SWK Holdings Corp (SWKH)

[~S.B.A.~]

On April 2, 2013, SWK Funding LLC ("SWK Funding"), a wholly-owned subsidiary of SWK Holdings Corporation (the "Company"), along with Bess Royalty, LP ("Bess", and together with the Company, the “Purchasers”) purchased a royalty stream paid on the net sales of Besivance®, an ophthalmic antibiotic, from InSite Vision, Inc. ("InSite") for $15 million. Besivance is marketed globally by Bausch & Lomb. SWK Funding funded $6 million of the purchase price at closing to own 40.1325% of the royalty stream. If net sales achieve certain sales milestones during 2013, Bess will pay a $1 million milestone to InSite in February 2014. The Company will have no obligation with respect to this milestone payment. In addition, such additional payment by Bess would not result in a change in the Company's interest in the royalty. Under the terms of the agreement, when the Purchasers receive a 1x cash on cash return of the total purchase price from the Besivance royalty stream, Insite will be entitled to retain 25% of the Besivance royalty stream received above $4.2 million annually. The Besivance royalty stream will be returned to InSite if the Purchasers receive 2.75x cash on cash return of the total purchase price.



InSite recorded $1.2 million and $2.1 million of Besivance royalty revenues for the years ended December 31, 2011 and December 31, 2012, respectively. Patent protection for Besivance in the United States expires in mid-2021.