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ctiservierterminationagt

                                                                                                    TERMINATION AND TRANSFER AGREEMENT    THIS TERMINATION    AND  TRANSFER   AGREEMENT     (the “Termination and Transfer  Agreement”) is effective as of November 1st, 2018 and between      LES LABORATOIRES SERVIER, a company duly organized and existing under the laws of  France, having offices and principal place of business at 50 Rue Carnot, 92284 Suresnes Cedex,  France   and   INSTITUT  DE  RECHERCHES  INTERNATIONALES  SERVIER,  a  company  duly  organized and existing under the laws of France, having offices and principal place of business at  50 Rue Carnot, 92284 Suresnes Cedex, France                                      together, hereinafter referred to as “SERVIER”   on the one hand,   AND   CTI BIOPHARMA CORP., a corporation organized and existing under the laws of Delaware,  having  offices  and  principal  place  of  business  at  3101  Western  Ave.,  Suite  800,  Seattle,  WA  98121, United States of America   and   CTI LIFE SCIENCES LIMITED,    a company duly organized and existing under the laws of  England, having offices and principal place of business at Highlands House, Basingstoke Road,  Spencers Wood, Reading, Berkshire RG7 1NT, United Kingdom                                            together, hereinafter referred to as “CTI”    on the other hand,      SERVIER  and  CTI  being  hereinafter  individually  referred  to as  the  “Party”  and  collectively  referred to as the “Parties”.     RECITALS   A.   On  September  16th,  2014  SERVIER  and  CTI  entered  into an  Exclusive  License  and       Collaboration  Agreement  (the  “Original  Agreement”)  pursuant  to  which  the  Parties                                         1                                           

 

     established a collaboration for the Development, Manufacturing and Commercialization       of License Product, all as set forth therein.   B.   On April 21, 2017, the Parties entered into an Amended and Restated Exclusive License       and  Collaboration  Agreement  (the  “A&R  Agreement”)  to  reflect  the  transfer  of       commercial rights to SERVIER in all countries of the world except for the United States,       and  transfer  the  MA  for  the  Licensed  Compound  in  the  European  Union  upon  a  PIX       Positive  Outcome.  The  Parties  acknowledge  that  the  A&R  Agreement  superseded  and       replaced the Original Agreement in its entirety.     C.   On July 2nd 2018 the Parties entered into an Amendment n°1 to the A&R Agreement, to       modify  Article  6.2.1  of  the  A&R  Agreement,  related  to  the  conditions  of  an  EU  MA       transfer.      D.   On  6  July  2018,  CTI  informed  SERVIER  of  the  results  of  the  PIX306  Trial  did  not       achieve statistically significant progression free survival (PFS) results and therefore did       not meet the criteria for PIX Positive Outcome.    E.   In consideration of (i) no PIX Positive Outcome, and (ii) SERVIER’s intent to maintain,       despite no PIX Positive Outcome, the Licensed Product available for the patients in its       markets, the Parties have agreed to:               a. Terminate the A&R Agreement for mutual convenience in its entirety (except                 as expressly provided herein);               b. have CTI continue certain activities during the Transitional Time-Period (as                 defined hereinafter);               c. define the agreed conditions of an asset purchase agreement to be signed by                 the Parties in case (a) of Positive EMA Position (as defined hereinafter) or, (b)                 if requested by SERVIER in the event there is no Positive EMA Position; and               d. define  the  consequences  of  the  termination  of  the  A&R  Agreement  if                 SERVIER does not request an asset purchase agreement in case of no Positive                 EMA Position.       The Parties to this Termination and Transfer Agreement, intending to be legally bound,       hereby agree to the following terms and conditions:                              ARTICLE 1  DEFINITION        Capitalized Terms used and not defined in this Termination and Transfer Agreement have       the respective meaning ascribed thereto in the A&R Agreement.     

 

                    ARTICLE 2 TERMINATION / RELEASES   2.1  SERVIER and CTI mutually agree to terminate the A&R Agreement as of the date hereof  (the “Termination Date”) and, accordingly, except as expressly provided herein otherwise the  A&R Agreement shall have no further effect except as expressly provided in Section 3.1.  Such  termination  shall  be  effective  as  of  the  Termination  Date  and  deemed  to  be a termination  mutually  agreed  upon  by  and  between CTI and SERVIER,  and  neither  Party  shall  have  any  responsibility or liability of any kind as a result of this termination.  The Parties hereby waive all  rights  to  notice  termination  as  may  be  otherwise  provided  under  the A&R  Agreement  or  Applicable Law.   2.2  The Parties anticipate that at the time (a) of entering into the Asset Purchase Agreement  (as defined below) or (b) SERVIER notifying CTI that it does not desire to enter into the Asset  Purchase  Agreement, the Parties will consider  in good faith providing each other a release of  Claims that addresses the period between the Termination Date and such later date.                  ARTICLE 3 CONSEQUENCES OF TERMINATION   3.1  As an immediate consequence of such termination, the Parties agree as follow:   A  transition  time-period  (hereinafter  the “Transition  Time-Period”) is  open  from  the  Termination  Date until  either  (i)  the  execution  of  the  Asset  Purchase  Agreement  or  (ii)  notification by SERVIER that it does not request an Asset Purchase Agreement, during which  period (i) conditions of the termination of the  A&R  Agreement are postponed and (ii) Parties  agree to continue to perform their obligations as defined under the A&R Agreement.   Parties hereby expressly agree that the Final Clinical Study Report milestone (as defined under  article 10.2 of the A&R Agreement) is due by SERVIER to CTI. CTI issued an invoice dated  December  13th,  2018  and  SERVIER  as  explicitly  confirmed  by  written  notice  that  the  Final  Clinical  Study  milestone  as  occurred  and,  accordingly,  the  associated  milestone  is  due  and  payable to CTI.   During such Transition Time-Period,            a) To the extent not completed prior to the Termination Date, CTI shall timely file             any  further  Regulatory  Materials,  MAA,  MA  and  other  Regulatory  Approval             applications (including update to the EMA as to PIX306 Trial and any renewal of             the  MA  and  any  LEG  obligations (legally  binding  measures))  necessary  for             obtaining  approval  of  the  Standard  MA  regarding  the  Licensed  Product  in  the             European Union and shall be responsible for maintaining the MA in the European             Union. SERVIER shall prepare all files and answers to be submitted by CTI to the             EMA, and shall collaborate with CTI during the review process.           b) CTI shall continue the performance of specific activities listed in Appendix I (the  

 

           “Transition  Activities”).  SERVIER  shall  pay  CTI, on  February  22,  2019             €620.000 to cover CTI operating costs (including but not limited to on-going PV,             QA and Regulatory activities) from November 1st 2018 until the earlier of (i) the             execution of the Asset Purchase Agreement or notice from SERVIER that it does             not intend to enter into the Asset Purchase Agreement and (ii) 31 May 2019. Such             an  amount  has  been  defined by  the  Parties  based on  information  provided  as             defined  under  Appendix  II. Parties  hereby  acknowledge  and  agree  that  €65.000             have already been paid by SERVIER to CTI based on the invoices n°3040 dated              November 12 2018, n°3042 dated December 8th, n°2018 and 3043 dated December             30th,  2018.If  the  Transition  Time-Period,  extends  beyond  31  May  2019,  then             SERVIER  and  CTI  shall  discuss  definition  of  Additional  Transaction  Activities             and  SERVIER  shall  reimburse  CTI  for  its  costs  and  expenses  incurred  for  the             performance of the Additional Transition Activities during such additional period             within 30 days of CTI providing SERVIER a reasonably detailed invoice therefor,             to be approved by SERVIER, knowing that the detailed invoice shall not (i) exceed             50.000€ per  month and (ii)  shall  not exceed  200.000€ for the entire  Additional             Transaction Activities.               For clarity, other than the Transition  Activities  specified on  Appendix I and the             additional  Transition  Activities  to  be  further  discussed  by  the  Parties,             notwithstanding  anything  herein  to  the  contrary,  CTI  shall  not  be  obligated  to             perform  any  other  activities  during  the  Transition  Period and  the  additional             Transition Period, as described in the paragraph above.           c) Development  Plan:  no  new  development  activities with  respect  to  the  Licensed             Product shall be initiated by either Party during the Transition Time-Period.           d) Financial  Terms  as  defined  under  Article  10  of  the  A&R  Agreement  shall  be             modified and be dependent on the Option (as defined hereinafter).   3.2  Parties  have  identified  3 Options (hereinafter  Option  I,  Option  II(i)  and  Option  II(ii)),  based on EMA position relating to Licensed Product’s outcome as described below:            Option I: Positive EMA position           “Positive EMA position” shall mean granting of a Standard MA  by the EMA as a          Definitive EMA Position.  In such a case CTI hereby agrees to transfer the Assets (as          defined hereinafter) to SERVIER and SERVIER agrees to acquire such Assets, all on          the  terms  and  conditions  herein.  The  Parties  therefore  have  discussed  the  principal          terms and conditions of the asset purchase agreement to be negotiated and drafted in          good  faith and  entered  into  by  the  Parties  (the  “Asset  Purchase  Agreement”),  as          further defined hereinafter.           Option II: Negative EMA position   

 

        “Negative EMA position” shall mean refusal to grant a Standard MA by the EMA as          a Definitive EMA Position (whether such refusal results in a Conditional MA or the          suspension  or  withdrawal  of  the  MA).  In  such  a  case,  SERVIER shall  request  by          written notice to CTI no later than 10 Business Days of the Negative EMA position          either (i) the Parties shall work together to request withdrawal of the License Product          from  all SERVIER’s Territory,  as  further  described  hereinafter or  (ii)  the  Parties          negotiate and enter into the Asset Purchase Agreement.         For purposes of this Termination and Transfer Agreement, “Definitive EMA Position”        shall mean that the EMA has provided a definitive position with respect the MAA for the        Licensed  Product,  which  position  is  endorsed  by  the  European  Commission  and  not        appealable or appealed by the Parties.   3.3.1 Consequences of the Options, Term-sheet           The following elements shall be inserted in a new agreement based on the Option:           Option I           CTI  and  SERVIER  shall promptly  negotiate  and  execute  the  Asset  Purchase          Agreement  pursuant  to  which  CTI  shall transfer  to  SERVIER  and  SERVIER  shall          accept the transfer of the Assets as set forth below.  The “Assets” shall mean those          assets identified in Appendix III.           For clarity, SERVIER remains the owner of the assets related to the Licensed Product          that  have  already  been  assigned  to  SERVIER  or  registered  by  SERVIER. In  this          regard, Section 6.2.2. of the Trademark and Domain Name License and Assignment          Agreement signed on the 8th of June of 2015 shall become void as well as Article III          of  Amendment  n°1  to  the  Trademark  and  Domain  Name  License  and  Assignment          Agreement signed on October 2nd, 2017.            From and after the closing of the Asset Purchase Agreement, and as the MA holder,          SERVIER  shall  endorse,  acquire  and  be  responsible  for any  and  all  further  EMA          specific commitments. Accordingly, SERVIER shall be provided, in a timely manner          to allow SERVIER to comply with the EMA requirements, every element enabling          the assessment of the research project / Access to clinical study data and remaining          biological  samples,  in  each  case  (i)  in  the  possession  and  control  of  CTI  and  (ii)          related to the Licensed Product.           Financial conditions: Parties agree on the following financial terms to be paid by          SERVIER to CTI:                Two  million  Euros  (€2.000.000) at  signature  of  the  Asset Purchase                Agreement.  

 

     SERVIER will pay no royalties nor additional milestones to CTI in the future,        and no further costs after the close of the Asset Purchase Agreement.        SERVIER shall, as between CTI and SERVIER, be responsible for all costs of        assuming the MA including reimbursing CTI for all costs and expenses reason        as incurred by CTI in transferring the MA to SERVIER.        Other terms, conditions, and provisions that  are usual and customary for an        Asset Purchase Agreement of this type, and  may include without limitation        intellectual  property,  confidentiality,  representations,  warranties,  insurance,        indemnification, applicable law, dispute resolution, publications and publicity,        assignment, change in control, and termination, will be negotiated and agreed        upon in the definitive Asset Purchase Agreement to be signed by the Parties at        the latest 30 days after Positive EMA position.   Option II(i)   If  SERVIER  notifies  that  it  elects  clause  (i)  of  Option  II  (i.e., withdrawal  of  the  License Product from all SERVIER’s Territory), then the Parties shall work together  to  request from  the  applicable  Regulatory  Authorities a  product  withdrawal  of  the  Licensed Product  from all jurisdictions within the SERVIER Territory without  MA  transfer  and  cooperate  in  the  Licensed  Product  withdrawal  process as  soon  as  practicable, to be mutually agreed upon.   - Financial conditions:         Each Party shall be solely responsible for its own internal cost related to the        withdrawal activities        Each Party shall be solely responsible for cost incurred for termination of its        third party agreements        SERVIER shall be solely responsible for cost related to the destruction of all        of its stocks of Licensed Products or components thereof and any other third        party  costs  incurred  for  the  withdrawal  activities  of  its  stocks  of  Licensed        Products in the SERVIER Territory        Each  Party  remains  the  owner  of  the  trademark  registrations  and  domain        names registered on its behalf. Each Party shall be solely responsible to decide        of the  maintenance (including  but not limited to the renewal) of trademarks        registrations and domain names.         In this regard, the section 6.2.2. of the Trademark and Domain Name License        and  Assignment Agreement signed on the 8th of  June of 2015 shall  become        void as well as Article III of Amendment n°1 to the Trademark and Domain        Name License and Assignment Agreement signed on October 2nd, 2017.  

 

   Option II(ii)      If  SERVIER  notifies  that  it  elects  clause  (ii)  of  Option  II  (i.e.,  negotiation  and     execution of the Asset Purchase Agreement), then the Parties shall negotiate and enter     into  the  Asset  Purchase  Agreement  on  the  terms  and  conditions  identical  to  those     described  in  Option  I  above  for  the  Asset  Purchase  Agreement, except the  Asset     Purchase Agreement to be signed by the Parties at the latest 30 days after notice from     SERVIER of its election.                                                        ARTICLE 4 CONFIDENTIALITY AND PUBLICATION          4.1    Confidentiality Obligations of SERVIER                   4.1.1. For the duration of this Termination and Transfer Agreement and a period of five        (5) years, SERVIER:   4.1.1.1. shall hold in strict confidence any and all Confidential Information disclosed to it        by or on behalf of CTI (together “CTI Confidential Information”), and shall not        use, nor disclose or supply to any Third Party, nor permit any Third Party, to have        access  to  the  CTI  Confidential  Information,  without  first  obtaining  the  written        consent of  CTI,  except  as  expressly  permitted  in this  Termination  and  Transfer        Agreement; and   4.1.1.2. shall take all reasonable precautions necessary or prudent to prevent material in        its possession or control that contains or refers to CTI Confidential Information        from being destroyed or lost, or discovered, received, used, intercepted or copied        by any Third Party.     4.1.2. SERVIER’s obligations of confidentiality and non-use under this Section 4.1 shall        not apply, and SERVIER shall have no further obligations with respect to any of        the  CTI  Confidential  Information,  to  the  extent  that  such  CTI  Confidential        Information:   4.1.2.1. is  or  becomes  part  of  the  public  domain  after  its  disclosure  without  breach  by        SERVIER of this Termination and Transfer Agreement;   4.1.2.2. was rightfully in SERVIER’s possession before disclosure by CTI and was not        acquired directly or indirectly from CTI;   4.1.2.3.is obtained from a Third Party with no obligation of confidentiality to CTI, who        has a right to disclose it to SERVIER;   4.1.2.4.is developed independently by SERVIER or any of its Affiliates without reference        to  or  use  of  the  CTI  Confidential  Information,  as  evidenced by  SERVIER’s        written records; or  

 

4.1.2.5.subject to Section 4.3.2, is required to be revealed in response to a court decision        or administrative order, or to comply with Applicable Law or rules of a securities        exchange (as established by an opinion of an outside legal counsel), in which case        SERVIER  shall  inform  CTI  immediately  by  written  notice  and  cooperate  with        CTI using its commercially reasonable efforts either to seek protective measures        for such CTI Confidential Information, or to seek confidential treatment of such        CTI Confidential Information, and in any case, SERVIER shall disclose only such        portion of the CTI Confidential Information which is so required to be disclosed;        provided, further, that, notwithstanding this Section 4.1.2.5, such information that        is  disclosed  pursuant  to  such  requirement  shall  continue  to  constitute  CTI        Confidential Information for purposes other than the required disclosure until an        exception in Sections 4.1.2.1 through 4.1.2.4 above shall apply.           4.2. Confidentiality Obligations of CTI.   4.2.1. For the duration of this Termination and Transfer Agreement and a period of five        (5) years, CTI:   4.2.1.1.shall hold in strict confidence any and all Confidential Information disclosed to it        by or on behalf of SERVIER (“SERVIER Confidential Information”), and shall        not use, nor disclose or supply to any Third Party nor permit any Third Party to        have access to the SERVIER Confidential Information, without first obtaining the        written consent of SERVIER, except as expressly permitted  in this Termination        and Transfer Agreement; and   4.2.1.2.shall take all reasonable precautions necessary or prudent to prevent material in its        possession  or  control  that  contains  or  refers  to  SERVIER  Confidential        Information  from  being  destroyed  or  lost,  or  discovered,  received,  used,        intercepted or copied by any Third Party.     4.2.2. CTI’s obligations of confidentiality and non-use under this Section 4.2 shall not        apply,  and  CTI  shall  have  no  further  obligations  with  respect  to  any  of  the        SERVIR Confidential Information to the extent that such SERVIER Confidential        Information:   4.2.2.1.is or becomes part of the public domain after its disclosure without breach by CTI        of this Termination and Transfer Agreement;   4.2.2.2.was rightfully in CTI’s possession before disclosure by SERVIER to CTI and was        not acquired directly or indirectly from SERVIER;   4.2.2.3.is obtained from a Third Party with no obligation of confidentiality to SERVIER,        who has a right to disclose it to CTI;   4.2.2.4.is developed independently by CTI or any of its Affiliates without reference to or        use  of  the  SERVIER  Confidential  Information,  as  evidenced  by  CTI’s  written        records; or  

 

4.2.2.5.is required to be revealed in response to a court decision or administrative order,        or to comply with Applicable Law or rules of a securities exchange (as established        by  an  opinion  of  an  outside  legal  counsel),  in  which  case  CTI  shall  inform        SERVIER immediately by written notice and cooperate with SERVIER using its        commercially  reasonable  efforts  either  to  seek  protective  measures  for  such        SERVIER  Confidential  Information,  or  to  seek  confidential  treatment  of  such        SERVIER Confidential Information to the extent practicable in light of CTI’s time        constraints under Applicable Law or rules of a securities exchange as justified by        such  opinion  of  outside  legal  counsel,  and  in  any  case,  CTI  shall  disclose  only        such portion of the SERVIER Confidential Information which is so required to be        disclosed; provided, further,  that,  notwithstanding  this  Section  4.2.2.5,  such        information  that  is  disclosed  pursuant  to  such  requirement  shall  continue  to        constitute  SERVIER  Confidential  Information  for  purposes  other  than  the        required disclosure until an exception  in Sections above 4.2.2.1 through 4.2.2.4        above shall apply.           4.3. Publicity; Required Disclosures.     4.3.1. Except  with  respect  to  the  press  release  to  be  mutually  agreed  by  the  Parties        announcing the entering into of this Termination and Transfer Agreement, or any        other press release, public disclosure or any other disclosure to a Third Party with        substance substantially similar to such mutually agreed press release which may        be issued by either or both of the Parties upon execution of this Termination and        Transfer Agreement, no disclosure shall be made by either Party concerning the        execution of this Termination and Transfer Agreement or the terms and conditions        hereof  without  the  prior  written  consent  of  the  other  Party,  which  shall  not  be        unreasonably withheld, conditioned or delayed.     4.3.2. Without prejudice to Section 4.3.1, each Party may issue a press release or public        announcement  if  required  to  be  revealed  in  response  to  a  court  decision  or        administrative  order,  if  required  under  Applicable  Law  or  rules  of  a  securities        exchange  or  if  relating  to  such  Party’s  Development, regulatory  or  commercial        activities  under  this  Termination  and  Transfer  Agreement, provided that such        Party shall use commercially reasonable efforts to provide the other Party with a        copy of such press release or public announcement at least ten (10) Business Days        (or  a  shorter  period  of  time  if  required  under,  or  in  order  to  comply  with,        Applicable  Law  or  stock  exchange  regulations)  in  advance  of  its  intended        publication or release thereof and shall consider in good faith the comments of the        other  Party, which  comments  shall  be  provided  as  promptly  as  reasonably        practicable following receipt of the press release or public announcement from the        Party desiring to make the disclosure.     4.3.3. Notwithstanding Section 4.3.1 and subject to the other provisions of this Article 4:    4.3.3.1.no  Party  shall  make  any  publication  or  disclosure  of  Data  generated  by  or  on        behalf of the other Party (other than any such Data as is generated pursuant to the        Development Plan) without the prior written approval of the other Party;  

 

4.3.3.2.neither Party shall use the name of the other Party in any publicity or advertising        without the prior written consent of the other Party; and   4.3.3.3.either  Party  may  disclose  the  existence  of  this  Termination  and  Transfer        Agreement and the terms and conditions hereof in connection with a due diligence        process associated with any future financing by either Party or the negotiation or        exploration  of  a  possible  strategic  corporate  transaction  involving  such  Party,        provided  that  such  disclosure  is  limited  to  information  that is  relevant  to  the        contemplated transaction and is made in the course of such diligence, negotiation        or exploration, and pursuant to confidentiality obligations consistent with those set        forth in this Termination and Transfer Agreement.   4.3.4.  Each Party agrees that it shall cooperate fully and  in a timely  manner with the        other Party with respect to all disclosures required by the Securities and Exchange        Commission and any other Governmental  Authority or Regulatory  Authority or        recognized  stock  exchange  or  quotation  system,  including  requests  for        confidential treatment of Confidential Information of either Party included in any        such disclosure.  Each Party shall consult with the other Party on the provisions of        this  Termination  and  Transfer  Agreement,  together  with  exhibits  or  other        attachments  attached  hereto,  to  be  filed  with  the  Securities  and  Exchange        Commission and/or for either Party as otherwise required by Applicable Law and        shall  use  commercially  reasonable  efforts  to  limit  the  disclosure  to  those        provisions required to be disclosed by Applicable Laws.  A draft of the filing shall        be provided to the other Party at least ten (10) Business Days (or a shorter period        of time  if required under, or in order to comply  with,  Applicable  Law or stock        exchange  regulations)  in  advance  of  its  intended  publication  or  release  thereof,        and the disclosing Party  shall consider  in good faith the comments of the other        Party, which comments shall  be provided as promptly  as reasonably practicable        following timely receipt of the proposal from the disclosing Party.    4.3.5. Once  a  disclosure  is  publicly  disclosed  in  accordance  with  the  terms  of  this        Termination  and  Transfer Agreement,  the  substance  of  such  disclosure  (or  any        portion thereof) may be repeated in a subsequent public disclosure by either Party        without regard to the notification or other requirements of this Article 4.           4.4. Scientific Papers, Abstracts and Posters.   4.4.1. Scientific Papers.  Each Party or its designee shall provide to the other, prior to        submission  for  publication,  a  draft of  any  articles  and  papers  containing        Confidential  Information  or  concerning  the  Licensed  Compound  or  Licensed        Product  which  have  been  prepared  by  or  on  behalf  of  such  Party  (each  a        “Scientific Paper”) to be published in indexed medical and scientific journals and        similar publications (“Medical Journals”).  Commencing with the receipt of such        draft Scientific Paper, the Receiving Party shall have fifteen (15) Business Days to        notify the sending Party of its observations and suggestions with respect thereto (it        being  understood  that,  during  such  fifteen  (15)  Business  Day  period,  no        submission for publication thereof shall take place), and the Parties shall discuss  

 

      these observations and suggestions. The Party proposing to publish such Scientific        Paper  shall, in  good  faith,  consider  the  comments  made  by  the  other  Party,        particularly  if  disclosure  may  be  prejudicial  to  the  other  Party’s  opportunity  to        obtain  any  Patent.  Neither  Party  will  publish  or  present  any  Confidential        Information of the other Party without such other Party’s prior written consent.         The  sending  Party  shall  provide  to  the  Receiving  Party  copies  of  any  final        Scientific  Paper  accepted  by  a  Medical  Journal,  within  ten  (10)  Business  Days        after the approval thereof (upon availability and distribution of such information        assuming that providing such information is acceptable taking into consideration        the publishers’ need to comply with any healthcare compliance guidelines).  To        enable  free  exchange  of  copyrighted  material  between  the  Parties,  each  Party        agrees that it has or shall (i) obtain and maintain, at its own expense, an Annual        Copyright License or equivalent license from the Copyright Clearance Center and        (ii)  list  the  other  Party  as  a  collaborator  in  an  agreement  with  the  Copyright        Clearance Center if required by such agreement.   4.4.2. Abstracts and Posters.  If a Party intends to present findings with respect to any        Licensed  Compound  or  Licensed  Product  at  symposia  or  other  meetings  of        healthcare  professionals,  or  international  and/or  US  or  European  congresses,        conferences or meetings organized by a professional society or organization (any        such  occasion,  a  “Scientific  Meeting”),  to  the  extent  permitted  by  Applicable        Laws, such Party or its designee shall provide to the other, prior to submission or        presentation, as the case may be, copies of (i) all abstracts that will be submitted        for publication in connection with (a) any international Scientific Meeting, in any        Scientific Meeting in the European Union or in the United States (b) with respect        to CTI, any Scientific Meeting in the SERVIER Territory and any major Scientific        Meetings  in the CTI Territory and (c) with respect to SERVIER, any Scientific        Meeting  in  the  CTI  Territory  and  any  Scientific  Meeting  in  the SERVIER key        markets, as reasonably determined by SERVIER and (ii) all posters that will be        presented  at  such  Scientific  Meeting,  in  each  case,  concerning  the  Licensed        Compound or Licensed Product which have been prepared by or on behalf of one        of the Parties,  for submission or presentation.  Commencing with the receipt of        any such abstract or poster, the Receiving Party shall have five (5) Business Days        in the case of  an  abstract, or ten (10) Business  Days  in the case of a poster, to        inform the sending Party of its observations and suggestions with respect thereto        (it being understood that, during such review period, as applicable, no submission        or  presentation  thereof  shall  take  place),  and  the  Parties  shall  discuss  these        observations and suggestions.  The Party proposing to publish such an abstract or        make such a presentation shall, in good faith, consider the comments made by the        other  Party,  particularly  if  disclosure  may  be  prejudicial  to  the  other  Party’s        opportunity to obtain any patent rights.  A Party will not publish or present any        Confidential  Information  of  the  other  Party  without  such  other  Party’s  prior        written consent.  The sending Party shall provide to the Receiving Party copies of        (i) all  final abstracts as soon as reasonably practicable  after the approval of the        Scientific  Meeting,  and  (ii)  all  final  posters  accepted  for  publication  or  to  be        presented five (5) Business Days prior to the planned publication or presentation        thereof  (upon  availability  and  distribution  of  such  information  assuming  that  

 

      providing such information is acceptable taking into consideration the publishers’        need to comply with any healthcare compliance guidelines).  The Parties shall use        good faith and Commercially Reasonable Efforts to provide the other Party with        draft slide presentations in accordance with the foregoing time periods.     4.5. Registries.  Each Party shall be free to disclose any clinical trial Data generated        by such Party concerning the Licensed Product as required by Applicable Law in        clinical trial registries; provided, however, that the Party proposing to make such        disclosure shall have provided the other Party at least ten (10) Business Days prior        to  such  disclosure  (to  the  extent  practicable),  a  detailed  description  of  the        proposed disclosure and shall have, in good faith, considered the comments made        by the other Party.           4.6. Timeline Extension or Deferral of Disclosures.   4.6.1. Each  Party  agrees  that  it  will  not  unreasonably  withhold,  condition  or  delay  its        consent to requests for extensions of the above timelines in this Article 4 in the        event that material late-breaking Data becomes available.   4.6.2. If either Party believes that any proposed press release or other public statement,        or  any  publication,  presentation  or  other  disclosure  would  be  prejudicial  to  its        opportunity  to  obtain  any  Patent,  then  the  affected  Party  shall  notify  the        publishing Party within the timeframe provided for in this Article 4 as applicable,        or  if  not  applicable,  as  soon  as  practicable  after  receipt  of  the  proposed  press        release or other public statement, publication, presentation or other disclosure, and        the  publishing  Party  shall  refrain  from  making  such  press  release,  other  public        statement, publication, presentation or other disclosure for an additional forty-five        (45) Business Days from the last day of the period otherwise provided for herein        to enable the preparation and filing of any necessary patent applications.     4.7. Failure to Object to Disclosure.  If the Party proposing any press release or other        public statement, or any publication, presentation or other disclosure referred to in        this  Article 4 (excluding  for the avoidance of doubt any promotional  materials)        receives no objection from the other Party within the timeframes set forth in the        corresponding Section, then, the Party proposing such press release, other public        statement, publication, presentation, or other disclosure  shall  be  free to proceed        with  the  same  without  further  reference  to  or  agreement  from  the  other  Party;        provided, however,  that  any  such  publication,  presentation  or  other  disclosure        shall acknowledge the other Party’s contribution to any Data included therein if        requested by such other Party.                          4.8. Authorized Disclosure.   4.8.1. Except  as  expressly  provided  otherwise  in  this  Termination  and  Transfer        Agreement, each Party may use and disclose Confidential Information of the other        Party  as  follows:   (i)  under  appropriate  written  confidentiality  provisions  

 

       substantially equivalent to those in this Termination and Transfer Agreement, in         connection  with  the  performance  of  its  obligations  (e.g.,  in  sublicense         agreements),  or  as  reasonably  necessary  in  the  exercise  of  its  rights,  under  this         Termination  and  Transfer  Agreement,  or  in  furtherance  of  the  Development,         Manufacture,  use,  Medical  Affairs  Activities  or  Commercialization  of  the         Licensed Product, or in complying with the terms of the University of Vermont         Agreement or the Novartis Agreements subject to the prior approval by SERVIER         of a redacted version of this Termination and Transfer Agreement if required to be         provided;  (ii)  to  the  extent  such  disclosure  is  reasonably  necessary  in  filing  or         prosecuting patent applications in accordance with this Termination and Transfer         Agreement, prosecuting  or  defending  litigation,  complying  with  applicable         governmental  regulations  or  the  rules  of  any  national  securities  exchange,         obtaining  Regulatory  Approvals  for  Licensed  Product,  fulfilling  post-approval         regulatory  obligations,  or  as  otherwise required  by  Applicable  Law; provided,         however,  that  if  a  Party  intends  to  rely  on  clause  (i)  or  (ii)  to  make  any  such         disclosure  of  the  other  Party’s  Confidential  Information,  it  will,  except  to  the         extent inappropriate in the case of patent applications or as required by Applicable         Law, use commercially reasonable efforts to secure confidential treatment of such         Confidential  Information  so  disclosed;  (iii)  in  communication  with  advisors,         including lawyers and accountants, on a need-to-know basis, in each case under         appropriate  confidentiality  provisions  substantially  equivalent  to  those  of  this         Termination and Transfer Agreement; (iv) to actual or potential Sublicensees; or         (vi) to the extent mutually agreed to in writing by the Parties.    4.8.2. Notwithstanding  the  foregoing,  the  Parties  recognize  that  independent         investigators, academic centers and cooperative  groups have  been engaged, and         will be engaged in the future, to conduct clinical and non-clinical studies of the         Licensed Compound and of the Licensed Product.  The Parties recognize that such         investigators,  academic  centers  and  cooperative  groups  operate  in  an  academic         environment and may publish and release information regarding such studies in a         manner  consistent  with  academic  standards; provided that  each  Party  will  use         reasonable  efforts  to  prevent  publications  prior  to  the  filing  of  relevant  patent         applications and to seek confidential treatment for any Confidential Information         of either Party that is disclosed to such academic centers, cooperative groups or         investigators.                     ARTICLE 5 DISPUTE RESOLUTION   a)     Arbitration.  In the event an Arbitrable Matter arises (each, a “Dispute”), and the         Parties  cannot  resolve  such  Dispute  within  thirty  (30)  days  of  the  matter  being         referred to them, then either Party may submit such Dispute to arbitration for final         resolution  by arbitration request (the  “Arbitration Request”) under the Rules of         Arbitration  of  the  International  Chamber  of  Commerce  (the  “Rules”)  by  three         arbitrators  appointed  in  accordance  with  said  Rules  (each  such  arbitration,  an         “Arbitration”).  Any  Arbitration  may  be  initiated  by  either  Party  in  accordance         with  the  Rules.  Each  Arbitration  will  be  conducted  in  English,  and  all  foreign         language  documents  shall  be  submitted  in  the  original  language  and,  if  so  

 

       requested by any arbitrator or Party, shall also be accompanied  by  a translation         into  English.  The  place  of  arbitration  shall  be  Geneva,  Switzerland,  which         location cannot be changed, and the location for all hearings and meetings in any         Arbitration shall be selected by a majority vote of the arbitrators. The arbitrators         in any Arbitration shall enforce and not modify the terms of this Termination and         Transfer  Agreement.   The  governing  law  set  forth  in  Section  7(i)  shall  only  be         applied  to the  merits  of  the  Dispute,  and  the  Parties  agree  that  none  of  the         procedural rules of such governing law (or any similar procedural laws, including         discovery  and  cross-examination)  will  apply  in  any  Arbitration; provided,         however, that all privileges restricting disclosure established under the governing         law set forth in Section 7(i) shall apply and may be invoked by both Parties.  The         award of the arbitrators shall be final and binding on each Party and its respective         successors and assigns, and judgment may be entered thereupon and enforced in         any court of competent jurisdiction pursuant to the United Nations Convention on         the Recognition and Enforcement of Foreign Arbitral Awards or other Applicable         Law.  All costs and expenses of any Arbitration, including reasonable attorneys’         fees and expenses and the administrative and arbitrator fees and expenses, shall be         borne by the Parties as determined by the arbitrators.  Nothing in this Section 5(a)         shall be construed as limiting the right of a Party to seek, in a court of competent         jurisdiction, an injunction or other equitable relief in aid of Arbitration (including         to maintain the status quo or preserve the subject matter of the Arbitration) with         respect  to  any  actual  or  threatened  breach  of  this Termination and  Transfer         Agreement or otherwise to prevent or avoid irreparable harm.     b)     Confidential.  Except to the limited extent necessary to comply with Applicable         Law, legal process, or a court order or to enforce a final settlement agreement or         secure enforcement or vacatur of the arbitrators’ award, the Parties agree that the         existence,  terms  and  content  of  any  Arbitration,  all  information  and  documents         disclosed in any Arbitration or evidencing any arbitration results, award, judgment         or  settlement,  or  the  performance  thereof,  and  any  allegations,  statements  and         admissions  made  or  positions  taken  by either  Party  in  any  Arbitration  shall  be         treated and maintained in confidence and are not intended to be used or disclosed         for any other purpose or in any other forum.   c)     Communications with Internal Counsel.  In the course of the negotiation and         implementation of this Termination and Transfer Agreement and the resolution of         any disputes, investigations, administrative or other proceedings relating thereto,         each Party will call upon the members of its internal legal department to provide         advice  to  such  Party and  its  directors,  employees  and  agents  on  legal  matters.          Notwithstanding  any  rights  to  the  contrary  under  applicable  procedural  or         substantive rules of  law, each Party agrees  not to request, produce or otherwise         use  any  such  communications  between  members  of  its  legal  department  and         directors,  employees  or  agents  in  connection  with  any  such  disputes,         investigations,  administrative  or  other  proceedings,  to  the  extent  such         communications,  if  they  had  been  exchanged  between  such  Party  and  external         attorneys, would have been covered by legal privilege and not disclosable.  

 

                                       ARTICLE 6 SURVIVAL     Articles  1  (Definitions),  5  (Dispute  resolution),  7(i)  (Governing  Law/    Jurisdiction), which  by their terms or nature are intended or expressly  stated to    survive the expiration or termination of this Termination and Transfer Agreement    shall  survive  the  expiration  or  termination  of  this  Termination  and  Transfer    Agreement and shall bind the Parties, their successors and permitted assigns.                                       ARTICLE 7 MISCELLANEOUS   (a)     Entire agreement   This  Termination  and  Transfer  Agreement  and  the  Appendices  attached  hereto,  constitute the entire understanding between the Parties relating to the subject matter  hereof  and  thereof  as  of  the  Effective  Date,  and  supersedes  all  proposals,  oral  or  written, and all other prior communications between the Parties with respect to such  subject matter, including the Original Agreement and the A&R Agreement which is  hereby terminated as of the Termination Date. In the event of any conflict between a  substantive provision of this Termination and Transfer Agreement and any Appendix  hereto, the substantive provisions of this Termination and Transfer Agreement shall  prevail.    (b)     Amendments.     No amendment or modification to this Termination and Transfer Agreement shall be  valid  or  binding  upon  the  Parties  unless  designated  as  such,  made  in  writing  and  signed by the representatives of such Parties.                        (c)     Force Majeure.     Neither Party shall be responsible to the other for any failure or delay in performing  any of  its obligations under this Termination  and Transfer  Agreement, or for other  nonperformance  hereunder,  if  such  delay  or  nonperformance  is  caused  by  strike,  stoppage  of  labor,  lockout  or  other  labor  trouble,  fire,  flood,  accident,  war,  act  of  terrorism, act of God or of the government of any country or of any local government,  which  is unavoidable and  beyond the control of  the Party relying on such event to  excuse  its  performance  hereunder.   In  such  event,  the  Party  affected  shall  use  commercially reasonable efforts to resume performance of its obligations.     (d)     Notices.    Any notices, consents, waivers, requests, reports, approvals, designations, responses,  or other communications provided for in this Termination and Transfer Agreement to  

 

be made by either of the Parties to the others shall be in writing to the other at its/their  address set forth below.  Any such notice or communication may be given by mail,  hand, overnight courier, email or facsimile.  Either Party may, by like notice, specify  an address to which notices and communications shall thereafter be sent.  Any such  notice, instruction or communication shall be deemed to have been delivered when (i)  received  if  delivered  by  hand  or  overnight  courier  (with  written  confirmation  of  receipt), (ii) received if delivered by an internationally recognized overnight delivery  service  (receipt  requested),  and  (iii)  sent  by  fax  or  by  email  (with  written  confirmation  of  receipt), provided that  a  copy  is  immediately  sent  by  an  internationally recognized overnight delivery service (receipt requested); in each case,  if  such  transmission  is  on  a  Business  Day,  otherwise,  on  the  next  Business  Day  following such transmission, and if sent to the appropriate addresses and fax numbers  set forth below (or to such other addresses and fax numbers as a Party may designate  by notice).       In the case of SERVIER:           With required copies                                       (which shall not                                       constitute notice) to:      LES LABORATOIRES SERVIER           LES LABORATOIRES                                       SERVIER     50 Rue Carnot                     50 Rue Carnot      92284 Suresnes Cedex              92284 Suresnes Cedex      France                            France      Attention: Alliance Management    Attention: Director Contract     Director & US Licenses            Department       Facsimile: +33 1 55 72 54 66      Facsimile: +33 1 57 72 39 00        email:                            email:      mail.alliance.management@servier.com matthieu.guerineau@servier.com                                             In the case of CTI:               With required copies (which     CTI BioPharma Corp.               shall not constitute notice) to:     3101 Western Ave., Suite 800      Wilson Sonsini Goodrich &     Seattle, WA  98121                Rosati     Telephone:  (206) 272-4652        650 Page Mill Road     Facsimile:  (206) 272-4302        Palo Alto, CA     Email:  jvolpone@ctibiopharma.com Telephone:  (650) 493-9300     Attention:  John  Volpone,   Vice Facsimile:  (650) 493-6811     President, Strategic Operations   Email: iedvalson@wsgr.com                                       Attention:  Ian Edvalson                                        and                                        CTI Legal Affairs  

 

                                     Attention:  Vice President, Legal                                       Affairs   (e)     Further Assurances   Each  Party  shall  (and  shall  cause  its  Affiliates  and  Sublicensees  to)  execute,  acknowledge and deliver, without additional consideration, such  further assurances,  instruments  and  documents,  and  shall  take  such  further  actions,  as  the  other  Party  shall reasonably request in order to fulfill the intent of this Termination and Transfer  Agreement and the transactions contemplated hereby.                  (f)     Severability.     If  any  one  or  more  of  the  provisions  of  this Termination  and  Transfer Agreement  shall  be  held  to  be  invalid,  illegal  or  unenforceable  as  a  matter  of  law,  then  this  Termination and Transfer Agreement shall be construed as if such provision were not  contained  herein  and  the  validity,  legality  or  enforceability  of  the  remaining  provisions  hereof  shall  not  in  any  way  be  affected  or  impaired  thereby  and  shall  continue in full force and effect.  In the event any provisions shall be held invalid,  illegal  or  unenforceable,  the  Parties  shall  use  commercially  reasonable  efforts  to  substitute  a  valid,  legal  and  enforceable  provision,  which  conforms  as  nearly  as  possible to the original intent of the Parties.                        (g)     No Waiver.     None of the provisions of this Termination and Transfer Agreement can be waived  except in a writing signed by the Party granting the waiver.  No failure by a Party to  exercise any right under this Termination and Transfer Agreement or to insist upon  compliance with any term or condition of this Termination and Transfer Agreement  shall  operate  as  a  waiver  of  such  right,  or  excuse  a  similar  subsequent  failure  to  perform any such term or condition by the other Party, nor shall any single or partial  exercise  of  any  right  preclude  any  other  or  further  exercise  of  that  right  or  the  exercise  of  any  other  rights.   The  waiver  by  any  Party  of  any  breach  of  this  Termination and Transfer Agreement shall not be deemed a waiver of any prior or  subsequent breach.  All remedies of either Party shall be cumulative, and the pursuit  of one remedy shall not be deemed a waiver of any other remedy.       (h)     Independent Contractors.     The relationship of the Parties under this Termination and Transfer Agreement shall  be  solely  that of  independent  contractors  and  nothing  herein  shall  be  construed to  create or imply any relationship of employment, agency,  joint venture, partnership  or any relationship other than that of independent contractors.  Moreover, each Party  agrees  not  to  construe  this  Termination  and  Transfer  Agreement,  or  any  of  the  

 

transactions contemplated hereby, as a partnership for any tax purposes.  Each Party  shall  act  solely  as  an  independent  contractor,  and  nothing  in  this  Termination  and  Transfer Agreement shall be construed to give any Party the power or authority to act  for, bind, or commit the other.  SERVIER and CTI acknowledge and agree that each  of them  is engaged  in a separate and  independent business and  neither shall  state,  represent or imply any interest in or control over the business of the other.                        (i)     Governing Law.     This Termination and Transfer Agreement shall be governed by and construed and  enforced in accordance with the laws of England and Wales, to the exclusion of its  conflict of law provisions.        (j)    Construction of this Termination and Transfer Agreement.     Except where the context otherwise requires, wherever used, the use of any gender  shall be applicable to all genders, and the word “or” is used in the inclusive sense.   When  used  in  this  Termination  and  Transfer  Agreement,  “including”  means  “including without limitation”.  Capitalized terms used but not explicitly defined in  this Termination and Transfer Agreement shall have the same meaning ascribed to  such terms in the Agreement. References to either Party include the successors and  permitted  assigns  of  that  Party.   The  headings  of  this  Termination  and  Transfer  Agreement  are  for convenience  of  reference  only  and  in  no  way  define,  describe,  extend or limit the scope or intent of this Termination and Transfer Agreement or the  intent of any provision contained in this Termination and Transfer Agreement.     (k)     Counterparts.     This  Termination  and  Transfer  Agreement  may  be  executed  in  two  (2)  or  more  counterparts,  each  of  which  shall  be  an  original  and  all  of  which  shall  constitute  together  the  same  document.   Counterparts  may  be  signed  and  delivered  by  facsimile, or electronically in PDF format, each of which shall be binding when sent.                              * * * *                   

 

List of Appendices:   Appendix I: Transition activities    Appendix II: Evaluation of Cost of the Transitional activities   Appendix III Assets   Appendix IV: Patents   Appendix V : Trademarks   Appendix VI : Domain names                                 * * * *                                                          (signature page follows)  

 

      IN WITNESS WHEREOF,   the  Parties  have  executed  this  Termination  and  Transfer  Agreement in duplicate originals by their proper officers.                    LES LABORATOIRES SERVIER            CTI BIOPHARMA CORP.                  By: /s/ Christian Bazantay                 By: /s/ Adam R. Craig                                             Name: Mr. Christian BAZANTAY        Name: Adam R. Craig         Title:   Proxy                      Title: CEO, President                Date:  February 25, 2019            Date: February 20, 2019                                                        CTI LIFE SCIENCES LIMITED         By: /s/ Eric Falcand                      By: /s/ Bruce Seeley                               Name: Mr. Eric FALCAND              Name: Bruce Seeley         Title:   Proxy                      Title: Director                Date:  February 25, 2019            Date: February 20, 2019                  INSTITUT DE RECHERCHES INTERNATIONALES SERVIER            By: /s/ Claude Bertrand                                  Name: Dr. Claude BERTRAND         Title: Chief Scientific Officer Research and Development         Date: February 25, 2019  

 

                 APPENDIX I: Transition Activities                                         -  Pharmacovigilance on the Licensed Product for SERVIER Territory  -  CTI will handle the submission for SERVIER, and under the guidance and support of     SERVIER.  Diligent  efforts  by  CTI  to  support: the  submission  process  and  any     documentation required for the MA file submission, and Q&A process with EMA  -  CTI  will  continue  to  manage/  pay  for  all  the  remaining  activities  of  PIX306 Trial,     which is closing down and manage the CRO in place.                  

 

                                                                                       APPENDIX II: Evaluation of the costs of the Transitional activities                                                                 22                                 

 

                                                                                                               APPENDIX III: Assets    “Asset” shall mean all of CTI’s or its Affiliates’ right, title and interest in or to the following:        (a)    inventory, subject to SERVIER’s limitation (to be specified in the Asset Purchase  Agreement,  if  any), to  the  extent  related  to,  used  in  or  held  for  use  in  the  development  commercialization  and  manufacturing  of  the  Licensed  Product  (collectively,  the  “Purchased  Inventory”);      (b)    each agreement to which CTI or its Affiliate is party and related to, used in or held  for  use  in  the  development,  commercialization  and  manufacturing  of  the  Licensed  Product  (collectively, the “Assigned Contracts”) and the counterparty such agreement is:          1. University of Vermont dated March 8th, 1995          2. Novartis dated January 3, 2014, in part, limited to the part of the agreement Pixuvri         related          3. Baxter [assignment requires Baxter’s consent to be obtained by CTI before closing]          4. Nerpharma [assignment requires Nerpharma’s consent to be obtained by CTI         before closing]   Including any supply, manufacturing contract that is material and specific to Licensed Product  and the MA Holder License for the Licensed Product in Israel.   Parties agree that assignment of the Novartis and University of Vermont agreements include the  novation of all related royalty obligations by SERVIER.    Such obligations shall not, in aggregate, be over 4.5% of the Net Sales for aggregate annual sales  less or equal to USD200M.    As to the University of Vermont’s agreement CTI declares that 1st commercialization of the  licensed product per country are as follows:        1Q 2013:  Germany, Austria, Sweden and United Kingdom;         2Q 2013:  Denmark;         3Q 2013:  Finland;         1Q2014:  Israel;  and        2Q 2014:  Turkey.                                                   23                                           

 

   (c)    all  Intellectual  Property  owned  by  CTI  and  related  to,  used  in,  or  held  for  use  development,  commercialization  or  manufacturing  of  the  Licensed  Product,  (collectively,  the  “Assigned Intellectual Property”) and including         Patents (as defined under Appendix IV)       Domain names (Appendix V)           Trademarks (Appendix VI)       manufacturing-related information including know how        (d)  all  files, correspondence, and documentation related to the  filing, prosecution, or  maintenance  of  the Assigned  Intellectual  Property,  and  any  other notices,  communications  or  other correspondence between CTI  and any Governmental Authority, relating to the Licensed  Product;         (e)  all  transferable Regulatory  Materials (other  than  Product  Registrations)  that  are  related to, used in or held for use for the development, commercialization or manufacturing of  the Licensed Product;        (f)   all transferable Regulatory Approvals that are (i) related to, used in or held for use  in the development, commercialization or manufacturing of the Licensed Product (collectively,  the “Transferred Product Registrations”);         (g)  copies of (i) all Data and files (including material correspondence or notes to file  associated  with  such  Data  and  files)  related  to  any  Transferred  Product  Registrations,  (ii) completed clinical and nonclinical reports and statistical database (together with clinical data  sets  associated  with  such  reports)  with  respect  to  the  Licensed  Product, (iii) copies  of  the  approved label components with respect to a Licensed Product and related correspondence with  Governmental  Authorities, (iv) all  labeling  decision  documents  with  respect  to  the  Licensed  Product and related correspondence with Governmental Authorities, (v) the safety database for  the Licensed Product, (vi) all reports and clinical data pertaining to any adverse experience and  other data, information and materials relating to adverse experiences with respect to the Licensed  Product including but not limited to                            Full Data from PIX 301, Pix 306, AZA-I-01, AZA-I-02, AZA-I-             03, AZA-I-04, AZA-I-05, AZA-I-06, AZA-I-07, PIX 109, AZA-II-01, AZA-II-             02, PIX 203, AZA-III-02, PIX real observational study, and PVG studies                           Licensed Product Files (CMA, NDA, Study Master File)      (h)    all promotional material that is related to, used in or held for use for the Licensed  Product;        (i)   existing packaged drug product        (j)   remaining drug substance shall be provided to SERVIER, for use by SERVIER in  the further production of clinical trial material/ commercial units.   

 

   (k)    all  other  assets,  properties  and  rights  of  a  type  not  expressly  covered  in  this  Appendix  III  that  are  related  to,  used  in  or  held  for  the  development,  commercialization  or  manufacturing of the Licensed Product.   For clarity, Assets excludes all subject matter, including Intellectual Property that comprises or  relates to any compound, product or technology other than the Licensed Compound or Licensed  Product.  

 

                                                                     APPENDIX IV: Patents                            26               

 

                                                                                                            APPENDIX V: Trademarks         List of trademarks to be assigned to SERVIER in case of Option I or Option II (ii):            TRADEMAR       OWNER           INTERNATIONA       COUNTR      APPLICATION  K                              L CLASS -          Y /         N° /                                 GOODS AND          STATUS /    REGISTRATIO                                SERVICES           KEY         N N°                                                    DATES  PIXUVRI        CTI Biopharma   Class 05           Norway      Registration                 Corp.           Pharmaceutical     Registered  number : 254686                                 preparations for the Filed :  29 Application                                 treatment of       october     number :                                  immunological and  2009        200911139                                 inflammatory       Registered :                                  diseases and for use 5 march                                 in chemotherapy,   2010                                 pharmaceutical                                 preparations used to                                 treat cancer.                 CTI Biopharma                      Norway      Registration                 Corp.           Class 05           Registered  number : 271275                                 Pharmaceutical     Filed : 22                                   compositions for the january   Application                                 treatment of       2013        number :                                 immunological and  Registered : 201301132                                 inflammatory       24 june                                 diseases, for use in 2013                                 chemotherapy                                 treatment,                                 pharmaceutical                                 compositions used                                 for cancer treatment,                                 all the aforesaid                                 goods containing                                 Pixantrone.  PIXUVRI        CTI Biopharma   Class 05           European    Registration                 Corp.           Pharmaceutical     Union       number :                                 preparations and   Registered  008646275                                 products;          Filed  28                                    pharmaceutical     october     Applicaiton                                 preparations for the 2009      number :                                   treatment of       Registered : 008646275                                 immunological and  18 june                                 inflammatory       2010                                         27                                           

 

                diseases and for use                  in chemotherapy                  treatment;                  pharmaceutical                  preparations used for                  the treatment of                  cancer.                   Class 42                  Scientific and                  medical research;                  research,                  development and                  scientific, medical                  and pharmaceutical                  testing; providing                  information and                  consulting services                  in the field of                  research,                  development and                  scientific, medical                  and pharmaceutical                  testing.                   Class 44                  Medical services;                  medical, health and                  pharmaceutical                  consultation                  services.   CTI Biopharma   Class 05           European    Registration  Corp.           Pharmaceutical     Union       number :                  preparations for the Registered 011236833                  treatment of       Filed : 3                     immunological and  octobre     Application                  inflammatory       2012        number :                  diseases and for use Registered : 011236833                  in chemotherapy    8 mai 2013                  treatment;                  pharmaceutical                  preparations used for                  the treatment of                  cancer.                   Class 42                  Scientific and                  medical research;                  research,  

 

                               development and                                 scientific testing;                                 providing                                 information and                                 consulting services                                 in the field of                                 research,                                 development and                                 scientific testing.                                  Class 44                                 Medical services;                                 medical, health and                                 pharmaceutical                                 consultation                                 services; medical                                 and pharmaceutical                                 testing; providing                                 information and                                 consulting services                                 in the field of                                 medical and                                 pharmaceutical                                 testing.                  CTI Biopharma   Class 05           U.S.        Serial Number :                 Corp.           pharmaceutical     Allowed -   87323749                                 preparations for the Intent to                                 treatment of       Use 2nd                                 immunological,     Extension                                 inflammatory       of Time                                 diseases and       Granted 5                                 oncological        june 2018                                 disorders          Filed : 3                                                    february                                                    2017  PIXUVRI        CTI Biopharma                      U.S.        Serial Number :                 Corp.           Class 05           Allowed -   87323759                                 pharmaceutical     Intent to                                 preparations for the Use 2nd                                 treatment of       Extension                                 immunological,     of Time                                 inflammatory       Granted 5                                 diseases and       june 2018                                 oncological        Filed : 3                                 disorders          february                                                    2017  

 

               CTI Biopharma   Class 05           U.S.        Serial Number :                 Corp.           pharmaceutical     Allowed -   87261930                                 preparations for the Intent to                                 treatment of       Use 2nd                                 immunological and  Extension                                 inflammatory       of Time                                 diseases and for use Granted 5                                 in chemotherapy    june 2018                                 treatment          Filed : 8                                                    december                                                    2016  PIXUVRI        CTI Biopharma                      Israël      Application                 Corp.           Class 05           Registered  number : 224410                                 Pharmaceutical     Filed : 28                                 preparations for the october                                 treatment of       2009                                 immunological and  Registered :                                 inflammatory       10 january                                 diseases and for use 2011                                 in chemotherapy                                 treatment;                                 pharmaceutical                                 preparations used for                                 the treatment of                                 cancer; all included                                 in class 5.                 CTI Biopharma   Class 05           Israël      Application                 Corp.           Pharmaceutical     Registered  number : 252804                                 preparations for the Filed : 23                                 treatment of       january                                 immunological and  2013                                 inflammatory       Registered :                                 diseases and for use 6 october                                 in chemotherapy    2014                                 treatment;                                 pharmaceutical                                 preparations used for                                 the treatment of                                 cancer; all included                                 in class 5  PIXUVRI                                           Colombia    Registration                                 Class 05           Registered - number : 403937                                 pharmaceutical     Change of                                    preparations for the ownership Application                                 treatment of       filed       number :                                   immunological and  Filed : 28  09121635  

 

                               inflammatory       october                                 diseases and for use 2009                                 in the treatment of Registered :                                 chemotherapy;      13 july                                 pharmaceutical     2010                                 preparations used for                                 the treatment of                                 cancer.  PIXUVRI        CELL                               Paraguay    Registration                 THERAPEUTICS    Class 05           Registered - number : 337976                 , INC.          Pharmaceutical     Change of                                    products,          ownership   Application                                 pharmaceutical     filed       number : 939563                                 products used for the Filed : 29                                 treatment of cancer. october                                                    2009                                                    Registered :                                                    24                                                    september                                                    2010  PIXUVRI        CELL            Class 05           Peru        Registration                 THERAPEUTICS    Pharmaceutical     Registered - number :                 , INC.          preparations for the Change of P00163579                                 treatment of       ownership                    CTI             immunological and  filed       Application                 BIOPHARMA       inflammatory       Filed : 29  number : 2009-                CORP.           diseases and for use october   403793                                 in the treatment of 2009                                 chemotherapy;      Registered :                                 Pharmaceutical     27 april                                 preparations used for 2010                                 the treatment of                                 cancer.  PIXUVRI        CELL            Class 05           Venezuela   Registration                 THERAPEUTICS    pharmaceutical     Registered - number : P307185                 , INC.          preparations for the Change of                                  treatment of       ownership   Application                                 immunological and  filed       number : 2009-                                inflammatory       Filed : 30  018153                                 diseases and for use october                                 in chemotherapy    2009                                 treatments,        Registered :                                 pharmaceutical     26 january                                 preparations used for 2011                                 the treatment of                                 cancer.  

 

PIXUVRI                        Class 05           Bolivia     Registration                 CTI             pharmaceutical     Registered - number : 128296                 BIOPHARMA       preparations;      Change of                    CORP.           Pharmaceutical     ownership   Application                                 preparations used for filed    number :                                 the treatment of   Filed : 28  4372/2009                                 cancer, in class 5 of october                                 the international  2009                                 classification.    Registered :                                                    16 june                                                    2011                                                                      

 

                             Appendix VI: Domain names                                               Domain names to transfer to SERVIER in case Information required for transfer purpose in  of Option 1                              case of Option I                                              -  Authorisation code of each domain name  pixantrone.co.uk                               and zone files, if existing;                                              -  Check by CTI they have access to the                                                 registrant email address listed on each  pixantrone.info                                                 domain name, in order to approve transfer                                                 request once sent by Servier Contact within  pixantrone.net                              -  CTI in charge of domain names transfers is                                                  Tom Blackwell  pixantrone.org                                 tblackwell@ctibiopharma.com                                                  (206) 272-4625                                              -  Contact within Servier for domain name is  pixantrone.us                                                 Elodie Billaudeau                                                 (elodie.billaudeau@servier.com and  pixuvri.com                                    mail.domaines@servier.com)Exhibit

Exhibit 10.7

SECONDAMENDED AND RESTATED SUPPLEMENTAL TRUST AGREEMENT 
This Second Amended and Restated Supplemental Trust Agreement, dated as of December 4, 2018 (this “Supplemental Trust Agreement”), is entered into by and among BUILD AMERICA MUTUAL ASSURANCE COMPANY, a corporation organized and existing under the laws of New York (the “Beneficiary”), HG RE LTD., an exempted Bermuda limited company (the “Grantor”), and THE BANK OF NEW YORK MELLON, a banking corporation organized and existing under the laws of the State of New York (the “Trustee”), (the Grantor, the Beneficiary and the Trustee are hereinafter each sometimes referred to individually as a “Party” and collectively as the “Parties”).  
RECITALS:
WHEREAS, HGR Patton (Luxembourg) S.a r.l, United States of America Branch, Beneficiary and Trustee  entered into a certain Supplemental Trust Agreement dated as of July 20, 2012 (the “Original Agreement”) ; and
WHEREAS, the interest of HGR Patton (Luxembourg) S.a r.l., United States of America Branch, as Grantor under the Original Agreement, was assigned to the Grantor; and 
WHEREAS, the Grantor Beneficiary and Trustee enterrd into an Amended and Restated  Supplemental Trust Agreement dated  as of August 14, 2017 amending   the Original Agreement in certain respects and restating the Original Agreement in its entirety (the “Amended Supplemental Trust Agreement”); and
WHEREAS, the Grantor and the Beneficiary have entered into that certain First Loss Reinsurance Treaty Agreement, dated as of July 20, 2012 (as it may be amended or restated in accordance with its terms, the "Reinsurance Agreement"); and
WHEREAS, pursuant to the Original Agreement and the Amended Agreement the Grantor has created and maintains a trust account with the Trustee (the “Supplemental Trust Account”) for the purposes set forth in the Reinsurance Agreement and herein; and
WHEREAS, the Grantor, the Beneficiary and the Trustee have entered into that certain Regulation 114 Trust Agreement, dated July 20, 2012 (as it may be amended or restated in accordance with its terms, the "Regulation 114 Trust Agreement"), pursuant to which HG Re has established the Regulation 114 Trust Account (as defined therein); and 
WHEREAS, the Trustee has agreed to continue to act as trustee hereunder, and to hold Assets in the Supplemental Trust Account in accordance with the terms and conditions of this Second Amended and Restated Supplemental Trust Agreement; 
WHEREAS, the Parties desire to amend and restate the Amended Supplemental Trust Agreement as herein set forth to, among other things acknowledge the contribution and delivery of Surplus Notes (as defined herein) from the Supplemental Trust Account to HGR Fund B, a sub-fund of HGR Portfolio Solutions ICAV (“HGR Fund B”) in exchange for the receipt by the 

NY01/ 7269182.9 

Exhibit 10.7

Supplemental Trust Account of shares of HGR Fund B and to otherwise restate the Amended Supplemental Trust Agreement in its entirety;
NOW, THEREFORE, for and in consideration of the premises and the promises and the mutual agreements hereinafter set forth, the Parties, intending to be legally bound, covenant and agree as follows:
		
	SECTION 1.
	Deposit of Assets into the Supplemental Trust Account.

(a)    The Grantor hereby establishes the Supplemental Trust Account with the Trustee for the sole use and benefit of the Beneficiary, under the terms set forth herein, in order to secure payment of amounts owed by the Grantor to the Beneficiary under the Reinsurance Agreement.  The Trustee shall administer the Supplemental Trust Account in its name as Trustee for the sole use and benefit of the Beneficiary.  The Supplemental Trust Account shall be subject to withdrawal by the Beneficiary and the Grantor, respectively, solely as provided herein.  The Trustee hereby accepts the Supplemental Trust Account upon the terms set forth in this Supplemental Trust Agreement.
(b)    The Trustee will accept and credit to the Supplemental Trust Account all assets which from time to time are delivered to it for deposit in the Supplemental Trust Account by or on behalf of the Grantor or the Beneficiary (all such assets actually received in the Supplemental Trust Account are herein referred to individually as an “Asset” and collectively as the “Assets”).  The Trustee is authorized and shall have the power to receive such Assets and to hold, invest, reinvest and dispose of the same for the uses and purposes of and according to the provisions herein set forth.  All Assets shall be maintained by the Trustee in the Supplemental Trust Account separate and distinct from all other assets under the control of or on the books of the Trustee and shall be received and continuously kept in a safe place at the Trustee’s office within the United States of America.
(c)    The Grantor shall ensure that (i) any Assets transferred to the Trustee for deposit in the Supplemental Trust Account will be in such form that the Beneficiary, or the Trustee upon direction by the Beneficiary, may whenever necessary negotiate any such Assets, without consent or signature from the Grantor or any other person or entity in accordance with the terms of this Supplemental Trust Agreement, (ii) from and after the date hereof, all Assets transferred to the Trustee for deposit in the Supplemental Trust Account will consist only of Eligible Assets, Surplus Notes and the shares of HGR Fund B, and (iii) each such Asset shall be at the time of transfer free and clear of all claims, liens, interests and encumbrances whatsoever (other than those arising under this Supplemental Trust Agreement).
(d)    Prior to depositing the Assets in the Supplemental Trust Account, and from time to time thereafter as required, the Grantor shall execute or cause the execution of assignments, endorsement in blank, or transfer legal title to the Trustee of all shares, obligations or other Assets requiring assignments, so that the Beneficiary, or the Trustee upon direction by the Beneficiary, may whenever necessary negotiate any such Assets, without the consent or signature from the Grantor or any other person or entity.  Any Assets received by the Trustee which are not in such proper negotiable form shall not be accepted by the Trustee and shall be returned to the 

Page 2

Exhibit 10.7

Grantor as unacceptable. The Trustee may hold Assets of the Supplemental Trust Account in bearer form or in its own name or that of a nominee.  
(e)    The Trustee shall have no responsibility to determine whether the Assets in the Supplemental Trust Account are sufficient to secure the Grantor's obligations to the Beneficiary.  Furthermore, the Trustee shall have no responsibility whatsoever to determine whether Assets transferred to the Supplemental Trust Account constitute Eligible Assets.
		
	SECTION 2.
	Withdrawal or Transfer of Assets from the Supplemental Trust Account.

(a)    Without notice to the Grantor, the Beneficiary shall have the right, at any time and from time to time, to withdraw from the Supplemental Trust Account, subject only to written notice from the Beneficiary to the Trustee (the “Withdrawal Notice”), such Assets as are specified in such Withdrawal Notice.  The Withdrawal Notice shall also specify instruction to the Trustee as to how such specified Assets shall be delivered.  The Beneficiary may from time to time designate a third party (the “Beneficiary Designee”) in a Withdrawal Notice to whom all or part of the Assets specified therein shall be delivered. The Beneficiary shall not be required to present any other statement or document in addition to a Withdrawal Notice in order to withdraw any Assets, except that the Beneficiary shall acknowledge receipt of any such Assets withdrawn upon request by the Trustee; nor is said right of withdrawal or any other provision of this Supplemental Trust Agreement subject to any conditions or qualifications not contained in this Supplemental Trust Agreement.  
(b)    Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title and interest in the Assets specified in such Withdrawal Notice and shall deliver physical custody (or such other form as is necessary to complete the transfer) of such Assets to or for the account of the Beneficiary or the Beneficiary Designee, as applicable, as specified in such Withdrawal Notice.  The Trustee shall notify the Grantor and the Beneficiary within five (5) Business Days following each withdrawal from the Supplemental Trust Account.  The Trustee may rely on any Withdrawal Notice delivered by the Beneficiary without making any investigation of the Beneficiary's authority to deliver it.
(c)    Without limitation of the foregoing provisions of this Section 2, the Grantor shall be permitted to withdraw Assets from the Supplemental Trust Account from time to time, subject only to written notice from the Grantor to the Trustee, provided that such written notice shall have been countersigned by the Beneficiary (the “Grantor Withdrawal Notice”), such Assets as are specified in such Grantor Withdrawal Notice.  The Grantor Withdrawal Notice shall also specify instruction to the Trustee as to how such specified Assets shall be delivered.  The Grantor may from time to time designate a third party (the “Grantor Designee”) in a Grantor Withdrawal Notice to whom all or part of the Assets specified therein shall be delivered.  The Grantor shall not be required to present any other statement or document in addition to a Grantor Withdrawal Notice in order to withdraw any Assets, except that the Grantor shall acknowledge receipt of any such Assets withdrawn upon request by the Trustee.

Page 3

Exhibit 10.7

(d)    Subject to Sections 2 and 3 of this Supplemental Trust Agreement and subsections (e) and (f) below, the Trustee shall allow no substitution or withdrawal of any Asset from the Supplemental Trust Account in the absence of a Withdrawal Notice or a Grantor Withdrawal Notice.
(e)    Upon written notice to the Trustee from the Beneficiary, the Trustee shall transfer amounts held in the Supplemental Trust Account to the Regulation 114 Trust Account (the “Transfer Notice”).
(f)    Upon written notice to the Trustee from the Beneficiary, the Trustee shall request a redemption by the issuer of some or all of the HGR Fund B shares in exchange for receipt by the Trust from HGR Fund B of all assets then distributable in kind or in cash by HGR Fund B on account of the redemption by the Trustee of said shares and the Trustee shall hold the same in the Supplemental Trust Account as Assets subject to the provisions of this Agreement.  In the event HGR Fund B does not honor the redemption when requested by the Trustee, upon written notice from the Beneficiary, the Trustee shall take all required actions to liquidate HGR Fund B in order to effect the distribution of assets by HGR Fund B to the Supplemental Trust as shareholder of HGR Fund B.
		
	SECTION 3.
	Redemption, Investment and Substitution of Assets.

(a)    The Trustee shall surrender for payment all maturing Assets and all Assets called for redemption, deposit the principal amount of the proceeds of any such payment to the Supplemental Trust Account and give written notice to the Beneficiary and the Grantor of such action.
(b)    The Grantor may appoint an investment manager (in such capacity, the “Asset Manager”), to make investment decisions with regard to the Assets held by the Trustee in the Supplemental Trust Account.  The Grantor shall promptly notify the Trustee in writing of the termination of the appointment of the Asset Manager.  From time to time, the Grantor, or the Asset Manager, acting on behalf of Grantor, may instruct the Trustee to invest Assets in the Supplemental Trust Account (other than the Surplus Notes held therein) in Eligible Assets.  The Trustee agrees to follow any investment instructions from the Asset Manager and to execute and settle all such trades in the ordinary course.  The Grantor shall be responsible to ascertain whether investments are “Eligible Assets”.
(c)    From time to time, the Grantor may provide written instructions to the Trustee to direct the Trustee to substitute other Eligible Assets for Assets presently held in the Supplemental Trust Account; provided, however, that (i) such written instructions (A) certify that the fair market values of the assets being substituted equals or exceeds the fair market value of  the assets being withdrawn and (B) reference current information from an independent third-party pricing source that customarily values such assets, and (ii) the Beneficiary is promptly notified of said substitution and given a copy of said written instructions.  In the case of a substitution of Eligible Assets for Surplus Notes or shares of HGR Fund B, the fair market value of the assets to be so transferred into the Supplemental Trust Account must be at least equal to the par value of the Surplus Notes or net asset value of the shares of HGR Fund B determined by reference to the 

Page 4

Exhibit 10.7

par value of the Surplus Notes, to be removed, plus any accrued but unpaid interest thereon through the date of such removal, minus any such accrued but unpaid interest that was previously assigned pursuant to Section 14(g)(iii) of the Reinsurance Agreement.  The Trustee shall also follow any instructions regarding substitution of assets that are signed by both the Grantor and the Beneficiary.
(d)    When the Trustee is directed to deliver or receive Assets against payment, delivery will be made in accordance with generally accepted market practice.
		
	SECTION 4.
	Trust Income.

All payments of interest, dividends and other income in respect to the Assets in the Supplemental Trust Account shall be promptly deposited into the Supplemental Trust Account.
		
	SECTION 5.
	Right to Vote Assets.

(a)    The Trustee shall forward all annual and interim stockholder and other financial reports and all proxies and proxy materials relating to the Assets in the Supplemental Trust Account to the Grantor within a reasonable period of time following the Trustee’s receipt thereof.  The Grantor shall have the full and unqualified right to vote any shares of stock or other securities in the Supplemental Trust Account.
(b)    Notwithstanding paragraph 5(a), the Grantor shall direct the Trustee to act with respect to the any exercise or non-exercise of voting rights of HGR Fund B shares. In order for the Trustee to act with respect to the exercise or non-exercise of voting rights of the HGR Fund B shares, it must receive written instructions of the Grantor using the Trustee’s generated form or clearly marked as instructions, addressed as the Trustee may from time to time request, by such time as the Trustee shall advise the Grantor or its designee.  If the Trustee does not receive such written instructions by such deadline, the Trustee shall not be liable for failure to take any action relating to or to exercise any rights conferred by such HGR Fund B shares.
(c)    In the case of the exercise or non-exercise of voting rights of the HGR Fund B shares on the matters set forth in paragraph (d) of this section, Grantor must obtain the prior written consent of Beneficiary, which consent shall not be unreasonably withheld, and provide such written consent to the Trustee in the form required by the Trustee.
(d)    Matters requiring written consent of Beneficiary are any proposed changes to the HGR Fund B’s:
i.          Investment objectives, policies or restrictions;
ii.         Borrowing or leverage;
iii.        Dividend policy;
v.         Liabilities; and

Page 5

Exhibit 10.7

vi.        Ability to sell and list its shares publicly.
		
	SECTION 6.
	Additional Rights and Duties of the Trustee.

(a)    The Trustee shall be a bank which is a member of the Federal Reserve System of the United States of America or a New York State chartered bank or trust company and shall not be a parent, subsidiary or affiliate of the Grantor or the Beneficiary.
(b)    The Trustee shall be liable for its own negligence, willful misconduct or lack of good faith arising out of or in connection with the performance of its obligations in accordance with this Supplemental Trust Agreement.
(c)    The Trustee shall notify the Grantor and the Beneficiary in writing promptly, but in no event more than ten (10) calendar days, following each deposit into, or withdrawal from, the Supplemental Trust Account and shall notify the Grantor promptly of the receipt by the Trustee of any Withdrawal Notice or Transfer Notice.
(d)    The Trustee shall be under no obligation to determine whether or not any instructions given by the Grantor or the Beneficiary are contrary to any provision of law. It is understood and agreed that the Trustee’s duties are solely those set forth herein and that the Trustee shall have no duty to take any other action unless specifically agreed to by the Trustee in writing. Without limiting the generality of the foregoing, the Trustee shall not have any duty to advise, manage, supervise or make recommendations with respect to the purchase, retention or sale of any Assets in the Supplemental Trust Account as to which a default in the payment of principal or interest has occurred or to be responsible for the consequences of insolvency or the legal inability of any broker, dealer, bank or other agent employed by the Grantor or Trustee with respect to the Assets except to the extent that the Trustee was negligent, engaged in willful misconduct or acted with a lack of good faith in the selection of any such person or entity.
(e)    The Trustee shall accept and open all mail directed to the Grantor or the Beneficiary in care of the Trustee.
(f)    The Trustee shall furnish to the Grantor and the Beneficiary a statement of all Assets in the Supplemental Trust Account upon the inception of the Supplemental Trust Account and at regular intervals no less frequently than at the end of each quarter thereafter.  
(g)    The Trustee shall keep full and complete records of the administration of the Supplemental Trust Account in accordance with all applicable law.  Upon the request of the Grantor or the Beneficiary, the Trustee shall promptly permit the Grantor or the Beneficiary, their respective agents, employees, independent auditors and regulatory authorities to examine, audit, excerpt, transcribe and copy, during the Trustee’s normal business hours, any books, documents, papers and records relating to the Supplemental Trust Account or the Assets. Any out-of-pocket expenses incurred by the Trustee in relation to any such audit shall be reimbursed by the Grantor and/or the Beneficiary, as the case may be.

Page 6

Exhibit 10.7

(h)    Unless otherwise provided in this Supplemental Trust Agreement, the Trustee is authorized to follow and rely upon all instructions given by officers of the Grantor or the Beneficiary and by attorneys-in-fact acting under written authority furnished to the Trustee by the Grantor or the Beneficiary, including, without limitation, instructions given by letter, facsimile transmission or electronic media, if the Trustee believes such instructions to be genuine and to have been signed, sent or presented by the proper party or parties. In the absence of negligence, the Trustee shall not incur any liability to anyone resulting from actions taken by the Trustee in reliance in good faith on such instructions.  The Trustee shall not incur any liability in executing instructions (i) from any attorney-in-fact prior to receipt by it of notice of the revocation of the written authority of the attorney-in-fact or (ii) from any officer of the Grantor or the Beneficiary.
(i)    The duties and obligations of the Trustee shall only be such as are specifically set forth in this Supplemental Trust Agreement, as it may from time to time be amended, and no implied duties or obligations shall be read into this Supplemental Trust Agreement against the Trustee.
(j)    No provision of this Supplemental Trust Agreement shall require the Trustee to take any action which, in the Trustee’s reasonable judgment, would result in any violation of this Supplemental Trust Agreement or any provision of law.
(k)    The Trustee may confer with counsel of its own choice in relation to matters arising under this Supplemental Trust Agreement.  The opinion of said counsel shall be full and complete authority and protection for the Trustee with respect to any action taken, suffered or omitted by it in good faith and in accordance with the opinion of said counsel, other than with respect to the withdrawal of Assets by the Beneficiary.
(l)    Except in the case of the Surplus Notes (which shall be maintained by the Trustee in certificated form), the Trustee may maintain the Assets in book-entry form with, and utilize the services of, any Federal Reserve Bank, The Depository Trust Company or similar such depositories ("Central Depositories") as appropriate.  Assets may be held in the name of a nominee maintained by the Trustee or any Central Depository.
(m)    The Trustee shall be liable for (i) the safekeeping of the Assets and administering the Supplemental Trust Account in accordance with the provisions of this Supplemental Trust Agreement and (ii) its own negligence, willful misconduct or lack of good faith in performing its duties under this Supplemental Trust Agreement.  The Trustee shall exercise the standard of care with respect to the Assets that a professional trustee, engaged in the banking or trust company industry, having professional expertise in financial and securities processing transactions and custody would observe in such affairs.  The Trustee shall be liable for physical loss of or damage to Assets under its care, custody, possession or control or the care, custody, possession or control of its  subcustodians, other agents or nominee(s) selected by it, including but not limited to loss due to fire, burglary, robbery, theft or mysterious disappearance.  Notwithstanding the foregoing, the Trustee shall not be responsible for loss of or damage to Assets held in Central Depositories, including but not limited to loss due to fire, burglary, robbery, theft or mysterious disappearance.  

Page 7

Exhibit 10.7

(n)    Whenever in the administration of the Supplemental Trust Account created by this Supplemental Trust Agreement the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action thereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement or certificate signed by or on behalf of Grantor and/or Beneficiary, as appropriate, and delivered to the Trustee and said statement or certificate shall be full warrant to the Trustee for any action taken, suffered or omitted by it on the faith thereof.
(o)    The Trustee shall execute and settle securities transactions by itself or by means of an agent or broker.  The Trustee shall not be responsible for any act or omission, or for the solvency, of any such agent or broker, unless in the case of agent(s), such agent(s) is selected by the Trustee, or in the case of brokers, such broker is negligently selected by the Trustee.
(p)    The Trustee is not required to make advances of cash, securities or any other property on behalf of the Supplemental Trust Account, or permit overdrafts in the Supplemental Trust Account in connection with the acquisition or disposition of Assets in the Supplemental Trust Account; provided, however, that if the Trustee is required by industry practice to make such advance or permit such an overdraft, such advance or overdraft shall be deemed a loan by the Trustee to the Grantor, which loan shall be payable on demand and shall bear interest at the Trustee’s customary rate for similar loans.  The Grantor shall be solely responsible for repayment of such loan and any interest thereon.
		
	SECTION 7.
	The Trustee’s Compensation; Expenses.

(a)    The Grantor shall pay the Trustee, as compensation for its services under this Supplemental Trust Agreement, a fee computed at rates determined by the Trustee from time to time and agreed to in writing to the Grantor. The Grantor shall pay or reimburse the Trustee for all of the Trustee’s expenses and disbursements in connection with its duties under this Supplemental Trust Agreement (including reasonable attorneys’ fees and expenses), except any such expense or disbursement as may arise from the Trustee’s negligence, willful misconduct, lack of good faith or failure to administer the Supplemental Trust Account in accordance with the terms of this Supplemental Trust Agreement.  The Grantor also hereby indemnifies the Trustee for, and holds it harmless against, any loss, liability, costs or expenses (including reasonable attorney’s fees and expenses) incurred or made without negligence, willful misconduct or lack of good faith on the part of the Trustee, arising out of or in connection with the performance of its obligations in accordance with the provisions of this Supplemental Trust Agreement (which shall be the sole obligation of the Trustee), including any loss, liability, costs or expenses arising out of or in connection with the status of the Trustee and its nominee as the holder of record of the Assets. The Grantor hereby acknowledges that the foregoing indemnities shall survive the resignation of the Trustee or the termination of this Supplemental Trust Agreement.
(b)    No Assets shall be withdrawn from the Supplemental Trust Account or used in any manner for paying compensation to, or reimbursement of expenses or indemnification of, the Trustee.

Page 8

Exhibit 10.7

		
	SECTION 8.
	Resignation or Removal of the Trustee.

(a)    The Trustee may resign at any time upon delivery of a written notice thereof to the Beneficiary and the Grantor effective not less than ninety (90) calendar days after receipt by the Beneficiary and the Grantor of such notice. The Trustee may be removed by the Grantor’s delivery to the Trustee and the Beneficiary of a written notice of removal, effective not less than ninety (90) calendar days after receipt by the Trustee and the Beneficiary of such notice. No such resignation or removal shall become effective until a successor trustee has been appointed and approved by the Beneficiary and the Grantor and all Assets in the Supplemental Trust Account have been duly transferred to the successor trustee in accordance with paragraph (b) of this Section 8.
(b)    Upon receipt by the proper Parties of the Trustee’s notice of resignation or the Grantor’s notice of removal, as applicable, the Grantor and the Beneficiary shall appoint a successor trustee. Any successor trustee shall be a bank or trust company specified in Section 6(a) of this Supplemental Trust Agreement.  Upon the acceptance of the appointment as trustee hereunder by a successor trustee and the transfer to such successor trustee of all Assets in the Supplemental Trust Account, the resignation or removal of the trustee shall become effective. Thereupon, such successor trustee shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed trustee, and the resigning or removed trustee shall be discharged from any future duties and obligations under this Supplemental Trust Agreement, but the resigning or removed trustee shall continue after such resignation or removal to be entitled to the benefits of the indemnities provided herein for the Trustee.
		
	SECTION 9.
	Termination of the Supplemental Trust Account.

The Supplemental Trust Account and this Supplemental Trust Agreement shall be effective until terminated by the provision of sixty (60) calendar days’ advance written notice sent to the Trustee jointly by the Grantor and the Beneficiary.  Upon the termination of the Supplemental Trust Account, the Trustee shall, with the Beneficiary’s prior written consent, such consent not to be unreasonably withheld or delayed, transfer to the Grantor all of the Assets of the Supplemental Trust Account not previously withdrawn by the Beneficiary.
		
	SECTION 10.
	Definitions.

Except as the context shall otherwise require, the following terms shall have the following meanings for purposes of this Supplemental Trust Agreement (the definitions to be applicable to both the singular and the plural forms of each term defined if both forms of such term are used in this Supplemental Trust Agreement):
“Beneficiary” shall include any successor of the Beneficiary by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator.
“Business Day” means any day other than a day on which banks in the State of New York or the Islands of Bermuda are permitted or required to be closed.

Page 9

Exhibit 10.7

 “Eligible Assets” means cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the type specified in Paragraphs (1), (2), (3), (8) and (10) of Subsection (a) of Section 1404 of the New York Insurance Law; provided, however, that such investments are issued by an institution that is not the parent, a subsidiary or an affiliate of either the Grantor or the Beneficiary and, provided further, that the investments comply with the investment guidelines attached hereto as Exhibit A, as the same may be amended from time to time upon written notice by the Beneficiary and the Grantor to the Trustee.

“Person” means an individual, corporation, limited liability company, association, joint-stock company, business trust or other similar organization, partnership, joint venture, trust, unincorporated organization or government or any agency, instrumentality or political subdivision thereof.
"Surplus Notes" means the Beneficiary's $503 million Surplus Notes due April 1, 2042, presently outstanding in the amount of $499 million.
		
	SECTION 11.
	Governing Law.

This Supplemental Trust Agreement shall be subject to and governed by the laws of the State of New York, without regard to its conflict of laws provision and the Supplemental Trust Account created hereunder shall be administered in accordance with the laws of said state.
		
	SECTION 12.
	Successors and Assigns.

This Supplemental Trust Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, permitted assigns and legal representatives.  Neither this Supplemental Trust Agreement, nor any right or obligation hereunder, may be assigned by any Party without the prior written consent of the other Parties hereto.  Any assignment in violation of this Section 12 shall be void and shall have no force and effect.
		
	SECTION 13.
	Severability.

All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary to render this Supplemental Trust Agreement legal, valid and enforceable. If any term of this Supplemental Trust Agreement, or part thereof, shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the Parties that the remaining terms hereof, or part thereof, shall constitute their agreement with respect to the subject matter hereof and all such remaining terms, or parts thereof, shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Supplemental Trust Agreement shall be replaced by a valid provision which will implement the purpose of the illegal, invalid or unenforceable provision.
		
	SECTION 14.
	Entire Agreement.

Page 10

Exhibit 10.7

This Supplemental Trust Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof, and there are no understandings or agreements, conditions or qualifications relative to this Supplemental Trust Agreement which are not fully expressed in this Supplemental Trust Agreement.
		
	SECTION 15.
	Amendments.

This Supplemental Trust Agreement may be modified or otherwise amended, and the observance of any term of this Supplemental Trust Agreement may be waived, only if such modification, amendment or waiver is in writing and signed by the Parties.
		
	SECTION 16.
	Notices.

Unless otherwise specifically provided for in this Agreement, all notices, requests, demands and other communications under this Supplemental Trust Agreement must be in writing and will be deemed to have been duly given or made as follows:  (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent by reputable overnight air courier, two Business Days after mailing; (c) if sent by facsimile transmission or electronic mail, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if otherwise actually personally delivered, when delivered, and shall be delivered as follows:
If to the Grantor:
HG Re Ltd.
ATTN:  President
A.S. Cooper Building, 26 Reid Street
Hamilton HM 11
Bermuda
Telephone: (441) 278-3148
Fax: (441) 278-3145
Email: kevin.pearson@hgreltd.com

With a copy to:

White Mountains Insurance Group, Ltd.
ATTN: General Counsel
80 South Main Street
Hanover, NH 03755
Telephone: (603) 640-2202
Fax: (603) 643-4592
Email: rseelig@whitemountains.com

If to the Beneficiary:
Build America Mutual Assurance Company

Page 11

Exhibit 10.7

ATTN:  General Counsel
200 Liberty Street, 27th Floor
New York, NY  10281
Telephone: 212-365-7561
Email: generalcounsel@buildamerica.com

Page 12

Exhibit 10.7

If to the Trustee:
The Bank of New York Mellon
Melissa Sciore
BNY Mellon Asset Servicing
111 Sanders Creek Parkway
East Syracuse, NY  13057

or to such other address or to such other Person as a Party may have last designated by notice to the other Parties.

		
	SECTION 17.
	Headings.

The headings of the Sections have been inserted for convenience of reference only and shall not be deemed to constitute a part of this Supplemental Trust Agreement.
		
	SECTION 18.
	Counterparts.

This Supplemental Trust Agreement may be executed in any number of counterparts, and all of such counterparts, taken together, shall evidence one and the same agreement. Delivery of a copy of this Supplemental Trust Agreement bearing an original signature by facsimile transmission or by electronic mail in “portable document format” form shall have the same effect as physical delivery of the paper document bearing the original signature.
		
	SECTION 19.
	No Third Party Beneficiaries.

Except as otherwise expressly set forth in any provision of this Supplemental Trust Agreement, nothing in this Supplemental Trust Agreement is intended or shall be construed to give any Person, other than the Parties, any legal or equitable right, remedy or claim under or in respect of this Supplemental Trust Agreement or any provision contained herein.
		
	SECTION 20.
	PATRIOT ACT; SANCTIONS.

(a)    The Grantor and the Beneficiary hereby acknowledge that the Trustee is subject to federal laws, including the Customer Identification Program (“CIP”) requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which the Trustee must obtain, verify and record information that allows the Trustee to identify the Grantor and the Beneficiary.  Accordingly, prior to opening an account hereunder, the Trustee will ask the Grantor and the Beneficiary to provide certain information including, but not limited to, the Grantor’s and the Beneficiary’s name, physical address, tax identification number and other information that will help the Trustee to identify and verify the Grantor’s and the Beneficiary’s identity such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information.  The Grantor and the Beneficiary agree that the Trustee cannot open an account hereunder unless and until the Trustee verifies the Grantor’s and the Beneficiary’s identity in accordance with the Trustee’s CIP. 

Page 13

Exhibit 10.7

(b)    “Sanctions” shall mean all economic sanctions, laws, rules, regulations, executive orders and requirements administered by any governmental authority of the U.S. (including the U.S. Office of Foreign Assets Control) and the European Union (including any national jurisdiction or member state thereof), in addition to any other applicable authority with jurisdiction over the Grantor.  Throughout the term of this Agreement, the Grantor (i) shall maintain, and comply with, those programs, policies, procedures and measures designed to ensure compliance with, and prevent violations of, Sanctions (an “Economic Sanctions Compliance Program”) which includes measures to accomplish effective and timely scanning of all relevant data with respect to its clients and with respect to incoming or outgoing assets or transactions; (ii) shall ensure that neither the Grantor nor any of its affiliates, directors, officers, employees or clients (to the extent such clients are covered by this Agreement) is an individual or entity that is, or is owned or controlled by an individual or entity that is: (A) the target of Sanctions, or (B) located, organized or resident in a country or territory that is, or whose government is, the target of Sanctions; and (iii) shall not, directly or indirectly, use the Account in any manner that would result in a violation of Sanctions.
The Grantor will promptly provide to the Trustee such information as the Trustee reasonably requests in connection with the matters referenced in this Section 20, including information regarding the Account, the assets held or to be held in the Account, the source thereof, and the identity of any individual or entity having or claiming an interest therein.  The Trustee may decline to act or provide services in respect of any Account, and take such other actions as it, in its reasonable discretion, deems necessary or advisable, in connection with the matters referenced in this Section 20.  If the Trustee declines to act or provide services as provided in the preceding sentence, except as otherwise prohibited by applicable law or official request, the Trustee will inform the Grantor as soon as reasonably practicable.

[Remainder of page left intentionally blank]

Page 14

Exhibit 10.7

IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and Restated Supplemental Trust Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
HG RE LTD., as Grantor 
 
 
 
By:      
Name:      
Title:      
 

BUILD AMERICA MUTUAL ASSURANCE COMPANY, as Beneficiary 
 
 
 
By:      
Name:      
Title:      
 

THE BANK OF NEW YORK MELLON, as Trustee 
 
 
 
By:      
Name:      
Title:     

Page 15

Exhibit 10.7

EXHIBIT A

Investment Guidelines

Exhibit 10.7

HG Re Ltd.
Investment Portfolio Guidelines
for the
Regulation 114 Trust and Supplemental Trust

Scope

The investment guidelines contained herein (“Guidelines”) apply to the following:
		
	i.
	All the Investable Assets of the Regulation 114 Trust; and

		
	ii.
	All the Investable Assets of the Supplemental Trust.  

These Guidelines establish an investment objective and policy, investment guidelines and limits and a governance framework.  The Guidelines are established and reviewed annually by the HG Re Ltd. Board of Directors or its designated committee.  
Investment Objectives 

The primary Investment Objectives for the Portfolios subject to these Guidelines are: 
		
	i.
	To preserve claims paying resources;

		
	ii.
	To provide for sufficient liquidity to pay claims;

		
	iii.
	To generally avoid realized capital losses;

		
	iv.
	To ensure compliance with the limitations set forth in Section 1404 of the New York Insurance Law, the Regulation 114 Trust Agreement, the Supplemental Trust Agreement and these Guidelines; and

		
	v.
	Subject to the foregoing, to maximize risk adjusted returns.

Investment Manager

HG Re Ltd. will outsource the management of the Portfolios to one or more Portfolio Managers.  The Portfolio Manager/s shall be selected and monitored by HG Re Ltd. and may be changed from time to time with the approval of the HG Re Ltd. Board of Directors. The Portfolio Manager/s shall adhere to the Guidelines set forth herein.

Exhibit 10.7

Eligible Investments

Subject to the restrictions set forth in the Credit Quality and Compliance with New York Insurance sections below, the following are eligible investments:
		
	i.
	Cash and certificates of deposit issued by a U.S. bank;

		
	ii.
	Obligations issued or guaranteed by the U.S. Government or an agency thereof;

		
	iii.
	Obligations issued by a Government Sponsored Enterprise;

		
	iv.
	Obligations issued or guaranteed by U.S. states, U.S. municipalities and any agency or instrumentality thereof, limited to the following insurable sectors:

		
	a.
	General Obligation (States, Counties, Cities, School Districts, Special Districts, and Community College Districts)

		
	b.
	Special Tax Secured (Income, Ad Valorem, Sales, Excise, Public Service Tax, Income, Motor Vehicle Tax)

		
	c.
	Public Colleges and Universities

		
	d.
	Water, Sewer & Solid Waste Utility Revenue (without landfill or mass burn facilities)

		
	e.
	General Fund, Non Ad Valorem or Appropriation 

		
	f.
	Electric and Gas Utility Revenue (retail and wholesale)

		
	g.
	Transportation Facilities with 3 or more years of operating history (Airports, Ports, Toll Roads and Bridges, Parking, Mass Transit)

		
	h.
	Municipal Pools (secured by loans from the categories listed above); 

		
	v.
	Obligations issued by U.S. companies that are registered under the Securities Exchange Act of 1934 provided that such obligations are not issued by an institution that is the parent, a subsidiary or an affiliate of either the Grantor or the Beneficiary; and

		
	vi.
	Securities of any investment company registered under the Investment Company Act of 1940, if such company invests at least 90% of its assets in the eligible investments set forth above. 

All of the Investable Assets shall be denominated in U.S. dollars.

Obligations that have been insured by BAM are not eligible for purchase unless the purchase of such obligations is part of a claim payment or has been specifically approved by the Surveillance and Risk Management Committees of BAM as part of a work out process.

Exhibit 10.7

Credit Quality

		
	i.
	At all times, Investable Assets with a term at purchase of 12 months or more shall have a Rating of A/A3 or higher; 

		
	ii.
	At all times, Investable Assets with a term at purchase of less than 12 months must have a short term Rating of A1/P1 (MIG1-VMIG1 for tax-exempts);

		
	iii.
	At all times, the Regulation 114 Trust shall have an average Rating of at least AA-/Aa3 on a stand-alone basis without the benefit of insurance; and

		
	iv.
	At all times, the Supplemental Trust shall have an average Rating of at least AA-/Aa3 on a stand-alone basis without the benefit of insurance.

Concentration Limits

Investable Assets shall be diversified in order to minimize the risk of large losses.  The following diversification guidelines shall apply to the Regulation 114 Trust and the Supplemental Trust each on a stand-alone basis and shall be maintained at all times.  These limitations do not apply to securities issued by the U.S. Government or an agency thereof or securities issued or guaranteed by a Government Sponsored Enterprise. 
		
	i.
	The total investment in any one issuer’s securities having a Rating of AAA/Aaa shall not exceed 5% of the respective Portfolio;

		
	ii.
	The total investment in any one issuer’s securities having a Rating of AA/Aa shall not exceed 3% of the respective Portfolio;

		
	iii.
	The total investment in any one issuer’s securities having a Rating of A/A shall not exceed 2% of the respective Portfolio; 

		
	iv.
	The total investment in obligations issued by entities in a single state shall be limited to:

		
	a.
	15% of the tax-exempt portion of the respective Portfolio for California, New York and Texas; and

		
	b.
	10% of the tax-exempt portion of the respective Portfolio for all other states;

		
	v.
	The total investment in obligations of companies within any one Industry shall not exceed 15% of the taxable portion of the respective Portfolio.

Compliance with New York Insurance Law

Not withstanding to the limitations set forth herein, the Regulation 114 Trust shall at all times remain in compliance with paragraphs (1), (2), (3), (8) and (10) of subsection (a) of section §1404 of the New York Insurance Law, as described in Appendix B.

Exhibit 10.7

Liquidity

The Portfolios shall maintain adequate liquidity on a stand-alone basis to meet their respective obligations under the Reinsurance Agreement, provided further that at least 90% of the Investable Assets in each of the Portfolios shall be invested in securities that are commonly traded in established secondary markets.
Reporting

The Investment Manager will provide HG Re Ltd. a report for each of the Portfolios to BAM within 10 business days following the end of each calendar quarter containing but not limited to the following: 
		
	i.
	A list of all Investable Assets in the Portfolio, 

		
	ii.
	The market value on the last business day of such calendar quarter of each Investable Asset in the Portfolio, and 

		
	iii.
	Certification that the Investable Assets in the Portfolio comply with these Guidelines.

HG Re Ltd. will in turn provide a copy of the aforementioned reports to BAM within 15 business days following the end of each calendar quarter.

Exhibit 10.7

APPENDIX A
GLOSSARY OF TERMS

“BAM” – Build America Mutual Assurance Company, a New York domiciled mutual insurance corporation.
“Government Sponsored Enterprise” (“GSE”) – A financial services corporation created by the U.S. Congress to enhance the availability of credit and reduce the cost of credit in targeted sections of the economy including agriculture, home finance and education.  GSEs include but are not limited to: (i) Federal National Mortgage Association (“FNMA”) and (ii) Federal Home Loan Mortgage Corporation (“FHLMC”).
“Industry” – For the purpose of this document, an Industry will be determined with reference to the Bloomberg industry classifications.
“Investable Assets” – All cash and securities supervised and directed by HG Re Ltd. pursuant to these Guidelines.
“Moody’s” – Moody’s Investor Service.
“Portfolio/s” – All of the Investable Assets of the Regulation 114 Trust and/or the Supplemental Trust.
“Portfolio Manager/s” – Nationally recognized qualified third party asset manager.
“Rating” – For purposes of the Guidelines and limitations contained herein, the rating of each security will be the lesser of the credit rating issued by S&P or Moody’s for Investable Assets that are rated by such agencies.  In the event of disparate ratings between S&P and Moody’s, the lower credit rating will be used.  If neither S&P nor Moody’s has rated a particular Investable Asset, then the lowest credit rating available from another major rating agency shall be assigned.  
“Regulation 114 Trust” – All of the Investable Assets of the Regulation 114 Trust established pursuant to the Regulation 114 Trust Agreement dated as of July 20, 2012 entered into by and among BAM (the “Beneficiary”), HG Re Ltd (the “Grantor”) and the Bank of New York Mellon (the "Trustee").

“Reinsurance Agreement” – The First Loss Reinsurance Treaty Agreement dated as of July 20, 2012 entered into by and between BAM and HG Re Ltd. 
“S&P” – Standard & Poor’s Rating Service. 
“Supplemental Trust” – All of the Investable Assets of the Supplemental Trust, established pursuant to the Supplemental Trust Agreement dated as of July 20, 2012 entered into by and among BAM (the “Beneficiary”), HGR Patton (Luxembourg) S.à r.l., United States of America Branch, a subsidiary of HG Re Ltd. (the “Grantor”) and the Bank of New York Mellon (the "Trustee").

Exhibit 10.7

APPENDIX B
SECTION 1404 OF THE NEW YORK INSURANCE LAW

The types of assets described in paragraphs (1), (2), (3), (8) and (10) of Insurance Law §1404(a) are as follows:
Paragraph 1 (Government Obligations).
(1) Government obligations. Obligations which are not in default as to principal or interest, which are valid and legally authorized, and which are issued, assumed, guaranteed or insured by:

(A) the United States or by any agency or instrumentality thereof,
(B) any state of the United States,
(C) any territory or possession of the United States or any other governmental unit in the United States, or
(D) any agency or instrumentality of any governmental unit referred to in subparagraphs (B) and (C) of this paragraph, provided that obligations to be eligible under this paragraph shall be by law (statutory or otherwise) payable, as to both principal and interest, from taxes levied or by law required to be levied or from adequate special revenues pledged or otherwise appropriated or by law required to be provided for the purpose of such payment, but in no event shall obligations be eligible for investment under this paragraph if payable solely out of special assessments on properties benefited by local improvements.

Paragraph 2 (Obligations of American Institutions).

(2) Obligations of American institutions.

(A) Obligations which are issued by any solvent American institution or which are assumed or guaranteed by any solvent American institution (other than an insurance company) and which are not in default as to principal or interest provided such obligations:

(i) are adequately secured by collateral security having a market value not less than the principal amount thereof and have investment qualities and characteristics wherein the speculative elements are not predominant, or

(ii) are rated A or higher (or the equivalent thereto) by a securities rating agency recognized by the superintendent, or if not so rated, are similar in structure and in all material respects to other obligations of the same institution which are so rated, or

(iii) are insured by one or more authorized insurance companies (other than the investing insurer or any parent, subsidiary or affiliate of such insurer) who are licensed to insure obligations in this state and, after considering such insurance, are rated Aaa (or the equivalent thereto) by a securities rating agency recognized by the superintendent, or

(iv) have been given the highest quality designation by the Securities Valuation Office of the National Association of Insurance Commissioners.

(B) No investment in or loan upon the obligations of any institution, other than an institution which issues mortgage related securities, and no investment in any one mortgage related security, made pursuant to the provisions of this paragraph shall exceed five per centum of the admitted assets of such insurer as shown by its last statement on file with the superintendent.

Paragraph 3 (Preferred or guaranteed shares of American institutions).

Exhibit 10.7

(3) Preferred or guaranteed shares of American institutions. 

(A) Preferred or guaranteed shares issued or guaranteed by a solvent American institution if all of the institution's obligations are eligible as investments under item (ii) or (iv) of subparagraph (A) of paragraph two of this subsection.

(B) No investment in the preferred or guaranteed shares of any institution made pursuant to the provisions of this paragraph shall exceed two percent of such insurer's admitted assets as shown by its last statement on file with the superintendent.

Paragraph 8 (Equity interests).

(8) Equity interests. 

(A) Investments in common shares or partnership interests of any solvent American institution, if:

(i) all its obligations and preferred shares, if any, are eligible as investments under this subsection and

(ii) such equity interests of any such institution except an insurance company are registered on a national securities exchange, as provided in the Securities Exchange Act of 1934, 15 U.S.C. §§78a-78kk or otherwise registered pursuant to said act and, if so otherwise registered, price quotations therefor are furnished through a nationwide automated quotations system approved by the National Association of Securities Dealers, Inc., provided that an insurer may invest under this paragraph an amount not exceeding one percent of the insurer's admitted assets as shown by its last statement on file with the superintendent even though such equity interests are not so registered and are not issued by an insurance company.

(B) Investment limitations. 

(i) No insurer subject to the provisions of paragraph two of subsection (a) or subsection (b) of section one thousand four hundred three of this article shall invest in or loan upon any one institution's outstanding equity interests an amount exceeding one percent of the insurer's admitted assets as shown by its last statement on file with the superintendent, and 

(ii) the cost of any investment in equity interests, made pursuant to this paragraph, when added to the aggregate cost of all other investments in equity interests then held pursuant to this paragraph, paragraph six and clause (ii) of subparagraph (A) of paragraph ten of this subsection shall not exceed:

(I) in the case of an insurer authorized to make investments under item (i) of this subparagraph except a retirement system organized pursuant to article forty-six of this chapter, the lesser of its surplus to policyholders or ten percent of its admitted assets as shown by its last statement on file with the superintendent, and

(II) in the case of a retirement system organized pursuant to article forty-six of this chapter, thirty percent of its admitted assets as shown by its last statement on file with the superintendent.

Paragraph 10 (Investment companies).

(10) Investment companies. 

(A) Securities of any investment company registered pursuant to the federal Investment Company Act of 1940, 15 U.S.C. § 802, if such company:

(i) invests at least ninety percent of its assets in the types of securities which qualify as a reserve investment pursuant to the provisions of paragraph one, two or three of this subsection or which invest in securities 

Exhibit 10.7

which are determined by the superintendent to be substantively similar to the types of securities set forth in such paragraphs; or

(ii) invests at least ninety percent of its assets in the types of equity interests which qualify as a reserve investment pursuant to the provisions of paragraph eight of this subsection.

(B) Investment limitations. Investments made by an insurer subject to the provisions of paragraph two of subsection (a) or subsection (b) of section one thousand four hundred three of this article shall not exceed the following limitations:

(i) in any investment company qualifying under item (i) of subparagraph (A) hereof, ten percent of such insurer's admitted assets as shown by its last statement on file with the superintendent and the aggregate amount of investment in such qualifying investment companies shall not exceed twenty-five percent of such insurer's admitted assets as shown by its last statement on file with the superintendent; and

(ii) in any investment company qualifying under item (ii) of subparagraph (A) hereof, five percent of such insurer's admitted assets as shown by its last statement on file with the superintendent and the aggregate amount of investment in such qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to the provisions of subparagraph (B) of paragraph eight of this subsection.

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