Exhibit 10.1

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by the Registrant to the Securities and Exchange Commission (the
“Commission”). Such portions have been redacted and are marked with a “[***]” in
place of the redacted language. The redacted information has been filed
separately with the Commission.

ROYALTY INTEREST ASSIGNMENT AGREEMENT

between

EPOCH BIOSCIENCES, INC.

as Assignor

and

DRUG ROYALTY TRUST 9

as Assignee

and

NANOGEN, INC.

as Guarantor

September 29, 2006

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ROYALTY INTEREST ASSIGNMENT AGREEMENT

THIS AGREEMENT is made and entered into as of September 29, 2006,

BETWEEN:

EPOCH BIOSCIENCES, INC.,

a corporation organized and existing under the laws

of State of Delaware

(hereinafter referred to as “Epoch” or “Assignor”)

                                - and -

DRUG ROYALTY TRUST 9,

a Delaware trust acting through its manager

(hereinafter referred to as “Assignee”).

                                - and -

NANOGEN, INC.,

a corporation organized and existing under the laws

of the State of Delaware

(hereinafter referred to as “Nanogen” or “Guarantor”).

WHEREAS Assignor is a party to a Second Amended and Restated Collaboration,
License and Supply agreement with Applera Corporation (the “Licensee”) dated as
of August 17, 2000, as amended by the First Side Agreement dated October 31,
2001, the Amendment No. 1 to the Second Amended and Restated Collaboration,
License and Supply Agreement dated July 26, 2002 and Amendment No. 2 to the
Second Amended and Restated Collaboration, License and Supply Agreement dated as
of December 31, 2005 (as amended, the “License Agreement”);

AND WHEREAS Assignor wishes to sell, assign, convey and transfer to Assignee,
and Assignee wishes to purchase from Assignor, certain rights under the License
Agreement, upon and subject to the terms and conditions hereinafter set forth;

AND WHEREAS Nanogen as the parent corporation of Epoch has agreed to guarantee
the payment by Epoch of the Minimum Royalty Payments (as defined herein);

NOW THEREFORE for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

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ARTICLE 1

INTERPRETATION

 

1.1 Definitions

In this Agreement:

“Acquired Royalty Payments” means the First Stream Royalty Payments together
with the Second Stream Royalty Payments;

“Affiliate” means a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Person specified;

“Agreement” means this Royalty Interest Assignment Agreement, the recitals, all
attached exhibits and schedules, and any agreement, exhibit or schedule
supplementing or amending this Agreement. All uses of the words “hereto”,
“herein,” “hereof,” “hereby” and “hereunder” and similar expressions refer to
this Agreement and not to any particular section or portion of it;

“Applicable Law” means, in respect of any Person, property, transaction or
event, any statute, law, ordinance, rule, regulation, regulatory policy, order,
judgment or decree applicable to that Person, property, transaction or event;

“Assigned Interests” has the meaning specified in Section 2.1;

“Assignee” has the meaning specified in the introduction to this Agreement;

“Assignor” has the meaning specified in the introduction to this Agreement;

“Authorization” has the meaning specified in Section 7.2(e);

“Business Day” means any day of the week other than a Saturday, Sunday or a day
observed as a statutory or civic holiday in New York, New York;

“Closing Document” means any document, instrument, undertaking or agreement made
or delivered pursuant to or in connection with this Agreement;

“control” means, in respect of a legal Person, direct or indirect legal or
beneficial ownership of more than 50% of the voting interests in or the equity
or participation interests in, or the right to appoint more than 50% of the
directors or the management of, such Person;

“Effective Date” means the date hereof;

“Encumbrances” means liens, charges, security interests, mortgages, options,
privileges, pledges, trusts or deemed trusts (whether contractual, statutory or
otherwise) and any other encumbrance, right or claim of any other person of any
kind whatsoever;

“First Stream Royalty Payments” has the meaning specified in Section 2.1(a);

“Governmental Agency” means any domestic or foreign government whether federal,
state, provincial or municipal and any governmental agency, governmental
authority, governmental tribunal or governmental commission of any kind
whatever;

“including,” when used herein or in any Closing Document, means “including
without limitation” and shall not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it;

“Know-How” means Licensed Know-How, as that term is defined in the License
Agreement;

“License Agreement” has the meaning specified in the recitals to this Agreement;

“Licensee” has the meaning specified in the recitals to this Agreement;

“Licensee Acknowledgment” has the meaning specified in Section 7.2;

“Lock Box Account” has the meaning specified in Section 3.2(a);

“Lock Box Agreement” has the meaning specified in Section 3.2(b);

“Minimum Royalty Payments” has the meaning specified in Section 3.4;

“Notice” has the meaning specified in Section 10.6;

“Parties” means Epoch, Assignee and Nanogen, collectively, and “Party” means any
one of them;

“Patents” means the Licensed Patents and Related Patents, as those terms are
defined in the License Agreement, including those Patents and patent
applications set forth on Exhibit C attached hereto;

“Permitted Encumbrances” means (i) any license in intellectual property granted
prior to, or granted after the date hereof in accordance with Section
8.5(b)(iii), by Assignor, including patents and trademarks held by Assignor,
that does not interfere with, or cause a diminution of value of, the Assigned
Interests, and (ii) the Security Interest;

“Person” includes an individual, corporation, partnership, limited partnership,
limited liability partnership, limited liability company, joint venture,
association, trust, unincorporated organization, or any other legal entity;

“Product” means a Licensed Product, as that term is defined in the License
Agreement;

“Purchase Price” has the meaning specified in section 3.1;

“Quencher Agreement” means the license and supply agreement between Epoch and
the Licensee dated as of September 2, 2003 in respect of Epoch's Eclipse™
product as amended by Amendment No. 1 to the Quencher

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License and Supply Agreement dated September 2, 2003 and as further amended by
Amendment No. 2 dated December 31, 2005, as such agreement may be further
amended from time to time;

“Reports” means (i) any notices of breach of the License Agreement and any
notices of infringement or claims in respect of the Patents and Know-How and
(ii) all reports, statements, calculations and certifications referenced in and
deliverable under Section 5.06 of the License Agreement relating to the
calculation and payment of the Royalties, and for greater certainty “Reports”
does not include any of the foregoing documents or any information in any of the
foregoing documents that does not relate to the calculation and payment of
Royalties, such as, for example, the selling price of the Bare Probes for Large
Sale Orders under Section 6.02 of the License Agreement;

“Royalties” means all of the royalties payable to Epoch under the License
Agreement in respect of (i) Net Sales (as defined in the License Agreement) made
and (ii) Net Revenues (as defined in the License Agreement) received, as
calculated in accordance with Article 5 and section 4.02 respectively of the
License Agreement, together with any collections or recoveries receivable or
lump sum payments payable in lieu thereof including in connection with (a) any
litigation to enforce the License Agreement, the Patents or the Know-How,
(b) any interest payable thereon pursuant to Section 5.07 of the License
Agreement, and (c) any deficiency payment plus interest thereon as described in
Section 5.10 of the License Agreement;

“Second Stream Royalty Payments” has the meaning specified in Section 2.1(b);

“Security Agreement” has the meaning specified in Section 7.2(c);

“Security Interest” means the security interest granted pursuant to the Security
Agreement;

“Term” has the meaning specified in Section 1.9;

“Third Party” means any Person other than Epoch or Assignee, and their
respective Affiliates and Assignee's co-investors;

“Transmission” means any electronic means of sending messages, including
facsimile transmission, which produces a paper record; and

“USPTO” mean the United States Patent and Trademark office.

 

1.2 Headings

The division of this Agreement into articles, sections and subsections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. Unless otherwise
specified, references in this Agreement to Sections, Exhibits and Schedules are
references to sections of and schedules and exhibits to this Agreement.

 

1.3 Number and Gender

Unless otherwise specified in this Agreement, words in the singular number
include the plural and vice-versa and words in one gender include all genders.

 

1.4 Entire Agreement

This Agreement, together with the Closing Documents, constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, negotiations, discussions and understandings,
written or oral. There are no representations, warranties, conditions, other
agreements or acknowledgements, whether direct or collateral, or express or
implied, that form part of or affect this Agreement, or which induced any Party
to enter into this Agreement or on which reliance is placed by any Party, except
as specifically set forth in this Agreement or in the Closing Documents.

 

1.5 Applicable Law; Waiver of Jury Trial

This Agreement shall be governed by, and interpreted and enforced in accordance
with, the laws of the State of New York, without giving effect to the principles
of conflicts of law thereof except as set forth in Section 5-1401 of the New
York General Obligations Law.

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EACH PARTY HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, OR
ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION HEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH
PARTY, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS
TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

1.6 Consent to Jurisdiction

Each of Assignor, Assignee and Guarantor (a) hereby irrevocably submits to the
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and to the extent that such United States district
court lacks jurisdiction despite the consent herein, to the jurisdiction of the
courts of the State of New York sitting in New York County and the appellate
courts therefrom, and (b) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Assignor and Assignee consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 1.6 shall affect or limit any right to serve
process in any other manner permitted by law.

 

1.7 Currency

Unless otherwise specified in this Agreement, all statements of or references to
monetary amounts in this Agreement are references to the lawful currency of the
United States of America and all sums of money to be paid or calculated pursuant
to this Agreement shall be calculated and paid in United States currency.

 

1.8 Exhibits and Schedules

The Exhibits and Schedules attached hereto form an integral part of this
Agreement.

 

1.9 Term

The term (the “Term”) of this Agreement shall commence as of the Effective Date
and shall continue until the date of receipt by Assignee of all Acquired Royalty
Payments, including the Acquired Royalty Payment for the quarterly period ending
on and including December 31, 2011 and the receipt by Assignee of all Reports in
respect of Acquired Royalty Payments.

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ARTICLE 2

PURCHASE AND ASSUMPTION

 

2.1 Purchase of Assigned Interests

Assignor hereby sells, assigns and transfers to Assignee and Assignee hereby
purchases from Assignor an undivided interest in all right, title and interest
of Assignor in and to the rights set forth in Subsections (a) through (c) below
(collectively, the “Assigned Interests”):

 

  (a) the right to receive one hundred percent (100%) of the Royalties during
the period from and including July 1, 2006 up to and including December 31, 2011
and designated on Exhibit A as First Stream Royalty Payments (the “First Stream
Royalty Payments”;

 

  (b) the right to receive [***] percent [***] of the Royalties during the
period from and including July 1, 2006 up to and including December 31, 2011 and
designated on Exhibit A as Second Stream Royalty Payments (the “Second Stream
Royalty Payments”); and

 

  (c) the right to receive any and all Reports.

ARTICLE 3

PAYMENTS

 

3.1 Payment of Purchase Price

In consideration for the Assigned Interests, Assignee shall concurrent with the
execution of this Agreement pay to Epoch $20,000,000 (the “Purchase Price”). All
payments shall be paid to or to the order of Epoch by wire transfer of same day
funds to the bank account designated by Epoch or its authorized agent.

 

3.2 Remittances of Royalties

(a) Payments of the Acquired Royalty Payments shall be made directly to a lock
box account (the “Lock Box Account”) held with HSBC as agent, but otherwise in
the manner provided in the License Agreement and the Assignor shall so direct
the Licensee and any of Licensee's customers with licences under Section 4.02 of
the License Agreement.

(b) Assignee and Assignor shall enter into a lock box account agreement (the
“Lock Box Agreement”) with HSBC as agent, which Lock Box Agreement shall provide
for the disbursement of funds to Assignee or to Assignor from the lock box
account in accordance with the payment provisions of this Agreement.

(c) If at any time Assignor receives or has received any Acquired Royalty
Payment, Assignor shall be deemed to be holding such funds in trust for Assignee
and shall forthwith upon receipt of such funds, deliver the same to Assignee
without deduction or set-off.

*** Confidential portions omitted and filed separately with the Commission.

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(d) If at any time Assignee receives or has received any payment or other monies
paid into the Lock Box Account that are not in respect of the Assigned Interests
or that Assignee is not otherwise entitled to, Assignee shall be deemed to be
holding such funds in trust for Assignor and shall forthwith upon receipt of
such funds, deliver the same to Assignor without deduction or set-off.

 

3.3 Offset

(a) Assignor agrees that the Assigned Interests and all payments in respect
thereof shall be free of any claim as between Assignor and Licensee for offset,
true up or deficiency, whether arising prior to or after the Effective Date and
agrees to hold Assignee harmless in respect of any such offset, true up or
deficiency.

(b) If under the terms of the License Agreement, Licensee is entitled to reduce
any amount payable thereunder in respect of the Assigned Interests by amounts
paid to Assignor in respect of the Quencher Agreement, Assignor agrees that any
such reduction shall constitute a set-off under (a) above and shall hold
Assignee harmless in respect thereof.

 

3.4 Minimum Royalties

(a) If in any year of the calendar years 2006 through and including 2011 the
Acquired Royalty Payments for that year are less than the minimum royalty
payment for that year as specified on Schedule A (each a “Minimum Royalty
Payment” and collectively, the “Minimum Royalty Payments”) then Epoch shall
within 45 days of the end of such calendar year pay to Assignee an amount equal
to the difference between the Acquired Royalty Payment for that year and the
Minimum Royalty Payment for that year.

(b) If the Assignor has made a Minimum Royalty Payment in respect of a calendar
year and thereafter additional Royalties are paid by Licensee in respect of that
calendar year, Assignee shall be entitled to the excess of those Royalties over
the Minimum Royalty Payment and Assignor shall be entitled to the amounts up to
the Minimum Royalty Payment paid by Assignor to Assignee.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF ASSIGNOR

Assignor represents and warrants as at the Effective Date to Assignee as
follows, and acknowledges that Assignee is relying on such representations and
warranties in entering into this Agreement:

 

4.1 Corporate Matters

(a) Epoch is a corporation duly incorporated and in good standing under the laws
of the State of Delaware.

(b) Assignor has all necessary corporate power, right and authority to carry on
its business as it is presently conducted.

(c) Assignor has all necessary corporate power, right and authority to execute
and deliver, and to observe and perform its covenants and obligations under this
Agreement, the License Agreement and each of the Closing Documents to which it
is a party.

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(d) Assignor has taken all corporate action necessary to authorize the execution
and delivery of, and the observance and performance of its covenants and
obligations under this Agreement and the Closing Documents to which it is a
party.

(e) This Agreement and each Closing Document to which Assignor is a party has
been or will be duly executed and delivered by Assignor, and this Agreement and
each Closing Document to which Assignor is a party constitutes or will
constitute a legal, valid and binding obligation of Assignor enforceable against
it in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights or by general principles of equity.

(f) Assignor is not insolvent and no proceedings have been taken or authorized
by Assignor, to the knowledge of Assignor by any other Person, with respect to
the bankruptcy, insolvency, liquidation, dissolution or winding up of Assignor.

 

4.2 Title

(a) Assignor is the exclusive owner of all legal and equitable title, free and
clear of all Encumbrances (i) to the Assigned Interests, (ii) other than
Permitted Encumbrances, to the Patents and (iii) to the Know-How.

(b) The License Agreement is free and clear of all Encumbrances other than
Permitted Encumbrances granted by or imposed in respect of Assignor or, to the
knowledge of Assignor, the Licensee.

 

4.3 License Agreements

(a) Each of the License Agreement and the Quencher Agreement, a copy of each of
which together with all amendments thereto is attached as Exhibit B hereto, and
each of which is a true and complete copy of the original thereof, is in full
force and effect and has not been further amended. The License Agreement is a
valid, legal and binding obligation of Epoch and, to the knowledge of Epoch, of
the Licensee, enforceable against each party thereto in accordance with its
terms. Neither Assignor nor, to the knowledge of Epoch, Licensee is in material
default of any of its respective obligations under the License Agreement.
Neither Licensee nor Assignor has waived any rights or defaults under the
License Agreement that would adversely affect in any material respect the
Assigned Interests, the License Agreement, the Patents, the Products or the
Know-How and no event has occurred which, after the giving of notice or the
lapse of time or both, would constitute a material default or breach by Assignor
or, to the knowledge of Epoch, by the Licensee of the License Agreement.

(b) Assignor has not received any notice, and is not otherwise aware of, any
actual or potential defense or claim (including any claim of recoupment) of the
Licensee that could be asserted against Assignee as assignee of the Assigned
Interests.

(c) Assignor has provided to Assignee a true and complete copy of each report
and certificate delivered by Licensee pursuant to Section 5.06 of the License
Agreement.

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(d) the License Agreement is the only agreement (other than this Agreement) that
the Assignor is a party to with respect to the Assigned Interests.

(e) the Patents licensed under the License Agreement for the Exclusive Licensed
Field (as that term is defined in the License Agreement) are not licensed under
any other agreement other than the Quencher Agreement for any field outside of
the Exclusive Licensed Field. After the Effective Date, any royalty under any of
the Patents payable to Assignor arising from the sale of any Product which is a
licensed product covered by both the License Agreement and the Quencher
Agreement shall be a Royalty subject to, and shall be paid to Assignee under,
the terms of this Agreement.

(f) Licensee has no prepayments of Royalties remaining unapplied under the
License Agreements, including pursuant to Section 5.01 of the License Agreement.

(g) Other than pursuant to the Authorization, no agent has been appointed by
Assignor pursuant to Section 5.10 of the License Agreement for the purpose of
inspecting records relating to the Assigned Interests.

 

4.4 Intellectual Property

(a) Exhibit C sets forth a complete list of all patent applications and patents
within the Patents, including the status of each patent and patent application.
No Person has challenged the validity or enforceability of any of the Patents.
To the knowledge of Assignor, there is no infringement of the Patents by any
Person. Assignor has not received any demand or claim in writing by any Person
that (i) such person has any ownership interest in any of the Patents, (ii) any
of the Patents are, or may be invalid or (iii) that the Product infringes upon
or may infringe upon or otherwise interferes with any patent or other right of
any kind of any third party and Epoch is not aware of any basis for any Person
to claim that they have any interest in any of the Patents. To the knowledge of
Assignor, the Patents are valid and enforceable and all appropriate fees have
been paid. To the knowledge of Assignor, the naming of inventors in any of the
Patents is correct and occurred without any deceptive intent. To the knowledge
of Assignor, neither the Products nor any of the Products sold by Licensee
infringe or interfere with any patent or other right of any kind of any third
party. Assignor has disclosed to Assignee all third party patents relevant to
the Assigned Interests for which Assignor has requested a legal opinion
concerning validity or non-infringement. Other than pursuant to the License
Agreement and the Quencher Agreement Epoch has not granted any Person the right
under the Patents to develop, manufacture, distribute, import, make, use, market
or sell the Products or any other product that would infringe the Patents.

(b) To the knowledge of Assignor, all material Know-How is owned by Assignor,
and has been treated as proprietary and confidential and in a manner consistent
with protecting its trade secrets from disclosure or misappropriation. To the
knowledge of Assignor, no third party has a claim or has claimed any ownership
rights or received any demand or claim by any person that any of the Know-How is
infringing any intellectual property rights of any third party.

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4.5 Absence of Conflicting Agreements

Neither the execution and delivery of this Agreement or of any of the Closing
Documents, nor the observance and performance by Assignor of any covenant or
obligation under this Agreement or any Closing Document to which it is a party,
or the consummation of any of the transactions contemplated hereby and thereby,
contravenes or results in, or will contravene or result in, a violation of or a
default under (with or without the giving of notice or lapse of time, or both)
or in the acceleration of any obligation under:

 

  (a) any Applicable Law;

 

  (b) the certificate of incorporation, by-laws or similar organizational
documents of Assignor or any directors', shareholders', or members’ resolutions
of such Party; or

 

  (c) any material instrument, contract, lease, license or other agreement to
which Assignor is a party, or by which it or its business or property is bound
or affected.

 

4.6 Consents and Approvals

Other than the Licensee Acknowledgement, no consent, approval, license, order or
authorization, registration, declaration or filing with or of any Governmental
Agency or other Person is required by Assignor in connection with:

 

  (a) the execution and delivery by Assignor of this Agreement and the Closing
Documents to which it is a party;

 

  (b) the observance and performance by Assignor of its obligations under this
Agreement and the Closing Documents to which it is a party; or

 

  (c) the consummation of any of the transactions contemplated thereby.

 

4.7 Compliance with Applicable Law

Assignor has conducted and is conducting its business in compliance with all
Applicable Laws, and is not in violation of any Applicable Laws, except for
violations which do not or will not (either individually or in the aggregate)
adversely affect in any material respect the Assigned Interests, the License
Agreement, the Patents, the Products or Assignor's ability to perform its
obligations under this Agreement.

 

4.8 Litigation

There is no claim, demand, suit, action, cause of action, dispute, proceeding,
litigation, investigation, grievance, arbitration, governmental proceeding or
other proceeding, including appeals and applications for review, in progress
against, by or relating to Assignor, the Assigned Interests, the License
Agreement, the Patents or the Products, which would invalidate the Agreement or
limit Epoch's ability to carry out its obligations hereunder or materially
adversely affect the Assigned Interests, the License Agreement, the Patents or
the Products, nor to the knowledge of Assignor, are any of the same pending or
threatened. There is not presently outstanding against Assignor any judgment,
decree, injunction, order or award of any court, Governmental Agency or
arbitrator that has, or could have, a material adverse effect on the Assigned
Interests, the License Agreement, the Patents or the Products or such Party or
its business or property.

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4.9 Survival

The representations and warranties in this Article 4 shall survive the Closing
and the consummation of the transactions contemplated by this Agreement for the
Term, except for representations as to title, which shall survive indefinitely.
To the extent not performed by the Effective Date, the covenants of Assignor in
this Agreement shall survive the Closing and the consummation of the
transactions contemplated by this Agreement for the Term and for a period of one
year after the expiry of the Term.

ARICLE 5

REPRESENTATIONS AND WARRANTIES OF ASSIGNEE

Assignee represents and warrants to Assignor as at the Effective Date and
acknowledges that Assignor is relying on such representations and warranties in
entering into this Agreement:

 

5.1 Corporate Matters

(a) Assignee is a trust duly formed and validly existing under the laws of the
State of Delaware.

(b) Assignee has all necessary power and capacity to execute and deliver, and to
observe and perform its covenants and obligations under this Agreement and each
of the Closing Documents to which it is a party.

(c) Assignee has taken all action necessary to authorize the execution and
delivery of, and the observance and performance of its covenants and obligations
under, this Agreement and the Closing Documents to which it is a party.

(d) This Agreement and each Closing Document to which Assignee is a party has
been or will be duly executed and delivered by Assignee, and this Agreement and
each Closing Document to which Assignee is a party, constitutes or will
constitute a legal, valid and binding obligation of Assignee enforceable against
it in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights or by general principles of equity.

 

5.2 Consents and Approvals

No consent, approval, license, order or authorization, registration, declaration
or filing with or of any Governmental Agency or other Person is required by
Assignee in connection with:

 

  (i) the execution and delivery by Assignee of this Agreement and the Closing
Documents to which it is a party;

 

  (ii) the observance and performance by Assignee of its obligations under this
Agreement and the Closing Documents to which it is a party; or

 

  (iii) the consummation of any of the transactions contemplated thereby.

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5.3 Absence of Conflicting Agreements

Neither the execution and delivery of this Agreement or of any of the Closing
Documents, nor the observance and performance by Assignee of any covenant or
obligation under this Agreement or any Closing Document to which it is a party,
or the consummation of any of the transactions contemplated hereby and thereby,
contravenes or results in, or will contravene or result in, a violation of or a
default under (with or without the giving of notice or lapse of time, or both)
or in the acceleration of any obligation under:

 

  (i) any Applicable Law;

 

  (ii) the certificate of trust, trust agreement or similar organizational
documents of Assignee or any directors’, shareholders’, members’ or trustees’
resolutions of such Party; or

 

  (iii) any material instrument, contract, lease, license or other agreement to
which Assignee is a party, or by which it or its business or property is bound
or affected.

 

5.4 Compliance with Applicable Law

Assignee has conducted and is conducting its business in compliance with all
Applicable Laws, and is not in violation of any Applicable Laws, except for
violations which do not or will not (either individually or in the aggregate)
adversely affect in any material respect the Assignee's ability to perform its
obligations under this Agreement.

 

5.5 Litigation

There is no claim, demand, suit, action, cause of action, dispute, proceeding,
litigation, investigation, grievance, arbitration, governmental proceeding or
other proceeding, including appeals and applications for review, in progress
against, by or relating to Assignee, which would invalidate the Agreement or
materially limit Assignee's ability to carry out its obligations hereunder nor
to the knowledge of Assignee, are any of the same pending or threatened. There
is not presently outstanding against Assignee any judgment, decree, injunction,
order or award of any court, Governmental Agency or arbitrator that has, or
could have, a material adverse effect on the Assignee or its business or
property.

 

5.6 Survival

The representations and warranties in this Article 5 shall survive the Closing
and the consummation of the transactions contemplated by this Agreement for the
Term. To the extent not performed by the Effective Date, the covenants of
Assignee in this Agreement shall survive the Closing and the consummation of the
transactions contemplated by this Agreement for the Term and for a period of one
year after the expiry of the Term.

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF NANOGEN

Nanogen represents and warrants to Assignee as at the Effective Date as follows,
and acknowledges that Assignee is relying on such representations and warranties
in entering into this Agreement:

 

6.1 Corporate Matters

(a) Nanogen is a corporation duly incorporated and in good standing under the
laws of the State of Delaware.

(b) Nanogen has all necessary corporate power, right and authority to carry on
its business as it is presently conducted.

(c) Nanogen has all necessary corporate power, right and authority to execute
and deliver, and to observe and perform its covenants and obligations under this
Agreement, and each of the Closing Documents to which it is a party.

(d) Nanogen has taken all corporate action necessary to authorize the execution
and delivery of, and the observance and performance of its covenants and
obligations under this Agreement and the Closing Documents to which it is a
party.

(e) This Agreement and each Closing Document to which Nanogen is a party has
been or will be duly executed and delivered by Nanogen, and this Agreement and
each Closing Document to which Nanogen is a party constitutes or will constitute
a legal, valid and binding obligation of Nanogen enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors’
rights or by general principles of equity.

(f) Nanogen is not insolvent and no proceedings have been taken or authorized by
Nanogen, to the knowledge of Nanogen by any other Person, with respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of Nanogen.

 

6.2 Absence of Conflicting Agreements

Neither the execution and delivery of this Agreement or of any of the Closing
Documents, nor the observance and performance by Nanogen of any covenant or
obligation under this Agreement or any Closing Document to which it is a party,
or the consummation of any of the transactions contemplated hereby and thereby,
contravenes or results in, or will contravene or result in, a violation of or a
default under (with or without the giving of notice or lapse of time, or both)
or in the acceleration of any obligation under:

 

  (a) any Applicable Law;

 

  (b) the certificate of incorporation, by-laws or similar organizational
documents of Nanogen or any directors' or shareholders' resolutions of such
Party; or

 

  (c) any material instrument, contract, lease, license or other agreement to
which Nanogen is a party, or by which it or its business or property is bound or
affected.

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6.3 Consents and Approvals

No consent, approval, license, order or authorization, registration, declaration
or filing with or of any Governmental Agency or other Person is required by
Nanogen, in connection with:

 

  (a) the execution and delivery by Nanogen of this Agreement and the Closing
Documents to which it is a party;

 

  (b) the observance and performance by Nanogen of its obligations under this
Agreement and the Closing Documents to which it is a party; or

 

  (c) the consummation of any of the transactions contemplated thereby.

 

6.4 Compliance with Applicable Law

Nanogen has conducted and is conducting its business in compliance with all
Applicable Laws, and is not in violation of any Applicable Laws, except for
violations which do not or will not (either individually or in the aggregate)
adversely affect in any material respect the Assigned Interests, the License
Agreement, the Patents, the Products or Nanogen's ability to perform its
obligations under this Agreement.

 

6.5 Litigation

There is no claim, demand, suit, action, cause of action, dispute, proceeding,
litigation, investigation, grievance, arbitration, governmental proceeding or
other proceeding, including appeals and applications for review, in progress
against, by or relating to Assignee, the Assigned Interests, the License
Agreement, the Patents or the Products, which would invalidate the Agreement or
limit Nanogen's ability to carry out its obligations hereunder or materially
adversely affect the Assigned Interests, the License Agreement, the Patents or
the Products, nor to the knowledge of Nanogen, are any of the same pending or
threatened. There is not presently outstanding against Nanogen any judgment,
decree, injunction, order or award of any court, Governmental Agency or
arbitrator that has, or could have, a material adverse effect on the Assigned
Interests, the License Agreement, the Patents or the Products or Nanogen or its
business or property.

 

6.6 Survival

The representations and warranties in this Article 6 shall survive the Closing
and the consummation of the transactions contemplated by this Agreement for the
Term, except for representations as to title, which shall survive indefinitely.
To the extent not performed by the Effective Date, the covenants of Guarantor in
this Agreement shall survive the Closing and the consummation of the
transactions contemplated by this Agreement for the Term until and for a period
of one year after the expiry of the Term.

ARTICLE 7

CLOSING

 

7.1 Assignee Deliveries

Assignee shall deliver to Epoch concurrent with delivery of this Agreement:

 

  (a) an amount of same day funds equal to the Purchase Price;

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  (b) the duly executed and delivered counterpart to the Lock Box Agreement;

 

  (c) such other documents and instruments as Assignor may reasonably require to
give effect to and carry out the transactions contemplated herein.

 

7.2 Assignor Deliveries

Assignor shall deliver to Assignee concurrent with delivery of this Agreement:

 

  (a) a duly executed and delivered acknowledgment from Licensee in form and
substance acceptable to the Assignee (the “Licensee Acknowledgment”);

 

  (b) standard corporate authority and enforceability opinions on this
Agreement, the Security Agreement and the Lock Box Agreement and a no conflict
with laws opinion on the License Agreement, from counsel to the Assignor each in
form and substance satisfactory to the Assignee and its counsel;

 

  (c) a duly executed and delivered security agreement granting a security
interest in the License Agreement, the Patents and the Know-How to (the
“Security Agreement”) Assignee as security for the performance of Assignor’s
obligations hereunder; and

 

  (d) a duly executed and delivered Lock Box Agreement;

 

  (e) a duly executed and delivered authorization of Assignor appointing the
Assignee or Assignee's nominee as Assignor's duly authorized agent for the
purposes of inspecting Licensee’s records relating to the Assigned Interests
pursuant to Section 5.10 of the License Agreement (the “Authorization”);

 

  (f) a duly executed and delivered joint direction of Assignor and Assignee to
Licensee to pay Royalties into the Lock Box Account;

 

  (g) in respect of both Assignor and Nanogen:

 

  (i) a current certificate of good standing from the secretary of State for the
State of Delaware;

 

  (ii) certified resolutions authorizing the transaction;

 

  (iii) incumbency certificates; and

 

  (iv) such other documents and instruments as Assignee may reasonably require
to give effect to and carry out the transactions contemplated herein.

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ARTICLE 8

COVENANTS

The Parties covenant and agree as follows:

 

 

8.1 License Agreements

(a) Unless otherwise agreed to in writing by the Parties, Assignor shall not,
with respect to the Assigned Interests (i) forgive, release, or compromise any
amount owed or to become owing with respect to the Assigned Interests on or
after the Effective Date, (ii) modify, waive, cancel or otherwise relinquish any
of the Assigned Interests under the License Agreement, or (iii) amend, restate
or novate either the License Agreement or the Quencher Agreement in a manner
that could adversely affect, or diminish the value of, the Assigned Interests.

(b) Upon becoming aware of any breach of the License Agreement arising with
respect to the Assigned Interests Assignor shall promptly notify Assignee in
writing of such breach.

(c) During the Term and while any obligations remain outstanding under this
Agreement, Assignor will not terminate, modify, or subcontract or otherwise
delegate its obligations under the License Agreement without the prior written
consent of Assignee and will fulfill all of its supply obligations under the
License Agreement.

(d) Assignor will promptly provide to the Assignee copies of all Reports
delivered under the License Agreement during the Term or after the Term to the
extent the Reports relate to Assigned Interests.

(e) Any royalty under any of the Patents payable to Assignor arising from the
sale of any Product which is a licensed product covered by both the License
Agreement and the Quencher Agreement shall be a Royalty subject to, and shall be
paid to Assignee under, the terms of this Agreement.

(f) From time to time after the date hereof and during the Term, Assignee may
change its nominee for purposes of the Authorization, and upon request of
Assignee Assignor shall promptly execute and deliver to Assignor a new
Authorization in respect of Assignee's nominee as duly authorized agent.

(g) Epoch will not exercise its rights to inspect Licensee’s records relating to
the Assigned Interests pursuant to the audit rights under Section 5.10 of the
License Agreement without the prior written consent of Assignee, which consent
may be withheld in Assignee’s sole discretion.

(h) Assignee acknowledges that the License Agreement may be terminated by the
Licensee (other than by reason of an act or omission of Epoch which caused such
termination) in accordance with Section 9.02(c) of the License Agreement, and
that a termination of the License Agreement by Licensee in accordance with such
section would not in and of itself constitute a breach of this Section 8.1 or
any other provision of this Agreement. Assignor covenants that in the event that
the License Agreement is terminated by Licensee, Assignor will use its
commercially reasonable efforts to enter into a license agreement for the
Products within the Field of Use for the Patents specified in the Licence
Agreement or into a transaction to effect the exploitation for gain of those
rights (in either case a “Replacement Agreement”), and to effect an assignment
to Assignee of the royalties or proceeds under that Replacement Agreement in
order

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to achieve as closely as possible an economic result no worse to the Assignee
than if the License Agreement had not been terminated, and generally on terms
and conditions that are acceptable to Assignee acting reasonably. Assignor shall
consult with Assignee prior to entering into any Replacement Agreement and shall
keep Assignee informed as to the status of negotiations with respect to and
completion of the Replacement Agreement.

 

8.2 Maintenance and Access to Records

Assignor agrees that it will retain all books and records and any other
documents, information and files relating to the Products generated by it or
delivered to it by the Licensee during the Term and thereafter for such period
as is required by Applicable Law. So long as such books and records and such
other documents, information and files are retained by the Assignors, the
Assignee or its authorized representatives shall have reasonable access thereto
during the Term and for a period of six months after the end of the Term (the
“Clean-Up Period”), provided that if at the end of the Clean-Up Period there is
a bona fide dispute between the parties with respect to any aspect of this
Agreement, including as to whether or not the Term or the Clean-Up Period has
expired, then notwithstanding the expiry of the Clean-Up Period, this right
shall continue.

 

8.3 Conduct of the Business

During the Term, Assignor shall cause its business and other activities with
respect to the Assigned Interests, the License Agreement, the Patents, the
Products and the Know-How to be carried on in the ordinary course, consistent
with past practice and shall not take or permit to be taken any action that will
have a material adverse effect on the Products.

 

8.4 True Sale

(a) Assignor and Assignee intend and agree that the sale, assignment and
transfer of the Assigned Interests under Section 2.1 (the “Assignment”) shall
be, and is, a true sale by Assignor to Assignee that is absolute and irrevocable
and that provides Assignee with the full benefits of ownership of the Assigned
Interests, and neither Assignor nor Assignee intends the transactions
contemplated hereunder to be, or for any purpose to be characterized as, a loan
from Assignee to Assignor. Assignor waives any right to contest or otherwise
assert that this Agreement is other than a true sale by Assignor to Assignee
under Applicable Law, which waiver shall be enforceable against Assignor in any
bankruptcy or insolvency proceeding relating to Assignor.

(b) Assignor hereby consents to Assignee recording and filing, at Assignee'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 perfect the Assignment intended to be effected by this Agreement,
including precautionary filings customary in true sale transactions.

 

8.5 Patent Obligations

(a) During the Term, Assignor shall, at is own cost, in accordance with its
standard procedures and with good practice, and subject to the rights of
Licensee under the License Agreement, use its commercially reasonable efforts
(including making payment of appropriate fees to the USPTO) to, (i) prosecute
and maintain in full force and effect each pending patent application worldwide
included in the Patents; (ii) maintain and keep in full force and effect any

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issued Patents in each of the countries worldwide in which Assignor has an
issued patent, and (iii) maintain all Know-How relating to the Products in
strict confidence other than disclosure to Licensee in accordance with the
License Agreement. Assignor shall provide notice to Assignee of all information
relating to the prosecution and/or validity or enforceability of any patent or
application in the Patents, including all correspondence to and from the USPTO
or any other patent office in which any patent application is pending or from
which any patent has issued. If practicable, such notice to Assignee shall be in
sufficient time to allow Assignee to comment, or act pursuant to section (b)
below, on matters which may have a material effect on the scope, validity, or
enforceability of any of the Patents.

(b) Assignor shall not during the Term without the prior written consent of
Assignee abandon any of the Patents or Know-How, or sell, transfer, assign or
otherwise dispose of the Patents or Know-How to any Person and shall not grant
any licenses thereunder other than (i) the license in the License Agreement,
(ii) the license in the Quencher Agreement, and (iii) any license for use
outside the Field of Use as defined in the License Agreement or the Quencher
Agreement that does not and would not materially interfere with or impair the
value of the Assigned Interests. Assignee shall have, at its option, the right
to have Assignor assign to Assignee all right, title and interest in any Patent
that Assignor decides to abandon.

(c) Assignor hereby grants to Assignee an irrevocable power of attorney with
power of substitution to act in the place and stead of Assignor in performing
the actions specified in (a)(i) and (a)(ii) above. Such power is acknowledged by
Assignor to be coupled with an interest and shall be exercisable during the Term
immediately upon Assignor's breach of the covenant in (a)(i) and (a)(ii) above.
Upon the expiry of the Clean-Up Period, this power shall terminate provided that
if at the end of the Clean-Up Period there is a bona fide dispute between the
parties with respect to any aspect of this Agreement, including as to whether or
not the Term or the Clean-Up Period has expired, then notwithstanding the expiry
of the Clean-Up Period, this right shall continue.

 

8.6 Certain Conduct

During the Term, without the prior written consent of Assignee, which consent
shall not be unreasonably withheld, Assignor shall not: (i) create or suffer to
exist any Encumbrance other than the Security Interest on any of the Assigned
Interests or the License Agreement; (ii) amend or terminate the License
Agreement or fail to perform and fulfill its obligations under the License
Agreement in accordance with the terms thereof if such amendment, termination or
failure to perform would have a material adverse affect on any of the Assigned
Interests; (iii) sell, transfer, assign or otherwise dispose of any interest in
the Patents other than pursuant to a Permitted Encumbrance, or (iv) agree to do
any of the foregoing.

 

8.7 Indemnities

(a) Assignor hereby indemnifies and agrees to hold Assignee harmless from any
damages suffered or incurred by Assignee to the extent resulting from (i) any
material breach of a representation or warranty of Assignor contained herein, or
(ii) the material breach by Assignor of any covenant contained in this Agreement
or any of the Closing Documents, or (iii) any Encumbrance of any of the Assigned
Interests or the License Agreement, other than any Encumbrance created by
Assignee or a Permitted Encumbrance. Assignee hereby indemnifies and holds
Assignor harmless from any damages suffered or incurred by Assignor to the
extent resulting from (i) any material breach of a representation or warranty of
Assignee contained herein, or (ii) the material breach by Assignee of any
covenant contained in this Agreement or the Assignee Closing Documents.

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(b) Assignor hereby indemnifies and agrees to hold Assignee harmless from any
damages suffered or incurred by Assignee to the Extent resulting from any breach
of the License Agreement by a party thereto, other than (i) the failure of
Licensee to pay the royalties owing thereunder where such failure to pay is not
related to, resulting from or in response to a breach of the License Agreement
by Assignor or (ii) a breach of a covenant or representation by a party to the
License Agreement related to or resulting from one or both of the parties'
inability to market, commercialize or exploit the Patents.

 

8.8 Third Party Claims Procedure

The indemnified party shall give notice (the “Indemnity Notice”) to the
indemnifying party specifying the particulars of any Third Party claim within
ten (10) days after it receives notification of the claim; provided, however,
that failure to give such notice within such time period shall not prejudice the
rights of the indemnified party except to the extent that the failure to give
such notice materially adversely affects the ability of the indemnifying party
to defend the claim or to cure the breach of the representation, warranty,
covenant or obligation giving rise to the claim. Subject to the terms of this
Section 8.8, the indemnifying party shall have sole control over the defense and
settlement of such claim. The indemnifying party may not settle or compromise
the claim without the prior written consent of the indemnified party unless such
settlement or compromise (i) involves no payment (whether by cash, securities or
other instrument), assignment, granting of a license or admission of fault or
wrongdoing by the indemnified party and (ii) the indemnified party receives a
comprehensive general release of all claims from the applicable third parties.
The indemnified party shall provide to the indemnifying party, in confidence,
all files, books, records and other information in its possession or control
which may be relevant to the defense of such claim. The indemnified party shall
co-operate in all reasonable respects in the defense of such claim but at the
expense of the indemnifying party. If the indemnifying party fails to diligently
defend such claim throughout the period that such claim exists, its right to
defend the claim shall terminate and the indemnified party may assume the
defense of such claim at the sole expense of the indemnifying party. In such
event, the indemnified party may compromise or settle such claim, without the
consent of the indemnifying party.

ARTICLE 9

GUARANTEE

 

9.1 Guarantee

The Guarantor hereby unconditionally, absolutely and irrevocably guarantees (the
“Guarantee”) the full and punctual payment and performance by the Assignor as
and when due of the obligations of the Assignor under this Agreement to pay, as
and when due, the Minimum Royalty Payments (the “Obligations”).

 

9.2 Nature of Guarantee

Subject to Section 9.5, this Guarantee shall in all respects be a continuing,
absolute, unconditional and irrevocable guarantee of payment or performance when
due and not of collection, and shall remain in full force and effect until all
Obligations have been indefeasibly paid in full and all obligations of the
Guarantor hereunder have been indefeasibly paid in full. The Guarantor
guarantees that the Obligations will be paid or performed strictly in accordance

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with the terms of this Agreement and/or the relevant Closing Document,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of Assignor with respect
thereto. Assignee shall not be bound to avail itself of any remedies or to
exhaust its recourse against Assignor or others or any security or other
guarantees it may at any time hold before being entitled to payment from the
Guarantor. The Guarantor renounces all benefits of discussion and division. The
liability of the Guarantor under the Guarantee shall be absolute, unconditional
and irrevocable irrespective of, and without being lessened or limited by:

 

  (a) the failure of Assignee to assert any claim or demand or to enforce any
right or remedy against Assignor or any other Person (including any other
guarantor) under the provisions of any other document delivered under, pursuant
to or in connection with this Agreement, or otherwise, or to exercise any right
or remedy against any other guarantor of, or collateral securing, any of the
Obligations;

 

  (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other extension, compromise,
indulgence or renewal of any Obligation;

 

  (c) any reduction, limitation, variation, impairment, discontinuance or
termination of the Obligations for any reason (other than by reason of any
payment which is not required to be rescinded), including any claim of waiver,
release, discharge, surrender, alteration or compromise, and shall not be
subject to (and the Guarantor hereby waives any right to or claim of) any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, non-genuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the Obligations
or otherwise (other than by reason of any payment which is not required to be
rescinded);

 

  (d) any amendment to, rescission, waiver or other modification of, or any
consent to any departure from, any of the terms of this Agreement or other
Closing Document;

 

  (e) any addition, exchange, release, discharge, renewal, realization or
non-perfection of any collateral security for the Obligations or any amendment
to, or waiver or release or addition of, or consent to departure from, any other
guarantee held by Assignee as security for the Obligations;

 

  (f) the loss of or in respect of or the unenforceability of any other
guarantee or other security which Assignee may now or hereafter hold in respect
of the Obligations, whether occasioned by the fault of Assignee or otherwise;

 

  (g) any change in the name of Assignor or in the constating documents, capital
structure, capacity or constitution of Assignor, the bankruptcy or insolvency of
Assignor, the sale of any or all of Assignor's business or assets or Assignor
being consolidated, merged or amalgamated with any other Person; or

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  (h) any other circumstance (other than satisfaction in full of all
Obligations) which might otherwise constitute a defense available to, or a legal
or equitable discharge of, Assignor, any surety or any guarantor.

 

9.3 Enforcement

Upon default in payment or performance of the Obligations by Assignor under this
Agreement or any Closing Document, the Guarantor shall forthwith, if the default
is a payment default, pay to Assignee the total amount of the Obligations and
the Assignee may apply the sum so paid against such of the Obligations as
Assignee may see fit and change any such application in whole or in part from
time to time, and if the default is a performance default, perform such
Obligation.

 

9.4 Guarantee in Addition to Other Security

The Guarantee shall be in addition to and not in substitution for any other
guarantee or other security which Assignee may now or hereafter hold in respect
of the Obligations, and Assignee shall be under no obligation to marshal in
favour of the Guarantor any other guarantee or other security or any moneys or
other assets which Assignee may be entitled to receive or may have a claim upon.

 

9.5 Release of Guarantee

The Guarantee shall be released and the Assignor's Minimum Royalty Payments
obligations shall cease to be effective in the event Licensee (i) is adjudged
bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for
the benefit of creditors, (iii) files a petition or proposal under bankruptcy,
insolvency or similar legislation, or (iv) has instituted against it proceedings
under bankruptcy, insolvency or similar legislation including for the
appointment of a receiver or trustee which proceedings are not vacated within 60
days thereof;

 

9.6 Reinstatement

The Guarantee shall continue to be effective or shall be reinstated, as the case
may be, if at any time any payment (in whole or in part) of any of the
Obligations is rescinded or must otherwise be returned or restored by Assignee
for any reason other than the insolvency, bankruptcy or reorganization of
Assignor provided it does not involve the wilful misconduct of Assignee, all as
though such payment had not been made.

 

9.7 Waiver of Notice, etc.

The Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and the Guarantee.

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ARTICLE 10

GENERAL

 

10.1 Confidentiality

During the term of this Agreement and for five years thereafter, each of
Assignee and Assignor and their respective Affiliates, shall not use, reveal or
disclose to Third Parties (other than Assignee’s beneficiaries and the
Assignor's and Assignee's respective financial institutions, counsel and
advisors and then only on a confidential basis) any information received from
the other Party in connection with this Agreement (including any information or
reports provided to Assignee or its Affiliates by Licensee, and including the
terms of this Agreement), without first obtaining the written consent of the
disclosing or other Party, except as may be otherwise provided herein. This
confidentiality obligation shall not apply to information which (a) is or
becomes a matter of public knowledge (other than as a result of a breach of this
Agreement), (b) is already in the possession of the receiving Party, (c) is
disclosed to the receiving Party by a Third Party having the right to do so, or
(d) is required by Applicable Law to be disclosed, including pursuant to
applicable securities laws provided that if Assignor is required to file this
Agreement or any other Closing Document in any registry of repository accessible
by the public, Assignor will use its commercially reasonable efforts to obtain
confidential treatment for commercially sensitive information from such
documents and shall co-operate and consult with Assignee in that regard. The
Parties shall take reasonable measures to assure that no unauthorized use or
disclosure is made.

 

10.2 Amendment

This Agreement may be amended or supplemented only by a written agreement signed
by each Party.

 

10.3 Waiver of Rights

Any waiver of, or consent to depart from, the requirements of any provision of
this Agreement shall be effective only if it is in writing and signed by the
Party giving it, and only in the specific instance and for the specific purpose
for which it has been given. No failure on the part of any Party to exercise,
and no delay in exercising, any right under this Agreement shall operate as a
waiver of such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of any
other right.

 

10.4 Tender

Any tender of documents hereunder may be made upon the Parties or their
respective counsel and money shall be tendered by wire transfer of same day
funds.

 

10.5 Expenses

Epoch agrees to pay all reasonable costs and expenses of Assignee in connection
with the transaction contemplated by this Agreement, any amendments or
modifications of (or supplements to) this Agreement and any and all other
documents furnished pursuant hereto or in connection herewith, including the
reasonable fees, and out-of-pocket expenses of counsel and consultants to
Assignee, to a maximum of [***] (the “Cap”) provided that costs incurred by
Assignee for the preparation by Assignee’s U.S. bankruptcy counsel for Assignee
of a memorandum of advice on the transactions contemplated by this Agreement
shall not be included in, and shall be in addition to, any amounts paid under
the Cap, as well as all reasonable costs and expenses (including, without
limitation, reasonable legal fees and expenses), if any, in connection with the
enforcement of this Agreement.

 

*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

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Assignor shall be responsible for and pay for its expenses in connection with
the transactions contemplated by this Agreement, including any counsel and
broker fees.

 

10.6 Notices

Any notice, demand or other communication (a “Notice”) required or permitted to
be given or made hereunder shall be in writing and shall be sufficiently given
or made if:

 

  (a) delivered in person during normal business hours of the recipient on a
Business Day and left with a receptionist or other responsible employee of the
recipient at the relevant address set forth below;

 

  (b) sent by courier (overnight delivery); or

 

  (c) sent by Transmission, charges prepaid and confirmed by registered mail as
provided in Subsection (b);

in the case of a Notice to Epoch at:

Epoch Biosciences, Inc.

21720 23rd Drive SE #150

Bothwell, WA 98021 USA

Attn: Robert Saltmarsh and David Ludvigson

Facsimile No.: (425) 482-5550

and in the case of a Notice to Assignee at:

Drug Royalty Trust 9

In care of Drug Royalty Corporation Inc.

in its capacity as manager

Royal Bank Plaza, Suite 3120, South Tower

Box 122, 200 Bay Street

Toronto, Ontario M5J 2J3

Canada

Attn: Behzad Khosrowshahi

Facsimile No. (416) 863-5161

with a copy to:

Davies Ward Phillips & Vineberg LLP

44th Floor

1 First Canadian Place

Toronto, Ontario M5X 1B1

Canada

Attn: Rosemary Newman or Gillian R. Stacey

Facsimile No. (416) 863-0871

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and in the case of a Notice to Nanogen:

Nanogen, Inc.

10398 Pacific Center Court

San Diego, CA 92121

Toronto, Ontario M5X 1B1

Canada

Attn: Robert Saltmarsh and David Ludvigson

Facsimile No. (858) 410-4949

Any Notice so given shall be deemed to have been given and to have been received
(a) on the day of delivery in person or by courier, if so delivered, and (b) on
the day following the day Notice was sent by Transmission, provided such day is
a Business Day and if not, on the first Business Day thereafter. Addresses for
Notice may be changed by giving notice in accordance with this Section 10.6.

 

10.7 Assignment

 

(a) Upon notice in writing to Assignor, this Agreement and all of the rights of
Assignee under this Agreement and the Assigned Interests and the Closing
Documents shall be assignable by Assignee without restriction.

 

(b) Neither this Agreement, nor any or all of the rights or obligations
hereunder shall be assignable by Assignor without the prior written consent of
Assignee, which consent shall not be unreasonably withheld provided that Epoch
may without the prior consent of Assignee but with prior written notice assign
this Agreement together with all of its rights hereunder to an Affiliate of
Epoch, provided that such Affiliate assumes all of Epoch's obligations hereunder
and is at least as credit-worthy as Epoch, and further provided that if at any
time such Affiliate ceases to be an Affiliate of Epoch, then all rights and
obligations under this Agreement shall revert to Epoch or Epoch’s successor.

 

(c) This Agreement shall inure to the benefit of and be binding upon the Parties
and their respective successors (including any successor by reason of merger,
reorganization, sale of assets or statutory arrangement of any Party) and
permitted assigns.

 

10.8 Further Assurances

Each Party shall do such acts and shall execute such further documents,
conveyances, deeds, assignments, transfers and the like, and will cause the
doing of such acts and will cause the execution of such further documents as are
within its power as any other Party may in writing at any time and from time to
time reasonably request be done and/or executed, in order to give full effect to
the provisions of this Agreement and the Closing Documents.

 

10.9 Independent Parties

Nothing contained in this Agreement shall in any way or for any purpose
constitute any Party a partner or agent or legal representative of any other
Party in the conduct of any business or otherwise or a member of a joint venture
or joint enterprise or create any fiduciary relationship among them. Except as
expressly provided herein, no Party shall have any authority to act for or to
assume any obligation or responsibility on behalf of any other and no Party
shall have any authority to bind any other Party to act or to undertake any
obligation or responsibility whatsoever.

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10.10 Further Transactions

If Assignor proposes to enter into a further assignment or sale transaction
similar in nature to the transactions contemplated by this Agreement in respect
of any Royalties other than the Acquired Royalty Payments, Assignee shall have a
right of first refusal and a right of last offer in respect of any such further
transactions.

 

10.11 Public Announcements

The Parties agree that no public announcements concerning the transactions
contemplated herein will be made by any Party, except as may be necessary, in
the opinion of counsel to the Party making such disclosure, to comply with the
requirements of any Applicable Law, including applicable Securities Laws and
subject to Section 10.1. If any such public statement or release is so required
concerning the transactions contemplated herein, the Party making such
disclosure shall consult with the other Party prior to making such statement or
release, and the Parties shall use reasonable efforts, acting in good faith, to
agree upon a text for such statement or release which is satisfactory to all
Parties.

 

10.12 Severability

If any covenant, obligation or provision of this Agreement or the application
thereof to any Person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement or the application of such
covenant, obligation or agreement to Persons or circumstances, other than those
as to which it is held invalid or unenforceable, shall not be affected thereby
and each covenant, obligation and provision of this Agreement shall be
separately valid and enforceable to the fullest extent permitted by law.

 

10.13 Counterparts

This Agreement may be executed in any number of counterparts and each such
executed counterpart shall be deemed to be an original. All executed
counterparts when taken together shall constitute one and the same agreement.

 

10.14 Facsimile Execution

To evidence the fact that it has executed this Agreement, a Party may send a
copy of its executed counterpart to the other Party by facsimile Transmission
and that Party shall be deemed to have delivered this Agreement on the date it
sent such facsimile Transmission. In such event, such Party shall forthwith
deliver to the other Party the counterpart of this Agreement executed by such
Party.

SIGNATURE PAGES TO FOLLOW THIS PAGE

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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.

 

EPOCH BIOSCIENCES, INC. by   /s/ ROBERT SALTMARSH   Name:   Robert Saltmarsh  
Title:   Chief Financial Officer

 

DRUG ROYALTY TRUST 9, by   DRUG ROYALTY CORPORATION INC., its Manager,   by  
/s/ BEHZAD KHOSROWSHAHI     Name:   Behzad Khosrowshahi     Title:   President
and Chief Executive Officer

 

NANOGEN, INC. by   /s/ DAVID LUDVIGSON   Name:   David Ludvigson   Title:  
President and Chief Operating Officer

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EXHIBIT A

ROYALTY PAYMENT STREAMS

First Stream Royalty Payments (in millions)

 

Calendar
Year

   Royalties
Payable    Minimum
Royalty
Payment

2006

   [***]    $ 1.82 M

2007

   [***]    $ 4.30 M

2008

   [***]    $ 4.82 M

2009

   [***]    $ 5.20 M

2010

   [***]    $ 5.41 M

2011

   [***]    $ 5.41 M

Second Stream Royalty Payments (in millions)

 

Calendar Year

 

Royalties Payable

2006

  greater than [***]

2007

  greater than [***]

2008

  greater than [***]

2009

  greater than [***]

2010

  greater than [***]

2011

  greater than [***]

 

*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.

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EXHIBIT B

LICENSE AGREEMENT AND QUENCHER AGREEMENT

 

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EXHIBIT C

PATENTS AND PATENT APPLICATIONS