Exhibit 10.3

 

  REDACTED   Certain identified information, indicated by [***], has been
excluded from the exhibit because it is both (i) not material and (ii) would
likely cause competitive harm if publicly disclosed.

 

 

 

ASSET PURCHASE AGREEMENT

 

 

by and between

 

1.4SC AG, with registered seat at Am Klopferspitz 19a, 82152 Martinsried,
Germany, registered in the commercial register of the local court of Munich
under HRB 132917, represented by its management board [and supervisory board]

 

- “4SC” or “Seller” -

 

and

 

2.Immunic AG (currently Blitz 16-571 AG), with registered seat at Am
Klopferspitz 19, 82152 Planegg-Martinsried, Germany, registered in commercial
register of the local court of Munich under HRB 223333, represented by its
management board [and supervisory board]

 

- “Immunic” or “Purchaser” -

 

- 4SC and Immunic hereinafter also referred to as “Parties” and each as “Party”
-

 

 

 

 

Table of Content

 

RECITALS 3 Section 1 Option to the Sale and Transfer of Assets 3 Section 2 Sale
and Transfer of Panoptes Agreements 6 Section 3 Option Right of Purchaser 6
Section 4 Excluded Assets and Agreements; No Transfer of Employment
Relationships and No Transfer of Insurance Agreements 7 Section 5  Purchase
Price 7 Section 6  Warranties 13 Section 7 Additional Provisions on Transfer of
Sold Assets and Sold Agreements 15 Section 8 Non-Compete, Non-Solicitation,
Confidentiality 15 Section 9 Miscellaneous 16

 

 

 

 

RECITALS

 

WHEREAS, 4SC is an innovative biotech company with a strong focus on research
and development listed on the Prime Standard of the Frankfurt Stock Exchange
since December 2005.

 

WHEREAS, 4SC discovers and develops targeted small molecule drugs for the
treatment of cancer and autoimmune diseases in indications with a high unmet
medical need and major economic potential. 4SC’s product pipeline comprises
promising drug programs at various stages of clinical development, as well as
early-stage research projects. Certain results of those research projects are
the products [***] (collectively “Sold Projects”) which comprise a number of
patents, patent applications, know-how and project related materials.

 

WHEREAS, 4SC (through the Seller’s 100% subsidiary 4SC Discovery GmbH) has
entered into a Patent and Know How Assignment Agreement as well as a separate
Patent License Agreement with Panoptes Pharma GmbH, each on July 2, 2013, in
regards to certain know-how and patent rights relating to developing and
commercializing the chemical compound [***] (collectively “Panoptes
Agreements”). The Panoptes Agreements are attached hereto as Annex R.

 

WHEREAS, Immunic intends to acquire from 4SC and 4SC intends to sell to Immunic
certain assets, in particular the Sold Projects, and related rights in
accordance with the terms and conditions of this asset purchase agreement
(hereinafter “APA”).

 

NOW THEREFORE, the Parties agree as follows:

 

Section 1
Option to the Sale and Transfer of Assets

 

1.The Seller hereby sells to the Purchaser, with economic effect as from the
date of payment of Tranche 1 (as defined in Section 5 below) (the “Effective
Date”), the assets described in this Section para. 1 lit. (a) through lit. (c)
irrespective of how they are shown in the balance sheets of the Seller and
whether or not they have to be shown in such balance sheets (together the “Sold
Assets”), if and to the extent the respective Sold Asset is owned by the Seller:

 

(a)The (i) rights to all patent applications and patents listed in Annex 1
hereto, and any and all reissues, substitutions, continuations, divisions,
continuations-in-part applications, as well as patents granted on the
aforementioned patent applications and/or patents and (ii) the right to apply
for and register trademarks on the Sold Projects and/or Sold Assets (altogether
“Sold IP”).

 

(b)Any and all know-how pertaining or relating exclusively to the Sold Projects
as listed in Annex 2 hereto (altogether “Sold Know-How”). The term “know-how”
includes but is not limited to all specifications, results and reports of
preclinical and clinical studies and all other documentation containing any data
relating to the application for regulatory approval and registrations dossiers.
It shall further include secret and confidential information in tangible form,
contained in documents, materials, correspondence and other records (whether in
hardcopy or in electronic format), including process descriptions and operating
instructions, all written research documents, tabulations, experimental reports,
specimen, drawings and plans, as well as to all intangible information
pertaining or relating exclusively to the Sold Projects. In case the tangible or
intangible information does not pertain to the Sold Projects exclusively and
cannot be easily separated, i.e. in case of laboratory notebook (Laborjournale),
such information shall not be part of the Sold Know-How, but the Seller shall
undertake all reasonable efforts to provide Purchaser with copies of the
relevant information in the laboratory notebook relating to the Sold Projects to
the extent that the Purchaser requires such information for the reasonable
defense against third party claims or the reasonable enforcement of Sold-IP
and/or Sold Know-How against third parties. The historic clinical studies,
where, for the avoidance of doubt, the Seller remains official sponsor, shall
also not be part of the Sold Know-How and solely para. 9 below shall apply to
such studies and the information contained therein (collectively: the “Historic
Clinical Studies”).

 

1 

 

 

(c)A copy of the existing quality management reports relating to the Sold Assets
and Sold Projects as listed in Annex 3.

 

2.Subject to Section 1 para. 6 below, the Seller hereby transfers to the
Purchaser the ownership of all Sold Assets. To the extent the Seller only has an
expectancy right (Anwartschaftsrecht) to the Sold Assets, the Seller hereby
transfers to the Purchaser such expectancy rights to the Sold Assets. This
transfer is particularly performed as follows:

 

(a)The Seller shall transfer to the Purchaser its possession of the tangible
Sold Assets. To the extent that such Sold Assets are located on real estate or
in buildings that are in the Seller’s possession, transfer of possession shall
take place by performing such possession on behalf of Purchaser and by granting
the Purchaser access to the respective real estate or buildings
(Besitzmittlungsverhältnis).

 

(b)All documents, materials and information which form part of the Sold Know-How
shall be transferred to the Purchaser in the same way as described under lit.
(a) above. The delivery of each of the documents shall be noted in a report that
is established for this purpose and signed by both Parties.

 

(c)Seller shall procure that within 6 months after the Purchaser has exercised
its option right set forth in Section 3 below, the intangible Sold Know-How is
transferred to Purchaser as follows: Within such period, the Seller undertakes
to introduce the Purchaser’s employees into the Sold Know-How. This introduction
shall be provided in the form of meetings, taking place at the offices of
Purchaser in Martinsried or any other venue agreed by the Parties, and shall be
free of cost for Purchaser, to the extent that it does not exceed 24 man-days.
For the avoidance of doubt, this introduction relates solely to data created
prior to the Effective Date; any forward looking support or other services with
respect to the future usage or development of the Sold Assets, except for the
processing of the COMPONENT study data related to the Sold Projects to prepare
an audit and inspection ready trial master file in accordance with ICH
(International Council for Harmonisation of Technical Requirements for
Pharmaceuticals for Human Use) GCP (good clinical practice) guidelines, will be
invoiced on the basis of service and/or development agreements yet to be
concluded. The Parties acknowledge that Dr. Manfred Gröppel as main possessor of
the intangible Sold Know-How is likely to join the Purchaser.

 

3.To the extent that Sold Assets are in possession of third parties, the Seller
(i) hereby transfers to the Purchaser the Seller’s repossession claims, and (ii)
if Seller’s repossession claim against any third party is not transferable,
hereby undertakes to instruct the third party at issue in writing to hold
possession of the relevant Sold Asset in its possession to the benefit of the
Purchaser and to hand it over to the Purchaser upon the latter’s request.

 

4.If and to the extent further declarations have to be made or actions have to
be taken to transfer any Sold Assets to the Purchaser, the Seller shall, to the
extent reasonably required, make such declarations or take such actions without
undue delay upon request of the Purchaser. Any and all costs and expenses in
connection with the transfer of the Sold Assets to the Purchaser, in particular
without limitation any and all fees and expenses of the patent offices, shall be
borne by the Purchaser with the exception of (i) internal administration costs
of the Seller and (ii) payments to be rendered under or in connection with the
German Inventing Employee Act (Gesetz über Arbeitnehmererfindungen) with respect
solely to the Sold Assets.

 

2 

 

 

5.Unless explicitly specified otherwise in this APA, the Parties assume that
none of the Sold Assets is in the possession by anybody else than the Seller. If
it turns out that such assumption is wrong, the Seller shall be obliged to
transfer upon Purchaser’s request the possession of any such assets, rights or
claims or to procure the transfer of the possession of any such assets, rights
or claims to the Purchaser without undue delay and at no additional costs to the
Purchaser.

 

6.The transfer of the Sold Assets to the Purchaser pursuant to paras. 2 to 5
above shall be subject to the condition precedent (aufschiebende Bedingung) of
the payment of [***].

 

7.The Purchaser shall, on a product-by-product basis, in case of a development
of the Sold Projects [***], for the registration of the transfer of the Sold IP
regarding such product with the respective official registries (“IP
Registration”). In the event that a third party takes legal action against, or
relating to, the Sold IP, or Purchaser intends to take legal action against a
third party based on the Sold IP, the Purchaser shall [***] apply for IP
Registration of the Sold IP to the extent affected by such legal action, and
shall use best efforts to procure that such third party acknowledges the
Purchaser as party (as the case may be plaintiff or defendant) in a court of law
or proceedings before a patent office. Should such third party not acknowledge
the Purchaser as such party, Seller agrees to support Purchaser in such legal
action as reasonably required, and Purchaser shall reimburse Seller [***]. In
the event of a disposal of the Sold Assets in whole or in part (and individually
or as part of a disposal of more than [***] of all assets of Purchaser), the
Purchaser shall procure that the respective acquirer applies as soon as
practicable, but in any event not later than six months after such disposal, for
IP Registration of the Sold IP (in case of a partial disposal, to the extent
that the Sold IP is disposed of). The Purchaser shall prepare and deliver all
reasonably requested documentation and Seller shall give all reasonably
requested declarations and make all necessary signatures that the Purchaser
reasonably requires for the IP Registration, and Purchaser and Seller agree to
promptly after the Effective Date transfer formal ownership in sold IP directly
to Purchaser by separate agreements as in Annex X, as well as by preparation of
forms and declarations which may be required by the respective official
registries. The Purchaser shall bear all costs related to such registration.

 

8.The Purchaser undertakes to use commercially reasonable efforts to develop and
commercialize, by itself or via licensees, the Sold Projects until market
approval for at least one Product (as defined hereafter) in the European Union
and the US, provided that, in the event of a disposal of the Sold Assets in
whole or in part (and individually or as part of a disposal of more than [***]
of all assets of Purchaser), the Purchaser shall use best efforts to procure
that the respective acquirer agrees to assume the obligation in this para. 8 as
well.

 

9.With effect as from the Effective Date and subject to the condition precedent
(aufschiebende Bedingung) of the payment of [***], the Seller hereby grants (i)
a non-exclusive license for the use of the Historic Clinical Studies to the
extent that they solely relate to the Sold Projects and (ii) a right of
possession (Besitzrecht) of such studies (to the extent that such studies are in
tangible form), both with the proviso that the Purchaser shall undertake all
reasonable efforts to provide the Seller with copies of the relevant Historic
Clinical Studies, and provide Seller access to the originals thereof, to the
extent that the Seller requires such studies for (a) the reasonable defense
against third party claims or (b) for any correspondence with public authorities
(notably regulatory authorities), in particular to comply with information
requests from such authorities. If Purchaser does not comply with its
obligations under the preceding sentence, the Seller shall be entitled to
terminate the aforementioned license for the use and the right of possession of
the Historic Clinical Studies and request return of the Historic Clinical
Studies. For the avoidance of doubt, the Seller retains ownership of any and all
Historic Clinical Studies.

 

3 

 

 

Section 2
Sale and Transfer of Panoptes Agreements

 

1.The Seller hereby sells to the Purchaser the rights and obligations of the
Seller arising out of the Patent License Agreement with Panoptes Pharma GmbH
dated July 2, 2013 (the “Sold Agreement”) by way of assumption of contract with
full discharge of the Seller (Vertragsübernahme mit schuldbefreiender Wirkung),
to the extent that the Seller’s 100% subsidiary 4SC Discovery GmbH (“4SC
Discovery”) is counterparty to the Sold Agreement, with effect as from the
Effective Date. For the avoidance of doubt, the rights and obligations arising
out of the Patent and Know How Assignment Agreement with Panoptes Pharma GmbH
dated July 2, 2013 are not sold and shall remain with the Seller / 4SC
Discovery.

 

2.The sale pursuant to Section 2.1 extends to all present and future rights and
obligations of the Seller under the Sold Agreement as from the Effective Date.

 

3.Subject to the condition precedent (aufschiebende Bedingung) of the payment of
[***], the Seller hereby transfers to the Purchaser, and the Purchaser hereby
accepts the transfer of, the Sold Agreement in accordance with the provisions
set forth above by way of an assumption of contract with full discharge of the
Seller. The Purchaser acknowledges and agrees that the transfer of the Sold
Agreement may require the consent of the respective contractual partners or of
other third parties in order to become effective, and that the Seller does not
guarantee in any way that such consents will be given. Section 7 below remains
unaffected.

 

4.The Purchaser hereby assumes the Sold Agreement with the effect of fully
discharging the Seller’s obligations (Vertragsübernahme mit schuldbefreiender
Wirkung) subject to the condition precedent (aufschiebende Bedingung) of the
payment of [***], and, if required, any third party consent as set out in
Section 7 below, and shall indemnify and hold harmless the Seller from and
against [***].

 

5.With effect as from the Effective Date, the Purchaser hereby assumes, and
agrees to pay, perform and discharge when due, all liabilities and obligations
arising from or under the Sold Agreement (whether actual or contingent, known or
unknown). These liabilities are hereby assumed by the Purchaser with full
discharge of the Seller (mit schuldbefreiender Wirkung) subject to the condition
precedent (aufschiebende Bedingung) of the payment of [***], and, if required,
any third party consent as set out in Section 7 below; pending such consent, the
Purchaser assumes these liabilities as direct debtor (Schuldbeitritt).

 

Section 3
Option Right of Purchaser

 

1.The’ Purchaser shall be entitled to accept the sale and transfer of the Sold
Assets and the Sold Agreement as set forth in Section 1 and Section 2 above by
written declaration to be addressed to Seller by fax ((+49-89-700763-2600) or
email (kathleen.masch-wiest@4sc.com) until no later than [***] (“Option Term”).

 

2.In case the Purchaser does not fully accept the sale and transfer of the Sold
Assets and the Sold Agreement as set forth in Section 1 and Section 2 within the
Option Term, this APA in total shall become null and void, with the exception of
Section 7 para. 4 sentence 2, Section 8 para. 2 and Section 9 below which shall
survive any termination of this APA.

 

4 

 

 

Section 4
Excluded Assets and Agreements; No Transfer of
Employment Relationships and No Transfer of Insurance Agreements

 

1.The Seller does not sell and the Purchaser does not acquire any assets,
agreements or offers that are not expressly referred to in Sections 1 and 2
above.

 

2.The Purchaser does not assume any obligations from the Seller unless these (i)
are expressly referred to in this APA, (ii) result from the Sold Agreement or
(iii) are directly attached to any Sold Asset.

 

3.The Parties assume that no obligations (of whatever nature) from the Seller
vis-a-vis public authorities, administrative entities and other public entities,
no matter in which jurisdiction, from or in connection with taxes or violations
of legal provisions, will be transferred to the Purchaser by operation of law
following the consummation of the transactions contemplated herein. If, contrary
to the Parties’ assumption, any such obligation should be transferred to the
Purchaser, the Seller shall indemnify and hold harmless the Purchaser from any
such obligation and related costs incurred by the Purchaser.

 

4.The Parties assume that no employment relationships will be transferred to the
Purchaser by operation of law following the consummation of the transactions
contemplated herein. If, contrary to the Parties’ assumption, any employment
relationship should be transferred to the Purchaser, the Seller shall indemnify
and hold harmless the Purchaser from any costs, losses, expenses and/or other
negative consequences resulting from such transfer of the respective employment
relationships or the obligations towards any transferred employee unless the
Purchaser explicitly agrees to assume such transferred employment relationship
and continues to employ such transferred employee. However, given that Dr.
Manfred Gröppel is considering joining the Purchaser in the course of, or
following the consummation of the transactions contemplated herein, the
Purchaser acknowledges that no liability of the Seller whatsoever shall result
from the transfer of Dr. Manfred Gröppel’s employment relationship to the
Purchaser.

 

5.The Parties assume that no insurance agreements will be transferred to the
Purchaser by operation of law following the consummation of the transactions
contemplated herein. If, contrary to the Parties’ assumption, any insurance
agreements should be transferred to the Purchaser, the Seller shall indemnify
and hold harmless the Purchaser from any costs, losses, expenses and/or other
negative consequences resulting from such transfer or the obligations of the
Purchaser towards the relevant insurance company unless the Purchaser is legally
compelled to enter into such insurance or otherwise agrees to assume such
transferred insurance agreements and continues such insurance agreements.

 

Section 5
Purchase Price

 

1.Subject to the condition precedent (aufschiebende Bedingung) that Purchaser
accepts the sale and transfer of the Sold Assets and the Sold Agreement as set
forth in Section 1 and Section 2 above in accordance with Section 3 above (the
date of such acceptance the “Exercise Date”), Purchaser shall pay to Seller a
purchase price consisting of the following components:

 

(a)[***] (“Tranche 1”);

 

(b)[***] (“Tranche 2”);

 

(c)an amount equal to [***] for a period ending upon [***]; provided that the
aforementioned percentage of the aggregate Net Sales is, on a country-by-country
and product-by-product basis, reduced from [***] (“Tranche 3”); and

 

5 

 

 

(d)a further amount equal to [***].

 

2.“Net Sales” shall mean with respect to any substance and/or product that has
been developed using Sold Assets or is covered by the Sold IP and/or Sold
Know-How or is otherwise stemming from the Sold Projects (“Product”) for any
period, the total (gross) amount billed or invoiced on sales of such Product
during such period by (i) the Purchaser; (ii) its affiliates within the meaning
of §§ 15 et seq. of the German Stock Corporation Act (AktG) (“Affiliates”) or
(iii) licensees of the Purchaser and/or its Affiliates worldwide to third
parties (including wholesalers) in bona fide arm’s length transactions, less the
following deductions, in each case related specifically to the Product and
actually allowed and taken by such third parties and not otherwise recovered by
or reimbursed to the Purchaser, its Affiliates or their respective licensees:

 

(i)trade, cash and quantity discounts (other than price discounts granted at the
time of invoicing which have been already included in the gross amount
invoiced);

 

(ii)taxes on sales (such as sales, value added, or use taxes) to the extent
added to the sale price and set forth separately as such in the total amount
invoiced (but not including taxes assessed against the income derived from such
sale);

 

(iii)amounts repaid or credited by reason of rejections, defects, return goods
allowance, recalls or returns, or because of retroactive price reductions,
including rebates or wholesaler charge backs;

 

(iv)freight, insurance, and other transportation charges to the extent added to
the sale price and set forth separately as such in the total amount invoiced, as
well as any fees for services provided by wholesalers and warehousing chains
related to the distribution of such Product;

 

(v)cost of collections or for commissions paid to independent sales agencies of
Purchaser, its Affiliates or their respective licensees;

 

(vi)deductions to gross invoice price of Product imposed by Regulatory
Authorities or other governmental entities (where such deductions are imposed
based on published and independently verifiable regulatory standards); and

 

(vii)standard inventory costs of devices or delivery systems sold as unit with
the Product and used for dispensing or administering or delivering the Product,
provided that they are directly related to the respective sold product.

 

No deductions shall be made for the cost of collections or for commissions paid
to regular employees of Purchaser, its Affiliates or their respective licensees.

 

If a Product is sold in form of a combination product, then Net Sales for such
combination product shall be determined on a country-by-country basis by mutual
agreement of the Parties in good faith taking into account the perceived
relative value contributions of the Product and the other ingredient or
component in the combination product, as reflected in their respective market
prices. In case of disagreement, an independent expert agreed upon by both
Parties within thirty (30) days following the first commercial sale in the
specific country or, failing such agreement, an independent expert designated by
the Industrie- und Handelskammer für München und Oberbayern at its earliest
convenience, shall determine such relative value contributions and such
determination shall be final and binding upon the Parties.

 

6 

 

 

If a Product is sold as part of a bundled transaction (i.e. a scenario in which
a number of transactions for an assortment of goods, services, and intangibles
are combined), the amount to be included in Net Sales shall be determined based
on the pro rata allocation of the amount invoiced for all products included in
such bundled transaction, based on the average per unit net sales price
(calculated for the calendar quarter being reported) for such Product and the
average per unit net sales price (calculated for the calendar quarter being
reported) for every other product included in such bundled transaction and the
number of units of Product and every other product included in such bundled
transaction.

 

Net Sales shall not include transfers or dispositions for no profit, for
charitable, promotional, evaluation, pre-clinical, clinical, regulatory, or
governmental purposes or as commercial samples to the extent such transfers and
dispositions are in line with international standards and applicable form. Net
Sales shall include the amount or fair market value of all other consideration
received by the Purchaser or its Affiliates or their respective licensees in
respect of the Product, whether such consideration is in cash, payment in kind,
exchange or other form. Net Sales shall not include sales between or among the
Purchaser, its Affiliates, or their respective licensees. Subject to the above,
Net Sales shall be calculated in accordance with the standard internal policies
and procedures of the Purchaser, its Affiliates, or their respective licensees,
which must be in accordance with IFRS or the generally accepted accounting
principles as practiced in the United States (US-GAAP).

 

3.“Exit” shall mean (i) any sale of more than [***] of all shares in the
Purchaser in a single transaction or a series of related transactions to one or
more third parties; (ii) the disposal (including by way of licenses) of in
aggregate more than [***] of all assets of Purchaser to one or more third
parties (according to their fair value and irrespective of whether such assets
may be shown in the Purchaser’s financial statements under applicable generally
accepted accounting principles); (iii) a share swap, contribution, merger, other
transformation or take-over of Purchaser, if the shareholding in the new entity
by the current shareholders of the Purchaser following the merger is less than
50 %; (iv) the liquidation of the Purchaser; or (v) the direct or indirect (via
a holding company) listing of the Purchaser and/or the Purchaser’s shares and/or
the public offering of the Purchaser’s shares or a secondary offering of the
Purchaser’s shares on a stock exchange (the “IPO”); provided, however, that in
the event that not all shares in or assets of the Purchaser are included in the
Exit, then each subsequent sale, disposal, share swap, contribution, merger,
other transformation or take-over of shares in or assets of the Purchaser not
included in the initial Exit shall also be considered to be an “Exit” and the
Seller shall be entitled [***]. The following shall be considered the
“Proceeds”: (i) In case of a sale of shares in the Purchaser: The total purchase
price received by the shareholders of the Purchaser as consideration for the
relevant shares in the Purchaser; (ii) in case of a disposal of assets of the
Purchaser: The total purchase price or other consideration (including upfront,
milestone, earn-out and royalty payments) received by the Purchaser as
consideration for the relevant assets of the Purchaser; (iii) in case of a share
swap, contribution, merger, other transformation or take-over: The total number
of shares of the receiving or surviving legal entity received by the
shareholders of the Purchaser as consideration for the relevant shares in the
Purchaser; (iv) in case of a liquidation: The cash proceeds resulting from the
liquidation (Liquidationserlös) remaining after satisfaction of all liabilities
of the Purchaser; and (v) in case of an IPO: The fully-diluted pre-money
valuation of the Purchaser in such IPO. If and to the extent that the Proceeds
do not consist of cash, but rather of a consideration in kind (e.g. shares), the
Seller shall receive [***] in such consideration in kind and (in case of a mixed
consideration, e.g. cash and shares) in the same ratio as the shareholders of
the Purchaser, provided that [***]. With respect to the amount of any
substituting payment in cash as well as in all other cases in which the value of
a consideration in kind is relevant, to the extent that the consideration in
kind consists of shares in companies listed on a stock exchange, the share price
fixed at the stock exchange at the time and date that the transfer of the
consideration in kind to the shareholders of the Purchaser takes effect shall be
conclusive, and in all other cases, the fair market value of such consideration
in kind at the time and date of the consummation of the Exit shall be
conclusive, which shall be determined with binding effect on both Parties by the
Purchaser’s auditor in accordance with the IDW-guidelines. In case of an !PO,
the Seller shall receive [***].

 

7 

 

 

4.The Tranches set forth in para. 1 above shall be due and payable as follows:

 

(a)Tranche 1 within [***].

 

(b)Tranche 2 within [***].

 

(c)Tranche 3 shall be paid [***].

 

(d)Tranche 4 within [***].

 

5.Each payment on Tranche 3 or Tranche 4 shall be accompanied by a statement
from the Purchaser in sufficient detail to allow for the calculation of the
payments due hereunder, [***].

 

6.Each of the Tranches set forth in para. 1 above shall be transferred to the
following account of Seller: [***]

 

7.Any payments to be made under this APA shall be made in EUR free of costs and
charges by irrevocable wire transfer of immediately available funds.

 

8.Unless otherwise provided herein, each of the Parties shall pay interest on
any amounts becoming due and payable to the other Party under this APA as from
[***].

 

9.No Party shall be entitled to

 

(a)set-off any rights and claims it may have against the other Party, against
any rights or claims which the other Party may have under or in connection with
this APA, or

 

(b)refuse to perform any obligation it may have under or in connection with this
APA on the grounds that it has a right of retention,

 

except as (i) explicitly permitted herein or (ii) except for claims undisputed
by the respective other Party or (iii) in respect of claims resulting from a
final and non-appealable court judgement or court settlement or by a final
arbitral award obtained in accordance with this APA.

 

10.Until [***], the Purchaser shall, and the Purchaser shall procure that its
Affiliates and their respective licensees, maintain complete and accurate books
and records of account, in accordance with generally accepted accounting
principles, of all transactions and other business activities relevant for the
payments under this APA, sufficient to confirm the accuracy of all reports and
payments furnished by Purchaser to Seller under this Section 5. Upon Seller’s
written notice to Purchaser, during normal business hours and not more than once
every calendar year, a certified public accountant designated by Seller and
reasonably acceptable to Purchaser shall have the right to audit such books and
records of account of the Purchaser, its Affiliates and their respective
licensees (provided always that such certified public accountant enters into an
appropriate confidentiality agreement with Purchaser and its Affiliates), in
order to confirm the accuracy and completeness of all such reports and all such
payments. Such certified public accountant may disclose to Seller only whether
such reports and payments are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to Seller.
Seller shall bear all costs and expenses incurred by it in connection with any
such audit; [***].

 

8 

 

 

11.In the event of a disposal of the Sold Assets by the Purchaser to a third
party in whole or in part (and individually or as part of a disposal of more
than [***] of all assets of Purchaser), the Purchaser shall procure that the
acquirer assumes all of the obligations of Purchaser under this APA, in
particular without limitation the obligations to pay the purchase price under
this Section 5 and the book keeping and auditing obligations under para. 10
above, it being understood that for the obligations of the Purchaser under
Section 1 para. 8, only Section 1 para. 8 shall be relevant; following such
disposal of the Sold Assets, any reference to the Purchaser, its Affiliates and
their respective licensees in this Section 5, in particular without limitation
in the definition of Net Sales, shall henceforth refer to such acquirer, its
Affiliates and their respective licensees mutatis mutandis. The same shall apply
in the event of a universal transaction (Gesamtrechtsnachfolge).

 

12.In addition to the purchase price, the Purchaser shall reimburse the Seller
for [***]. The relevant costs and expenses up to the date hereof are set forth
in Annex 4 hereto, and the further costs and expenseS incurred after the date
hereof up until the Effective Date shall be agreed upon by the Purchaser in
advance and documented by the Seller in the same format and submitted to the
Purchaser as of the Effective Date. Such reimbursement shall be due and payable
concurrently with Tranche 1, i.e. the Purchaser shall not be obligated to
reimburse the Seller in case it does not accept the sale and transfer of the
Sold Assets and Sold Projects pursuant to Section 3.

 

13.All payments due to the terms of this APA are expressed to be exclusive of
VAT or similar indirect taxes (e.g. goods and service tax). VAT/indirect taxes
shall be added to the payments due to the terms of this APA if legally
applicable. Withholding taxes, if any, shall be borne by Seller.

 

Section 6
Warranties

 

1.The Seller hereby represents and warrants in the form of independent
undertakings pursuant to § 311 para. 1 German Civil Code (selbständiges
Garantieversprechen gem. § 311 Abs. 1 BGB) to the Purchaser that the statements
set forth in this Section 6 para. 1 (collectively “Warranties” and each a
“Warranty”) are true and correct as of the date hereof:

 

(a)The Seller does validly exist under the law of the Federal Republic of
Germany. The execution and performance by the Seller of this APA are within the
Seller’s power and authority, do not violate the articles of association or

 

by-laws of the Seller and have been duly authorized by all necessary corporate
and other actions and required approvals on the part of the Seller.

 

(b)The execution and performance of this APA by the Seller require no approval
or consent by any governmental authority and do not violate any applicable law
or decision by any court or governmental authority binding on the Seller.

 

(c)The Seller is the lawful owner of the Sold Assets. The Seller is fully
entitled to transfer the Sold Assets which are free and clear of any liens,
encumbrances or any other third party rights, in particular the assets are not
subject to any pledges or other security rights of any third party and have not
been subject to any execution proceedings (Zwangsvollstreckung), unless
explicitly disclosed in Section 1 para. 1. The Seller has not granted any
license with regard to the Sold Assets to any third party.

 

(d)To the knowledge of the Seller, none of the Sold IP is subject to any
judgment, injunction, order or decree which materially restricts the use thereof
and no third party has challenged or threatened to challenge any Sold IP. The
Seller does not know of, or of any basis for, any claim for revocation,
amendment, opposition or rectification or any challenge to ownership or
entitlement in respect of any of the Sold IP. The Seller has not licensed any
intellectual property rights necessary for the exploitation of the Sold Projects
from any third parties. The Seller explicitly does not provide any
representation and warranty as to the patentability or validity of any of the
Sold IP, for the commercial exploitability or the fitness for any purpose of any
of the Sold IP and for the non-infringement of any third party right by any of
the Sold IP or its use.

 

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(e)To the knowledge of the Seller, Seller has undertaken all appropriate means
to keep the Sold Know-How secret, in particular by concluding appropriate
confidentiality agreements and by limiting the access to the Sold Know-How to
the personal/third party contractors to the extent reasonably required.

 

(f)Seller is not aware of any circumstances that have infringed the
confidentiality of the Sold Know-How.

 

(g)The Seller explicitly does not provide any representation and warranty as to
the confidentiality of the Sold Know-How, for the commercial exploitability or
the fitness for any purpose of any of the Sold Know-How and for the
non-infringement of any third party right by the use of the Sold Know-How.

 

2.If and to the extent that any of the Warranties is incorrect, the Seller shall
be liable to put the Purchaser into the same position the Purchaser would be in,
had the respective Warranty been correct or had the respective breach not
occurred (Naturalrestitution). If and to the extent that the Seller fails to put
the Purchaser into the position it would be in without such breach of Warranty
within one month from notification of such breach, the Purchaser shall be
entitled to claim monetary damages in cash (Schadensersatz in Geld).

 

3.Any claims of the Purchaser pursuant to the afore-mentioned para. 2 (the
“Warranty Claims”) shall be limited as follows:

 

(a)Warranty Claims arising from a breach of Warranty pursuant to para. 1 lit.
(a) through lit. (c) (including) above (collectively “Title Warranties”) shall
become time-barred under the statute of limitations (verjähren) three years
after the Exercise Date. The limitation period (Verjährungsfrist) for all other
Warranty Claims shall be 18 months after the Exercise Date.

 

(b)The Seller shall not be liable for any Warranty Claims unless and until the
amount of the individual Warranty Claim exceeds [***] (the “De Minimis Amount”)
and unless and until the aggregate amount of all Warranty Claims which
individually exceed the De Minimis Amount exceeds [***], in which event all of
such Warranty Claims which individually exceed the De Minimis Amount shall be
recoverable under this APA.

 

(c)The total liability of the Seller for any and all Warranty Claims shall in
the aggregate be limited to an amount equal to [***] of the amounts actually
received by the Seller as purchase price under Section 5 above, except for any
and all Warranty Claims related to the breach of any of the Title Warranties
that shall be limited to an amount of [***] of the amounts actually received by
the Seller as purchase price under Section 5 above.

 

(d)The Purchaser may not assert Warranty Claims if and to the extent that it had
knowledge of the facts or circumstances on which the claim is based when this
APA was concluded. § 442 (1) sentence 2 German Civil Code (BGB) and § 377 German
Commercial Code (HGB) shall not apply. A possible knowledge of Dr. Manfred
Gröppel shall neither be attributed (zugerechnet) to the Purchaser nor to the
Seller within this Section 6.

 

(e)Warranty Claims may only be asserted against the Seller once for one and the
same loss, even if this arises from a breach of more than one Warranty.

 

(f)Moreover, the Seller shall not be liable to the extent that (i) the Purchaser
failed to fulfil its duty to avoid or mitigate the loss pursuant to § 254 German
Civil Code (BGB), or (ii) the Warranty Claim is attributable to an amendment to
legal provisions which was made after this APA was signed.

 

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4.The Parties agree that the rights and remedies which the Purchaser may have in
relation to Warranty Claims are limited to the rights and remedies expressly
provided for in this APA which shall apply in lieu of all other rights and
remedies that would be available to the Purchaser under statutory law in
relation to Warranty Claims. Except as expressly provided for otherwise in this
APA, any and all other rights and remedies of any legal nature which the
Purchaser may have against the Seller with respect to Warranty Claims shall be
hereby expressly waived and excluded, in particular, without limitation, any
statutory rights and remedies based on a breach of a representation and warranty
as well as claims based on a frustration of contract (Störung der
Geschäftsgrundlage, § 313 German Civil Code (BGB)), voidance of the APA
(Anfechtung), rescission of the APA (Rücktritt), reduction of the purchase price
(Minderung), supplementary performance (Nacherftüllung) and other claims for
defects according to § 437 German Civil Code (BGB), compensation for expenses
(Aufwendungsersatz), culpa in contrahendo (Verschulden bei
Vertragsverhandlungen, § 311 German Civil Code (BGB)), breach of contract (§§
280 to 282 German Civil Code (BGB)) and rights and remedies based on tort (§§
823 et seq. German Civil Code (BGB)). For the avoidance of doubt, the Seller’s
liability is not excluded or limited with respect to claims for willful
misconduct (Vorsatz) and willful deceit (arglistige Täuschung).

 

5.Except as expressly provided for otherwise in this APA, the Warranties shall
be exhaustive and the Seller does not assume any express or implied guarantees,
representations, warranties, indemnities or similar instruments of any kind in
addition to the Warranties.

 

Section 7
Additional Provisions on Transfer of Sold Assets and Sold Agreements

 

1.If the transfer of any Sold Assets or the Sold Agreement (including
obligations) hereunder depends on the consent of a third party, the Parties
shall cooperate in good faith and jointly endeavor to obtain such consent
without undue delay; in this context the Parties shall disclose to the third
party the scope according to which the Purchaser assumes the rights and
obligations of the Seller.

 

2.Until the required consent pursuant to para. 1 above has been obtained in
relation to any Sold Asset or the Sold Agreement, the Parties shall, to the
extent legally permissible, treat each other with effect from the Effective Date
as if the transfer of the Sold Asset or Sold Agreement hereunder had already
become effective as of the Effective Date. Consequently, until such consent is
given, the Seller shall, via its 100% subsidiary 4SC Discovery, act vis-à-vis
third parties (im Auβenverhältnis) as owner of the relevant asset, party to the
relevant agreement or offer, or debtor of the relevant obligation, as the case
may be, but shall, to the extent legally permissible, in the internal
relationship with the Purchaser (im Innenverhältnis) act for the Purchaser’s
account, but only in accordance with and on the prior written instruction of
Purchaser. Consequently, with effect as from the Effective Date, the Purchaser
shall indemnify and hold harmless the Seller from and against any and all costs,
losses, proceedings, claims, demands and expenses resulting from or relating to
the relevant Sold Agreement as the Seller may reasonably require.

 

3.The Purchaser acknowledges that Panoptes Pharma GmbH has signaled that it will
not grant its consent to the transfer to the Sold Agreement, that therefore a
transfer of the Sold Agreement will probably not be possible, and that the Sold
Agreement does not encompasses the possibility to grant a sub-license or to
otherwise transfer the license granted thereunder to a third party.

 

4.The Seller shall procure that its 100% subsidiary 4SC Discovery does not
terminate the Sold Agreement unless there is good cause (wichtiger Grund), and
furthermore that a potential acquirer of 4SC Discovery also assumes the Seller’s
obligations under this APA if and to the extent that they relate solely to 4SC
Discovery.

 

5.Until the expiry of the Option Term, Seller shall reasonably participate in
and support the due diligence process of Purchaser and its advisors in regard to
the Sold Assets or Sold Agreement and any and all rights and obligations
pertaining to them in order to facilitate a financing of Purchaser. Any
reasonable out-of-pocket expenses, in particular travel expenses, of the Seller
resulting therefrom shall be reimbursed by the Purchaser, provided that
Purchaser has granted its prior approval to such expenses.

 

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Section 8
Non-Compete, Non-Solicitation, Confidentiality

 

1.For a period of [***] following the Effective Date the Seller shall refrain,
and shall procure that its Affiliates refrain, from engaging, itself or through
Affiliates, in research and/or development activities as well as service
activities in the field of [***] (any of such business activities a “Competing
Activity”), provided that any other research and/or development activities as
well as service activities, in particular, without limitation, the service
activities performed by the Seller or any of its Affiliates at the date of this
APA, shall not be deemed a Competing Activity, and further provided that, for
the avoidance of doubt, Panoptes Pharma GmbH shall not be considered an
Affiliate for the purposes of this Section 8 and any activities conducted by
Panoptes Pharma GmbH shall not be a Competing Activity;

 

2.In the case of a breach by the Seller of the obligations set forth in para. 1
above, the damages and losses of the Purchaser for which the Seller shall be
liable as a result thereof shall include any damages suffered by Purchaser or
any of its Affiliates. In addition to any other remedies available to the
Purchaser under this APA or applicable law, the Seller, as the case may be,
shall pay to the Purchaser irrespective of fault a penalty of [***] for each
individual breach by the Seller, as the case may be, of any of its obligations
set out in para. 1 above. If a breach continues for more than ten business days,
such continuation shall be regarded as a new and separate breach within the
meaning of this para. 2. The Purchaser shall not be deemed to have waived the
requirement of the Seller, and the Seller shall not be deemed to be relieved of
its obligation, to comply with the obligations of para. 1 above by the Purchaser
accepting payment of such penalty or seeking any other remedy available to which
the Purchaser may be entitled under this APA or applicable law.

 

3.For a period of [***] the Seller shall refrain, and shall procure that its
Affiliates refrain, from soliciting or attempting to solicit the employment of
[***] as future director, officer or key employee of Purchaser, it being
understood that the Seller’s right to enter into service agreements with [***]
as (external) advisor or consultant shall remain unaffected.

 

4.The Seller shall keep the Sold Know-How confidential during the Option Term
and after the Exercise Date, unless otherwise provided in this APA. The Seller
undertakes to exercise all reasonable efforts to ensure that the duty of
confidentiality regarding the Sold Know-How laid down in this APA is observed by
all its Affiliates and all its employees.

 

5.Each Party undertakes to maintain secrecy of the confidential information and
the confidential know-how disclosed by the other Party before the Effective Date
and shall only use this information for the purpose of this APA. Each Party
shall be allowed to disclose confidential information of the other Party to its
employees, senior executives or advisers and its subsidiaries only if and to the
extent to which these employees, senior executives, advisers and subsidiaries
need to know this information for the purpose of this APA. The Parties undertake
to exercise all necessary efforts to ensure that the duty of confidentiality
laid down in this APA are observed by such employees, senior executives,
advisers or subsidiaries.

 

6.The Parties understand and agree that in the case of a breach by the Seller of
its obligations in this Section 8, the remedies available to the Purchaser under
this APA may not be sufficient to indemnify the Purchaser fully against all
damage, and that therefore the Purchaser shall be entitled to enforce any claims
for specific performance (Unterlassungs- and Beseitigungsansprüche) by
injunctive relief (einstweiliger Rechtsschutz).

 

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Section 9
Miscellaneous

 

1.The Parties are aware and agree that the transfer of the Sold Assets is
subject to German law. This APA shall be interpreted exclusively consistent with
German law and usage of terminology. This includes, without limitation, the
legal concepts and terms contained in this APA, the English translations of
which may not be identical with the original German terms in their respective
legal understanding.

 

2.Should any provision of this APA, or any provision incorporated into this APA
in the future, be or become invalid or unenforceable, the validity or
enforceability of the other provisions of this APA shall not be affected
thereby. The invalid or unenforceable provision shall be deemed to be
substituted by a suitable and equitable provision which, to the extent legally
permissible, comes as close as possible to the intent and purpose of the invalid
or unenforceable provision. The same shall apply if (i) the Parties have
unintentionally failed to address a certain matter in this APA (Regelungslücke);
in this case a suitable and equitable provision shall be deemed to have been
agreed upon which comes as close as possible to that the Parties, in light of
the intent and purpose of this APA, would have agreed upon if they had
considered the matter; or (ii) any provision of this APA is invalid because of
the scope of any time period or performance stipulated herein; in this case the
Parties shall be deemed to have agreed upon a legally permissible time period or
performance which comes as close as possible to the stipulated time period or
performance.

 

Planegg-Martinsried, this __May 15, 2016

 

/s/ Enno Spillner Vorstand /s/ Manfried Groeppel

4SC AG

CEO

Immunic AG

COO

 

 

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