EXHIBIT 10.4

 

ROYALTY AGREEMENT

(Revised May 1, 2017)

 

This Royalty Agreement (this "Agreement") is entered into effective as of *Date*
(the "Effective Date") by and between Caretta Therapeutics, LLC (the "Company"),
and *Print* (the “Subscriber”).

 

WHEREAS, pursuant to that certain Subscription Agreement (Revised Offering May
1, 2017) dated as of the date hereof for the purchase of certain convertible
notes (the “Convertible Notes”), it is contemplated that the Company will pay
Subscriber a royalty based on sales of the Company’s prospective Venodol product
as set forth herein.

 

NOW, THEREFORE, the parties agree as follows:

 

1. Royalty. During Subscriber’s Royalty Term, the Company will pay the
Subscriber a royalty calculated in the manner set forth on Schedule A to this
Agreement, subject to the Maximum Royalty Amount as set forth on Schedule A (the
"Royalty"), and payable as set forth in Section 3.

 

2. Term. The “Royalty Term” for Subscriber shall mean the period beginning on
October 1, 2018, and ending on the date set forth on the table on Schedule B.
Notwithstanding the forgoing, the Royalty Term shall terminate upon the payment
to Subscriber of the Maximum Royalty Amount.

 

3. Payment Terms and Report. The Company will pay the foregoing Royalty payments
to the Subscriber within thirty (30) days after the end of each calendar
quarter. The Company will provide the Subscriber with an quarterly report that
details the calculation of Royalty payments.

 

4. Miscellaneous.

 

4.1 Notice. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party), or (c) one (1) business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

 

To the Company:

 

Caretta Therapeutics, LLC

11147 Aurora Avenue, Building 3

Urbandale, Iowa 50322

Attention: President

Telephone: (515) 274-9087

 

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If to the Subscriber, to its address and facsimile number set forth at the end
of this Agreement, or to such other address and/or facsimile number and/or to
the attention of such other person as specified by written notice given to the
Company five (5) business days prior to the effectiveness of such change.
Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (a), (b) or (c) above, respectively.

 

4.2 Entire Agreement; Amendment; Waiver. This Agreement supersedes all other
prior oral or written agreements between the Subscriber, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Subscriber makes any representation,
warranty, covenant or undertaking with respect to such matters.

 

4.3 Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

4.4 Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of Iowa, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Iowa or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of Iowa. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in Polk County, Iowa for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party hereby irrevocably waives any right it may
have, and agrees not to request, a jury trial for the adjudication of any
dispute hereunder or in connection with or arising out of this Agreement or any
transaction contemplated hereby.

 

4.5 Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

 

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4.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns. The
Subscriber shall not assign its rights hereunder without the consent of the
Company, which consent shall not be unreasonably withheld.

 

4.7 No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

4.8 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

4.9 Legal Effect. The Subscriber acknowledges that: (a) it has read this
Agreement and the exhibits hereto; and (b) it understands the terms and
consequences of this Agreement and is fully aware of its legal and binding
effect.

 

4.10 No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

4.11 Independent Legal Advice. The parties hereto acknowledge that they have
each received independent legal advice with respect to the terms of this
Agreement and the transactions contemplated herein or have knowingly and
willingly elected not to do so

 

4.12 Counterparts. This Agreement may be executed in two or more counterparts
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

[Signatures on following page]

 

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WHEREAS, the parties have entered into this Royalty Agreement as of the date
hereof.

 

CARETTA THERAPEUTICS, LLC

    By:

Name:

John M. Krohn   Title: President        

SUBSCRIBER

 

 

 

 

By:

 

 

Name:

*Print*

 

Address:

*Address*

 

 

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SCHEDULE A

 

Subscriber: *Print*

 

Your Royalty Information

 

Your Investment Amount

Your Royalty Term

Maximum Royalty Amount ($)

*Amount*

October 1, 2018 to *RoyTerm*

*MaxRoyalty*

 

Subscriber’s Royalty for a particular Royalty Period shall be calculated as
follows: (a) the Royalty Pool accrued for the applicable Royalty Period,
multiplied by (b) Subscriber’s Royalty Percentage for the applicable Royalty
Period.

 

For purposes of this Agreement, the following definitions shall apply:

 

“Affiliated Investment Amount” shall mean the aggregate Investment Amounts of
(i) Subscriber and Subscriber’s spouse, (ii) their parents, children, and
grandchildren, (iii) entities where the individuals described in subsections (i)
and (ii) hold a majority of the outstanding equity interests and voting
interests, (iv) revocable trusts formed by the individuals described in
subsections (i) and (ii), (v) irrevocable trusts where substantially all of the
beneficiaries are individuals described in subsections (i) and (ii), and (vi)
retirement accounts for the benefit of individuals described in subsections (i)
and (ii).

 

“Investment Amount” shall mean the total principal amount of Convertible Notes
purchased from the Company.

 

“Maximum Royalty Amount” means the Investment Amount multiplied by Max Royalty
Multiple set forth on the table below. The Max Royalty Multiple shall be
determined by using the Affiliated Investment Amount.

 

“OTC Roll-On Venodol” shall mean any venom-based analgesic produced by the
Company that is available for sale over-the-counter and is distributed in
roll-on packaging, regardless of the size of the packaging.

 

“OTC Oral Venodol” shall mean any venom-based analgesic produced by the Company
that is available for sale over-the-counter and is distributed and packaged for
oral ingestion, regardless of the size of the packaging.

 

“Prescription Strength Venodol” shall mean any venom-based analgesic produced by
the Company that is available for sale only with a prescription from a licensed
physician, regardless of the method of use and size of packaging.

 

“Royalty Percentage” shall mean, for each Royalty Period, (i) Subscriber’s
Investment Amount divided by (ii) the aggregate Investment Amounts of all
subscribers that have entered into a Royalty Agreement and whose Royalty Terms
include the applicable Royalty Period.

 

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“Royalty Period” shall mean a calendar quarter during the Royalty Term.

 

“Royalty Pool” shall mean the aggregate of (i) $0.60 for each unit of OTC
Roll-On Venodol sold, (ii) $0.60 for each unit of OTC Oral Venodol sold, and
(iii) $0.80 for each unit of Prescription Strength Venodol sold during the
relevant Royalty Period. The number of units sold during the relevant period
shall mean the number of individual products sold by the Company during such
period, less any returns received during such period. For purposes of clarity,
multi-pack products shall count as multiple units based on the number of
included units of product (i.e. a bulk package of 6 OTC Roll-On Venodol bottles
shall constitute 6 units).

 

“Royalty Term” shall mean the period beginning on October 1, 2018 and ending on
the date set forth on the following table for the Subscriber’s Affiliated
Investment Amount.

 

Affiliated Investment Amount

Royalty Term End Date

Max Royalty Multiple

At least

But less than

$25,000

$50,000

12/31/2023

4.00

$50,000

$100,000

12/31/2023

5.00

$100,000

$150,000

12/31/2023

6.00

$150,000

$200,000

12/31/2023

7.00

$200,000

$250,000

9/31/2024

8.00

$250,000

$300,000

9/31/2024

9.00

$300,000

$350,000

9/31/2024

10.00

$350,000

$400,000

9/31/2024

11.00

$400,000

$500,000

9/31/2024

12.00

$500,000

$600,000

3/31/2025

12.25

$600,000

$700,000

3/31/2025

12.50

$700,000

$800,000

3/31/2025

12.75

$800,000

$900,000

3/31/2025

13.00

$900,000

$1,000,000

3/31/2025

13.25

$1,000,000

$1,200,000

9/31/2025

13.50

$1,200,000

$1,400,000

9/31/2025

13.75

$1,400,000

$1,600,000

3/31/2026

14.00

$1,600,000

$1,800,000

3/31/2026

14.25

$1,800,000

$2,000,000

9/31/2026

14.50

$2,000,000

9/31/2026

15.00

 

 

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