Exhibit 10.1

 

EXECUTION COPY

 

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

TETRALOGIC PHARMACEUTICALS CORPORATION,

 

TETRALOGIC RESEARCH AND DEVELOPMENT CORPORATION

 

AND

 

MEDIVIR AB

 

DATED AS OF NOVEMBER 2, 2016

 

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”) is made and entered into as of
this 2nd day of November, 2016 by and among TetraLogic Pharmaceuticals
Corporation, a Delaware corporation (“TLOG”), TetraLogic Research and
Development Corporation, a Delaware corporation (“TR&D” and, collectively with
TLOG, the “Sellers”), and Medivir AB, a Swedish corporation (the “Buyer”).

 

WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers desire
to sell to the Buyer, certain of the Sellers’ assets free and clear of
Encumbrances (as defined below) except for Permitted Encumbrances (as defined
below), and to assume from the Sellers certain specified liabilities pursuant to
the terms and subject to the conditions set forth herein; and

 

WHEREAS, the Board of Directors of TLOG (the “TLOG Board”) has unanimously
(a) determined that it is in the best interests of TLOG and its shareholders and
noteholders, and declared it advisable, to enter into this Agreement,
(b) approved the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by the Sellers, and
(c) resolved, subject to the terms and conditions set forth in this Agreement,
to recommend adoption of this Agreement by its shareholders and to seek consent
to the transactions contemplated hereby by its noteholders (the “TLOG Board
Recommendation”).

 

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1                                    (a) Definitions.  As used in this
Agreement, the following terms have the meanings specified in this
Section 1.1(a).

 

“Acceptable Confidentiality Agreement” means a confidentiality and standstill
agreement that contains confidentiality and standstill provisions that are no
less favorable to TLOG than those contained in the Confidentiality Agreement.

 

“Accounts Receivable” means any and all accounts receivable and other amounts
receivable owed to any Seller, together with all security or collateral therefor
(in each case to the extent not otherwise constituting Purchased Assets) and any
interest or unpaid financing charges accrued thereon.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise. For clarity, the definition of Affiliate
does not include any Person who is considered an affiliate of a party solely
because of being deemed an affiliate under the Securities Act or the Exchange
Act.

 

“Alternative Transaction Proposal” means a proposal or offer from, or indication
of interest in making a proposal or offer by, any Person (other than Buyer)
relating to any (a) direct or indirect acquisition of assets of TLOG or its
direct or indirect Subsidiaries (including any voting equity interests of such
Subsidiaries, but excluding sales of inventory in the ordinary course of
business) related to the Business, (b) direct or indirect acquisition of the
voting equity interests of TLOG, other than the Senior Note Conversion,
(c) tender offer or exchange offer, other than the Senior Note Conversion, that
if consummated would result in any Person beneficially owning (within the
meaning of Section 13(d) of the

 

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Exchange Act) voting equity interests of TLOG, (d) merger, consolidation, other
business combination or similar transaction involving TLOG or any of its direct
or indirect Subsidiaries, or (e) liquidation or dissolution (or the adoption of
a plan of liquidation or dissolution) of TLOG or the declaration or payment of
an extraordinary dividend (whether in cash or other property) by TLOG.

 

“Assumed Agreements” means the Contracts listed on Schedule 2.1(b).

 

“Assumption Agreement” means the Assumption Agreement to be executed and
delivered by the Buyer and the Sellers at the Closing, substantially in the form
of Exhibit A.

 

“Bankruptcy Code” means 11 U.S.C. § 101, et. seq., as may be amended from time
to time.

 

“Bill of Sale” means the Bill of Sale and Assignment Agreement to be executed
and delivered by the Sellers to the Buyer at the Closing, substantially in the
form of Exhibit B.

 

“Books and Records” means all books, records, files, documents, data,
information and correspondence, whether in electronic or tangible form, related
to the Business, including, without limitation, all records with respect to
supply sources; reports relating to research or development of products or of
any materials used in the research, development, manufacture, marketing or sale
of products, including all raw data relating to clinical trials of products, all
case report forms relating thereto, all statistical programs developed (or
modified in a manner material to the use or function thereof) to analyze
clinical data; all market research data, market intelligence reports,
statistical programs (if any) used for marketing and sales research;
promotional, advertising and marketing materials, sales forecasting models,
medical education materials, sales training materials, web site content and
advertising and display materials; pricing lists, customer lists and financial
data; all records, including vendor and supplier lists, manufacturing records,
sampling records, standard operating procedures, quality control and release
testing procedures and batch records, related to the manufacturing process; all
bioassay development reports, all toxicology data packages, all pharmacology
data packages; all laboratory notebooks; all drug master files; all analytical
and quality control data; all documentation relating to the Intellectual
Property Rights.

 

“Business” means the business conducted by TLOG and its Affiliates related to
the research, development, manufacture and commercialization of SMAC mimetics
and HDAC inhibitors, including birinapant and SHP-141 (Sellers’ proprietary
suberohydroxamic acid 4-methoxcarbonyl phenyl ester).

 

“Business Day” means any day that is not a Saturday, Sunday or other day on
which banks are required or authorized by Legal Requirement to be closed in New
York, New York or Stockholm, Sweden.

 

“Clinical Hold” means that (i) the FDA has issued an order to a party pursuant
to 21 CFR §312.42 to delay one or more proposed clinical investigation(s) of a
Lead Molecule or any Product or suspend one or more ongoing investigations, or
(ii) a Governmental Authority in any other country or group of countries (other
than the FDA) has issued an equivalent order to that set forth in (i).

 

“Clinical Trial Report” means a report of a clinical study of any Lead Molecule
or Product where the clinical and statistical description, presentations, and
analyses are integrated into a single report, incorporating tables and figures
into the main text of the report or at the end of the text, with appendices
containing such information as the protocol, sample case report forms,
investigator-related information, information related to the test
drugs/investigational products including active control/comparators, technical
statistical documentation, related publications, patient data listings, and
technical statistical details such as derivations, computations, analyses, and
computer output.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

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“Confidentiality Agreement” means the Confidentiality Agreement by and between
the Buyer and TLOG, dated June 16, 2015, as amended from time to time.

 

“Contract” means any lease, contract, agreement, deed, mortgage, license, note,
bond, mortgage, indenture or other legally enforceable agreement, commitment or
instrument, whether written or oral.

 

“Copyrights” means copyrights, whether registered or unregistered (including
copyrights in computer software programs), mask work rights, works of authorship
and moral rights, and all registrations, applications and renewals therefor.

 

“EMA” means the European Medicines Agency or any successor agency thereto.

 

“Employees” means all employees of the Sellers or their Affiliates, including
those on disability or leave of absence, paid or unpaid.

 

“Encumbrances” means any charge, lien (statutory or otherwise), mortgage, lease,
hypothecation, encumbrance, pledge, security interest, option, license or other
right of use, first offer or first refusal, easement, servitude, restrictive
covenant, encroachment, claim, conditional or installment sale agreement, use or
transfer limitation, equitable interest or similar restriction; provided,
however, that Assumed Liabilities shall not constitute Encumbrances.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expenses”  means all reasonable and documented out-of-pocket fees and expenses
(including all fees and expenses of counsel, accountants, financial advisors and
investment bankers), incurred by the Buyer or on its behalf in connection with
or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and any transactions related thereto, the review
of the TLOG Proxy Statement, or in connection with other Governmental
Authorizations, and all other matters related to the transactions contemplated
hereby.

 

“FDA” means the United States Food and Drug Administration, or any successor
agency thereto.

 

“First Commercial Sale” shall mean the first shipment of a drug product to a
Third Party (except shipments or sales under named patient or compassionate use
programs) by the Buyer, an Affiliate or sublicensee of Buyer, or any Third Party
to which Buyer has assigned or transferred rights of commercialization, in any
country after receipt of the applicable Regulatory Approval.

 

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“Good Clinical Practices” means the current standards for clinical trials for
pharmaceuticals, as set forth in the ICH guidelines and applicable regulations
promulgated thereunder, as amended from time to time, and such standards of good
clinical practice as are promulgated by the FDA, EMA and other Governmental
Authorities in (a) countries in which a clinical study of a Lead Molecule or any
Product is conducted, (b) the United States, (c) the United Kingdom, or (d) the
European Union.

 

“Good Laboratory Practices” means the current standards for laboratory
activities for pharmaceuticals, as set forth in the FDA’s Good Laboratory
Practice regulations or the Good Laboratory Practice principles of the
Organization for Economic Co-Operation and Development, as amended from time to
time, and such standards of good laboratory practice as are required by other
organizations and Governmental Authorities in (a) countries in which development
of a Lead Molecule is conducted, (b) the United States, (c) the United Kingdom,
or (d) the European Union.

 

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“Good Manufacturing Practices” means the current quality assurance standards
that ensure that pharmaceutical products are consistently produced and
controlled in accordance with the quality standards appropriate to their
intended use as defined in 21 C.F.R. § 210 and 211, European Directive
2003/94/EC, Eudralex 4, Annex 16, and applicable United States, European Union,
United Kingdom and ICH guidance or equivalent laws in other jurisdictions.

 

“Governmental Authority” means any federal, municipal, state, local or foreign
governmental, administrative or regulatory authority, department, agency,
commission or body (including any court or similar tribunal), or any subdivision
thereof, or any quasi-governmental or private body exercising any regulatory or
other governmental or quasi-governmental authority.

 

“Governmental Authorization” means any permit, license, certificate, approval,
consent, permission, clearance, designation, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any Legal Requirement, including any
Regulatory Approval.

 

“Income Taxes” means any Taxes measured by or imposed on net income.

 

“Intellectual Property” means (i) all Regulatory Documentation and Intellectual
Property Rights, and (ii) all Books and Records.

 

“Intellectual Property Rights” means all of the rights arising from or in
respect of the following, whether protected, created or arising under a Legal
Requirement: (A) Patents; (B) Trademarks; (C) Copyrights; (D) confidential and
proprietary information, or non-public processes, designs, specifications,
technology, know-how, techniques, formulas, invention disclosures, inventions
(whether or not patentable and whether or not reduced to practice), concepts,
trade secrets, discoveries, ideas, research and development, compositions,
manufacturing and production processes, technical data and information, customer
lists, supplier lists, pricing and cost information, and business and marketing
plans and proposals, in each case, under this clause (D), excluding any rights
in respect of any of the foregoing that comprise or are protected by Patents;
(E) all applications, registrations and permits related to any of the foregoing
clauses (A) through (D); and (F) any and all rights to institute any Proceedings
for past, present, or future infringement, misappropriation or other violation
of any of the foregoing.

 

“Inventory” means all inventory (including all drug supply, material on
stability, raw materials, products in-process, placebos and finished products)
of the Sellers or their Affiliates.

 

“Knowledge” means, as to a particular matter, (a) the actual knowledge of:
(i) with respect to the Buyer, its chief executive officer, and (ii) with
respect to the Sellers, any of the following individuals holding the following
officer positions within TLOG: Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, or General Counsel, or (b) all facts that such
individuals would reasonably be expected to know in the normal course of
exercising his or her duties based on applicable title or position.

 

“Lead Molecule” means birinapant or SHP-141 (remetinostat) (together, the “Lead
Molecules”).

 

“Lead Molecule Event” means (1) any drug-related adverse event or events in
patients who received a Lead Molecule in a clinical trial or any other setting,
or any other adverse events specifically relating to the research, development
or manufacture of a Lead Molecule, if such adverse event or events would
reasonably be expected to prevent, or materially delay, the filing with the FDA
of an Investigational New Drug application (an “IND”) covering such Lead
Molecule, or materially limit the scope of such IND or any subsequent clinical
trial regarding such Lead Molecule or (2) any failure to adhere to the
requirements under the US Food Drug and Cosmetics Act, the regulations and
guidance documents of the FDA promulgated thereunder or any other applicable
Legal Requirement, the equivalent Legal Requirement of the EMA and its Committee
for Medicinal Products for Human Use, or the EU

 

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member states, or any Governmental Authorization (including the failure to
possess or maintain the validity of any permit), relating to the investigational
use and clinical trials of a Lead Molecule or with respect to the making of
untrue or fraudulent statements or the disclosure of information, or any failure
to adhere to clinical protocols or informed consent requirements, in any such
case under this clause (2), which, individually or in the aggregate, would
reasonably be expected to prevent or materially delay the filing with the FDA of
an IND covering a Lead Molecule, or prevent or materially delay a Lead Molecule
from obtaining Regulatory Approval, or materially limit the scope of Regulatory
Approval, from the FDA or the European Commission, to market the Lead Molecule
for any indication.

 

“Legal Requirement” means any federal, state, local, municipal, or other law,
statute, legislation, constitution, principle of common law, resolution,
ordinance, code, edict, decree, proclamation, treaty, convention, rule,
regulation, ruling, directive, pronouncement, requirement, specification,
determination, decision, opinion or interpretation issued, enacted, adopted,
passed, approved, promulgated, made, implemented or otherwise put into effect by
or under the authority of any Governmental Authority.

 

“Liability” means any debt, obligation or liability of any nature (including any
unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.

 

“Licensed Intellectual Property” means all Intellectual Property and
Intellectual Property Rights licensed to any Seller or any Affiliate of such
Seller pursuant to the Assumed Agreements.

 

“Material Adverse Effect” means any event, condition, circumstance, development
or effect that, individually or in the aggregate with all other events, changes,
conditions, circumstances, developments and effects, has had or would reasonably
be expected to have or to result in a material adverse effect on: (i) the
Purchased Assets, taken as a whole; (ii) the Assumed Liabilities, taken as a
whole; or (iii) the ability of the Sellers to perform their material obligations
under this Agreement.

 

“NDA” or “New Drug Application” shall mean a new drug application filed with the
U.S. Food and Drug Administration pursuant to 21 C.F.R. § 314, seeking
permission to market the applicable drug product in interstate commerce in the
United States.

 

“Net Sales” shall mean the gross amount invoiced by the Buyer, its Affiliates
and sublicensees,  or any Third Party to which Buyer has assigned or transferred
rights of commercialization on account of sales to Third Parties in the
applicable country, less the total of: (a) trade, cash, and/or quantity
discounts not already reflected in the amount invoiced; (b) excise, sales and
other consumption Taxes and customs duties to the extent included in the invoice
price, including any portion of annual fees due under Section 9008 of the United
States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48);
(c) freight, insurance and other transportation charges to the extent included
in the invoice price; (d) returns or retroactive price reductions; and
(e) compulsory payments and rebates directly related to the sale, accrued, paid
or deducted pursuant to Legal Requirements, or payable to managed health care
organizations.  In the case of any product that contains any Product(s) in
combination with any other clinically active ingredient(s) that is not a Lead
Molecule, whether packaged together and sold for a single price, in the same
formulation or sold together for a single price (a “Combination Product”) in any
country, Net Sales for such Combination Product in such country shall be
calculated by multiplying actual Net Sales of such Combination Product by the
fraction A/(A+B) where A is the average invoice price of the Lead Molecule
contained in the Combination Product, if sold separately by the Buyer, its
Affiliates or sublicensees in such country, and B is the average invoice price
of the other active ingredient(s) in the Combination Product, if sold separately
by the Buyer, its Affiliates or sublicensees in such country.  If, on a
country-by-country basis, the other active ingredient(s) in the Combination
Product

 

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is not sold separately by the Buyer, its Affiliates or sublicensees in such
country, Net Sales for the purpose of determining royalties of the Combination
Product shall be calculated by multiplying actual Net Sales of such Combination
Product by the fraction A/D, where A is the average invoice price of the Product
contained in the Combination Product, if sold separately by the Buyer, its
Affiliates or sublicensees in such country, and D is the average invoice price
of the Combination Product in such country.  If neither the Product nor the
other active ingredient(s) in the Combination Product is sold separately in a
given country by the Buyer, its Affiliates or sublicensees, the Buyer shall
allocate Net Sales for such Combination Product equally based on the total
number of active ingredient(s) in the Combination Product.  Net Sales shall be
determined in accordance with International Financial Reporting Standards (as
endorsed by the European Union), consistent with the Buyer’s books and records
and consistent with the Buyer’s historical sales of other products (except as
otherwise contemplated in this definition of Net Sales); provided, that in the
event any portion of Net Sales for any period is attributable to a Third Party
to which the Buyer has assigned or transferred rights of commercialization and
which Third Party’s financial statements apply GAAP as its applicable accounting
standards, the Buyer may determine Net Sales in accordance with GAAP.

 

“Patents” means all U.S. and foreign patents, patent applications, any reissues,
reexaminations, divisionals, provisionals, substitutions, renewals,
continuations, continuations-in-part and extensions (including supplementary
protection certificates) thereof.

 

“Permitted Encumbrances” means: (a) statutory liens for current Taxes, special
assessments or other governmental charges not yet due and payable or the amount
or validity of which is being contested in good faith; (b) mechanics’,
materialmens’, carriers’, workers’, repairers’ and similar statutory liens
arising or incurred in the ordinary course of business which liens are not
reasonably likely to materially interfere with the use or value of any Purchased
Assets or the assets of the Acquired Entities; (c) statutory liens creating a
security interest in favor of landlords under leases which do not materially
interfere with the Sellers’ current use of, or materially affect the value of,
any Purchased Asset or the Acquired Entities’ current use of, or materially
affect the value of, any of their assets; (d) Encumbrances on any of the
Purchased Assets which do not materially interfere with the Sellers’ current use
of, or materially affect the value of, any Purchased Asset or the Acquired
Entities’ current use of, or materially affect the value of, any of their
assets; and (e) Encumbrances arising from applicable laws of general application
which do not materially interfere with the Sellers’ current use of, or
materially affect the value of, any Purchased Asset or the Acquired Entities’
current use of, or materially affect the value of, any of their assets.

 

“Person” means any individual, corporation, partnership, limited partnership,
limited liability company, syndicate, group, trust, association or other
organization or entity or Governmental Authority.

 

“Phase III Clinical Trial” shall mean a human clinical trial conducted for
inclusion in that portion of the Regulatory Filing for Regulatory Approval in a
country in the European Union, a country currently in the United Kingdom, the
United States or Japan, which generate safety and efficacy data of a drug
product on sufficient numbers of patients to support Regulatory Approval in the
proposed therapeutic indication, as more fully defined, in the United States in
21 C.F.R.§312.21(c), and its equivalents in the European Union, a country
currently in the United Kingdom, and Japan.

 

“Pre-Closing Tax Period” means any taxable period (or, with respect to a
Straddle Period, any portion thereof) ending on or prior to the Closing Date.

 

“Pre-Closing AE Taxes” means (a) all Liability for Taxes of the Acquired
Entities for any Pre-Closing Tax Period, (b) all Liability resulting by reason
of the several liability of the Acquired Entities pursuant to Treasury
Regulations Section 1.1502-6 or any analogous Legal Requirement or by reason of
the Acquired Entities having been a member of any consolidated, combined or
unitary group on or prior to the Closing Date, and (c) all Liability for Taxes
of any other Person (other than the Acquired Entities) imposed on the Acquired
Entities as a transferee or successor, by contract or pursuant to any Legal

 

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Requirement, which Taxes relate to an event or transaction occurring before the
Closing; provided, however, that Pre-Closing AE Taxes shall not include any
Taxes resulting from (x) any transactions occurring on the Closing Date after
the Closing outside of the ordinary course of business (other than as explicitly
contemplated by this Agreement), (y) a Section 338 election in connection with
any of the transactions contemplated herein, or (z) a breach by Buyer of
Section 7.6(e).

 

“Product” means any product that incorporates, constitutes or contains a Lead
Molecule or other compound included in the Purchased Assets, in all forms,
presentations, formulations, methods of administration and dosage forms for
therapeutic use in humans.

 

“Purchased Assets” means the assets to be acquired by the Buyer as described in
Section 2.1.

 

“Purchased IP” means all Intellectual Property Rights (including the goodwill)
owned by any Seller or any of its Affiliates as of the Closing (including the
right to use trade names included in the Purchased Assets and including the
Intellectual Property Rights listed on Schedule 2.1(c)), and all right, title
and interest of any Seller in the Licensed Intellectual Property.

 

“Reasonable Commercial Efforts” means the level of efforts normally used by
pharmaceutical companies of comparable size and resources, for the development
or commercialization of a Product that has similar market potential at a similar
stage in its development or product life, resulting from its own research
efforts or that it has otherwise acquired or licensed, taking into account
issues of patent coverage, regulatory exclusivity, cost to develop, safety,
efficacy, target product profile, competitiveness of the market place,
regulatory structure and likelihood of approval, anticipated profitability,
proprietary position of the Product, and other relevant regulatory, scientific,
technical, business, marketing, and commercial factors, and, in the event that
TLOG or TR&D materially breaches its obligations under this Agreement, the
resulting adverse effect on the Buyer’s ability to perform its obligations
hereunder.

 

“Registered IP” means all Intellectual Property Rights that, as of the date of
this Agreement, are registered, filed or issued under the authority of, with or
by any Governmental Authority, including all Patents, registered Copyrights,
registered mask works and registered Trademarks and all applications for any of
the foregoing.

 

“Regulatory Approval” means, with respect to any Product in any regulatory
jurisdiction, approval from the applicable Governmental Authority sufficient to
manufacture, distribute, use (including in clinical trials) and sell such
Product in such regulatory jurisdiction in accordance with applicable Legal
Requirements, including receipt of pricing and reimbursement approvals, where
required.

 

“Regulatory Documentation” means, in respect of a Product, (a) the trial master
file and all regulatory files relating to the development, Regulatory Approval
(including Regulatory Filings), manufacture or commercialization of the Product,
including any licenses (to the extent transferable), minutes of meetings and
telephone conferences with any Governmental Authorities (to the extent
maintained in such files), validation data, preclinical and clinical studies and
tests related to the Product (including all Clinical Trial Reports, audit
reports of clinical studies and all other clinical data, annual reports and
safety reports associated therewith, which are in a Seller’s or its
Subsidiaries’ control, and all correspondence with Governmental Authorities
regarding the marketing status of the Product; and (b) all records maintained
under Good Manufacturing Practices or other applicable Legal Requirements,
including record keeping or reporting requirements of Governmental Authorities,
all correspondence and communications with Governmental Authorities in
connection with the Product, including those relating to any product labeling or
promotional materials, adverse event files, complaint files or manufacturing
records.

 

“Regulatory Filing” means any application or submission (including amendments
thereto) to a Governmental Authority with respect to any registration,
clearance, approval, authorization, license,

 

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permit or other right granted or issued by such Governmental Authority for the
development, testing, manufacture, use or sale of any Product, including an IND
filing.

 

“Representatives” means, with respect to any Person, its accountants, officers,
directors, managers, employees, counsel, financial advisors and other authorized
representatives.

 

“SEC” means the United States Securities and Exchange Commission or any
successor agency thereto.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Senior Notes” means TLOG’s 8.00% Convertible Senior Notes Due 2019.

 

“Senior Note Conversion” means the exchange into TLOG preferred stock of at
least $2,200,000 of principal amount of the Senior Notes.

 

“SHAPE Phase II Clinical Trial” means “A Randomized Phase 2 Study to Evaluate
Three Treatment Regimens of SHAPE, a Histone Deacetylase Inhibitor, in Patients
With Stage IA, IB or IIA Cutaneous T-Cell Lymphoma” (ClinicalTrials.gov
identifier: NCT02213861).

 

“Straddle Period” means any taxable period that includes (but does not end on)
the Closing Date.

 

“Subsidiaries” means, with respect to any party to this Agreement, any other
Person a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such Person is directly or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries.

 

“Superior Proposal” means a bona fide written Alternative Transaction Proposal
involving the direct or indirect acquisition pursuant to a tender offer,
exchange offer, merger, consolidation or other business combination, of all or
substantially all of TLOG’s consolidated assets or a majority of the outstanding
TLOG Common Stock, that the TLOG Board determines in good faith (after
consultation with outside legal counsel and its financial advisor) is more
favorable from a financial point of view to the holders of TLOG Common Stock and
TLOG Senior Notes than the transactions contemplated by this Agreement, taking
into account (a) any revisions to the terms of this Agreement proposed by the
Buyer during the Notice Period set forth in Section 7.9(d), and (b) all other
considerations that the TLOG Board deems relevant.

 

“Tax” means any and all tax (whether Federal, state, local or foreign)
including, without limitation, any net or gross income tax, franchise tax,
service tax, capital stock tax, capital gains tax, gross receipts tax, franchise
tax, social security tax, net worth tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, real or personal
property tax, unemployment tax, social security tax, workers compensation tax,
disability tax, business tax, withholding tax or payroll tax, windfall profits
tax, customs, tariffs, import duties and other taxes or governmental fees or
charges, levy, assessment, tariff, duty (including any customs duty), deficiency
or fee (including any fine, addition, penalty or interest), imposed, assessed or
collected by or under the authority of any Governmental Authority.

 

“Tax Return” means any return, report, information return or other document
(including any related or supporting information) required to be supplied to any
Governmental Authority with respect to Taxes.

 

“Termination Fee” means the amount of $1,300,000.

 

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“Third Party” shall mean any Person other than a Seller, the Buyer or their
respective Affiliates or sublicensees of rights conveyed under this Agreement.

 

“TLOG Common Stock” means the Common Stock, par value $0.0001 per share, of
TLOG.

 

“TLOG Noteholders” means the holders of the Senior Notes.

 

“TLOG Noteholders Consent” means the written consent of the TLOG Noteholders to
consent to the transactions contemplated by this Agreement.

 

“TLOG Shareholders” means the holders of TLOG Common Stock.

 

“TLOG Shareholders Meeting” means the special meeting of the TLOG Shareholders
to be held to approve the transactions contemplated by this Agreement.

 

“Trademarks” means registered or unregistered trademarks, service marks, trade
dress rights, trade names, Internet domain names, identifying symbols, logos,
emblems, signs or insignia, and including all goodwill associated with the
foregoing, and all registrations, applications and renewals therefor.

 

“Transaction Documents” means this Agreement, the Assumption Agreement, the Bill
of Sale and Assignment Agreement and any Contracts and documents to be entered
into by the parties hereto in connection with the Closing.

 

“Transfer Taxes” means any sales, use, purchase, transfer, franchise, deed,
fixed asset, stamp, documentary stamp or other Taxes (excluding any income or
capital gains Taxes) and recording charges (including penalties and interest)
payable in respect of (and as a result of) the sale of the Purchased Assets to,
and the assumption of the Assumed Liabilities by, the Buyer.

 

“Valid Claim” means, with respect to a particular country and any Lead Molecule
or Product, a claim of an issued and unexpired Patent included in the Purchased
IP, or the claim of an unissued pending patent application, that claims a Lead
Molecule or Product as a composition of matter or the use of a Lead Molecule or
Product which claim has not lapsed, been canceled or become abandoned or
disclaimed and has not been declared invalid and/or unenforceable by an
unreversed and unappealable decision or judgment of a court or other appropriate
body of competent jurisdiction, and which has not been rejected, revoked or
admitted to be invalid or unenforceable through reissue or disclaimer (other
than a terminal disclaimer).

 

(b)  Each of the terms set forth below shall have the meaning ascribed thereto
in the following Section:

 

Definition

 

Location

“Acquired Entities”

 

Section 2.1(i)

“Acquired Equity Interests”

 

Section 2.1(i)

“Agreement”

 

Preamble

“Allocation”

 

Section 7.6(b)

“Annual Net Sales”

 

Section 3.3(b)(i)

“Assumed Liabilities”

 

§ 2.3

“Buyer”

 

Preamble

“Buyer Documents”

 

Section 6.2

“Buyer Regulatory Documents”

 

Section 6.5

“Closing”

 

§ 4.1

“Closing Date”

 

§ 4.1

 

9

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“Closing Payment”

 

Section 3.1

“Documentary Materials”

 

Section 2.1(d)

“Earn-out Payment”

 

Section 3.3(b)(ii)

“End Date”

 

Section 9.1(b)

“Excluded Agreements”

 

Section 2.2(h)

“Excluded Assets”

 

§ 2.2

“Excluded Liabilities”

 

§ 2.4

“Expense Statement”

 

Section 9.3(d)

“Fundamental Representations”

 

Section 10.4

“Generic Version”

 

Section 3.3(a)

“Harvard Agreement”

 

Section 2.3

“Indemnification Cap”

 

Section 7.8(b)

“Indemnified Party”

 

Section 7.8(d)

“Indemnifying Party”

 

Section 7.8(d)

“Insurance Policies”

 

Section 5.14

“Liquidated Damages”

 

Section 3.4

“Loss”

 

Section 7.8(a)

“Merger Agreement”

 

Section 2.3

“Notice Period”

 

Section 7.9(d)

“Princeton License”

 

Section 2.3

“Proceeding”

 

§ 5.6

“Professional Services”

 

§ 2.4(b)

“Project Tulip VDR”

 

Section 7.7(d)

“Purchase Price”

 

§ 3.1

“Required Consents”

 

§ 7.5(a)

“Requisite Approvals”

 

Section 7.9(b)

“Seller Documents”

 

Section 5.2

“Sellers”

 

Preamble

“Shape AU”

 

Section 2.2(m)

“Threshold Amount”

 

Section 7.8(c)

“TLOG”

 

Preamble

“TLOG Acquisition Agreement”

 

Section 7.9(a)

“TLOG Adverse Recommendation Change”

 

Section 7.9(a)

“TLOG Board”

 

Recitals

“TLOG Board Recommendation”

 

Recitals

“TLOG Proxy Statement”

 

Section 7.10(c)

“TLOG SEC Documents”

 

Section 5.10(a)

“TR&D”

 

Preamble

“WEHI Agreement”

 

Section 2.3

 

Section 1.2                                    Construction.  The terms
“hereby,” “hereto,” “hereunder” and any similar terms as used in this Agreement,
refer to this Agreement in its entirety and not only to the particular portion
of this Agreement where the term is used.  The term “including,” when used
herein without the qualifier, “without limitation,” shall mean “including,
without limitation.”  Wherever in this Agreement the singular number is used,
the same shall include the plural, and the masculine gender shall include the
feminine and neuter genders, and vice versa, as the context shall require.  The
word “or” shall not be construed to be exclusive.  Unless otherwise indicated,
references to Articles, Sections, Schedules and Exhibits refer to Articles,
Sections, Schedules and Exhibits of and to this Agreement.

 

10

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ARTICLE II
PURCHASE AND SALE

 

Section 2.1                                    Purchase and Sale of Assets. 
Upon the terms and subject to the satisfaction of the conditions contained in
this Agreement, at the Closing, each Seller shall sell, assign, convey, transfer
and deliver to the Buyer, and the Buyer shall, by the Buyer’s payment of the
Purchase Price, purchase and acquire from the Sellers, right, title and
interest, free and clear of all Encumbrances (other than Permitted
Encumbrances), in and to all of the properties, rights, interests and other
tangible and intangible assets of the Sellers relating to the Business (wherever
located and whether or not required to be reflected on a balance sheet prepared
in accordance with generally accepted accounting principles), including any such
assets acquired by the Sellers after the date hereof but prior to the Closing;
provided, however, that the Purchased Assets shall not include any of the
Excluded Assets.  Without limiting the generality of the foregoing, the
Purchased Assets shall include the following (except to the extent listed or
otherwise included as an Excluded Asset):

 

(a)                                 all Inventory, supplies, materials and spare
parts of the Sellers as of the Closing;

 

(b)                                 all Assumed Agreements;

 

(c)                                  all Purchased IP;

 

(d)                                 all files, documents, instruments, papers,
books, reports, records, tapes, microfilms, photographs, letters, budgets,
forecasts, ledgers, journals, title policies, customer lists, regulatory
filings, all supporting documents for regulatory filings, operating data and
plans, technical documentation (lab notebooks, manufacturing instructions and
processes, design specifications, blueprints, records of experiments, electronic
copies of patent applications as filed, operating instructions, logic manuals,
flow charts, and similar items), user documentation (including installation
guides, user manuals, process manuals, training materials, release notes and
working papers), marketing documentation, advertising and promotional materials
(including sales brochures, flyers, pamphlets and web pages), and other similar
materials all to the extent related to the Business, in each case whether or not
in electronic form, and without regard to the media used, and similar items of
the Sellers as of the Closing (except as otherwise expressly described in
Section 2.2) (collectively, the “Documentary Materials”);

 

(e)                                  all rights under non-disclosure or
confidentiality, non-compete, non-solicitation or invention assignment
agreements with current and former Employees and agents of the Sellers or with
third parties relating to the Business (or any portion thereof), including all
non-disclosure agreements executed by parties to which a Seller has made
available information, whether or not such agreements are included as Assumed
Agreements;

 

(f)                                   all rights of the Sellers under or
pursuant to all warranties, representations and guarantees made by suppliers,
manufacturers or contractors, pertaining to any Purchased Assets;

 

(g)                                  any documents or other materials that are
subject to attorney-client or other privilege, or to the attorney work product
protection, to the extent that they relate to any of the Purchased Assets,
including all Patent, Copyright, and Trademark prosecution files and materials
prepared or held by attorneys representing a Seller on such matters;

 

(h)                                 all general, commercial and product
liability insurance benefits, including rights and proceeds, arising from or
relating to the Business, the Purchased Assets or the Assumed Liabilities (other
than directors and officers liability policies maintained by the Sellers);

 

(i)                                     (1) 100% of the equity interest in
TetraLogic Birinapant UK Ltd. and (2) 100% of the equity interests in TetraLogic
Shape UK Ltd. (all of such equity interests described in (1) and (2), the
“Acquired Equity Interests”, and all of the entities to which such Acquired
Equity Interests relate, the “Acquired Entities”);

 

11

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(j)                                    Tax receivables, Tax credits of any kind
or nature and Tax refunds, in each case of the Acquired Entities, other than the
Excluded Assets described in Section 2.2(n), Section 2.2(o) or Section 2.2(p);

 

(k)                                 copies of all Tax Returns filed by the
Acquired Entities for any taxable period beginning on or after January 1, 2012,
and all examination reports, statements, deficiencies and correspondence between
each Acquired Entity and any Governmental Authority relating to Taxes for
taxable periods beginning on or after January 1, 2012; and

 

(l)                                     all claims (including claims for past
infringement or misappropriation of Purchased IP) and causes of action of the
Sellers as of the Closing against Persons other than the Sellers (regardless of
whether or not such claims and causes of action have been asserted by the
Sellers), and all rights of indemnity, warranty rights, rights of contribution,
rights to refunds, rights of reimbursement and other rights of recovery,
including rights to insurance proceeds, possessed by the Sellers as of the
Closing (regardless of whether such rights are currently exercisable), in each
case to the extent related to the Purchased Assets.

 

Section 2.2                                    Excluded Assets.  Notwithstanding
any provision herein to the contrary, the Purchased Assets shall not include the
following (collectively, the “Excluded Assets”):

 

(a)                                 all items of machinery, equipment,
furniture, fixtures, leasehold improvements and other tangible personal property
owned by the Sellers as of the Closing;

 

(b)                                 all advances, prepaid assets (including the
pre-paid clinical deposits listed on Schedule 7.12(i)), security and other
deposits, prepayments, and other current assets (other than Inventory) of the
Sellers, as of the Closing;

 

(c)                                  all cash, cash equivalents, bank accounts,
deposit accounts, trust accounts, escrow accounts, securities accounts and the
free credit balances held therein, security and performance deposits, payroll
tax deposits, and other liquid assets as of the Closing;

 

(d)                                 all Accounts Receivable of the Sellers as of
the Closing, and other amounts receivable by the Sellers as of the Closing
(under the Assumed Agreements or otherwise);

 

(e)                                  any records, documents or other information
relating to current or former Employees of the Sellers, and any materials
containing information about Employees, disclosure of which would violate an
Employee’s reasonable expectation of privacy, except as otherwise consented to
in writing by any such Employee;

 

(f)                                   the Sellers’ minute books and other
corporate books and records relating to its organization and existence and the
Sellers’ books and records relating to Taxes of the Seller, including, but not
limited to, Tax Returns and related worksheets ;

 

(g)                                  the Sellers’ rights under this Agreement
and the other Transaction Documents;

 

(h)                                 any Contracts other than the Assumed
Agreements (the “Excluded Agreements”);

 

(i)                                     all claims and causes of action of the
Sellers as of the Closing against Persons other than the Buyer (regardless of
whether or not such claims and causes of action have been asserted by the
Sellers), and all rights of indemnity, warranty rights, rights of contribution,
rights to refunds, rights of reimbursement and other rights of recovery,
including rights to insurance proceeds, of the Sellers (regardless of whether
such rights are currently exercisable), in each case

 

12

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to the extent directly related to: (1) any Excluded Assets or Excluded
Liabilities; or (2) any item of tangible or intangible property not acquired by
the Buyer at the Closing;

 

(j)                                    all rights under director and officer (or
similar) insurance policies maintained by the Sellers;

 

(k)                                 any documents or other materials which are
subject to attorney-client or other privilege, except those set forth in
Section 2.1(g);

 

(l)                                     the Sellers’ right, title and interest
to the other assets, if any, set forth in Schedule 2.2;

 

(m)                             (1) TLOG’s equity interest in TR&D and
(2) TR&D’s equity interest in Shape Pharmaceuticals Pty. Ltd. (“Shape AU”);

 

(n)                                 Tax receivables and Tax refunds actually
received by the Acquired Entities, in each case which relate to any Pre-Closing
Tax Period;

 

(o)                                 Tax credits of any kind or nature of the
Acquired Entities, in each case which can be utilized by the Sellers with
respect to the Sellers’ allocable Taxes for the Straddle Period; and

 

(p)                                 All U.S. federal income Tax net operating
losses, Tax receivables, Tax credits of any kind whatsoever, or Tax refunds.

 

Section 2.3                                    Assumed Liabilities.  On the
Closing Date, the Buyer shall execute and deliver to the Sellers the Assumption
Agreement pursuant to which the Buyer shall assume and agree to pay, perform and
discharge when due the Assumed Liabilities.  For purposes of this Agreement,
“Assumed Liabilities” means only the following Liabilities (to the extent not
paid prior to the Closing): (a) the Liabilities of the Sellers under the Assumed
Agreements to the extent such Liabilities (i) become due and payable after the
Closing; (ii) do not arise from or relate to any breach by the Sellers of any
provision of any of such Assumed Agreements; and (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 Assumed Agreements; (b) all Liabilities that
are incurred and arise after the Closing from the operation by Buyer of the
Purchased Assets after the Closing; (c) all Liabilities which become due and
owing on or after the Closing Date by the Acquired Entities; (d) diligence,
milestone, royalty and patent maintenance obligations which become due on or
after the Closing Date pursuant to the terms of the Merger Agreement between
TLOG and Shape Pharmaceuticals, Inc., et.al. dated April 17, 2014 (the “Merger
Agreement”); the License Agreement among Shape Pharmaceuticals, Inc., Harvard
University and Dana-Farber Cancer Institute, dated October 7, 2008 (the “Harvard
License”);  the Amended and Restated License Agreement between TLOG and
Princeton University, dated October 6, 2006 (the “Princeton License”); the
Licence Agreement between TLOG and the Walter & Eliza Hall Institute for Medical
Research, dated January 1, 2014, as amended (the “WEHI License”); and the
Definitive Agreement between Shape Pharmaceuticals, Inc. and the Leukemia &
Lymphoma Society, dated June 24, 2010, as amended; (e) all Transfer Taxes; and
(f) all Taxes that are incurred and arise after the Closing from the ownership,
possession, use, operation or sale or other disposition by Buyer of the
Purchased Assets or the Business after the Closing, other than Pre-Closing AE
Taxes.

 

Section 2.4                                    Excluded Liabilities.  The Buyer
shall not assume or be obligated to pay, perform or otherwise discharge any
Liabilities of the Sellers other than the Assumed Liabilities (collectively the
“Excluded Liabilities”).  The Excluded Liabilities include the following:

 

(a)                                 (i) all Income Taxes of the Sellers,
(ii) all Taxes (other than Transfer Taxes) that are incurred and arise prior to
the Closing from the ownership, possession, use, operation or sale or other
disposition by the Sellers of the Purchased Assets or the Business (other than
relating to the Acquired

 

13

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Entities) prior to the Closing, (iii) any liability of the Sellers for Taxes of
any Person under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or non-U.S. law), as a transferee or successor, by contract or
otherwise, which Taxes relate to an event or transaction occurring before the
Closing; and (iv) all Pre-Closing AE Taxes;

 

(b)                                 all Liabilities of the Sellers relating to
legal services, accounting services, financial advisory services, investment
banking services or any other professional services (“Professional Services”)
performed in connection with this Agreement and any of the transactions
contemplated hereby;

 

(c)                                  all Liabilities with respect to current and
former Employees of the Sellers (including Liabilities under or relating to any
of the Sellers’ or the Acquired Entities’ employee benefit plans);

 

(d)                                 all Liabilities relating to Excluded Assets;

 

(e)                                  all accounts payable (or other amounts
payable), including intercompany payables between any Seller, on the one hand,
and any Acquired Entity, on the other hand;

 

(f)                                   any accrued but unpaid amounts due to the
applicable contract research organization as of the Closing Date in connection
with the ongoing SHAPE Phase 2 Clinical Trial, except as set forth on Schedule
7.12(iv); and

 

(g)                                  any other Liability that is not expressly
included among the Assumed Liabilities.

 

Section 2.5                                    Assignment of Certain Contracts.

 

(a)                                 The Sellers shall, and shall cause their
respective Affiliates to, reasonably cooperate with the Buyer in order to
identify, as promptly as practicable following the date hereof, additional
Assumed Agreements, if any, for which the Sellers recommend that the Buyer
obtain consent of, or provide notice to, the applicable Third Party in
connection with the transactions contemplated by this Agreement; provided that
nothing in this Section 2.5 shall obligate the Buyer to take any action with
respect to such additional Assumed Agreements.

 

(b)                                 The Buyer and the Sellers shall use their
respective commercially reasonable efforts prior to the Closing to obtain, and
to cooperate in obtaining, all consents and Governmental Authorizations from
Governmental Authorities and third parties necessary to assume and assign each
Assumed Agreement and the other Purchased Assets to the Buyer or related to any
material Contract to which any Acquired Entity is a party; provided, however,
that neither the Sellers nor the Buyer shall be required to pay or commit to pay
any amount to (or incur any material obligation in favor of) any Person from
whom any such consent or Governmental Authorization may be required other than
de minimis and ordinary course filing and administrative fees.

 

(c)                                  Notwithstanding anything in this Agreement
to the contrary, to the extent that the sale, transfer, assignment, conveyance
or delivery or attempted sale, transfer, assignment, conveyance or delivery to
Buyer of any asset that would be a Purchased Asset or an Assumed Liability, or
any material Contract to which any Acquired Entity is a party, or any claim or
right or any benefit arising thereunder or resulting therefrom is prohibited by
any applicable Legal Requirement or would require any consent from any
Governmental Authority or any other Third Party and such consents shall not have
been obtained prior to the Closing (or is not in full force and effect), the
Closing shall proceed without the sale, transfer, assignment, conveyance or
delivery of such asset (and without reduction in the Purchase Price) unless
there is a failure of one or more of the conditions set forth in Article VIII,
in which event the Closing shall proceed only if each failed condition is waived
by the Party entitled to the benefit thereof.  In the event that any failed
condition is waived and the Closing proceeds without the transfer or assignment
of any such asset, then following the Closing, the Buyer and the Sellers shall
use their respective commercially

 

14

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reasonable efforts, and reasonably cooperate with each other, to the maximum
extent permitted by applicable Legal Requirement and the applicable Purchased
Asset, Assumed Liability or Contract, to obtain promptly such consent as quickly
as practicable.  Pending such consent, the parties shall reasonably cooperate
with each other to provide Buyer with all of the benefits of use of such asset
(or any right or benefit arising thereunder, including the enforcement for the
benefit of Buyer of any and all rights of Sellers against a Third Party
thereunder) free of any cost or expense.  Once consent for the sale, transfer,
assignment, conveyance or delivery of any such asset not sold, transferred,
assigned, conveyed or delivered at the Closing is obtained, the Sellers shall
promptly transfer, assign, convey and deliver such asset to Buyer at no
additional cost or expense pursuant to a special-purpose assignment and
assumption agreement substantially similar in terms to those of the Assumption
Agreement (which special-purpose agreement the parties shall prepare, execute
and deliver in good faith at the time of such transfer).  To the extent that any
such asset cannot be transferred or the full benefits or use of any such asset
cannot be provided to Buyer the Closing but in any event no later than the date
that is 180 days after the Closing pursuant to this Section 2.5, then the Buyer
and the Sellers shall enter into such arrangements (including subleasing,
sublicensing or subcontracting) to provide to the parties hereto the economic
(taking into account Tax costs and benefits) and operational equivalent of
obtaining such consent.

 

(d)                                 If, following the Closing, any Seller
receives or becomes aware that it holds any asset, property or right which
constitutes a Purchased Asset (including any of the assets described in
Section 2.2(e) to the transfer of which the applicable Employee has consented in
writing), then such Seller shall transfer such asset, property or right to Buyer
as promptly as practicable for no additional consideration.  If, following the
Closing, Buyer receives or becomes aware that it holds any asset, property or
right which constitutes an Excluded Asset, then Buyer shall transfer such asset,
property or right to the Sellers as promptly as practicable for no additional
consideration.

 

ARTICLE III
PURCHASE PRICE

 

Section 3.1                                    Purchase Price.  In consideration
for the transfer of the Purchased Assets to the Buyer, subject to the terms and
conditions of this Agreement, the purchase price for the Purchased Assets shall
be the sum of: (i) (A) Twelve Million U.S. Dollars ($12,000,000 USD), plus
(B) an amount equal to the aggregate expenses of the type described in Schedule
7.12(iv) to the extent such amounts have actually been paid to the applicable
contract research organization as of the Closing, to be paid to the Sellers by
the Buyer in immediately available funds by wire transfer at the Closing to one
or more bank accounts designated by the Sellers in a written invoice delivered
by the Sellers to the Buyer prior to the Closing (the “Closing Payment”); plus
(ii) assumption of the Assumed Liabilities at Closing, plus (iii) payment of the
milestone amounts as provided in Section 3.2, below, plus (iv) payment of the
Earn-Out Payments as provided in Section 3.3, below (collectively, “Purchase
Price”).

 

Section 3.2                                    Milestone Payments.

 

(a)                                 Milestone Payments.  The Buyer is obligated
to make the following payments to the Sellers at such time, if any, as any one
or more of the following milestones is achieved. For purposes of this
Section 3.2 and Section 3.3 “birinapant” shall include any and all SMAC mimetic
compounds included in the Purchased Assets.

 

Milestone

 

U.S. Dollars

 

1.              First Commercial Sale of SHP-141 in any country in the European
Union or Great Britain.

 

$

7,000,000

 

2.              First calendar year in which worldwide Net Sales of SHP-141
total more than $100 Million U.S.

 

$

15,000,000

 

 

15

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3.              First calendar year in which worldwide Net Sales of SHP 141
total more than $200 Million.

 

$

6,000,000

 

4.              Enrollment of the first patient in the first Phase III Clinical
Trial of any drug product containing birinapant for any indication.

 

$

10,000,000

 

5.              First acceptance by the FDA of filing of an NDA for any drug
product containing birinapant for any indication.

 

$

5,000,000

 

6.              First Commercial Sale of any drug product containing birinapant
in the United States for any indication.

 

$

10,000,000

 

7.              First calendar year in which worldwide Net Sales of all drug
products containing birinapant total more than $200 Million U.S.

 

$

20,000,000

 

8.              First calendar year in which worldwide Net Sales of all drug
products containing birinapant total more than $500 Million U.S.

 

$

30,000,000

 

9.              First calendar year in which worldwide Net Sales of all drug
products containing birinapant total more than $1 Billion U.S.

 

$

50,000,000

 

 

(b)                                 Timing. The Buyer shall notify the Sellers
of the achievement of each milestone promptly following its determination that a
payment in respect of such milestone is payable, setting forth the clause in
Section 3.2(a) giving rise to such payment obligation and the amount thereof.
The Buyer shall make payment of such amount within thirty (30) days of
delivering the foregoing notice.  All payments shall be made by wire transfer in
United States Dollars to the credit of such bank account designated by Sellers
for the Closing Payment, or such account as may be otherwise designated, from
time to time, by the Sellers in writing to the Buyer.

 

(c)                                  Single Payment Obligation.  It is
understood that each of the milestone payments above in subparagraph (a) will
not be made more than once, on the first instance only of attaining such
milestone.  For clarification, if multiple milestones are attained
simultaneously or in the same calendar year, each milestone shall be due and
payable at the time of its attainment.

 

Section 3.3                                    Earn-Out Payments.

 

(a)                                 Term.  Earn-Out Payments (as defined below)
shall be payable on Net Sales of birinapant from the Closing Date until, with
respect to each country, the later of (1) the expiration of all marketing
exclusivity periods (including data exclusivity) covering birinapant, or (2) the
last to expire Patent (including extensions thereof) in such country with a
Valid Claim with claims covering birinapant, formulations of birinapant,  or one
of its approved indications or methods of administration (as a method of use).
If a Generic Version (as defined below) of birinapant is sold by a Third Party
in a country after which sales of birinapant by the Buyer, its Affiliates,
sublicensees or other transferees in any calendar year constitute less than
eighty percent (80%) of the combined sales (on a unit volume basis) of
birinapant and Generic Versions of birinapant in such calendar year according to
IMS market share data in such country for such calendar year, then Buyer shall
not be required to make any Earn-Out Payments for that portion of the calendar
year in such country. Notwithstanding the foregoing, if, at any time during the
twenty-four (24) months after a termination of such Earn-Out Payment obligation,
there is no

 

16

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Generic Version of birinapant on the market in such country, then Earn-Out
Payments shall resume with respect to Net Sales of birinapant in such country. 
For the purposes of this Section 3.3(a), a “Generic Version” of birinapant shall
mean any pharmaceutical product (other than a product which was initially sold
as a Product hereunder) that includes birinapant as an active ingredient and is
sold by a Third Party. In the event of the introduction of a Generic Version of
birinapant in any country, the parties will reasonably cooperate to challenge
such introduction in a legal and commercially appropriate manner.

 

(b)                                 Net Sales.

 

(i)                                     Buyer is obligated to pay Earn-Out
Payments to the Sellers at the following annual, calendar basis rate, on
worldwide Net Sales of any Product containing birinapant (“Annual Net Sales”):

 

Net Sales

 

Earn-Out Rate

 

Those Annual Net Sales from 0 to 500,000,000 U.S. Dollars

 

5

%

Those Annual Net Sales from 500,000,000 to 1,000,000,000 U.S. Dollars

 

7.5

%

Those Annual Net Sales Above 1,000,000,000 U.S. Dollars

 

10

%

 

(ii)                                  The Buyer will report all Net Sales of
Products containing birinapant as specified in this Article within thirty (30)
days after the end of each calendar year, together with a calculation of the
earn-out payments payable under clause (i) above, subject to Section 3.3(c) (an
“Earn-out Payment”).  The Buyer shall make payment of such amount within the
earlier of (x) thirty (30) days after delivering the foregoing notice, and
(y) sixty (60) days after the end of the applicable calendar year.

 

(c)                                  Offset for Certain Third Party Royalty
Payments.  The Buyer shall be entitled to offset against any royalties due to
the Sellers (i) (A) 100% of any royalties or other payments for Products
containing birinapant paid by the Buyer or any Affiliate of the Buyer to a Third
Party under the Merger Agreement, any Assumed Agreements or Contracts to which
an Acquired Entity is a party and (B) 50% of any royalties or other payments for
Products containing birinapant paid by the Buyer or any Affiliate of the Buyer
under any license to intellectual property owned or controlled by a Third Party
that covers a Product, such that the use, manufacture or sale of such Product
absent such license would otherwise infringe such intellectual property of such
Third Party and (ii) the costs (including reasonable attorneys’ fees and
expenses) of removing any Permitted Encumbrances from the Purchased Assets or
any assets of any Acquired Entity; provided that the Earn-Out Payments otherwise
due to Sellers on account of Net Sales of Products containing birinapant shall
not be reduced by more than fifty percent (50%); provided further that the
foregoing limitation shall not apply to offsets in accordance with clause
(ii) above. The Buyer shall carry forward any offsets permitted under this
Section 3.3(c) into future payment periods until such time as all such offsets
have been applied.

 

(d)                                 Records of Sales.                          
Buyer, its Affiliates, sublicensees and assignees or transferees shall keep for
three (3) years from the end of each calendar year complete and accurate records
of

 

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their sales of Products in sufficient detail to allow the accruing milestone and
Earn-Out Payments to be determined accurately.  Sellers shall have the right for
a period of one (1) year after receiving any report or statement with respect to
milestone and Earn-Out Payments due and payable to appoint an independent
certified public accountant reasonably acceptable to Buyer to inspect the
relevant records to verify such report or statement.  Buyer and its Affiliates,
sublicensees and transferees or assignees shall each make its records available
for inspection by such independent certified public accountant during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from Sellers, solely to verify the accuracy of the
reports and payments.  Such inspection right shall not be exercised more than
once in any calendar year.  Sellers agree to hold in strict confidence all
information concerning milestone and Earn-Out Payments and reports, and all
information learned in the course of any audit or inspection (and not to make
copies of such reports and information), except to the extent necessary for
Sellers to reveal such information in order to enforce its rights under this
Agreement or if disclosure is required by applicable Legal Requirement.  The
results of each inspection, if any, shall be binding on both parties.  Sellers
shall pay for such inspections, except that in the event there is any upward
adjustment in aggregate Earn-Out Payments payable for any year shown by such
inspection of more than ten percent (10%) of the amount paid, Buyer shall pay
for such inspection. Buyer shall include in each sublicense or marketing
agreement entered into by it pursuant to this Agreement a provision requiring
the sublicensee or marketing partner to keep and maintain adequate records of
sales made pursuant to such sublicense or marketing agreement and to grant
access to such records by the aforementioned independent public accountant for
the reasons specified in this Section.  Any overpayments shall be fully
creditable against amounts payable in subsequent payment periods.  Sellers agree
that all information subject to review under this Section or under any
sublicense or marketing agreement is confidential and that Sellers shall retain
and cause their representative to retain all such information in confidence.

 

Section 3.4                                    Post-Closing Efforts.  Buyer
agrees to use Reasonable Commercial Efforts to (i) initiate a Phase III Clinical
Trial for SHP-141 in accordance with the timeline specified in the Merger
Agreement; (ii) solely to the extent the condition to Closing set forth in
Section 8.2(e) is satisfied (and not waived by the Buyer) and the applicable
affiliate of Merck actually supplies KEYTRUDA in the manner contemplated by such
confirmation, commence a proof of concept clinical trial of birinapant in
combination with KEYTRUDA in solid tumors (NCT02587962); and (iii) support with
reasonable supplies of birinapant the Jonnson Comprehensive Cancer Center
sponsored clinical trial of birinapant in combination with paclitaxel and
carboplatin in ovarian cancer (NCT02756130).  The parties acknowledge and agree
that the remedy for breach by Buyer of its obligations under this Section 3.4
shall be only as follows, notwithstanding any other provisions hereof, including
Section 7.8: (x) in the case of a breach by the Buyer of Section 3.4(i), the
Buyer shall pay to the Sellers the amount specified in Milestone 1 under
Section 3.2(a); (y) in the case of a breach by the Buyer of Section 3.4(ii), the
Buyer shall pay to the Sellers 50% of the amount specified in Milestone 4 under
Section 3.2(a); and (z) in the case of a breach by the Buyer of
Section 3.4(iii), the Buyer shall pay to the Sellers 50% of the amount specified
in Milestone 4 under Section 3.2(a) (such amounts, collectively, the “Liquidated
Damages”).  The parties intend that the Liquidated Damages constitute
compensation, and not a penalty. The parties acknowledge and agree that the
Sellers’ harm caused by the Buyer’s breach of this Section 3.4 would be
impossible or very difficult to accurately estimate as of the date hereof, and
that the Liquidated Damages are a reasonable estimate of the anticipated or
actual harm that might arise from the Buyer’s breach. The Buyer’s payment of the
applicable portion of the Liquidated Damages is the Sellers’ sole liability and
entire obligation and the Sellers’ exclusive remedy for any breach by the Buyer
of this Section 3.4.  To the extent all or any portion of the Liquidated Damages
becomes payable hereunder, the breach by the Buyer giving rise to such payment
obligation shall be considered an achievement of such milestone (or the
applicable portion of such milestone) for all purposes hereunder (including
Section 3.2(c)).  Amounts payable under this Section 3.4 shall be payable in the
manner specified in Section 3.2(b).

 

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ARTICLE IV
THE CLOSING

 

Section 4.1                                    Time and Place of the Closing. 
Upon the terms and subject to the satisfaction of the conditions contained in
Article VIII of this Agreement, the closing of the sale of the Purchased Assets
and the assumption of the Assumed Liabilities contemplated by this Agreement
(the “Closing”) shall take place at the offices of Wiggin and Dana LLP in New
York, NY at 10:00 A.M. (local time) not later than the second Business Day
following the date on which the conditions set forth in Article VIII have been
satisfied (other than the conditions with respect to actions the respective
parties hereto will take at the Closing itself) or, to the extent permitted,
waived by the applicable party in writing, or at such other place and time as
the Buyer and the Sellers may mutually agree.  The Closing may be consummated by
means of an exchange of executed documents as attachments in “pdf” or similar
format to electronic mail messages.  The date and time at which the Closing
actually occurs is herein referred to as the “Closing Date.”

 

Section 4.2                                    Deliveries by the Seller.  At or
prior to the Closing, the Sellers shall deliver the following to the Buyer:

 

(a)                                 the Bill of Sale, duly executed by the
Sellers, recordable assignment agreements with respect to any Purchased IP not
owned by an Affiliate of the Sellers that is purchased by the Buyer (including,
in the Buyer’s sole discretion, a patent assignment agreement and a trademark
assignment agreement), and all such other instruments of assignment or
conveyance as shall be reasonably necessary to transfer to the Buyer good and
valid title, free and clear of all Encumbrances (other than Permitted
Encumbrances), to all of the Purchased Assets in accordance with this Agreement;

 

(b)                                 the certificate contemplated by
Section 8.2(c);

 

(c)                                  the Assumption Agreement, duly executed by
the Sellers;

 

(d)                                 evidence of receipt of the Requisite
Approvals and any Required Consents, in each case in form reasonably acceptable
to the Buyer;

 

(e)                                  any certificates or other documents
reflecting the Acquired Equity Interests, in each case in form reasonably
acceptable to the Buyer

 

(f)                                   resignations of each of the directors and
officers of the Acquired Entities;

 

(g)                                  letters of direction addressed to
applicable past and current counsel to the Sellers, in a form reasonably
acceptable to the Buyer and duly executed by the applicable Seller, authorizing
the Buyer to obtain access to the documents and material set forth in
Section 2.1(g); and

 

(h)                                 such other customary instruments of
transfer, assumption, filings or documents, in form and substance reasonably
satisfactory to the Buyer, as may be required to give effect to this Agreement.

 

Section 4.3                                    Deliveries by the Buyer.  At or
prior to the Closing, the Buyer shall deliver the following to the Sellers:

 

(a)                                 The Closing Payment;

 

(b)                                 the Assumption Agreement, duly executed by
the Buyer; and

 

(c)                                  the certificate contemplated by
Section 8.3(c).

 

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Each Seller hereby represents and warrants to the Buyer that, except as set
forth in the correspondingly-numbered Schedule:

 

Section 5.1                                    Organization and Good Standing. 
Each Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now conducted. Each Seller and each of its Affiliates is duly
qualified or authorized to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization, except
where the failure to be so qualified, authorized or in good standing would not
have, or reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Purchased Assets.

 

Section 5.2                                    Authority Relative to this
Agreement.  Each Seller has all requisite power, authority and legal capacity to
execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
such Seller in connection with the transactions contemplated by this Agreement
(the “Seller Documents”), to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated by this Agreement. Other than
obtaining the Requisite Approvals, the execution, delivery and performance of
this Agreement and each of the Seller Documents and the consummation of the
transactions contemplated by this Agreement have been duly authorized and
approved by all required corporate action on the part of each Seller.  No other
proceeding on the part of a Seller is necessary to authorize this Agreement and
the Seller Documents and the transactions contemplated by this Agreement, other
than obtaining the Requisite Approvals. This Agreement has been, and each of the
Seller Documents will be at or prior to the Closing, duly and validly executed
and delivered by each Seller party thereto.  Assuming due authorization,
execution and delivery by of this Agreement by the Buyer and receipt of the
Requisite Approvals, this Agreement constitutes, and each of the Seller
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of each Seller party thereto, enforceable against such
Seller in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally or
general principles of equity.

 

Section 5.3                                    No Violation; Consents.  The
execution, delivery and performance of this Agreement by each Seller, and the
consummation by such Seller of the transactions contemplated by this Agreement,
do not and will not: (a) conflict with or results in any breach of any provision
of such Seller’s Certificate of Incorporation or Bylaws (or similar
organizational documents); (b) conflict with or result in a violation or breach
of any provision of any Legal Requirement applicable to such Seller, the
Business or the Purchased Assets, to the extent having, individually or in the
aggregate, a Material Adverse Effect ; (c) except as set forth in Schedule 5.3,
require the consent, notice or other action by any Person under, conflict with,
result in a violation or breach of, constitute a default or an event that, with
or without notice or lapse of time or both, would constitute a default under,
result in the acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract or Governmental Authorization to which
such Seller is a party or by which such Seller or the Business is bound or to
which any of the Purchased Assets are subject (including any Assumed Agreement),
to the extent having, individually or in the aggregate, a Material Adverse
Effect; or (d) result in the creation or imposition of any Encumbrance (other
than Permitted Encumbrances) on any Purchased Assets, to the extent having
individually or in the aggregate, a Material Adverse Effect.  Except as set
forth in Schedule 5.3, no consent, approval, Governmental Authorization,
declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to any Seller in connection with the execution and delivery
of this Agreement and the other Transaction Documents and the consummation of
the transactions contemplated hereby and thereby.

 

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Section 5.4                                    Title to Assets; Capitalization;
Intellectual Property.

 

(a)                                 The Sellers have good and valid title to the
Purchased Assets, in each case free and clear of all Encumbrances (other than
Permitted Encumbrances).  The Purchased Assets are sufficient for the continued
conduct of the Business after the Closing in substantially the same manner as
currently conducted by the Sellers on the date of this Agreement and constitute
all of the rights, property and assets necessary to conduct the Business as
currently conducted by the Sellers.

 

(b)                                 Schedule 5.4(b) sets forth (i) the
authorized and outstanding capital stock of each Seller and each Acquired Entity
and (ii) the outstanding debt securities of each Seller and each Acquired
Entity.  The Acquired Equity Interests have been duly authorized, are validly
issued, fully paid and non-assessable, and are owned of record and beneficially
by the applicable Seller, free and clear of all Encumbrances. Upon consummation
of the transactions contemplated by this Agreement, the Buyer shall own all of
the Acquired Equity Interests, free and clear of all Encumbrances.  All of the
Acquired Equity Interests were issued in compliance with applicable Legal
Requirements. None of the Acquired Equity Interests were issued in violation of
any agreement, arrangement or commitment to which any Seller or any of its
Affiliates is a party or is subject to or in violation of any preemptive or
similar rights of any Person.  There are no outstanding or authorized options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the Acquired
Entities or obligating any Seller or any Acquired Entity to issue or sell any
shares of capital stock of, or any other interest in, the Acquired Entities. No
Acquired Entity has any outstanding or authorized any stock appreciation,
phantom stock, profit participation or similar rights. There are no voting
trusts, stockholder agreements, proxies or other agreements or understandings in
effect with respect to the voting or transfer of any of the Acquired Equity
Interests.

 

(c)                                  Schedule 2.1(c) sets forth a complete list
of all Registered IP and all Contracts under which any Seller or its
Subsidiaries have obtained Intellectual Property Rights. Except as set forth on
Schedule 5.4(c), the Intellectual Property Rights set forth on Schedule
2.1(c) constitutes all of the Intellectual Property Rights that are necessary
for the operation of the Business after the Closing in substantially the same
manner as conducted by the Sellers on the date of this Agreement.  As of the
Closing Date, the Sellers or their Subsidiaries owns or otherwise has the right
to transfer all of the Purchased IP.

 

(d)                                 To the Knowledge of the Sellers, except as
set forth on Schedule 2.1(c), the Purchased IP is valid, subsisting and
enforceable.

 

(e)                                  Except as set forth on Schedule 5.4(c), to
the Knowledge of the Sellers, the operation of the Business, as has been and is
now being conducted, does not presently infringe or constitute a
misappropriation of any registered or unregistered Patents, Trademarks,
Copyrights, trade secrets or other proprietary rights of any Person and neither
any Seller, nor any Subsidiaries thereof, has received any written notice from
any Person, or has Knowledge of, any actual or threatened claim or assertion to
the contrary or of any facts or alleged facts which are likely to serve as the
basis for such assertion.

 

(f)                                   Any registration, maintenance and renewal
fees due in connection with the Registered IP have been paid in a timely manner
and all necessary documents and certificates in connection with the Registered
IP have, for the purposes of maintaining such Registered IP, been filed in a
timely manner with the relevant Governmental Authorities.

 

(g)                                  The Intellectual Property Rights are free
and clear of all Encumbrances and no Person other than each Seller or its
Subsidiaries, including any current or former employee or consultant of either
Seller or any Subsidiaries thereof, has any proprietary, commercial or other
interest in any of the Intellectual Property Rights.

 

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(h)                                 There are no existing agreements, options,
commitments, or rights with, of or to any Person to acquire or obtain any rights
to, any of the Intellectual Property Rights.

 

(i)                                     The Sellers or their applicable
Subsidiaries have the unrestricted right to assign, transfer and/or grant to the
Buyer all rights in the Intellectual Property Rights that is being assigned,
transferred and/or granted to the Buyer under this Agreement and the Assumed
Agreements, in each case free of any rights or claims of any Person and without
obligations to pay any royalties, license fees or other amounts to any Person,
except as otherwise provided under the Contracts set forth on Schedule 2.1(c).

 

(j)                                    To the Knowledge of the Sellers, there is
no unauthorized use or infringement by any Person of any of the Patents
contained in the Intellectual Property Rights.

 

(k)                                 There are no claims or causes of action
(including any inventorship challenges) pending or, to the Knowledge of the
Sellers, threatened with respect to any of the Intellectual Property Rights nor
have any claims or causes of action been brought during the past three
(3) years.

 

(l)                                     Neither any Seller, nor any Subsidiary
thereof, has entered into any Contract (i) granting any Person the right to
bring infringement actions with respect to, or otherwise to enforce rights with
respect to, any of the Intellectual Property Rights, or (ii) except as set forth
in Schedule 5.4(c), expressly agreeing to indemnify any Person against any
charge of infringement of any of the Intellectual Property Rights.

 

(m)                             Except as set forth in Schedule 5.4(c), none of
the Sellers or any of their Subsidiaries have entered into any Contract granting
any Person the right to control the prosecution of any of the Patents contained
in the Intellectual Property Rights.

 

(n)                                 None of the Trademarks contained in the
Intellectual Property Rights are or have been the subject of any opposition,
cancellation, abandonment or similar proceeding, and no Seller or any of its
Subsidiaries has received any written notice from any Person, or has Knowledge,
of any actual or threatened claim or assertion to the contrary, or of any facts
or alleged facts which are likely to serve as a basis for such claim or
assertion.

 

(o)                                 To the Knowledge of the Sellers, there are
no Trademarks of any Person that are interfering or potentially interfering with
the Trademarks contained in the Intellectual Property Rights or any other
Trademarks material to the Business.

 

(p)                                 To the Knowledge of the Sellers, there is no
unauthorized use or infringement of the Copyrights contained in the Intellectual
Property Rights.

 

(q)                                 Except as set forth on Schedule 2.1(c), no
Seller or any of its Subsidiaries has granted any licenses or sublicenses under
or to any of the Intellectual Property Rights or entered into any distribution
or marketing arrangements with respect to any Intellectual Property Rights or
the Lead Compounds.

 

(r)                                    All employees of and consultants to any
Seller or its Subsidiaries with access to confidential information with respect
to the Business are subject to obligations to maintain the confidentiality of
such confidential information.

 

(s)                                   Each Seller and its Subsidiaries has, with
respect to the Business, used commercially reasonable efforts to maintain its
trade secrets and know-how in confidence.  To the Knowledge of the Sellers,
there has been no misappropriation of any trade secrets, know-how or other
confidential information of the Sellers or their respective Subsidiaries with
respect to the Business.

 

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Section 5.5                                    Contracts.  Each material
Contract to which any Seller or its Affiliates is a party or is bound and which
is an Assumed Agreement, relates to a Purchased Asset or is a Contract to which
an Acquired Entity is a party is valid and in full force and effect in
accordance with its terms.  No Seller or any of its Affiliates or, to the
Sellers’ Knowledge, any other party thereto is in breach of or default under (or
is alleged to be in breach of or default under) or has provided or received any
notice of any intention to terminate, any Assumed Agreement or any such material
Contract to any such Person is a party or is bound.  Except as set forth on
Schedule 5.5, the Assumed Agreements are all of the Contracts necessary for the
operation of the Business after the Closing in substantially the same manner as
currently conducted by the Sellers on the date of this Agreement.  Each Assumed
Agreement is valid and binding on Seller in accordance with its terms and is in
full force and effect.  No event or circumstance has occurred that, with notice
or lapse of time or both, would constitute an event of default under any Assumed
Agreement or result in a termination thereof or would cause or permit the
acceleration or other changes of any right or obligation or the loss of any
benefit thereunder.  Complete and correct copies of each Assumed Agreement
(including all modifications, amendments and supplements thereto and waivers
thereunder) have been made available to the Buyer. There are no material
disputes pending or threatened under any Contract included in
the Purchased Assets.  Without limiting the generality of the foregoing:

 

(a)                                 all milestone payments due under Section 5.3
of the Harvard License as of the date hereof have been paid in full by TLOG, and
all milestone payments that will become due under Section 5.3 of the Harvard
License on or as of the Closing Date shall have been paid in full by TLOG; and

 

(b)                                 Schedule 5.5(b) sets forth all outstanding
research payment obligations under Section 7.1 of the WEHI License.

 

Section 5.6                                    Legal Proceedings and Orders. 
There is no action, suit, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding or any informal
proceeding) or investigation pending or being heard by or before, or otherwise
involving, any Governmental Authority or any arbitrator or arbitration panel
(each a “Proceeding”), and no Person has threatened in writing to commence any
Proceeding: (a) that relates to and would reasonably be expected to adversely
affect any of the Purchased Assets; or (b) that challenges, or that would
reasonably be expected to have the effect of preventing, materially delaying,
making illegal or otherwise materially interfering with, any of the transactions
contemplated by this Agreement.  There is no governmental order, writ,
injunction, judgment or decree to which any Seller or any of its Affiliates or
any of the Purchased Assets, is subject.

 

Section 5.7                                    Inventory.  Schedule 5.7 lists
all inventory of the Sellers and their Affiliates as of August 31, 2016.  The
information on Schedule 5.7 was derived from the books and records of the
Sellers and, taken as a whole, is accurate and complete in all material respects
as of such date.  All Inventory is owned by the applicable Seller or its
Subsidiaries free and clear of all Encumbrances (other than Permitted
Encumbrances) and no Inventory is held on a consignment basis.

 

Section 5.8                                    Compliance with Legal
Requirements.  Each Seller, each of the Acquired Entities and Shape AU is in
material compliance with, and has at all times since January 1, 2014 complied in
all material respects with, all Legal Requirements applicable to the conduct of
the Business as currently conducted or the ownership and use of the Purchased
Assets.  All Governmental Authorizations required for each Seller, each Acquired
Entity and Shape AU to conduct the Business as currently conducted or for
ownership and use of the Purchased Assets have been obtained and are valid and
in full force and effect.  All material fees and charges with respect to such
permits as of the date hereof have been paid in full. Schedule 5.8 lists all
current Governmental Authorizations issued to the Sellers, the Acquired Entities
or Shape AU which are related to the conduct of the Business as currently
conducted or the ownership and use of the Purchased Assets. To the Sellers’
Knowledge, no event has occurred that, with or without notice or lapse of time
or both, would reasonably be expected to result in the revocation, suspension,
lapse or limitation of any Governmental Authorization set forth in Schedule 5.8.

 

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Section 5.9                                    Regulatory Matters.  Without
limiting the generality of Section 5.8:

 

(a)                                 Schedule 5.9(a) sets forth a true, complete
and correct list of all Governmental Authorizations from the FDA, EMA and all
other Governmental Authorities held by any Seller or its Subsidiaries relating
to the Lead Molecules or any Product, and there are no other Governmental
Authorizations required for the Lead Molecules or any Product in connection with
the conduct of the Business as currently conducted on the date of this
Agreement.  All such Governmental Authorizations are (i) in full force and
effect, (ii) validly registered and on file with applicable Governmental
Authorities, and (iii) in compliance with all formal filing and maintenance
requirements. Each Seller or its Subsidiaries has filed all required notices and
responses to notices, supplemental applications, reports (including all adverse
event/experience reports) and other information with the FDA, EMA and all other
applicable Governmental Authorities.

 

(b)                                 (i) Each Seller and its Subsidiaries has
conducted its research, development, manufacturing, supply, promotion, testing,
distribution, marketing, licensing, and sales with respect to the Business in
compliance in all material respects with all applicable Legal Requirement, 
(ii) no Seller, or any Subsidiaries thereof, has received any written notice or
other communication from any Governmental Authority (A) withdrawing or placing a
Lead Molecule or any Product on Clinical Hold or requiring the termination or
suspension or investigation of any pre-clinical studies or clinical trials of a
Lead Molecule or any Product or (B) alleging any material violation of any
applicable Legal Requirement and (iii) there are no claims or causes of action
against or affecting the Business, a Lead Molecule or any Product or any Seller
relating to or arising under any applicable Legal Requirement relating to
government health care programs, private health care plans or the privacy and
confidentiality of patient health information. Each Seller and its Subsidiaries
has made available to the Buyer complete and correct copies of all Governmental
Authorizations and regulatory dossiers relating thereto, all serious adverse
event reports, periodic adverse event reports, non-clinical expedited safety
reports and other pharmacoviligance reports and data, and all other Governmental
Authority communications, documents and other information submitted by any
Seller or its Subsidiaries to or received by any Seller or its Subsidiaries from
the FDA, the EMA or any other Governmental Authority, including inspection
reports, warning letters and similar documents, relating to each Seller or its
Subsidiaries, the conduct of the Business or a Lead Molecule or any Product.

 

(c)                                  All pre-clinical studies and clinical
trials conducted or being conducted with respect to the Lead Molecule or any
Product or the Business by or, to the Knowledge the Sellers, at the direction of
(including any sponsored by) any Seller or its Subsidiaries have been and are
being conducted in material compliance with all applicable Legal Requirement,
including the applicable requirements of Good Laboratory Practices and Good
Clinical Practices and applicable regulations and guidances that relate to the
proper conduct of clinical studies and requirements relating to the protection
of human subjects (including “Informed Consent” as such term is defined under
applicable Legal Requirement) and applicable Legal Requirement governing the
privacy of patient medical records and other personal information, data and
biological specimens, and no such informed consent documents would prevent the
transfer of such personal information, data and biological specimens to the
Buyer. No Seller, or any Subsidiaries thereof, has received any written
notifications or, to the Knowledge of the Sellers, any other communications from
any institutional review board (IRB), ethics committee or safety monitoring
committee raising any issues, including from any Governmental Authority in any
jurisdiction requiring the termination or suspension or investigation of any
clinical studies conducted by, or on behalf of, any Seller or its Subsidiaries,
or in which any Seller or its Subsidiaries has participated and, to Knowledge of
the Sellers, no such action has been threatened. Complete and correct copies of
all material scientific and clinical data of the Sellers and their Subsidiaries
with respect to a Lead Molecule or any Product or the Business have been made
available to the Buyer.

 

(d)                                 Any manufacture of a Lead Molecule or any
Product, including any clinical supplies used in any clinical trials and any
drug delivery devices used in such clinical trials, by or on behalf of any

 

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Seller or its Subsidiaries has been conducted in material compliance with the
applicable specifications and applicable requirements of current Good
Manufacturing Practices and all other applicable Legal Requirement. In addition,
each Seller and its Subsidiaries is in material compliance with all applicable
registration and listing requirements, including those set forth in 21 U.S.C.
Section 360 and 21 C.F.R. Parts 207 and 807 and all similar applicable Legal
Requirement. To the Knowledge of the Sellers, neither the Lead Molecules nor any
Product has been adulterated or misbranded.

 

(e)                                  No Seller or any Subsidiaries thereof has,
with respect to the Business made an untrue or misleading statement of a
material fact or fraudulent statement to any Governmental Authority, failed to
disclose a material fact required to be disclosed to any Governmental Authority,
or committed an act, made a statement, or failed to make a statement, including
with respect to any scientific data or information, that, at the time such
disclosure was made or failure to disclose occurred, would reasonably be
expected to provide a basis for any Governmental Authority to invoke the FDA
policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991), or
any similar rule, regulation or policy. No Seller or any of its Subsidiaries
has, nor has any Representative of any of the foregoing, been convicted of any
crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. §
335a(a) or any similar applicable Legal Requirement or authorized by 21 U.S.C. §
335a(b) or any similar applicable Legal Requirement.  No Seller or any
Subsidiaries thereof has, nor has any Representative of any of the foregoing,
been convicted of any crime or engaged in any conduct for which such Person
could be excluded from participating in any U.S. federal health care programs
and each Seller and its Subsidiaries has appropriate policies and restrictions
in its agreements with third parties precluding the use of any individuals
convicted of any crimes or engaged in any conduct for which such Person could be
excluded from participating in any U.S. federal health care programs.

 

(f)                                   Except as set forth on Schedule 5.9(f),
(i) There has not occurred a Lead Molecule Event during the time period any
Seller or its Subsidiaries held rights to a Lead Molecule nor, to the Knowledge
of the Sellers, prior to such time period; and (ii) to the Knowledge of the
Sellers, no event has occurred and no facts or circumstances exist which could
reasonably be expected to lead to or result in the occurrence of a Lead Molecule
Event.

 

(g)                                  Any disclosures of payments or other
transfers of value to healthcare providers have been made in accordance with all
applicable Legal Requirement. All clinical trials of the Lead Molecules or any
Products have been publicly disclosed in accordance with all applicable Legal
Requirement.

 

(h)                                 Schedule 7.12 sets forth (i) all deposits
and other pre-paid amounts delivered by any Seller or any Acquired Entity with
respect to the Business as of the date hereof, (ii) all amounts paid by any
Seller or any Acquired Entity to the applicable contract research organization
as of the date hereof in connection with the ongoing SHAPE Phase 2 Clinical
Trial, (iii) all amounts accrued but not yet paid by any Seller or any Acquired
Entity to the applicable contract research organization as of the date hereof in
connection with the ongoing SHAPE Phase 2 Clinical Trial, and (iv) the Sellers’
good faith estimate of all amounts which will accrue and become payable to the
applicable contract research organization following the date hereof in
connection with the ongoing SHAPE Phase 2 Clinical Trial.

 

Section 5.10                             SEC Filings.

 

(a)                                 SEC Filings. TLOG has filed with or
furnished to, as applicable, the SEC all registration statements, prospectuses,
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated by reference) required to be filed or
furnished by it with the SEC since January 1, 2013 (the “TLOG SEC Documents”). 
To the Sellers’ Knowledge, none of the TLOG SEC Documents, including any
financial statements, schedules or exhibits included or incorporated by
reference therein at the time they were filed (or, if amended or superseded by a
subsequent filing, as of the date of the last such amendment or superseding
filing prior to the date hereof),

 

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contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading in any material respect.  None of TLOG’s Subsidiaries is required to
file or furnish any forms, reports or other documents with the SEC.

 

(b)                                 Off-balance Sheet Arrangements. Neither TLOG
nor any of its Subsidiaries is a party to, or has any commitment to become a
party to, any joint venture, off balance sheet partnership or any similar
Contract (including any Contract or arrangement relating to any transaction or
relationship between or among TLOG and any of its Subsidiaries, on the one hand,
and any unconsolidated affiliate, including any structured finance, special
purpose or limited purpose entity or person, on the other hand, or any “off
balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under
the Exchange Act)), where the result, purpose or intended effect of such
Contract is to avoid disclosure of any material transaction involving, or
material liabilities of, TLOG or any of its Subsidiaries in TLOG’s or such
Subsidiary’s published financial statements or other TLOG SEC Documents.

 

Section 5.11                             Taxes.

 

(a)                                 All Tax Returns relating to the Business or
the Purchased Assets that are required to be filed by any Seller or any of its
Affiliates (including any Tax Returns required to be filed in any jurisdiction
by any of the Affiliates being acquired by the Buyer), either separately or as
members of a group of corporations, on or before the Closing Date have been duly
filed on a timely basis with the appropriate Governmental Authority and all
amounts set forth thereon have been paid in full.  All such Tax Returns are
true, correct and complete in all material respects and correctly reflect the
taxable income or loss (or other measure of Tax) of the Sellers and their
Affiliates.  All Taxes that are due and payable on or before the Closing Date by
the Sellers or any of their Affiliates with respect to the Business (or as to
which the Buyer could be liable as a transferee or otherwise) have been paid in
full and all deposits required to be made with respect to any such Taxes have
been duly made. The unpaid Taxes of the Sellers or any of their Affiliates
(i) did not, as of the date of the latest balance sheet, exceed the reserves for
Tax Liability set forth on the face of the latest balance sheet, and (ii) will
not exceed the reserve described in clause (i) as adjusted for the passage of
time through the Closing Date in accordance with past custom and practice of the
Sellers or their Affiliates in filing their Tax Returns.   No Seller or any of
its Affiliates has waived any statute of limitations or extended the period for
the assessment of collection with respect to any Tax concerning or attributable
to the Business (or as to which the Buyer could be liable as a transferee or
otherwise).  There is no material dispute or claim concerning any Tax liability
of the Sellers attributable to the Business or attributable to any of the
Acquired Entities either (i) claimed or raised by any Governmental Authority in
writing or (ii) as to which any of the Sellers has Knowledge.  To the Knowledge
of the Sellers, no written claim has been made by any Governmental Authority in
any jurisdiction in which any Seller or its Affiliates currently does not pay
Taxes or file Tax Returns that such Seller or its Affiliates is required to pay
Taxes or file Tax Returns with respect to the Business (or as to which Buyer
could be liable as a transferee or otherwise).  There are no Liens on the
Purchased Assets with respect to any Tax other than Permitted Encumbrances.

 

(b)                                 Each Seller and its Affiliates: (i) have
complied with all applicable legal and information reporting requirements with
respect to payments made to employees and third parties and the withholding and
payment of withheld Taxes with respect to the Business (or as to which the Buyer
could be liable as a transferee or otherwise) and timely paid over to the proper
Governmental Authorities all amounts required to be so withheld and paid over
for all periods in the manner required by any applicable Legal Requirement, and
(ii) have duly collected and remitted any sales, value-added and similar Taxes
required to be collected and remitted with respect to the Business (or as to
which the Buyer could be liable as a transferee or otherwise), except for any
items described in (i) and (ii) that are not yet due to be paid or remitted.

 

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(c)                                  There is no Tax sharing agreement, Tax
allocation agreement, Tax indemnity or assumption obligation or similar written
or unwritten agreement, arrangement, understanding or practice with respect to
Taxes to which any Seller or any of its Affiliates is a party, subject,
obligated or bound in any manner under which the Buyer could be liable for or
become obligated to pay Taxes.  No Purchased Asset is:  (i) “tax-exempt use
property” within the meaning of Section 168(h) of the Code, or (ii) secures any
debt the interest on which is exempt from tax under Section 103 of the Code.

 

(d)                                 No Seller or any of Affiliates is subject to
withholding under Section 1445 of the Code or subject to Code Section 1446 (or
any similar state law withholding requirements) or subject to withholding on any
portion of the Purchase Price in any foreign jurisdiction, including, but not
limited to, the United Kingdom or Australia, and, at the Closing Date, each
Seller shall deliver to the Buyer a certificate or certificates to that effect. 
To the extent any withholding is required, any amount withheld shall be treated
as paid to the Seller.

 

Section 5.12                             No Bankruptcy. There are no Proceedings
by or before any Governmental Authority or any Proceeding pending, or threatened
in writing against any Seller or Acquired Entity, or any of their respective
properties, including outstanding federal and state tax liens, garnishments or
insolvency or bankruptcy proceedings and proceedings affecting its business and
properties, or the ownership, management, repair, use, occupancy, possession or
operation thereof.  Without limiting the generality of the foregoing, no Seller
or any of the Acquired Entities or anyone acting on their behalf has filed or
maintained or caused or permitted to be filed or maintained any petition for
protection under the Bankruptcy Code for or against any Seller or any Acquired
Entity; and (ii) to the Knowledge of the Sellers, none of the creditors or any
other Person has filed or maintained or caused or threatened to file any
voluntary or involuntary petition under the Bankruptcy Code for or against any
Seller or any Acquired Entity.  Each Seller acknowledges and agrees that the
Purchase Price to be paid hereunder is reasonably equivalent to the value of the
Purchased Assets.

 

Section 5.13                             Absence of Certain Changes or Events. 
Since June 30, 2016, except in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, the
Business has been conducted in the ordinary course of business and there has not
been or occurred:

 

(a)                                 any Material Adverse Effect or any event,
condition, change or effect that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or

 

(b)                                 any event, condition, action or effect that,
if taken during the period from the date of this Agreement through the Closing,
would constitute a breach of Section 7.1.

 

Section 5.14                             Insurance.   Schedule 5.14 sets forth
(a) a true and complete list of all current policies or binders of fire,
liability, product liability, umbrella liability, real and personal property,
workers’ compensation, vehicular, fiduciary liability and other casualty and
property insurance maintained by the Sellers or their Affiliates and relating to
the Business, the Purchased Assets or the Assumed Liabilities (collectively, the
“Insurance Policies”); and (b) with respect to the Business, the Purchased
Assets or the Assumed Liabilities, a list of all pending claims and the claims
history for the Business since January 1, 2013. No Seller or any of its
Affiliates has received any written notice of cancellation of, premium increase
with respect to, or alteration of coverage under, any of such Insurance
Policies. All premiums due on such Insurance Policies have either been paid or,
if not yet due, accrued. All such Insurance Policies (a) are in full force and
effect and enforceable in accordance with their terms; and (b) have not been
subject to any lapse in coverage. No Seller or any of its Affiliates is in
default under, or has otherwise failed to comply with, in any material respect,
any provision contained in any such Insurance Policy. The Insurance Policies are
of the type and in the amounts customarily carried by Persons conducting a
business similar to the Business and are sufficient for compliance with all
applicable Legal Requirements and Contracts to which any Seller or any of

 

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its Affiliates is a party or by which it is bound.  True and complete copies of
the Insurance Policies have been made available to the Buyer.

 

Section 5.15                             Brokers.  Except as set forth on
Schedule 5.15, no Person is entitled to any brokerage, financial advisory,
finder’s or similar fee or commission payable by the Seller.

 

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER

 

The Buyer hereby represents and warrants to the Sellers as follows:

 

Section 6.1                                    Organization and Good Standing. 
The Buyer is duly organized, validly existing and in good standing under the
laws of Sweden.

 

Section 6.2                                    Authority Relative to this
Agreement.  Buyer has all requisite power, authority and legal capacity to
execute and deliver this Agreement and each other agreement, document, or
instrument or certificate contemplated by this Agreement or to be executed by
the Buyer in connection with the transactions contemplated by this Agreement
(the “Buyer Documents”), to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement and each of the Buyer Documents and
the consummation of the transactions contemplated by this Agreement have been
duly authorized and approved by all required corporate action on the part of the
Buyer.  No other proceedings on the part of the Buyer is necessary to authorize
this Agreement and the Buyer Documents and the transactions contemplated by this
Agreement. This Agreement has been, and each of the Buyer Documents will be at
or prior to the Closing, duly and validly executed and delivered by the Buyer. 
Assuming due authorization, execution and delivery by the Sellers, this
Agreement constitutes, and each of the Buyer Documents when so executed and
delivered will constitute, legal, valid and binding obligations of the Buyer,
enforceable against Buyer in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally or general principles of equity.

 

Section 6.3                                    No Violation; Consents.  The
execution, delivery and performance of this Agreement by the Buyer, and the
consummation by the Buyer of the transactions contemplated by this Agreement, do
not and will not: (a) conflict with or result in any breach of any provision of
the Buyer’s Certificate of Incorporation or Bylaws (or similar organization
documents); (b) conflict with or result in a violation or breach of any
provision of any Legal Requirement applicable to the Buyer; or (c) require the
consent, notice or other action by any Person under any Contract to which Buyer
is a party.  No consent, approval, Governmental Authorization, declaration or
filing with, or notice to, any Governmental Authority is required by or with
respect to the Buyer in connection with the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby.

 

Section 6.4                                    Legal Proceedings and Orders. 
There is no pending Proceeding, and, to the Buyer’s Knowledge, no Person has
threatened to commence any Proceeding that could have a material adverse effect
on the Buyer’s ability to consummate the transactions contemplated hereby. There
is no order, writ, injunction, judgment or decree to which the Buyer is subject
that could have a material adverse effect on the Buyer’s ability to consummate
the transactions contemplated hereby.

 

Section 6.5                                    Securities Regulation. The Buyer
has filed with or furnished to, as applicable, the Swedish securities regulatory
authorities all documents regarding its business and capital stock (including
exhibits and all other information incorporated by reference) required to be
filed or furnished by it since January 1, 2014 (the “Buyer Regulatory
Documents”).  To the Buyer’s Knowledge, none of the Buyer Regulatory Documents,
including any financial statements, schedules or exhibits included or
incorporated by

 

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reference therein at the time they were filed (or, if amended or superseded by a
subsequent filing, as of the date of the last such amendment or superseding
filing prior to the date hereof), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading in any material respect.

 

Section 6.6                                    Brokers.  No Person is entitled
to any brokerage, financial advisory, finder’s or similar fee or commission
payable by the Buyer.

 

Section 6.7                                    Buyer’s Investigation.  Buyer
acknowledges and affirms that it has completed its own independent
investigation, analysis and evaluation of the Purchased Assets, that it has made
all such reviews and inspections of the Purchased Assets as it deems necessary
and appropriate, and that in making its decision to enter into this Agreement
and consummate the transactions contemplated hereby, it has relied on its own
investigation, analysis, and evaluation with respect to all matters without
reliance upon any express or implied representations or warranties except as
expressly set forth in this Agreement.

 

Section 6.8                                    Buyer’s Resources.  Buyer will
have, at the Closing, the resources and capabilities (financial or otherwise) to
perform its obligations hereunder to be performed on the Closing Date, including
payment of the Closing Payment.  Buyer has not incurred any obligation,
commitment, restriction or liability of any kind that would materially impair
its ability to satisfy its payment and funding obligations under this Agreement.

 

ARTICLE VII
COVENANTS OF THE PARTIES AND INDEMNIFICATION

 

Section 7.1                                    Conduct of Business.

 

(a)                                 Except as required by applicable Legal
Requirement, as contemplated or required by the terms of any Transaction
Document, or as otherwise consented to in writing by the Buyer (such consent not
to be unreasonably withheld or delayed), during the period commencing on the
date of this Agreement and continuing through the Closing or the earlier
termination of this Agreement in accordance with its terms, the Sellers shall:
(i) operate the Business in the usual, regular and ordinary course of business
in all material respects; (ii) use commercially reasonable efforts to preserve
in all material respects the Business and the Purchased Assets; and (iii) use
commercially reasonable efforts to preserve in all material respects the
goodwill and relationships with creditors, customers, licensees, lessors,
suppliers, and others having material business dealings with it.   In addition,
until the Closing or the earlier termination of this Agreement, the Sellers
shall consult with the Buyer on all material aspects of the Business and
material decisions relating to the operations of the Business and shall take
into account the views of the Buyer with respect thereto.

 

(b)                                 Except as required by applicable Legal
Requirement or as contemplated or required by the terms of any Transaction
Document, during the period commencing on the date of this Agreement and
continuing through the Closing or the earlier termination of this Agreement in
accordance with its terms, each Seller covenants that it will not, without the
prior written consent of the Buyer, such consent not to be unreasonably withheld
or delayed: (i) sell, lease (as lessor), transfer or otherwise dispose of (or
permit to become subject to an Encumbrance (other than Permitted Encumbrances))
any of the Purchased Assets, other than the sale of inventory in the ordinary
course of business and the sale of obsolete inventory; and (ii) amend in any
material respect or voluntarily terminate (or waive any material provision of)
any Assumed Agreement.

 

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Section 7.2                                    Access to and Delivery of
Information; Maintenance of Records.

 

(a)                                 Between the date of this Agreement and the
Closing Date, the Sellers shall, during ordinary business hours, upon reasonable
notice: (i) give the Buyer and the Buyer’s Representatives reasonable access to
the Sellers’ accountants, counsel, financial advisors and other authorized
outside representatives, officers and senior management and, upon reasonable
request, other employees and all books, records and other documents and data,
offices and other facilities of the Sellers related to the Business or the
Purchased Assets; (ii) permit the Buyer and the Buyer’s Representatives to make
such reasonable inspections and copies of all books, records and other documents
of the Sellers related to the Business or the Purchased Assets, as the Buyer may
reasonably request; and (iii) furnish the Buyer with such financial and
operating data and other information as the Buyer and the Buyer’s
Representatives may from time to time reasonably request.  All information
obtained by the Buyer or the Buyer’s Representatives pursuant to this
Section 7.2 shall be subject to the terms of the Confidentiality Agreement.

 

(b)                                 After the Closing Date and until any
complete dissolution and liquidation of the Sellers, the Buyer and the Buyer’s
Representatives shall have reasonable access to all of the Sellers’ books and
records, including all information pertaining to the Assumed Agreements, in each
case to the extent not purchased by the Buyer hereunder and in the possession of
the Sellers to the extent that: (i) such books, records and information relate
to any period prior to the Closing Date; and (ii) such access may reasonably be
required by the Buyer in connection with the Assumed Liabilities or the
Purchased Assets, or other matters relating to or affected by the operation of
the Business or the Purchased Assets or tax matters relating to or affected by
the ownership of the Purchased Assets or the operations of the Business prior to
the Closing Date.  Such access shall be afforded by the Sellers upon receipt of
reasonable advance notice and during normal business hours.  If the Sellers
shall desire to dispose of any such books and records upon or prior to its
dissolution, the Sellers shall: (A) give the Buyer at least twenty (20) days
prior written notice of such disposition; and (B) give the Buyer a reasonable
opportunity, at the Buyer’s expense, to segregate and remove such books and
records as the Buyer may select and/or to copy such books and records as the
Buyer may select.

 

(c)                                  Between the Closing Date and until any
complete dissolution and liquidation of the Sellers, the Sellers and the
Sellers’ Representatives shall have reasonable access to all of the books and
records of the Sellers delivered to the Buyer at Closing, including all
information pertaining to the Assumed Agreements to the extent that: (i) such
books, records and information relate to any period prior to the Closing Date;
and (ii) such access may reasonably be required by the Sellers in connection
with the Excluded Liabilities, the Excluded Assets or tax matters relating to
any period prior to the Closing.  Such access shall be afforded by the Buyer
upon receipt of reasonable advance notice and during normal business hours.  In
connection with such access, the Sellers and Sellers’ Representatives shall use
commercially reasonable efforts to minimize disruption to the Buyer’s business;
provided further that in connection with the Sellers’ and/or the Sellers’
Representatives’ access to any offices and other facilities of the Buyer, the
Sellers and/or the Sellers’ Representatives shall be accompanied at all times by
a representative of the Buyer unless the Buyer otherwise agrees, shall not
materially interfere with the use and operation of such offices and other
facilities, and shall comply with all reasonable safety and security rules and
regulations for such offices and other facilities.  Following the Closing, all
information obtained by the Sellers or the Sellers’ Representatives pursuant to
this Section 7.2 and all information included in the Purchased Assets shall be
considered Confidential Information of the Buyer pursuant to the terms of the
Confidentiality Agreement and the Sellers shall continue to comply with the
terms of the Confidentiality Agreement.

 

Section 7.3                                    Expenses. Except as otherwise set
forth in Section 9.3, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such costs and expenses.

 

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Section 7.4                                    Further Assurances.  Subject to
the terms and conditions of this Agreement (including Section 2.5), the Sellers
and the Buyer shall use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable Legal Requirements to consummate
and make effective the sale of the Purchased Assets and assumption of the
Assumed Liabilities in accordance with this Agreement.  The Sellers shall use
all commercially reasonable efforts to cause the conditions set forth in
Sections 8.1 and 8.2 to be satisfied on a timely basis.  The Buyer shall use all
commercially reasonable efforts to cause the conditions set forth in Sections
8.1 and 8.3 to be satisfied on a timely basis.  Neither the Sellers, on the one
hand, nor the Buyer, on the other hand, shall, without the prior written consent
of the other, take any action that would reasonably be expected to prevent or
materially impede, interfere with or delay the transactions contemplated by this
Agreement.  From time to time, on or after the Closing Date, the Sellers shall
execute and deliver such documents to the Buyer as the Buyer may reasonably
request in order to more effectively vest in the Buyer all of the Sellers’
right, title and interest to the Purchased Assets, free and clear of all
Encumbrances (other than Permitted Encumbrances).

 

Section 7.5                                    Governmental Authority Approvals
and Cooperation.

 

(a)                                 Governmental Authority Approvals.  Prior to
the Closing, the Sellers and the Buyer shall use their commercially reasonable
efforts to make any filings and notifications, and to obtain any consents from
Governmental Authorities, required to be made and obtained under applicable
Legal Requirements in connection with the transactions contemplated by this
Agreement (collectively, the “Required Consents”) as promptly as practicable.

 

(b)                                 Cooperation.  Subject to any restrictions
under applicable Legal Requirements,  each party hereto: (i) shall cooperate
with each other party hereto in connection with the filings and consents
contemplated by Section 7.5(a); (ii) shall promptly inform each other party
hereto of any communication received by such party from any Governmental
Authority concerning this Agreement, the transactions contemplated hereby and
any filing, notification or request for consent related thereto; and (iii) shall
permit each other party hereto to review in advance any proposed written
communication or information submitted to any such Governmental Authority in
response thereto.

 

Section 7.6                                    Taxes.

 

(a)                                 Transfer Taxes.  The Sellers shall prepare
and file all necessary Tax Returns and other documentation relating to Transfer
Taxes and shall provide the Buyer a reasonable opportunity to review and comment
on such Tax Returns (and in any event not fewer than five Business Days) prior
to the filing thereof.  The Buyer shall bear and pay any Transfer Taxes.  The
Buyer and the Sellers shall cooperate with each other to the extent legally
permitted to minimize any such Transfer Taxes.

 

(b)                                 Purchase Price Allocation.  Promptly
following the date of this Agreement, and in any event prior to the Closing, the
parties shall mutually agree upon an allocation of the sum of the Purchase Price
and the Assumed Liabilities (and any adjustments thereof) among the Purchased
Assets as of the Closing Date (the “Allocation”) in accordance with Section 1060
of the Code and the Treasury Regulations thereunder, and such allocation shall
be binding on all parties hereto.  In the event the parties cannot agree on an
Allocation on or prior to the Closing Date, the parties shall appoint by mutual
agreement the office of an impartial nationally recognized firm of independent
certified public accountants that has not been retained by any Seller or the
Buyer in the past three (3) years who, acting as experts and not arbitrators,
shall resolve any disputes with respect to the Allocation.  Except as otherwise
required by applicable Legal Requirements, the Buyer and the Sellers shall
report for all Tax purposes all transactions contemplated by this Agreement in a
manner consistent with the Allocation, if any, and shall not take any position
inconsistent therewith in any Tax Return, in any refund claim, in any litigation
or otherwise.

 

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(c)                                  Adjustments to Purchase Price.  Any
payments made in accordance with this Agreement (including payments made
pursuant to Section 3.2, 3.3 and indemnification payments) shall be treated as
Purchase Price adjustments for Tax purposes.

 

(d)                                 Proration of Taxes.  For a Straddle Period,
the portion of any personal property Taxes and real property Taxes that shall be
deemed to be payable for the portion of the period ending on the Closing Date
shall be the amount of such Taxes for the entire period (or, in the case of such
Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period) multiplied by a fraction the numerator of which is
the number of calendar days in the period ending on (and including) the Closing
Date and the denominator of which is the number of calendar days in the entire
period.  The portion of any other Taxes for a Straddle Period (including income
Taxes, sales and use Taxes and Taxes based on gross or net receipts or payments)
that shall be deemed to be payable for the portion of the period ending on the
Closing Date shall be determined based on a closing of the books as of the
Closing Date, provided that all permitted allowances, exemptions and deductions
that are normally computed on the basis of an entire year or period (such as
depreciation and amortization deductions) shall accrue on a daily basis and
shall be allocated in proportion to the number of days in each such period.

 

(e)                                  Amended Returns and Retroactive Elections. 
Except as required by applicable Legal Requirement, the Sellers shall not, and
shall not cause or permit the Acquired Entities to, (i) amend any Tax Returns
(other than related to Income Taxes) with respect to the Business or the
Purchased Assets filed with respect to a Pre-Closing Tax Period that has
prospective effect to the period after the Closing, or (ii) make any Tax
election for the Acquired Entities that has prospective effect to the period
after the Closing, without the prior written consent of the Buyer, which shall
not be unreasonably withheld, conditioned, or delayed.  Except as required by
applicable Legal Requirement, the Buyer shall not, and shall not cause or permit
the Acquired Entities to, (i) amend any Tax Returns filed with respect to a
Pre-Closing Tax Period or (ii) make any Tax election that has retroactive effect
to the Pre-Closing Tax Period, in each such case without the prior written
consent of the Sellers, which shall not be unreasonably withheld, conditioned,
or delayed.

 

(f)                                   Acquired Entity Tax Returns.

 

(i)                                     Prior to the Closing Date, the Sellers
shall, or shall cause the Acquired Entities to, prepare and file, on a timely
basis and on a basis consistent with past practice, all Tax Returns that are
required to be filed by any of the Acquired Entities (taking account of
extensions) prior to the Closing Date and shall cause the Acquired Entities to
pay all Taxes with respect thereto.

 

(ii)                                  The Buyer shall timely prepare or cause to
be prepared and will file or cause to be filed any Tax Returns for the Acquired
Entities that are due after the Closing Date. The Sellers and the Buyer will, if
permitted by applicable Legal Requirement, close the taxable period of each
Acquired Entity as of the close of business on the Closing Date. Except as
otherwise required by applicable Legal Requirement, neither the Sellers nor the
Buyer shall take any position inconsistent with the preceding sentence on any
Tax Return. Any such Tax Returns that relates to a Straddle Period shall be
prepared in a manner consistent with the respective Acquired Entity’s past
practice, except as otherwise required by applicable Legal Requirement.  The
Buyer shall deliver to the Sellers for their review a draft of each Tax Return
of each Acquired Entity to be filed after the Closing Date which may give rise
to any Tax liability of any Seller or any Tax liability of each Acquired Entity
for which any Seller is liable under to this Agreement not fewer than thirty
(30) days prior to the deadline for filing such Tax Return (including
extensions). The Sellers shall notify the Buyer in writing if they reasonably
object to any portion of the draft Tax Return within fifteen (15) days after the
draft Tax Return is delivered to the Sellers, and such notice of objection shall
specify with particularity any such items and state the specific factual or
legal basis for any such objection. If the Buyer does not receive a written
objection by the end of

 

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the fifteen (15)-day period, the Buyer may file the applicable Tax Return.  If
the Sellers notify the Buyer that they reasonably object to any portion of the
draft Tax Return on or before the end of such review period, the Buyer and the
Sellers shall negotiate in good faith and use commercially reasonable efforts to
resolve such dispute.  Any disagreements regarding the draft Tax Returns that
are not resolved within another fifteen (15) days by the parties shall be
resolved by an independent third party nationally recognized certified public
accounting firm that is acceptable to both parties, and any determination by
such independent certified public accountant shall be final.  The costs, fees
and expenses of the independent certified public accountant shall be borne
equally by the Buyer, on the one hand, and the Sellers, on the other hand. The
Sellers shall pay the Buyer for any Taxes that are the responsibility of the
Sellers pursuant to this Agreement (and payable by the Buyer or the Acquired
Entities to the applicable Governmental Authority) within five (5) days after
such amount is agreed upon by the applicable parties (or finally determined) as
contemplated by Section 7.6.

 

(g)                                  Cooperation on Tax Matters.  Buyer and the
Sellers shall fully cooperate, to the extent reasonably requested by the other
party, with respect to the filing of Tax Returns, filing of Tax elections, and
any audit, litigation or other proceeding with respect to Taxes.  Such
cooperation shall include the retention and provision of records and information
relevant to such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information. 
Buyer and the Sellers agree to retain records with respect to Tax matters
pertinent to the Acquired Entities until the expiration of the relevant statute
of limitations.  Buyer and the Sellers further agree to use their reasonable
best efforts to obtain any certificate or other document from any Governmental
Authority as may be necessary to mitigate, reduce or eliminate any Tax that may
be imposed.

 

Section 7.7                                    Transfer of Purchased Assets.

 

(a)                                 The Sellers and the Buyer agree that unless
otherwise requested by the Buyer in writing, any of the Purchased Assets
(including software) that can be transmitted to the Buyer electronically will be
so delivered to the Buyer promptly following the Closing and will not be
delivered to the Buyer on any tangible medium.  Promptly following any
electronic transmission, the Sellers shall execute and deliver to the Buyer a
certificate in a form reasonably acceptable to the Buyer and containing, at a
minimum, the following information: (i) the date of transmission; (ii) the time
the transmission was commenced and concluded; (iii) the name of the individual
who made the transmission; (iv) the signature of such individual; and (v) a
description of the nature of the items transmitted in sufficient detail to
distinguish the transmission from other transmissions.

 

(b)                                 The Buyer will make all necessary
arrangements for the Buyer to take possession of the Purchased Assets, and, at
the Buyer’s expense, to transfer the same to a location specified by the Buyer
as promptly as practicable following the Closing.  Each Seller shall, and shall
cause its Affiliates and Representatives to, reasonably cooperate with the Buyer
in connection with the foregoing.

 

(c)                                  After the Closing, if the Sellers or any of
their Affiliates receives any payment, refund or other amount which is or
relates to a Purchased Asset or which is otherwise properly due and owing to the
Buyer, the Sellers shall promptly remit, or shall cause to be remitted, such
amount to the Buyer. The Sellers shall promptly endorse and deliver to the Buyer
any notes, checks, negotiable instruments or other documents which are or relate
to Purchased Assets or are otherwise properly due and owing to the Buyer, and
the Buyer shall have the right and authority to endorse, without recourse, the
names of the Sellers on any such instrument or document.  After the Closing, if
the Buyer or any of its Affiliates receives any payment, refund or other amount
which is properly due and owing to the Sellers, the Buyer shall promptly remit,
or shall cause to be remitted, such amount to the Sellers. The Buyer shall
promptly endorse and deliver to the Sellers any notes, checks, negotiable
instruments or other documents

 

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which are properly due and owing to the Sellers, and the Sellers shall have the
right and authority to endorse, without recourse, the names of the Buyer on any
such instrument or document.

 

(d)                                 Promptly following the Closing, the Sellers
shall deliver or cause to be delivered to the Buyer two (2) writable media
copies of the Project Tulip virtual data room maintained at
datasite.merrillcorp.com (the “Project Tulip VDR”).

 

Section 7.8                                    Indemnification.

 

(a)                                 Each Seller shall indemnify and hold Buyer
and its Affiliates, and their employees, officers and directors harmless against
any loss, damages, action, suit, claim, demand, liability, expense (including
reasonable attorneys’ fees and expenses), bodily injury, death or property
damage (a “Loss”), that may be brought, instituted or arise against or be
incurred by such persons to the extent such Loss is based on or arises out of
(i) any Excluded Asset or Excluded Liability or the conduct of the Business
prior to the Closing, (ii) the breach by either Seller of any of its covenants
set forth in this Agreement, (iii) the breach by either Seller of any of its
representations or warranties set forth in this Agreement, or (iv) the
development, manufacture, use, sale, storage or handling of a drug substance or
a drug product prior to the Closing by the Sellers or their Affiliates or their
representatives, agents or subcontractors, or any actual or alleged violation of
Legal Requirement resulting therefrom; provided however, that the foregoing
indemnification shall not apply to any Loss to the extent such Loss is caused by
the willful misconduct of the Buyer or its Affiliates.

 

(b)                                 Buyer shall indemnify and hold the Sellers,
and their Affiliates, and their employees, officers and directors harmless
against any Loss that may be brought, instituted or arise against or be incurred
by such persons to the extent such Loss is based on or arises out of:

 

(i)             the development, manufacture, use, sale, storage or handling of
a drug substance or a drug product after the Closing by the Buyer or its
Affiliates or their representatives, agents or subcontractors, or any actual or
alleged violation of Legal Requirement resulting therefrom; or

 

(ii)          the breach by the Buyer of any of its covenants set forth in this
Agreement;

 

(iii)       the breach by the Buyer of any of its representations and warranties
set forth in this Agreement;

 

provided however, that the foregoing indemnification shall not apply to any Loss
to the extent such Loss is caused by the willful misconduct of Seller or its
Affiliates.

 

(c)                                  Notwithstanding anything else in this
Agreement to the contrary: (i) (A) the Sellers shall not have liability under
Section 7.8(a) until the aggregate amount of the Loss to be indemnified to the
Buyer exceeds an amount equal to One Hundred Thousand Dollars ($100,000) (the
“Threshold Amount”) in which event the Sellers shall be responsible for the
aggregate amount of Loss in excess of the Threshold Amount up to the
Indemnification Cap (as defined below) and (B) the maximum aggregate liability
of the Sellers under Section 7.8(a) shall be an amount equal to the aggregate of
One Million, Two Hundred Thousand Dollars ($1,200,000) (the “Indemnification
Cap”); and (ii) (A) the Buyer shall not have liability under
Section 7.8(b) until the aggregate amount of the Loss to be indemnified to the
Sellers exceed and amount equal to the Threshold Amount in which event the Buyer
shall be responsible for the aggregate amount of Loss in excess of the Threshold
Amount up to the Indemnification Cap and (B) the maximum aggregate liability of
the Buyer under Section 7.8(b) shall be an amount equal to the Indemnification
Cap; provided, however, that the foregoing limitations in this clause (c) shall
not apply to any Loss based upon, arising out of, with respect to or by reason
of (w) any claim for indemnity under Section 7.8(a)(iii) in respect of any
inaccuracy in or breach of any Fundamental Representation, (x) fraud, (y) a
claim for indemnity under Section 7.8(a)(i) with respect to the Excluded
Liabilities described in

 

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Section 2.4(a) or under Section 7.8(a)(iii) in respect of any inaccuracy in or
breach of any representation and warranty in Section 5.11, or (z) a claim for
indemnity under Section 7.8(a)(ii) or Section 7.8(b)(ii) in respect of a breach
of any of the covenants set forth in Section 7.7(c) or Section 7.11.

 

(d)                                 Each party entitled to be indemnified by the
other party (an “Indemnified Party”) pursuant to Section 7.8(a) or 7.8(b) shall
give notice to the other party (an “Indemnifying Party”) promptly after such
Indemnified Party has actual knowledge of any threatened or asserted claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided
that:

 

(i)                                     counsel for the Indemnifying Party, who
shall conduct the defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party’s expense (unless (i) the employment of counsel by such
Indemnified Party has been authorized by the Indemnifying Party; or (ii) the
Indemnified Party shall have reasonably concluded that there may be a conflict
of interest between the Indemnifying Party and the Indemnified Party in the
defense of such action, in each of which cases the Indemnifying Party shall pay
the reasonable fees and expenses of one law firm serving as counsel for the
Indemnified Party, which law firm shall be subject to approval, not to be
unreasonably withheld, by the Indemnifying Party); and

 

(ii)                                  The failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement to the extent that the failure to give notice
did not materially prejudice the Indemnifying Party.

 

(iii)                               No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the approval of each Indemnified
Party, which approval shall not be unreasonably withheld, conditioned or
delayed, consent to entry of any judgment or enter into any settlement which
(1) would result in injunctive or other relief being imposed against the
Indemnified Party; or (2) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.

 

(iv)                              Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.

 

Notwithstanding anything to the contrary contained in this Section 7.8(d),
following the winding up or dissolution of any Seller, such Seller shall not
have the right to assume the defense of any threatened or asserted claim for
which indemnification is sought, except that a successor which was created
primarily for tax planning purposes or to change a Seller’s business form or
jurisdiction may assume the defense of any such claim or litigation resulting
therefrom.

 

(e)                                  Buyer may, at its sole discretion, claim
any payment (or any portion thereof) to which it is finally determined to be
entitled pursuant to Section 7.8(g) directly from either Seller or any amounts
due to the Sellers under Section 3.2 or Section 3.3, and in the latter case may
set-off such payment against such amounts.  This right of set-off shall not be
Buyer’s sole remedy for amounts owed pursuant to this Section 7.8, and nothing
contained herein shall limit Buyer’s right to insist on payment directly from a
Seller as set forth in this Section 7.8.

 

(f)                                   The representations, warranties and
covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its

 

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Representatives) or by reason of the fact that the Indemnified Party or any of
its Representatives should have known that any such representation or warranty
is, was or might be inaccurate or by reason of the Indemnified Party’s waiver of
any condition set forth in Article VIII, except to the extent the Indemnified
Party has actual knowledge of the inaccuracy of such representation or
warranty.  For purposes of this Section 7.8, any inaccuracy in or breach of any
representation or warranty or the amount of indemnifiable Loss with respect
thereto shall be determined without regard to any materiality, Material Adverse
Effect or other similar qualification contained in or otherwise applicable to
such representation or warranty.

 

(g)                                  Once a Loss is agreed to by the
Indemnifying Party or finally adjudicated to be payable pursuant to
this Section 7.8, the Indemnifying Party shall satisfy its obligations within
ten (10) Business Days of such agreement or final, non-appealable adjudication
by wire transfer of immediately available funds. The parties hereto agree that
should an Indemnifying Party not make full payment of any such obligations
within such ten (10) Business Day period, any amount payable shall accrue
interest from and including the date of agreement of the Indemnifying Party or
final, non-appealable adjudication to but excluding the date such payment has
been made at the prime lending rate prevailing during such period as published
in The Wall Street Journal, Eastern Edition. Any interest payable hereunder
shall be calculated on a daily basis from the date such amounts were required to
be paid until (but excluding) the date of actual payment, and on the basis of a
360-day year.

 

Section 7.9                                    No Solicitation.

 

(a)                                 TLOG shall not, and shall cause its
Subsidiaries not to, and shall not authorize or permit its Representatives and
its Subsidiaries’ Representatives to, directly or indirectly, solicit an
Alternative Transaction Proposal or the making of any proposal that could
reasonably be expected to lead to any Alternative Transaction Proposal, or,
subject to Section 7.9(b), (i) conduct or engage in any discussions or
negotiations with, disclose any non-public information relating to TLOG or any
of its Subsidiaries to, afford access to the business, properties, assets, books
or records of TLOG or any of its Subsidiaries to, or knowingly assist,
participate in, facilitate or encourage any effort by, any Third Party that is
seeking to make, or has made, any Alternative Transaction Proposal,
(ii) (A) amend or grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of TLOG or any of its
Subsidiaries or (B) approve any transaction under, or any Third Party becoming
an “interested shareholder” under, Section 203 of the DGCL, other than the
Senior Note Conversion, or (iii) enter into any agreement in principle, letter
of intent, term sheet, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement or other Contract
relating to any Alternative Transaction Proposal (each, a “TLOG Acquisition
Agreement”). Subject to Section 7.9(b), neither the TLOG Board nor any committee
thereof shall fail to make, withdraw, amend, modify or materially qualify, in a
manner adverse to the Buyer, the TLOG Board Recommendation, or recommend an
Alternative Transaction Proposal, fail to recommend against acceptance of any
tender offer or exchange offer for the shares of TLOG Common Stock within ten
(10) Business Days after the commencement of such offer, or make any public
statement inconsistent with the TLOG Board Recommendation, or resolve or agree
to take any of the foregoing actions (any of the foregoing, a “TLOG Adverse
Recommendation Change”). TLOG shall, and shall cause its Subsidiaries, to cease
immediately and cause to be terminated, and shall not authorize or knowingly
permit any of its Representatives or its Subsidiaries’ Representatives to
continue, any and all existing activities, discussions or negotiations, if any,
with any Third Party conducted prior to the date hereof with respect to any
Alternative Transaction Proposal and shall terminate any such Third Party’s and
its Representatives’ access to any virtual data room maintained by the Sellers,
including the Project Tulip VDR.

 

(b)                                 Notwithstanding Section 7.9(a), prior to the
receipt of the approval of the TLOG Shareholders and the TLOG Noteholders
Consent (collectively, the “Requisite Approvals”), the TLOG Board, directly or
indirectly through any Representative, may, subject to Section 7.9(c), (i)

 

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participate in negotiations or discussions with any Third Party that has made
(and not withdrawn) a bona fide, unsolicited Alternative Transaction Proposal in
writing that the TLOG Board believes in good faith, after consultation with
outside legal counsel and its financial advisor, constitutes or would reasonably
be expected to result in a Superior Proposal, (ii) thereafter furnish to such
Third Party non-public information relating to TLOG or any of its Subsidiaries
pursuant to an executed confidentiality agreement that constitutes an Acceptable
Confidentiality Agreement, (iii) following receipt of and on account of a
Superior Proposal, make a TLOG Adverse Recommendation Change, and/or (iv) take
any action that any court of competent jurisdiction orders TLOG to take (which
order remains unstayed), but in each case referred to in the foregoing clauses
(i) through (iv), only if the TLOG Board determines in good faith, after
consultation with outside legal counsel, that the failure to take such action
would reasonably be expected to cause the TLOG Board to be in breach of its
fiduciary duties under applicable Legal Requirement. Nothing contained herein
shall prevent the TLOG Board from disclosing to TLOG’s Shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act
with regard to an Alternative Transaction Proposal, if TLOG determines, after
consultation with outside legal counsel, that failure to disclose such position
would constitute a violation of applicable Legal Requirement.

 

(c)                                  The TLOG Board shall not take any of the
actions referred to in clauses (i) through (iv) of Section 7.9(b) unless TLOG
shall have delivered to the Buyer a prior written notice advising Buyer that it
intends to take such action. TLOG shall notify Buyer promptly (but in no event
later than twenty-four (24) hours) after receipt by TLOG (or any of its
Representatives) of any Alternative Transaction Proposal, any inquiry that would
reasonably be expected to lead to an Alternative Transaction Proposal, any
request for non-public information relating to TLOG or any of its Subsidiaries
or for access to the business, properties, assets, books or records of TLOG or
any of its Subsidiaries by any Third Party. In such notice, TLOG shall identify
the Third Party making, and details of the material terms and conditions of, any
such Alternative Transaction Proposal, indication or request. TLOG shall keep
Buyer fully informed, on a current basis, of the status and material terms of
any such Alternative Transaction Proposal, indication or request, including any
material amendments or proposed amendments as to price and other material terms
thereof. TLOG shall provide Buyer with at least forty-eight (48) hours prior
notice of any meeting of the TLOG Board (or such lesser notice as is provided to
the members of the TLOG Board) at which the TLOG Board is reasonably expected to
consider any Alternative Transaction Proposal. TLOG shall promptly provide Buyer
with a list of any non-public information concerning TLOG’s business, present or
future performance, financial condition or results of operations, provided to
any Third Party, and, to the extent such information has not been previously
provided to the Buyer, copies of such information.

 

(d)                                 Except as set forth in this Section 7.9(d),
the TLOG Board shall not make any TLOG Adverse Recommendation Change or enter
into (or permit any Subsidiary to enter into) a TLOG Acquisition Agreement. 
Notwithstanding the foregoing, at any time prior to the receipt of the Requisite
Approvals, the TLOG Board may make a TLOG Adverse Recommendation Change or enter
into (or permit any Subsidiary to enter into) a TLOG Acquisition Agreement, if:
(i) TLOG promptly notifies Buyer, in writing, at least five (5) Business Days
(the “Notice Period”) before making a TLOG Adverse Recommendation Change or
entering into (or causing a Subsidiary to enter into) a TLOG Acquisition
Agreement, of its intention to take such action with respect to a Superior
Proposal, which notice shall state expressly that TLOG has received an
Alternative Transaction Proposal that the TLOG Board intends to declare a
Superior Proposal and that the TLOG Board intends to make a TLOG Adverse
Recommendation Change and/or TLOG intends to enter into a TLOG Acquisition
Agreement; (ii) TLOG attaches to such notice the most current version of the
proposed agreement (which version shall be updated on a prompt basis) and the
identity of the Third Party making such Superior Proposal; (iii) TLOG shall, and
shall cause its Subsidiaries to, during the Notice Period, negotiate with the
Buyer in good faith to make such

 

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adjustments in the terms and conditions of this Agreement so that such
Alternative Transaction Proposal ceases to constitute a Superior Proposal, if
Buyer, in its discretion, proposes to make such adjustments (it being agreed
that in the event that, after commencement of the Notice Period, there is any
material revision to the terms of a Superior Proposal, including, any revision
in price, the Notice Period shall be extended, if applicable, to ensure that at
least three (3) Business Days remains in the Notice Period subsequent to the
time TLOG notifies Buyer of any such material revision (it being understood that
there may be multiple extensions)); and (iv) the TLOG Board determines in good
faith, after consulting with outside legal counsel and its financial advisor,
that such Alternative Transaction Proposal continues to constitute a Superior
Proposal after taking into account any adjustments made by the Buyer during the
Notice Period in the terms and conditions of this Agreement.

 

Section 7.10                             Shareholders and Noteholders Meetings;
Preparation of Proxy Materials.

 

(a)                                 Subject to the terms set forth in this
Agreement, TLOG shall take all action necessary to duly call, give notice of,
convene and hold the TLOG Shareholders Meeting and obtain the TLOG Noteholders
Consent as soon as reasonably practicable after the date the SEC confirms that
it has no further comments on the TLOG Proxy Statement, and, in connection
therewith, TLOG shall mail the TLOG Proxy Statement to the holders of its Common
Stock in advance of such meeting (and in any event not more than thirty (30)
days after the date hereof).  Except to the extent that the TLOG Board shall
have effected a TLOG Adverse Recommendation Change as permitted by
Section 7.9(b) hereof, the TLOG Proxy Statement shall include the TLOG Board
Recommendation.  Subject to Section 7.9 hereof, TLOG shall use commercially
reasonable efforts to (i) solicit from (A) the holders of TLOG Common Stock
proxies in favor of the approval of the transactions contemplated hereby and
(B) the holders of TLOG Senior Notes consent to the transactions contemplated
hereby and (ii) take all other actions necessary or advisable to secure the vote
or consent of the holders of TLOG Common Stock and TLOG Senior Notes required by
applicable Legal Requirement to obtain such approval or consent. TLOG shall keep
Buyer updated with respect to proxy solicitation results as requested Buyer.

 

(b)                                 Notwithstanding anything contained herein to
the contrary, TLOG may, in its sole discretion, adjourn, recess or postpone the
TLOG Shareholders Meeting (i) to the extent necessary to ensure that any
supplement or amendment to the TLOG Proxy Statement required by applicable Legal
Requirement is provided to the TLOG Shareholders within a reasonable amount of
time in advance of the TLOG Shareholders Meeting, (ii) if as of the time for
which the TLOG Shareholders Meeting is originally scheduled (as set forth in the
TLOG Proxy Statement) there are insufficient shares of TLOG capital stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the TLOG Shareholders Meeting, or (iii) to solicit
additional proxies if TLOG reasonably believes it may be necessary to obtain
TLOG stockholder approval.  TLOG shall not be required to hold the TLOG
Shareholders Meeting or obtain the TLOG Noteholders Consent if this Agreement is
terminated before such meeting is held or consent received.

 

(c)                                  None of the information included or
incorporated by reference in the letter to the TLOG Shareholders or the TLOG
Noteholders, notice of meeting, proxy statement and forms of proxy
(collectively, the “TLOG Proxy Statement”), to be filed with the SEC in
connection with the transactions contemplated by this Agreement, will, at the
date it is first mailed to the TLOG Shareholders or at the time of the TLOG
Shareholders Meeting or at the time of any amendment or supplement thereof,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, no representation or warranty is made by TLOG with respect to
statements made or incorporated by reference therein based on information
supplied by the Buyer expressly for inclusion or

 

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incorporation by reference in the TLOG Proxy Statement. The TLOG Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act.

 

(d)                                 In connection with the TLOG Shareholders
Meeting, as soon as reasonably practicable following the date of this Agreement
TLOG shall prepare and file the TLOG Proxy Statement with the SEC.  The Buyer
and the Sellers will cooperate and consult with each other in the preparation of
the TLOG Proxy Statement. Without limiting the generality of the foregoing, the
Buyer will furnish TLOG the information relating to the Buyer required by the
Exchange Act and the rules and regulations promulgated thereunder to be set
forth in the TLOG Proxy Statement. TLOG shall not file the TLOG Proxy Statement,
or any amendment or supplement thereto, without providing Buyer a reasonable
opportunity to review and comment thereon (which comments shall be reasonably
considered by TLOG). TLOG shall use its commercially reasonable efforts to
resolve, and each party agrees to consult and cooperate with the other party in
resolving, all SEC comments with respect to the TLOG Proxy Statement as promptly
as practicable after receipt thereof and to cause the TLOG Proxy Statement in
definitive form to be cleared by the SEC and mailed to the TLOG Shareholders and
TLOG Noteholders as promptly as reasonably practicable following filing with the
SEC. TLOG agrees to consult with the Buyer prior to responding to SEC comments
with respect to the preliminary TLOG Proxy Statement. Each of Buyer and the
Sellers agrees to correct any information provided by it for use in the TLOG
Proxy Statement which shall have become false or misleading and TLOG shall
promptly prepare and mail to its shareholders an amendment or supplement setting
forth such correction. TLOG shall as soon as reasonably practicable (i) notify
Buyer of the receipt of any comments from the SEC with respect to the TLOG Proxy
Statement and any request by the SEC for any amendment to the TLOG Proxy
Statement or for additional information and (ii) provide Buyer with copies of
all written correspondence between TLOG and its Representatives, on the one
hand, and the SEC, on the other hand, with respect to the TLOG Proxy Statement.

 

Section 7.11                             Intercompany Payables and Other
Arrangements.  On or prior to the Closing, the Sellers shall, and shall cause
their Affiliates to, take such action as may be necessary to terminate, prior to
or concurrently with the Closing, the intercompany payables and other
obligations between any Seller or any Affiliate of any Seller (other than the
Acquired Entities), on the one hand, and any of the Acquired Entities, on the
other hand, and to take or cause to be taken the other actions described in
Schedule 7.11.

 

Section 7.12                             Continuation of Shape Phase II Clinical
Trial.  From the date hereof and until the Closing, the Sellers shall, and shall
cause their Affiliates to, (a) use commercially reasonable efforts to continue
the SHAPE Phase II Clinical Trial in a manner substantially similar to the
manner being conducted as of the date of this Agreement and (b) pay as they
become due all accrued amounts to the applicable contract research organization
in connection therewith as described in Schedule 7.12 attached hereto.  On or
prior to the Closing Date, the Sellers shall pay or cause to be paid all
expenses of the type described in Schedule 7.12(iii).  Notwithstanding anything
to the contrary in this Agreement, in the event this Agreement is terminated
prior to the Closing for any reason other than pursuant to Section 9.1(g) or
Section 9.1(h), promptly following such termination, the Buyer shall
(x) reimburse the Sellers for expenses of the type described in Schedule
7.12(iv) to the extent such amounts have actually been paid to the applicable
contract research organization as of the date of such termination (and any such
payment shall be made consistent with the procedures described in
Section 7.8(g)) and (y) pay the applicable contract research organization
directly for any accrued but unpaid expenses of the type described in Schedule
7.12(iv) as of the date of such termination.

 

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ARTICLE VIII
CONDITIONS TO CLOSING

 

Section 8.1                                    Conditions to Each Party’s
Obligations to Effect the Closing.  The respective obligations of each party to
effect the sale and purchase of the Purchased Assets shall be subject to the
fulfillment at or prior to the Closing of the following conditions:

 

(a)                                 no preliminary or permanent injunction or
other order or decree by any Governmental Authority which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect and no Legal Requirement shall have been enacted by any
Governmental Authority which prohibits the consummation of the transactions
contemplated hereby.

 

(b)                                 TLOG shall have received the Requisite
Approvals.

 

Section 8.2                                    Conditions to Obligations of the
Buyer.  The obligation of the Buyer to effect the purchase of the Purchased
Assets and the assumption of the Assumed Liabilities contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing of the
following additional conditions:

 

(a)                                 Each Seller shall have performed and
complied in all material respects with the covenants contained in this Agreement
which are required to be performed and complied with by it on or prior to the
Closing Date;

 

(b)                                 the representations and warranties of the
Sellers which are set forth in this Agreement, the other Transaction Documents
and any certificate or other writing delivered pursuant hereto shall be true and
correct in all respects (in the case of any representation or warranty qualified
by materiality or Material Adverse Effect) or in all material respects (in the
case of any representation or warranty not qualified by materiality or Material
Adverse Effect) on and as of the date of this Agreement and on and as of the
Closing Date as though made at and as of the Closing Date (except to the extent
that any such representation or warranty speaks as of a particular date in which
case the accuracy of such representation or warranty shall be determined as of
that specified date in all respects).

 

(c)                                  the Buyer shall have received a certificate
from an authorized officer of each Seller, dated as of the Closing Date, to the
effect that the conditions set forth in Sections 8.2(a), 8.2(b), and 8.2(f) have
been satisfied;

 

(d)                                 the Purchased Assets shall be able to be
delivered free and clear of any Encumbrances other than Permitted Encumbrances;

 

(e)                                  the Buyer shall have received written
confirmation from the applicable affiliate of Merck that a new stock of KEYTRUDA
will be provided free of cost within the scope of the existing Clinical Trial
and Collaboration Agreement, such confirmation to be in form and substance
reasonably acceptable to the Buyer;

 

(f)                                   all approvals, consents and waivers that
are listed on Schedule 5.3 shall have been received, and executed counterparts
thereof shall have been delivered to the Buyer;

 

(g)                                  the Sellers shall have delivered to the
Buyer executed powers of attorney and such other documentation as the Buyer may
reasonably request, in form and substance reasonably acceptable to the Buyer, in
order to permit the Buyer, at its option, to record assignments in the
applicable patent offices for all Patents contained in the Intellectual Property
Rights following the Closing;

 

(h)                                 the Sellers shall have completed the
transactions contemplated by Section 7.11;

 

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(i)                                     the Buyer shall have received the other
items to be delivered to it pursuant to Section 4.2; and

 

(j)                                    since the date of this Agreement, there
shall not have occurred any Material Adverse Effect.

 

Any condition specified in this Section 8.2 may be waived by the Buyer; provided
that no such waiver shall be effective against the Buyer unless it is set forth
in a writing executed by the Buyer.

 

Section 8.3                                    Conditions to Obligations of the
Sellers.  The obligation of the Sellers to effect the sale of the Purchased
Assets contemplated by this Agreement shall be subject to the fulfillment at or
prior to the Closing of the following additional conditions:

 

(a)                                 the Buyer shall have performed and complied
in all material respects with the covenants contained in this Agreement which
are required to be performed and complied with by the Buyer on or prior to the
Closing Date

 

(b)                                 the representations and warranties of the
Buyer which are set forth in this Agreement, the other Transaction Documents and
any certificate or other writing delivered pursuant hereto shall be true and
correct in all respects (in the case of any representation or warranty qualified
by materiality or material adverse effect) or in all material respects (in the
case of any representation or warranty not qualified by materiality or material
adverse effect) on and as of the date of this Agreement and on and as of the
Closing Date as though made at and as of the Closing Date (except to the extent
that any such representation or warranty speaks as of a particular date in which
case the accuracy of such representation or warranty shall be determined as of
that specified date in all respects);

 

(c)                                  the Sellers shall have received a
certificate from an authorized officer of the Buyer, dated as of the Closing
Date, to the effect that the conditions set forth in Section 8.3(a) and
Section 8.3(b) have been satisfied; and

 

(d)                                 the Sellers shall have received the other
items to be delivered to it pursuant to Section 4.3.

 

Any condition specified in this Section 8.3 may be waived by the Sellers;
provided that no such waiver shall be effective against the Sellers unless it is
set forth in a writing executed by each Seller.

 

ARTICLE IX
TERMINATION AND ABANDONMENT

 

Section 9.1                                    Termination.  This Agreement may
be terminated at any time prior to the Closing by:

 

(a)                                 mutual written consent of the Sellers and
the Buyer;

 

(b)                                 the Sellers or the Buyer, if the Closing has
not occurred on or before January 31, 2017 (the “End Date”); provided, however,
that the right to terminate this Agreement pursuant to this Section 9.1(b) shall
not be available to any party whose breach of any representation, warranty,
covenant or agreement set forth in this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before the End Date;

 

(c)                                  the Sellers or the Buyer, if this Agreement
and the transactions contemplated hereby have been submitted to the TLOG
Shareholders for approval at a duly convened TLOG

 

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Shareholders Meeting and to the TLOG Noteholders in accordance with the terms of
the Senior Notes and the Requisite Approvals shall not have been obtained at
such meetings (including any adjournments or postponements thereof).

 

(d)                                 the Sellers if: (i) any of the Buyer’s
representations and warranties contained in this Agreement shall be inaccurate
as of the date of this Agreement, or shall have become inaccurate as of a date
subsequent to the date of this Agreement (as if made on and as of such
subsequent date), such that the condition set forth in Section 8.3(b) would not
be satisfied; or (ii) any of the Buyer’s covenants or obligations contained in
this Agreement shall have been breached such that the condition set forth in
Section 8.3(a) would not be satisfied; provided, however, that if an inaccuracy
in any of the Buyer’s representations and warranties or a breach of a covenant
or obligation by the Buyer is curable by the Buyer within ten Business Days
after the date of written notice from the Sellers to the Buyer of the occurrence
of such inaccuracy or breach, then the Sellers may not terminate this Agreement
under this Section 9.1(b) on account of such inaccuracy or breach: (A) during
the ten Business Day period commencing on the date on which the Buyer receives
notice of such inaccuracy or breach; or (B) after such ten Business Day period
if such inaccuracy or breach shall have been fully cured during such period in a
manner that does not result in a material breach of any covenant or obligation
of the Buyer;

 

(e)                                  the Buyer if: (i) any of the Sellers’
representations and warranties contained in this Agreement shall be inaccurate
as of the date of this Agreement, or shall have become inaccurate as of a date
subsequent to the date of this Agreement (as if made on and as of such
subsequent date), such that the condition set forth in Section 8.2(b) would not
be satisfied (it being understood that, in determining the accuracy of the
representations and warranties referred to in Section 8.2(b) as of the date of
this Agreement or as of any subsequent date for purposes of this
Section 9.1(c), all materiality qualifications that are contained in such
representations and warranties and that limit the scope of such representations
and warranties shall be disregarded); or (ii) any of the Sellers’ covenants or
obligations contained in this Agreement shall have been breached such that the
condition set forth in Section 8.2(a) would not be satisfied; provided, however,
that if an inaccuracy in any of the Sellers’ representations and warranties or a
breach of a covenant or obligation by any of the Sellers is curable by it within
ten Business Days after the date of written notice from the Buyer to the Sellers
of the occurrence of such inaccuracy or breach, then the Buyer may not terminate
this Agreement under this Section 9.1(c) on account of such inaccuracy or
breach: (A) during the ten Business Day period commencing on the date on which
the Sellers receive notice of such inaccuracy or breach; or (B) after such ten
Business Day period if such inaccuracy or breach shall have been fully cured
during such period in a manner that does not result in a material breach of any
covenant or obligation of the Sellers;

 

(f)                                   the Sellers or the Buyer, if (x) any Legal
Requirement shall be enacted that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited, or (y) consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or Governmental Authority having competent
jurisdiction; provided, however, that the right to terminate this Agreement
pursuant to this Section 9.1(f) shall not be available to any party whose breach
of any representation, warranty, covenant or agreement set forth in this
Agreement has been the cause of, or resulted in, the issuance, promulgation,
enforcement or entry of any such Legal Requirement;

 

(g)                                  the Buyer, if (i) a TLOG Adverse
Recommendation Change shall have occurred, (ii) TLOG shall have entered into, or
publicly announced its intention to enter into, a TLOG Acquisition Agreement
(other than an Acceptable Confidentiality Agreement), (iii) TLOG shall have
breached or failed to perform in any material respect any of the covenants and
agreements set forth in Section 7.9, (iv) the TLOG Board fails to reaffirm
(publicly, if so requested by the Buyer) the TLOG Board Recommendation within
ten (10) Business Days after the date any Alternative Transaction Proposal (or
material modification thereto) is first publicly disclosed by TLOG or the Person
making such Alternative Transaction Proposal, (v) a tender offer or exchange
offer relating to TLOG Common Stock shall have

 

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been commenced by a Person unaffiliated with the Buyer and TLOG shall not have
sent to its stockholders pursuant to Rule 14e-2 under the Securities Act, within
ten (10) Business Days after such tender offer or exchange offer is first
published, sent or given, a statement reaffirming the TLOG Board Recommendation
and recommending that stockholders reject such tender or exchange offer, or
(vi) TLOG or the TLOG Board (or any committee thereof) shall publicly announce
its intentions to do any of actions specified in this Section 9.1(g); or

 

(h)                                 the Sellers, if prior to the receipt of the
Requisite Approvals, the TLOG Board authorizes TLOG, in full compliance with the
terms of this Agreement, including Section 7.9(b) hereof, to enter into a TLOG
Acquisition Agreement (other than an Acceptable Confidentiality Agreement) in
respect of a Superior Proposal; provided that TLOG shall have paid any amounts
due pursuant to Section 9.3(b) hereof in accordance with the terms, and at the
times, specified therein; and provided further that in the event of such
termination, TLOG substantially concurrently enters into such TLOG Acquisition
Agreement.

 

Section 9.2                                    Procedure and Effect of
Termination.  In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby pursuant to Section 9.1, written notice
thereof shall forthwith be given by the terminating party to the other party and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto; provided,
however, that: (a) no party shall be relieved of any Liability arising from any
intentional breach by such party of any provision of this Agreement; and
(b) this Section 9.2, Section 9.3, and Article X shall not be affected by the
termination hereof and shall remain in full force and effect.

 

Section 9.3                                    Fees and Expenses Following
Termination.

 

(a)                                 If this Agreement is terminated by the Buyer
pursuant to Section 9.1(g), then TLOG shall pay to the Buyer (by wire transfer
of immediately available funds), (i) in five (5) Business Days after such
termination, a fee in an amount equal to the Termination Fee, and (ii) within
five (5) Business Days after receipt by the Sellers of an Expense Statement, the
Expenses set forth therein.

 

(b)                                 If this Agreement is terminated by the
Sellers pursuant to Section 9.1(h), then TLOG shall pay to the Buyer (by wire
transfer of immediately available funds), (i) at or prior to such termination,
the Termination Fee, and (ii) within five (5) Business Days after receipt by the
Sellers of an Expense Statement, the Expenses set forth therein.

 

(c)                                  The Sellers acknowledge and hereby agree
that the provisions of this Section 9.3 are an integral part of the transactions
contemplated by this Agreement, and that, without such provisions, the Buyer
would not have entered into this Agreement. If TLOG shall fail to pay in a
timely manner the amounts due pursuant to this Section 9.3, and, in order to
obtain such payment, the Buyer makes a claim against TLOG that results in a
judgment against TLOG, the TLOG shall pay to the Buyer the reasonable costs and
expenses of Buyer (including its reasonable attorneys’ fees and expenses)
incurred or accrued in connection with such suit, together with interest on the
amounts set forth in this Section 9.3 at the prime lending rate prevailing
during such period as published in The Wall Street Journal, Eastern Edition. Any
interest payable hereunder shall be calculated on a daily basis from the date
such amounts were required to be paid until (but excluding) the date of actual
payment, and on the basis of a 360-day year. The parties acknowledge and agree
that in no event shall TLOG be obligated to pay the Termination Fee on more than
one occasion.

 

(d)                                 In connection with any termination in which
a Termination Fee is payable to the Buyer, the Buyer shall promptly deliver to
the Sellers one or more statements setting forth in reasonable detail Buyer’s
Expenses as of the date of such Termination, together with applicable supporting
documentation (the “Expense Statement”).

 

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Section 9.4                                    Extension; Waiver.  At any time
prior to the Closing, the Sellers, on the one hand, or the Buyer, on the other
hand, may: (a) extend the time for the performance of any of the obligations or
acts of the Buyer (in the case of an agreed extension by the Sellers) or the
Sellers (in the case of an agreed extension by the Buyer); (b) waive any
inaccuracies in the representations and warranties of the Buyer (in the case of
a wavier by the Sellers) or the Sellers (in the case of a waiver by the Buyer)
contained herein or in any document delivered pursuant hereto; (c) waive
compliance with any of the agreements of the Buyer (in the case of a wavier by
the Sellers) or the Sellers (in the case of a waiver by the Buyer) contained
herein; or (d) waive any condition to its obligations hereunder.  Any agreement
on the part of the Sellers, on the one hand, or the Buyer, on the other hand, to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of the Sellers or the Buyer, as applicable.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

Section 10.1                             Amendment and Modification.  This
Agreement may be amended, modified or supplemented only by written agreement of
the Sellers and the Buyer.

 

Section 10.2                             Waiver of Compliance; Consents.  Except
as otherwise provided in this Agreement, any failure of any of the parties to
comply with any obligation, covenant or condition herein may be waived by the
party or parties entitled to the benefits thereof only by a written instrument
signed by the party or parties granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, or condition
shall not operate as a waiver of, or estoppel with respect to any subsequent or
other failure.

 

Section 10.3                             Publicity.  The parties agree to issue
press releases promptly after the date on which this Agreement is executed by
the last of the parties to sign, the language of which releases to be negotiated
in good faith by the parties.  Except as may be required in any proxy statement
or other applicable Legal Requirement (based upon the reasonable advice of
counsel), no party to this Agreement shall, prior to the Closing, make any
public announcements (other than the press releases described in the foregoing
sentence and any investor presentations related to such press releases) in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party (which consent shall not be unreasonably withheld, conditioned or
delayed), and the parties shall cooperate as to the timing and contents of any
such announcement.

 

Section 10.4                             Survival.  Subject to the limitations
and other provisions of this Agreement, the representations and warranties
contained herein shall survive the Closing and shall remain in full force and
effect until the earlier of the date that is (i) the last calendar day of the
month in which the Buyer receives a final report from its independent accountant
in respect of its financial statements as of, and for the period ending,
December 31, 2017, and (ii) eighteen (18) months from the Closing Date;
provided, that the representations and warranties in: (a) Section 5.1,
Section 5.2, Section 5.4(a), Section 5.4(b), Section 5.15, Section 6.1,
Section 6.2, and Section 6.3 shall survive indefinitely (such representations
and warranties described in this clause (a), the “Fundamental Representations”);
and (b) Section 5.11 shall survive for the full period of all applicable
statutes of limitations (giving effect to any waiver, mitigation or extension
thereof) plus 60 days.  All covenants and agreements of the parties contained
herein shall survive the Closing indefinitely or for the period explicitly
specified therein. Notwithstanding the foregoing, any indemnification claims
asserted in good faith and in writing by notice from the non-breaching party to
the breaching party prior to the expiration date of the applicable survival
period shall not thereafter be barred (and the right of set-off under
Section 7.8(e) shall not be terminated) by the expiration of the relevant
representation or warranty and such claims (and rights of set-off) shall survive
until finally resolved.

 

Section 10.5                             Notices.  All notices, requests,
demands and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given or made as follows: (a) if sent by
registered or certified mail in the United States return receipt requested, upon
receipt; (b) if sent designated

 

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for overnight delivery by nationally recognized overnight air courier (such as
Federal Express), two business days after delivery to such courier; (c) if sent
by electronic mail transmission before 5:00 p.m. in New York, upon receipt;
(d) if sent by electronic mail transmission after 5:00 p.m. in New York, on the
following Business Day; and (e) if otherwise actually personally delivered, when
delivered, provided that such notices, requests, demands and other
communications are delivered to the address set forth below, or to such other
address as any party shall provide by like notice to the other parties to this
Agreement:

 

(a)                                 If to the Sellers, to:

 

TetraLogic Pharmaceuticals Corporation

Attention:  General Counsel

Email: rsherman@TLOG.com

 

(b)                                 If to the Buyer, to:

 

Medivir AB

Blasieholmsgatan 2

111 48 Stockholm, Sweden

Attention: Chief Executive Officer

Email:  niklas.prager@medivir.com

 

with a copy (which shall not constitute notice) to:

 

Wiggin and Dana LLP

281 Tresser Blvd.

Stamford, CT 06901

E-mail:  mkaduboski@wiggin.com

Attention:  Mark S. Kaduboski

 

Section 10.6                             Assignment.  This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however, that prior to the Closing Date, neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law, without the prior written consent of the
other parties hereto; provided that the Buyer may, upon written notice to the
Sellers, assign to any controlled Affiliate thereof all or a portion of its
rights and obligations hereunder without the consent of either Seller; provided,
further, that no such assignment by the Buyer shall relieve the Buyer of any of
its liabilities or obligations hereunder.  Any assignment of this Agreement or
any of the rights, interests or obligations hereunder in contravention of this
Section 10.5 shall be null and void and shall not bind or be recognized by the
Sellers or the Buyer.

 

Section 10.7                             Severability.  If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any Legal Requirement, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

 

Section 10.8                             Governing Law.  This Agreement shall be
governed by the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof.  Each of the parties hereto irrevocably
consents to the exclusive jurisdiction and venue of any court within New York
County, State of New York, in connection with any matter based upon or arising
out of this Agreement or the matters

 

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contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of New York for such persons and waives and
covenants not to assert or plead any objection which they might otherwise have
to such jurisdiction, venue and such process.

 

Section 10.9                             Counterparts.  This Agreement may be
executed and delivered (including by electronic transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
Electronically transmitted signatures shall be deemed to be, and shall be
legally effective as, original signatures for all purposes of this Agreement.

 

Section 10.10                      Incorporation of Schedules and Exhibits.  All
Schedules and all Exhibits attached hereto and referred to herein are hereby
incorporated herein by reference and made a part of this Agreement for all
purposes as if fully set forth herein.

 

Section 10.11                      Entire Agreement.  This Agreement (including
all Schedules and all Exhibits), the Transaction Documents, and the
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, written and oral, among the parties with respect
thereto.  For the avoidance of doubt, the Confidentiality Agreement shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and continue to be in full force and effect.

 

Section 10.12                      Remedies.  The parties hereby acknowledge and
agree that money damages may not be an adequate remedy for any breach or
threatened breach of any of the provisions of this Agreement and that, in such
event, each party or its respective successors or assigns may, in addition to
any other rights and remedies existing in their favor, apply to any other court
of competent jurisdiction for specific performance, injunctive and/or other
relief in order to enforce or prevent any violations of this Agreement.

 

Section 10.13                      Headings.  The descriptive headings contained
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

*   *   *   *   *

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written by their respective officers thereunto duly
authorized.

 

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

 

 

 

By:

/s/ J. Kevin Buchi

 

 

Name: J. Keven Buchi

 

 

Title: CEO

 

 

 

 

TETRALOGIC RESEARCH AND DEVELOPMENT CORPORATION

 

 

 

 

By:

/s/ Richard Sherman

 

 

Name: Richard Sherman

 

 

Title: President

 

[Signature Page to Asset Purchase Agreement]

 

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MEDIVIR AB

 

 

 

 

By:

/s/ Ola Burmark

 

 

Name: Ola Burmark

 

 

Title: CFO

 

 

 

 

By:

/s/ Christine Lind

 

 

Name: Christine Lind

 

 

Title: Executive Vice President, Strategic Business Development

 

[Signature Page to Asset Purchase Agreement]

 

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