Innoviva, Inc. - 10 Jan 2023 Form 4 Insider Report for Armata Pharmaceuticals, Inc. (ARMP)

Footnote F1

As previously disclosed on Amendment No. 8 to Statement of Beneficial Ownership on Schedule 13D, as filed by Innoviva Strategic Opportunities LLC ("Innoviva Sub"), a Delaware limited liability company and a wholly-owned subsidiary of Innoviva, Inc. ("Innoviva" and, together with Innoviva Sub, the "Reporting Persons") with the Securities and Exchange Commission ("Commission") on January 10, 2023, Armata Pharmaceuticals, Inc., a Washington corporation (the "Issuer") entered into, as borrower, a secured convertible credit and security agreement (the "Credit Agreement") with Innoviva Sub on January 10, 2023. The Credit Agreement provides for a secured term loan facility in an aggregate amount of $30,000,000 (the "Loan") at an interest rate of 8.0% per annum, and has a maturity date of January 10, 2024.

Footnote F2

The Credit Agreement provides that if a Qualified Financing (as defined in the Credit Agreement) occurs, the outstanding principal amount of, and all accrued and unpaid interest on, the Loan shall be converted (the "Mandatory Conversion") into shares of the Issuer's common stock, $0.01 par value per share ("Common Stock") at a price per share equal to a 15.0% discount to the lowest price per share for Common Stock paid by investors in a Qualified Financing (which price paid by investors in a Qualified Financing may not be less than a 15.0% discount to the closing price of Common Stock immediately prior to the consummation of a Qualified Financing event).

Footnote F3

The Credit Agreement also requires the Issuer to file a registration statement (the "Registration Statement") for the resale of all securities issued to Innoviva Sub in connection with any conversion under the Credit Agreement. After the Registration Statement has been declared effective by the Commission, any outstanding Loan amount, including all accrued and unpaid interest thereon, may be converted at Innoviva Sub's option into shares of Common Stock at a price per share equal to the greater of book value or market value per share of Common Stock on the date immediately preceding the effective date of the Credit Agreement, which is $1.52 (as may be appropriately adjusted for any stock split, combination or similar act) (the "Optional Conversion"). As of January 10, 2023, pursuant to the Optional Conversion, the Loan is convertible into 19,736,843 shares of Common Stock of the Issuer, contingent upon the effectiveness of the Registration Statement.

Footnote F4

In addition, pursuant to previous transactions, (i) Innoviva Sub is the direct beneficial owner, and Innoviva is the indirect beneficial owner, of 16,365,969 shares of Common Stock, 4,500,000 warrants to purchase Common Stock with an exercise price of $5.00, and 6,153,847 warrants to purchase Common Stock with an exercise price of $3.25 and (ii) Innoviva is the direct beneficial owner of 8,710,800 shares of Common Stock and 8,710,800 warrants to purchase Common Stock with an exercise price of $2.87.

Footnote F5

In 2020, Innoviva designated Odysseas Kostas, M.D. and Sarah Schlesinger, M.D., two of the members of the board of directors of Innoviva, to serve on the board of directors of the Issuer. In 2021, Innoviva designated Jules Haimovitz, a member of the board of directors of Innoviva, to serve on the board of directors of the Issuer. As such, solely for purposes of Section 16 of the Exchange Act, the Reporting Persons may be deemed to be directors by deputization. For purposes of the exemption under Rule 16b-3 promulgated under the Exchange Act, the board of directors of the Issuer approved the acquisition of any direct or indirect pecuniary interest in any shares of Common Stock, as a result of or in connection with the transactions reported on this Form 4.