Exhibit 10.1

 

 

MILESTONE AND ROYALTY BUY-OUT AGREEMENT

 

This Milestone and Royalty Buy-Out Agreement (this “Agreement”) is entered into
as of this 7th day of September, 2018, by and between Xenon Pharmaceuticals Inc.
(hereinafter “Xenon”), Valeant Pharmaceuticals Ireland Limited (hereinafter
“VPIL”) and Valeant Pharmaceuticals Luxembourg S.a.r.l. (hereinafter “VPL”),
each referred to herein individually as a “Party,” and collectively as the
“Parties.”

 

 

RECITALS

 

A.WHEREAS, VPL and 1st Order Pharmaceuticals, Inc. (“1st Order”) previously
entered into an Asset Purchase Agreement dated October 30, 2015 (the “APA”)
pursuant to which 1st Order purchased from VPL rights to an investigational
compound known as VRX621698 and certain related assets as described in the APA;

 

B.WHEREAS, 1st Order previously entered into an Intellectual Property Assignment
Agreement between 1st Order and Valeant Pharmaceuticals International (“VPI”)
dated February 8, 2017, pursuant to which VPI assigned to 1st Order additional
intellectual property assets (the “IP Assignment Agreement”);

 

C.WHEREAS, the APA provides, among other things, for the payment of certain
milestones and royalties by 1st Order to VPL;

 

D.WHEREAS, 1st Order subsequently sold to Xenon all of its right, title and
interest in and to all assets purchased by 1st Order pursuant to the APA and the
IP Assignment Agreement, including without limitation, all rights with respect
to the investigational compound known as 1OP-2198 (previously VRX621698 and now
referred to as XEN1101) (the “Compound”), and any variant forms thereof,
including as salt, freebase or pro-drug, and all other assets of 1st Order
related thereto pursuant to that certain Asset Purchase Agreement dated April
25, 2017 between 1st Order and Xenon (the “Xenon APA”).

 

E.WHEREAS, pursuant to the Xenon APA, Xenon undertook to pay to VPL any relevant
milestone and royalty payments due to VPL from 1st Order arising under Sections
2.4 and 2.5 of the APA.

 

F.WHEREAS, the Parties desire to enter into this Agreement for Xenon to buy out
any past, present and future milestone payment and royalties that have or may
become owed to VPL under the APA in exchange for the payment by Xenon of US
$6,000,000 to VPIL as described herein;

 

Now, therefore, for valuable consideration, the receipt of which is hereby
acknowledged, Xenon, VPL and VPIL (VPL and VPIL collectively, “Valeant Parties”)
agree as follows:

 

1.Milestone and Royalty Buy-Out. Xenon shall buy out all past, present and
future milestone payments and royalties owed to VPL under Sections 2.4 and 2.5
of the APA for the sum of Six Million US Dollars (US $6,000,000.00) (the
"Milestone and Royalty Buy-Out Amount"). Payment of the Milestone and Royalty
Buy-Out Amount in the form of a wire transfer shall be delivered to VPIL
pursuant to written instructions provided to Xenon, within fourteen (14) days
from the date that this Agreement is fully executed by Xenon and the Valeant
Parties. Upon such payment of the Milestone and Royalty Buy-Out Amount, Xenon
and 1st Order shall be and are hereby fully and forever discharged and relieved
of past, present and future payments of any amounts to be paid to VPL described
in Sections 2.4 or 2.5 of the APA. 1st Order is an intended third party
beneficiary of the foregoing sentence and such sentence is for the benefit of
and enforceable by 1st Order (provided however that Xenon and the Valeant
Parties may modify or amend this Agreement by agreement between Xenon and the
Valeant Parties without the consent of 1st Order).

 

2.No Further Accounting Obligations. As a result of this Agreement, neither
Xenon nor 1st Order shall have any further obligations to VPL under Section
2.5(d) of the APA, including but not limited obligations to keep records or make
reports, and the Valeant Parties fully and forever discharge and relieve 1st
Order and Xenon from any such obligations.

 

 

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3.Taxes.  Notwithstanding anything in this Agreement to the contrary, the
Valeant Parties agree to pay as due all withholding taxes imposed by the
Canadian Revenue Agency (the “CRA”) in respect of the Milestone and Royalty
Buy-Out Amount (the “Taxes”) regardless of whether such Taxes are assessed or
would ordinarily be assessed against either or both Valeant Parties or Xenon. In
the event that the CRA contacts Xenon regarding such Taxes and/or demands that
Xenon pays them, Xenon shall promptly notify the Valeant Parties. In the event
that Xenon pays such Taxes, VPIL shall promptly reimburse Xenon within 60 days
from the date Xenon makes written demand therefor.

 

4.Other Terms and Provisions of APA. All other terms and provisions of the APA,
except those expressly discharged herein, shall remain in full force and
effect.  For clarity, the Valeant Parties acknowledge and agree that Article 5
of the APA has terminated and no longer has any force or effect.

 

5.Representation and Warranty.

 

 

a)

Each Party represents and warrants to the other Party, and acknowledges that the
other Party is relying on such representations and warranties it has all
necessary corporate power and authority to execute and deliver this Agreement
and to complete the transactions contemplated herein. It has duly and validly
executed and delivered this Agreement and this Agreement constitutes the legal
and valid binding obligation enforceable in accordance with its terms. No notice
to, or consent or approval from, any authority is required in connection with
its execution and performance of this Agreement. The execution and performance
of this Agreement by it will not violate any applicable law, any organizational
documents by which it is bound or any agreements to which it is bound.

 

 

b)

The Valeant Parties represent and warrant that (i) the Valeant Parties have the
sole right and interest under the APA to obtain the payments described in
Section 2.4 and 2.5 of the APA, (ii) such right and interest has not been
transferred to any other entity and (iii) the payment of the Milestone and
Royalty Buy-Out Amount to VPIL by Xenon as described in this Agreement fully and
forever discharges and relieves Xenon and 1st Order of past, present and future
payments of any amounts to be paid under Sections 2.4 or 2.5 of the APA.

 

6.Authority. Each person and entity executing this Agreement does hereby
personally represent that he/she has the authority to execute this Agreement on
behalf of, and fully bind, such purported principal.

 

7.Governing Law. This Agreement shall in all respects be interpreted, enforced
and governed by and under the laws of the State of Delaware without giving
effect to any choice of law or conflict of laws rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Any legal proceeding relating to this Agreement or the enforcement of any
provision of this Agreement may be brought or otherwise commenced only in any
state or federal court located in the State of Delaware. Each party to this
Agreement: (i) irrevocably and unconditionally consents and submits to the
exclusive jurisdiction and venue of the state and federal courts located in
State of Delaware; (ii) agrees that each state and federal court located in the
State of Delaware shall be deemed to be a convenient forum; and (iii) agrees not
to assert (by way of motion, as a defense or otherwise), in any such legal
proceeding commenced in any state or federal court located in the State of
Delaware, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such legal proceeding is improper or that
this Agreement or the subject matter of this Agreement may not be enforced in or
by such court.

 

8.Binding Effect. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective predecessors, successors, assigns,
partners, partnerships, joint ventures, parents, subsidiaries, affiliated and
related entities, officers, directors, principals, agents, servants, employees,
representatives and all persons, firms, associations, and/or corporations
connected with them.

 

9.Counterparts. This Agreement may be executed in any number of counterparts,
and any party hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto. The Parties agree that
the delivery of this Agreement may be effected by means of an exchange of
facsimile or other electronic signatures.

 

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10.Additional Documents. The Parties agree to cooperate fully and execute any
and all supplementary documents and to take all additional actions which may be
necessary or appropriate to give full force and effect to the basic terms and
intent of this Agreement.

 

11.Confidentiality; Press Release. Each Party shall hold the terms and
conditions of this Agreement in strict confidence, and neither Party shall issue
any press release concerning the subject matter of this Agreement without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld. Except as provided in this Section 11, nothing in this
Agreement shall restrict or otherwise limit the Xenon’s ability or right to
issue any press release or make any public statement regarding its operations or
the Purchased Assets (as defined in the APA), including, among other things, the
development and commercialization of the Compound. Notwithstanding the
foregoing, each Party shall be permitted to disclose the terms and conditions of
this Agreement (a) to its actual or potential acquisition partners, licensees,
collaborators or private investors, and others on a need to know basis and
subject to written agreements containing confidentiality obligations at least as
restrictive as this Section 11; or (b) to the extent necessary to comply with
applicable laws and court orders (including securities laws or regulations and
the applicable rules of any public stock exchange).

 

12.Entire Agreement. This Agreement constitutes the entire understanding between
and among the Parties with regard to the matters herein set forth. There are no
representations, warranties, arrangements, or undertakings, oral or written,
between or among the Parties relating to the subject matter of this Agreement
which are not fully expressed in this Agreement. This Agreement may not be
amended or modified except upon a written agreement signed by the Parties.

 

[intentionally left blank – signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Milestone and Royalty Buy-Out Agreement to be executed by their
duly authorized representatives as of the date first written above.

 

 

VALEANT PHARMACEUTICALS LUXEMBOURG S.A.R.L.

 

By

 

/s/ Michael Kennan

Name:

 

Michael Kennan

Title:

 

Manager

 

 

By

 

/s/ Franck Deconinck

Name:

 

Franck Deconinck

Title:

 

Manager

 

 

 

VALEANT PHARMACEUTICALS IRELAND LIMITED

 

By

 

/s/ Graham Jackson

Name:

 

Graham Jackson

Title:

 

Director

 

 

XENON PHARMACEUTICALS INC.

 

By

 

/s/ Ian Mortimer

Name:

 

Ian Mortimer

Title:

 

President & CFO

 

By

 

/s/ Robin Sherrington

Name:

 

Robin Sherrington

Title:

 

EVP, Business and Corporate Development