EXHIBIT 10.1
EXECUTION
 
CONTRIBUTION AGREEMENT
 
This CONTRIBUTION AGREEMENT (this “Agreement”) is made as of August 3, 2012 (the
“Effective Date”), by and among LipimetiX, LLC, a Delaware limited liability
company (“LipimetiX”), Capstone Therapeutics Corp., a Delaware corporation
(“Capstone”), LipimetiX Development, LLC, a Delaware limited liability company
(the “Company”), and The UAB Research Foundation (“UABRF”), Dennis I. Goldberg,
Ph.D. (“Goldberg”), Philip M. Friden, Ph.D., Eric Morrell, Ph.D., G. M.
Anantharamaiah, Ph.D. and Palgunachari Mayakonda, Ph.D., Frederick Meyer, Ph.D.,
Michael Webb, and Jeffrey Elton, Ph.D. (UABRF, and Doctors Goldberg, Friden,
Morrell, Anantharamaiah, Mayakonda, Meyer and Elton, and Mr. Webb are referred
to herein as the “LX Members”).  LipimetiX and Capstone are sometimes referred
to herein individually as a “Contributor” and collectively as the
“Contributors.”  Certain capitalized terms are defined in Article 6 below.
 
RECITALS
 
WHEREAS, the Contributors have formed the Company to develop a family of Apo E
Mimetic molecules, including AEM-28 and AEM-18 and their analogs (collectively,
“AEM-28”) in broadly defined vascular and cardiovascular indications including
without limitation hypercholesterolemia, hyperlipidemia, acute coronary
syndrome, obesity and diabetes;
 
WHEREAS, on the Effective Date, the Contributors and the LX Members are
executing the Limited Liability Company Operating Agreement in the form attached
hereto as Exhibit A (the “LLC Agreement”), governing the capitalization and
operation of the Company; and
 
WHEREAS, LipimetiX wishes to transfer to the Company certain intellectual
property rights and Capstone wishes to contribute certain capital to the
Company, in each case in exchange for their respective membership interests in
the Company.
 
NOW THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements herein contained, the Contributors, the LX
Members and the Company agree as follows:
 
ARTICLE 1
CONTRIBUTION OF ASSETS
 
1.1           LipimetiX Contribution.
 
(a)           Subject to the terms and conditions of this Agreement, as of the
Effective Date, LipimetiX hereby assigns, transfers, and delivers to the
Company, and the Company hereby accepts from LipimetiX, as a contribution, free
and clear of all title defects, objections, liens, pledges, claims, rights of
first refusal, options, charges, security interests, mortgages, or other
encumbrances of any nature whatsoever, all right, title and interest, in and to
that certain Exclusive License Agreement dated August 26, 2011 between UABRF and
LipimetiX (the “UABRF License Agreement”), together with all Intellectual
Property owned by LipimetiX relating to the subject matter of the UABRF License
Agreement, the domain name
 
 
 

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“lipimetix.com”, and the name, “LipimetiX” (the “Contributed Assets”), and each
of the LX Members hereby consents to the contribution of the Contributed Assets
to the Company.  In exchange for the Contributed Assets, on the Effective Date
the Company shall (i) issue to LipimetiX 400,000 Common Units (the “LipimetiX
Common Units”) pursuant to the LLC Agreement, and (ii) pay to LipimetiX cash in
the amount of $379,000. The parties agree that the transfer of the Contributed
Assets in exchange for the LipimetiX Common Units shall be treated as a
tax-deferred exchange described in Section 721 of the Internal Revenue Code of
1986, as amended (the “Code”) and the parties agree that the transfer of the
Contributed Assets in exchange for cash will not be treated as a tax-deferred
exchange described in Section 721 of the Code.  LipimetiX hereby directs the
Company to issue, on LipimetiX’s behalf, the foregoing LipimetiX Common Units
directly (such issuance, the “Direct Unit Issuance”) to the LX Members in
proportion to their respective ownership interests in LipimetiX, as set forth on
Exhibit F hereto.  Upon the execution of the LLC Agreement, each of the LX
Members shall become members of the Company.
 
(b)           Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not assume or in any way become liable for, and
LipimetiX shall retain, all of LipimetiX’s debts, liabilities, and obligations
of any nature whatsoever, whether accrued, absolute, or contingent, whether
known or unknown, whether due or to become due, except that the Company shall,
on the Effective Date, assume, perform and discharge when due all of the
responsibilities, liabilities and obligations related to the Contributed Assets
(including without limitation, all of the responsibilities, liabilities and
obligations of the Licensee under the UABRF License Agreement), but only to the
extent that any such responsibility, liability or obligation first arises on or
after the Effective Date.
 
1.2           Capstone Contribution.
 
(a)           Subject to the terms and conditions of this Agreement, Capstone
hereby contributes $3,300,000 in cash to the Company (the “Initial Capstone
Contribution”), and the Company hereby accepts the Initial Capstone Contribution
from Capstone.  In exchange for the Initial Capstone Contribution, on the
Effective Date the Company shall issue to Capstone 600,000 Common Units and
2,300,000 Preferred Units pursuant to the LLC Agreement.
 
(b)           Subject to the terms and conditions of this Agreement, Capstone
shall, as of the date hereof, transfer $2,700,000 into an escrow account (the
“Escrow Funds” and collectively with the Initial Capstone Contribution and the
Contributed Assets, the “Contributions”), pursuant to an Escrow Agreement, in
substantially the form of Exhibit H hereto (the “Escrow Agreement”).  The Escrow
Funds shall be disbursed in accordance with procedures set forth in the Escrow
Agreement as follows:
 
(i)           To the Company upon the allowance by the FDA of an IND for AEM-28
which will allow the Company to pursue human clinical trials for the treatment
of severe refractory hypercholesterolemia;
 
(ii)           To the Company or Capstone, as specified in a joint instruction
of Capstone and the Joint Development Committee of the Company; or
 
 
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(iii)           To Capstone upon any event of dissolution.
 
 (c)           The Company shall issue 1 Preferred Unit to Capstone pursuant to
the LLC Agreement for each dollar that is disbursed from the Escrow Funds to the
Company pursuant to 1.2(b)(i) or 1.2(b)(ii) above.
 
ARTICLE 2
CLOSING
 
2.1           Closing Deliveries.
 
(a)           The Contributors and the Company will execute, where appropriate,
and deliver the following documents and agreements as of the Effective Date:
 
(i)           LLC Agreement;
 
(ii)           Bill of Sale, Assignment and Assumption Agreement in
substantially the form of Exhibit B hereto;
 
(iii)           First Amendment and Consent to Assignment of Exclusive License
Agreement by and among UABRF, LipimetiX and the Company in substantially the
form of Exhibit C hereto;
 
(iv)           Accounting Services Agreement between the Company and Capstone,
in substantially the form of Exhibit D hereto;
 
(v)           Management Agreement between the Company and Benu BioPharma, Inc.
in substantially the form of Exhibit E hereto;
 
(vi)           Escrow Agreement;
 
(vii)           Certificate of Amendment of LipimetiX changing the name of
LipimetiX to remove all reference to LipimetiX and iterations thereof in
substantially the form of Exhibit I hereto.
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LIPIMETIX AND GOLDBERG
 
LipimetiX and Goldberg hereby jointly and severally represent and warrant to
Capstone that the following statements are true and correct as of the date
hereof:
 
3.1           Organization and Qualification.  LipimetiX is a limited liability
company that is duly organized, validly existing, and in good standing under the
laws of its state of organization, with the power and authority to own, lease,
and operate its properties and to carry on its business as now being
conducted.  LipimetiX is licensed or qualified to do business as a foreign
limited liability company and is in good standing in the jurisdictions in which
it conducts its business.
 
3.2           Authority.  The execution and delivery of this Agreement and the
consummation
 
 
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of the transactions contemplated hereby have been duly authorized by all
necessary limited liability company action on the part of LipimetiX and its
members and no further action is required on the part of LipimetiX or its
members to authorize this Agreement or the transactions contemplated
hereby.  LipimetiX has the power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; this Agreement
is the legal, valid, and binding obligation of LipimetiX.
 
3.3           No Violations.  Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
 
(a)           (i) violates or will violate any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory authority,
or (ii) to Goldberg and LipimetiX’s knowledge, violates or will violate any laws
(statutory or otherwise), ordinances, rules, regulations, bylaws, or codes of
governmental and regulatory authorities, whether federal, state, or local
(collectively, “Laws”) to which LipimetiX or any of its properties or assets are
subject;
 
(b)           violates or will violate, or conflicts with or will conflict with,
any provision of, or constitutes a default under, the operating agreement or
other organizational documents of LipimetiX; or
 
(c)           (i) violates or breaches or constitutes a default (or an event
which, with the giving of notice or lapse of time or both, would constitute a
default) under, or give rise to a right to terminate, any mortgage, contract,
agreement, deed of trust, license, lease, or other instrument, arrangement,
commitment, obligation, understanding, or restriction of any kind to which
LipimetiX is a party or by which it or its tangible or intangible assets or
properties may be bound (including without limitation the UABRF License
Agreement), or (ii) will cause, or give any person grounds to cause, to be
accelerated (with notice or lapse of time or both) the maturity of, or will
increase, any liability or obligation of LipimetiX.
 
3.4           Title to Assets; Transfer.  LipimetiX has good and marketable
title to, undisputed possession of and complete and unrestricted power to sell,
assign, transfer, convey, and deliver all of the Contributed Assets free and
clear of all options, adverse claims, restrictions, tenancies, debts, claims,
security interests, defects of title, mortgages, liens, pledges, charges, or
encumbrances of any nature whatsoever.
 
3.5           Litigation.  LipimetiX is not bound by any order, judgment,
stipulation, or consent decree of any court or governmental agency; there is no
suit, action, or other proceeding or governmental investigation pending or
threatened that could adversely affect LipimetiX’s financial condition or the
Contributed Assets; there are no currently pending or, to the knowledge of
Goldberg and LipimetiX, threatened investigations, complaints, citations, orders
or judgments relating to its business operations, environmental protection,
labor relations, employee safety and health, wages, hours, and other labor
standards, and fair employment.
 
3.6           Intellectual Property Rights.
 
(a)           To Goldberg and LipimetiX’s knowledge, LipimetiX has taken all
necessary action to maintain and protect each item of Intellectual Property
conveyed to the Company hereby.
 
 
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(b)           The UABRF License Agreement is a valid and binding agreement in
accordance with its terms and is in full force and effect and has not been
assigned, in whole or in part, to any third party.  Neither LipimetiX nor, to
Goldberg and LipimetiX’s knowledge, UABRF, is in default under the UABRF License
Agreement and no event has occurred or condition exists which, with the giving
of notice or passage of time or both, would constitute a default thereunder,
except only that as of the date hereof LipimetiX owes UABRF $314,651.30 pursuant
to Sections 5.1 and 5.2 of the UABRF License Agreement for unpaid patent
expenses, of which $161,274.77 is in arrears.
 
(c)           There are no Disclaimed Licensed Patents as defined in the UABRF
License Agreement and all rights initially granted to LipimetiX under the UABRF
License Agreement are valid and subsisting.
 
(d)           To such Goldberg and LipimetiX’s knowledge, AEM-28 is eligible for
orphan drug designation by the U.S. Food & Drug Administration for treatment of
homozygous familial hypercholesterolemia, and LipimetiX is not aware of any
facts or circumstances that would make such designation impractical or unlikely.
 
(e)           To Goldberg and LipimetiX’s knowledge, LipimetiX has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of third parties, and LipimetiX has never
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation (including any claim
that LipimetiX must license or refrain from using any Intellectual Property
rights of any third party) by LipimetiX.  To Goldberg and LipimetiX’s knowledge,
no third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of LipimetiX.
 
(f)           LipimetiX does not own any patents, nor has it filed any patent
applications, relating to the subject matter of the UABRF License Agreement.
 
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CAPSTONE
 
Capstone hereby represents and warrants to LipimetiX that the following
statements are true and correct as of the date hereof:
 
4.1           Organization and Qualification.  Capstone is a corporation that is
duly organized, validly existing, and in good standing under the laws of its
state of organization, with the power and authority to own, lease, and operate
its properties and to carry on its business as now being conducted.  Capstone is
licensed or qualified to do business as a foreign limited liability company and
is in good standing in the jurisdictions in which it conducts its business.
 
4.2           Authority.  Capstone has the power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
this Agreement is the legal, valid, and binding obligation of Capstone.
 
4.3           No Violations.  Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
 
 
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(a)           (i) violates or will violate any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory authority,
or (ii) to the knowledge of Capstone, violates or will violate Laws to which
Capstone or any of its properties or assets are subject is subject;
 
(b)           violates or will violate, or conflicts with or will conflict with,
any provision of, or constitutes a default under, the by-laws, certificate of
incorporation or other organizational documents of Capstone; or
 
(c)           (i) violates or breaches or constitutes a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or give rise to a right to terminate, any mortgage, contract, agreement, deed of
trust, license, lease, or other instrument, arrangement, commitment, obligation,
understanding, or restriction of any kind to which Capstone is a party or by
which it or its tangible or intangible assets or properties may be bound, or
(ii) will cause, or give any person grounds to cause, to be accelerated (with
notice or lapse of time or both) the maturity of, or will increase, any
liability or obligation of Capstone.
 
4.4           Litigation.  Except as disclosed on Exhibit G attached hereto,
Capstone is not bound by any order, judgment, stipulation, or consent decree of
any court or governmental agency; there is no suit, action, or other proceeding
or governmental investigation pending or threatened that could adversely affect
Capstone’s financial condition or the Capstone Contribution; and there are no
currently pending or, to the knowledge of Capstone, threatened investigations,
complaints, citations, orders or judgments relating to its business operations,
environmental protection, labor relations, employee safety and health, wages,
hours, and other labor standards, and fair employment.
 
ARTICLE 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; GUARANTY
 
5.1           Survival.  The covenants, agreements, representations, and
warranties of the Contributors contained herein or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Effective Date.
 
5.2           Indemnification.  Each Contributor shall indemnify and hold
harmless the Company and the other Contributor from any and all damage, loss,
liability, and expense (including, without limitation, reasonable expenses of
investigation and attorneys’ fees and expenses in connection with any action,
suit, proceeding, claim, investigation, or other loss) (collectively, a “Loss”)
incurred or suffered by the Company or the other Contributor arising out of any
breach of any covenant, agreement, warranty, or representation or any inaccuracy
or omission in any representation or warranty made by such indemnifying
Contributor pursuant to this Agreement.
 
Goldberg shall, jointly and severally, indemnify and hold harmless the Company
and Capstone from any and all Losses incurred or suffered by the Company or
Capstone arising out of any breach or inaccuracy of any representation or
warranty set forth in Article 3 hereof.
 
 
 
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ARTICLE 6
DEFINITIONS
 
“Intellectual Property” means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications and patent disclosures, together with all
reissuances, divisionals, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof, and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (c) all works of authorship, all copyrights and all
applications, registrations, and renewals in connection therewith, (d) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing, production and
research processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (e) all computer software
(including data and related documentation), (f) all licenses granting rights to
technology, (g) all other proprietary rights and (h) all copies and tangible
embodiments of the foregoing (in whatever form or medium).
 
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department, agency
or political subdivision thereof).
 
ARTICLE 7
MISCELLANEOUS PROVISIONS
 
7.1           Amendment and Modification.  This Agreement may be amended,
modified, or supplemented only by written agreement of the Company, Capstone and
LipimetiX, if amended prior to the dissolution of LipimetiX, and by the Company,
Capstone and the holders of a majority of the LipimetiX Common Units after the
dissolution of LipimetiX.
 
7.2           Assignment.  This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Contributors, LX Members and the
Company, and their respective successors and permitted assigns.  Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any person other than the Contributors, LX Members and the Company and
their respective successors and permitted assigns any right, remedy, or claim
under or by reason of this Agreement or any provisions herein contained.
 
7.3           Expenses.  Each of the Company, LX Members and Contributors shall
pay all costs and expenses incurred by it in connection with this Agreement and
the performance of its obligations hereunder, including, but not limited to, the
fees and expenses of its own attorneys, accounts, and
consultants.  Notwithstanding the foregoing, however, the Company will reimburse
LipimetiX for the reasonable attorneys’ fees incurred in connection with the
transactions contemplated hereby, not to exceed $10,000, without prior approval
by Capstone.
 
7.4           Further Assurances.  From time to time, at the request of the
Company or any
 
 
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Contributor and without further consideration, each Contributor and each of the
LX Members, at its own expense, will execute and deliver such other documents,
and take such other action, as the Company may reasonably request in order to
consummate more effectively the transactions contemplated hereby and to vest in
the Company good and marketable title to the Contributed Assets.
 
7.5           Governing Law.  This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware (without regard to
any conflicts of law doctrines).
 
7.6           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument and shall become a binding Agreement when
one or more of the counterparts have been signed by the Company and each of the
Contributors and LX Members and delivered to the other parties.
 
7.7           Headings.  The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
 
7.8           Entire Agreement.  This Agreement, including the exhibits and
other documents and instruments referred to herein, embodies the entire
agreement and understanding of the Contributors, LX Members and Company in
respect of the subject matter contained herein.  This Agreement supersedes all
prior agreements and understandings between the Contributors, LX Members and
Company with respect to such subject matter.
 
7.9           Severability.  If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
 
7.10           Inconsistency or Conflict.  In the event of any inconsistency or
conflict between any provision of this Agreement and any provision of the LLC
Agreement, the provisions of the LLC Agreement shall govern.
 
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
 
LIPIMETIX, LLC,
a Delaware limited liability company

___________________________________
Dennis I. Goldberg
President and CEO

CAPSTONE THERAPEUTICS CORP.
a Delaware corporation

___________________________________
John M. Holliman, III
Executive Chairman

LIPIMETIX DEVELOPMENT, LLC
a Delaware limited liability company

___________________________________
Les M. Taeger
Authorized Person

LX MEMBERS:

THE UAB RESEARCH FOUNDATION
a __________

___________________________________
David Winwood
Chief Executive Officer

_________________________
Dennis I. Goldberg, Ph.D.
 
Signature Page - Contribution Agreement
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_________________________
Philip M. Friden, Ph.D.

_________________________
Eric Morrell, Ph.D.

_________________________
G. M. Anantharamaiah, Ph.D.

_________________________
Palgunachari Mayakonda, Ph.D.

_________________________
Frederick Meyer, Ph.D.

_________________________
Jeffrey Elton, Ph.D.

_________________________
Michael Webb

Signature Page - Contribution Agreement
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Exhibits
 
A.            Form of Amended and Restated Limited Liability Company Agreement
 
B.            Form of Bill of Sale and Assignment and Assumption Agreement
 
C.            Form of First Amendment and Consent to Assignment of Exclusive
License Agreement
 
D.            Form of Accounting Services Agreement
 
E.           Form of Management Agreement
 
F.            Distribution Schedule for LipimetiX Common Units
 
G.            Litigation Disclosure
 
H.            Form of Escrow Agreement
 
I.            Certificate of Amendment