0001203944-08-000013.txt : 20080415 0001203944-08-000013.hdr.sgml : 20080415 20080415154942 ACCESSION NUMBER: 0001203944-08-000013 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20080229 FILED AS OF DATE: 20080415 DATE AS OF CHANGE: 20080415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAPTOR PHARMACEUTICALS CORP. CENTRAL INDEX KEY: 0001203944 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 980379351 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-50720 FILM NUMBER: 08757159 BUSINESS ADDRESS: STREET 1: 9 COMMERCIAL BLVD, SUITE 200 CITY: NOVATO STATE: CA ZIP: 94949 BUSINESS PHONE: 415-382-1390 MAIL ADDRESS: STREET 1: 9 COMMERCIAL BLVD, SUITE 200 CITY: NOVATO STATE: CA ZIP: 94949 FORMER COMPANY: FORMER CONFORMED NAME: HIGHLAND CLAN CREATIONS CORP. DATE OF NAME CHANGE: 20060531 FORMER COMPANY: FORMER CONFORMED NAME: HIGHLAND CLAN CREATIONS CORP DATE OF NAME CHANGE: 20021106 10QSB/A 1 raptor10qsba022908.htm RAPTOR FORM 10-QSB/A 022908

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB/A

AMENDMENT NO. 1

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2008

[

]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to __________

Commission file number 000-50720

Raptor Pharmaceuticals Corp.
(Exact name of small business issuer as specified in its charter)

Delaware		98-0379351
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9 Commercial Blvd., Suite 200, Novato, CA 94949

(Address of principal executive offices)

(415) 382-8111

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso No x

The registrant has 40,221,297 shares of common stock outstanding as of March 24, 2008.

Transitional Small Business Disclosure Format (Check one):

Yeso

No x

EXPLANATORY NOTE

Raptor Pharmaceuticals Corp. (the “Company”) is filing this Amendment No. 1 (the “Amendment”) to its Quarterly Report on Form 10-QSB for the quarter ended February 29, 2008, as filed with the Securities and Exchange Commission on April 15, 2007* (the ”Original Report”), in order to attach Exhibits 4.1, 4.2, 10.1, 10.2, 10.3, and 10.4, . Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Amendment sets forth those Exhibits not filed with the Original Report (the “Additional Exhibits”).

In addition, Item 6 of Part II of the Original Report is being updated hereby solely to include asterisks to reflect the fact that confidential treatment is being requested with respect to certain filings and to reflect the inclusion with this Amendment of the certifications required pursuant to Rules 13a-14(a)/15d-14(a) and Rules 13a-14(b)/15d-14(b) of the Exchange Act, which have been re-executed and re-filed as of the date of this Amendment. The certifications of the Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) are attached to this Amendment as Exhibits 31.1, 31.2, and 32.1.

Except as otherwise expressly stated for the items amended in this Amendment, this Amendment continues to speak as of the date of the Original Report and the Company has not updated the disclosure contained herein to reflect events that have occurred since the filing of the Original Report.

* Please note that the Company intends to file with the Office of Information Technology, Division of Corporate Finance, via an EDGAR CORRESP submission, a request pursuant to Rule 13(b) of Regulation S-T, that the filing date of its Quarterly Report to be adjusted from “April 15, 2008” to “April 14, 2008.”

-1-

Item 6.	Exhibits.
(4)	Instruments Defining the Rights of Security Holders, Including Indentures
4.1	Warrant to purchase common stock dated December 14, 2007 issued to Flower Ventures, LLC
4.2	Warrant to purchase common stock dated December 14, 2007 issued to ICON Partners, LP
(10)	Material Contracts
10.1	Merger agreement between Bennu Pharmaceuticals Inc. and Encode Pharmaceuticals, Inc. dated December 14, 2007**
10.2	Pharmaceutical development services agreement between Bennu Pharmaceuticals Inc. and Patheon Pharmaceuticals Inc. dated January 7, 2008**
10.3	License agreement between Encode Pharmaceuticals, Inc. and Regents of the University of California dated October 31, 2007**
10.4	Amendment number one to license agreement between Encode Pharmaceuticals, Inc. (acquired by Bennu Pharmaceuticals Inc.) and the Regents of the University of California dated February 29, 2008**
(31)	Section 302 Certification
31.1	Certification of Christopher M. Starr, Ph.D., Chief Executive Officer and Director
31.2	Certification of Kim R. Tsuchimoto, Chief Financial Officer, Secretary and Treasurer
(32)	Section 906 Certification
32.1	Certification of Christopher M. Starr, Ph.D., Chief Executive Officer and Director, and of Kim R. Tsuchimoto, Chief Financial Officer, Secretary and Treasurer
** Certain portions of this agreement have been redacted and submitted to the Securities and Exchange Commission under a confidential treatment request pursuant to Rule 24b-2. -2-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RAPTOR PHARMACEUTICALS CORP.

By: /s/ Christopher M. Starr

Christopher M. Starr, Ph.D.

Chief Executive Officer and Director

(Principal Executive Officer)

Date: April 15, 2008

By: /s/ Kim R. Tsuchimoto

Kim R. Tsuchimoto

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

Date: April 15, 2008

-3-

Exhibit Index
4.1	Warrant to purchase common stock dated December 14, 2007 issued to Flower Ventures, LLC
4.2	Warrant to purchase common stock dated December 14, 2007 issued to ICON Partners, LP
10.1	Merger agreement between Bennu Pharmaceuticals Inc. and Encode Pharmaceuticals, Inc. dated December 14, 2007**
10.2	Pharmaceutical development services agreement between Bennu Pharmaceuticals Inc. and Patheon Pharmaceuticals Inc. dated January 7, 2008**
10.3	License agreement between Encode Pharmaceuticals, Inc. and Regents of the University of California dated October 31, 2007**
10.4	Amendment number one to license agreement between Encode Pharmaceuticals, Inc. (acquired by Bennu Pharmaceuticals Inc.) and the Regents of the University of California dated February 29, 2008**
31.1	Certification of Christopher M. Starr, Ph.D., Chief Executive Officer and Director
31.2	Certification of Kim R. Tsuchimoto, Chief Financial Officer, Secretary and Treasurer
32.1	Certification of Christopher M. Starr, Ph.D., Chief Executive Officer and Director, and of Kim R. Tsuchimoto, Chief Financial Officer, Secretary and Treasurer

** Certain portions of this agreement have been redacted and submitted to the Securities and Exchange Commission under a confidential treatment request pursuant to Rule 24b-2.

EX-4 2 raptorwarrantflower.htm 4.1 RAPTOR WARRANT - FLOWER VENTURES

Exhibit 4.1

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE ON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES LAWS (THE “ACTS”). NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER MAY BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT OR COMMON STOCK PURCHASABLE HEREUNDER, AS APPLICABLE, UNDER THE ACTS, OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACTS.

RAPTOR PHARMACEUTICALS CORP.

WARRANT AGREEMENT

Issue Date: December 14, 2007

1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its assigns (“Holder”), is the owner of a warrant of Raptor Pharmaceuticals Corp., a Delaware corporation, (the “Corporation”), subject to adjustments as provided herein, to purchase One Million Seven Hundred Ninety Six (1,000,796) shares of the Common Stock, $.001 par value (the “Common Stock”), of the Corporation from the Corporation at the price per share shown below (the “Exercise Price”).

Holder: Flower Ventures, LLC

Exercise Price per share: $ 0.67

Except as specifically provided otherwise, all references in this Warrant to the Exercise Price and the number of shares of Common Stock purchasable hereunder shall be to the Exercise Price and number of shares after any adjustments are made thereto pursuant to this Warrant.

2. Corporation’s Representations/Covenants. The Corporation represents and covenants that the shares of Common Stock issuable upon the exercise of this Warrant and upon payment therefor shall at delivery be fully paid and non-assessable and free from taxes, liens, encumbrances and charges with respect to their purchase. The Corporation shall take any necessary actions to assure that the par value per share of the Common Stock is at all times equal to or less than the then current Exercise Price per share of Common Stock issuable pursuant to this Warrant. The Corporation shall at all times until the issuance of the shares upon exercise hereof reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants of the Corporation, including this Warrant.

3. Method of Exercise; Fractional Shares. Subject to the terms and conditions hereof, this Warrant is exercisable at the option of the Holder after December 14, 2007 by surrendering this Warrant, on any business day during the period (the “Exercise Period”) beginning on the issue date of this Warrant specified above and ending at 5:00 p.m. (New York time) eight (8) years after the original issue date of this Warrant. To exercise this Warrant, the Holder shall surrender this Warrant at the principal office of the Corporation or that of the duly authorized and acting transfer agent for its Common Stock, together with the executed exercise form (substantially in the form of that attached hereto) and together with payment for the Common Stock purchased under this Warrant. The principal office of the Corporation is located at the address specified on the signature page of this Warrant; provided, however, that the Corporation may

LEGAL_US_W # 57908002.1

change its principal office upon notice to the Holder. Except as specified below under paragraph 4, at the option of the Holder payment shall be made either by certified or official bank check payable to the order of the Corporation or by wire transfer. Upon the partial exercise of this Warrant, the Corporation shall issue to the Holder a new Warrant of the same tenor and date, and for the balance of the number of shares of Common Stock not purchased upon such partial exercise and any previous exercises. This Warrant is not exercisable with respect to a fraction of a share of Common Stock. In lieu of issuing a fraction of a share remaining after exercise of this Warrant as to all full shares covered by this Warrant, the Corporation shall pay for the fractional share cash equal to the same fraction at the fair market price for such share.

Cashless Exercise.

(a) The Holder may, upon any full or partial exercise of this Warrant, pay the Exercise Price applicable to such exercise by delivering this Warrant and receiving from the Corporation in return therefor the number of shares of Common Stock as to which the Warrant is being exercised which have a fair market value on the date of exercise equal to the fair market value of the Warrant as established in paragraph 4(b).

(b) The fair market value of this Warrant shall mean the fair market value of the Common Stock purchasable under this Warrant minus the Exercise Price of this Warrant.

(c) The fair market value of the Common Stock is, if the Common Stock is traded on a national securities exchange or in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the average of the daily market prices of such stock on the ten (10) trading days immediately preceding the date as of which such value is to be determined. The market price for each such trading day shall be average of the closing prices on such day of the Common Stock on all domestic exchanges on which the Common Stock is then listed, or if there have not been sales on any such exchange on such day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if the Common Stock is not so listed, the average of the high and low bid and asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization. If at any time the Common Stock is not listed on any domestic exchange or quoted in the NASDAQ System or the domestic over-the-counter market, the fair market value shall be the higher of (i) the book value thereof, as determined by any firm of independent public accountants of recognized standing selected by the Corporation (which may be the Corporation’s regular independent accountants), as of the last day of any month ending within sixty days preceding the date as of which the determination is to be made; or (ii) the fair market value thereof, which shall be reasonably determined by the Board of Directors of the Corporation as of a date which is within fifteen days of the date as of which the determination is to be made.

5. Protection Against Dilution. The number of shares of Common Stock purchasable under this Warrant, and the Exercise Price, shall be adjusted as set forth as follows. If at any time or from time to time after the date of this Warrant, the Corporation:

(a)

pays a dividend payable in, or other distribution of, Common Stock, or

(b) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock. or

then, and in each such case, the number of shares of Common Stock purchasable upon exercise of this

LEGAL_US_W # 57908002.1

Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of shares or other securities of the Corporation which the Holder would have owned or have been entitled to receive after the happening of any of the events described above had this Warrant been exercised immediately prior to the happening of such event.

Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted, as herein provided, the Exercise Price payable upon exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of shares of Common Stock purchasable upon the exercise of this Warrant immediately prior to such adjustment, and of which the denominator shall be the number of shares of Common Stock so purchasable immediately thereafter.

6. Adjustment for Reorganization, Consolidation, Merger, Etc. In the case of any capital reorganization or reclassification of the Common Stock of the Corporation (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) during the Exercise Period or in case, during the Exercise Period, the Corporation (or any such other corporation) shall consolidate with or merge into another corporation or convey all or substantially all its assets to another corporation, the Holder, upon exercise, at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the Common Stock of the Corporation (or such other corporation), the proportionate share of all stock, securities or other property issued, paid or delivered for or on all of the Common Stock of the Corporation (or such other corporation) as is allocable to the shares of Common Stock then called for by this Warrant as if the Holder had exercised the Warrant immediately prior thereto, all subject to further adjustment as provided in paragraph 5 of this Warrant.

7. Notice of Adjustment. On the happening of an event requiring an adjustment of the Exercise Price or the shares purchasable under this Warrant, the Corporation shall immediately give written notice to the Holder stating the adjusted Exercise Price and the adjusted number and kind of securities or other property purchasable under this Warrant resulting from the event and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based.

8. Dissolution, Liquidation. In case the voluntary or involuntary dissolution, liquidation or winding up of the Corporation (other than in connection with a reorganization, consolidation, merger, or other transaction covered by paragraph 6 above) is at any time proposed, the Corporation shall give at least thirty days prior written notice to the Holder. Such notice shall contain: (a) the date on which the transaction is to take place; (b) the record date (which shall be at least thirty (30) days after the giving of the notice) as of which holders of Common Stock will be entitled to receive distributions as a result of the transaction; (c) a brief description of the transaction, (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (e) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights under this Warrant shall terminate.

9. Rights of Holder. This Warrant does not entitle the Holder to any voting rights or any other rights as a shareholder of the Corporation. No dividends are payable or will accrue on this Warrant or the shares purchasable under this Warrant prior to exercise of this Warrant. Upon the surrender of this Warrant and payment of the Exercise Price as provided above, the person or entity entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the record holder of such shares as of the close of business on the date of the surrender of this Warrant for exercise as provided above. Upon the exercise of this Warrant, the Holder shall have all of the rights of a shareholder in the Corporation.

10. Exchange for Other Denominations. This Warrant is exchangeable, on its surrender by the Holder to the Corporation, for a new Warrant of like tenor and date representing in the aggregate the

LEGAL_US_W # 57908002.1

right to purchase the balance of the number of shares purchasable under this Warrant in denominations and subject to restrictions on transfer contained herein, in the name designated by the Holder at the time of surrender.

11. Substitution. Upon receipt by the Corporation of evidence satisfactory (in the exercise of reasonable discretion) to it of the ownership of and the loss, theft or destruction or mutilation of the Warrant, and (in the case or loss, theft or destruction) of indemnity satisfactory (in the exercise of reasonable discretion) to it, and (in the case of mutilation) upon the surrender and cancellation thereof, the Corporation will issue and deliver, in lieu thereof, a new Warrant of like tenor.

12. Restrictions on Transfer. Neither this Warrant nor the shares of Common Stock issuable on exercise of this Warrant have been registered under the Securities Act or any other securities laws (the “Acts”). Neither this Warrant nor the shares of Common Stock purchasable hereunder may be sold, transferred, pledged or hypothecated in the absence of (a) an effective registration statement for this Warrant or Common Stock purchasable hereunder, as applicable, under the Acts, or (b) an opinion of counsel reasonably satisfactory to the Corporation that registration is not required under such Acts. If the Holder seeks an opinion as to transfer without registration from Holder’s counsel, the Corporation shall provide such factual information to Holder’s counsel as Holder’s counsel reasonably request for the purpose of rendering such opinion. Each certificate evidencing shares of Common Stock purchased hereunder will bear a legend describing the restrictions on transfer contained in this paragraph unless, in the opinion of counsel reasonably acceptable to the Corporation, the shares need no longer to be subject to the transfer restrictions.

13. Transfer. Except as otherwise provided in this Warrant, this Warrant is transferable only on the books of the Corporation by the Holder in person or by attorney, on surrender of this Warrant, properly endorsed.

14. Recognition of Holder. Prior to due presentment for registration of transfer of this Warrant, the Corporation shall treat the Holder as the person exclusively entitled to receive notices and otherwise to exercise rights under this Warrant. All notices required or permitted to be given to the Holder shall be in writing and shall be given by first class mail, postage prepaid, addressed to the Holder at the address of the Holder appearing in the records of the Corporation.

15. Payment of Taxes. The Corporation shall pay all stock transfer taxes and similar governmental charges that may be imposed with respect to the issuance of shares of Common Stock upon exercise of this Warrant; provided, however, that the Corporation shall not be required to pay any tax or other charge imposed in connection with any transfer of this Warrant or the issuance or delivery of certificates for shares of Common Stock to a person or entity other than the existing Holder of this Warrant; provided, further, that the Corporation shall not be required to pay any income or other similar tax levied on any Holder of this Warrant.

16. Headings. The headings in this Warrant are for purposes of convenience in reference only, shall not be deemed to constitute a part of this Warrant and shall not affect the meaning or construction of any of the provisions of this Warrant.

17. Miscellaneous. This Warrant may not be changed, waived, discharged or terminated except by an instrument in writing signed by the Corporation and the Holder. This Warrant shall inure to the benefit of and shall be binding upon the Holder and the successors and assigns of the Corporation.

18. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to its principles governing conflicts of law.

LEGAL_US_W # 57908002.1

RAPTOR PHARMACEUTICALS CORP.,

a Delaware corporation

By: /s/ Kim R. Tsuchimoto

Kim R. Tsuchimoto

Chief Financial Officer

[Signature Page to Warrant]

LEGAL_US_W # 58709003.1

RAPTOR PHARMACEUTICALS CORP.

Exercise Form

(To be executed by the Holder to purchase

Common Stock pursuant to the Warrant)

The undersigned holder of the attached Warrant hereby: (1) irrevocably elects to exercise purchase rights represented by such Warrant for, and to purchase, ___________ shares of Common Stock of Raptor Pharmaceuticals Corp., a Delaware corporation, and encloses a certified check, official bank check or has wired payment of $___________________________ therefor; (2) requests that a certificate for the shares be issued in the name of the undersigned; and (3) if such number of shares is not all of the shares purchasable under this Warrant, that a new Warrant of like tenor for the balance of the remaining shares purchasable under this Warrant be issued.

Date:______________________________

__________________________________________

Signature

LEGAL_US_W # 58709003.1

RAPTOR PHARMACEUTICALS CORP.

Form of Transfer

(To be executed by the Holder to transfer the Warrant)

For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below :

Names of

Assignee

Address

Taxpayer ID No.

Number of shares

subject to transferred Warrant

The undersigned registered holder further irrevocably appoints ____________________ _______________________________ attorney (with full power of substitution) to transfer this Warrant as aforesaid on the books of the Corporation.

Date:______________________________

__________________________________________

Signature

LEGAL_US_W # 58709003.1

EX-4 3 raptorwarranticon.htm 4.2 RAPTOR WARRANT - ICON PARTNERS

Exhibit 4.2

RAPTOR PHARMACEUTICALS CORP.

WARRANT AGREEMENT

Issue Date: December 14, 2007

1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its assigns (“Holder”), is the owner of a warrant of Raptor Pharmaceuticals Corp., a Delaware corporation, (the “Corporation”), subject to adjustments as provided herein, to purchase Ninety Seven Thousand Four Hundred Eighty (97,480) shares of the Common Stock, $.001 par value (the “Common Stock”), of the Corporation from the Corporation at the price per share shown below (the “Exercise Price”).

Holder: ICON Partners, LP

Exercise Price per share: $ 0.56

LEGAL_US_W # 57908311.1

Cashless Exercise.

(b) The fair market value of this Warrant shall mean the fair market value of the Common Stock purchasable under this Warrant minus the Exercise Price of this Warrant.

(a)

pays a dividend payable in, or other distribution of, Common Stock, or

(b) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock. or

then, and in each such case, the number of shares of Common Stock purchasable upon exercise of this

LEGAL_US_W # 57908311.1

10. Exchange for Other Denominations. This Warrant is exchangeable, on its surrender by the Holder to the Corporation, for a new Warrant of like tenor and date representing in the aggregate the

LEGAL_US_W # 57908311.1

18. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to its principles governing conflicts of law.

LEGAL_US_W # 57908311.1

RAPTOR PHARMACEUTICALS CORP.,

a Delaware corporation

By: Kim R. Tsuchimoto

Kim R. Tsuchimoto

CFO

[Signature Page to Warrant]

LEGAL_US_W # 58709586.1

RAPTOR PHARMACEUTICALS CORP.

Exercise Form

(To be executed by the Holder to purchase

Common Stock pursuant to the Warrant)

Date:______________________________

__________________________________________

Signature

LEGAL_US_W # 58709586.1

RAPTOR PHARMACEUTICALS CORP.

Form of Transfer

(To be executed by the Holder to transfer the Warrant)

For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below :

Names of

Assignee

Address

Taxpayer ID No.

Number of shares

subject to transferred Warrant

Date:______________________________

__________________________________________

Signature

LEGAL_US_W # 58709586.1

EX-10 4 raptorencodemerger.htm 10.1 RAPTOR MERGER AGREEMENT BENNU - ENCODE

Exhibit 10.1

EXECUTION COPY

MERGER AGREEMENT

This Merger Agreement (this “Agreement”) is dated December 14, 2007 (the “Effective Date”), and is by and among Encode Pharmaceuticals, Inc., a company having a place of business located at 801 Brickell Avenue, Suite 942, Miami, Florida 33131 (hereinafter referred to as “Encode”), Raptor Pharmaceuticals, Corp., a company having a place of business located at 9 Commercial Boulevard, Suite 200, Novato, CA 94949 (hereinafter referred to as “Raptor”), Bennu Pharmaceuticals Inc., a company duly organized and existing under the laws of the State of Delaware, having a place of business located at 9 Commercial Boulevard, Suite 200, Novato, CA 94949 (hereinafter referred to “Bennu”), and Nicholas Stergis, an individual having a place of business at 801 Brickell Avenue, Suite 942, Miami, Florida 33131.

RECITALS

WHEREAS, the respective Boards of Directors of each of Raptor, Bennu and Encode have determined that it is advisable and in the best interests of their respective companies and stockholders that Encode be merged with and into Bennu in accordance with the requirements of the Delaware General Corporation Law (“DGCL”) and the terms of this Agreement, pursuant to which Bennu will be the surviving corporation and will be a wholly-owned subsidiary of Raptor (the “Merger”);

WHEREAS, Raptor, as the sole stockholder of Bennu, has approved this Agreement, the Merger and the transactions contemplated by this Agreement pursuant to action taken by written consent in accordance with the requirements of the DGCL and the Bylaws of Bennu;

WHEREAS, the Persons listed on Appendix A (collectively the “Encode Stockholders”) as holders of (i) a majority of the shares of common stock, par value $0.001 per share, of Encode (the “Common Stock”); and (ii) all outstanding options, warrants or other rights to acquire or receive shares of Common Stock (the “Encode Convertible Securities” and together with the Common Stock, the “Encode Securities”), such Encode Securities constituting the majority of the outstanding capital stock of Encode on a fully-diluted basis giving effect to the exercise or conversion of the Encode Convertible Securities, have approved this Agreement, the Merger and the transactions contemplated by this Agreement pursuant to action taken by written consent in accordance with the requirements of DGCL and the Bylaws of Encode;

WHEREAS, the parties to this Agreement intend that the Merger qualify as a “reorganization,” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that Raptor, Bennu and Encode will each be a “party to a reorganization,” within the meaning of Section 368(b) of the Code, with respect to the Merger.

NOW THEREFORE, the parties hereto hereby agree as follows:

ARTICLE 1.

THE MERGER

1.1. The Merger. Upon the terms and subject to the conditions set forth in this Agreement and the Certificate of Merger, and in accordance with the DGCL, Encode shall be

LEGAL_US_W # 57260898.15

merged with and into Bennu and the separate existence of Encode shall cease at the Effective Time (as defined in Section 1.3). At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger, and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, following the Effective Time, Bennu shall be the surviving corporation (the “Surviving Corporation”) and shall succeed to and possess all of the rights, properties, privileges, immunities, powers, franchises, and purposes, and be subject to all the duties, liabilities, debts, obligations, and restrictions of Encode, all without further act or deed.

1.2. The Closing. The closing of the transactions contemplated by this Agreement, including the Merger (the “Closing”) will take place at the offices of Paul, Hastings, Janofsky, and Walker LLP, at 515 South Flower, Los Angeles, California 90071, or at such other place as is mutually agreeable to Raptor and Encode, and shall occur contemporaneously with the filing and acceptance of the Certificate of Merger in the form attached as Exhibit A (the “Certificate of Merger”) with the Secretary of State of the State of Delaware. The date of the Closing is referred to as the “Closing Date.”

1.3. The Effective Time. As soon as is practicable following the signing of this Agreement, the parties shall file a copy of the Certificate of Merger executed in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with and accepted by the Secretary of State of the State of Delaware (the time the Merger becomes effective being hereinafter referred to as the “Effective Time”).

1.4. No Further Action Necessary for Conversion of Encode Securities. At the Effective Time, as a result of the Merger and without any other action on the part of Raptor, Bennu, Encode, or any holder of any Encode Securities:

(a) Conversion of Capital Stock of Bennu. All of the outstanding shares of common stock, $0.001 par value per share, of Bennu (the “Bennu Common Stock”) issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall represent 3,000 shares of common stock of the Surviving Corporation.

(b) Conversion of Common Stock. Each share of Common Stock held by a Stockholder surrendered in accordance with Section 1.6 will be canceled and extinguished and be converted automatically into the right to receive Raptor Common Stock in the amount of the Per Share First Share Consideration and, subject to achievement of a Trigger Event (as hereinafter defined), the Per Share Contingent Share Consideration, in accordance with Appendix B. Fractional shares shall be rounded up or down to the nearest whole number.

(c) Cancellation of Encode or Subsidiary Stock. Notwithstanding Section 1.4(c), each share of any Encode Securities that is owned by Encode or any of its subsidiaries, if any, shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist without any conversion thereof or payment therefor.

(d) Conversion of Encode Convertible Securities. Encode shall deliver a cancellation agreement (in a form reasonably satisfactory to Raptor) (the “Cancellation Agreement”) to each holder of an Encode Convertible Security granted by Encode, such that the outstanding Encode Convertible Securities shall be deemed canceled and extinguished and be

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converted automatically into, in the case of Encode Convertible Securities which constitute warrants, the right to receive a warrant exercisable for Raptor Common Stock and, in the case of Encode Convertible Securities which constitute options, the right to receive an option exercisable for Raptor Common Stock, in each case in the amount of the Per Share First Share Consideration and, subject to achievement of a Trigger Event, the Per Share Contingent Share Consideration, each as multiplied by the number of shares of Common Stock such holder would have been entitled to purchase under the terms of such Encode Convertible Security at the Effective Time, in accordance with and at exercises prices as set forth on Appendix B. Fractional shares shall be rounded up or down to the nearest whole number.

(e) No Interest; No Further Rights. Notwithstanding anything herein to the contrary, there shall be no interest payable on any portion of the Merger Consideration regardless of when ultimately paid, if at all. All Encode Securities, when canceled and/or converted pursuant to this Section 1.4, shall no longer be outstanding and shall automatically be canceled and retired, and each Securityholder shall cease to have any rights with respect thereto, except the right to receive the respective consideration provided for in this Section 1.4. At the Effective Time, the stock transfer books of Encode shall be closed, and no transfer of any of the foregoing securities shall be made thereafter. If, after the Effective Time, certificates or any other evidence of any of the foregoing securities are presented to the Surviving Corporation or Raptor, they shall be canceled and exchanged by the Surviving Corporation or Raptor as provided for in this Agreement.

(f) Except as otherwise required by Law, none of Raptor, Bennu, the Surviving Corporation or any other party to this Agreement shall be liable to any Securityholder for such amount of the consideration or any subsequent payments required to be delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

1.5.

The Merger Consideration. The aggregate Merger Consideration shall be:

(a) An aggregate of Four Million Nine Hundred Thousand (4,900,000) restricted, unregistered newly issued shares (the “First Shares”) of Raptor common stock, par value $.001 per share (“Raptor Common Stock”), to be issued and delivered to the Securityholders at the Effective Time (the “First Closing”) in accordance with Appendix B;

(b) Comprised of the amounts set forth below, on a one-time basis, if at all, an aggregate of Two Million Four Hundred Thousand (2,400,000) restricted, unregistered newly issued shares (the “Contingent Shares”) of Raptor Common Stock, payable in such amounts are set forth below to the extent that a Trigger Event is achieved with respect to such amount and subject to stock splits, stock dividends, reclassifications, recapitalizations, reorganizations and other similar events between the date hereof and the Milestone Termination Date (as defined below) with respect to the Trigger Event to which the payment of such amount relates, to be issued and delivered to the Securityholders in accordance with Appendix B with respect to a Trigger Event within thirty (30) days after the occurrence of such Trigger Event (any payment made by Raptor pursuant to any of Subsections 1.5(b)(2) and 1.5(b)(4), if any, are each referred to herein individually as a “Milestone Payment” and collectively as the “Milestone Payments”):

(1)

Reserved;

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(2) Five Hundred Thousand (500,000) restricted, unregistered shares of Raptor Common Stock upon the receipt by Bennu of Marketing Approval for a Cystinosis Product from the applicable Regulatory Agency in a Major Market;

(3)

Reserved;

(4) One Million Nine Hundred Thousand (1,900,000) restricted, unregistered shares of Raptor Common Stock upon the receipt by Bennu of Marketing Approval for a Non-C Product from the applicable Regulatory Agency in a Major Market; and

(5) an amount equal to Two Million Four Hundred Thousand (2,400,000) restricted, unregistered shares of Raptor Common Stock, less the aggregate of all Milestone Payments made or owing by Bennu, upon, if at all, the consummation of any transaction or series of related transactions that results in the sale of all or substantially all of the Encode Assets other than to an Affiliate of the Surviving Corporation or Raptor in such case where the Encode Assets are valued at no less than $2.5 million (a “Sale”) (each of the pre-conditions set forth in Subsections 1.5(b)(2), 1.5(b)(4), and 1.5(b)(5), a “Trigger Event” and collectively as the “Trigger Events”);

Any of such Trigger Events shall be referred to herein as a “Second Closing”; provided, however, no Securityholder shall have any right to receive any Milestone Payment or Contingent Shares for any Trigger Event occurring after the fifth anniversary of the Effective Time (the “Milestone Termination Date”). Notwithstanding anything herein to the contrary, the parties hereto understand and agree that any Milestone Payment made by Raptor pursuant to any Milestone under any of Subsections 1.5(b)(2) and 1.5(b)(4) will be made on a one-time basis notwithstanding any subsequent Milestone accomplished under such subparagraph thereafter and that the aggregate of all Milestone Payments shall not under any circumstances exceed, in the aggregate, Two Million Four Hundred Thousand (2,400,000) restricted, unregistered shares of Raptor Common Stock. The parties hereto also understand and agree that each Securityholder’s right to receive any Milestone Payments (other than those already earned and owing by Raptor) shall cease upon the occurrence of a Sale notwithstanding any subsequent Milestone accomplished thereafter.

(c) Notwithstanding anything in this Agreement to the contrary, Raptor shall have the option, in its sole discretion, to recoup in full all Losses incurred by it or any of its Affiliates arising from any claim for indemnification pursuant to Section 5, and credited against any Milestone Payment then due and owing or to be due and owing under this Agreement. Raptor shall have the right to designate, reverse and re-designate any prospective application of such recoupment. Raptor, Encode and the Stockholder Representative agree that whether a claim for indemnification exists will be initially determined in the sole discretion of the board of directors of Raptor (the “Board”) and Raptor will thereafter provide Encode and the Stockholder Representative with written notice of such determination and reasonable detail supporting such determination and claim (the “Claim Notice”). During the period beginning on the date that the Claim Notice is sent by Raptor to Encode and the Stockholder Representative and ending on the date on which any dispute between Raptor and Encode with respect to such Claim Notice is resolved pursuant to arbitration in accordance with Section 6.13 (or otherwise resolved pursuant to a written agreement between the Raptor and Encode), Raptor, Encode and the Stockholder

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Representative agree that neither Bennu nor Raptor shall have any obligation to pay the Milestone Payments or any portion thereof, and during such time, all Milestone Payments shall be tolled and suspended and no interest shall accrue thereon during such period. If the arbitrator resolves the dispute that is the subject of the Claim Notice in a manner adverse to Raptor such that Raptor is obligated to continue to make payments of the Milestone Payments to the Securityholders, then subject to the terms and conditions contained herein, the suspension of the payment of the Milestone Payments which were otherwise due and owing shall cease and the Milestone Payments shall thereafter continue to be paid in accordance with this Agreement.

1.6. Exchange of Shares and Closing. At the Effective Time, Raptor shall make available to Encode for exchange in accordance with this Article I, Raptor Common Stock in an amount sufficient to permit payment of the consideration described in Section 1.5 and, if Encode has not delivered to Raptor the items and documents required by this Article I:

(a) As soon as reasonably practicable after the date hereof, Encode shall cause to be mailed to each holder of record of a certificate or certificates which as of the date hereof represented outstanding shares of Common Stock (the “Certificates”) and each holder of Encode Convertible Securities (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates and/or Encode Convertible Securities shall pass, only upon proper delivery of the Certificates to Encode, and shall be in such form and have such other provisions as Raptor may reasonably specify, including acknowledgement of the terms of this Agreement and such Securityholder’s indemnification obligations hereunder), and/or, as applicable, the Cancellation Agreement and (ii) instructions for use in effecting the surrender of the Certificates and/or Encode Convertible Securities in exchange for the consideration described herein. Upon surrender of a Certificate and/or an Encode Convertible Security for cancellation to Encode, together with such letter of transmittal and/or Cancellation Agreement, duly completed and validly executed, and such other documents as may be reasonably required pursuant to such instructions, the holder of such Certificate and/or Encode Convertible Security shall be entitled to receive the consideration described herein, and the Certificate and/or Encode Convertible Security so surrendered shall forthwith be canceled. Until surrendered as contemplated by this Section 1.6(a), each Certificate and/or Encode Convertible Security that, prior to the Effective Time, represented shares of Common Stock or a right to acquire or purchase Common Stock will be deemed from and after the Effective Time, for all corporate purposes, to evidence the right to receive the consideration described herein. If any Certificate and/or Encode Convertible Security shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact, in form and substance reasonably acceptable to Raptor, by the Person claiming such Certificate and/or Encode Convertible Security to be lost, stolen or destroyed, and complying with such other conditions as Raptor may reasonably impose (including the execution of an indemnification undertaking or the posting of an indemnity bond or other surety in favor of Raptor and Encode with respect to the Certificate and/or Encode Convertible Security alleged to be lost, stolen or destroyed), Encode will deliver to such Person, the consideration described herein.

(b) If all or a portion of the consideration payable hereunder is to be delivered to any Person other than the Person in whose name the Certificate and/or Encode Convertible Security formerly representing Common Stock and/or Encode Convertible Securities is registered or issued, it shall be a condition to such right to receive such portion of such consideration that the Certificate and/or Encode Convertible Security so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person surrendering

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such Certificate and/or Encode Convertible Security shall pay to the Surviving Corporation any transfer or other Taxes required by reason of the payment of the consideration to a Person other than the registered holder of the Certificate and/or Encode Convertible Security surrendered, or shall establish to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable.

1.7.

Registration Rights.

(a) Any time following 140 days from Closing and prior to the expiration of the fourth anniversary of the date hereof, Raptor shall grant ICON Capital Partners LP (“ICP”) a demand registration rights which shall be exercised, if at all, by delivery of written notice to such effect to Raptor after such 140th day following the Closing. Upon exercise of the demand, Raptor shall, subject to the existing registration rights of the holders of Raptor Common Stock immediately prior to the Effective Time, at its own expense (excluding underwriting commissions and discounts, such expenses to be borne on a pro rata basis by the holders of Raptor Common Stock whose shares are being registered), use its commercially reasonable efforts to prepare and file a registration statement within sixty (60) days of receipt of the written notice described in the first sentence of this Section with the Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “1933 Act”), covering the First Shares issued to ICP for public resale and shall use its commercially reasonable efforts to cause such registration statement to become effective by the SEC within sixty (60) days thereafter. Within ninety (90) days following the achievement of a Trigger Event (provided the Trigger Event occurs on or prior to the fifth anniversary of the Effective Time), Raptor shall, subject to the existing registration rights of the holders of Raptor Common Stock immediately prior to such filing, use its commercially reasonable efforts to prepare and file a registration statement or an amendment to the registration statement described above with the SEC pursuant to the 1933 Act covering the Contingent Shares issued to ICP. Raptor shall use its commercially reasonable efforts to keep each of such registration statements effective for a period not exceeding the earlier of (i) the second anniversary of the date on which such applicable registration statement is declared effective by the SEC, (ii) the date on which the First Shares or the Contingent Shares, as applicable, issued to ICP may be sold without restriction by the volume limitations of Rule 144(e) of the 1933 Act or (iii) such time as all of the First Shares or the Contingent Shares, as applicable, issued to ICP included in such registration statement have been sold (such period, the “Registration Period”). The registration rights under this Section 1.7 shall not be assignable except to controlled Affiliates of ICP.

(b) Following the effectiveness of a registration statement filed pursuant to this Section 1.7, Raptor may, at any time, suspend the effectiveness of such registration for up to 45 days, as appropriate (a “Suspension Period”), by giving notice to the holders of the Raptor Common Stock covered by such registration statement, if Raptor shall have determined that Raptor may be required to disclose any material corporate development which disclosure may have a Material Adverse Effect or would be reasonably likely to cause a violation of the 1933 Act or Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, no more than two Suspension Periods (i.e., 90 days) may occur in immediate succession. Raptor shall use its commercially reasonable efforts to limit the duration and number of any Suspension Periods. The holders of the Raptor Common Stock covered by the applicable registration statement agree that, upon receipt of any notice from Raptor of a Suspension Period, such holders shall forthwith discontinue disposition of restricted Raptor Common Stock covered by such registration statement or prospectus until such holders (i) are advised in writing by Raptor that the use of the

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applicable prospectus may be resumed, (ii) have received copies of a supplemental or amended prospectus, if applicable, and (iii) have received copies of any additional or supplemental filings which are incorporated or deemed to be incorporated by reference into such prospectus.

(c) As a condition to the inclusion of its shares of Raptor Common Stock in any registration statement whether pursuant to this Section 1.7 or Section 1.8, each Securityholder shall furnish to Raptor such information regarding such Securityholder and the distribution proposed by such Securityholder as Raptor may request in writing, including completing one or more registration statement questionnaires in the form(s) provided by Raptor or as shall be required in connection with any registration referred to in this Section 1.7 or Section 1.8, duly executed by such Securityholder, in each case within three business days after such information is requested by Raptor. Such Securityholder covenants that upon Raptor’s request, such Securityholder will promptly notify Raptor of any changes in such information or other information, under signature of such Securityholder, as Raptor may request in connection with any registration referred to in this Section 1.7 or Section 1.8.

(d) Each Securityholder hereby covenants with Raptor not to make any sale of the shares of Raptor Common Stock without effectively causing the prospectus delivery requirements under the 1933 Act to be satisfied.

(e) Each Securityholder agrees not to take any action with respect to any distribution deemed to be made pursuant to a registration statement filed pursuant to this Section 1.7 or Section 1.8 which would constitute a violation of Regulation M under the Securities Exchange Act of 1934, as amended or any other applicable rule, regulation or Law.

(f) At the end of the Registration Period, the Securityholders shall discontinue sales of shares pursuant to any registration statement filed pursuant to this Section 1.7 or Section 1.8 upon receipt of notice from Raptor of its intention to remove from registration the shares covered by such registration statement which remain unsold, and such Securityholders shall notify Raptor of the number of shares registered which remain unsold immediately, but in any event no later than three Business Days, following receipt of such notice from Raptor.

(g) If an offering in connection with which ICP is entitled to registration under this Section 1.7 is an underwritten offering, then ICP shall, unless otherwise agreed by the Company, so advise the Company as a part of its request made pursuant to this Section 1.7, and the Company shall include such information in the written notice referred to in Section 1.7(a). In such event, the right of ICP to include its First Shares (and Contingent Shares, if applicable) in such registration shall be subject to the provisions of this Agreement as well as the registration rights of existing shareholders of Raptor Common Stock and shall be conditioned upon ICP’s participation in such underwriting and the inclusion of ICP’s First Shares (and Contingent Shares, if applicable) in the underwriting to the extent provided herein. All Securityholders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting, including, without limitation, a lockup agreement acceptable to such underwriter or underwriters.

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1.8.

Piggyback Registrations.

(a) If at any time prior to the 140th day following the date of this Agreement, the Company shall determine to file with the SEC a registration statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall send to the Securityholders written notice of such determination and, if within fifteen (15) days after the effective date of such notice, the Securityholders shall so request in writing, the Company shall, subject to the existing registration rights of the holders of Raptor Common Stock, include in such registration statement all or any part of the First Shares such Securityholders request to be registered, except that if, (i) inclusion of such shares would result in the offering not being conducted in accordance with the provisions of Rule 415, or (ii) in connection with any underwritten public offering for the account of the Company, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Raptor Common Stock which may be included in the registration statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then, subject to the existing registration rights of the holders of Raptor Common Stock, the Company shall be obligated to include in such registration statement only such limited portion of the First Shares with respect to which the Securityholders have requested inclusion hereunder (i) as would enable the offering to be conducted in accordance with the provisions of Rule 415 or (ii) as the underwriter shall permit.

(b) Subject to Section 1.7, if an offering in connection with which the Securityholders are entitled to registration under this Section 1.8 is an underwritten offering, then the right of any Securityholder to include his First Shares in such registration shall be subject to the provisions of this Agreement as well as the registration rights of existing shareholders of Raptor Common Stock and shall be conditioned upon such Securityholder’s participation in such underwriting on the same terms and conditions as the existing shareholders of Raptor Common Stock participating therein and the inclusion of such Securityholder’s First Shares in the underwriting to the extent provided herein. All Securityholders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement with the underwriter or underwriters selected for such underwriting in the form acceptable to Raptor, including, without limitation, a lockup agreement acceptable to such underwriter or underwriters.

(c) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.8 whether or not any Securityholder has elected to include securities in such registration, and shall promptly notify any Securityholder that has elected to include shares in such registration of such termination or withdrawal.

(d) Notwithstanding anything herein to the contrary, the piggyback registration rights provided pursuant to this Section 1.8 shall be subject to the provisions of Section 1.7 and the rights of the Company and obligations of the Securityholders in the same manner as the demand registration rights, including, without limitation, the Company’s right to suspend the effectiveness of any registration initiated by it under this Section 1.8.

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1.9. The Surviving Corporation. The certificate of incorporation and bylaws of Bennu as in effect immediately prior to the Effective Time shall be the certificate of incorporation and bylaws of the Surviving Corporation from and after the Effective Time until duly amended in accordance with applicable Law. The officers and directors of Bennu immediately prior to the Effective Time shall be the officers and directors of the Surviving Corporation from and after the Effective Time until the earlier of their resignation or their removal or until their respective successors are duly elected and qualified, as the case may be. The Merger shall have the effects set forth in Section 259 of the DGCL.

1.10. Tax Intent of the Parties. It is the intention of the parties that the Merger be treated as a reorganization qualifying under Section 368(a) of the Internal Revenue Code of 1986, as amended. The parties shall use their best efforts to take all reasonable actions necessary to cause the Merger to qualify as a reorganization pursuant to such section and shall treat the Merger accordingly on their respective tax returns.

1.11. Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title, and possession to all rights, properties, privileges, immunities, powers, franchises, and purposes of either of Bennu or Encode, the officers of the Surviving Corporation are fully authorized, in the name of each of Bennu and Encode or otherwise, to take, and shall take, all such lawful and necessary action.

1.12. Tax Returns. The Stockholder Representative shall prepare and file, no later than December 31, 2007, all income Tax Returns required to be filed by Encode on or before the Closing with any federal or state Governmental Authority, which have not been so filed as of the Closing.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES OF ENCODE

As a material inducement to Raptor and Bennu to enter into this Agreement and to consummate the transactions contemplated hereby, and subject to the exceptions set forth in the Disclosure Schedule delivered pursuant to this Agreement on the date hereof, Encode hereby represents and warrants to Raptor and Bennu that, except with respect to Sections 2.1, 2.2, 2.3, 2.5, 2.6, 2.8, 2.9, and 2.12 which such Sections shall not be qualified by “Knowledge”, to its actual Knowledge:

2.1. Encode Assets. At the Closing (as hereinafter defined), Encode has good, valid and marketable title to, or a good, valid and marketable leasehold interest in, the Assets used by it, located on its premises or disclosed on the Most Recent Balance Sheet or acquired thereafter prior to the Closing, free and clear of all Liens, which constitute all of Encode’s Assets (collectively, the “Encode Assets”), such Encode Assets as set forth on Schedule 2.1. Encode owns, has a valid leasehold interest in, or has a valid license to use, all of the Encode Assets necessary for the conduct of its business as presently conducted and as presently proposed to be conducted by it, and such Encode Assets, taken as a whole, constitute all of the Assets necessary for the operation of the business of Encode as presently conducted.

2.2. Organization; Qualification. Encode is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full corporate power

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and authority to own, lease and operate all of its properties and Assets and carry on its business as it is currently being conducted. Encode is duly qualified to do business and is in good standing as a foreign entity in those jurisdictions in which the nature of the business conducted by it or the property it owns, leases or operates requires it to so qualify, except where the failure to be so qualified or in good standing in such jurisdiction would not reasonably be expected to have a Material Adverse Effect on Encode. Such jurisdictions as set forth on Schedule 2.2. As used in this Agreement, “Material Adverse Effect,” with respect to Encode or Raptor, means a material adverse effect on the business, properties, Assets, operations, condition (financial or otherwise) of such entity taken as a whole, or on the authority or ability of Encode or Raptor, as the case may be, to perform its obligations under this Agreement. Complete and correct copies of the certificate of incorporation and by-laws of Encode as currently in effect have been delivered to Raptor. Encode has no subsidiaries. Encode has not assumed by merger, Contract, assignment or assumption any Liability of any other Person.

2.3. Authorization. Encode has all requisite power and authority, corporate or otherwise, to execute and deliver this Agreement and any and all instruments necessary or appropriate in order to fully effectuate the terms and conditions of this Agreement and to perform and consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by Encode have been duly and validly authorized by all requisite action on the part of Encode, including by the board of directors of Encode and all of the Securityholders and no other proceedings on the part of Encode are necessary with respect thereto. This Agreement has been duly and validly executed and delivered by Encode and, assuming the due authorization, execution and delivery of this Agreement by Raptor, constitutes a valid and legally binding obligation of Encode, enforceable against Encode in accordance with its terms and conditions, except as enforceability thereof may be limited by (a) any applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting creditors’ rights generally or (b) general principles of equity, whether considered in a proceeding in equity or at Law.

2.4. Consents and Approvals. Except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, Encode is not required to obtain any material Permit, make any filing with, provide any notice to, or obtain the consent of any Governmental Authority, any party to any Encode Contract, or any other Person in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby.

2.5. Capitalization. As of the date hereof and as of immediately prior to the Closing, the authorized issued and outstanding capital stock of Encode is as set forth in Schedule 2.5 attached hereto. All of the outstanding capital stock of Encode is held beneficially and of record by the Securityholders free and clear of any Liens. The Common Stock has been duly authorized and all shares of Common Stock have been validly issued and are fully paid, non-assessable and free and clear of any Liens and have been issued and transferred free and clear of any preemptive or similar rights. Except as set forth on Schedule 2.5, Encode does not have any outstanding (i) capital stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor any rights or options to subscribe for or to purchase its capital stock or (ii) any stock appreciation rights or phantom stock or similar plans or rights. There are no (i) outstanding obligations of Encode (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options

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or other rights to acquire its capital stock or (ii) voting trusts, proxies or other agreements among the Securityholders with respect to the voting or transfer of the Encode Securities.

2.6. No Violations. Encode’s execution and delivery of this Agreement and performance by Encode of its obligations under this Agreement and the consummation of the transactions contemplated hereby do not and will not (a) violate any provision of the certificate of incorporation or by-laws of Encode, (b) conflict with, result in a breach of, constitute a default under (whether with or without the passage of time, the giving of notice or both), accelerate the performance required by, result in the creation of any Lien upon any of the properties or Assets of Encode under, or create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under or adversely affect the rights or obligations of Surviving Corporation under, any Contract or Permit to which Encode is a party or by which any properties or Assets of Encode are bound, or (c) violate any Law or Order currently in effect to which Encode is subject.

2.7. Contracts. Encode has made available to Raptor a true correct and complete copy of each Contract to which Encode is a party or by which it or any of its Assets or properties are bound (the “Encode Contracts”), all of which Contracts are set forth on Schedule 2.7 hereto. Each Encode Contract is in full force and effect and is valid and enforceable in accordance with its terms. Encode is not in default under any Encode Contract, and no event or circumstance has occurred that would, with notice or lapse of time or both, constitute an event of default under any Encode Contract where such default would have a Material Adverse Effect on Encode.

2.8. Litigation. There is no, and during the past three (3) years there have not been any, (i) suit, claim, action, proceeding, hearing, notice of violation, demand letter or investigation (each, an “Action”) pending or threatened against Encode or any executive officer or director of Encode (in their capacity as such) or their respective businesses, properties or Assets, including, without limitation, an Action to enjoin, in whole or in part, the Merger, (ii) material customer claims or demands against Encode or (iii) Orders with respect to or involving Encode. To the Knowledge of Encode, there is no basis for any such Action, claims or demands, or Orders.

2.9. No Brokers or Finders. Encode has not, and their respective Affiliates, officers, directors or employees have not, employed any broker or finder or incurred any liability for any brokerage or finder’s fee or commissions or similar payment in connection with the Merger.

2.10.

Financial Statements; Books and Records.

(a) Attached hereto as part of Schedule 2.10 are true, correct and complete copies of (i) the unaudited balance sheet of Encode as of December 31, 2006, and the related unaudited statements of income and cash flow for the respective twelve-month period then ended, and (ii) the unaudited balance sheet of Encode for the period between January 1, 2007 through November 11, 2007 (the “Most Recent Balance Sheet”), and the related unaudited statements of income and cash flow for the period then ended. Except as set forth on Schedule 2.10, the financial statements described in the foregoing clauses (i) and (ii) (including in all cases the notes thereto, if any) (x) have been prepared in accordance with GAAP, consistently applied throughout the periods indicated, (y) have been prepared from, and in accordance with, the books and records of Encode, and (z) fairly present the financial condition of Encode and accurately reflect the operating results and cash flows of Encode; provided, however, that such financial statements do not contain all footnotes required under GAAP and are subject to normal year-end

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audit adjustments (the effect of which will not, individually or in the aggregate, be materially adverse to Encode).

(b) The books of account, minute books and other records of Encode, all of which have been made available to Raptor, are accurate and complete in all material respects. At the Closing, all of those books and records will be in the possession of Bennu.

2.11. Absence of Undisclosed Liabilities. Except as set forth on Schedule 2.11, Encode has no Liabilities, other than (i) Liabilities set forth on the liabilities side of the Most Recent Balance Sheet, (ii) Liabilities which have arisen after the date of the Most Recent Balance Sheet in the Ordinary Course of Business (none of which is a Liability resulting from breach of contract, breach of warranty, tort, infringement, violation of Law or environmental liability or clean-up obligation), and (iii) Liabilities of Encode pursuant to Encode Contracts set forth on Schedule 2.7 (none of which is a Liability resulting from breach of contract, breach of warranty, tort, infringement, violation of Law or environmental liability or clean-up obligation).

2.12.

Tax Matters. Except as set forth on Schedule 2.12:

(a) Encode has filed (or has had filed on its behalf) all Tax Returns that it was required to file under applicable Laws. All such Tax Returns were true, correct and complete in all respects and were prepared in compliance with all applicable Laws. All Taxes due and owing by (or with respect to the operations of) the Encode (whether or not shown on any Tax Return) have been paid. Encode is not the beneficiary of any extension of time within which to file any Tax Return. No claim or demand has ever been made by an authority in a jurisdiction where Encode does not file Tax Returns that Encode is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any Assets of Encode.

(b) Encode has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

2.13. Material Contracts. Schedule 2.13 sets forth all of the Encode Contracts. All of the Encode Contracts and Leases (the “Material Contracts”) are valid, binding and enforceable as to Encode and the other parties thereto, in accordance with their respective terms. Each Material Contract will be in full force and effect in accordance with its terms upon consummation of the transactions contemplated hereby. Encode, and to the Knowledge of Encode, each other party thereto, has performed all obligations required to be performed by it and is not in default under or in breach of, or in receipt of any claim or demand of default or breach under, any Material Contract. There has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute a default by Encode, or to the Knowledge of Encode, any of the other parties to such Material Contracts. Encode has not received written notice that any party to any Material Contract intends to cancel or terminate any such Material Contract or to exercise or not to exercise any option to renew thereunder.

(a) There has been made available to Raptor (i) a true, correct and complete copy of each Material Contract, together with all amendments, waivers or other changes thereto, and (ii) a true, correct and complete description of the material terms of all oral Material Contracts.

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2.14.

Intellectual Property Rights.

(a) Schedule 2.14(a) contains a complete and accurate list of all of the following that are owned or used by Encode: (i) patented or registered Intellectual Property Rights, (ii) pending patent applications or other applications for registrations of other Intellectual Property Rights, (iii) computer software (other than mass-marketed software purchased or licensed for less than a total cost of $5,000), (iv) trade or corporate names, trade dress, logos, slogans, Internet domain names, material unregistered trademarks, and material unregistered service marks, (v) material unregistered copyrights, and (vi) any other material Intellectual Property Rights.

(b) Encode owns and possesses, free and clear of all Liens, all right, title and interest in and to, or has the right to use pursuant to a valid and enforceable written license set forth on Schedule 2.14(b), all Intellectual Property Rights necessary for or used in the operation of the business of Encode as presently conducted and as presently proposed to be conducted (together with the Intellectual Property Rights set forth on Schedule 2.14(a), the “Encode Intellectual Property Rights”). All of the Encode Intellectual Property Rights are valid and enforceable and none of the Encode Intellectual Property Rights have been misused. No loss or expiration of any of the Encode Intellectual Property Rights is threatened, pending or reasonably foreseeable. Encode has taken all necessary and customary actions to maintain and protect the Encode Intellectual Property Rights. The owners of any Intellectual Property Rights licensed to Encode have taken all commercially reasonable action to maintain and protect the Intellectual Property Rights subject to such licenses.

(c) Except as set forth on Schedule 2.14(c), (i) Encode has not infringed, misappropriated or otherwise conflicted with, and the operation of the business of Encode as currently conducted and as proposed to be conducted will not infringe, misappropriate or otherwise conflict with, any Intellectual Property Rights of other Persons and Encode is not aware of any facts which indicate a likelihood of any of the foregoing and Encode has not received any notices regarding any of the foregoing (including, any demands or offers to license any Intellectual Property Rights from any other Person), and (ii) no third party has infringed, misappropriated or otherwise conflicted with any of the Encode Intellectual Property Rights. The transactions contemplated by this Agreement will not impair the right, title or interest of any of Encode in or to the Encode Intellectual Property Rights, and all of the Encode Intellectual Property Rights will be owned or available for use by the Surviving Corporation or Raptor immediately after the Closing on terms and conditions identical to those under which Encode owned or used the Encode Intellectual Property Rights immediately prior to the Closing.

(d) All past and present employees of, and consultants to, Encode have entered into agreements providing for the non-disclosure of Confidential Information and the assignment to Encode of all Intellectual Property Rights authored, created or otherwise developed by such employee or consultant in the course of employment or engagement with Encode, without any restrictions or obligations whatsoever.

2.15.

Employee Matters.

(a) Encode has never employed any employees and has never incurred any Liabilities, expenses or obligations with respect to any employee.

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(b) Schedule 2.15(a) contains a true, correct and complete list as of the date hereof of the officers and directors of Encode.

2.16. Employee Benefit Plans. Encode has never adopted any Employee Benefit Plan and has never incurred any Liabilities, expenses or obligations with respect to any such plan.

2.17. Compliance with Laws. Except as set forth on Schedule 2.17, Encode has complied in all material respects with, is in compliance in all material respects with and has operated its business and maintained its Assets in compliance in all material respects with, all applicable Laws.

2.18. Adequate Disclosure. None of (i) the information contained in the Schedules, or (ii) the representations and warranties of Encode and the Securityholders contained in this Agreement contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they are or were made, not misleading.

2.19. Application of Takeover Protections. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not impose any restriction on Encode or any Securityholder, or create in any party (including any current Securityholder) any rights, under any share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other similar anti-takeover provisions under Encode’s certificate of incorporation or by-laws or the Laws of its jurisdiction of incorporation.

ARTICLE 3.

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ENCODE REGARDING THE SECURITYHOLDERS

As a material inducement to Raptor and Bennu to enter into this Agreement and to consummate the transactions contemplated hereby, Encode hereby represents and warrants to Raptor and Bennu as follows:

3.1. Investment Purpose. Each Securityholder is acquiring the shares of Raptor Common Stock for its own account as principal for investment purposes, and not as nominee or agent, and not with a present view toward the public sale or distribution thereof and has no intention of selling or distributing any of such shares of Raptor Common Stock or any arrangement or understanding with any other Persons regarding the sale or distribution of such shares of Raptor Common Stock except as would not result in a violation of the 1933 Act. No Securityholder will, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the shares of Raptor Common Stock except pursuant to and in accordance with the 1933 Act.

3.2. Questionnaires. The Accredited Investor Questionnaires, in the form of Appendix D attached hereto, submitted by each Securityholder to Raptor in connection with its acquisition of the shares of Raptor Common Stock, was accurate and correct when delivered and is accurate and correct as of the date hereof. Each Securityholder is an “accredited investor” within the meaning of Rule 501 of Regulation D under the 1933 Act.

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3.3. Reliance on Exemptions. Each Securityholder understands that the shares of Raptor Common Stock are being offered and sold to and acquired by it in reliance upon specific exemptions from the registration requirements of the United States and that Raptor is relying upon the truth and accuracy of, and each Securityholder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Encode and each Securityholder in order to determine the availability of such exemptions and the eligibility of each Securityholder to acquire the shares of Raptor Common Stock.

3.4. Information. Each Securityholder has been afforded the opportunity to ask questions of Raptor.

3.5.

Acknowledgement of Risk.

(a) Each Securityholder acknowledges and understands that its investment in the shares of Raptor Common Stock involves a significant degree of risk, including, without limitation: (i) Raptor remains a development stage business and requires substantial funds in addition to the proceeds from the disposition of the shares of Raptor Common Stock; (ii) an investment in Raptor is speculative, and only Securityholders who can afford the loss of their entire investment should consider investing in Raptor and the shares of Raptor Common; (iii) such Securityholder may not be able to liquidate its investment; (iv) transferability of the shares of Raptor Common Stock is extremely limited; (v) in the event of a disposition of the shares of Raptor Common Stock, such Securityholder could sustain the loss of its entire investment; and (vi) Raptor has not paid any dividends on its Raptor Common Stock since inception and does not anticipate the payment of dividends in the foreseeable future. Such risks are more fully set forth in the Public Filings;

(b) Each Securityholder is able to bear the economic risk of holding shares of Raptor Common Stock for an indefinite period as well as the loss of its entire investment, and has sufficient knowledge and experience in financial and business matters such that it is capable of evaluating the risks of the investment in the shares of Raptor Common Stock; and

(c) Each Securityholder has, in connection with such Securityholder’s decision to purchase the shares of Raptor Common Stock, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of Raptor contained herein, and such Securityholder has, with respect to all matters relating to this Agreement and the disposition and acquisition of the shares of Raptor Common Stock, relied solely upon the advice of such Securityholder’s own counsel and has not relied upon or consulted any counsel to Raptor.

3.6. Governmental Review. Each Securityholder understands that no federal, provincial or state agency or any other government or Governmental Authority has passed upon or made any recommendation or endorsement of the shares of Raptor Common Stock or an investment therein.

3.7.

Transfer or Resale. Each Securityholder understands that:

(a) the shares of Raptor Common Stock have not been and are not being registered under the 1933 Act (other than as contemplated in this Agreement) or qualified under any other applicable federal or state securities Laws and that the shares of Raptor Common Stock

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being acquired by it are being offered and sold to it pursuant to one or more exemptions from the registration or qualification requirements of such securities Laws and that the representations and warranties contained in this Article III are given with the intention that Raptor may rely thereon for purposes of claiming such exemptions and, consequently, each Securityholder may have to bear the risk of owning the shares of Raptor Common Stock for an indefinite period of time because the shares of Raptor Common Stock may not be transferred unless: (i) the resale of the shares of Raptor Common Stock is registered pursuant to an effective registration statement under the 1933 Act, as contemplated herein; (ii) each Securityholder has delivered to Raptor an opinion of counsel (in form, substance and scope reasonably satisfactory to Raptor) to the effect that the shares of Raptor Common Stock to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; or (iii) the shares of Raptor Common Stock are sold or transferred pursuant to Rule 144;

(b) any sale of the shares of Raptor Common Stock made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of the shares of Raptor Common Stock under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and

(c) except as set forth in this Agreement, neither Raptor nor any other Person is under any obligation to register the resale of the shares of Raptor Common Stock under the 1933 Act or any state securities Laws or to comply with the terms and conditions of any exemption thereunder.

3.8. Legends. Each Securityholder understands the stock certificates representing the shares of Raptor Common Stock to be issued to the Securityholders shall be imprinted with conspicuous restrictive legends in the following forms (and a stop-transfer order may be placed against transfer of the certificates for such shares of Raptor Common Stock):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.”

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“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 30, 2008.”

Upon the request of a Securityholder or any successor holder of Raptor Common Stock, accompanied by an opinion of counsel selected by the Securityholder or successor holder, which opinion and other counsel are reasonably satisfactory to Raptor, to the effect that a transfer by the holder will not violate the 1933 Act or applicable state or other securities Laws and that the legend may be removed, Raptor shall remove the legend from the Raptor Common Stock held by the holder or shall issue to the holder a new certificate for Raptor Common Stock without the transfer legend.

3.9. Residency. Each Securityholder certifies that it is a resident of the jurisdiction set forth immediately below such Securityholder’s name on the signature pages hereto.

3.10. No Short Sales. Between the time each Securityholder learned about this Agreement and the transactions contemplated herein and the public announcement of the same, such Securityholder has not engaged in any short sales or similar transactions with respect to any Raptor Common Stock, nor has such Securityholder, directly or indirectly, caused any Person to engage in any short sales or similar transactions with respect to any Raptor Common Stock. Additionally, such Securityholder understands and acknowledges, severally and not jointly with any other Securityholder, that the SEC currently takes the position that coverage of short sales of the shares of Raptor Common Stock “against the box” prior to the date such shares are registered is a violation of Section 5 of the 1933 Act, as set forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.

ARTICLE 4.

REPRESENTATIONS OF RAPTOR AND BENNU

As a material inducement to Encode to enter into this Agreement and to consummate the transactions contemplated hereby, Raptor and Bennu hereby represent and warrant, on a joint and several basis, to Encode that:

4.1. Organization; Qualification. Raptor is a corporation with full corporate power and authority to own all of its properties and assets and carry on its business as it is currently being conducted. Bennu is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full corporate power and authority to own all of its properties and assets and carry on its business as it is currently being conducted.

4.2. Authorization. Raptor and Bennu each have the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by Raptor and Bennu have each been duly and validly authorized by the Board and the board of directors of Bennu, respectively, and no other proceedings on the part of Raptor or Bennu are necessary with respect thereto. This Agreement has been duly and validly executed and delivered by Raptor and Bennu and, assuming the due authorization, execution and delivery of this Agreement by Encode, constitutes a valid and legally binding obligation of Raptor and Bennu, enforceable against Raptor and Bennu in

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accordance with its terms and conditions, except as enforceability thereof may be limited by (a) any applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting creditors’ rights generally or (b) general principles of equity, whether considered in a proceeding in equity or at Law.

4.3. Consents and Approvals. To the Knowledge of Raptor and Bennu, neither Raptor nor Bennu are required to obtain any Permit, make any filing with, or obtain the consent of any Governmental Authority or any other Person in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

4.4. No Violations. Assuming the accuracy of the representations of the Securityholders set forth herein, Raptor and Bennu’s execution and delivery of this Agreement and performance by them of their obligations under this Agreement do not (a) violate any provision of the certificate of incorporation or by-laws of Raptor or Bennu, (b) conflict with, result in a breach of, constitute a default under (or an event that, with notice or lapse of time or both, would constitute a default under), accelerate the performance required by, result in the creation of any Lien upon any of the properties or assets of Raptor or Bennu under, or create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any Contract or Permit to which Raptor or Bennu is a party or by which any properties or assets of Raptor or Bennu are bound, or (c) violate any Law or Order currently in effect to which Raptor or Bennu are subject, in each case where such conflict, breach or violation would have a Material Adverse Effect on Raptor or Bennu.

ARTICLE 5.

INDEMNIFICATION

5.1.

Indemnification. Subject to the limitations of Sections 5.2 and 5.3 hereof:

(a) Encode agrees to indemnify, defend and hold Raptor and its Affiliates, subsidiaries (including the Surviving Corporation), officers, directors, employees or agents thereof (collectively, the “Raptor Indemnified Parties”) harmless from and against and in respect of any and all out-of-pocket loss, cost, expense, liability or claim (including reasonable attorneys’ fees and other costs and expenses) (all of the foregoing collectively, “Losses”), resulting from or arising in connection with any breach of representation or warranty on the part of Encode under the terms of this Agreement or in any certificate delivered hereunder or pursuant hereto or non-fulfillment of any agreement on the part of Encode under the terms of this Agreement or the Stockholder Representative under Section 1.12. For purposes of this Agreement, Losses shall specifically exclude any special, incidental, indirect, consequential, or similar damages (including but not limited to damages for indirect loss of profits, loss of business reputation or the like).

(b) Raptor agrees to indemnify, defend and hold Encode (the “Encode Indemnified Parties”) harmless from and against any and all Losses resulting from any breach of representation or warranty on the part of Raptor or Bennu under the terms of this Agreement or in any certificate delivered hereunder or pursuant hereto or non-fulfillment of any agreement on the part of Raptor under the terms of this Agreement.

5.2.

Limitation on Liability and Recourse.

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(a) With respect to any claim for indemnification under this Agreement, neither Encode, on the one hand, nor Raptor, on the other hand, shall be liable to the other for indemnification unless the aggregate amount of the damages incurred by the other as a result of such breach exceeds the sum of $50,000 (whereupon such Party shall be liable for the amount of such damages in excess of $50,000).

(b) Notwithstanding anything contained therein to the contrary, Encode shall not be liable to the Raptor Indemnified Parties for any breach of a representation or warranty contained in this Agreement that was known to Raptor prior to the Closing, whether set forth in any document delivered to Raptor prior to the Closing by any Encode Stockholder, or any Person performing due diligence on Encode on behalf of Raptor.

(c) Notwithstanding anything contained herein to the contrary, Encodes’ aggregate liability to all Raptor Indemnified Parties for all indemnity obligations hereunder shall not exceed the value of the aggregate number of shares of Raptor Common Stock issued or which become issuable in the Merger, which liability shall be satisfied, by the delivery to the Raptor Indemnified Parties of cash and/or such number of First Shares or Contingent Shares which shall equal such liability (which First Shares shall be deemed equal to, for purposes hereof, the Stock Valuation Price of Raptor Common Stock as calculated in accordance with Section 5.2(d) on the date of the First Closing (the “Closing Price”) and which Contingent Shares shall be valued at the higher of (x) the Closing Price on the date of the First Closing and (y) the Closing Price on the date of any Second Closing). This Section 5.2 is qualified in its entirety with respect to, and does not apply to the extent of, fraud, willful misconduct or intentional misrepresentation on the part of Encode or any Securityholder.

(d) Stock Valuation. For purposes of this Section 5.2, the per share value of the Raptor Common Stock shall be calculated as follows (the “Stock Valuation Price”):

(1) If traded over the counter (other than the Nasdaq National Market), the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the ten (10) day period ending three business days prior to the date of the First Closing or the applicable Second Closing, whichever is applicable;

(2) If traded on a securities exchange or the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the shares on such exchange or Nasdaq National Market over the ten (10) day period ending three business days prior to the date of the First Closing or the applicable Second Closing, whichever is applicable; or

(3) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board.

5.3. Termination of Indemnity Obligations. The indemnity obligations herein under Section 5.1(a) and (b), and the representations and warranties contained in this Agreement or in any certificate delivered in connection with this Agreement (which shall survive the Closing), shall terminate on such date that is 18 months after the Closing except (i) as to matters as to which the applicable indemnified party has made a claim for indemnification on or prior to such date specifically addressing an actual claim or demand and (ii) with respect to any fraudulent or

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intentional breach of a representation or warranty contained in this Agreement or any Schedule attached hereto. The obligation to indemnify referred to in the preceding clauses (i) and (ii) shall survive the expiration of such period until such claims are finally resolved and any obligations with respect thereto are fully satisfied.

5.4.

Third Party Claims.

(a) In the case of any claim asserted by a Third Party against a Party entitled to indemnification under this Agreement (the “Indemnified Party”), notice shall be given by the Indemnified Party to the Party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may participate in such defense at such Indemnified Party’s expense, and (iii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such Indemnifying Party is materially damaged as a result of such failure to give notice. After notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense of the claim or litigation, except as pursuant to Section 5.4(b), the Indemnifying Party shall not be liable to such Indemnified Party under Section 5.1(a) or 5.1(b) for any fees of other counsel or any other expenses, in each case subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. If an Indemnifying Party assumes the defense of such an action, (i) no compromise or settlement thereof may be effected by the Indemnifying Party without the Indemnified Party’s consent (which shall not be unreasonably withheld) unless (x) there is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnified Party and (y) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party and (ii) the Indemnifying Party shall have no liability with respect to any compromise or settlement thereof effected without its consent (which shall not be unreasonably withheld). If notice is given to an Indemnifying Party of the commencement of any action and it does not, within 30 days after the Indemnified Party’s notice is given, give notice to the Indemnified Party of its election to assume the defense thereof, the Indemnifying Party shall be bound by any determination made in such action or any compromise or settlement thereof effected by the Indemnified Party. Pending the 30-day period disclosed in the preceding sentence or, if earlier, notification from the Indemnifying Party as to whether it will assume the defense of a claim, the Indemnified Party will not incur or agree to incur (whether of investigation, defense or otherwise) with respect to such claim in excess of $15,000 without giving the Indemnifying Party ten (10) days prior notice of such incurrence or agreement.

(b) Notwithstanding the provisions of Section 5.4(a), if in the reasonable judgment of the Indemnified Party, based upon written advice of counsel that there are one or more legal defenses available to it which are different from or in addition to those available to the Indemnifying Party, a conflict of interest may exist, such Indemnified Party may, by notice to the Indemnifying Party, employ separate counsel at the Indemnifying Party’s sole cost and expense and may participate in the defense, compromise or settlement of such action, but the

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Indemnifying Party shall not be bound by any compromise or settlement thereof effected without its consent (which shall not be unreasonably withheld).

(c) The Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this Section 5.4 and the records of each shall be available to the other with respect to such defense, subject to the right of any party to withhold any such records on the basis of attorney-client privilege.

ARTICLE 6.

MISCELLANEOUS

6.1. Definition of Certain Terms. When used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means an individual or entity controlled by or under common control with a party.

“Affiliated Group” means any affiliated group as defined in Internal Review Code §1504 that has filed a consolidated return for federal income tax purposes (or any similar group under state, local or foreign Law) for a period during which Encode was a member.

“Assets” mean, with respect to any Person, all businesses, properties, assets, machinery, equipment, furniture, fixtures, Permits, goodwill and rights of such Person as a going concern, of every nature, kind and description, tangible and intangible, owned or leased, wheresoever located (whether in the United States or otherwise) and whether or not carried or reflected on the books or records of such Person, used, held for use, or useful in connection with the operation of the business of such Person.

“Confidential Information” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to the business, products, services or affairs of Encode (including information regarding Encode’s relationships with its suppliers, distributors, customers, members, licensees, independent contractors or other business relations). Confidential Information includes, but is not limited to, the following: (a) internal business information (including information relating to strategies, staffing plans and practices, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures and accounting and business methods), (b) identities of, individual requirements of, specific contractual arrangements with, and information about, the suppliers, distributors, customers, members, licensees, independent contractors or other business relations of Encode and its confidential information, (c) trade secrets, know-how, compilations of data and analyses, techniques, systems, research, records, reports, manuals, documentation, data and databases relating thereto and (d) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable). Notwithstanding the foregoing, Confidential Information does not include information that (i) was in the public domain at the time of communication by the disclosing party, (ii) entered the public domain subsequent to the time of communication by the disclosing party through no fault of the receiving party, (iii) is or becomes available to the receiving party on a nonconfidential basis from a source not known by the receiving party to be prohibited from disclosing such information by a legal or fiduciary obligation, or (iv) is disclosed with the prior written consent of the disclosing party.

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“Contract” means any loan or credit agreement, note, bond, mortgage, indenture, lease, sublease, purchase order or other agreement, commitment, understanding or instrument, whether written or oral.

“Cystinosis Product” means a product for the treatment of Cystinosis that is predominantly based upon and derived from the Encode Assets.

“Employee Benefit Plan” means each “employee benefit plan” (as defined in ERISA §3(3)) and each other benefit plan, program, agreement or arrangement maintained, sponsored, contributed to (or required to be contributed to) by Encode, or with respect to which Encode has any Liability.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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

“Governmental Authority” means any governmental or regulatory body, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority.

“Indebtedness” means at a particular time with respect to Encode, without duplication, (i) any obligations under any indebtedness for borrowed money (including, without limitation, all principal, interest, premiums, penalties, fees, expenses, indemnities and breakage costs), (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (iv) any indebtedness pursuant to a guarantee, (v) any obligations under capitalized leases or with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, (vi) any “earn-out” payment obligations and (vii) any indebtedness secured by a Lien on a Person’s assets.

“Intellectual Property Rights” means (i) all patents, patent applications and patent disclosures as well as any reissues, continuations, continuations-in-part, divisions, revisions, extensions or reexaminations thereof, (ii) all trademarks, service marks, trade dress, trade names, brands, slogans, logos, Internet domain names, and corporate names (and all translations, adaptions, derivations, and combinations of the foregoing), together with all of the goodwill associated therewith, (iii) all copyrights and copyrightable works, (iv) all registrations, applications and renewals for any of the foregoing, (v) all computer software (including source code and object code), data, databases and documentation thereof, (vi) all trade secrets and other Confidential Information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing, production, design and merchandising processes and techniques, research and development information, industry analyses, drawings, specifications, designs, plans, proposals, technical data, financial and accounting data, business and marketing plans and customer and supplier lists and related information), (vii) all rights of privacy and rights of publicity, (viii) all licensing, franchising, merchandising, advertising, rental and similar rights, (ix) all other intellectual property and proprietary rights, (x) all advertising and promotional materials, (xi) all copies and tangible embodiments of any of the foregoing, in whatever form or medium, (xii) all rights to sue for past, present and future infringement or misappropriation of any of the foregoing, and (xiii)

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all proceeds of any of the foregoing, including license royalties and other income and damages and other proceeds of suit.

“Knowledge” means, with respect to any Person, (i) the actual knowledge of such Person (including the actual knowledge of the officers and directors of such Person) and (ii) that knowledge which could have been acquired by such Person after making such due inquiry and exercising such due diligence as a prudent businessperson would have made or exercised in the management of his, her or its business affairs in light of all of the circumstances applicable thereto, including due inquiry of those representatives of such Person who could reasonably be expected to have knowledge of the matters in question.

“Law” means any laws, statutes, ordinances, regulations, rules, and orders of any Governmental Authority.

“Liability” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether accrued, absolute, contingent, matured or unmatured.

“Lien” means, with respect to the assets or property of any Person, any claim, lien, security interest, deed of trust, mortgage, encumbrance or charge of any kind, excluding statutory liens for taxes not yet due, in favor of any other Person, whether voluntarily incurred or arising by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

“Major Market” shall mean the United States of America, Germany, France, Italy, Spain, the United Kingdom, Japan, China, Taiwan, South Korea, Australia, or the European Union (but only for clinical trials submitted to, and Marketing Approvals from, the EMEA for the centralized procedure in which the Marketing Approval from the EMEA is for all countries in the European Union).

“Marketing Approval” shall mean, with respect to a particular Product and country, approval by the applicable Regulatory Agencies in such country of a Marketing Approval Application filed in such country, permitting the Product to be marketed and sold in that country for the indications for which approval is sought, including, if applicable, approval of pricing or reimbursement.

“Marketing Approval Application” shall mean, with respect to a particular Product and country, a marketing authorization application (including an equivalent to an NDA in the United States), including all supporting documentation and data submitted for such application to be accepted for review or approval, filed with the requisite Regulatory Agency of such country and requesting approval for marketing and/or commercialization of such Product for a particular indication in such country.

“Merger Consideration” means the First Shares and, subject to achievement of a Trigger Event, the Contingent Shares.

“NDA” shall mean a new drug application to permit commercial marketing of a Product in the United States, pursuant to section 505 of the United States Federal Food, Drug and

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Cosmetic Act, and the regulations promulgated thereunder, as amended from time to time, as submitted to the United States Food and Drug Administration or foreign equivalent relating to any use of Cystinosis Product.

“Non-C Product” means a Product, other than a Cystinosis Product, that is predominantly based upon and derived from the Encode Assets.

“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, arbitral tribunal, administrative agency, or other Governmental Authority.

“Ordinary Course of Business” means Encode’s ordinary course of business consistent with its historical practice (including with respect to quantity and frequency).

“Party” means any of Raptor, Bennu, Encode.

“Permit” means all permits, licenses, authorizations, registrations, franchises, approvals, consents, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Per Share First Share Consideration” means Four and One-Twelfth (4 1/12) First Shares.

“Per Share Contingent Share Consideration” means with respect to the achievement of any Trigger Event, the Contingent Shares issuable upon achievement of such Trigger Event as permitted in Section 1.5(b), divided by the fully diluted shares of the Common Stock of Encode as shown on Appendix B attached hereto.

“Person” means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Authority or other entity.

“Product” means any of a Cystinosis Product or Non-C Product.

“Public Filings” Raptor’s reports, schedules, forms, statements and other documents required to be filed by it with the SEC within the 12 months prior to the Closing Date, pursuant to the reporting requirements of 1933 Act and the Securities Exchange Act of 1934, as amended (including all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits) incorporated by reference therein).

“Regulatory Agency” means (a) the FDA, (b) the EMEA, or (c) any other governmental entity with regulatory authority comparable to the FDA or the EMEA in any Major Market.

Representative” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

“Securityholders” means all of the holders of Encode Securities as set forth on Appendix B.

“Stockholders” means all of the holders of Common Stock as set forth on Appendix C.

LEGAL_US_W # 57260898

“Successful Completion” shall mean, with respect to a clinical trial, (i) completion of the final clinical trial report for the clinical trial provided that the data from the clinical trial demonstrates that the primary endpoints in the clinical trial protocol have been met; or (ii) the initiation of the next phase of development (i.e. the initiation of a subsequent clinical trial for the same therapeutic for which the initial clinical trial has been conducted, and in the case of completion of a phase II trial or phase III trial, the filing of a Marketing Approval Application to obtain Marketing Approval for the same Product to which such trial relates).

“Tax” or “Taxes” means all (i) United States federal, state or local or non-United States taxes, assessments, charges, duties, levies or other similar governmental charges of any nature, including all income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, registration and other taxes, assessments, charges, duties, fees, levies or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, penalties and interest; (ii) any Liability for the payment of any amount of a type described in clause (i) arising as a result of being or having been a member of any consolidated, combined, unitary or other group or being or having been included or required to be included in any Tax Return related thereto; and (iii) any Liability for the payment of any amount of a type described in clause (i) or clause (ii) as a result of any obligation to indemnify or otherwise assume or succeed to the Liability of any other Person.

“Tax Return” means any return, information report or filing with respect to Taxes, including any schedules attached thereto and including any amendment thereof.

“Third Party” means a Person who or which is neither a Party nor an Affiliate of a Party.

6.2. Severability. If any provision of this Agreement is held in any jurisdiction to be prohibited or unenforceable for any reason, that provision will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any such jurisdiction will not invalidate or render unenforceable that provision in any other jurisdiction.

LEGAL_US_W # 57260898

6.3.

Notices.

(a) Every notice or other communication required or contemplated by this Agreement must be in writing and sent by one of the following methods: (a) personal delivery, in which case delivery is deemed to occur the day of delivery; (b) certified or registered mail, postage prepaid, return receipt requested, in which case delivery is deemed to occur the day it is officially recorded by the U.S. Postal Service as delivered to the intended recipient; or (c) next-day delivery to a U.S. address by recognized overnight delivery service such as Federal Express, in which case delivery is deemed to occur one business day after being sent. In each case, a notice or other communication sent to a Party must be directed to the address for that Party set forth below, or to another address designated by that party by written notice:

If to Raptor, to:

Raptor Pharmaceuticals Corp.

9 Commercial Boulevard, Suite 200

Novato, CA 94949

Attn : Christopher Starr, Ph.D.

CEO

with a copy to:

Paul, Hastings, Janofsky & Walker, LLP

515 South Flower Street, 25^th Floor

Los Angeles, CA 90071-2228

Attention: Siobhan McBreen Burke

Fax: 213-627-0705

If to Bennu:

Bennu Pharmaceuticals Inc.

9 Commercial Boulevard, Suite 200

Novato, CA 94949

Attn : Thomas E. Daley

President

If to Encode, to:

Encode Pharmaceuticals, Inc.

801 Brickell Avenue, Suite 942

Miami, FL 33131

Attention: Nicholas Stergis

LEGAL_US_W # 57260898

with a copy to:

Lehman & Eilen LLP

Mission Bay Office Plaza

20283 State Road 7, Suite 300

Boca Raton, FL 33498

Attention: Hank Gracin, Partner

Fax: 561-237-0803

(b) Notice not given in writing shall be effective only if acknowledged in writing by a duly authorized representative of the party to whom it was given.

6.4. Entire Agreement. This Agreement, together with all exhibits and schedules, and the documents referred to herein constitute the entire agreement and understanding among the parties hereto pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties hereto pertaining to the subject matter hereof.

6.5. Confidentiality. From and after the Closing, the Stockholder Representative shall, and shall cause each other Encode Stockholder, and each of its and their Affiliates and Representatives to, treat and hold as confidential all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement or as required by applicable Law, and deliver promptly to Raptor or Bennu, at the request and option of Raptor or Bennu, all tangible embodiments (and all copies) of the Confidential Information which are in its possession or under its control. In the event that any of the Stockholder Representative, any Encode Stockholder, or any of their Affiliates or Representatives (the “Disclosing Parties”) is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, such Disclosing Party shall notify Raptor and Bennu promptly of the request or requirement so that Raptor and Bennu may seek an appropriate protective order or waive compliance with the provisions of this Section 6.5. If, in the absence of a protective order or the receipt of a waiver hereunder, such Disclosing Party is, on the written advice of counsel, compelled to disclose any Confidential Information to any tribunal, such Disclosing Party may disclose the Confidential Information to the tribunal; provided that such Disclosing Party shall use his or its best efforts to obtain, at the request of Raptor or Bennu and at Raptor’s or Bennu’s expense, an order or other assurance that confidential treatment shall be accorded to such portion of the Confidential Information required to be disclosed as the Purchaser shall designate.

6.6. Amendments and Waivers. This Agreement may not be amended or any provision of this Agreement waived except by an instrument in writing signed on behalf of each of the parties hereto. No waiver by any party of any default, breach or misrepresentation under this Agreement will be deemed to extend to any prior or subsequent default, breach or misrepresentation or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No course of dealing between or among the parties hereto shall be deemed

LEGAL_US_W # 57260898

effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any such party under or by reason of this Agreement.

6.7. Counterparts. This Agreement may be executed in several counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by electronic mail in portable document file (pdf) format, shall be effective as delivery of a manually executed counterpart to this Agreement.

6.8. Governing Law. This Agreement is governed by the law of the State of Delaware, without giving effect to the conflicts of laws provisions.

6.9. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties and their respective heirs, successors and permitted assigns.

6.10. Assignment. This Agreement and all rights, interests or obligations hereunder, by or on behalf of any of the parties hereto, shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated by Encode or any Securityholder, without the prior written consent of Raptor. Any attempted assignment in violation of this Section 6.10 shall be void ab initio.

6.11. Publicity and Reports. No party hereto shall issue any press release, publicity statement or other public notice relating to this Agreement, or the transactions contemplated hereby, without the prior written approval of the other parties hereto, except to the extent that a particular action may be required by applicable Law or legal process, in which event the party taking the particular action will give reasonable notice to the other parties hereto.

6.12.

Encode Stockholder Representative.

(a) In order to efficiently administer the transactions contemplated hereby, Encode and Mr. Stergis hereby represent and warrant that the Encode Stockholders have appointed Mr. Stergis as their representative in connection with this Agreement (the “Encode Representative”) and that the Encode Stockholders have granted the Encode Representative the full power and authority to amend or modify this Agreement on their behalf and appointed the Encode Representative as attorney-in-fact for this purpose. Mr. Stergis has accepted such appointment.

(b) A decision, act, consent or instruction of the Encode Representative (including, without limitation, with respect to indemnification and dispute resolution hereunder) shall constitute a decision of each of the Encode Stockholders, and shall be final, binding and conclusive upon each of the Encode Stockholders, and Raptor and Bennu may rely upon any decision, act, consent or instruction of the Encode Representative as being the decision, act, consent or instruction of each and all of the Encode Stockholders. Each of Raptor and Bennu is relieved from any liability to any of the Encode Stockholders or any other person for any acts done by them in accordance with such decision, act, consent or instruction of the Encode Representative.

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(c) In the event that the Encode Representative becomes unable to perform his responsibilities hereunder or resigns from such position, the Encode Stockholders (acting by the vote of a majority of the Encode Stockholders shall select a representative to fill the vacancy and such substituted representation shall be considered to be the Encode Representative for all purposes under this Agreement upon its execution of this Agreement and delivery of evidence of such vote reasonably acceptable to Raptor and Bennu.

(d) On or before December 17, 2007, Encode may identify a candidate for consideration for nomination to election of the Board in 2008, provided that Encode provides reasonably detailed information supporting the qualifications of such individual to serve on the Board. Raptor agrees to inform the Nominating Committee of Raptor of the candidate so identified by Encode and of the qualifications of such candidate provided by Encode to Raptor for purposes of consideration by such Nominating Committee, subject to fiduciary duties and other issues and matters the Nominating Committee deems appropriate and relevant, of the nomination of such candidate for election to the Board in 2008; it being acknowledged and agreed that Raptor cannot provide any assurance or guarantee that any candidate identified by Encode will be nominated by the Nominating Committee of the Board for election to the Board or, if so nominated, will be elected to serve on the Board by the stockholders of Raptor.

6.13. Dispute Resolution. The Parties agree to attempt initially to solve all claims, disputes, or controversies arising under, out of, or in connection with this Agreement by conducting good faith negotiations. Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. The Party giving such notice shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During such period, the Parties shall make good faith efforts to amicably resolve the dispute without arbitration. Any arbitration hereunder shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Each such arbitration shall be conducted by a panel of three arbitrators: One arbitrator shall be appointed by each of Raptor and by the Encode Representative, and the third shall be appointed by the two arbitrators so chosen. Each arbitrator shall be an attorney whose primary practice area comprises mergers and acquisitions, including within the biotechnology and pharmaceutical industries, with at least fifteen (15) years practice experience. Any arbitration shall be held in San Francisco, California. The arbitrators shall have the authority to grant specific performance. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.

(Remainder of Page Intentionally Left Blank)

LEGAL_US_W # 57260898

EXECUTION COPY

IN WITNESS HEREOF, Encode, Raptor and Bennu hereby execute this Agreement as of the date stated in the first introductory clause of this Agreement.

ENCODE PHARMACEUTICALS, INC.

By: /s/ Nicholas Stergis

Name: Nicholas Stergis

Title: Vice Chairman

RAPTOR PHARMACEUTICALS CORP.

By: /s/ Christopher Starr, Ph.D.

Name: Christopher Starr, Ph.D.

Title: President and Chief Executive Officer

BENNU PHARMACEUTICALS INC.

By: /s/ Thomas E. Daley

Name: Thomas E. Daley

Title: President

NICHOLAS STERGIS

By: /s/ Nicholas Stergis

Name: Nicholas Stergis

[Signature Page to Merger Agreement]

LEGAL_US_W # 58709676.1

Appendix A

Encode Common Stock Holders

Flower Ventures, LLC

Icon Capital Partners LP

Encode Convertible Security Holders

Option Holders

Dr. Dohil

Dr. Schneider

H. David Coherd

Warrant Holders

Icon Capital Partners LP

Flower Ventures, LLC

LEGAL_US_W # 58709676.1

Appendix B

	First Shares	Contingent Shares (Second Closing)

Stockholder	Received at First Closing		Trigger Event 1	Trigger Event 2
Flower Ventures, LLC	3,249,337		331,565	1,259,947
Icon Capital Partners LP	194,960		19,894	75,597
Total	3,444,297		351,459	1,335,544

Optionholder¹
Dr. Dohil	162,467		16,578	62,997
Dr. Schneider	162,467		16,578	62,997
H. David Coherd	32,493		3,316	12,600
Total	357,427		36,472	138,594

Warrantholder²
Icon Capital Partners LP	97,480³		9,947⁴	37,798⁴
Flower Ventures, LLC	1,000,796⁵		102,122⁶	388,064⁶
Total	1,098,276		112,069	425,862

Total Number of Shares Received	4,900,000		500,000	1,900,000

_________________________

¹Optionholders are to receive options exercisable for Raptor Common Stock in the amounts set forth opposite such optionholders’ names. The exercise prices for such options shall be determined on the date of grant (i.e., the First Closing or the relevant Second Closing, if any) in accordance with Raptor’s 2006 Equity Incentive Plan.

²Warrantholders are to receive warrants exercisable for Raptor Common Stock in the amounts set forth opposite such warrantholders’ names.

³The warrant to be received by Icon Capital Partners LP exercisable for Raptor Common Stock is to have an exercise price of $0.56 per share of Raptor Common Stock.

⁴The warrant to be received by Icon Capital Partners LP exercisable for Raptor Common Stock is to have an exercise price equal to market price per share of Raptor Common Stock on the date of the relevant Second Closing, if any.

⁵The warrant to be received by Flower Ventures, LLC exercisable for Raptor Common Stock is to have an exercise price of $0.67 per share of Raptor Common Stock.

⁶The warrant to be received by Flower Ventures, LLC exercisable for Raptor Common Stock is to have an exercise price equal to market price per share of Raptor Common Stock on the date of the relevant Second Closing, if any.

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Appendix C

Encode Common Stock Holders

Flower Ventures, LLC

Icon Capital Partners LP

LEGAL_US_W # 58709676.1

Appendix D

BENNU PHARMACEUTICALS INC.

AND

RAPTOR PHARMACEUTICALS, INC.

QUALIFICATION STATEMENT

LEGAL_US_W # 58709676.1

Exhibit A

CERTIFICATE OF MERGER

OF ENCODE PHARMACEUTICALS, INC.

WITH AND INTO BENNU PHARMACEUTICALS INC.

Pursuant to Title 8, Section 251 of the Delaware General Corporation Law, the undersigned corporation, organized and existing under the Delaware General Corporation Law, does HEREBY CERTIFY AS FOLLOWS:

FIRST: That the name and state of incorporation of each of the constituent corporations to the merger (each a “Constituent Corporation”) is as follows:

Name	State of Incorporation
Bennu Pharmaceuticals Inc. (“Bennu”)	Delaware
Encode Pharmaceuticals, Inc.	Delaware

SECOND: That Merger Agreement (the “Merger Agreement”) entered into as of November 29, 2007, by and among the Constituent Corporations, Raptor Pharmaceuticals Corp., a Delaware corporation (“Raptor”), and Nicholas Stergis has been approved, adopted, certified, executed and acknowledged by each of the Constituent Corporations and Raptor pursuant to Section 251 of the Delaware General Corporation Law.

THIRD: That the name of the surviving corporation of the merger shall be Bennu Pharmaceuticals Inc. (the “Surviving Corporation”) and that the Surviving Corporation shall be wholly owned by Raptor, immediately subsequent to the effective time of the merger.

FOURTH: The Certificate of Incorporation of the Surviving Corporation shall be the Certificate of Incorporation of Bennu immediately prior to the effective time of the merger and was filed with the Secretary of State of Delaware on August 1, 2007 as amended on August 30, 2007.

FIFTH: That executed copies of the Merger Agreement are on file at the principal place of business of the Surviving Corporation at 9 Commercial Boulevard, Suite 200, Novato, CA 94949.

SIXTH: That this Certificate of Merger shall be effective at 11:59 P.M., Delaware time, on December 14, 2007.

SEVENTH: That a copy of the Merger Agreement will be furnished by the Surviving Corporation, upon request and without cost to any stockholder of either constituent corporation.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, Bennu Pharmaceuticals Inc. has caused this Certificate of Merger to be executed by its duly authorized officer this 14th day of December, 2007.

BENNU PHARMACEUTICALS INC.

By:

Name:

Title:

[Signature Page to Certificate of Merger]

Schedule 2.1

(Encode Assets)

License Agreement by and between the Regents of the University of California and Encode Pharmaceuticals, Inc. dated October 31, 2007

Consulting Agreement with Dr. Ranjan Dohil dated November 7, 2007

Consulting Agreement with Dr. Jerry Schneider dated November 7, 2007

Schedule 2.2

(Jurisdiction)

Delaware

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Schedule 2.5

(Capitalization)

Authorized common stock: 2,000,000 shares, par value 0.001 per share

Authorized and issued preferred stock, zero

			Raptor Shares	Trigger Event Shares
Encode Stock Holders	Number of Shares	Percentage	First Closing		2	4
Flower Ventures, LLC	1,000,000	66.31%	3,249,337		331,565	1,259,947
Icon Capital Partners LP	60,000	3.98%	194,960		19,894	75,597
Total	1,060,000

Options Replaced with Raptor Options
Dr. Ranjan Dohil	50,000	3.32%	162,467		16,578	62,997
Dr. Jerry Schneider	50,000	3.32%	162,467		16,578	62,997
H. David Coherd	10,000	0.66%	32,493		3,316	12,599
Total	110,000

Warrants Replaced with Raptor Warrants
Icon Capital Partners LP	30,000	1.99%	97,480		9,947	37,798
Flower Ventures, LLC	308,000	20.42%	1,000,796		102,122	388,064
	338,000

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LEGAL_US_W # 57642930.1

Grand Total (FD)	1,508,000	100.00%	4,900,000	500,000	1,900,000


Merger exchange ratio	3.24933687
Upfront Raptor Shares	4,900,000

Trigger Event Shares
Section 1.5(b)(2)	500,000
Section 1.5(b)(4)	1,900,000

* Nicholas Stergis is managing member

** H. David Coherd is a partner within ICON Capital and investor designee to Encode

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Schedule 2.7

(Contracts)

License Agreement by and between the Regents of the University of California and Encode Pharmaceuticals, Inc. dated October 31, 2007

Consulting Agreement with Dr. Ranjan Dohil dated November 7, 2007

Consulting Agreement with Dr. Jerry Schneider dated November 7, 2007

Indemnification Agreement by and between H. David Coherd, dated November 8, 2007

Indemnification Agreement by and between Nicholas Stergis, dated January 18, 2002

Management Services Agreement by and between Accredited Ventures, Inc. and Encode Pharmaceuticals, Inc. dated June 18, 2003

Commitment Agreement by and between Accredited Ventures Inc. and Encode Pharmaceuticals, Inc. dated January 18, 2002

Commitment Agreement by and between Nicholas Stergis and Encode Pharmaceuticals, Inc.

Confidentiality Agreement by and between Encode Pharmaceuticals, Inc. and Oregon Health & Sciences University dated July 5, 2007

10.

Retainer agreement with Lehman & Eilen LLP

11.

Confidentiality Agreement by and between Encode Pharmaceuticals, Inc. and RemeGenex, Inc.

12.

Confidentiality Agreement by and between Accredited Ventures Inc. and Encode Pharmaceuticals, Inc.

13.

Confidentiality Agreement by and between Encode Pharmaceuticals, Inc. and James S. Kuo, M.D., MBA

14.

Confidentiality Agreement by and between Encode Pharmaceuticals, Inc. and Duska Therapeutics, Inc.

15.

Confidentiality Agreement by and between Encode Pharmaceuticals, Inc. and University of Texas, Health Sciences Center

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Schedule 2.10

(Unaudited Financial Statements)

Balance Sheet (unaudited)

					Nov 17, 07
ASSETS
	Current Assets
		Checking/Savings
			Bank of America*		49,000.00
		Total Checking/Savings			49,000.00
	Total Current Assets				49,000.00
	Other Assets
		Prepaid Expense			1,000.00
	Total Other Assets				1,000.00
TOTAL ASSETS					50,000.00
LIABILITIES & EQUITY
	Liabilities
		Current Liabilities
			Accounts Payable
				Accounts Payable	3,600.00
			Total Accounts Payable		3,600.00
			Other Current Liabilities
				Advances from Affiliate	6,027.40
			Total Other Current Liabilities		6,027.40
		Total Current Liabilities*			9,627.40
	Total Liabilities				9,627.40
	Equity
		Additional Paid-In Capital			317,824.29
		Common Stock			1,060.00
		Retained Earnings			-93,768.57
		Net Income			-184,743.12
	Total Equity				40,372.60
TOTAL LIABILITIES & EQUITY					50,000.00

* at closing Encode will have no assets or liabilities.

Income Statement (unaudited)

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LEGAL_US_W # 57642930.1

					Jan 1 - Nov 17, 07
	Ordinary Income/Expense
		Expense
			Computer Equipment		1,838.72
			Licenses and Permits		204.00
			Printing and Reproduction		60.00
			Rent		5,489.00
			Research and Development		50,000.00
			Stock Option Expense		126,277.00
			Taxes
				State	874.40
			Total Taxes		874.40
		Total Expense			184,743.12
	Net Ordinary Income				-184,743.12
Net Income					-184,743.12

Schedule 2.11

(Undisclosed Liabilities)

Patent reimbursement expense associated with License Agreement with the Regents of the University of California. Current estimate: $13,000 (Encode has not yet received invoice from UCSD)

Schedule 2.12

(Tax Matters)

Encode has not filed Federal or Statement income tax returns for the period of 2002-2006. Following closing, Encode shall at its own expense prepare and file these returns.

Schedule 2.13

(Material Contracts)

License Agreement by and between the Regents of the University of California and Encode Pharmaceuticals, Inc. dated October 31, 2007

Consulting Agreement with Dr. Ranjan Dohil dated November 7, 2007

Consulting Agreement with Dr. Jerry Schneider dated November 7, 2007

Schedule 2.14(a)(b)

(Schedule of Intellectual Property)

[*****]

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Schedule 2.14(c)

(Schedule of Intellectual Property)

None

Schedule 2.15(a)

(Schedule of Officer and Directors)

Name	Position/Title
Nicholas Stergis	Secretary, Treasurer, Vice Chairman and Interim President, Director
H. David Coherd	Director

Schedule 2.17

(Compliance with Laws)

none

[*****] The Company has requested confidential treatment of certain portions of this agreement which have been omitted and filed separately with the U.S. Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934

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EX-10 5 raptorpatheon.htm 10.2 RAPTOR - PATHEON AGREEMENT

Exhibit 10.2

PATHEON PROPOSAL: BNU-FCO1-0401-1107-R0

1. Parties:	Patheon Pharmaceuticals Inc. (“Patheon”)		Bennu Pharmaceuticals Inc. (“Client”)
	2110 East Galbraith Road		9 Commercial Blvd., Suite 200
	Cincinnati, OH 45237		Novato, CA 94949
	USA		USA

2. Product: Methylpyrazole (“Product”)

3. Indication: ALDH2 Deficiency

4. Contract: This Proposal (including the Project Scope, Budget Summary, Standard Terms and Conditions for Pharmaceutical Development Services (“Terms and Conditions”) when accepted by Client shall become a contract binding on the parties (“Contract”).

5. Description of Services: See Project Scope (Part A).

6. Payment and Currency: See Budget Summary (Part B).

7. Legal Terms: See Terms and Conditions (Part C).

8. Effective Date: January 7, 2008

9. Term: From the Effective Date until completion by Patheon of the pharmaceutical development services (“Services”).

10. Date of Confidentiality Agreement: October 23, 2007
11. Date of PatheonPartner^TM External User Account / Access Form __________, 200 [If applicable]
12. Date: January 7, 2008

Patheon Pharmaceuticals Inc.		Bennu Pharmaceuticals Inc.
By: /s/ Paul K. Wilkinson		By: /s/ Thomas E. Daley
Name: Paul K. Wilkinson		Name: Thomas E. Daley
Title: Group Director - PDS		Title: President
		Finance Contact: Kim Tsuchimoto, CFO

CONFIDENTIAL

Table of Contents

Part A: PROJECT SPECIFICS AND DETAILS

Project Scope

Project Initiation

Environmental, Health and Safety

Analytical Services

4.1. Cleaning Residuals Assay – 1 Surface Material (Method Development and Validation) 3

4.2.

Product Potency and Related Substances Assay (Method Development)

4.3. Product Potency and Related Substances Assay (Method Validation Phase II)3

4.4.

Product Forced Degradation Study

4.5.

Product Dissolution Assay – Profile by HPLC (Method Development)

4.6. Product Dissolution Assay – Profile by HPLC (Method Validation Phase II)3

Microbiology

Preformulation

6.1.

Excipient Compatibility Studies

Formulation Development

7.1.

Vehicle Screening for Liquid Fill Capsules

7.2.

Liquid Filled Capsules Feasibility Batches

Stability - Liquid Filled Capsules Feasibility Batches

Clinical Trial Material (CTM) Placebo Manufacturing

10.

Liquid Filled Capsules - Active CTM Manufacturing

11.

Stability - Placebo CTM Batch

12.

Stability - Liquid Filled Capsules Active CTM Batches

13.

Project Support

14.

High Level Timeline

15.

General Information

Standard Assumption:

PART B: BUDGET SUMMARY

CONFIDENTIAL

Patheon Proposal # BNU-FCO1-0401-1107-R0

PART C: LEGAL TERMS AND CONDITIONS

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

PART A:

Methylpyrazole

Formulation Development - [*****]

For

Bennu Pharmaceuticals Inc.

Proposal No.: BNU-FCO1-0401-1107-R0

Dated: 7-January-2008

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

The proposal outlines the Services that Patheon is proposing to perform for the Client relating to the Product. The initial sections describe the Services to be performed by Patheon that address Client’s specific project requirements. The section below entitled General Information provides additional background information on pharmaceutical development services by Patheon.

1.	Project Scope

For general information on the pharmaceutical development services provided by Patheon please refer to the section below entitled “General Information”.

Patheon will perform the following activities to support the Formulation Development - [*****] (Phase II) of Methylpyrazole:

•	Project Initiation

•	Environmental, Health and Safety

•	Microbiology

•	Analytical Development and Services

•	Preformulation

•	Formulation Development

•	Manufacturing

•

Stability

In an effort to ensure that Patheon is meeting your future needs with respect to this drug development proposal, please have a designated representative from your company notify Patheon at the end of the Phase II clinical trials process, and if possible, several months prior to the clinical project entering Phase III, such that Patheon can evaluate the appropriate site for the subsequent registration batch planning and ultimate commercial production. To provide the best possible outcome and to ensure we meet the designated timelines and ultimate launch date target, the site selected for registration may or may not be the same site where the development or clinical supply work is to take place. The selection of the registration site will depend on equipment needs, site capacity, Client preference and handling or containment requirements of the API.

2.	Project Initiation

Project Initiation Fee covers a series of activities at the start of a project that are performed by cross functional team members.

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Patheon Proposal # BNU-FCO1-0401-1107-R0

3.	Environmental, Health and Safety

Active Pharmaceutical Ingredient(s):

•	4-methylpyrazole

•	Patheon’s preliminary categorization = Category 2

Prior to the commencement of analytical method development, formulation development and manufacturing activities, a thorough review by Patheon of the Environmental, Health and Safety (EH&S) requirements for the API will be completed. The Budget Summary for this Project Scope assumes that the EH&S review will determine that the API can be safely handled at Patheon. A summary report of the evaluation will be provided to the Client.

4.	Analytical Services

Patheon will perform method development, method validation or method transfer for the Client.

The following documents will be generated for each method to support the analytical work:

•	Protocols (except for development work)

•	Reports (data summary will be generated for development work)

Analytical Methods

4.1. Cleaning Residuals Assay – 1 Surface Material (Method Development and Validation)

4.2.	Product Potency and Related Substances Assay (Method Development)

4.3.	Product Potency and Related Substances Assay (Method Validation Phase II)

4.4.	Product Forced Degradation Study

4.5.	Product Dissolution Assay – Profile by HPLC (Method Development)

4.6.	Product Dissolution Assay – Profile by HPLC (Method Validation Phase II)

5.	Microbiology

Patheon will perform validation of microbial recovery from pharmacopeial articles following USP <1227> guideline and USP Harmonized methods (USP<61> and <62>) on Methylpyrazole. A harmonized specification based on USP<1111> will

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

be followed to meet USP/EP/JP acceptance criteria for pharmaceutical preparations and substances for pharmaceutical use. The validated methods will cover USP, EP and JP compendia for Microbiological Examination of Non-Sterile Products and Antimicrobial Effectiveness Testing (AET). The budget represents four trials for the validation and assumes only [*****] will be evaluated.

6.	Preformulation

Patheon will provide a protocol and report for Preformulation.

6.1.

Excipient Compatibility Studies

•	8-10 excipients

•	1:1 blends with API placed in amber glass

•	Storage conditions: 25°C / 60 % RH and 40° C / 75 % RH

•	Tested at 40° C / 75 % RH at 0, 4, 8 and 12 week time points

•	Potency and Physical Appearance

•	Active will be placed on stability as control samples

•	HPLC method

7.	Formulation Development

Patheon will provide a protocol and report for Formulation Development.

7.1.

Vehicle Screening for Liquid Fill Capsules

Several solvent, co-solvent and stability enhancer systems will be evaluated for solubility. Five (5) solvent systems/vehicles will undergo analytical evaluation for solubility only. These systems are to be manufactured in a non-cGMP area for feasibility evaluation only.

7.2.

Liquid Filled Capsules Feasibility Batches

•	Liquid Filled Capsules, [*****]

•	Six (6) Batches

•	Approximately 0.25 kilograms each batch

•	Packaged into HDPE bottles (i.e. 30’s) for stability

•

Non-GMP

•	No QA review

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Patheon Proposal # BNU-FCO1-0401-1107-R0

Liquid Filled Capsules Feasibility batches will be tested for:

•	Content uniformity

•	Dissolution(profile)

•

Potency

•	Related substances

•	Physical testing including appearance, capsule weight, etc.

8.	Stability - Liquid Filled Capsules Feasibility Batches

•	Six (6) batches (lead and back up of [*****]) from section 7.2 for stability testing

The following storage conditions and test-points are suggested for testing:

1, 3 and 6 months for 40°C ± 2°C / 75% ± 5% RH

Testing per sample:

•

Potency

•	Related substances

•	Dissolution(profile)

•	Physical testing including appearance, moisture, etc.

9.	Clinical Trial Material (CTM) Placebo Manufacturing

Patheon will manufacture:

•	One (1) CTM Placebo batch

•	Approximately 5,000 units

•	Excipients released as per USP/EP/JP

•	Batch record

•	Packaged into HDPE bottles (i.e. 30’s) for stability

•	cGMP conditions

•

QA review

CTM Manufacturing Process Train

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

•

Mixer

•	Encapsulator

•

Bander

The following in-process and finished product testing is based upon one set of analysis for each of the described tests. If additional sample testing is required, it will be considered as an additional activity for which a separate cost will be provided to the Client.

Testing (one set of analysis):

In-Process Testing:

• Physical Parameters (i.e. appearance, weight, weight variation)

Finished Product Testing:

• Absence of Active

10.

Liquid Filled Capsules – Active CTM Manufacturing

Patheon will manufacture:

•	Methylpyrazole Capsules, [*****]

•	Two (2) CTM Active batches

•	Five (5) kilograms each batch (approximately 10,000 capsules)

•	Back-to-back manufacturing

•	Excipients released as per USP/EP/JP

•	Batch record

•	Packaged into HDPE bottles (i.e. 30’s) for stability

•	cGMP conditions

•

QA review

•	Manufacturing report

CTM Manufacturing Process Train

•

Mixer

•	Encapsulator

•

Bander

The following in-process and finished product testing is based upon one set of analysis for each of the described tests. If additional sample testing is required, it

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

will be considered as an additional activity for which a separate cost will be provided to the Client.

Testing (one set of analysis):

In-Process Testing:

• Bulk Homogeneity

• Physical Parameters (i.e. appearance, weight and weight variation)

Finished Product Testing:

• Content Uniformity (as per USP)

• Potency

• Related Substances

• Dissolution (profile)

• Moisture (LOD or KF)

• Microbial Limit Testing

11.

Stability – Placebo CTM Batch

Patheon shall design a stability program to monitor:

•	One (1) batch under ICH conditions

The following storage conditions and test-points are suggested for testing:

3, 6, 9, 12, 18, 24 and 36 months for 25°C ± 2°C / 60% ± 5% RH

Testing per sample:

•	Physical testing including appearance

•	Microbial Limit Testing (annually)

12.

Stability – Liquid Filled Capsules Active CTM Batches

Patheon shall design a stability program to monitor:

•	[***] batches under ICH conditions [***]

•	Additional samples will be stored as contingency samples if required to generate long-term stability of the product

The following storage conditions and test-points are suggested for testing:

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Patheon Proposal # BNU-FCO1-0401-1107-R0

1, 3 and 6 months for 40°C ± 2°C / 75% ± 5% RH

1, 3, 6, 9, and 12 months for 30°C ± 2°C / 65% ± 5% RH*

3, 6, 9, 12, 18, 24 and 36 months for 25°C ± 2°C / 60% ± 5% RH

(* Tested only if required due to significant changes in the next level condition)

Testing per sample:

•

Potency

•	Related substances

•	Dissolution (profile)

•	Physical testing including appearance, capsule weight, etc.

•	Microbial Limit Testing (annually)

13.

Project Support

Patheon will provide project management support to monitor the progress of the project against established timelines and will provide the Client with frequent updates. The project manager will coordinate regular biweekly teleconference meetings and quarterly face-to-face meetings. The fee for project management is incorporated in the breakdown cost for each activity in the Budget Summary.

14.

High Level Timeline

The attached High Level Timeline is presented at this stage as a projected estimate of the duration and achievable milestones, based upon Patheon’s experience and history. The High Level Timeline should not be taken as part of an agreed legal deliverable of this proposal.

Once the project has been awarded to Patheon and the relevant legal documentation is in place, a revised Timeline detailing set milestones and duration of deliverables will be agreed upon between Patheon and the Client. The revised Timeline would likely have a similar duration and would be based upon resources and the availability of manufacturing time at the initiation of the project.

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

15.

General Information

This section provides additional background information on the pharmaceutical development services performed by Patheon portions of which may be applicable depending on the Scope of Work outlined in Part A.

Standard Assumption:

The approach used would be outlined in a more detailed protocol prepared by Patheon and on request approved by the Client. Further studies may be required in the later development stages of the project. Where required these would be discussed and agreed separately with the Client.

It is assumed that the API and/or formulation do not absorb/adsorb to any metal, glass or other components used during the processing and analytical testing of the batch. The fees for any investigational work associated with the API and/or formulation interacting with components are not included within this proposal.

The identification of unknown impurities detected during the study is not included as part of this proposal.

A) Project Initiation

The Project Initiation Fee covers a series of activities at the start of a project. These activities include (but are not limited to) scientific review of Client documentation, literature research and review, procurement of project specific equipment and tooling, analytical method research and attendance by cross functional team members for initial Client ”kick-off “ meetings.

B) Environmental, Health & Safety

If it is determined by Patheon’s Environmental Health and Safety personnel that any of the active ingredients are a Category III or Category IV compound (an occupational exposure level) then an air sampling method will be required at Client’s expense prior to commercialization. Patheon reserves the right, in its sole and absolute discretion, to conduct an air sampling method on Category I and II compounds, at such price and upon such terms as may be mutually agreed to between the parties prior to commercialization.

Prior to commercialization, Patheon will evaluate the Product and the proposed launch volume and, at the Client’s request, select the appropriate Patheon facility for commercialization. The Patheon facility used for performance of the Services will not necessarily be the facility available for commercialization.

Patheon will not receive any active pharmaceutical ingredients (API) from the Client until a MSDS has been received, Patheon has completed the categorization of the API and that the Client has completed and returned the EH&S Survey to Patheon.

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

C) Analytical Services

Cleaning Residuals Assay

The Cleaning Residuals Assay method development and validation is for the detection of the API. If an excipient, other than the API, in the product formulation has a therapeutic effect (e.g. Vitamin E), the Client must advise Patheon. Patheon will evaluate the need for a cleaning residuals assay for the excipient. If needed and possible, Patheon will develop and validate a combined cleaning method for the API and the concerned excipient without additional cost. Otherwise, a separate cleaning method may be required for the excipient at an additional cost to the Client through a Change of Scope.

Analytical Protocols and Reports

Analytical protocols will be drafted by Patheon for validation activities only and submitted to the Client for approval prior to execution with the exception of the Cleaning Residuals Assay, which will be approved internally by Patheon. No protocols will be issued for method development activities. Upon completion of the development activities, a summary of the data will be provided to the Client. The analytical methods have been based upon HPLC unless otherwise stated.

An analytical report will be provided to the Client once the method validation is complete. If method validation is not specified in the title of an analytical method under this Project Scope, then the validation of such analytical method is not included in this Project Scope and the additional method validation costs will be quoted separately by Patheon.

API Receipt and Release

Patheon will receive and release the active pharmaceutical ingredients (API) for Clinical Trial Material (CTM) manufacture based on the following: (i) Identification testing; and (ii) the accompanying Certificate of Analysis (COA) from the API Vendor (Client qualified) and COA from the Client.

Non-GMP Excipient Receipt and Release

Patheon will receive and release materials / excipients (other than API) for non-GMP Formulation Development Batches based on receipt of a Certificate of Analysis (CoA), Certificate of Conformance (CoC), or an equivalent document from the vendor of such materials/excipients, the client, or a third party testing lab. At a minimum the document must contain the results from ID testing and assay.

Reference Standards for APIs and Related Substances

The Client shall provide Patheon with accurate, appropriate, sufficient and the most current applicable reference standards (such as USP, NF, BP, EP, and JP) for the APIs and related substances to complete the scope of work outlined herein.

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Method Development

The method development will cover the sample preparation procedures, HPLC conditions, calibration procedures, specificity, detection limit (if applicable), quantitation limit (if applicable), accuracy and repeatability. Should the effort to develop the method exceed 80 bench work hours, additional costs may be incurred and would be covered by a change of scope.

Forced Degradation Study

In order to assess whether the API or product potency assay is suitable for use as stability–indicating assay, a series of experiments will be performed to study degradation. The API or product will be treated with acidic, basic, oxidative, light and thermal conditions, the stressed samples will be analyzed by the potency method using DAD and ensure that the active peak is pure from peak purity assessment. If the peak purity fails, the method needs to be redeveloped for stability-indicating, and a change of scope will be issued.

Product Dissolution Assay by HPLC (Method Development)

Patheon will develop the assay required for testing dissolution of the product. The development will challenge the following parameters. Should the effort to develop the method exceed 80 bench work hours, additional costs may be incurred and would be covered by a change of scope.

• Sink condition

• Selection of medium, apparatus speed

• Optimization of medium conc. & pH

• System suitability

• Specificity

• Accuracy

• Repeatability

Interlab Qualification

Inter-Laboratory Qualification involves the comparison of two different series of laboratory analyses for the same lot of material/product. This verifies that both laboratories (i.e., the originating and receiving laboratories) are following the same procedure accurately and producing results that are precise and equivalent. The Client needs to provide to Patheon the method validation report. The following parameters will be performed at both Patheon and the originating laboratory:

• System Suitability

• Stability of Standard and Sample Solution

• Repeatability

• Quantitation Limit (if applicable)

• Detection Limit (if applicable)

Method Transfer

Method Transfer is an on site validation process in the receiving laboratory, which verifies that method performs in the receiving laboratory in an equivalent manner to the originating laboratory. The Client needs to provide to Patheon the method validation report. The following parameters will be performed at Patheon as the receiving laboratory:

• System Suitability

• Linearity

• Stability of Standard and Sample Solutions

• Repeatability

• Quantitation Limit (if applicable)

• Detection Limit (if applicable)

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Method Evaluation

Patheon will evaluate the test method(s) required to support the Project. Method evaluation will cover the sample preparation procedures, HPLC conditions, calibration procedures, specificity, accuracy, repeatability and detection/quantitation limits (if appropriate). If the method(s) is/are deemed unsuitable, new method(s) will be developed and billed as a change of scope.

Method Validation Phase Levels

Patheon will validate the test method required to support the Project. The validation will challenge the following parameters based on the Project Clinical Phase Level:

Phase I

• System Suitability

• Linearity

• Specificity

• Range

• Accuracy

• Repeatability

• Solution Stability

• Quantitation Limit (if applicable)

• Detection Limit (if applicable)

Phase II

• System Suitability

• Linearity

• Specificity

• Range

• Accuracy

• Intermediate Precision

• Repeatability

• Solution Stability

• Quantitation Limit (if applicable)

• Detection Limit (if applicable)

Phase III

• System Suitability

• Linearity

• Specificity

• Range

• Accuracy

• Intermediate Precision

• Repeatability

• Solution Stability

• Robustness

• Quantitation Limit (if applicable)

• Detection Limit (if applicable)

D) Microbiology

The cost allocated to this Service in the Budget Summary of Part B is the per sample price and will vary depending on the number of samples required for method validation. If a worst case scenario approach were taken, the cost would be based upon testing MLT and AET (if applicable) at two dilutions and/or the usage of the largest volume of diluent(s) based on specification. Testing will be done in compliance with the applicable Pharmacopeia (i.e. USP/NF, EP, JP etc.). Client will be billed based on the actual number of samples and replicates required in order to successfully validate the Product.

E) Stability

The analytical data used for the release of each lot manufactured at Patheon will be considered as initial (T=0) data if the stability study commences not more than 1 month after release testing.

Cost efficiencies for analytical testing have been built into the stability program based upon the number of samples pulled in a given month. The cost for this stability program assumes that all lots will be placed on stability at the same time. If these lots are not placed on stability at the same time, the cost will be adjusted accordingly through a change of scope agreement.

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Patheon Proposal # BNU-FCO1-0401-1107-R0

F)	Formulation Development, Manufacturing, Protocols and Reports

Formulation Development

The approach used in formulation development would be outlined in a detailed protocol prepared by Patheon and approved by the Client. The formulation development studies would be conducted using suitable laboratory scale equipment. If stated in the formulation development section, product will be hand packaged into suitable containers for the stability study.

Development Report

Upon completion of the manufacturing activities, a minimum of one formulation development report (formulation development report would include all formulation development activities up until and including prototype batch manufacture) will be provided to the Client for review and approval.

Manufacturing Report

Upon completion of the manufacturing activities, Patheon will prepare (by a senior process engineer) a report summarizing manufacturing data and fact findings during the manufacturing and packaging process, along with manufacturing issues and future recommendations to the Client for review and approval.

G)	Manufacturing Validation

Master Validation Plan

This high level document outlines the planned validation activities. The price includes protocol generation and approval. For multiple strengths, a single master validation plan is typically generated.

Process Validation

The process validation includes the generation and approval of the process validation protocol, execution of the validation batches, and the generation and approval of a final process validation report. The specific testing plan for a process validation is not known at the time of quotation, therefore the pricing is based on the following assumptions for testing and sampling of solid dose products on a per batch basis. Blender and drums: blend uniformity (up to a total of 24 samples), physical blend testing (bulk/tapped density, sieve analysis); Cores: Beginning, middle and end (30 cores for content uniformity), ID, appearance, dissolution, water content; Coated Tablets (one coating pan): release testing per pan, (ID, appearance, potency, content uniformity, related substances, dissolution, weight variation, water content, micro).

For liquids and semi-solids, it is assumed that the testing consists of the following: ID, appearance, blend homogeneity, potency and related substances, viscosity, foreign particulate testing, specific gravity and micro. These tests could be performed on the primary finished pack (e.g. uniformity within a filled tube).

- [*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

Packaging Validation

The packaging validation includes the generation and approval of the packaging validation protocol, execution time for the validation batches, and the generation and approval of a final packaging validation report. Packaging validation is a standard solid dose or semi-solid/liquid into a single SKU (stock keeping unit), and that three batches are to be packaged per SKU. For additional strengths or SKUs, it is assumed that there will be a separate protocol and report generated. It is assumed that for analytical tests, only identification will be required during the packaging activities. Packaging validation will analyze for fill count, fill volume, labelling, lot numbering and expiration date printing, cartoning, tube crimping, tube seal, bottle/cap seal etc.

Bulk Hold Time Study

The bulk hold time study includes the generation and approval of a protocol, the execution of the protocol, and the generation and approval of a final report. It is assumed that the study will be conducted for [*****], for each of the blend (solid or liquid/semi solid), cores and coated tablets. Three time points is assumed for the study and that the testing will consist of the following: Blend: potency and related substances; Cores: Appearance, dissolution, water content, potency and related substances Coated Tablets: ID, appearance, potency and related substances, dissolution, weight variation, water content, micro.

Cleaning Validation

The cleaning validation includes the generation and approval of a protocol, execution and the generation and approval of a final cleaning validation report. It is assumed that 3 separate trials will be required for the study, and that each trial will cover up to 16 pieces of equipment (analyzed in 4 groups of 4 pieces of equipment).

Shipping Study

The shipping study will test the effectiveness of the packaging components to protect the final product during transportation. This is accompanied by conducting vibrational and compression studies as well as a drop test.

To ensure quality of the test samples, the test samples will be prepared on site prior to testing. A sample of bulk product will be shipped to our in-house testing facility along with packaging components. Associated shipping costs will be billed back to the client.

The following testing will be performed.

Study:

• Vibration (Single Resonance)

• Compression (Static Load)

• Drop

Test:

• Appearance before and after each study

If additional sample testing is required, it will be considered as an additional activity for which a separate cost will be provided to the Client.

- [*****]

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Part B: Budget Summary

Once a project has been awarded to Patheon, a similar budget will be presented to the Client that will include Unique Identity Numbers for invoicing purposes only.

[*****]

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Patheon Proposal # BNU-FCO1-0401-1107-R0

PART C

STANDARD TERMS AND CONDITIONS

FOR PHARMACEUTICAL DEVELOPMENT SERVICES

1.	Services:

(a)

Patheon agrees to perform the pharmaceutical development services described in the Project Scope (“Services”). Patheon shall meet the Standard of Care in the performance of its obligations hereunder. “Standard of Care” shall mean (i) meeting the highest professional standard of diligence, care, timeliness, trust, dependability, safety, efficiency, economy and skill exercised by members of Patheon’s profession in the United States; (ii) exercising such professional standard by appropriate action or inaction during the term of this Contract; and (iii) complying with all applicable laws and/or regulations.

(b)

Parties must agree on changes, deletions or additions to the Services (“Changes”).

(c)

Minor Changes shall be confirmed by electronic mail, facsimile or other written document. Significant Changes (such as a request by the Client to change the Project Scope) shall be confirmed by a Change of Scope Agreement, executed by each of Patheon and Client.

2.	Payment and Deposit:

Payment

(a)

Client shall pay Patheon for the Services as outlined in this Contract and for any Changes which shall be invoiced separately at Patheon’s then prevailing hourly rates.

(b)

If Client causes any delay to Patheon’s provision of Services for reason within its control (such as a delay in responding to a Patheon inquiry or a delay in the delivery of the active pharmaceutical ingredient (“API”)), then Patheon shall be entitled to charge the Client for any additional costs incurred in the provision of the Services as a result of the delay.

(c)

Patheon invoices may be issued upon completion of each milestone set out in the Budget Summary and shall be due and payable within 30 days of the date of such invoice. If Client anticipates not being able to meet the net 30 day terms, then Client may request that Patheon forward each invoice to the facsimile number and/or email address stipulated by the Client from time to time to ensure that it has the full 30 days to process payment. Interest on past due accounts will accrue at a rate of 1.5% per month.

Deposit (if Applicable as per the Budget Summary)

(a)

Prior to the commencement of the Services, Client shall deliver to Patheon the deposit (“Deposit”) set out in the Budget Summary.

(b)

Deposit shall be held by Patheon until the Services are fully completed or until this Contract expires or is terminated in accordance with Section 4, whichever occurs sooner.

(c)

Deposit shall be credited towards the final invoice for the Services and any remaining balance shall be returned to the Client.

(d)

Patheon may apply all or a portion of the Deposit against accounts overdue in excess of 60 days from the date of the invoice, such to be applied first to the oldest accounts outstanding.

(e)

Patheon may, at its option, suspend all Services until such time as any outstanding invoices have been paid in full and the original amount of the Deposit has been replenished.

3.	Supply of API and Materials:

(a)

[*****].

(b)

The costs of all third party suppliers’ fees and the purchase of project specific items (such as raw materials, excipients, packaging, special equipment, tooling, change parts, laboratory columns and reagents, reference standards including those under the applicable United States Pharmacopoeia, the National Formulary, the British Pharmacopoeia, the European Pharmacopoeia or the Japanese Pharmacopoeia) necessary for Patheon to perform the Services (such costs, fees and purchases, collectively, “Project Costs”) shall be purchased by Patheon and charged to Client at [*****], such projected Project Costs to be provided to Client Notwithstanding anything to the contrary, [*****].

(c)

If applicable, Patheon and the Client will cooperate and provide such assistance to each other as may be reasonably necessary to permit the import of the API and other materials into the country where the Services will be performed.

Termination:

(a)

Either party may terminate this Contract if the other party is in material breach of any provisions of this Contract and the other party fails to remedy such breach within 30 days of the date of notice of such breach by the non-breaching party.

(b)

Client may terminate this Contract immediately for any business reason.

(c)

Any re-scheduling of any part of the Services beyond 120 days requested by Client shall, at Patheon’s option, be deemed to be a termination of the Contract.

(d)

Upon completion or expiry of the Contract or if the Client terminates the Contract for any business reason or if Patheon terminates the Contract because of: (i) Client’s failure to cure any default within the 30 day notice period; or (ii) Client rescheduling any part of the Services beyond the 180 days, then Client shall pay to Patheon:

•

any fees and expenses due and owing to Patheon for the Services rendered up to the date of completion, expiry or termination; and

•

all actual costs incurred by Patheon to complete activities associated with the completion, expiry or termination and close of the Services rendered up to the date of completion, expiry or termination including, without limitation disposal fees that may be payable in respect of any materials and supplies owned by the Client to be disposed of by Patheon; and

(e)

Client shall arrange for the pickup from the Patheon site of all materials and supplies owned by Client within 5 days after the earlier of the completion, termination or expiration of this Contract. Patheon shall charge a $30.00 per square foot per month storage fee for all materials and supplies stored at the Patheon site after the fifth day following the completion, termination or

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Patheon Proposal # BNU-FCO1-0401-1107-R0

expiration of the Contract or shall, at the discretion of Client, dispose of such materials and supplies at Client’s cost.

5.	Intellectual Property:

(a)

The term “Intellectual Property” includes, without limitation, rights in patents, patent applications, formulae, trade-marks, trade-mark applications, trade-names, trade secrets, inventions, copyright, industrial designs and know-how.

(b)

For the term of this Contract, Client hereby grants to Patheon, a non-exclusive, non-sublicenseable, paid-up, royalty-free, non-transferable, limited license to use that Client Intellectual Property that Patheon must use in order to perform the Services and solely for the purpose of rendering the Services. Unless authorized by Client Patheon may not itself or allow others to: (i) make unauthorized use, disclosure or copying of any such Intellectual Property received by it; (ii) disassemble, decompile, recast, or reverse engineer any of such Intellectual Property; (iii) rent, loan, lease, sublicense, transfer, reproduce, or otherwise distribute any of such Intellectual Property; or (iv) modify, alter, delete or obscure any proprietary rights notice embedded in or affixed to any of such Intellectual Property, if any. Patheon must return to Client all of such Client Intellectual Property and other Client confidential information in tangible form, including without limitation, all copies, translations, interpretations, derivative works and adaptations thereof, immediately upon the expiry or termination of this Contract or upon request by the Client.

(c)

All Intellectual Property generated or derived by Patheon in the course of performing the Services, to the extent it is specific to the development, manufacture, use and/or sale of the Client’s Product that is the subject of the Services, shall be the exclusive property of Client. If and to the extent that Patheon retains any interest in such Intellectual Property, Patheon hereby grants assigns and transfers to Client all right, title and interest in and to such Intellectual Property and all rights therein, including without limitation all patent, copyright, trademark, trade secret and other proprietary rights, the right to make and distribute derivative works thereof and the right to make any modifications or adjustments thereto. Patheon hereby expressly waives any moral or similar rights to object to any such modifications, adjustments or additions.

(d)

Notwithstanding subsection (c) above, all Intellectual Property generated or derived by Patheon in the course of performing the Services that do not relate to Client’s Product and which have application to manufacturing processes or formulation development of products or drug delivery systems shall be the exclusive property of Patheon. Patheon hereby grants to Client, a perpetual, irrevocable, non-exclusive, paid-up, royalty-free, transferable license of such Intellectual Property which Client may use for the manufacture, use and/or sale of Client’s Product.

6.	Indemnity:

Indemnification by Client

Subject to Sections 6B and 6C(c), Client shall defend, indemnify and hold Patheon, its affiliates and their respective directors, officers, employees and agents (collectively, “Patheon Indemnitees”) harmless from and against any and all third-party actions, causes of action, costs (including reasonable legal fees), claims, damages, liabilities and expenses (collectively, “Losses”) relating to or arising from:

•

the manufacture (except as may be contemplated by the Services) or distribution of the Client’s Product or the use of the Client’s Product by patients either as part of or outside of the scope of any clinical trials;

•

the performance of the Services in accordance with the terms of this Contract;

•

any misrepresentation, negligence or willful misconduct by Client or any of its affiliates and their respective directors, officers, employees and agents (collectively, “Client Indemnitees”);

•

any breach by the Client of the Client’s representations, obligations or warranties under this Contract; or

•

any claim of infringement or alleged infringement of any third party’s intellectual property rights in respect of the Client’s Product.

This indemnity shall not apply to the extent that such Losses are:

•

determined to have resulted from the negligence or willful misconduct of Patheon; or

•

for which Patheon is obligated to indemnify the Client Indemnitees pursuant to Section 6B.

Indemnification by Patheon

Subject to Sections 6A and 6C(c), Patheon shall defend, indemnify and hold the Client Indemnitees harmless from and against any and all Losses resulting from, relating to or arising from

•

any misrepresentation, negligence or willful misconduct by Patheon or any of its affiliates and their respective directors, officers, employees and agents; or

•

any breach by Patheon of Patheon’s representations, obligations or warranties under this Contract;

This indemnity shall not apply to the extent that such Losses are:

•

determined to have resulted from the negligence or willful misconduct of Client; or

•

for which Client is obligated to indemnify the Patheon Indemnitees pursuant to Section 6A.

Limitation of Liability

(a)

If Patheon fails to materially perform any part of the Services in accordance with the terms of this Contract, then Client’s sole remedy, subject to subparagraph (b), shall be to request Patheon to:

•

repeat that part of the Service at Patheon’s costs, [*****]; or

•

reimburse Client for the price for that part of the Service, [*****].

(b)

[*****], provided, however, that in no case shall Patheon liability for the loss of API exceed $[*****] per kilogram, up to a maximum amount of $[*****] in all circumstances. Client acknowledges that the Services involve scientific experiments that require the use of judgment and any loss of API in exercising such judgment [*****].

(c)

Under no circumstances whatsoever shall either party be liable to the other in contract, tort, negligence, breach of statutory duty or otherwise for (i) any (direct or indirect) loss of profits, of production, of anticipated savings, of business or goodwill or (ii) any other liability, damage, cost or expense of any kind incurred by the other party of an indirect or consequential nature, regardless of any notice of the possibility of such damages.

No Warranty

PATHEON MAKES NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS

Page 21 of 23

CONFIDENTIAL

Patheon Proposal # BNU-FCO1-0401-1107-R0

CONTRACT. PATHEON MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY IN RESPECT OF THE CLIENT’S PRODUCT.

7.	Regulatory Filings:

(a)

Client shall have the sole responsibility for filing of all documents with the applicable regulatory authority (such as the United States Food and Drug Administration (“FDA”), the Health Products and Food Branch of Health Canada or the European Medicine Evaluation Agency) (the “Regulatory Authority”) and to take any other actions that may be required for the receipt of approval from the Regulatory Authority for the commercial manufacture of the Client’s Product.

(b)

At least 21 days prior to filing any documents with the Regulatory Authority that incorporate data generated by Patheon, Client shall provide Patheon with a copy of the documents incorporating such data so as to give Patheon the opportunity to verify the accuracy and regulatory validity of such documents as it relates to the Patheon-generated data.

(c)

If Patheon is selected as the commercial site of manufacture of the Product which is the subject of the Services under this Contract, then at least 21 days prior to filing with the Regulatory Authority any documentation which is or is equivalent to the FDA’s Chemistry and Manufacturing Controls (“CMC”) portion of the New Drug Application or of the Abbreviated New Drug Application, as the case may be, Client shall provide Patheon with a copy of the CMC portion as well as all supporting documents which have been relied upon to prepare the CMC portion. Such disclosure shall permit Patheon to verify that the CMC portion accurately describes the Services that Patheon has performed and the manufacturing processes that Patheon will perform pursuant to this Contract.

8. Shipping (if applicable): Shipments (if applicable) of Client’s Product shall be made EXW (as defined in INCOTERMS 2000) Patheon’s shipping point unless otherwise mutually agreed. Risk of loss or of damage to such Product shall transfer to the Client when the Product is loaded onto the carrier’s vehicle by Patheon for shipment at the EXW point. The Product shall be transported in accordance with the Client’s instructions.

9.	Miscellaneous:

Assignment

Neither this Contract, nor any of either party’s rights hereunder, may be assigned or otherwise transferred by either party without the prior written consent of the other party, which consent shall not be unreasonably withheld.

Force Majeure

Except for payment obligations, neither party will be responsible for delay or failure in performance resulting from acts beyond the reasonable control and without the fault or negligence of such party, including, but not limited to, strikes or other labour disturbances, lockouts, quarantines, communicable disease outbreaks, riots, wars, acts of terrorism, fires, floods, storms, interruption of or delay in transportation, defective equipment, lack of or inability to obtain fuel, power or components or compliance with any order or regulation of any government entity.

Survival

Any termination or expiration of this Contract shall not affect any outstanding obligations or payments due hereunder prior to such termination or expiration, nor shall it prejudice any other remedies that the parties may have under this Contract. The Confidentiality Agreement and sections 4, 5, 6 and 7 of the Contract shall survive the expiration or termination of this Contract.

Independent Contractors

The parties are independent contractors and this Contract shall not be construed to create between Patheon and the Client any other relationship such as, by way of example only, that of employer-employee, principal, agent, joint-venturer, co-partners or any similar relationship.

Confidentiality

The Confidentiality Agreement entered into between the parties shall apply to all confidential information about the parties and the Services to be conducted under this Contract and such Confidentiality Agreement is deemed to be incorporated herein by reference. If the Confidentiality Agreement expires or terminates prior to the expiration or termination of this Contract, then the terms of the Confidentiality Agreement shall nonetheless continue to govern the parties’ obligations of confidentiality for the term of this Contract and for 5 years thereafter.

Patheon Partner^TM

In order to participate in the PatheonPartner^TM program, Client must submit a completed PatheonPartner^TM External User Account/Access Form to its Patheon project manager. If applicable, the PatheonPartner^TM External User Account/Access Form signed by the Client shall apply to the Client’s use of the PatheonPartner^TM website in respect of the Services.

Other Terms

No terms, provisions or conditions of any purchase order or other business form or written authorization used by Client or Patheon will have any effect on the rights, duties or obligations of the parties, or otherwise modify, this Contract, regardless of any failure of Client or Patheon to object to such terms, provisions, or conditions unless such document specifically refers to this Contract and is signed by both parties.

Insurance

Each party shall maintain during the term of this Contract general liability and product liability insurance. Either party may request evidence of such insurance.

Entire Agreement

This Contract constitutes the complete agreement between the parties with respect to this subject matter and supersedes all other prior agreements and understandings, whether written or oral. Any modifications, amendment or supplement to this Contract must be in writing and signed by authorized representatives of both parties.

Facsimile

This Contract may be signed in counterparts and by facsimile.

Choice of Law

This Contract is governed by the laws of the State of Ohio, without regard to any conflicts-of-law principle that directs the application to another jurisdiction’s law.

Page 22 of 23

CONFIDENTIAL

GRAPHIC 6 img1.jpg GRAPHIC begin 644 img1.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``H'!P@'!@H("`@+"@H+#A@0#@T- M#AT5%A$8(Q\E)"(?(B$F*S7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#V2BBB@`HH MHH`****`"BBB@`HHJ":\AA."VYO[J\FLZE6G2CS5'9>8TF]$3T54$EY/]R-8 M5]7Y/Y4X60;F:624^A.!^5EO#']R)1^%25:6(>[2^3?XW7Y![I#]IST@E/_`:7SV_YX2?E4M% M4J=3K/\`!"NNQ'YP[QR#_@-*)HSWQ]1BGT5:C-=?P_X(M!`P/0@TM)L4_P`( MI-I[,1^M5>74!U%-RXZKD>JTH8-TH4D]`L+1115""BBB@`K,O-8%I*Z[%*IU M8G%:$TJP0O*WW44L:Y7396U+5XD/*JQF?\.GZD5+8T:'_"31?W%_7_"I(O$* M2IJ#0]+>32[C4KE27EA80*>H4@ M_-]3V]OK0V]D%C9TO6/[1GDC,838N[(.>]8UIXIU:_OID@TR*.TCD*BXF9AN M`/8=S4>A175B6N9/EDE3:L9'*C.VEOKTD^6A6#T%=%H=]<:GH]O?7,*PO.N$I)`4]/TYKR MSQ3>IJWBR'(84BCU2!4C4*HYX`&!VKN3U(:- MHD*"2<`F>.[O5=?BTVWL(O+DE(\PL>,_E7+>"$6QMM5UV0<6D'EQD_P!\_P"1^=#>N@DC9U/XBS6>JW%G M;6$E?$1H7_06MO\`ONDFWU&X7I^I_E0TTKW! M'2VOB:TO?#DVLQ*52%6+(W4,!T_E^=WY"NAK!\&6/V/P]$Y&'N&,I^AX'Z`5O52V!F!XQU$6.C>6#A[AP@^G4UR^C MV&NW]NUYIC+&A8IN,NPMCKVZ5J^,=(UK5]0B^QV?F6\*84F55RQZ\$_2NDT6 MP_LO1K6S.-T48WX[L>6_4FIM=CO9'+'1/&,GRF]10?6Y;_"B/P_%X>B;6==N MUG,!W1PIG:S]LD\DYKMZX7Q;HWB3Q#J*106BQV,1PA:9>?5R,T-6"YG:!;7/ MC#7I;V\R;6-MTOH?1!_7V^M=S>WV/W$!P!P6'\A4=GI/]D:3#IM@GRJ/GD)` M+'N?QJ6ST]DEWSJ!M^Z,YKQL;/$U)K#4(M)[RMI\G_78VIJ"7-+[CF-+\1I= M^,+?3[?!@&\,Y_C8*>GL,5H_$#4/L7AMX5;#W3",?3J:Y[1/".NZ?XHM[V2T M5;>.M'QSH>N:Y?P+8V@DMX$X8RJN6/7@FO0PV'AAJ7LX+_@ MF6A_V5_\`KD_E74:W?C3-%N[PG!BC.W_>/`_6 MC1-/&E:+:6/&88P&QW;J?U)K)\;:?JFJZ5%9:;`)=TFZ4EPN`.@Y]_Y5U;(C MJ^88(8]S%&P2Q/'/YUV7_"N?#_`/0MQG`_D: MLZI_Q)_`&GZ>/EFU!S<2COCJ/_9?RJYKGA37=;\4274EJJVCRJH,/#>NZQK`>SL@UI!&L<7[U1QWX)]:FVXQOA+P5IVJZ&E]J*2EYG;9LD* MC8.!^H-;7_"N?#W_`#RN/^_YK"M=/^(%E;I;V_R11KM1?,CP!4ZP?$5F"F0* M"<%M\?'O35NP$GC*&U\.>$HM(T]61+J?G!7+6.B^.M&0PV,92,G.U9 M49<^O)H>CN'0]-KR7Q7/'3W/YDUKO9?$*_C,,TGDHW#$R MHO'X9-;'ACP6F@,U]$M:/BJ/4M5MECB$K3,?,5L MMR0,`^N/RKT2B*ZB9Y'X=9]*\0VLK?*8Y?+D^A^4_P`_TK=\2[]3\1FWC/.Y M;=/8D\_S-6-7\,W[ZS<7%G:>9#(V\,'48)Z\$^M6]%T/4%UJ.\O[[)K>'[/D_O%;G'../ MRJ]6I`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`% ..%%%`!1110`4444`?_]D_ ` end EX-10 7 raptorucsdagreement.htm 10.3 RAPTOR - UCSD LICENSE

Exhibit 10.3

LICENSE AGREEMENT

BETWEEN

Encode Pharmaceuticals, Inc.

AND

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

FOR

CASE NO. SD2006-092

TABLE OF CONTENTS

Recitals

Article 1:

Definitions

Article 2:

Grant

Article 3:

Consideration

Article 4:

Reports, Records and Payments

Article 5:

Patent Matters

Article 6:

Governmental Matters

Article 7:

Termination of Agreement

Article 8:

Limited Warranty and Indemnification

Article 9:

Use of Names and Trademarks

Article 10:

Miscellaneous Provisions

UCSDTechTIPS4/15/08GLA

LICENSE AGREEMENT

This agreement (“Agreement”) is made by and between Encode Pharmaceuticals, Inc. (EPI), a Delaware corporation having an address at 801 Brickell Avenue, 9^th Floor, Miami, FL 33131 (“LICENSEE”) and The Regents of the University of California, a California corporation having its statewide administrative offices at 1111 Franklin Street, Oakland, California 94607-5200 (“UNIVERSITY”), represented by its San Diego campus having an address at University of California, San Diego, Technology Transfer & Intellectual Property Services, Mail Code 0910, 9500 Gilman Drive, La Jolla, California 92093-0910 (“UCSD”).

This Agreement is effective on the date of the last signature (“Effective Date”).

RECITALS

WHEREAS, the inventions disclosed in UCSD Disclosure Docket No. SD SD2006-092 and titled “Enterically Coated Cysteamine” (“Invention”), were made in the course of research at UCSD by Drs. Ranjan Dohil and Jerry Schneider (hereinafter and collectively, the “Inventors”) and are covered by Patent Rights as defined below;

WHEREAS, the Inventors are employees of UCSD, and they are obligated to assign all of their right, title and interest in the Invention to UNIVERSITY;

WHEREAS, LICENSEE entered into a secrecy agreement (UC Control No. 2007-20-0348) with UNIVERSITY, effective January 31, 2007, for the purpose of evaluating the Invention;

WHEREAS, UNIVERSITY is desirous that the Invention be developed and utilized to the fullest possible extent so that its benefits can be enjoyed by the general public;

WHEREAS, LICENSEE is desirous of obtaining certain rights from UNIVERSITY for commercial development, use, and sale of the Invention, and the UNIVERSITY is willing to grant such rights; and

WHEREAS, LICENSEE understands that UNIVERSITY may publish or otherwise disseminate information concerning the Invention and Technology (as defined below) at any time and that LICENSEE is paying consideration thereunder for its early access to the Invention and Technology, not continued secrecy therein.

NOW, THEREFORE, the parties agree:

UCSDTechTIPS4/15/08GLA

ARTICLE 1. DEFINITIONS

The terms, as defined herein, shall have the same meanings in both their singular and plural forms.

1.1 “Affiliate” means any corporation or other business entity which is bound in writing by LICENSEE to the terms set forth in this Agreement and in which LICENSEE owns or controls, directly or indirectly, at least fifty percent (50%) of the outstanding stock or other voting rights entitled to elect directors, or in which LICENSEE is owned or controlled directly or indirectly by at least fifty percent (50%) of the outstanding stock or other voting rights entitled to elect directors; but in any country where the local law does not permit foreign equity participation of at least fifty percent (50%), then an “Affiliate” includes any company in which LICENSEE owns or controls or is owned or controlled by, directly or indirectly, the maximum percentage of outstanding stock or voting rights permitted by local law.

1.2 “Sublicense” means an agreement into which LICENSEE enters with a third party that is not an Affiliate for the purpose of (i) granting certain rights under the Patent Rights; (ii) granting an option to certain Patent Rights; or (iii) forbearing the exercise of any rights, granted to LICENSEE under this Agreement. “Sublicensee” means a third party with whom LICENSEE enters into a Sublicense.

1.3 “Field” means human therapeutics for metabolic and neurologic disorders, subject to diligence specified in Section 3.3.

1.4 “Territory” means world-wide.

1.5 “Term” means the later of (i) the expiration date of the longest-lived Patent Rights on a country-by-country basis or (ii) ten (10) years after market introduction.

1.6 “Patent Rights” means [*****]

1.7 “Technology” means the written technical information relating to the Invention which the Inventors provide to LICENSEE prior to and during the Term of this Agreement.

1.8 “Licensed Method” means any method that uses Technology, or is covered by Patent Rights, the use of which would constitute, but for the license granted to LICENSEE under this Agreement, an infringement, an inducement to infringe or contributory infringement, of any pending or issued claim within Patent Rights.

1.9 “Licensed Product” (“LP”) means any service, composition or product that uses Technology, or is covered by the claims of Patent Rights, or that is produced by the Licensed Method, or the manufacture, use, sale, offer for sale, or importation

UCSDTechTIPS4/15/08GLA

of which would constitute, but for the license granted to LICENSEE under this Agreement, an infringement, an inducement to infringe or contributory infringement, of any pending or issued claim within the Patent Rights.

1.10 “Net Sales” means [*****]

1.11	“Patent Costs” [*****]

ARTICLE 2. GRANTS

2.1 License. Subject to the limitations set forth in this Agreement and Sponsor’s Rights, UNIVERSITY hereby grants to LICENSEE, and LICENSEE hereby accepts, a license under Patent Rights to make and have made, to use and have used, to sell and have sold, to offer for sale, and to import and have imported Licensed Products and to practice Licensed Methods and to use Technology, in the Field within the Territory and during the Term.

The license granted herein is exclusive for Patent Rights and non-exclusive for Technology.

2.2 Sublicense.

(a) The license granted in Paragraph 2.1 includes the right of LICENSEE to grant Sublicense to third parties during the Term but only for as long the license is exclusive.

(b) With respect to Sublicense granted pursuant to Paragraph 2.2(a), LICENSEE shall:

(i) not receive, or agree to receive, anything of value in lieu of cash as consideration from a third party under a Sublicense granted pursuant to Paragraph 2.2(a) without the express written consent of UNIVERSITY;

(ii) to the extent applicable, include all of the rights of and obligations due to UNIVERSITY (and, if applicable, the Sponsor’s Rights) and contained in this Agreement;

(iii) within thirty days of the execution of the Sublicense agreement, Licensee shall provide UNIVERSITY with a copy of each Sublicense issued; and

(iv) collect and guarantee payment of all payments due, directly or indirectly, to UNIVERSITY from Sublicensees and summarize and deliver all reports due, directly or indirectly, to UNIVERSITY from Sublicensees.

UCSDTechTIPS4/15/08GLA

(c) Upon termination of this Agreement for any reason, UNIVERSITY, at its sole discretion, shall determine whether LICENSEE shall cancel or assign to UNIVERSITY any and all Sublicenses.

2.3 Reservation of Rights. UNIVERSITY reserves the right to:

(a) use the Invention, Technology and Patent Rights for educational and research purposes;

(b) publish or otherwise disseminate any information about the Invention and Technology at any time; and

(c) allow other nonprofit institutions to use Invention, Technology and Patent Rights for educational and research purposes in their facilities.

ARTICLE 3. CONSIDERATION

3.1 Fees and Royalties. The parties hereto understand that the fees and royalties payable by LICENSEE to UNIVERSITY under this Agreement are partial consideration for the license granted herein to LICENSEE under Technology, and Patent Rights. LICENSEE shall pay UNIVERSITY:

(a) a license issue fee of fifty thousand dollars (US$50,000), within thirty (30) days after the Effective Date;

(b) license maintenance fees of fifteen thousand dollars (US$15,000) per year and payable on the first anniversary of the Effective Date and annually thereafter on each anniversary; provided however, that LICENSEE’s obligation to pay this fee shall end on the date when LICENSEE is commercially selling a Licensed Product;

Amount

Date or Event

(i)

For each orphan indication, the following amounts will be paid:

[*****]

(ii)

For each non-orphan indication, the following amounts will be paid:

[*****]

(d) an earned royalty of [*****]

UCSDTechTIPS4/15/08GLA

(i)

(e) a percentage of all Sublicense Fees received by LICENSEE from its Sublicensees [*****]

(f) on each and every Sublicense royalty payment received by LICENSEE from its Sublicensees on Net Sales of Licensed Product by Sublicensee, the higher of (i) the percentage of royalties received by LICENSEE according to the schedule in 3.1(e); or (ii) royalties based on the royalty rate in Paragraph 3.1(d) as applied to Net Sales of Sublicensee;

(g) beginning the calendar year of commercial sales of the first Licensed Product by LICENSEE, its Sublicensee, or an Affiliate and if the total earned royalties paid by LICENSEE under Paragraphs 3.1(d) and (f) to UNIVERSITY in any such year cumulatively amounts to less than:

[*****]

(“minimum annual royalty”), LICENSEE shall pay to UNIVERSITY a minimum annual royalty on or before February 28 following the last quarter of such year the difference between amount noted above and the total earned royalty paid by LICENSEE for such year under Paragraphs 3.1(d) and (f); provided, however, that for the year of commercial sales of the first Licensed Product, the amount of minimum annual royalty payable shall be pro-rated for the number of months remaining in that calendar year.

All fees and royalty payments specified in Paragraphs 3.1(a) through 3.1(g) above shall be paid by LICENSEE pursuant to Paragraph 4.3 and shall be delivered by LICENSEE to UNIVERSITY as noted in Paragraph 10.1.

3.2 Patent Costs. LICENSEE shall reimburse UNIVERSITY all past (prior to the Effective Date) and future (on or after the Effective Date) Patent Costs incurred in the Territory within thirty (30) days following the date an itemized invoice is sent from UNIVERSITY to LICENSEE.

3.3 Due Diligence.

(a) LICENSEE shall, either directly or through its Affiliate(s) or Sublicensee(s):

(i) secure one million dollars of funding (US$1,000,000) on or before December 15 2008 (“First Financing Milestone”);

(ii)

[*****]

(iii) [*****] spend not less than [*****] for the development of Licensed Products during [*****] of this Agreement. LICENSEE may, at its sole option, fund the research of any one of the Inventors and credit the amount of such funding actually paid to UCSD against its obligation under this paragraph;

(iv) For the indications of Cystinosis, Huntington’s Disease, Batten’s Disease and Schizophrenia, perform the following activities [*****]:

UCSDTechTIPS4/15/08GLA

Years from Effective Date:
Cystinosis

[*****]

Cystinosis

[*****]

Huntington’s Disease

[*****]

Batten’s Disease

[*****]

Schizophrenia

[*****]

Activity

[*****]

(v) market Licensed Products in the United States within six (6) months of receiving regulatory approval to market such Licensed Products;

(vi) reasonably fill the market demand for Licensed Products following commencement of marketing at any time during the term of this Agreement; and

(vii) obtain all necessary governmental approvals for the manufacture, use and sale of Licensed Products.

(b) If LICENSEE fails to perform any of its obligations specified in Paragraphs 3.3(a)(i)-(vii), then UNIVERSITY shall have the right and option to either terminate this Agreement or change LICENSEE’s exclusive license to a nonexclusive license. This right, if exercised by UNIVERSITY, supersedes the rights granted in Article 2.

(c) If, [*****] the Effective Date, LICENSEE fails to show it has initiated and is maintaining an active development program for a clinical indication in the Field, and UNIVERSITY receives a bona fide inquiry from a third party with a bona fide financial plan that would enable the licensure and development of a therapy for such clinical indication, UNIVERSITY shall give notice to LICENSEE. LICENSEE shall, [*****], either (i) complete a Sublicense grant to the third party, or (ii) shall provide UNIVERSITY a detailed plan for the development of a product to treat said clinical indication and shall begin actual implementation of, and maintain, such plan immediately. If LICENSEE does not either (i) complete a Sublicense grant or (ii) demonstrate implementation of said development plan within [*****] days of receipt of such notice from UNIVERSITY, then UNIVERSITY shall have the right to exclude such clinical indication from the Field.

ARTICLE 4. REPORTS, RECORDS AND PAYMENTS

4.1 Reports.

(a) Progress Reports.

UCSDTechTIPS4/15/08GLA

Beginning six months after Effective Date and ending after first commercial sale of the last Licensed Product to be introduced, LICENSEE shall report to UNIVERSITY progress covering LICENSEE’s (and Affiliate’s and Sublicensee’s) activities for the preceding six months to develop and test all Licensed Products and obtain governmental approvals necessary for marketing the same. Such semi-annual reports shall be due within sixty days of the reporting period and include a summary of work completed, summary of work in progress, current schedule of anticipated events or milestones, market plans for introduction of Licensed Products, and summary of resources (dollar value) spent in the reporting period.

(b) Royalty Reports. After the first commercial sale of a Licensed Product anywhere in the world, LICENSEE shall submit to UNIVERSITY quarterly royalty reports on or before each February 28, May 31, August 31 and November 30 of each year. Each royalty report shall cover LICENSEE’s (and each Affiliate’s and Sublicensee’s) most recently completed calendar quarter and shall show:

(i) the date of first commercial sale of a Licensed Product in each country;

(ii) the gross sales, deductions as provided in Paragraph 1.11, and Net Sales during the most recently completed calendar quarter and the royalties, in US dollars, payable with respect thereto;

(iii) the number of each type of Licensed Product sold;

(iv) Sublicense fees and royalties received during the most recently completed calendar quarter in US dollars, payable with respect thereto;

(v) the method used to calculate the royalties; and

(vi) the exchange rates used.

If no sales of Licensed Products have been made and no Sublicense revenue has been received by LICENSEE during any reporting period, LICENSEE shall so report.

4.2 Records & Audits.

(a) LICENSEE shall keep, and shall require its Affiliates and Sublicensees to keep, accurate and correct records of all Licensed Products manufactured, used, and sold, and Sublicense fees received under this Agreement. Such records shall be retained by LICENSEE for at least five (5) years following a given reporting period.

(b) All records shall be available during normal business hours for inspection at the expense of UNIVERSITY by UNIVERSITY’s Internal Audit Department or by a Certified Public Accountant selected by UNIVERSITY and in compliance with the other terms of this Agreement for the sole purpose of verifying reports and payments or other

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compliance issues. Such inspector shall not disclose to UNIVERSITY any information other than information relating to the accuracy of reports and payments made under this Agreement or other compliance issues. In the event that any such inspection shows an under reporting and underpayment in excess of [*****] for any [*****] period, then LICENSEE shall pay the cost of the audit as well as any additional sum that would have been payable to UNIVERSITY had the LICENSEE reported correctly, plus an interest charge at a rate of [*****] per year. Such interest shall be calculated from the date the correct payment was due to UNIVERSITY up to the date when such payment is actually made by LICENSEE. For underpayment not in excess of [*****] for any [*****] period, LICENSEE shall pay the difference within [*****] without interest charge or inspection cost.

4.3 Payments.

(a) All fees reimbursements and royalties due UNIVERSITY shall be paid in United States dollars and all checks shall be made payable to “The Regents of the University of California”, referencing UNIVERSITY’s taxpayer identification number, 95-6006144, and sent to UNIVERSITY according to Paragraph 10.1 (Correspondence). When Licensed Products are sold in currencies other than United States dollars, LICENSEE shall first determine the earned royalty in the currency of the country in which Licensed Products were sold and then convert the amount into equivalent United States funds, using the exchange rate quoted in the Wall Street Journal on the last business day of the applicable reporting period.

(b)

Royalty Payments.

(i) Royalties shall accrue when Licensed Products are invoiced, or if not invoiced, when delivered to a third party or Affiliate.

(ii) LICENSEE shall pay earned royalties [*****] on or before [*****] of each calendar year. Each such payment shall be for earned royalties accrued within LICENSEE’s most recently completed calendar quarter.

(iii) Royalties earned on sales occurring or under Sublicense granted pursuant to this Agreement in any country outside the United States shall not be reduced by LICENSEE for any taxes, fees, or other charges imposed by the government of such country on the payment of royalty income, except that all payments made by LICENSEE in fulfillment of UNIVERSITY’s tax liability in any particular country may be credited against earned royalties or fees due UNIVERSITY for that country. LICENSEE shall pay all bank charges resulting from the transfer of such royalty payments.

(iv) If at any time legal restrictions prevent the prompt remittance of part or all royalties by LICENSEE with respect to any country where a Licensed Product is sold or a Sublicense is granted pursuant to this Agreement, LICENSEE shall convert the amount owed to UNIVERSITY into US currency and shall pay UNIVERSITY directly from its US sources of fund for as long as the legal restrictions apply.

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(v) In the event that any patent or patent claim within Patent Rights is held invalid in a final decision by a patent office from which no appeal or additional patent prosecution has been or can be taken, or by a court of competent jurisdiction and last resort and from which no appeal has or can be taken, all obligation to pay royalties based solely on that patent or claim or any claim patentably indistinct therefrom shall cease as of the date of such final decision. LICENSEE shall not, however, be relieved from paying any royalties that accrued before the date of such final decision, that are based on another patent or claim not involved in such final decision, or that are based on the use of Technology.

(c) Late Payments. In the event royalty, reimbursement and/or fee payments are not received by UNIVERSITY when due, LICENSEE shall pay to UNIVERSITY interest charges at a rate of [*****] per year. Such interest shall be calculated from the date payment was due until actually received by UNIVERSITY.

ARTICLE 5. PATENT MATTERS

5.1 Patent Prosecution and Maintenance.

(a) Provided that LICENSEE has reimbursed UNIVERSITY for Patent Costs pursuant to Paragraph 3.2, UNIVERSITY shall diligently prosecute and maintain the United States and, if available, foreign patents, and applications in Patent Rights using counsel of its choice. UNIVERSITY shall provide LICENSEE with copies of all relevant documentation relating to such prosecution and LICENSEE shall keep this documentation confidential. The counsel shall take instructions only from UNIVERSITY, and all patents and patent applications in Patent Rights shall be assigned solely to UNIVERSITY.

(b) UNIVERSITY shall consider amending any patent application in Patent Rights to include claims reasonably requested by LICENSEE to protect the products contemplated to be sold by LICENSEE under this Agreement.

(c) LICENSEE may elect to terminate its reimbursement obligations with respect to any patent application or patent in Patent Rights upon three (3) months’ written notice to UNIVERSITY. UNIVERSITY shall use reasonable efforts to curtail further Patent Costs for such application or patent when such notice of termination is received from LICENSEE. UNIVERSITY, in its sole discretion and at its sole expense, may continue prosecution and maintenance of said application or patent, and LICENSEE shall have no further license with respect thereto. Non-payment of any portion of Patent Costs with respect to any application or patent may be deemed by UNIVERSITY as an election by LICENSEE to terminate its reimbursement obligations with respect to such application or patent. The University is not obligated to file, prosecute, or maintain Patent Rights outside of the territory at any time or to file, prosecute, or maintain Patent Rights to which Licensee has terminated its License hereunder.

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(d) LICENSEE shall apply for an extension of the term of any patent in Patent Rights if appropriate under the Drug Price Competition and Patent Term Restoration Act of 1984 and/or European, Japanese and other foreign counterparts of this law. LICENSEE shall prepare all documents for such application, and UNIVERSITY shall execute such documents and to take any other additional action as LICENSEE reasonably requests in connection therewith.

5.2	Patent Infringement.

(a) In the event that UNIVERSITY (to the extent of the actual knowledge of the licensing professional responsible for the administration of this Agreement) or LICENSEE learns of infringement of potential commercial significance of any patent licensed under this Agreement, the knowledgeable party will provide the other (i) with written notice of such infringement and (ii) with any evidence of such infringement available to it (the “Infringement Notice”). During the period in which, and in the jurisdiction where, LICENSEE has exclusive rights under this Agreement, neither UNIVERSITY nor LICENSEE will notify a third party (including the infringer) of infringement or put such third party on notice of the existence of any Patent Rights without first obtaining consent of the other. UNIVERSITY shall have the right to terminate this Agreement immediately without the obligation to provide 60 days’ notice as set forth in Paragraph 7.1 if LICENSEE notifies a third party of infringement or puts such third party on notice of the existence of any Patent Rights with respect to such infringement without first obtaining the written consent of UNIVERSITY. Both UNIVERSITY and LICENSEE will use their diligent efforts to cooperate with each other to terminate such infringement without litigation.

(b) If infringing activity of potential commercial significance by the infringer has not abated within ninety (90) days following the date the Infringement Notice takes effect, LICENSEE may institute suit for patent infringement against the infringer. UNIVERSITY may voluntarily join such suit at its own expense, but may not thereafter commence suit against the infringer for the acts of infringement that are the subject of LICENSEE’s suit or any judgment rendered in that suit. LICENSEE may not join UNIVERSITY in a suit initiated by LICENSEE without UNIVERSITY’S prior written consent. If, in a suit initiated by LICENSEE, UNIVERSITY is involuntarily joined other than by LICENSEE, LICENSEE will pay any costs incurred by UNIVERSITY arising out of such suit, including but not limited to, any legal fees of counsel that UNIVERSITY selects and retains to represent it in the suit.

(c) If, within a hundred and twenty (120) days following the date the Infringement Notice takes effect, infringing activity of potential commercial significance by the infringer has not been abated and if LICENSEE has not brought suit against the infringer, UNIVERSITY may institute suit for patent infringement against the infringer. If UNIVERSITY institutes such suit, LICENSEE may not join such suit without UNIVERSITY’S consent and may not thereafter commence suit against the infringer for the acts of infringement that are the subject of UNIVERSITY’S suit or any judgment rendered in that suit.

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(d) Any recovery or settlement received in connection with any suit will first be shared by UNIVERSITY and LICENSEE equally to cover the litigation costs each incurred, and next shall be paid to UNIVERSITY or LICENSEE to cover any litigation costs it incurred in excess of the litigation costs of the other. In any suit initiated by LICENSEE, any recovery in excess of litigation costs will be shared between LICENSEE and UNIVERSITY as follows: (i) for any recovery other than amounts paid for willful infringement: (A) UNIVERSITY will receive [*****] of the recovery if UNIVERSITY was not a party in the litigation and did not incur any litigation costs; (B) UNIVERSITY will receive [*****] of the recovery if UNIVERSITY was a party in the litigation, but did not incur any litigation costs, including the provisions of Paragraph 5.2(b) above, or (C) UNIVERSITY will receive [*****] of the recovery if UNIVERSITY incurred any litigation costs in connection with the litigation; and (ii) for any recovery for willful infringement, UNIVERSITY will receive [*****] of the recovery. In any suit initiated by UNIVERSITY, [*****]. UNIVERSITY and LICENSEE agree to be bound by all determinations of patent infringement, validity, and enforceability (but no other issue) resolved by any adjudicated judgment in a suit brought in compliance with this Section 5.2.

(e) Any agreement made by LICENSEE for purposes of settling litigation or other dispute shall comply with the requirements of Section 2.2 (Sublicenses) of this Agreement.

(f) Each party will cooperate with the other in litigation proceedings instituted hereunder but at the expense of the party who initiated the suit (unless such suit is being jointly prosecuted by the parties).

(g) Any litigation proceedings will be controlled by the party bringing the suit, except that UNIVERSITY may be represented by counsel of its choice in any suit brought.

5.3 Patent Marking. LICENSEE shall mark all Licensed Products made, used or sold under the terms of this Agreement, or their containers, in accordance with the applicable patent marking laws.

ARTICLE 6. GOVERNMENTAL MATTERS

6.1 Governmental Approval or Registration. If this Agreement or any associated transaction is required by the law of any nation to be either approved or registered with any governmental agency, LICENSEE shall assume all legal obligations to do so. LICENSEE shall notify UNIVERSITY if it becomes aware that this Agreement is subject to a United States or foreign government reporting or approval requirement. LICENSEE shall make all necessary filings and pay all costs including fees, penalties, and all other out-of-pocket costs associated with such reporting or approval process.

6.2 Export Control Laws. LICENSEE shall observe all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data

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to foreign countries, including, without limitation, the International Traffic in Arms Regulations and the Export Administration Regulations.

ARTICLE 7. TERMINATION OF THE AGREEMENT

7.1 Termination by UNIVERSITY.

(a) If LICENSEE fails to perform or violates any term of this Agreement, then UNIVERSITY may give written notice of default (“Notice of Default”) to LICENSEE. If LICENSEE fails to cure the default within ninety (90) days of the Notice of Default, UNIVERSITY may terminate this Agreement and the license granted herein by a second written notice (“Notice of Termination”) to LICENSEE. If a Notice of Termination is sent to LICENSEE, this Agreement shall automatically terminate on the effective date of that notice. Termination shall not relieve LICENSEE of its obligation to pay any fees owed at the time of termination and shall not impair any accrued right of UNIVERSITY.

(b) This Agreement will terminate immediately, without the obligation to provide ninety (90) days notice as set forth in Paragraph 7.1(a), if LICENSEE files a claim including in any way the assertion that any portion of UNIVERSITY’s Patent Rights is invalid or unenforceable where the filing is by the LICENSEE, a third party on behalf of the LICENSEE, or a third party at the written urging of the LICENSEE.

7.2 Termination by LICENSEE.

(a) LICENSEE shall have the right at any time and for any reason to terminate this Agreement upon a ninety (90)-day written notice to UNIVERSITY. Said notice shall state LICENSEE’s reason for terminating this Agreement.

(b) Any termination under Paragraph 7.2(a) shall not relieve LICENSEE of any obligation or liability accrued under this Agreement prior to termination or rescind any payment made to UNIVERSITY or action by LICENSEE prior to the time termination becomes effective. Termination shall not affect in any manner any rights of UNIVERSITY arising under this Agreement prior to termination.

7.3 Survival on Termination. The following Paragraphs and Articles shall survive the termination of this Agreement:

(a)

Article 4 (REPORTS, RECORDS AND PAYMENTS);

(b)

Paragraph 7.4 (Disposition of Licensed Products on Hand);

(c)

Paragraph 8.2 (Indemnification);

(d)

Article 9 (USE OF NAMES AND TRADEMARKS);

(e)

Paragraph 10.2 hereof (Secrecy); and

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(f)

Paragraph 10.5 (Failure to Perform).

7.4 Disposition of Licensed Products on Hand. Upon termination of this Agreement, LICENSEE may dispose of all previously made or partially made Licensed Product within a period of one hundred and twenty (120) days of the effective date of such termination provided that the sale of such Licensed Product by LICENSEE, its Sublicensees, or Affiliates shall be subject to the terms of this Agreement, including but not limited to the rendering of reports and payment of royalties required under this Agreement.

ARTICLE 8. LIMITED WARRANTY AND INDEMNIFICATION

8.1 Limited Warranty.

(a)

UNIVERSITY warrants that it has the lawful right to grant this license.

(b) The license granted herein and the associated Technology are is provided “AS IS” and without WARRANTY OF MERCHANTABILITY or WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE or any other warranty, express or implied. UNIVERSITY makes no representation or warranty that the Licensed Product, Licensed Method or the use of Patent Rights or Technology will not infringe any other patent or other proprietary rights.

(c) In no event shall UNIVERSITY be liable for any incidental, special or consequential damages resulting from exercise of the license granted herein or the use of the Invention, Licensed Product, Licensed Method or Technology.

(d)

Nothing in this Agreement shall be construed as:

(i) a warranty or representation by UNIVERSITY as to the validity or scope of any Patent Rights;

(ii) a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or shall be free from infringement of patents of third parties;

(iii) an obligation to bring or prosecute actions or suits against third parties for patent infringement except as provided in Paragraph 5.2 hereof;

(iv) conferring by implication, estoppel or otherwise any license or rights under any patents of UNIVERSITY other than Patent Rights as defined in this Agreement, regardless of whether those patents are dominant or subordinate to Patent Rights; or

(v) an obligation to furnish any know-how not provided in Patent Rights and Technology; or

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(vi)

an obligation to update Technology.

8.2 Indemnification.

(a) LICENSEE shall indemnify, hold harmless and defend UNIVERSITY, its officers, employees, and agents; the sponsors of the research that led to the Invention; and the Inventors of the patents and patent applications in Patent Rights and their employers against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license or any Sublicense. This indemnification shall include, but not be limited to, any product liability.

(b) LICENSEE, at its sole cost and expense, shall insure its activities in connection with the work under this Agreement and obtain, keep in force and maintain insurance or an equivalent program of self insurance as follows:

(i) Prior to initiation of human clinical trials, comprehensive or commercial general liability insurance (contractual liability included) with limits of at least: (A) each occurrence, one million dollars (US$1,000,000); (B) products/completed operations aggregate, one million dollars (US$1,000,000); (C) personal and advertising injury, one million dollars (US$1,000,000); and (D) general aggregate (commercial form only), one million dollars (US$1,000,000); and

(ii) Upon initiation of human clinical trials, comprehensive or commercial general liability insurance (contractual liability included) with limits of at least: (A) each occurrence, one million dollars (US$1,000,000); (B) products/completed operations aggregate, five million dollars (US$5,000,000); (C) personal and advertising injury, one million dollars (US$1,000,000); and (D) general aggregate (commercial form only), five million dollars (US$5,000,000); and

(iii) the coverage and limits referred to above shall not in any way limit the liability of LICENSEE.

(c) Upon request, LICENSEE shall furnish UNIVERSITY with certificates of insurance showing compliance with all requirements. Such certificates shall: (i) provide for thirty (30) day advance written notice to UNIVERSITY of any modification; (ii) indicate that UNIVERSITY has been endorsed as an additional insured under the coverage referred to above; and (iii) include a provision that the coverage shall be primary and shall not participate with nor shall be excess over any valid and collectable insurance or program of self-insurance carried or maintained by UNIVERSITY.

(d) UNIVERSITY shall notify LICENSEE in writing of any claim or suit brought against UNIVERSITY in respect of which UNIVERSITY intends to invoke the provisions of this Article. LICENSEE shall keep UNIVERSITY informed on a current basis of its defense of any claims under this Article.

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ARTICLE 9. USE OF NAMES AND TRADEMARKS

9.1 Nothing contained in this Agreement confers any right to use in advertising, publicity, or other promotional activities any name, trade name, trademark, or other designation of either party hereto (including contraction, abbreviation or simulation of any of the foregoing). Unless required by law, the use by LICENSEE of the name, “The Regents of the University of California” or the name of any campus of the University Of California is prohibited, without the express written consent of UNIVERSITY.

9.2 UNIVERSITY may disclose to the Inventors the terms and conditions of this Agreement upon their request. If such disclosure is made, UNIVERSITY shall request the Inventors not disclose such terms and conditions to others.

9.3 UNIVERSITY may acknowledge the existence of this Agreement and the extent of the grant in Article 2 to third parties, but UNIVERSITY shall not disclose the financial terms of this Agreement to third parties, except where UNIVERSITY is required by law to do so, such as under the California Public Records Act.

ARTICLE 10. MISCELLANEOUS PROVISIONS

10.1 Correspondence. Any notice or payment required to be given to either party under this Agreement shall be deemed to have been properly given and effective:

(a) on the date of delivery if delivered in person, or

(b) five (5) days after mailing if mailed by first-class or certified mail, postage paid, to the respective addresses given below, or to such other address as is designated by written notice given to the other party.

If sent to LICENSEE:

Encode Pharmaceuticals, Inc.

801 Brickell Avenue, 9^th Floor

Miami, FL

33131

Attention: Nicholas Sturgis, M.S.

Vice Chairman

Phone:

305-789-6691

Fax:

305-789-6664

If sent to UNIVERSITY by mail:

University of California, San Diego

Technology Transfer & Intellectual Property Services

9500 Gilman Drive

Mail Code 0910

La Jolla, CA 92093-0910

Attention: Assistant Vice Chancellor

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If sent to UNIVERSITY by courier:

University of California, San Diego

Technology Transfer & Intellectual Property Services

10300 North Torrey Pines Road

Torrey Pines Center North, First Floor

La Jolla, CA 92037

Attention: Assistant Vice Chancellor

For wire payments to UNIVERSITY:

All payments due UNIVERSITY and made by wire transfers shall include an additional wire transfer fee of twenty-five dollar (US$25) to the amount due. Wire transfers shall be made using the following information:

UCSD receiving bank name:	Bank of America
UCSD bank account no.:	1233018188
UCSD bank routing (ABA) no.:	0260-0959-3
UCSD bank account name:	Regents of the University of California, UCSD Depository
UCSD bank ACH format code:	CTX
CHIPS Address:	0959
UCSD bank address:	Bank of America PO Box 37025 San Francisco, CA 94137 U.S.A.
UCSD addendum information:	Reference UCSD-TechTIPS Case No.: 2006-092 Department contact: Financial Manager
SWIFT Address:	BOFAUS3N

A fax copy of the transaction receipt should be sent to Financial Manager at: (858) 534-7345. LICENSEE is responsible for all bank charges of wire transfer funds. The bank charges should not be deducted from total amount due to the Regents of the University of California

10.2	Secrecy.

(a) “Confidential Information” shall mean information, including Technology, relating to the Invention and disclosed by UNIVERSITY to LICENSEE during the term of this Agreement, which if disclosed in writing shall be marked “Confidential”, or if first disclosed otherwise, shall within thirty (30) days of such disclosure be reduced to writing by UNIVERSITY and sent to LICENSEE:

(b) Licensee shall:

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(i) use the Confidential Information for the sole purpose of performing under the terms of this Agreement;

(ii) safeguard Confidential Information against disclosure to others with the same degree of care as it exercises with its own data of a similar nature;

(iii) not disclose Confidential Information to others (except to its employees, agents or consultants who are bound to LICENSEE by a like obligation of confidentiality) without the express written permission of UNIVERSITY, except that LICENSEE shall not be prevented from using or disclosing any of the Confidential Information that:

(A) LICENSEE can demonstrate by written records was previously known to it;

(B) is now, or becomes in the future, public knowledge other than through acts or omissions of LICENSEE;

(D) is required to be disclosed by law or a court of competent jurisdiction; and

(c) The secrecy obligations of LICENSEE with respect to Confidential Information shall continue for a period ending five (5) years from the termination date of this Agreement.

10.3 Assignability. This Agreement is binding upon and inures to the benefit of UNIVERSITY, its successors and assigns. But it is personal to Licensee and assignable by Licensee only with the written consent of UNIVERSITY. The consent of UNIVERSITY will not be required if the assignment is in conjunction with the transfer of all or substantially all of the business of Licensee to which this license relates.

10.4 No Waiver. No waiver by either party of any breach or default of any covenant or agreement set forth in this Agreement shall be deemed a waiver as to any subsequent and/or similar breach or default.

10.5 Failure to Perform. In the event of a failure of performance due under this Agreement and if it becomes necessary for either party to undertake legal action against the other on account thereof, then the prevailing party shall be entitled to reasonable attorney’s fees in addition to costs and necessary disbursements.

10.6 Governing Laws. THIS AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF

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CALIFORNIA, but the scope and validity of any patent or patent application shall be governed by the applicable laws of the country of the patent or patent application.

10.7 Force Majeure. A party to this Agreement may be excused from any performance required herein if such performance is rendered impossible or unfeasible due to any catastrophe or other major event beyond its reasonable control, including, without limitation, war, riot, and insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes, lockouts, or other serious labor disputes; and floods, fires, explosions, or other natural disasters. When such events have abated, the non-performing party’s obligations herein shall resume.

10.8 Headings. The headings of the several sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

10.9 Entire Agreement. This Agreement embodies the entire understanding of the parties and supersedes all previous communications, representations or understandings, either oral or written, between the parties relating to the subject matter hereof.

10.10 Amendments. No amendment or modification of this Agreement shall be valid or binding on the parties unless made in writing and signed on behalf of each party.

10.11 Severability. In the event that any of the provisions contained in this Agreement is held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provisions had never been contained in it.

[Signatures on Following Page]

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IN WITNESS WHEREOF, both UNIVERSITY and LICENSEE have executed this Agreement, in duplicate originals, by their respective and duly authorized officers on the day and year written.

ENCODE PHARMACEUTICALS, INC.:

THE REGENTS OF THE

UNIVERSITY OF CALIFORNIA:

By: /s/ Nicholas Stergis

By: /s/ Jane Moores, Ph.D.

(Signature)

Name: Nicholas Stergis

Jane Moores, Ph.D.

Title: Vice Chairman

Assistant Vice Chancellor,

Intellectual Property

Date: 10/31/07

Date: 10/29/07

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EX-10 8 raptorucsdlicense.htm 10.4 RAPTOR - UCSD LICENSE AMENDMENT 1

Exhibit 10.4

AMENDMENT NO. 1 to LICENSE AGREEMENT,

UC CONTROL NUMBER 2008-03-0236, EFFECTIVE DECEMBER 29, 2006

between

ENCODE PHARMACEUTICALS, INC.

(ACQUIRED BY BENNU PHARMACEUTICALS, INC.)

and

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

for:

SD2006-092: “Enterically Coated Cysteamine”

This amendment (“Amendment”) to the license agreement UC Control No. 2008-03-0236, effective October 31, 2007 (“Agreement”) is made by and between Bennu Pharmaceutical, Inc. (“RECIPIENT”), having an address at 9 Commercial Blvd., Suite 200, Novato, CA 94949 (“Licensee” as of December 14, 2007) and The Regents of the University of California, a California corporation having its statewide administrative offices at 1111 Franklin Street, Oakland, California 94607-5200 (“University”), represented by its San Diego campus having an address at University of California, San Diego, Technology Transfer Office, Mail-code 0910, 9500 Gilman Drive, La Jolla, California 92093-0910 (“UCSD”).

When signed by both parties, this Amendment is effective as of the date of the last signature below (“Amendment Date”).

Whereas, Licensee has entered into a secrecy agreement UC Control No. 2008-20-0288, with the effective date of December 10, 2007;

Whereas, as per Section 10.3 of Agreement, Encode Pharmaceuticals has transferred all or substantially all of its business to Bennu Pharmaceuticals (See Exhibit A);

Whereas, Licensee wishes to specifically include the human disease non-alcoholic steatohepatitis (NASH) in the Field of the Agreement;

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, the parties amend the Agreement and otherwise agree as follows:

1.	Section 1.3 is deleted and restated in its entirety as follows:

“Field” means human therapeutics for metabolic and neurologic disorders, subject to diligence specified in Section 3.3. For the sake of clarity, the human disease of non-alcoholic steatohepatitis (NASH) is included in the Field.

2.	Section 1.6 is deleted and restated in its entirety as follows:

“Patent Rights” means [*****]

4.	Section 1.7 is deleted and restated in its entirety as follows:

“Technology” means the written technical information and know-how relating to the Invention, which the UNIVERSITY provides to LICENSEE prior to and during the Term of this Agreement.

5.	Paragraph 3.3 (a) (iv) is restated in its entirety as follows:

(iv) For the indications of Cystinosis, Huntington’s Disease, Batten’s Disease, Schizophrenia and Non-alcoholic Steatohepatitis (“NASH”) perform the following activities within the specified number of years from the Effective Date:

-2-

Years from Effective Date:

Cystinosis

[*****]

Cystinosis

[*****]

NASH

[*****]

Huntington’s Disease

[*****]

Batten’s Disease

[*****]

Schizophrenia

[*****]

Activity

[*****]

MISCELLANEOUS.

4.1 Defined Terms. All terms used, but not defined, herein shall have the respective meanings set forth in the Agreement.

4.2 Continuing Effect. This Amendment shall be effective for all purposes as of the Amendment Date. Except as otherwise expressly modified by this Amendment, the Agreement shall remain in full force and effect in accordance with its terms.

3.3 Governing Laws. This Amendment shall be governed by, interpreted and construed in accordance with the laws of the State of California, without regard to conflicts of law principles.

The parties agree that this Amendment may be executed by facsimile and in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, both UNIVERSITY and LICENSEE have executed this Amendment, in duplicate originals, by their respective and duly authorized officers on the day and year written.

[Signatures on Following Page]

-3-

BENNU PHARMACEUTICALS, INC.:

THE REGENTS OF THE

UNIVERSITY OF CALIFORNIA:

By: /s/ Kim R. Tsuchimoto

By:

/s/ Jane Moores, Ph.D.

Name: Kim R. Tsuchimoto

Jane Moores, Ph.D.

Title: Chief Financial Officer

Assistant Vice-Chancellor, Intellectual Property

Date: 2/29/08

Date:

2/27/08

[REST OF PAGE INTENTIONALLY LEFT BLANK]

-4-

Exhibit A: Copy of Certificate of Merger

CERTIFICATE OF MERGER

OF ENCODE PHARMACEUTICALS, INC.

WITH AND INTO BENNU PHARMACEUTICALS INC.

FIRST: That the name and state of incorporation of each of the constituent corporations to the merger (each a “Constituent Corporation”) is as follows:

Name	State of Incorporation
Bennu Pharmaceuticals Inc. (“Bennu”)	Delaware
Encode Pharmaceuticals, Inc.	Delaware

FOURTH: That executed copies of the Merger Agreement are on file at the principal place of business of the Surviving Corporation at 9 Commercial Boulevard, Suite 200, Novato, CA 94949.

FIFTH: That this Certificate of Merger shall be effective at 11:59 P.M., Delaware time, on December 14, 2007.

SIXTH: That a copy of the Merger Agreement will be furnished by the Surviving Corporation, upon request and without cost to any stockholder of either constituent corporation.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

-5-

IN WITNESS WHEREOF, Bennu Pharmaceuticals Inc. has caused this Certificate of Merger to be executed by its duly authorized officer this 14th day of December, 2007.

BENNU PHARMACEUTICALS INC.

By: /s/ Kim R. Tsuchimoto

Name: Kim R. Tsuchimoto

Title: Chief Financial Officer

UCSD Case No. SD2001-203: GLA

EX-31 9 exhibit31a.htm 31.1 CEO CERTIFICATION

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Christopher M. Starr, certify that:

1. I have reviewed this quarterly report on Form 10-QSB/A of Raptor Pharmaceuticals Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-(15e)) for the small business issuer and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its condensed consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared:

b. [paragraph intentionally omitted]

c. Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: April 15, 2008

By: /s/ Christopher M. Starr

Christopher M. Starr, Ph.D.

Chief Executive Officer and Director

(Principal Executive Officer)

EX-31 10 exhibit31b.htm 31.2 CFO CERTFICATION

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Kim R. Tsuchimoto, certify that:

1. I have reviewed this quarterly report on Form 10-QSB/A of Raptor Pharmaceuticals Corp.;

b. [paragraph intentionally omitted]

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: April 15, 2008

By: /s/ Kim R. Tsuchimoto

Kim R. Tsuchimoto

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

EX-32 11 exhibit32.htm 32.1 CEO AND CFO CERTFICATION

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Securities and Exchange Commission

450 Fifth Street, N.W

Washington, D.C. 20549

Ladies and Gentlemen:

The certification set forth below is being furnished to the Securities and Exchange Commission solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and with Section 1350 of Chapter 63 of Title 18 of the United States Code.

Christopher M. Starr, Ph.D., the Chief Executive Officer and Director of Raptor Pharmaceuticals Corp. and Kim R. Tsuchimoto, the Chief Financial Officer, Secretary and Treasurer of Raptor Pharmaceuticals Corp. each certifies that:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Raptor Pharmaceuticals Corp.

By: /s/ Christopher M. Starr

Christopher M. Starr, Ph.D.

Chief Executive Officer and Director

By: /s/ Kim R. Tsuchimoto

Kim R. Tsuchimoto

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer and Principal Accounting Officer)