Exhibit 10.1

ROYALTY RIGHT AGREEMENT

dated as of May 15, 2019

between

QUOTIENT LIMITED

and

THE PURCHASER NAMED HEREIN

 

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Table of Contents

 

             Page     ARTICLE I

 

  RULES OF CONSTRUCTION AND DEFINED TERMS

 

 

Section 1.1

  Rules of Construction and Defined Terms      1     ARTICLE II

 

  ROYALTY RIGHT

 

 

Section 2.1

  Sale of Royalty Right      1    

Section 2.2

  Payment Procedures      1  

            

 

Section 2.3

  Notice of First Sale Date      3    

Section 2.4

  Information Rights      3    

Section 2.5

  Audit Rights      4    

Section 2.6

  Transferability of Royalty Right      4    

Section 2.7

  Allocation of Purchase Price      5    

Section 2.8

  No Partnership or Joint Venture      5     ARTICLE III

 

  MERGERS

 

 

Section 3.1

  Mergers      5     ARTICLE IV

 

  CONFIDENTIALITY

 

 

Section 4.1

  Confidentiality      6     ARTICLE V

 

  SURVIVAL OF CERTAIN PROVISIONS

 

 

Section 5.1

  Survival of Certain Provisions      6     ARTICLE VI

 

  NOTICES

 

 

Section 6.1

  Notices      7     ARTICLE VII

 

  SUCCESSORS AND ASSIGNS

 

 

Section 7.1

  Successors and Assigns      7  

 

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  ARTICLE VIII

 

  SEVERABILITY

 

 

Section 8.1

  Severability      8     ARTICLE IX

 

  WAIVER OF JURY TRIAL

 

 

Section 9.1

  WAIVER OF JURY TRIAL      8     ARTICLE X

 

  GOVERNING LAW; CONSENT TO JURISDICTION

 

 

Section 10.1

  Governing Law; Consent to Jurisdiction      8     ARTICLE XI

 

  COUNTERPARTS

 

 

Section 11.1

  Counterparts      8                  ARTICLE XII

 

  TABLE OF CONTENTS AND HEADINGS

 

 

Section 12.1

  Table of Contents and Headings      9     ARTICLE XIII

 

  TAX MATTERS; TAX DISCLOSURE

 

 

Section 13.1

  Tax Matters      9    

Section 13.2

  Tax Disclosure      9  

Annex A

 

    Rules of Construction and Defined Terms

  

 

 

 

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ROYALTY RIGHT AGREEMENT

Dated as of May 15, 2019

To the Purchaser named on the signature page hereto

Ladies and Gentlemen:

Quotient Limited, a public limited liability company formed under the Laws of
Jersey, Channel Islands (the “Seller”), hereby covenants and agrees with you as
follows:

ARTICLE I

RULES OF CONSTRUCTION AND DEFINED TERMS

Section 1.1 Rules of Construction and Defined Terms. The rules of construction
set forth in Annex A shall apply to this Royalty Right Agreement and are hereby
incorporated by reference into this Royalty Right Agreement as if set forth
fully in this Royalty Right Agreement. Capitalized terms used but not otherwise
defined in this Royalty Right Agreement shall have the respective meanings given
to such terms in Annex A, which is hereby incorporated by reference into this
Royalty Right Agreement as if set forth fully in this Royalty Right Agreement.

ARTICLE II

ROYALTY RIGHT

Section 2.1 Sale of Royalty Right. The Seller hereby sells to the purchaser
named on the signature page hereto (together with any Person to whom the Royalty
Right is Transferred pursuant to the terms hereof, the “Purchaser”) the Royalty
Right in consideration for the consideration set forth in Section 2.7(b). The
Royalty Right shall only be evidenced by this Royalty Right Agreement and shall
not be evidenced by a certificate or other instrument.

Section 2.2 Payment Procedures. (a) On or prior to each Royalty Right Payment
Date, the Seller shall (i) pay, by wire transfer in immediately available funds
in U.S. dollars to the Purchaser Account, the Royalty Right Payment Amount with
respect to the corresponding Royalty Right Period and (ii) deliver to the
Purchaser a report (a “Report”) setting forth (A) such Royalty Right Payment
Amount and (B) MosaiQ™ Net Sales for such Royalty Right Period, calculated in
reasonable detail. Each Report and the contents thereof shall be subject to the
Confidentiality Agreement. Notwithstanding the foregoing, the Seller shall not
be obligated to deliver any Report pursuant to this Section 2.2 unless the
Confidentiality Agreement is effective and has a remaining term of not less than
six (6) months at the time such Report is to be delivered,

(b) All payments made by or on behalf of the Seller (including any Successor
Company) in respect of this Royalty Right Agreement or the Royalty Right will be
made free and clear of and without withholding or deduction for, or on account
of, any Taxes unless the withholding or deduction of such Taxes is then required
by law. If any deduction or withholding for, or on account of, any Taxes imposed
or levied by or on behalf of a Relevant Taxing Jurisdiction, will

 

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at any time be required by law to be made from any payments made by or on behalf
of the Seller or paying agent with respect to this Royalty Right Agreement or
the Royalty Right the Seller will pay (together with such payments) such
additional amounts (the “Additional Amounts”) as may be necessary in order that
the net amounts received by the Purchaser in respect of such payments, after
such withholding or deduction (including any such deduction or withholding from
such Additional Amounts), will not be less than the amounts which would have
been received by the Purchaser in respect of such payments on this Royalty Right
Agreement or the Royalty Right, as applicable, in the absence of such
withholding or deduction; provided, however, that no such Additional Amounts
will be payable for or on account of:

(1) any Taxes that would not have been so imposed but for the existence of any
present or former connection between the Purchaser and a Relevant Taxing
Jurisdiction (it being understood that a Relevant Taxing Jurisdiction is to be
determined as though a payment with respect to this Royalty Right Agreement or
the Royalty Right were made on the date of this Royalty Right Agreement) but
excluding, in each case, any connection arising solely from the acquisition,
ownership or holding of this Royalty Right Agreement or the Royalty Right or the
receipt of any payment or the exercise or enforcement of rights under this
Royalty Right Agreement or the Royalty Right;

(2) any Tax that is imposed or withheld by reason of the failure by the
Purchaser or the beneficial owner of this Royalty Right Agreement or the Royalty
Right to comply with a reasonable written request of the Seller addressed to the
Purchaser, after reasonable notice (at least 30 days before any such withholding
or deduction would be payable), to provide certification, information, documents
or other evidence concerning the nationality, residence or identity of the
Purchaser or such beneficial owner or to make any declaration or similar claim
or satisfy any other reporting requirement relating to such matters that is
required by a statute, treaty, regulation or administrative practice of the
Relevant Taxing Jurisdiction as a precondition to exemption from, or reduction
in the rate of deduction of, all or part of such Tax but only to the extent the
Purchaser or such beneficial owner is legally entitled to provide such
certification or documentation;

(3) any Taxes that are payable otherwise than by deduction or withholding from a
payment under or with respect to this Royalty Right Agreement or the Royalty
Right;

(4) any estate, inheritance, gift, sales, excise, transfer, personal property or
similar tax, assessment or other governmental charge;

(5) any tax imposed by reason of the Purchaser’s or beneficial owner’s past or
present status (or the past or present status of a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, the
Purchaser or beneficial owner, if the Purchaser or beneficial owner is an
estate, a trust, a partnership or a corporation) as a personal holding company,
private foundation or other tax exempt organization, passive foreign investment
company, controlled foreign corporation with respect to the United States, bank,
or as a corporation that accumulates earnings to avoid U.S. federal income tax;
or

 

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(6) any combination of items (1) through (5) above.

Notwithstanding anything to the contrary herein, the Seller shall be permitted
to withhold or deduct any amounts required by FATCA and the Seller shall not be
required to pay any additional amounts with respect to any FATCA withholding or
deduction imposed on or with respect to this Royalty Right Agreement or the
Royalty Right.

The Seller will (i) make any required withholding or deduction and (ii) remit
the full amount deducted or withheld to the Relevant Taxing Jurisdiction in
accordance with applicable Law. The Seller will provide certified copies of tax
receipts evidencing the payment of any Taxes so deducted or withheld to each
Relevant Taxing Jurisdiction imposing such Taxes, or if such tax receipts are
not available, certified copies of other reasonable evidence of such payments as
soon as reasonably practicable to the Purchaser.

Wherever in this Royalty Right Agreement there is mentioned, in any context:

(1) the Royalty Right Payment Amount; or

(2) interest, if any, pursuant to Section 2.5 of this Royalty Right Agreement
such reference shall be deemed to include payment of Additional Amounts to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof.

The foregoing obligations will survive any termination, defeasance or discharge
of this Royalty Right Agreement or Royalty Right and any transfer by the
Purchaser or beneficial owner of this Royalty Right Agreement or the Royalty
Right, and will apply mutatis mutandis to any jurisdiction in which any
Successor Company is organized, engaged in business for tax purposes or
otherwise resident for tax purposes, or any jurisdiction from or through which
any payment under, or with respect to this Royalty Right Agreement or Royalty
Right is made by or on behalf of the Seller, or any political subdivision or
governmental authority thereof or therein having the power to tax.

Section 2.3 Notice of First Sale Date. Within fifteen (15) days following the
occurrence of the First Sale Date, the Seller shall provide notice in writing to
the Purchaser of the date on which the First Sale Date occurred (the “First Sale
Notice”).

Section 2.4 Information Rights. Upon the Purchaser’s prior written request, the
Seller shall meet at reasonable times during normal business hours with the
Purchaser up to two times per calendar year to discuss the content of any Report
or First Sale Notice (or reasons for the lack of any Report or First Sale
Notice). The Seller shall promptly furnish to the Purchaser all relevant
information and documentation in connection with this Royalty Right Agreement
that the Purchaser may reasonably request in connection with the determination
of whether or when the First Sale Date occurred and whether the calculation of
MosaiQ™ Net Sales or a Royalty Right Payment Amount is in error. The Seller
agrees to maintain books and records relevant to the calculation of MosaiQ™ Net
Sales and Royalty Right Payment Amounts. Any information or documentation
discussed, provided or made available by the Seller pursuant to this Section 2.4
shall be subject to the Confidentiality Agreement. Notwithstanding the
foregoing, the Seller shall not be obligated to meet to discuss any Report or
First Sale Notice (or

 

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reasons for the lack of any Report or First Sale Notice), or provide or make
available any information or documentation, pursuant to this Section 2.4 unless
the Confidentiality Agreement is effective and has a remaining term of not less
than six (6) months at the time such information or documentation is to be
discussed, provided or made available.

Section 2.5 Audit Rights. Subject to reasonable advance written notice from the
Purchaser within six (6) months of each Royalty Right Payment Date, the Seller
shall permit an independent accounting firm of national reputation chosen by the
Purchaser to have access during normal business hours to the books and records
of the Seller as may be reasonably necessary to audit the calculation of MosaiQ™
Net Sales and Royalty Right Payment Amounts (or reasons for the lack of any
calculation therefor) for the applicable Royalty Right Period pertaining to such
Royalty Right Payment Date. Any such audit shall be at the expense of the
Purchaser; provided, however, that if any such audit reveals a discrepancy in
favor of the Purchaser of at least 5% of a Royalty Right Payment Amount, then
the cost of such audit shall instead be borne by the Seller. In the event that
any audit reveals an underpayment of any Royalty Right Payment Amount, then the
underpayment amount shall be paid within thirty (30) days after Purchaser makes
a demand therefor, plus interest thereon if such amount is in excess of five
percent (5%) of the amount that actually should have been paid. Such interest
shall be calculated from the date such amount was due until the date such amount
is actually paid, at the rate of one-half percent (0.5%) over the prime rate of
interest as published in The Wall Street Journal, Eastern Edition, in effect on
the date such amount was due. The independent accounting firm conducting any
audit pursuant to this Section 2.5 shall agree to be bound by the terms of the
Confidentiality Agreement or shall otherwise agree to confidentiality provisions
acceptable to the Seller. Any books and records, information or other
documentation provided or made available by the Seller pursuant to this
Section 2.5 shall be subject to the Confidentiality Agreement. Notwithstanding
the foregoing, the Seller shall not be obligated to provide or make available
any books and records, information or other documentation pursuant to this
Section 2.5 unless the Confidentiality Agreement is effective and has a
remaining term of not less than six months at the time such books and records,
information or other documentation is to be provided or made available.

Section 2.6 Transferability of Royalty Right. Subject to the final sentence of
this Section 2.6, at the option of the Purchaser, the Royalty Right may be
Transferred, in whole but not in part, but only in compliance with applicable
Laws and upon three (3) Business Days’ notice to the Seller. Any request to
Transfer the Royalty Right must be in writing and accompanied by a written
instrument or instruments of Transfer and any other documentation reasonably
requested by the Seller (including a Confidentiality Agreement executed by the
transferee and any new information in respect of the Purchaser Account
contemplated by the definition thereof) in a form reasonably satisfactory to the
Seller. Upon receipt of such written request and other instruments and
documentation reasonably satisfactory to the Seller, the Seller shall recognize
the requested Transfer, and Seller’s recognition of any such Transfer shall not
be unreasonably withheld, delayed or conditioned. Any duly Transferred Royalty
Right shall be the valid obligation of the Seller, evidencing the same right and
entitling the transferee to the same benefits and rights under this Royalty
Right Agreement as those previously held by the transferor. Any Transfer of the
Royalty Right shall be without charge (other than the cost of any transfer tax,
which shall be the responsibility of the transferor). Notwithstanding anything
to the contrary herein, the consent of the Seller shall be required with respect
to, and the Seller shall have the right to decline to consent to and recognize,
any Transfer that is proposed to be made to any Person that the Seller
reasonably determines is a competitor of the Seller.

 

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Section 2.7 Allocation of Purchase Price. The Seller and the Purchaser hereby
acknowledge and agree that the Notes issued to the Purchaser (or its Affiliate)
and the Royalty Right sold by the Seller to the Purchaser on the date hereof
constitute an “investment unit” for purposes of Section 1273(c)(2) of the Code.
In accordance with Section 1273(b)(2) of the Code and Section 1273(c)(2)(A) of
the Code, the issue price of the investment unit is 100% of the principal amount
of such Notes. Allocating that issue price between such Notes and such Royalty
Right based on their relative fair market values, as required by
Section 1273(c)(2)(B) of the Code and U.S. Treasury Regulations
Section 1.1273-2(h)(1), results in (a) such Notes having an issue price of
83.63% of the principal amount of such Notes and (b) such Royalty Right having a
purchase price of 16.37% of the principal amount of such Notes. The Seller and
the Purchaser agree to prepare their respective U.S. federal income tax returns,
including statements and reports related thereto, in a manner consistent with
the foregoing agreement, to the extent such returns, statements and reports are
required to be filed.

Section 2.8 No Partnership or Joint Venture. For the avoidance of doubt, the
Royalty Right shall not represent any equity or ownership interest in the Seller
or have any voting, management or dividend rights. The Seller and the Purchaser
are not partners, associates or joint venturers with each other, and nothing
herein shall be construed to impose any liability as such on either of them or
make them a partnership, an association, a joint venture or any other kind of
entity or legal form.

ARTICLE III

MERGERS

Section 3.1 Mergers. The Seller shall not, directly or indirectly, consolidate,
amalgamate or merge with or into or wind up or convert into (whether or not the
Seller is the surviving Person), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to any Person unless (a) the Seller is the
surviving Person or the Person formed by or surviving any such consolidation,
amalgamation, merger, winding up or conversion (if other than the Seller) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation, partnership, limited liability company or
similar entity organized or existing under the Laws of an Approved Jurisdiction
(the Seller or such Person, as the case may be, being herein called the
“Successor Company”), (b) the Successor Company (if other than the Seller)
expressly assumes all the obligations of the Seller under this Royalty Right
Agreement pursuant to documents or instruments in form reasonably satisfactory
to the Purchaser, and (c) the Seller shall have delivered to the Purchaser an
Officer’s Certificate stating that such consolidation, amalgamation, merger,
winding up, conversion, sale, assignment, transfer, lease, conveyance or other
disposition and such documents or instruments (if any) comply with this Royalty
Right Agreement. The Successor Company (if other than the Seller) shall succeed
to, and be substituted for, the Seller under this Royalty Right Agreement, and
in such event the Seller will automatically be released and discharged from its
obligations under this Royalty Right Agreement.

 

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ARTICLE IV

CONFIDENTIALITY

Section 4.1 Confidentiality. Except as otherwise required by applicable Law or
judicial or administrative proceedings (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigation demand or
similar process) or the rules and regulations of any securities exchange or
trading system or any Governmental Authority or pursuant to requests from
regulatory agencies having oversight over the Seller and except as otherwise set
forth in this Section 4.1, the Seller will, and will cause each of its
Affiliates, directors, officers, employees, agents, representatives and
similarly situated persons who receive such information to, treat and hold as
confidential and not disclose to any Person any and all Confidential Information
furnished to it by the Purchaser, as well as the information on the signature
page to this Royalty Right Agreement, and to use any such Confidential
Information and other information only in connection with this Royalty Right
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, the Seller may disclose such information solely on a need-to-know
basis and solely to its members, directors, employees, managers, officers,
agents, brokers, advisors, lawyers, bankers, trustees, representatives,
investors, co-investors, insurers, insurance brokers, underwriters and financing
parties; provided, however, that such Persons shall be informed of the
confidential nature of such information and shall be obligated to keep such
Confidential Information and other information confidential pursuant to
obligations of confidentiality no less onerous than those set forth herein.
Except as otherwise required by applicable Law or judicial or administrative
proceedings (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) or the rules
and regulations of any securities exchange or trading system or any Governmental
Authority or pursuant to requests from regulatory agencies having oversight over
the Seller, in no event shall the Purchaser’s name (in any variation) be used in
any public announcement or filing, or in any type of mail or electronic
distribution intended for an audience that is not solely limited to the
Affiliates of the Seller. Except as required by applicable Law or judicial or
administrative proceedings (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process) or the rules and regulations of any securities exchange or trading
system or any Governmental Authority or pursuant to requests from regulatory
agencies having oversight over the Seller, neither the Seller nor any of its
Affiliates shall disclose to any Person, or use or include in any public
announcement or any public filing, the identity of any shareholders, members,
directors or Affiliates of the Purchaser, without the prior written consent of
such shareholder, member, director or Affiliate.

ARTICLE V

SURVIVAL OF CERTAIN PROVISIONS

Section 5.1 Survival of Certain Provisions. The covenants and agreements
contained in this Royalty Right Agreement shall survive (a) the execution and
delivery of this Royalty Right Agreement and (b) any Transfer by the Purchaser
of the Royalty Right or any interest therein. All such provisions are binding
upon and may be relied upon by the Purchaser, regardless of any investigation
made at any time by or on behalf of the Purchaser. All statements contained in
any certificate or other instrument delivered by or on behalf of either party
hereto

 

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pursuant to this Royalty Right Agreement shall be deemed to have been relied
upon by the other party hereto and shall survive the consummation of the
transactions contemplated hereby regardless of any investigation made by or on
behalf of any such party. This Royalty Right Agreement and the Purchase
Agreement embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings relating to the
subject matter hereof, other than the separate Confidentiality Agreement entered
into between the Purchaser (or its Affiliate) and the Seller relating to the
transactions contemplated hereby. The Royalty Right shall remain in full force
and effect following any Change of Control (as defined in that certain
indenture, dated as of October 14, 2016, by and among the Seller, certain
Subsidiaries of the Seller and U.S. Bank National Association, as trustee and
collateral agent, as supplemented and amended by that certain first supplemental
indenture, dated as of December 4, 2018, by and among the Seller, certain
Subsidiaries of the Seller and U.S. Bank National Association, as trustee and
collateral agent (such indenture, as so supplemented and amended, the
“Indenture”)).

ARTICLE VI

NOTICES

Section 6.1 Notices. All statements, requests, notices and agreements hereunder
shall be in writing and delivered by hand, mail or overnight courier as follows:

(a) if to the Purchaser, as set forth on the signature page hereto; and

(b) if to the Seller, to:

Quotient Limited

B1, Business Park Terre Bonne

Route de Crassier 13

1262 Eysins

Switzerland

Attention: Christopher Lindop, Chief Financial Officer

With a copy by email to:

Email:       Chris.Lindop@quotientbd.com

ARTICLE VII

SUCCESSORS AND ASSIGNS

Section 7.1 Successors and Assigns. This Royalty Right Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors, permitted assignees and permitted transferees. The Seller may not
assign any of its rights or obligations hereunder or any interest herein without
the prior written consent of the Purchaser, other than in accordance with the
terms of Section 3.1.

 

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ARTICLE VIII

SEVERABILITY

Section 8.1 Severability. Any provision of this Royalty Right Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by Law)
not invalidate or render unenforceable such provision in any other jurisdiction.

ARTICLE IX

WAIVER OF JURY TRIAL

Section 9.1 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PURCHASER AND THE SELLER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS ROYALTY RIGHT AGREEMENT.

ARTICLE X

GOVERNING LAW; CONSENT TO JURISDICTION

Section 10.1 Governing Law; Consent to Jurisdiction. THIS ROYALTY RIGHT
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF
RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. To the extent permitted by applicable Law, the parties hereto hereby
submit to the non-exclusive jurisdiction of the federal and state courts of
competent jurisdiction in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Royalty Right
Agreement or the transactions contemplated hereby.

ARTICLE XI

COUNTERPARTS

Section 11.1 Counterparts. This Royalty Right Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Royalty Right
Agreement. Any counterpart may be executed by facsimile or other electronic
transmission, and such facsimile or other electronic transmission shall be
deemed an original.

 

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ARTICLE XII

TABLE OF CONTENTS AND HEADINGS

Section 12.1 Table of Contents and Headings. The Table of Contents and headings
of the Articles and Sections of this Royalty Right Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.

ARTICLE XIII

TAX MATTERS; TAX DISCLOSURE

Section 13.1 Tax Matters. The Seller and the Purchaser intend that the Royalty
Right be treated for U.S. federal, state and local tax purposes as a contractual
right to receive the Royalty Right Payment Amounts, if any. The Seller and the
Purchaser do not intend that the Royalty Right be treated as an equity or
ownership interest in the Seller or that any amount allocated to the Royalty
Right pursuant to Section 2.7 be treated as a contribution to capital, and
neither the Seller nor the Purchaser shall take any action inconsistent with
such treatment. The Purchaser shall treat the Royalty Right Payment Amounts, if
any, as ordinary income for U.S. federal, state and local tax purposes, and
neither the Seller nor the Purchaser shall take any action inconsistent with
such treatment.

Section 13.2 Tax Disclosure. Notwithstanding anything expressed or implied to
the contrary herein, the Purchaser, on the one hand, and the Seller, on the
other hand, and its respective employees, representatives and agents may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and the tax structure of the transactions contemplated by this Royalty
Right Agreement and the agreements and instruments referred to herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Person relating to such tax treatment and tax structure;
provided, however, that neither such Person nor any employee, representative or
other agent thereof shall disclose any other information that is not relevant to
understanding the tax treatment and tax structure of such transactions
(including the identity of any party and any information that could lead another
to determine the identity of any party) or any other information to the extent
that such disclosure could reasonably result in a violation of any Law relating
to federal or state securities matters. For these purposes, the tax treatment of
the transactions contemplated by this Royalty Right Agreement and the agreements
and instruments referred to herein means the purported or claimed U.S. federal
or state tax treatment of such transactions. Moreover, the tax structure of the
transactions contemplated by this Royalty Right Agreement and the agreements and
instruments referred to herein includes any fact that may be relevant to
understanding the purported or claimed U.S. federal or state tax treatment of
such transactions.

{SIGNATURE PAGE FOLLOWS}

 

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If the foregoing is in accordance with your understanding of this Royalty Right
Agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among us and you in accordance with
its terms.

 

Very truly yours, QUOTIENT LIMITED By:  

                                  

  Name:   Title:

{Signature Page to the Royalty Right Agreement}

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PURCHASER:

 

{Insert Purchaser’s name on line above}

By:    

                                              

  Name:     Title:     Address:     Email:     Purchaser Account Information:  
  Bank:  

                          

    ABA #:  

                                

    Account #:  

                                  

Name/Attention:  

                              

  Percentage Purchased:                                         
                  %

{Signature Page to the Royalty Right Agreement}

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ANNEX A

RULES OF CONSTRUCTION AND DEFINED TERMS

Unless the context otherwise requires, in this Annex A and otherwise in this
Royalty Right Agreement:

 

(a)

A term has the meaning assigned to it and an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP, unless any
Transaction Document (or other document) otherwise provides.

 

(b)

Where any payment is to be made, any funds are to be applied or any calculation
is to be made under this Royalty Right Agreement on a day that is not a Business
Day, unless this Royalty Right Agreement otherwise provides, such payment shall
be made, such funds shall be applied and such calculation shall be made on the
succeeding Business Day, and payments shall be adjusted accordingly, including
interest unless otherwise specified.

 

(c)

Words of the masculine, feminine or neuter gender shall mean and include the
correlative words of other genders.

 

(d)

The definitions of terms shall apply equally to the singular and plural forms of
the terms defined.

 

(e)

The terms “include”, “including” and similar terms shall be construed as if
followed by the phrase “without limitation”.

 

(f)

Unless otherwise specified, references to an agreement or other document include
references to such agreement or document as from time to time amended, restated,
reformed, supplemented or otherwise modified in accordance with the terms
thereof (subject to any restrictions on such amendments, restatements,
reformations, supplements or modifications set forth in this Annex A or
otherwise in this Royalty Right Agreement) and include any Annexes, Exhibits and
Schedules attached thereto.

 

(g)

References to any Law shall include such Law as from time to time in effect,
including any amendment, modification, codification, replacement or reenactment
thereof or any substitution therefor.

 

(h)

References to any Person shall be construed to include such Person’s successors
and permitted assigns (subject to any restrictions on assignment, transfer or
delegation set forth in this Annex A or otherwise in this Royalty Right
Agreement), and any reference to a Person in a particular capacity excludes such
Person in other capacities.

 

(i)

The word “will” shall be construed to have the same meaning and effect as the
word “shall”.

 

(j)

The words “hereof”, “herein”, “hereunder” and similar terms when used in this
Annex A or otherwise in this Royalty Right Agreement shall refer to this Royalty
Right Agreement as a whole and not to any particular provision hereof or
thereof, and Article, Section, Annex, Schedule and Exhibit references herein and
therein are references to Articles and Sections of, and Annexes, Schedules and
Exhibits to, this Royalty Right Agreement unless otherwise specified.

 

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(k)

In the computation of a period of time from a specified date to a later
specified date, the word “from” means “from and including” and each of the words
“to” and “until” means “to but excluding”.

 

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“Additional Amounts” has the meaning set forth in Section 2.2(b) of this Royalty
Right Agreement.

“Affiliate” means, with respect to any specified Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the specified Person. For purposes
of this definition, “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise,
and “controlled” has a meaning correlative thereto.

“Applicable Market” means the donor testing market in the United States and the
European Union. For purposes of this definition, “donor testing market” means
the collection of blood or plasma from donors and in relation to which blood
grouping (characterizing blood-group antigens and antibodies to such antigens in
a given blood sample) and/or serological disease screening (detecting the
presence of pathogens in a blood sample that are associated with particular
diseases or conditions) is performed, in each case, by agencies that collect
blood or plasma from donors.

“Approved Jurisdiction” means Jersey, Channel Islands, the United States of
America, any state or commonwealth thereof or the District of Columbia or any
other country which is on the date of this Royalty Right Agreement a member of
the Organization of Economic Cooperation and Development.

“Business Day” means any day other than a Saturday, a Sunday or any other day on
which banking institutions are authorized or required by Law to close in New
York City or Jersey, Channel Islands.

“Capital Stock” means: (a) in the case of a corporation, corporate stock or
shares; (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and membership rights; and (d) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person; in each case to the extent
treated as equity in accordance with GAAP, but excluding from all of the
foregoing any debt securities convertible into or exchangeable for Capital Stock
whether or not such debt securities include any right of participation with
Capital Stock

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Confidential Information” means all information (whether written or oral, or in
electronic or other form) furnished before or after the date hereof concerning
the Purchaser or its Affiliates (including any of its equityholders), including
any and all information regarding any aspect of the Purchaser’s business,
including its owners, funds, strategy, market views, structure, investors or
potential investors. Such Confidential Information includes any tax exemption
form provided by the Purchaser to the Seller or its Affiliates. Notwithstanding
the foregoing definition, “Confidential Information” shall not include
information that is (v) independently developed or discovered by the Seller
without use of or access to any information described in

 

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the second preceding sentence, as demonstrated by documentary evidence,
(w) already in the public domain at the time the information is disclosed or has
become part of the public domain after such disclosure through no breach of this
Royalty Right Agreement, (x) lawfully obtainable from other sources,
(y) required to be disclosed in any document to be filed with any Governmental
Authority or (z) required to be disclosed by court or administrative order or
under securities Laws applicable to any party to this Royalty Right Agreement or
pursuant to the rules and regulations of any stock exchange or stock market on
which securities of the Seller or its Affiliates or the Purchaser or its
Affiliates may be listed for trading.

“Confidentiality Agreement” means a confidentiality agreement substantially in
the form of Exhibit E to the Indenture.

“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock). For the avoidance of doubt, Equity
Interests shall not include the Royalty Right.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Royalty Right Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with) or any
regulations thereunder or official interpretations thereof or an
intergovernmental agreement between the United States and another jurisdiction
facilitating the implementation thereof (or any fiscal or regulatory
legislation, rules or practices implementing such an intergovernmental
agreement).

“First Sale Date” means the date of first sale of MosaiQ™ consumables in respect
of the Applicable Market by the Seller (or any Affiliate, licensee or other
commercial partner thereof).

“First Sale Notice” has the meaning set forth in Section 2.3 of this Royalty
Right Agreement.

“GAAP” means generally accepted accounting principles in effect in the United
States from time to time.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Indenture” has the meaning set forth in Section 5.1 of this Royalty Right
Agreement.

“IRS” means the U.S. Internal Revenue Service or any successor thereto.

“Laws” means, collectively, all international, foreign, federal, state and local
laws, statutes, treaties, rules, guidelines, regulations, ordinances, judgments,
orders, writs, injunctions, decrees, codes and administrative or judicial
precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case whether or not having
the force of law.

 

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“MosaiQTM” means the technology platform being developed by the Seller and its
Subsidiaries that is known as MosaiQTM (whether marketed under such name or any
other name), comprised of a high-throughput instrument and the related
consumables for use with such instrument.

“MosaiQTM Net Sales” means the gross amount invoiced for sales of MosaiQTM
instruments and related consumables in arm’s length sales by the Seller, any of
its Affiliates or the Seller’s licensees, sublicensees, assignees, transferees
or other commercial partners (or any of their respective Affiliates) to
independent, unrelated third parties, less the following deductions from such
gross amounts that are actually incurred, allowed, accrued or specifically
allocated: (i) credits, price adjustments or allowances for damaged products (to
the extent not covered by insurance), defective goods, returns or rejections of
MosaiQTM instruments and/or related consumables; (ii) normal and customary
trade, cash and quantity discounts, allowances and credits (other than price
discounts granted at the time of invoicing that have been already reflected in
the gross amount invoiced); (iii) chargeback payments, rebates and similar
allowances (or the equivalent thereof) granted to group purchasing
organizations, managed health care organizations, distributors or wholesalers or
to federal, state/provincial, local and other governments, including their
agencies, or to trade customers; (iv) any fees paid to any third party logistics
providers, wholesalers and distributors; (v) any freight, postage, shipping,
insurance and other transportation charges incurred by the selling Person in
connection with shipping MosaiQTM instruments and/or related consumables to
third party logistics providers, wholesalers and distributors and to customers;
(vi) adjustments for billing errors or recalls; (vii) sales, value-added (to the
extent not refundable in accordance with applicable Law), and excise taxes,
tariffs and duties, and other taxes (including annual fees due under
Section 9008 of the United States Patient Protection and Affordable Care Act of
2010 (Pub. L. No. 111-48) and other comparable Laws), levied on, absorbed,
determined or imposed with respect to such sale (but not including taxes
assessed against the income derived from such sale); and (viii) amounts written
off by reason of uncollectible debt, provided that if the debt is thereafter
paid, the corresponding amount shall be added to the MosaiQTM Net Sales of the
period during which it is paid. MosaiQTM Net Sales, as set forth in this
definition, shall be calculated applying, in accordance with GAAP, the standard
accounting practices the selling Person customarily applies to other branded
products sold by it or its Affiliates under similar trade terms and conditions.

“Notes” means the 12% Senior Secured Notes of the Seller.

“Officer’s Certificate” means a certificate signed by the chief executive
officer, president, chief financial officer, any vice president, the controller,
the treasurer or the secretary of the Seller in his or her capacity as such an
officer.

“Person” means an individual, corporation, partnership, association, limited
liability company, unincorporated organization, trust, joint stock company or
joint venture, a Governmental Authority or any other entity.

 

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“Purchase Agreement” means that certain purchase agreement dated January 15,
2019 to which the Seller and the Purchaser (or an Affiliate thereof), among
others, are party, as amended by that certain amendment no. 1 to purchase
agreement dated April 30, 2019 to which the Seller and the Purchaser (or an
Affiliate thereof), among others, are party.

“Purchaser” has the meaning set forth in Section 2.1 of this Royalty Right
Agreement.

“Purchaser Account” means the account described as such on the signature page
hereto, as such account may be changed by the Purchaser in its sole discretion
from time to time (including in connection with any Transfer of the Royalty
Right in accordance with Section 2.6) upon five (5) Business Days’ prior written
notice to the Seller in accordance with Section 6.1 of this Royalty Right
Agreement.

“Relevant Taxing Jurisdiction” means, with respect to any payment under this
Royalty Right Agreement or the Royalty Right made by the Seller or a paying
agent appointed by it, (1) any jurisdiction, or any political subdivision or
governmental authority thereof or therein having the power to tax, from or
through which the Seller or such paying agent makes such payment or (2) any
jurisdiction in which the Seller or such paying agent is incorporated or
organized, engaged in business for tax purposes, or otherwise considered to be a
resident for tax purposes, or any political subdivision or governmental
authority thereof or therein having the power to tax.

“Report” has the meaning set forth in Section 2.2(a) of this Royalty Right
Agreement.

“Royalty Right” means the right to receive the Royalty Right Payment Amounts
pursuant to, and subject to the terms and conditions of, this Royalty Right
Agreement.

“Royalty Right Agreement” means this royalty right agreement to which this Annex
A is attached and made part.

“Royalty Right Payment Amount” means, with respect to any Royalty Right Period,
the product of (a) the Royalty Right Percentage multiplied by (b) MosaiQ™ Net
Sales in the Applicable Market during such Royalty Right Period.

“Royalty Right Payment Date” means each March 20 and September 20 during the
Royalty Right Term and the first March 20 or September 20 following the end of
the Royalty Right Term.

“Royalty Right Percentage” means the percentage set forth on the signature page
hereto.

“Royalty Right Period” means the two full calendar quarters preceding the
applicable Royalty Right Payment Date (or, in the case of the first such Royalty
Right Payment Date, for the period beginning on the First Sale Date and ending
on the last day of the calendar quarter preceding such Royalty Right Payment
Date).

“Royalty Right Term” means the period commencing on the First Sale Date and
ending on the last day of the calendar quarter in which the eighth anniversary
of the First Sale Date occurs.

 

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“Seller” has the meaning set forth in the preamble to this Royalty Right
Agreement.

“Subsidiary” means, with respect to any Person, (a) any corporation, association
or other business entity (other than a partnership, joint venture, limited
liability company or similar entity) of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time of determination owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof, and (b) any partnership, joint venture, limited
liability company or similar entity of which (i) more than 50% of the capital
accounts, distribution rights, total equity and voting interests or general and
limited partnership interests, as applicable, are owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof, whether in the form of membership, general,
special or limited partnership interests or otherwise, and (ii) such Person or
any Subsidiary of such Person is a controlling general partner or otherwise
controls such entity. For purposes of clarity, a Subsidiary of a Person shall
not include any Person that is under common control with the first Person solely
by virtue of having directors, managers or trustees in common and shall not
include any Person that is solely under common control with the first Person
(i.e., a sister company with a common parent).

“Successor Company” has the meaning set forth in Section 3.1 of this Royalty
Right Agreement.

“Taxes” means any present or future tax, fee, duty, levy, tariff, impost,
assessment or other governmental charge (including penalties, interest and other
liabilities related thereto).

“Transfer” means sell, assign, transfer, pledge, hypothecate, encumber, gift or
in any other manner dispose of.

“U.S.” or “United States” means the United States of America, its 50 states,
each territory thereof and the District of Columbia.

“Voting Stock” of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

 

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