Document:

PURCHASE AGREEMENT (N109HQ)

THIS PURCHASE AGREEMENT (N109HQ) (this "Agreement"), dated as of July 26 2017, by and between AEROCENTURY CORP., a Delaware corporation ("Buyer") and METLIFE CAPITAL, LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller").

WITNESSETH:

WHEREAS, Seller is (i) the owner participant under the Participation Agreement [N109HQ], dated as of May 29, 2007, among  Seller (as assignee of Metropolitan Life Insurance Company), Wells Fargo Delaware Trust Company, National Association, not in its individual capacity but solely as Owner Trustee (the "Owner Trustee"), Republic Airlines Inc. (the "Lessee") (as amended, modified and supplemented from time to time, the "Participation Agreement"), and (ii) the sole beneficiary of the trust (the "Trust") created under the Trust Agreement [N109HQ], dated as of May 25, 2007 (as amended, modified and supplemented from time to time, the "Trust Agreement"), between the Owner Trustee and Seller (as assignee of the Metropolitan Life Insurance Company).

WHEREAS, Seller holds all of the right, title, and interest in and to (x) one hundred percent (100%) of the beneficial interest and in the Trust Estate (as defined in the Trust Agreement), and (y) in its capacity as owner of the beneficial interest described in clause (x) of this paragraph and in its capacity as owner participant, all contractual rights and obligations, if any, in, to, and under the Participation Agreement, the Trust Agreement and any other Operative Documents (as defined below) to which Seller is a party (collectively, the "OP Rights").

WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires to purchase from Seller, the OP Rights, excluding the Retained Rights (as defined below) (the "Transferred Rights"), pursuant to the terms and subject to the conditions set forth in this Agreement and the Assignment Agreement (as defined below).

  NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1. Definitions.

The following terms, when capitalized, shall have the following meanings for all purposes of this Agreement, except where the context otherwise requires:

"Aircraft" shall have the meaning specified in Appendix A to the Lease.

"Assignment Agreement" shall mean the Assignment and Assumption Agreement in the form of Appendix E hereto to be entered into on the Closing Date between Buyer and Seller.

"Assumption Order" shall mean the Order Pursuant to 11 U.S.C. §§ 363(b) and 365(a) and Fed. R. Bankr. P. 6006 (I) Authorizing Assumption of Aircraft Leases as Amended (N109HQ, N110HQ and N111HQ) and (II) Approving Allowed Unsecured Claim, dated October 21, 2016, entered by the Bankruptcy Court in the case styled In re Republic Airways Holdings Inc., Case No. 16-10429 (SHL).

"Bankruptcy Court" shall mean the United States Bankruptcy Court for the Southern District of New York.

"Buyer Inspection" shall mean Buyer's physical inspection of the Aircraft and all associated records which took place on or about May 15, 2017.

"Chapter 11 Case" means the chapter 11 cases of Lessee and certain of its affiliates in the Bankruptcy Court which have been consolidated for procedural purposes only and are being

jointly administered under Case No. 16-10429.

"Closing Date" shall mean the date of Closing as such term is defined in Section 2(e) of this Agreement.

"Economic Closing Date" means the date specified in Section 2(b)(ii) of this Agreement.

"Escrow Agent" shall mean McAfee & Taft, Oklahoma City.

"Escrow Agreement" shall mean the escrow agreement dated May 9, 2017 and entered into between Seller, Buyer and the Escrow Agent.

"Event of Loss" shall have the meaning given to such term in Appendix A to the Lease.

"FAA" shall mean the United States Federal Aviation Authority.

"FAA Counsel" shall mean McAfee & Taft, Oklahoma City, Oklahoma.

"Guaranty" shall mean the Guaranty delivered by Parent to Seller and Trustee, dated May 29, 2007.

"Lease" shall mean the Lease Agreement, dated as of May 29, 2007, between Lessee and Owner Trustee relating to the Aircraft, as amended by Amendment No. 1 to Lease Agreement (N109HQ), dated October 10, 2016, and as further supplemented and amended through the Closing Date (but excluding the Lease Amendment).

"Lease Amendment" means the Lease Amendment No.2 to the Lease Agreement substantially in the form of Appendix D.

"Lessee" shall mean Republic Airlines Inc.

"Lessor Liens" shall have the meaning specified in Appendix A to the Lease.

"Operative Documents" shall mean the Lease, the Trust Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Guaranty, true and correct copies of which are attached as Appendix A.

"Other Participation Agreement(s)" means (i) the Participation Agreement [N111HQ] between Owner Trustee, Seller and Lessee, dated June 28, 2007 and (ii) the Participation Agreement  [N110HQ] between Owner Trustee, Seller and Lessee, dated June 28, 2007

"Owner Trustee" shall mean Wells Fargo Delaware Trust Company, not in its individual capacity, but solely as Owner Trustee.

"Parent" shall mean Republic Airways Holdings Inc.

"Participation Agreement" shall mean the Participation Agreement between Owner Trustee, Seller and Lessee, dated May 29, 2007.

"Permitted Liens" shall have the meaning specified in Appendix A to the Lease.

"Person" shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof.

"Purchase Price" has the meaning specified in Section 2(b)(i) of this Agreement.

"Records" shall mean all maintenance records of any Airframe, Engine, Propeller or Part which are possessed by Seller, or retained by a third party at its request including, without limitation, the Manuals and Technical Records covered by the Lease.

"Retained Rights" shall mean all of Seller's rights, title and interest in, to and under the Trust Estate, the Participation Agreement, the Trust Agreement and the other Operative Documents which are retained by Seller under the Assignment Agreement.

"Seller's Account" shall mean the Seller's account for receipt of wire transfers set forth on Appendix B, or such other account designated by Seller by written notice to Buyer.

"Tax Indemnity Agreement" shall mean the Tax Indemnity Agreement, between Lessee and Seller, dated May 29, 2007.

"Transaction Documents" shall mean this Agreement, the Assignment and any other document executed and delivered in connection with the transactions contemplated hereby by Buyer or Seller or designated by Buyer and Seller as a "Transaction Document".

"Transferred Rights" has the meaning specified in the Recitals to this Agreement.

"Trust" shall mean that certain Delaware statutory trust, of which Seller is the sole beneficiary and Wells Fargo Delaware Trust Company is Owner Trustee, created pursuant to the Trust Agreement.

"Trust Agreement" shall mean the Trust Agreement dated May 25, 2007, between Seller, as beneficiary, and Wells Fargo Delaware Trust Company, as owner trustee, as amended to the date of Closing.

"Trust Estate" shall have the meaning set forth in Appendix A to the Lease.

Section 2. Purchase and Sale; Purchase Price; Conditions Precedent; Closing.

(a) Purchase and Sale.

Subject to the terms and conditions of this Agreement, pursuant to the Assignment Agreement, Buyer hereby agrees to purchase from Seller, and Seller hereby agrees to sell, assign, transfer and convey to Buyer, on the Closing Date, all of the Transferred Rights.

(b) Purchase Price.

(i) The purchase price (the "Purchase Price") for the Transferred Rights payable by Buyer to Seller shall be Ten Million Four Hundred Twenty-Eight Thousand U.S. Dollars ($10,428,000). Prior to Closing, Buyer shall deposit with the Escrow Agent sufficient funds to cover the Purchase Price and 50% of the agreed fees of the Escrow Agent in accordance with the terms of the Escrow Agreement, and Buyer agrees to cause Escrow Agent to pay the Purchase Price due hereunder by wire transfer on the Closing Date to Seller's Account.

(ii) The Purchase Price is based on an assumed closing date of May 31, 2017 (the "Economic Closing Date"). If the Closing Date occurs after the Economic Closing Date, the Purchase Price shall be adjusted by: (a) subtracting any payments actually received by Seller from Lessee for Basic Rent accruing for periods after the Economic Closing Date; and (b) adding an amount to cover Seller's carrying cost for the period between the Economic Closing Date and the actual Closing Date (the "Interim Period"), calculated on a daily basis (based on a 365 day year) equal to the product of (i) an annual six percent interest rate and (ii) the Purchase Price adjusted by any payments of Basic Rent actually received by Seller from Lessee in accordance with clause (a) above.

(iii) [Reserved]

(iv) Seller acknowledges receipt by the Escrow Agent of a deposit (the "Deposit") from Buyer in the amount of US$500,000. Upon execution of this Agreement, the Deposit shall be non-refundable, except if Buyer has complied with all of the conditions precedent required of Buyer under this Agreement and the Assignment Agreement and either (i) the conditions precedent to Buyer's obligations are not satisfied on or before July 30, 2017 or (ii) Seller is unable to deliver the Transferred Rights to the Buyer in compliance with all of the terms and conditions of this Agreement on or before July 30, 2017.

(v) Buyer hereby acknowledges that any (i) claims of Owner Trustee or Seller against Lessee or Parent for Lessee obligations under the Lease or any other Operative Agreement accruing prior to Lessee's filing for bankruptcy reorganization under the Chapter 11 Case (including Lease deficiency claims resulting from Lessee's bankruptcy and reorganization and any unsecured claims approved by the Bankruptcy Court pursuant to the Assumption Order) (the "Bankruptcy Claims") and (ii) distributions received by Owner Trustee or Seller in respect of their respective Bankruptcy Claims are not included in the Transferred Rights.

(c) Seller's Conditions Precedent to Closing. The following shall each be a condition precedent to Seller's obligations to close each of the transactions contemplated hereby:

(i) the closing procedures set forth in Section 2(e) have been satisfied to the satisfaction of Seller;

(ii) Seller and Buyer shall have entered into a purchase agreement on terms satisfactory to Seller with respect to Seller's rights under the transactions contemplated by the Other Participation Agreement(s).

(iii) Buyer shall have delivered to Seller a certificate, signed by a duly authorized officer of Buyer, stating that the representations and warranties contained in Section 4(b) are true and correct as of the Closing Date;

(iv) Buyer shall have delivered to Seller a copy of an incumbency certificate as to the person or persons authorized to execute and deliver this Agreement and the Assignment Agreement on behalf of Buyer and all other documents described herein required to be executed and delivered by Buyer hereunder;

(v) Escrow Agent shall have confirmed receipt of the Deposit, the Purchase Price and all Documents (as defined in the Escrow Agreement); and

(vi) Buyer shall have executed the Closing Notice (as defined in the Escrow Agreement) and delivered an executed counterpart of such Closing Notice to Escrow Agent.

(d) Buyer's Conditions Precedent to Closing. The following shall each be a condition precedent to Buyer's obligations to close each of the transactions contemplated hereby:

(i) the closing procedures set forth in Section 2(e) have been satisfied to the satisfaction of Buyer;

(ii) Lessee shall have executed and delivered to the Escrow Agent the Lessee Acknowledgement and Consent, in substantially the form attached as Appendix C, which provides for Lessee's recognition of the mortgage on the Aircraft in favor of Buyer's lender and Buyer's pledge of the OP Rights to Buyer's lender, with irrevocable instructions to the Escrow Agent to release to the other parties thereto immediately following the Closing;

(iii) Owner Trustee and Lessee shall each have executed and delivered to Escrow Agent the Lease Amendment, in substantially the form attached as Appendix D, with irrevocable instructions to the Escrow Agent to release to the other parties thereto immediately following the Closing;

(iv) Buyer shall have received from Seller a certificate, signed by a duly authorized officer of Seller stating that the representations and warranties contained in Section 4(a) are true and correct as of the Closing Date;

(v) Buyer shall have received from Seller a copy of an incumbency certificate as to the person or persons authorized to execute and deliver this Agreement and the Assignment Agreement on behalf of Seller and all documents described herein required to be executed and delivered by Seller hereunder;

(vi) Buyer shall have received (i) an opinion of FAA Counsel confirming aircraft registration in the name of the Owner Trustee, and absence of  liens recorded on the FAA aircraft registry and International Registry on the Aircraft (except for the Lease and this contract of sale); and (ii) such opinions of Buyer's counsel with respect to taxation issues of any applicable taxing jurisdiction deemed necessary by Buyer in a form satisfactory to Buyer in its sole discretion, with respect to the transactions contemplated hereby, including the sale of the OP Rights, transfer of beneficial ownership of the Aircraft, deemed assignment of the lease due to such transfer, and taxation of payments payable under the Lease following such transfer;

 

(vii) Buyer shall have received copies of the originally executed Operative Documents;

(viii) No Event of Loss with respect to the Airframe or any Engine shall have occurred and no circumstance, condition, act or event, that, with the giving of notice or lapse of time or both, would give rise to or constitute and Event of loss with respect to the Airframe or any Engine shall have occurred

(ix) Buyer shall have received from Parent an acknowledgment of the transfer of the OP Rights and confirmation of the continuing effectiveness of the Guaranty notwithstanding such transfer, in the form included in the Lease Amendment or in such other form in form acceptable to Buyer.

(x) Lessee shall have obtained an order from the U.S. Bankruptcy Court confirming the Lessee's plan of reorganization, which order has become final.

(e) Closing Procedures. Closing of the sale of the Transferred Rights (the "Closing") shall occur on July 26, 2017, or at such later time as the parties mutually agree (the "Closing Date"), but in no event later than July 30, 2017.  Prior to Closing, Buyer, Seller, Lessee, and Owner Trustee shall each have prepositioned with FAA Counsel fully executed copies of the Assignment Agreement and the Lease Amendment for purposes of filing with the FAA aircraft registry after Closing.

At the Closing:

(i) Seller and Buyer shall execute and deliver the Assignment Agreement;

(ii) Buyer shall pay the Purchase Price for the Transferred Rights, as the Purchase Price may be adjusted pursuant to Section 2(b) of this Agreement, to the Seller's Account; and

(iii) Seller shall deliver to Buyer true, correct and complete sets of all of the Operative Documents.

Section 3. Condition of Aircraft and Records.

(a) Buyer acknowledges that (i) Buyer has not sought from Seller, or looked to or relied upon Seller for, any analysis, evaluation or advice with respect to Lessee, the Lease, the Trust Estate or the Aircraft or the financial condition, operations, investment potential or tax attributes of the same and (ii) Buyer has either been supplied with or has had access to all information, which it has deemed necessary to evaluate the assignment, transfer and conveyance contemplated by this Agreement and the Assignment Agreement.

(b) Buyer further acknowledges that:

(i) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES AS SET FORTH IN SECTION 4(a) HEREOF, SELLER HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND SELLER'S RIGHTS WITH RESPECT TO THE TRANSFERRED RIGHTS AND THE AIRCRAFT ARE BEING ACQUIRED BY BUYER ON AN "AS IS, WHERE IS AND WITH ALL FAULTS" BASIS.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR THE ASSIGNMENT, SELLER HAS NOT MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OR FOR ANY PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON LIABILITY IN TORT, STRICT OR OTHERWISE, AS TO FREEDOM FROM INTERFERENCE IN POSSESSION OR USE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF.

Section 4. Representations and Warranties.

(a) Representations and Warranties - Seller. Seller represents and warrants to Buyer that:

(i) Seller is a limited partnership duly organized and validly existing under the laws of Delaware and it has the power and authority to own its assets and carry on its business as presently carried on;

(ii) the execution, delivery, and performance of the Purchase Agreement and the Assignment Agreement and the consummation of the transactions contemplated thereby have been (or by Closing will have been) duly authorized by all necessary limited partnership action of Seller;

(iii) assuming the validity of execution and delivery by all parties other than Seller, the obligations of Seller under the Purchase Agreement and the Assignment Agreement when executed and delivered by Seller constitute or will constitute legal, valid and binding obligations of Seller enforceable in accordance with their respective terms except to the extent that such enforceability may be limited by bankruptcy, insolvency or similar laws respecting creditors' rights generally;

(iv) the execution and delivery of, the performance of Seller's obligations under, and compliance with the provisions of, the Purchase Agreement or the Assignment Agreement by Seller will not violate in any respect any provision of, or cause a breach or default of:

(A) any law or regulation or any order, judgment or decree of any governmental authority, agency or court to which Seller is subject; or

(B) the charter documents or bylaws or resolution of the directors or shareholder of Seller or its partners; or any mortgage, charge, deed, contract or other undertaking or instrument binding on Seller;

(v) on the Closing Date, the Seller is the sole owner of the Transferred Rights, which shall be conveyed to Buyer at Closing free and clear of any claims, liens, security interests, encumbrances, or rights of others of any nature whatsoever (except for Permitted Liens other than Lessor Liens);

(vi) on the Closing Date, Seller is the sole beneficial owner of the Trust Estate.  At Closing, the Trust Estate is free and clear of any Liens except for Permitted Liens other than Lessor Liens;

(vii) there are no pending or, to the knowledge of Seller, threatened actions, or proceedings against Seller before any court, arbitrator or administrative agency which, if adversely determined, would materially adversely affect the ability of Seller to perform its obligations under this Agreement or the Assignment Agreement on the Closing Date;

(viii) Seller has not assigned, transferred or granted any rights or interest in the Trust Estate or any portion thereof (including any residual or remarketing rights) except as provided in the Lease;

(ix) Seller is not in default under any term or provision under the Trust Agreement;

(x) To Seller's knowledge, there are no outstanding contractual obligations of the Trust other than those owed as lessor under the Operative Documents (as defined in Appendix A to the Lease) to which Owner Trustee is a party;

(xi) Seller has not received any written notice from Lessee that would materially adversely affect the value of the Trust Estate or the Aircraft or the Lessee's ability to consummate the transactions contemplated by this Agreement;

(xii) other than the consent of the Lessee and the FAA and such other consents and approvals that have been obtained (or will be obtained by Closing), no other consents or approvals are required for Seller to perform its obligations under this Agreement and the Assignment Agreement; and

(xiii) with respect to the Lease:

(A) To Seller's actual knowledge, the Lease is in full force and effect and is enforceable in accordance with its terms; the Lease, as attached in Appendix A includes all amendments, supplements and modifications agreed by Lessor prior to the Closing Date, and represents the entire agreement of the parties in respect thereof prior to the Closing Date;

(B) No Default or Event of Default under the Lease (and as defined under the Lease) with respect to Lessee's obligation to pay Basic Rent, and to Seller's actual knowledge, no Event of Default resulting from a breach of other Lessee obligations, has occurred, exists, is presently continuing other than the Lessee's Chapter 11 Case;

(C) To Seller's actual knowledge, no Event of Loss (as defined in the  Appendix A to the Lease) has occurred;

(D) Seller has not received a written notice from Lessee that it has exercised any option or right to terminate the Lease;

(E) To Seller's actual knowledge, Lessor has performed all of its obligations (including all payment obligations) which exist in favor of Lessee under the Lease and is not in default of any of its obligations under the Lease;

 (F) To Seller's actual knowledge, there have been no prepayments of scheduled Basic Rent under the Lease.

(G) Seller has not delivered, and has not directed Owner Trustee to deliver, a chattel paper original signed Lease to any third party in order to perfect an assignment for security of such Lease.

(b) Representations and Warranties - Buyer. Buyer represents and warrants to Seller that:

(i) it is a corporation duly organized in Delaware, validly existing and in good standing under the laws of such jurisdiction and it has the power and authority to own its assets and carry on its business as presently carried on;

(ii) the execution, delivery and performance of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby have been (or by Closing will have been) duly authorized by all necessary corporate action of Buyer;

(iii) assuming the validity of execution and delivery by any other parties thereto, the Transaction Documents when executed and delivered by Buyer constitute or will constitute legal, valid and binding obligations of Buyer enforceable in accordance with their respective terms except to the extent that such enforceability may be limited by bankruptcy, insolvency or similar laws respecting creditors' rights generally;

(iv) the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the Transaction Documents by Buyer will in no way violate in any respect any provision of, or cause a breach or default of:

(A) any law or regulation or any order, judgment or decree of any governmental authority, agency or court to which Buyer is subject; or

 (B) the Certificate of Formation, Bylaws, or any resolution of the directors or shareholders of any of the corporate members or managers of Buyer; or

(C) any mortgage, charge,  deed, contract or other undertaking or instrument of Buyer;

(v) Buyer is acquiring title to the Transferred Rights without a view to the resale or distribution thereof in a manner which would require registration under the Securities Act of 1933, as amended;

(vi) there are no pending or, to the knowledge of Buyer, threatened actions or proceedings against Buyer before any court, arbitrator or administrative agency which, if adversely determined, would materially adversely affect the ability of Buyer to perform its obligations under this Agreement, the Assignment Agreement or any of the other Transaction Documents to which it is a party; and

(vii) Buyer has independently and without reliance on Seller and based upon such information and materials as it deems appropriate, made its own appraisal of, and investigation into, the condition and value of the Aircraft, the Trust Estate and the Transferred Rights; and

(viii) Other than the consent of the Lessee and the FAA and such other consents and approvals that have been obtained (or will be obtained by Closing), no other consents or approvals are required to consummate the transactions contemplated by this Agreement.

Section 5. Indemnities.

(a) Buyer agrees to indemnify, reimburse and hold harmless Seller, and its shareholders, directors,  agents, employees, subcontractors, successors and assigns (herein referred to as the "Related Indemnitees"), from and against any and all claims, damages, losses, liabilities, demands, suits, judgments, causes of action, legal proceedings, whether civil or criminal, penalties, fines, other sanctions, and any costs and expenses in connection therewith, including costs of investigation and attorney's fees and expenses (any and all of which are hereafter referred to as "Claims"), that may result from or arise in any manner out of, or in relation to any breach or default of Buyer's representations and warranties contained in this Agreement or the Assignment Agreement.

(b) Seller agrees to indemnify, reimburse and hold harmless Buyer and each of its Related Indemnitees, from and against any and all Claims that may result from or arise in any manner out of, or in relation to any breach of Seller's representations and warranties contained in this Agreement.

(d) The indemnities set forth in this Section 5 shall survive the execution of this Agreement.

Section 6. Costs; Taxes.

(a) Each party will be responsible for its own costs and expenses related to negotiating, documenting and closing the transaction contemplated hereby, except that (i) Buyer and Seller will split equally any reimbursement costs and expenses for FAA Counsel in effecting registration of the transfer of ownership of the OP Rights and amendment of the Lease, if necessary, and escrow agent fees; (ii) Seller shall be responsible for any costs and expenses owed to the Owner Trustee with respect to its review and approval of the Transaction Documents; (iii) Seller shall be responsible for any costs and expenses of Lessee in connection with the review and approval of the Transaction Documents; and (iv) Buyer shall be responsible for costs and expenses, including legal fees and expenses of FAA Counsel, incurred for the registration on the International Registry and FAA of the sale of the OP Rights and/or Aircraft to Buyer, if required, the assignment of the Lease to Buyer's lender, if required, and the recordation of mortgages on the Aircraft by Buyer's lender.

(b) Buyer shall be responsible for all sales, use and excise duty, stamp duty and any GST or VAT taxes (other than any taxes based on net income of Seller) in connection with the purchase and sale of the Trust Estate and the Transferred Rights and will pay Seller the Purchase Price free and clear of all such taxes. Notwithstanding the foregoing, Buyer and Seller will reasonably cooperate for the purpose of minimizing or eliminating any tax impact on either party associated with the transaction contemplated by this Agreement and the Assignment on the Closing Date.

Section 7. Risk of Loss and Damage.

 If the Aircraft is destroyed or suffers any damage or loss prior to the Closing Date, Buyer may elect to either (a) terminate this Agreement by written notice to Seller and thereafter neither party shall have any further rights or obligations hereunder with respect thereto, or (b) proceed to close the transaction as provided herein, including, without limitation, disbursement of the amounts set forth in Section 2 hereof, without any reduction in the Purchase Price, with all insurance proceeds applied as provided in the Lease.

Section 8. Miscellaneous.

(a) Notice. All notices required or permitted hereunder shall be in writing and may be either personally delivered, faxed, telexed or sent by a reputable overnight courier service addressed as follows:

(i) If to Buyer:

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA, 94010

Attn: President

Fax: (650) 696-3929

If to Seller:

MetLife Capital, Limited Partnership

One MetLife Way

Whippany, NJ 07981

Attn:  Mark Bisci

Fax:  (973) 355-4250

or at such other address as either party gives to the other from time to time through proper notice. Any such notice shall be effective and shall be deemed to have been given when received at the addresses set forth above, as such addresses are modified as set forth above.

(b) Nonwaiver Remedies Cumulative. No covenant or condition of this Agreement can be waived except by the written consent of the party to be charged with such waiver. Forbearance or indulgence by any party in any regard whatsoever shall not constitute a waiver of the covenant or condition to which such forbearance or indulgence may relate, and until complete performance thereof, or the written waiver thereof, the forbearing or indulging party shall be entitled to invoke any remedy available to it under this Agreement or by law or in equity or otherwise despite such forbearance or indulgence. No right or remedy of any party provided for herein is exclusive of any other right or remedy, but all such rights and remedies are cumulative of every other right and remedy provided for herein, at law, in equity, by statute, or otherwise, and may be exercised concurrently or separately from time to time. The prevailing party shall be entitled to attorney's fees and forum costs.

(c) Applicable Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of New York (without regard to any conflicts of law rule which might result in the application of the laws of any other jurisdiction), including all matters of construction, validity and performance.

(d) Severability.  Any provision of this Agreement which may be prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability in such jurisdiction only, without invalidating the remaining provisions hereof in such jurisdiction and without invalidating any of the provisions hereof in any other jurisdiction.

(e) Waiver of Jury Trial. EACH OF BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,THISAGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

(f) Consent to Jurisdiction. Each of Buyer and Seller irrevocably agrees that any legal action or proceedings arising out of or in connection with this Agreement and the Assignment Agreement may be brought in any State or Federal Court in New York City, New York, which shall have the exclusive jurisdiction to settle any disputes arising out of or in connection with this Agreement and the Assignment Agreement and irrevocably and unconditionally submits to the exclusive jurisdiction of such courts. Each of Buyer and Seller irrevocably waives any objection it may now or hereafter have to the laying of venue of any action or proceeding in any court and any claim it may now or hereafter have that any action or proceeding has been brought in an inconvenient forum.

(g) Further Assurances. Seller and Buyer will promptly, at any time and from time to time, execute and deliver to each other, such further instruments and documents, and take such further action, as Seller or Buyer, as the case may be, may from time to time reasonably request and which are necessary to carry out this Agreement and to establish and protect the rights, interests, and remedies created in favor of Seller or Buyer.

(h) Exclusivity. This Agreement and the Assignment Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior oral and written communications, proposals, agreements, representations, statements, negotiations and undertakings between the parties hereto with respect to the subject matter hereof.

(i) No Broker. Buyer and Seller each hereby represent to the other that it has not directly or indirectly employed or otherwise procured any broker in connection with the sale of the Aircraft hereunder for whose compensation any of the other parties is responsible or liable, other than Tailwind Capital, which has been engaged by Seller, and whose compensation will be the sole responsibility of Seller. Each party agrees to pay, indemnify, and hold harmless the other parties from and against any and all liabilities, losses, costs, damages, claims and expenses (including attorney's fees and litigation costs) the other parties shall ever suffer, incur or be threatened with because of any claim by any broker or agent claiming by, through or under the indemnifying party, whether or not meritorious, for any fee, commission or other compensation with respect to the sale of the Transferred Rights.

(j) Confidentiality. Each party to this Agreement agrees that it will treat this Agreement, each of the other Transaction Documents, and the contents thereof as privileged and confidential and will not disclose, or cause to be disclosed, the terms, hereof or thereof to any Person, except that any such information may be disclosed (i) to the extent necessary in connection with the enforcement of such party's rights under any Transaction Documents, (ii) to such party's agents, attorneys and accountants, (iii) to the extent required pursuant to applicable law or by any governmental or supervisory authority (including pursuant to any applicable SEC regulations), (iv) to the extent that prior to such disclosure, such information is publicly available (if such availability is not the result of the disclosing party's breach of this subsection (k), and (v) with the prior written consent of the other party.

(k) Counterparts. This document may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same original.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.

AEROCENTURY CORP.

By:____________________________

Its:___________________________

METLIFE CAPITAL, LIMITED PARTNERSHIP

By: 23rd Street Investments Inc.

Its: General Partner

By: __________________________

Its:___________________________

APPENDICES

A - OPERATIVE DOCUMENTS

B - SELLER'S ACCOUNT FOR WIRE TRANSFER

C - LESSEE ACKNOWLEDGMENT AND CONSENT TO LENDER

D - LEASE AMENDMENT

E - ASSIGNMENT AND ASSUMPTION AGREEMENT

Appendix A

Operative Documents

Appendix B

Seller's Account for Wire Transfer

             JPMorgan Chase

            ABA No: xxxxxxxxxxxx

            Account #: XXXXXXXX

            Acct Name: XXXXXXX

            Reference: Republic Sale Proceeds

Appendix C

Lessee Acknowledgment and Consent to Lender

Appendix D

Lease Amendment

Appendix E

Assignment and Assumption AgreementBlueprint

 

 
Exhibit
10.1

 

SUBLICENSE AGREEMENT

 

This
Agreement is entered into as of August 7, 2017 (“Effective
Date”), by and between TransChem, Inc., a corporation
organized and existing under the laws of the State of Delaware,
having an office and place of business at 6415 Buffalo Speedway,
Houston, Texas 77005 (“Sublicensor”) on one
hand, and AzurRx Biopharma, Inc., a corporation organized and
existing under the laws of Delaware having an office and place of
business at 760 Parkside Avenue, Downstate Biotechnology Incubator,
Suite 217, Brooklyn, New York 11226 (“Sublicensee”) on the
other hand.

 

 

 

S t a t e m e n t

 

Sublicensor holds
a license from Albert Einstein College of Medicine, Inc., a not for
profit corporation organized and existing under the laws of the
State of New York, having an office and place of business at 1300
Morris Park Avenue, Bronx, New York 10461 (“Einstein”),
Victoria Link Limited, a wholly owned subsidiary of Victoria
University of Wellington, a University established under the
Education Act 1989 having its registered offices at Kelburn Parade,
Wellington 6140, New Zealand (“Viclink”) (Einstein and
Viclink shall be referred to collectively as
“Licensors”) to patents and patent applications
relating to Helicobacter pylori 5’-methylthioadenosine
nucleosidase (“MTAN”) inhibitors (the “Master
License”). Sublicensee wishes to acquire an exclusive license
to Sublicensor’s rights in the aforementioned patent rights,
and Sublicensor wishes to grant such license to
Sublicensee.

 

NOW,
THEREFORE, in consideration of the promises and mutual covenants,
conditions and limitations herein contained and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Sublicensor and Sublicensee agree as
follows:

 

1. Definitions

 

1.01

“Agreement Patents” means
the patents and patent applications listed on Appendix A, together
with any and all patents and patent applications which issue from
or are based on such patents and patent applications and from any
and all divisionals, continuations, continuations-in-part (but only
to the extent the claims thereof are enabled by disclosure of the
parent application) and foreign counterparts of such patents and
patent applications, and any and all reissues, renewals and
extensions or the like of such patents and patent applications and
any and all U.S. and foreign patents which are based on such
patents and patent applications. Appendix A shall be updated from
time-to-time by the parties.

 

1.02

"First
Field" means MTAN inhibitors for the treatment and/or
prevention of Helicobacter pylori (H. pylori) infections. [*****].
[*****].

 

1.03

“Second
Field” means MTAN
inhibitors for the treatment and/or prevention of bacterial
infections. [*****]. [*****].

 

1.0

“Field” means collectively,
the First Field and the Second Field.

 

1.05

“First Licensed Product”
means any product or service in the First Field, the development,
manufacture, use, provision or sale of which is covered by a claim
of Agreement Patents, or which cannot be marketed without a license
or sublicense for the use of the Agreement Patents in any
jurisdiction in which such product is approved for sale or is being
manufactured.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

1.06

 “Second Licensed
Product” means any product or service in the Second
Field, the development, manufacture, use, provision or sale of
which is covered by a claim of Agreement Patents, or which cannot
be marketed without a license or sublicense for the use of the
Agreement Patents in any jurisdiction in which such product is
approved for sale or is being manufactured.

 

1.07

 “Licensed Products” means,
collectively, First Licensed Products and Second Licensed
Products.

 

1.08

Net Sales” means the total
consideration, in any form, received by Sublicensee as
consideration for the sale, lease, provision or other disposition
of Licensed Products by Sublicensee to an independent third party,
less:

 

(a)

customary and
reasonable trade discounts actually taken, refunds, returns and
recalls; and

 

(b)

when included in
gross sales, customary and reasonable freight, shipping, duties,
and sales, V.A.T. and/or use taxes based on sales prices, but not
including taxes when assessed on incomes derived from such
sales.

 

 If
Sublicensee intends to accept from independent third parties any
non-cash consideration as Net Sales, Sublicensee must first obtain
Sublicensor’s written approval. For any non-cash
consideration approved by Sublicensor and received as Net Sales,
the parties will appoint an independent third party to determine,
at Sublicensee’s expense, the present day fair market value
of such consideration and that value shall be added to Net Sales in
place of the non-cash consideration. Net Sales shall exclude any
samples of Licensed Products transferred or disposed of at no cost
for promotional or educational purposes.

 

In the
event that, during a particular calendar quarter, a Licensed
Product is sold in combination with one or more other products,
whether or not such other products are packaged or otherwise
physically combined with such Licensed Product, for a single price
(a “Combination Product”), Net Sales from sales of a
Combination Product, for purposes of calculating royalties due
under this Agreement, shall be calculated by multiplying the Net
Sales of the Combination Product by the fraction A/(A+B), where A
is the average per unit sales price for such calendar quarter of
the Licensed Product sold separately in the country of sale and B
is the average per unit sales price for such calendar quarter of
the other product(s) sold separately in the country of sale. In the
event that no separate sales are made of the Licensed Product
and/or the other product(s) in the country of sale, separate sale
prices in commensurate countries may be used instead. In the event
that no separate sales are made of the Licensed Product and/or the
other product(s), Net Sales from sales of a Combination Product,
for purposes of determining royalty payments on such Combination
Products, shall be calculated using the entire Net Sales of such
Combination Products.

 

1.09

 “Confidential
Information” means any information designated as such
in writing by the disclosing party, whether by letter or by the use
of an appropriate proprietary stamp or legend, prior to or at the
time any such confidential or proprietary materials or information
are disclosed by the disclosing party to the recipient.
Notwithstanding the foregoing, information or materials which are
orally or visually disclosed to the recipient by the disclosing
party, or are disclosed in a writing or other tangible form without
an appropriate letter, proprietary stamp or legend, shall
constitute Confidential Information if the disclosing party, within
thirty (30) days after such disclosure, delivers to the recipient a
written document or documents describing such information or
materials and referencing the place and date of such oral, visual,
written or other tangible disclosure.

 

1.10

 “Marketable
Securities” means shares of the common stock of
Sublicensee that are listed or quoted for trading on the NASDAQ
Global Market, the NASDAQ Global Select Market, the New York Stock
Exchange, or the New York Stock Exchange Amex (each, a
“Trading Market”).

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

1.11

“Volume Weighted Average
Price” means, for the applicable date, the
price determined by the average
of the daily volume weighted average price of the common stock of
Sublicensee for the twenty (20) consecutive trading days ending on
the trading day immediately before the applicable date on the
applicable Trading Market as reported by Bloomberg L.P., based on a
trading day from 9:30 a.m. to 4:02 p.m. (New York City
time).

 

2.

Agreement Patents

 

2.01

Sublicensee will
reimburse Licensors for expenses incurred in connection with the
preparation, filing, prosecution and maintenance of the Agreement
Patents (and not previously reimbursed to Licensors by a third
party) as follows: [*****]. Amounts paid by Sublicensee pursuant to
this Section 2.01 are non-refundable and not creditable against any
other payment due to Sublicensor.

 

2.02

As of and after the
Effective Date, and only to the extent that a third party is not
obligated to do so, Sublicensee will pay the cost of preparing,
filing, prosecuting, maintaining and resisting challenges to the
validity of the Agreement Patents (as well as the cost of
preparing, filing, prosecuting, maintaining and resisting
challenges to the validity of corresponding applications in at
least the United States, [*****], and in such other jurisdictions
as Sublicensee shall determine), using patent counsel selected by
Licensor. Such payments will be due within five (5) days of
Sublicensee’s receipt of a request for upfront payment from
Licensor’s patent counsel relating to said costs. Sublicensee
will pay the cost of defending and/or prosecuting any interference,
reexamination, reissue, opposition, cancellation and nullity
proceedings involving Agreement Patents to the extent that a third
party is not obligated to do so. Sublicensor will keep Sublicensee
fully informed concerning such Sublicensee supported patents and
applications and will consult with Sublicensee concerning the
preparation, filing, prosecution, maintenance and challenges to the
validity of such Sublicensee supported patents and applications.
Sublicensor and Sublicensee shall cooperate with any reasonable
request of the other in connection with any such preparation,
filing, prosecution, maintenance and/or defense. To the extent not
prohibited by law or contractual obligations of Sublicensor,
Sublicensor shall inform Sublicensee with respect to the
preparation, filing, prosecution, maintenance, defense or
enforcement of any patents or applications listed on Appendix A
that are supported by a third party. Notwithstanding anything
contained herein to the contrary, in the event that Sublicensee
elects not to prepare, file, prosecute, maintain, or resist
challenges to the validity of any patent or patent application
within the Agreement Patents, or defend and/or prosecute any
interference, reexamination, reissue, opposition, cancellation and
nullity proceedings involving Agreement Patents, Sublicensee shall
give Sublicensor thirty (30) days prior written notice of such
election. Any patents or patent applications so elected by
Sublicensee shall at the end of the notice period cease to be
considered Agreement Patents, and Sublicensor shall then be free,
at its election, to abandon or maintain the prosecution of such
patent application or issued patent or grant rights to such patent
application or issued patent to third parties.

 

2.03

Amounts paid by
Sublicensee pursuant to Section 2.02 will be non-refundable and not
creditable against any other payment due to
Sublicensor.

 

3.

License Grant

 

3.01

Sublicensor hereby
grants to Sublicensee, subject to the terms and conditions of the
Master License, a worldwide, exclusive license to
Sublicensor’s rights in the Agreement Patents, to make, have
made, use, have used, provide, import, have imported, market,
distribute, offer to sell, sell and have sold First Licensed
Products and Second Licensed Products.

 

3.02

Nothing contained
in this Agreement shall be construed or interpreted as a grant, by
implication or otherwise, of any license except as expressly
specified in Section 3.01 hereof.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

4.

Confidentiality

 

4.01

Sublicensee will
retain in confidence Confidential Information of Sublicensor
(“Sublicensor Confidential Information”) and
Sublicensee will not disclose any such Sublicensor Confidential
Information to any third party without the prior written consent of
Sublicensor, except that Sublicensee shall have the right to
disclose such Sublicensor Confidential Information to any third
party for commercial or research and development purposes under
written terms of confidentiality and non-disclosure which are
commercially reasonable. Sublicensee will keep confidential all
Sublicensor Confidential Information for a period of five (5) years
after termination or expiration of this Agreement, provided,
however, that the obligation of confidentiality will not apply to
any such information which:

 

(a)

was known to
Sublicensee or generally known to the public prior to its
disclosure hereunder; or

 

(b)

subsequently
becomes known to the public by some means other than a breach of
this Agreement, including but not limited to publication and/or
laying open to inspection of any patent applications or patents;
or

 

(c)

is subsequently
disclosed to Sublicensee by a third party having a lawful right to
make such disclosure; or

 

(d)

is required to be
disclosed by regulation, law or court order to the most limited
extent necessary to comply therewith, provided Sublicensor are
given a fair opportunity to defend against such disclosure;
or

 

(e)

is independently
developed by Sublicensee as evidenced by Sublicensee’s
written records.

 

4.02

During the term of
this Agreement, it is contemplated that Sublicensor may become
aware of Confidential Information of Sublicensee
(“Sublicensee Confidential Information”). Sublicensor
agree to retain such Sublicensee Confidential Information in
confidence and not to disclose any such Sublicensee Confidential
Information to a third party without prior written consent of
Sublicensee for a period ending five (5) years after termination or
expiration of this Agreement, except that such obligations shall
not apply to any information which:

 

(a)

was known to
Sublicensor or generally known to the public prior to their
disclosure hereunder; or

 

(b)

subsequently
becomes known to the public by some means other than a breach of
this Agreement; or

 

(c)

is subsequently
disclosed to Sublicensor by a third party having a lawful right to
make such disclosure; or

 

(d)

is required to be
disclosed by regulation, law or court order to the most limited
extent necessary to comply therewith, provided Sublicensee is given
a fair opportunity to defend against such disclosure;
or

 

(e)

is independently
developed by Sublicensor as evidenced by Sublicensor’s
written records.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

5.

Royalties and Payments

 

5.01

Sublicensee shall
make the following payments to Sublicensor:

 

(a)

Sublicensee will
pay to Sublicensor [*****] of Net Sales (the
“Royalty”).

 

(b)

Royalty
Offset/Stacking Royalties. In the event that, with respect to Net
Sales of Licensed Products, Sublicensee is required to pay
royalties to unaffiliated third parties for patent rights such that
the practice of the Agreement Patent(s) would infringe such rights,
the amount due and payable to Sublicensor hereunder shall be
proportionally reduced by [*****] due such third party, but in no
event shall the Royalty payable to Sublicensor be less than [*****]
of Net Sales. By example, if the royalty due other third parties
equals [*****] of Net Sales, the Royalty due Sublicensor shall be
[*****]; if the royalty due other third parties equals [*****] of
Net Sales, the Royalty due Sublicensor shall be
[*****].

 

5.02

Sublicensee shall
make the following license signing and license maintenance payments
to Sublicensor:

 

(a)

Upon execution of
this Agreement by the parties, Sublicensee will pay to Sublicensor
[*****] as a sublicense signing fee, which payment is
non-refundable and not creditable against any other payment due to
Sublicensor pursuant to this Agreement.

 

(b)

On each of the
first, second, third and fourth anniversaries of the Effective
Date, Sublicensee will pay to Sublicensor [*****] as a sublicense
maintenance fee. This payment is non-refundable but is creditable
against actual Royalties and payments due to Sublicensor pursuant
to Sections 5.01 and 5.02 during the twelve (12) month period
following each such anniversary.

 

(c)

On the fifth
anniversary of the Effective Date, Sublicensee will pay to
Sublicensor [*****] as a sublicense maintenance fee. This payment
is non-refundable but is creditable against actual Royalties and
payments due to Sublicensor pursuant to Sections 5.01 and 5.02
during the twelve (12) month period following such fifth
anniversary.

 

(d)

On the sixth
anniversary of the Effective Date, Sublicensee will pay to
Sublicensor [*****] as a sublicense maintenance fee. This payment
is non-refundable but is creditable against actual Royalties and
payments due to Sublicensor pursuant to Sections 5.01 and 5.02
during the twelve (12) month period following such sixth
anniversary.

 

(e)

On the seventh
anniversary of the Effective Date and every anniversary of the
Effective Date thereafter, Sublicensee will pay to Sublicensor
[*****] as a sublicense maintenance fee. Each such payment is
non-refundable but is creditable against actual Royalties and other
payments due to Sublicensor pursuant to Sections 5.01 and 5.02
during the twelve (12) month period following each such
anniversary.

 

5.03

Sublicensee shall
make the following milestone payments to Sublicensor:

 

(a)

Upon the initiation
by Sublicensee of the first Phase I clinical trial (or its foreign
equivalent) for each Licensed Product (or each indication for a
Licensed Product) anywhere in the world, Sublicensee shall [*****].
Notwithstanding the foregoing, if no such Phase I clinical trial
has occurred by [*****] from the Effective Date, and no Phase I
clinical trial initiated by a Sublicensee for a Licensed Product
has occurred by [*****] from the Effective Date, then Sublicensee
shall [*****];

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

(b)

Upon the completion
by Sublicensee of the first Phase I clinical trial (or its foreign
equivalent) for each Licensed Product (or each indication for a
Licensed Product) anywhere in the world, Sublicensee shall [*****].
Notwithstanding the foregoing, if no such Phase I clinical trial
has been completed by [*****] from the Effective Date, and no Phase
I clinical trial initiated by a Sublicensee for a Licensed Product
has been completed by [*****] from the Effective Date, then
Sublicensee shall pay to Sublicensor [*****];

 

(c)

Upon the initiation
by Sublicensee of the first Phase II clinical trial (or its foreign
equivalent) for each Licensed Product (or each indication for a
Licensed Product) anywhere in the world, Sublicensee shall [*****].
Notwithstanding the foregoing, if no such Phase II clinical trial
has occurred by [*****] from the Effective Date, and no Phase II
clinical trial initiated by a Sublicensee for a Licensed Product
has occurred by [*****] from the Effective Date, then Sublicensee
shall pay to Sublicensor [*****];

 

(d)

Upon the completion
by Sublicensee of the first Phase II clinical trial (or its foreign
equivalent) for each Licensed Product (or each indication for a
Licensed Product) anywhere in the world, Sublicensee shall [*****].
Notwithstanding the foregoing, if no such Phase II clinical trial
has been completed by [*****] from the Effective Date, and no Phase
II clinical trial initiated by a Sublicensee for a Licensed Product
has been completed by [*****] from the Effective Date, then
Sublicensee shall pay to Sublicensor [*****];

 

(e)

Upon the initiation
by Sublicensee of the first Phase III clinical trial (or its
foreign equivalent) for each Licensed Product (or each indication
for a Licensed Product) anywhere in the world, Sublicensee shall
[*****]. Notwithstanding the foregoing, if no such Phase III
clinical trial has occurred by [*****] from the Effective Date, and
no Phase III clinical trial initiated by a Sublicensee for a
Licensed Product has occurred by [*****] from the Effective Date,
then Sublicensee shall pay to Sublicensor [*****];

 

(f)

Upon the submission
of a new drug application to the FDA (or its foreign equivalent)
for each Licensed Product (or each indication for a Licensed
Product), Sublicensee shall [*****]. Notwithstanding the foregoing,
if no such new drug application has been submitted to the FDA by
[*****] from the Effective Date, and no new drug application was
submitted by a Sublicensee for a Licensed Product by [*****] from
the Effective Date, then Sublicensee shall pay to Sublicensor
[*****];

 

(g)

Upon first
commercial sale of each Licensed Product (or each indication for a
Licensed Product) by Sublicensee, Sublicensee shall [*****];
and

 

(h)

[*****].

 

5.04

[*****].

 

5.05

Sublicensee’s
failure to pay full Royalties, transfer stock or make complete
payments under Sections 5.01, 5.02, 5.03 or 5.04 shall be a breach
of this Agreement.

 

6.

Payment Reports and Records

 

6.01

All cash payments
required to be made by Sublicensee to Sublicensor pursuant to this
Agreement shall be made to Sublicensor in U.S. Dollars by wire
transfer or by check payable to Sublicensor and sent to
Sublicensor’s address set out in Section 12.01. All Shares
and Marketable Securities shall be issued to Sublicensor at
Sublicensor’s address set out in Section 12.01.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

6.02

All payments
required to be made by Sublicensee to Sublicensor pursuant to this
Agreement shall be subject to a charge of one and one-half percent
(1.5%) per month or Two Hundred and Fifty Dollars (US$250),
whichever is greater, if late. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate quoted by the
Wall Street Journal, averaged on the last business day of each of
the three (3) consecutive calendar months constituting the calendar
quarter in which the payment was earned. Sublicensee will bear any
loss of exchange or value and pay any expenses incurred in the
transfer or conversion to U.S. dollars.

 

6.03

Payment due from
Sublicensee to Sublicensor pursuant to Section 5.01 will be paid
within thirty (30) days after the end of each calendar year quarter
during which the payment accrued. If no Royalties or other payments
are due for any quarter, Sublicensee will send a statement signed
by an officer of Sublicensee to that effect to Sublicensor. Payment
shall be accompanied by a statement of the number of Licensed
Products and Combination Products sold by Sublicensee in each
country, total billings for such Licensed Products and Combination
Products, the values of A and B used to calculate the Net Sales of
Combination Products, deductions applicable to determine the Net
Sales thereof, the amount of Net Sales realized by Sublicensee, the
amount of any deduction and a detailed listing thereof, and the
total payment due from Sublicensee to Sublicensor (the
“Royalty Report”). Such Royalty Report shall be signed
by an officer of Sublicensee.

 

6.04

Sublicensee shall
maintain complete and accurate books of account and records showing
Net Sales. Such books and records of Sublicensee shall be open to
inspection, in confidence, during usual business hours, upon at
least ten (10) business days prior notice to Sublicensee, by an
independent certified public accountant appointed by Sublicensor on
behalf of Sublicensor, who has entered into a written agreement of
confidentiality with Sublicensor which is no less protective of
Sublicensee’s Confidential Information than the provisions of
Section 4.01 hereof and to whom Sublicensee has no reasonable
objection, for the purpose of verifying the accuracy of the
payments made to Sublicensor by Sublicensee pursuant to this
Agreement. All information, data, documents and materials reviewed
during the course of an audit shall be deemed Sublicensee’s
Confidential Information and subject to the confidentiality
provisions of this Agreement. Any notice by Sublicensor requesting
such inspection will contain detailed information regarding the
records and time periods being audited, which will be no greater
than one year prior to the date of the audit, but no further back
than the Effective Date. Sublicensee shall retain all applicable
records for one year subsequent to the expiration or termination of
this Agreement. Inspection shall be at Sublicensor’s sole
expense and limited to those matters related to Sublicensee’s
payment obligations under this Agreement and shall take place not
more than once per calendar year. Sublicensor will provide to
Sublicensee a complete copy of any audit report generated pursuant
to this Section. Any underpayment revealed by any inspection, plus
interest on the underpayment amount at the rate of one and one-half
percent (1.5%) per month or Two Hundred and Fifty Dollars (US$250),
whichever is greater, shall be promptly paid by Sublicensee to
Sublicensor. Further, if any inspection reveals an underpayment to
Sublicensor of ten percent (10%) or greater, then the cost of the
inspection shall be paid by Sublicensee. No audit may be commenced
until all prior audits are final and closed. Only periods with
amounts paid by Sublicensee with no open dispute may be the subject
of an audit by Sublicensor. No audit results may be extrapolated or
otherwise applied to any period that is not the subject of an
audit. If Sublicensee disagrees in any respect with the results of
the verification provided in this Section, Sublicensor and
Sublicensee shall meet to attempt to resolve the disagreement. If
they are unable within thirty (30) days to reach a resolution,
Sublicensor and Sublicensee shall jointly retain an independent
auditor to review the books and records and calculations hereunder
and the verification conducted under this Section and make a final
determination regarding any disputed item or items (the "Final
Determination"). The decision of such independent auditor with
respect to the payments, if any, to be made pursuant to this
Section shall be final and binding on the parties. The costs of
such independent auditor shall be borne by the non-prevailing
party.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

7.

Infringement

 

7.01

Each party should
provide timely written notice of any suspected infringement of the
Agreement Patents to the other party and the parties should then
discuss and agree upon a strategy for addressing the infringement
consistent with the terms and conditions of the Master
License.

 

8.

Prohibition on Use of Names; No Publicity

 

8.01

No party to this
Agreement shall use the name of any other party without the prior
written consent of such other party, except if the use of such name
is required by law, regulation, federal securities law, or judicial
order, in which event the party intending to use such name will
promptly inform in writing the relevant other party prior to any
such required use. Additionally, No party to this Agreement shall
use the name of the Licensors without the prior written consent of
the Licensors, except if the use of such name is required by law,
regulation, federal securities law, or judicial order, in which
event the party intending to use such name will promptly inform in
writing the relevant other party prior to any such required use. No
party to this Agreement will make any public announcement regarding
the existence of this Agreement, and/or the Master License, and/or
the collaboration hereunder without obtaining the prior written
consent of the other party, except if such announcement is required
by law, regulation, federal securities law or judicial order, in
which event the party intending to make such announcement will
promptly inform the other party prior to such
announcement.

 

9.

Term and Termination

 

9.01

Unless terminated
earlier under other provisions hereof, this Agreement will expire
upon the expiration of the last Agreement Patent. Upon termination
or expiration of this Agreement for any reason, Sections 4, 8,
9.08, 9.09, 11.01 through 11.09, 11.14 and 12 shall survive and all
undisputed payment obligations under Articles 5 and 6 hereof
accrued as of the termination date shall be paid by Sublicensee
within thirty (30) days of such termination or
expiration.

 

9.02

Sublicensee may
terminate this Agreement and the licenses granted hereunder for any
reason and without further liability, by giving notice to
Sublicensor sixty (60) days prior to such termination. Upon such
termination, Sublicensee shall not use Agreement Patents for any
purpose and all of Sublicensee’s rights in Agreement Patents
shall be terminated.

 

9.03

If Sublicensor or
Sublicensee defaults on or breaches any term or condition of this
Agreement, the aggrieved party may serve notice upon the other
party of the alleged default or breach. If such default or breach
is not remedied within sixty (60) days from the date of such
notice, the aggrieved party may at its election terminate this
Agreement, subject to the conditions set forth in Sections 11.17
and 11.18; provided that if such default cannot reasonably be cured
within such sixty (60)-day period and the defaulting party shall
have commenced to cure such default within such sixty (60)-day
period and thereafter diligently and expeditiously proceeds to cure
the same, such sixty (60)-day period may be extended for so long as
it shall require such defaulting party in the exercise of due
diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of one-hundred twenty
(120) days in the aggregate. Any failure to terminate hereunder
shall not be construed as a waiver by the aggrieved party of its
right to terminate for future defaults or breaches. Upon
termination of this Agreement by Sublicensor pursuant to this
Section 9.03, the licenses granted by Sublicensor to Sublicensee
shall terminate and Sublicensee shall not use Agreement Patents for
any purpose and all of Sublicensee’s rights in Agreement
Patents shall be terminated.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

9.04

If Sublicensee
makes an assignment for the benefit of creditors or if proceedings
for a voluntary bankruptcy are instituted on behalf of Sublicensee
or if Sublicensee is declared bankrupt or insolvent, Sublicensor
may, at its election, terminate this Agreement by providing notice
to Sublicensee. Upon termination of this Agreement by Sublicensor
pursuant to this Section 9.04, the licenses granted by Sublicensor
to Sublicensee shall terminate and Sublicensee shall not use
Agreement Patents for any purpose and all of Sublicensee’s
rights in Agreement Patents shall be terminated.

 

9.05

If Sublicensee is
convicted of a felony relating to the manufacture, use or sale of
Licensed Products or a felony relating to moral turpitude,
Sublicensor may, at its election, terminate this Agreement by
notice to Sublicensee. Upon termination of this Agreement by
Sublicensor pursuant to this Section 9.05, the licenses granted by
Sublicensor to Sublicensee shall terminate and Sublicensee shall
not use Agreement Patents for any purpose and all of
Sublicensee’s rights in Agreement Patents shall be
terminated.

 

9.06

Notwithstanding the
provisions of Section 9.03 hereof, should Sublicensee fail to pay
Sublicensor any cash, or issue to Sublicensor any Marketable
Securities, as applicable, when due and payable under this
Agreement, then upon thirty (30) days written notice Sublicensor
may, at its election, terminate this Agreement, unless within the
thirty (30) day period all delinquent amounts together with
interest due and unpaid have been paid in cash, or issued in
Marketable Securities (as applicable), by Sublicensee. Upon
termination of this Agreement by Sublicensor pursuant to this
Section 9.06, the licenses granted by Sublicensor to Sublicensee
shall terminate and Sublicensee shall not use Agreement Patents for
any purpose and all of Sublicensee’s rights in Agreement
Patents shall be terminated.

 

9.07

Termination of this
Agreement by Sublicensee or Sublicensor shall not prejudice the
rights of the parties accruing herein.

 

9.08

If Sublicensee
terminates this Agreement pursuant to Section 9.02 or if
Sublicensor terminate this Agreement pursuant to Sections 9.03,
9.04, 9.05 or 9.06, then Sublicensee shall, upon such termination,
assign to Sublicensor all right, title and interest in and to any
Dependent Patents and Dependent Know-How (as defined below)
developed by or for Sublicensee during the term of this Agreement,
and shall, within thirty (30) days of termination, provide copies
of all documents and other materials embodying Dependent Know-How
to Sublicensor. As used in this Section 9.08, the term
“Dependent Patents” means any U.S. or foreign patent
application or patent which claims an invention the practice of
which would infringe a claim of a patent or patent application of
the Agreement Patents or the practice of which results in a product
covered by a claim of a patent or patent application of Agreement
Patents. “Dependent Know-How” means confidential
information, including clinical trial information, the practical
application of which would infringe a claim of a patent or patent
application of Agreement Patents, or which results in a product
covered by a claim of a patent or patent application of Agreement
Patents. Sublicensee agrees to take all actions and execute any and
all documents reasonably requested by Sublicensor to effectuate the
terms of this Section 9.08 at Sublicensor’s expense. During
the time period between notice of termination and the effective
date of termination Sublicensee will take whatever actions are
necessary to prevent any Dependent Patent from becoming abandoned
or canceled at Sublicensor’s expense.

 

9.09

If Sublicensee
terminates this Agreement pursuant to Section 9.02 or if
Sublicensor terminates this Agreement pursuant to Sections 9.03,
9.04, 9.05 or 9.06, Sublicensee shall submit a final Royalty Report
to Sublicensor and any payments and patent costs due to Sublicensor
hereunder as of the date of termination shall be payable within
thirty (30) days of the date of termination. In addition, within
ten (10) days of notice of such termination, Sublicensee shall
provide Sublicensor with a report showing the status of all
Dependent Patents, including, without limitation, a list of all
countries where Dependent Patents have been filed and a list of all
actions which must be taken with respect to the Dependent Patents
and relevant due dates.

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

10.

Amendment and Assignment

 

10.01

This Agreement sets
forth the entire understanding between Sublicensor and Sublicensee
pertaining to the subject matter hereof.

 

10.02

Except as otherwise
provided herein, this Agreement may not be amended, supplemented or
otherwise modified, except by an instrument in writing signed by
both parties.

 

10.03

Without the prior
written approval of the other party, which approval shall not be
unreasonably withheld, no party may assign this Agreement except
that this Agreement may be assigned without the other party’s
consent as follows: (a) to an entity acquiring substantially all of
such party’s business to which this Agreement relates, (b) in
the event of a merger, consolidation, change in control,
reorganization or other combination or similar transaction of such
party, or (ii) the transfer or assignment to an affiliate, in each
case, pursuant to which the surviving entity or assignee assumes
the assigning or merging party’s obligations hereunder in
writing. Any attempted assignment in contravention of this Section
11.03 shall be null and void.

 

11.

Miscellaneous Provisions

 

11.01

This Agreement
shall be construed and the rights of the parties governed in
accordance with the laws of the State of New York, excluding its
law of conflict of laws. Any dispute or issue arising hereunder,
including any alleged breach by any party, shall be heard,
determined and resolved by an action commenced in the state or
federal courts in New York, New York, which the parties hereby
agree shall have proper jurisdiction and venue over the issues and
the parties. Sublicensor and Sublicensee hereby agree to submit to
the jurisdiction of the state or federal courts in New York and
waive the right to make any objection based on jurisdiction or
venue. The New York courts shall have the right to grant all relief
to which Sublicensor and Sublicensee are or shall be entitled
hereunder, including all equitable relief as the Court may deem
appropriate.

 

11.02

This Agreement has
been prepared jointly.

 

11.03

If any term or
provision of this Agreement or the application thereof to any
person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application
of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be
affected thereby and each term and provision of this Agreement
shall be valid and enforced to the fullest extent permitted by
law.

 

11.04

Sublicensee agrees
to indemnify Sublicensor and their current or former directors,
officers, employees, and agents and their respective successors,
heirs and assigns (Sublicensor, and each such person being the
“Sublicensor Indemnified Parties”) for the cost of
defense and for damages awarded and losses and liabilities
incurred, if any, as a result of any third party claims,
liabilities, suits or judgments based on or arising out of the
research, development, marketing, manufacture, sale and/or
provision of Licensed Products by Sublicensee, and/or the licenses
granted under this Agreement, or otherwise related to the conduct
of Sublicensee’s business, so long as such claims,
liabilities, suits, or judgments are not attributable to the
material breach of this Agreement or the grossly negligent or
intentionally wrongful acts or omissions by the Sublicensor
Indemnified Parties.

 

Sublicensor agrees
to indemnify Sublicensee and their respective current or former
directors, officers, employees, representatives and agents and
their respective successors, heirs and assigns (Sublicensee and
each such person being the “Sublicensee Indemnified
Parties”) for the cost of defense and for damages awarded and
losses and liabilities incurred, if any, as a result of any third
party claims, liabilities, suits or judgments based on or arising
out of any breach by Sublicensor of its representations, warranties
and covenants under this Agreement, so long as such claims,
liabilities, suits, or judgments are not attributable to the
material breach of this Agreement or the grossly negligent or
intentionally wrongful acts or omissions by the Sublicensee
Indemnified Parties.

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

This
indemnity is conditioned upon the indemnified party’s
obligation to: (i) advise indemnifying party of any claim or
lawsuit, in writing promptly after the indemnified party has
received notice of said claim or lawsuit provided however that the failure or
delay to do so shall not relieve the indemnifying party of any
obligation or liability that it may have to the party seeking
indemnity, except to the extent that the ability to defend or
resolve the claim, liability, suit or judgment is adversely
affected thereby, (ii) assist the indemnifying party and its
representatives, at the indemnifying party’s expense, in the
investigation and defense of any lawsuit and/or claim for which
indemnification is provided, and (iii) permit indemnifying party to
control the defense of such claim or lawsuit for which
indemnification is provided. Neither party shall make any
settlement of any claims that may give rise to liability of the
other party hereto without the prior written consent of the other
party.

 

11.05

Sublicensee agrees
to indemnify Licensors and their current or former directors,
governing board members, trustees, officers, faculty, medical and
professional staff, employees, students and agents and their
respective successors, heirs and assigns (Licensors and each such
person being the “Indemnified Parties”) for the cost of
defense and for damages awarded and losses and liabilities
incurred, if any, as a result of any third party claims,
liabilities, suits or judgments based on or arising out of the
research, development, marketing, manufacture, sale and/or
provision of Licensed Products by Sublicensee, and/or the licenses
granted under this Agreement, or otherwise related to the conduct
of Sublicensee’s business, so long as such claims,
liabilities, suits, or judgments are not solely attributable to
grossly negligent or intentionally wrongful acts or omissions by
the Indemnified Parties.

 

1.06

Nothing in this
Agreement is or shall be construed as:

 

(a)

Except as set forth
in Section 11.08, a warranty or representation by Sublicensor that
anything made or used by Sublicensee under any license granted in
this Agreement (including, without limitation, Licensed Products)
is or will be free from infringement of patents, copyrights, and
other rights of third parties; or

 

(b)

Granting by
implication, estoppel, or otherwise any license, right or interest
other than as expressly set forth herein.

 

11.07

Except as expressly
set forth in this Agreement, the parties MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW, STATUTE OR OTHERWISE, AND
THE PARTIES SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN ADDITION,
EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS
HEREUNDER, NO PARTY SHALL BE LIABLE FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, UNDER ANY
THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.

 

IN
PARTICULAR, EXCEPT FOR THE PARTIES’ INDEMNIFICATION
OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY, THEIR
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES OR AFFILIATES BE LIABLE
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS
OF WHETHER SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO
KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE
FOREGOING.

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

11.08

Each of Sublicensor
and Sublicensee represent and warrant to the other that as of the
Effective Date:

 

(a)

it is a corporation
or entity duly organized and validly existing under the laws of the
state or other jurisdiction of its incorporation or
organization;

 

(b)

they have the legal
right and authority to enter into this Agreement and to perform all
of their obligations hereunder;

 

(c)

when executed by
all parties, this Agreement will constitute a valid and legally
binding obligation and shall be enforceable in accordance with its
terms;

 

(d)

there are no
existing or threatened actions, suits or claims pending or
threatened against them that may affect the performance of their
obligations under the Agreement.

 

(e)

the execution,
delivery and performance by each party of this Agreement and its
compliance with the terms and provisions hereof does not and will
not conflict with or result in a breach of any of the terms and
provisions of or constitute a default under: (i) a loan agreement,
guaranty, financing agreement, agreement affecting a Licensed
Product or other agreement or instrument affecting a Licensed
Product; (ii) the provisions of its charter or other operative
documents or bylaws; or (iii) any order, writ, injunction or decree
of any court or governmental authority entered against it or by
which any of its property is bound; and

 

(f)

it has the full
right, power and authority to grant all of the right, title and
interest in the licenses, if any, granted to the other party under
this Agreement;

 

 

Sublicensor
represents and warrants to Sublicensee that (a) Sublicensor has a
valid license in and to all Agreement Patents (with the right to
sublicense) for use by Sublicensee as contemplated hereunder free
and clear of all liens and encumbrances of any nature whatsoever,
and (b) Sublicensee’s exercise of the license to the
Agreement Patents granted herein will not infringe or
misappropriate the intellectual property rights of any third
party.

 

11.09

Except as expressly
set forth hereunder, Sublicensee represents and warrants that it
has not relied on any information provided by Sublicensor or
Sublicensor’s current or former employees and has conducted
its own due diligence investigation to its own satisfaction prior
to entering into this Agreement.

 

11.10

Sublicensee
represents and warrants that before Sublicensee makes any sales of
Licensed Products or performs or causes any third party to perform
any clinical trials or tests in human subjects involving Licensed
Products, Sublicensee will acquire and maintain in each country in
which Sublicensee shall test or sell Licensed Products, appropriate
insurance coverage reasonably acceptable to Licensors and
Sublicensor, but providing coverage in respect of Licensed Products
in an amount no less than five million (US $5,000,000) per claim.
Sublicensee will not perform, or cause any third party to perform,
any clinical trials or any tests in human subjects involving
Licensed Products unless and until it/they obtain(s) all required
regulatory approvals with respect to Licensed Products in the
applicable countries. Prior to instituting any clinical trials or
any tests in human subjects, or sale of any Licensed Product,
Sublicensee shall provide evidence of such insurance to Licensors
and Sublicensor. If Licensors determine that such insurance is not
reasonably appropriate, it shall so advise Licensee and/or
Sublicensee and Licensee and/or Sublicensee shall delay such
trials, tests or sales until the parties mutually agree that
reasonably appropriate coverage is in place. Licensors shall be
listed as additional insureds in Sublicensee’s insurance
policies. If such insurance is underwritten on a ‘claims
made’ basis, Sublicensee agrees that any change in
underwriters during the term of this Agreement will require the
purchase of ‘prior acts’ coverage to ensure that
coverage will be continuous throughout the term of this
Agreement.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

11.11

Each of Sublicensor
and Sublicensee shall exercise its rights and perform its
obligations hereunder in compliance with all applicable laws and
regulations. In particular, it is understood and acknowledged that
the transfer of certain commodities and technical data is subject
to United States laws and regulations controlling the export of
such commodities and technical data, including all Export
Administration Regulations of the United States Department of
Commerce. These laws and regulations, among other things, prohibit
or require a license for the export of certain types of technical
data to certain specified countries. Sublicensee hereby agrees and
gives written assurance that Sublicensee will comply with all
United States laws and regulations controlling its export of
commodities and technical data relating to Licensed Products, that
Sublicensee will be solely responsible for any violation of such by
Sublicensee, and that Sublicensee will defend and hold Licensors
and Sublicensor harmless in the event of any legal action of any
nature occasioned by such violation by Sublicensee.

 

11.12

Sublicensee agrees
(i) to obtain all regulatory approvals required for the manufacture
and sale of Licensed Products prior to marketing or selling any
such Licensed Products and (ii) to utilize legally appropriate
patent marking on such Licensed Products. Sublicensee agrees to
register or record this Agreement as is required by law or
regulation in any country where the license is in
effect.

 

11.13

Sublicensee agrees
that it will comply with 35 U.S.C. §204 Preference for United
States Industry. Upon Sublicensee’s reasonable request and
expense, Sublicensor shall request that Licensors seek waiver of
this requirement. Sublicensee will prepare all necessary papers at
its sole cost and expense and will provide same to Licensors
together with detailed instructions as to how to seek waiver of
this requirement.

 

11.14

Any tax required to
be withheld under the laws of any jurisdiction on royalties payable
to Sublicensor by Sublicensee under this Agreement will be promptly
paid by Sublicensee for and on behalf of Sublicensor to the
appropriate governmental authority, and Sublicensee will furnish
Sublicensor with proof of payment of the tax together with official
or other appropriate evidence issued by the competent governmental
authority sufficient to enable Sublicensor to support a claim for
tax credit with respect to any sum so withheld. Any tax required to
be withheld on payments by Sublicensee to Sublicensor will be an
expense of and be borne solely by Sublicensor, and
Sublicensee’s royalty payment(s) to Sublicensor following the
withholding of the tax will be decreased by the amount of such tax
withholding. Sublicensee will cooperate with Sublicensor in the
event Sublicensor elect to assert, at their own expense, exemption
from any tax.

 

11.15

Sublicensee will
meet all of the following due diligence requirements:

 

(a)

[*****]

 

(b)

[*****]

 

(c)

[*****]

 

(d)

[*****]

 

(e)

[*****]

 

(f)

[*****]

 

(g)

[*****]

 

(h)

[*****]

 

(i)

[*****]

 

(j)

[*****]

 

(k)

[*****]

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

(l)

[*****]

 

(m)

[*****]

 

(n)

[*****]

 

(o)

[*****]

 

(p)

[*****]

 

(q)

[*****]

 

(r)

[*****]

 

(s)

[*****]

 

11.16

In the event
Sublicensor determine that Sublicensee has failed to fulfill any of
its obligations under Section 15.15(a) – (d) and 11.15(s),
Sublicensor may treat such failure as breach in accordance with
Section 0.03.

 

11.17

In the event
Sublicensor determine that Sublicensee has failed to fulfill any of
its obligations under Sections 11.15(e)-(k), Sublicensor may treat
such failure as breach in accordance with Section 9.03, except that
Sublicensee may cure such breach within sixty (60) days of
notification of the breach by either:
[*****].[*****].[*****].

 

11.18

In the event
Sublicensor determines that Sublicensee has failed to fulfill any
of its obligations under Section 11.15(l) – (r) for the
Second Licensed Product, Sublicensor may treat such failure as
breach in accordance with Section 9.03, except that Sublicensee may
cure the breach by either: [*****].[*****].[*****].

 

11.19

Sublicensee shall
be entitled to extend the milestone schedule in Section 11.15 for
one additional one year period for either the First Licensed
Product or the Second Licensed Product upon payment of [*****] to
Sublicensor, provided,
however, that the extension
permitted by this Section 11.19 [*****].

 

11.20

In the event
Sublicensee (or any entity acting under Sublicensee’s control
or on its behalf) initiates any proceeding or otherwise asserts any
claim challenging the validity or enforceability of any of the
Agreement Patents in any court, administrative agency or other
forum (“Challenge”), the royalty rates set forth in
Section 5.01 and the license maintenance fees set forth in Section
5.04 shall be automatically doubled on and after the date of such
Challenge for the remaining term of this Agreement. Moreover, to
the extent not already covered by Sections 2.01, 2.02 and 2.03,
Sublicensee agrees to pay all costs and expenses (including actual
attorneys’ fees) incurred by Sublicensor in connection with
defending a Challenge.

 

11.21

Neither party shall
be held liable or responsible to the other party nor be deemed to
have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement to the
extent, and for so long as, such failure or delay is caused by or
results from causes beyond the reasonable control of the affected
party; provided, however, that the party affected shall not have
caused or procured such event, shall have used reasonable diligence
to avoid such event or ameliorate its effects, shall give prompt
notice of such event to the other party, and shall continue to take
all reasonable actions within its power to comply as fully as
possible with the terms of this Agreement. Notwithstanding the
foregoing, in the event that any force majeure event shall continue
for more than one hundred eighty (180) days, the party not subject
to such force majeure event may, in its sole discretion, terminate
this Agreement written notice to the other party.

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

12.

Notices

 

12.01

Any notice or
report required or permitted hereunder shall be given in writing,
and shall be deemed to have been properly given and effective upon
delivery, by registered or certified mail, return receipt
requested, or by facsimile with proof of receipt and a confirmation
copy sent by overnight courier, or by overnight courier, to the
following addresses:

 

To Sublicensor:

 

TransChem,
Inc.

6415
Buffalo Speedway

Houston, Texas
77005

Attention: Warren
Lau, CEO

 

With copy to:

 

John W.
Campbell, Ph.D.

Morgan,
Lewis & Bockius LLP

77 West
Wacker Drive, Fifth Floor

Chicago, IL
60601

 

To Sublicensee:

 

AzurRx
Biopharma, Inc.

760
Parkside Avenue,

Downstate
Biotechnology Incubator, Suite 217

Brooklyn, New York
11226

Attention: Thijs
Spoor, President and CEO

 

With
copy to:

 

Y.
Jerry Cohen, Esq.

Cohen
Tauber Spievack & Wagner, PC

420
Lexington Avenue, Suite 2400

New
York, NY 10170

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

13.

Counterpart.

 

This
Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute a single
instrument.

 

 

 

 

SIGNATURE PAGE
FOLLOW

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

IN
WITNESS WHEREOF, the parties have entered into this Agreement
effective as of the day and year first above written.

 

TRANSCHEM,
INC.

 

/s/ Warren C. Lau

Name:
Warren C. Lau

Title:
President & CEO

 

Date:  
July 14,
2017

 

 

AZURRX
BIOPHARMA, INC.

 

 

/s/ Thijs Spoor

Name:
Thijs Spoor

Title:
Chief Executive Officer and President

 

 

Date:   
August 7,
2017

 

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

APPENDIX
A - Agreement Patents

 

(List
of Patents Begins on Next Page)

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

[*****]

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

 

 

Appendix B - Excluded Compound List

 

 

 

[*****]

 

 

 

 

*****
AZURRX BIOPHARMA, INC. HAS REQUESTED THAT THE OMITTED PORTIONS OF
THIS DOCUMENT, WHICH ARE INDICATED BY [*****], BE AFFORDED
CONFIDENTIAL TREATMENT. AZURRX BIOPHARMA, INC. HAS SEPARATELY FILED
THE OMITTED PORTIONS OF THE DOCUMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION.

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