Exhibit 10.7

FORM OF

CONTINGENT VALUE RIGHTS AGREEMENT

BETWEEN

MEREO BIOPHARMA GROUP PLC

and

COMPUTERSHARE INC.

Dated as of [                ]

 

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TABLE OF CONTENTS

 

 

     Page  

ARTICLE 1 DEFINITIONS

     1  

Section 1.1

  Definitions      1  

ARTICLE 2 CONTINGENT VALUE RIGHTS

     7  

Section 2.1

  Holders of CVRs; Appointment of Rights Agent      7  

Section 2.2

  Non-transferable      7  

Section 2.3

  No Certificate; Registration; Registration of Transfer; Change of Address     
7  

Section 2.4

  Payment Procedures      8  

Section 2.5

  No Voting, Dividends or Interest; No Equity or Ownership Interest      10  

Section 2.6

  Ability to Abandon CVR.      10  

Section 2.7

  Share Consideration Cap.      11  

Section 2.8

  Cash Consideration Cap.      11  

Section 2.9

  Fractional Entitlements      11  

ARTICLE 3 THE RIGHTS AGENT

     12  

Section 3.1

  Certain Duties and Responsibilities      12  

Section 3.2

  Certain Rights of Rights Agent      12  

Section 3.3

  Resignation and Removal; Appointment of Successor      14  

Section 3.4

  Acceptance of Appointment by Successor      15  

ARTICLE 4 COVENANTS

     15  

Section 4.1

  List of Holders      15  

Section 4.2

  TIGIT      15  

Section 4.3

  NAVI      16  

Section 4.4

  Prohibited Actions      16  

ARTICLE 5 AMENDMENTS

     17  

Section 5.1

  Amendments Without Consent of Holders or Rights Agent      17  

Section 5.2

  Amendments with Consent of Holders      18  

Section 5.3

  Effect of Amendments      18  

ARTICLE 6 CONSOLIDATION, MERGER, SALE OR CONVEYANCE

     18  

Section 6.1

  Milan May Not Consolidate, Etc.      18  

Section 6.2

  Successor Substituted      19  

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE 7 MISCELLANEOUS

     19  

Section 7.1

  Notices to Rights Agent and to Milan      19  

Section 7.2

  Notice to Holders      20  

Section 7.3

  Entire Agreement      20  

Section 7.4

  Merger or Consolidation or Change of Name of Rights Agent      20  

Section 7.5

  Successors and Assigns      20  

Section 7.6

  Benefits of Agreement; Action by Majority of Holders      21  

Section 7.7

  Governing Law      21  

Section 7.8

  Jurisdiction      21  

Section 7.9

  WAIVER OF JURY TRIAL      21  

Section 7.10

  Severability Clause      22  

Section 7.11

  Counterparts; Effectiveness      22  

Section 7.12

  Termination      22  

Section 7.13

  Force Majeure      23  

Section 7.14

  Construction      23  

 

Schedules:

  

Schedule A

   NAVI Team Members

Schedule B

   TIGIT Budget

Schedule C

   NAVI Budget

 

 

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FORM OF

CONTINGENT VALUE RIGHTS AGREEMENT1

THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of [•] (this “Agreement”), is
entered into by and among Mereo BioPharma Group plc, a public limited company
incorporated under the laws of England and Wales (“Milan”), and Computershare
Inc., a Delaware corporation, as initial Rights Agent (as defined herein).

PREAMBLE

WHEREAS, Milan, Mereo US Holdings Inc., a Delaware corporation and direct
wholly-owned subsidiary of Milan, and Mereo MergerCo One Inc., a Delaware
corporation and indirect wholly-owned subsidiary of Milan (“Merger Sub”), and
OncoMed Pharmaceuticals, Inc., a Delaware corporation (the “Company”), have
entered into an Agreement and Plan of Merger and Reorganization, dated as of
December 5, 2018 (the “Merger Agreement”), pursuant to which Merger Sub will
merge with and into the Company (the “Merger”), with the Company surviving the
Merger as a wholly-owned indirect subsidiary of Milan (the “Surviving
Corporation”);

WHEREAS, pursuant to the Merger Agreement, and in accordance with the terms and
conditions thereof, Milan has agreed to provide to Holders (as defined herein)
contingent value rights as hereinafter described;

WHEREAS, the parties have done all things necessary to make the contingent value
rights, when issued pursuant to the Merger Agreement and hereunder, the valid
obligations of Milan and to make this Agreement a valid and binding agreement of
Milan, in accordance with its terms; and

NOW, THEREFORE, in consideration of the premises and the consummation of the
transactions referred to above, it is mutually covenanted and agreed, for the
proportionate benefit of all Holders, as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions.

Capitalized terms used but not otherwise defined herein have the meanings
ascribed thereto in the Merger Agreement. The following terms have the meanings
ascribed to them as follows:

“AIM” means the Alternative Investment Market operated by the London Stock
Exchange.

 

1 

NTD: TIGIT Milestone and all TIGIT-related definitions, payment mechanics,
covenants and other operative sections and all references to any of the
foregoing to be deleted if the TIGIT Cash Payment is received by the Company
prior to the Effective Time.

 

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“Assignee” has the meaning set forth in Section 7.5

“Cash Consideration Cap” means $79,700,000.

“Celgene” means Celgene Co. and Celgene Corp., and each of their respective
successors or assignees.

“Celgene Collaboration Agreement” means that Master Research and Collaboration
Agreement by and among Celgene Co., Celgene Corp. and the Company dated
December 2, 2013.

“Celgene Co.” means Celgene Alpine Investment Company II, LLC, a Delaware
limited liability company.

“Celgene Corp.” means Celgene Corporation, a Delaware corporation.

“Celgene Option” means that exclusive option granted by the Company to Celgene
with respect to the TIGIT Program pursuant to Section 3.1.1(c) of the Celgene
Collaboration Agreement.

“CVR” means a contingent contractual right of Holders to receive the Milestone
Payments, pursuant to the Merger Agreement and this Agreement.

“CVR Register” has the meaning set forth in Section 2.3(b).

“Diligent Efforts” means carrying out those obligations and tasks that comprise
a level of effort and expenditure of resources that is consistent with
commercially reasonable practices normally and typically devoted by a company
within the bio-pharmaceutical industry of comparable size and resources to a
product or product candidate at a similar stage in its development or product
life, as applicable, taking into account, without limitation, issues of safety
and efficacy, market potential, anticipated pricing and reimbursement rates,
costs, labeling, pricing reimbursement, the competitiveness of alternative
products, the patent and other proprietary position of the product, and the
likelihood of regulatory approval given the regulatory structure involved.
“Diligent Efforts” shall not include, and Milan shall have no obligation or
liability to, (i) fund or otherwise support or incur any cost or expense
relating to the NAVI Product or the TIGIT Program (except, in each case, in
respect of clinical trials commenced prior to the date hereof) in excess of the
commitments provided for in the budget set forth on Schedule B and Schedule C
hereto, as applicable, (ii) enroll any additional subjects in any currently
ongoing trial of the NAVI Product and the TIGIT Program or (iii) commit to any
additional development activities of the NAVI Product or the TIGIT Program not
provided for in such applicable budget. For the avoidance of doubt, a failure to
achieve the TIGIT Milestone or the NAVI Milestone in and of itself may be
consistent with Diligent Efforts.

“DLL4” means delta-like ligand 4.

 

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“First NAVI Period” means the period commencing on the date of this Agreement
and ending at 11:59 p.m., New York City time, on [[•], 2020].2

“Holder” means, at the relevant time, a Person in whose name CVRs are registered
in the CVR Register.

“London Stock Exchange” means London Stock Exchange plc.

“Loss” has the meaning set forth in Section 3.2(g).

“Majority of Holders” means, at any time, the registered Holder or Holders of
more than 50% of the total number of CVRs registered at such time, as set forth
on the CVR Register.

“Milestone Non-Achievement Certificate” has the meaning set forth in
Section 2.4(c).

“Milestone Payments” means (i) the TIGIT Milestone Payment and (ii) the NAVI
Milestone Payments.

“Milestone Payment Date” means, in respect of any Milestone, the date that is
thirty (30) Business Days following the achievement of such Milestone.

“Milestone Period” means the TIGIT Milestone Period or the NAVI Milestone
Period, as applicable.

“Milestones” means each of the TIGIT Milestone and the NAVI Milestones.

“NAVI Agreement” means the NAVI Investment Agreement or the NAVI Partnership
Agreement, as applicable.

“NAVI Cash Payment” means a NAVI Partnership Receipt or a NAVI Investment
Receipt.

“NAVI Investment Agreement” means a definitive investment agreement, stock sale
agreement, or similar agreement duly approved by the Milan Board in accordance
with Section 4.3(a) and entered into by Milan or one of its Subsidiaries
(including NAVI Sub) and a third party within the First NAVI Period and pursuant
to which (i) a third party acquires an ownership interest in NAVI Sub of up to
eighty-point-five percent (80.5%), provided that, following the entry into such
NAVI Investment Agreement, Milan or one or more of its Subsidiaries (other than
NAVI Sub) retains, in the aggregate, a minimum of nineteen-point-five percent
(19.5%) of the issued and outstanding equity interests of NAVI Sub on a
fully-diluted basis, and (ii) Milan or one or more of its Subsidiaries (other
than NAVI Sub) are or may be entitled to receive one or more NAVI Cash Payments.

“NAVI Investment CVR Allocation” means 0.70.

 

2 

NTD: To be the date that is eighteen (18) months after the Closing Date.

 

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“NAVI Investment Receipt” means each cash milestone payment payable to Milan or
one or more of its Subsidiaries (other than NAVI Sub) pursuant to a NAVI
Investment Agreement (or any agreement contemplated by such NAVI Investment
Agreement), except for any (i) royalty or similar sales-based payment that is
measured, in whole or in part, by reference to the quantity of NAVI Product that
is produced or sold or the revenues (or a formula that makes reference to such
revenues) derived therefrom and (ii) for the avoidance of doubt only, any fees
for service, research and development funding, reimbursement of intellectual
property filing, prosecution, litigation and maintenance-related expenses or
reimbursement of manufacturing expenses received from a counterparty pursuant to
a NAVI Investment Agreement.

“NAVI Milestone” will be deemed to occur upon the actual receipt during the
Second NAVI Period by Milan or one or more of its Subsidiaries (other than NAVI
Sub) of a NAVI Cash Payment.

“NAVI Milestone Achievement Certificate” has the meaning set forth in
Section 2.4(b).

“NAVI Milestone Payment” means, with respect to any NAVI Milestone, a cash
payment in an aggregate principal amount equal to the product determined by
multiplying (i)(A) in the case of a NAVI Investment Receipt, the NAVI Investment
CVR Allocation, or (B) in the case of a NAVI Partnership Receipt, the NAVI
Partnership CVR Allocation, by (ii) the relevant NAVI Cash Payment actually
received by Milan or one or more of its Subsidiaries (other than NAVI Sub), net
of (A) any Tax (including any applicable value added or sales taxes and
including any Tax which would be payable but for the utilization of a relief),
(B) 50% of any expenditure by Milan or its Subsidiaries pursuant to the budget
set forth on Schedule C, and (C) any other reasonable cost or expense
attributable to the receipt of such payment (which, for the avoidance of doubt,
shall include (x) any costs, reasonable out-of-pocket fees, expenses or charges
incurred by Milan or its Subsidiaries in excess of the commitments provided for
in the budget set forth on Schedule C, (y) any costs, reasonable out-of-pocket
fees, expenses or charges incurred by Milan or its Subsidiaries under the
relevant NAVI Agreement, and (z) any costs, reasonable out-of-pocket fees,
expenses or charges incurred by Milan or its Subsidiaries, or for which Milan or
one or more of its Subsidiaries is responsible, in connection with the
preparation, negotiation and execution of the relevant NAVI Agreement, in each
case to the extent such costs, out-of-pocket fees, expenses or charges have not
been previously accounted for in the calculation of a prior NAVI Milestone
Payment).

“NAVI Milestone Period” means the First NAVI Period, provided that, if a NAVI
Agreement is entered into by Milan or one of its Subsidiaries and a third party
within the First NAVI Period in accordance with the provisions of
Section 4.2(b), then the NAVI Milestone Period shall mean the Second NAVI
Period.

“NAVI Partnership Agreement” means a definitive partnership agreement,
collaboration agreement, joint venture agreement, profit sharing agreement,
license or sublicense agreement, asset sale agreement, stock sale agreement, or
similar agreement duly approved by the Milan Board in accordance with
Section 4.3(a) and entered into by Milan or one of its Subsidiaries (including
NAVI Sub) and a third party within the First NAVI Period and pursuant to which
(i) the right to develop, manufacture or commercialize the NAVI Product is
granted, licensed, assigned, sold, transferred or otherwise conveyed (including
by operation of law but excluding any NAVI Investment Agreement) to a third
party, and (ii) Milan or one or more of its Subsidiaries (other than NAVI Sub)
are or may be entitled to receive one or more NAVI Cash Payments from such third
party.

 

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“NAVI Partnership CVR Allocation” means 0.70.

“NAVI Partnership Receipt” means each cash milestone payment payable to Milan or
one or more of its Subsidiaries pursuant to a NAVI Partnership Agreement (or any
agreement contemplated by such NAVI Partnership Agreement), except for any
(i) royalty or similar sales-based payment that is measured, in whole or in
part, by reference to the quantity of NAVI Product that is produced or sold or
the revenues (or a formula that makes reference to such revenues) derived
therefrom and (ii) for the avoidance of doubt only, any fees for service,
research and development funding, reimbursement of intellectual property filing,
prosecution, litigation and maintenance-related expenses or reimbursement of
manufacturing expenses received from a counterparty pursuant to a NAVI
Partnership Agreement.

“NAVI Product” means any product that constitutes, incorporates, comprises, or
contains one or more molecules that incorporate, comprise or consist of one or
more immunoglobulin domains, or fragment(s) thereof, that specifically bind(s)
to DLL4 and VEGF, whether or not as the sole active ingredient, and in all
forms, presentations, and formulations (including manner of delivery and
dosage).

“NAVI Sub” means [•], a Delaware corporation and wholly-owned subsidiary of the
Surviving Corporation that holds all of Milan’s indirect right, title and
interest in and to the NAVI Product.

“Notice” has the meaning set forth in Section 7.1.

“Officer’s Certificate” means a certificate signed by the chief executive
officer and the chief financial officer of Milan, in their respective official
capacities.

“Permitted Transfer” means a Transfer of one or more CVRs (i) upon death by will
or intestacy; (ii) by instrument to an inter vivos or testamentary trust in
which the CVRs are to be passed to beneficiaries upon the death of the trustee;
(iii) made pursuant to a court order of a court of competent jurisdiction (such
as in connection with divorce, bankruptcy or liquidation); (iv) made by
operation of law (including a consolidation or merger) or without consideration
in connection with the dissolution, liquidation or termination of any
corporation, limited liability company, partnership or other entity; (v) if the
Holder is a partnership, a distribution from the transferring partnership to its
partners or former partners in accordance with their partnership interests;
(vi) in the case of CVRs payable to a nominee, from a nominee to a beneficial
owner (and, if applicable, through an intermediary) or from such nominee to
another nominee for the same beneficial owner, in each case as permitted by The
Depository Trust Company (“DTC”); (vii) to Milan or its Affiliates; or (viii) as
provided in Section 2.6.

“Rights Agent” means the Rights Agent named in the first paragraph of this
Agreement, until a successor Rights Agent shall have been appointed pursuant to
Article 3 of this Agreement, and thereafter “Rights Agent” will mean such
successor Rights Agent.

 

5

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“Second NAVI Period” means the period commencing on the date of this Agreement
and ending at 11:59 p.m., New York City time, on [[•], 2024].3

“TIGIT Cash Payment” means the cash payment payable by Celgene to the Company,
or to Milan or any of its Subsidiaries on or after the Closing Date, on the
exercise of the Celgene Option.

“TIGIT Milestone” will be deemed to occur upon the occurrence of both (i) the
exercise of the Celgene Option and (ii) actual receipt by Milan or one or more
of its Subsidiaries (or their respective successors or assigns) of the TIGIT
Cash Payment.

“TIGIT Milestone Achievement Certificate” has the meaning set forth in
Section 2.4(a).

“TIGIT Milestone Payment” means, subject to Section 2.7 and Section 2.8, a
number of Milan Depositary Shares equal to the TIGIT Ratio.

“TIGIT Milestone Period” means the period commencing on the date of this
Agreement and ending at 11:59 p.m., New York City time, on December 31, 2019.

“TIGIT” means that Hippo Umbrella Target (as defined in the Celgene
Collaboration Agreement) known as TIGIT and designated as a target by Celgene
effective December 22, 2015.

“TIGIT Program” means the Hippo Designated Program (as defined in the Celgene
Collaboration Agreement) with TIGIT as the designated target.

“TIGIT Ratio” means the quotient obtained by dividing (a) the TIGIT Cash Payment
actually received by Milan or one or more of its Subsidiaries, net of any Tax
(including any applicable value added or sales taxes and including any Tax which
would be payable but for the utilization of a relief), and reasonable cost or
expense attributable to the receipt of such payment (which, for the avoidance of
doubt, shall include any costs, reasonable out-of-pocket fees, expenses or
charges incurred, directly or indirectly, by Milan or its Subsidiaries in excess
of the commitments provided for in the budget set forth on Schedule B) by
(b) the volume-weighted average price per Milan Depositary Share on the
principal trading market on which such Milan Depositary Shares are then listed
or quoted as reported by Bloomberg L.P. over the ten (10) trading days (based on
a trading day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City
time) on each day on which such principal trading market is open for trading)
immediately following the date of the announcement by Milan of the TIGIT
Milestone (which in any event shall be within five (5) Business Days of receipt
by Milan of the TIGIT Cash Payment).

“Transfer” means transfer, pledge, hypothecation, encumbrance, assignment or
other disposition (whether by sale, merger, consolidation, liquidation,
dissolution, dividend, distribution or otherwise), the offer to make such a
transfer or other disposition, and each Contract, arrangement or understanding,
whether or not in writing, to effect any of the foregoing.

 

 

3 

NTD: To be the date that is five (5) years from the Closing Date.

 

6

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“VEGF” means vascular endothelial growth factor.

ARTICLE 2

CONTINGENT VALUE RIGHTS

Section 2.1 Holders of CVRs; Appointment of Rights Agent.

(a) As provided in the Merger Agreement, effective as of the Closing, each
Holder will be entitled to one CVR for each Share that is validly accepted for
payment, and paid for, pursuant to Section 1.8(c) of the Merger Agreement.

(b) Milan hereby appoints the Rights Agent to act as rights agent for Milan in
accordance with the express terms and conditions set forth in this Agreement,
and the Rights Agent hereby accepts such appointment.

Section 2.2 Non-transferable.

A Holder may not at any time Transfer CVRs, other than pursuant to a Permitted
Transfer. Any attempted Transfer that is not a Permitted Transfer, in whole or
in part, will be void ab initio and of no effect.

Section 2.3 No Certificate; Registration; Registration of Transfer; Change of
Address.

(a) Holders’ rights and obligations in respect of CVRs derive solely from this
Agreement; CVRs will not be evidenced by a certificate or other instrument.

(b) The Rights Agent will maintain an up-to-date register (the “CVR Register”)
for the purposes of (i) identifying the Holders of CVRs, (ii) determining
Holders’ entitlement to CVRs and (iii) registering the CVRs and Permitted
Transfers thereof. The CVR Register will initially show one position for the
Rights Agent representing all of the CVRs provided to the holders of shares of
Company Common Stock held immediately prior to Closing. Neither Milan nor its
Subsidiaries will have any responsibility or liability whatsoever to any person
other than the Holders.

(c) Subject to the restriction on transferability set forth in Section 2.2,
every request made to Transfer CVRs must be in writing and accompanied by a
written instrument of Transfer, together with the signature guarantee of a
guarantor institution which is a participant in a signature guarantee program
approved by the Securities Transfer Association (a “signature guarantee”) and
other requested documentation in a form reasonably satisfactory to the Rights
Agent, duly executed and properly completed, as applicable, by the Holder or
Holders thereof, or by the duly appointed legal representative, personal
representative or survivor of such Holder or Holders, setting forth in
reasonable detail the circumstances relating to the Transfer. Upon receipt of
such written notice, the Rights Agent will, subject to its reasonable
determination in accordance with its own internal procedures, that the Transfer
instrument is in proper form and the Transfer, is a Permitted Transfer and
otherwise complies on its face with the other terms and conditions of this
Agreement, register the Transfer of the applicable CVRs in the CVR Register. All
Transfers of CVRs registered in the CVR Register will be the valid obligations
of Milan, evidencing the same right, and entitling the transferee to the same
benefits and rights under this Agreement, as those held by the transferor. Milan
and the Rights Agent may each require payment of a sum sufficient to cover any
stamp or other transfer tax or governmental charge that is imposed in connection
with (and would not have been imposed but for) any such registration of
transfer. No transfer of CVRs shall be valid until registered in the CVR
Register and any transfer not duly registered in the CVR Register shall be void.

 

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(d) A Holder may make a written request to the Rights Agent to change such
Holder’s address of record in the CVR Register. Such written request must be
duly executed by such Holder. Upon receipt of such written notice, the Rights
Agent shall promptly record the change of address in the CVR Register.

Section 2.4 Payment Procedures.

(a) If the TIGIT Milestone occurs at any time prior to the expiration of the
TIGIT Milestone Period, then, on or prior to the Milestone Payment Date relating
thereto, (i) Milan, or a Person nominated by Milan (with written notice thereof
from Milan to the Rights Agent), as the case may be, will (A) deliver to the
Rights Agent, a certificate (the “TIGIT Milestone Achievement Certificate”)
certifying the date of satisfaction of the TIGIT Milestone and that the Holders
are entitled to receive the TIGIT Milestone Payment, (B) allot and issue to the
Depositary, or as the Depositary directs, the Milan Ordinary Shares underlying
the Milan Depositary Shares comprising the TIGIT Milestone Payment, (C) deliver
to the Depositary, for the benefit of the Holders, evidence of book-entry shares
representing Milan Ordinary Shares underlying the Milan Depositary Shares
comprising the TIGIT Milestone Payment and (D) take all steps necessary to
ensure that the Milan Ordinary Shares underlying the Milan Depositary Shares
comprising the TIGIT Milestone Payment are admitted to trading on AIM and
(ii) Milan shall procure that the Depositary shall promptly (and in any event,
within ten (10) Business Days) issue and deliver to the Holders, by first-class
postage prepaid mail, to the address of each Holder set forth in the CVR
Register at such time or by other method of delivery as specified by the
applicable Holder in writing to the Rights Agent, the number of whole Milan
Depositary Shares equal to the product determined by multiplying (A) the
quotient determined by dividing (x) the TIGIT Milestone Payment by (y) the total
number of CVRs registered in the CVR Register at such time, by (B) the number of
CVRs registered to such Holder in the CVR Register at such time. For the
avoidance of doubt, each of the requirements of the TIGIT Milestone must be
fully satisfied for the TIGIT Milestone to be considered to be attained, and
(i) Milan shall have no further liability in respect of the TIGIT Milestone
Payment upon delivery of the Milan Depositary Shares in accordance with this
Section 2.4(a) and the satisfaction of each of Milan’s obligations set forth in
this Section 2.4(a) and (ii) the Holders will not be entitled to, and Milan will
not be liable for, any TIGIT Milestone Payment in the event of any partial
satisfaction of the TIGIT Milestone.

 

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(b) If a NAVI Milestone occurs at any time prior to the expiration of the Second
NAVI Period and on each such occurrence, then, on or prior to the Milestone
Payment Date relating thereto, Milan, or a Person nominated by Milan (with
written notice thereof from Milan to the Rights Agent), as the case may be, will
deliver to the Rights Agent (i) a certificate (each such certificate, a “NAVI
Milestone Achievement Certificate”) certifying the date of satisfaction of the
applicable NAVI Milestone and that the Holders are entitled to receive a NAVI
Milestone Payment, and (ii) the applicable NAVI Milestone Payment, by wire
transfer of immediately available funds to an account designated by the Rights
Agent. Upon receipt of the wire transfer referred to in the foregoing sentence,
the Rights Agent will promptly (and in any event, within ten (10) Business Days)
pay, by check mailed, first-class postage prepaid, to the address of each Holder
set forth in the CVR Register at such time or by other method of delivery as
specified by the applicable Holder in writing to the Rights Agent, an amount in
cash equal to the product determined by multiplying (A) the quotient determined
by dividing (x) the applicable NAVI Milestone Payment by (y) the total number of
CVRs registered in the CVR Register at such time, by (B) the number of CVRs
registered to such Holder in the CVR Register at such time. For the avoidance of
doubt, each of the requirements of each NAVI Milestone must be fully satisfied
for such NAVI Milestone to be considered to be attained, and (i) Milan shall
have no further liability in respect of the NAVI Milestone Payment upon delivery
of the relevant funds in accordance with this Section 2.4(b) and (ii) the
Holders will not be entitled to, and Milan will not be liable for, any NAVI
Milestone Payment in the event of any partial satisfaction of the requirements
relating to such NAVI Milestone.

(c) If a Milestone is not attained at any time prior to the expiration of the
applicable Milestone Period then, on or before the date that is ten
(10) Business Days after the end of such Milestone Period, Milan will deliver to
the Rights Agent an Officer’s Certificate (the “Milestone Non-Achievement
Certificate”) certifying that the applicable Milestone has not occurred and that
Milan has complied in all material respects with its obligations under this
Agreement. The Rights Agent will promptly (and in any event, within ten
(10) Business Days after receipt) deliver a copy of such Milestone
Non-Achievement Certificate to the Holders. The Rights Agent will deliver to
Milan a certificate certifying the date of delivery of such certificate to the
Holders.

(d) If the Rights Agent does not receive from the Majority of Holders a written
objection to a Milestone Non-Achievement Certificate within thirty (30) Business
Days after the date of delivery of such Milestone Non-Achievement Certificate by
the Rights Agent to the Holders, the Holders will be deemed to have accepted
such Milestone Non-Achievement Certificate, and Milan and its Subsidiaries will
have no further obligation or liability with respect to the determination of the
applicable Milestone Payment.

(e) Except to the extent any portion of any Milestone Payment is required to be
treated as imputed interest pursuant to applicable Law, the parties hereto agree
to treat the CVRs and all Milestone Payments for all Tax purposes as
consideration for shares of Company Common Stock and Company Options pursuant to
the Merger Agreement, and the parties hereto will not take any position to the
contrary on any Tax Return or for other Tax purposes except as required by
applicable Law.

(f) Milan and the Rights Agent will be entitled to deduct and withhold, or cause
to be deducted and withheld, from any Milestone Payment otherwise payable
pursuant to this Agreement, such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
applicable Law relating to Taxes. To the extent that amounts are so deducted and
withheld, such deducted and withheld amounts will be treated for all purposes of
this Agreement as having been paid to the Holder in respect of which such
deduction and withholding was made. Prior to making any such Tax deductions or
withholdings or causing any such Tax deductions or withholdings to be made with
respect to any Holder, the Rights Agent will, to the extent reasonably
practicable, provide notice to the Holder of such potential Tax deduction or
withholding and a reasonable opportunity for the Holder to provide any necessary
Tax forms in order to avoid or reduce such withholding amounts; provided that
the time period for payment of a Milestone Payment by the Rights Agent set forth
in Section 2.4(a) or Section 2.4(b) will be extended by a period equal to any
delay caused by the Holder providing such forms, provided, further, that in no
event shall such period be extended for more than ten (10) Business Days, unless
otherwise requested by the Holder for the purpose of delivering such forms and
agreed to by the Rights Agent.

 

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(g) Any portion of a Milestone Payment that remains undistributed to the Holders
six (6) months after the Milestone Payment Date (including by means of uncashed
checks or invalid addresses on the CVR Register) will be delivered by the Rights
Agent to Milan or a person nominated in writing by Milan (with written notice
thereof from Milan to the Rights Agent), and any Holder will thereafter look
only to Milan for payment of such Milestone Payment (which shall be without
interest).

(h) If any Milestone Payment (or portion thereof) remains unclaimed by a Holder
two (2) years after the applicable Milestone Payment Date (or immediately prior
to such earlier date on which such Milestone Payment would otherwise escheat to
or become the property of any Governmental Authority), such Milestone Payment
(or portion thereof) will, to the extent permitted by applicable Law, become the
property of Milan and will be transferred to Milan or a person nominated in
writing by Milan (with written notice thereof from Milan to the Rights Agent),
free and clear of all claims or interest of any Person previously entitled
thereto, and no consideration or compensation shall be payable therefor. Neither
Milan nor the Rights Agent will be liable to any Person in respect of a
Milestone Payment delivered to a public official pursuant to any applicable
abandoned property, escheat or similar legal requirement under applicable Law.

Section 2.5 No Voting, Dividends or Interest; No Equity or Ownership Interest.

(a) CVRs will not have any voting or dividend rights, and interest will not
accrue on any amounts payable in respect of CVRs.

(b) CVRs will not represent any equity or ownership interest in Milan or any of
its Subsidiaries or in the Surviving Corporation. The sole right of the Holders
to receive property hereunder is the right to receive Milestone Payments, if
any, in accordance with the terms hereof. It is hereby acknowledged and agreed
that a CVR shall not constitute a security of Milan or any of its Subsidiaries
or of the Surviving Corporation.

Section 2.6 Ability to Abandon CVR.

A Holder may at any time, at such Holder’s option, abandon all of such Holder’s
remaining rights represented by CVRs by transferring such CVR to Milan or a
person nominated in writing by Milan (with written notice thereof from Milan to
the Rights Agent) without consideration in compensation therefor, and such
rights will be cancelled, with the Rights Agent being promptly notified in
writing by Milan of such transfer and cancellation. Nothing in this Agreement is
intended to prohibit Milan or its Affiliates from offering to acquire or
acquiring CVRs, in private transactions or otherwise, for consideration in its
sole discretion.

 

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Section 2.7 Share Consideration Cap.

The number of Milan Ordinary Shares underlying the Milan Depositary Shares to be
issued pursuant to this CVR Agreement, when aggregated with the number of Milan
Ordinary Shares underlying the Milan Depositary Shares issued as Share
Consideration pursuant to Section 1.5(a)(ii) of the Merger Agreement shall not,
in the aggregate, exceed the Share Consideration Cap, and, if the aggregate
number of Milan Depositary Shares to be issued pursuant to Section 2.4(a) of
this CVR Agreement would require the allotment and issuance of an aggregate
number of Milan Ordinary Shares (underlying such Milan Depositary Shares) that,
together with the aggregate number of Milan Ordinary Shares underlying the Milan
Depositary Shares issued at Closing (collectively, the “Total Share
Consideration”), otherwise exceed the Share Consideration Cap, then the number
of Milan Depositary Shares to be issued pursuant to this CVR Agreement shall be
appropriately reduced so that the Total Share Consideration does not exceed the
Share Consideration Cap. For the avoidance of doubt, the Share Consideration Cap
shall not operate to limit or restrict any NAVI Milestone Payment which is or
becomes payable pursuant to this Agreement.

Section 2.8 Cash Consideration Cap.

The aggregate principal amount of all cash payments made to Holders by Milan as
NAVI Milestone Payments pursuant to this CVR Agreement shall in no case exceed
the Cash Consideration Cap. If the aggregate principal amount to be paid to
Holders by Milan pursuant to Section 2.4(b) of this CVR Agreement would,
together with the aggregate principal amount of any prior such cash payments,
otherwise exceed the Cash Consideration Cap, then the applicable NAVI Milestone
Payment shall be appropriately reduced so that the aggregate principal amount of
such payment, together with any prior such cash payments, does not exceed the
Cash Consideration Cap.

Section 2.9 Fractional Entitlements.

No fractional Milan Ordinary Shares or Milan Depositary Shares shall be issued
in connection with the TIGIT Milestone Payment, and no certificates or scrip for
any such fractional shares shall be issued. Any fractional share resulting from
the application of the TIGIT Ratio shall be rounded down to the nearest whole
share, with no cash being paid for any fractional share eliminated by such
rounding.

 

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ARTICLE 3

THE RIGHTS AGENT

Section 3.1 Certain Duties and Responsibilities.

(a) The Rights Agent will not have any liability for any actions taken or not
taken in connection with this Agreement, except to the extent such liability
arises as a result of the willful misconduct, bad faith or gross negligence of
the Rights Agent (in each case as determined by a final non-appealable judgment
of court of competent jurisdiction). Notwithstanding anything in this Agreement
to the contrary, any liability of the Rights Agent under this Agreement will be
limited to the amount of annual fees paid by Milan to the Rights Agent during
the twelve (12) months immediately preceding the event for which recovery from
the Rights Agent is being sought. Anything to the contrary notwithstanding, in
no event will the Rights Agent be liable for special, punitive, indirect,
incidental or consequential loss or damages of any kind whatsoever (including,
without limitation, lost profits), even if the Rights Agent has been advised of
the likelihood of such loss or damages, and regardless of the form of action.

(b) The Rights Agent shall not have any duty or responsibility in the case of
the receipt of any written demand from any Holder with respect to any action or
default by any person or entity, including, without limiting the generality of
the foregoing, any duty or responsibility to initiate or attempt to initiate any
proceedings at law or otherwise or to make any demand upon Milan or the Company.
All rights of action under this Agreement may be enforced by the Rights Agent,
any claim, action, suit, audit, investigation or proceeding instituted by the
Rights Agent will be brought in its name as the Rights Agent and any recovery in
connection therewith will be for the proportionate benefit of all the Holders,
as their respective rights or interests may appear on the CVR Register.

Section 3.2 Certain Rights of Rights Agent.

(a) The Rights Agent undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement, and no implied covenants or
obligations will be read into this Agreement against the Rights Agent.

(b) The Rights Agent may rely and will be protected by Milan in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order or other paper or
document believed by it in good faith to be genuine and to have been signed or
presented by or on behalf of Milan.

(c) Whenever the Rights Agent deems it desirable that a matter be proved or
established prior to taking or omitting any action hereunder, the Rights Agent
may (i) rely upon an Officer’s Certificate and (ii) incur no liability and be
held harmless by Milan for or in respect of any action taken or omitted to be
taken by it under the provisions of this Agreement in reliance upon such
Officer’s Certificate.

(d) The Rights Agent may engage and consult with counsel of its selection, and
the advice or opinion of such counsel will, in the absence of bad faith, gross
negligence or willful misconduct on the part of the Rights Agent, be full and
complete authorization and protection in respect of any action taken or not
taken by the Rights Agent in reliance thereon.

(e) Any permissive rights of the Rights Agent hereunder will not be construed as
a duty.

(f) The Rights Agent will not be required to give any note or surety in respect
of the execution of its powers or otherwise under this Agreement.

 

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(g) Milan agrees to indemnify the Rights Agent for, and to hold the Rights Agent
harmless from and against, any loss, liability, damage, judgment, fine, penalty,
cost or expense (each, a “Loss”) suffered or incurred by the Rights Agent and
arising out of or in connection with the Rights Agent’s performance of its
obligations under this Agreement, including the reasonable and documented costs
and expenses of defending the Rights Agent against any claims, charges, demands,
actions or suits arising out of or in connection in connection with the
execution, acceptance, administration, exercise and performance of its duties
under this Agreement, including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly, or enforcing its
rights hereunder, except to the extent such Loss has been determined by a final
non-appealable decision of a court of competent jurisdiction to have resulted
from the Rights Agent’s gross negligence, bad faith or willful misconduct or
breach of this Agreement.

(h) In addition to the indemnification provided under Section 3.2(g), Milan
agrees (i) to pay the fees of the Rights Agent in connection with the Rights
Agent’s performance of its obligations hereunder, as agreed upon in writing by
the Rights Agent and Milan on or prior to the date of this Agreement, and
(ii) to reimburse the Rights Agent for all reasonable and properly documented
out-of-pocket expenses, including all Taxes (other than income, receipt,
franchise or similar Taxes) and governmental charges, incurred by the Rights
Agent in the performance of its obligations under this Agreement, except that
Milan will have no obligation to pay the fees of the Rights Agent or reimburse
the Rights Agent in connection with any lawsuit initiated by the Rights Agent on
behalf of itself or the Holders, except in the case of any suit enforcing the
provisions of Section 2.4(a), Section 2.4(b) or Section 3.2(g), if Milan is
found by a court of competent jurisdiction to be liable to the Rights Agent or
the Holders, as applicable in such suit.

(i) No provision of this Agreement shall require the Rights Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it believes that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.

(j) The Rights Agent will not be deemed to have knowledge of any event of which
it was supposed to receive notice hereunder but has not received written notice
of such event, and the Rights Agent will not incur any liability for failing to
take action in connection therewith, in each case, unless and until it has
received such notice in writing.

(k) Subject to applicable Law, (i) the Rights Agent and any shareholder,
affiliate, director, officer or employee of the Rights Agent may buy, sell or
deal in any securities of Milan or become peculiarly interested in any
transaction in which Milan may be interested, or contract with or lend money to
Milan or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement, and (ii) nothing herein will preclude the Rights
Agent from acting in any other capacity for Milan or for any other Person.

(l) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorney or agents and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorney or agents or
for any loss to Milan or the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(each as determined by a final non-appealable judgment of a court of competent
jurisdiction) in the selection and continued employment thereof.

 

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(m) Milan shall perform, acknowledge and deliver or cause to be performed,
acknowledged and delivered all such further and other acts, documents,
instruments and assurances as may be reasonably required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of this
Agreement.

(n) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement (except its
countersignature thereof) or be required to verify the same, and all such
statements and recitals are and shall be deemed to have been made by Milan only.

(o) The obligations of Milan under this Section 3.2 shall survive the expiration
of the CVRs and the termination of this Agreement and the resignation,
replacement or removal of the Rights Agent.

Section 3.3 Resignation and Removal; Appointment of Successor.

(a) The Rights Agent may resign at any time by written notice to Milan. Any such
resignation notice shall specify the date on which such resignation will take
effect (which shall be at least forty-five (45) days following the date that
such resignation notice is delivered), and such resignation will be effective on
the earlier of (x) the date so specified and (y) the appointment of a successor
Rights Agent.

(b) Milan will have the right to remove the Rights Agent at any time by written
notice to the Rights Agent, specifying the date on which such removal will take
effect. Such notice will be given at least forty-five (45) days prior to the
date so specified (or, if earlier, the appointment of the successor Rights
Agent).

(c) If the Rights Agent resigns, is removed or becomes incapable of acting,
Milan will promptly appoint a qualified successor Rights Agent. Notwithstanding
the foregoing, if Milan fails to make such appointment within a period of
forty-five (45) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent, then the incumbent Rights Agent may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. The
successor Rights Agent so appointed will, upon its acceptance of such
appointment in accordance with this Section 3.3(c) and Section 3.4, become the
Rights Agent for all purposes hereunder.

(d) Milan will give notice to the Holders of each resignation or removal of the
Rights Agent and each appointment of a successor Rights Agent in accordance with
Section 7.2. Each notice will include the name and address of the successor
Rights Agent. If Milan fails to send such notice within ten (10) Business Days
after acceptance of appointment by a successor Rights Agent, the successor
Rights Agent will cause the notice to be mailed at the expense of Milan.

(e) Notwithstanding anything to the contrary in this Section 3.3, unless
consented to in writing by the Majority of Holders, Milan will not appoint as a
successor Rights Agent any Person that is not a stock transfer agent of national
reputation or the corporate trust department of a commercial bank.

 

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(f) The Rights Agent will reasonably cooperate with Milan and any successor
Rights Agent in connection with the transition of the duties and
responsibilities of the Rights Agent to the successor Rights Agent, including
the transfer of all relevant data, including the CVR Register, to the successor
Rights Agent.

Section 3.4 Acceptance of Appointment by Successor.

Every successor Rights Agent appointed hereunder will, at or prior to such
appointment, execute, acknowledge and deliver to Milan and to the resigning or
removed Rights Agent an instrument accepting such appointment and a counterpart
of this Agreement, and such successor Rights Agent, without any further act,
deed or conveyance, will become vested with all the rights, powers, trusts and
duties of the Rights Agent; provided that upon the request of Milan or the
successor Rights Agent, such resigning or removed Rights Agent will execute and
deliver an instrument transferring to such successor Rights Agent all the
rights, powers and trusts of such resigning or removed Rights Agent.

ARTICLE 4

COVENANTS

Section 4.1 List of Holders.

Milan will furnish or cause to be furnished to the Rights Agent, in such form as
Milan receives from the Company’s transfer agent (or other agent performing
similar services for the Company), the names and addresses of the Holders within
fifteen (15) Business Days following the Closing Date.

Section 4.2 TIGIT.

(a) During the TIGIT Milestone Period, Milan will, and will cause its
Subsidiaries to, use Diligent Efforts to obtain and receive the TIGIT Cash
Payment upon execution of a License Agreement (as defined under the Celgene
Collaboration Agreement).

(b) Notwithstanding anything to the contrary herein, Milan will not, and will
cause its Subsidiaries to not, breach any of the material terms and conditions
under the Celgene Collaboration Agreement that relate to the TIGIT Program,
including Section 3.1.3 and Section 5.1.4(b).

(c) Except as expressly set forth in Section 4.2(a) and Section 4.2(b), none of
Milan or any of its Subsidiaries shall have any obligation or liability
whatsoever to any Person relating to or in connection with any action, or
failure to act, with respect to the TIGIT Program, including in connection with
any failure to receive the TIGIT Cash Payment.

 

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Section 4.3 NAVI.

(a) During the First NAVI Period, Milan will permit the individuals associated
with NAVI Sub and identified on Schedule A hereto (the “NAVI Team”) to use
Diligent Efforts to (i) solicit third party interest with respect to a NAVI
Agreement, such that the NAVI Sub or a third party, as applicable, will advance
the NAVI Product, and (ii) recommend, by written notice to the chief executive
officer of Milan, that Milan enter into discussions with one or more such third
parties that have expressed interest with respect to a NAVI Agreement; provided
that, notwithstanding anything to the contrary in this Agreement, Milan will
have no obligation or liability to fund or otherwise support or incur any cost
or expense relating to NAVI Sub or the NAVI Product in excess of the commitments
provided for in Schedule C hereto (except in respect of clinical trials
commenced prior to the date hereof). Milan will use Diligent Efforts to promptly
and in good faith evaluate any expression of interest so recommended by the NAVI
Team and will, if determined by Milan in good faith to be reasonably likely to
result in a NAVI Agreement reasonably acceptable to Milan, use Diligent Efforts
to negotiate (with the assistance of the NAVI Team, as requested by Milan) with
the relevant third party, the definitive documentation for a NAVI Agreement.

(b) Except as expressly set forth in Section 4.3(a), none of Milan or any of its
Subsidiaries shall have any obligation or liability whatsoever to any Person
relating to or in connection with any action, or failure to act, by the NAVI
Team, including in connection with any failure (i) to identify third parties or
solicit acceptable third party expressions of interest or (ii) to enter into
enter into a NAVI Agreement prior to the expiration of the First NAVI Period.

(c) The entry into a NAVI Agreement by Milan or any of its Subsidiaries
(including NAVI Sub) shall be subject to, and contingent upon, a determination
by the Milan Board, having consulted with outside counsel, that the NAVI
Agreement is fair to, advisable and in the best interests of Milan and its
shareholders. Without limiting the foregoing, neither Milan nor any of its
Subsidiaries (including NAVI Sub) shall be compelled to enter into any
investment agreement, stock sale agreement, or similar agreement with respect to
NAVI Sub or the NAVI Product if, immediately following the execution of such
agreement, Milan or one or more of its Subsidiaries (other than NAVI Sub) would
hold less than nineteen-point-five (19.5%) of the issued and outstanding equity
interests of NAVI Sub on a fully-diluted basis.

(d) For the avoidance of doubt (i) upon and following the entry into a NAVI
Agreement, Milan and its Subsidiaries’ obligations, if any, with respect to NAVI
Sub or the NAVI Product shall be set forth exclusively in such NAVI Agreement
and Milan and its Subsidiaries shall have no obligation or liability to Holders
with respect thereto, other than as expressly set forth herein, and (ii) Milan
and its Subsidiaries shall not be required to enter into a NAVI Agreement or any
other agreement with respect to NAVI Sub or the NAVI Product after the
expiration of the First NAVI Period.

Section 4.4 Prohibited Actions.

Milan shall take no action for the principal purpose of (i) reducing the amount
of any Milestone Payments payable under this Agreement or (ii) restricting
Milan’s ability to pay any of the Milestone Payments hereunder.

 

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ARTICLE 5

AMENDMENTS

Section 5.1 Amendments Without Consent of Holders or Rights Agent.

(a) Milan, at any time and from time to time, may unilaterally enter into one or
more amendments to this Agreement for any of the following purposes, without the
consent of any of the Holders or the Rights Agent:

(i) to evidence the appointment of another Person as a successor Rights Agent
and the assumption by any successor Rights Agent of the covenants and
obligations of the Rights Agent herein in accordance with the provisions hereof;

(ii) subject to Section 6.1, to evidence the succession of another person to
Milan and the assumption of any such successor of the covenants of Milan
outlined herein in a transaction contemplated by Section 6.1;

(iii) to add to the covenants of Milan such further covenants, restrictions,
conditions or provisions for the protection and benefit of the Holders; provided
that in each case, such provisions shall not adversely affect the interests of
the Holders;

(iv) to cure any ambiguity, to correct or supplement any provision in this
Agreement that may be defective or inconsistent with any other provision in this
Agreement, or to make any other provisions with respect to matters or questions
arising under this Agreement; provided that in each case, such provisions shall
not adversely affect the interests of the Holders;

(v) as may be necessary or appropriate to ensure that CVRs are not subject to
registration under the U.S. Securities Act of 1933, as amended, or the U.S.
Securities Exchange Act of 1934, as amended and the rules and regulations made
thereunder, or any applicable state securities or “blue sky” laws;

(vi) as may be necessary or appropriate to ensure that Milan is not required to
produce a prospectus or an admission document in order to comply with applicable
Law;

(vii) to cancel CVRs (i) in the event that any Holder has abandoned its rights
in accordance with Section 2.6, (ii) in order to give effect to the provisions
of Section 2.7 or (iii) following a transfer of such CVRs to Milan or its
Affiliates in accordance with Section 2.2 or Section 2.3;

(viii) as may be necessary or appropriate to ensure that Milan complies with
applicable Law; or

(ix) to effect any other amendment to this Agreement that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the legal rights under this Agreement of any such Holder. Notwithstanding
anything to the contrary contained herein, Milan and the Rights Agent may, but
will not be obligated to, enter into any amendment that adversely affects, in
any material respect, the Rights Agent’s own rights, duties, responsibilities or
protections

 

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(b) Promptly after the execution by Milan of any amendment pursuant to this
Section 5.1, Milan will (or will cause the Rights Agent to) notify the Holders
in general terms of the substance of such amendment in accordance with
Section 7.2.

Section 5.2 Amendments with Consent of Holders.

(a) In addition to any amendments to this Agreement that may be made by Milan
without the consent of any Holder or the Rights Agent pursuant to Section 5.1,
with the consent of the Majority of Holders, Milan and the Rights Agent may
enter into one or more amendments to this Agreement for the purpose of adding,
eliminating or amending any provisions of this Agreement, even if such addition,
elimination or amendment is adverse to the interests of the Holders.

(b) Promptly after the execution by Milan and the Rights Agent of any amendment
pursuant to the provisions of this Section 5.2, Milan will (or will cause the
Rights Agent to) notify the Holders in general terms of the substance of such
amendment in accordance with Section 7.2.

Section 5.3 Effect of Amendments.

Upon the execution of any amendment under this Article 5, this Agreement will be
modified in accordance therewith, such amendment will form a part of this
Agreement for all purposes and every Holder will be bound thereby. Upon the
delivery of a certificate from an appropriate officer of Milan which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 5, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything in this Agreement to the contrary, the Rights Agent
shall not be required to execute any supplement or amendment to this Agreement
that it has determined would adversely affect its own rights, duties,
obligations or immunities under this Agreement. No supplement or amendment to
this Agreement shall be effective unless duly executed by the Rights Agent.

ARTICLE 6

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

Section 6.1 Milan May Not Consolidate, Etc.

Milan shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless:

(a) the Person formed by such consolidation or into which Milan is merged or the
Person that acquires by conveyance or transfer, or that leases, the properties
and assets of Milan substantially as an entirety (the “Surviving Person”) shall
expressly assume payment of amounts on all CVRs and the performance of every
duty and covenant of this Agreement on the part of Milan to be performed or
observed; and

 

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(b) Milan has delivered to the Rights Agent an Officer’s Certificate, stating
that such consolidation, merger, conveyance, transfer or lease complies with
this Article 6 and that all conditions precedent herein provided for relating to
such transaction have been complied with.

Section 6.2 Successor Substituted.

Upon any consolidation of or merger by Milan with or into any other Person, or
any conveyance, transfer or lease of the properties and assets substantially as
an entirety to any Person in accordance with Section 6.1, the Surviving Person
shall succeed to, and be substituted for, and may exercise every right and power
of, and shall assume all of the obligations of Milan under this Agreement with
the same effect as if the Surviving Person had been named as Milan herein.

ARTICLE 7

MISCELLANEOUS

Section 7.1 Notices to Rights Agent and to Milan.

All notices, requests and other communications (each, a “Notice”) to any party
hereunder shall be in writing. Such Notice shall be deemed given (a) on the date
of delivery, if delivered in person or by facsimile or e-mail (upon confirmation
of receipt) prior to 5:00 p.m. in the time zone of the receiving party or on the
next Business Day, if delivered after 5:00 p.m. in the time zone of the
receiving party or (b) on the first Business Day following the date of dispatch,
if delivered by FedEx or by other internationally recognized overnight courier
service (upon proof of delivery), addressed as follows:

if to the Rights Agent, to:

Computershare Inc.

250 Royall Street

Canton, MA 02021

if to Milan, to:

Mereo BioPharma Group plc

4th Floor, 1 Cavendish Place

London WIG 0QF

Attention: General Counsel

Email: legal@mereobiopharma.com

with a copy, which shall not constitute notice, to:

Davis Polk & Wardwell London LLP

5 Aldermanbury Square

London EC2V 7HR

Attention: Simon Witty, Leo Borchardt, Michael Davis

Email: simon.witty@davispolk.com; leo.borchardt@davispolk.com;
michael.davis@davispolk.com

 

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or to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto.

Section 7.2 Notice to Holders.

All Notices required to be given to the Holders will be given (unless otherwise
herein expressly provided) in writing and mailed, first-class postage prepaid,
to each Holder at such Holder’s address as set forth in the CVR Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the sending of such Notice, if any, and will be deemed given on the date of
mailing. In any case where notice to the Holders is given by mail, neither the
failure to mail such Notice, nor any defect in any Notice so mailed, to any
particular Holder will affect the sufficiency of such Notice with respect to
other Holders.

Section 7.3 Entire Agreement.

As between Milan and the Rights Agent, this Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement, notwithstanding the reference to any other agreement herein, and
supersedes all prior agreements and understandings, both written and oral, among
or between any of the parties with respect to the subject matter of this
Agreement.

Section 7.4 Merger or Consolidation or Change of Name of Rights Agent.

Any corporation or limited liability company or Person into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation or limited liability company or other Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation or limited liability
company succeeding to the stock transfer or other shareholder services business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation or limited liability company or other entity would be eligible for
appointment as a successor Rights Agent under the provisions of Section 3.3. The
purchase of all or substantially all of the Rights Agent’s assets employed in
the performance of transfer agent activities shall be deemed a merger or
consolidation for purposes of this Section 7.4.

Section 7.5 Successors and Assigns.

This Agreement will be binding upon, and will be enforceable by and inure solely
to the benefit of, the Holders, Milan and the Rights Agent and their respective
successors and assigns. Except for assignments to its Affiliates and as provided
in Section 7.4, the Rights Agent may not assign this Agreement without Milan’s
prior written consent. Subject to Section 5.1(a)(ii) and Article 6 hereof, Milan
may assign, in its sole discretion and without the consent of any other party,
any or all of its rights, interests and obligations hereunder to one or more of
its Affiliates or to any Person with whom Milan is merged or consolidated, or
any entity resulting from any merger or consolidation to which Milan shall be a
party (each, an “Assignee”); provided, however, that in connection with any
assignment to an Assignee, Milan shall agree to remain liable for the
performance by Milan of its obligations hereunder (to the extent Milan exists
following such assignment). Milan or an Assignee may not otherwise assign this
Agreement without the prior consent of the Majority of Holders. Any attempted
assignment of this Agreement in violation of this Section 7.5 will be void ab
initio and of no effect.

 

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Section 7.6 Benefits of Agreement; Action by Majority of Holders.

Nothing in this Agreement, express or implied, will give to any Person (other
than Milan, the Rights Agent, the Holders and their respective permitted
successors and assigns hereunder) any benefit or any legal or equitable right,
remedy or claim under this Agreement or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of
Milan, the Rights Agent, the Holders and their permitted successors and assigns.
The Holders will have no rights hereunder except as are expressly set forth
herein. Except for the rights of the Rights Agent set forth herein, the Majority
of Holders will have the sole right, on behalf of all Holders, by virtue of or
under any provision of this Agreement, to institute any action or proceeding at
law or in equity with respect to this Agreement, and no individual Holder or
other group of Holders will be entitled to exercise such rights.

Section 7.7 Governing Law.

This Agreement and the CVRs will be governed by, and construed in accordance
with, the laws of the State of New York, without regard to the conflicts of law
rules of such state.

Section 7.8 Jurisdiction.

In any action or proceeding between any of the parties hereto arising out of or
relating to this Agreement or any of the transactions contemplated hereby, each
of the parties hereto: (a) irrevocably and unconditionally consents and submits
to the exclusive jurisdiction and venue of the Supreme Court of the State of New
York, County of New York, or, if under applicable Law exclusive jurisdiction is
vested in the Federal courts, the United States District Court for the Southern
District of New York (and appellate courts thereof); (b) agrees that all claims
in respect of such action or proceeding shall be heard and determined
exclusively in accordance with clause (a) of this Section 7.8; (c) waives any
objection to laying venue in any such action or proceeding in such courts;
(d) waives any objection that such courts are an inconvenient forum or do not
have jurisdiction over any Party; and (e) agrees that service of process upon
such Party in any such action or proceeding shall be effective if notice is
given in accordance with Section 7.1 or Section 7.2 of this Agreement.

Section 7.9 WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATION OF THIS WAIVER, (III) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.8.

 

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Section 7.10 Severability Clause.

In the event that any provision of this Agreement, or the application of any
such provision to any Person or set of circumstances, is for any reason
determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, will not be impaired or otherwise affected and
will continue to be valid and enforceable to the fullest extent permitted by
applicable Law. Upon such a determination, the parties hereto will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible; provided, however, that if an excluded provision
shall affect the rights, immunities, liabilities, duties or obligations of the
Rights Agent, the Rights Agent shall be entitled to resign upon forty-five
(45) days’ written notice to Milan.

Section 7.11 Counterparts; Effectiveness.

This Agreement may be signed in any number of counterparts, each of which will
be deemed an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement or any counterpart may be
executed and delivered by facsimile copies or delivered by electronic
communications by portable document format (.pdf), each of which shall be deemed
an original. This Agreement will become effective when each party hereto will
have received a counterpart hereof signed by the other party hereto. Until and
unless each party has received a counterpart hereof signed by the other party
hereto, this Agreement will have no effect and no party will have any right or
obligation hereunder (whether by virtue of any oral or written agreement or any
other communication).

Section 7.12 Termination.

This Agreement will automatically terminate and be of no further force or effect
and, except as provided in Section 3.2, the parties hereto will have no further
liability hereunder, and the CVRs will expire without any consideration or
compensation therefor, upon the earlier to occur of (i) payment by Milan of each
of the TIGIT Milestone Payment and each NAVI Milestone Payment eligible to be
attained and (ii) the expiration of each of the TIGIT Milestone Period and the
NAVI Milestone Period. The termination of this Agreement will not affect or
limit the right of Holders to receive the Milestone Payments under Section 2.4
to the extent earned prior to the termination of this Agreement, and the
provisions applicable thereto will survive the expiration or termination of this
Agreement.

 

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Section 7.13 Force Majeure.

Notwithstanding anything to the contrary contained herein, none of the Rights
Agent, Milan or any of its Subsidiaries will be liable for any delays or
failures in performance resulting from acts beyond its reasonable control
including acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunctions of computer facilities, or loss of
data due to power failures or mechanical difficulties with information storage
or retrieval systems, labor difficulties, war or civil unrest.

Section 7.14 Construction.

(a) For purposes of this Agreement, whenever the context requires: singular
terms will include the plural, and vice versa; the masculine gender will include
the feminine and neuter genders; the feminine gender will include the masculine
and neuter genders; and the neuter gender will include the masculine and
feminine genders.

(b) As used in this Agreement, the words “include” and “including,” and
variations thereof, will not be deemed to be terms of limitation, but rather
will be deemed to be followed by the words “without limitation.”

(c) The headings contained in this Agreement are for convenience of reference
only, will not be deemed to be a part of this Agreement and will not be referred
to in connection with the construction or interpretation of this Agreement.

(d) Any reference in this Agreement to a date or time shall be deemed to be such
date or time in New York City, United States, unless otherwise specified. The
parties hereto and the Company have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and the Company and no presumption or burden of proof shall arise
favoring or disfavoring any Person by virtue of the authorship of any provision
of this Agreement.

(e) All references herein to “$” are to United States Dollars.

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
as of the day and year first above written.

 

MEREO BIOPHARMA GROUP PLC By:  

 

  Name:   Title: COMPUTERSHARE INC. By:  

 

  Name:   Title: