materials, intermediates and reference standards for and Poloxamer Assets stock
on hand; and

(d) All of Seller’s data, records, files, manuals and other documentation that
embody the Program Technology or the Transferred Agreements, including: (i)
studies, reports, publications, correspondence and other similar documents and
records, whether in electronic form or otherwise; (ii) all regulatory
submissions and any amendments thereto prepared in connection with the Poloxamer
Assets and all related materials and documentation including regulatory
correspondence, tracking files, meeting minutes and strategy materials; and
(iii) all files, documents, correspondence, and records of attorneys or
consultants of Seller relating to the prosecution of Program Patents, but
excluding Seller’s data, records, files, manuals or other documentations related
to non-Program Therapies; in each case, excluding the Excluded Assets. The
delivery of all Purchased Assets in a physical form shall be made at such place
as mutually agreed by Buyer and Seller.

2.4 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.3 or elsewhere in this Agreement, any and all assets of Seller not
expressly set forth in Section 2.3 and Exhibit A (collectively, the “Excluded
Assets”) shall not be part of the sale and purchase contemplated hereunder, are
excluded from the Purchased Assets, and shall remain the property of Seller
after the Closing.

2.5 Assumed Liabilities. Upon and subject to the terms, conditions,
representations and warranties of Seller contained in this Agreement, and
subject to Section 2.3 above, Buyer hereby assumes and agrees to pay, perform,
and discharge in a timely manner when due the following:

(a) any Liabilities of Seller under the Transferred Agreements as disclosed in
Exhibit B, but only to the extent such Liabilities (i) arise after the Closing
Date, (ii) do not arise from or relate to any breach by the Seller of any
provision of any of such Transferred Agreements, (iii) do not arise from or
relate to any event, circumstance or condition occurring or existing on or prior
to the Closing Date that, with notice or lapse of time, would constitute or
result in a breach of any of such Transferred Agreements, and (iv) are
ascertainable (in nature and amount) solely by reference to the express terms of
such Transferred Agreements; and

(b) all Liabilities of Seller relating to the prosecution, ownership, control,
operation, maintenance, sale, lease, or use of Purchased Assets by Buyer but
only to the extent that they arise after the Closing;

4

 

--------------------------------------------------------------------------------

 

2.6 Retained Liabilities. Except for the Assumed Liabilities and the obligations
of Buyer pursuant to Section 2.5 above, Buyer shall not assume, and shall have
no liability for, any Liabilities of Seller of any kind, character or
description, whether accrued, absolute, contingent or otherwise, it being
understood that Buyer is expressly disclaiming any express or implied assumption
of any Liabilities other than the Assumed Liabilities.

2.7 Cash Payments; Contingent Payments. In consideration of the Purchased
Assets, Buyer will pay to Seller the following cash payments set forth in
Section 2.7(a) below (“Cash Payments”) and contingent payments set forth in
Section 2.7(b) below (“Contingent Payments”), respectively:

(a) Cash Payments. Buyer shall pay Seller One Hundred Twenty-Five Thousand and
00/100 Dollars (US$125,000.00) in Cash Payments as follows:

(i) US$25,000 upon execution of the Letter of Intent, which Seller hereby
acknowledges receipt as having been paid;

(ii) US$50,000 upon execution and delivery of this Agreement; and

(iii) US$50,000 upon submission by Seller of a letter, or multiple letters if
warranted, to (A) the United States Food & Drug Administration officially
transferring the two (2) Vepoloxamer INDs (US IND # 31,246 and US IND # 121,764)
from Seller to Buyer and (B) Notice of Recordation of the assignment of all
registrable intellectual property from Seller to Buyer with the United States
Patent & Trademark Office.  Seller shall then make this final payment by wire
transfer of immediately available funds within two (2) business days of the
applicable events.

(b) Contingent Payments. The Contingent Payments shall consist of either (1)
royalties on Net Sales as described in Section 2.7(b)(i) below (“Royalties”) and
(2) sales milestone payments as described in Section 2.7(b)(ii) below (“Sales
Milestone Payments”) if Seller directly sells a Product or (3) a percentage of
value received as described in Section 2.7(b)(iii) below in the case where Buyer
does not generate revenues from direct sales and receives value as the result of
a license, sale or other change in commercial control of Vepoloxamer or a
Vepoloxamer Product(s):

(i) Royalty: For the duration of a Valid Claim, Seller shall be entitled to
receive the following Royalties:

(A) Three percent (3%) of Net Sales of a Storage Product; and

(B) Five percent (5%) of Net Sales of a Therapeutic Product.

(ii) Sales Milestones: Seller shall be entitled to the following Sales Milestone
Payments.  (For the sake of clarity, these Sales Milestone Payments are one-time
payments to be made in each instance only upon the first instance of achieving
each applicable sales milestone, respectively):

(A) A one-time payment of US$2,500,000 following the first instance where Net
Sales of a Storage Product exceed US$50,000,000 in a calendar year;

(B) An additional one-time payment of US$7,500,000 following the first instance
where Net Sales of a Storage Product exceed US$150,000,000 in a calendar year;

(C) An additional one-time payment of US$10,000,000 following the first instance
where Net Sales of a Therapeutic Product exceed US$150,000,000 in a calendar
year;

(D) An additional one-time payment of US$15,000,000 following the first instance
where Net Sales of a Therapeutic Product exceed US$300,000,000 in a calendar
year; and

(E) An additional one-time payment of US$25,000,000 following the first instance
where Net Sales of a Therapeutic Product exceed US$600,000,000 in a calendar
year.

Payments shall be made within thirty (30) calendar days of achievement of the
applicable milestone.

5

 

--------------------------------------------------------------------------------

 

(iii) Contingent Payments in the case where Buyer does not generate revenues
from direct sales and receives value as the result of a license, sale or other
change in control of Vepoloxamer or a Vepoloxamer Product(s):

(A) If Buyer or its Affiliate enters into an agreement whereby Buyer does not
sell Product directly and receives tangible value from a third party following
the sale, license or other business transaction involving a change of control
for the commercial rights to Vepoloxamer or a product containing Vepoloxamer,
then the Contingent Payment(s) as described in Section 2.7(b)(i) and Section
2.7(b)(ii) shall not apply and the Contingent Payment(s) to Seller shall be:

(1) Thirty-five percent (35%) of any value received for a Therapeutic Product if
a change of control for the Therapeutic Product occurs within three (3) years of
the Effective Date; or

(2) Seven and one-half percent (7.5%) of any value received if a change of
control of the Therapeutic Product occurs three (3) or more years following the
Effective Date.

(B) In the case of a Storage Product, Buyer shall be entitled to twenty percent
(20%) of any value received if a change in control of the Storage Product occurs
within three (3) years of the Effective Date or seven and one-half percent
(7.5%) of any value received if the change in control of the Storage Product
occurs three (3) or more years following the Effective Date.

(C) For clarity and the avoidance of doubt, notwithstanding anything to the
contrary in this Section 2.7, “value received” where indicated in this Section
2.7(b)(iii) for purposes of Buyer’s obligation to make Contingent Payments to
Seller shall include any and all forms of consideration as and when received by
Buyer, including without limitation upfront payments, milestone payments,
royalties, and other then-present and then-future payments.

Any Contingent Payment will only be owed by Buyer to Seller following the actual
receipt of monies by Buyer with such payment to be made to Seller within thirty
(30) calendar days of the receipt by Buyer.

2.8 Payment Reports.

(a) Within sixty (60) days after the first business day of each calendar quarter
during which a commercial sale of a Product is made, Buyer (or its designee
Affiliate) will submit to Seller a written report with respect to the preceding
calendar quarter (the “Payment Report”) setting forth: (a) Net Sales of Products
during such quarter; and (b) a calculation of amounts due Seller for such
quarter.  Simultaneously with the submission of each Payment Report, Buyer (or
its designee Affiliate) will make payment to Seller of amounts due for the
calendar quarter covered by such Payment Report.  Payment will be by such method
as Seller may, from time to time, reasonably request.

(b) With respect to sales in foreign countries (or not consummated in U.S.
dollars), Buyer (or its designee Affiliate) will make payment to Seller in the
U.S. in U.S. dollars. Contingent Payments for sales in other than U.S. dollars
will be determined first in the currency in which the sale is consummated and
then converted to U.S. dollars using the buying rates of exchange quoted by The
Wall Street Journal (or its successor) in New York, New York for the last
business day of the calendar quarter covered by the applicable Payment
Report.  The Payment Report will show sales both in the non-U.S. dollar currency
and in U.S. dollars and will identify the exchange rate used.

(c) Buyer will maintain or required to be maintained records reasonable adequate
to support the calculation of the payment obligations under Section 2.7. Such
records will be maintained (a) with respect to Contingent Payments, for four (4)
years from the quarter with respect to which such records relate. Upon
reasonable notice, but not more than once per calendar year, Seller may have a
certified public accountant or auditor (reasonably acceptable to Buyer or, as
applicable, an Affiliate or a licensee) inspect the records required to be
maintained hereunder for purposes of verifying the accuracy of amounts paid
hereunder; provided, however, that such accountant or auditor will enter into a
confidentiality agreement with Buyer (or the applicable Affiliate or licensee).
In the event that such inspection shows that Buyer (or an Affiliate or a
licensee) has underpaid amounts due hereunder by five percent (5%) or more with
respect to any calendar year, Buyer (or the applicable Affiliate or licensee)
will pay, within fifteen (15) days after demand by Seller, the reasonable
out-of-pocket costs of such inspection, in addition to the amount of such
underpayment and interest thereon at a rate of five percent (5%) per annum.
Seller agrees (and will require applicable Affiliates and licensees to agree) to
cooperate with Seller’s accountant or auditor in connection with any such
inspection.

2.9 Purchase Price Allocation. Buyer will provide an allocation of the Cash
Payment enumerated in Section 2.7 above among the Purchased Assets for all
purposes (including tax and financial accounting). Each of Buyer and Seller will
file all tax returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.

6

 

--------------------------------------------------------------------------------

 

2.10 Closing. The closing of the transactions contemplated by this Agreement
(the “Closing”) will take place simultaneously with the execution and delivery
of this Agreement (the “Closing Date”) at the offices of Buyer, but effective as
of 12:01 A.M. on the business day following the Effective Date.

2.11 Closing Deliverables. On the Closing Date, each of Seller and Buyer will
duly execute and deliver:

(a) the Bill of Sale and Assignment in the form attached hereto as Exhibit C
(required to transfer the INDs and any other assets as listed in Exhibit A);

(b) the Patent Assignment in the form attached hereto as Exhibit D; and

(c) Officer’s Certificate of Seller confirming the accuracy of the
representations and warranties made in Article III as of the Closing Date,
substantially in the form attached hereto as Exhibit E.

ARTICLE III

SELLER REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties. Seller represents and warrants to Buyer that
the statements contained in this Article III are true and correct as of the
Effective Date.

3.1.1 Organization and Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has full corporate power and authority to enter into this Agreement and
the documents to be delivered and contemplated hereunder, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.

3.1.2 No Conflicts; Consents. The execution, delivery and performance by Seller
of this Agreement and the documents to be delivered or contemplated hereunder,
and the consummation of the transactions contemplated hereby, do not and will
not: (a) violate or conflict with the certificate of incorporation, bylaws or
other organizational document of Seller; (b) violate or conflict with any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Seller or the Purchased Assets; (c) conflict with, or result in (with or
without notice or lapse of time or both) any violation of, or default under, or
give rise to a right of termination, acceleration or modification of any
obligation or loss of any benefit under any contract or other instrument to
which Seller is a party or to which any of the Purchased Assets are subject; or
(d) result in the creation or imposition of any Encumbrance on the Purchased
Assets.  No consent, approval, waiver or authorization is required to be
obtained by Seller from any person or entity (including any governmental
authority) in connection with the execution, delivery and performance by Seller
of this Agreement and the consummation of the transactions contemplated hereby.

3.1.3 Title to Purchased Assets. Seller owns and has good title to the Purchased
Assets, (a) free and clear of free and clear of any Encumbrance arising during
and attributable to the Seller Custody Period, and (b) to the best of Seller’s
knowledge after reasonable inquiry, free and clear of any Encumbrance prior to
the Seller Acquisition Date.

3.1.4 Compliance with Laws. Seller has complied, and is now complying, with all
applicable federal, state and local laws and regulations applicable to ownership
of the Purchased Assets.

3.1.5 Legal Proceedings. There is no claim, action, suit, proceeding or
governmental investigation (“Action”) of any nature pending or, to Seller’s
knowledge (after reasonably inquiry), threatened against or by Seller (a)
relating to or affecting the Purchased Assets; or (b) that challenges or seeks
to prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.  To Seller’s knowledge (after reasonable inquiry), no event has
occurred or circumstances exist that may give rise to, or serve as a basis for,
any such Action.

3.1.6 Full Disclosure. No representation or warranty by Seller in this Agreement
or any certificate or other document furnished or to be furnished to Buyer
pursuant to this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which it is made, not misleading.

3.1.7 Use of Purchased Assets. Seller has not used or taken any adverse action
with respect to the Purchased Assets during the Seller Custody Period.

3.1.8 No other Representations or Warranties.

(a) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS
ARTICLE 3, NEITHER SELLER NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR
IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO SELLER, THE PURCHASED ASSETS,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE ASSUMED LIABILITIES AND
ANY OTHER

7

 

--------------------------------------------------------------------------------

 

RIGHTS OR OBLIGATIONS TO BE TRANSFERRED HEREUNDER OR PURSUANT HERETO, AND SELLER
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SELLER OR ANY
OF ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS
ARTICLE 3, SELLER HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE,
COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO BUYER OR ITS AFFILIATES OR
REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT
MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER BY ANY DIRECTOR, OFFICER, EMPLOYEE,
AGENT, CONSULTANT, OR REPRESENTATIVE OF SELLER OR ANY OF ITS
AFFILIATES).  SELLER MAKES NO REPRESENTATIONS OR WARRANTIES TO BUYER REGARDING
THE PROBABLE SUCCESS OR PROFITABILITY OF THE PURCHASED ASSETS OR THE PRODUCT.

(b) EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT FOR A BREACH BY SELLER OF ANY
SELLER REPRESENTATION OR WARRANTY, BUYER, UPON THE CLOSING, SHALL BE DEEMED TO
HAVE WAIVED, RELINQUISHED, AND RELEASED SELLER AND EACH OF ITS AFFILIATES FROM
AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN CONTRACT, STRICT LIABILITY OR TORT), LOSSES, DAMAGES, LIABILITIES,
COSTS, AND EXPENSES OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER OR ANY OF ITS AFFILIATES, AT
ANY TIME BY REASON OF OR ARISING OUT OF ANY AND ALL ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES, OR MATTERS REGARDING THE PURCHASED ASSETS OR THE TRANSACTION
CONTEMPLATED HEREIN.  BUYER ACKNOWLEDGES AND AGREES THAT THE WAIVERS, RELEASES,
AND OTHER PROVISIONS CONTAINED IN THIS PROVISION WERE A MATERIAL FACTOR IN
SELLER’S ACCEPTANCE OF THE PURCHASE PRICE AND THAT SELLER WOULD HAVE BEEN
UNWILLING TO SELL THE PURCHASED ASSETS TO BUYER UNLESS SELLER AND EACH OF ITS
AFFILIATES IS RELEASED AS EXPRESSLY SET FORTH ABOVE. BUYER, WITH BUYER’S
COUNSEL, HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS
AGREEMENT, AND UNDERSTANDS THE SIGNIFICANCE AND EFFECT THEREOF.  THE FOREGOING
WAIVER AND RELEASE SHALL NOT MODIFY, ALTER OR LIMIT ANY OF SELLER’S
REPRESENTATIONS OR WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

ARTICLE IV

BUYER REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties. Buyer represents and warrants to Seller that
the statements contained in this Article IV are true and correct as of the
Effective Date.

4.1.1 Organization and Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of South Carolina.
Buyer has full corporate power and authority to enter into this Agreement and
the documents to be delivered or contemplated hereunder, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.

4.1.2 Authorization. The execution, delivery and performance by Buyer of this
Agreement and the documents to be delivered in connection herewith, and the
consummation by Buyer of the transactions contemplated hereby and thereby, are
within the powers of Buyer and have been duly authorized by all necessary action
on the part of Buyer. This Agreement and each of the documents to be delivered
in connection herewith to which Buyer is a party have been duly executed and
delivered by Buyer and constitute valid and binding agreements of Buyer,
enforceable against Buyer in accordance with their respective terms.

4.1.3 No Conflicts; Consents. The execution, delivery and performance by Buyer
of this Agreement and the documents to be delivered or contemplated hereunder,
and the consummation of the transactions contemplated hereby, do not and will
not: (a) violate or conflict with the certificate of incorporation, bylaws or
other organizational document of Buyer; (b) violate or conflict with any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Buyer; or (c) conflict with, or result in (with or without notice or lapse of
time or both) any violation of, or default under, or give rise to a right of
termination, acceleration or modification of any obligation or loss of any
benefit under any contract or other instrument to which Buyer is a party.  No
consent, approval, waiver or authorization is required to be obtained by Buyer
from any person or entity (including any governmental authority) in connection
with the execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby.

4.1.4 No Other Representations or Warranties. BUYER ACKNOWLEDGES AND AGREES THAT
(I) SELLER IS THE MERE CUSTODIAN OF, AND TOOK NO ADVERSE ACTION REGARDING, THE
PURCHASED ASSETS

8

 

--------------------------------------------------------------------------------

 

DURING THE SELLER CUSTODY PERIOD, (II) PRIOR TO THE SELLER ACQUISITION DATE,
CLINICAL DEVELOPMENT OF VEPOLOXAMER AND/OR THE PRODUCT WAS DISCONTINUED AND ALL
CLINICAL STUDIES OF VEPOLOXAMER AND/OR THE PRODUCT WERE WOUND DOWN AFTER FAILURE
TO ACHIEVE PRIMARY EFFICACY ENDPOINTS, (III) IT HAS MADE ITS OWN INQUIRY AND
INVESTIGATION INTO, AND, BASED THEREON, HAS FORMED AN INDEPENDENT JUDGMENT
CONCERNING SELLER, THE PURCHASED ASSETS, THE PRODUCT, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, THE ASSUMED LIABILITIES, AND ANY OTHER ASSETS,
RIGHTS OR OBLIGATIONS TO BE TRANSFERRED HEREUNDER OR PURSUANT HERETO, AND (IV)
IT HAS BEEN FURNISHED WITH, OR GIVEN ADEQUATE ACCESS TO, SUCH INFORMATION ABOUT
SELLER, THE PURCHASED ASSETS, THE PRODUCT, THE ASSUMED LIABILITIES, AND ANY
OTHER RIGHTS OR OBLIGATIONS TO BE TRANSFERRED HEREUNDER OR PURSUANT HERETO, AS
IT HAS REQUESTED. EXCEPT FOR THE SPECIFIC REPRESENTATIONS AND WARRANTIES
EXPRESSLY MADE BY SELLER IN ARTICLE 3 ABOVE, (I) BUYER ACKNOWLEDGES AND AGREES
THAT (A) SELLER IS NOT MAKING AND HAS NOT MADE ANY REPRESENTATION OR WARRANTY,
EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE PURCHASED ASSETS,
SELLER, SELLER’S AFFILIATES, OR ANY OF SELLER’S OR ITS AFFILIATES’ RESPECTIVE
BUSINESSES, ASSETS, LIABILITIES, OPERATIONS, PROSPECTS, OR CONDITION (FINANCIAL
OR OTHERWISE), INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF ANY ASSETS, THE NATURE OR EXTENT OF ANY LIABILITIES, THE
PROSPECTS OF THE PURCHASED ASSETS OR THE PRODUCT, THE EFFECTIVENESS OR THE
SUCCESS OF ANY OPERATIONS, OR THE ACCURACY OR COMPLETENESS OF ANY CONFIDENTIAL
INFORMATION MEMORANDA, DOCUMENTS, PROJECTIONS, MATERIAL OR OTHER INFORMATION
(FINANCIAL OR OTHERWISE) REGARDING THE PURCHASED ASSETS OR THE PRODUCT, SELLER
OR SELLER’S AFFILIATES FURNISHED TO PURCHASER OR ITS REPRESENTATIVES OR MADE
AVAILABLE TO PURCHASER AND ITS REPRESENTATIVES IN ANY FORM IN EXPECTATION OF, OR
IN CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED HEREBY, OR IN RESPECT OF ANY
OTHER MATTER WHATSOEVER, AND (B) NO OFFICER, AGENT, REPRESENTATIVE OR EMPLOYEE
OF SELLER OR ANY OF SELLER’S AFFILIATES HAS ANY AUTHORITY, EXPRESS OR IMPLIED,
TO MAKE ANY REPRESENTATIONS, WARRANTIES, OR AGREEMENTS NOT SPECIFICALLY SET
FORTH IN THIS AGREEMENT AND SUBJECT TO THE LIMITED REMEDIES HEREIN PROVIDED;
(II) BUYER SPECIFICALLY DISCLAIMS THAT IT IS RELYING UPON OR HAS RELIED UPON ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES THAT MAY HAVE BEEN MADE BY ANY PERSON,
AND ACKNOWLEDGES AND AGREES THAT SELLER HAS SPECIFICALLY DISCLAIMED AND DOES
HEREBY SPECIFICALLY DISCLAIM ANY SUCH OTHER REPRESENTATION OR WARRANTY MADE BY
ANY PERSON; (III) BUYER SPECIFICALLY DISCLAIMS ANY OBLIGATION OR DUTY BY SELLER
TO MAKE ANY DISCLOSURES OF FACT NOT REQUIRED TO BE DISCLOSED PURSUANT TO THE
SPECIFIC REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 3 ABOVE; AND (IV)
BUYER IS ACQUIRING THE PURCHASED ASSETS AND THE ASSUMED LIABILITIES IN “AS IS”
CONDITION AND ON A “WHERE IS” BASIS, SUBJECT ONLY TO THE SPECIFIC
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 3 ABOVE.

ARTICLE V

OTHER AGREEMENTS

5.1 Bulk Sales Laws. The parties hereby waive compliance with the provisions of
any bulk sales, bulk transfer or similar laws of any jurisdiction that may
otherwise be applicable with respect to the sale of any or all of the Purchased
Assets to Buyer.

5.2 Transfer Taxes. All transfer, documentary, sales, use, stamp, registration,
value added and other taxes and fees (including any penalties and interest)
incurred in connection with this Agreement and the documents to be delivered or
contemplated hereunder will be borne and paid by Seller. Each party will, at its
own expense, timely file any tax return or other document required to be filed
by such party with respect to such taxes or fees (and the other party will
cooperate reasonably with respect thereto).

5.3 Further Assurances. Following the Closing, each of the parties hereto will
execute and deliver such additional documents, instruments, conveyances and
assurances and take such further actions as may be reasonably required to carry
out the provisions hereof and give effect to the transactions contemplated by
this Agreement and the documents to be delivered or contemplated hereunder.

9

 

--------------------------------------------------------------------------------

 

ARTICLE VI

INDEMNIFICATION

6.1 Indemnification.

6.1.1 By Seller. Seller will defend, indemnify and hold harmless Buyer, each
Affiliate and each licensee, and each of their respective stockholders,
directors, officers and employees, from and against all claims, judgments,
damages, liabilities, settlements, losses, costs and expenses, including
attorneys’ fees and disbursements, arising from or relating to (i) any
inaccuracy in or breach of any of the representations or warranties of Seller
contained in this Agreement or any document to be delivered or contemplated
hereunder; or (ii) any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Seller pursuant to this Agreement or any document
to be delivered or contemplated hereunder.  Whenever any claim will arise for
indemnification hereunder, Buyer will promptly provide written notice of such
claim to Seller including any reasonable information relating such claim and the
amount, if known, of such claim.

6.1.2 By Buyer. Buyer will defend, indemnify and hold harmless Seller, each
Affiliate and each licensee, and each of their respective stockholders,
directors, officers and employees, from and against all claims, judgments,
damages, liabilities, settlements, losses, costs and expenses, including
attorneys’ fees and disbursements, arising from or relating to (i) any
inaccuracy in or breach of any of the representations or warranties of Buyer
contained in this Agreement or any document to be delivered or contemplated
hereunder; (ii) any breach or non-fulfillment of any covenant, agreement or
obligation to be performed by Buyer pursuant to this Agreement or any document
to be delivered or contemplated hereunder; (iii) any Assumed Liability, or (iv)
any claims or causes of action by any entity or person arising on or after the
Closing Date in connection with the Purchased Assets or any of them.  Whenever
any claim will arise for indemnification hereunder, Seller will promptly provide
written notice of such claim to Buyer including any reasonable information
relating such claim and the amount, if known, of such claim.

6.2 Tax Treatment of Indemnification. Any indemnification payment made under
this Agreement will be treated by the parties as an adjustment to the Cash
Payment for tax purposes, unless otherwise required by law.

6.3 Effect of Investigation. The right to indemnification or other remedy of a
party based on the representations, warranties, covenants and agreements of the
other party contained in this Agreement will not be affected by any
investigation conducted by such party with respect to, or any knowledge acquired
by such party at any time, with respect to the accuracy or inaccuracy of, or
compliance with, any such representation, warranty, covenant or agreement.

6.4 Cumulative Remedies. The rights and remedies provided in this Article VI are
cumulative and are in addition to and not in substitution for any other rights
and remedies available at law or in equity or otherwise.

6.5 Survival. All representations and warranties of the parties contained in
this Agreement will survive the Closing for a period of twelve (12) months from
the Closing Date, except that the representations and warranties provided in
Section 3.1.3 (Title to Purchased Assets) and 3.1.4 (Compliance with Laws) will
survive the Closing for a period of eighteen (18) months from the Closing
Date.  The indemnification obligations contained in this Article VI will survive
the Closing.

ARTICLE VII

MISCELLANEOUS

7.1 Expenses. All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby will be paid by the party incurring
such costs and expenses.

10

 

--------------------------------------------------------------------------------

 

7.2 Notices. All notices, requests, consents, claims, demands, waivers and other
communications required or permitted hereunder must be in writing and will be
deemed delivered on the date of receipt or refusal of receipt (based on
documented confirmation of delivery or refusal).  Notice provided via email will
be effective if the recipient personally (i.e., not by automated machine
response) confirms receipt from the sender, including by personally responding
to the email.  Such communications must be sent to the receiving party at the
following addresses (or at such other address as a party may specify pursuant to
a notice given in accordance with this Section 7.2):

 

If to Buyer:

LifeRaft Biosciences Inc.

940 Johnnie Dodds Blvd., Suite 205

Mt. Pleasant, South Carolina 29464

Attn: Martin Emanuele, Ph.D., President and CEO

Email: marty@liferaftbio.com

 

 

With a copy to:

Buxton & Collie, LLC

940 Johnnie Dodds Blvd., Suite 205

Mt. Pleasant, South Carolina 29464

Attn: James T. H. Buxton

Email: jbuxton@buxtonandcollie.com

 

 

If to Seller:

Savara Inc.

900 S. Capital of Texas Highway

Suite 150

Austin, TX 78746 USA

Attn: Rob Neville, CEO

Email: rob.neville@savarapharma.com

 

 

With a copy to:

Life Science Legal LLC

214 South Spring Street

Independence, Missouri 64050

Attn: Tom Fredrick

Email: tfredrick@lifesciencelegal.com

 

7.3 Headings. The headings in this Agreement are for reference only and will not
affect the interpretation of this Agreement.

7.4 Severability. If any term or provision of this Agreement is invalid, illegal
or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction.

7.5 Entire Agreement. This Agreement and the documents to be delivered or
contemplated hereunder constitute the sole and entire agreement of the parties
to this Agreement with respect to the subject matter contained in this Agreement
and supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and the
documents to be delivered or contemplated hereunder, the statements in the body
of this Agreement will control. Without limiting the foregoing, this Agreement
will be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.

7.6 Amendment and Modification. This Agreement may only be amended, modified or
supplemented by an agreement in writing signed by each party hereto.

7.7 Waiver. No waiver by any party of any provision hereof will be effective
unless explicitly set forth in writing and signed by the party so waiving. No
waiver by any party shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written waiver,
whether of a similar or different character, and whether occurring before or
after that waiver. No failure to exercise, or delay in exercising, any right,
remedy, power or privilege arising from this Agreement will operate or be
construed as a waiver thereof; nor will any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

11

 

--------------------------------------------------------------------------------

 

7.8 Governing Law; Venue. This Agreement and the transactions contemplated
hereby will be governed by and construed in accordance with the internal laws of
the State of New York. If any party brings against any other party any
proceeding arising out of this Agreement, such party may bring that proceeding
only in the United States District Court for New York or, only if there is no
federal subject matter jurisdiction, in any state court of New York sitting in
New York County, and each party hereby submits to the exclusive jurisdiction of
those courts for purposes of any such proceeding.  The parties undertake not to
commence any suit, action or proceeding arising out of or relating to this
Agreement in a forum other than a forum described in this Section 7.8; provided,
however, that nothing in this Agreement will preclude Buyer or Seller from
bringing any suit, action or proceeding in any other court for the purposes of
enforcing the provisions of this Section 7.8 or enforcing any judgment obtained
by either party.

The parties hereby waive, to the fullest extent permitted by applicable law, any
objection which they now or hereafter have to personal jurisdiction or to the
laying of venue of any such suit, action or proceeding brought in an applicable
court described in this Section 7.8, and the parties agree that they will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court. The parties agree that, to the fullest extent
permitted by law, a final and non-appealable judgment in any suit, action or
proceeding brought in any applicable court described in this Section 7.8 will be
conclusive and binding upon the parties and may be enforced in any other
jurisdiction.

7.9 Specific Performance. The parties agree that irreparable damage would occur
if any provision of this Agreement were not performed in accordance with the
terms hereof and that the parties will be entitled to specific performance of
the terms hereof, in addition to any other remedy to which it is entitled at law
or in equity.

7.10 Legal Fees. In the event any legal action is commenced in connection with
this Agreement, the prevailing party in such action will be entitled to recover,
in addition to court costs, such amount as the court may adjudge as reasonable
attorneys’ fees. A party will be considered the “prevailing party” if (a) it
initiated the litigation and substantially obtained the relief it sought, either
through a judgment or the losing party’s voluntary action before trial or
judgment; (b) the other party withdraws its action without substantially
obtaining the relief the other party sought (except in connection with an agreed
settlement); or (c) it did not initiate the litigation and judgment is entered
for any party, but without substantially granting the relief sought by the
initiating party or granting more substantial relief to the non-initiating party
with respect to any counterclaim asserted by the non-initiating party in
connection with such litigation.

7.11 Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will be deemed to be one
and the same agreement. A signed copy of this Agreement delivered by e-mail or
other means of electronic transmission will be deemed to have the same legal
effect as delivery of an original signed copy of this Agreement.

[Remainder of page intentionally left blank; signature page immediately follows]

 

 

 

12

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed and delivered this Asset
Purchase Agreement effective as of the Effective Date.

 

LIFERAFT BIOSCIENCES INC.

 

SAVARA INC.

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name:

Martin Emanuele, PhD

 

Name:

Rob Neville

 

 

 

 

 

Title:

CEO

 

Title:

CEO

 

 

 

13

 

--------------------------------------------------------------------------------

 

Exhibit A

PURCHASED ASSETS

All tangible and intangible property related to polyoxyethylene containing
surface-active agents owned or controlled by Seller as of the Effective Date
including, but not limited to:

(a) Listing of Patents/Patent Applications to be transferred and assigned to
Buyer:

 

 

Country

Inventor(s)

Title

 

Serial No.

 

(Patent No.)

4001

US-PAT

Emanuele, R. Martin;

Vetticaden, Santosh; Keran,

Patrick

 

Assignee: Mast Therapeutics, Inc.

Poloxamer Therapy for Heart Failure

14/793,662

 

(US 9,757,411)

 

Priority:

62/021,691

62/126,400

 

CIP of

PCT/US14/456

27

4003US

US-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics, Inc.

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

14/793,670

 

(US 9,403,941)

4003US CON

US-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics, Inc.

Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

15/207,441

 

 

4003TW

TW-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

104122001

 

Priority:  

62/021,697

4003AU

AU-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics, Inc.

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

2015287993

4003EP

EP-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics,

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

15747613.6

 

 

 

--------------------------------------------------------------------------------

 

 

Country

Inventor(s)

Title

 

Serial No.

 

(Patent No.)

 

 

Inc.

 

 

4003KR

KR-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics, Inc.

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

1020177003330

4003JP

JP-PAT

Emanuele, R. Martin;

Balasubramanian, Mannarsamy

 

Assignee: Mast Therapeutics, Inc.

A Poloxamer Composition Free of Long Circulating Material and Methods for
Production and Uses Thereof

2017-501308

4005AU

AU-PAT

Emanuele, R. Martin

Methods for Enhancing

Oxygenation of Jeopardized

Tissue

2011329088

 

(2011329088)

4005EP

EP-PAT

Emanuele, R. Martin

Methods for Enhancing

Oxygenation of Jeopardized

Tissue

11841387.1

 

(Regional

Phase of

PCT/US2011/0

60747)

4005JP

JP-PAT

Emanuele, R. Martin

Methods for Enhancing

Oxygenation of Jeopardized

Tissue

2013-538989

 

(National Phase of

PCT/US2011/0

60747)

 

(5823530)

4005NZ

NZ-PAT

Emanuele, R. Martin

Methods for Enhancing

Oxygenation of Jeopardized

Tissue

610441

 

(610441)

4005SG

SG-PAT

Emanuele, R. Martin

Methods for Enhancing

Oxygenation of Jeopardized

Tissue

201303544-9

 

(National Phase of

PCT/US2011/0

60747)

 

Patent No.

190695

4010AU

AU

Emanuele, R. Martin

 

Assignee:  

Mast Therapeutics, Inc.

Treatment of Diuretic Induced Alterations of Plasma Volume

2014337190

 

 

 

--------------------------------------------------------------------------------

 

 

Country

Inventor(s)

Title

 

Serial No.

 

(Patent No.)

4010CA/

51911-

3001

CA

Emanuele, R. Martin

 

Assignee:  

Mast Therapeutics, Inc.

Treatment of Diuretic Induced Alterations of Plasma Volume

2927361

4010JP

JP

Emanuele, R. Martin

 

Assignee:  

Mast Therapeutics, Inc.

Treatment of Diuretic Induced Alterations of Plasma Volume

2016-524404

4010KR

KR

Emanuele, R. Martin

 

Assignee:  

Mast Therapeutics, Inc.

Treatment of Diuretic Induced Alterations of Plasma Volume

1020167012662

4010NZ

NZ

Emanuele, R. Martin

 

Assignee:  

Mast Therapeutics, Inc.

Treatment of Diuretic Induced Alterations of Plasma Volume

719663

MAST

4027-

WO

WO-PAT

Emanuele, R. Martin

 

Assignee: Mast Therapeutics, Inc.

Polyoxyethylene/

Polyoxypropylene Copolymers and Fibrinolytic Inhibitors,

Uses Thereof and

Compositions

PCT/US2016/4

1304

 

Claims priority to 62/189,705

Mast

4028-

WO

WO-PAT

Emanuele, R. Martin, Arthur,

John, Hoye, Will, Smith,

Stewart, Stirn, Scott

Reduce Sodium Poloxamer-188

Formulations and Methods For Use

PCT/US2016/4

1374

 

Claims priority to 62/189,580 and 62/238,059

 

(b) Vepoloxamer (previously known as purified poloxamer 188); and

(c) To the limited extent related to Vepoloxamer, other assets and intellectual
property acquired by Seller through its merger with Mast Therapeutics,
including, but not limited to, rights under that certain License Agreement,
dated June 8, 2004, between SynthRx, Inc. and CytRx Corporation (the “License
Agreement”), if and to the extent assignable, sub-licensable, or otherwise
transferable under the License Agreement. For clarity, the Purchased Assets
includes the following, if and to the extent in the actual possession of Seller:

(i) know-how, data or other intellectual property reflected therein; analytical
methods; specifications; methods of manufacturing, storing, transporting or
analyzing; dosing regimens; preclinical and clinical study protocols, designs
and schema; study reports (whether or not final); statistical analyses and
methodologies; stability protocols; formulations; routes of administration;
combinations, including as adjuvants; applications and other submissions to, and
approvals, clearances, designations or other actions by United States or foreign
regulatory bodies such as, but not limited to, INDs and their foreign
equivalents, in each instance related to Vepoloxamer;

(ii) communications with third parties, including regulatory bodies, patent
offices, and other government agencies and authorities; invention disclosures;
patent, trademark and copyright applications and allowances, issuances and
registrations; and any internet domains related to Vepoloxamer to the extent
such communications are available to Seller;

 

 

--------------------------------------------------------------------------------

 

(iii) embodiments of the foregoing, including books and records; computer and
network files; email; and other electronic or physical documents, records or
files evidencing, reflecting or incorporating the foregoing, in each instance
related to Vepoloxamer to the extent such items are available to the Seller; and

(iv) existing inventory of GLP stored Vepoloxamer active pharmaceutical
ingredient (up to 100 KG) and formulated Vepoloxamer drug product (up to 1,500
vials).

The foregoing notwithstanding, the Purchased Assets shall not include any
contract or other agreement, except the License Agreement.

 

 

--------------------------------------------------------------------------------

 

Exhibit B

Assumed Liabilities

Liabilities of Seller under the License Agreement and other Transferred
Agreement(s), including:

(a) Proteomics and RNA expression array samples stored at University of
Rochester Medical Center (URMC), commencing with the amount ($4,500/Q) next due
on November 1, 2017.

(b) Any and all royalty and other payment obligations in relation to Vepoloxamer
as and when due and payable to any third party, including without limitation
royalties payable to SynthRx, Inc. and its successor(s) in interest pursuant to
the License Agreement.

 

 

--------------------------------------------------------------------------------

 

Exhibit C

BILL OF SALE AND ASSIGNMENT

This BILL OF SALE AND ASSIGNMENT (“Bill of Sale”), dated as of October __, 2017,
is executed and delivered by Savara Inc., a Delaware corporation (“Seller”) to
LifeRaft Biosciences Inc., a South Carolina corporation (the “Buyer”).

BACKGROUND

Pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”),
dated as of the date hereof, by and between the Seller and the Buyer, the Seller
has agreed to sell, assign, transfer, deliver and convey to the Buyer the
Purchased Assets.

AGREEMENT

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Bill of Sale and in the Purchase Agreement, and
for other good and valuable consideration, the receipt and adequacy of which are
conclusively acknowledged, and intending to be legally bound hereby, the Seller
hereby agrees as follows:

1. Pursuant to the terms of the Purchase Agreement, Seller does hereby sell,
assign, transfer, deliver and convey unto the Buyer all of Seller’s right, title
and interest in, to and under the Purchased Assets to have and to hold all the
Purchased Assets hereby conveyed to the Buyer and its successors and assigns,
for their own use and benefit forever, free and clear of all Encumbrances,
subject to Assumed Liabilities.

2. The covenant of further assurances contained in Section 5.3 of the Purchase
Agreement is hereby incorporated by reference as though restated in this Bill of
Sale. The execution and delivery of any such additional documents or instruments
shall not affect the validity of this Bill of Sale.

3. This Bill of Sale shall be binding upon Seller and its successors and
assigns, and shall inure to the benefit of the Buyer and its successors and
assigns. All representations, warranties, covenants, agreements and indemnities
contained in the Purchase Agreement shall survive the execution and delivery of
this Bill of Sale and shall continue in full force and effect as provided in the
Purchase Agreement.  Neither the making nor the acceptance of this Bill of Sale
or of any other instrument or document of sale, transfer, assignment,
conveyance, acquisition or acceptance as to any particular Purchased Asset shall
restrict, impair, reduce, expand or otherwise modify the terms of the Purchase
Agreement.  In the event of any conflict between the terms and provisions of
this Bill of Sale, the terms and provisions of the Purchase Agreement shall be
deemed to govern and be controlling in all circumstances.

4. This Bill of Sale shall be governed by, and construed in accordance with, the
Laws of the State of New York applicable to contracts executed in and to be
performed in that state without giving effect to any choice or conflict of law
provision or rule that would cause the application of the law of any
jurisdiction other than the State of New York.

5. All capitalized terms used but not otherwise defined in this Bill of Sale
shall have the meanings ascribed to such terms in the Purchase Agreement.

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has caused this Bill of Sale to be duly
executed and delivered as of the date first above written.

 

 

SELLER:

 

 

 

 

 

 

SAVARA INC.

 

 

 

 

 

 

By:

 

 

 

Print Name:

 

 

 

Title:

 

 

 

 

 

 

 

BUYER:

 

 

 

 

 

 

LIFERAFT BIOSCIENCES INC.

 

 

 

 

 

 

By:

 

 

 

Print Name:

 

 

 

Title:

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit D

PATENT AND INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

THIS AGREEMENT is made the __ day of October, 2017, by and between Savara Inc.
(“Savara”), a company incorporated in the State of Delaware, and LifeRaft
Biosciences, Inc. (“LifeRaft”), a company incorporated in the State of South
Carolina.

WHEREAS, Savara and LifeRaft are parties to an Asset Purchase Agreement dated as
of the date hereof (“Asset Purchase Agreement”) pursuant to which Savara agrees
to assign to LifeRaft its title, rights and interest in and to the patent and
patent applications described in Asset Purchase Agreement Exhibit A (“Exhibit
A”);

WHEREAS, Savara and LifeRaft wish to document by formal assignment to LifeRaft
of Savara’s title, interest and rights in and to the patents and patent
applications.

LifeRaft and Savara therefore agree as follows.

1. “Assigned Patents” shall mean the issued U.S. and foreign patents and patent
applications listed on Exhibit A, including the following rights directly
related to Assigned Patents, if and to the extent in the actual possession of
Seller:

 

(i)

know-how, data or other intellectual property reflected therein; analytical
methods; specifications; methods of manufacturing, storing, transporting or
analyzing; dosing regimens; preclinical and clinical study protocols, designs
and schema; study reports (whether or not final); statistical analyses and
methodologies; stability protocols; formulations; routes of administration;
combinations, including as adjuvants; applications and other submissions to, and
approvals, clearances, designations or other actions by United States or foreign
regulatory bodies such as, but not limited to, INDs and their foreign
equivalents, in each instance related to Vepoloxamer;  

 

(ii)

communications with third parties, including regulatory bodies, patent offices,
and other government agencies and authorities; invention disclosures; patent,
trademark and copyright applications and allowances, issuances and
registrations; and any internet domains related to Vepoloxamer to the extent
such communications are available to Seller; and

 

(iii)

embodiments of the foregoing, including books and records; computer and network
files; email; and other electronic or physical documents, records or files
evidencing, reflecting or incorporating the foregoing, in each instance related
to Vepoloxamer to the extent such items are available to the Seller.

2. For good and valuable consideration, receipt of which is hereby acknowledged,
Savara hereby assigns to LifeRaft all of the right, title and interest in (i)
the inventions disclosed in any patent or application listed on Exhibit A, (ii)
the Assigned Patents, (iii) any U.S. or foreign Letters Patent which may issue
from any application listed on Exhibit A, and (iv) all divisions, continuations,
reissues, re-examinations and extensions of the patents and applications listed
on Exhibit A.

3. Savara agrees to execute upon the request of LifeRaft any assignment paper or
other document reasonably necessary to evidence the assignment of the rights
hereunder to LifeRaft, and agrees to reasonably cooperate with LifeRaft in all
other matters relating to the assignment of these rights to LifeRaft.

4. This Agreement shall be construed in accordance with and governed by the laws
of the State of New York, excluding any choice of law rules which direct the
application of the laws of another jurisdiction.

5. This Agreement, together with the Asset Purchase Agreement, constitutes the
sole understanding of the parties with respect to the transactions provided
herein and supersedes and merges herein any previous agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Agreement was executed and delivered by Savara and
LifeRaft as of the date first above written.

 

SAVARA INC.

 

 

 

 

By:

 

 

Print Name:

 

 

Title:

 

 

 

 

 

LIFERAFT BIOSCIENCES INC.

 

 

 

 

By:

 

 

Print Name:

 

 

Title:

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit E

Officer’s Certificate of Seller