As filed with the Securities and Exchange Commission on August 8, 2013

File No.              

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

 Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

 

ContraVir Pharmaceuticals, Inc.

(Exact name of Registrant as specified in its charter)

 

Delaware

 

46-2783806

(State or other jurisdiction of

 incorporation or organization)

 

(I.R.S. employer

 identification number)

 

 

 

420 Lexington Avenue

Suite 2012

New York, New York

 

10170

(Address of principal executive offices)

 

(Zip Code)

 

212-297-0020

(Registrant’s telephone number, including area code)

 

Securities to be registered pursuant to Section 12(b) of the Act: None.

 

Securities to be registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer o  
 (Do not check if a smaller reporting company)

 

Smaller reporting company x

 

 

 



 

CONTRAVIR PHARMACEUTICALS, INC.

 

INFORMATION REQUIRED IN REGISTRATION STATEMENT

 CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

 

Certain information required to be included herein is incorporated by reference to specifically identified portions of the body of the information statement filed herewith as Exhibit 99.1. None of the information contained in the information statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.

 

Item 1.   Business.

 

The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Business” and “Our Relationship with Synergy Following the Distribution.” Those sections are incorporated herein by reference.

 

Item 1A.   Risk Factors.

 

The information required by this item is contained under the section of the information statement entitled “Risk Factors.” That section is incorporated herein by reference.

 

Item 2.   Financial Information.

 

The information required by this item is contained under the sections of the information statement entitled “Selected Historical Financial Data,” and “Management’s Discussion and Analysis of Financial Condition and Plan of Operations.” Those sections are incorporated herein by reference.

 

Item 3.   Properties.

 

The information required by this item is contained under the section of the information statement entitled “Business — Properties.” That section is incorporated herein by reference.

 

Item 4.   Security Ownership of Certain Beneficial Owners and Management.

 

The information required by this item is contained under the section of the information statement entitled “Security Ownership of Certain Beneficial Owners and Management.” That section is incorporated herein by reference.

 

Item 5.   Directors and Executive Officers.

 

The information required by this item is contained under the section of the information statement entitled “Management.” That section is incorporated herein by reference.

 

Item 6.   Executive Compensation.

 

The information required by this item is contained under the section of the information statement entitled “Compensation Discussion and Analysis” and “Executive Compensation.” Those sections are incorporated herein by reference.

 

Item 7.   Certain Relationships and Related Preson Transactions.

 

The information required by this item is contained under the sections of the information statement entitled “Management” and “Certain Relationships and Related Person Transactions.” Those sections are incorporated herein by reference.

 

Item 8.   Legal Proceedings.

 

The information required by this item is contained under the section of the information statement entitled “Business — Legal Proceedings.” That section is incorporated herein by reference.

 

Item 9.   Market Price of, and Dividends on, the Registrant’s Common Equity and Related Stockholder Matters.

 

The information required by this item is contained under the sections of the information statement entitled “Dividend Policy” and

 

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“Description of Our Capital Stock.” Those sections are incorporated herein by reference.

 

Item 10.   Recent Sales of Unregistered Securities.

 

The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock — Sale of Unregistered Securities.” These sections are incorporated herein by reference.

 

Item 11.   Description of Registrant’s Securities to be Registered.

 

The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock.” That section is incorporated herein by reference.

 

Item 12.   Indemnification of Directors and Officers.

 

The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock — Limitations on Liability and Indemnification of Officers and Directors.” That section is incorporated herein by reference.

 

Item 13.   Financial Statements and Supplementary Data.

 

The information required by this item is contained under the sections of the information statement entitled “Index to Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.

 

Item 14.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

N/A.

 

Item 15.   Financial Statements and Exhibits.

 

(a)  Financial Statements

 

The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.

 

(b)  Exhibits

 

See below.

 

The following documents are filed as exhibits hereto:

 

Exhibit

 

 

Number

 

Exhibit Description

 

 

 

3.1

 

Certificate of Incorporation of ContraVir Pharmaceuticals, Inc.

3.2

 

By-Laws of ContraVir Pharmaceuticals, Inc.

4.1

 

Promissory Note, dated June 5, 2013, issued by ContraVir Pharmaceuticals, Inc. to Synergy Pharmaceuticals Inc.

10.1

 

Contribution Agreement, dated June 10, 2013, as amended and restated August 5, 2013, by and between Synergy Pharmaceuticals Inc. and ContraVir Pharmaceuticals, Inc.

10.2

 

Shared Services Agreement, dated July 8, 2013, as amended and restated August 5, 2013, by and between Synergy Pharmaceuticals Inc. and ContraVir Pharmaceuticals, Inc.

10.3

 

Loan and Security Agreement, dated June 5, 2013, between Synergy Pharmaceuticals Inc. and ContraVir Pharmaceuticals, Inc.

99.1

 

Information Statement of ContraVir Pharmaceuticals, Inc., preliminary and subject to completion, dated               , 2013

 

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SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Dated: August, 8, 2013

CONTRAVIR PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

By:

/s/ Gary S. Jacob

 

 

Name: Gary S. Jacob

 

 

Title:    Chief Executive Officer

 

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Exhibit 3.1

 

Delaware

The First State

 

I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “CONTRAVIR PHARMACEUTICALS, INC.”, FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF MAY, A.D. 2013, AT 1:17 O’ CLOCK P.M.

 

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS.

 

 

 

 

 

 

5335117 8100

 

/s/ Jeffrey W. Bullock

 

 

Jeffrey W. Bullock, Secretary of State

 

130585678

AUTHENTICATION:

 

0434764

You may verify this certificate online

 

 

at corp. delaware.gov/authver.shtml

 

DATE:

 

05-15-13

 

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State of Delaware

 

Secretary of State

 

Division of Corporations

 

Delivered 01:23 PM 05/15/2013

 

FILED 01:17 PM 05/15/2013

 

SRV 130585678 - 5335117 FILE

 

CERTIFICATE OF INCORPORATION

 

OF

 

CONTRAVIR PHARMACEUTICALS, INC.

 

ARTICLE I

 

The name of this corporation is CONTRAVIR PHARMACEUTICALS, INC.

 

ARTICLE II

 

The address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, Dover, County of Kent, Delaware 19904. The registered agent of the corporation in the State of Delaware at such address is National Registered Agents, Inc.

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

 

ARTICLE IV

 

Section 1. Number of Authorized Shares. The total number of shares of stock which the Corporation shall have the authority to issue shall be One Hundred Forty Million (140,000,000) shares. The Corporation shall be authorized to issue two classes of shares of stock, designated, “Common Stock” and “Preferred Stock.” The Corporation shall be authorized to issue One Hundred Twenty Million (120,000,000) shares of Common Stock, each share to have a par value of $0.0001 per share, and Twenty Million (20,000,000) shares of Preferred Stock, each share to have a par value of $0.0001 per share.

 

Section 2. Common Stock. The Board of Directors of the Corporation may authorize the issuance of shares of Common Stock from time to time. The Corporation may reissue shares of Common Stock that are redeemed, purchased, or otherwise acquired by the Corporation unless otherwise provided by law.

 

Section 3. Preferred Stock. The Board of Directors of the Corporation may by resolution authorize the issuance of shares of Preferred Stock from time to time in one or more series. The Corporation may reissue shares of Preferred Stock that are redeemed, purchased, or otherwise acquired by the Corporation unless otherwise provided by law. The Board of Directors is hereby authorized to fix or alter the designations, powers and preferences, and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series as may be permitted by the DGCL, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share, as well as the number of members, if any, of the Board of Directors or the percentage of members, if any, of the Board of Directors each class or series of Preferred Stock may be entitled to elect), rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of any wholly unissued series of Preferred Stock, the number of shares constituting any such series and the designation thereof, and to increase or decrease the number of shares of any such series subsequent to the issuance of shares of such series, but not below the number of shares of such series then outstanding and any other powers, preferences and relative, participating, optional or other special rights of each series of Preferred Stock, and any qualifications, limitations or restrictions of such shares as are permitted by law, all as may be stated in such resolution.

 

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Section 4. Dividends and Distributions. Subject to the preferences applicable to Preferred Stock outstanding at any time, the holders of shares of Common Stock shall be entitled to receive such dividends, payable in cash or otherwise, as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefore.

 

Section 5. Voting Rights. Each share of Common Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Corporation.

 

ARTICLE V

 

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of directors or in the Bylaws of the Corporation.

 

ARTICLE VI

 

The number of directors of the Corporation shall be fixed from time to time by or in the manner provided in the Bylaws of the Corporation or amendment thereof duly adopted by the Board of Directors or by the stockholders of the Corporation. Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the Board of Directors, acting by not less than a majority of the Directors then in office, although less than a quorum. Any director so chosen shall hold office until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.  Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

 

ARTICLE VII

 

No action, which has not been previously approved by the Board of Directors, shall be taken by the stockholders except at an annual meeting or a special meeting of the stockholders. Any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.

 

ARTICLE VIII

 

In furtherance of, and not in limitation of, the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the By-laws or adopt new By-laws without any action on the part of the stockholders; provided that any By-law adopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered or repealed by the stockholders.

 

ARTICLE IX

 

No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of a director, then the liability of the directors

 

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shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Article IX by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

 

ARTICLE X

 

The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and reasonably incurred by such Covered Person.  The right to indemnification conferred by this Article X shall include the right to be paid by the Corporation the reasonable expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition, except where the Covered Person pleads guilty or nolo contendere in a criminal proceeding (excluding traffic violations and other minor offenses), upon receipt by the Corporation of an undertaking by or on behalf of the Covered Person receiving advancement to repay the amount advanced if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation under this Article X.  Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors of the Corporation. Any amendment, repeal or modification of this paragraph 8 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

 

ARTICLE XI

 

Unless the Corporation (through approval of the Board of Directors) consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the By-laws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

 

ARTICLE XII

 

The Corporation shall have the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) or the By-laws, from time to time, to amend this Certificate of Incorporation or any provision thereof in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment thereof are conferred subject to such right.

 

ARTICLE XIII

 

The name and mailing address of the incorporator is Jeffrey J. Fessler, c/o Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006.

 

* * * * * * * *

 

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I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation pursuant to the DGCL, do make this Certificate of Incorporation, hereby acknowledging, declaring, and certifying that the foregoing Certificate of Incorporation is my act and deed and that the facts herein stated are true, and have accordingly hereunto set my hand this 15th day of May, 2013.

 

 

 

/s/ Jeffrey J. Fessler

 

Jeffrey J. Fessler, Incorporator

 

4


Exhibit 3.2

 

BY-LAWS OF CONTRAVIR PHARMACEUTICALS, INC.

 

EFFECTIVE AS OF May 15, 2013

 

Article I

 

Stockholders’ Meetings.

 

1. Place of Meetings.  Meetings of the stockholders shall be held at such time and place within or without the State of Delaware as may be designated by the Board of Directors.

 

2. Annual Meetings.  The annual meeting of the stockholders shall be held on such date and at such time and place as the Board of Directors may designate. At such annual meeting, the stockholders shall elect directors, in accordance with the requirements of the Certificate of Incorporation, and transact such other business as may properly be brought before the meeting.

 

3. Special Meetings.  Except as otherwise provided by law, special meetings of the stockholders for any purpose or purposes may only be called by the Chairman of the Board, and shall be called by the Chairman of the Board or the Secretary at the request in writing of a majority of the Board of Directors.

 

4. Notice.  Written notice of an annual or special meeting shall be given to each stockholder entitled to vote thereat, not less than ten nor more than sixty days prior to the meeting. The date, place and time of the meeting shall be stated in the notice of such meeting delivered to or mailed to stockholders. If mailed, such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation.

 

5. Quorum; Adjournments; Postponement.  The holders of stock representing a majority of the voting power of all shares of stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall be requisite for and shall constitute a quorum of all meetings of the stockholders, except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws. In the absence of a quorum, holders of stock representing a majority of the voting power of all shares present in person or represented by proxy at the meeting, or the Chairman of the meeting, may adjourn any meeting of stockholders, annual or special, from time to time, to reconvene at the same or some other place, until a quorum shall be present or represented. Notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. Furthermore, after the meeting has been duly organized, the Chairman of the meeting may adjourn any meeting of stockholders, annual or special, from time to time, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. Any previously scheduled meeting of stockholders may be postponed by the Board of Directors prior to the date previously scheduled for such meeting and the Corporation shall publicly announce such postponement.

 

6. Voting; Proxies.  At each meeting of the stockholders of the Corporation, every stockholder having the right to vote may authorize another person to act for him by proxy. Such authorization must be in writing and executed by the stockholder or his authorized officer, director, employee, or agent. To the extent permitted by law, a stockholder may authorize another person or persons to act for him as proxy by transmitting or authorizing the transmission of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that the electronic transmission either sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder. A copy, facsimile transmission or other reliable reproduction of a writing or transmission authorized by this paragraph 6 of Article I may be substituted for or used in lieu of the original writing or electronic transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile transmission or other reproduction shall be a complete reproduction of the entire original writing or transmission. No proxy authorized hereby shall be voted or acted upon more than three years from its date, unless the proxy provides

 



 

for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing a subsequent duly executed proxy with the Secretary of the Corporation. The vote for directors shall be by ballot. No ballot, proxies or votes, nor any revocations thereof or changes thereto shall be accepted after the time set for the closing of the polls pursuant to paragraph 10 of Article I of these By-laws unless the Court of Chancery upon application of a stockholder shall determine otherwise. Each proxy shall be delivered to the inspectors of election prior to or at the meeting. Unless a greater number of affirmative votes is required by the Certificate of Incorporation, these By-laws, the rules or regulations of any stock exchange applicable to the Corporation, or as otherwise required by law or pursuant to any regulation applicable to the Corporation, if a quorum exists at any meeting of stockholders, stockholders shall have approved any matter, other than the election of directors, if the votes cast by stockholders present in person or represented by proxy at the meeting and entitled to vote on the matter in favor of such matter exceed the votes cast by such stockholders against such matter. A nominee for director shall be elected to the Board of Directors if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which the Secretary of the Corporation determines that the number of nominees exceeds the number of directors to be elected as of the record date for such meeting. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee.

 

7. Inspectors of Election.  The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation present or represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the Corporation present or represented at the meeting and such inspectors’ count of all votes and ballots. Such certification shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

 

8. List of Stockholders Entitled to Vote.  At least ten days before every meeting of the stockholders a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, with the post office address of each, and the number of shares held by each, shall be prepared by the Secretary. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours at the Corporation’s headquarters or on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, and shall be produced and kept at the time and place of meeting during the whole time thereof and subject to the inspection of any stockholder who may be present. The original or duplicate stock ledger shall be provided at the time and place of each meeting and shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders or to vote in person or by proxy at such meeting.

 

9. Organization.  Meetings of stockholders shall be presided over by the Chairman of the Board, or in his absence by a Chairman designated by the Board of Directors, or in the absence of such designation by a Chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the Chairman of the meeting may appoint any person to act as secretary of the meeting.

 

10. Conduct of Meetings.  The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at such meeting by the Chairman of the meeting. The Board of Directors of the Corporation may adopt by resolution such rules or regulations for the conduct of meetings of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the Chairman of any meeting of stockholders shall have the

 

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right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such Chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the Chairman of the meeting, may include, without limitation, the following: (1) the establishment of an agenda or order of business for the meeting; (2) rules and procedures for maintaining order at the meeting and the safety of those present; (3) limitations on attendance at or participation in the meeting, to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the Chairman shall permit; (4) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (5) limitations on the time allotted to questions or comments by participants. The Chairman of any meeting shall determine all matters relating to the conduct of the meeting, including, but not limited to, determining whether any nomination or other item of business has been properly brought before the meeting in accordance with these By-laws, and if the Chairman should so determine and declare that any nomination or other item of business has not been properly brought before the meeting, then such business shall not be transacted at such meeting. Unless and to the extent determined by the Board of Directors or the Chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

 

11. Fixing Date for Determination of Stockholders of Record.  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment or postponement thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment or postponement thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; and (2) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the date next preceding the day on which the meeting is held; and (b) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating, thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment or postponement of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned or postponed meeting.

 

12. Consent of Stockholders in Lieu of Meeting.  Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of the capital stock entitled to vote thereon were present and voted. Such consents shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days after the earliest dated consent delivered in the manner required by this paragraph 12 of Article I to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided above in this paragraph 12 of Article I.

 

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13. Notice of Stockholder Proposal.  At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting business must be: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder (i) who is a stockholder of record on the date of the giving of the notice provided for in this paragraph 13 of this Article I and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this paragraph 13 of this Article I. For business to be properly brought before an annual meeting by a stockholder (other than the nomination of a person for election as a director, which is governed by paragraphs 16, 17 and 18 of Article II of these By-laws), the stockholder intending to propose the business (the “Proponent”) must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a Proponent’s notice must be delivered to or mailed (including by courier) and received by the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days in advance of the anniversary of the previous year’s annual meeting; provided, however, that in the event the annual meeting is called for a date that is not within 25 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received no later than the close of business on the 10th day following the date on which such notice of the date of the annual meeting was mailed or the public disclosure of the date of the annual meeting was made, whichever first occurs. If no annual meeting was held in the previous year, then a shareholder’s notice, in order to be considered timely, must be received by the Secretary of the Corporation not later than the later of the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which notice of the date of the annual meeting was mailed or public disclosure of such date was made. In no event shall the adjournment or postponement of the annual meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. (For purposes of these By-laws, public disclosure shall be deemed to include a disclosure made in a press release reported by the Dow Jones News Services, Associated Press or a comparable national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). To be in proper written form, a Proponent’s notice to the Secretary must set forth: (a) as to each matter the Proponent proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, and (b) as to the Proponent and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of each such person, and of any holder of record of the Proponent’s shares as they appear on the Corporation’s books, (ii) (A) the class and number of all shares of capital stock of the Corporation that are owned by each such person (beneficially and of record) and owned by any holder of record of each such person’s shares, as of the date of the Proponent’s notice, and a representation that the Proponent will notify the Corporation in writing of the class and number of such shares owned of record and beneficially by each such person as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed and (B) the name of each nominee holder of shares of stock of the Corporation owned but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (iii) any material interest of each such person, or any affiliates or associates of each such person, in such business, (iv) a description of any transaction, agreement, arrangement or understanding with respect to such business between or among each such person and any of its affiliates or associates, and any others (including their names) in connection with the proposal of such business and any interest of such person or any affiliates or associates in such business, including the contemplated benefit therefrom to such person or affiliate or associate of such person, and a representation that the Proponent will notify the Corporation in writing of any such transaction, agreement, arrangement or understanding in effect as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed, (v) a description of any transaction, agreement, arrangement or understanding (including any derivative instruments, swaps, warrants, short positions, profit interests, options, hedging transactions, borrowed or loaned shares or other transactions) that has been entered into as of the date of the Proponent’s notice by, or on behalf of, each such person or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of each such person or any of its affiliates or associates with respect to shares of stock of the Corporation, and a representation that the Proponent will notify the Corporation in writing of any such transaction, agreement, arrangement or understanding in effect as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed, (vi) a representation that the Proponent is a holder of record or beneficial

 

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owner of shares of the Corporation entitled to vote at the annual meeting and intends to appear in person or by proxy at the meeting to propose such business, (vii) a representation whether the Proponent intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding shares required to approve the proposal and/or otherwise to solicit proxies from stockholders in support of the proposal, and (viii) any other information relating to each such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by each such person with respect to the proposed business to be brought by each such person before the annual meeting pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

 

14. Compliance with Procedures.  Notwithstanding anything in these By-laws to the contrary: (a) no business shall be conducted at any annual meeting except in accordance with the procedures set forth in paragraph 13 of this Article I, and (b) unless otherwise required by law, if a Proponent intending to propose business at an annual meeting pursuant to paragraph 13 of this Article I does not provide the information required under paragraph 13 to the Corporation (including providing the updated information required by clauses (b)(ii), (b)(iv) and (b)(v) of paragraph 13 by the deadlines specified therein), or the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to present the proposed business, such business shall not be transacted, notwithstanding that proxies in respect of such business may have been received by the Corporation. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of paragraph 13 of this Article I, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Nothing contained in paragraphs 13 and 14 of this Article I shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision).

 

Article II

 

Directors.

 

1. Number; Election; Term; Resignation.   The Board of Directors shall consist of one or more members, the exact number of which shall initially be fixed by the Incorporator and thereafter from time to time by the Board of Directors.  Except as otherwise provided herein or by law, directors shall be elected by a plurality of the votes cast at Annual Meetings of Stockholders, and each director so elected shall hold office until the next Annual Meeting and until his successor is duly elected and qualified, or until his earlier resignation or removal.  Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time is not specified, it shall take effect immediately upon receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

2. Vacancies.  Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, if the office of any director becomes vacant for any reason or any new directorship is created by any increase in the authorized number of directors, a majority of the directors then in office, although less than a quorum, may choose a successor or successors or fill the newly created directorship. Any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified.

 

3. Duties and Powers.  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws required to be exercised or done by the stockholders.

 

4. Place of Meetings; Records.  The directors may hold their meetings either within or without the State of Delaware and keep the books of the Corporation outside of the State of Delaware at such places as they may from time to time determine.

 

5. Organizational Meeting.  As necessary, the Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, at its first meeting after or immediately

 

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prior to each annual meeting of stockholders. Such meeting may be held at any other time or place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors or in a consent and waiver of notice thereof signed by all of the directors.

 

6. Regular Meetings.  Regular meetings of the Board may be held without notice at such time and place either within or without the State of Delaware as shall from time to time be determined by the Board.

 

7. Special Meetings.  Special meetings of the Board may be called by the Chairman of the Board, the President or Chief Executive Officer by the mailing of notice to each director at least 48 hours before the meeting or by notifying each director of the meeting at least 24 hours prior thereto either personally, by telephone or by electronic transmission; special meetings shall be called on like notice by the Chairman of the Board, the President or Chief Executive Officer or, on the written request of any two directors, by the Secretary, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

 

8. Organization.  At each meeting of the Board of Directors or any committee thereof, the Chairman of the Board of Directors or the Chairman of such committee, as the case may be, or, in his absence or if there be none, a director chosen by a majority of the directors present, shall act as Chairman. Except as provided below, the Secretary of the Corporation shall act as secretary at each meeting of the Board and of each committee thereof. In case the Secretary shall be absent from any meeting of the Board of Directors or of any committee thereof, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the Chairman of the meeting may appoint any person to act as secretary of the meeting. Notwithstanding the foregoing, the members of each committee of the Board of Directors may appoint any person to act as secretary of any meeting of such committee and the Secretary or any Assistant Secretary of the Corporation may, but need not if such committee so elects, serve in such capacity.

 

9. Quorum.  At all meetings of the Board the presence of a majority of the total number of directors determined by resolution pursuant to paragraph 1 of this Article II to constitute the Board of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, by the applicable rules of any securities exchange, by the Certificate of Incorporation or by these By-laws.

 

10. Committees.  The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Each member of a committee must meet the requirements for membership, if any, imposed by applicable law and the rules and regulations of any securities exchange or quotation system on which the securities of the Corporation are listed or quoted for trading. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation as the Board of Directors may by resolution duly delegate to it except as prohibited by law, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Notwithstanding anything to the contrary contained in this Article II, the resolution of the Board of Directors establishing any committee of the Board of Directors and/or the charter of any such committee may establish requirements or procedures relating to the governance and/or operation of such committee that are different from, or in addition to, those set forth in these By-laws and, to the extent that there is any inconsistency between these By-laws and any such resolution or charter, the terms of such resolution or charter shall be controlling. Nothing herein shall limit the authority of the Board of Directors to appoint other committees consisting in whole or in part of persons who are not directors of the Corporation to carry out such functions as the Board may designate. Unless otherwise provided for in any resolution of the Board of Directors designating a committee pursuant to this paragraph 10 of Article II: (i) a quorum for the transaction of business of such committee shall be a majority of the authorized number of members of such committee; and (ii) the act of a majority of the members of such committee present at any meeting of such committee at which there is a quorum shall be the act of the committee (except as otherwise specifically provided by law, the Certificate of Incorporation or by these By-laws).

 

11. Presence at Meeting.  Members of the Board of Directors or any committee designated by the Board may participate in the meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons in the meeting can hear each other and participate. The

 

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ability to participate in a meeting in the above manner shall constitute presence at said meeting for purposes of a quorum and any action thereat.

 

12. Action Without Meetings.  Any action required or permitted to be taken at any meeting of the Board of Directors or any committee designated by the Board may be taken without a meeting, if all members of the Board or committee consent thereto in writing and the writing or writings are filed with the minutes of the proceedings of the Board or committee.

 

13. Compensation.  The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash and/or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for service as committee members.

 

14. Interested Directors.  No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because any such director’s or officer’s vote is counted for such purpose if: (i) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors constitute less than a quorum; or (ii) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

 

15. Eligibility to Make Nominations.  Nominations of candidates for election as directors at an annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (an “Election Meeting”) may be made (1) by any stockholder (a) who is a stockholder of record on the date of the giving of the notice provided for in paragraph 16 of this Article II and on the record date for the determination of stockholders entitled to notice of and to vote at such Election Meeting and (b) who complies with the notice procedures set forth in paragraph 16 of this Article II, or (2) by or at the direction of the Board of Directors (or any duly authorized committee thereof); provided, however, that nothing in these By-laws shall be deemed to limit any class voting rights upon the occurrence of dividend arrearages provided to holders of Preferred Stock. In order to be eligible for election as a director, any director nominee must first be nominated in accordance with the provisions of these By-laws.

 

16. Procedure for Nominations by Stockholders.  Any stockholder (i) who is a stockholder of record on the date of the giving of the notice provided for in this paragraph 16 of this Article II and on the record date for the determination of stockholders entitled to notice of and to vote at such Election Meeting and (ii) who complies with the notice procedures set forth in this paragraph 16 of this Article II may nominate one or more persons for such election only if written notice of such stockholder’s intent to make such nomination is delivered to or mailed (including by courier) and received by the Secretary of the Corporation at the principal executive offices of the Corporation. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, such notice must be received by the Secretary (1) with respect to an annual meeting of stockholders, not less than 90 days nor more than 120 days in advance of the anniversary of the previous year’s annual meeting; provided, however, that in the event the annual meeting is called for a date that is not within 25 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received no later than the close of business on the 10th day following the date on which such notice of the date of the annual meeting was mailed or the public disclosure of the date of the annual meeting was made, whichever first occurs; and (2) with respect to a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting,

 

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by the close of business on the 10th day following the date on which such notice of the date of the special meeting was mailed or the public disclosure of the date of the special meeting was made, whichever first occurs. If no annual meeting was held in the previous year, then a shareholder’s notice, in order to be considered timely, must be received by the Secretary of the Corporation not later than the later of the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which notice of the date of the annual meeting was mailed or public disclosure of such date was made. In no event shall the adjournment or postponement of the annual meeting or a special meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. To be in proper written form, the notice of the stockholder intending to make the nomination (the “Proponent”) shall set forth: (a) as to each person whom the stockholder proposes to nominate for election as director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of all shares of capital stock of the Corporation that are owned of record and beneficially by such person, (iv) a statement whether each such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or reelection at the next meeting at which such person would face election or reelection, an irrevocable resignation effective upon acceptance of such resignation by the Board of Directors, in accordance with the Corporation’s Corporate Governance Principles, (v) as an appendix, a completed and signed questionnaire, representation and agreement required by paragraph 18 of this Article II, and (vi) any other information relating to such nominee that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies for election as directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (b) as to the Proponent and the beneficial owner, if any, on whose behalf the nomination is being made: (i) the name and address of each such person, and of any holder of record of the Proponent’s shares as they appear on the Corporation’s books, (ii) (A) the class and number of all shares of capital stock of the Corporation that are owned by each such person (beneficially and of record) and owned by any holder of record of each such person’s shares, as of the date of the Proponent’s notice, and a representation that the Proponent will notify the Corporation in writing of the class and number of such shares owned of record and beneficially by each such person as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed and (B) the name of each nominee holder of shares of stock of the Corporation owned but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (iii) a description of any transaction, agreement, arrangement or understanding with respect to such nomination between or among each such person and any of its affiliates or associates, and any others (including their names) in connection with the proposal of such nomination and any interest of such person or any affiliates or associates in such nomination, including the contemplated benefit therefrom to such person or affiliate or associate of such person, and a representation that the Proponent will notify the Corporation in writing of any such transaction, agreement, arrangement or understanding in effect as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed, (iv) a description of any transaction, agreement, arrangement or understanding (including any derivative instruments, swaps, warrants, short positions, profit interests, options, hedging transactions, borrowed or loaned shares or other transactions) that has been entered into as of the date of the Proponent’s notice by, or on behalf of, each such person or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of each such person or any of its affiliates or associates with respect to shares of stock of the Corporation, and a representation that the Proponent will notify the Corporation in writing of any such transaction, agreement, arrangement or understanding in effect as of the record date for the meeting not later than five business days following the later of the record date or the date notice of the record date is first publicly disclosed, (v) a representation that the Proponent is a holder of record or beneficial owner of shares of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (vi) a representation whether the Proponent intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or otherwise to solicit proxies from stockholders in support of the nomination, and (vii) any other information relating to each such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies for election as directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to

 

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serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

 

17. Compliance with Procedures.  If the Chairman of the Election Meeting determines that a nomination of any candidate for election as a director was not made in accordance with the applicable provisions of these By-laws, such nomination shall be void. Notwithstanding anything in these By-laws to the contrary, unless otherwise required by law, if a Proponent intending to make a nomination at an annual or special meeting pursuant to paragraph 16 of this Article II does not provide the information required under paragraph 16 to the Corporation (including providing the updated information required by clauses (b)(ii), (b)(iii) and (b)(iv) of paragraph 16 by the deadlines specified therein), or the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.

 

18. Submission of Questionnaire; Representation and Agreement.  To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under paragraph 16 of this Article II of these By-laws) to the Secretary of the Corporation at the principal executive offices of the Corporation, a written questionnaire, with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (i) is not and will not become a party to (A) any transaction, agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any transaction, agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (iii) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

 

Article III

 

Officers.

 

1. Election; Term of Office; Appointments.  The Board of Directors, at its first meeting after or immediately prior to each annual meeting of stockholders, shall elect at least the following officers: a Chairman of the Board, a President and/or Chief Executive Officer, a Treasurer and a Secretary. The Board may also elect, appoint, or provide for the appointment of such other officers and agents as may from time to time appear necessary or advisable in the conduct of the affairs of the Corporation. Officers of the Corporation shall hold office until their successors are chosen and qualify in their stead or until their earlier death, resignation or removal, and shall perform such duties as from time to time shall be prescribed by these By-laws and by the Board and, to the extent not so provided, as generally pertain to their respective offices. The Board of Directors may fill any vacancy occurring in any office of the Corporation at any regular or special meeting. Two or more offices may be held by the same person.

 

2. Removal and Resignation.  Any officer elected or appointed by the Board of Directors may be removed at any time, either with or without cause, by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer elected or appointed by the Board becomes vacant for any reason, the vacancy may be filled by the Board. Any officer may resign at any time upon written notice to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time is not specified, upon receipt thereof by the Board or the Secretary, as the case may be; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

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3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or Chief Executive Officer or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

 

4. Chairman of the Board.  The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors and shall perform such duties, and exercise such powers, as from time to time shall be prescribed by these By-laws or by the Board of Directors.

 

5. President and/or Chief Executive Officer.  The President or Chief Executive Officer, in the absence of the Chairman of the Board, shall preside at meetings of the Directors. The President and/or Chief Executive Officer shall have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President and/or Chief Executive Officer shall have the power to execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these By-laws, the Board of Directors or the President or Chief Executive Officer. The President and/or Chief Executive Officer shall have such authority and perform such duties in the management of the Corporation as from time to time shall be prescribed by the Board of Directors and, to the extent not so prescribed, he shall have such authority and perform such duties in the management of the Corporation, subject to the control of the Board, as generally pertain to the office of President or Chief Executive Officer.

 

6. Vice Presidents.  Vice Presidents shall perform such duties as from time to time shall be prescribed by these By-laws, by the Chairman of the Board, by the President or Chief Executive Officer or by the Board of Directors, and except as otherwise prescribed by the Board of Directors, they shall have such powers and duties as generally pertain to the office of Vice President.

 

7. Secretary.  The Secretary or person appointed as secretary at all meetings of the Board and of the stockholders shall record all votes and the minutes of all proceedings in a book to be kept for that purpose, and he shall perform like duties for the committees of the Board when required. He shall give, or cause to be given, notice of all meetings of the stockholders, and of the Board of Directors if required. He shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer’s signature. He shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. He shall perform such other duties as may be prescribed by these By-laws or as may be assigned to him by the Chairman of the Board, the President or Chief Executive Officer or the Board of Directors, and, except as otherwise prescribed by the Board of Directors, he shall have such powers and duties as generally pertain to the office of Secretary.

 

8. Treasurer.  The Treasurer shall have custody of the Corporation’s funds and securities. He shall perform such other duties as may be prescribed by these By-laws or as may be assigned to him by the Chairman of the Board, the President or Chief Executive Officer or the Board of Directors, and, except as otherwise prescribed by the Board of Directors, he shall have such powers and duties as generally pertain to the office of Treasurer.

 

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Article IV

 

Stock.

 

1. Stock.  The shares of the Corporation shall be represented by certificates or shall be uncertificated. Each registered holder of shares, upon request to the Corporation, shall be provided with a certificate of stock representing the number of shares owned by such holder. The certificates of stock of the Corporation shall be in the form or forms from time to time approved by the Board of Directors. Such certificates shall be numbered and registered, shall exhibit the holder’s name and the number of shares, and shall be signed in the name of the Corporation by the following officers of the Corporation: the Chairman of the Board of Directors, or the President or a Vice President; and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. If any certificate is manually signed (1) by a transfer agent other than the Corporation or its employee, or (2) by a registrar other than the Corporation or its employee, any other signature on the certificate, including those of the aforesaid officers of the Corporation, may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

 

2. Lost Certificates.  The Board of Directors or any officer of the Corporation to whom the Board of Directors has delegated authority may authorize any transfer agent of the Corporation to issue, and any registrar of the Corporation to register, at any time and from time to time unless otherwise directed, a new certificate or certificates of stock in the place of a certificate or certificates theretofore issued by the Corporation, alleged to have been lost or destroyed, upon receipt by the transfer agent of evidence of such loss or destruction, which may be the affidavit of the applicant; a bond indemnifying the Corporation and any transfer agent and registrar of the class of stock involved against claims that may be made against it or them on account of the lost or destroyed certificate or the issuance of a new certificate, of such kind and in such amount as the Board of Directors shall have authorized the transfer agent to accept generally or as the Board of Directors or an authorized officer shall approve in particular cases; and any other documents or instruments that the Board of Directors or an authorized officer may require from time to time to protect adequately the interest of the Corporation. A new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper to do so.

 

3. Transfers of Stock.  Transfers of stock shall be made upon the books of the Corporation: (1) upon presentation of the certificates by the registered holder in person or by a duly authorized attorney, or upon presentation of proper evidence of succession, assignment or authority to transfer the stock, and upon surrender of the appropriate certificate(s), or (2) in the case of uncertificated shares, upon receipt of proper transfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individual presenting proper evidence of succession, assignment or authority to transfer the stock.

 

4. Holder of Record.  The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

 

5. Transfer and Registry Agents.  The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

 

6. Dividends.  Dividends upon the capital stock of the Corporation, subject to the requirements of the General Corporation Law of the State of Delaware and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with paragraph 12 of Article II hereof), and may be paid in cash, in property, or in shares of the Corporation’s capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

 

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Article V

 

Indemnification.

 

1. Right to Indemnification.  The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) (a “proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity, or other enterprise, including service with respect to employee benefit plans, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

 

2. Prepayment of Expenses.  The Corporation shall pay the expenses (including attorneys’ fees) incurred by an officer or director of the Corporation in defending any proceeding in advance of its final disposition, except where the officer or director pleads guilty or nolo contendere in a criminal proceeding (excluding traffic violations and other minor offenses), provided, however, that the payment of such expenses shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it shall ultimately be determined that the director or officer is not entitled to be indemnified. Payment of such expenses incurred by former officers or directors or other employees and agents of the Corporation may be made by the Board of Directors in its discretion upon such terms and conditions, if any, as it deems appropriate.

 

3. Claims.  If a claim for indemnification or payment of expenses (including attorneys’ fees) under this Article is not paid in full within sixty days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

 

4. Nonexclusivity of Rights.  The right conferred on any person by this Article V shall not be exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, these By-laws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

 

5. Insurance.  The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article V.

 

6. Certain Definitions.   For purposes of this Article V, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article V, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes

 

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duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article V.

 

7. Survival of Indemnification and Advancement of Expenses. The indemnification and, subject to the discretion of the Board of Directors, advancement of expenses provided by, or granted pursuant to, this Article V shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

8. Other Indemnification.  The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non profit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, non profit entity, or other enterprise.

 

9. Amendment or Repeal.  Any repeal or modification of the foregoing provisions of this Article V shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

 

10. Indemnification of Employees and Agents.  The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article V to directors and officers of the Corporation.

 

Article VI

 

Miscellaneous.

 

1. Delaware Office.  The address of the registered office of the Corporation in the State of Delaware shall be at 160 Greentree Drive, Suite 101, County of Kent, Delaware 19904 and the name of its registered agent at such address is National Registered Agents, Inc.

 

2. Other Offices.  The Corporation may also have offices at other such places, both within and without the State of Delaware, as the Board of Directors from time to time may appoint or the business of the Corporation may require.

 

3. Seal.  The corporate seal shall be in the form adopted by the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. The seal may be affixed by any officer of the Corporation to any instrument executed by authority of the Corporation, and the seal when so affixed may be attested by the signature of any officer of the Corporation.

 

4. Notice.  Whenever notice is required to be given by law, the Certificate of Incorporation or these By-laws, a written waiver signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting, is not lawfully called or convened. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form

 

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of electronic transmission, when directed to the stockholder. Notice to directors or committee members may be given personally or by means of electronic transmission.

 

5. Amendments.  The Board of Directors shall have the power to adopt, amend or repeal the By-laws of the Corporation by the affirmative action of a majority of its members. These By-laws may be adopted, amended or repealed by the affirmative vote of a majority of the voting power of all shares issued and outstanding and entitled to vote at any regular meeting of stockholders or at any special meeting of the stockholders if notice of such proposed adoption, amendment or repeal be contained in the notice of such special meeting.

 

6. Form of Records.  Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minutes books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

 

7. Checks.  All checks, drafts, notes and other orders for the payment of money shall be signed by such officer or officers or agents as from time to time may be designated by the Board of Directors or by such officers of the Corporation as may be designated by the Board to make such designation.

 

8. Execution of Corporate Instruments.   The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the Corporation the corporate name without limitation, or enter into contracts on behalf of the Corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the Corporation. Such authority may be general or confined to specific instances, and unless so authorized by the Board or by these Bylaws, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

 

9. Deposits.   All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.

 

10. General and Special Bank Accounts.   The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient .

 

11. Fiscal Year.  The fiscal year of the Corporation shall be fixed by the Board of Directors.

 

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Exhibit 4.1

 

 

 


 

 


 

 


 

 


 

 

EXHIBIT 10.1

 

AMENDED AND RESTATED

 

CONTRIBUTION AGREEMENT

 

THIS AMENDED AND RESTATED CONTRIBUTION AGREEMENT (this “Agreement” ) is made and entered into as of August 5, 2013, but effective as of June 10, 2013, by and between Synergy Pharmaceuticals Inc., a Delaware corporation ( “Parent” ), and ContraVir Pharmaceuticals, Inc., a Delaware corporation (the “Company” ).  Certain capitalized terms used but not otherwise defined herein are intended to have the meanings given to them in EXHIBIT A attached hereto.

 

RECITALS

 

WHEREAS , Parent and Company are parties to that certain contribution agreement, dated June 10, 2013 (the “ Existing Agreement ”);

 

WHEREAS, pursuant to the Existing Agreement, Parent transferred to the Company the business being conducted by Parent consisting of the research, development, product design and related activities of Parent relating solely to the research, development, product design and related activities of FV-100, the valyl ester pro-drug of Cf1743, a bicyclic nucleoside analogue (collectively, the “Business” ) by effecting the contribution to the Company of all of the Acquired Assets (as defined below) in exchange for the: (i) issuance to Parent of 9,000,000 shares of the common stock, par value $0.001 per share of the Company (the “Common Stock” ), representing 100% of the outstanding shares of Common Stock as of immediately following such issuance; and (ii) assumption by the Company of the Assumed Liabilities (as defined below) (collectively, the “Transaction” ) ; and

 

AGREEMENT

 

NOW, THEREFORE , in consideration of the mutual covenants and promises contained in this Agreement, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, Parent and Company hereby agree that the Existing Agreement is amended and restated in its entirety as follows:

 

ARTICLE I
CONTRIBUTION

 

SECTION 1.01.  Contribution.

 

(a)                                  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Parent shall contribute, transfer, convey and deliver to the Company, and the Company shall acquire and accept from Parent, all the right, title and interest of Parent in, to and under the Acquired Assets.

 

(b)                                  In consideration of the contribution, transfer, conveyance and delivery by Parent of the Acquired Assets, the Company shall: (i) issue to Parent 9,000,000 shares of Common Stock, representing 100% of the outstanding shares of Common Stock as of immediately following such issuance; and (ii) assume the Assumed Liabilities.

 



 

SECTION 1.02.  Transfer of Assets .

 

(a)                                  The term “Acquired Assets” means all of Parent’s right, title and interest in, to and under those certain assets identified below (which the parties hereto acknowledge and agree shall include all BMS Acquired Assets but shall not include any Excluded Assets):

 

(i)                                     the following (collectively, the “Transferred Intellectual Property” ):

 

(A)                                the patents, patent applications and statutory invention registrations of Parent identified in Section 1.02(a)(i)(A) of the Parent Disclosure Schedule, together with any reissues, divisions, continuations, continuations-in-part, extensions, provisional or supplemental protection certificates, renewals and reexaminations thereof (collectively, the “Transferred Patents” );

 

(B)                                the trademark registrations, trademark applications, service mark registrations, service mark applications and domain name registrations of Parent identified in Section 1.02(a)(i)(B) of the Parent Disclosure Schedule, together with all extensions and renewals thereof and all goodwill associated therewith;

 

(C)                                the copyright registrations of Parent identified in Section 1.02(a)(i)(C) of the Parent Disclosure Schedule, together with all extensions and renewals thereof; and

 

(D)                                all Product Formulae and Manufacturing Knowhow of Parent (collectively, the “Technology” ) that are exclusively related to the Product, in each case to the extent transferable in light of legal, contractual and practical considerations;

 

provided , however , that the parties acknowledge and agree that the Transferred Intellectual Property shall: (i) include all assets defined as “Transferred  Intellectual Property” in the BMS Purchase Agreement; but (ii) not include any Excluded Intellectual Property;

 

(ii)                                 all raw materials (including all bulk active pharmaceutical ingredients for the Product), works-in-progress, components, supplies and other inventories (including items in transit, on consignment, or covered by open purchase orders or in the possession of any third party) used or held for use by Parent solely in, or arise solely out of, the conduct of the Business on the Closing Date, to the extent transferable in light of legal, contractual and practical considerations (collectively, the “Transferred Inventory” ); provided , however , that the parties acknowledge and agree that the Transferred Intellectual Property shall: (i) include all assets defined as “Transferred  Inventory” in the BMS Purchase Agreement; but (ii) not include any Excluded Intellectual Property;

 

(iii)                             all contracts, leases, subleases, indentures, licenses, agreements, commitments and all other legally binding arrangements (including binding purchase orders outstanding as of the Closing Date), whether written or oral ( “Contracts” ), to which Parent is a party or by which any of the Acquired Assets is bound, that are used solely in, or related solely to, the conduct of the Business, including the BMS Purchase Agreement and the Contracts set forth in Section 4.06 of the Parent Disclosure Schedule, and in each case to the extent transferable in light of legal, contractual and practical considerations (collectively, the “Transferred Contracts” ); provided , however , that that the parties acknowledge and agree that the Transferred Contracts shall: (i) include all Contracts defined as “Transferred  Contracts” in the BMS Purchase Agreement; but (ii) not include any Excluded Contracts;

 

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(iv)                              all licenses, permits, authorizations and approvals (including NDAs, BLAs and MAAs, if any) from any Governmental Entity (other than Environmental Permits) ( “Permits” ) of Parent that are used solely in the conduct of the Business or related solely to any of the Acquired Assets, including the Permits identified in Section 1.02(a)(iv) of the Parent Disclosure Schedule, to the extent transferable in light of legal, contractual and practical considerations (collectively, the “Transferred Permits” ); provided , however , that the parties acknowledge and agree that the Transferred Permits shall: (i) include all Permits defined as “Transferred  Permits” in the BMS Purchase Agreement; but (ii) not include any Excluded Permits;

 

(v)                                  all Environmental Permits of Parent that are used solely in the conduct of the Business, including the Environmental Permits identified in Section 1.02(a)(v) of the Parent Disclosure Schedule (collectively, the “Transferred Environmental Permits” ); provided , however , that the parties acknowledge and agree that the Transferred Environmental Permits shall: (i) include all Environmental Permits defined as “Transferred  Environmental Permits” in the BMS Purchase Agreement; but (ii) not include any Excluded Environmental Permits;

 

(vi)                              all books and records (or portions of books and records), including laboratory books, and preclinical and clinical studies lists (in all cases, in any form or medium) ( “Records” ), of Parent that relate solely to, or that arise solely out of, the conduct of the Business, in each case in existence on the Closing Date and within the possession and control of Parent and to the extent transferable in light of legal, contractual and practical considerations (collectively, the “Transferred Records” );  provided , however , that the parties acknowledge and agree that the Transferred Records shall: (i) include all Records defined as “Transferred  Records” in the BMS Purchase Agreement; but (ii) not include any Excluded Records;

 

(vii)                          all proprietary rights of Parent to the information, materials, data and work product proprietary to Parent in respect of research and development activities and preclinical and clinical trials conducted or being conducted solely for use in connection with the conduct of the Business, in each case to the extent transferable in light of legal, contractual and practical considerations; and

 

(viii)                      all tangible personal property and interests therein, including equipment and furnishings ( “Personal Property” ) of Parent listed in Section 1.02(a)(viii) of the Parent Disclosure Schedule (collectively, the “Transferred Personal Property” );  provided , however , that the parties acknowledge and agree that the Transferred Personal Property shall include all Personal Property defined as “Transferred  Personal Property” in the BMS Purchase Agreement.

 

(b)                                  The term “Excluded Assets” means:

 

(i)                                     all cash and cash equivalents of Parent;

 

(ii)                                 all Accounts Receivable;

 

(iii)                             (A) all intellectual property of Parent, other than the Transferred Intellectual Property, including the intellectual property identified in Section 1.02(b)(iii) of the Parent Disclosure Schedule and (B) all Technology of Parent other than the Technology included in the Transferred Intellectual Property, including all Product Formulae, Manufacturing Knowhow and packaging specifications which are not exclusively related to the Product (collectively, the “Excluded Intellectual Property” );

 

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(iv)                              all raw materials, work-in-process, finished goods, supplies, parts, spare parts and other inventories of Parent other than the Transferred Inventory, including the items identified in Section 1.02(b)(iv) of the Parent Disclosure Schedule (collectively, the “Excluded Inventory” );

 

(v)                                  all credits, deferred charges, and prepaid items of Parent (collectively, the “Excluded Miscellaneous Rights” );

 

(vi)                              all Contracts, including the Contracts identified in Section 1.02(b)(vi) of the Parent Disclosure Schedule, to which Parent is a party other than the Transferred Contracts described in Section 1.02(a)(iii) (collectively, the “Excluded Contracts” );

 

(vii)                          all Permits of Parent other than the Transferred Permits (collectively, the ‘‘Excluded Permits” ) and all Environmental Permits of Parent other than the Transferred Environmental Permits (collectively, the “Excluded Environmental Permits” );

 

(viii)                      all of the following: (A) any and all books and records prepared and maintained by Parent, including financial records, laboratory books, batch records and stability studies, that do not relate exclusively to the Product, (B) any and all Tax records that relate to Taxes that constitute Excluded Tax Liabilities, (C) any and all records to the extent related to any Excluded Assets or Excluded Liability, (D) any and all books and records prepared in connection with the Transaction including bids received from other parties and analyses relating to the Product, and (E) any and all books and records, files, correspondence or other Records of Parent or its Affiliates other than the Transferred Records (collectively, the “Excluded Records” );

 

(ix)                              all rights, claims and credits of Parent to the extent relating to any Excluded Asset or any Excluded Liability, including any such items arising under insurance policies and all guarantees, warranties, indemnities and similar rights in favor of Parent in respect of any other Excluded Asset or any Excluded Liability;

 

(x)                                  any refund or credit of Taxes attributable to any Excluded Tax Liability;

 

(xi)                              all insurance policies and insurance contracts insuring the Product or the Acquired Assets, together with any claim, action or other right Parent might have for insurance coverage under any past and present policies and insurance contracts insuring the Product or the Acquired Assets, in each case including any proceeds received from any such policy or contract prior to, on or after the Closing Date;

 

(xii)                          all rights of Parent under this Agreement, the Other Transaction Documents and the other agreements and instruments executed and delivered in connection with this Agreement;

 

(xiii)                      all land, buildings, improvements and fixtures thereon owned or leased by Parent, including the leaseholds, sub-leaseholds and other interests in real property listed in Section 1.02(b)(xiii) of the Parent Disclosure Schedule;

 

(xiv)                       all tangible personal property and other fixed assets and interests therein, including all equipment, furnishings, furniture and fixtures, owned or leased by Parent, including the tangible personal property and other fixed assets and interests therein, including all equipment, furnishings, furniture and fixtures listed in Section 1.02(b)(xiv) of the Parent Disclosure Schedule, and any warranty rights applicable to such tangible personal property, fixed assets and equipment other than the Transferred Personal Property (collectively, the “Excluded Personal Property” ); and

 

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(xv)                           except to the extent identified in a subsection of Section 1.02(a) of the Parent Disclosure Schedule as included in the Acquired Assets, all other properties, assets, goodwill and rights of Parent of whatever kind and nature, real, personal or mixed, tangible or intangible, that are not used, held for use or intended to be used exclusively in connection with, or that do not arise exclusively out of, the Product or the Acquired Assets.

 

SECTION 1.03.  Assumed Liabilities.

 

(a)                                  Upon the terms and subject to the conditions of this Agreement, the Company  shall assume, effective as of 12:00:01 a.m. on the Closing Date, and from and after the Closing the Company shall pay, perform and discharge when due, all of the following liabilities, obligations and commitments ( “Liabilities” ) of Parent (which the parties hereto acknowledge and agree shall include all BMS Assumed Liabilities but shall not include any Excluded Liabilities) (the “Assumed Liabilities” );

 

(i)                                     all Accounts Payable, accrued expenses and other current liabilities arising out of or relating to the Product, the Acquired Assets or the Business arising on or after the Closing Date;

 

(ii)                                 all Liabilities in respect of any lawsuits, claims, actions or proceedings arising out of or relating to the manufacture, production, marketing, commercialization, distribution or sale of the Product or the ownership, sale, lease or use of any of the Acquired Assets prior to, on or after the Closing Date;

 

(iii)                             all Liabilities for warranty claims and product liability or similar claims, including all suits, actions or proceedings relating to any such Liabilities, arising out of or relating to the Product) whether arising prior to, on or after the Closing Date;

 

(iv)                              all Liabilities for Taxes arising out of or relating to or in respect of the Product or any Acquired Asset for any Post-Closing Tax Period, other than any Excluded Tax Liabilities;

 

(v)                                  all Liabilities for transfer, documentary, sales, use, registration, value added and other similar Taxes and related amounts (including any penalties, interest and additions to Tax) incurred in connection with this Agreement, any of the Other Transaction Documents or the transactions contemplated hereby and thereby ( “Transfer Taxes” );

 

(vi)                              all Environmental Liabilities to the extent arising out of or relating to the conduct of the Business or the Acquired Assets or the ownership, sale or lease of any of the Acquired Assets, whether arising prior to, on or after the Closing Date;

 

(vii)                          all Liabilities under or otherwise to the extent arising out of or relating to the Transferred Permits, whether arising prior to, on or after the Closing Date; and

 

(viii)                      all other Liabilities of Parent of whatever kind and nature, primary or secondary, direct or indirect, absolute or contingent, known or unknown, whether or not accrued, arising out of or relating to the conduct of the Business, the Product or Acquired Assets or the ownership, sale or lease of any of the Acquired Assets, whether arising prior to, on or after the Closing Date, including all Liabilities arising under the BMS Purchase Agreement and any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity.

 

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(b)                                  Notwithstanding any other provision of this Agreement, the Company shall not assume any Excluded Liability, each of which shall be retained and paid, performed and discharged when due by Parent.  The term “Excluded Liability” means:

 

(i)                                     all Liabilities, to the extent related to or arising out of any Excluded Asset;

 

(ii)                                 any Tax payable with respect to any business, asset, property or operation of Parent (including any Taxes relating to or arising out of the Acquired Assets) for any Pre-Closing Tax Period, other than any Tax for which the Company is responsible pursuant to Section 8.04 ( “Excluded Tax Liability” ); and

 

(iii)                             all Accounts Payable other than the accounts payable, accrued expenses and other current liabilities assumed pursuant to Section 1.03(a)(i).

 

(c)                                   Each of Parent’s and the Company’s obligations under this Section 1.03 will not be subject to offset or reduction by reason of any actual or alleged breach of any representation, warranty, covenant or agreement contained in this Agreement or any Other Transaction Document or any right or alleged right to indemnification hereunder.

 

SECTION 1.04.  Risk of Loss.   Until the Closing, any loss of or damage to the Acquired Assets from fire, casualty or any other occurrence shall be the sole responsibility of Parent.  On the Closing Date, title to the Acquired Assets shall be transferred to the Company and the Company shall thereafter bear all risk of loss associated with the Acquired Assets and be solely responsible for procuring adequate insurance to protect the Acquired Assets against any such loss; provided, however, that the Company’s responsibility under this Section 1.04 is not contingent on the Company’s ability to procure adequate insurance.

 

SECTION 1.05.  Consents of Third Parties.

 

(a)                                  Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any asset (including any Contract or Permit) or any claim, right or benefit arising under or resulting from any such asset (including any Contract or Permit), claim, right or benefit arising under or resulting from such asset (including any Contract or Permit) if the assignment or transfer thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such third party, would be ineffective with respect to any party to an agreement concerning such asset (including any Contract or Permit), claim, right or benefit, or, upon assignment or transfer, would in any way adversely affect the rights of Parent or, upon transfer, the Company.  If any transfer or assignment by Parent to, or any assumption by the Company of, any interest in, or liability, obligation or commitment under, any asset (including any Contract or Permit), or any claim, right or benefit requires the consent of a third party, then such transfer or assumption shall be made subject to such consent being obtained.

 

(b)                                  If any such consent is not obtained prior to the Closing, Parent and the Company shall cooperate (each at their own expense) in any lawful and reasonable arrangement reasonably proposed by the Company under which the Company shall obtain the economic claims, rights and benefits under the asset (including any Contract or Permit) or related claim, right or benefit with respect to which the consent has not been obtained in accordance with this Agreement.  Such reasonable arrangement may include: (i) the subcontracting, sublicensing or subleasing to the Company of any and all rights of Parent against the other party to such third-party agreement arising out of a breach or cancellation thereof by the other party; and (ii) the enforcement by Parent of such rights.

 

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(c)                                   Notwithstanding that the laptops, desktops and other computer hardware included as part of the Transferred Personal Property have (and will at closing have) installed on them certain Parent and third party operating systems and software, the Company hereby acknowledges and agrees that the Acquired Assets do not include ownership of, or any licenses or other rights to use, any such operating systems or software, and that Parent has not and does not intend to complete a software license or other transfer with respect to any such operating systems or software.  The Company further agrees that it shall be fully responsible for obtaining any and all licenses or other rights required to continue to use such operating systems and software, and to otherwise comply with all Applicable Laws, in each case from and after the Closing Date.

 

SECTION 1.06.  Refunds and Remittances.

 

(a)                                  After the Closing, if Parent receives: (i) any refund or other amount which is an Acquired Asset or is otherwise properly due and owing to the Company in accordance with the terms of this Agreement; or (ii) any refund or other amount which is related to claims or other matters for which the Company is responsible hereunder, and which amount is not an Excluded Asset, or is otherwise properly due and owing to the Company in accordance with the terms of this Agreement, Parent promptly shall remit, or shall cause to be remitted, such amount to the Company at the address set forth in Section 11.06.

 

(b)                                  After the Closing, if the Company receives: (i) any refund or other amount which is an Excluded Asset or is otherwise properly due and owing to Parent in accordance with the terms of this Agreement; or (ii) any refund or other amount which is related to claims or other matters for which Parent is responsible hereunder, and which amount is not an Acquired Asset, or is otherwise properly due and owing to Parent in accordance with the terms of this Agreement, the Company promptly shall remit, or shall cause to be remitted, such amount to Parent at the address set forth in Section 11.06.

 

ARTICLE II
CLOSING

 

SECTION 2.01.  Closing.

 

(a)                                  The closing of the Transaction (the “Closing” ) shall take place on the date hereof and shall be held at the offices of Parent located at 420 Lexington Avenue, Suite 2012, New York, NY 10170.  The date on which the Closing shall occur is hereinafter referred to as the “Closing Date” .  For purposes of this Agreement, the Closing shall be deemed effective at 12:00:01 a.m. on the Closing Date.

 

(b)                                  At the Closing, the Company shall deliver to Parent:

 

(i)                                     a stock certificate representing the shares of Common Stock to be issued to Parent pursuant to Section 1.01(b);

 

(ii)                                 the Assumption Agreement and such other instruments of assumption and such other instruments and documents as Parent may reasonably request to effect or evidence the acquisition of the Acquired Assets and the assumption of the Assumed Liabilities;

 

(iii)                             an executed counterpart of the IP Assignment Documents with respect to the Transferred Intellectual Property; and

 

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(iv)                              the certificate required to be delivered by the Company under Section 3.02(a) duly executed by an authorized officer of the Company.

 

(c)                                   At the Closing, Parent shall deliver to the Company;

 

(i)                                     the Bill of Sale and such other instruments and documents as the Company may reasonably request to effect or evidence the transfer to the Company of the Acquired Assets;

 

(ii)                                 an executed counterpart of the IP Assignment Documents with respect to the Transferred Intellectual Property; and

 

(iii)                             the certificate required to be delivered by Parent under Section 3.01(a) duly executed by an authorized officer of Parent.

 

ARTICLE III
CONDITIONS TO CLOSING

 

SECTION 3.01.  Conditions to Obligations of the Company.   The obligation of the Company to effect the Transaction is subject to the satisfaction (or written waiver by the Company) as of the Closing of the following conditions:

 

(a)                                  The representations and warranties of Parent made in this Agreement shall be true and correct in all material respects as of the time of the Closing as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and Parent shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Parent by the time of the Closing.  Parent shall have delivered to the Company a certificate dated as of the Closing Date and signed by an authorized officer of Parent confirming the foregoing.

 

(b)                                  No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any federal, state or local government or any court of competent jurisdiction, administrative or regulatory agency or commission or other governmental authority or instrumentality, including the FDA, the EMEA or any successor agency thereto which has the responsibility over the development and commercialization of the Product (a “Governmental Entity” ), or other legal restraint or prohibition shall be in effect preventing the Transaction.

 

(c)                                   Other Transaction Documents.  Parent shall have executed and delivered to the Company the Other Transaction Documents to which Parent is a party.

 

SECTION 3.02.  Conditions to Obligation of Parent.   The obligation of Parent to effect the Transaction is subject to the satisfaction (or written waiver by Parent) as of the Closing of the following conditions:

 

(a)                                  The representations and warranties of the Company made in this Agreement shall be true and correct in all material respects as of the time of the Closing as though made as of such time, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date), and the Company shall have performed or complied in all material respects with all obligations and

 

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covenants required by this Agreement to be performed or complied with by the Company by the time of the Closing.  The Company shall have delivered to Parent a certificate dated the Closing Date and signed by an authorized officer of the Company confirming the foregoing.

 

(b)                                  No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental Entity, or other legal restraint or prohibition shall be in effect preventing the Transaction.

 

(c)                                   The Company shall have executed and delivered to Parent the Other Transaction Documents to which the Company is a party.

 

SECTION 3.03.  Frustration of Closing Conditions.   Neither the Company nor Parent may rely on the failure of any condition set forth in this Article III to be satisfied if such failure was caused by such party’s failure to act in good faith or to use its best efforts to cause the Closing to occur, as required by Section 8.02.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT

 

Except as set forth in Parent Disclosure Schedule attached hereto (the “Parent Disclosure Schedule” ), Parent hereby represents and warrants to the Company as follows:

 

SECTION 4.01.  Authority.   Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Parent has all requisite corporate power and authority to enter into this Agreement and to enter into the Other Transaction Documents to which it is, or is specified to be, a party and to consummate the transactions contemplated hereby and thereby.  All corporate acts and other proceedings required to be taken by Parent to authorize the execution, delivery and performance of this Agreement and the Other Transaction Documents to which it is, or is specified to be, a party and to consummate the transactions contemplated hereby and thereby have been duly and properly taken.  This Agreement has been duly executed and delivered by Parent and, assuming this Agreement has been duly authorized, executed and delivered by the Company, constitutes, and the Other Transaction Documents on the Closing Date will be duly executed and delivered by Parent, and upon the due authorization, execution and delivery by each other party to the Other Transaction Documents will constitute, a legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its and their terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and to general equitable principles.

 

SECTION 4.02.  No Conflicts; Consents.

 

(a)                                  The execution and delivery of this Agreement by Parent do not, and the execution and delivery of the Other Transaction Documents to which it is, or is specified to be, a party by Parent will not, and the consummation of the transactions contemplated hereby and thereby and compliance with the terms and conditions hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under, or result in the creation of any liens, claims, encumbrances, security interests, options, charges or restrictions of any kind ( “Liens” ) upon any of the Acquired Assets under, any provision of: (i) its certificate of incorporation or bylaws; (ii) any Contract to which Parent is a party or by which any of its properties or assets are bound; or (iii) any judgment, order, or decree, or, subject to the matters referred to in paragraph

 

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(b) below, Applicable Law, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

(b)                                  To the knowledge of Parent, no material consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to Parent in connection with the execution, delivery and performance of this Agreement, the Other Transaction Documents or the consummation of the transactions contemplated hereby or thereby other than: (i) those that may be required solely by reason of the Company’s (as opposed to any other third party’s) participation in the transactions contemplated hereby or by the Other Transaction Documents; and (ii) such consents, approvals, licenses, permits, orders, authorizations, registrations, declarations and filings the absence of which, or the failure to make or obtain which, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

SECTION 4.03.  Taxes.

 

(a)                                  For purposes of this Agreement: (i) “ Tax” or “Taxes” shall mean all federal, state, local and foreign taxes and similar assessments (other than Transfer Taxes), including all interest, penalties and additions imposed with respect to such amounts; (ii) “ Pre-Closing Tax Period” shall mean all taxable periods ending on or before the Closing Date and the portion ending on the Closing Date of any taxable period that includes (but does not end on) the Closing Date; and (iii) “ Post-Closing Tax Period” shall mean all taxable periods beginning and ending after the Closing Date and the portion beginning on the day after the Closing Date of any Straddle Period.

 

(b)                                  No material Tax liens have been filed and no material claims are being asserted in writing with respect to any Taxes due with respect to the Acquired Assets.

 

SECTION 4.04.  Good and Valid Title.   Parent has, or as of the Closing Date will have, good and valid title to all material Acquired Assets (other than Transferred Inventory covered by open purchase orders), in each case free and clear of all Liens, except: (i) such as are set forth in Section 4.04 of the Parent Disclosure Schedule; (ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business or Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business and Liens for Taxes and other governmental charges which are not due and payable or which may thereafter be paid without penalty; and (iii) other imperfections of title or encumbrances, if any, which do not, individually or in the aggregate, materially impair the continued use and operation of the Acquired Assets to which they relate (the Liens described in clauses (i), (ii) and (iii) above are hereinafter referred to collectively as “Permitted Liens” ).  This Section 4.04 does not relate to Intellectual Property or Contracts, such items being the subjects of Section 4.05 and Section 4.06, respectively.

 

SECTION 4.05.  Intellectual Property.

 

(a)                                  Parent owns, or as of the Closing Date will own, free and clear of all Liens (except to the extent the Transferred Intellectual Property may be licensed from third parties), the material Transferred Intellectual Property, and the consummation of Transaction will not conflict with, alter or impair any such rights in any material respect.  The Transferred Intellectual Property constitutes all of the Intellectual Property owned by or in-licensed by Parent relating solely to the Product.  As of the date of this Agreement, no claims are pending or, to the knowledge of Parent, threatened in writing against Parent by any person with respect to the ownership, validity or enforceability of any material Transferred Intellectual Property.

 

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(b)                                  Parent has not granted any material options, licenses or agreements relating to the Transferred Intellectual Property, except non-exclusive implied licenses to end-users in the ordinary course of business.  To the knowledge of Parent, Parent is not as of the date hereof bound by or a party to any material options, licenses or agreements of any kind constituting part of the Acquired Assets relating to the intellectual property of any other person, except for agreements relating to computer software licensed to Parent or its Affiliates in the ordinary course of business.

 

(c)                                   To the knowledge of Parent, there are no patents, patent applications or statutory registrations of Parent which were owned by Inhibitex as of closing date of the acquisition of Inhibitex by BMS ( i.e. , February 13, 2012) and relate solely to the Product which are not included as part of the Transferred Patents.

 

SECTION 4.06.  Contracts.

 

(a)                                  Section 4.06 of the Disclosure Schedule sets forth each Transferred Contract that is or contains:

 

(i)                                     a covenant by Parent not to compete (other than pursuant to any radius restriction contained in any lease, reciprocal easement or development, construction, operating or similar agreement) or other covenant restricting the research, development, manufacture, marketing or distribution of the Product that materially impairs the such activities as the Business is currently conducted;

 

(ii)                                 an agreement, contract or other arrangement with Parent; provided , however , that the foregoing shall be deemed not to include any Other Transaction Document or any agreement, contract or other arrangement that will expire or be terminated at or prior to Closing;

 

(iii)                             (A) a continuing contract for the future purchase of materials, supplies or equipment (other than purchase contracts and orders for inventory in the ordinary course of business consistent with past practice); (B) a management, service, consulting or other similar type of contract (other than contracts for services in the ordinary course of business); or (C) an advertising agreement or arrangement, in any such case which has an aggregate future liability to any person in excess of $100,000 and is not terminable by Parent by notice of not more than one hundred and eighty (180) days for a cost of less than $100,000;

 

(iv)                              a material license, option or other agreement relating in whole or in part to the Transferred Intellectual Property (including any license or other agreement under which Parent is licensee or licensor of any such Transferred Intellectual Property); or

 

(v)                                  any other agreement, contract, lease, license, commitment or instrument to which Parent is a party and by or to which any of the Product or the Acquired Assets or Business is bound by or subject to, in each case which has an aggregate future liability to any person in excess of $100,000 and is not terminable by Parent by notice of not more than one hundred and eighty (180) days for a cost of less than $100,000.

 

(b)                                  Except as set forth in Section 4.06 of the Parent Disclosure Schedule, each Transferred Contract set forth in Section 4.06 of the Parent Disclosure Schedule is valid, binding and in full force and effect and, to the knowledge of Parent, is enforceable by Parent in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally, general principles of equity and the discretion of courts in granting equitable remedies and except to the extent that the failure of a Transferred Contract to be valid,

 

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binding and in full force and effect would not be reasonably likely to have a Material Adverse Effect.  Parent has performed in all material respects all material obligations required to be performed by it to date under the Transferred Contracts and is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the knowledge of Parent, no other party to any of the Transferred Contracts set forth in Section 4.06 of the Parent Disclosure Schedule, as of the date of this Agreement, is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder, except to the extent that such breach or default would not be reasonably likely to have a Material Adverse Effect.

 

SECTION 4.07.  Transferred Permits.   During the past three (3) years, Parent has not received written notice of any suit, action or proceeding relating to the revocation or modification of any Transferred Permit the loss of which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.08.  Litigation.   To the knowledge of Parent, there are no lawsuits or claims pending as of the date of this Agreement, with respect to which Parent has been contacted in writing by counsel for the plaintiff or claimant, against any Acquired Asset and which: (i) involve an uninsured claim of, or which involve an uninsured unspecified amount which would reasonably be expected to result in a liability of, more than $100,000; (ii) seek any material injunctive relief; or (iii) seek any legal restraint on or prohibition against the Transaction.  To the knowledge of Parent, as of the date of this Agreement, Parent is not a party or subject to or in default under any material judgment, order, injunction or decree of any Governmental Entity or arbitration tribunal applicable to the Product or any material Acquired Asset.

 

SECTION 4.09.  Compliance with Applicable Laws.   To the knowledge of Parent, Parent is in compliance in all material respects with all applicable statutes, laws, ordinances, rules, orders and regulations of any Governmental Entity ( “Applicable Laws” ), including those relating to occupational health and safety, except for instances of noncompliance that, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.  Parent has not received during the two (2) years prior to the date hereof any written communication from a Governmental Entity that alleges that Parent is in violation of any Applicable Laws except for any such violations that, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.  This Section 4.09 does not relate to matters with respect to Taxes, which are the subject of Section 4.03, or environmental matters, which are the subject of Section 4.10.

 

SECTION 4.10.  Environmental Matters.   To the knowledge of Parent: (i) Parent (in each case solely to the extent related to the Business or the Acquired Assets) and the Acquired Assets are in compliance with all applicable Environmental Laws; (ii) Parent has not received prior to the date hereof, any written communication from a Governmental Entity that alleges that Parent is in violation of any applicable Environmental Law in connection with the conduct of the Business, the substance of which communication has not been resolved, or that it is a potentially responsible party under the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ( “CERCLA” ) (in each case, solely to the extent related to the Business or Acquired Assets); and (iii) there are no pending or, to the knowledge of Parent, threatened lawsuits, actions, arbitrations, claims, complaints or other proceedings against Parent relating to non-compliance with applicable Environmental Laws, to exposure to Hazardous Materials or to a Release of Hazardous Material (in each case, solely to the extent related to the Business or the Acquired Assets).  Except as specifically provided in Section 4.02, the representations and warranties made in this Section 4.10 are Parent’s exclusive representations and warranties relating to environmental matters.

 

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SECTION 4.11.  Absence of Changes or Events.   Subject to the matters set forth in the Parent Disclosure Schedule, including Section 4.11 thereof, since August 17, 2012, there has not been any event, occurrence or development that has resulted in a Material Adverse Effect.  The Company acknowledges that there has been and will continue to be a disruption to the conduct of the Business as a result of the announcement by Parent of its intention to sell the Product and the Acquired Assets and as a result of the execution and delivery of this Agreement and the consummation of the Transaction, and the Company agrees that such disruptions do not and shall not constitute a breach of this Section 4.11 or of Section 5.02.

 

SECTION 4.12.  Accredited Investor.   Parent is an “accredited investor” within the meaning of Rule 501, as presently in effect, of Regulation D under the Securities Act of 1933, as amended (the “Securities Act” ).

 

SECTION 4.13.  DISCLAIMER.   THE COMPANY ACKNOWLEDGES THAT EXCEPT AS SET FORTH IN THIS ARTICLE IV, NEITHER PARENT NOR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE ACQUIRED ASSETS, THE PRODUCT, ANY OTHER ASPECT OF THE BUSINESS, OR THE ACCURACY AND COMPLETENESS OF ANY INFORMATION REGARDING THE ACQUIRED ASSETS FURNISHED OR MADE AVAILABLE TO THE COMPANY AND ITS REPRESENTATIVES AND THE COMPANY HAS NOT RELIED ON ANY REPRESENTATION FROM PARENT OR ANY OTHER PERSON WITH RESPECT TO THE ACQUIRED ASSETS, THE PRODUCT, ANY ASPECT OF THE BUSINESS, OR THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING THE ACQUIRED ASSETS FURNISHED OR MADE AVAILABLE TO THE COMPANY AND ITS REPRESENTATIVES IN DETERMINING TO ENTER INTO THIS AGREEMENT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE IV.  THE COMPANY ACKNOWLEDGES THAT SHOULD THE CLOSING OCCUR, THE COMPANY SHALL ACQUIRE THE ACQUIRED ASSETS WITHOUT ANY REPRESENTATION AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS AND THE COMPANY SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE COMPANY GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY LIENS, THAT ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED AND THAT ANY REQUIREMENTS OF APPLICABLE LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

 

ARTICLE V
COVENANTS OF PARENT

 

Parent covenants and agrees as follows:

 

SECTION 5.01.  Access.   From the date hereof to the Closing, Parent shall give the Company and its representatives, employees, counsel and accountants reasonable access, during normal business hours and upon reasonable advance notice, to the Acquired Assets; provided , however , that such access: (i) does not unreasonably disrupt the normal operations of Parent; (ii) would not be reasonably expected to violate any attorney-client privilege of Parent or violate any Applicable Law; and (iii) would not reasonably be expected to breach any duty of confidentiality owed to any person whether the duty arises contractually, statutorily or otherwise.

 

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SECTION 5.02.  Ordinary Conduct.

 

(a)                                  From the date hereof until the Closing, Parent shall cause the distribution and sale of the Product to be conducted in all material respects in the ordinary course in substantially the same manner as conducted as of the date hereof and shall make all reasonable efforts consistent with current practices to preserve the relationships with customers, suppliers, distributors and others with whom Parent has a material business relationship with respect to the Product.

 

(b)                                  From the date hereof until the Closing, Parent shall not do any of the following in connection with the Acquired Assets without the prior written consent of the Company:

 

(i)                                     permit, allow or suffer any Acquired Asset to become subjected to any Lien of any nature whatsoever which would have been required to be set forth in Section 4.04 or 4.05 of the Parent Disclosure Schedule if it existed on the date of this Agreement;

 

(ii)                                 sell, lease or otherwise dispose of any Acquired Assets which are material, individually or in the aggregate, to the Product, except for sales of raw materials, work-in-process, finished goods, supplies and other inventories in the ordinary course of business;

 

(iii)                             terminate, modify or amend in any material respect any Transferred Contract or Transferred Permit; or

 

(iv)                              agree, whether in writing or otherwise, to do any of the foregoing

 

SECTION 5.03.  Transferred Intellectual Property.   Parent shall make no filings with any Governmental Entity relating to the Transferred Intellectual Property, nor grant or attempt to grant any material options, licenses or agreements relating to the Transferred Intellectual Property.

 

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Parent as follows:

 

SECTION 6.01.  Authority.   The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has all requisite corporate power and authority to enter into this Agreement and the Other Transaction Documents to which it is, or is specified to be, a party and to consummate the transactions contemplated hereby and thereby.  All corporate acts and other proceedings required to be taken by the Company to authorize the execution, delivery and performance of this Agreement and the Other Transaction Documents to which it is, or is specified to be, a party and to consummate the transactions contemplated hereby and thereby have been duly and properly taken.  This Agreement has been duly executed and delivered by the Company and, assuming this Agreement has been duly authorized, executed and delivered by Parent, constitutes, and the Other Transaction Documents on the Closing Date will be duly executed by the Company, and upon the due authorization, execution and delivery by each other party to the Other Transaction Documents, will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its and their terms, subject, as to enforcement, to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and to general equitable principles.

 

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SECTION 6.02.  No Conflicts; Consents.

 

(a)                                  The execution and delivery of this Agreement by the Company does not, and the execution and delivery by the Company of each Other Transaction Document to which it is, or is specified to be, a party will not, and the consummation of the transactions contemplated hereby and thereby and compliance with the terms hereof and thereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties, or assets of the Company under, any provision of: (i) its certificate of incorporation or bylaws, (ii) any Contract to which the Company is a party or by which any of its properties or assets are bound or (iii) any judgment, order, or decree, or, subject to the matters referred to in paragraph (b) below, Applicable Law, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, would not be reasonably likely to have a material adverse effect on the ability of the Company to consummate the Transaction.

 

(b)                                  To the knowledge of the Company, no consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to the Company in connection with the execution, delivery and performance of this Agreement, the Other Transaction Documents or the consummation of the transactions contemplated hereby or thereby, other than: (i) those that may be required solely by reason of Parent’s (as opposed to any other third party’s) participation in the transactions contemplated hereby or by the Other Transaction Documents; and (ii) such consents, approvals, licenses, permits, orders, authorizations, registrations, declarations and filings the absence of which, or the failure to make which, individually or in the aggregate, would not be reasonably likely to have a material adverse effect on the ability of the Company to consummate the Transaction.

 

SECTION 6.03.  Actions and Proceedings.   There are no: (i) outstanding judgments, orders, injunctions or decrees of any Governmental Entity or arbitration tribunal against the Company; (ii) lawsuits, actions or proceedings pending or, to the knowledge of the Company, threatened against the Company; or (iii) investigations by any Governmental Entity which are pending or, to the knowledge of the Company, threatened against the Company, which, in the case of each of clauses (i), (ii) and (iii), have had or would be reasonably likely to have a material adverse effect on the ability of the Company to consummate the Transaction.

 

SECTION 6.04.  Valid Issuance.   The shares of Common Stock that are being issued to Parent hereunder, when sold, issued and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under applicable federal and state securities laws.

 

SECTION 6.05.  Offering.   Assuming the accuracy of the representations and warranties of Parent contained in Article IV, the offer, sale and issuance of the shares of Common Stock being issued to Parent hereunder are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

 

SECTION 6.06.  No Knowledge of Misrepresentation or Omission.   The Company has no knowledge that any of the representations and warranties of Parent made in this Agreement or any

 

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Other Transaction Document qualified as to materiality are not true and correct, or that those not so qualified are not true and correct in all material respects, and the Company has no knowledge of any material errors in, or material omissions from, any section of the Parent Disclosure Schedule.

 

ARTICLE VII
COVENANTS OF THE COMPANY

 

The Company covenants and agrees as follows:

 

SECTION 7.01.  No Additional Representations.   The Company acknowledges that it and its representatives have received or been afforded the opportunity to review prior to the date hereof all written materials which Parent was required to deliver or make available, as the case may be, to the Company pursuant to this Agreement on or prior to the date hereof.  The Company acknowledges that it and its representatives have been permitted full and complete access to the books and records, facilities, equipment, Contracts and other properties and assets of Parent to the extent relating to the Product or the Acquired Assets that it and its representatives have desired or requested to see and/or review, and that it and its representatives have had a full opportunity to meet with the officers and employees of Parent to discuss the Product, the Acquired Assets and the Assumed Liabilities.  The Company acknowledges that neither Parent nor any other person has made any representation or warranty, expressed or implied, as to the accuracy or completeness of any information regarding the Acquired Assets or the Assumed Liabilities furnished or made available to the Company and its representatives, except as expressly set forth in this Agreement or the Parent Disclosure Schedule, and neither Parent nor any other person shall have or be subject to any liability to the Company or any other person resulting from the distribution to the Company, or the Company’s use of, any such information.

 

SECTION 7.02.  Advice to Parent.   The Company shall promptly advise Parent orally and in writing of any change or event occurring between the date of this Agreement and the Closing Date which the Company believes would be reasonably likely to have a material adverse effect on the ability of the Company to consummate the Transaction.

 

SECTION 7.03.  Acknowledgement of Assignment.   The execution and delivery of this Agreement by the Company constitutes an agreement by the Company to be bound by the terms and conditions of that certain Patent and Technology License Agreement, dated as of February 2, 2005, between University College Cardiff Consultants Limited and Contravir Research Incorporated (FV-100), as amended March 27, 2007, in accordance with Section 12.1 thereof.

 

ARTICLE VIII
MUTUAL COVENANTS

 

SECTION 8.01.  Consents.   The Company acknowledges that certain consents and waivers with respect to the Transaction may be required from parties to the Transferred Contracts and issuers of the Transferred Permits in order to transfer such Transferred Contracts or Transferred Permits to the Company and that such consents and waivers have not been obtained.  The Company agrees that, except for the provision of Section 1.05(b), Parent shall not have any liability or obligation whatsoever to the Company arising out of or relating to the failure to obtain any consents or waivers that may be required in connection with the Transaction or because of the termination of any Transferred Contract or Transferred Permit as a result thereof.  The Company further agrees that no representation, warranty, covenant or agreement of Parent contained herein shall be breached or deemed breached, and no condition shall be deemed not satisfied, as a result of: (i) the failure to obtain any such consent or waiver; (ii) any such termination; or (iii) any lawsuit, action, proceeding or investigation

 

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commenced or threatened by or on behalf of any person arising out of or relating to the failure to obtain any such consent or waiver or any such termination.  Prior to the Closing, Parent shall cooperate with the Company, upon the request of the Company, in any reasonable manner in connection with the Company obtaining any such consents and waivers; provided , however , that such cooperation shall not include any requirement of Parent  to expend money, commence, defend or participate in any litigation, incur any obligation in favor of, or offer or grant any accommodation (financial or otherwise) to, any third party.

 

SECTION 8.02.  Cooperation.

 

(a)                                  The Company and Parent shall cooperate with each other, and shall cause their respective officers, employees, agents, auditors and representatives to cooperate with each other, for a period of sixty (60) days after the Closing to ensure the orderly transition of the Product and the Acquired Assets from Parent to the Company and to minimize any disruption to the respective businesses of Parent and the Company that might result from the Transaction.  After the Closing, upon reasonable written notice, the Company and Parent shall furnish or cause to be furnished to each other and their employees, counsel, auditors and representatives reasonable access, during normal business hours, to such information and assistance relating to the Product and the Acquired Assets as is reasonably necessary for financial reporting and accounting matters, the preparation and filing of any Tax returns, reports or forms or the defense of any Tax claim or assessment.  The obligation to cooperate pursuant to the preceding sentence insofar as it concerns Taxes shall terminate at the time the relevant applicable statute of limitations expires (giving effect to any extension thereof).  Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in assisting the other pursuant to this Section 8.02.  Neither party shall be required by this Section 8.02 to take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations.

 

(b)                                  From time to time, as and when requested by either party hereto, the other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions (subject to the provisions of Sections 8.01 and 8.02), as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement.

 

SECTION 8.03.  Publicity.   Parent and the Company agree that no public release or announcement concerning the Transaction shall be issued by either party or its Affiliates without the prior written consent of the other party (which consent shall not be unreasonably withheld), except as such release or announcement may be required by Applicable Law or the rules or regulations of any United States or foreign securities exchange to which such party is subject, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance.

 

SECTION 8.04.  Tax Covenants.

 

(a)                                  All Transfer Taxes and any filing or recording fees applicable to the Transaction shall be paid by the Company.  Each party shall use reasonable efforts to avail itself of any available exemptions from any such Taxes or fees, and to cooperate with the other party in providing any information and documentation that may be necessary to obtain such exemptions.

 

(b)                                  Parent shall be entitled to any refunds or credits of Taxes relating to any Excluded Tax Liability.  The Company shall be entitled to any refunds or credits of Taxes relating to the Acquired Assets, other than any such refunds or credits of Taxes relating to any Excluded Tax Liability.

 

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(c)                                   Any value-added, goods and services, stamp duties, ad valorem and similar Taxes shall be allocated between portions of a tax period that includes (but does not end on) the Closing Date (a “Straddle Period” ) in the following manner: (i) in the case of a Tax imposed in respect of property and that applies ratably to a Straddle Period, the amount of Tax allocable to a portion of the Straddle Period shall be the total amount of such Tax for the period in question multiplied by a fraction, the numerator of which is the total number of days in such portion of such Straddle Period and the denominator of which is the total number of days in such Straddle Period; and (ii) in the case of sales, value added and similar transaction-based Taxes (other than Transfer Taxes), such Taxes shall be allocated to the portion of the Straddle Period in which the relevant transaction occurred.

 

SECTION 8.05.  Recordation of Transfer of Intellectual Property.   The Company shall be responsible, at its sole cost and expense, for all applicable recordations of the assignment of the Transferred Intellectual Property.

 

SECTION 8.06.  Retention of Certain Records.   Parent may retain all Records prepared in connection with the Transaction, and such Records shall be Excluded Records for all purposes hereunder.

 

ARTICLE IX
INDEMNIFICATION

 

SECTION 9.01.  Indemnification by Parent.   From and after the Closing, Parent shall indemnify the Company and its Affiliates and each of their respective officers, directors, employees, agents and representatives against and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and expenses) ( “Losses” ) suffered or incurred by any such indemnified party to the extent arising from: (i) any breach of any representation or warranty of Parent contained in Sections 4.01, 4.02, 4.04 or 4.05 of this Agreement which survives the Closing; and (ii) any breach of any covenant of Parent contained in this Agreement requiring performance after the Closing Date.  Notwithstanding the forgoing: (a) Parent shall not have any liability under clauses (i) or (ii) of this Section 9.01 unless the aggregate of all Losses for which Parent would be liable, but for this clause (a), exceeds on a cumulative basis an amount equal to $50,000, and then only to the extent of any such excess; (b) Parent shall not have any liability under clause (i) of this Section 9.01 for any individual item (or series of related items) where the Losses relating thereto are less than $10,000 and such items shall not be aggregated for purposes of the foregoing clause (a) of this Section 9.01; (c) Parent shall not have any liability under clauses (i) or (ii) of this Section 9.01 for any breach of a representation or warranty if the Company had knowledge of such breach at the time of the Closing and such breach would have given rise to a failure to be satisfied of the condition to the Company’s obligations set forth in Section 3.01(a); (d) Parent’s liability under clauses (i) and (ii) of this Section 9.01 shall in no event exceed $50,000; and (e) Parent shall not have any liability under this Section 9.01 to the extent the liability or obligation arises as a result of (x) any action taken or omitted to be taken by the Company or any of its Affiliates or (y) any breach of a representation or warranty that is covered by a certificate delivered pursuant to Section 3.01(a) except to the extent Parent had knowledge that such representation or warranty was not true and correct in all material respects when made.

 

SECTION 9.02.  Indemnification by the Company.   From and after the Closing, the Company shall indemnify Parent and its Affiliates and each of their respective officers, directors, employees, agents and representatives against and hold them harmless from any Losses suffered or incurred by any such indemnified party to the extent arising from: (i) any breach of any representation or warranty of the Company which survives the Closing contained in this Agreement; (ii) any breach of any covenant of the Company contained in this Agreement requiring performance after the Closing

 

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Date; (iii) any Assumed Liability; and (iv) any claim arising from the Company’s operations of the Business subsequent to Closing.

 

SECTION 9.03.  Limitations on Liability; Cooperation.

 

(a)                                  Notwithstanding any provision herein, neither Parent nor the Company shall in any event be liable to the other party or its Affiliates, officers, directors, employees, agents or representatives on account of any indemnity obligation set forth in Section 9.01 or Section 9.02 for any indirect, consequential, special, incidental or punitive damages (including lost profits, loss of use, damage to goodwill or loss of business).

 

(b)                                  The Company and Parent shall cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify the other party hereunder including by making commercially reasonable efforts to mitigate or resolve any such claim or liability.

 

(c)                                   The Company acknowledges and agrees that: (i) other than the representations and warranties of Parent specifically contained in this Agreement, there are no representations or warranties of Parent, or any other person either expressed or implied with respect to the Transaction, the Product, the Acquired Assets or the Assumed Liabilities; and (ii) it shall have no claim or right to indemnification pursuant to Section 9.01 with respect to any information, documents or materials (other than this Agreement and the Parent Disclosure Schedule) furnished by Parent or any of its officers, directors, employees, agents or advisors to the Company and its representatives.

 

(d)                                  The Company further acknowledges and agrees that, should the Closing occur, its sole and exclusive remedy with respect to any and all claims relating to this Agreement, any Other Transaction Document, the Transaction, any document or certificate delivered in connection herewith, the Product, the Acquired Assets and the Assumed Liabilities or any federal, state, local or foreign statute, law, ordinance, rule or regulation or otherwise (other than claims of, or causes of action arising from, fraud) shall be pursuant to the indemnification provisions set forth in this Article IX.  In furtherance of the foregoing, the Company hereby waives, from and after the Closing, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud) it or any of its Affiliates may have against Parent arising under or based upon this Agreement, any Other Transaction Document, the Transaction, any document or certificate delivered in connection herewith, the Product, the Acquired Assets and the Assumed Liabilities or any federal, state, local or foreign statute, law, ordinance, rule or regulation or otherwise (except pursuant to the indemnification provisions set forth in this Article IX).

 

SECTION 9.04.  Losses Net of Insurance, etc.   The amount of any Losses for which indemnification is provided under this Article IX shall be net of any amounts recovered or recoverable by the indemnified party under insurance policies with respect to such Losses and shall be reduced to take account of any net Tax benefit (including as a result of any basis adjustment) actually realized by the indemnified party arising from the incurrence or payment of any such Loss.  In computing the amount of any such Tax benefit, the indemnified party shall be deemed to recognize all other items of income, gain, loss, deduction or credit before recognizing any item arising from the incurrence or payment of any indemnified Losses.

 

SECTION 9.05.  Termination of Indemnification.

 

(a)                                  The obligations to indemnify and hold harmless a party hereto pursuant to: (i) Sections 9.0l(i) and 9.02(i) shall terminate when the applicable representation or warranty terminates

 

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pursuant to paragraph (b) below; and (ii) the other clauses of Sections 9.01 and 9.02 shall not terminate; provided , however , that as to clause (i) of this sentence such obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified or the related party thereto shall have, before the expiration of the applicable period, previously made a claim by delivering a notice of such claim (stating in reasonable detail the basis of such claim) to the indemnifying party.

 

(b)                                  The representations and warranties in this Agreement shall survive the Closing solely for purposes of Sections 9.01 and 9.02 and shall terminate at the close of business on August 17, 2013.

 

SECTION 9.06.  Procedures Relating to Indemnification for Third Party Claims.

 

(a)                                  In order for a party to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any person against the indemnified party (a “Third Party Claim” ), such indemnified party must notify the indemnifying party in writing, and in reasonable detail, of the Third Party Claim within ten (10) business days after receipt by such indemnified party of written notice of the Third Party Claim; provided , however , that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been prejudiced as a result of such failure (except that the indemnifying party shall not be liable for any expenses incurred during the period in which the indemnified party failed to give such notice).  Thereafter, the indemnified party shall deliver to the indemnifying party, promptly after the indemnified party’s receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim.

 

(b)                                  If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the indemnifying party; provided , however , that such counsel is not reasonably objected to by the indemnified party.  Should the indemnifying party so elect to assume the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof.  If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnifying party), at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense.  The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has failed to assume the defense thereof (other than during the period prior to the time the indemnified party shall have given notice of the Third Party Claim as provided above).

 

(c)                                   If the indemnifying party so elects to assume the defense of any Third Party Claim, all of the indemnified parties shall cooperate with the indemnifying party in the defense or prosecution thereof.  Such cooperation shall include the retention and (upon the indemnifying party’s request) the provision to the indemnifying party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Whether or not the indemnifying party shall have assumed the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party’s prior written consent (which consent shall not be unreasonably withheld).

 

SECTION 9.07.  Procedures Related to Indemnification for Other Claims.   In the event any indemnified party should have a claim against any indemnifying party under Section 9.01 or 9.02 that does not involve a Third Party Claim being asserted against or sought to be collected from such

 

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indemnified party, the indemnified party shall deliver notice of such claim with reasonable promptness to the indemnifying party.  The failure by any indemnified party to so notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have to such indemnified party under Section 9.01 or 9.02, except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure.  If the indemnifying party disputes its liability with respect to such claim, the indemnifying party and the indemnified party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction.

 

ARTICLE X
TERMINATION

 

SECTION 10.01.  Termination.   This Agreement may be terminated and the Transaction may be abandoned at any time prior to the Closing by:

 

(a)                                  mutual written consent of Parent and the Company;

 

(b)                                  Parent, if any of the conditions set forth in Section 3.02 shall have become incapable of fulfillment, and shall not have been waived by Parent;

 

(c)                                   the Company, if any of the conditions set forth in Section 3.01 shall have become incapable of fulfillment, and shall not have been waived by the Company; or

 

(d)                                  either party hereto, if the Closing does not occur on or prior to June 30, 2013;

 

(e)                                   either party hereto, in the event of the institution against the other party of any proceeding under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar Applicable Law affecting the rights of creditors generally, which proceeding is not dismissed within thirty (30) days of filing, or the institution by the other party of any proceeding under the United States Bankruptcy Code or any other federal or state bankruptcy, reorganization, receivership, insolvency or other similar Applicable Law affecting the rights of creditors generally or the making by the other party of a composition or an assignment or trust mortgage for the benefit of creditors;

 

provided , however , that the party seeking termination pursuant to clause (b), (c) or (d) is not in breach in any material respect of any of its representations, warranties, covenants or agreements contained in this Agreement.

 

SECTION 10.02.  Return of Confidential Information.   If this Agreement is terminated as provided herein, the Company shall return to Parent all documents and other material received by the Company, its Affiliates and their respective representatives from Parent, its Affiliates or their respective representatives relating to the transactions contemplated hereby and by the Other Transaction Documents, whether so obtained before or after the execution hereof.

 

SECTION 10.03.  Consequences of Termination.  In the event of the termination of this Agreement by Parent or the Company pursuant to this Article X, written notice thereof shall forthwith be given to the other party and this Agreement shall be terminated, without further action by either party.  If this Agreement is terminated as described in this Article X, this Agreement shall become void and of no further force or effect, except for the provisions of: (i) Section 8.03 relating to publicity; (ii) this Article X; (iii) Section 11.03 relating to certain expenses; (iv) Section 11.04 relating to attorney fees and expenses; and  (v) Section 11.10 relating to finder’s fees and broker’s fees.

 

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Nothing in this Article X shall be deemed to release either party from any liability for any intentional and material breach by such party of the terms and provisions of this Agreement prior to such termination or to impair the right of either party to compel specific performance by the other party of its obligations under this Agreement.

 

ARTICLE XI
MISCELLANEOUS

 

SECTION 11.01.  Assignment.   This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the Company or Parent (including by operation of law in connection with a merger, consolidation or sale of substantially all the assets of the Company or Parent) without the prior written consent of the other party hereto; provided, however, the Company may assign its rights and obligations hereunder to any transferee of all or substantially all of the assets of the Company that relate to the Product pursuant to a merger, consolidation or otherwise, to the extent that the transferee assumes in writing all of the obligations of the Company that relate to the Product under this Agreement, in each case without the consent of Parent.  Any attempted assignment in violation of this Section 11.01 shall be void.

 

SECTION 11.02.  No Third-Party Beneficiaries.   This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder.

 

SECTION 11.03.  Expenses.   Whether or not the Transaction is consummated, and except as otherwise specifically provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transaction shall be paid by the party incurring such costs or expenses.

 

SECTION 11.04.  Attorney Fees.   A party in breach of this Agreement shall, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement.  The payment of such expenses is in addition to any other relief to which such other party may be entitled.

 

SECTION 11.05.  Amendments.   This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.  By an instrument in writing, the Company, on the one hand, or Parent, on the other hand, may waive compliance by the other with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.

 

SECTION 11.06.  Notices.   All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one business day in the case of overnight mail or overnight courier service), as follows:

 

(a)                                  if to Parent,

 

Synergy Pharmaceuticals Inc.
420 Lexington Avenue, Suite 2012

 

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New York, New York 10170
Telephone:  (212) 297-0020
Facsimile:  (212) 297-0019

Attention:  Gary Jacob

 

with a copy to:

 

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone:  (212) 930-9700

Facsimile:  (212) 930-9725

Attention:  Jeffrey J. Fessler, Esq.

 

(b)                                  if to the Company,

 

ContraVir Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 2012
New York, New York 10170
Telephone:  (212) 297-0020
Facsimile:  (212) 297-0019
Attention: Bernard S. Denoyer

 

SECTION 11.07.  Interpretation; Exhibits, Schedules.   The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise: (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein); (ii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; (iii) all references herein to Articles, Sections, Appendices, Exhibits or Schedules shall be construed to refer to Articles, Sections, Appendices, Exhibits and Schedules of this Agreement; and (iv) the headings contained in this Agreement, the Parent Disclosure Schedule, other Schedules or any Appendix or Exhibit are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Any matter set forth in any provision, subprovision, section or subsection of the Parent Disclosure Schedule shall be deemed set forth for all purposes of the Parent Disclosure Schedule to the extent relevant and reasonably apparent.  The Parent Disclosure Schedule, all other Schedules and all Appendices and Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in the Parent Disclosure Schedule, any other Schedule or any Appendix or Exhibit annexed hereto but not otherwise defined therein, shall have the meaning as defined in this Agreement.  In the event of an ambiguity or a question of intent or interpretation, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

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SECTION 11.08.  Counterparts.   This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party.  The exchange of copes of this Agreement or amendments thereto and of signature pages by facsimile or email transmission in portable digital format (or similar format) shall constitute effective execution and delivery of such instrument(s) as to the parties and may be used in lieu of the original Agreement or amendment for all purposes.  Signatures of the parties transmitted by facsimile or by email transmission in portable digital format (or similar format) shall be deemed to be their original signatures for all purposes.

 

SECTION 11.09.  Entire Agreement.   This Agreement, together with the Other Transaction Documents, contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.  Neither party shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein or therein.

 

SECTION 11.10.  Fees.   The Company hereby represents and warrants that no brokers or finders that have acted for the Company in connection with this Agreement or the Transaction or that may be entitled to any brokerage fee, finder’s fee or commission in respect thereof.

 

SECTION 11.11.  Severability.   If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances.

 

SECTION 11.12.  Consent to Jurisdiction.   Each of the Company and Parent irrevocably submits to the exclusive jurisdiction of: (i) the Supreme Court of the State of New York, New York County; and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the Other Transaction Documents or any transaction contemplated hereby or thereby.  Each of the Company and Parent agrees to commence any such action, suit or proceeding either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County.  Each of the Company and Parent further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address(es) set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 11.12.  Each of the Company and Parent irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, the Other Transaction Documents or the transactions contemplated hereby or thereby in: (a) the Supreme Court of the State of New York, New York County; or (b) the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

SECTION 11.13.  WAIVER OF JURY TRIAL.   EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT,

 

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THE OTHER TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY HERETO: (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.13.

 

SECTION 11.14.  Governing Law.   This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such state, without regard to the conflicts of law principles of such state.

 

[ Remainder of page intentionally left blank; signature page follows. ]

 

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IN WITNESS WHEREOF, Parent and the Company have caused their duly authorized representatives to executed this Agreement as of the date first written above.

 

 

SYNERGY PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Gary S. Jacob

 

 

Name:

Gary S. Jacob

 

 

Title:

President and Chief Executive Officer

 

 

 

 

 

CONTRAVIR PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Bernard F. Denoyer

 

 

Name:

Bernard F. Denoyer

 

 

Title:

Chief Financial Officer

 

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EXHIBIT A

 

CERTAIN DEFINITIONS

 

“Accounts Payable” means all accounts payable and liabilities, obligations and commitments, regardless of when asserted, billed or imposed, of Parent as of the end of the day immediately prior to the Closing Date.

 

“Accounts Receivable” means all accounts receivable, notes receivable and other indebtedness due and owed by any third party to Parent as of the end of the day immediately prior to the Closing Date, including all trade accounts receivable representing amounts receivable in respect of goods shipped, products sold or services rendered prior to the day immediately prior to the Closing Date and the full benefit of any security for such accounts or debts.

 

“Affiliate” means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person; and for the purposes of this definition, “control” when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Assumption Agreement” means the assumption agreement to be executed by the Company to evidence its assumption of the Assumed Liabilities.

 

“Bill of Sale” means a bill of sale and assignment with respect to the Acquired Assets.

 

“BLA” means a Biologic License Application, as defined in the United States Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder.

 

“business day” means any day, other than a Saturday or Sunday, on which commercial banks are not required or authorized to close in the City of New York.

 

“Dollars” or “$” means lawful money of the United States of America.

 

“Environmental Law” means any statutes, laws, ordinances, rules, orders and regulations of any Governmental Entity relating to pollution, protection of the environment or human health or the preservation or restoration of natural resources.

 

“Environmental Liability” means any Liability, loss, demand, claim or cost, contingent or otherwise (including any Liability for judgments, orders, damages, costs of investigation, remediation or monitoring, medical monitoring, natural resources damages, fines, penalties, professional fees, or settlements), and relating to, arising under or resulting from: (i) any actual or alleged (a) compliance or noncompliance with any Environmental Law or Environmental Permit, (b) generation, use, storage, management, treatment, transportation or disposal of any Hazardous Material or (c) presence, release or threatened release of, or exposure to, any Hazardous Material; or (ii) any contract, agreement, or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Environmental Permit” means any certificate, consent, permit, license, registration, approval or other authorization issued under or pursuant to Environmental Laws or otherwise relating to the use, emission or discharge of Hazardous Materials.

 

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“GAAP” means generally accepted accounting principles in the United States.

 

“Hazardous Material” means any hazardous, toxic or deleterious chemical, material, substance or waste, including radioactive, explosive, medical or biohazardous materials or wastes, petroleum and its byproducts and distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, or urea formaldehyde foam insulation.

 

“IP Assignment Documents” means with respect to any Transferred Intellectual Property, intellectual property (patent, trademark, copyright and domain name assignments, as applicable) assignments of such Transferred Intellectual Property.

 

“MAA” means a Marketing Authorization Application filed with the applicable Governmental Entity in the European Union for authorization to market and sell a drug or medicine for human patients.

 

“Manufacturing Knowhow” means knowhow, technology, data, designs, process and methods relating to the manufacture and production of the Product.

 

“Material Adverse Effect” means any change, effect, event or occurrence or state of facts that individually or taken together with other changes, effects, events or occurrences or state of facts: (i) is, or would reasonably be expected to be, materially adverse to the Business, the Product and the Acquired Assets, taken as a whole; or (ii) would prevent or materially impede, interfere with, hinder or delay the consummation by Parent of the Transaction, other than, with respect to any change, effect, event or occurrence or state of facts having the results described in the foregoing clause (i), any change, effect, event or occurrence or state of facts relating to (A) economic, financial market or geographical conditions in general (including national or international conditions), (B) changes in Applicable Law or GAAP or other applicable accounting regulations or principles or interpretations thereof, (C) changes in conditions generally affecting the pharmaceutical or biotechnology industries, (D) the announcement of this Agreement and the Transaction and the performance of and compliance with the terms of this Agreement, (E) any acts or omissions of Parent taken after the date of this Agreement with the prior written consent of the Company pursuant to Section 5.02, (F) any changes in global or national political conditions, (G) any outbreak or escalation of hostilities, any occurrence or threat of acts commonly referred to as terrorist attacks or any armed hostilities associated therewith and any national or international calamity or emergency or any escalation thereof or (H) any of the matters described in Section 4.11 of the Parent Disclosure Schedule.

 

“NDA” means a new drug application for a drug filed in accordance with 21 C.F.R. Part 314, and all supplements filed pursuant to the requirements of the FDA, including all documents, data and other information concerning the applicable drug which are necessary for FDA approval to market such drug in the United States, and any equivalent application submitted to any other health authority.

 

“Other Transaction Documents” means: (i) the Bill of Sale; (ii) the Assumption Agreement; and (iii) the IP Assignment Documents.

 

“person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.

 

“Product Formulae” means the specific percentages and specifications for the mixing and preparation of the ingredients used in the manufacture of the Product, taken as a whole and not in part.  For the avoidance of doubt: (i) the Product Formulae does not include Manufacturing Knowhow associated with the manufacture of the Product to which such Product Formulae relates; and (ii) does not

 

28



 

refer separately to a particular ingredient or specification or combination of ingredients and/or specifications that do not comprise the entire, specific Product Formulae.

 

“subsidiary” of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, fifty percent (50%) or more of the equity interests of which) is owned directly or indirectly by such first person or by another subsidiary of such person.

 

“United States” means the United States of America, including its territories and possessions (excluding all military bases and other military installations outside of the continental United States, Alaska, Hawaii and Washington, D.C.).

 

*                                          *                                          *

 

29


Exhibit 10.2

 

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

 

This Amended and Restated Shared Services Agreement, dated as of August 5, 2013, but effective as of May 15, 2013 (the “ Effective Date ”), is by and between ContraVir Pharmaceuticals, Inc., a Delaware corporation (“ ContraVir ”), and Synergy Pharmaceuticals Inc., a Delaware corporation (“ Synergy ”). ContraVir and Synergy are sometimes referred to herein separately as a “ Party ” and together as the “ Parties ”.

 

RECITALS

 

WHEREAS , ContraVir and Synergy are parties to that certain shared services agreement, dated July 8, 2013, but effective as of May 16, 2013 (the “ Existing Agreement ”);

 

WHEREAS , pursuant to the Existing Agreement, Synergy agreed to directly or indirectly provides certain administrative, legal, tax, financial, information technology and other services to ContraVir;

 

NOW, THEREFORE , in consideration of the mutual covenants and promises contained in this Agreement, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, Synergy and ContraVir hereby agree that the Existing Agreement is amended and restated in its entirety as follows:

 

ARTICLE I.

DEFINITIONS

 

Section 1.01 Definitions . As used in this Agreement, the following terms have the following meanings, applicable both to the singular and the plural forms of the terms described. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Master Separation Agreement.

 

Action ” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal, other than any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation relating to taxes.

 

Additional Services ” has the meaning set forth in Section 2.02 .

 

Affiliate ” means any entity that directly or indirectly owns, is owned by, or is under the common ownership with a Party, at any time during the term of this Agreement. “Owns”, “owned” or “ownership” means direct or indirect possession of more than fifty percent (50%) of the votes of holders of a corporation’s voting securities, or a comparable equity or other ownership interest in any other type of entity; provided that for the purposes of this Agreement, Synergy and its Affiliates shall not constitute Affiliates of ContraVir or its Affiliates, and vice-versa.

 

Agreement ” means this Shared Services Agreement, together with the schedules and exhibits

 



 

hereto, as the same may be amended and supplemented from time to time in accordance with the provisions hereof.

 

Change of Control ” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock, by contract or otherwise) of in excess of 50% of the voting securities of either Party, (b) either Party merges into or consolidates with any other Person, or any Person merges into or consolidates with either Party and, after giving effect to such transaction, the stockholders of either Party immediately prior to such transaction own less than 50% of the aggregate voting power of such Party or the successor entity of such transaction, or (c) either Party sells or transfers all or substantially all of its assets to another Person and the stockholders of such Party immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction. For purposes of this definition, (i) no effect shall be given to the proviso to the definition of “Affiliate” set forth herein and (ii) the distribution of any ContraVir securities by Synergy on or after the date hereof shall not constitute a “Change of Control” under the terms and conditions of this Agreement.

 

Code ” means the Internal Revenue Code of 1986 (or any successor statute), as amended from time to time, and the regulations promulgated thereunder.

 

Contract ” means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of such Person’s property under applicable law.

 

ContraVir ” has the meaning set forth in the preamble to this Agreement.

 

ContraVir Business ” means the business presently conducted by ContraVir as of the Effective Date.

 

ContraVir Covered Parties ” has the meaning set forth in Section 3.01 .

 

ContraVir Entities ” means ContraVir Pharmaceuticals, Inc. and its Subsidiaries, from time to time, and “ ContraVir Entity ” means any one of the ContraVir Entities.

 

ContraVir Indemnified Person ” means each of the ContraVir Entities and their respective directors, officers, agents, employees, and Subcontractors.

 

ContraVir Personnel ” means any Synergy employee, agent or Subcontractor providing the Synergy Services.

 

Distribution ” means a distribution by Synergy of common stock (and preferred stock, if any) of ContraVir or common stock (and preferred stock, if any) of a Person that is a successor to ContraVir, which distribution is to holders of common stock of Synergy.

 

Distribution Date ” means the date on which a Distribution occurs.

 

Effective Date ” has the meaning set forth in the preamble to this Agreement.

 

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

2



 

Force Majeure ” has the meaning set forth in Section 9.05(a) .

 

Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

 

Initial Term ” has the meaning set forth in Section 8.01 .

 

Insurance Policies ” means insurance policies pursuant to which a Person makes a true risk transfer to an insurer.

 

Insurance Proceeds ” means those monies paid from one of the Synergy Insurance Policies.

 

Insurance Transition Period ” has the meaning set forth in Section 3.01 .

 

Laws ” has the meaning set forth in Section 4.06(a) .

 

Lease ” or “ Leases ” has the meaning set forth in Section 4.01(a) .

 

Leased Premises ” has the meaning set forth in Section 4.01(a) .

 

Liabilities ” means all debts, liabilities, guarantees, assurances, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of any Contract or tort based on negligence or strict liability) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.

 

License ” has the meaning set forth in Section 4.01(a) .

 

License Area ” or “ License Areas ” has the meaning set forth in Section 4.01(a) .

 

License Commencement Date ” has the meaning set forth in Section 4.02(a) .

 

License Expiration Date ” has the meaning set forth in Section 4.02(a) .

 

License Period ” has the meaning set forth in Section 4.02(a) .

 

Loss ” and “ Losses ” mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including, without limitation, the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), including direct, consequential and punitive damages.

 

Party ” or “ Parties ” has the meaning set forth in the preamble to this Agreement.

 

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

 

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Personal Information ” has the meaning set forth in Section 2.05 .

 

Premises ” has the meaning set forth in Section 4.01(a) .

 

Renewal Term ” has the meaning set forth in Section 7.01 .

 

Schedule 4.01 ” means the schedule attached hereto, as amended from time to time, which lists the Leased Premises of Synergy.

 

Subcontractor ” has the meaning set forth in Section 8.04 .

 

Subsidiary ” of any Person means a corporation, limited liability company, joint venture, partnership, trust, association or other entity in which such Person: (1) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such entity, (B) the total combined equity interests, or (C) the capital or profits interest, in the case of a partnership; or (2) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body. In the case of ContraVir, “ Subsidiary ” means any Subsidiary existing as of the Effective Date or that may be formed or acquired subsequent to the Effective Date, so long as, in either case, such entity remains a Subsidiary of ContraVir.

 

Synergy ” has the meaning set forth in the preamble to this Agreement.

 

Synergy Entities ” means Synergy and its Subsidiaries (other than ContraVir), and “ Synergy Entity ” means any one of the Synergy Entities in place on the Effective Date and any entity which becomes a Subsidiary of Synergy thereafter.

 

Synergy Indemnified Person ” has the meaning set forth in Section 6.02(a) .

 

Synergy Insurance Policy ” or “ Synergy Insurance Policies ” has the meaning set forth in Section 3.01 .

 

Synergy Personnel ” means any Synergy employee, agent or Subcontractor providing the Synergy Services.

 

Synergy Services ” means the various administrative, financial (including internal audit and payroll functions), legal, tax, insurance, facility, information technology and other services to be provided by, or on behalf of, Synergy or its Subsidiaries to ContraVir and its Subsidiaries as described in this Agreement, together with any Licenses or Additional Services provided by, or on behalf of, the Synergy Entities pursuant to this Agreement.

 

Systems ” has the meaning set forth in Section 2.04 .

 

Section 1.02 Internal References . Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding Articles, Sections and paragraphs in this Agreement, references to exhibits or schedules shall refer to the corresponding exhibits or schedules in this Agreement, and references to the Parties shall mean the Parties to this Agreement.

 

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ARTICLE II.

PURCHASE AND SALE OF SERVICES

 

Section 2.01 Purchase and Sale of Synergy Services .

 

(a) Subject to the terms and conditions of this Agreement and in consideration of the costs for the Synergy Services described below, Synergy agrees to provide or cause to be provided to ContraVir and its Subsidiaries, and ContraVir agrees to purchase from Synergy, the Synergy Services, until such Synergy Services are terminated in accordance with the provisions hereof.

 

(b) The Parties acknowledge and agree that (i) the Synergy Services to be provided, or caused to be provided, by Synergy under this Agreement shall, at ContraVir’s request, be provided directly to ContraVir or its Subsidiaries and (ii) Synergy may satisfy its obligation to provide or to procure the Synergy Services hereunder by causing one or more of its Subsidiaries to provide or to procure such services. With respect to the Synergy Services provided to, or procured on behalf of, any ContraVir Subsidiary, ContraVir agrees to pay on behalf of such Subsidiary all amounts payable by or in respect of such Synergy Services pursuant to this Agreement, including Section 5.03 hereof.

 

Section 2.02 Additional Services . In addition to the Synergy Services to be provided or procured in accordance with Section 2.01 , if requested by ContraVir, and to the extent that Synergy and ContraVir may mutually agree in writing, Synergy shall provide or cause to be provided additional services to ContraVir (“ Additional Services ”). The scope of any such Additional Services, as well as the costs and other terms and conditions applicable to such Additional Services, shall be as mutually agreed by Synergy and ContraVir prior to the provision of such Additional Services.

 

Section 2.03 General Standard of Synergy Service . Except as otherwise agreed to in writing by the Parties or as described in this Agreement, the Parties agree that the nature, quality, degree of skill and standard of care applicable to the delivery of the Synergy Services hereunder, and the skill levels of the Synergy Personnel providing such Synergy Services, shall be substantially the same as or consistent with those which Synergy exercises or employs in providing similar services provided within or to any Synergy Entity. Notwithstanding the foregoing, if there is an increase in the complexity of a Synergy Service (whether as a result of increased quantity or quality, changing frequency or regulatory requirements or otherwise), ContraVir acknowledges and agrees that such Synergy Service may not be provided within the same amount of time as it had previously taken during such period, and, in such a case, Synergy shall use commercially reasonable efforts to provide such Synergy Service in a timely manner. Notwithstanding anything herein to the contrary, the Synergy Services are to be provided in a manner that does not disparately treat ContraVir (or its Subsidiaries or its or their personnel or business) as compared to Synergy’s treatment of itself (or its Subsidiaries or its or their personnel or business) when it is providing such Synergy Service.

 

Section 2.04 IT Systems . While using or accessing any computers, systems, software, networks, information technology or related infrastructure or equipment (including any data stored thereon or transmitted thereby) (“ Systems ”) of Synergy (whether or not such use or access is provided as a Synergy Service), ContraVir shall, and shall cause each of its Subsidiaries and their respective ContraVir Personnel to, adhere in all respects to Synergy’s processes, policies and procedures (including any of the foregoing with respect to Confidential Information, data, communications and system privacy, operation, security and proper use) as in effect on the Effective Date or as communicated or otherwise made available to ContraVir from time to time in writing.

 

Section 2.05 Privacy Laws and Personal Information . In connection with the performance or receipt of the Synergy Services under this Agreement, the Parties acknowledge and agree that each Party

 

5



 

and their Subsidiaries are or may be subject to laws and regulations governing the privacy and security of personal or personally identifiable information and related records of their employees, investors, customers and prospective customers (“ Personal Information ”). Accordingly, each Party, on behalf of itself and its Subsidiaries, agrees to and shall (i) ensure that its employees, agents, and Subcontractors, including third party service providers, cooperate with each other with respect to their obligations under such applicable privacy laws and regulations, and (ii) comply with all provisions of such applicable privacy laws and regulations, in each case relating to the collection, storage, use, processing, disclosure or disposal of Personal Information provided to or accessible by a Party, their Subsidiaries and their respective employees, agents, and Subcontractors in the course of performing under this Agreement. For the avoidance of doubt, all Personal Information shall also be protected as Confidential Information to the extent such treatment provides further protection to the information against unauthorized use or disclosure.

 

ARTICLE III.

INSURANCE MATTERS

 

Section 3.01 ContraVir Insurance Coverage During Transition Period . Throughout the period beginning on the Effective Date and ending upon the first to occur of the Distribution Date, the termination or expiration of this Agreement in accordance with ARTICLE VII   hereof, or such other date as may be required by applicable laws (the “ Insurance Transition Period ”), Synergy shall continue to maintain at its own cost insurance coverage under Insurance Policies that cover and are for the benefit of the ContraVir Entities and their respective directors, officers and employees (the “ ContraVir Covered Parties ”) at the same levels that Synergy maintains such coverage for itself and the other Synergy Entities and their respective directors, officers and employees, including policies providing coverage for commercial general liability, statutory workers’ compensation, employer’s liability insurance, comprehensive automobile liability, property, and professional services liability (i.e., errors and omissions) (collectively, the “ Synergy Insurance Policies ”). The ContraVir Entities’ pro rata portion of all costs and expenses associated with the Synergy Insurance Policies shall be calculated in accordance with the allocation methodology described in Section 5.01 .

 

Section 3.02 Cooperation; Payment of Insurance Proceeds to ContraVir; Agreement Not to Release Carriers . Each Party shall share such information as is reasonably necessary in order to permit the other Party to manage and conduct its insurance matters in an orderly fashion. Synergy, at the request of ContraVir, shall cooperate with and use its commercially reasonable efforts to assist ContraVir in recovering any Insurance Proceeds for claims relating to the ContraVir Business, the assets or liabilities of ContraVir, whether such claims arise under any Contract or agreement, by operation of law or otherwise, existing or arising from any past acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed before the Effective Date, on the Effective Date or during the Insurance Transition Period, and Synergy shall promptly pay any such recovered Insurance Proceeds to ContraVir. Neither Synergy nor ContraVir, nor any of their respective

 

6



 

Subsidiaries, shall take any action which would intentionally jeopardize or otherwise interfere with the other Party’s ability to collect any Insurance Proceeds. Except as otherwise contemplated by this Agreement or any other agreement between the Parties with effect from and after the Effective Date, ContraVir shall not (and shall ensure that no affiliate of ContraVir shall) provide any insurance carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if such release, amendment, modification or waiver would adversely affect any rights or potential rights of Synergy (or its Subsidiaries) thereunder. However, no right or obligation of either Party arising solely in connection with the recovery or collection of Insurance Proceeds or the provision to any insurance carrier of a release, amendment, modification or waiver of rights pursuant to this Section 3.02 shall (A) preclude any Synergy Entity or any ContraVir Entity from presenting any claim or from exhausting any policy limit, (B) except as otherwise required under the terms of this Agreement, require any Synergy Entity or any ContraVir Entity to pay any premium or other amount or to incur any Liability, or (C) except as otherwise required under the terms of this Agreement, require any Synergy Entity or ContraVir Entity to renew, extend or continue any policy in force.

 

Section 3.03 ContraVir Insurance Coverage After the Insurance Transition Period . After the expiration of the Insurance Transition Period, ContraVir shall be responsible for obtaining and maintaining Insurance Policies in respect of the ContraVir Entities’ risk of loss and such insurance arrangements shall be separate and apart from the Synergy Insurance Policies; provided that nothing herein shall be deemed to be a relinquishment of any rights of a ContraVir Covered Party under any Synergy Insurance Policies written on an occurrence basis issued prior to the termination of the Insurance Transition Period.

 

Section 3.04 Cooperation . Synergy and ContraVir shall cooperate with each other in all respects, and shall execute any additional documents which are reasonably necessary, to effectuate the provisions of this ARTICLE III .

 

Section 3.05 No Assignment or Waiver . This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any Synergy Entity in respect of any Insurance Policy or any other contract or policy of insurance.

 

ARTICLE IV.

REAL ESTATE MATTERS

 

Section 4.01 Real Estate License .

 

(a) Synergy by certain lease agreements (the “ Leases ” and individually “ Lease ”), leases those certain spaces and is the current holder of the leasehold estates created thereby as described on Schedule 4.01 annexed hereto and incorporated herein (the “ Leased Premises ”). Synergy hereby grants to ContraVir a license (the “ License ”) to use and occupy those certain Leased Premises (collectively, the “ Premises ”) in which the ContraVir Business may be operated from time to time as designated in writing by the Parties, which writing shall be incorporated by reference herein (each space to be referred to herein as a “ License Area “ and collectively the “ License Areas ”), each of which is located in the Premises and rights of access thereto for the purposes hereinafter provided along with the right to use all equipment, furniture and fixtures, including communications and information systems office equipment, cabling and appurtenant items that are owned by Synergy and located in the License Areas as of the License Commencement Date

 

7



 

(as such term is defined in Section 4.02 below), for the applicable License Period (as such term is defined in Section 4.02 below). In connection with its use of each License Area and to the extent applicable, ContraVir shall also have the non-exclusive right to use (i) in common with Synergy and the other occupants of the building in which the Premises are located, the common areas outside the Premises that Synergy has the right to use, and (ii) in common with the Synergy and the other occupants of the Premises, the hallways, stairways, elevators, restrooms, kitchens, break rooms, photocopy rooms, facsimile rooms, conference rooms and other areas of the Premises (including the equipment and supplies located therein) that may be reasonably necessary for ContraVir’s use of the Premises, except those areas that Synergy may reasonably designate as private.

 

(b) ContraVir has inspected and is familiar with the License Areas and accepts same and the contents thereof in their “as is” condition as of the License Commencement Date. Synergy shall not be required to perform any work or furnish any materials in order to prepare the License Areas for ContraVir’s occupancy.

 

Section 4.02 License Period .

 

(a) The License Period (the “ License Period ”) for each License Area shall commence on the date hereof (the “ License Commencement Date ”) and, subject to the provisions of subparagraphs (b) and (c) below (as and to the extent applicable), shall expire (subject to sooner termination as hereinafter provided) at 11:59 P.M. on the date (the “ License Expiration Date ”) that is the termination date under this Agreement or, with respect to any Leased Premises, any earlier date that is one (1) day prior to the expiration date of the term of the Lease covering the related License Area, unless sooner terminated pursuant to any term or provision hereof or pursuant to law.

 

(b) In the event the term of a Lease covering a License Area shall sooner terminate in accordance with the provisions thereof (e.g., by reason of casualty or condemnation, and the landlord under the Lease shall exercise a right of termination contained in the Lease, or Synergy, as the tenant thereunder shall exercise a right of termination thereunder), the License Period for the License Area shall automatically terminate on the date of such termination of such Lease. Synergy shall give ContraVir reasonable prior notice of any such termination.

 

Section 4.03 License Fee . ContraVir shall pay a license fee for the License Areas at rates to be calculated in accordance with the allocation methodology described in Section 6.01 , which fee shall be paid in accordance with Section 6.03 .

 

Section 4.04 Services . ContraVir acknowledges that, in some of locations of the License Areas, a third-party landlord provides services to such locations. Synergy shall reasonably cooperate with ContraVir so as to enable ContraVir to obtain such services, but the foregoing shall not require Synergy to institute any action or proceeding against a landlord. To the extent that any service to a License Area has been supplied directly by Synergy, then Synergy shall continue to provide such services to such License Area during the related License Period and ContraVir shall be responsible for its pro rata share of Synergy’s out-of-pocket costs in connection therewith. Synergy shall provide such services to such License Area in substantially the same manner and quality as Synergy has provided the same to the License Area prior to the License Commencement Date or in substantially the same manner and quality as Synergy provides such services to itself. Synergy hereby grants to ContraVir the right to receive all of the services and benefits with respect to the License Areas which are to be provided by the related landlord under the Leases. Notwithstanding the foregoing, although the Parties contemplate that the landlords will,

 

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in fact, perform their obligations under the Leases, in the event of any default or failure of such performance by any of the landlords, Synergy will, upon the specific written request of ContraVir, make demand upon such landlord(s) to perform its obligations under the related Lease.

 

Section 4.05 Uses . ContraVir shall use and occupy a License Area for any purpose permitted under applicable laws and governmental regulations and, with respect to the Leased Premises, as permitted as a permitted use under the related Lease or subleases, and for no other purpose except as may be reasonably agreed upon in writing by Synergy and ContraVir. Nothing in this paragraph shall require ContraVir to use and occupy a License Area, except to the extent Synergy is required to use or occupy same under the terms of the related Lease.

 

Section 4.06 Compliance with Law; Observance of Lease Provisions .

 

(a) ContraVir shall promptly comply with all present and future applicable laws and regulations of all state, Federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of any Board of Fire Underwriters or any similar body (all of the foregoing being hereinafter collectively referred to as “ Laws “) having jurisdiction which shall impose any violation, order or duty upon Synergy or any landlord of Synergy with respect to the related License Area, to the extent only, however, that such compliance (i) relates to ContraVir’s manner of use of the related License Area as opposed to the mere use for the purposes herein permitted, and (ii) with respect to the Leased Premises, is required of the tenant under the related Lease. To the extent that ContraVir is not required to comply with any Laws pursuant to this subparagraph (a) above with respect to a License Area, Synergy shall comply with such Laws applicable to the related License Area or, if applicable, Synergy shall exercise reasonable efforts to require its third-party landlord to comply with such Laws (to the extent such compliance is the obligation of such landlord under the terms of the related Lease to Synergy). ContraVir shall not violate applicable provisions of any Lease governing the manner of use of the related License Area, the use of building elevators, building common areas, and similar provisions, so as not to cause a default thereunder.

 

(b) To the extent required under a Lease, Synergy shall obtain the consent of the related landlord for ContraVir to license the related License Area. This License is subject to, and ContraVir accepts this License subject to, all the terms, covenants, provisions, conditions and agreements contained in the Leases and the matters to which the related landlords are subject and subordinate, all of which are made a part of this Agreement as though fully set forth herein as if ContraVir were the Tenant named therein and Synergy were the landlord named therein. This License shall also be subject to, and ContraVir accepts this License also subject to, any amendments and supplements to the Leases hereafter made between any landlord and Synergy provided the same do not limit the rights or expand the obligations of ContraVir hereunder in any material respect without ContraVir’s consent (not to be unreasonably withheld). ContraVir covenants and agrees (i) to perform, observe and be bound by each and every covenant, condition and provision of the Leases as applicable to the related License Area (including the building rules and regulations) and (ii) that ContraVir will not do or cause to be done or suffer or permit its agents or employees to do any act or thing to be done which would or might cause the landlord or the rights of Synergy as tenant thereunder to any Lease be cancelled, terminated or forfeited or make Synergy liable for any damages, claim or penalty. Synergy (A) will not do or cause to be done or suffer or permit any act or thing to be done which would or might cause a Lease or the rights of ContraVir thereunder (through this Agreement) to be cancelled, terminated or forfeited or make ContraVir liable for damages, claims or penalty, (B) will not voluntarily terminate a Lease without the prior consent of ContraVir, which consent shall not be unreasonably withheld, and (C) shall deliver to ContraVir promptly upon receipt or delivery

 

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copies of all default notices under a Lease sent or received by Synergy.

 

Section 4.07 Repairs . ContraVir, throughout the License Period, shall take good care of the License Areas and the fixtures and appurtenances therein and, if applicable, as required of the tenant pursuant to the terms of the related Leases. Synergy shall make, or exercise reasonable efforts to cause to be made by such related landlord responsible for such repairs, all necessary structural and other repairs (for which ContraVir is not responsible pursuant to the provisions hereof) to the License Area.

 

Section 4.08 Damage and Destruction .

 

(a) Neither Synergy nor ContraVir shall have any responsibility to each other in the event of any damage to or theft of any equipment or property of the other Party unless required pursuant to the terms of  Section 4.09   or ARTICLE VII , and the Party incurring such loss shall look to its own insurance coverage, if any, for recovery in the event of any such damage, loss or theft (which, in the case of ContraVir, if such event occurs during the Insurance Transition Period, such insurance coverage shall mean the Synergy Insurance Policies).

 

(b) If a License Area is destroyed or damaged by fire or other casualty, the license fee as to such License Area shall abate (entirely if all or substantially all of the License Area is damaged and rendered untenantable and proportionately if only a portion of the License Area is damaged and rendered untenantable, except, with respect to the Leased Premises, in both cases only to the extent that Synergy’s rent under the related Lease is also abated) from the date of the casualty to the date by which Synergy (or a landlord under a related Lease) shall have repaired and restored the License Area or damaged portion thereof (but not ContraVir’s property and equipment therein) to substantially the same condition it was in prior to the occurrence of such casualty. In the event that any substantial portion of any License Area is rendered untenantable by casualty for a period in excess of four (4) months, or if the casualty occurs in the last year prior to the License Expiration Date for any License Area, then ContraVir may terminate the License with respect to such License Area. With respect to the Leased Premises, if the casualty or damage occasioned to the License Area, or to the Premises covered by a related Lease of which the damaged License Area forms a part, shall be so extensive as to entitle either or both of the landlord and Synergy to terminate the Lease, and either such landlord or Synergy shall terminate the Lease therefor in accordance with the terms thereof, then this Agreement with respect to such License Area shall automatically terminate on the Lease termination date, as provided in Section 4.02(b)  hereof.

 

Section 4.09 Insurance/Indemnity .

 

(a) Upon the expiration of the Insurance Transition Period, ContraVir shall obtain and maintain in full force and effect throughout the related License Periods with respect to the related License Area the insurance (other than property insurance as to alterations in the Premises or equipment owned by Synergy in the Premises, which insurance Synergy shall carry) required to be maintained by Synergy under any related Lease. Upon request by Synergy, if ContraVir carries such insurance separate from Synergy, ContraVir shall provide evidence of such insurance to Synergy in accordance with the requirements of any such related Lease.

 

(b) With respect to each Leased Premises, ContraVir shall owe the same indemnification obligations to Synergy as set forth in the Lease covering the License Area as if the words “Owner” or “Landlord” and “Tenant “or “Lessee” or words of similar import, wherever the same appear in the related Lease pertaining to indemnification were construed to mean, respectively, “Synergy” and “ContraVir”.

 

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With respect to all Owned Premises and with respect to any Leased Premises where the related Lease is silent on the indemnification obligations running from the “Tenant” to “Landlord”, then for the related License Area, ContraVir shall indemnify, defend and hold each Synergy Indemnified Person harmless from and shall defend each Synergy Indemnified Person against all claims made or judicial or administrative actions filed which allege that any Synergy Indemnified Person is liable to the claimant (other than to the extent caused by or arising from a Synergy Indemnified Person’s gross negligence or willful misconduct) by reason of (i) any injury to or death of any person, or damage to or loss of property, or any other thing occurring on or about the License Area or the Premises, or in any manner growing out of, resulting from or connected with the use, condition or occupancy of, the License Area or the Premises, if caused by any negligent act or willful misconduct of ContraVir or its agents, partners, contractors, employees, permitted assignees, licensees, sublessees, invitees or any other person or entity for whose conduct ContraVir is legally responsible, (ii) violation by ContraVir of any contract or agreement to which ContraVir is a party in each case affecting the License Area or the occupancy or use thereof by ContraVir and (iii) violation of or failure to observe or perform any condition, provision or agreement of this ARTICLE IV on ContraVir’s part to be observed or performed hereunder. Synergy shall similarly indemnify, defend and hold each ContraVir Indemnified Person harmless from and shall defend each ContraVir Indemnified Person against all claims made or judicial or administrative actions filed which allege that any ContraVir Indemnified Person is liable to the claimant (other than to the extent caused by or arising from a ContraVir Indemnified Person’s negligence or willful misconduct) by reason of (i) any injury to or death of any person, or damage to or loss of property, or any other thing occurring on or about the Premises, or in any manner growing out of, resulting from or connected with the use, condition or occupancy of, the Premises, if caused by any negligent act or willful misconduct of Synergy or its agents, partners, contractors, employees, permitted assignees, licensees, sublessees, invitees or any other person or entity for whose conduct Synergy is legally responsible (other than ContraVir), (ii) violation by Synergy of any contract or agreement to which Synergy is a party in each case affecting the Premises or the occupancy or use thereof by Synergy and (iii) violation of or failure to observe or perform any condition, provision or agreement of this ARTICLE IV on Synergy’s part to be observed or performed hereunder. In addition, and to the extent applicable, if Synergy is the beneficiary of an indemnity or release from the landlord under a Lease, Synergy shall use commercially reasonable efforts to similarly indemnify or release ContraVir, to the extent Synergy actually receives the benefit of such indemnity or release.

 

(c) Solely with respect to real estate matters governed by this ARTICLE IV , in the event of a conflict between, on the one hand, this Section 4.09 , and, on the other hand, Section 6.03 , the provisions of this Section 4.09 shall prevail. Notwithstanding the foregoing, the remaining provisions of ARTICLE VI shall remain in full force and effect with respect to the real estate matters governed by this  ARTICLE IV .

 

Section 4.10 Assignment; Sublicensing . The License granted hereby is personal to ContraVir and shall not be assigned nor shall ContraVir sublicense or otherwise permit or suffer the occupancy of any/all License Area(s) by any third party without first obtaining the prior written consent of Synergy.

 

Section 4.11 Alterations; Restoration . No alterations may be made by ContraVir to the License Areas without first obtaining (A) the prior written consent of Synergy, and (B) if required by a related Lease, the prior written consent of the related landlord of such Lease (which Synergy shall request from such landlord). Synergy, at the time of giving any such consent to any alterations by ContraVir, shall notify ContraVir if any such alterations must be removed and the License Areas restored, at the expiration

 

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or sooner termination of the applicable License Period. If Synergy employs Synergy Personnel at the License Areas, Synergy will reasonably cooperate with ContraVir to coordinate such requested alternations. Any costs associated with making such alterations, including construction or increased operating costs, shall be borne by ContraVir.

 

Section 4.12 Quiet Enjoyment . Synergy covenants and agrees that, so long as ContraVir shall pay the license fee described in Section 4.03 as and when due and in accordance with Section 5.03 and shall otherwise fully, faithfully and timely observe and perform within applicable notice and cure periods the agreements, covenants and conditions of this Agreement on its part to be observed and performed with respect to the related License Area, ContraVir shall and may peaceably and quietly have, hold and enjoy the related License Area for the related License Period, as same may be extended, without disturbance, hindrance, ejection or molestation by or from Synergy (subject, however, to the provisions hereof) or any one claiming by, through or under Synergy. Synergy may relocate ContraVir to any License Area upon reasonable prior written notice to ContraVir;  provided (i) Synergy pays for all reasonable relocation costs and expenses of ContraVir, and (ii) if the License Area is relocated to another building more than twenty-five (25) miles away from the existing License Area, ContraVir may elect to terminate the License with respect to such License Area and shall have up to ninety (90) days from the date of the relocation notice to find alternative premises to occupy. ContraVir shall abide by the building rules and regulations applicable to the buildings within which any License Area is located, which may be amended or modified by Synergy from time to time in its reasonable discretion.

 

Section 4.13 Surrender . On the related License Expiration Dates or sooner termination of the License with respect to the related License Area, ContraVir, if requested by Synergy or required by the restoration terms of a related Lease which would be applicable to the related License Area, shall restore the related portion of the License Area to the condition existing on the License Commencement Date insofar as the installations and alterations were made by or on behalf of ContraVir, ordinary wear and tear, fire and other casualty excepted (or if not so requested by Synergy, shall restore the related License Area only insofar as installations and alterations were made by or on behalf of ContraVir (or any assignee or Subsidiary of ContraVir), to the condition required by such restoration provisions of a related Lease) and otherwise comply with the surrender provisions of the Lease to the extent applicable to the License Area. Notwithstanding anything to the contrary contained herein, in no event shall ContraVir have any obligation to restore a License Area to the condition such space was in on the License Commencement Date to the extent such restoration related to an alteration which was made to such space prior to the License Commencement Date.

 

Section 4.14 Subordination . The License granted herein is subject and subordinate to all ground and underlying leases affecting the real property of which the License Areas form a part and to all mortgages which may now or hereafter affect such leases or such real property.

 

Section 4.15 Warranties . EXCEPT AS SET FORTH IN THIS AGREEMENT, THE PARTIES DO NOT MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSE AREAS, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

Section 4.16 Inability To Perform . Neither Party shall be responsible for delays in the performance of its obligations caused by events beyond that Party’s reasonable control, including, but not limited to, acts of God.

 

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Section 4.17 Good Faith . The License Areas are of such configuration and are not of such size as to justify, in either case, in the opinion of the Parties, entering into formal leases and/or subleases covering each of the License Area. The Parties have therefore entered into this Agreement which, the Parties recognize, is not dispositive of all matters and issues that may arise during the License Period with respect to the License Area. As and when issues and matters arise during the course of the License Period that are not definitively controlled by the provisions of this Agreement or any related Lease, the Parties shall act reasonably and in good faith endeavor to adjust and resolve such issues and matters.

 

Section 4.18 Site Specific Agreements . The Parties shall execute or cause their applicable subsidiaries to execute any additional agreements as may be reasonably necessary to effectuate the intent of this ARTICLE IV .

 

Section 4.19 Cooperation . Should the Parties desire to license, sublease, or enter into any other office sharing agreement with each other for spaces and locations not set forth on Schedule 4.01, or to renew any license and consequently the related underlying Lease for any space or location set forth on Schedule 4.01, then the Parties agree to cooperate with each other and to provide reasonable assistance to each other in identifying new spaces and entering into new leases, subleases, or other agreements, as applicable, with landlords and other related third parties as well as to cooperate and work with one another to reach mutually acceptable terms and provisions for any license, sublease or related agreement between each other; provided   that any such new or renewed arrangement between the Parties shall be subject to Synergy’s approval. This Section 4.19 shall survive the term of this Agreement.

 

ARTICLE V.

LABORATORY AND OTHER EXPENSES

 

Section 5.01 Laboratory Services During Laboratory Transition Period . Throughout the period beginning on the Effective Date and ending upon the first to occur the termination or expiration of this Agreement in accordance with ARTICLE VIII hereof, or such other date as may be required by applicable laws (the “ Laboratory Transition Period ”), Synergy shall make available to ContraVir Synergy’s laboratories and/or cause to make Synergy Personnel available for the purpose of testing required for pre-clinical development or clinical development related to the ContraVir Business (“ Laboratory Services ”).  All services performed by Synergy’s Personnel shall be subject to the provisions of Section 2.03 above.

 

Section 5.03 Laboratory Services After the Laboratory Transition Period . After the expiration of the Laboratory Transition Period, ContraVir shall be responsible for obtaining any laboratory services required for pre-clinical development or clinical development related to the ContraVir Business.

 

Section 5.03 Cooperation . Synergy and ContraVir shall cooperate with each other in all respects, and shall execute any additional documents which are reasonably necessary, to effectuate the provisions of this ARTICLE V .

 

ARTICLE VI.

SERVICE COSTS; OTHER CHARGES

 

Section 6.01 Costs for Synergy Services .

 

(a) Each Synergy Service and Laboratory Services will be provided at the price calculated in

 

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accordance with the methodology described in this Section 6.01 , which prices will be reviewed on an annual basis at least thirty (30) days prior to the end of each of Synergy’s fiscal years commencing with the Synergy fiscal year ending December 31, 2013. In the event of a material change in the level of service for any Synergy Service or Laboratory Service prior to the termination of such Synergy Services and/or Laboratory Service pursuant to the terms of this Agreement, the Parties will work together in good faith to recalculate the price for such Synergy Service and/or Laboratory Service.

 

(b) ContraVir will generally be allocated certain costs based on the ContraVir Business’s revenues, headcount or other mutually agreed to statistics (relative to aggregate revenues, headcount or other statistics), as agreed upon by the Parties, and calculated in a manner consistent with practices between the Parties, as such practices may be changed from time to time by the Parties. Notwithstanding the foregoing, certain third party costs will be charged directly to ContraVir, as agreed upon by the Parties.

 

(c) No later than 90 days prior to the end of the Initial Term and 45 days prior to the end of any Renewal Term, the Parties shall commence discussions to determine the appropriate level of service and cost for each Synergy Service to be provided in the subsequent Renewal Term based on a good faith review of the Synergy Services and levels of service provided in the then-current term and a good faith estimate of ContraVir’s future service requirements.

 

Section 6.02 Payment .

 

(a) Charges for Synergy Services and/or Laboratory Services shall be invoiced quarterly in arrears by Synergy, within ten (10) business days after the end of the applicable quarter. Each invoice shall be directed to the Chief Financial Officer of ContraVir or such other person designated in writing from time to time by ContraVir’s Chief Financial Officer. Each such invoice shall be payable in accordance with Section 6.03 ; provided that if ContraVir, in good faith, disputes any invoiced charge, payment of such charge may be made only after mutual resolution of such dispute. ContraVir agrees to notify Synergy promptly, and in no event later than thirty (30) days following receipt of an invoice, of any disputed charge. Notwithstanding the foregoing, in no event will any delay of payment relating to disputed charges affect the timely payment of undisputed charges in accordance with this Section 6.02(a)  .

 

(b) During the term of this Agreement, Synergy shall keep such books, records and accounts as are reasonably necessary to verify the calculation of the fees and related expense for all Synergy Services and/or Laboratory Services provided hereunder. Synergy shall provide documentation supporting any amounts invoiced by Synergy pursuant to this Section 6.02 as ContraVir may from time to time reasonably request. ContraVir shall have the right to review such books, records and accounts of Synergy with respect to the provision of the Synergy Services at any time upon reasonable notice, and ContraVir agrees to conduct any such review in a manner so as not to unreasonably interfere with the normal business operations of Synergy.

 

Section 6.03 Payments under this Agreement . For purposes of this Agreement, and solely with respect to periods prior to the Distribution Date, any “payment” by ContraVir to Synergy pursuant to this Agreement shall be treated as having been made upon an offset of intercompany account(s) of amounts otherwise owing by Synergy to ContraVir in accordance with the Parties’ general practice of offsetting intercompany account(s); provided   that ContraVir provides prompt notice of such offset to Synergy with sufficient detail of the intercompany account(s) being offset. All payments shall be made to Synergy within the time prescribed for payment in this Agreement, or if no period is prescribed, within ten (10) days after delivery of written notice of payment owing together with a computation of the amounts

 

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due.

 

Section 6.04 Responsibility for Synergy Personnel . All Synergy Personnel employed by Synergy in connection with its rendering of the Synergy Services will be Synergy’s employees, agents, or Subcontractors, as the case may be. Synergy will have the sole and exclusive responsibility for all such personnel, will supervise such Synergy Personnel, and will cause such personnel to cooperate with ContraVir in performance of the Synergy Services in accordance with the terms and conditions of ARTICLE II ,  ARTICLE III ,  ARTICLE IV ARTICLE V   and ARTICLE VII . Synergy will pay, and be solely responsible for the payment of, any and all wages, salaries, or other compensation or benefits payable to such Synergy Personnel, plus any and all premiums, contributions and taxes for workers’ compensation insurance, unemployment compensation, disability insurance, FICA, payroll, and all similar provisions now or hereafter imposed by any Governmental Authority with respect to, or measured by, wages, salaries, or other compensation paid or to be paid, or benefits provided or to be provided, by Synergy to any Synergy Personnel. No person providing Synergy Services to ContraVir pursuant to the terms of this Agreement shall be deemed to be, or shall have any rights as, an employee of ContraVir.

 

ARTICLE VII.

WARRANTY DISCLAIMER, LIMITATION OF LIABILITY AND INDEMNIFICATION

 

Section 7.01 No Warranty . The Parties both acknowledge and agree that Synergy has agreed to provide or cause to be provided the Synergy Services and/or Laboratory Services hereunder as an accommodation to ContraVir. EXCEPT FOR THE LIMITED REPRESENTATIONS OF THE PARTIES SET FORTH IN SECTION 9.14   BELOW, NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED (INCLUDING WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION), ARE MADE BY SYNERGY OR ANY SYNERGY ENTITY WITH RESPECT TO THE PROVISION OF THE SYNERGY SERVICES AND/OR LABORATORY SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED.

 

Section 7.02 Limitation of Liability - Synergy .

 

(a) ContraVir agrees that none of the Synergy Entities and their respective directors, officers, Subcontractors and employees (each of the Synergy Entities and their respective directors, officers, Subcontractors and employees, a “ Synergy Indemnified Person ”) shall have any Liability, whether direct or indirect, in contract or tort or otherwise, to ContraVir or any ContraVir Entity or any other Person under the control of ContraVir or any ContraVir Entity for or in connection with the Synergy Services and/or Laboratory Services rendered or to be rendered or granted or to be granted into by any Synergy Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any Synergy Indemnified Person’s actions or inactions in connection with any Synergy Services or such transactions, except for any Liabilities resulting from (i) any material breach of this Agreement on the part of any Synergy Indemnified Person; or (ii) the gross negligence, bad faith or willful misconduct of any Synergy Indemnified Person in connection with this Agreement.

 

(b) None of the Synergy Entities shall have any Liability to ContraVir or any other Person for failure to perform Synergy’s obligations under this Agreement or otherwise, where such failure to perform

 

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similarly affects the Synergy Entities receiving the same or similar services and does not have a disproportionately adverse effect on ContraVir; provided , however , the provisions of this  Section 7.02(b)   shall not relieve any Synergy Entity from any Liability resulting from such Entity’s failure to maintain the Synergy Insurance Policies pursuant to the terms of this Agreement.

 

(c) In addition to the foregoing, ContraVir agrees that, in all circumstances, it shall use commercially reasonable efforts to mitigate and otherwise minimize damages to ContraVir, whether direct or indirect, due to, resulting from or arising in connection with any failure by Synergy to comply fully with Synergy’s obligations under this Agreement.

 

Section 7.03 Indemnification by Synergy . Except as otherwise provided in this Agreement, Synergy shall, for itself and as agent for each Synergy Entity, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless each ContraVir Indemnified Person from and against, and shall reimburse such ContraVir Indemnified Person with respect to, any and all Losses that any third party seeks to impose upon the ContraVir Indemnified Person, or which are imposed upon the ContraVir Indemnified Person, and that, following the Effective Date, relate to, arise or result from, any of the following items (without duplication):

 

(a) any material breach by any Synergy Entity of this Agreement; and

 

(b) the gross negligence, bad faith or willful misconduct of any Synergy Indemnified Person in connection with the Synergy Services rendered or to be rendered by, or granted or to be granted by any Synergy Indemnified Person pursuant to this Agreement or the transactions contemplated by this Agreement.

 

In the event that any Synergy Entity makes a payment to a ContraVir Indemnified Person hereunder, and such ContraVir Indemnified Person subsequently diminishes the Loss on account of which such payment was made, either directly or through a third-party recovery (other than a recovery indirectly from ContraVir), ContraVir will promptly repay (or will cause such ContraVir Indemnified Person to promptly repay) such Synergy Entity the amount by which the payment made by such Synergy Entity exceeds the actual cost of the associated indemnified Loss.

 

Notwithstanding the foregoing, the provisions of this Section 7.03 shall terminate immediately upon a Change of Control.

 

Section 7.04 Disclaimer of Damages . IN NO EVENT SHALL ANY SYNERGY ENTITY BE LIABLE TO ANY CONTRAVIR ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES;  PROVIDED ,  HOWEVER , THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY’S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES AS SET FORTH IN THIS AGREEMENT OR IN ANY INTERCOMPANY AGREEMENT.

 

Section 7.05.  Procedure for Claims . Each indemnified Party agrees to give the indemnifying Party prompt written notice of any Loss or discovery of fact upon which such indemnified Party intends to base a request for indemnification under this Article VII. Each Party shall furnish promptly to the other

 

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copies of all papers and official documents received in respect of any Loss. The indemnifying Party shall have the sole right to defend, settle, or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate. The indemnifying Party shall obtain the written consent of the indemnified Party, which shall not be unreasonably withheld or delayed, prior to ceasing to defend, settling or otherwise disposing of any loss if as a result thereof the indemnified Party would become subject to injunctive or other equitable relief or any remedy other than the payment of money, which payment would be the responsibility of the indemnifying Party. The indemnifying Party shall not be liable for any settlement or other disposition of a loss by the indemnified Party which is reached without the written consent of the indemnifying Party. The reasonable costs and expenses, including reasonable fees and disbursements of counsel incurred by any indemnified Party in cooperating with the indemnifying Party in its defense of a loss, shall be reimbursed on a quarterly basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the indemnified Party.

 

ARTICLE VIII.

TERM AND TERMINATION

 

Section 8.01 Term . Except as otherwise provided herein, or as otherwise agreed in writing by the Parties, (a) this Agreement shall have an initial term from the Effective Date through the Distribution Date (the “ Initial Term ”), and will be renewed automatically thereafter for successive three (3) month terms (each, a “ Renewal Term ”) with respect to any Synergy Services then in effect, unless either Party elects not to renew this Agreement or any specific Service provided hereunder by notice in writing to the other Party not less than forty-five (45) days prior to the end of any term, and (b) Synergy’s obligation to provide, grant or procure, and ContraVir’s right to purchase or continue to benefit from, a Synergy Service shall cease as of the applicable date set forth in the schedules attached hereto, as applicable, or the applicable date set forth in any arrangement between the Parties pursuant to which such Synergy Services are provided or such earlier date determined in accordance with Section 8.02 .

 

Section 8.02 Termination .

 

(a) The Parties may by mutual agreement from time to time terminate this Agreement with respect to one or more of the Synergy Services and/or Laboratory Services, in whole or in part.

 

(b) ContraVir may terminate any Synergy Services and/or Laboratory Services at any time (i) upon at least thirty (30) days prior written notice of such termination by ContraVir to Synergy, effective as of such 30th day, or (ii) if Synergy shall have failed to perform any of its material obligations under this Agreement relating to such Synergy Service, ContraVir shall have notified Synergy in writing of such failure, and such failure shall have continued for a period of at least thirty (30) days after receipt by Synergy of written notice of such failure from ContraVir, effective as of such thirtieth day.

 

(c) Subject to the provisions of Section 8.02(d)  and Section 8.03 , Synergy may terminate any Synergy Service at any time if ContraVir shall have failed to perform any of its material obligations under this Agreement, Synergy shall have notified ContraVir in writing of such failure, and such failure shall have continued for a period of at least thirty (30) days after receipt by ContraVir of written notice of such failure from Synergy, effective as of such thirtieth (30 th  ) day.

 

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(d)                   If a Party undergoes a Change of Control, this Agreement shall automatically terminate without further notice to either Party.

 

(e) Upon any termination of this Agreement by Synergy, including any determination by Synergy to not renew this Agreement pursuant to Section 7.01 above (other than a termination as a result of a default by ContraVir), each License shall continue for a period of up to ninety (90) days to allow ContraVir to find alternative premises to occupy. ContraVir shall pay any costs incurred by Synergy arising from Synergy’s provision of adequate physical and information technology separation and segregation during such ninety (90) day transition period.

 

Section 8.03 Termination of ARTICLE III . Notwithstanding anything to the contrary contained in this ARTICLE VIII :

 

(a) The provisions of ARTICLE III shall continue with respect to each applicable Synergy Insurance Policy, for such period of time following the date upon which the Synergy Entities hold shares of ContraVir common stock representing less than a majority of the total outstanding shares of ContraVir common stock as is permitted in the applicable insurance policy but, in no event, for more than ninety (90) days; and

 

(b) Synergy’s obligation to maintain the Synergy Insurance Policies for the ContraVir Entities, and, except as provided in Section 8.04 below, ContraVir’s obligation to pay or reimburse Synergy, as the case may be, for the expenses resulting from such Synergy Insurance Policies shall cease as of the applicable date determined in accordance with this Section 8.03 ; provided , however , nothing in this  Section 8.03 shall eliminate Insurance Coverage for a claim pending as of the date of termination until such time as replacement coverage has been obtained. Synergy shall provide ContraVir with prior written notice of termination of Insurance Coverage pursuant to this Section 9.03 as soon as reasonably practical after Synergy’s determination of the date upon which the Synergy Entities hold shares of ContraVir common stock representing less than a majority of the total outstanding shares of ContraVir common stock.

 

Section 8.04 Effect of Termination .

 

(a) Other than as required by law or Section 8.03 above, upon the effective date of the termination of (1) any Synergy Service and/or Laboratory Services (excluding any service relating to the Synergy Insurance Policies) pursuant to Section 8.02 , (2) any Synergy Service and/or Laboratory Services relating to the Synergy Insurance Policies pursuant to Section 8.03 , or (3) upon termination of this Agreement in accordance with its terms, Synergy shall have no further obligation to provide such terminated Synergy Service and/or Laboratory Services (or any Synergy Service, in the case of termination of this Agreement), and ContraVir shall have no obligation to pay any fees relating to such terminated Synergy Services and/or Laboratory Services (or to make any other payments hereunder, in the case of termination of this Agreement); provided that, notwithstanding such termination:

 

(i) ContraVir shall remain liable to Synergy for any fees owed and payable in respect of the Synergy Services provided prior to the effective date of such termination;

 

(ii) Synergy shall continue to charge ContraVir for administrative and program costs relating to benefits paid after but incurred prior to the termination of any Synergy Service;

 

(iii) ContraVir shall be obligated to pay such expenses in accordance with the terms of this Agreement; provided further that (A) Synergy makes commercially reasonable efforts to obtain available

 

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refunds of such costs and (B) if Synergy obtains a refund of any such costs already paid by ContraVir, Synergy shall return such portion of the costs to ContraVir; and

 

(iv) in the event of the termination of any License pursuant to Section 8.02(d) , Synergy shall be obligated to continue to provide such License to ContraVir for a period of up to ninety (90) days and ContraVir shall be obligated to continue to pay any applicable license fees to Synergy for that same time period.

 

(b) Following termination of this Agreement with respect to any Synergy Service, the Parties agree to cooperate with each other in providing for an orderly transition of such Synergy Service to ContraVir or to a successor service provider as designated by ContraVir. In the event of any termination with respect to one or more, but less than all, of the Synergy Services described herein, this Agreement will continue in full force and effect with respect to any Synergy Services not so terminated. The provisions of ARTICLE VII , ARTICLE VIII , and ARTICLE IX shall survive the termination this Agreement.

 

(c) Notwithstanding anything to the contrary in this Agreement, upon a termination of this Agreement pursuant to Section 8.02(d), Synergy shall have no further liability under this Agreement and shall not be required to perform any obligations hereunder, including, but not limited to, any Synergy Service or Laboratory Service, or make any payment pursuant to this Agreement.

 

ARTICLE VIII.

MISCELLANEOUS

 

Section 9.01 Ownership .

 

(a) This Agreement and the performance of the Synergy Services and/or Laboratory Services hereunder will not affect the ownership of any assets or responsibility for any liabilities allocated in any of the other Intercompany Agreements. Neither Party will gain, by virtue of this Agreement or the Synergy Services provided hereunder, by implication or otherwise, any rights of ownership of any property or intellectual property rights owned by the other Party or such other Party’s Subsidiaries.

 

(b) ContraVir shall own all property or intellectual property rights assigned to ContraVir pursuant to the Intercompany Agreements, as well as any changes, additions or improvements thereto made by Synergy solely on behalf of ContraVir in the performance of the Synergy Services, including the granting of the Licenses. In addition, ContraVir will own any data with respect to ContraVir or the ContraVir Business to the extent such data is developed by Synergy solely on behalf of ContraVir or the ContraVir Business. To the extent that data provided by ContraVir to Synergy is owned by ContraVir and such data is processed or used by Synergy in performance of the Synergy Services and/or Laboratory Services, such data and any modifications to that data shall remain the property of ContraVir. The provisions of this Section 9.01(b)  do not grant ContraVir any rights to any data concerning Synergy, any other Synergy Entity or Synergy’s business.

 

Section 9.02 No Agency . Nothing in this Agreement shall (i) constitute or be deemed to constitute a partnership or joint venture between or among the Parties hereto or their respective Subsidiaries, or (ii) create an agency or employment relationship between or among the Parties, in either case, for any purpose whatsoever. Neither Party hereto nor its Subsidiaries shall have authority or power to bind the other Party hereto or its Subsidiaries or to contract in the name of, or create a Liability against, the other Party hereto or such other Party’s Subsidiaries in any way or for any purpose.

 

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Section 9.03 Subcontractors . In connection with the Synergy Services, Synergy may hire or engage one or more third-party subcontractors (each, a “ Subcontractor ”) to perform all or any of its obligations under this Agreement; provided   that, subject to Section 6.01 , Synergy shall pay for all fees due each such Subcontractor and shall in all cases remain primarily responsible for all obligations undertaken by each such Subcontractor on Synergy’s behalf pursuant to the terms of this Agreement with respect to the scope, quality, degree of skill and nature of the Synergy Services provided hereunder. Synergy’s hiring of any Subcontractors pursuant to this Section 9.03 shall be conducted consistently with Synergy’s current practice of hiring independent contractors.

 

Section 9.04 Force Majeure .

 

(a) For purposes of this Section 9.04 , “ Force Majeure ” means an event beyond the control of either Party, which by its nature could not have been foreseen by such Party, or, if it could have been foreseen, was unavoidable, and includes without limitation, acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) and failure of energy sources.

 

(b) Continued performance of a Synergy Service and/or Laboratory Services may be suspended immediately to the extent caused by Force Majeure. Synergy will give prompt notice to ContraVir of the occurrence of the event giving rise to the suspension and of its nature and anticipated duration. The Parties shall cooperate with each other to find alternative means and methods for the provision of the suspended Synergy Service and/or Laboratory Services. Notwithstanding anything to the contrary contained herein, if the performance of a Synergy Service and/or Laboratory Services is suspended due to Force Majeure for a period exceeding thirty (30) days, ContraVir shall have the right to terminate this Agreement with respect to such Synergy Service and/or Laboratory Services upon delivery of written notice to Synergy. Such termination shall be effective immediately. No charges will be incurred with respect to a Synergy Service and/or Laboratory Services for any time period during which the provision of such Synergy Service has been suspended or terminated pursuant to this Section 9.04 .

 

(c) Without limiting the generality of Section 6.01 , neither Party shall be under any liability for failure to fulfill any obligation under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances of Force Majeure.

 

Section 9.05 Entire Agreement . This Agreement and any exhibits or schedules attached hereto or thereto, and the Insurance Policies referred to herein, constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof.

 

Section 9.06 Governing Law and Jurisdiction . This Agreement, including the validity hereof and the rights and obligations of the Parties hereunder, shall be construed in accordance with and shall be governed by the laws of the State of New York applicable to contracts made and to be performed entirely in such State (without giving effect to the conflicts of laws provisions thereof).

 

Section 9.07 Amendment . This Agreement and any schedule may be amended at any time after

 

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such date by mutual written consent of Synergy and ContraVir evidenced by an instrument in writing signed on behalf of each of the Parties. In the event Synergy requests that ContraVir provides certain services to Synergy at a future date, and to the extent that the Parties mutually agree with respect to the provision of such services, the Parties shall execute a supplement to this Agreement setting forth the terms and conditions of such services to be provided to Synergy by ContraVir, including a description of any related fees.

 

Section 9.08 Notices . Notices, offers, requests or other communications required or permitted to be given by either Party pursuant to the terms of this Agreement shall be given in writing to the respective Parties to the following addresses:

 

If to Synergy or Synergy Entity, to:

 

Synergy Pharmaceuticals Inc.

420 Lexington Avenue, Suite 1609

New York, New York 10174

Attention: Secretary

Facsimile: (212) 297-0019

 

If to ContraVir or a ContraVir Entity, to:

 

ContraVir Pharmaceuticals, Inc.

420 Lexington Avenue, Suite 1609

New York, New York 10174

Attention: Secretary

Facsimile: (212) 297-0019

 

or to such other address or facsimile number as the Party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by facsimile or email, confirmed by first class mail. All notices shall be deemed to have been given when received, if hand delivered; when transmitted, if transmitted by facsimile, email or similar electronic transmission method; one working day after it is sent, if sent by recognized overnight courier; and three days after it is postmarked, if mailed first class mail or certified mail, return receipt requested, with postage prepaid.

 

Section 9.09 Counterparts . This Agreement, including the Intercompany Agreements and the exhibits and schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section 9.10 Binding Effect; Assignment . This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective legal representatives and successors, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may be enforced separately by each Synergy Entity and each ContraVir Entity. Neither Party may assign this Agreement or any rights

 

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or obligations hereunder, without the prior written consent of the other Party, and any such assignment shall be void; provided , however , either Party may assign this Agreement to a successor entity formed solely in connection with such Party’s reincorporation in another jurisdiction or into another business form.

 

Section 9.11 Severability . If any term or other provision of this Agreement or the schedules or exhibits attached hereto (or Insurance Policies described herein) is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible.

 

Section 9.12 Failure or Indulgence not Waiver; Remedies Cumulative . No failure or delay on the part of either Party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the schedules or any exhibits attached hereto (or the Insurance Policies described herein) are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

Section 9.13 Authority . Each of the Parties represents to the other Party that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

 

Section 9.14 Specific Performance . The Parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, without the necessity of proving irreparable damage or posting a bond, in addition to any other remedy at law or equity.

 

Section 9.15 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

Section 9.16 Interpretation . The headings contained in this Agreement, in any exhibit or schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 9.17 Conflicting Agreements . In the event of conflict between this Agreement and any other agreement executed on or prior to the Effective Date in connection with the subject matter hereof, the provisions of this Agreement shall prevail.

 

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Section 9.18 Third Party Beneficiaries . Except as specifically set forth in this Agreement, none of the provisions of this Agreement shall be for the benefit of or enforceable by any third party, including any creditor of any Person. No such third party shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any claim in respect of any liability (or otherwise) against either Party hereto.

 

Section 9.19 Incorporation by Reference . All schedules to this Agreement are incorporated herein by reference and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any schedule but not otherwise defined therein shall have the meaning as defined in this Agreement.

 

Section 9.20 Relationship of Parties . The status of the Parties under this Agreement shall be that of independent contractors. Neither Party shall have the right to enter into any agreements on behalf of the other Party, nor shall it represent to any person that it has any such right or authority. Nothing in this Agreement shall be construed as establishing a partnership or joint venture relationship between the Parties. Neither Party shall have authority to enter into contracts or binding commitments in the name or on behalf of the other Party. Neither Party will use the other Party’s logo or marks without prior written approval, and then such use shall be only for the benefit of the other Party and at the direction of the other Party. Neither Party shall be, nor represent itself as being, an agent of the other Party, and shall not be, nor represent itself as being, authorized to bind the other Party. Each Party agrees, acknowledges and understands that neither it nor its employees or agents shall have the status of an employee of the other Party and shall not participate in any employee benefit plans or group insurance plans or programs (including, but not limited to salary, bonus or incentive plans, stock option or purchase plans, or plans pertaining to retirement, deferred savings, disability, medical or dental), even if it is considered eligible to participate pursuant to the terms such plans. In addition, each Party understands and agrees that consistent with its independent contractor status, neither it nor its employees or agents will apply for any of the other Party’s government-sponsored benefits intended only for employees, including, but not limited to, unemployment benefits. Such Party’s exclusion from benefit programs maintained by the other Party is a material component of this Agreement. To the extent a Party or its employees or agents may become eligible for any benefit programs maintained by the other Party (regardless of timing or reason for eligibility), such Party hereby waives its right to participate in the programs. Each Party shall defend, indemnify and hold the other Party harmless from any and all claims made by its personnel on account of an alleged failure by the other Party to satisfy any tax or withholding obligations.

 

Section 9.21  Compliance with Laws . Each Party will comply with all applicable laws, rules, ordinances and regulations of any governmental entity or regulatory agency governing the actions to be taken and provided hereunder. Neither Party will take any action in violation of any applicable law, rule, ordinance or regulation that could result in liability being imposed on the other Party.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have signed this Amended and Restated Shared Services Agreement by their duly authorized representatives as of the date first set forth above.

 

 

 

 

SYNERGY PHARMACEUTICALS INC.

 

 

 

 

 

By:

/s/ Gary S. Jacob

 

Name:

Gary S. Jacob

 

Title:

Chief Executive Officer

 

 

 

 

 

CONTRAVIR PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Bernard S. Denoyer

 

Name:

Bernard S. Denoyer

 

Title:

Chief Financial Officer

 

[Signature Page to Amended and Restated Shared Services Agreement]

 

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Exhibit 10.3

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security Agreement, dated June 5, 2013 between ContraVir Pharmaceuticals, Inc. a Delaware Corporation with offices at 420 Lexington Avenue, Suite 1609, New York, NY 10170 (hereinafter called “Borrower”), Synergy Pharmaceuticals Inc., a Delaware Corporation with offices at 420 Lexington Avenue, Suite 1609, New York, NY 10170 (hereinafter called “Lender”).

 

WHEREAS, Borrower has requested Lender to make loans in the aggregate amount of up to $500,000 available to Borrower for working capital purposes.

 

NOW THEREFORE, the parties hereto hereby agree as follows:

 

1.                                       For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower hereby grants to Lender a security interest in certain property described in Schedule 1 hereto, as set said security interest and pledge to include a lien on all proceeds, products, accessions and substitutions of the property (property, proceeds, products, accessions and substitutions, are hereinafter sometimes collectively referred to as the “Collateral”).

 

2.                                       The security interest granted herein is given to secure performance and payment of all obligations and indebtedness of Borrower to Lender of whatever kind and whenever or however created or incurred (hereinafter called the “Indebtedness”), including, without limiting the generality of the foregoing, that certain Promissory Note (hereinafter called the “Borrower’s Note”) dated the date hereof, executed by Borrower payable to the order of Lender payable on or before June 5, 2014, with interest at the rate prescribed therein, which evidences loans made by Lender to Borrower secured by the Collateral, together with any and all renewals, extensions or rearrangements of the Borrower’s Note.  Lender shall endorse on the Schedules to the Borrower’s Notes, appropriate notations to evidence the date, amount, and maturity of each loan made by Lender and the date and amount of each payment of principal made by Borrower with respect thereto; provided , that the failure of Lender to make any such notation or endorsement shall not affect the obligations of Borrower, hereunder under the Borrower’s Note. The Lender is hereby irrevocably authorized by Borrower so to endorse the Borrower’s Note and to attach to and make a part of the Borrower’s Note a continuation of any such schedule, when required.  The amount and time of any advances to the Borrower shall be in the sole discretion of the Lender and any obligation, express or implied, of the Lender to make advances shall terminate upon an “Event of Default” hereafter defined.

 

3.                                       If Lender shall have required Borrower to deliver to Lender any or all of the Collateral and if Borrower shall receive or become entitled to receive any rights, distributions or payments of any kind or description with respect to or on account of such Collateral, Borrower agrees to accept same as agent for Lender, to hold same in trust for Lender, and to forthwith deliver same to Lender in the form received, with the endorsement of Borrower when necessary to be held by Lender as Collateral hereunder.

 

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4.                                       Borrower agrees to pay prior to delinquency, all taxes, charges, liens and assessments, if any, against the Collateral, and upon the failure of Borrower to do so, Lender at its option may pay any of them and shall be the sole judge of the legality or validity thereof and the amount necessary to discharge the same.  Any such payment by Lender shall be immediately due and payable by Borrower to Lender and shall become part of the Indebtedness secured hereby.

 

5.                                       At the option of Lender and without necessity of demand or notice, all or any part of the Indebtedness shall immediately become due and payable irrespective of any agreed maturity upon the happening of any of the following events of default (“Events of Default”):

 

(a)                                  default in the payment of any of the Indebtedness when due, after expiration of any applicable grace period;

 

(b)                                  any breach of this Agreement or any other agreement between Lender and Borrower;

 

(c)                                   the entry of a final judgment, issuance of an injunction or order of attachment against the Borrower, or any of the Collateral and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed;

 

(d)                                  the appointment of a receiver, conservator, custodian, trustee, or similar person, officer or committee of, or for any property of, the Borrower which appointment shall not be dismissed within 30 days of such appointment;

 

(e)                                   the insolvency, dissolution, commission of an act of bankruptcy, assignment for the benefit of creditors, making of a bulk transfer, granting of a security interest in any property subject to this Agreement, the whole or partial suspension or liquidation of usual business, or failure in business, of or by Borrower;

 

(f)                                    the commencement of any proceeding, suit or action under any provisions of the Bankruptcy Code, as amended, or any similar statute, for adjudication as a bankrupt, reorganization, composition, extension, arrangement, wage earner’s plan, receivership, liquidation or dissolution by or against Borrower which is not discharged within 30 days thereafter;

 

(g)                                   failure of the Borrower or the Collateral to comply with Regulations U or X of the Board of Governors of the Federal Reserve System, as amended;

 

(h)                                  the Borrower shall terminate or suspend the transaction of its usual business and such termination or suspension shall continue for a period of 10 days; or

 

(i)                                      Borrower shall default in the payment of the principal of or interest on any indebtedness for borrowed money, other than the Borrower’s Note (including, without limitation, any obligation on account of equipment leases or title retention or conditional sales agreements) beyond any period of grace provided with respect thereto, or in the performance of, or compliance with, any term contained in any agreement or instrument

 

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evidencing or relating to such indebtedness, or under which any such indebtedness is created, and shall not have cured such default within any period of grace provided by such agreement or instrument, if the effect of such default is to cause or permit the holder of such indebtedness (or a trustee on behalf of such holder) to cause such indebtedness to become due prior to its stated maturity; or

 

(j)                                     Lender shall in good faith consider the Indebtedness or Collateral insecure or unsafe.

 

6.                                       If all or any part of the Indebtedness shall become due and payable by demand or as specified in Paragraph 5, Lender may then, or at any time thereafter, apply, set-off, collect, draw upon, draft upon, sell in one or more sales or otherwise dispose of, any or all of the Collateral, in such order as Lender may elect, and any such sale may be made either at public or private sale at its place of business or elsewhere, either for cash or upon credit or for future delivery, at such price as Lender may deem fair, and Lender may be the purchaser of any or all Collateral so sold and hold the same thereafter in its own right free from any claim of Borrower or right of redemption.  No such purchase or holding by the Lender shall be deemed retention by the Lender in satisfaction of the Indebtedness.  If any applicable provision of the Uniform Commercial Code or other law requires Lender to give reasonable notice of any such sale or disposition or other action, five days prior written notice shall constitute reasonable notice. Lender may require Borrower to assemble the Collateral and make it available to Lender at a place designated by Lender which is reasonably convenient to Lender and Borrower.  Any sale hereunder may be conducted by an auctioneer or any officer or agent of Lender.

 

7.                                       Lender shall be under no duty whatsoever to make or give any presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor or notice of intent to accelerate with respect to any Collateral or the Indebtedness.  Lender shall not be liable for failure to collect or realize upon any or all of the Indebtedness or Collateral, or for any delay in so doing, not shall Lender be under any duty to take any action whatsoever with regard thereto.  Lender shall, however, use reasonable care in the custody and preservation of any Collateral in its possession, and in attempting to collect the proceeds of any of the Collateral or in permitting Borrower to make such collection, prior to the expiration dates thereof, but need not take any steps to keep the Collateral identifiable.  Lender shall have no duty to comply with any recording, filing, or other legal requirements necessary to establish or maintain the validity, priority or enforceability of, or Lender’s rights in or to, any of the Collateral.

 

8.                                       Subject to the provisions of paragraph 7 hereof, Borrower waives any right to require Lender to proceed against any person, exhaust any Collateral or pursue any other remedy in Lender’s power; waives any and all notice of acceptance of this Agreement or of creation or modification of any of the Indebtedness; and waives any defense arising by reason of any liability or other defense of any Borrower or any other person, or by reason of the cessation from any cause whatsoever of the liability of Borrower or any other person.  All dealings between Borrower and Lender, whether or not resulting in the creation of lndebtedness, shall conclusively be presumed to have been had or consummated in reliance upon this Agreement. Until all Indebtedness shall have been paid in full, Borrower shall have no right to subrogation, and

 

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Borrower waives any right to enforce any remedy which Lender now has or may hereafter have against any Borrower or against any other person and waives any benefit of and any right to participate in any Collateral or security whatsoever now or hereafter held by Lender.  Borrower authorizes Lender without notice or demand and without any reservation of rights against Borrower and without affecting Borrower’s liability hereunder or on the Indebtedness, from time to time to (a) take and hold security, other than the Collateral, for the payment of any or all of the indebtedness, and exchange, enforce, waive and release any or all of the Collateral or other security; and (b) after an Event of Default as specified in Section 5, apply the Collateral or other security and direct the order or manner of sale thereof as Lender in its discretion may determine.

 

9.                                       The proceeds of any sale or other disposition of the Collateral and all sums received or collected by Lender from or on account of the Collateral shall be applied by Lender in the manner set forth in Section 9-504 of the Uniform Commercial Code of the State of New York in effect at the time of such sale or other disposition of the Collateral.  Borrower shall remain liable to Lender for any indebtedness, advances, costs, charges and expenses, together with interest thereon remaining unpaid and shall pay the same immediately to Lender.

 

10.                                Borrower represents, warrants and agrees that, except for the security interests of Lender (which security interests have been assigned to Lender as Collateral), Borrower owns good and indefeasible title to the Collateral, no security interest or lien has been created by Borrower or is known by Borrower to exist with respect to any Collateral and, to the best of Borrower’s information and belief, no financing statement or other security instrument is on file in any jurisdiction covering such Collateral; Borrower will not create any other security interest or lien and will not file or permit to be filed any other financing statement or security instrument; Borrower will execute, deliver and file such financing statements, security agreements and other documents as may be requested by Lender from time to time to confirm, perfect and preserve the security interest created hereby, and in addition, hereby authorizes Lender to execute on behalf of Borrower, deliver and file such financing statements, security agreements and other documents without the signature of Borrower, all at the expense of Borrower.

 

12.                                The only office where the Borrower keeps, or will at any time prior to final release hereof keep, records concerning any part of the Collateral which is “accounts” as that term is defined in the Uniform Commercial Code is at the address of Borrower shown at the beginning of this Agreement, which office is the principal place of business and the location of the chief executive office of Borrower.

 

13.                                Lender may transfer any or all of the Indebtedness, and upon any such transfer Lender may transfer any or all of the Collateral and shall be fully discharged thereafter from all liability with respect to the Collateral to transferred, and the transferee shall be vested with all rights, powers and remedies of Lender hereunder with respect to Collateral so transferred; but with respect to any Collateral not so transferred Lender shall retain all rights, powers and remedies hereby given.  Lender may at any time deliver any or all of the Collateral to Borrower, whose receipt shall be a complete and full acquittal for the Collateral so delivered, and Lender shall thereafter be discharged from any liability therefore.

 

4



 

14.                                The term “Borrower” as used throughout this Agreement shall include:  (a) the respective successors and assigns of Borrower; (b) any individual, association, trust, partnership, corporation, or other entity to which all or substantially all of the business or assets of Borrower shall have been transferred or with or into which Borrower shall have been merged, consolidated, reorganized or absorbed; and (c) in the case of a partnership or joint venture, any general or limited partnership or joint venture which shall have been created by reason of, or continued in existence after, the admission of any new partner, partners or joint venturers therein or the dissolution of the existing partnership or joint venture by the death, resignation or other withdrawal of any partner or joint venture.

 

15.                                The execution and delivery of this Agreement in no manner shall impair or affect any other security (by endorsement or otherwise)  for the payment of the Indebtedness and no security taken hereafter as security for payment of the Indebtedness shall impair in any manner or affect this Agreement, all such present future additional security to be considered as cumulative security.

 

16.                                Upon payment in full of all of the Indebtedness, Lender will promptly thereafter release to Borrower all of the Collateral.

 

17.                                This is a continuing Agreement and all the rights, powers and remedies of Lender hereunder shall continue to exist until all Indebtedness shall have been paid in full.  Otherwise this Agreement shall continue irrespective of the fact that any or all of the Indebtedness may have become barred by any statute of limitations or that the liability of Borrower may have ceased, and notwithstanding the death, incapacity or bankruptcy of Borrower or any other event or proceeding affecting Borrower.  The rights, powers and remedies of Lender hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and, regardless of whether or not the Uniform Commercial Code is in effect in the jurisdiction where such rights, powers and remedies are asserted, Lender shall have the rights, powers and remedies of a Lender under the New York Uniform Commercial Code, as amended.  Lender may exercise its bankers’ lien or right of set-off with respect to the Indebtedness in the same manner as if the Indebtedness were unsecured.  No forbearance or delay by Lender in exercising any right, power or remedy shall be deemed a waiver thereof or preclude any other or further exercise thereof, and no single or partial exercise of any right, power or remedy shall preclude any other or further exercise thereof, or the exercise of any right, power or remedy.

 

18.                                Expect as the context may otherwise require any term used herein that is defined in Articles 1, 5 or 9 of the Uniform Commercial Code shall have the meaning given therein.  If any provision of this Agreement is rendered or declared illegal or unenforceable by reason of any existing or subsequently enacted legislation or by a decree of any court of last resort, it is the intent of the parties that such illegal or unenforceable provision shall be reformed to the extent required to rectify such illegality or unenforceability and all remaining portions of this Agreement shall remain in full force and effect.

 

19.                                Lender or its assignees shall remit to Borrower any excess proceeds of the Collateral over

 

5



 

and above the aggregate Indebtedness.

 

20.                                Lender shall prepare for execution by Borrower such instruments as may be necessary or appropriate to place of public record and/or otherwise further to evidence, protect, and perfect the liens referred to herein.  All such instruments presented by Lender will be immediately executed and delivered by Borrower.  Borrower hereby irrevocably appoints Lender its attorney-in-fact to execute and deliver any and all such instruments.  The liens herein referred to as security for the Indebtedness, in favor of Lender, are and shall be first, prior and superior to all other liens.

 

21.                                All agreements between Borrower and Lender are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of deferment in accordance with this Agreement or advancement of the loan proceeds, acceleration of maturity of the Indebtedness, or otherwise, shall the amount paid or agreed to be paid to Lender for the use, forbearance or detention of the money to be loaned hereunder exceed the maximum permissible amount paid or agreed to be paid to Lender under applicable law. If, from any circumstance whatsoever, fulfillment of any provision hereof or of the Borrower Note, at the time performance of such provision shall be due, by law, then, ipso facto , the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any circumstance Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal of the Indebtedness and not to the payment of interest.  This provision shall control every other provision of all agreements between Borrower and Lender.

 

22.                                To induce the Lender to enter into the transactions provided for herein, Borrower represents and warrants to Lender that:

 

(a)                                  Borrower is duly authorized to execute and deliver this Agreement and the Borrower’s Note and to perform all of their obligations under this Agreement, including the execution, delivery and performance of whatever additional documents are necessary or required;

 

(b)                                  the execution and delivery by Borrower of this Agreement and the Borrower’s Note and the performance by Borrower of its obligations under this Agreement and the Borrower’s Note do not and will not conflict with any provision of law, or of the charter or by-laws, or of any other agreement affecting or binding upon Borrower;

 

(c)                                   this Agreement and the Borrower’s Note, when duly executed and delivered in accordance with this Agreement, will be, valid and binding obligations of Borrower enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights and except to the extent that the availability of specific performance thereof may be limited by principles of equity;

 

(d)                                  Borrower is a duly organized and validly existing Delaware corporation in good standing under the laws of organization and is duly qualified and in good standing as a foreign

 

6



 

corporation in all other jurisdictions where the ownership or leasing of property makes such qualification necessary;

 

(e)                                   no part of the proceeds of the Borrower’s Note will be utilized to purchase or carry any “margin stock” (as defined by the Federal Reserve Board Regulation U) or to extend credit or to others for the purpose of purchasing or carrying by margin stock;

 

(f)                                    no certificate or statement herewith or heretofore delivered by Borrower to Lender in connection herewith, or in connection with any transaction contemplated hereby, contains any untrue statement of a material fact or fails to state any material fact necessary to keep the statements contained herein from being misleading;

 

(g)                                   there are no proceedings pending or, to the knowledge of the Borrower, threatened, nor any outstanding judgment, order, writ, injunction, decree or award affecting Borrower before any court, governmental instrumentality or other body which have, or if adversely determined would have, a material adverse effect on the condition, business or properties, financial or otherwise, of Borrower;

 

(h)                                  Borrower is not in default under the terms of any existing contract, agreement, lease or other commitment which is material to any of its properties or assets;

 

(i)                                      Borrower has filed all tax returns required to have been filed, if any, and has paid all taxes and assessments, if any, except those for which extensions have been obtained and except those being contested in good faith by appropriate proceedings;

 

23.                                Until Lender is paid in full for the principal and interest of all indebtedness due Lender under the terms of this Agreement and the Borrower’s Note, Borrower agrees that it will:

 

(a)                                  furnish or cause to be furnished to the Lender any financial or other information that the Lender may reasonably deem necessary or desirable;

 

(b)                                  duly pay and discharge all taxes, assessments and governmental charges owned by or against Borrower or any of its properties, prior to the date on which penalty will attach thereto, unless and only to the extent that any such taxes are contested in good faith by appropriate proceedings by Borrower;

 

(c)                                   take whatever actions are necessary to comply with all statutes and regulations governing its activities and operations;

 

(d)                                  promptly cure any defects in the execution and deliver of this Agreement and all other instruments executed in connection with this transaction;

 

(e)                                   execute and deliver or cause to be executed and delivered any other instruments or documents which the Lender may reasonably request;

 

7



 

(f)                                    promptly notify the Lender of any Event of Default discovered by Borrower.

 

(g)                                   immediately upon consummation of any public or private offering of securities, apply the proceeds thereof to payment in full of him Indebtedness.

 

24.                                The Borrower covenants and agrees that, until payment in full of the principal of, interest on, the Borrower’s Note, the Indebtedness and any other indebtedness of the Borrower to the Lender, whether now existing or hereafter arising, unless the Lender shall otherwise consent in writing, it will not, directly or indirectly:

 

(a)                                  permit any material adverse change in the condition, financial or otherwise, or the operations of the Borrower;

 

(b)                                  declare or pay, or set apart any funds for the payment of, any dividends (other than dividends payable in capital stock of the Borrower) on any shares of capital stock of any class of the Borrower, or apply any of its funds, property or assets to, or set apart any funds, property or assets for, the purchase, redemption or other retirement of, or make any other distribution, by reduction of capital or otherwise, in respect of, any shares of any class of capital stock of the Borrower;

 

(c)                                   incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any indebtedness or liability (including capitalized lease obligations), except:

 

(i)             indebtedness to the Lender; or

 

(ii)            indebtedness with respect to trade obligations and other normal accruals in the ordinary course of business not yet due and payable, or with respect to which it is contesting in good faith the amount or validity thereof by appropriate proceeds, and then only to the extent it has set aside on its books adequate reserves therefor.

 

(d)                                  Create, incur, assume or suffer to exist any mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any part of the Collateral now or hereafter owned, other than:

 

(i)             liens securing the payment of taxes, and other governmental charges, either not yet due or the validity of which is being contested in good faith by appropriate proceedings, and as to which it shall have set aside on its books adequate reserves;

 

(ii)            deposits under worker’s compensation, unemployment insurance and social security laws, or to secure statutory obligations;

 

(iii)           liens securing obligations of the Borrower to the Lender under this Agreement.

 

8



 

(e)                                   Except as otherwise explicitly permitted by this Agreement, guarantee, endorse or otherwise in any way become or be responsible for obligations of any other person, whether by agreement to purchase the indebtedness of any other person, or agreement for the furnishing of funds to any other person, through purchase of goods, supplies or services, or by way of stock purchase, capital contribution, advance or loan, for the purpose of paying or discharging any indebtedness or obligation of such other person, or otherwise, except endorsements on negotiable instruments for collection in the ordinary course of business.

 

(f)                                    Except in the ordinary course of its business, sell, lease, transfer or otherwise dispose of its properties, assets, rights or licenses to any person.

 

(g)                                   Dissolve, liquidate, consolidate or merge with, or otherwise acquire all or substantially all of the assets or properties of, any other corporation, partnership, business, firm, person or other entity, or make any change in its legal name or the name under which it conducts business.

 

(h)                                  Sell, assign, discount or dispose in any way of any accounts receivable, promissory notes or trade acceptance held by the Borrower, with or without recourse, except for collection (including endorsements) in the ordinary course of business.

 

25.                                Any notices or other communication required or permitted to be given by this Agreement or any other document and instruments referred to herein must be given in writing and must be telegraphed, telexed, telecopied, personally delivered or mailed by prepaid certified or registered mail return receipt requested to the party to whom such notice or communication is directed at the address of such party set forth hereinabove.  Any notice or communication required or permitted hereunder shall be deemed to be given on the earlier of the date of actual receipt or upon the third day after the date the notice or communication is mailed, or, if such notice is given by telegram, telex or telecopy, when sent.  Any party may change its address for purposes of this Agreement by giving notice of such change to all other parties pursuant to this Section.

 

26.                                This Agreement shall be governed by and construed in accordance with the laws of the State of New York and the substantive laws of the State of New York shall govern the validity, construction, enforcement and interpretation of this Agreement and all other documents and instruments referred to herein, unless otherwise specified therein or unless the laws of another state require the application of the laws of such state.  At the option of the Lender, an action may be brought to enforce this Agreement in the state courts of New York.

 

27.                                This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document.

 

[SIGNATURE PAGE FOLLOWS]

 

9



 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first above written.

 

 

CONTRAVIR PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Gary S. Jacob

 

Gary S. Jacob, Chief Executive Officer

 

 

 

 

 

SYNERGY PHARMACEUTICALS INC.

 

 

 

 

 

By:

/s/ Bernard F. Denoyer

 

Bernard F. Denoyer, Senior Vice President, Finance

 

10



 

SCHEDULE 1

 

Description of Collateral

 

This Security Agreement covers the following types (or items of property):

 

1.                                       All of the Borrower’s presently existing and hereafter arising accounts, contract rights, instruments, documents, chattel paper, and all other forms of obligations owing to the Borrower arising out of the sale or lease of goods or the rendition of services by the Borrower whether or not earned by performance, and any and all credit insurance, guaranties and other security therefor, as well as all merchandise returned to or reclaimed by the Borrower.

 

2.                                       All of the Borrower’s present and hereafter acquired equipment, including without limitation, motor vehicles, furniture, fixtures, dies, tools, jigs, office equipment and other tangible personal property of the Borrower, and all machine tools, equipment, fixtures, office equipment, furniture, furnishings, motors, motor vehicles, tools, dies, parts, jigs, goods and any and all attachments, accessories, accessions, replacements, substitutions, additions and improvements thereto, wherever located.

 

3.                                       All of the Borrower’s present and future general intangibles and other personal property (including, without limitation, and all choses or things in action, contract rights, goodwill, patents, trade names, trademarks, blueprints, drawings, purchase orders, computer programs, computer discs, computer tapes, literature, reports, catalogs, deposit accounts and tax refunds) other than goods and accounts. Specifically included is the “Transferred Intellectual Property”  as defined in the Contribution Agreement Section 1.02(a)(i) between the parties hereto.

 

4.                                       All of the Borrower’s present and future inventory in which the Borrower has any interest, including, but not limited to, goods, held by the Borrower for sale or lease or to be furnished under a contract of service and all of the Borrower’s present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located, and any documents of title representing any of the above.

 

5.                                       All books and records of the Borrower, including, but not limited to, minute books, ledgers, records indicating, summarizing or evidencing Borrower’s assets, liabilities, accounts and all information relating thereto, records indicating, summarizing or evidencing Borrower’s business operations or financial condition, all computer programs, disc or tape files, printouts, runs and other computer prepared information and the equipment containing such information.

 

6.                                       All proceeds (as defined in the UCC) of all of the foregoing, including, but not limited to proceeds of insurance, and any and all accounts, equipment, general intangibles, inventory, money, deposit accounts or other tangible and intangible property resulting from the sale or other deposition of any of the items in paragraph 1 through 5 above, and the proceeds therefrom.

 

S-2


Exhibit 99.1

 

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended.

 

Preliminary and Subject to Completion, dated August 8, 2013

 

INFORMATION STATEMENT

 

ContraVir Pharmaceuticals, Inc.

 

This information statement is being furnished in connection with the distribution by Synergy Pharmaceuticals Inc., or Synergy, to its shareholders of 100% of the outstanding shares of common stock of ContraVir Pharmaceuticals, Inc., a wholly owned subsidiary of Synergy, that holds directly or indirectly the assets and liabilities associated with Synergy’s FV-100 assets. To implement the distribution, Synergy will distribute all of the shares of ContraVir common stock on a pro rata basis to the Synergy shareholders.

 

For every common share of Synergy held of record by you as of the close of business on [*], 2013, the record date for the distribution, you will receive approximately [*] shares of ContraVir common stock. You will receive cash in lieu of any fractional shares of ContraVir common stock which you would have received after application of the above ratio. As discussed under “The Distribution — Trading Between the Record Date and Distribution Date,” if you sell your common shares of Synergy in the “regular-way” market after the record date and before the separation, you also will be selling your right to receive shares of our common stock in connection with the separation. We expect the shares of ContraVir common stock to be distributed by Synergy to you on [*], 2013. We refer to the date of the distribution of the ContraVir common stock as the “distribution date.”

 

No vote of Synergy’s shareholders is required. Therefore, you are not being asked for a proxy, and you are requested not to send us a proxy, in connection with the separation. You do not need to pay any consideration, exchange or surrender your existing common shares of Synergy or take any other action to receive your shares of ContraVir common stock.

 

There is no current trading market for ContraVir common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and we expect “regular-way” trading of ContraVir common stock to begin on the first trading day following the completion of the separation. We anticipate that ContraVir  common stock will be quoted on the OTC Bulletin Board shortly after the distribution is completed.

 

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 8.

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

 

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

 

The date of this information statement is          , 2013

 

This information statement was first mailed to Synergy shareholders on or about           , 2013.

 



 

TABLE OF CONTENTS

 

 

 

Page

Questions and Answers about the Separation and Distribution

 

1

Information Statement Summary

 

5

Risk Factors

 

8

Cautionary Statement Concerning Forward-Looking Statements

 

33

Dividend Policy

 

34

Capitalization

 

34

Selected Historical Financial Data

 

 

 

 

 

Management’s Discussion and Analysis of Financial Condition and Plan of Operations

 

34

Business

 

37

Management

 

46

Compensation Discussion and Analysis

 

48

Executive Compensation

 

48

Certain Relationships and Related Person Transactions

 

56

Security Ownership of Certain Beneficial Owners and Management

 

56

The Distribution

 

56

Our Relationship with Synergy Following the Distribution

 

59

Material U.S. Federal Income Tax Consequences

 

60

Description of Our Capital Stock

 

62

Where You Can Find More Information

 

65

Index to Financial Statements

 

F-1

 

Trademarks, Trade Names and Service Marks

 

We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this Information Statement include: www.contravir.com , which may be registered or trademarked in the United States and other jurisdictions. Each trademark, trade name or service mark of any other company appearing in this Information Statement is, to our knowledge, owned by such other company.

 

Presentation of Information

 

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the financial statements of ContraVir Pharmaceuticals, Inc., which are comprised of Synergy’s FV-100 assets, assumes the completion of all the transactions referred to in this information statement in connection with the separation and distribution. Unless the context otherwise requires, references in this information statement to “ContraVir Pharmaceuticals, Inc.,” “ContraVir,” “we,” “us,” “our” and “our company” refer to ContraVir Pharmaceuticals, Inc.. References in this information statement to “Synergy” refers to Synergy Pharmaceuticals Inc., a Delaware corporation, and its consolidated subsidiaries (other than ContraVir Pharmaceuticals, Inc.), unless the context otherwise requires.

 

i



 

QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION

 

What is ContraVir and why is Synergy separating ContraVir’s business and distributing its stock?

 

ContraVir currently is a wholly owned subsidiary of Synergy that was formed to hold Synergy’s FV-100 assets. The separation of ContraVir from Synergy and the distribution of ContraVir common stock are intended to provide you with equity investments in two separate companies that will be able to focus on each of their respective businesses. We expect that the separation will result in enhanced long-term performance of each business for the reasons discussed in the sections entitled “The Distribution — Background” and “The Distribution — Reasons for the Separation.”

 

 

 

Is Synergy retaining any products after completion of the distribution?

 

Synergy will retain all product candidates that it has developed to treat gastrointestinal, or GI, disorders and diseases. Its lead product candidate is plecanatide (formerly called SP-304), a guanylate cyclase C, or GC-C, receptor agonist, to treat GI disorders, primarily chronic idiopathic constipation, or CIC, and constipation-predominant-irritable bowel syndrome, or IBS-C. CIC and IBS-C are functional gastrointestinal disorders that afflict millions of sufferers worldwide. CIC is primarily characterized by constipation symptoms but a majority of these patients report experiencing straining, bloating and abdominal discomfort as among their most bothersome symptoms. Synergy is also developing SP-333, a second generation GC-C receptor agonist for the treatment of inflammatory bowel diseases, such as ulcerative colitis, or UC.

 

 

 

Why am I receiving this document?

 

Synergy is delivering this document to you because you are a holder of common stock of Synergy. If you are a holder of Synergy common stock on [*], 2013, you are entitled to receive approximately [*] shares of ContraVir common stock for each common share of Synergy that you held at the close of business on the record date. ContraVir will not issue fractional shares of its common stock in the distribution. This document will help you understand how the separation and distribution will affect your investment in Synergy and your investment in ContraVir after the separation.

 

 

 

How will the separation of ContraVir from Synergy work?

 

To accomplish the separation, Synergy will distribute 100% of the outstanding shares of common stock of ContraVir to Synergy’s shareholders on a pro rata basis as a dividend.

 

 

 

Why is the separation of ContraVir structured as a distribution?

 

Synergy believes that a distribution of shares of ContraVir to the Synergy shareholders is an efficient way to separate its GI product candidates and its other product candidate in a manner that will create long-term value for Synergy, ContraVir and their respective shareholders.

 

 

 

What is the record date for the distribution?

 

The record date for the distribution will be [*], 2013.

 

 

 

When will the distribution occur?

 

We expect the shares of ContraVir common stock to be distributed by Synergy on [*], 2013 to holders of record of common shares of Synergy at the close of business on the record date.

 

 

 

What do shareholders need to do to participate in the distribution?

 

Shareholders of Synergy as of the record date will not be required to take any action to receive ContraVir common stock in the distribution, but you are urged to read this entire information statement carefully . No shareholder approval of the distribution is required. You are not being asked for a proxy . You do not need to pay any consideration, exchange or surrender your existing common shares of Synergy or take any other action to receive your shares of ContraVir common stock. Please do not send in your Synergy stock certificates.

 

 

 

Will I receive physical certificates representing shares of ContraVir common stock following the separation?

 

No. Following the separation, ContraVir will not issue physical certificates representing shares of ContraVir common stock. If you own common shares of Synergy as of the close of business on the record date, Synergy, with the assistance of Philadelphia Stock Transfer, Inc., the settlement and distribution agent, will electronically distribute shares of ContraVir common stock to you or to your brokerage firm on your behalf by way of direct registration in book-entry form. Philadelphia Stock Transfer will mail you a book-entry account statement that reflects your shares of ContraVir common stock, or your bank or brokerage firm will credit your account for the shares.

 

 

 

 

 

Following the distribution, shareholders whose shares are held in book-entry form may request that their shares of ContraVir common stock held in book-entry form be transferred to a brokerage or other account at any time, without charge.

 

1



 

How many shares of ContraVir common stock will I receive in the distribution?

 

Synergy will distribute to you approximately [*] shares of ContraVir common stock for each share of Synergy common stock held at the record date. Based on approximately [*] shares of Synergy common stock outstanding as of [*], 2013, a total of approximately 9,000,000 shares of ContraVir common stock will be distributed. Synergy will retain no shares of following the distribution. For additional information on the distribution, see “The Distribution.”

 

 

 

Will ContraVir issue fractional shares of its common stock in the distribution?

 

No. ContraVir will not issue fractional shares of its common stock in the distribution. Fractional shares that Synergy shareholders would otherwise have been entitled to receive will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of these sales will be distributed ratably to those shareholders who would otherwise have been entitled to receive fractional shares.

 

 

 

What are the conditions to the distribution?

 

The distribution is subject to a number of conditions, including, among others,

 

·                   the Synergy board of directors will have declared the distribution of all outstanding shares of ContraVir common stock to Synergy’s shareholders;

·                   the U.S. Securities and Exchange Commission, or the “SEC,” will have declared our Registration Statement on Form 10, of which this Information Statement is a part, effective under the Securities Exchange Act of 1934, as amended, or the “Exchange Act,” no stop order suspending the effectiveness of the Registration Statement will be in effect, no proceedings for that purpose will be pending before or threatened by the SEC and notice of Internet availability of this Information Statement or this Information Statement will have been mailed to Synergy’s shareholders;

·                   no order, injunction or decree that would prevent the consummation of the distribution will be threatened, pending or issued (and still in effect) by any governmental entity of competent jurisdiction, no other legal restraint or prohibition preventing the consummation of the distribution will be in effect, and no other event outside the control of Synergy will have occurred or failed to occur that prevents the consummation of the distribution;

·                   no other events or developments will have occurred prior to the distribution that, in the judgment of the Synergy board of directors, would result in the distribution having a material adverse effect on Synergy or its shareholders; and

·                   Synergy and us will have executed and delivered all ancillary agreements related to the distribution.

 

The fulfillment of the above conditions will not create any obligation on Synergy’s part to effect the distribution. We are not aware of any material federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, other than the SEC’s declaration of the effectiveness of the Registration Statement, in connection with the distribution. Synergy has the right not to complete the distribution if, at any time, the Synergy board of directors determines, in its sole and absolute discretion, that the distribution is not in the best interests of Synergy or its shareholders or is otherwise not advisable For a complete discussion of all of the conditions to the distribution, see “The Distribution — Conditions to the Distribution.”

 

 

 

What is the expected date of completion of the separation?

 

The completion and timing of the separation are dependent upon a number of conditions. We expect the shares of ContraVir common stock to be distributed by Synergy after the close of trading on [*], 2013 to the holders of record of common shares of Synergy at the close of business on the record date; however, no assurance can be provided as to the timing of the separation or that all conditions to the separation will be met.

 

 

 

Can Synergy decide to cancel the distribution of ContraVir common stock even if all the conditions have been met?

 

Yes. The distribution is subject to the satisfaction or waiver of certain conditions. See the section entitled “The Distribution — Conditions to the Distribution.” Until the distribution has occurred, Synergy has the right to terminate the distribution, even if all of the conditions are satisfied, if at any time the board of directors of Synergy determines that the distribution is not in the best interests of Synergy and its shareholders or that market conditions or other circumstances are such that it is not advisable at that time to separate the clinical and medical products businesses from the remainder of Synergy.

 

2



 

What if I want to sell my shares of Synergy common stocks or my ContraVir common stock?

 

You should consult with your financial advisors, such as your stockbroker, bank or tax advisor.

 

 

 

What is “regular-way” and “ex-distribution” trading?

 

Beginning on or shortly before the record date and continuing up to and through the distribution date, it is expected that there will be two markets in common shares of Synergy: a “regular-way” market and an “ex-distribution” market. Common shares of Synergy that trade in the “regular-way” market will trade with an entitlement to shares of ContraVir common stock distributed pursuant to the distribution. Shares that trade in the “ex-distribution” market will trade without an entitlement to shares of ContraVir common stock distributed pursuant to the distribution.

 

 

 

 

 

If you decide to sell any common shares of Synergy before the distribution date, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your common shares of Synergy with or without your entitlement to ContraVir common stock pursuant to the distribution.

 

 

 

Where will I be able to trade shares of ContraVir common stock?

 

ContraVir anticipates that ContraVir common stock will be quoted on the OTC Bulletin Board shortly after the distribution is completed. ContraVir anticipates that trading in shares of its common stock will begin on a “when-issued” basis on or shortly before the record date and will continue up to and through the distribution date and that “regular-way” trading in ContraVir common stock will begin on the first trading day following the completion of the separation. If trading begins on a “when-issued” basis, you may purchase or sell ContraVir common stock up to and through the distribution date, but your transaction will not settle until after the distribution date. ContraVir cannot predict the trading prices for its common stock before, on or after the distribution date.

 

 

 

What will happen to the listing of common shares of Synergy?

 

Common shares of Synergy will continue to trade on the Nasdaq Global Market after the distribution.

 

 

 

Will the number of common shares of Synergy that I own change as a result of the distribution?

 

No. The number of common shares of Synergy that you own will not change as a result of the distribution.

 

 

 

Will the distribution affect the market price of my Synergy shares?

 

Yes. As a result of the distribution, Synergy expects the trading price of shares of Synergy common stock immediately following the distribution to be lower than the “regular-way” trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of the FV-100 assets held by ContraVir. Synergy believes that over time following the separation, assuming the same market conditions and the realization of the expected benefits of the separation, the Synergy common stock and the ContraVir common stock should have a higher aggregate market value as compared to what the market value of Synergy common stock would be if the separation and distribution did not occur. There can be no assurance, however, that such a higher aggregate market value will be achieved. This means, for example, that the combined trading prices of one share of Synergy common stock and [*] share of ContraVir common stock after the distribution may be equal to, greater than or less than the trading price of one share of Synergy common stock before the distribution.

 

 

 

 

 

For more information regarding the potential U.S. federal income tax consequences to Synergy and to you of the contribution and the distribution, see the section entitled “Material U.S. Federal Income Tax Consequences.”

 

 

 

Will I be taxed on the shares of ContraVir distributed to me in the separation?

 

Yes. The distribution of ContraVir common stock in the separation will be a taxable dividend to Synergy stockholders. An amount equal to the fair market value of ContraVir common stock received by you will be treated as a taxable dividend to the extent of your ratable share of any current or accumulated earnings and profits of Synergy, with the excess treated as a non-taxable return of capital to the extent of your tax basis in Synergy stock and any remaining excess treated as capital gain.

 

See “Material U.S. Federal Income Tax Consequences” for more information. You should consult your tax advisor about the particular consequences of the distribution to you, including the application of state, local and foreign tax laws.

 

 

 

How will I determine my tax basis in the ContraVir shares distributed to me in the separation?

 

Your tax basis in shares of ContraVir common stock distributed to you in the separation will equal the fair market value of such shares on the date of such distribution. Your holding period for such shares will begin the day after the distribution date.

 

See “Material U.S. Federal Income Tax Consequences” for more information. You should consult your tax advisor about the particular consequences of the distribution to you, including the application of U.S. Federal, state, local and foreign tax laws.

 

 

 

How will the separation affect my tax basis and holding period in Synergy stock?

 

Your tax basis in shares of Synergy held at the time of the distribution of ContraVir common stock in the separation will be reduced (but not below zero) by the amount by which the fair market value of the ContraVir common stock distributed to you exceeds your ratable share of Synergy’s current and accumulated earnings and profits. Your holding period for such Synergy shares will not be affected by the distribution.

 

See “Material U.S. Federal Income Tax Consequences” for more information. You should consult your tax advisor about the particular consequences of the distribution to you, including the application of state, local and foreign tax laws.

 

 

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What will ContraVir’s relationship be with Synergy following the separation?

 

On July 8, 2013, we entered into a shared services agreement, as amended and restated on August 5, 2013, with Synergy. This agreement provides for the provision of certain administrative, financial, legal, tax, insurance, facility, information technology and other services to ContraVir attributable to periods prior to, at and after ContraVir’s separation from Synergy and will govern the relationship between ContraVir and Synergy subsequent to the completion of the separation. For additional information regarding the shared services agreement, see the sections entitled “Risk Factors — Risks Related to the Separation” and “Our Relationship with Synergy Following the Distribution.”

 

 

 

Who will manage ContraVir after the separation?

 

ContraVir benefits from having in place a management team with an extensive background in the clinical and medical products businesses. Led by Gary S. Jacob, who will be ContraVir’s Chief Executive Officer after the separation until his replacement is identified, ContraVir’s management team possesses deep knowledge of, and extensive experience in, its industry. For more information regarding ContraVir’s management, see “Management.”

 

 

 

Are there risks associated with owning ContraVir common stock?

 

Yes. ContraVir’s business is subject to both general and specific risks relating to ContraVir’s business, the industry in which it operates, its ongoing contractual relationships with Synergy and its status as a separate, publicly traded company. ContraVir’s business is also subject to risks relating to the separation. These risks are described in the “Risk Factors” section of this information statement beginning on page 8. You are encouraged to read that section carefully.

 

 

 

Does ContraVir plan to pay dividends?

 

ContraVir currently intends to retain any earnings to finance research and development, acquisitions and the operation and expansion of its business, and does not anticipate paying any cash dividends for the foreseeable future. As a result, your return on your investment in ContraVir common stock will be determined by increases and decreases in the market price of its common stock. See “Dividend Policy.”

 

 

 

Who will be the distribution agent, transfer agent, and registrar for the ContraVir common stock?

 

The distribution agent, transfer agent, and registrar for the ContraVir common stock will be Philadelphia Stock Transfer, Inc. For questions relating to the transfer or mechanics of the stock distribution, you should contact:

 

ContraVir Pharmaceuticals, Inc.

Investor Relations

420 Lexington Avenue, Suite 2012

New York, New York 10170

(212) 297-0020

 

 

 

Where can I find more information about Synergy and ContraVir?

 

Before the distribution, if you have any questions relating to Synergy’s business performance, you should contact:

 

Synergy Pharmaceuticals Inc.

Investor Relations

420 Lexington Avenue, Suite 2012

New York, New York 10170

(212) 297-0020

 

 

 

 

 

After the distribution, ContraVir shareholders who have any questions relating to ContraVir’s business performance should contact us at:

 

ContraVir Pharmaceuticals, Inc.

Investor Relations

420 Lexington Avenue, Suite 2012

New York, New York 10170

(212) 297-0020

 

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INFORMATION STATEMENT SUMMARY

 

The following is a summary of material information discussed in this information statement. This summary may not contain all the details concerning the separation or other information that may be important to you. To better understand the separation and ContraVir’s business and financial position, you should carefully review this entire information statement. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the financial statements of ContraVir Pharmaceuticals, Inc., which are comprised of the assets and liabilities of Synergy’s FV-100 assets, assumes the completion of all the transactions referred to in this information statement in connection with the separation and distribution. Unless the context otherwise requires, references in this information statement to “ContraVir Pharmaceuticals, Inc.,” “ContraVir,” “we,” “us,” “our” and “our company” refer to ContraVir Pharmaceuticals, Inc. References in this information statement to “Synergy” refers to Synergy Pharmaceuticals Inc., a Delaware corporation, and its consolidated subsidiaries (other than ContraVir Pharmaceuticals, Inc.), unless the context otherwise requires.

 

This information statement describes the assets to be transferred to us by Synergy in the separation as if the transferred assets were our business for all historical periods described. References in this information statement to our historical assets, liabilities, products, businesses or activities of our business are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the transferred businesses as the businesses were conducted as part of Synergy and its subsidiaries prior to the separation.

 

Our Company

 

We are a biopharmaceutical company focused primarily on the development of drugs to treat herpes zoster, or shingles, which is an infection caused by the reactivation of varicella zoster virus or VZV. FV-100 is an orally available nucleoside analogue prodrug of CF-1743 that we are developing for the treatment of  shingles. Published preclinical studies demonstrate that FV-100 is significantly more potent against VZV than acyclovir, valacyclovir, and famciclovir, the FDA-approved drugs used for the treatment of shingles. Preclinical studies further demonstrate that FV-100 has a more rapid onset of antiviral activity, and may fully inhibit the replication of VZV more rapidly than these drugs at significantly lower concentration levels. In addition, pharmacokinetic data from completed Phase 1 and 2 clinical trials suggest that FV-100 has the potential to demonstrate antiviral activity when dosed orally once-a-day at significantly lower levels than valacyclovir, acyclovir, and famciclovir.

 

The Phase 2 clinical trial for FV-100 was completed in December 2010. This trial represented the first clinical trial of FV-100 in shingles patients, and was a well-controlled; double blind study comparing two different dosing arms of FV-100 to an active control (valacyclovir). A total of 350 patients, aged 50 years and older, were enrolled in one of three treatment arms: 200 mg FV-100 administered once daily; 400 mg FV-100 administered once daily; and 1,000 mg valacyclovir administered three times per day. In addition to further evaluating its safety and tolerability, the main objectives of the trial were to evaluate the potential therapeutic benefit of FV-100 in reducing the severity and duration of shingles-related pain, the incidence of PHN, and the time to lesion healing. There were no statistical differences observed on the primary endpoint, which was the reduction in the severity and duration of shingles-associated pain over the first 30 days after lesion appearance. There were, however, numerically favorable treatment differences, and in particular in those patients that received 400 mg FV-100, as compared to valacyclovir, for the primary endpoint of the study.

 

There were also favorable, non-statistically significant treatment differences observed for key secondary pain endpoints, including the reduction in the severity and duration of shingles-associated pain over 90 days (a 14% relative reduction as compared to valacyclovir for 400mg FV-100) and the incidence of post-herpetic neuralgia or PHN (a 39% relative reduction as compared to valacyclovirfor 400 mg FV-100). The secondary endpoints were not powered to demonstrate statistically significant treatment differences between the arms. FV-100 was generally well tolerated at both dose levels, and demonstrated a similar adverse event profile as compared to valacyclovir.

 

We are currently reviewing the clinical data from the Phase 2 trial and performing post hoc analyses, conducting additional market research, including reimbursement, pricing, and competitive analyses, etc. We are also evaluating a number of clinical, regulatory and commercial pathways for the potential future development of FV-100. Based upon the results of the Phase 2 study coupled with the additional market research, we are re-evaluating the focus of the clinical development program. We anticipate concluding this evaluation in the second half of 2013.

 

From Inception (May 15, 2013) through June 30, 2013, we generated no revenue.

 

Our Strengths

 

We believe that we possess a number of competitive advantages that distinguish us from our competitors, including:

 

·                   Potential effectiveness in patients presenting with shingles after 72 hours from the onset of an outbreak;

·                   Potential to reduce pain to a greater extent over the first 90 days following initiation of therapy compared to the competition;

·                   Potential to reduce the incidence of post-herpetic neuralgia, or PHN;

·                   A reduction in the number of doses per day to 1-2 as compared to 3-5 with the competition; and

·                   Greater potency at eradicating the zoster virus than the competition.

 

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Our Strategy

 

Design and conduct clinical trials that establish the superiority of FV-100 over the standard of care.

 

Market Opportunity for the Treatment of Shingles

 

VZV, a DNA virus and a member of the herpes virus group, is the virus that causes both chickenpox and herpes zoster, or shingles. Chickenpox, the initial infection caused by VZV in an individual, generally occurs during childhood and it is caused by exposure to another individual with an active infection. After the chickenpox infection subsides, VZV remains latent in the individual’s dorsal root and cranial nerve ganglia, and can re-emerge later in life. Therefore, shingles is typically not transmitted from one individual to the next, and only those individuals who have had chickenpox are generally at risk for shingles.

 

Although shingles can occur in any individual with a prior VZV infection, its incidence varies with its key risk factors, which are advanced age, immune status and being female. Shingles is largely a disease of the aged or aging, with over 50% of all cases occurring in individuals over the age of 60, and approximately 80% occurring in individuals over the age of 40. A study in 2007 based upon data from 2000 implied that there were approximately 1 million new cases shingles cases that year. Due to the aging of the population in many industrialized countries, as well as the increasing use of immunosuppressive agents in transplant patients and the increased numbers of immunosuppressed patients from cancer therapy, the incidence of shingles has increased and is expected to continue to increase. A recent study from the Centers for Disease Control investigating medical claims data from MarketScan ®  databases from 1993-2006 indicated that the crude incidence of shingles case increased 259% over that period of time. Furthermore, a study conducted by the Mayo Clinic suggests that the recurrence rate for shingles is approximately 6.2%, which reflects a much higher rate than prior studies, which assessed a shorter follow-up period. It is estimated that approximately 20-30% of all persons in the U.S. will suffer from shingles at some point during their lifetime.

 

The symptoms associated with shingles generally include localized lesions and pain. In many cases the patient may notice localized prodromal pain prior to the appearance of any lesions; however, the first recognizable symptom of shingles is generally lesions that will continue to form for a week or two. Such lesions generally follow the path of nerves that emanate from the spinal cord around the torso (thoracic); however, the infection is also commonly found on the face, neck, lower back and in certain cases, systemically. Within several weeks, the lesions in the infected areas will typically begin to heal, and these dermatological symptoms generally will resolve within a month or less after the appearance of the first lesion. In rare instances, lesions may never appear, but pain will be present.

 

The pain associated with an episode of shingles is attributed to both the damage caused to the affected nerves by the replication of VZV and the inflammatory response associated with the infection. Pain symptoms are commonly described as a burning sensation, with bouts of stabbing and shooting pain, often set off by contact with the infected area. The majority of shingles patients experience such pain for several weeks in connection with their active infection, referred to as acute pain. For many patients, shingles-associated pain does not resolve when the lesions heal and the inflammation subsides, but, rather, continues for months, or possibly years. Persistent shingles-associated pain that lasts more than three to four weeks is referred to as sub-acute pain or neuralgia. Shingles-associated pain that persists more than three months is generally referred to as PHN, which is the most common and clinically relevant complication of shingles. Approximately 15-20% of all shingles patients experience PHN, although the incidence of PHN is more prevalent in patients over 50 years of age. Previous studies have established that additional risk factors for PHN include greater acute pain intensity, severity of the dermatological symptoms or lesions, and the presence and greater severity of a painful prodrome preceding the lesions or rash.

 

Valacyclovir, acyclovir and famciclovir are oral antivirals currently indicated and approved by the FDA, and regulatory agencies in many other countries, for the treatment shingles. These generically available drugs are referred to as “pan-herpetic” drugs, as they are used to treat infections caused by various herpes viruses, including herpes simplex 1 and 2, and VZV. Unlike those drugs, FV-100 only demonstrates antiviral activity against VZV, and not the other herpes viruses. Based upon an analysis by data compiled by IMS Health, Inc. (“IMS”) on our behalf, and a recent utilization study of the use of Valtrex ®  from 1994-2009 conducted by the FDA as well as other market research we have independently conducted, we estimate that 15 -30% of the nearly 17 million retail prescriptions written for valacyclovir, acyclovir and famciclovir combined in 2009 were for the treatment of herpes zoster.

 

Risks Associated with Our Business

 

An investment in our common stock involves risks associated with our business. The following list of risk factors is not exhaustive. Please read carefully the risks relating to these and other matters described under “Risk Factors” beginning on page 8 and “Cautionary

 

6



 

Statement Concerning Forward-Looking Statements” on page 33.

 

·                   We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.

 

·                   Our product candidate is in the early stages of development and its commercial viability remains subject to the successful outcome of current and future preclinical studies, clinical trials, regulatory approvals and the risks generally inherent in the development of pharmaceutical product candidate. If we are unable to successfully advance or develop our product candidate, our business will be materially harmed.

 

·                   If the results of preclinical studies or clinical trials for our product candidate, including those that are subject to existing or future license or collaboration agreements, are unfavorable or delayed, we could be delayed or precluded from the further development or commercialization of our product candidate, which could materially harm our business.

 

·                   If third party vendors upon whom we rely to conduct our preclinical studies or clinical trials do not perform or fail to comply with strict regulations, these studies or trials of our product candidate may be delayed, terminated, or fail, or we could incur significant additional expenses, which could materially harm our business.

 

·                   We, and our collaborators, must comply with extensive government regulations in order to advance our product candidate through the development process and ultimately obtain and maintain marketing approval for our products in the U.S. and abroad.

 

·                   Delays in clinical testing could result in increased costs to us and delay our ability to generate revenue.

 

·                   The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidate, our business will be substantially harmed.

 

·                   If our product candidate is unable to compete effectively with marketed drugs targeting similar indications as our product candidate, our commercial opportunity will be reduced or eliminated.

 

·                   If the manufacturers upon whom we rely fail to produce FV-100, in the volumes that we require on a timely basis, or fail to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization of our product candidate.

 

·                   If government and third-party payers fail to provide adequate reimbursement or coverage for our products or those we develop through collaborations, our revenues and potential for profitability will be harmed.

 

·                   If a third party claims we are infringing on its intellectual property rights, we could incur significant expenses, or be prevented from further developing or commercializing our product candidate.

 

·                   Even if our product candidate receives regulatory approval, it may still face future development and regulatory difficulties.

 

·                   Healthcare reform measures could hinder or prevent our product candidate’s commercial success.

 

·                   We will require substantial additional funding which may not be available to us on acceptable terms, or at all. If we fail to raise the necessary additional capital, we may be unable to complete the development and commercialization of our product candidate, or continue our development programs.

 

·                   We may not achieve some or all of the expected benefits of the Separation and Distribution, if any.

 

·                   The assets and resources that we acquired from Synergy in connection with the Contribution Agreement and the Shared Services Agreement may not be sufficient for us to operate as a stand-alone company, and we may experience difficulty in separating our assets and resources from Synergy.

 

The Separation and Distribution

 

On August 8, 2013, Synergy announced that it intended to separate its FV-100 assets from the remainder of its business.

 

On [*], 2013, the Synergy board of directors approved the distribution of 100% of our issued and outstanding shares of common stock on the basis of approximately [*] shares of our common stock for each share of Synergy common stock held on the record date.

 

Our Post-Separation Relationship with Synergy

 

On July 8, 2013, we entered into a Shared Services Agreement, as amended and restated August 5, 2013, with Synergy, effective

 

7



 

May 16, 2013. This agreement provides for the provision of certain administrative, financial, legal, insurance, facility, information technology and other services to ContraVir attributable to periods prior to, at and after ContraVir’s separation from Synergy and will govern the relationship between ContraVir and Synergy subsequent to the completion of the separation. For additional information regarding the shared services agreement, see the sections entitled “Risk Factors — Risks Related to the Separation” and “Our Relationship with Synergy Following the Distribution.”

 

Reasons for the Separation

 

The Synergy board of directors believes that separating the FV-100 assets from the remainder of Synergy is in the best interests of Synergy and its shareholders because such separation is expected to:

 

·                   improve strategic planning, increase management focus and streamline decision-making by providing the flexibility to implement the unique strategic plans of each company and to respond more effectively to different clinical, patient and market needs of each company in changing business, pharmacological and economic environments;

 

·                   allow each of Synergy and us to adopt the capital structure, investment policy and dividend policy best suited to each business’ financial profile and business needs, as well as resolve the current competition for capital among Synergy and its investors; and

 

·                   facilitate incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business, and enhance employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives, while at the same time creating an independent equity structure that will facilitate our ability to effect future acquisitions and in-licensing utilizing our common stock.

 

The Synergy board of directors considered a number of potentially negative factors in evaluating the separation, including risks relating to the creation of a new public company, possible increased costs and one-time separation costs, but concluded that the potential benefits of the separation outweighed these factors. For more information, see the sections entitled “The Distribution — Reasons for the Distribution” and “Risk Factors” included elsewhere in this information statement.

 

Corporate Information

 

ContraVir was incorporated in Delaware on May 15, 2013 for the purpose of holding Synergy’s FV-100 assets in connection with the separation and distribution described herein. Prior to the contribution of the FV-100 assets, which will occur immediately prior to the distribution, we had no operations. The address of ContraVir’s principal executive offices is 420 Lexington Avenue, Suite 2012, New York, New York 10170. ContraVir’s telephone number is (212) 297-0020.

 

RISK FACTORS

 

You should carefully consider the following risks and other information in this information statement in evaluating us and our common stock. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into three groups: risks related to our business, risks related to the separation and risks related to our common stock.

 

Risks Related to Our Business

 

Our prospects are largely dependent on the success of FV-100, which was the subject of a Phase II clinical trial that failed to meet its primary endpoints. While we seek to determine the implications, if any, of the Phase II results on our FV-100 product candidate and consider other potential strategic pathways, there can be no assurance we will be able to successfully advance or develop our FV-100 product candidate and if we are unable to further develop or obtain regulatory approval, our business will be materially harmed.

 

In December 2010 Inhibitex, Inc., a previous owner of the FV-100 assets,  announced that in a pivotal Phase II clinical trial of FV-100, an oral antiviral compound being developed to treat herpes zoster, more commonly referred to as shingles, failed to meet its primary endpoints. We are currently conducting various analyses of our preclinical and clinical data related to FV-100, as well as analyzing the various lots of clinical trial material used in the Phase II trials in an effort to determine whether the results of the Phase II trial were a consequence of one or more factors, including the potency and consistency of the clinical trial material, the change in the dosing schedule, and selection of the patient population studied and the appropriateness of the primary efficacy endpoint used in the clinical trial to determine the effectiveness of the treatments. If we are unable to successfully advance or develop our FV-100 product candidate, it will have a material adverse effect on our business.

 

8



 

Our product candidate is in the early stages of development and its commercial viability remains subject to the successful outcome of current and future preclinical studies, clinical trials, regulatory approvals and the risks generally inherent in the development of pharmaceutical product candidate. If we are unable to successfully advance or develop our product candidate, our business will be materially harmed.

 

In the near-term, failure to successfully advance the development of FV-100 may have a material adverse effect on us. To date, we have not successfully developed or commercially marketed, distributed or sold any product candidate. The success of our business depends primarily upon our ability to successfully advance the development of FV-100 through preclinical studies and clinical trials, have these product candidate approved for sale by the FDA or regulatory authorities in other countries, and ultimately have this product candidate successfully commercialized by us or a strategic collaborator. We cannot assure you that the results of our ongoing preclinical studies or clinical trials will support or justify the continued development of our product candidate, or that we will receive approval from the FDA, or similar regulatory authorities in other countries, to advance the development of our product candidate.

 

Our product candidate must satisfy rigorous regulatory standards of safety and efficacy before we can advance or complete their clinical development or they can be approved for sale. To satisfy these standards, we must engage in expensive and lengthy preclinical studies and clinical trials, develop acceptable manufacturing processes, and obtain regulatory approval of our product candidate. Despite these efforts, our product candidate may not:

 

·         offer therapeutic or other medical benefits over existing drugs or other product candidate in development to treat the same patient population;

·         be proven to be safe and effective in current and future preclinical studies or clinical trials;

·         have the desired effects;

·         be free from undesirable or unexpected effects;

·         meet applicable regulatory standards;

·         be capable of being formulated and manufactured in commercially suitable quantities and at an acceptable cost; or

·         be successfully commercialized by us or by collaborators.

 

Even if we demonstrate favorable results in preclinical studies and early-stage clinical trials, we cannot assure you that the results of late-stage clinical trials will be favorable enough to support the continued development of our product candidate. A number of companies in the pharmaceutical and biopharmaceutical industries have experienced significant delays, setbacks and failures in all stages of development, including late-stage clinical trials, even after achieving promising results in preclinical testing or early-stage clinical trials. Accordingly, results from completed preclinical studies and early-stage clinical trials of our product candidate may not be predictive of the results we may obtain in later-stage trials. Furthermore, even if the data collected from preclinical studies and clinical trials involving  our product candidate demonstrates a satisfactory safety and efficacy profile, such results may not be sufficient to support the submission of a NDA or BLA to obtain regulatory approval from the FDA in the U.S., or other similar regulatory agencies in other jurisdictions, which is required to market and sell the product.

 

Our product candidate will require significant additional research and development efforts, the commitment of substantial financial resources, and regulatory approvals prior to advancing into further clinical development or being commercialized by us or collaborators. We cannot assure you that our product candidate will successfully progress through the drug development process or will result in a commercially viable product. We do not expect our product candidate to be commercialized by us or collaborators for at least several years.

 

Our product candidate may exhibit undesirable side effects when used alone or in combination with other approved pharmaceutical products or investigational new drugs, which may delay or preclude their further development or regulatory approval, or limit their use if approved.

 

Throughout the drug development process, we must continually demonstrate the safety and tolerability of our product candidates to obtain regulatory approval to further advance their clinical development or to market them. Even if our product candidate demonstrate biologic activity and clinical efficacy, any unacceptable adverse side effects or toxicities, when administered alone or in the presence of other pharmaceutical products, which can arise at any stage of development, may outweigh their potential benefit. In preclinical studies and clinical trials we have conducted to date, our product candidate has demonstrated an acceptable safety profile, although these studies and trials have involved a small number of subjects or patients over a limited period of time. We may observe adverse or significant adverse events or drug-drug interactions in future preclinical studies or clinical trials of this product candidate, which could result in the delay or termination of their development, prevent regulatory approval, or limit their market acceptance if they are ultimately approved.

 

9



 

We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.

 

As of June 30, 2013, we had an accumulated deficit of $140,495 since May 15, 2013 (inception). We expect to incur significant and increasing operating losses for the next several years as we expand our research and development, continue our clinical trials of FV-100, acquire or license technologies, advance other product candidates into clinical development, complete clinical trials, seek regulatory approval and, if we receive FDA approval, commercialize our products. Because of the numerous risks and uncertainties associated with product development efforts, we are unable to predict the extent of any future losses or when we will become profitable, if at all. If we are unable to achieve and then maintain profitability, the market value of our common stock will likely decline.

 

If the actual or perceived therapeutic benefits of FV-100 are not sufficiently different from existing generic drugs currently used to treat shingles or reduce or prevent shingles-associated pain and PHN, we may terminate the development of FV-100 at any time, or our ability to generate significant revenue from the sale of FV-100, if approved, may be limited and our potential profitability could be harmed.

 

Valacyclovir, famciclovir and acyclovir are existing generic drugs currently used to treat shingles patients. Generic drugs are compounds that have no remaining patent protection, and generally have an average selling price substantially lower than drugs that are protected by patents and intellectual property rights. Unless a patented drug can differentiate itself from generic drugs treating the same condition or disease in a clinically meaningful manner, the existence of generic competition in any indication may impose significant pricing pressure on patented drugs. Accordingly, if at any time we believe that FV-100 may not provide meaningful therapeutic benefits, perceived or real, over these existing generic drugs, we may delay or terminate its future development. We cannot provide any assurance that later-stage clinical trials of FV-100, will demonstrate any meaningful therapeutic benefits over existing generic drugs sufficient to justify its continued development. Further, if we successfully develop FV-100 and it is approved for sale, we cannot assure you that any real or perceived therapeutic benefits of FV-100 over generic drugs will result in it being, accepted for sale by insurance company formularies, prescribed by physicians or commanding a price higher than the existing generic drugs.

 

If the results of preclinical studies or clinical trials for our product candidate, including those that are subject to existing or future license or collaboration agreements, are unfavorable or delayed, we could be delayed or precluded from the further development or commercialization of our product candidate, which could materially harm our business.

 

In order to further advance the development of, and ultimately receive regulatory approval to sell, our product candidate, we must conduct extensive preclinical studies and clinical trials to demonstrate their safety and efficacy to the satisfaction of the FDA or similar regulatory authorities in other countries, as the case may be. Preclinical studies and clinical trials are expensive, complex, can take many years to complete, and have highly uncertain outcomes. Delays, setbacks, or failures can occur at any time, or in any phase of preclinical or clinical testing, and can result from concerns about safety or toxicity, a lack of demonstrated efficacy or superior efficacy over other similar products that have been approved for sale or are in more advanced stages of development, poor study or trial design, and issues related to the formulation or manufacturing process of the materials used to conduct the trials. The results of prior preclinical studies or clinical trials are not necessarily predictive of the results we may observe in later stage clinical trials. In many cases, product candidate in clinical development may fail to show desired safety and efficacy characteristics despite having favorably demonstrated such characteristics in preclinical studies or earlier stage clinical trials.

 

In addition, we may experience numerous unforeseen events during, or as a result of, preclinical studies and the clinical trial process, which could delay or impede our ability to advance the development of, receive regulatory approval for, or commercialize our product candidate, including, but not limited to:

 

·         communications with the FDA, or similar regulatory authorities in different countries, regarding the scope or design of a trial or trials;

 

·         regulatory authorities or IRBs not authorizing us to commence or conduct a clinical trial at a prospective trial site;

 

·         enrollment in our clinical trials being delayed, or proceeding at a slower pace than we expected, because we have difficulty recruiting patients or participants dropping out of our clinical trials at a higher rate than we anticipated;

 

·         our third party contractors, upon whom we rely for conducting preclinical studies, clinical trials and manufacturing of our trial materials, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;

 

·         having to suspend or ultimately terminate our clinical trials if participants are being exposed to unacceptable health or safety risks;

 

·         IRBs or regulators requiring that we hold, suspend or terminate our preclinical studies and clinical trials for various reasons, including non-compliance with regulatory requirements; and

 

·         the supply or quality of drug material necessary to conduct our preclinical studies or clinical trials being insufficient, inadequate or unavailable.

 

Even if the data collected from preclinical studies or clinical trials involving our product candidate demonstrate a satisfactory safety and efficacy profile, such results may not be sufficient to support the submission of a NDA or BLA to obtain regulatory approval from the FDA in the U.S., or other similar foreign regulatory authorities in foreign jurisdictions, which is required to market and sell the product.

 

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If third party vendors upon whom we rely to conduct our preclinical studies or clinical trials do not perform or fail to comply with strict regulations, these studies or trials of our product candidate may be delayed, terminated, or fail, or we could incur significant additional expenses, which could materially harm our business.

 

We have limited resources dedicated to designing, conducting and managing preclinical studies and clinical trials. We have historically relied, and intend to continue to rely, on third parties, including clinical research organizations, consultants and principal investigators, to assist us in designing, managing, monitoring and conducting our preclinical studies and clinical trials. We rely on these vendors and individuals to perform many facets of the drug development process, including certain preclinical studies, the recruitment of sites and patients for participation in our clinical trials, maintenance of good relations with the clinical sites, and ensuring that these sites are conducting our trials in compliance with the trial protocol and applicable regulations. If these third parties fail to perform satisfactorily, or do not adequately fulfill their obligations under the terms of our agreements with them, we may not be able to enter into alternative arrangements without undue delay or additional expenditures, and therefore the preclinical studies and clinical trials of our product candidate may be delayed or prove unsuccessful. Further, the FDA may inspect some of the clinical sites participating in our clinical trials in the U.S., or our third-party vendors’ sites, to determine if our clinical trials are being conducted according to GCPs. If we or the FDA determine that our third-party vendors are not in compliance with, or have not conducted our clinical trials according to, applicable regulations we may be forced to delay, repeat or terminate such clinical trials.

 

We have limited capacity for recruiting and managing clinical trials, which could impair our timing to initiate or complete clinical trials of our product candidate and materially harm our business.

 

We have limited capacity to recruit and manage the clinical trials necessary to obtain FDA approval or approval by other regulatory authorities. By contrast, larger pharmaceutical and bio-pharmaceutical companies often have substantial staffs with extensive experience in conducting clinical trials with multiple product candidates across multiple indications. In addition, they may have greater financial resources to compete for the same clinical investigators and patients that we are attempting to recruit for our clinical trials. As a result, we may be at a competitive disadvantage that could delay the initiation, recruitment, timing, completion of our clinical trials and obtaining regulatory approvals, if at all, for our product candidate.

 

We, and our collaborators, must comply with extensive government regulations in order to advance our product candidate through the development process and ultimately obtain and maintain marketing approval for our products in the U.S. and abroad.

 

The product candidates that we, or our collaborators, are developing require regulatory approval to advance through clinical development and to ultimately be marketed and sold, and are subject to extensive and rigorous domestic and foreign government regulation. In the U.S., the FDA regulates, among other things, the development, testing, manufacture, safety, efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale and distribution of pharmaceutical and biopharmaceutical products. Our product candidate is also subject to similar regulation by foreign governments to the extent we seek to develop or market them in those countries. We, or our collaborators, must provide the FDA and foreign regulatory authorities, if applicable, with preclinical and clinical data, as well as data supporting an acceptable manufacturing process, that appropriately demonstrate our product candidate’ safety and efficacy before they can be approved for the targeted indications. Our product candidate has not been approved for sale in the U.S. or any foreign market, and we cannot predict whether we or our collaborators will obtain regulatory approval for any product candidate we are developing or plan to develop. The regulatory review and approval process can take many years, is dependent upon the type, complexity, novelty of, and medical need for the product candidate, requires the expenditure of substantial resources, and involves post-marketing surveillance and vigilance and ongoing requirements for post-marketing studies or Phase 4 clinical trials. In addition, we or our collaborators may encounter delays in, or fail to gain, regulatory approval for our product candidate based upon additional governmental regulation resulting from future legislative, administrative action or changes in FDA policy or interpretation during the period of product development. Delays or failures in obtaining regulatory approval to advance our product candidate through clinical development, and ultimately commercialize them, may:

 

·  adversely impact our ability to raise sufficient capital to fund the development of the program candidate;

 

·  adversely affect our ability to further develop or commercialize  our product candidate;

 

·  diminish any competitive advantages that we or our collaborators may have or attain; and

 

·  adversely affect the receipt of potential milestone payments and royalties from the sale of our products or product revenues.

 

Furthermore, any regulatory approvals, if granted, may later be withdrawn. If we or our collaborators fail to comply with applicable regulatory requirements at any time, or if post-approval safety concerns arise, we or our collaborators may be subject to restrictions or a number of actions, including:

 

·  delays, suspension or termination of clinical trials related to our products;

 

·  refusal by regulatory authorities to review pending applications or supplements to approved applications;

 

·  product recalls or seizures;

 

 

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·  suspension of manufacturing;

 

·  withdrawals of previously approved marketing applications; and

 

·  fines, civil penalties and criminal prosecutions.

 

Additionally, at any time we or our collaborators may voluntarily suspend or terminate the preclinical or clinical development of a product candidate, or withdraw any approved product from the market if we believe that it may pose an unacceptable safety risk to patients, or if the product candidate or approved product no longer meets our business objectives. The ability to develop or market a pharmaceutical product outside of the U.S. is contingent upon receiving appropriate authorization from the respective foreign regulatory authorities. Foreign regulatory approval processes typically include many, if not all, of the risks and requirements associated with the FDA regulatory process for drug development and may include additional risks.

 

We have limited experience in the development of small molecule antiviral product candidate and therefore may encounter difficulties developing our product candidate or managing our operations in the future.

 

Our lead product candidate, FV-100, is a chemical compound, also referred to as small molecules. We have limited experience in the discovery, development and manufacturing of these small molecule antiviral compounds. In order to successfully develop this product candidate, we must continuously supplement our research, clinical development, regulatory, medicinal chemistry, virology and manufacturing capabilities through the addition of key employees, consultants or third-party contractors to provide certain capabilities and skill sets that we do not possess. We cannot assure you that we will be able to attract or retain such qualified employees, consultants or third-party contractors with appropriate small molecule antiviral drug development experience. In the event we cannot attract such capabilities or successfully develop or manage our antiviral pipeline, our business could be materially harmed.

 

We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely impact our business.

 

A pharmaceutical product cannot be marketed in the U.S. or other countries until we have completed rigorous and extensive regulatory review processes, including approval of a brand name. Any brand names we intend to use for our product candidate will require approval from the FDA regardless of whether we have secured a formal trademark registration from the U.S. Patent and Trademark Office, or the PTO. The FDA typically conducts a review of proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also object to a product brand name if we believe the name inappropriately implies medical claims. If the FDA objects to any of our proposed product brand names, we may be required to adopt an alternative brand name for our product candidate. If we adopt an alternative brand name, we would lose the benefit of our existing trademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercialize our product candidate.

 

Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

 

Our product candidate may not prove to be safe and efficacious in clinical trials and may not meet all the applicable regulatory requirements needed to receive regulatory approval. In order to receive regulatory approval for the commercialization of our product candidate, we must conduct, at our own expense, extensive preclinical testing and clinical trials to demonstrate safety and efficacy of this product candidate for the intended indication of use. Clinical testing is expensive, can take many years to complete, if at all, and its outcome is uncertain. Failure can occur at any time during the clinical trial process.

 

The results of preclinical studies and early clinical trials of new drugs do not necessarily predict the results of later-stage clinical trials. The design of our clinical trials is based on many assumptions about the expected effects of our product candidate, and if those assumptions are incorrect it may not produce statistically significant results. Preliminary results may not be confirmed on full analysis of the detailed results of an early clinical trial. Product candidates in later stages of clinical trials may fail to show safety and efficacy sufficient to support intended use claims despite having progressed through initial clinical testing. The data collected from clinical trials of our product candidate may not be sufficient to support the filing of an NDA or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated with drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization or achieve sales or profits.

 

Delays in clinical testing could result in increased costs to us and delay our ability to generate revenue.

 

We may experience delays in clinical testing of our product candidate. We do not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a clinical trial, in securing clinical trial agreements with prospective sites with

 

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acceptable terms, in obtaining institutional review board approval to conduct a clinical trial at a prospective site, in recruiting patients to participate in a clinical trial or in obtaining sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, competing clinical trials and new drugs approved for the conditions we are investigating. Clinical investigators will need to decide whether to offer their patients enrollment in clinical trials of our product candidate versus treating these patients with commercially available drugs that have established safety and efficacy profiles. Any delays in completing our clinical trials will increase our costs, slow down our product development, timeliness and approval process and delay our ability to generate revenue.

 

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidate, our business will be substantially harmed.

 

The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidate or any product candidate we may seek to develop in the future will ever obtain regulatory approval.

 

Our product candidate could fail to receive regulatory approval for many reasons, including the following:

 

·                   the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

 

·                   we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;

 

·                   the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

 

·                   the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

 

·                   the data collected from clinical trials of our product candidate may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere;

 

·                   the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies;

 

·                   the FDA or comparable foreign regulatory authorities may fail to approve the companion diagnostics we contemplate developing with partners; and

 

·                   the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

 

This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidate, which would significantly harm our business, results of operations and prospects.

 

In addition, even if we were to obtain approval, regulatory authorities may approve  our product candidate for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidate.

 

We, as the newly formed entity, ContraVir, have not previously submitted a biologics license application, or BLA, or a New Drug Application, or NDA, to the FDA, or similar drug approval filings to comparable foreign authorities, for  our product candidate, and we cannot be certain that  our product candidate will be successful in clinical trials or receive regulatory approval. Further, our product candidate may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidate, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market one or more of our product candidate, our revenues will be dependent, in part, upon our collaborators’ ability to obtain regulatory approval of the companion diagnostics to be used with our product candidate, as well as the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patients that we are targeting for our product candidate are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.

 

We plan to seek regulatory approval to commercialize our product candidate both in the United States, the European Union and in additional foreign countries. While the scope of regulatory approval is similar in other countries, to obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy

 

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and governing, among other things, clinical trials and commercial sales, pricing and distribution of our product candidate, and we cannot predict success in these jurisdictions.

 

We may be required to suspend or discontinue clinical trials due to unexpected side effects or other safety risks that could preclude approval of our product candidate.

 

Our clinical trials may be suspended at any time for a number of reasons. For example, we may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to the clinical trial patients. In addition, the FDA or other regulatory agencies may order the temporary or permanent discontinuation of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements or that they present an unacceptable safety risk to the clinical trial patients.

 

Administering any product candidate to humans may produce undesirable side effects. These side effects could interrupt, delay or halt clinical trials of our product candidate and could result in the FDA or other regulatory authorities denying further development or approval of our product candidate for any or all targeted indications. Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating in our clinical trials.

 

If we fail to comply with healthcare regulations, we could face substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could be adversely affected.

 

As a developer of pharmaceuticals, even though we do not intend to make referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal and state healthcare laws and regulations pertaining to fraud and abuse, false claims and patients’ privacy rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse laws and patient privacy laws of both the federal government and the states in which we conduct our business. The laws include:

 

·                                 the federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

 

·                                 federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, and which may apply to entities like us which provide coding and billing information to customers;

 

·                                 the federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

 

·                                 the Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug manufacturing and product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples; and

 

·                                 state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.

 

If our operations are found to be in violation of any of the laws described above or any governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even if we successfully defends against it, could cause us to incur significant legal expenses and divert management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

 

If we are unable to satisfy regulatory requirements, we may not be able to commercialize our product candidate.

 

We need FDA approval prior to marketing our product candidate in the United States. If we fail to obtain FDA approval to market our product candidate, we will be unable to sell our product candidate in the United States and we will not generate any revenue.

 

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The FDA’s review and approval process, including among other things, evaluation of preclinical studies and clinical trials of a product candidate as well as the manufacturing process and facility, is lengthy, expensive and uncertain. To receive approval, we must, among other things, demonstrate with substantial evidence from well-designed and well-controlled pre-clinical testing and clinical trials that the product candidate is both safe and effective for each indication for which approval is sought. Satisfaction of these requirements typically takes several years and the time needed to satisfy them may vary substantially, based on the type, complexity and novelty of the pharmaceutical product. We cannot predict if or when we will submit an NDA for approval for  our product candidate currently under development. Any approvals we may obtain may not cover all of the clinical indications for which we are seeking approval or may contain significant limitations on the conditions of use.

 

The FDA has substantial discretion in the NDA review process and may either refuse to file our NDA for substantive review or may decide that our data is insufficient to support approval of our product candidate for the claimed intended uses. Following any regulatory approval of our product candidate, we will be subject to continuing regulatory obligations such as safety reporting, required and additional post marketing obligations, and regulatory oversight of promotion and marketing. Even if we receive regulatory approvals, the FDA may subsequently seek to withdraw approval of our NDA if we determine that new data or a reevaluation of existing data show the product is unsafe for use under the conditions of use upon the basis of which the NDA was approved, or based on new evidence of adverse effects or adverse clinical experience, or upon other new information. If the FDA does not file or approve our NDA or withdraws approval of our NDA, the FDA may require that we conduct additional clinical trials, preclinical or manufacturing studies and submit that data before it will reconsider our application. Depending on the extent of these or any other requested studies, approval of any applications that we submit may be delayed by several years, may require us to expend more resources than we have available, or may never be obtained at all.

 

We will also be subject to a wide variety of foreign regulations governing the development, manufacture and marketing of our products. Whether or not FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries must still be obtained prior to marketing the product in those countries. The approval process varies and the time needed to secure approval in any region such as the European Union or in a country with an independent review procedure may be longer or shorter than that required for FDA approval. We cannot assure you that clinical trials conducted in one country will be accepted by other countries or that an approval in one country or region will result in approval elsewhere.

 

If our product candidate is unable to compete effectively with marketed drugs targeting similar indications as our product candidate, our commercial opportunity will be reduced or eliminated.

 

We face competition generally from established pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions. Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Small or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Our commercial opportunity will be reduced or eliminated if our competitors develop and commercialize GI drugs that are safer, more effective, have fewer side effects or are less expensive than our product candidate. These potential competitors compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient enrollment for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.

 

If approved and commercialized, FV-100 intends to compete with at least 4 currently approved prescription therapies for the treatment of shingles, acyclovir, valacyclovir and famiciclovir.  In addition, Zostavax®, a live attenuated varicella zoster virus VZV vaccine, is available and may reduce the overall incidence of shingles.. We also believe other companies are developing products that will compete with shingles should they be approved by the FDA. For example, valomaciclovir is being developed by Epiphany Pharmaceuticals and has completed Phase IIb clinical trials for VZV infections. To our knowledge, other potential competitors are in earlier stages of development. If potential competitors are successful in completing drug development for their product candidates and obtain approval from the FDA, they could limit the demand for FV-100.

 

We expect that our ability to compete effectively will depend upon our ability to:

 

·                               successfully identify and develop key points of product differentiations from currently available therapies;

 

·                                 successfully and rapidly complete clinical trials and submit for and obtain all requisite regulatory approvals in a cost-effective manner;

 

·                                 maintain a proprietary position for our products and manufacturing processes and other related product technology;

 

·                                 attract and retain key personnel;

 

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·                                 develop relationships with physicians prescribing these products; and

 

·                                 build an adequate sales and marketing infrastructure for our product candidate.

 

Because we will be competing against significantly larger companies with established track records, we will have to demonstrate that, based on experience, clinical data, side-effect profiles and other factors, our products, if approved, are competitive with other products. If we are unable to compete effectively in the GI drug market and differentiate our products from other marketed GI drugs, we may never generate meaningful revenue.

 

We currently have no sales and marketing organization. If we are unable to establish a direct sales force in the United States to promote our products, the commercial opportunity for our products may be diminished.

 

We currently have no sales and marketing organization. If  our product candidate is approved by the FDA, we intend to market that product through our own sales force. We will incur significant additional expenses and commit significant additional management resources to establish our sales force. We may not be able to establish these capabilities despite these additional expenditures. We will also have to compete with other pharmaceutical and biotechnology companies to recruit, hire and train sales and marketing personnel. If we elect to rely on third parties to sell our product candidate in the United States, we may receive less revenue than if we sold our products directly. In addition, although we would intend to use due diligence in monitoring their activities, we may have little or no control over the sales efforts of those third parties. In the event we are unable to develop our own sales force or collaborate with a third party to sell our product candidate, we may not be able to commercialize our product candidate which would negatively impact our ability to generate revenue.

 

We may need others to market and commercialize our product candidate in international markets.

 

Currently, we do not have any plans to enter international markets. In the future, if appropriate regulatory approvals are obtained, we may commercialize our product candidate in international markets. However, we have not decided how to commercialize our product candidate in those markets. We may decide to build our own sales force or sell our products through third parties. If we decide to sell our product candidate in international markets through a third party, we may not be able to enter into any marketing arrangements on favorable terms or at all. In addition, these arrangements could result in lower levels of income to us than if we marketed our product candidate entirely on our own. If we are unable to enter into a marketing arrangement for our product candidate in international markets, we may not be able to develop an effective international sales force to successfully commercialize those products in international markets. If we fail to enter into marketing arrangements for our products and are unable to develop an effective international sales force, our ability to generate revenue would be limited.

 

If the manufacturers upon whom we rely fail to produce FV-100, in the volumes that we require on a timely basis, or fail to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the development and commercialization of our product candidate.

 

We do not currently possess internal manufacturing capacity. We plan to utilize the services of contract manufacturers to manufacture our clinical supplies. Any curtailment in the availability of FV-100, however, could result in production or other delays with consequent adverse effects on us. In addition, because regulatory authorities must generally approve raw material sources for pharmaceutical products, changes in raw material suppliers may result in production delays or higher raw material costs.

 

We continue to pursue API and drug product supply agreements with other manufacturers. We may be required to agree to minimum volume requirements, exclusivity arrangements or other restrictions with the contract manufacturers. We may not be able to enter into long-term agreements on commercially reasonable terms, or at all. If we change or add manufacturers, the FDA and comparable foreign regulators may require approval of the changes. Approval of these changes could require new testing by the manufacturer and compliance inspections to ensure the manufacturer is conforming to all applicable laws and regulations and GMP. In addition, the new manufacturers would have to be educated in or independently develop the processes necessary for the production of our product candidate.

 

The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products may encounter difficulties in production, particularly in scaling up production. These problems include difficulties with production costs and yields, quality control, including stability of the product and quality assurance testing, shortages of qualified personnel, as well as compliance with federal, state and foreign regulations. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of our clinical trials, increase the costs associated with conducting our clinical trials and, depending upon the period of delay, require us to commence new clinical trials at significant additional expense or to terminate a clinical trial.

 

We are responsible for ensuring that each of our contract manufacturers comply with the GMP requirements of the FDA and other regulatory authorities from which we seek to obtain product approval. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The approval process for NDAs includes a review of the

 

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manufacturer’s compliance with GMP requirements. We are responsible for regularly assessing a contract manufacturer’s compliance with GMP requirements through record reviews and periodic audits and for ensuring that the contract manufacturer takes responsibility and corrective action for any identified deviations. Manufacturers of FV-100 or other product candidates may be unable to comply with these GMP requirements and with other FDA and foreign regulatory requirements, if any.

 

While we will oversee compliance by our contract manufacturers, ultimately we will not have control over our manufacturers’ compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of FV-100 or other product candidates is compromised due to a manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize FV-100 or other product candidates, and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of FV-100 or other product candidates, entail higher costs or result in us being unable to effectively commercialize FV-100 or other product candidates. Furthermore, if our manufacturers fail to deliver the required commercial quantities on a timely basis and at commercially reasonable prices, we may be unable to meet demand for any approved products and would lose potential revenues.

 

We may not be able to manufacture our product candidate in commercial quantities, which would prevent us from commercializing our product candidate.

 

To date, our product candidate has been manufactured in small quantities for preclinical studies and clinical trials. If our product candidate is approved by the FDA or comparable regulatory authorities in other countries for commercial sale, we will need to manufacture such product candidate in larger quantities. We may not be able to increase successfully the manufacturing capacity for  our product candidate in a timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA must review and approve. If we are unable to increase successfully the manufacturing capacity for a product candidate, the clinical trials as well as the regulatory approval or commercial launch of that product candidate may be delayed or there may be a shortage in supply. Our product candidate requires precise, high quality manufacturing. Our failure to achieve and maintain these high quality manufacturing standards in collaboration with our third-party manufacturers, including the incidence of manufacturing errors, could result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could harm our business, financial condition and results of operations.

 

Materials necessary to manufacture our product candidate may not be available on commercially reasonable terms, or at all, which may delay the development and commercialization of our product candidate.

 

We rely on the third-party manufacturers of our product candidate to purchase from third-party suppliers the materials necessary to produce bulk APIs, and product candidate for our clinical trials, and we will rely on such manufacturers to purchase such materials to produce the APIs and finished products for any commercial distribution of our products if we obtain marketing approval. Suppliers may not sell these materials to our manufacturers at the time they need them in order to meet our required delivery schedule or on commercially reasonable terms, if at all. We do not have any control over the process or timing of the acquisition of these materials by our manufacturers. Moreover, we currently do not have any agreements for the production of these materials. If our manufacturers are unable to obtain these materials for our clinical trials, testing of the affected product candidate would be delayed, which may significantly impact our ability to develop the product candidate. If we or our manufacturers are unable to purchase these materials after regulatory approval has been obtained for one of our products, the commercial launch of such product would be delayed or there would be a shortage in supply of such product, which would harm our ability to generate revenues from such product and achieve or sustain profitability.

 

Our product candidate, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting our potential to generate revenues.

 

If  our product candidate is approved for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of any approved product by physicians, healthcare professionals and third-party payers and our profitability and growth will depend on a number of factors, including:

 

·                                 demonstration of safety and efficacy;

 

·                                 changes in the practice guidelines and the standard of care for the targeted indication;

 

·                                 relative convenience and ease of administration;

 

·                                 the prevalence and severity of any adverse side effects;

 

·                                 budget impact of adoption of our product on relevant drug formularies and the availability, cost and potential advantages of alternative treatments, including less expensive generic drugs;

 

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·                                 Pricing, reimbursement and cost effectiveness, which may be subject to regulatory control;

 

·                                 effectiveness of our or any of our partners’ sales and marketing strategies;

 

·                                 the product labeling or product insert required by the FDA or regulatory authority in other countries; and

 

·                                 the availability of adequate third-party insurance coverage or reimbursement.

 

If any product candidate that we develop does not provide a treatment regimen that is as beneficial as, or is perceived as being as beneficial as, the current standard of care or otherwise does not provide patient benefit, that product candidate, if approved for commercial sale by the FDA or other regulatory authorities, likely will not achieve market acceptance. Our ability to effectively promote and sell any approved products will also depend on pricing and cost-effectiveness, including our ability to produce a product at a competitive price and our ability to obtain sufficient third-party coverage or reimbursement. If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, patients and third-party payers, our ability to generate revenues from that product would be substantially reduced. In addition, our efforts to educate the medical community and third-party payers on the benefits of our product candidate may require significant resources, may be constrained by FDA rules and policies on product promotion, and may never be successful.

 

Guidelines and recommendations published by various organizations can impact the use of our product.

 

Government agencies promulgate regulations and guidelines directly applicable to us and to our product. In addition, professional societies, practice management groups, private health and science foundations and organizations involved in various diseases from time to time may also publish guidelines or recommendations to the health care and patient communities. Recommendations of government agencies or these other groups or organizations may relate to such matters as usage, dosage, route of administration and use of concomitant therapies. Recommendations or guidelines suggesting the reduced use of our products or the use of competitive or alternative products that are followed by patients and health care providers could result in decreased use of our proposed product.

 

If we are unable to retain or attract key employees, advisors or consultants, we may be unable to successfully develop our product candidate in a timely manner, if at all, or otherwise manage our business effectively.

 

We have adopted an operating model that largely relies on the outsourcing of a number of responsibilities and key activities to third-party consultants, and contract research and manufacturing organizations in order to advance the development of our product candidate. Therefore, our success depends in part on our ability to retain highly qualified key management, personnel, and directors to develop, implement and execute our business strategy, operate the company and oversee the activities of our consultants and contractors, as well as academic and corporate advisors or consultants to assist us in this regard. We are currently highly dependent upon the efforts of our management team. In order to develop our product candidate, we need to retain or attract certain personnel, consultants or advisors with experience in a number of disciplines, including research and development, clinical trials, medical matters, government regulation of pharmaceuticals, manufacturing, formulation and chemistry, business development, accounting, finance, human resources and information systems. Although we have not experienced material difficulties in retaining key personnel in the past, we may not be able to continue to do so in the future on acceptable terms, if at all. If we lose any key managers or employees, or are unable to attract and retain qualified key personnel, directors, advisors or consultants, the development of our product candidate could be delayed or terminated and our business may be harmed.

 

If third-party contract manufacturers upon whom we rely to formulate and manufacture our product candidate do not perform, fail to manufacture according to our specifications or fail to comply with strict regulations, our preclinical studies or clinical trials could be adversely affected and the development of our product candidate could be delayed or terminated or we could incur significant additional expenses.

 

We do not own or operate any manufacturing facilities. We intend to rely on third-party contractors, at least for the foreseeable future, to formulate and manufacture these preclinical and clinical materials. Our reliance on third-party contract manufacturers exposes us to a number of risks, any of which could delay or prevent the completion of our preclinical studies or clinical trials, or the regulatory approval or commercialization of our product candidate, result in higher costs, or deprive us of potential product revenues. Some of these risks include:

 

·              our third-party contractors failing to develop an acceptable formulation to support later-stage clinical trials for, or the commercialization of, our product candidate;

 

·              our contract manufacturers failing to manufacture our product candidate according to their own standards, our specifications, cGMPs, or otherwise manufacturing material that we or the FDA may deem to be unsuitable in our clinical trials;

 

·              our contract manufacturers being unable to increase the scale of, increase the capacity for, or reformulate the form of our product candidate. We may experience a shortage in supply, or the cost to manufacture our products may increase to the point where it adversely

 

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affects the cost of our product candidate. We cannot assure you that our contract manufacturers will be able to manufacture our products at a suitable scale, or we will be able to find alternative manufacturers acceptable to us that can do so;

 

·              our contract manufacturers placing a priority on the manufacture of their own products, or other customers’ products;

 

·              our contract manufacturers failing to perform as agreed or not remain in the contract manufacturing business; and

 

·              our contract manufacturers’ plants being closed as a result of regulatory sanctions or a natural disaster.

 

Manufacturers of pharmaceutical products are subject to ongoing periodic inspections by the FDA, the U.S. Drug Enforcement Administration (“DEA”) and corresponding state and foreign agencies to ensure strict compliance with FDA-mandated cGMPs, other government regulations and corresponding foreign standards. While we are obligated to audit their performance, we do not have control over our third-party contract manufacturers’ compliance with these regulations and standards. Failure by our third-party manufacturers, or us, to comply with applicable regulations could result in sanctions being imposed on us or the drug manufacturer from the production of other third-party products. These sanctions may include fines, injunctions, civil penalties, failure of the government to grant pre-market approval of drugs, delays, suspension or withdrawal of approvals, seizures or recalls of product, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our business.

 

In the event that we need to change our third-party contract manufacturers, our preclinical studies, clinical trials or the commercialization of our product candidate could be delayed, adversely affected or terminated, or such a change may result in significantly higher costs.

 

Due to regulatory restrictions inherent in an IND, NDA or BLA, various steps in the manufacture of our product candidate may need to be sole-sourced. In accordance with cGMPs, changing manufacturers may require the re-validation of manufacturing processes and procedures, and may require further preclinical studies or clinical trials to show comparability between the materials produced by different manufacturers. Changing our current or future contract manufacturers may be difficult for us and could be costly, which could result in our inability to manufacture our product candidate for an extended period of time and therefore a delay in the development of our product candidate. Further, in order to maintain our development time lines in the event of a change in our third-party contract manufacturer, we may incur significantly higher costs to manufacture our product candidate.

 

Our industry is highly competitive and subject to rapid technological changes. As a result, we may be unable to compete successfully or develop innovative products, which could harm our business.

 

Our industry is highly competitive and characterized by rapid technological change. Key competitive factors in our industry include, among others, the ability to successfully advance the development of a product candidate through preclinical and clinical trials; the efficacy, toxicological, safety, resistance or cross-resistance, and dosing profile of a product or product candidate; the timing and scope of regulatory approvals, if ever achieved; reimbursement rates for and the average selling price of competing products and pharmaceutical products in general; the availability of raw materials and qualified contract manufacturing and manufacturing capacity; manufacturing costs; establishing and maintaining intellectual property and patent rights and their protection; and sales and marketing capabilities. If ultimately approved, FV-100 or any other product candidate we may develop, would compete against existing therapies or other product candidates in various stages of clinical development that we believe may potentially become available in the future for the treatment of chronic shingles-associated pain and the prevention of staphylococcal infections. Some of the large pharmaceutical companies that currently market products that would compete with our product candidate, if approved, include, but are not limited to multiple large generic companies such as GlaxoSmithKline and Merck.

 

Developing a pharmaceutical product candidate is a highly competitive, expensive and risky activity with a long business cycle. Many organizations, including the large pharmaceutical and biopharmaceutical companies that have existing products on the market or in clinical development that could compete with FV-100 have substantially more resources than we have, and much greater capabilities and experience than we have in research and discovery, designing and conducting preclinical studies and clinical trials, operating in a highly regulated environment, manufacturing drug substances and drug products, and marketing and sales. Our competitors may be more successful than we are in obtaining FDA or other regulatory approvals for their product candidates and achieving broad market acceptance once they are approved. Our competitors’ drugs or product candidates may be more effective, have fewer negative side effects, be more convenient to administer, have a more favorable resistance profile, or be more effectively marketed and sold than any drug we, or our potential collaborators, may develop or commercialize. New drugs or classes of drugs from competitors may render our product candidate obsolete or non-competitive before we are able to successfully develop them or, if approved, before we can recover the expenses of developing and commercializing them. We anticipate that we or our collaborators will face intense and increasing competition as new drugs and drug classes enter the market and advanced technologies or new drug targets become available. If our product candidate does not demonstrate any competitive advantages over existing drugs, new drugs or product candidate, we or our future collaborators may terminate the development or commercialization of our product candidate at any time.

 

We anticipate that  FV-100 if successfully developed and approved, will compete directly or indirectly with existing generic drugs. Generic drugs are drugs whose patent protection has expired, and generally have an average selling price substantially lower than drugs protected by intellectual property rights. Unless a patented drug can differentiate itself from a generic drug in a meaningful manner, the

 

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existence of generic competition in any indication may impose significant pricing pressure on competing patented drugs.

 

We also face, and will continue to face, intense competition from other companies for collaborative arrangements with pharmaceutical and biopharmaceutical companies, and for attracting investigators and clinical sites capable of conducting our preclinical studies and clinical trials. These competitors, either alone or with their collaborators, may succeed in developing technologies or products that are safer, more effective, less expensive or easier to administer than ours. Accordingly, our competitors may succeed in obtaining FDA or other regulatory approvals for their product candidates more rapidly than we can. Companies that can complete clinical trials, obtain required regulatory approvals and commercialize their products before their competitors may achieve a significant competitive advantage, including certain patent and FDA marketing exclusivity rights that could delay the ability of competitors to market certain products. We cannot assure you that product candidates resulting from our research and development efforts, or from joint efforts with our collaborators, will be able to compete successfully with our competitors’ existing products or products under development.

 

We do not currently have any internal drug discovery capabilities, and therefore we are dependent on in-licensing or acquiring development programs from third parties in order to obtain additional product candidates.

 

If in the future we decide to further expand our pipeline, we will be dependent on in-licensing or acquiring product candidates as we do not have significant internal discovery capabilities at this time. Accordingly, in order to generate and expand our development pipeline, we have relied, and will continue to rely, on obtaining discoveries, new technologies, intellectual property and product candidates from third-parties through sponsored research, in-licensing arrangements or acquisitions. We may face substantial competition from other biotechnology and pharmaceutical companies, many of which may have greater resources then we have, in obtaining these in-licensing, sponsored research or acquisition opportunities. Additional in-licensing or acquisition opportunities may not be available to us on terms we find acceptable, if at all. In-licensed compounds that appear promising in research or in preclinical studies may fail to progress into further preclinical studies or clinical trials.

 

If a product liability claim is successfully brought against us for uninsured liabilities, or such claim exceeds our insurance coverage, we could be forced to pay substantial damage awards that could materially harm our business.

 

The use of any of our existing or future product candidates in clinical trials and the sale of any approved pharmaceutical products may expose us to significant product liability claims. We currently have product liability insurance coverage for our clinical trials in the amount of $5.0 million, under Synergy’s existing insurance policy. This coverage will need to be replaced upon the distribution being proposed in this information statement. Such insurance coverage, under Synergy or independently procured, may not protect us against any or all of the product liability claims that may be brought against us in the future. We may not be able to acquire or maintain adequate product liability insurance coverage at a commercially reasonable cost or in sufficient amounts or scope to protect us against potential losses. In the event a product liability claim is brought against us, we may be required to pay legal and other expenses to defend the claim, as well as uncovered damage awards resulting from a claim brought successfully against us. In the event our product candidate is approved for sale by the FDA and commercialized, we may need to substantially increase the amount of our product liability coverage. Defending any product liability claim or claims could require us to expend significant financial and managerial resources, which could have an adverse effect on our business.

 

If our use of hazardous materials results in contamination or injury, we could suffer significant financial loss.

 

Our research activities, through third parties, involve the controlled use of certain hazardous materials and medical waste. Notwithstanding the regulations controlling the use and disposal of these materials, as well as the safety procedures we undertake, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident or environmental discharge or exposure, we may be held liable for any resulting damages, which may exceed our financial resources and have an adverse effect on our business.

 

Risks Relating to the Commercialization of our Product Candidate

 

We may delay or terminate the development of a product candidate at any time if we believe the perceived market or commercial opportunity does not justify further investment, which could materially harm our business.

 

Even though the results of preclinical studies and clinical trials that we have conducted or may conduct in the future may support further development of one or more of our product candidates, we may delay, suspend or terminate the future development of a product candidate at any time for strategic, business, financial or other reasons, including the determination or belief that the emerging profile of the product candidate is such that it may not receive FDA approval, gain meaningful market acceptance, generate a significant return to shareholders, or otherwise provide any competitive advantages in its intended indication or market.

 

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If we fail to enter into collaborations, license agreements or other transactions with third parties to accelerate the development of our product candidate, we will bear the risk of developmental failure.

 

We plan to seek out-licensing opportunities as a way to accelerate the development of  our product candidate. There is no guarantee that we will enter into a future transaction on favorable terms, or at all, or that discussions will initiate or progress on our desired timelines. Completing transactions of this nature is difficult and time-consuming. Potentially interested parties may decline to re-engage or may terminate discussions based upon their assessment of our competitive, financial, regulatory or intellectual property position or for any other reason. Furthermore, we may choose to defer consummating a transaction relating to  our product candidate until additional clinical data is obtained. If we decide do not actively pursue a transaction until we have additional clinical data, we and our stockholders will bear the risk that our product candidate fails prior to any future transaction.

 

If we fail to enter into or maintain collaborations or other sales, marketing and distribution arrangements with third parties to commercialize our product candidate, or otherwise fail to establish marketing and sales capabilities, we may not be able to successfully commercialize our products.

 

We currently have no infrastructure to support the commercialization  of our product candidate, and have little, if any, experience in the commercialization of pharmaceutical products. Therefore, if our product candidate is successfully developed and ultimately approved for sale, our future profitability will depend largely on our ability to access or develop suitable marketing and sales capabilities. We anticipate that we will need to establish relationships with other companies, through license and collaborations agreements, to commercialize our product candidate in the U.S. and in other countries around the world. To the extent that we enter into these license and collaboration agreements, or marketing and sales arrangements with other companies to sell, promote or market our products in the U.S. or abroad, our product revenues, which may be in the form of indirect revenue, a royalty, or a split of profits, will depend largely on their efforts, which may not be successful. In the event we develop a sales force and marketing capabilities, this may result in us incurring significant costs before the time that we may generate any significant product revenues. We may not be able to attract and retain qualified third parties or marketing or sales personnel, or be able to establish marketing capabilities or an effective sales force.

 

If government and third-party payers fail to provide adequate reimbursement or coverage for our products or those we develop through collaborations, our revenues and potential for profitability will be harmed.

 

In the U.S. and most foreign markets, our product revenues, and therefore the inherent value of our product candidate, will depend largely upon the reimbursement rates established by third-party payers for such product candidate or products. Such third-party payers include government health administration authorities, managed-care organizations, private health insurers and other similar organizations. These third-party payers are increasingly challenging the price and examining the cost effectiveness of medical products, services and pharmaceuticals. In addition, significant uncertainty exists as to the reimbursement status, if any, of newly approved drugs or pharmaceutical products. Further, the comparative effectiveness of new compounds over existing therapies and the assessment of other non-clinical outcomes are increasingly being considered in the decision by these payers to establish reimbursement rates. We may also need to conduct post-marketing clinical trials in order to demonstrate the cost-effectiveness of our products. Such studies may require us to commit a significant amount of management time and financial resources. We cannot assure you that any products we successfully develop will be reimbursed in part, or at all, by any third-party payers in any countries.

 

Domestic and foreign governments continue to propose legislation designed to expand the coverage, yet reduce the cost, of healthcare, including pharmaceutical drugs. In some foreign markets, governmental agencies control prescription drugs’ pricing and profitability. In the U.S. significant changes in federal health care policy have been recently approved and will mostly likely result in reduced reimbursement rates in the future. We expect that there will continue to be federal and state proposals to implement more governmental control over reimbursement rates of pharmaceutical products. In addition, we expect that increasing emphasis on managed care and government intervention in the U.S. healthcare system will continue to put downward pressure on the pricing of pharmaceutical products domestically. Cost control initiatives could decrease the price that we receive for any of our product candidates that may be approved for sale in the future, which would limit our revenues and profitability. Accordingly, legislation and regulations affecting the pricing of pharmaceutical products may change before our product candidate is approved for sale, which could further limit or eliminate reimbursement rates for our product candidate. Further, pressure from social activist groups, whose goal it is to reduce the cost of drugs, particularly in less developed nations, may also place downward pressure on the price of drugs, which could result in downward pressure on the prices of our products in the absence of generic competition.

 

If any product candidate that we develop independently or through collaborations is approved but does not gain meaningful acceptance in its intended market, we are not likely to generate significant revenues or become profitable.

 

Even if our product candidate is successfully developed and we or a collaborator obtain the requisite regulatory approvals to commercialize it in the future, it may not gain market acceptance or utilization among physicians, patients or third party payers. The degree of market acceptance that our product candidate may achieve will depend on a number of factors, including:

 

·              the therapeutic efficacy or perceived benefit of the product relative to existing therapies, if they exist;

 

·              the timing of market approval and existing market for competitive drugs;

 

·              the level of reimbursement provided by payers to cover the cost of the product to patients;

 

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·              the net cost of the product to the user or payer;

 

·              the convenience and ease of administration of our product;

 

·              the product’s potential advantages over existing or alternative therapies;

 

·              the actual or perceived safety of similar classes of products;

 

·              the actual or perceived existence, prevalence and severity of negative side effects;

 

·              the effectiveness of sales, marketing and distribution capabilities; and

 

·              the scope of the product label approved by the FDA.

 

There can be no assurance that physicians will choose to prescribe or administer our product, if approved, to the intended patient population. If our product does not achieve meaningful market acceptance, or if the market for our product proves to be smaller than anticipated, we may not generate significant revenues or ever become profitable.

 

Even if we or a collaborator achieve market acceptance for our product, we may experience downward pricing pressure on the price of our product due to social or political pressure to lower the cost of drugs, which would reduce our revenue and future profitability.

 

Pressure from social activist groups and future government regulations, whose goal it is to reduce the cost of drugs, particularly in less developed nations, also may put downward pressure on the price of drugs, which could result in downward pressure on the prices of our product in the future.

 

We may be unable to successfully develop a product candidate that is the subject of collaboration if our collaborator does not perform, terminates our agreement, or delays the development of our product candidate.

 

We expect to continue to enter into and rely on license and collaboration agreements or other business arrangements with third parties to further develop and/or commercialize our existing and future product candidates. Such collaborators or partners may not perform as agreed upon or anticipated, fail to comply with strict regulations, or elect to delay or terminate their efforts in developing or commercializing our product candidates even though we have met our obligations under the arrangement. For example, if an existing or future collaborator does not devote sufficient time and resources to our collaboration arrangement, we may not realize the full potential benefits of the arrangement, and our results of operations may be adversely affected.

 

A majority of the potential revenue from existing and future collaborations will likely consist of contingent payments, such as payments for achieving development or regulatory milestones and royalties payable on the sales of approved products. The milestone and royalty revenues that we may receive under these collaborations will depend primarily upon our collaborator’s ability to successfully develop and commercialize our product candidate. In addition, our collaborators may decide to enter into arrangements with third parties to commercialize products developed under our existing or future collaborations using our technologies, which could reduce the milestone and royalty revenue that we may receive, if any. In many cases, we will not be directly involved in the development or commercialization of our product candidate and, accordingly, will depend entirely on our collaborators. Our collaboration partners may fail to develop or effectively commercialize our product candidate because they:

 

·    do not allocate the necessary resources due to internal constraints, such as limited personnel with the requisite scientific expertise, limited capital resources, or the belief that other product candidate or other internal programs may have a higher likelihood of obtaining regulatory approval or may potentially generate a greater return on investment;

 

·              do not have sufficient resources necessary to fully support the product candidate through clinical development, regulatory approval and commercialization;

 

·              are unable to obtain the necessary regulatory approvals; or

 

·              may re-evaluate the importance and their support for developing our product candidate pipeline due to a change in management, business operations or financial strategy.

 

In addition, a collaborator may decide to pursue the development of a competitive product candidate developed outside of our collaboration with them. Conflicts may also arise if there is a dispute about the progress of, or other activities related to, the clinical development or commercialization of a product candidate, the achievement and payment of a milestone amount, the ownership of intellectual property that is developed during the course of the collaborative arrangement, or other licensing agreement terms. If a collaboration partner fails to develop or effectively commercialize our product candidate for any of these reasons, we may not be able to replace them with another partner willing to develop and commercialize our product candidate under similar terms, if at all. Similarly, we may disagree with a collaborator as to which party owns newly or jointly-developed intellectual property. Should an agreement be revised or terminated as a result of a dispute and before we have realized the anticipated benefits of the collaboration, we may not be able to obtain certain development support or revenues that we anticipated receiving. We may also be unable to obtain, on terms acceptable to us, a license from such collaboration partner to any of its intellectual property that may be necessary or useful for us to continue to develop

 

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and commercialize the product candidate.

 

If we are unable to adequately protect or expand our intellectual property related to our current or future product candidates, our business prospects could be harmed.

 

Our success depends in part on our ability to:

 

·              obtain and maintain intellectual property rights;

 

·              protect our trade secrets; and

 

·              prevent others from infringing on our proprietary rights or patents.

 

We will be able to protect our proprietary intellectual property rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. The patent position of pharmaceutical and biopharmaceutical companies involves complex legal and factual questions, and, therefore, we cannot predict with certainty whether we will be able to ultimately enforce our patents or proprietary rights. Therefore, any issued patents that we own or otherwise have intellectual property rights to may be challenged, invalidated or circumvented, and may not provide us with the protection against competitors that we anticipate.

 

The degree of future protection for our proprietary intellectual property rights is uncertain because issued patents and other legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. Our future patent position will be influenced by the following factors:

 

·              we or our licensors may not have been the first to discover the inventions covered by each of our or our licensors’ pending patent applications and issued patents, and we may have to engage in expensive and protracted interference proceedings to determine priority of invention;

 

·              our or our licensors’ pending patent applications may not result in issued patents;

 

·              our or our licensors’ issued patents may not provide a basis for commercially viable products, may not provide us with any competitive advantages, or may be challenged by third parties; and

 

·              third parties may develop intellectual property around our or our licensors’ patent claims to design competitive intellectual property and ultimately product candidates that fall outside the scope of our or our licensors’ patents.

 

Because of the extensive time required for the development, testing and regulatory review and approval of a product candidate, it is possible that before  our product candidate can be approved for sale and commercialized, our relevant patent rights may expire, or such patent rights may remain in force for only a short period following approval and commercialization. Patent expiration could adversely affect our ability to protect future product development and, consequently, our operating results and financial position. Also, patent rights may not provide us with adequate proprietary protection or competitive advantages against competitors with similar technologies. The laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the U.S. and those countries may lack adequate rules and procedures for defending our intellectual property rights. For example, we may not be able to prevent a third party from infringing our patents in a country that does not recognize or enforce patent rights, or that imposes compulsory licenses on or restricts the prices of life-saving drugs. Changes in either patent laws or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property.

 

We may not develop or obtain rights to products or processes that are patentable. Even if we or our licensors do obtain patents, such patents may not adequately protect the products or technologies we own or have licensed, or otherwise be limited in scope. In addition, we may not have total control over the patent prosecution of subject matter that we license from others. Accordingly, we may be unable to exercise the same degree of control over this intellectual property as we would over our own. Others may challenge, seek to invalidate, infringe or circumvent any pending or issued patents we own or license, and rights we receive under those issued patents may not provide competitive advantages to us. We cannot assure you as to the degree of protection that will be afforded by any of our issued or pending patents, or those licensed by us.

 

If a third party claims we are infringing on its intellectual property rights, we could incur significant expenses, or be prevented from further developing or commercializing our product candidate.

 

Our success will also depend on our ability to operate without infringing the patents and other proprietary intellectual property rights of third parties. This is generally referred to as having the “freedom to operate”. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. The defense and prosecution of intellectual property claims, USPT interference proceedings and related legal and administrative proceedings, both in the U.S. and internationally, involve complex legal and factual questions. As a result, such proceedings are lengthy, costly and time-consuming and their outcome is highly uncertain. We may become involved in protracted and expensive litigation in order to determine the enforceability, scope and

 

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