Exhibit 10.1

 

FORM OF EXCHANGE AND CONSENT AGREEMENT

 

EXCHANGE AND CONSENT AGREEMENT (this “Agreement”), dated as of November 14,
2016, by and between TetraLogic Pharmaceuticals Corporation, a Delaware
corporation, with offices located at 343 Phoenixville Pike, Malvern, PA 19355
(the “Company”), and each of the Noteholders listed on Schedule 1 attached
hereto (collectively, the “Noteholders” and each individually, a “Noteholder”).

 

WHEREAS, the Company has agreed to sell substantially all of its assets relating
to the birinapant and SHP-141 (remetinostat) lead molecules to Medivir AB, a
company organized under the laws of Sweden (such transaction, the “Asset
Purchase”), pursuant to the terms and conditions of that certain asset purchase
agreement by and among the Company, its wholly-owned subsidiary TetraLogic
Research and Development Corporation and Medivir AB, dated as of November 1,
2016 (the “APA”);

 

WHEREAS, on June 23, 2014, the Company issued 8.00% Convertible Senior Notes due
2019 (the “Notes”) to certain investors under an indenture, dated as of June 23,
2014 (the “Indenture”);

 

WHEREAS, each Noteholder currently owns, beneficially or of record, the
aggregate principal amount of Notes set forth on Schedule 1 hereto next to such
Noteholder’s name, and all rights to interest thereon;

 

WHEREAS, concurrently herewith, the Company is entering agreements with other
holders of Notes (the “Other Noteholders”, and such agreements, each an “Other
Agreement”) substantially in the form of this Agreement (other than with respect
to the identity of the holder of Notes, and proportional changes reflecting the
different aggregate principal amount of Notes of such Other Noteholders);

 

WHEREAS, the Notes listed on Schedule 1 hereto together with the Notes listed on
Schedule 1 attached to the Other Agreements collectively represent 100% of all
issued and outstanding principal amount of the Notes on the date hereof;

 

WHEREAS, the Notes have accrued but unpaid interest as of October 31, 2016 in
the amount of $1,322,222.49; and

 

WHEREAS, concurrently with the execution of the APA and as a condition and
inducement to its willingness to enter into the APA, the Company has requested
that the Noteholders agree, and each of the Noteholders has agreed, to enter
into this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the Company and each Noteholder hereby agree as
follows:

 

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1.                                      EXCHANGE OF NOTES.

 

a.                                      Within three (3) business days of
execution of this Agreement (the “Exchange Date”), each Noteholder hereby agrees
to, and to direct its nominee to, exchange the aggregate principal amount of
Notes set forth for each Noteholder next to such Noteholder’s name under
Schedule 1 hereto (collectively, the “Exchanged Notes”) for newly issued shares
of convertible participating preferred stock series A of the Company (the
“Preferred Stock”), having the designations, rights and preferences set forth in
the term sheet attached as Exhibit A hereto (the “Term Sheet”), in the amount of
Preferred Stock for each Noteholder set forth opposite such Noteholder’s name on
Schedule 1 attached hereto (such shares, the “Exchange Shares”).

 

b.                                      The Exchange Shares will be issued in a
transaction exempt from registration pursuant to Section 4(a)(2) and Regulation
D of the Securities Act of 1933, as amended (the “Securities Act”), and will be
deemed “restricted” under the Securities Act.

 

c.                                       Prior to the Exchange Date, the Company
shall have caused a certificate of designation for the Exchange Shares
substantially in the form attached as Exhibit B hereto reflecting the
designations, preferences and rights set forth in the Term Sheet (the
“Certificate of Designation”) to be filed with the Secretary of State of the
State of Delaware and to be in full force and effect.

 

d.                                      On the Exchange Date, the Company shall,
or shall cause its transfer agent (the “Transfer Agent”) to, credit the number
of Exchange Shares to which each Noteholder is entitled hereunder to each
Noteholder’s or its designee’s account in accordance with the Deposit/Withdrawal
At Custodian (“DWAC”) instructions set forth on Schedule 1 hereto, on the books
and records of the Company kept by the Transfer Agent. Upon the Noteholder’s
receipt of the Exchange Shares in accordance with the immediately preceding
sentence, each Noteholder shall deliver or cause to be delivered to the trustee
under the Indenture (the “Trustee”) a DWAC instruction requesting to withdraw
the Exchanged Notes from its account.

 

e.                                       On or prior to the Exchange Date, the
Company shall deliver or cause to be delivered to the Trustee an officer’s
certificate, certifying the CUSIP, the list of participants and corresponding
participant numbers, the date of withdrawal, and the Exchanged Notes to be
withdrawn from each participant’s account.

 

f.                                        Upon confirmation from the Trustee
that (i) the Exchanged Notes have been withdrawn from each participant’s account
as provided in Section 1.e above, (ii) the Exchanged Notes have been cancelled
in accordance with the provisions of the Indenture, and (iii) the Exchange
Shares have been credited to the Noteholders in accordance with the DWAC
instructions set forth on Schedule 1 hereto, on the books and records of the
Company kept by the Transfer Agent, all Exchanged Notes shall have been deemed
satisfied and discharged in their entirety and no longer outstanding, in force
and in effect.

 

g.                                       Following consummation of the Note
exchange provided in this Section 1, there will remain $41,550,000 in aggregate
principal amount of Notes outstanding (the “Remaining Notes”) plus accrued but
unpaid interest on all Notes (including the Exchanged Notes) from June 15, 2016
to the Exchange Date (the “Accrued Interest”).  The Remaining Notes of each

 

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Noteholder following consummation of the Note exchange provided in this
Section 1 is set forth opposite such Noteholder’s name on Schedule 1 attached
hereto.

 

h.                                      The Company represents and warrants that
upon issuance as provided hereunder and under the Certificate of Designation,
all Exchange Shares will be duly authorized, validly issued, fully paid and
non-assessable.

 

i.                                          The Company and each Noteholder
shall execute and/or deliver such other documents and agreements as are mutually
acceptable and take such other actions as are customary, reasonably necessary
and mutually acceptable to effectuate the exchange of the Exchanged Notes and
issuance of the Exchange Shares under this Section 1.

 

2.                                      REMAINING NOTES.

 

a.                                      As soon as practicable following the
closing of the Asset Purchase and other transactions contemplated by the APA
(the “APA Closing”), but in any event within one (1) business day of the APA
Closing, the Company shall pay $12,000,000 in cash (the “Closing Cash Amount”)
to the Trustee as paying agent under the Indenture for the benefit of the
holders of the Remaining Notes in partial redemption of $12,000,000 in aggregate
principal amount of such Remaining Notes (the “Redeemed Notes”) prior to any
other payments to the holders of Preferred Stock or Junior Stock (as defined in
the Certificate of Designation). Immediately upon such payment, all such
redeemed aggregate principal amount of the Redeemed Notes shall be deemed
satisfied and discharged in its entirety and no longer outstanding, in force and
in effect. The portion of the Closing Cash Amount payable to each Noteholder
pursuant to this Section 2(a) is set forth opposite such Noteholder’s name on
Schedule 1 attached hereto.

 

b.                                      The Company shall deliver or cause to be
delivered to the Trustee all notices, legal opinions and other officer’s
certificates, and shall execute such supplemental indenture as may be necessary
to effectuate such partial redemption of the Remaining Notes under the
Indenture.

 

c.                                       The Company and each Noteholder shall
execute and/or deliver such other documents and agreements as are mutually
acceptable and take such other actions as are customary, reasonably necessary
and mutually acceptable to effectuate the partial redemption of the Remaining
Notes contemplated by this Agreement, including consenting to any amendments to
the Indenture or the entry into of a supplemental indenture to permit such
partial redemption.

 

3.                                      CONSENT AND VOTING.

 

a.                                      Each Noteholder hereby agrees solely
with the Company to vote, or cause to be voted, all shares of Preferred Stock
and all shares of the Company’s common stock, $0.0001 par value per share (the
“Common Stock”) owned by such Noteholder, beneficially or of record, or over
which such Noteholder has voting control, at any meeting of shareholders or
pursuant to any action by written consent of the shareholders of the Company in
favor of the Asset Purchase and the consummation of all transactions
contemplated by the APA.

 

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b.                                      Each Noteholder hereby consents, and
agrees solely with the Company to instruct the Trustee to consent, to the Asset
Purchase and the consummation of all transactions contemplated by the APA.

 

c.                                       The Company hereby agrees that it shall
not enter into any amendment or provide any waiver under the APA without the
prior written consent of the Noteholders holding, beneficially or of record, a
majority in aggregate principal amount of the Notes then outstanding, which
consent shall not be unreasonably withheld, conditioned or delayed.

 

4.                                      ACKNOWLEDGEMENT AND WAIVERS.

 

a.                                      From and after the consummation of the
Note exchange provided under Section 1 above and receipt by each Noteholder of
the Exchange Shares hereunder, each Noteholder hereby acknowledges and agrees
that:

 

(i) all amounts due and owing under such Noteholder’s Exchanged Notes shall have
been satisfied in full except for the Accrued Interest and that there shall be
no other amounts due or owing under such Exchanged Notes or the Indenture with
respect to such Exchanged Notes except for the Accrued Interest;

 

(ii) all obligations other than the obligation to pay Accrued Interest under
such Noteholder’s Exchanged Notes and the Indenture with respect to such
Exchanged Notes shall have been fully satisfied and discharged; and

 

(iii) except with respect to the Accrued Interest, it waives any and all rights,
title and interests under its Exchanged Notes and under the Indenture with
respect to such Exchanged Notes, including without limitation its right to
receive any payment of principal or any other amount (other than the Accrued
Interest) under such Exchanged Notes.

 

b.                                      From and after payment by the Company of
the Closing Cash Amount, as contemplated in Section 2.a above, each Noteholder
hereby acknowledges and agrees that:

 

(i) all amounts due and owing under the Redeemed Notes shall have been paid in
full except for the Accrued Interest and all accrued but unpaid interest on the
Remaining Notes from the Exchange Date to the date the Company paid the Closing
Cash Amount as provided in Section 2 above (the “Remaining Interest” and,
together with the Accrued Interest, the “Interest”) and that there shall be no
other amounts due or owing under such Noteholder’s Redeemed Notes or the
Indenture with respect to such Redeemed Notes other than the Interest; and

 

(ii) all obligations other than the obligation to pay Interest under such
Noteholder’s Redeemed Notes and the Indenture with respect to such Redeemed
Notes shall have been fully satisfied and discharged.

 

c.                                       From and after the date hereof, each
Noteholder hereby conditionally waives with respect to any and all Notes owned
by it, beneficially or of record, and agrees to cause its respective
nominee(s) as record holder of any Note beneficially owned by it to waive, in
each case, subject to the closing of the Asset Purchase:

 

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(i) its right to exercise its right to put its Notes under Article 3 of the
Indenture upon the occurrence of any event set forth under clauses (2) and
(4) of the definition of Fundamental Change under the Indenture;

 

(ii) the applicability of the covenants and obligations set forth under
Section 5.02 of the Indenture;

 

(iii) the applicability of the covenants and obligations set forth in Article 6
of the Indenture;

 

(iv) its rights to receive interest payments in cash under Section 12.01 of the
Indenture on June 15 and December 15 of each year and agrees instead that any
such interest amounts shall be paid through the issuance of additional notes
having the same terms as the Remaining Notes as modified by this Agreement; and

 

(v) the applicability of any defined terms or Events of Default (as defined in
the Indenture) or other terms or covenants under the Indenture related to the
waivers set forth above.

 

d.                                      Each Noteholder hereby conditionally
agrees to extend with respect to any and all Remaining Notes owned by it,
beneficially or of record, and agrees to cause its respective nominee(s) as
record holder of any Remaining Note beneficially owned by it to extend, the
maturity of the Remaining Notes to June 15, 2024.

 

e.                                       In addition, from and after the date
hereof, each Noteholder hereby acknowledges and agrees not to declare, or
instruct the Trustee to declare, an Event of Default (as defined in the
Indenture) or accelerate the payment of any Notes owned by it, beneficially or
of record, or to otherwise exercise or instruct the Trustee to exercise any
remedy under the Indenture arising from any Event of Default, whether now
existing or hereafter arising, until the consummation of the Asset Purchase and
other transactions contemplated under the APA or termination of the APA by one
or both of the parties thereto in accordance with its terms, in each case,
solely, to the extent necessary for the consummation of the Asset Purchase and
other transactions contemplated by the APA.

 

f.                                        The Company shall deliver or cause to
be delivered to the Trustee all notices, legal opinions and other officer’s
certificates, and shall execute such supplemental indenture as may be necessary
to effectuate the waivers and amendments contemplated by this Section 4 to the
Indenture.

 

g.                                       The Company and each Noteholder shall
execute and/or deliver such other documents and agreements and take such other
actions as are customary, reasonably necessary and mutually acceptable to
effectuate the waivers and amendments contemplated by this Section 4, including
consenting to any amendments to the Indenture or the entry into of a
supplemental indenture to permit the partial redemption of the Remaining Notes.

 

h.                                      Each Noteholder hereby waives its right
to convert any of the principal amount of the Notes into shares of Common Stock
pursuant to Article 11 of the Indenture unless and until

 

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the date upon which the Company receives a milestone or earn-out payment
pursuant to Section 3.2 or Section 3.3 of the APA (or other payment in lieu
thereof).

 

5.                                      REPRESENTATIONS AND WARRANTIES

 

a.                                      Noteholder Representations and
Warranties.  Each Noteholder, severally and not jointly, hereby represents and
warrants to the Company that, as of the date hereof, as of the Exchange Date and
as of the APA Closing:

 

i.                                          Such Noteholder has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.  The execution and delivery of this Agreement by such Noteholder and the
consummation by such Noteholder of the transactions contemplated hereby have
been duly and validly authorized by its board of directors or other governing
body, and/or no other proceedings on its part are necessary to authorize this
Agreement or to consummate such transactions.  This Agreement has been duly and
validly executed and delivered by such Noteholder and, assuming due
authorization, execution and delivery by the other parties hereto, constitutes
its legal, valid and binding obligation, enforceable against such Noteholder in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors’
rights generally or by general principles governing the availability of
equitable remedies, and, in the case of Common Pension Fund D, subject to the
New Jersey Tort Claims Act (N.J.S.A. 59:1-1 et seq.) and the New Jersey
Contractual Liability Act (N.J.S.A. 59:13-1 et seq.) as each may be amended from
time to time.

 

ii.                                       The execution and delivery of this
Agreement by such Noteholder does not, and the performance of this Agreement by
such Noteholder shall not, (A) conflict with or violate its organizational
documents, (B) conflict with or violate any agreement, arrangement, law, rule,
regulation, order, judgment or decree to which it is a party or by which it is
(or the Notes or Preferred Stock owned, beneficially or of record, by it and its
affiliates are) bound or affected or (C) result in the creation of a lien or
encumbrance on any of the Notes or Preferred Stock owned, beneficially or of
record, by it and its affiliates which would affect such Noteholder’s ability to
comply with the terms and conditions of this Agreement.

 

iii.                                    The execution and delivery of this
Agreement by such Noteholder does not, and the performance of this Agreement by
such Noteholder shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental entity except for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).

 

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iv.                                   Such Noteholder is the beneficial owner or
owner of record of the Notes and will transfer and deliver to the Company as and
when required under this Agreement valid title to the Exchanged Notes and the
Redeemed Notes, each free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, preemptive or similar rights,
agreements, limitations on such Noteholder’s voting rights, charges and other
encumbrances of any nature whatsoever.

 

v.                                      Such Noteholder shall receive the
Exchange Shares under this Agreement for its own account solely for the purpose
of investment and not with a view to, or for offer or sale in connection with,
any distribution of the Exchange Shares in violation of the Securities Act and
the rules and regulations promulgated thereunder.  Such Noteholder has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Exchange Shares, and is
able to bear the economic risk of such investment.

 

vi.                                   Such Noteholder is a qualified
institutional buyer as defined in Rule 144A under the Securities Act or an
accredited investor as defined in Rule 501(a) of the Securities Act.

 

vii.                                Neither such Noteholder nor any of its
affiliates or representatives has acted on behalf of the Company or has received
any commission or remuneration from the Company in connection with entering into
this Agreement or the consummation of the transactions contemplated under this
Agreement or the APA.  Neither such Noteholder nor any of its affiliates or
representatives (i) was solicited by any person or entity on behalf of the
Company to enter into this Agreement or to consummate the transactions
contemplated under this Agreement, or (ii) has solicited any other investor in
the Company’s Notes to enter into this Agreement or to consummate the
transactions contemplated under this Agreement.

 

b.                                      Company Representations and
Warranties.  The Company hereby represents and warrants to such Noteholder that,
as of the date hereof, as of the Exchange Date and as of the APA Closing:

 

i.                                          The Company has all necessary power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.  The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by its board of directors or other governing body, and no other
proceedings on its part are necessary to authorize this Agreement or to
consummate such transactions.  This Agreement has been duly and validly executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes its legal, valid and binding
obligation, enforceable against the Company in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors’ rights generally or by
general principles governing the availability of equitable remedies.

 

ii.                                       The transactions contemplated by this
Agreement, including the issuance of the Exchange Shares, are duly authorized
and upon issuance in accordance with the terms of this Agreement, the Exchange
Shares will be duly authorized, validly issued, fully paid and non-assessable
and free from all preemptive or similar rights, taxes, security interests,
liens, claims,

 

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pledges, charges, options, rights of first refusal, agreements, limitations on
such Noteholder’s voting rights, charges and other encumbrances of any nature
whatsoever with respect to the issue thereof with the holders of the Exchange
Shares being entitled to the rights and preferences set forth in the Certificate
of Designation.  As of the Exchange Date, a number of shares of Common Stock
shall have been duly authorized and reserved for issuance which equals the
maximum number of shares of Common Stock issuable upon conversion of the
Exchange Shares (assuming for purposes hereof, that the Exchange Shares are
convertible at the Conversion Ratio (as defined in the Term Sheet) and without
taking into account any limitations on the conversion of the Preferred Shares,
if any, set forth in the Certificate of Designation or the Term Sheet).  The
shares of Common Stock issuable upon conversion of the Exchange Shares in
accordance with the Certificate of Designation will be validly issued, fully
paid and non-assessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.

 

iii.                                    The execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company shall not, (A) conflict with or violate its organizational documents, or
(B) conflict with or violate any agreement, arrangement, law, rule, regulation,
order, judgment or decree to which it is a party or by which it is bound or
affected.

 

iv.                                   The execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental entity except as contemplated
in this Agreement, or for applicable requirements, if any, of the Exchange Act,
and except where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or delay
the performance by the Company of its obligations under this Agreement.

 

v.                                      Assuming the accuracy of the
representations and warranties set forth in Section 5(a), the Exchange Shares
(a) will be exempt from the registration requirements of the Securities Act
pursuant to Section 4(a)(2) of the Securities Act, and (b) will be issued in
compliance with all applicable state and federal laws concerning the issuance of
the Exchange Shares.  For the purposes of Rule 144 promulgated under the
Securities Act, the Company acknowledges that, assuming the accuracy of each
Noteholder’s representations and warranties hereunder, the holding period of the
Exchange Shares may be tacked onto the holding period of the Exchanged Notes and
the Company agrees not to take a position contrary thereto.

 

vi.                                   There is no action, lawsuit, arbitration,
claim or proceeding pending or, to the knowledge of the Company, threatened,
against the Company that would reasonably be expected to impede the consummation
of the transactions contemplated hereby.

 

vii.                                As of their respective filing dates, the
Company’s filings with the SEC under the Exchange Act, during the two (2) years
prior to the date hereof (the “SEC Documents”), complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, 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
the light of the circumstances under which

 

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they were made, not misleading. The Company represents that, as of the date
hereof, no material event or circumstance has occurred which would be required
to be publicly disclosed or announced on a Current Report on Form 8-K, either as
of the date hereof or solely with the passage of time by the Company but which
has not been so publicly announced or disclosed.

 

6.                                      COVENANTS.

 

a.                                      No Transfer.  Each Noteholder
acknowledges and agrees prior to (i) the APA Closing and partial redemption of
the Remaining Notes pursuant to Section 2.a of this Agreement or (ii) the
termination of the APA by either party thereto (the “Legend Removal Date”), not
to dispose or attempt to dispose, directly or indirectly, by operation of law or
otherwise, voluntarily or involuntarily, of any Notes or shares of Preferred
Stock owned by it, beneficially or of record, or any right, power, or interest
therein, including through any sale, gift, pledge, encumbrance, or creation of a
security interest in any Notes or shares of Preferred Stock; provided, that such
Noteholder shall be permitted to transfer its interest in any Notes or shares of
Preferred Stock to a party that agrees in writing to be bound by the terms and
conditions of this Agreement and executes a joinder to this Agreement to that
effect.  Each Noteholder hereby agrees and consents to the entry of stop
transfer instructions by the Company with the Transfer Agent or the Trustee
against the transfer of any Notes or shares of Preferred Stock inconsistent with
the terms of this Section 6.a.

 

b.                                      Compliance with the Securities
Act.  Each Noteholder acknowledges and agrees that the Exchange Shares have not
been and will not be registered under the Securities Act or any applicable
securities laws of any state of the United States and that the sale contemplated
hereby is being made in reliance on an exemption from such registration pursuant
to Section 4(a)(2) and Regulation D of the Securities Act, and the Company is
relying upon the truth and accuracy of, and such Noteholder’s compliance with,
the representations, warranties, covenants, agreements, acknowledgments and
understandings of such Noteholder contained in this Agreement in order to
determine the availability of such exemptions and eligibility of Noteholders to
acquire the Exchange Shares.

 

c.                                       Legend.

 

i.                                          It is understood that certificates
evidencing the Exchange Shares may bear the following legend until the Legend
Removal Date:

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO TRANSFER RESTRICTIONS SET
FORTH UNDER AN EXCHANGE AND CONSENT AGREEMENT DATED NOVEMBER 14, 2016.  COPIES
OF THIS AGREEMENT CAN BE OBTAINED FROM THE COMPANY UPON REQUEST.”

 

ii.                                       It is understood that certificates
evidencing the Exchange Shares may bear the following legend or any similar
legend solely in the event that the applicable Noteholder: (i) has not satisfied
the required holding period under Rule 144 (whether through tacking of the
holding period of the Exchanged Notes or otherwise) and (ii) is not at the time
of the proposed sale or transfer, or during the ninety (90) days immediately
preceding such time, an “affiliate” of the Company:

 

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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT AND SUCH
REGISTRATION STATEMENT REMAINS EFFECTIVE, (II) SUCH SECURITIES MAY BE SOLD
PURSUANT TO RULE 144, OR (III) IF REQUESTED BY THE COMPANY, THE COMPANY HAS
RECEIVED AN OPINION OF COMPANY COUNSEL, STATING THAT SUCH TRANSFER MAY LAWFULLY
BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT.”

 

7.                                      TERMINATION. In the event that (i) the
APA is terminated for any reason, (ii) the Asset Purchase and other transactions
contemplated under the APA are not consummated on or before January 31, 2017, or
(iii) the Company announces its intent to pursue a transaction or a series of
transactions alternative to the Asset Purchase and other transactions
contemplated under the APA, then all waivers, agreements and covenants of the
Noteholders set forth in Section 4.c, Section 4.d, Section 4.e, Section 4.h and
Section 6.a will immediately and automatically expire and will have no further
force and effect.

 

8.                                      MISCELLANEOUS.

 

a.                                      Permission to Disclose.  Each Noteholder
hereby agrees and consents to the disclosure by the Company of this Agreement
and all transactions contemplated hereunder as required by law, including stock
exchange and securities regulations (including on a Form 8-K or proxy statement
filed with the Securities and Exchange Commission).  For the avoidance of doubt,
any such disclosure shall not identify any Noteholder by name.

 

b.                                      Specific Performance.  The parties
hereto agree that irreparable damage may occur in the event any provision of
this Agreement was not performed in accordance with the terms hereof and that
the parties hereto shall be entitled to seek specific performance of the terms
hereof, in addition to any other remedy at law or in equity.

 

c.                                       Entire Agreement.  This Agreement
constitutes the entire agreement between the Company and each Noteholder with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the Company and each Noteholder
with respect to the subject matter hereof.

 

d.                                      Amendment.  This Agreement may not be
amended and no other actions may be taken under this Agreement except by an
instrument in writing signed by the Company and each Noteholder.

 

e.                                       Severability.  If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule or law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of this Agreement 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 hereby
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties hereto as closely as possible to the fullest
extent permitted by applicable law in a mutually acceptable manner in order that
the terms of this Agreement remain as originally contemplated.

 

f.                                        Notices.  All notices and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made and shall be effective upon receipt if
delivered personally, upon receipt of a transmission confirmation if sent by

 

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electronic transmission or facsimile (with a confirming copy sent by overnight
courier) and on the next business day if sent by Federal Express, United Parcel
Service, Express Mail or other reputable overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by notice), it being understood and agreed that with respect to Common Pension
Fund D, all notices and communications will be made by personal delivery:

 

If to the Noteholder, to the address specified on Schedule 1 hereto.  With a
copy to (which shall not constitute notice):

 

Brown Rudnick LLP

7 Times Square
New York, NY 10036

Attention: John Storz

Facsimile: (212) 938-2825

E-mail: jstorz@brownrudnick.com

If to the Company, to:

 

TetraLogic Pharmaceuticals Corporation

343 Phoenixville Pike

Malvern, PA 19355

Telephone: (610) 889-9900

Fax: (610) 889-9994

Attention: General Counsel

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

 

Pepper Hamilton LLP

400 Berwyn Park

899 Cassatt Road

Berwyn, PA 19312-1183

Telephone: (610) 640-7825

Fax: (610) 640-7835

Attention: Jeffrey P. Libson, Esq.

 

g.                                       Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state
without regard to the principles of conflicts of law of any jurisdiction;
provided that, solely with respect to Common Pension Fund D, this Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey without regard to the principles of conflicts of law of any
jurisdiction.

 

h.                                      MUTUAL WAIVER OF JURY TRIAL.  BECAUSE
DISPUTES ARISING IN CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN
CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,

 

11

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

 

RELATED OR INCIDENTAL TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

i.                                          Consent to Jurisdiction.

 

i.              Each party to this Agreement, except the Common Pension Fund D:
(i) hereby irrevocably submits to the exclusive jurisdiction of the United
States courts and New York State courts sitting in Manhattan, New York City,
State of New York, for the purposes of any suit, action or proceeding arising
out of or related to this Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper.  Each party hereto consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing in this Section 8.i. shall affect or limit any right to
serve process in any other manner permitted by law.

 

ii.             Solely with respect to Common Pension Fund D, litigation related
to this Agreement shall be bought in the appropriate courts of the State of New
Jersey, and each of the Company and Common Pension Fund D, for purpose of any
such litigation, hereby submits to the exclusive jurisdiction and venue of such
courts.

 

j.                                         Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be an original and all
of which, when taken together, shall constitute one and the same instrument. 
Delivery of an executed counterpart of a signature page by facsimile or other
electronic transmission (including .pdf) shall be as effective as delivery of a
manually executed counterpart.

 

k.                                      Fees and Expenses.  Each party shall
bear its own expenses, including the fees and expenses of accountants, financial
or other advisors or representatives engaged by it, incurred in connection with
this Agreement and the transactions contemplated hereby; provided that the
Company shall pay the reasonable and documented fees and expenses of one firm of
counsel for all Noteholders related to this Agreement, the Certificate of
Designation, the issuance of the Preferred Stock and other matters set forth in
this Agreement.

 

l.                                          Survival of Representations,
Warranties and Covenants.  The representations and warranties contained in or
made pursuant to this Agreement shall survive the closing of the transactions
contemplated hereunder without limitation.

 

m.                                  Successors and Assigns.  The provisions of
this Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective successors or assigns.

 

n.                                      Expiration Date.  Notwithstanding any
other provision hereof to the contrary, if the Exchange Date with respect to any
Noteholder has not occurred by 5:00 p.m. (New York City time) on the thirtieth
(30th) day following the date hereof, unless otherwise mutually agreed to by the
parties to this Agreement, the nonbreaching party shall have the right to
terminate this Agreement with respect to such breaching party at the close of
business on such date by delivering a written notice to that effect to each
other party to this Agreement and without liability of any party to any other
party.

 

[Signature Pages Follow]

 

12

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

 

The Noteholders and the Company have caused their respective signature pages to
this Agreement to be duly executed as of the date first written above.

 

 

COMPANY

 

 

 

 

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

13

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

 

 

 

NOTEHOLDERS

 

 

 

WHITEBOX RELATIVE VALUE

 

PARTNERS L.P.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

WHITEBOX MULTI-STRATEGY

 

PARTNERS L.P.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

PANDORA SELECT PARTNERS L.P.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

WHITEBOX GT FUND L.P.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

14

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

 

 

LAZARD ASSET MANAGEMENT LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

15

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

 

 

HIGHBRIDGE CAPITAL

 

MANAGEMENT, LLC

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

16

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

 

 

GEODE DIVERSIFIED FUND, a

 

segregated account of Geode Capital

 

Master Fund Ltd.

 

 

 

By: Geode Capital Management LP, its

 

investment manager

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

17

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

 

 

LINDEN ADVISORS LP

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

18

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

 

 

NOMURA SECURITIES

 

INTERNATIONAL, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

19

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

 

 

TELEMETRY SECURITIES LLC

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

20

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

 

 

HUDSON BAY CAPITAL

 

MANAGEMENT LP

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

21

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

 

 

STATE OF NEW JERSEY COMMON

 

PENSION FUND D

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to Exchange and Consent Agreement]

 

22

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

 

Schedule 1

 

Noteholders

 

Aggregate
Principal
Amount of Notes

 

Exchanged
Notes

 

Number of Shares
of Preferred Stock

 

Redeemed
Notes

 

Remaining
Notes

 

Whitebox Advisors LLC [Address] [Instructions for issuance of Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Lazard Asset Management [Address] [Instructions for issuance of Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Linden Advisors LP [Address] [Instructions for issuance of Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Nomura Securities International, Inc. [Address] [Instructions for issuance of
Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Telemetry Securities LLC [Address] [Instructions for issuance of Preferred
Stock]

 

 

 

 

 

 

 

 

 

 

 

Geode Diversified Fund [Address] [Instructions for issuance of Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Hudson Bay Capital Management LP [Address] [Instructions for issuance of
Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Highbridge Capital Management LLC [Address] [Instructions for issuance of
Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

State of New Jersey Common Pension Fund D [Address] [Instructions for issuance
of Preferred Stock]

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

43,750,000

 

$

2,200,000

 

12,222,225

 

$

12,000,000

 

$

41,550,000

 

 

23

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

 

EXHIBIT A

 

TERM SHEET

 

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

 

EXECUTION COPY

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

Debt Exchange

November 2, 2016

 

WHEREAS, concurrently with the execution of an asset purchase agreement (the
“APA”) between TetraLogic Pharmaceuticals Corporation, a Delaware corporation
(the “Issuer”), and Medivir AB, a company organized under the laws of Sweden
(“Medivir”), for the sale of substantially all of the Issuer’s assets relating
to the birinapant and SHP-141 (remetinostat) lead molecules to Medivir (the
“Medivir Sale”) and as a condition and inducement to its willingness to enter
into the APA, the Company has requested that each Noteholder set forth in
Schedule I hereto (each, a “Noteholder”) agree, and each of the Noteholders has
agreed, to enter into this Term Sheet;

 

WHEREAS, each Noteholder signatory to this Term Sheet currently owns,
beneficially or of record, the aggregate principal amount of 8.00% Convertible
Senior Notes due 2019 (the “Notes”) of the Issuer set forth on Schedule I hereto
next to such Noteholder’s name, and all rights to interest thereon;

 

WHEREAS, the Notes listed on Schedule I hereto collectively represent 100% of
all issued and outstanding principal amount of the Notes on the date hereof;

 

WHEREAS, this Term Sheet will become effective only when agreed to, and
executed, by holders of 100% in aggregate principal amount of Notes;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the Company and each Noteholder hereby agree as
follows:

 

Note Exchange

 

To the exchange (the “Exchange”) of $2,200,000 in aggregate principal amount of
issued and outstanding Notes (the “Aggregate Converted Amount”) for 12,222,222
newly issued shares of convertible participating preferred stock series A of the
Issuer (the “Preferred Stock”), having a liquidation preference of $0.18 per
share of Preferred Stock (the “Liquidation Preference”).

 

Following the Exchange, there will remain $41,550,000 in aggregate principal
amount of Notes outstanding (the “Remaining Notes”) plus accrued but unpaid
interest thereon. As of October 31, 2016, there is $$1,322,222.49 of accrued and
unpaid interest on the Notes.

 

The specific Aggregate Converted Amount and Remaining Notes of each holder Notes
will be as set forth in Schedule I hereto.

 

Upon issuance of the Preferred Stock, the Aggregate Converted

 

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

 

 

 

Amount surrendered for Exchange will be deemed paid in full and canceled.

 

As soon as practicable following the date hereof and no later than November 14,
2016, the Noteholders shall execute and deliver an Exchange and Consent
Agreement (the “Exchange and Consent Agreement”) substantially in the form
attached as Exhibit A hereto.

 

 

 

Remaining Notes

 

The Remaining Notes will remain issued and outstanding in accordance with their
terms and governed by the indenture dated June 23, 2014 (the “Indenture”),
subject to such amendments and modifications as may be agreed upon by the
Noteholders as set forth in and evidenced by a supplemental indenture to become
effective on the date of closing of the Medivir Sale (see “Exchange Timing and
Mechanics / Supplemental Indenture” below).

 

Upon the consummation of the Medivir Sale, $12,000,000 (the “Closing Cash
Amount”) shall be promptly distributed in cash to the holders of Remaining Notes
in partial redemption of $12,000,000 in aggregate principal amount of such
Remaining Notes and in priority to any payments to the holders of Preferred
Stock or Junior Stock (as defined below).

 

 

 

Restrictions on Transfers of Remaining Notes

 

Until the consummation of the Medivir Sale, holders of Remaining Notes shall not
transfer, directly or indirectly, any such Remaining Notes except to other
persons who have agreed to be bound by the terms set forth in this Term Sheet
and in the Exchange and Consent Agreement.

 

 

 

Preferred Dividends

 

The Preferred Stock will entitle its holders to a preferred dividend when, as
and if declared by the board of directors of the Issuer (the “Board”), at a rate
of 8%. Dividends shall be cumulative, whether or not declared by the Board and
shall accrue semi-annually from the date of issuance of the Preferred Stock or
from the most recent date on which dividends were paid or provided for.

 

Dividends on the Preferred Stock shall be payable prior to and in preference to
any payment of any dividend or other distribution on stock which ranks junior to
the Preferred Stock, including the common stock (collectively, the “Junior
Stock”). No dividends or other distributions shall be made on Junior Stock prior
to all payments on the Preferred Stock having been made in full.

 

After all accrued but unpaid dividends have been paid on the

 

2

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

 

 

 

Preferred Stock, the holders of Preferred Stock shall also be entitled to any
additional dividends or other distributions paid on the common stock by the
Issuer in an amount per share of Preferred Stock equal to the amount paid or
distributed per share of common stock as if the Preferred Stock had been
converted into common stock as provided under “Conversion Rights” below.

 

 

 

Liquidation Rights

 

Upon (i) a liquidation, dissolution or winding-up of the Issuer, whether
voluntary or involuntary, (ii) a merger or consolidation of the Issuer, (iii) a
sale, lease or other transfer or disposition of all or substantially all of the
assets of the Issuer and/or its subsidiaries (including the Medivir Sale) or
(iv) a change of control or other direct or indirect transfer of the Issuer’s
securities such that after such transfer a person or group of related persons
(other than holders of Notes and their affiliates) would own directly or
indirectly 50% or more of the outstanding voting stock of the Issuer (each, a
“Liquidation Event”), after (i) taking into account other costs of liquidation
and after (ii) all payments on the Remaining Notes have been made in full as
provided above, but before (iii) any payment or distribution is made to the
holders of Junior Stock, the holders of Preferred Stock shall be entitled to
receive out of the assets of the Issuer legally available for distribution an
amount per share of Preferred Stock equal to the sum of the aggregate
Liquidation Preference of the Preferred Stock plus any accrued but unpaid
dividends per share of Preferred Stock as provided under “Preferred Dividends”
above (the “Liquidation Amount”).

 

If, upon consummation of such Liquidation Event, the assets of the Issuer and
its subsidiaries are insufficient to make payment in full of the Liquidation
Amount to all holders of Preferred Stock, then such assets shall be distributed
pro rata among the holders of Preferred Stock based on their respective
Liquidation Amount.

 

If, in any Liquidation Event, the amount of consideration received by the Issuer
or its subsidiaries in such Liquidation Event is in the form of milestone
payments or earn-outs, such amounts (net of costs of liquidation) shall be
promptly distributed to the holders of Preferred Stock as and when received by
the Issuer or its subsidiaries until the Liquidation Amount owed to such holders
is paid in full.

 

After the Liquidation Amount has been paid in full on the

 

3

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

 

 

 

Preferred Stock, the holders of Preferred Stock shall also be entitled to any
additional dividends or other distributions paid on the common stock by the
Issuer in an amount per share equal to the amount paid or distributed per share
of common stock as if the Preferred Stock had been converted into common stock
as provided under “Conversion Rights” below.

 

 

 

Conversion Rights

 

Each outstanding share of Preferred Stock shall be convertible at any time at
the option of the holder thereof and without payment of additional consideration
into fully paid and non-assessable shares of common stock. The number of shares
of common stock into which each share of Preferred Stock shall initially be
convertible (the “Conversion Ratio”) into shall be shall be one (1).

 

The Conversion Ratio shall be subject to customary adjustments for stock splits,
dividends and equity issuances.

 

 

 

Voting Rights

 

The holders of Preferred Stock will vote on all matters submitted to a vote of
the holders of stock of the Issuer, including any vote submitted to a vote of
the holders of common stock of the Issuer, in which case they will hold the
number of votes equal to the number of shares of common stock into which such
shares of Preferred Stock would be converted into if converted as provided under
“Conversion Rights” above.

 

 

 

Redemption Rights

 

There will be no redemption rights on the Preferred Stock.

 

 

 

Covenants

 

The Certificate of Designations for the Preferred Stock will include
restrictions on the ability of the Issuer to do the following without consent of
a majority of the issued and outstanding shares of Preferred Stock:

 

·                  Consummate any Liquidation Event

·                  Incur any indebtedness

·                  Issue any Junior Stock or other equity securities that would
be pari passu or senior in right of payment, upon liquidation or otherwise, to
the Preferred Stock

·                  Enter into any contract for the consummation of any event
above

 

The Exchange and Consent Agreement will also include restrictions on the ability
of any holder to transfer, directly or indirectly, its shares of Preferred Stock
prior to the consummation of the Medivir Sale except to other persons who have
agreed to be bound by the terms set forth in this Term Sheet and in the Exchange
and Consent Agreement.

 

4

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

 

Exchange Timing and Mechanics / Supplemental Indenture

 

Each Noteholder hereby agrees to: (i) the Exchange upon the individual terms set
forth for each such holder on Schedule I, (ii) the consummation of the Medivir
Sale (including voting their shares of Preferred Stock in favor of such Medivir
Sale), and (iii) the Company’s use of all the Closing Cash Amount received from
the Medivir Sale, to pay the outstanding amounts due under the Remaining Notes
in the first instance.

 

Each Noteholder further conditionally agrees to (a) waive any put right for
their Notes related to the Medivir Sale or a delisting or suspension of trading
of the Issuer’s common stock, (b) waive any right to receive current cash
payment of interest on the Remaining Notes on the interest payment date under
the Indenture and agree that any interest will continue to accrue until paid,
(c) waive any public reporting and other rights under the Indenture, in each
case as may be necessary or advisable to give effect to the terms set forth in
this Term Sheet and in the Exchange and Consent Agreement, (d) extend the
maturity of the Remaining Notes until June 15, 2024, and (e) to execute and/or
deliver such other documents and agreements and take such other actions as are
customary and reasonably necessary to effectuate the partial redemption of the
Remaining Notes contemplated by this Term Sheet, including consenting to any
amendment or supplement to the Indenture to permit such partial redemption. The
waivers and extensions set forth in clauses (a) through (e) above shall
automatically terminate and be of no further force and effect as if they had
never been provided if the APA is terminated or the Medivir Sale is not
consummated for any reason. Upon the closing of the Medivir Sale, the
Noteholders and the Company will enter into a supplement to the Indenture to
permanently waive or otherwise amend the Indenture to reflect the matters
identified in clauses (a) through (e) above.

 

Holders of Notes will agree to withdraw the Aggregate Converted Amount of Notes
from the facilities of The Depository Trust Company and perform all acts
requested by the Issuer or its counsel in connection with the Exchange and other
transactions contemplated in this Term Sheet.

 

 

 

Timeline

 

The Exchange will be consummated and the Preferred Stock issued as soon as
practicable following the execution of the Exchange and Consent Agreement and in
any event prior to the record date for the shareholders meeting for the approval
of the Medivir Sale.

 

 

 

Securities Considerations

 

The Preferred Stock will be issued in reliance on Section

 

5

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

 

 

 

4(a)(2) and Regulation D under the Securities Act of 1933 and will be
“restricted” upon issuance.

 

The Issuer will delist and deregister the common stock as soon as practicable
following the execution of the Exchange and Consent Agreement.

 

 

 

Other Unsecured Liabilities

 

Other unsecured liabilities of the Issuer shall be as set forth in the budget
attached as Exhibit B hereto and paid with cash on hand of the Issuer as and
when they become payable and in no event later than three (3) business days
following the closing of the Medivir Sale. In no event shall the Closing Cash
Amount be used by the Issuer to pay such unsecured liabilities. In no event
shall the holders of Notes take any action to restrict the payment by the Issuer
of such unsecured liabilities with the Issuer’s current available cash on hand.

 

 

 

Professional Fees

 

The Issuer shall pay the reasonable and documented fees and expenses of one firm
of counsel for holders of Notes, related to the exchange of Note, issuance of
the Preferred Stock and other matters as set forth in this Term Sheet.

 

 

 

Governing Law

 

New York Law.

 

6

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

 

The Noteholders and the Company have caused their respective signature pages to
this Term Sheet to be duly executed as of the date first written above.

 

 

COMPANY

 

 

 

 

 

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

 

 

 

 

 

 

By:

/s/ J. Kevin Buchi

 

 

Name: J. Kevin Buchi

 

 

Title: CEO

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

NOTEHOLDERS

 

 

 

 

 

 

WHITEBOX RELATIVE VALUE PARTNERS L.P.

 

 

 

 

 

 

 

By:

/s/ Mark Strefling

 

 

Name: Mark Strefling

 

 

Title:  Chief Operating Officer and General Counsel

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

NOTEHOLDERS

 

 

 

 

 

 

WHITEBOX MULTI-STRATEGY PARTNERS L.P.

 

 

 

 

 

 

 

By:

/s/ Mark Strefling

 

 

Name: Mark Strefling

 

 

Title:  Chief Operating Officer and General Counsel

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

NOTEHOLDERS

 

 

 

 

 

 

PANDORA SELECT PARTNERS L.P.

 

 

 

 

 

 

 

By:

/s/ Mark Strefling

 

 

Name: Mark Strefling

 

 

Title:  Chief Operating Officer and General Counsel

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

NOTEHOLDERS

 

 

 

 

 

 

WHITEBOX GT FUND L.P.

 

 

 

 

 

 

 

By:

/s/ Mark Strefling

 

 

Name: Mark Strefling

 

 

Title:  Chief Operating Officer and General Counsel

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

LAZARD ASSET MANAGEMENT LLC,

an investment adviser to certain accounts and pooled investment vehicles it
manages

 

 

 

 

 

 

 

By:

 /s/ Gerald B. Mazzari

 

 

Name: Gerald B. Mazzari

 

 

Title:   Chief Operating Officer

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

HIGHBRIDGE INTERNATIONAL LLC

 

 

 

By:  HIGHBRIDGE CAPITAL MANAGEMENT, LLC,

as Trading Manager

 

 

 

 

By:

 /s/ Jason Hempel

 

 

Name:  Jason Hempel

 

 

Title:   Managing Director

 

 

 

 

 

 

 

HIGHBRIDGE TACTICAL CREDIT & CONVERTIBLES MASTER FUND, L.P.

 

 

 

By:  HIGHBRIDGE CAPITAL MANAGEMENT, LLC,

as Trading Manager

 

 

 

By:

 /s/ Jason Hempel

 

 

Name:  Jason Hempel

 

 

Title:   Managing Director

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

GEODE DIVERSIFIED FUND

 

 

 

BY: GEODE CAPITAL MANAGEMENT LP, manager

 

 

 

 

 

 

 

By:

 /s/ Jeffrey S. Miller

 

 

Name: Jeffrey S. Miller

 

 

Title: Chief Operating Officer

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

LINDEN ADVISORS LP

 

 

 

 

 

 

By:

 /s/ Robert G. Lennon

 

 

Name:  Robert G. Lennon

 

 

Title:  Director Legal Research/Analyst

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

NOMURA SECURITIES INTERNATIONAL, INC.

 

 

 

 

 

 

By:

 /s/ Robert Thebault

 

 

Name: Robert Thebault

 

 

Title:  Managing Director

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

TELEMETRY SECURITIES LLC

 

 

 

 

 

 

By:

 /s/ Dan Sommers

 

 

Name:  Dan Sommers

 

 

Title: Portfolio Manager

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

HUDSON BAY MASTER FUND LTD.

 

 

 

BY:  HUDSON BAY CAPITAL MANAGEMENT LTD.

 

 

 

 

 

 

By:

/s/ Roy Astrachan

 

 

Name:   Roy Astrachan

 

 

Title:  Authorized Signatory

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

 

STATE OF NEW JERSEY COMMON PENSION FUND D

 

 

 

 

 

 

By:

/s/ Christopher McDonough

 

 

Name:   Christopher McDonough

 

 

Title:   Director, Division of Investment

 

[Signature Page to Term Sheet for Note Exchange]

 

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

 

EXHIBIT B TO THE TERM SHEET

 

BUDGET

 

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

 

TLOG

Shut-down Costs

Estimated as of 10/29/16

(000s)

 

Severance Proposal - 10/29/16

 

2,153

 

Additional payroll for Oct/Nov/Dec

 

121

 

Lantium - 60 days notice

 

7

 

D&O insurance - 3 year tail

 

490

 

Shareholder vote

 

25

 

Legal fees

 

200

 

Houlihan monthly and transaction fees

 

775

 

Other misc

 

50

 

BOD fees 4Q16

 

75

 

AUS R&D tax refund 2016

 

(50

)

Sale of PA R&D tax credits

 

(150

)

DE Franchise tax refund

 

(36

)

 

 

3,660

 

 

 

 

 

Cash balance at 10/29/16

 

5,334

 

Net liabilities at 10/29/16

 

(152

)

Shut-down costs per above

 

(3,660

)

Net remaining cash at closing

 

1,522

 

 

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EXHIBIT B

 

CERTIFICATE OF DESIGNATION

 

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Exhibit B

 

CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF

TETRALOGIC PHARMACEUTICALS CORPORATION

 

Pursuant to Section 151 of the General Corporation Law of the State of Delaware,
TetraLogic Pharmaceuticals Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the “Corporation”),
in accordance with the provisions of Section 103 thereof, does hereby submit the
following:

 

WHEREAS, the Sixth Amended and Restated Certificate of Incorporation of the
Corporation (the “Certificate of Incorporation”) authorizes the issuance of up
to 25,000,000 shares of preferred stock, par value $0.0001 per share, of the
Corporation (“Preferred Stock”) in one or more series, and expressly authorizes
the Board of Directors of the Corporation (the “Board”), subject to limitations
prescribed by law, to provide, out of the unissued shares of Preferred Stock,
for series of Preferred Stock, and, with respect to each such series, to
establish and fix the number of shares to be included in any series of Preferred
Stock and the designation, rights, preferences, powers, restrictions and
limitations of the shares of such series; and

 

WHEREAS, it is the desire of the Board to establish and fix the number of shares
to be included in a new series of Preferred Stock and the designation, rights,
preferences and limitations of the shares of such new series.

 

NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue
of a series of Preferred Stock and does hereby in this Certificate of
Designation (the “Certificate of Designation”) establish and fix and herein
state and express the designation, rights, preferences, powers, restrictions and
limitations of such series of Preferred Stock as follows:

 

1.              Designation. There shall be a series of Preferred Stock that
shall be designated as “Series A Convertible Participating Preferred Stock” (the
“Series A Preferred Stock”) and the number of Shares constituting such series
shall be 12,222,225. The rights, preferences, powers, restrictions and
limitations of the Series A Preferred Stock shall be as set forth herein.

 

2.              Defined Terms. For purposes hereof, the following terms shall
have the following meanings:

 

“APA” means that certain Asset Purchase Agreement by and among the Corporation,
TetraLogic Research and Development Corporation, a Delaware corporation
(“TetraLogic Research”) and Medivir AB, a company organized under the laws of
Sweden (“Medivir”), dated as of November 2, 2016, as may be amended supplemented
or modified from time to time.

 

“Board” has the meaning set forth in the Recitals.

 

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

 

“Certificate of Designation” has the meaning set forth in the Recitals.

 

“Certificate of Incorporation” has the meaning set forth in the Recitals.

 

“Change of Control” means (a) any sale, lease or transfer or series of sales,
leases or transfers of all or substantially all of the assets of the Corporation
and its Subsidiaries (including the Medivir Sale); (b) any change of control or
other direct or indirect transfer of the Corporation’s securities such that
after such transfer a Person or group of related Persons (other than holders of
Notes and their respective affiliates) would own directly or indirectly fifty
percent (50%) or more of the outstanding voting stock of the Corporation; or
(c) any merger, consolidation, recapitalization or reorganization of the
Corporation with or into another Person (whether or not the Corporation is the
surviving corporation).

 

“Common Stock” means the common stock, par value $0.0001 per share, of the
Corporation.

 

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock, but excluding Options.

 

“Corporation” has the meaning set forth in the Preamble.

 

“Conversion Notice” has the meaning set forth in Section 8.2(a).

 

“Conversion Price” means initially $0.18, subject to adjustments as provided
herein.

 

“Conversion Ratio” means each Share shall equal the quotient obtained by
dividing (x) the Liquidation Amount thereof, by (y) the Conversion price then in
effect, which Conversion Ratio shall initially be equal to one (1), subject to
adjustment as provided herein.

 

“Conversion Shares” means the shares of Common Stock or other capital stock of
the Corporation then issuable upon conversion of the Series A Preferred Stock in
accordance with the terms of Section 8.

 

“Date of Issuance” means, for any Share of Series A Preferred Stock, the date on
which the Corporation initially issues such Share (without regard to any
subsequent transfer of such Share or reissuance of the
certificate(s) representing such Share).

 

“Dividend Payment Date” has the meaning set forth in Section 4.1.

 

“Excluded Issuances” means any issuance or sale by the Corporation after the
Date of Issuance of: (a) shares of Common Stock issued on the conversion of the
Series A Preferred Stock; or (b) shares of Common Stock issued upon the
conversion or exercise of Options or Convertible Securities issued prior to the
Date of Issuance, provided that such securities are not amended on or after the
date hereof to increase the number of shares of Common Stock issuable

 

2

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thereunder, to lower the exercise, conversion or exchange price thereof or to
extend the term thereof.

 

“Junior Securities” means, collectively, the Common Stock and any other class of
securities that is specifically designated as junior to the Series A Preferred
Stock.

 

“Liquidation” has the meaning set forth in Section 5.1.

 

“Liquidation Amount” has the meaning set forth in Section 5.1.

 

“Liquidation Value” means, with respect to any Share on any given date, $0.18
(as adjusted for any stock splits, stock dividends, recapitalizations or similar
transaction with respect to the Series A Preferred Stock).

 

“Medivir Sale” means the sale of certain assets of the Corporation and
TetraLogic Research to Medivir pursuant to the APA.

 

“Notes” means those certain issued and outstanding 8.00% Convertible Senior
Notes due 2019 of the Corporation.

 

“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common capital stock
or equivalent equity security is quoted or listed on the principal trading
market on which the Common Stock is then listed, if any (or, if so elected by a
majority of the then total outstanding Shares of Series A Preferred Stock, any
other market, exchange or quotation system), or, if there is more than one such
Person or such entity, the Person or entity designated by a majority of the then
total outstanding Shares of Series A Preferred Stock or in the absence of such
designation, such Person or entity with the largest public market capitalization
as of the date of consummation of the Change of Control, reorganization or
recapitalization.

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, governmental authority, unincorporated organization, trust,
association or other entity.

 

“Preferred Stock” has the meaning set forth in the Recitals.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations thereunder, which shall be in
effect at the time.

 

“Series A Approval” has the meaning set forth in Section 6.2.

 

“Series A Preferred Stock” has the meaning set forth in Section 1.

 

“Share” means a share of Series A Preferred Stock.

 

3

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“Subsidiary” means, with respect to any Person, any other Person of which a
majority of the outstanding shares or other equity interests having the power to
vote for directors or comparable managers are owned, directly or indirectly, by
the first Person.

 

“Successor Entity” means one or more Person or Persons (or, if so elected by a
majority of the then total outstanding Shares of Series A Preferred Stock, the
Corporation or Parent Entity) formed by, resulting from or surviving any Change
of Control, reorganization or recapitalization or one or more Person or Persons
(or, if so elected by a majority of the then total outstanding Shares of
Series A Preferred Stock, the Corporation or the Parent Entity) with which such
Change of Control, reorganization or recapitalization shall have been entered
into.

 

3.              Rank. With respect to payment of dividends and distribution of
assets upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, all Shares of the Series A Preferred Stock shall rank
senior to all Junior Securities.

 

4.              Dividends.

 

4.1                Accrual and Payment of Dividends. From and after the Date of
Issuance of any Share, cumulative dividends on such Share shall accrue, whether
or not declared by the Board and whether or not there are funds legally
available for the payment of dividends, semi-annually in arrears at the rate of
8% per annum on the sum of the Liquidation Value thereof plus all unpaid accrued
and accumulated dividends thereon. All accrued dividends on any Share shall be
paid in cash only when, as and if declared by the Board out of funds legally
available therefor or upon a Liquidation of the Series A Preferred Stock in
accordance with the provisions of Section 5; provided, that to the extent not
paid on the last day of June and December of each calendar year (each such date,
a “Dividend Payment Date”), all accrued dividends on any Share shall accumulate
and compound on the applicable Dividend Payment Date whether or not declared by
the Board and shall remain accumulated, compounding dividends until paid
pursuant hereto. All accrued and accumulated dividends on the Shares shall be
prior to and in preference to any dividend on any Junior Securities and shall be
fully declared and paid before any dividends are declared and paid, or any other
distributions or redemptions are made, on any Junior Securities.

 

4.2                Participating Dividends. Subject to Section 4.1, in addition
to the dividends accruing on the Series A Preferred Stock pursuant to
Section 4.1 hereof, if the Corporation declares or pays a dividend or
distribution on the Common Stock, whether such dividend or distribution is
payable in cash, securities or other property, including the purchase or
redemption by the Corporation or any of its Subsidiaries of shares of Common
Stock for cash, securities or property, but excluding repurchases at cost of
Common Stock held by employees or consultants of the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase, the Corporation shall simultaneously declare and pay a dividend
on the Series A Preferred Stock on a pro rata basis with the Common Stock
determined on an as-converted basis assuming all Shares had been converted
pursuant to Section 8 as of immediately prior to the

 

4

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

 

record date of the applicable dividend (or if no record date is fixed, the date
as of which the record holders of Common Stock entitled to such dividends are to
be determined).

 

4.3                Partial Dividend Payments. Except as otherwise provided
herein, if at any time the Corporation pays less than the total amount of
dividends then accrued and accumulated with respect to the Series A Preferred
Stock, such payment shall be distributed pro rata among the holders thereof
based upon the aggregate accrued and accumulated but unpaid dividends on the
Shares held by each such holder.

 

5.              Liquidation.

 

5.1                Series A Preferred Stock. In the event of any voluntary or
involuntary liquidation, dissolution, winding up or Change of Control of the
Corporation (collectively, a “Liquidation”), the holders of Shares of Series A
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation legally available for distribution to its stockholders after
(i) taking into account the costs of Liquidation and after (ii) all outstanding
payments on the Notes have been made in full, but before any payment shall be
made to the holders of Junior Securities by reason of their ownership thereof,
an amount in cash equal to the aggregate Liquidation Value of all Shares held by
such holders, plus all unpaid accrued and accumulated dividends on all such
Shares (whether or not declared) (the “Liquidation Amount”).  If, in any
Liquidation, the amount of consideration received by the Corporation or its
Subsidiaries in such Liquidation is in the form of milestone payments or
earn-outs, such amounts (net of costs of Liquidation) shall be promptly
distributed first on the Notes until all outstanding amounts due under the Notes
are paid in full and then to the holders of Series A Preferred Stock as and when
received by the Corporation or its Subsidiaries until the Liquidation Amount
owed to such holders is paid in full.

 

5.2                Miscellaneous.

 

(a)                Participation With Junior Securities on Liquidation. In
addition to and after payment in full of all preferential amounts required to be
paid to the holders of Series A Preferred Stock upon a Liquidation under this
Section 5, the holders of Shares of Series A Preferred Stock then outstanding
shall be entitled to participate with the holders of shares of Junior Securities
then outstanding, pro rata as a single class based on the number of outstanding
shares of Junior Securities on an as-converted basis held by each holder as of
immediately prior to the Liquidation, in the distribution of all the remaining
assets and funds of the Corporation available for distribution to its
stockholders.

 

(b)                Insufficient Assets. If upon any Liquidation the remaining
assets of the Corporation available for distribution to its stockholders shall
be insufficient to pay the holders of the Shares of Series A Preferred Stock the
full preferential amount to which they are entitled under Section 5.1, (i) the
holders of the Shares shall share ratably in any distribution of the remaining
assets and funds of the Corporation in proportion to their respective full
preferential amounts which would otherwise be payable in respect of the Series A
Preferred Stock in the aggregate upon such

 

5

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

 

Liquidation if all amounts payable on or with respect to such Shares were paid
in full, and (ii) the Corporation shall not make or agree to make any payments
to the holders of Junior Securities.

 

6.              Voting.

 

6.1                Voting Generally. Each holder of outstanding Shares of
Series A Preferred Stock shall be entitled to vote with holders of outstanding
shares of Common Stock, voting together as a single class, with respect to any
and all matters presented to the stockholders of the Corporation for their
action or consideration (whether at a meeting of stockholders of the
Corporation, by written consent of stockholders in lieu of a meeting to the
extent permitted by the Corporation’s bylaws, as may be amended and restated
from time to time, or otherwise), except as provided by law or by the provisions
of Section 6.2 below. In any such vote, each Share of Series A Preferred Stock
shall be entitled to a number of votes equal to the number of shares of Common
Stock into which the Share is or would be without taking into account any
limitations or pre-requisites to convertibility as set forth in Section 8,
convertible pursuant to Section 7 herein as of the record date for such vote or
written consent or, if there is no specified record date, as of the date of such
vote or written consent. Each holder of outstanding Shares of Series A Preferred
Stock shall be entitled to notice of all stockholder meetings (or requests for
written consent) given to the holders of Common Stock in accordance with the
Corporation’s bylaws, as may be amended and restated from time to time.

 

6.2                Other Special Voting Rights. Without the prior written
consent of holders of not less than a majority of the then total outstanding
Shares of Series A Preferred Stock (a “Series A Approval”), voting separately as
a single class with one vote per Share, in person or by proxy, either in writing
without a meeting or at an annual or a special meeting of such holders, and any
other applicable stockholder approval requirements required by law, the
Corporation shall not take, and shall cause its Subsidiaries not to take or
consummate, any of the actions or transactions described in this Section 6.2
(any such action or transaction without such prior written consent being null
and void ab initio and of no force or effect) as follows:

 

(a)                create, or authorize the creation of, any additional class or
series of capital stock of the Corporation (or any security convertible into or
exercisable for any class or series of capital stock of the Corporation) or
issue or sell, or obligate itself to issue or sell, any securities of the
Corporation or any Subsidiary of the Corporation (or any security convertible
into or exercisable for any class or series of capital stock of the Corporation
or any Subsidiary of the Corporation), including any class or series of capital
stock of the Corporation that ranks superior to or in parity with the Series A
Preferred Stock in rights, preferences or privileges (including with respect to
dividends, liquidation, redemption or voting);

 

(b)                (A) reclassify, alter or amend any existing security of the
Corporation that is pari passu with the Series A Preferred Stock in respect of
the distribution of assets on the Liquidation of the Corporation, the payment of
dividends, anti-dilution protections, or rights of redemption, if such
reclassification, alteration or amendment would render such other security
senior to the Series A Preferred Stock in respect of any such right, preference
or privilege, or (B) reclassify,

 

6

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

 

alter or amend any existing security of the Corporation that is junior to the
Series A Preferred Stock in respect of the distribution of assets on the
Liquidation of the Corporation, the payment of dividends, anti-dilution
protections, or rights of redemption, if such reclassification, alteration or
amendment would render such other security senior to or pari passu with the
Series A Preferred Stock in respect of any such right, preference or privilege;

 

(c)                 increase or decrease the number of authorized shares of any
series of Preferred Stock or authorize the issuance of or issue any share of
Preferred Stock;

 

(d)                other than as contemplated by this Certificate of
Designation, amend, alter, modify or repeal the Certificate of Incorporation,
this Certificate of Designation or the by-laws of the Corporation, including the
amendment of the Certificate of Incorporation by the adoption or amendment of
any Certificate of Designation or similar document, or amend the organizational
documents of any Subsidiary of the Corporation;

 

(e)                 incur or issue, or cause any Subsidiary of the Corporation
to incur or issue, any indebtedness or debt security, other than trade accounts
payable and/or letters of credit, performance bonds or other similar credit
support incurred in the ordinary course of business, or amend, renew, refinance,
increase or otherwise alter in any material respect the terms of any
indebtedness previously approved or required to be approved by the holders of
the Series A Preferred Stock;

 

(f)                  redeem, purchase or otherwise acquire or pay or declare any
dividend or other distribution on (or pay into or set aside for a sinking fund
for any such purpose) any capital stock of the Corporation other than (i) with
respect to the Series A Preferred Stock in accordance with this Certificate of
Designation and (ii) as provided in Section 5;

 

(g)                 conduct any business other than (i) taking such specific
actions necessary and appropriate or otherwise reasonably related to the
exercise and enforcement of the Corporation’s or its Subsidiaries’ rights
arising under the APA and other contractual agreements and arrangements to which
the Corporation or any of its Subsidiaries is a party or is bound or any of
their respective assets is subjected; or (ii) actions reasonably related to the
furtherance and or implementation of the transactions contemplated by the APA;

 

(h)                increase or decrease the size of the Board of Directors of
the Corporation;

 

(i)                    declare bankruptcy, dissolve, liquidate or wind up the
affairs of the Corporation or any Subsidiary of the Corporation;

 

(j)                   effect, or enter into any agreement to effect, a Change of
Control except for the Medivir Sale;

 

(k)                acquire, or cause a Subsidiary of the Corporation to acquire,
in any transaction or series of related transactions, the stock or any material
assets of another Person, or enter into any joint venture with any other Person;

 

7

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

 

(l)                    sell, transfer, license, lease or otherwise dispose of,
in any transaction or series of related transactions, any assets of the
Corporation or any Subsidiary of the Corporation, including the sale, transfer,
license, lease, assignment or other disposition of the APA or any of the
Corporation’s rights arising thereunder, but excluding the payment of trade
payables in the ordinary course and other payments under contractual agreements
and arrangements to which the Corporation or any Subsidiary of the Corporation
is a party or is bound or any of their respective assets is subjected, including
under the APA;

 

(m)            enter into, or become subject to, any agreement or instrument or
other obligation which by its terms restricts the Corporation’s ability to
perform its obligations under this Certificate of Designation, including the
ability of the Corporation to pay dividends or make any redemption or other
liquidation payment required hereunder;

 

(n)                (A) list any of the Corporation’s securities on any exchange,
or (B) register any such under the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder) (the “Exchange
Act”); and

 

(o)                agree or commit (in writing or otherwise) to do any of the
foregoing.

 

7.              Redemption.  The Series A Preferred Stock shall not be
redeemable.

 

8.              Conversion.

 

8.1                Right to Convert. Subject to the provisions of this
Section 8, each Share, shall, at the option of each holder of Series A Preferred
Stock at any time and from time to time on or after the Date of Issuance, be
converted into such number shares of Common Stock as determined by the
Conversion Ratio; provided however, that such right may only be exercised during
the period commencing on the business day immediately following the later of the
date upon which (i) the shares of Common Stock have been deregistered under the
Exchange Act, and (ii) the Corporation receives a milestone or earn-out payment
pursuant to Section 3.2 or Section 3.3 of the APA (or other payment in lieu
thereof).

 

8.2                Procedures for Conversion; Effect of Conversion

 

(a)                Procedures for Holder Conversion. In order to effectuate a
conversion of Shares of Series A Preferred Stock pursuant to Section 8.1, a
holder shall (a) submit a written election to the Corporation that such holder
elects to convert Shares, and the number of Shares elected to be converted (a
“Conversion Notice”) and (b) if the Shares are certificated, surrender, along
with such written election, to the Corporation the certificate or certificates
representing the Shares being converted, duly assigned or endorsed for transfer
to the Corporation (or accompanied by duly executed stock powers relating
thereto) or, in the event the certificate or certificates are lost, stolen or
missing, accompanied by an affidavit of loss executed by the holder and an
agreement reasonably acceptable to the Corporation to indemnify the Corporation
against any claim that may be made against the Corporation on account of the
alleged loss, theft or destruction of such

 

8

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

 

certificate, in each case, as soon as practicable following the delivery of such
Conversion Notice to the Corporation. The conversion of such Shares hereunder
shall be deemed effective as of the date of surrender of such Series A Preferred
Stock certificate or certificates or delivery of such affidavit of loss or
cancellation of the Shares on the books and records of the registrar for the
Shares if the Shares are not certificated. Upon the receipt by the Corporation
of a written election and, if applicable, the surrender of such
certificate(s) and accompanying materials, the Corporation shall as promptly as
practicable (but in any event within ten (10) days thereafter) deliver to the
relevant holder (a) a certificate in such holder’s name (or the name of such
holder’s designee as stated in the written election) for the number of shares of
Common Stock (including any fractional share) to which such holder shall be
entitled upon conversion of the applicable Shares as calculated pursuant to
Section 8.1 and, if applicable (b) a certificate in such holder’s (or the name
of such holder’s designee as stated in the written election) for the number of
Shares of Series A Preferred Stock (including any fractional share) represented
by the certificate or certificates delivered to the Corporation for conversion
but otherwise not elected to be converted pursuant to the written election. All
shares of capital stock issued hereunder by the Corporation shall be duly and
validly issued, fully paid and nonassessable, free and clear of all taxes,
liens, charges and encumbrances with respect to the issuance thereof.

 

(b)                Effect of Conversion. All Shares of Series A Preferred Stock
converted as provided in this Section 8.1 shall no longer be deemed outstanding
as of the effective time of the applicable conversion and all rights with
respect to such Shares shall immediately cease and terminate as of such time,
other than the right of the holder to receive shares of Common Stock in exchange
therefor.

 

8.3                Reservation of Stock. The Corporation shall at all times when
any Shares of Series A Preferred Stock are outstanding reserve and keep
available out of its authorized but unissued shares of capital stock, solely for
the purpose of issuance upon the conversion of the Series A Preferred Stock,
such number of shares of Common Stock issuable upon the conversion of all
outstanding Series A Preferred Stock pursuant to this Section 8, taking into
account any adjustment to such number of shares so issuable in accordance with
Section 8.5 hereof. The Corporation shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Corporation upon each such issuance). The
Corporation shall not close its books against the transfer of any of its capital
stock in any manner which would prevent the timely conversion of the Shares of
Series A Preferred Stock.

 

8.4                No Charge or Payment. The issuance of certificates for shares
of Common Stock upon conversion of Shares of Series A Preferred Stock pursuant
to Section 8.1 shall be made without payment of additional consideration by, or
other charge, cost or tax to, the holder in respect thereof; provided, however,
that the Corporation shall not be required to pay any taxes payable in respect
of any transfer involved in the issuance or delivery of any certificate for such
shares in a

 

9

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

 

name other than that of the holder of the Shares of Series A Preferred Stock in
respect of which such shares are being issued.

 

8.5                Adjustment to Conversion Ratio. In order to prevent dilution
of the conversion rights granted under this Section 8, the Conversion Ratio
shall be subject to adjustment from time to time as provided in this Section 8.

 

(a)                Adjustments for Issuance of Common Stock. Except as provided
in Section 8.5(b) and except in the case of an event described in either
Section 8.5(c), Section 8.5(d), Section 8.5(e), of Section 8.5(f), if the
Corporation shall, at any time or from time to time after the Date of Issuance,
issue or sell any shares of Common Stock without consideration or for
consideration per share less the Liquidation Amount, then immediately upon such
issuance or sale, the Conversion Ratio in effect immediately prior to such
issuance or sale shall be reduced (and in no event increased) to a Conversion
Ratio to proportionately reflect such issuance of Common Stock. Whenever
following the Date of Issuance, the Corporation shall issue or sell any shares
of Common Stock, the Corporation shall prepare a certificate signed by an
executive officer setting forth, in reasonable detail, the number of shares
issued or sold, or deemed issued or sold, the amount and the form of the
consideration received by the Corporation and the method of computation of such
amount and shall cause copies of such certificate to be mailed to the holders of
record of Series A Preferred Stock at the address specified for such holder in
the books and records of the Corporation (or at such other address as may be
provided to the Corporation in writing by such holder).

 

(b)                Exceptions To Adjustment Upon Issuance of Common Stock.
Anything herein to the contrary notwithstanding, there shall be no adjustment to
the Conversion Price or the number of Conversion Shares issuable upon conversion
of the Series A Preferred Stock with respect to any Excluded Issuance.

 

(c)                 Adjustments for Subdivisions or Combinations of Common
Stock.  In the event the outstanding shares of Common Stock shall be subdivided
(by any subdivision, combination of shares or recapitalization, stock dividends,
stock splits or otherwise) into a greater number of shares of Common Stock, the
Conversion Ratio then in effect for Series A Preferred Stock shall, concurrently
with the effectiveness of such subdivision, be proportionately decreased based
on the ratio of (A) the total number of shares of Common Stock outstanding
immediately prior to such subdivision to (B) the total number of shares of
Common Stock outstanding immediately after such subdivision.  In the event the
outstanding shares of Common Stock shall be combined or consolidated by
reclassification or otherwise into a lesser number of shares of Common Stock,
the Conversion Ratio then in effect for the Series A Preferred Stock shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased on the same basis.

 

(d)                Adjustments for Recapitalization, Reclassification, Exchange
and Substitution.  If at any time or from time to time the Common Stock issuable
upon conversion of the Series A Preferred Stock shall be changed into the same
or a different number of shares of any other class

 

10

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

 

or classes of stock, whether by recapitalization, capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 8.5(a) above), then, concurrently with the effectiveness
of such recapitalization, reorganization or reclassification, the Shares of
Series A Preferred Stock shall thereafter be convertible into, in lieu of the
number of shares of Common Stock which the holders thereof would have been
entitled to receive prior to such recapitalization, reorganization or
reclassification, a number of shares of such other class or classes of stock
equivalent to the number of shares of such other class or classes of stock that
a holder of the number of shares of Common Stock into which shares of the
Series A Preferred Stock would have been converted immediately before such
recapitalization, reorganization or reclassification would have received in
connection with such recapitalization, reorganization or reclassification.  In
addition, to the extent applicable in any reorganization or recapitalization,
provision shall be made so that the holders of shares of the Series A Preferred
Stock shall thereafter be entitled to receive upon conversion of such shares the
number of shares of stock or other securities or property of the Corporation or
otherwise, to which a holder of the number of shares of Common Stock deliverable
upon conversion of shares of the Series A Preferred Stock immediately prior to
such recapitalization or reorganization would have been entitled on such
reorganization or recapitalization (but taking into account the relative value
of the shares of Common Stock pursuant to such recapitalization or
reorganization and the value of such shares of capital stock, such adjustments
to the number of shares of capital stock and such conversion price being for the
purpose of protecting the economic value of the Shares of Series A Preferred
Stock immediately prior to the occurrence or consummation of such
recapitalization or reorganization).  Upon the occurrence or consummation of any
event provided under clause (b) or (c) of the definition of Change of Control,
it shall be a required condition to the occurrence or consummation of any such
transaction that, the Corporation and the Successor Entity or Successor
Entities, jointly and severally, shall succeed to, and the Corporation shall
cause any Successor Entity or Successor Entities to jointly and severally
succeed to, and be added to the term “Corporation” under this Certificate of
Designation (so that from and after the date of such transaction, each and every
provision of this Certificate of Designation referring to the “Corporation”
shall refer instead to each of the Corporation and the Successor Entity or
Successor Entities, jointly and severally), and the Corporation and the
Successor Entity or Successor Entities, jointly and severally, may exercise
every right and power of the Corporation prior thereto and shall assume all of
the obligations of the Corporation prior thereto under this Certificate of
Designation with the same effect as if the Corporation and such Successor Entity
or Successor Entities, jointly and severally, had been named as the Corporation
in this Certificate of Designation.

 

(e)                 Adjustment for Certain Dividends and Distributions.  In the
event the Corporation at any time or from time to time after Date of Issuance
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable on
the Common Stock in additional shares of Common Stock, then and in each such
event the Conversion Ratio in effect immediately before such event shall be
proportionately reduced as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date. Notwithstanding the foregoing

 

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(i) if such record date shall have been fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed therefor, the
Conversion Ratio shall be recomputed accordingly as of the close of business on
such record date and thereafter the Conversion Ratio shall be adjusted pursuant
to this subsection as of the time of actual payment of such dividends or
distributions; and (ii) no such adjustment shall be made if the holders of
Series A Preferred Stock simultaneously receive a dividend or other distribution
of shares of Common Stock in a number equal to the number of shares of Common
Stock as they would have received if all outstanding Shares of Series A
Preferred Stock had been converted into Common Stock on the date of such event.

 

(f)                  Adjustments for Other Dividends and Distributions.  In the
event the Corporation at any time or from time to time after the Date of
Issuance shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation (other than a distribution of shares of
Common Stock in respect of outstanding shares of Common Stock) or in other
property and the provisions of Section 8.5(e) do not apply to such dividend or
distribution, then and in each such event the holders of Series A Preferred
Stock shall receive, simultaneously with the distribution to the holders of
Common Stock, a dividend or other distribution of such securities or other
property in an amount equal to the amount of such securities or other property
as they would have received if all outstanding Shares of Series A Preferred
Stock had been converted into Common Stock on the date of such event.

 

(g)                 Certain Events. If any event of the type contemplated by the
provisions of this Section 8.5 but not expressly provided for by such provisions
occurs, then the Board shall make an appropriate adjustment in the Conversion
Ratio and the number of Conversion Shares issuable upon conversion of Shares of
Series A Preferred Stock so as to protect the rights of the holder of such
Shares in a manner consistent with the provisions of this Section 8; provided,
that no such adjustment pursuant to this Section 8.5 shall increase the
Conversion Ratio or decrease the number of Conversion Shares issuable as
otherwise determined pursuant to this Section 8.

 

(h)                Certificate as to Adjustment.

 

(i)                    As promptly as reasonably practicable following any
adjustment of the Conversion Ratio, but in any event not later than ten
(10) days thereafter, the Corporation shall furnish to each holder of record of
Series A Preferred Stock at the address specified for such holder in the books
and records of the Corporation (or at such other address as may be provided to
the Corporation in writing by such holder) a certificate of an executive officer
setting forth in reasonable detail such adjustment and the facts upon which it
is based and certifying the calculation thereof.

 

(ii)                 As promptly as reasonably practicable following the receipt
by the Corporation of a written request by any holder of Series A Preferred
Stock, but in any event not later than ten (10) days thereafter, the Corporation
shall

 

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furnish to such holder a certificate of an executive officer certifying the
Conversion Ratio then in effect and the number of Conversion Shares or the
amount, if any, of other shares of stock, securities or assets then issuable to
such holder upon conversion of the Shares of Series A Preferred Stock held by
such holder.

 

9.              Notices.

 

9.1                In the event:

 

(a)                that the Corporation shall take a record of the holders of
its Common Stock (or other capital stock or securities at the time issuable upon
conversion of the Series A Preferred Stock) for the purpose of entitling or
enabling them to receive any dividend or other distribution, to vote at a
meeting (or by written consent), to receive any right to subscribe for or
purchase any shares of capital stock of any class or any other securities, or to
receive any other security; or

 

(b)                of any capital reorganization of the Corporation, any
reclassification of the Common Stock of the Corporation, any consolidation or
merger of the Corporation with or into another Person, or sale of all or
substantially all of the Corporation’s assets to another Person (other than the
Medivir Sale); or

 

(c)                 of the voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation;

 

then, and in each such case, the Corporation shall send or cause to be sent to
each holder of record of Series A Preferred Stock at the address specified for
such holder in the books and records of the Corporation (or at such other
address as may be provided to the Corporation in writing by such holder) at
least twenty (20) days prior to the applicable record date or the applicable
expected effective date, as the case may be, for the event, a written notice
specifying, as the case may be, (A) the record date for such dividend,
distribution, meeting or consent or other right or action, and a description of
such dividend, distribution or other right or action to be taken at such meeting
or by written consent, or (B) the effective date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up is proposed to take place, and the date, if any is to be fixed, as of
which the books of the Corporation shall close or a record shall be taken with
respect to which the holders of record of Common Stock (or such other capital
stock or securities at the time issuable upon conversion of the Series A
Preferred Stock) shall be entitled to exchange their shares of Common Stock (or
such other capital stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, and the amount per share and
character of such exchange applicable to the Series A Preferred Stock and the
Conversion Shares. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give written notice to each
holder of Shares of such material change.

 

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9.2                Notice Mechanics. Except as otherwise provided herein, all
notices, requests, consents, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been given: (a) when
delivered by hand (with written confirmation of receipt); (b) when received by
the addressee if sent by a nationally recognized overnight courier (receipt
requested); (c) on the date sent by facsimile or e-mail of a PDF document (with
confirmation of transmission) if sent during normal business hours of the
recipient, and on the next business day if sent after normal business hours of
the recipient; or (d) on the third day after the date mailed, by certified or
registered mail, return receipt requested, postage prepaid. Such communications
must be sent (x) to the Corporation, at its principal executive offices and
(y) to any stockholder, at such holder’s address at it appears in the stock
records of the Corporation (or at such other address for a stockholder as shall
be specified in a notice given in accordance with this Section 9).

 

10.       Reissuance of Series A Preferred Stock. Any Shares of Series A
Preferred Stock redeemed, converted or otherwise acquired by the Corporation or
any Subsidiary of the Corporation shall be cancelled and retired as authorized
and issued shares of capital stock of the Corporation and no such Shares shall
thereafter be reissued, sold or transferred.

 

11.       Amendment and Waiver. No provision of this Certificate of Designation
may be amended, modified or waived except by an instrument in writing executed
by the Corporation and a Series A Approval, and any such written amendment,
modification or waiver will be binding upon the Corporation and each holder of
Series A Preferred Stock; provided, that no amendment, modification or waiver of
the terms or relative priorities of the Series A Preferred Stock may be
accomplished by the merger, consolidation or other transaction of the
Corporation with another corporation or entity unless the Corporation has
obtained the prior written consent of the holders in accordance with this
Section 11.

 

12.       Noncircumvention. The Corporation hereby covenants and agrees that the
Corporation will not, by amendment of its Certificate of Incorporation, Bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Certificate of Designation, and will at all times in good faith carry
out all of the provisions of this Certificate of Designation and take all action
as may be required to protect the rights of the holders of Shares of Series A
Preferred Stock.  Without limiting the generality of the foregoing, the
Corporation (i) shall not increase the par value of any shares of Common Stock
receivable upon the conversion of this Certificate of Designation above the
Conversion Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the conversion of
the Shares of Series A Preferred Stock, and (iii) shall, so long as any Shares
of Series A Preferred Stock are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the Shares of
Series A Preferred Stock, the number of

 

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shares of Common Stock set forth in Section 8.3 to effect the conversion of the
Shares of Series A Preferred Stock then outstanding.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the
Corporation by its Chief Executive Officer this    th day of November, 2016.

 

 

TetraLogic Pharmaceuticals Corporation

 

 

 

 

 

 

By:

 

 

Name: Kevin Buchi

 

Title: Chief Executive Officer

 

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