Exhibit 10.9

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

ROYALTY PURCHASE AGREEMENT

dated as of September 20, 2018

among Agenus Royalty Fund, LLC
as Seller,

AGENUS Inc.
as Seller Parent

and

XOMA (US) LLC
Purchaser

 

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

1

 

 

Section 1.01

Definitions.

1

 

 

ARTICLE II PURCHASE AND SALE OF THE PURCHASED ROYALTY INTERESTS

8

 

 

Section 2.01

Purchase and Sale.

8

Section 2.02

Transfers and Payments in Respect of the Purchased Royalty Interests.

9

Section 2.03

Purchase Price.

10

Section 2.04

No Assumed Obligations.

10

Section 2.05

Excluded Assets.

10

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER PARENT

11

 

 

Section 3.01

Organization; Operations of Seller Parent and Seller.

11

Section 3.02

Corporate Authorization.

12

Section 3.03

Governmental Authorization.

12

Section 3.04

Ownership.

12

Section 3.05

Solvency.

12

Section 3.06

Litigation.

13

Section 3.07

Compliance with Laws.

13

Section 3.08

Conflicts.

13

Section 3.09

No Withholding

14

Section 3.10

License Agreements.

14

Section 3.11

Products; Royalties.

14

Section 3.12

Intellectual Property Matters.

15

Section 3.13

No Other Representations or Warranties.

16

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

16

 

 

Section 4.01

Organization.

16

Section 4.02

Authorization.

17

Section 4.03

Broker’s Fees.

17

Section 4.04

Conflicts.

17

Section 4.05

Access to Information.

17

 

 

ARTICLE V COVENANTS

18

 

 

Section 5.01

Books and Records.

18

Section 5.02

Confidentiality; Public Announcement.

19

Section 5.03

Commercially Reasonable Efforts; Further Assurance.

21

Section 5.04

Remittance to Joint Escrow Account.

21

Section 5.05

Incyte Agreement, Merck Agreement.

22

Section 5.06

Audits.

23

Section 5.07

Notice.

24

Section 5.08

Seller Operations.

24

Section 5.09

Special Purpose Vehicle Covenants

25

Section 5.10

Patent Maintenance

26

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

Section 5.11

[*]

26

 

 

ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING

26

 

 

Section 6.01

Closing.

26

Section 6.02

Conditions Applicable to Purchaser in Closing.

27

Section 6.03

Conditions Applicable to Seller in Closing.

28

 

 

ARTICLE VII EXPIRATION

29

 

 

Section 7.01

Expiration Date.

29

Section 7.02

Effect of Expiration.

29

 

 

ARTICLE VIII MISCELLANEOUS

29

 

 

Section 8.01

Survival.

29

Section 8.02

Specific Performance.

29

Section 8.03

Notices.

30

Section 8.04

Successors and Assigns.

31

Section 8.05

Indemnification.

31

Section 8.06

Independent Nature of Relationship.

34

Section 8.07

Tax.

34

Section 8.08

Entire Agreement.

35

Section 8.09

Governing Law.

35

Section 8.10

Severability.

35

Section 8.11

Counterparts; Effectiveness.

35

Section 8.12

Amendments; No Waivers.

36

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

 

EXHIBITS

Exhibit A

—

Form of Bill of Sale

Exhibit B

—

Incyte Agreement

Exhibit C

—

Merck Agreement

Exhibit D

—

LICR Agreement

Exhibit E

—

Intellectual Property Matters

Exhibit F

—

Form of Incyte Direction Letter

Exhibit G

—

Form of Merck Direction Letter

Exhibit H

—

Form of Legal Opinion of Goodwin Procter LLP

 

 

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

ROYALTY PURCHASE AGREEMENT

This ROYALTY PURCHASE AGREEMENT (as amended, supplemented or otherwise modified
from time to time, this “Agreement”) is made and entered into as of September
20, 2018, by and among AGENUS ROYALTY FUND, LLC, a Delaware limited liability
company (“Seller”), Agenus Inc., a Delaware corporation (“Seller Parent”), and
XOMA (US) LLC (“Purchaser”).

WHEREAS, Seller wishes to sell, assign, convey and transfer to Purchaser, and
Purchaser wishes to purchase from Seller, the Purchased Royalty Interests, upon
and subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, agreements
representations and warranties set forth herein, the parties hereto agree as
follows:

ARTICLE I

DEFINITIONS

Section 1.01Definitions.

The following terms, as used herein, shall have the following meanings:

“Affiliate” shall mean any Person that controls, is controlled by, or is under
common control with another Person.  For purposes of this definition, “control”
shall mean (i) in the case of corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the stock or shares having the right to vote
for the election of directors, and (ii) in the case of non-corporate entities,
direct or indirect ownership of at least fifty percent (50%) of the equity
interests with the power, or the power by contract or otherwise, to direct the
management and policies of such non-corporate entities.

“Agenus Switzerland” shall mean Agenus Switzerland Inc., a joint stock company
organized under the laws of Switzerland formerly known as 4-Antibody AG, and a
wholly-owned subsidiary of Seller Parent.

“Agreement” shall have the meaning set forth in the first paragraph hereof.

“Bankruptcy Event” shall mean the occurrence of any of the following:

(i) Seller shall commence any case, proceeding or other action (a) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, relief of debtors or the like, seeking
to have an order for relief entered with respect to such party, or seeking to
adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its respective debts, or (b) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
portion of its assets, or Seller shall make a general assignment for the benefit
of its creditors; or

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(ii) there shall be commenced against Seller any case, proceeding or other
action of a nature referred to in clause (i) above which remains undismissed,
undischarged or unbonded for a period of ninety (90) calendar days; or

(iii) there shall be commenced against Seller any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against (a) all or any substantial portion of its assets and/or
(b) the Royalties, which results in the entry of an order for any such relief
which shall not have been vacated, discharged, stayed, satisfied or bonded
pending appeal within forty-five (45) calendar days from the entry thereof; or

(iv) Seller shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii) or (iii) above; or

(v) Seller shall become unable, admit in writing its inability, or fail
generally, to pay its debts as they become due; or

(vi) Seller shall be in a financial condition such that the sum of its debts, as
they become due and mature, is greater than the fair value of its property on a
going concern basis.

“Bill of Sale” shall mean the Bill of Sale pursuant to which Seller shall assign
to Purchaser all of its right, title and interest in and to the Purchased
Royalty Interests purchased hereunder, which Bill of Sale shall be substantially
in the form of Exhibit A.

“Business Day” shall mean any day other than a Saturday, a Sunday, any day which
is a legal holiday under the laws of New York, or any day on which banking
institutions located in New York or in the state in which the Depository Bank is
located are authorized or required by law or other governmental action to close.

“Closing” shall have the meaning set forth in Section 6.01.

“Closing Date” shall have the meaning set forth in Section 6.01.

“Confidential Information” shall mean, as it relates to Seller Parent, Seller
and their respective Affiliates, the Incyte Agreement, the Merck Agreement,  the
Licensed Products, the Patent Rights, know-how, trade secrets, confidential
business information, financial data and other like information (including but
not limited to ideas, research and development, know-how, formulas, schematics,
compositions, technical data and results, techniques, inventions (whether
patentable or not), practices, methods, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and
proposals), inventory, ideas, algorithms, processes, computer software programs
or applications (in both source code and object code form), client lists,
tangible or intangible proprietary information or material, and any other
technical or scientific information, as well as any such information that would
be deemed “Confidential Information” of Merck under the Merck Agreement or of
Incyte under the Incyte Agreement, in each case, regardless of whether such
information is specifically designated as confidential and regardless of whether
such information is in written, oral, electronic, or other form.  For the
avoidance of doubt, any notices or reports delivered by a Seller Party pursuant
to this Agreement shall be deemed to be Confidential Information.

- 2 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“Confidentiality Breach” means, with respect to the disclosure of any
Confidential Information that a Seller Party received pursuant or related to the
Merck Agreement, Incyte Agreement or LICR Agreement, as applicable, to
Purchaser, that such disclosure would be expected, in Seller Parent’s
reasonable, good faith judgment, to constitute a breach by Seller Parent of its
confidentiality obligations under such agreement.

“Depository Bank” shall mean Bank of New York Mellon or such other bank or
financial institution as may be agreed between the parties from time to time.

“Direction Letters” shall have the meaning set forth in Section 2.02(a)i.

“Discrepancy” shall have the meaning set forth in Section 2.02(a)iii.

“Dispute” shall mean any opposition, interference proceeding, reexamination
proceeding, cancellation proceeding, re-issue proceeding, invalidation
proceeding, inter parties review proceeding, injunction, claim, lawsuit,
proceeding, hearing, investigation, complaint, arbitration, mediation, demand,
investigation, or decree.

“EMA” shall mean the European Medicines Agency.

“Excluded Incyte Milestone” shall mean one Milestone Payment of $5,000,000 to be
received by Seller from Incyte for the advancement of the TIM-3 program into
clinical development pursuant to Section 7.5(b) of the Incyte Agreement.

“Excluded Liabilities and Obligations” shall have the meaning set forth in
Section 2.04.

“Exploitation” shall mean, with respect to a Licensed Product, the manufacture,
use, sale, offer for sale (including marketing and promotion), importation,
distribution or other commercialization.

“FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto.

“Governmental Authority” shall mean any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether foreign, federal, state or local (domestic or foreign),
including each Patent Office, the FDA, the EMA, or any other government
authority in any country.

“Incyte” shall mean Incyte Europe Sarl, a Swiss limited liability company, its
Affiliates and any successors-in-interest and assigns under the Incyte
Agreement.

“Incyte Agreement” shall mean that certain License, Development and
Commercialization Agreement, dated as of January 9, 2015, by and between Seller
Parent and Incyte, as amended on February 14, 2017, and as may be further
amended from time to time, together with the following letter agreements, letter
dated November 6, 2015, Side Letter No. 1 dated February 2, 2016, Side Letter
No. 2 dated April 20, 2016 and Side Letter No. 3 dated December 21, 2017.

“Incyte Confidential Information” shall have the meaning set forth in Section
5.02(f).

- 3 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“Incyte Direction Letter” shall have the meaning set forth in Section 5.04(c).

“Joint Escrow Account” shall mean the deposit account established and maintained
at the Depository Bank into which payments of the Royalties and Milestones are
to be remitted in accordance with Section 2.02(a) (and the terms of an escrow
agreement to be agreed upon by the parties) and the account from which the
Depository Bank transfers funds into the Purchaser Account and the Seller
Account.

“Knowledge” shall mean, with respect to the Seller Parties and their Affiliates,
the actual knowledge of (i) Garo Armen, Chief Executive Officer of the Seller
Parent, (ii) Christine Klaskin, VP of Finance of the Seller Parent, (iii) Evan
Kearns, Vice President and General Counsel of the Seller Parent, (iv) Michael
Plater, Chief Business Officer of the Seller Parent, and (v) Christian Cortis,
Chief Strategy Officer & Head of Finance of the Seller Parent and their
respective successors in such positions, provided that with respect to Sections
3.11(g) and 3.12, “Knowledge” shall mean the actual knowledge of Michael
Robinson, Vice President, Head of Intellectual Property, and his successor in
such position.

“Law” shall mean any law, rule, ordinance or regulation, or any judgment, order,
writ, decree, permit or license of any Governmental Authority.

“License Party Audit” shall have the meaning set forth in Section 5.06(b).

“Licensed Patents” means pending or granted: (i) patent applications as set
forth in Exhibit E, and the patents resulting therefrom, if any, (ii)
divisionals, continuations, continuations-in-part (solely to the extent such
continuations-in-part disclose the same invention disclosed in any of the
foregoing), reissues, renewals, substitutions, registrations, re-examinations,
revalidations, and the like of any such patents and patent applications the
subject of (i) above, and (iii) any and all foreign equivalents of the patents
and patent applications the subject of (i) and (ii) above.

“Licensed Product” as to the Incyte Agreement or the Merck Agreement, as
applicable, shall mean each Product covered therein as of the date hereof.

“LICR” shall mean the Ludwig Institute for Cancer Research Ltd., a non-profit
corporation organized under the laws of Switzerland, its Affiliates and any
successors-in-interest and assigns under the LICR Agreement.

“LICR Agreement” shall mean that certain License Agreement dated as of December
5, 2014, by and between LICR and Seller Parent, and as may be further amended
from time to time in the future.

“Lien” shall mean lien, hypothecation, charge, instrument, preference, priority,
security agreement, security interest, interest, mortgage, option, privilege,
pledge, liability, covenant, order, tax, right of recovery, trust or deemed
trust (whether contractual, statutory or otherwise arising) or any encumbrance,
right or claim of any other person of any kind whatsoever whether choate or
inchoate, filed or unfiled, noticed or unnoticed, recorded or unrecorded,
contingent or non-contingent, material or non-material, known or unknown.

- 4 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“Losses” shall mean collectively, any and all damages, losses, assessments,
awards, cause of actions, claims, charges, costs and expense (including
reasonable expenses of investigation and reasonable attorneys’ fees and
expenses), fines, judgments, liabilities, obligations or penalties; provided,
however that Losses shall not include any lost profits  or consequential,
punitive, special or incidental damages except any lost profits or
consequential, punitive, special or incidental damages awarded or payable by a
Purchaser Indemnified Party to a Third Party in connection with a claim or
action for which the Seller Parent is required to indemnify the Purchaser
pursuant to Section 8.05.

“Material Adverse Effect” shall mean a material adverse effect on (i) the
validity or enforceability of any of the Transaction Documents, the Incyte
Agreement or the Merck Agreement, (ii) the ability of a Seller Party or any of
its Affiliates to perform any of its material obligations under any of the
Transaction Documents, the Incyte Agreement or the Merck Agreement, (iii) the
rights or remedies of Purchaser under any of the Transaction Documents, the
Incyte Agreement or the Merck Agreement,  (iv)  the timing, amount or duration
of the Royalties, taken as a whole, and recognizing the early stage nature of
the Licensed Products and the risks associated with the development and
potential commercialization of early stage biopharmaceutical products, or (v)
the right of  Purchaser to receive payments in respect of the Purchased Royalty
Interests in accordance with the Transaction Documents, the Incyte Agreement or
the Merck Agreement.

“Merck” shall mean Merck Sharp & Dohme Corp., a corporation organized and
existing under the laws of New Jersey, its Affiliates and any
successors-in-interest and assigns under the Merck Agreement.

“Merck Agreement” shall mean that certain License and Research Collaboration
Agreement dated as of April 25, 2014, by and between Merck and Seller Parent, as
amended effective April 25, 2015, and February 6, 2017, and as may be further
amended from time to time.

“Milestones” shall mean one hundred percent (100%) of all future milestone
payments that become owed, accrued or otherwise payable to Seller after the
Closing pursuant to Section 5.4 of the Merck Agreement and Section 7.5 of the
Incyte Agreement including, without limitation, all clinical, regulatory,
commercial and sales milestones pursuant to such sections (collectively, the
“Milestone Payments”), and any future sums accrued, paid or due, other than
Milestone Payments, that are (i) in lieu of the Milestone Payments (which shall
not consist of securities without Purchaser’s prior written consent); (ii) in
satisfaction of the obligation to pay the Milestone Payments; or (iii) indemnity
payments, recoveries, damages, settlement or other amounts to which Seller is or
may become entitled to pursuant to or in connection with the Incyte Agreement or
the Merck Agreement, as applicable, or any Licensed Patent thereunder, whether
based on actual or alleged infringement, breach, or other circumstance, in each
case described in this clause (iii) to the extent such infringement, breach,
default or other circumstance has resulted or would result in a reduction in, or
such payment is made in lieu of, Milestone Payments; and (iv) all proceeds
(including any damages, monetary awards or other amounts recovered, whether by
judgment or settlement) paid, owed, accrued or otherwise payable with respect to
any of the foregoing of any suit, proceeding or other legal action taken to
enforce the right to receive any of the foregoing (other than amounts awarded or
recovered in connection with any judgment or settlement for reimbursement of the
costs and expenses (including attorneys’ fees) of the party bringing such suit
or proceeding or taking such other legal action).

- 5 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“Net Sales” shall mean “Net Sales” as such term is defined in the Incyte
Agreement or the Merck Agreement, as applicable.

“Patent Rights” shall mean “Patent Rights” as such term is defined in the Incyte
Agreement or the Merck Agreement, as applicable, but only to the extent such
Patent Rights are owned or controlled by Seller Parent or its Affiliates.

“Permitted Liens” shall mean any: (a) Liens in favor of Purchaser or its
Affiliates; (b) Liens created, permitted or required by the Transaction
Documents in favor of Purchaser; (c) Liens incurred by Purchaser after the
Closing Date; and (d) Liens that will be released at the Closing.

“Person” shall mean an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, but not including a
government or political subdivision or any agency or instrumentality of such
government or political subdivision.

“Product” shall mean “Royalty Bearing Product” as such term is defined in the
Incyte Agreement or “Product” as such term is defined in the Merck Agreement, as
applicable.

“Purchase Price” shall be the amount set forth in Section 2.03 which shall be
payable in United States Dollars.

“Purchased Royalty Interests” shall mean (a) thirty three percent (33%) of all
of the Royalties (net of all outbound royalties paid, owed, accrued or otherwise
payable by Seller Parent or its Affiliates to LICR under the LICR Agreement);
(b) ten percent (10%) of all future Milestones (other than the Excluded Incyte
Milestone); and (c) in the case of each of (a) and (b) above, all “accounts” (as
such term is defined in the UCC) of Seller with respect to the Royalties and
Milestones.  For clarity, the Purchased Royalty Interests do not include any
portion of the Excluded Incyte Milestone.

“Purchaser” shall have the meaning set forth in the first paragraph hereof.

“Purchaser Account” shall mean Purchaser’s deposit account with Silicon Valley
Bank which account Purchaser may change from time to time by furnishing written
notice to Seller.  

“Purchaser Indemnified Party” shall have the meaning set forth in Section
8.05(a).

“Purchaser-Requested Audit” shall have the meaning set forth in Section 5.06(a).

“Representatives” shall have the meaning set forth in Section 5.02(b).

“[*]” shall have the meaning set forth in Section [*].

- 6 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“Royalty” or “Royalties” shall mean without duplication, (a) one hundred percent
(100%) of all royalties paid, owed, accrued or otherwise payable after the
Closing by Incyte pursuant to Section 7.6 of the Incyte Agreement with respect
to Net Sales of any applicable Licensed Product thereunder, (b) all royalties
paid, owed, accrued or otherwise payable after the Closing by Merck pursuant to
Section 5.5 of the Merck Agreement with respect to Net Sales of any applicable
Licensed Product thereunder (collectively (a) and (b) are hereinafter referred
to as “Royalty Payments”), (c) any sums accrued, paid or due, other than Royalty
Payments, that are (i) in lieu of the Royalty Payments (which shall not consist
of securities without Purchaser’s prior written consent); (ii) in satisfaction
of the obligation to pay the Royalty Payments; or (iii) indemnity payments,
recoveries, damages, settlement or other amounts to which Seller is or may
become entitled to pursuant to or in connection with the Incyte Agreement or the
Merck Agreement, as applicable, or any Licensed Patent thereunder, whether based
on actual or alleged infringement, breach, default or other circumstance, in
each case described in this clause (iii) to the extent such infringement,
breach, or other circumstance has resulted or would result in a reduction in, or
such payment is made in lieu of, Royalty Payments; and (d) all proceeds
(including any damages, monetary awards or other amounts recovered, whether by
judgment or settlement) paid, owed, accrued or otherwise payable with respect to
any of the foregoing of any suit, proceeding or other legal action taken to
enforce the right to receive any of the foregoing (other than amounts awarded or
recovered in connection with any judgment or settlement for reimbursement of the
costs and expenses (including attorneys’ fees) of the party bringing such suit
or proceeding or taking such other legal action).

“Secured Party” has the meaning set forth in Section 6.02(j).

“Seller” has the meaning set forth in the preamble.

“Seller Account” shall mean a segregated account established for the benefit of
Seller.

“Seller Indemnified Party” has the meaning set forth in Section 8.05(b).

“Seller Organizational Documents” means the certificate of formation of Seller
dated as of September 14, 2018 and the limited liability company agreement of
Seller dated as of September 14, 2018.

“Seller Parent” has the meaning set forth in the preamble.

“Seller Party” shall mean Seller and Seller Parent, individually, and “Seller
Parties” shall mean Seller and Seller Parent, collectively.

“[*]” shall have the meaning set forth in Section [*].

“Specified Persons” shall mean (i) Garo Armen, Chief Executive Officer of the
Seller Parent, (ii) Christine Klaskin, VP of Finance of the Seller Parent, (iii)
Evan Kearns, Vice President and General Counsel of the Seller Parent, (iv)
Michael Plater, Chief Business Officer of the Seller Parent and (v) Christian
Cortis, Chief Strategy Officer & Head of Finance, and their respective
successors in such positions provided that with respect to Section 3.11(g) and
3.12, “Specified Person” shall mean Michael Robinson, Vice President, Head of
Intellectual Property, and his successor in such position.

- 7 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

“[*]” shall have the meaning set forth in Section [*].

“Subsidiary” or “Subsidiaries” shall mean with respect to any Person (i) any
corporation of which the outstanding capital stock having at least a majority of
votes entitled to be cast in the election of directors under the ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority voting interest under
ordinary circumstances is at the time owned, directly or indirectly, by such
Person.

“Third Party” shall mean any Person other than Seller, Seller Parent or
Purchaser or their respective Affiliates.

“Third Party Patents” shall mean, with respect to any Third Party, any and all
issued patents and pending patent applications as of the date of this Agreement,
including all provisional applications, substitutions, continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all patents-of-addition, reissues, reexaminations and extensions or
restorations by existing or future extension or restoration mechanisms
(including regulatory extensions), and all supplementary protection
certificates, together with any foreign counterparts thereof anywhere in the
world, of such Third Party.

“Transaction Documents” shall mean, collectively, this Agreement and the Bill of
Sale.

“UCC” shall mean the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ROYALTY INTERESTs

Section 2.01Purchase and Sale.

(a)Subject to the terms and conditions of this Agreement, on the Closing Date,
Seller hereby sells, assigns, transfers, conveys and grants to Purchaser, and
Purchaser hereby purchases, acquires and accepts from Seller, all of Seller’s
rights, title and interest in and to the Purchased Royalty Interests, free and
clear of any and all Liens, other than Permitted Liens.  

(b)Each of Seller and Purchaser intends and agrees that the sale, assignment and
transfer of the Purchased Royalty Interests under this Agreement shall be, and
is, a true sale by Seller to Purchaser that is absolute and irrevocable and that
provides Purchaser with the full benefits of ownership of the Purchased Royalty
Interests, and each of Seller and Purchaser do not intend the transactions
contemplated hereunder to be, or for any purpose characterized as, a loan from
Purchaser to Seller, or a pledge or security agreement.  Seller waives any right
to contest or otherwise assert that this Agreement is other than a true sale by
Seller to Purchaser under applicable law, which waiver shall be enforceable
against Seller in any bankruptcy or insolvency proceeding relating to Seller.

- 8 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(c)Seller hereby consents to Purchaser recording and filing, at Purchaser’s sole
cost and expense, financing statements (and continuation statements with respect
to such financing statements when applicable) meeting the requirements of
applicable law in such manner and in such jurisdictions as are necessary or
appropriate to (i) evidence or perfect the sale, assignment, transfer,
conveyance and grant by Seller to Purchaser, and the purchase, acquisition and
acceptance by Purchaser from Seller, of the Purchased Royalty Interests and (ii)
perfect the security interest in the Purchased Royalty Interests granted by
Seller to Purchaser pursuant to Section 2.01(d).

(d)Notwithstanding that Seller and Purchaser expressly intend for the sale,
contribution, assignment, transfer, conveyance and granting of the Purchased
Royalty Interests to be a true, complete, absolute and irrevocable sale and
assignment, in the event that any transfer contemplated by this Agreement is
held not to be a sale, Seller hereby assigns, conveys, grants and pledges to
Purchaser, as security for its obligations created hereunder, a first priority
security interest in and to all of Seller’s right, title and interest in, to and
under the Purchased Royalty Interests, whether now owned or hereafter acquired,
and any “proceeds” (as such term is defined in the UCC) thereof and, solely in
such event, this Agreement shall constitute a security agreement.

Section 2.02Transfers and Payments in Respect of the Purchased Royalty
Interests.

(a)Payments of the Royalties.  Purchaser shall be entitled to receive the
following transfers and payments in respect of the Purchased Royalty Interests:

i.Effective upon the Closing, Purchaser shall be entitled to receive any and all
payments of the Purchased Royalty Interests.  Any and all payments of the
Purchased Royalty Interests shall be paid by Incyte, Merck or other payor, as
applicable, into the Joint Escrow Account by wire transfer of immediately
available funds in accordance with the Incyte Direction Letter or Merck
Direction Letter (collectively, the “Direction Letters”), as the case may be, or
other instruction letter provided to such other payor in compliance with Section
5.04(c), and distributed from the Joint Escrow Account to the Purchaser
Account.  If Seller or its Affiliates receives any payment on account of any
Purchased Royalty Interests directly from the payor of such Purchased Royalty
Interests, Seller or any of its Affiliates, as the case may be, shall hold such
amounts in trust for the benefit of Purchaser and, within five (5) Business Days
after receipt thereof, transfer all such funds into the Joint Escrow Account by
wire transfer of immediately available funds.  

ii.Notwithstanding any claim or set-off which Seller may have against Purchaser
or which Incyte or Merck, as applicable, may have against Seller, Seller shall
use its reasonable best efforts to ensure that Incyte and Merck remit all
payments that each is required to pay under the Incyte Agreement or the Merck
Agreement, respectively, with respect to the Purchased Royalty Interests
directly to the Joint Escrow Account, pursuant to the Direction Letters.

- 9 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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iii.For the avoidance of doubt, the parties understand and agree that if Incyte
or Merck, as applicable, fails to make any payment in respect of the Purchased
Royalty Interests when Seller or Purchaser reasonably believes they are due
under the Incyte Agreement or the Merck Agreement, as applicable (each such
unpaid amount, a “Discrepancy”), because of a disagreement with Incyte or Merck,
as applicable, as to when, whether or the amount of any payment of the Purchased
Royalty Interests that are owed, then Seller shall not be obligated to pay to
Purchaser or otherwise compensate or make Purchaser whole with respect to any
such Discrepancy, but instead the parties shall attempt to recover such
Discrepancy from Incyte or Merck, as applicable; provided, however, that nothing
in this Section 2.02(a) shall limit or affect in any respect the rights of any
Purchaser Indemnified Party under Section 8.05.

iv.For the avoidance of doubt, the parties understand and agree that if Incyte
or Merck, as applicable, fails to pay any payment in respect of the Purchased
Royalty Interests when Seller or Purchaser reasonably believes they are due
under the Incyte Agreement or the Merck Agreement, as applicable, because of any
set-off under any of the agreements effectuated by Incyte or Merck, as the case
may be, then Seller shall pay to Purchaser the amount required to make Purchaser
whole with respect to any such deficiency, by depositing the amount thereof in
the Purchaser Account.

Section 2.03Purchase Price.

In consideration for the sale of the Purchased Royalty Interests, and subject to
the terms and conditions set forth herein, Purchaser shall pay to Seller, or its
designee, on the Closing Date, the sum of $15,000,000 (the “Purchase Price”) by
wire transfer to an account designated in writing by Seller prior to the
Closing.

Section 2.04No Assumed Obligations.

Notwithstanding any provision in this Agreement or any other writing to the
contrary, Purchaser is acquiring only the Purchased Royalty Interests and is not
assuming any liability or obligation of either Seller Party or any of their
Affiliates of whatever nature, whether presently in existence or arising or
asserted hereafter, whether under the Incyte Agreement, the Merck Agreement or
any Transaction Document or otherwise.  All such liabilities and obligations
shall be retained by and remain obligations and liabilities of such Seller Party
(the “Excluded Liabilities and Obligations”).

Section 2.05Excluded Assets.

Purchaser does not, by purchase of the rights granted hereunder or otherwise
pursuant to any of the Transaction Documents, acquire any assets or contract
rights of Seller or any of its Affiliates under the Incyte Agreement, the Merck
Agreement, the Patent Rights or any other assets of either Seller Party
(including the Excluded Incyte Milestone), other than the Purchased Royalty
Interests.

- 10 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER Parent

Seller and Seller Parent, as applicable, hereby represents and warrants to
Purchaser as of the date first written above the following:

Section 3.01Organization; Operations of Seller Parent and Seller.

(a)Seller Parent is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has all powers and all licenses,
authorizations, consents and approvals required to conduct its business as now
conducted and as proposed to be conducted in connection with the transactions
contemplated by the Transaction Documents to which Seller Parent is a party and
the Incyte Agreement and the Merck Agreement.  Seller Parent is duly qualified
to do business as a foreign corporation and is in good standing in every
jurisdiction in which the failure to do so could reasonably be expected to
result, individually or in the aggregate, in a Material Adverse Effect.

(b)Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of Delaware, and has all powers and all licenses,
authorizations, consents and approvals required to conduct its business as now
conducted and as proposed to be conducted in connection with the transactions
contemplated by the Transaction Documents to which Seller is a party.  Seller is
duly qualified to do business as a foreign limited liability company and is in
good standing in every jurisdiction in which the failure to do so could
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect.

(c)Since September 14, 2018, Seller (i) has had no business activities other
than acquiring the right to receive payments under the Merck Agreement and the
Incyte Agreement, selling the Purchased Royalty Interests to Purchaser as
contemplated hereby and otherwise performing its obligations under the
Transaction Documents and (ii) has not been, is not, and will not be engaged, in
any business unrelated to effecting the transactions contemplated by the
Transaction Documents.  Since September 14, 2018, the sole assets of Seller that
it has owned consist exclusively of the right to receive payments under the
Merck Agreement and the Incyte Agreement and any rights arising under the Incyte
Agreement or the Merck Agreement, as applicable.  Since September 14, 2018,
Seller has not incurred any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person, except as required to execute and
deliver the Transaction Documents and to consummate the transactions
contemplated thereby.  Immediately prior to Closing, Seller shall have no
obligations or liabilities, except those incurred in connection with, and
pursuant to the Transaction Documents and the transactions contemplated thereby.

- 11 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 3.02Corporate Authorization.

Each Seller Party has all necessary corporate or limited liability company, as
applicable, power and authority to enter into, execute and deliver the
Transaction Documents to which it is a party and to perform all of the
obligations to be performed by it hereunder and thereunder and to consummate the
transactions contemplated hereunder and thereunder.  The Transaction Documents
to which such Seller Party is a party have been duly authorized, executed and
delivered by such Seller Party and each Transaction Document to which it is a
party constitutes the valid and binding obligation of such Seller Party,
enforceable against such Seller Party in accordance with its terms, subject, as
to enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally or general
equitable principles.

Section 3.03Governmental Authorization.

Except for filings with the Securities and Exchange Commission, its successor or
foreign equivalent, the execution and delivery by a Seller Party of the
Transaction Documents to which it is a party, and the performance by such Seller
Party of its obligations hereunder and thereunder and under the Incyte Agreement
and the Merck Agreement, as applicable, do not require any notice to, action or
consent by, or in respect of, or filing with, any Governmental Authority.

Section 3.04Ownership.

Seller is the exclusive owner of the entire right, title (legal and equitable)
and interest in, to and under the Purchased Royalty Interests and has good and
valid title thereto, free and clear of all Liens (other than Permitted
Liens).  The Purchased Royalty Interests sold, assigned, transferred, conveyed
and granted to Purchaser at the Closing are not pledged, sold, contributed,
assigned, transferred, conveyed or granted by Seller to any Person, nor has
Seller consented to any such action.  Seller has full right to sell, contribute,
assign, transfer, convey and grant the Purchased Royalty Interests to
Purchaser.  Upon the sale, assignment, transfer, conveyance and granting by
Seller of the Purchased Royalty Interests to Purchaser, Purchaser shall acquire
good and valid title to the Purchased Royalty Interests free and clear of all
Liens, other than Permitted Liens, and shall be the exclusive owner of the
Purchased Royalty Interests.

Section 3.05Solvency.

Assuming consummation of the transactions contemplated by the Transaction
Documents to which Seller is a party (i) the present fair saleable value of
Seller’s assets is greater than the amount required to pay its debts as they
become due, (ii)  Seller does not have unreasonably small capital with which to
engage in its business, (iii) Seller will be able to realize upon its assets and
pay its debts and other obligations as they mature, and (iv) Seller has not
incurred, will not incur, nor does it have present plans or intentions to incur,
debts or liabilities beyond its ability to pay such debts or liabilities as they
become absolute and matured.

- 12 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 3.06Litigation.

(a)There is no (i) action, suit, arbitration proceeding, claim, investigation or
other proceeding pending or, to the Knowledge of Seller and its Affiliates,
threatened against Seller Parent or any of its Affiliates or (ii) any inquiry of
any Governmental Authority pending or, to the Knowledge of Seller and its
Affiliates, threatened against Seller Parent or any of its Affiliates, in each
case with respect to clauses (i) and (ii) above, which, if adversely determined,
could reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect.

(b)To the actual knowledge of any Specified Person there is no (i) action, suit,
arbitration proceeding, claim, investigation or other legal proceeding pending
or threatened against Incyte or any of its Affiliates or Merck or any of its
Affiliates (x) involving the Licensed Products or (y) involving Seller Parent or
any of its Affiliates or (ii) any inquiry of any Governmental Authority pending
or threatened against Incyte or any of its Affiliates or Merck or any of its
Affiliates involving the Licensed Products, in each case with respect to clauses
(i) and (ii) above, which, if adversely determined, could reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect.

Section 3.07Compliance with Laws.

None of Seller, Seller Parent or any of its Subsidiaries (A) are in violation
of, or have violated, or to the Knowledge of Seller and its Affiliates, are
under investigation with respect to, or been given notice of any violation of,
in any material respect, any law, rule, ordinance or regulation of, or any
judgment, order, writ decree, permit or license granted, issued or entered by,
any Governmental Authority or (B) are subject to any judgment, order, writ
decree, permit or license granted, issued or entered by, any Governmental
Authority, which in the case of (A) or (B), could reasonably be expected to
result in a Material Adverse Effect.

Section 3.08Conflicts.

(a)Neither the execution and delivery of any of the Transaction Documents to
which Seller or Seller Parent is a party nor the performance or consummation of
the transactions contemplated hereby and thereby will:  (i) contravene, conflict
with, result in a breach or violation of, constitute a default under, or
accelerate the performance provided by, any provisions of the certificate of
incorporation or by-laws (or other organizational or constitutional documents)
of Seller Parent or any of its Affiliates; (ii) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any provision of the
Incyte Agreement or Merck Agreement; (iii) require any consent of any Person or
Governmental Authority; (iv) result in the creation or imposition of any Lien on
the Purchased Royalty Interests, other than Permitted Liens; or (v) except as
would not reasonably be expected to result in a Material Adverse Effect,
contravene, conflict with, result in a breach or violation of, constitute a
default under, or accelerate the performance provided by, in any material
respects any provisions of any Law, contract or agreement (other than the Incyte
Agreement or Merck Agreement) to which Seller Parent or any of its Affiliates or
any of their respective assets or properties are subject or bound.

- 13 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(b)Neither Seller Party has granted, nor does there exist, any Lien (other than
a Permitted Lien) on the Purchased Royalty Interests.  Neither Seller Party has
granted, nor does there exist, any Lien (other than a Permitted Lien and Liens
in favor of the Secured Party) on the Incyte Agreement or Merck Agreement.

Section 3.09No Withholding

No deduction or withholding for or on account of any tax has been made or, to
the Knowledge of Seller and its Affiliates, was required to be made under
applicable Law from any payment to Seller under the Incyte Agreement or the
Merck Agreement, as applicable.  As of the Closing Date, to the Knowledge of
Seller and its Affiliates, no deduction or withholding for or on account of any
tax is required to be made under applicable Law from any payment by Seller to
Purchaser under this Agreement.

Section 3.10License Agreements.

The Incyte Agreement attached hereto as Exhibit B, the Merck Agreement attached
hereto as Exhibit C, and the LICR Agreement attached hereto as Exhibit D are
true, correct and complete copies of each such agreement, as in effect on the
date hereof, and there have been no amendments or modifications to such
agreements which are not reflected in such exhibits.

Section 3.11Products; Royalties.

(a)Since February 14, 2017, Incyte has been responsible for the clinical
development of each of the Licensed Products being clinically developed under
the Incyte Agreement, and is responsible for seeking all applicable regulatory
approvals from applicable Governmental Authorities for each of such Licensed
Products, and Seller Parent or its Affiliates have no responsibility for the
clinical development of any of such Licensed Products nor for seeking any
regulatory approvals from any Governmental Authorities for any of such Licensed
Products.

(b)To the Knowledge of Seller and its Affiliates, Incyte is in compliance with
its obligations to develop each of the Licensed Products currently being
developed under the Incyte Agreement and to seek and obtain regulatory approvals
from applicable Governmental Authorities for such Licensed Products.  

(c)Merck has been responsible for the clinical development of the Licensed
Product being clinically developed under the Merck Agreement and is responsible
for seeking all applicable regulatory approvals from applicable Governmental
Authorities for such Licensed Product, and Seller Parent or its Affiliates have
no responsibility for the development of such Licensed Product nor for seeking
any regulatory approvals from any Governmental Authorities for such Licensed
Product.

(d)To the Knowledge of Seller and its Affiliates, Merck is in compliance with
its obligations to develop the Licensed Product currently being developed under
the Merck Agreement and seek and obtain regulatory approvals from applicable
Governmental Authorities for such Licensed Product.  

- 14 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(e)Other than (i) the Incyte Agreement, (ii) the Merck Agreement, (iii) the LICR
Agreement, (iv) the Transaction Documents, (v) any third party contractor
agreements entered into on Incyte’s behalf in performance of pre-clinical
services, (vi) agreements with the Secured Party, and (vii) the statutory right
of remuneration arising under German law, as of the Closing, neither Seller
Parent nor any of its Affiliates shall have entered into, are a party to, or are
otherwise subject to any agreement, contract, instrument or other binding
obligation that in any way relates to or involves the Royalties, Milestones or
the Products (which, for purposes of clarity, the parties acknowledge and agree
shall not include any agreement, contract, instrument or other binding
obligation that relates to the Patent Rights but does not otherwise relate to or
involve the Royalties, Milestones or the Products and shall not include any
expired material transfer, research or similar agreement or contract
manufacturing or similar agreement relating to or involving the Royalties,
Milestones or the Products).

(f)To the Knowledge of Seller and its Affiliates, neither Seller Parent nor
Seller nor any of their Affiliates has received any information from Incyte or
Merck, as applicable, or any Third Party or Governmental Authority, whether
through any form of written, oral or digital communication and whether or not
under any of the express provisions of the Incyte Agreement or the Merck
Agreement, as applicable (including pursuant to any joint steering committee
meeting or the meeting of any other organized body provided for under any such
agreement) relating to any of the Licensed Products (including any of the
clinical trials for any of the Licensed Products or any of the studies related
to those clinical trials) that would reasonably be expected to result in a
Material Adverse Effect.

(g)To the actual knowledge of the Specified Persons, no Third Party Patent that
Incyte or Merck, as applicable, does not have the right to use, has been, or is
infringed by Incyte’s or Merck’s, as applicable, Exploitation of an applicable
Licensed Product.

(h)Neither Seller Parent nor Agenus Switzerland has (i) received any notice of
any dispute from LICR, including pursuant to Article 8 of the LICR Agreement, or
(ii) given any notice of any dispute to LICR, including pursuant to Article 8 of
the LICR Agreement.

Section 3.12Intellectual Property Matters.  

(a)Exhibit E sets forth an accurate and complete list of all pending Licensed
Patents licensed to Incyte pursuant to the Incyte Agreement, and, to the
Knowledge of Seller and its Affiliates, Exhibit E sets forth an accurate and
complete list of all pending Licensed Patents licensed to Merck pursuant to the
Merck Agreement, including for each such Licensed Patent: (i) the jurisdictions
in which such Licensed Patent application is pending, (ii) the pending patent
application serial number, and (iii) the owner of such Licensed Patent
application.

(b)To the Knowledge of Seller and its Affiliates, the Licensed Patents have been
diligently prosecuted in accordance with applicable Law.  To the Knowledge of
Seller and its Affiliates, each individual involved in the filing and
prosecution of the Licensed Patents has complied in all material respects with
all applicable duties of candor and good faith in dealing with the United States
Patent Office in connection with the filing and prosecution of the Licensed
Patents.

- 15 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(c)To the Knowledge of Seller and its Affiliates, (i) there are no unpaid
maintenance or renewal fees payable by Seller to any Governmental Authority or
Third Party that currently are overdue for any of the Licensed Patents and (ii)
no Licensed Patents have lapsed or been abandoned, cancelled or expired.

(d)To the Knowledge of Seller and its Affiliates, the Licensed Patents have not
been the subject of any litigation, interference, reissue, inter partes review,
post-grant review, or re-examination proceedings.

(e)To the Knowledge of Seller and its Affiliates, Seller Parent has not received
any written notice of any pending or threatened Dispute, litigation,
interferences, inter partes reviews, post-grant reviews, reexaminations, or like
patent office proceedings involving any Licensed Patents.

(f)To the Knowledge of Seller and its Affiliates, neither Seller Parent or any
of its Affiliates has received written notice of any threatened or actual
action, suit or proceeding that claims that the manufacture, use, marketing,
sale, offer for sale, importation or distribution of a Product infringes any
patent or other intellectual property rights of any other Person or constitutes
misappropriation of any other Person’s trade secrets or other intellectual
property rights.

(g)To the Knowledge of Seller and its Affiliates, there is no Third Party
infringing any Licensed Patents.  Neither Seller nor any of its Affiliates has
received any notice of infringement of any Licensed Patents.

Section 3.13No Other Representations or Warranties.  

Except for the representations and warranties contained in this Article III,
neither Seller Party nor any other Person has made or makes any other express or
implied representation or warranty, either written or oral, on behalf of a
Seller Party, including any representation or warranty as to the accuracy or
completeness of any information regarding the Purchased Royalty Interests, the
Licensed Products or the Royalties furnished or made available to Purchaser or
its Representatives (including any information, documents, management
presentations or material delivered to Purchaser, or in any other form in
expectation of the transactions contemplated hereby) or as to the future
revenue, profitability or success of the Licensed Products, or any
representation or warranty arising from statute or otherwise in Law.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Purchaser represents and warrants to the Seller Parties as of the date first
written above, the following:

Section 4.01Organization.

Purchaser is a limited liability company duly formed, validly existing and in
good standing under the laws of Delaware and has all powers and all licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.

- 16 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

Section 4.02Authorization.

Purchaser has all necessary power and authority to enter into, execute and
deliver the Transaction Documents and to perform all of the obligations to be
performed by it hereunder and thereunder and to consummate the transactions
contemplated hereunder and thereunder.  The Transaction Documents have been duly
authorized, executed and delivered by Purchaser and each Transaction Document
constitutes the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject, as to enforcement of remedies,
to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and general equitable principles.

Section 4.03Broker’s Fees.

Purchaser has not taken any action that would entitle any Person to any
commission or broker’s fee that would be payable by Seller or its Affiliates in
connection with the transactions contemplated by the Transaction Documents.

Section 4.04Conflicts.

Neither the execution and delivery of this Agreement or any other Transaction
Document nor the performance or consummation of the transactions contemplated
hereby or thereby will:  (i) contravene, conflict with, result in a breach or
violation of, constitute a default under, or accelerate the performance provided
by, in any material respects, any provisions of (A) any law, rule or regulation
of any Governmental Authority, or any judgment, order, writ, decree, permit or
license of any Governmental Authority, to which Purchaser or any of its assets
or properties may be subject or bound; or (B) any contract, agreement,
commitment or instrument to which Purchaser is a party or by which Purchaser or
any of its assets or properties is bound or committed; (ii) contravene, conflict
with, result in a breach or violation of, constitute a default under, or
accelerate the performance provided by, any provisions of any organizational or
constitutional documents of Purchaser; or (iii) require any notification to,
filing with, or consent of, any Person or Governmental Authority.

Section 4.05Access to Information.

Purchaser acknowledges that it has (i) reviewed the Incyte Agreement and the
Merck Agreement and such other documents and information relating to the
Licensed Products and (ii) has had the opportunity to ask such questions of, and
to receive answers from, representatives of Seller concerning the Incyte
Agreement, the Merck Agreement and the Licensed Products, in each case as it
deemed necessary to make an informed decision to purchase the Purchased Royalty
Interests in accordance with the terms of this Agreement. Purchaser acknowledges
the early stage nature of the Licensed Products and accepts the risks associated
with the development and potential commercialization of early stage
biopharmaceutical products.  Purchaser has such knowledge, sophistication and
experience in financial and business matters that it is capable of evaluating
the risks and merits of purchasing the Purchased Royalty Interests in accordance
with the terms of this Agreement.

- 17 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 4.06Financing.

Purchaser has sufficient funds available to consummate all of the transactions
contemplated by any of the Transaction Documents and to pay the Purchase Price
and all other cash amounts required to be paid in connection with the
transactions contemplated by the Transaction Documents, and, when so required to
pay or otherwise perform, as applicable, Purchaser will be able to pay or
otherwise perform the obligations of Purchaser or any of its Affiliates under
the Transaction Documents (including the Purchase Price payment at Closing and
all other cash amounts required to be paid at or in connection with the
Closing).  Purchaser acknowledges and agrees that its obligations under this
Agreement are not contingent on obtaining financing.

ARTICLE V
COVENANTS

The parties covenant and agree as follows:

Section 5.01Books and Records.

(a)Subject to Section 5.02(g), as promptly as practicable (but in no event more
than two (2) Business Days) after receipt by Seller Parent or any of its
Affiliates of notice of any action, claim, investigation or proceeding
(commenced or threatened) relating to the transactions contemplated by any
Transaction Document or the Purchased Royalty Interests that, if determined
adversely, would reasonably be expected to result in a Material Adverse Effect,
Seller Parent shall inform Purchaser of the receipt of such notice and the
substance of such action, claim, investigation or proceeding and, if in writing,
shall furnish Purchaser with a copy of such notice and any related materials
with respect to such action, claim, investigation or proceeding.

(b)Seller shall keep and maintain, or cause to be kept and maintained, full and
accurate books of accounts and records adequate to reflect accurately all
Royalties and Milestones paid and/or payable with respect to the Incyte
Agreement and the Merck Agreement and all deposits made into, and disbursements
made from, the Joint Escrow Account.  Seller shall provide information as the
amount and calculation of the amount of all Royalties and Milestones paid into
the Joint Escrow Account hereunder in sufficient detail for Purchaser to review
the same for accuracy and shall certify that such calculations are correct.

(c)Subject to Section 5.02(g), Purchaser shall have the right, from time to
time, not more than twice per calendar year to request a meeting or
teleconference with the appropriate representatives of Seller Parent to discuss
the progress of the development of the Products, and/or during normal business
hours and upon at least ten (10) Business Days’ prior written notice to Seller,
to visit the offices and properties of Seller where books and records relating
or pertaining to the Purchased Royalty Interests are kept and maintained, to
inspect and make extracts from and copies of such books and records, to discuss,
with officers of Seller, the Purchased Royalty Interests and to verify
compliance with the provisions of the Transaction Documents, including, without
limitation, provisions relating to the receipt and application of the Royalties
and Milestones.  

- 18 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(d)Subject to Section 5.02(g), as promptly as practicable (but in no event more
than five (5) Business Days) after receipt by Seller Parent or any of its
Affiliates of any material written notice, certificate, offer, proposal,
correspondence, report or other material written communication from Incyte,
Merck, or any other payor of any Royalties or Milestones, or any Governmental
Authority directly relating to or referencing the Purchased Royalty Interests,
Seller Parent shall inform Purchaser of such receipt and the substance contained
therein and, if requested by Purchaser, shall furnish Purchaser with a copy of
such material written notice, certificate, offer, proposal, correspondence,
report or other material written communication.

Section 5.02Confidentiality; Public Announcement.

(a)Except as expressly authorized in this Agreement or the other Transaction
Documents or except with the prior written consent of Seller Parent, Purchaser
hereby agrees that (i) it will use the Confidential Information of the Seller
Parties solely for the purpose of the transactions contemplated by this
Agreement and the other Transaction Documents and exercising its rights and
remedies and performing its obligations hereunder and thereunder; (ii) it will
keep confidential the Confidential Information of the Seller Parties; and (iii)
it will not furnish or disclose to any Person any Confidential Information of
the Seller Parties.

(b)Subject to Section 5.02(f), but otherwise notwithstanding anything to the
contrary set forth in this Agreement or any other Transaction Document,
Purchaser may, without the consent of Seller Parent, furnish or disclose
Confidential Information of the Seller Parties to Purchaser’s Affiliates and its
and their actual and potential partners, directors, officers, employees,
managers, officers, investors, co-investors, partners, financing parties,
bankers, agents, consultants, advisors, insurers, rating agencies,
self-regulatory organizations, trustees and representatives (“Representatives”)
on a need-to-know basis provided that such Persons shall be informed of the
confidential nature of such information and shall be obligated to keep such
information confidential pursuant to the terms of this Section 5.02.  Each party
hereby acknowledges that the United States federal and state securities laws
prohibit any Person that has material, non-public information about a company
from purchasing or selling securities of such a company or from communicating
such information to any other Person under circumstances in which it is
reasonably foreseeable that such Person is likely to purchase or sell such
securities.

(c)If Purchaser, its Affiliates or their respective Representatives are required
by applicable law or legal or judicial process (including by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to furnish or disclose any portion of the Confidential
Information of the Seller Parties, Purchaser shall, to the extent practicable
and legally permitted, provide such Seller Party, as promptly as practicable,
with written notice of the existence of, and terms and circumstances relating
to, such requirement, so that such Seller Party may seek a protective order or
other appropriate remedy, at such Seller Party’s expense (and, if such Seller
Party seeks such an order, Purchaser, such Affiliates or such Representatives,
as the case may be, shall provide, at such Seller Party’s expense, such
cooperation as such Seller Party shall reasonably require).  Subject to the
foregoing, Purchaser, such Affiliates or such Representatives, as the case may
be, may disclose that portion (and only that portion) of the Confidential
Information of such Seller Party that is legally required to be disclosed;
provided, however, that Purchaser, such Affiliates or such Representatives, as
the case may be, shall exercise reasonable efforts (at the Seller Parties’
expense) to preserve the confidentiality of the Confidential Information of the
Seller Parties, including by obtaining reliable assurance that confidential
treatment will be accorded any such Confidential Information disclosed.  

- 19 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(d)Subject to Section 5.02(f), but otherwise notwithstanding anything to the
contrary contained in this Agreement or any of the other Transaction Documents,
Purchaser may disclose the Confidential Information of the Seller Parties, as
the case may be, including this Agreement, the other Transaction Documents and
the terms and conditions hereof and thereof, to the extent necessary in
connection with the enforcement of its rights and remedies hereunder or
thereunder or as required to perfect Purchaser’s rights hereunder or thereunder;
provided that, Purchaser shall only disclose that portion of the Confidential
Information that its counsel advises that it is legally required to disclose and
will exercise commercially reasonable efforts to ensure that confidential
treatment will be accorded to that portion of the Confidential Information that
is being disclosed, including requesting confidential treatment of information
in the Transaction Documents and Purchaser shall, to the extent practicable and
legally permitted, provide such Seller Party, as promptly as practicable, with
written notice of such request for confidential treatment of information in the
Transaction Documents, so that such Seller Party may also seek a protective
order or other appropriate remedy.  In any event, Purchaser will not oppose
action by a Seller Party to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Information in the event that confidential treatment cannot be obtained by
Purchaser.

(e)Subject to Section 5.02(d), each of Seller Parent, Seller and Purchaser shall
not, and shall cause their respective Affiliates not to, without the prior
written consent of the other party, issue any press release or make any other
public disclosure with respect to the transactions contemplated by this
Agreement or any other Transaction Document, except if and to the extent that
any such release or disclosure is required by applicable law or by any
Governmental Authority of competent jurisdiction, including in connection with
such party’s filings with the Securities and Exchange Commission, its successor
or foreign equivalent, in which case, Seller Parent, Seller, Purchaser or their
respective Affiliates, as the case may be, shall use commercially reasonable
efforts to consult in good faith with the other party regarding the form and
content thereof before issuing such press release or making such public
announcement; provided however, that once a party consults with the other
parties regarding a release or disclosure, such party may continue to make
substantially similar releases or discloses in the future without the need to
consult the other parties.

(f)If a Seller Party discloses or furnishes to Purchaser any Confidential
Information, that a Seller Party received as a Recipient (as defined in the
Incyte Agreement) pursuant to the Incyte Agreement (such Confidential
Information, “Incyte Confidential Information”), pursuant to this Agreement,
then with respect to all Incyte Confidential Information so disclosed or
furnished, Purchaser hereby agrees to be bound by Article 11 of the Incyte
Agreement with respect to the confidentiality and non-use of such Incyte
Confidential Information, in addition to the confidentiality and non-use
obligations under this Agreement.

- 20 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(g)If a Seller Party reasonably believes that the provision of any notice,
books, records, discussion, certificate, offer, proposal, correspondence, report
or other written communication to Purchaser pursuant to this Agreement would
constitute a Confidentiality Breach, then such Seller Party shall instead
provide Purchaser (i) a written summary of all information contained in such
notice, books, records, discussion, certificate, offer, proposal,
correspondence, report or other written communication; provided that to the
extent that such Seller Party reasonably believes that providing Purchaser with
any portion of the summary set forth in clause (i) would constitute a
Confidentiality Breach, then such Seller Party shall instead (ii) paraphrase or
otherwise describe the substance of such portion of such notice, books, records,
discussion, certificate, offer, proposal, correspondence, report or other
written communication to the maximum extent possible without causing a
Confidentiality Breach in the reasonable belief of such Seller Party.

Section 5.03Commercially Reasonable Efforts; Further Assurance.

Subject to the terms and conditions of this Agreement, each party hereto will
use its commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary under applicable
laws and regulations to consummate the transactions contemplated by any
Transaction Document.  Purchaser and the Seller Parties agree to execute and
deliver such other documents, certificates, agreements and other writings and to
take such other actions as may be necessary in order to consummate or implement
expeditiously the transactions contemplated by any Transaction Document and to
vest in Purchaser good, valid and marketable rights and interests in and to the
Purchased Royalty Interests free and clear of all Liens, other than Permitted
Liens.  

Section 5.04Remittance to Joint Escrow Account.

(a)Not later than thirty (30) Business Days following the Closing Date, Seller
and Purchaser shall establish the Joint Escrow Account and Seller and Purchaser,
each acting reasonably, shall execute and deliver all documents, certificates
and agreements as are reasonably required to establish the Joint Escrow Account.

(b)The Joint Escrow Account shall be maintained by Seller and Purchaser
throughout the term of this Agreement.

(c)Seller Parent and/or its Affiliates shall instruct and use commercially
reasonable efforts to cause the payor of any Royalties and Milestones (including
Incyte and Merck) to pay such Royalties and Milestones directly into the Joint
Escrow Account, and in furtherance thereof, promptly following the establishment
of the Joint Escrow Account, Seller Parent shall send an irrevocable letter
executed by a duly authorized officer of Seller Parent to each of Incyte and
Merck in the form attached hereto as Exhibit F to Incyte (the “Incyte Direction
Letter”) and in the form attached hereto as Exhibit G to Merck (the “Merck
Direction Letter”), with instructions to pay all such Royalties and Milestones
payable under the Incyte Agreement or the Merck Agreement, as applicable, to the
Joint Escrow Account.  Without in any way limiting the foregoing, commencing on
the Closing Date and at any time thereafter, any and all Purchased Royalty
Interests received by Seller Parent or any of its Affiliates shall be held in
trust for the benefit of Purchaser and transferred to the Joint Escrow Account
within five (5) Business Days of Seller Parent’s or its Affiliate’s knowledge of
its receipt thereof.  

- 21 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 5.05Incyte Agreement, Merck Agreement.

(a)Neither Seller Parent nor its Affiliates shall, without the written consent
of Purchaser, (i) forgive, release or compromise, or agree to any delay or
postponement of the payment of, any Purchased Royalty Interests owed under the
Incyte Agreement or the Merck Agreement, as applicable, (ii) waive, amend,
cancel or terminate, exercise or fail to exercise any of their rights
constituting or involving the right to receive the Purchased Royalty Interests,
(iii) amend, modify, restate, cancel, supplement, terminate or waive any
provision of the Incyte Agreement, the LICR Agreement or the Merck Agreement, as
applicable, or grant any consent thereunder, or agree to do any of the
foregoing, including entering into any agreement with Incyte, LICR or Merck, as
applicable, under the provisions of the Incyte Agreement or the Merck Agreement,
respectively, in all such cases, referring to or directly involving, the
Purchased Royalty Interests, if the effect thereof would reasonably be expected
to result in an adverse effect on the Purchased Royalty Interests, (iv) create,
incur, assume or suffer to exist any Lien, upon or with respect to the Purchased
Royalty Interests, or agree to do or suffer to exist any of the foregoing,
except for any Permitted Liens, (v) amend Sections 7.5 or 7.6 of the Incyte
Agreement or (vi) amend Sections 5.4 or 5.5 of the Merck Agreement.  

(b)Subject to Section 5.02(g), Seller Parent shall, as promptly as practicable,
provide to Purchaser copies of any formal notice or report directly relating to
the Purchased Royalty Interests and prepared by Incyte or Merck, as applicable,
it has received pursuant to the Incyte Agreement or the Merck Agreement, as
applicable.

(c)Subject to Section 5.02(g), as promptly as practicable after (A) receiving
written or oral notice from Incyte or Merck, as applicable (i) terminating the
Incyte Agreement or the Merck Agreement, respectively, (ii) alleging any breach
of or default or dispute under the Incyte Agreement or the Merck Agreement, as
applicable, by Seller Parent which, if not cured or adversely determined, as
applicable, could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, or (iii) asserting the existence of any
facts, circumstances or events which alone or together with other facts,
circumstances or events could reasonably be expected (with or without the giving
of notice or passage of time or both) to give rise to a breach of or default
under the Incyte Agreement or the Merck Agreement, as applicable, by Seller
Parent which, if not cured, could reasonably be expected to result in a Material
Adverse Effect, or give rise to the right to terminate the Incyte Agreement, or
the Merck Agreement, as applicable, by Incyte or Merck, respectively, or (B)
Seller or any of its Affiliates obtains Knowledge of any fact, circumstance or
event which alone or together with other facts, circumstances or events could
reasonably be expected (with or without the giving of notice or passage of time
or both) to give rise to a breach of or default under the Incyte Agreement or
the Merck Agreement, as applicable, by Seller Parent or its Affiliates which, if
not cured, could reasonably be expected to result in a Material Adverse Effect,
or give rise to the right to terminate the Incyte Agreement, or the Merck
Agreement, as applicable, by Incyte or Merck, respectively, in each case, Seller
Parent shall promptly give a written notice to Purchaser describing in
reasonable detail the relevant dispute, breach or default, including a copy of
any written notice received from Incyte or Merck, as applicable, and, in the
case of any breach or default or alleged breach or default by Seller Parent,
describing in reasonable detail any action Seller Parent proposes to take to
dispute or correct such dispute, alleged breach or default and (i) dispute such
breach or default, or (ii) cure as promptly as practicable such breach or
default in accordance with applicable Law and in a manner consistent in all
material respects with the standard with which Seller Parent or its Affiliates
would dispute or cure a breach in the administration of its own business
(assuming, for these purposes, that the Incyte Agreement or the Merck Agreement,
as applicable, were the only business of Seller Parent).

- 22 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(d)Seller Parent shall not take any actions under the Merck Agreement, the
Incyte Agreement or the LICR Agreement that could reasonably be expected to
result in a Material Adverse Effect without the prior written consent of
Purchaser.  Notwithstanding anything to the contrary contained in this
Agreement, Seller Parent and its Affiliates may directly or indirectly
(including by sublicense or otherwise) research, develop, manufacture, use,
sell, offer for sale (including marketing and promotion), import, distribute or
otherwise commercialize any biopharmaceutical product or products, except as
would be a breach of the Incyte Agreement or the Merck Agreement.

(e)Seller Parent shall, except as would not reasonably be expected to result in
a Material Adverse Effect, ensure that all licenses, covenants, releases and
other rights granted under the Incyte Agreement or the Merck Agreement, as
applicable, by or on behalf of Seller Parent and each of its Affiliates are, and
shall at all such times remain, valid, enforceable and in full force and effect
to the extent required by the Incyte Agreement or the Merck Agreement, as
applicable.

Section 5.06Audits.

(a)Consultation.  During the term of this Agreement, Seller Parent and Purchaser
shall consult with each other regarding the timing, manner and conduct of any
audit of Incyte’s or Merck’s records, as applicable, with respect to the
Royalties and the Milestones.  If in the course of such consultation, Purchaser
requests that Seller Parent conduct an inspection or audit of Incyte’s or
Merck’s records, as applicable (each a “Purchaser-Requested Audit”), with
respect to the Royalties and the Milestones, as applicable, Seller Parent shall
consider such request in good faith and act on such request in a manner
consistent in all material respects with the standard with which Seller Parent
would act in the administration of its own business (assuming, for these
purposes, that the Incyte Agreement or the Merck Agreement, as applicable, were
the only business of Seller Parent).  During any time that the Purchased Royalty
Interests owned by Purchaser constitute a greater percentage of the royalties
associated with the Incyte Agreement or the Merck Agreement than is then owned
by Seller and its Affiliates, then the above-referenced Purchaser-Requested
Audit (and the below referenced License Party Audit) shall become an automatic
mandatory rights of Purchaser (with Seller Parent or its assignee retaining its
own separate right) not subject to Seller’s prior consent and Purchaser shall
have the right to require Seller and its Affiliates to enforce provisions
contained in the Incyte Agreement or the Merck Agreement as applicable.

(b)Audits.  To the extent Seller Parent has the right to perform or cause to be
performed inspections or audits under the Incyte Agreement or the Merck
Agreement, as applicable, regarding payments payable and/or paid thereunder
(each, a “License Party Audit”), Seller Parent, subject to Section 5.06(a),
shall exercise such right in Seller Parent’s sole discretion.  If conducting a
Purchaser-Requested Audit, Seller Parent shall, to the extent permitted by the
Incyte Agreement or the Merck Agreement, as applicable, select such public
accounting firm to conduct the Purchaser-Requested Audit as Purchaser shall
reasonably recommend, and reasonably acceptable to Seller Parent, for such
purpose.  Subject to Section 5.02(g), as promptly as practicable after
completion of any License Party Audit (whether or not requested by Purchaser),
Seller Parent shall deliver to Purchaser an audit report summarizing the results
of such License Party Audit.  If an inspection or audit constitutes a
Purchaser-Requested Audit, all of the expenses of any such Purchaser-Requested
Audit (including, without limitation, the fees and expenses of the

- 23 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

independent public accounting firm) that would otherwise be borne by Seller
Parent pursuant to the Incyte Agreement or the Merck Agreement, as applicable,
shall instead be borne (as such expenses are incurred, upon the provision to
Purchaser of written documentation evidencing such expenses) by Purchaser,
provided that any reimbursement by Incyte or Merck, as applicable, of the
expenses of the Purchaser-Requested Audit shall belong to Purchaser.  Any
deficiency in payments of Royalties or Milestones made by Incyte or Merck, as
applicable, demonstrated in a License Party Audit shall be paid promptly, in
accordance with the Incyte Agreement or the Merck Agreement, as applicable, to
Purchaser and Seller by deposit in the Joint Escrow Account for further
distribution to Purchaser and Seller pursuant to the terms hereof.

Section 5.07Notice.

Each Seller Party shall provide Purchaser with written notice as promptly as
practicable (and in any event within five (5) Business Days) after becoming
aware of any of the following:

i.any Bankruptcy Event;

ii.any material breach or default by a Seller Party of any covenant, agreement
or other provision of this Agreement or any other Transaction Document to which
such Seller Party is a party; or

iii.any representation or warranty made by Seller Parent in any of the
Transaction Documents or in any certificate delivered to Purchaser pursuant
hereto shall prove to be untrue, inaccurate or incomplete in any material
respect on the date as of which made;

with, in the case of clause (i) above, a copy to the Depository Bank.  If
Purchaser has actual notice of any Bankruptcy Event, it shall be entitled to
give written notice thereof to the Depository Bank, provided it concurrently
delivers a copy thereof to Seller.

Section 5.08Seller Operations.  

Except as permitted under Section 8.04, all of the equity interests in Seller
are, and shall always be, owned, directly or indirectly, by Seller
Parent.  Following the Closing, Seller will not acquire or otherwise possess any
assets or incur any liabilities, Liens (other than Permitted Liens) or other
obligations (contractual or otherwise) except in connection with the performance
of its obligations under the Transaction Documents or resulting out of the
ownership of assets that are not the Purchased Royalty Interests.  Seller will
not undertake any actions other than to enter into and perform its obligations
under the Transaction Documents and all documents, instruments, or agreements
directly related thereto.  Neither Seller nor Seller Parent or any of their
Affiliates or any manager of Seller shall amend or alter the Seller
Organizational Documents, agree to dissolve Seller or otherwise windup its
affairs or allow or take any action for Seller to become subject to any
Bankruptcy Event.  Seller Parent shall use commercially reasonable efforts to
complete the dissolution of Agenus Switzerland and the

- 24 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

transfer of all of the assets and liabilities of Agenus Switzerland to Seller
Parent in a timely fashion.

Section 5.09Special Purpose Vehicle Covenants

(a)Seller will at all times remain in existence as a limited liability company
separate and distinct from Seller Parent or any other Person and will not
consent to or enter into any agreement or contract with respect to any
reorganization, merger, recapitalization or consolidation of Seller with or into
any other Person.  Seller shall maintain its accounts, books and records
separate from any other Person (including Seller Parent) and will not commingle
any funds with any other Person (including Seller Parent).

(b)Seller shall not:

(i)fail to hold itself out to the public and all other Persons as a legal entity
separate from the owners of its capital stock and from any other Person;

(ii)commingle its assets with assets of any other Person except in connection
with, and for the limited purposes of, operation of the Joint Escrow Account;

(iii)fail to conduct its business only in its own name, nor fail to comply with
all organizational formalities necessary to maintain its separate existence;

(iv)fail to maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person nor have its
assets listed on any financial statement of any other Person; provided, however,
that Seller’s assets may be included in a consolidated financial statement of
its Affiliates in conformity with applicable provisions of GAAP (provided that
such assets shall also be listed on Seller’s own separate balance sheet);

(v)fail to pay its own liabilities and expenses only out of its own funds,
except in respect of short term advances to be repaid;

(vi)enter into any transaction with an Affiliate except transactions that are at
prices and on terms and conditions that could be obtained on an arm’s-length
basis from unrelated Third Parties;

(vii)fail to correct any known misunderstanding regarding its separate identity
and not identify itself as a department or division of any other Person;

(viii)fail to maintain adequate capital in light of its contemplated business
purpose, transactions and liabilities; provided, however, that the foregoing
shall not require the holders of its capital stock to make additional capital
contributions to Seller;

(ix)fail to cause the representatives of Seller to act at all times with respect
to Seller consistently and in furtherance of the foregoing and in the best
interests of Seller;

(x)make any payment or distribution of assets with respect to any obligation of
any other person other than as required under trade or commercial agreements
entered into in the ordinary course of business; or

- 25 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(xi)engage in any business activity other than as contemplated hereunder or
under the other Transaction Documents and any activities ancillary or related
thereto.

Section 5.10Patent Maintenance

(a)Seller Parent and its Affiliates shall, subject to the provisions of the
Incyte Agreement and any rights of Incyte thereunder, and except as would not
reasonably be expected to result in a Material Adverse Effect, (i) prosecute and
maintain the Licensed Patents licensed to Incyte in accordance with, and,
subject to, the Incyte Agreement, and (ii) not disclaim or abandon any of such
applicable Licensed Patents, or fail to take any commercially reasonable action
necessary to prevent the disclaimer or abandonment of such applicable Licensed
Patents, except, in each case, where the disclaimer or abandonment of any such
applicable Licensed Patents is commercially reasonable or is pursuant to
instruction by Incyte or Merck.  For the avoidance of doubt, Seller Parent shall
have no obligation to pursue, request or obtain patent term extension under 35
U.S.C. 156, or any foreign counterpart thereto, in connection with any Licensed
Patent.

(b)With respect to patent applications included in the Licensed Patents, Seller
Parent and its Affiliates shall exercise commercially reasonable judgment in the
continued prosecution and maintenance of each patent application included in the
Licensed Patents and of any continuation or divisional patent application
thereof.

Section 5.11[*]

If Seller Parent or an Affiliate [*] or [*] (as applicable), and/or [*] by [*],
as applicable, [*] Seller Parent or its Affiliates (any [*], a “[*]”)], and
Seller Parent or its Affiliates [*] or [*] or [*] with respect to the [*] and
[*] of such [*] (each a [*]), then this Agreement shall [*] or [*], as
applicable, [*] (e.g., the [*] in respect of [*] would result in [*]), and such
[*] shall be deemed to be part of the [*]. If Seller Parent or an Affiliate [*]
and Seller Parent or such Affiliate [*] or [*] (each a “[*]”) prior to the [*],
then on or before [*] of such [*], the parties shall [*] or [*], as applicable,
[*] (e.g., the [*] in respect of [*] would result in [*]). For purposes of the
foregoing, with respect to [*] that are [*], a [*] will consist of the [*] under
a [*] or by Seller under a [*], but only to the extent Seller or its Affiliates
[*] or [*] under the [*] or the [*] (as applicable) prior to [*].

ARTICLE VI
THE CLOSING; CONDITIONS TO CLOSING

Section 6.01Closing.

Subject to the closing conditions set forth in Sections 6.02 and 6.03, the
closing of the transactions contemplated under this Agreement (the “Closing”)
shall take place on the date hereof, or such later date as may be agreed upon by
Purchaser and Seller (such date, the “Closing Date”).  

- 26 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 6.02Conditions Applicable to Purchaser in Closing.

The obligations of Purchaser to effect the Closing, including the requirement to
pay the Purchase Price pursuant to Section 2.03, shall be subject to the
satisfaction of each of the following conditions, as of the Closing Date, any of
which may be waived by Purchaser in its sole discretion:

(a)Accuracy of Representations and Warranties.  The representations and
warranties of the Seller Parent set forth in the Transaction Documents shall be
true, correct and complete in all material respects, as of the Closing Date.

(b)No Adverse Circumstances.  There shall not have occurred or be continuing any
event or circumstance described in the definition of a Material Adverse Effect.

(c)Litigation.  No action, suit, litigation, proceeding or investigation shall
have been instituted, be pending or, to the Knowledge of Seller and its
Affiliates, threatened (i) challenging or seeking to make illegal, to delay or
otherwise directly or indirectly to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain damages in
connection with the transactions contemplated by this Agreement, or (ii) seeking
to restrain or prohibit Purchaser’s acquisition or future receipt of the
Purchased Royalty Interests.

(d)Officer’s Certificate.  Purchaser shall have received a certificate of the
President of Seller pursuant to which such officer certifies that the conditions
set forth in Sections 6.02(a), (b) and (c) shall have been satisfied in all
material respects.

(e)Bill of Sale.  A Bill of Sale substantially in the form set forth in Exhibit
A shall have been executed and delivered by Seller to Purchaser, and Purchaser
shall have received the same.

(f)Legal Opinion.  Purchaser shall have received the opinions of Goodwin Procter
LLP, counsel to Seller, in the form set forth in Exhibit H.

(g)Corporate Documents of Seller and Seller Parent.  Purchaser shall have
received certificates of an executive officer of each of Seller and Seller
Parent (the statements made in which shall be true and correct on and as of the
Closing Date):  (i) attaching copies, certified by such officer as true and
complete, of the certificate of formation or incorporation and the operating
agreement or by-laws, as applicable, of Seller or Seller Parent (as applicable);
(ii) attaching copies, certified by such officer as true and complete, of
resolutions of the board of directors or Sole Manager, as applicable, of Seller
or Seller Parent (as applicable) authorizing and approving the execution,
delivery and performance by Seller or Seller Parent (as applicable) of the
Transaction Documents and the transactions contemplated herein and therein;
(iii) setting forth the incumbency of the officer or officers of Seller or
Seller Parent (as applicable) who have executed and delivered the Transaction
Documents including therein a signature specimen of each officer or officers;
and (iv) attaching copies, certified by such officer as true and complete, of a
certificate of the appropriate Governmental Authority of Seller’s or Seller
Parent’s (as applicable) jurisdiction of incorporation, stating that such party
is in good standing under the laws of such jurisdiction.

- 27 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(h)Covenants.  (i) Seller shall have complied in all material respects with the
covenants set forth in the Transaction Documents and (ii) Seller Parent shall
have complied in all material respects with the covenants set forth in the
Transaction Documents to which it is a party.

(i)Financing Statements.  Purchaser shall have received such other certificates,
documents and financing statements as Purchaser may reasonably request,
including one or more financing statements satisfactory to Purchaser to create,
evidence and perfect the sale of the Purchased Royalty Interests pursuant to
Section 2.01(c) and the back-up security interest granted pursuant to
Section 2.01(d).

(j)Release of Liens.  Seller Parent shall have received an executed and
delivered authorization from HealthCare Royalty Partners III, L.P., as secured
party on its own behalf and in a representative capacity for certain of its
affiliates (the “Secured Party”) to release the Lien of the Secured Party on the
Purchased Royalty Interests pursuant to that certain Security Agreement dated
January 19, 2018, by and between Seller Parent and Secured Party.

Section 6.03Conditions Applicable to Seller in Closing.

The obligations of Seller to effect the Closing shall be subject to the
satisfaction of each of the following conditions, any of which may be waived by
Seller in its sole discretion:

(a)Accuracy of Representations and Warranties.  The representations and
warranties of Purchaser set forth in this Agreement shall be true, correct and
complete as of the Closing Date in all material respects.

(b)Litigation.  No action, suit, litigation, proceeding or investigation shall
have been instituted, be pending or, to the actual knowledge of Purchaser,
threatened (i) challenging or seeking to make illegal, to delay or otherwise
directly or indirectly to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain damages in
connection with the transactions contemplated by this Agreement, or (ii) seeking
to restrain or prohibit Purchaser’s acquisition of the Purchased Royalty
Interests.

(c)Officer’s Certificate.  Seller shall have received at the Closing a
certificate of an authorized representative of Purchaser certifying that the
conditions set forth in Sections 6.03(a), ((b)) and ((d)) have been satisfied in
all respects as of the Closing Date.

(d)Covenants.  Purchaser shall have complied in all material respects with the
covenants set forth in the Transaction Documents.

(e)Purchase Price.  Seller shall have received payment of the Purchase Price in
accordance with Section 2.03.

(f)Release of Liens.  Seller Parent shall have received an executed and
delivered Lien release from the Secured Party.

- 28 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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ARTICLE VII
EXPIRATION

Section 7.01Expiration Date.

This Agreement shall terminate six (6) months following receipt by Purchaser of
all payments of the Purchased Royalty Interests to which it is entitled
hereunder.

Section 7.02Effect of Expiration.

In the event of the expiration of this Agreement pursuant to Section 7.01, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto or its Affiliates, directors, officers,
stockholders, managers or members other than the provisions of this Section 7.02
and Sections 5.02, 8.01 and 8.05 hereof, which shall survive any termination as
set forth in Section 8.01.  Nothing contained in this Section 7.02 shall relieve
any party from liability for any breach of this Agreement.

ARTICLE VIII
MISCELLANEOUS

Section 8.01Survival.

All representations and warranties made herein and in any other Transaction
Document or any closing certificates delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
continue to survive until the receipt by Purchaser of the last payment due
pursuant to the terms of both the Incyte Agreement and the Merck
Agreement.  Notwithstanding anything in this Agreement or implied by law to the
contrary, all of the agreements contained in Sections 5.02, 8.01 and 8.05 shall
survive indefinitely following the execution and delivery of this Agreement and
the Closing and the expiration of this Agreement.

Section 8.02Specific Performance.

Each of the parties hereto acknowledges that the other parties will have no
adequate remedy at law if it fails to perform any of its obligations under any
of the Transaction Documents.  In such event, each of the parties agrees that
the other parties shall have the right, in addition to any other rights they may
have (whether at law or in equity), to specific performance of this Agreement.

- 29 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Section 8.03Notices.

All notices, consents, waivers and communications hereunder given by any party
to the other shall be in writing and delivered personally, by hand, by a
recognized overnight courier, or by dispatching the same by certified or
registered mail, return receipt requested, with postage prepaid, or by email
(provided any notice given by email shall also be given by another method of
delivery permitted by this Section 8.03), in each case addressed:

If to Purchaser:

XOMA (US) LLC

2200 Powell Street

Suite 310
Emeryville, CA 94608

Attention: Legal Department
Email: bob.maddox@xoma.com

 

with a copy (which shall not constitute notice) to:

 

Donahue Fitzgerald LLP

1999 Harrison St. 25th Floor

Oakland, California 94612

Attention:  Steven K. Lee, Esq.
Email: slee@donahue.com

If to Seller Parent:

Agenus Inc.

3 Forbes Road

Lexington, MA 02421

Attention: Legal Department

Email: evan.kearns@agenusbio.com

If to Seller:

Agenus Royalty Fund, LLC

3 Forbes Road

Lexington, MA 02421

Attention: Legal Department

Email: evan.kearns@agenusbio.com

with a copy (which shall not constitute notice) to:

Goodwin Procter LLP

100 Northern Ave

Boston, MA 02210

Attention: Arthur R. McGivern, Esq.

Email: AMcGivern@goodwinlaw.com

- 30 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

or to such other address or addresses as Purchaser, Seller Parent or Seller may
from time to time designate by notice as provided herein, except that notices of
changes of address shall be effective only upon receipt.  All such notices,
consents, waivers and communications shall:  (a) when posted by certified or
registered mail, postage prepaid, return receipt requested, be effective three
(3) Business Days after dispatch, unless such communication is sent
trans-Atlantic, in which case they shall be deemed effective five (5) Business
Days after dispatch, (b) when delivered by a recognized overnight courier or in
person, be effective upon receipt when hand delivered or (c) on the date sent by
e-mail of a PDF document if sent during normal business hours of the recipient,
and on the next Business Day if sent after normal business hours of the
recipient, and followed by a transmission pursuant to another method of delivery
permitted by this Section 8.03.

Section 8.04Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.  Neither
Seller Party shall be entitled to assign any of their obligations and rights
under the Transaction Documents to which such Seller Party is a party without
the prior written consent of Purchaser.  Purchaser may assign any of its
obligations and rights under the Transaction Documents, without restriction and
without the consent of Seller; provided that, notwithstanding any assignment
pursuant to this Section 8.04, Purchaser shall remain obligated with respect to
the payment of the Purchase Price in connection with the Closing.

Section 8.05Indemnification.

(a)Seller Parent hereby agrees to indemnify and hold Purchaser and its
Affiliates and any of their respective partners, directors, managers, members,
officers, employees and agents (each a “Purchaser Indemnified Party”) harmless
from and against any and all Losses incurred or suffered by any Purchaser
Indemnified Party arising out of (i) any breach of any representation, warranty
or certification made by a Seller Party in any of the Transaction Documents to
which such Seller Party is a party or certificates given by such Seller Party in
writing pursuant hereto or thereto, (ii) any breach of or default under any
covenant or agreement by a Seller Party pursuant to any Transaction Document to
which such Seller Party is a party; (iii) any Excluded Liabilities and
Obligations, (iv) any breach of any representation, warranty or certification
made by a Seller Party in any of the Transaction Documents to which such Seller
Party is party or certificates given by a Seller Party to Purchaser in writing
pursuant to any Transaction Document to which such Seller Party is a party, to
the extent directly or indirectly related to the Purchased Royalty Interests or
the Purchaser’s interest therein or (v) any breach of or default under any
covenant or agreement by a Seller Party pursuant to any Transaction Document to
which such Seller Party is party, to the extent directly or indirectly related
to the Purchased Royalty Interests or Purchaser’s interest therein; provided
that the foregoing shall exclude any indemnification to any Purchaser
Indemnified Party (i) that results from the gross negligence or willful
misconduct of such Purchaser Indemnified Party, or (ii) to the extent resulting
from acts or omissions of Seller Parent or any of its Affiliates based upon the
written instructions from any Purchaser Indemnified Party.

- 31 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(b)Purchaser hereby agrees to indemnify and hold Seller Parent, its Affiliates
and any of their respective partners, directors, managers, officers, employees
and agents (each a “Seller Indemnified Party”) harmless from and against any and
all Losses incurred or suffered by a Seller Indemnified Party arising out of any
breach of any representation, warranty or certification made by Purchaser in any
of the Transaction Documents or certificates given by Purchaser in writing
pursuant hereto or thereto or any breach of or default under any covenant or
agreement by Purchaser pursuant to any Transaction Document, to the extent any
such Losses are not subject to indemnification by Seller hereunder; provided,
however, that the foregoing shall exclude any indemnification to any Seller
Indemnified Party (i) that results from the gross negligence or willful
misconduct of such Seller Indemnified Party, or (ii) to the extent resulting
from acts or omissions of Purchaser or any of its Affiliates based upon the
written instructions from any Seller Indemnified Party.

(c)If any claim, demand, action or proceeding (including any investigation by
any Governmental Authority) shall be brought or alleged against an indemnified
party in respect of which indemnity is to be sought against an indemnifying
party pursuant to the preceding paragraphs, the indemnified party shall,
promptly after receipt of notice of the commencement of any such claim, demand,
action or proceeding, notify the indemnifying party in writing of the
commencement of such claim, demand, action or proceeding, enclosing a copy of
all papers served, if any, provided that, the omission to so notify such
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party under the foregoing provisions of this
Section 8.05 unless, and only to the extent that, such omission results in the
forfeiture of, or have a material adverse effect on the exercise or prosecution
of, substantive rights or defenses by the indemnifying party.  In case any such
action is brought against an indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish and provided that the
indemnifying party acknowledges in writing to the indemnified party that it
would have an indemnity obligation pursuant to this Section 8.05 with respect to
such action, to assume and control the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 8.05 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.  In any such proceeding, an indemnified party
shall have the right to retain its own counsel, but the reasonable fees and
expenses of such counsel shall be at the expense of such indemnified party;
provided that the indemnifying party shall be responsible for the indemnified
party’s reasonable fees and expenses of such counsel if (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the indemnifying party has assumed the defense of such
proceeding and has failed within a reasonable time to retain counsel reasonably
satisfactory to such indemnified party or (iii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interests between
them based on the advice of counsel to the indemnified party.  It is agreed that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate law firm (in addition to local counsel where
necessary) for all such indemnified

- 32 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

parties.  The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any
indemnifiable Loss under this Agreement by reason of such settlement or
judgment.  No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement (i) includes an unconditional written release of such
indemnified party, in form and substance reasonably satisfactory to the
indemnified party, from all liability on claims that are the subject matter of
such claim or proceeding, (ii) does not include any statement as to an admission
of fault, culpability or failure to act by or on behalf of any indemnified party
and (iii) does not impose any continuing material obligation or restrictions on
any indemnified party.

(d)No claim for indemnification hereunder for breach of any representations or
warranties contained in any Transaction Document may be made after the
expiration of the survival period applicable to such representation or warranty;
provided that any written claim for breach thereof made prior to such expiration
date and delivered to the party against whom such indemnification is sought
shall survive thereafter with respect to such claim.

(e)Following the date first written above, except in the case of fraud or
intentional breach, the indemnification afforded by this Section 8.05 shall be
the sole and exclusive remedy for any and all Losses sustained or incurred by a
party hereto in connection with the transactions contemplated by the Transaction
Documents, including with respect to any breach of any representation, warranty
or certification made by a party hereto in any of the Transaction Documents or
certificates given by a party in writing pursuant hereto or thereto or any
breach of or default under any covenant or agreement by a party pursuant to any
Transaction Document.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS AGREEMENT OR PROVIDED FOR UNDER APPLICABLE LAW, EXCEPT AS PROVIDED FOR IN
THIS SECTION 8.05 AND FOR INSTANCES OF ACTUAL FRAUD OR WILLFUL MISCONDUCT, NONE
OF THE PARTIES HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO OR ANY PERSON,
WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR MULTIPLE DAMAGES OR LOST
PROFITS  RELATING TO THE BREACH OR ALLEGED BREACH HEREOF, WHETHER OR NOT THE
POSSIBILITY OF SUCH DAMAGES HAVE BEEN DISCLOSED TO ANY PARTY HERETO IN ADVANCE
OR COULD HAVE BEEN REASONABLY FORESEEN.  Notwithstanding the foregoing, in the
event of any breach or failure in performance of any covenant or agreement
contained in any Transaction Document, the non-breaching party shall be entitled
to seek specific performance, injunctive or other equitable relief.  For
clarity, neither party shall have any right to terminate this Agreement or any
other Transaction Document as a result of any breach by the other party hereof
or thereof, but instead shall have the right to seek indemnification under this
Section 8.05 and such specific performance.

(f)Other than with respect to a breach of Sections 5.04, 5.08 or 5.09, or any
fraud or intentional breach, in no event shall the maximum aggregate amount of
Losses that may be recovered by the Purchaser Indemnified Parties under this
Agreement pursuant to Section 8.05 [*].

- 33 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

Section 8.06Independent Nature of Relationship.

(a)The relationship between the Seller Parties, on the one hand, and Purchaser
is solely that of sellers and purchaser, and neither Purchaser nor Seller has
any fiduciary or other special relationship with the other or any of their
respective Affiliates.  Nothing contained herein or in any other Transaction
Document shall be deemed to constitute the Seller Parties and Purchaser as a
partnership, an association, a joint venture or other kind of entity or legal
form.  Any party shall not refer other party as a “partner” or the relationship
as a “partnership” or “joint venture”.

(b)No officer or employee of Purchaser will be located at the premises of Seller
Parent or any of its Affiliates.  No officer, manager or employee of Purchaser
shall engage in any commercial activity with Seller Parent or any of its
Affiliates other than as contemplated herein and in the other Transaction
Documents.

(c)Seller Parent and/or any of its Affiliates shall not at any time obligate
Purchaser, or impose on Purchaser any obligation, in any manner or respect to
any Person not a party hereto.

Section 8.07Tax.

(a)For U. S, federal, state and local income tax purposes, Seller and Purchaser
shall treat the transactions contemplated by the Transaction Documents as a sale
of the Purchased Royalty Interests.  The parties hereto agree not to take any
position that is inconsistent with the provisions of this Section 8.07(a) on any
tax return or in any audit or other administrative or judicial proceeding unless
otherwise required by law (including a good faith resolute of any tax
audit).  If there is an inquiry by any Governmental Authority of Purchaser or
Seller related to this Section 8.07(a), Seller and Purchaser shall cooperate in
responding to such inquiry in a reasonable manner consistent with this Section
8.07(a).

(b)To the extent any amount is withheld at source from a payment made pursuant
to the Incyte Agreement or the Merck Agreement, as applicable, such withheld
amount shall for all purposes of this Agreement be treated as paid to Seller and
Purchaser on a pro rata basis in accordance with each of the party’s underlying
ownership interest in each such payment (taking into account any amounts
withheld); e.g., with respect to Purchaser, amounts so withheld shall be
attributed to Purchaser, and deemed paid to Purchaser, in accordance with the
Purchased Royalty Interests.  Any amounts withheld pursuant to this Section
8.07(b) attributable to Purchaser shall be credited for the account of
Purchaser.  If there is an inquiry by any Governmental Authority of Purchaser
related to this Section 8.07, Seller shall cooperate with Purchaser in
responding to such inquiry in a reasonable manner consistent with this Section
8.07.  Neither party shall have any obligation to gross-up or otherwise pay the
other party any amounts with respect to source withholding.  All amounts
withheld at source as described herein shall for all purposes of this Agreement
be deemed to have been received by the party to which they are attributed as
provided above or to which the payment subject to such withholding was made.

- 34 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

(c)Any and all payments from Seller to Purchaser under this Agreement shall be
made without any deduction or withholding of any tax except as required by
applicable law, provided that Seller shall not make any deduction or withholding
of any U.S. tax as long as Purchaser has delivered to Seller a properly executed
IRS Form W-9 or any other applicable or successor forms prior to the payment and
that as a result withholding is not required by applicable law.  If any
withholding or deduction is required at source from a payment made pursuant to
the Incyte Agreement, the Merck Agreement or this Agreement, Seller and
Purchaser shall take commercially reasonable measures and cooperate with Incyte
or Merck, as applicable, to obtain any available reduction or exemption from
such tax.

Section 8.08Entire Agreement.

This Agreement, together with the Exhibits and Schedule hereto (which are
incorporated herein by reference), and the other Transaction Documents,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement.  No representation, inducement, promise,
understanding, condition or warranty not set forth herein (or in the Exhibits,
Schedule or other Transaction Documents) has been made or relied upon by either
party hereto.  None of this Agreement, nor any provision hereof, is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.

Section 8.09Governing Law.

This Agreement shall be construed in accordance with and governed by the laws of
the State of New York without giving effect to the principles of conflicts of
law thereof.  

Section 8.10Severability.

If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

Section 8.11Counterparts; Effectiveness.

This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.  This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other party
hereto.  Any counterpart may be executed by electronic signature and such
electronic signature shall be deemed an original.

- 35 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

Section 8.12Amendments; No Waivers.

(a)This Agreement or any term or provision hereof may not be amended, changed or
modified except with the written consent of the parties hereto.  No waiver of
any right hereunder shall be effective unless such waiver is signed in writing
by the party against whom such waiver is sought to be enforced.

(b)No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

 

[Signature page follows]

 

- 36 –

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

 

Agenus Inc.

 

 

By:

 

Name:

 

Title:

 

 

 

 

Agenus Royalty Fund, LLC

 

 

By:

 

Name:

 

Title:

 

 

 

 

[Signature Page to Royalty Purchase Agreement]

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

 

 

 

xoma (us) llc

 

 

By:

 

Name:

Jim Neal

Title:

CEO

 

[Signature Page to Royalty Purchase Agreement]

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.