exv10w42






Exhibit 10.42




EXCLUSIVE TECHNOLOGY OPTION AGREEMENT




          THIS EXCLUSIVE TECHNOLOGY OPTION AGREEMENT (the “Agreement”) is made and entered into as of
September 4, 2008 by and among Omeros Corporation, a Washington corporation (“Omeros”), Patobios
Limited, a corporation incorporated under the laws of the Province of Ontario (“Patobios”), Susan
R. George, M.D. (“Dr. George”) and Brian F. O’Dowd, Ph.D. (“Dr. O’Dowd”) and, with respect to
Article VIII and Article X only, U.S. Bank National Association, as escrow agent (the “Escrow
Agent”). Dr. George and Dr. O’Dowd are referred to herein each as a “Founder” and collectively as
the “Founders.”




RECITALS




          A. The Boards of Directors of each of Omeros and Patobios believe it is in the best interests
of each corporation and its respective shareholders that Patobios grant Omeros the exclusive option
to acquire the MOCA Technology in accordance with the terms of this Agreement for the Acquisition
Price during the Option Period and, in furtherance thereof, have approved this Agreement and all
transactions contemplated by the Agreement.




          B. In addition, Omeros has agreed that if during the Option Period the MOCA Technology meets
the De-Orphanization Milestone, Patobios may require that Omeros purchase the MOCA Technology for
the Acquisition Price.




          C. If Omeros purchases the MOCA Technology, a portion of the Acquisition Price otherwise
payable by Omeros shall be placed in escrow by Omeros as security for the indemnification
obligations set forth in this Agreement.




          D. Patobios and the Founders, on the one hand, and Omeros, on the other hand, desire to make
certain representations, warranties, covenants and other agreements in connection with the
Agreement.




          E. Concurrent with the execution and delivery of this Agreement, as a material inducement for
all of the parties to enter into this Agreement, Patobios is entering into a Consulting Agreement
in substantially the form attached hereto as Exhibit A (the “Consulting Agreements”) with Omeros.




          NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises set
forth herein, the mutual benefits to be gained by the performance thereof, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted,
the parties hereby agree as follows:





 





			
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ARTICLE I




DEFINITIONS




          For all purposes of this Agreement, the following terms shall have the following respective
meanings:




          1.1 “Acquisition Price” means an amount equal to (i) seven million seven hundred sixteen
thousand ($7.716MM) CAD less any Option Fee Credit, plus (ii) the Stock Consideration, plus (iii)
if Omeros paid Option Fee Two, the Patent Fee Amount (but only to the extent that the Patent Fee
Amount reduced Option Fee Two).




          1.2 “Agent Indemnification Expenses” has the meaning set forth in Section 8.4(j)(viii).




          1.3 “Agreement” means this Exclusive Technology Option Agreement.




          1.4 Omeros shall be deemed to be “Bankrupt” if it goes into liquidation, or seeks the benefit
of any bankruptcy or insolvency act, or a receiver or trustee is appointed for its property or
estate, or it makes an assignment of all assets for the benefit of creditors, whether any of such
events are the outcome of a voluntary act of Omeros or otherwise, and such procedures are not
terminated within ninety (90) days.




          1.5 “Business Day[s]” shall mean each day that is not a Saturday, Sunday or holiday on which
banking institutions located in Seattle, Washington are authorized or obligated by law or executive
order to close.




          1.6 “CAD” means Canadian dollar(s).




          1.7 “Closing” has the meaning set forth in Article VI.




          1.8 “Closing Date” has the meaning set forth in Article IV.




          1.9 “Common Share Amount” means a number of shares of Omeros Common Stock equal to the
quotient obtained by dividing (x) the Stock Exchange Rate, by (y) the USD Trading Price.




          1.10 “Compound Fee” has the meaning set forth in Section 7.2.




          1.11 “Conflict” has the meaning set forth in Section 4.5.




          1.12 “Contract” and “Contracts” have the meanings set forth in Section 4.5.




          1.13 “Deductible Amount” has the meaning set forth in Section 8.4(b).




          1.14 “De-Orphanization Milestone” means Omeros’ successful surrogate de-orphanization of an
orphan G protein-coupled receptor (“GPCR”) using the MOCA Technology as





 





			
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described in the Plan for MOCA Evaluation. A “successful surrogate de-orphanization” means
the identification of [†].




          1.15 “Enforcement Proceeds” has the meaning set forth in Section 3.7(b).




          1.16 ”Escrow Amount” shall mean a dollar amount equal to one million five hundred thousand
($1,500,000) CAD.




          1.17 “Escrow Distribution Notice” has the meaning set forth in Section 8.4(d)(iii).




          1.18 “Escrow Fund” has the meaning set forth in Section 8.4(a).




          1.19 “Escrow Period” has the meaning set forth in Section 8.4(d).




          1.20 “Escrow Termination Date” has the meaning set forth in Section 8.4(d)(ii).




          1.21 “Exchange Act” has the meaning set forth in Section 5.5.




          1.22 “Exercise Notice” has the meaning set forth in Section 3.2.




          1.23 “Expert Expenses” has the meaning set forth in Section 3.3(a).




          1.24 “Governmental Entity” has the meaning set forth in Section 4.6.




          1.25 “Indemnified Parties” has the meaning set forth in Section 8.2(a).




          1.26 “Improvements” means any and all improvements, advances, modifications, developments or
enhancements to the Assays, whether or not patentable.




          1.27 “Indemnity Exchange Rate” has the meaning set forth in Section 8.4(f).




          1.28 “Initial Escrow Holdback Amount” has the meaning set forth in Section 8.4(d)(i).




          1.29 “Initial Escrow Termination Date” has the meaning set forth in Section 8.4(d)(i).




          1.30 “Intellectual Property” means any or all of the following (a) inventions (whether or not
patentable), discoveries, improvements, and technology, (b) patents, patent applications, utility
models, (c) copyrights and works of authorship including, without limitation, computer programs,
source code, and executable code, whether embodied in software, firmware or otherwise,
architecture, documentation, designs, files, records, and data (if any), (d) proprietary and
confidential information, trade secrets, techniques and know how, (e) databases (if any), data
compilations and collections and technical data, (f) logos, trade names, trade dress, trademarks
and service marks and associated goodwill, (g) domain names, web addresses and sites and (h) tools,
methods and processes.




          1.31 “Lien” has the meaning in set forth in Section 3.4.





 





			
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          1.32 “Listed Disclosures” has the meaning set forth in Section 4.12.




          1.33 “Loss” and “Losses” have the meanings set forth in Section 8.2(a).




          1.34 “MOCA Technology” means all rights and interest in and title
(a) to assays conceived, invented, reduced to practice and/or developed by or under the
direction of either or both of the Founders and/or Patobios for the identification of transmembrane
protein-interacting molecules (the “Assays”), commonly referred to by the Founders as the
Multipurpose Original Cellular Assay (“MOCA”), all Improvements of such Assays, and all
Intellectual Property owned, controlled by or licensed (if applicable) to the Founders, Patobios
and/or Toronto related to such Assays and Improvements, including, without limitation, the
invention(s) and technology disclosed and/or claimed in International PCT Patent Application
PCT/CA03/00542 published as WO 03/087836 A1 as well as all Patents and Patent Applications from
which such International PCT Patent Application claims priority and all corresponding national and
regional Patent Applications including, without limitation, US Patent 7,309,576, US Patent
Application 11/937,275, AU 3218586, EP 03711772.8, MX 2004PA011134, JP 2003000584728, CA
2003002521946, NZ 536063, RU 2004133035, CN 03808297.7, IN 3528/DELNP/2004 and HK 05105861.0, all
continuation, continuation-in-part and divisional applications claiming priority from such Patents
and Patent Applications and all patents issuing from such Patent Applications, (b) all rights in
know-how, trade secrets and techniques related to such Assays and Improvements, (c) to all of
Patobios’ and the Founders’ rights in any and all Improvements made, in whole or in part, by or
under the direction of Patobios, any Founder, Omeros and/or a Third Party (as defined in Section
3.1(b) before, during or after the Option Period, including, by way of nonlimiting example, the
location of the nuclear localization sequence in the Assays, and (d) all trademark and service mark
rights, application, registrations and good will related to the MOCA Technology including the mark
MOCA. The term “MOCA Technology” does not and, if Omeros purchases the MOCA Technology, shall not
include, any liabilities of Patobios.




          1.35 “New Data” has the meaning set forth in Section 3.5.




          1.36 “Non-U.S. Person” has the meaning set forth in Section 4.18(c).




          1.37 “Officer’s Certificate” has the meaning set forth in Section 8.4(b).




          1.38 “Omeros SEC Documents” has the meaning set forth in Section 5.5.




          1.39 “Option Fee” means each of Option Fee One, Option Fee Two and Option Fee Three (as such
terms are defined in Article II).




          1.40 “Option Fee Credit” means an amount in CAD equal to the product obtained by multiplying
(x) the Option Fee for the Option Period in which Omeros gives the Exercise Notice (as defined in
Section 3.2), by (y) the quotient obtained by dividing the number of days remaining in such Option
Period following the date of the Exercise Notice by the total number of days in such Option Period.




          1.41 “Option Fee One” has the meaning set forth in Section 2.1.





 





			
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          1.42 “Option Fee Three” has the meaning set forth in Section 2.3.




          1.43 “Option Fee Two” has the meaning set forth in Section 2.2.




          1.44 “Option Fee Refund” means an amount in CAD equal to the product obtained by multiplying
(x) the Option Fee for the Option Period in which Omeros provides Patobios notice of termination of
this Agreement pursuant to Section 9.1(b) or Section 9.1(d), by (y) the quotient obtained by
dividing the number of days remaining in such Option Period following the date of the notice of
termination by the total number of days in such Option Period; provided, however, that if Omeros
provides the notice of termination (i) during Option Period One or (ii) at any time when it is
deemed to be Bankrupt, then the Option Fee Refund shall be $0.




          1.45 “Option Period” means each of (a) Option Period One, (b) Option Period Two, but only if
Omeros has paid Option Fee Two in accordance with Section 2.2, and (c) Option Period Three, but
only if Omeros has paid Option Fee Three in accordance with Section 2.3.




          1.46 “Option Period One” has the meaning set forth in Section 2.1.




          1.47 “Option Period Three” has the meaning set forth in Section 2.3.




          1.48 “Option Period Two” has the meaning set forth in Section 2.2.




          1.49 “Order” has the meaning set forth in Section 8.4(j)(ii).




          1.50 “Patent Action” has the meaning set forth in Section 3.6(b).




          1.51 “Patent Applications” has the meaning set forth in Section 3.6(a).




          1.52 “Patent Fee Amount” means, as of immediately prior to the payment by Omeros of Option Fee
Two (if applicable), fifty percent (50%) of the aggregate amount of fees and other expenses
incurred by the Founders and Patobios for which Omeros is obligated to reimburse the Founders and
Patobios pursuant to Section 3.6.




          1.53 “Patents” has the meaning set forth in Section 3.6(a).




          1.54 “Patobios Capital Stock” has the meaning set forth in Section 4.2.




          1.55 “Payment Date” means the date that Omeros pays an Option Fee or the Acquisition Price (as
applicable) to Patobios.




          1.56 “Payment Instructions” means the written payment instructions executed by Patobios and
delivered to Omeros prior to a Payment Date that provide delivery instructions for the Option Fee
or the Acquisition Price (including the Stock Consideration), as applicable, that may be paid by
Omeros to Patobios on such Payment Date.




          1.57 “Preferred Share Amount” means a number of shares of Omeros’ latest (relative to the
Closing Date (as defined in Article IV)) series of preferred stock (the “Preferred Stock”) equal





 





			
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to the quotient obtained by dividing (x) the Stock Exchange Rate, by (y) the price per share
at which Omeros last sold (prior to the Closing Date) the Preferred Stock in an arms-length
transaction, as evidenced in the most recent (relative to the Closing Date) executed stock purchase
agreement related to such sale that shall be provided by Omeros to Patobios.




          1.58 “Plan for MOCA Evaluation” means a written research plan for the further evaluation and
potential validation of the MOCA Technology by or on behalf of Omeros, as agreed and as maybe
amended from time to time by Patobios and Omeros in writing in a separate document, the provisions
of which shall include the De-Orphanization Milestone as defined herein.




          1.59 “Pro Rata Portion” has the meaning set forth in Section 8.3.




          1.60 “Public Market” means any securities trading markets on which Omeros Common Stock is
listed including, without limitation, AMEX, AIM, NASDAQ, NYSE and OTCBB. If Omeros Common Stock is
listed on more than one market, then Public Market shall mean the market with the greatest trading
volume of Omeros Common Stock as measured during the same period that the USD Trading Price is
determined.




          1.61 “Put Notice” has the meaning set forth in Section 3.3(a).




          1.62 “Put Objection Notice” has the meaning set forth in Section 3.3(a).




          1.63 “Regulation S” has the meaning set forth in Section 4.18(b)(ii).




          1.64 “Restricted Period” has the meaning set forth in Section 4.18(b)(iv).




          1.65 “Scientific Expert” has the meaning set forth in Section 3.3(a).




          1.66 “SEC” has the meaning set forth in Section 5.5.




          1.67 “Seller” and “Sellers” have the meanings set forth in Article IV.




          1.68 “Seller Representative” has the meaning set forth in Section 8.5(a).




          1.69 “Shares” has the meaning set forth in Section 4.18(b)(i).




          1.70 “Stock Consideration” means (a) if Omeros Common Stock is traded on a Public Market as of
the Closing Date, the Common Share Amount or (b) if Omeros Common Stock is not traded on a Public
Market as of the Closing Date, the Preferred Share Amount.




          1.71 “Stock Exchange Rate” means the product obtained by multiplying (x) three million
($3.0MM) CAD, by (y) the average daily noon USD to CAD exchange rate for the month preceding the
month of the Closing Date as quoted by the The Federal Reserve Board of the United States (or the
Bank of Canada if The Federal Reserve Board does not quote such average daily noon rate). For
purposes of illustration, if the preceding month average daily noon USD to CAD exchange rate is
$1.10 USD to $1 CAD, then the Stock Exchange Rate would be $3.3 million USD.





 





			
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          1.72 “Survival Date” has the meaning set forth in Section 8.1.




          1.73 “Third Party” has the meaning set forth in Section 3.1(b).




          1.74 “Third Party Claim” has the meaning set forth in Section 8.4(i).




          1.75 “Toronto” means The Governing Council of the University of Toronto.




          1.76 “Toronto Agreements” means, collectively, the Toronto Assignment and the Toronto Consent.




          1.77 “Toronto Assignment” has the meaning set forth in Section 4.17.




          1.78 “Toronto Consent” means the written consent of Toronto to the transactions contemplated
by this Agreement in the form attached hereto as Exhibit B, which shall be executed by Toronto and
delivered to Omeros simultaneously with the execution of this Agreement.




          1.79 “United States” has the meaning set forth in Section 4.18(c).




          1.80 “Unresolved Claims” has the meaning set forth in Section 8.4(d).




          1.81 “U.S. Person” has the meaning set forth in Section 4.18(c).




          1.82 “USD” means U.S. dollar(s).




          1.83 “USD Trading Price” shall mean the average closing sale price (in USD) of one share of
Omeros Common Stock as reported on the Public Market for the thirty (30) consecutive trading days
(or, if applicable, such shorter period of time that the average closing sales price has been
reported on the Public Market) ending on the date that is three (3) trading days immediately
preceding the Closing Date (as adjusted as appropriate to reflect any stock splits, stock
dividends, combinations, reorganizations, reclassifications or similar events). For purposes of
illustration, if the Closing Date falls on a Thursday, then the last day of such 30-day period
shall be the prior Monday (assuming Monday, Tuesday and Wednesday are trading days).




          1.84 “USPTO” has the meaning set forth in Section 4.15.




ARTICLE II




OPTION PERIOD




          2.1 Option Period One. Promptly following the date of this Agreement, Omeros shall pay two
hundred thousand ($200,000) CAD (“Option Fee One”) in accordance with the Payment Instructions. As
consideration for payment of Option Fee One, Omeros, the Founders and Patobios shall have the
rights and obligations set forth in Article III of this Agreement during the period beginning on
the date of this Agreement and ending at 5:00 p.m. Seattle time on June 4, 2009 (“Option Period
One”).





 





			
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          2.2 Option Period Two. If at any time during Option Period One, Omeros gives written notice
to Patobios of its intent to extend the Option Period beyond the end of Option Period One, and by
no later than the tenth (10) day following the last day of Option Period One, Omeros pays, in
accordance with the Payment Instructions, an additional amount equal to (i) six hundred fifty
thousand ($650,000) CAD less (ii) the Patent Fee Amount (“Option Fee Two”), then the Option Period
shall be extended for the period beginning at 5:00 pm Seattle time on the last day of Option Period
One and ending at 5:00 p.m. Seattle time on December 4, 2009 (the “Option Period Two”). During
Option Period Two, Omeros, the Founders and Patobios shall have the rights and obligations set
forth in Article III of this Agreement.




          2.3 Option Period Three. If at any time during Option Period Two, Omeros gives written notice
to Patobios of its intent to extend the Option Period beyond the end of Option Period Two, and by
no later than the tenth (10) day following the last day of Option Period Two, Omeros pays an
additional six hundred fifty thousand ($650,000) CAD (“Option Fee Three”) in accordance with the
Payment Instructions, then the Option Period shall be extended for the period beginning at 5:00
p.m. Seattle time on the last day of Option Period Two and ending at 5:00 p.m. Seattle time on June
4, 2010 (the “Option Period Three”). During Option Period Three, Omeros, the Founders and Patobios
shall have the rights and obligations set forth in Article III of this Agreement.




ARTICLE III




OPTION PERIOD RIGHTS AND OBLIGATIONS




          During the Option Period, as such may be extended by Omeros pursuant to Section 2.2 and
Section 2.3, Omeros, Patobios and the Founders shall have the rights and shall strictly comply with
their respective obligations set forth in this Article III. None of Omeros, Patobios or the
Founders shall have any of the rights or obligations set forth in this Article III following the
expiration of the Option Period or the termination of this Agreement in accordance with Section
9.1; provided, however, (a) that if an Exercise Notice or a Put Notice is provided within the
Option Period, then the Option Period shall automatically extend until the earlier of the Closing
Date and the termination of this Agreement in accordance with Section 9.1, (b) Omeros, on the one
hand, and Patobios and the Founders, on the other hand, shall be liable to each other for up to a
maximum amount equal to the aggregate gross proceeds paid by Omeros under this Agreement
(including, without limitation, for any payments made by Omeros pursuant to Section 3.6) for any
breach of any covenant to be performed by any such party pursuant to this Article III that occurred
during the Option Period, except in the case of fraud or willful breach of any such covenant by
such party in which case such liability shall not be so limited (provided, that for purposes of
this subsection (b), if Omeros purchases the MOCA Technology pursuant to this Agreement, then the
liability of Omeros, Patobios and the Founders shall instead be subject to limitations in
Article VIII), and (c) nothing herein shall limit the liability of a party for its fraud or willful
breach of any covenant to be performed by such party pursuant to this Article III that occurred
during the Option Period.





 





			
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          3.1 MOCA Technology Evaluation.





               (a) Omeros Evaluation. During the Option Period, Omeros shall have the exclusive right to
evaluate and test, and have evaluated and tested, the MOCA Technology as provided for in the Plan
for MOCA Evaluation. Unless Patobios or a Founder provides advance written consent, Omeros shall
not use the MOCA Technology except as provided in and envisioned by the Plan for MOCA Evaluation
during the Option Period. Any and all Improvements made by or on behalf of Omeros or by Patobios
or a Founder during the Option Period shall be owned solely by Patobios, subject to conveyance to
Omeros of all right, title and interest in and to such Improvements as part of any purchase of
the MOCA Technology by Omeros in accordance with Section 3.2. At the end of each defined
evaluation or test phase of any study being performed as part of the Plan for MOCA Evaluation,
Omeros shall prepare, or have prepared, written reports describing the results from the
evaluation and testing of the MOCA Technology by or on behalf of Omeros, including, without
limitation, the results of attempts to achieve the De-Orphanization Milestone, which reports
shall be promptly communicated in writing to Patobios.




               (b) Third Party Evaluation. During the Option Period, Omeros shall have the right to engage
one or more third parties (each a “Third Party”) to conduct testing of the MOCA Technology in
accordance with the Plan for MOCA Evaluation on Omeros’ behalf and at Omeros’ expense, provided
that Omeros shall (a) disclose to Patobios the identity of each Third Party and what portion(s)
of the Plan for MOCA Evaluation each Third Party is conducting on behalf of Omeros and (b) enter
into a written agreement with each Third Party pursuant to which such Third Party shall agree
that any Improvements made by such Third Party shall be initially owned solely by Patobios and
that any written study reports to be prepared by such Third Party at the end of each defined
evaluation or test phase of any study being performed as part of the Plan for MOCA Evaluation
shall be provided contemporaneously to Patobios and Omeros. Omeros shall not use a Third Party
to conduct testing of the MOCA Technology until Patobios shall have been given the opportunity to
review and approve those portions of Omeros’ agreement with the Third Party that are intended to
comply with Omeros’ obligations pursuant to this Section 3.1(b), provided that Patobios shall not
unreasonably withhold or delay its review and approval of those portions of such agreement.




               (c) Patobios Research. During the Option Period, Patobios and the Founders shall promptly
disclose to Omeros the data from and results of all further research, development, test,
evaluation, screening or surrogate de-orphanization activities performed by Patobios, the
Founders or any third party, to the extent permitted in accordance with this Agreement, using or
related to the MOCA Technology.



          3.2 Omeros’ Option to Purchase. At any time during the Option Period, Omeros shall have the
sole and exclusive right to purchase, and may exercise such right to purchase, and Patobios hereby
grants Omeros the sole and exclusive right to purchase, the MOCA Technology from Patobios by (a)
delivering written notice to Patobios of its intent to purchase the MOCA Technology (“Exercise
Notice”) and (b) paying the Acquisition Price in accordance with the Payment Instructions on the
Closing Date (subject to Section 8.4), which shall not be less than thirty (30)





 





			
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days, nor more than sixty (60) days, from the date of the Exercise Notice, on which Closing
Date Patobios shall sell to Omeros all right, title and interests in and to the MOCA Technology;
provided, however, that Omeros’ right to purchase, and Patobios’ obligation to sell, the MOCA
Technology pursuant to this Section 3.2 shall be subject to the fulfillment or waiver (as
permitted) on or before such Closing Date of the conditions set forth in Article VI, and should one
party fail to fulfill any obligation of such party that is a condition for Closing set forth in
Article VI, the other party may elect upon written notice to delay the Closing Date until such
obligation has either been fulfilled or such other party waives the associated condition.




          3.3 Patobios’ Right to Sell.





               (a) Put Notice. If at any time during the Option Period Patobios or the Founders receive
test results evidencing that Omeros has achieved the De-Orphanization Milestone (whether such
test results are provided by Omeros, a Third Party or any other person participating in the
testing of the MOCA Technology under the direction of Omeros), Patobios at its sole option may
require Omeros to purchase the MOCA Technology from Patobios for the Acquisition Price by
delivering written notice thereof to Omeros (“Put Notice”), provided that such Put Notice must be
given to Omeros within twenty (20) days of Patobios’ or the Founders’ receipt of test results
evidencing achievement of the De-Orphanization Milestone. If Omeros does not give Patobios and
the Founders a written objection (“Put Objection Notice”) to the Put Notice within twenty (20)
days of receipt thereof, Omeros shall pay the Acquisition Price in accordance with the Payment
Instructions on the Closing Date (subject to Section 8.4), which shall not be less than thirty
(30) days, nor more than sixty (60) days, from its receipt of the Put Notice. If Omeros gives a
Put Objection Notice to Patobios and the Founders, then, Patobios, the Founders and Omeros shall
meet promptly thereafter to review the results of the testing of the MOCA Technology and in good
faith attempt to determine together whether the De-Orphanization Milestone was achieved,
utilizing a mutually selected and agreed scientific expert (a “Scientific Expert”), and Omeros
will not be required to pay the Acquisition Price unless Omeros and Patobios agree in writing
that the De-Orphanization Milestone was achieved, in which case Omeros shall pay (i) the expenses
of the Scientific Expert (the “Expert Expenses”) and (ii) the Acquisition Price in accordance
with the Payment Instructions on the Closing Date (subject to Section 8.4), which shall not be
less than thirty (30) days, nor more than sixty (60) days, from the date of such written
agreement. If after utilizing a Scientific Expert, Omeros and Patobios agree in writing that the
De-Orphanization Milestone was not achieved, then Patobios will pay the Expert Expenses. If
after good faith negotiations Omeros and Patobios are not able to reach a mutual agreement within
sixty (60) days of the date of the Put Objection Notice as to whether the De-Orphanization
Milestone was achieved, the Founders may submit such dispute to arbitration in accordance with
Section 3.3(b) of this Agreement; provided that if the Founders do not submit such dispute to
arbitration within seventy (70) days of the date of the Put Objection Notice, then the applicable
Put Notice shall be void and have no force or effect pursuant to this Agreement. Omeros’
obligation to purchase, and Patobios and the Founders’ right to sell, the MOCA Technology
pursuant to this Section 3.3 shall be subject to the fulfillment or waiver (as permitted) on or
before such Closing Date of the conditions set forth in Article VI, and should one party fail to
fulfill any obligation of such party that is a condition for Closing set forth in Article VI, the
other party may elect upon written notice to delay the Closing Date until such obligation has
either been




 





			
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fulfilled or such other party waives the associated condition. The delivery or non-delivery
of a Put Objection Notice, any disagreement about whether the De-Orphanization Milestone has been
achieved and/or any determination that the De-Orphanization Milestone has not been achieved,
shall not suspend or terminate an Option Period or the parties’ respective rights and obligations
during such Option Period including, without limitation, Omeros’ continued right to purchase the
MOCA Technology during the Option Period as provided in Section 3.2.




               (b) Arbitration. Any dispute submitted to arbitration pursuant to Section 3.3(a) shall be
settled by arbitration conducted by one arbitrator mutually agreeable to Omeros and Patobios. In
the event that, within thirty (30) days after submission of any dispute to arbitration, Omeros
and Patobios cannot mutually agree on one arbitrator, then, within fifteen (15) days after the
end of such thirty (30)-day period, Omeros and Patobios shall each select one arbitrator. The
two arbitrators so selected shall select a third arbitrator. If Patobios fails to select an
arbitrator during this fifteen (15) day period, then the parties agree that the arbitration will
be conducted by one arbitrator selected by Omeros. Any arbitration shall be held in King County,
Washington, under the rules then in effect of the American Arbitration Association. The
arbitrator(s) shall determine how all expenses relating to the arbitration shall be paid,
including, without limitation, the respective expenses of each party, the fees of each arbitrator
and the administrative fee of the American Arbitration Association. The arbitrator or
arbitrators, as the case may be, shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrator or majority of the three arbitrators, as the case
may be, to discover relevant information from the opposing parties about the subject matter of
the dispute. The arbitrator, or a majority of the three arbitrators, as the case may be, shall
rule upon motions to compel or limit discovery and shall have the authority to impose sanctions,
including attorneys’ fees and costs, to the same extent as a competent court of law or equity,
should the arbitrators or a majority of the three arbitrators, as the case may be, determine that
discovery was sought without substantial justification or that discovery was refused or objected
to without substantial justification. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to whether the De-Orphanization Milestone was achieved shall
be final, binding, and conclusive upon the parties to this Agreement. Such decision shall be
written and shall be supported by written findings of fact and conclusions. If the decision of
the arbitrator(s) is that the De-Orphanization Milestone was achieved, then Omeros shall pay (i)
the Expert Expenses and (ii) the Acquisition Price in accordance with the Payment Instructions on
the Closing Date (subject to Section 8.4), which shall not be less than thirty (30) days, nor
more than sixty (60) days, from the date of such decision, provided that Patobios and the
Founders have fulfilled, or Omeros has waived, the conditions set forth in Article VI. If the
decision of the arbitrator(s) is that the De-Orphanization Milestone was not achieved as claimed
in the Put Notice, then the Put Notice shall be disregarded and this Agreement shall continue in
full force and effect in accordance with its terms and Patobios shall pay the Expert Expenses.
Judgment upon any award rendered by the arbitrator(s) may be entered in any court having
jurisdiction.



          3.4 No-Sale Obligations. During the Option Period, none of Patobios or the Founders may enter
into any written or oral agreement with any person or entity other than Omeros (a) providing for
the sale or other transfer of any equity interest in Patobios or the MOCA Technology,





 





			
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(b) providing for the acquisition of Patobios or the MOCA Technology or any interest in either
thereof, whether by merger, amalgamation, share exchange, recapitalization, consolidation,
liquidation, stock sale, option, purchase of assets, license, tender offer or otherwise or (c) that
may result in any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of
any sort (a “Lien”) being placed on Patobios, the MOCA Technology or any intellectual property or
other right included in the MOCA Technology and each of Patobios and the Founders shall take all
such action as shall be necessary to avoid any Lien being placed on Patobios, the MOCA Technology
or any intellectual property or other right included in the MOCA Technology. Patobios and the
Founders are not prohibited from soliciting offers to purchase Patobios or to purchase or license
the MOCA Technology during the Option Period from third parties, provided that (i) any of such
efforts shall be subject to all of the terms and conditions of this Agreement, (ii) Omeros shall
retain the sole and exclusive right to acquire the MOCA Technology during the Option Period by
paying the Acquisition Price as described in Section 3.2, (iii) Patobios shall disclose in writing
to Omeros the identity of any such third party that engages in any due diligence or other review of
Patobios or the MOCA Technology concurrently with the beginning of such due diligence or other
review and (iv) Patobios shall disclose to any such third party the existence of this Agreement and
the obligations in this Section 3.4 (but none of Patobios or the Founders shall disclose any other
terms of this Agreement).




          3.5 Third-Party Use and Disclosure. During the Option Period, each of Patobios and the
Founders shall not (a) allow or otherwise permit any other person or entity (other than Toronto as
permitted pursuant to the Toronto Consent and Omeros and Third Parties) to use the MOCA Technology,
or (b) publish, present or otherwise disclose, or permit any other person or entity to publish,
present or otherwise disclose, to any person or entity (other than Omeros and Third Parties) any
aspect of the Assays or the MOCA Technology, any Improvements, or any target- or compound-specific
results of attempted surrogate de-orphanization using the MOCA Technology, including, without
limitation, any reference to the location of the nuclear localization sequence (collectively “New
Data”), to any person or entity (other than Omeros), that is not, as of the date of this Agreement
as shown by Patobios’ written records, already disclosed in prior scientific journal publications,
published pending patent application(s) or issued patents included in the MOCA Technology, without
Omeros’ prior written consent. If Patobios or the Founders wish to publish, present or otherwise
disclose, or permit any other person or entity to publish, present or otherwise disclose, any New
Data, the Founders shall provide Omeros written notice including a copy of such intended
publication, presentation or other disclosure at least sixty (60) days in advance of the earlier of
the proposed submission of the New Data for publication or presentation or the proposed
publication, presentation or other disclosure of the New Data to seek Omeros’ consent to the
proposed publication, presentation or other disclosure. Omeros’ consent to the proposed
publication, presentation or other disclosure may not be unreasonably withheld but may be withheld
to preserve or protect rights in Intellectual Property or to preserve a competitive business
advantage as determined by Omeros.




          3.6 Patent Prosecution and Maintenance.





               (a) During the Option Period and prior to Omeros’ purchase of the MOCA Technology in
accordance with this Agreement, the Founders and Patobios shall have the sole




 





			
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right to apply for, prosecute and maintain patents and patent applications for inventions
included within the MOCA Technology (the “Patents” and the “Patent Applications”, respectively);
provided, however, that (i) the Founders and Patobios shall consult with and keep Omeros timely
informed of the status and progress of all Patent Applications and Patents, including the prompt
delivery of copies of all official correspondence filed with or received from international,
national and regional patent offices and patent counsel and advance notification of any proposed
actions to be taken or foregone with respect to the Patents and the good faith consideration of
all comments provided by Omeros, and the right for Omeros’ patent counsel to communicate directly
with the Founders’ and Patobios’ patent counsel, (ii) Omeros shall reimburse the Founders and
Patobios for all reasonable legal fees and government filing fees incurred by Patobios or the
Founders during the Option Period for application, prosecution and maintenance of the Patent
Applications and Patents; provided, however, that should the Founders or Patobios determine to
undertake the filing of any Patent Application (including, without limitation, regional or
national phase entry from an international patent application) for which Omeros does not wish to
reimburse the Founders and Patobios, Omeros shall so notify the Founders and Patobios in writing,
in which event Omeros shall be relieved of the obligation to reimburse the Founders and Patobios
for such filing, and such filing shall be excluded from the MOCA Technology and (iii) the
Founders and Patobios shall exert commercially reasonable efforts to diligently pursue all Patent
Applications to issuance or a final determination of unpatentability.




               (b) Patobios shall provide Omeros advance written notice of all upcoming actions required
for the filing, prosecution and maintenance of the Patents and the Patent Applications (“Patent
Action”), including a specific description of such Patent Action required, the deadline for
taking such Patent Action to avoid loss of right, the good faith estimated cost of such Patent
Action, and the patent office and patent attorney or patent agent communications addressing such
Patent Action, promptly after Patobios becomes aware of the upcoming action and in any event,
where possible, at least [†] days in advance of the deadline for completing such Patent Action
(it being acknowledged by Omeros that such notice will be for shorter periods in circumstances
where Patobios receives notice of a Patent Action and has less than [†] days to complete such
Patent Action). Omeros shall, before the later of [†] days prior to the deadline for taking such
Patent Action or [†] days following Omeros’ receipt of the notice of such Patent Action but in
any event prior to the deadline for completing such Patent Action, provide Patobios a written
response indicating either that Omeros (i) wishes Patobios to complete such patent Action, in
which case Patobios shall timely complete or timely cause the completion of such Patent Action
and Omeros shall be obligated to reimburse Patobios for Patobios’ documented third-party costs
for completion of such Patent Action incurred during the Option Period and prior to Omeros’
purchase of the MOCA Technology as provided for in Section 3.6(a) or (ii) does not wish Patobios
to complete or cause the completion of such Patent Action, in which event Omeros shall have no
obligation to reimburse Patobios for any costs associated with such Patent Action and the
specific Patent or Patent Application for which such Patent Action was requested shall thereafter
be excluded from the MOCA Technology as provided in Section 3.6(c). Should Omeros fail to
provide instructions within the time periods set forth in the foregoing sentence, Omeros shall be
deemed to have timely instructed Patobios that Omeros wishes to have Patobios complete such
Patent Action. Any instruction provided by Omeros with respect to completing a Patent Action for
a specific Patent or Patent Application shall not obligate Omeros with respect to future




 





			
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additional Patent Actions that may be required for such specific Patent or Patent
Application, which instead shall be addressed in turn in accordance with the procedures of this
Section 3.6(b). Any reimbursement payable due to Patobios pursuant to Sections 3.6(a) and 3.6(b)
shall be made by Omeros within [†] days from Omeros’ receipt of an invoice from Patobios
including supporting receipt or third party invoice documentation. With respect to Patent
Actions for which Omeros has agreed to reimburse Patobios’ for its costs, Omeros and Patobios may
agree in advance for Omeros to be invoiced directly by third party service providers for
authorized work, in which event Omeros shall make payment directly to such service providers
within [†] days from Omeros’ receipt of an invoice.




               (c) The Founders and Patobios shall promptly provide written disclosure to Omeros of any
inventions and Improvements included within the MOCA Technology promptly following the conception
or reduction to practice of such inventions and Improvements.



          3.7 Patent Enforcement.





               (a) If any party learns of the infringement of any Patent, published Patent Application or
other Intellectual Property right included in the MOCA Technology, such party shall promptly
notify the other parties of such infringement in writing and will provide the other parties with
all evidence of infringement in the notifying party’s possession. All parties shall use their
best efforts in cooperation with each other to terminate third party infringement without
litigation.




               (b) During the Option Period and prior to Omeros’ purchase of the MOCA Technology in
accordance with this Agreement, the Founders and Patobios shall have the sole right, after
consulting with Omeros and considering in good faith all comments and suggestions from Omeros, to
enforce the Patents, Patent Applications (to the extent enforceable) or other Intellectual
Property right included in the MOCA Technology against any third party infringers at the sole
cost and expense of Patobios. If after such consultation Patobios elects not to enforce the
Patents, Patent Applications (to the extent enforceable) or other Intellectual Property Right
included in the MOCA Technology, then Patobios shall immediately notify Omeros, in which event
Omeros shall have the right, at its sole cost and expense, to enforce the Patents, Patent
Applications (to the extent enforceable) or other Intellectual Property right included in the
MOCA Technology against the third party infringer(s), in which event any award, judgment,
settlement or damages collected (“Enforcement Proceeds”) shall belong solely to Omeros without
duty to account to any other party; provided, however, that if Omeros does not acquire the MOCA
Technology prior to the expiration of the Option Period, then following the expiration of the
Option Period Omeros shall pay to Patobios any Enforcement Proceeds it receives less an amount
equal to Omeros’ costs and expenses incurred in connection with such enforcement action. During
the Option Period and prior to Omeros’ purchase of the MOCA Technology, none of Patobios, the
Founders or Omeros shall enter into any settlement, agreement or understanding invalidating,
limiting or reducing the Patents, Patent Applications or other Intellectual Property rights in
the MOCA Technology, or granting any license to any third party to the Patents, Patent
Applications or other Intellectual Property rights in the MOCA Technology without the prior




 





			
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written consent of all of the other parties to this Agreement (other than the Escrow Agent),
which consent shall not be unreasonably withheld.



          3.8 Post-Acquisition Use of the MOCA Technology. Following the purchase by Omeros of the MOCA
Technology pursuant to this Agreement, Patobios shall have no further right to use the MOCA
Technology for any purpose, and the Founders shall have no further right to use the MOCA Technology
for any purpose except for such retained non-commercial academic research use rights as may be
enjoyed by the Founders by virtue of their employment by Toronto as provided for and in accordance
with the terms of the Toronto Assignment and the Toronto Consent. Following the purchase by Omeros
of the MOCA Technology pursuant to this Agreement, Patobios and the Founders shall have no right to
and shall not publish, present or otherwise disclose, or permit any other person or entity to
publish, present or otherwise disclose, any New Data unless expressly authorized by Omeros in
advance in writing.




ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF PATOBIOS AND THE FOUNDERS




          Patobios and the Founders (each, a “Seller” and together, the “Sellers”), jointly and
severally, hereby represent and warrant to Omeros on the date hereof and, if applicable, the date
of the Closing (as defined in Article VI) (the “Closing Date”), as though made on the Closing Date,
as follows:




          4.1 Organization.  Patobios is a corporation duly organized, validly existing and in good
standing under the laws of the Province of Ontario. Patobios has the corporate power to own its
properties and to carry on its business as currently conducted. Patobios is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the character or
location of its assets or properties (whether owned, leased or licensed) or the nature of its
business make such qualifications necessary.




          4.2 Capital Structure.  The authorized capital stock of Patobios consists of: an unlimited
number of Class A Preference shares, six thousand (6,000) of which are issued and outstanding; an
unlimited number of Class B Preference shares, four thousand (4,000) of which are issued and
outstanding; an unlimited number of Class I common shares, six thousand (6,000) of which are issued
and outstanding; and an unlimited number of Class II common shares, four thousand (4,000) of which
are issued and outstanding (“Patobios Capital Stock”). Each Founder holds three thousand (3,000)
Class A Preference shares, fifteen hundred (1,500) Class B Preference shares, three thousand Class
I common shares and fifteen hundred (1,500) Class II common shares, and Toronto holds one thousand
(1,000) Class B Preference shares and one thousand (1,000) Class II common shares. The Founders and
Toronto are the only holders of Patobios Capital Stock. There are no options, warrants or other
rights to purchase any outstanding Patobios Capital Stock or authorized and unissued Patobios
Capital Stock




          4.3 Subsidiaries.  Patobios does not have and has never had any subsidiaries or affiliated
companies and does not otherwise own and has never otherwise owned any shares of capital stock or





 





			
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any interest in, or control, directly or indirectly, any other corporation, limited liability
company, partnership, association, joint venture or other business entity.




          4.4 Authority.  Patobios and each of the Founders has all requisite power and authority or
capacity (as applicable) to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary corporate action on the
part of Patobios and no further action is required on the part of Patobios or the Founders to
authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Patobios and the Founders and assuming the due authorization, execution
and delivery by the other parties hereto, constitutes the valid and binding obligations of Patobios
and the Founders enforceable against each of them in accordance with its terms, except as such
enforceability may be subject to the laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and rules of law governing specific performance, injunctive
relief, or other equitable remedies.




          4.5 No Conflict.  The execution and delivery by Patobios and the Founders of this Agreement,
and the consummation of the transactions contemplated hereby, will not conflict with or result in
any violation of or default under (with or without notice or lapse of time, or both) or give rise
to a right of termination, cancellation, modification or acceleration of any obligation or loss of
any benefit under (any such event, a “Conflict”) (i) any provision of the organizational documents
of Patobios, (ii) except as set forth in the Toronto Agreements, any license, mortgage, indenture,
lease, contract, covenant or other agreement, instrument or commitment, permit, concession,
franchise or other license (each a “Contract” and collectively the “Contracts”) to which Patobios
or any of the Founders or any of their respective properties or assets (whether tangible or
intangible) are bound, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Patobios or the Founders or any of their respective properties or assets
(whether tangible or intangible). Patobios is in compliance with and has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted under, any of the
terms or conditions of any Contract, nor does Patobios or any of the Founders have any knowledge of
any event that would constitute such a breach, violation or default with the lapse of time, giving
of notice or both. Omeros shall be able to evaluate and test the MOCA Technology during the Option
Period in accordance with the Plan for MOCA Evaluation without the payment of any amounts or other
consideration or without giving up any rights, except for those amounts and rights that are
specifically set forth in this Agreement, including without limitation, any payments to be made by
Omeros to a Third Party as contemplated in Section 3.1(b) and any other payments Omeros may of its
own accord agree to make to any other Person. If Omeros acquires the MOCA Technology pursuant to
this Agreement, the MOCA
Technology and Omeros’ ownership or use thereof will not be subject to any Contracts, rights,
non-competition obligations, royalty payment obligations, assessments, fees or other obligations
(other than pursuant to Contracts to which Omeros may be a party, or other obligations that Omeros
has knowingly incurred).




          4.6 Consents.  Assuming the execution and delivery of the Toronto Consent by Toronto, no
consent, notice, waiver, approval, order or authorization of, or registration, declaration or
filing with any court, administrative agency or commission or other provincial, federal, state,
county, local





 





			
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or other foreign governmental authority, instrumentality, agency or commission (each,
a “Governmental Entity”) or any third party, including a party to any agreement with Patobios
and/or the Founders (so as not to trigger any Conflict), is required by, or with respect to,
Patobios or any of the Founders in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.




          4.7 Tax Matters.  Patobios has not been advised in writing (i) that any of its tax returns
have been or are being audited, or (ii) of any deficiency in assessment or proposed judgment with
respect to its taxes. There are (and, if applicable immediately following the Closing Date there
will be) no Liens on the assets of Patobios or the MOCA Technology relating to or attributable to
taxes. Neither Patobios nor any Founder has knowledge of any basis for the assertion of any claim
relating or attributable to taxes which, if adversely determined, would result in any Lien on the
assets of Patobios including, without limitation, the MOCA Technology.




          4.8 Title to MOCA Technology; Absence of Liens and Encumbrance.  Patobios has good and valid
title to the MOCA Technology, including, without limitation, the Assays, the Improvements, the
Patents, the Patent Applications and all other rights set forth in Section 1.34, free and clear of
any Liens except as set forth in the Toronto Agreements, and upon Omeros’ purchase of the MOCA
Technology pursuant to this Agreement, title to the MOCA Technology, including, without limitation,
the Assays, the Improvements, the Patents, the Patent Applications and all other rights set forth
in Section 1.34, will be transferred to Omeros.




          4.9 Litigation.  There is no action, suit, claim or proceeding of any nature pending, or to
the knowledge of Patobios or any of the Founders, threatened, against Patobios or any of the
Founders, their properties (tangible or intangible) or any of Patobios’ officers or directors that
relates directly or indirectly to the MOCA Technology, nor to the knowledge of Patobios or the
Founders is there any reasonable basis therefor. There is no investigation or other proceeding
pending or, to the knowledge of Patobios or any of the Founders, threatened, against Patobios or
any of the Founders, any of their respective properties (tangible or intangible) or any of
Patobios’ officers or directors by or before any Governmental Entity, nor to the knowledge of
Patobios or any of the Founders is there any reasonable basis therefor. No Governmental Entity has
at any time challenged or questioned the
legal right of Patobios to conduct its operations as presently or previously conducted or as
currently contemplated to be conducted.




          4.10 Brokers’ and Finders’ Fees; Third Party Expenses.  Neither Patobios nor any of the
Founders has incurred, nor will it incur, directly or indirectly, any liability for brokerage or
finders’ fees or agents’ commissions, fees related to investment banking or similar advisory
services or any similar charges in connection with the Agreement or any transaction contemplated
hereby.




          4.11 Compliance with Laws.  Patobios has complied with, is not in violation of, and has not
received any notices of violation with respect to, any provincial, federal, state or local statute,
law or regulation.




          4.12 Prior Disclosures. Patobios and the Founders have not made or submitted for publication
or presentation, or made any disclosure other than under valid agreements including





 





			
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industry
standard obligations of nondisclosure and non-use, of any technical or scientific aspect of the
MOCA Technology, or any results or data generated using the MOCA Technology, that are not included
in the Patents included in the MOCA Technology, except for the following disclosures, publications
or presentations: (a) O’Dowd et al., Dopamine Receptor Oligomerization Visualized in Living Cells,
J. Biol. Chem 280:37225-35 (2005), (b) O’Dowd et al., Using Ligand-Induced Conformational Change to
Screen for Compounds Targeting G-Protein-Coupled Receptors, J. Biomol. Screen. 12:175-85 (2007),
(c) O’Dowd et al., A Novel Drug Screening Assay for G Protein-coupled Receptors. In: Ligand Design
for G Protein-Coupled Receptors. Ed. D. Rognan, Wiley-VCH Verlag GmbH and Co., p51-60 (2006), (d)
Juhasz et al., Mu-opioid Receptor Heterooligomer Formation With The Dopamine D1 Receptor As
Directly Visualized In Living Cells. Eur. J. Pharmacol. 581:235-243 (2008) and [†] (collectively,
the “Listed Disclosures”).




          4.13 Prior Testing. Patobios and the Founders have disclosed to Omeros all material data and
results from all screening, testing, or other use or evaluation of the MOCA Technology by Patobios,
the Founders, Toronto or any third party, and have disclosed to Omeros any and all other
information known to Patobios or the Founders that are material to evaluation of the utility of the
MOCA Technology. None of Patobios or the Founders is aware of any data, results or other
information that could reasonably be interpreted by scientists of skill in the art as evidence that
the Assays included in the MOCA Technology will be unable, inefficient or ineffective for the
identification of transmembrane protein-interacting molecules when utilized in high-thoughput
screening and broadly applicable for the surrogate-deorphanization of orphan G protein-coupled
receptors.




          4.14 Representations Complete.  None of the representations or warranties made by Patobios or
the Founders in this Agreement, and none of the statements made in any exhibit, schedule or
certificate furnished by Patobios or the Founders pursuant to this Agreement contains, or will
contain on the Closing Date, any untrue statement of a material fact, or omits or will omit on the
Closing Date to state any
material fact necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.




          4.15 Intellectual Property.





               (a) All Patent Applications and Patents are listed in Section 1.34 of this Agreement, and
are all active and pending or issued. True and complete copies of all submissions and filings
to, and all office actions, search reports, communications and other correspondence from, the
United States Patent and Trademark Office (the “USPTO”) and other national, regional and
international patent offices have been provided to Omeros. Other than examination of the Patent
Applications at such patent offices as reflected in such documents, there are no proceedings or
actions before any court, tribunal, the USPTO or other national, regional and international
patent office related to any of the Patents and Patent Applications.




               (b) To the extent required by then current rules of the USPTO, all prior art and other
information material to the patentability of the claims of the Patent Applications known to
Patobios and the Founders or other individuals involved with the prosecution of US Patent
Applications and US Patents in the MOCA Technology has been timely disclosed to the USPTO,




 





			
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in
keeping with the duty of candor, good faith and disclosure owed to the USPTO,
and no
material
misrepresentation have been made to the USPTO in such Patents and Patent Applications. Patobios
and the Founders have timely complied with applicable duties of disclosure owed to other
national, regional and international patent offices in relation to the Patents and Patent
Applications and have made no material misrepresentations to such patent offices.




               (c) All inventions claimed in the Patents and Patent Applications have been invented solely
by the Founders. None of Patobios or any of the Founders have been notified of any inventorship
challenges nor has any interference been declared or provoked nor are Patobios or any of the
Founders aware of any conflicting inventorship claims in relation to any of the Patents or Patent
Applications. There are no third parties known to Patobios or any of the Founders who have or
will be able to assert rights, and no third parties have provided written notice to Patobios or
any of the Founders alleging that such third party may establish rights, to any Intellectual
Property included in the MOCA Technology. Except as may be set forth in any office action,
search report, communications and other correspondence from the USPTO and other national,
regional and international patent offices, no third party has asserted that any of the claims of
the Patents and Patent Applications are unpatentable, invalid or unenforceable. There is no
pending or threatened action, suit or proceeding or written claim by any third party challenging
Patobios’ or the Founders’ rights in or to, or the patentability, enforceability or validity of,
any Intellectual Property included in the MOCA Technology.




               (d) The Patent Applications claim what Patobios and the Founders reasonably believe after
due searching to be patentable subject matter, and all issued Patents are valid and enforceable.
All Patent Applications and Patents have been duly filed in or issued by the USPTO or other
national, regional and international patent offices and have been timely maintained and renewed
in accordance with all applicable provisions of law and administrative regulations in the
United States and all such other jurisdictions, and all necessary declarations, assignments,
documents, certificates and fees in connection with the Patents and Patent Applications have been
timely filed with the relevant patent offices. Patobios and the Founders have taken all
commercially reasonable steps to establish and preserve their ownership of all Intellectual
Property included in the MOCA Technology.




               (e) Except as set forth in the Toronto Agreements, none of Patobios or the Founders has
entered into any agreement with any third party granting such third party any rights related to
the MOCA Technology. Except as set forth in the Toronto Agreements, neither Patobios nor any of
the Founders has granted or otherwise transferred ownership of, or granted any nonexclusive or
exclusive license or right to use, or authorized the retention of any exclusive rights to use or
joint ownership of, any Intellectual Property included in the MOCA Technology to any third
parties. To the knowledge of Patobios and the Founders, Toronto has not granted or otherwise
transferred ownership of, or granted any nonexclusive or exclusive license or right to use, or
authorized the retention of any exclusive rights to use or joint ownership of, any Intellectual
Property included in the MOCA Technology to any party except to the Founders under the Toronto
Assignment. All Intellectual Property, including, without limitation, all Patents and Patent
Applications, included in the MOCA Technology are free and clear of any Liens or




 





			
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encumbrances,
except as set forth in the Toronto Agreements. Patobios is the exclusive owner of all
Intellectual Property included in the MOCA Technology. All Intellectual Property included in the
MOCA Technology will be fully transferable, alienable or licensable by Omeros on the Closing Date
without restriction and without payment of any kind to any third party. No Intellectual Property
included in the MOCA Technology is subject to any proceeding or outstanding decree, order,
judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by Patobios or any of the Founders or that may affect the validity, use or
enforceability of such Intellectual Property.




               (f) None of Patobios or the Founders are aware of infringement by third parties of any
Intellectual Property included in the MOCA Technology. None of Patobios or the Founders are
aware of any licenses or other third party rights required to utilize the MOCA Technology in its
current form and state, and the use of the MOCA Technology does not infringe other Intellectual
Property rights of any third party. There is no pending, or to Patobios’ or the Founder’s
knowledge, threatened action, suit or proceeding or written claim by any third party that the
MOCA Technology infringes or otherwise violates the Intellectual Property of a third party.




               (g) If Omeros purchases the MOCA Technology pursuant to this Agreement, Patobios and the
Founders will have disclosed to Omeros in writing all filings, responses and other actions that
must be taken by Omeros following the purchase of the MOCA Technology within sixty (60) days of
the Closing for the purposes of maintaining, perfecting and preserving all patents, patent
applications and other Intellectual Property included in the MOCA Technology. In each case in
which Patobios or any of the Founders has acquired any Intellectual Property included in the MOCA
Technology from any other person or entity, Patobios and the Founders, as the case may be, have
obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such
Intellectual Property and the associated Intellectual Property rights, and,
to the maximum extent provided for by, and in accordance with, applicable laws and
regulations, have recorded each such assignment with the relevant governmental authorities,
including the USPTO and applicable foreign, regional and international patent offices.




               (h) Except pursuant to the publication of the Patents and Patent Applications filed in
respect of the MOCA Technology and the Listed Disclosures, none of Patobios or any of the
Founders has permitted any of the Intellectual Property included in the MOCA Technology to enter
into the public domain.




               (i) There are no contracts, licenses or agreements between Patobios or any of the Founders
and any other person with respect to the Intellectual Property included in the MOCA Technology
under which there is any dispute regarding the scope of such agreement, or performance under such
agreement, including with respect to any payments to be made or received by Patobios or any of
the Founders.




               (j) Neither this Agreement nor the transactions contemplated hereby will result in:
(i) Omeros granting to any third party any right to or with respect to any Intellectual Property
included in the MOCA Technology or otherwise owned by, or licensed to, Omeros, (ii) Omeros




 





			
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being
bound by, or subject to, any non-compete or other material restriction on the operation or scope
of its business or research activities, or (iii) Omeros being obligated to pay any royalties or
other amounts to any person or entity.




               (k) Each of Patobios and the Founders has taken all reasonable steps that are required or
necessary to protect Patobios’ and the Founders’ rights in confidential information and trade
secrets of Patobios or any the Founders or provided by any other person to Patobios or the
Founders.




               (l) No government funding, or facilities or resources of a university, college, other
educational institution or research center other than Toronto, or funding from third parties, was
used in the development of the Intellectual Property included in the MOCA Technology, except for:
Proof of Principle Grant – Canadian Institutes for Health Research (a grant in the amount of
$100,000 CAD), Canadian Institutes for Health Research Grant (a grant in the amount of $175,000
CAD per annum for five years), Canada Research Chair Award (a grant in the amount of $200,000 CAD
per annum for five years) and University of Toronto (free use of facilities). No Governmental
Entity, university, college, other educational institution or research center has any claim or
right in or to the Intellectual Property included in the MOCA Technology other than Toronto to
the extent provided in the Toronto Assignment.



          4.16 Payment Allocation. The allocation of the Option Fees and Acquisition Price in
accordance with the Payment Instructions is consistent with all written or oral agreements among
Patobios, the Founders or Toronto or any other holders of Patobios Capital Stock and does not
violate the organizational documents of Patobios.




          4.17 Toronto Agreement. The Assignment of Rights from the University of Toronto between
Toronto and the Founders dated June 28, 2002 (the “Toronto Assignment”) was duly
executed and delivered by the Founders and Toronto, and constitutes a valid and binding
agreement among the Founders and Toronto, enforceable against each of them in accordance with its
terms, except as such enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency, and the relief of debtors and rules of law governing specific performance,
injunctive relief, or other equitable remedies. Except as set forth in the Toronto Consent, (a)
all obligations and covenants of the Founders to Toronto under the Toronto Agreement shall be fully
satisfied upon payment by Omeros of each Option Fee (as may be applicable) and the Acquisition
Price in accordance with the Payment Instructions (subject to Section 9.4), and (b) upon completion
of all such payments Toronto shall have no other interest or rights in or to the MOCA Technology.




          4.18 Regulation S





               (a) This Agreement is made by Omeros with the Sellers, who are all Non-U.S. persons (as
defined below in this Section 4.18(c)), in reliance upon each such Non-U.S. person’s
representations, warranties and covenants made in this Section 4.18.




               (b) Such Non-U.S. person has been advised and acknowledges that:




 





			
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                         (i) any shares of Omeros Common Stock or Preferred Stock, including Common Stock issuable upon
conversion of such Preferred Stock (the “Shares”), as the case may be, that may be issued to such
Non-U.S. person pursuant to this Agreement have not been, and when issued, will not be registered
under the United States Securities Act of 1933, as amended (the “Securities Act”), the securities
laws of any state of the United States or the securities laws of any other country;



                         (ii) in issuing and selling the Shares to such Non-U.S. person pursuant hereto, Omeros is
relying upon the “safe harbor” provided by Regulation S (“Regulation S”) and/or on Section 4(2)
under the Securities Act;



                         (iii) it is a condition to the availability of the Regulation S “safe harbor” that the Shares
not be offered or sold in the United States or to a U.S. person until the expiration of a one-year
“distribution compliance period” (or a six-month “distribution compliance period”, if Omeros is a
“reporting issuer”, as defined in Regulation S) following the Closing Date; and



                         (iv) notwithstanding the foregoing, prior to the expiration of the one-year “distribution
compliance period” (or six-month “distribution compliance period”, if Omeros is a “reporting
issuer”, as defined in Regulation S) after the Closing Date (the “Restricted Period”), the Shares
may be offered and sold by the holder thereof only if such offer and sale is made in compliance
with the terms of this Agreement and either: (A) if the offer or sale is within the United States
or to or for the account of a U.S. person (as such terms are defined in Regulation S), the
securities are offered and sold pursuant to an effective registration statement or pursuant to Rule
144 under the Securities Act or pursuant to an exemption from the registration requirements of the
Securities Act; or (B) the offer and sale is outside the United States and to other than a U.S.
person.




               (c) As used herein, the term “United States” means the United States of America, its
territories and possessions, any State of the United States, and the District of Columbia, and
the term “U.S. person” (as defined in Regulation S) means:



                         (i) a natural person resident in the United States;



                         (ii) any partnership or corporation organized or incorporated under the laws of the United
States;



                         (iii) any estate of which any executor or administrator is a U.S. person;



                         (iv) any trust of which any trustee is a U.S. person;



                         (v) any agency or branch of a foreign entity located in the United States;



                         (vi) any nondiscretionary account or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. person;




 





			
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                         (vii) any discretionary account or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated and (if an individual) resident in the United
States; and



                         (viii) a corporation or partnership organized under the laws of any foreign jurisdiction and
formed by a U.S. person principally for the purpose of investing in securities not registered under
the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.



          As used herein, the term “Non-U.S. person” means any person who is not a U.S. person or is
deemed not to be a U.S. person under Rule 902(k)(2) of the Securities Act.




               (d) Such Non-U.S. person agrees that with respect to the Shares, until the expiration of the
Restricted Period:



                         (i) such Non-U.S. person, its agents or its representatives have not and will not solicit
offers to buy, offer for sale or sell any of the Shares, or any beneficial interest therein in the
United States or to or for the account of a U.S. person; and



                         (ii) notwithstanding the foregoing, the Shares may be offered and sold by the holder thereof
only if such offer and sale is made in compliance with the terms of this Agreement and either:
(A) if the offer or sale is within the United States or to or for the account of a U.S. person (as
such terms are defined in Regulation S), the securities are offered and sold pursuant to an
effective registration statement or pursuant to Rule 144 under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act; or (B) the offer and sale is
outside the United States and to other than a U.S. person; and



                         (iii) such Non-U.S. person shall not engage in hedging transactions with regard to the Shares
unless in compliance with the Securities Act.



          The foregoing restrictions are binding upon subsequent transferees of the Shares, except for
transferees pursuant to an effective registration statement. Such Non-U.S. person agrees that after
the Restricted Period, the Shares may be offered or sold within the United States or to or for the
account of a U.S. person only pursuant to applicable securities laws.





               (e) Such Non-U.S. person has not engaged, nor is it aware that any party has engaged, and
such Non-U.S. person will not engage or cause any third party to engage, in any directed selling
efforts (as such term is defined in Regulation S) in the United States with respect to the
Shares.




               (f) Such Non-U.S. person: (i) is domiciled and has its principal place of business outside
the United States; (ii) certifies it is not a U.S. person and is not acquiring the Shares for the
account or benefit of any U.S. person; and (iii) at the time of the Closing Date, the Non-U.S.
person or persons acting on Non-U.S. person’s behalf in connection therewith will be located
outside the United States.




 





			
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               (g) At the time of offering to such Non-U.S. person and communication of such Non-U.S.
person’s order to purchase the Shares and at the time of such Non-U.S. Person’s execution of this
Agreement, the Non-U.S. person or persons acting on Non-U.S. person’s behalf in connection
therewith were located outside the United States.




               (h) Such Non-U.S. person is not a “distributor” (as defined in Regulation S) or a “dealer”
(as defined in the Securities Act).




               (i) Such Non-U.S. person acknowledges that Omeros shall make a notation in its stock books
regarding the restrictions on transfer set forth in this Section 4.18 and shall transfer such
shares on the books of Omeros only to the extent consistent therewith.



          In particular, such Non-U.S. person acknowledges that Omeros shall refuse to register any
transfer of the Shares not made in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act or pursuant to an available exemption from registration.





               (j) Such Non-U.S. person understands and agrees that each certificate held by such Non-U.S.
person representing the Shares, or any other securities issued in respect of the Shares upon
conversion thereof upon any stock split, stock dividend, recapitalization, merger, consolidation
or similar event, shall bear the following legend (in addition to any legend required by this
Agreement or under applicable state securities laws):




THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SHARES
REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR
ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE,
HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES
REPRESENTED BY THIS CERTIFICATE.




               (k) Such Non-U.S. person hereby represents that it is satisfied as to the full observance of
the laws of its jurisdiction in connection with any acquisition of the Shares and the execution
and delivery of this Agreement, including (i) the legal requirements within such Non-U.S.
person’s jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that may need to be
obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the
purchase,




 





			
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holding, redemption, sale or transfer of such securities. Such Non-U.S. person’s
receipt and beneficial ownership of the Shares will not violate any applicable securities or
other laws of such Non-U.S. person’s jurisdiction.



ARTICLE V




REPRESENTATIONS AND WARRANTIES OF OMEROS




          Omeros hereby represents and warrants to Patobios that on the date hereof and as of the
Closing Date, as though made on the Closing Date, as follows: 




          5.1 Organization.  Omeros is a corporation duly organized and validly existing under the laws
of the State of Washington. Omeros is duly qualified or licensed to do business and in good
standing as a foreign corporation in each jurisdiction in which the character or location of its
assets or properties (whether owned, leased or licensed) or the nature of its business make such
qualifications necessary.




          5.2 Authority.  Omeros has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby; provided, however, that
additional board and shareholder action and the filing of an amendment to Omeros’ Articles of
Incorporation may be required if Omeros issues its Preferred Stock as the Stock Consideration. The
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby have
been duly authorized by all necessary corporate action on the part of Omeros; provided,
however, that additional board and shareholder action and the filing of an amendment to Omeros’
Articles of Incorporation may be required if Omeros issues its Preferred Stock as the Stock
Consideration. This Agreement has been duly executed and delivered by Omeros and constitutes the
valid and binding obligation of Omeros, enforceable against Omeros in accordance with its terms,
except as such enforceability may be limited by principles of public policy and subject to the laws
of general application relating to bankruptcy, insolvency and the relief of debtors and rules of
law governing specific performance, injunctive relief or other equitable remedies.




          5.3 Consents.  No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, or any third party is required by or with
respect to Omeros in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as may be required under
applicable securities laws; (ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings which, if not obtained or made, would not have a material
adverse effect on the business, assets (including intangible assets), condition (financial or
otherwise), results of operations or capitalization of Omeros; and (iii) shareholder approval of,
and the filing of, an amendment to Omeros’ Articles of Incorporation if Omeros issues its Preferred
Stock as the Stock Consideration, which Omeros shall use its reasonable best efforts to obtain and
file, as applicable, if it issues Preferred Stock as the Stock Consideration.





 





			
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          5.4 Shares. When and if issued to the Founders, the Shares will be duly authorized, validly
issued, fully paid and nonassessable and free and clear of any liens and encumbrances; provided,
however, that the Shares may be subject to restrictions on transfer under Canadian or U.S.
provincial, state and/or federal securities laws and as set forth herein and, if Omeros issues its
Preferred Stock as the Stock Consideration, in any stock purchase agreement and/or shareholder
agreement to which the Founders may become parties.



          5.5 SEC Documents; Omeros Financial Statements. If as of the Closing Date Omeros has a class
of stock registered under Section 12(b) the United States Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and issues Common Stock as the Stock Consideration, Omeros shall make
the representations and warranties set forth in this Section 5.5 as of the Closing Date:



          A true and complete copy of each annual, quarterly and other report, registration statement,
and definitive proxy statement (as applicable) filed by Omeros with the United States Securities
and Exchange Commission (“SEC”) for the one-year period ending on the Closing Date (the “Omeros SEC
Documents”) is available on the Web site maintained by the SEC at http://www.sec.gov. As of their
respective filing dates, the Omeros SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Omeros SEC Documents, and none of
the Omeros SEC Documents contained on their filing dates any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, except to the
extent corrected by a subsequently filed Omeros SEC Document. The financial statements of Omeros
included in the Omeros SEC Documents (the “Omeros Financial Statements”) complied as to form in all
material respects with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto, except in the case of pro forma statements, or,
in the case of unaudited financial statements, except as permitted under Form 10-Q under the
Exchange Act) and fairly presented the consolidated financial position of Omeros and its
consolidated subsidiaries as of the respective dates thereof and the consolidated results of
Omeros’ operations and cash flows for the periods indicated (subject to, in the case of unaudited
statements, normal and recurring year-end audit adjustments). As of the Closing Date, Omeros has
filed with the SEC all filings required to be made under the Exchange Act that were required to be
filed during the one-year period ending on the Closing Date and, since the date of Omeros’ last SEC
filing, no event has occurred (other than the closing of the transactions contemplated by this
Agreement), which will require Omeros to complete such a filing by the fourth (4th) day following
the Closing Date.



          5.6 Preferred Stock Purchase Agreement. If as of the Closing Date Omeros does not have a
class of stock registered under Section 12(b) of the Exchange Act and issues Preferred Stock as the
Stock Consideration, Omeros shall not make the representations and warranties in Section 5.5 and
instead shall make the representations and warranties set forth in the stock purchase agreement
that Omeros previously negotiated for the its last arms-length sale and issuance of its Preferred
Stock, as modified by any schedule of exceptions delivered therewith. The Sellers will also be
entitled to be




 





			
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added as parties to any shareholder agreement that all of the previous purchasers of such Preferred Stock were made parties to in connection with the purchase of such Preferred Stock.




ARTICLE VI




CONDITIONS TO THE CLOSING OF THE PURCHASE AND SALE OF THE MOCA TECHNOLOGY




          Subject to the terms and conditions of this Agreement, if an Exercise Notice or a Put Notice
is provided within the Option Period, then the purchase and sale of the MOCA Technology and the
payment of the Acquisition Price shall occur at a closing (the “Closing”) to take place at such
time and at such place as mutually agreed by Omeros and Patobios, which shall not be less than
thirty (30) days, nor more than sixty (60) days, from the date of the Exercise Notice or Put
Notice, on which date Patobios shall sell to Omeros all right, title and interests in and to the
MOCA Technology; provided, however, that Omeros’ right to purchase, and Patobios’ obligation to
sell, the MOCA Technology shall be subject to the fulfillment or waiver (as permitted) on or before
such date of the conditions set forth in this Article VI.



          6.1 Conditions to Omeros’ Obligation to Close. The obligations of Omeros to purchase the MOCA
Technology shall be subject to the satisfaction at or prior to the Closing of the following
conditions, unless waived in writing by Omeros on or prior to the Closing:




               (a) Representations, Warranties and Covenants. (i) The representations and warranties of
the Sellers in this Agreement shall have been true and correct on the date they were made and
shall be true and correct in all material respects (without giving effect to any limitation as
to “materiality”) on and as of the Closing Date as though such representations and warranties
were made on and as of such time, and (ii) the Sellers shall have performed and complied in all
material respects with all covenants and obligations under this Agreement required to be
performed and complied with by the Sellers as of the Closing.




               (b) Bill of Sale. Patobios and the Founders shall have duly executed and delivered a Bill
of Sale to Omeros, in a form acceptable to Omeros, assigning, transferring and conveying to
Omeros all rights and title to and in the MOCA Technology.




               (c) Patent Assignments. Patobios shall have duly executed and delivered to Omeros a Patent
Assignment, in a form acceptable to Omeros, conveying all rights and title to and interest in all
patents, patent applications and inventions included in the MOCA Technology to Omeros.




               (d) Governmental Approval. Approvals from any Governmental Entity (if any) deemed
appropriate or necessary by Omeros shall have been timely obtained.




               (e) Third Party Consents. Patobios shall have delivered to Omeros all necessary consents,
waivers and approvals of parties to any Contract set as are required thereunder in




 





			
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connection with sale of the MOCA Technology, or for any such Contract to remain in full force and effect
without limitation, modification or alteration after the Closing.




               (f) Legal Opinion. Omeros shall have received a legal opinion from legal counsel to
Patobios, substantially in the form attached hereto as Exhibit C.




               (g) Certificate of Patobios and the Founders. Omeros shall have received a certificate,
validly executed by the Chief Executive Officer of Patobios for and on Patobios’s behalf and by
the Founders, to the effect that, as of the Closing:



                         (i) the representations and warranties of Patobios and the Founders in this Agreement were
true and correct on the date they were made and are true and correct on and as of the Closing Date
as though such representations and warranties were made on and as of such time;



                         (ii) Patobios and the Founders have performed and complied in all material respects with all
covenants and obligations under this Agreement required to be performed and complied with by such
parties as of the Closing; and



                         (iii) the conditions to the obligations of Omeros set forth in this Section 6.1 have been
satisfied (unless otherwise waived in accordance with the terms hereof).




               (h) Valid Placement. The issuance of Shares in connection with the Agreement shall qualify
as a valid exemption from the registration requirements of the Securities Act as a valid private
placement under Regulation S under the Securities Act.



          6.2 Conditions to Patobios’ Obligation to Close. The obligations of Patobios to sell and
transfer the MOCA Technology shall be subject to the satisfaction at or prior to the Closing of the
following conditions, unless waived in writing by Patobios on or prior to the Closing:





               (a) Acquisition Price. Omeros shall have delivered the Acquisition Price in accordance with
the Payment Instructions, subject to Section 8.4. Notwithstanding the foregoing or anything to
the contrary contained in this Agreement, if (i) Omeros Common Stock is not traded on a Public
Market as of the Closing Date and (ii) at least ten (10) days prior to the Closing Date Omeros or
Patobios gives written notice to the other party electing to pay or receive (as applicable) cash
in lieu of and in full satisfaction of the Stock Consideration, then in lieu of and in full
satisfaction of Omeros’ obligation to deliver the Stock Consideration portion of the Acquisition
Price pursuant to this Section 6.2(a), Omeros shall instead deliver to Patobios two million five
hundred thousand ($2.5 MM) CAD in accordance with the Payment Instructions. For the avoidance of
doubt, if Omeros is obligated to deliver cash in lieu of the Stock Consideration pursuant to the
preceding sentence, and Omeros
delivers, in accordance with the Payment Instructions (subject to Section 8.4), cash in an
amount equal to (I) seven million seven hundred sixteen thousand ($7.716MM) CAD less any Option
Fee Credit, plus (II) two million five hundred thousand ($2.5 MM) CAD, plus (III) if Omeros paid
Option Fee Two, the Patent Fee Amount (but only to the extent that the Patent Fee Amount reduced
Option Fee Two), then Omeros shall have no obligation to issue any of its equity or any
additional cash to Patobios, the




 





			
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Founders or any other party pursuant to this Agreement and
Omeros will have fully satisfied its obligations pursuant to this Section 6.2(a).




               (b) Representations, Warranties and Covenants. (i) The representations and warranties of
Omeros in this Agreement (other than the representations and warranties of the Omeros as of a
specified date, which shall be true and correct as of such date) shall have been true and correct
on the date they were made and shall be true and correct in all material respects (without
giving effect to any limitation as to “materiality”) on and as of the Closing Date as though such
representations and warranties were made on and as of such time, and (ii) Omeros shall have
performed and complied in all material respects with all covenants and obligations under this
Agreement required to be performed and complied with by such parties as of the Closing.




               (c) Governmental Approval. Approvals from any Governmental Entity necessary for Omeros to
purchase the MOCA Technology (if any) shall have been timely obtained.




               (d) Third Party Consents. Omeros shall have delivered to Patobios all necessary consents,
waivers and approvals of parties to any material contract to which Omeros is a party and that are
required in connection with purchase of the MOCA Technology, where the failure to obtain such
consent, waiver or approval would have a material adverse effect on Omeros.




               (e) Legal Opinion. Patobios shall have received a legal opinion from legal counsel to
Omeros, substantially in the form attached hereto as Exhibit D.




               (f) Certificate of Omeros. Patobios shall have received a certificate executed on behalf of
Omeros by its Chief Executive Officer for and on its behalf to the effect that, as of the
Closing:



                         (i) all representations and warranties made by Omeros in this Agreement (other than the
representations and warranties of Omeros as of a specified date, which were true and correct as of
such date) were true and correct on the date they were made and are true and correct in all
material respects on and as of the Closing Date as though such representations and warranties were
made on and as of such time; and



                         (ii) all covenants and obligations under this Agreement to be performed by Omeros on or before
the Closing have been so performed in all material respects.



          6.3 Conditions to Obligations of Each Party to Close. The respective obligations of Omeros to
purchase, and Patobios’ obligation to sell and transfer, the MOCA Technology shall be
subject to the satisfaction at or prior to the Closing of the following conditions, unless
waived in writing by Omeros and Patobios:





               (a) No Order. No Governmental Entity shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and which has the effect of




 





			
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making the sale and purchase of the MOCA Technology pursuant to this Agreement illegal or
otherwise prohibiting consummation of sale and purchase of the MOCA Technology pursuant to this
Agreement.




               (b) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the sale and purchase of the MOCA
Technology shall be in effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be threatened or pending.



ARTICLE VII




ADDITIONAL AGREEMENTS




          7.1 Confidentiality. Prior to and during the term of this Agreement, Omeros, Patobios and the
Founders (in each case the “Disclosing Party”) may disclose, directly or indirectly, to one or more
other parties hereto (in each case the “Receiving Party”) confidential and proprietary information
(“Confidential Information”) that has been developed or is owned by the Disclosing Party.
Confidential Information may include, without limitation, research and development information,
know-how, inventions, trade secrets, technical data, targets (genes or proteins), knock-out and
knock-in mouse strains, gene expression profiles, behavioral and physiological assays, phenotypes,
cell lines, cellular, biochemical and chemical assays, chemical structures, chemical
structure-activity relationships, formulae, treatment methods, clinical trial design criteria,
protocols, drawings, designs, models, samples, processes, chemistry, manufacturing and controls
information, regulatory information, and any type of product development, business or marketing
plans or strategies, financial information or business information. For purposes of clarity, all
data and results generated by Patobios or the Founders using the MOCA Technology shall be
considered as Patobios’ Confidential Information, and all data and results generated by Omeros
using the MOCA Technology shall be considered Omeros’ Confidential Information.





               (a) For a period of [†] from the date of termination of this Agreement, the Receiving Party
will not at any time disclose or otherwise make known or available to any person, firm,
corporation or other entity, or use for its own account or for any purpose other than attendant
to performance in accordance with this Agreement, any Confidential Information disclosed by the
Disclosing Party prior to or during the term of this Agreement, without the express prior written
consent of the Disclosing Party. The Receiving Party shall utilize reasonable procedures to
safeguard Confidential Information, including releasing Confidential Information only to
employees, consultants, directors, officers and advisors, on a “need-to-know”
basis, who have agreed to abide by obligations limiting use and disclosure substantially
similar to the Receiving Party’s obligations under this Section 7.1. Notwithstanding the
provisions of this Section 7.1, Omeros shall be permitted to disclose all information it
possesses related to the MOCA Technology in response to due diligence and similar requests from
third parties who have agreed to abide by obligations limiting use and disclosure substantially
similar to Omeros’ obligations under this Section 7.1




 





			
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               (b) Confidential Information does not include information that the Receiving Party can
establish:



                         (i) is or becomes generally available to the public other than as a result of a disclosure by
the Receiving Party;



                         (ii) was in the possession of the Receiving Party prior to its being furnished to the
Receiving Party under this Agreement, provided that the source of such information was not known to
the Receiving Party to be bound by a confidentiality agreement with, or other contractual, legal,
or fiduciary obligation of confidentiality to the Disclosing Party or any other party with respect
to such information and that such prior possession can reasonably be proven by the Receiving Party
by written records;



                         (iii) becomes available to the Receiving Party on a non-confidential basis from a source other
than the Disclosing Party, provided that such source is not bound by a confidentiality agreement
with, or other contractual, legal, or fiduciary obligation of confidentiality to the Disclosing
Party or any other party with respect to such information; or



                         (iv) was independently developed by the Receiving Party without reference to the Confidential
Information, provided that such independent development can reasonably be proven by the Receiving
Party by written records.




               (c) If the Receiving Party is required by law, regulation or order of a court of law,
administrative agency, or other governmental body to disclose any of the Confidential
Information, the Receiving Party will promptly provide the Disclosing Party with reasonable
advance written notice of such required disclosure, and will disclose only the legally required
portion of the Confidential Information.



          7.2 Ownership of Intellectual Property Related to Drug Targets and Compounds. Except for, and
subject to, Patobios’ ownership of Improvements to the MOCA Technology prior to Omeros’ purchase of
the MOCA Technology as set forth in Section 3.1, Omeros shall own any and all Intellectual Property
conceived, reduced to practice, developed, improved or enhanced by Omeros, with or without the
contribution of the Founders and Patobios, during performance of the Plan for MOCA Evaluation,
including without limitation all Intellectual Property related to potential drug targets and
compounds related to potential drug targets discovered during the surrogate de-orphanization of an
orphan GPCR during performance of the Plan for MOCA Evaluation, except as expressly follows in the
remainder of this Section 7.2. Notwithstanding anything in the foregoing sentence or elsewhere in
this Section 7.2, Patobios shall, prior to (but not after) the Closing, continue to own all
Intellectual Property rights in the MOCA Technology including any improvements thereto. If the
surrogate de-orphanization activities conducted during the performance of the Plan for MOCA
Evaluation result in one or more compounds that are hits (as such term is defined in Section 1.14)
but there are an insufficient number of hits to meet the De-Orphanization Milestone, and Omeros
does not exercise its option to purchase the MOCA Technology prior to termination of this
Agreement, then within thirty (30) days of termination of this Agreement, Omeros may pay to
Patobios a fee of [†] (“Compound Fee”) for which Omeros wishes to own all Intellectual Property





 





			
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rights that claim the composition of matter of such compound, and for any hit(s) for which Omeros
does not pay such a Compound Fee, Patobios shall own all Intellectual Property rights that claim
the composition of matter of such compound(s).




          7.3 Expenses. Except as set forth in Section 3.6, all fees and expenses incurred in
connection with this Agreement including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of this Agreement and
the transactions contemplated hereby, shall be the obligation of the respective party incurring
such fees and expenses.




          7.4 Public Disclosure. Except as required by applicable law or regulation, no party hereto
may use any other party’s name or identifying marks or information in any promotional, advertising
or other materials without the other party’s prior written consent; provided, however, Omeros may
through written or oral communications disclose the names and identifying marks and information of
the Sellers to Omeros’ employees, consultants, shareholders, underwriters (including their
attorneys) and potential partners, investors and consultants and for regulatory filings. Each of
the parties hereto shall not disclose to any third party the terms of this Agreement without the
prior written consent of the other parties, except to advisors, investors, and others on a
need-to-know basis under circumstances that reasonably ensure the confidentiality thereof, or to
the extent required by applicable law or regulation. The Sellers acknowledge and provide their
consent to Omeros filing this Agreement with the SEC and describing this Agreement in any filings
it may make with the SEC.




          7.5 Notification of Certain Matters. Patobios or any Founder, as the case may be, shall give
prompt notice to Omeros of: (i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or warranty of Patobios or any
Founder, respectively and as the case may be, contained in this Agreement to be untrue or
inaccurate at or prior to the Closing Date, and (ii) any failure of any Seller to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 7.5 shall not (a) limit
or otherwise affect any remedies available to the party receiving such notice or (b) constitute an
acknowledgment or admission of a breach of this Agreement. No disclosure pursuant to this
Section 7.5, however, shall be deemed to prevent or cure any misrepresentations, breach of warranty
or breach of covenant.




          7.6 Additional Documents and Further Assurances. Subject to the terms and conditions in this
Agreement, each of the parties hereto shall use reasonable efforts to take promptly, or cause to be
taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals, to satisfy the
closing conditions (if applicable) and to effect all necessary registrations and filings and to
remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate
and make effective the transactions contemplated by this Agreement for the purpose of securing to
the parties hereto the benefits contemplated by this Agreement; provided, however, that nothing in
this Agreement shall be interpreted or construed to obligate Omeros to deliver an Exercise Notice
or pay





 





			
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Option Fee Two or Option Fee Three nor to obligate Patobios to deliver a Put Notice upon
achievement of the De-Orphanization Milestone.




          7.7 Patents and Reasonable Assistance. After any purchase by Omeros of the MOCA Technology in
accordance with this Agreement, Omeros shall have the sole right, in its sole discretion, to apply
for, prosecute and maintain the Patent Applications and Patents. The Founders and Patobios will
provide all reasonable assistance, including review of documents and the execution of all
assignments, declarations and other documents, and will cause Patobios’ officers and employees to
review and execute all documents, necessary to make, prosecute, maintain and enforce the Patents,
and to confirm title in Omeros’ name if Omeros completes the purchase of the MOCA Technology, all
for no additional consideration but with reimbursement by Omeros of the Founders’ and Patobios’
reasonable expenses for such assistance.




          7.8 Patent Infringement. After any purchase by Omeros of the MOCA Technology in accordance
with this Agreement, Omeros shall have the sole right, in its sole discretion, to enforce the
Patents, published Patent Applications or other Intellectual Property right included in the MOCA
Technology against any infringers, at the sole cost of Omeros, and without duty to account for any
Enforcement Proceeds to any other party.




          7.9 Laboratory Records. After any purchase by Omeros of the MOCA Technology in accordance
with this Agreement, the Founders and Patobios shall deliver to Omeros all available original
laboratory notebooks and scientific records, in true and complete form, pertaining to the
conception, reduction to practice, testing, evaluation and use of the Assays and the MOCA
Technology by the Founders and Patobios.




ARTICLE VIII




SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW




          8.1 Survival of Representations, Warranties and Covenants. If Omeros purchases the MOCA
Technology pursuant to this Agreement, the representations and warranties of the Sellers and Omeros
contained in this Agreement or in any certificate or other instruments delivered pursuant to this
Agreement, shall survive for a period of two years following the Closing Date (the expiration of
such two-year period, the “Survival Date”).




          8.2 Indemnification.





               (a) Subject to the limitations set forth in Section 8.3(a), the Sellers agree to jointly and
severally indemnify and hold harmless Omeros and its officers, directors, affiliates, employees,
agents and representatives (the “Indemnified Parties”), against all claims, losses, liabilities,
damages, deficiencies, costs, interest, awards, judgments, penalties and expenses, including
attorneys’ and consultants’ fees and expenses and including any such expenses incurred in
connection with investigating, defending against or settling any of the foregoing (hereinafter
individually a “Loss” and collectively “Losses”) incurred or sustained by the Indemnified
Parties, or any of them, directly or indirectly, as a result of (i) any breach or inaccuracy of a
representation




 





			
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or warranty of any of the Sellers contained in this Agreement or in any
certificate or other instruments delivered pursuant to this Agreement and (ii) any failure by any
Seller to perform or comply with any covenant applicable to any of them contained in this
Agreement or in any certificate or other instruments delivered pursuant to this Agreement. The
Sellers shall not have any right of contribution, indemnification or right of advancement from
Omeros with respect to any Loss claimed by an Indemnified Party.




               (b) Any Seller committing fraud or any willful breach of any representation, warranty or
covenant contained in this Agreement, certificate or other instrument delivered pursuant to this
Agreement shall be severally, and not jointly, liable for, and shall indemnify and hold the
Indemnified Parties harmless for, any Losses incurred or sustained by the Indemnified Parties, or
any of them, directly or indirectly, as a result of such fraud or willful breach of a
representation or warranty, inaccuracy of any representation, warranty or covenant committed by
such Seller.



          8.3 Maximum Payments; Remedy.





               (a) Except as set forth in Section 8.3(b), the maximum amount an Indemnified Party may
recover from a Seller individually pursuant to the indemnity set forth in Section 8.2 for Losses
shall be limited to such Seller’s Pro Rata Portion of the Escrow Fund as set forth in Schedule
9.3 (“Pro Rata Portion”); provided, however, that except as set forth in Section 8.3(b), the
liability of each of the Sellers for breaches of the representations and warranties contained in
Section 4.8 (Title to MOCA Technology; Absence of Liens and Encumbrances) and Section 4.15
(Intellectual Property) hereof shall be limited to a CAD dollar amount equal to the aggregate
proceeds received, directly or indirectly, by such Seller (any payments made by Omeros pursuant
to Section 3.6 shall not be counted for purposes of determining the aggregate proceeds received
by a Seller).




               (b) Notwithstanding anything to the contrary set forth in this Agreement, nothing in this
Agreement shall limit the liability of any Seller (and the Escrow Fund shall not be the exclusive
remedy) in respect of Losses arising out of any fraud committed by such Seller or any willful
breach by such Seller of any representation, warranty or covenant contained in this Agreement,
certificate or other instrument delivered pursuant to this Agreement on the part of such Seller.



          8.4 Escrow Arrangements.





               (a) Escrow Fund. By virtue of this Agreement and as partial security for the indemnity
obligations provided for in Section 8.2 hereof, on the Closing Date, Omeros will notify and
deposit with the Escrow Agent the Escrow Amount without any act of Patobios or the Founders, such
deposit of the Escrow Amount to constitute an escrow fund (the “Escrow Fund”) to be governed by
the terms set forth herein. The Escrow Amount (plus any interest earned on such Escrow Amount in
accordance with Section 8.4(e)(ii)) shall be available to compensate the Indemnified Parties for
any claims by such parties for any Losses suffered or incurred by them and for which they are
entitled to recovery under this Article VIII. The Escrow Agent may




 





			
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execute this Agreement
following the date hereof and prior to the Closing, and such later execution, if so executed
after the date hereof, shall not affect the binding nature of this Agreement as of the date
hereof between the other signatories hereto.




               (b) Deductible Amount. Notwithstanding any provision of this Agreement to the contrary, an
Indemnified Party may not recover any Losses under Section 8.2(a)(i) unless and until one or more
Officer’s Certificates (as defined below) identifying such Losses under Section 8.2(a)(i) hereof
in excess of $25,000 CAD in the aggregate (the “Deductible Amount”) has or have been delivered to
the Escrow Agent or the Seller Representative (as defined in Section 8.5) as provided in Section
8.4(f), in which case Omeros shall be entitled to recover all Losses so identified including the
Deductible Amount. For the purposes hereof, “Officer’s Certificate” shall mean a certificate
signed by any officer of Omeros: (1) stating that an Indemnified Party has paid, sustained,
incurred, or properly accrued, or reasonably anticipates that it will have to pay, sustain,
incur, or accrue Losses, and (2) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid, sustained, incurred, or
properly accrued, or the basis for such anticipated liability, and, if applicable, the nature of
the misrepresentation, breach of warranty or covenant to which such item is related.




               (c) Satisfaction of Claims. Except to the extent that the Losses resulted from fraud or any
willful breach of any representation, warranty or covenant contained in this Agreement or in any
certificate or other instruments delivered pursuant to this Agreement, committed by any Seller,
claims by an Indemnified Party for Losses shall be satisfied solely from the Escrow Fund. Claims
by an Indemnified Party for Losses resulting from fraud or any willful breach of any
representation, warranty or covenant contained in this Agreement or in any certificate or other
instruments delivered pursuant to this Agreement, committed by any Seller shall be satisfied:
(A) first, from the Escrow Fund, but only after (i) satisfying all other claims not related to
fraud or any willful breaches of covenants committed by any Seller, and (ii) making appropriate
reserve as provided herein for Unresolved Claims (as defined in Section 8.4(d)), not related to
fraud or any willful breaches of covenants committed by any Seller, and (B) second, if the Escrow
Fund is insufficient after such satisfaction or reserve, solely and directly against such Seller.




               (d) Escrow Period; Distribution upon Termination of Escrow Periods. Subject to the
following requirements, the Escrow Fund shall be in existence immediately following the Closing
and shall terminate at 5:00 p.m. Seattle time, on the date thirty (30) days after the Survival
Date (the “Escrow Period”).



                         (i) At 5:00 p.m. Seattle time on the eighteen (18)-month anniversary of the Closing Date (the
“Initial Escrow Termination Date”) the Escrow Fund shall terminate with respect to five hundred
thousand ($500,000) CAD initially deposited into the Escrow Fund, less: (A) any amounts that have
been distributed out of the Escrow Fund prior to the Initial Escrow Termination Date pursuant to
Section 8.4(f) in satisfaction of indemnification claims pursuant to this Section 8.4, and (B) any
amounts (the “Initial Escrow Holdback Amount”) which, in the reasonable judgment of Omeros, subject
to the reasonable objection of the Seller Representative, is necessary to satisfy any then pending
and unsatisfied claims specified in any Officer’s Certificate(s)




 





			
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delivered to the Escrow Agent
prior to the tenth (10th) day following the Initial Escrow Termination Date with respect to facts
and circumstances existing prior to the Initial Escrow Termination Date. The Escrow Agent shall
distribute to Patobios the portion of the Escrow Fund that is available for distribution pursuant
to this section in accordance with Section 8.4(d)(iii); provided, however, that the Escrow Agent
will not distribute the Initial Escrow Holdback Amount until all related claims have been resolved,
at which time the Escrow Agent shall deliver to Patobios the remaining portion of the Initial
Escrow Holdback Amount, if any, not required to satisfy the claims described in Section
8.4(d)(i)(B). For clarification purposes, Initial Escrow Termination Date funds will not be
released until the expiration of the ten (10) day period referenced in 8.4(d)(i) and 8.4(d)(iii).




                         (ii) At 5:00 p.m. Seattle time on the last day of the Escrow Period (the “Escrow Termination
Date”) the Escrow Fund shall terminate with respect to any amounts remaining in the Escrow Fund at
that time; provided, however, that the Escrow Period shall not terminate with respect to any amount
which is necessary to satisfy any unsatisfied claims specified in any Officer’s Certificate
(“Unresolved Claims”) delivered to the Escrow Agent and the Seller Representative prior to the
Escrow Termination Date with respect to facts and circumstances existing prior to the Survival
Date. The Escrow Agent shall distribute to Patobios the portion of the Escrow Fund that is
available for distribution pursuant to this section in accordance with Section 8.4(d)(iii);
provided, however, that the Escrow Agent will not distribute any amounts related to any Unresolved
Claims until all such claims have been resolved, at which time the Escrow Agent shall deliver to
Patobios the remaining portion of the Escrow Fund, if any, not required to satisfy such claims.
For clarification purposes, Escrow Termination Date funds will not be released until the expiration
of the Escrow Period (as defined in Section 8.4(d)) and the ten (10) day period referenced
8.4(d)(iii).



                         (iii) Within ten (10) days of the Initial Escrow Termination Date and the Escrow Termination
Date, Omeros will notify the Seller Representative and the Escrow Agent in writing of the portion
of the Escrow Fund that may be distributed pursuant to Section 8.4(d)(i) or Section 8.4(d)(ii), as
applicable, and the allocation of such distribution (an “Escrow Distribution Notice”). If the
Escrow
Agent does not timely receive any Escrow Distribution Notice from Omeros, the Escrow Agent
shall promptly (and in any event within ten (10) days) after the expiration of such ten (10) day
period deliver to Patobios the portion of the Escrow Fund available to be released from the Escrow
Fund on such date, subject to the limitations in Section 8.4(d)(i) and Section 8.4(d)(ii). The
Seller Representative shall have twenty (20) days following receipt of the Escrow Distribution
Notice from Omeros during which to object to the contents thereof by sending written notice thereof
to Omeros and the Escrow Agent. If the Escrow Agent does not timely receive any such written
objection from the Seller Representative, or if such notice period is waived in writing by the
Seller Representative, the Escrow Agent shall distribute the Escrow Fund in accordance with the
Escrow Distribution Notice and will incur no liability, and shall be fully protected, in relying on
the Escrow Distribution Notice.




               (e) Protection of Escrow Fund.



                         (i) The Escrow Agent shall hold and safeguard the Escrow Fund during the Escrow Period, shall
treat such fund as a trust fund in accordance with the terms of this




 





			
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Agreement and shall hold and
dispose of the Escrow Fund only in accordance with the terms of this Article VIII.




                         (ii) The Escrow Amount shall be invested in Canadian dollar denominated funds as directed by
Omeros and Patobios and pending availability to U.S. Bank National Association. Patobios shall be
treated as having received and recontributed to the Escrow Fund income earned on the Escrow Fund,
and shall be liable and responsible for any taxes due with respect to such income. For
clarification purposes, Omeros and Patobios acknowledge that absent the aforementioned joint
written investment instruction, funds will remain uninvested.




               (f) Claims for Indemnification.



                         (i) Upon receipt by the Escrow Agent at any time on or before the Escrow Termination Date of
an Officer’s Certificate, the Escrow Agent shall, subject to the provisions of Section 8.4(g) and
Section 8.4(h), deliver to Omeros, as promptly as practicable, cash held in the Escrow Fund equal
to such Losses. If the Losses are denominated in USD, then the amount of CAD removed from the
Escrow Fund shall be sufficient to pay the Losses in USD using the daily noon USD to CAD exchange
rate for the day that such CAD are removed from the Escrow Fund and paid to Omeros (the “Indemnity
Exchange Rate”), as quoted by the The Federal Reserve Board of the United States (or the Bank of
Canada if The Federal Reserve Board does not quote such daily noon rate). Omeros shall set forth
the applicable Indemnity Exchange Rate in any such Officer’s Certificate delivered to the Escrow
Agent.



                         (ii) If the Seller Representative does not object in writing within the 30-day period after
delivery by the Omeros of the Officer’s Certificate, such failure to so object shall be an
irrevocable acknowledgment by the Seller Representative and the Sellers that the Indemnified Party
is entitled to the full amount of the claim for Losses set forth in such Officer’s Certificate.




               (g) Objections to Claims against the Escrow Fund. At the time of delivery of any Officer’s
Certificate to the Escrow Agent, a duplicate copy of such certificate shall be delivered to the
Seller Representative, and for a period of thirty (30) days after such delivery, the Escrow Agent
shall make no delivery to Omeros of any Escrow Amount pursuant to Section 8.4(f) unless the
Escrow Agent shall have received written authorization from the Seller Representative to make
such delivery. After the expiration of such thirty (30)-day period, subject to the limitations
set forth in Section 8.4(f)(i), the Escrow Agent shall make delivery of cash from the Escrow Fund
equal to the amount of Losses (converted to USD using the Indemnity Exchange Rate set forth by
Omeros in the Officer’s Certificate) claimed in the Officer’s Certificate; provided that no such
payment or delivery may be made if the Seller Representative shall object in a written statement
to the claim made in the Officer’s Certificate (an “Objection Notice”), and such Objection Notice
shall have been delivered to the Escrow Agent prior to the expiration of such thirty (30)-day
period.




 





			
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               (h) Resolution of Conflicts; Arbitration.



                         (i) In case the Seller Representative delivers an Objection Notice in accordance with Section
8.4(g) hereof, the Seller Representative and Omeros shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the Seller Representative
and Omeros should so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties and, in the case of a claim against the Escrow Fund, shall be furnished to the
Escrow Agent and, in the case of a claim directly against the Sellers, to the Sellers. The Escrow
Agent shall be entitled to rely on any such memorandum and make distributions from the Escrow Fund
in accordance with the terms thereof.



                         (ii) If no such agreement can be reached after good faith negotiation and prior to thirty (30)
days after delivery of an Objection Notice, either Omeros or the Seller Representative may demand
arbitration of the matter unless the amount of the Loss that is at issue is the subject of a
pending litigation with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration, and in either such event the matter
shall be settled by arbitration conducted by one arbitrator mutually agreeable to Omeros and the
Seller Representative. In the event that, within thirty (30) days after submission of any dispute
to arbitration, Omeros and the Seller Representative cannot mutually agree on one arbitrator, then,
within fifteen (15) days after the end of such thirty (30)-day period, Omeros and the Seller
Representative shall each select one arbitrator. The two arbitrators so selected shall select a
third arbitrator. If the Seller Representative fails to select an arbitrator during this fifteen
(15)-day period, then the parties agree that the arbitration will be conducted by one arbitrator
selected by Omeros.



                         (iii) Any arbitration shall be held in King County, Washington, under the rules then in effect
of the American Arbitration Association. The arbitrator(s) shall determine how all expenses
relating to the arbitration shall be paid, including without limitation, the respective expenses of
each party, the fees of each arbitrator and the administrative fee of the American Arbitration
Association. The arbitrator or arbitrators, as the case may be, shall set a limited time period
and establish procedures designed to reduce the cost and time for discovery while allowing
the parties an opportunity, adequate in the sole judgment of the arbitrator or majority of the
three arbitrators, as the case may be, to discover relevant information from the opposing parties
about the subject matter of the dispute. The arbitrator, or a majority of the three arbitrators,
as the case may be, shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys’ fees and costs, to the same extent as a
competent court of law or equity, should the arbitrators or a majority of the three arbitrators, as
the case may be, determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The decision of the
arbitrator or a majority of the three arbitrators, as the case may be, as to the validity and
amount of any claim in such Officer’s Certificate shall be final, binding, and conclusive upon the
parties to this Agreement. Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded
by the arbitrator(s), and the Escrow Agent shall be entitled to rely on, and make distributions
from the Escrow Fund in accordance with, the terms of such award,




 





			
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 judgment, decree or order as
applicable. Within thirty (30) days of a decision of the arbitrator(s) requiring payment by one
party to another, such party shall make the payment to such other party.




                         (iv) Judgment upon any award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. The forgoing arbitration provision shall apply to any dispute among the Sellers and
the Indemnified Parties under this Article VIII, whether relating to claims upon the Escrow Fund or
to the other indemnification obligations set forth in this Article VIII.




               (i) Third-Party Claims. In the event Omeros becomes aware of a third party claim which
Omeros reasonably believes may result in a demand against the Escrow Fund or for other
indemnification pursuant to this Article VIII (a “Third Party Claim”), Omeros shall notify the
Seller Representative of such claim, and the Seller Representative shall be entitled on behalf of
the Sellers, at their expense, to participate in, but not to determine or conduct, the defense of
such Third Party Claim. Omeros shall have the right in its sole discretion to conduct the defense
of, and to settle, any such claim; provided, however, that except with the consent of the Seller
Representative, no settlement of any such Third Party Claim with third party claimants shall be
determinative of the amount of Losses relating to such matter. In the event that the Seller
Representative has consented to any such settlement, the Sellers shall have no power or authority
to object under any provision of this Article VIII to the amount of any Third Party Claim by
Omeros against the Escrow Fund with respect to such settlement.




               (j) Escrow Agent’s Duties.



                         (i) The duties and responsibilities of the Escrow Agent shall be limited to those expressly
set forth in Article VIII and Article X of this Agreement. No implied duties or discretionary
powers may be imputed to it by the terms of this Agreement, or otherwise. The Escrow Agent shall
not be subject to, nor obliged to recognize, any other instrument governing the rights or duties of
the other parties to this Agreement, even though reference thereto may be made in this Agreement.



                         (ii) The Escrow Agent may disregard any and all notices or instructions received from any
source, except only (1) such notices or instructions as are specifically provided for in this
Agreement and (2) orders or process of any court entered or issued with jurisdiction. If from time
to time any property held pursuant to this Agreement becomes subject to any order, judgment,
decree, injunction or other judicial process (“Order”), the Escrow Agent may comply with any such
Order without liability to any person, even though such Order may thereafter be annulled, reversed,
modified or vacated.



                         (iii) Whenever the Escrow Agent should receive or become aware of any conflicting demands or
claims with respect to this Agreement or the rights of any of the parties hereto or any property
held hereunder, the Escrow Agent may without liability refrain from any action until the conflict
has been resolved or, alternatively, may tender into the registry or custody of any court which the
Escrow Agent determines to have jurisdiction all money or property in its hands under this
Agreement, together with such legal pleadings as it deems appropriate, less a reasonable allowance
for its legal fees and expenses, and thereupon be discharged from all further duties and




 





			
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liabilities under this Agreement. Any inaction or filing of proceedings pursuant to this section
shall not deprive the Escrow Agent of its compensation during such inaction or prior to such
filing.




                         (iv) Unless otherwise specifically indicated herein, the Escrow Agent shall proceed as soon as
practicable to collect any checks or other collection items at any time deposited hereunder. All
such collections shall be subject to the usual collection agreement regarding items received by its
commercial banking department for deposit or collection. The Escrow Agent shall have no duty (1)
to collect from any party any money, securities or documents required to be deposited with it, (2)
to notify anyone of any payment or maturity under the terms of any instrument deposited hereunder,
or (3) to take any legal action to enforce payment of any check, note or security deposited with
it. In the case of physical securities registered as to principal, income or both, the registered
holder thereof shall furnish to the Escrow Agent such stock or bond powers, endorsements or other
documents, properly executed with any necessary signature guarantees, necessary to permit the
transfer or negotiation of such securities to third persons by delivery alone.



                         (v) Except as may be specifically provided herein concerning investments of cash, the Escrow
Agent shall have no liability to pay interest on any money held pursuant to this Agreement. The
Escrow Agent may use its own bond department or brokerage affiliate in purchasing or selling
securities. The Escrow Agent shall not be liable for any depreciation or change in the value of
such documents or securities or any property evidenced thereby or for any losses incurred in
liquidating securities or other property to satisfy a distribution request. All distributions
provided for hereunder shall be made by the Escrow Agent from the principal of the deposit to the
extent thereof, subject to any unpaid fees and unreimbursed expenses of the Escrow Agent then
outstanding, in the order that proper requests therefor are received by the Escrow Agent. In no
event shall the Escrow Agent be required to seek contributions from any source or to advance its
own funds in order to satisfy a distribution request.



                         (vi) The Escrow Agent shall not be responsible for any recitals of fact in this Agreement, or
for the sufficiency, form, execution, validity or genuineness of any documents or securities
deposited under this Agreement or for any signature, endorsement or any lack of
endorsement thereon, or for the accuracy of any description therein, or for the identity,
authority or rights of the persons executing or delivering the same or this Agreement.



                         (vii) The Escrow Agent shall be fully protected in relying without investigation upon any
written notice, demand, certificate or document that it in good faith believes to be genuine, as to
the truth and accuracy of the statements made therein, the identity and authority of the persons
executing the same and the validity of any signature thereon. Although the Escrow Agent may demand
specific authorizations (including corporate resolutions, incumbency certificates and the like) or
identification from a party or its representative prior to taking any action hereunder, no such
demand shall constitute a waiver or deprive the Escrow Agent of the protections afforded by this
Section.



                         (viii) The Escrow Agent shall not be personally liable for any act taken or omitted by it
under this Agreement in good faith and in the exercise of its own best judgment. In no event shall
the Escrow Agent be liable to any person for punitive, special, indirect or consequential




 





			
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damages
of any kind, even if it is advised of the possibility thereof. The parties shall jointly and
severally indemnify, defend and hold harmless the Escrow Agent from and against any and all claims
that may be asserted against the Escrow Agent by any third parties and any and all liability, loss,
cost or expense (including reasonable attorneys’ fees) that may be incurred by the Escrow Agent as
a result of any such claim or otherwise as a result of acting as Escrow Agent hereunder, other than
those arising out of the gross negligence or willful misconduct of the Escrow Agent (the “Agent
Indemnification Expenses”), as follows: fifty percent (50%) to be paid by Omeros and fifty percent
(50%) to be paid by the Sellers on the basis of the Sellers’ Pro Rata Portions; provided, however,
that in the event any Seller fails to timely pay his or her Pro Rata Portion of the Agent
Indemnification Expenses, the parties agree that Omeros may at its option pay such Seller’s Pro
Rata Portion of the Agent Indemnification Expenses and recover an equal amount (without regard to
deductible amount in Section 8.4(b)) from such Founder’s Pro Rata Portion of the Escrow Fund
(converted to USD using the Indemnity Exchange Rate). The obligations of the parties under this
Section shall survive termination of this Agreement and distribution of the Escrow Fund.




                         (ix) The Escrow Agent may engage counsel of its own choosing to advise it concerning any of
its duties in connection with this Agreement, or in case it becomes involved in litigation on
account of being Escrow Agent under this Agreement, and good faith reliance on the advice of such
counsel shall fully protect the Escrow Agent.



                         (x) The Escrow Agent may resign by written notice to the other parties to this Agreement. Any
such resignation shall be effective upon delivery of the property then held in escrow to the
successor Escrow Agent, whereupon the resigning Escrow Agent shall be discharged of any further
duties under this Agreement. If an Escrow Agent resigns, the other parties shall appoint a
successor Escrow Agent; provided that if no successor is appointed within 30 days after
resignation, the resigning Escrow Agent may appoint as successor any corporation with trust powers
in the United States or may tender the Escrow Fund into court as provided in Section 8.4(j)(iii).



                         (xi) Upon distribution of the Escrow Funds in accordance with Section 8.4(d)(ii) or pursuant
to instructions given in accordance with this Agreement, the duties of the Escrow Agent shall
terminate and the Escrow Agent shall be discharged from any further liability under this Agreement.



                         (xii) The Escrow Agent shall not be responsible for any delays or failure to perform any
obligation hereunder caused by circumstances reasonably beyond its control, including but not
limited to breaches by other parties of their obligations hereunder, delays by messengers or other
independent contractors; mechanical or computer failures, malfunctioning or breakdowns in
electrical power, heat, light, air conditioning or telecommunications equipment, securities
exchanges, Federal Reserve Banks, clearing organizations or securities depositories; interference
by any industrial, juridical, governmental, civil or military action, acts of terrorism,
insurrection or revolution, nuclear fusion, fission or radiation; fires or other casualties, acts
of God or other similar occurrences.



                         (xiii) Patobios shall provide the Escrow Agent with its taxpayer identification number
documented by appropriate original Form W-8 or W-9 within 30 days after the




 





			
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Closing Date and prior
to any investment of the Escrow Funds hereunder. Failure to so provide such forms may prevent or
delay final disbursement of the Escrow Funds and may incur a penalty and cause Escrow Agent to be
required to withhold tax on any income payable hereunder. In the event that income of the Escrow
Fund may not be distributed during any year, such income shall be reported to the Internal Revenue
Service as the income of Patobios. Any payments of income may be subject to applicable United
States withholding regulations then in force.





               (k) Fees. All fees of the Escrow Agent for performance of its duties hereunder shall be
paid equally by Omeros and Patobios in accordance with the standard fee schedule of the Escrow
Agent attached hereto as Exhibit E. It is understood that the fees and usual charges agreed upon
for services of the Escrow Agent shall be considered compensation for ordinary services as
contemplated by this Agreement. In the event that the conditions of this Agreement are not
promptly fulfilled, or if the Escrow Agent renders any service not provided for in this
Agreement, or if the parties request a substantial modification of the terms of the Agreement, or
if any controversy arises, or if the Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to the Escrow Fund or its subject matter, the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all costs, attorney’s
fees, including allocated costs of in-house counsel, and expenses occasioned by such default,
delay, controversy or litigation.




               (l) Successor Escrow Agents. Any corporation into which the Escrow Agent in its individual
capacity may be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow Agent in its
individual capacity shall be a party, or any corporation to which substantially all the corporate
trust business of the Escrow Agent in its individual capacity may be transferred, shall be the
Escrow Agent under this Escrow Agreement without further act.



          8.5 Seller Representative.





               (a) Each Seller appoints Dr. O’Dowd as its agent and attorney-in-fact, as the “Seller
Representative” for and on behalf of the Sellers to give and receive notices and communications,
to authorize payment to any Indemnified Party from the Escrow Fund in satisfaction of claims by
any Indemnified Party, to object to such payments, to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, to assert, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators
with respect to, any other claim by any Indemnified Party against any Seller or by any such
Seller against any Indemnified Party or any dispute between any Indemnified Party and any such
Seller, in each case relating to this Agreement or the transactions contemplated hereby, and to
take all other actions that are either (i) necessary or appropriate in the judgment of the Seller
Representative for the accomplishment of the foregoing or (ii) specifically mandated by the terms
of this Agreement. Such agency may be changed by the Sellers from time to time upon not less than
thirty (30) days prior written notice to Omeros; provided, however, that the Seller
Representative may not be removed unless holders of a majority in interest of the Escrow Fund
agree to such removal and to the identity of the substituted agent. Notwithstanding




 





			
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the
foregoing, a vacancy in the position of Seller Representative may be filled by the holders of a
majority in interest of the Escrow Fund. No bond shall be required of the Seller Representative,
and the Seller Representative shall not receive any compensation for its services. Notices or
communications to or from the Seller Representative shall constitute notice to or from the
Sellers.




               (b) The Seller Representative shall not be liable for any act done or omitted hereunder as
Seller Representative while acting in good faith and in the exercise of reasonable judgment. The
Sellers on whose behalf the Escrow Amount was contributed to the Escrow Fund shall indemnify the
Seller Representative and hold the Seller Representative harmless against any loss, liability or
expense incurred without gross negligence or bad faith on the part of the Seller Representative
and arising out of or in connection with the acceptance or administration of the Seller
Representative’s duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Seller Representative. A decision, act, consent or instruction of the
Seller Representative shall constitute a decision of the Sellers and shall be final, binding and
conclusive upon the Sellers; and the Escrow Agent and Omeros may rely upon any such decision,
act, consent or instruction of the Seller Representative as being the decision, act, consent or
instruction of the Sellers. The Escrow Agent and Omeros are hereby relieved from any liability to
any person for any acts done by them in accordance with such decision, act, consent or
instruction of the Seller Representative.



ARTICLE IX




TERMINATION, AMENDMENT AND WAIVER




          9.1 Termination. This Agreement may be terminated:





               (a) at any time by mutual written consent of Omeros and Patobios;




               (b) at any time by Omeros prior to its receipt of a Put Notice by providing written notice
thereof to Patobios; provided, however, that if within ten (10) days of providing such notice,
Patobios gives Omeros a valid and timely Put Notice in accordance with Section 3.3(a), then this
Agreement will continue and may not be terminated by Omeros pursuant to this Section 9.1(b);




               (c) at any time by Patobios prior to receipt of an Exercise Notice by Patobios if it is not
in material breach of its obligations under this Agreement and there has been a material breach
of any representation, warranty, covenant or agreement of Omeros contained in this Agreement and
such breach has not been cured within sixty (60) calendar days after written notice thereof to
Omeros; provided, however, that no cure period shall be required for a breach which by its nature
cannot be cured;




               (d) at any time by Omeros if it is not in material breach of its obligations under this
Agreement and there has been a material breach of any representation, warranty, covenant or
agreement of Patobios or the Founders contained in this Agreement and such breach has not been




 





			
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cured within sixty (60) calendar days after written notice thereof to Patobios; provided,
however, that no cure period shall be required for a breach which by its nature cannot be cured;
or




               (e) by Omeros or Patobios prior to the Closing: (i) if there shall be a final non-appealable
order of a provincial, federal or state court in effect preventing consummation of the Closing,
(ii) if there shall be any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Closing by any Governmental Entity that would make consummation of the
Closing illegal, (iii) if Omeros is deemed to be Bankrupt and is thereby materially limited in
performing its obligations hereunder (provided that if Omeros is deemed to be Bankrupt and
lawfully tenders a total of ten million seven hundred and sixteen thousand dollars ($10.716MM)
CAD in cash to Patobios and provides evidence reasonably satisfactory to Patobios that such
payment is lawful and does not violate any material agreements to which Omeros is a party, then
Patobios may not terminate this Agreement pursuant to this subsection and may accept all of such
cash as full and complete consideration of the Acquisition Price), or (iv) if the Closing has not
occurred, at any time following the expiration of all the Option Periods for which the
corresponding Option Fees have been paid.



          9.2 Effect of Termination. In the event of termination of this Agreement, this Agreement
shall forthwith become void and there shall be no liability or obligation on the part of Omeros,
Patobios or the Founders, or their respective officers, directors or shareholders, if applicable;
provided, however, that, subject to the limitations provided herein (a) each party hereto shall
remain liable for any breaches of this Agreement or in any certificate or other instruments
delivered pursuant to this Agreement prior to its termination, (b) the provisions of Article I, the
Enforcement Proceeds provisions of Section 3.7, Sections 7.1, 7.2, 7.3 and 7.4, Article VIII,
Section 9.2 and Article X shall remain in full force and effect and survive any termination of this
Agreement pursuant to the terms of this Article IX, and (c) if Omeros terminates this Agreement
pursuant to Section 9.1(b) or
Section 9.1(d) during Option Period Two or Option Period Three, then within twenty (20) days
of Omeros giving notice of such termination, Patobios shall pay to Omeros an amount equal to the
Option Fee Refund in accordance with Omeros’ written instructions. The obligation to pay the
Option Fee Refund pursuant to Section 9.2(c) shall be a joint and several liability of Patobios and
the Founders.




          9.3 Amendment and Waiver. This Agreement may be amended, and any term may be waived, by the
parties hereto at any time by execution of an instrument in writing signed by Omeros, Patobios and
the Founders, provided that the duties and liabilities of the Escrow Agent may not be changed
without its prior written consent.




ARTICLE X




GENERAL PROVISIONS




          10.1 Notices. All notices and other communications required or permitted hereunder shall be
in writing and shall be mailed by registered or certified mail, postage prepaid, sent by overnight
courier, by facsimile or otherwise delivered by hand or by messenger addressed:





 





			
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(a) if to Omeros, to:



Omeros Corporation

1420 Fifth Avenue, Suite 2600

Seattle, WA 98101

Attention: Chief Executive Officer

Facsimile No.: (206) 676-5005



with a copy to:



Omeros Corporation

1420 Fifth Avenue, Suite 2600

Seattle, WA 98101

Attention: General Counsel

Facsimile No.: (206) 676-5005



and to:



Wilson Sonsini Goodrich & Rosati

Professional Corporation

701 Fifth Avenue, Suite 5100

Seattle, WA 98104

Attention: Craig Sherman

Facsimile No.: (206) 883-2699



(b) if to Patobios, the Founders or the Seller Representative, to:



Dr. Brian O’Dowd and Dr. Susan George

c/o 19 Boarhill Drive

Scarborough, Ontario

M1S 2L9

Facsimile No.: (416) 971-2868



with a copy to:



Hooey Remus LLP

One University Avenue, Suite 400

Toronto, Ontario

M5J 2P1

Attention: Mr. Gregory R. Mallough

Facsimile No.: (416) 362-3646



(c) If to the Escrow Agent, to:





 





			
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US Bank National Association

60 Livingston Avenue

EP-MN-WS3T

St. Paul, MN 55107

Attention: Scott Kjar

Phone (651)-495-3808

Fax: (651) 495-8087



with a faxed copy to:



Shirley Young

Fax: (206) 344-4630




          All such notices and communications will be deemed effectively given the earlier of (i) when
received, (ii) when delivered personally, (iii) one Business Day after being delivered by facsimile
(with receipt of appropriate confirmation) or (iv) one Business Day after being deposited with an
overnight courier service of recognized standing.



          10.2 Interpretation. The words “include,” “includes” and “including” when used herein shall
be deemed in each case to be followed by the words “without limitation.” The table of contents and
headings contained in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.



          10.3 Counterparts. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same counterpart.



          10.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, and the documents and
instruments and other agreements among the parties hereto referenced herein: (i) constitute the
entire agreement among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings both written and oral, among the parties with respect to the
subject matter hereof, (ii) are not intended to confer upon any other person any rights or remedies
hereunder, and (iii) may not be assigned without the consent of all parties hereto, provided,
however, that the Founders and Patobios hereby consent to Omeros’ assignment of this Agreement to
any successor in interest to Omeros as part of a merger, acquisition, other change of control or
together with a sale, transfer or other conveyance of all or substantially all of that part of
Omeros’ assets that pertain to this Agreement. For the avoidance of doubt, the Escrow Agent shall
have no duty, express or implied, to any person who is not a party to this Agreement and no such
person shall be deemed a “third party beneficiary” of this Agreement.



          10.5 Specific Performance. The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. Each party agrees that, in the event of any breach or




 





			
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threatened breach by any other party of any covenant or obligation contained in this Agreement, the
non-breaching party shall be entitled (in addition to any other remedy that may be available to it
whether in law or equity, including monetary damages) to seek and obtain (a) a decree or order of
specific performance to enforce the observance and performance of such covenant or obligation, and
(b) an injunction restraining such breach or threatened breach. Without limiting the foregoing,
the parties acknowledge that (a) if pursuant to Section 3.2 of the Agreement Omeros validly
delivers a Exercise Notice during the Option Period and tenders the Acquisition Price in accordance
with the Payment Instructions, Omeros shall be entitled to enforce specifically Patobios’ and the
Founders’ obligations to sell the MOCA Technology to Omeros on the terms set forth in this
Agreement, (b) if pursuant to Section 3.3 of the Agreement Patobios validly delivers a Put Notice
during the Option Period and Omeros does not object to the Put Notice under the terms in Section
3.3, then Patobios and the Founders shall be entitled to enforce specifically Omeros’ obligation to
purchase the MOCA Technology for the Acquisition Price on the terms set forth in this Agreement and
(c) Omeros shall be entitled to specifically enforce the Sellers’ obligations in Section 3.4 to not
sell Patobios or the MOCA Technology to a third party during the Option Period. Each party further
agrees that no other party hereto or any other person or entity shall be required to obtain,
furnish or post any bond or similar instrument in connection with or as a condition to obtaining
any remedy referred to in this Section 10.5, and each party hereto irrevocably waives any right it
may have to require the obtaining, furnishing or posting of any such bond or similar instrument.




          10.6 Severability. In the event that any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be interpreted so as
reasonably
to effect the intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such void or unenforceable
provision.




          10.7 Other Remedies. Any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude the exercise of
any other remedy.




          10.8 Governing Law. The rights and duties of Omeros, Patobios and the Founders pursuant to
this Agreement shall be governed by and construed in accordance with the laws of the State of
Washington, USA, regardless of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof. The rights and duties of the Escrow Agent pursuant to this Agreement
shall be governed by and construed in accordance with the laws of the State of Washington, USA,
regardless of the laws that might otherwise govern under applicable principles of conflicts of law
thereof. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue
of any court within King County, State of Washington, USA, in connection with any matter based upon
or arising out of this Agreement or the matters contemplated herein, agrees that process may be
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for such persons
and waives and covenants not to assert or plead any objection which they might otherwise have to
such jurisdiction, venue and such process.




          10.9 Taxes. Each party hereto has reviewed with its own tax advisors the provincial, federal,
state, local and foreign tax consequences of the transactions contemplated by this Agreement. Each
party hereto is relying solely on such advisors and not on any statements or representations of any
other party hereto or any of its agents. Each party hereto understands that it (and not any other
party hereto) shall be responsible for any tax liability that may arise as a result of the
transactions contemplated by this Agreement. If agreed in writing by Omeros and the Founders prior
to the Closing Date, the Acquisition Price may be paid all in cash (in CAD). Omeros further agrees
to consider any proposals by the Founders to change the structure of the Acquisition Price to
minimize the taxes to the Founders without detriment to Omeros; provided, however, that Omeros
shall not be obligated to accept any of such proposals and this sentence shall not in any way be
construed to limit or otherwise alter Omeros’ ability to enforce the terms of this Agreement. The
parties agree to account for all consideration payable to the Sellers by Omeros under this
Agreement, including the Option Fee and the Acquisition Price, as the acquisition of intellectual
property for Canadian G.S.T. purposes.




          10.10 Rules of Construction. The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefor, waive the application
of any law, regulation, holding or rule of construction providing that ambiguities in an agreement
or other document will be construed against the party drafting such agreement or document.




          10.11 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY AND ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.




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     IN WITNESS WHEREOF, Omeros, Patobios, the Founders and the Escrow Agent have caused this
Agreement to be signed, all as of the date first written above.



	 	 	 	 	 	 	 	 	 	 	 
	OMEROS CORPORATION	 	 	 	PATOBIOS LIMITED	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gregory A. Demopulos

	 	 
	 	By:
	 	/s/ Brian O’Dowd

	 	 
	 

	 	Gregory A. Demopulos, M.D. 


CEO & Chairman
	 	 	 	
Name:
	 	

Brian O’Dowd	 	 
	 

	 	 	 	 	 	

Title:
	 	

President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SUSAN R. GEORGE, M.D.	 	 	 	BRIAN F. O’DOWD, PH.D.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Susan R. George	 	 	 	/s/ Brian O’Dowd	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	U.S. BANK NATIONAL ASSOCIATION	 	 
	 	 	 	 	 	 	as Escrow Agent	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Kyle J. Lunde	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	

Name:
	 	

Kyle J. Lunde	 	 
	 

	 	 	 	 	 	

Title:
	 	

AVP	 	 






SIGNATURE PAGE TO EXCLUSIVE TECHNOLOGY OPTION AGREEMENT





 





			
	†	 	DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION




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