arcutis-ducentisredacted






Exhibit 10.1      [***] Certain information in this document has been excluded pursuant to Regulation S-K, Item  601(b)(10). Such excluded information is the type that the registrant treats as private or confidential  and is not material.    SHARE PURCHASE AGREEMENT   AMONG   ARCUTIS BIOTHERAPEUTICS, INC.   DUCENTIS BIOTHERAPEUTICS LTD.  SELLERS (AS DEFINED HEREIN)  AND  SHAREHOLDER REPRESENTATIVE SERVICES LLC, AS SHAREHOLDERS’   REPRESENTATIVE  DATED AS OF SEPTEMBER 7, 2022  





 






TABLE OF CONTENTS  PA G E   ARTICLE 1 DEFINED TERMS .........................................................................................2  Section 1.1. Definitions ..............................................................................................2  Section 1.2. Descriptive Headings; Certain Interpretations .....................................33  ARTICLE 2 PURCHASE AND SALE OF PURCHASED SHARES; CLOSING;  CONSIDERATION ....................................................................................35  Section 2.1. Purchase and Sale of Purchased Shares ...............................................35  Section 2.2. No Partial Sale ......................................................................................35  Section 2.3. Waiver ..................................................................................................35  Section 2.4. Closing .................................................................................................36  Section 2.5. Actions in Connection with the Closing...............................................36  Section 2.6. Paying Agent ........................................................................................43  Section 2.7. Shareholders’ Representative ...............................................................43  Section 2.8. Milestone Payments .............................................................................46  Section 2.9. Annual Net Sales Contingent Payments ...............................................51  Section 2.10. Divestment .........................................................................................53  Section 2.11. Closing Payment Adjustment .............................................................53  Section 2.12. Escrow ................................................................................................55  Section 2.13. Restriction on Transfer .......................................................................56  Section 2.14. Withholding Rights ............................................................................56  ARTICLE 3 CLOSING CONDITIONS ............................................................................57  Section 3.1. Conditions to each Party’s Obligation..................................................57  Section 3.2. Conditions to the Sellers’ and the Company’s Obligation ...................58  Section 3.3. Conditions to Buyer’s Obligation.........................................................59  ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS ............60  Section 4.1. Organization and Standing ...................................................................60  Section 4.2. Power and Authority; Binding Agreement ...........................................60  Section 4.3. Noncontravention .................................................................................61  Section 4.4. Purchased Shares ..................................................................................61  Section 4.5. Litigation ..............................................................................................62  Section 4.6. Exempt Issuance ...................................................................................62  Section 4.7. Certain Relationships ...........................................................................64  Section 4.8. No Other Representations ....................................................................64  Section 4.9. Brokers .................................................................................................64  ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY .........65  Section 5.1. Organization and Standing; No Subsidiaries........................................65      





 






Section 5.2. Power and Authority; Binding Agreement........................................... 65  Section 5.3. Authorization ........................................................................................ 66  Section 5.4. Capitalization ....................................................................................... 66  Section 5.5. Solvency ............................................................................................... 68  Section 5.6. Noncontravention ................................................................................. 68  Section 5.7. Compliance with Laws; Permits .......................................................... 68  Section 5.8. National Security and Investment Act ................................................. 69  Section 5.9. Financial Statements ............................................................................ 70  Section 5.10. Absence of Changes or Events ........................................................... 70  Section 5.11. Undisclosed Liabilities ....................................................................... 70  Section 5.12. Assets; Personal Property ................................................................... 70  Section 5.13. Real Property ...................................................................................... 70  Section 5.14. Contracts............................................................................................. 71  Section 5.15. Intellectual Property of the Company ................................................ 73  Section 5.16. Litigation ............................................................................................ 79  Section 5.17. Taxes .................................................................................................. 80  Section 5.18. Insurance ............................................................................................ 84  Section 5.19. Benefit Plans; Employee Matters ....................................................... 84  Section 5.20. Labor .................................................................................................. 85  Section 5.21. Regulatory Matters ............................................................................. 87  Section 5.22. Milestone Product and Clinical Trial Disclosures .............................. 88  Section 5.23. Environmental Matters ....................................................................... 89  Section 5.24. Books and Records ............................................................................. 89  Section 5.25. Filings ................................................................................................. 90  Section 5.26. Transactions with Affiliates ............................................................... 90  Section 5.27. Brokers ............................................................................................... 90  Section 5.28. Anticorruption Matters; Export Controls and Sanctions Matters....... 90  ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER ........................ 92  Section 6.1. Organization and Standing ................................................................... 92  Section 6.2. Power and Authority; Binding Agreement........................................... 92  Section 6.3. Noncontravention ................................................................................. 93  Section 6.4. Buyer Shares ........................................................................................ 93  Section 6.5. Brokers ................................................................................................. 93  Section 6.6. Litigation .............................................................................................. 93  ARTICLE 7 CERTAIN COVENANTS ............................................................................ 94  Section 7.1. Conduct of Business ............................................................................. 94  Section 7.2. Access................................................................................................... 97  Section 7.3. Tax Matters .......................................................................................... 97  Section 7.4. Insurance .............................................................................................. 99  





 






Section 7.5. Exclusivity ............................................................................................ 99  Section 7.6. Control of Company Pre-Closing ....................................................... 100  Section 7.7. Confidentiality .................................................................................... 100  Section 7.8. Development and Regulatory Approval ............................................. 102  Section 7.9. Notification of Certain Matters .......................................................... 102  Section 7.10. Termination of Shareholders’ Agreement ........................................ 102  ARTICLE 8 CERTAIN ADDITIONAL COVENANTS ................................................ 103  Section 8.1. Commercially Reasonable Efforts ..................................................... 103  Section 8.2. Publicity ............................................................................................. 103  Section 8.3. Expenses ............................................................................................. 104  Section 8.4. Further Assurances ............................................................................. 104  Section 8.5. Release ............................................................................................... 104  Section 8.6. Rule 144 ............................................................................................. 105  Section 8.7. Nasdaq Listing.................................................................................... 105  ARTICLE 9 INDEMNIFICATION ................................................................................. 106  Section 9.1. Survival of Representations and Warranties ...................................... 106  Section 9.2. Indemnification of Buyer Indemnified Parties ................................... 106  Section 9.3. Indemnification of Seller Indemnified Parties ................................... 108  Section 9.4. Limits on Indemnification .................................................................. 109  Section 9.5. Notice of Loss; Third Party Claims.................................................... 112  Section 9.6. Tax Treatment .................................................................................... 113  Section 9.7. Remedies ............................................................................................ 113  Section 9.8. Set-Off ................................................................................................ 113  Section 9.9. No Right of Contribution ................................................................... 114  Section 9.10. No Circular Recovery....................................................................... 114  Section 9.11. Release of Escrow Fund ................................................................... 115  ARTICLE 10 TERMINATION ....................................................................................... 115  Section 10.1. Termination ...................................................................................... 115  Section 10.2. Termination Procedure ..................................................................... 116  Section 10.3. Effect of Termination ....................................................................... 116  ARTICLE 11 MISCELLANEOUS ................................................................................. 116  Section 11.1. Notices .............................................................................................. 116  Section 11.2. Assignment ....................................................................................... 118  Section 11.3. Consents and Approvals ................................................................... 118  Section 11.4. Enforcement ..................................................................................... 118  Section 11.5. Amendment and Waiver................................................................... 119  Section 11.6. Entire Agreement ............................................................................. 119  Section 11.7. No Third-Party Beneficiaries ........................................................... 119  





 






Section 11.8. Counterparts ..................................................................................... 120  Section 11.9. Governing Law ................................................................................ 120  Section 11.10. Severability .................................................................................... 120  Section 11.11. Shareholders’ Representative ......................................................... 120  Section 11.12. Disclosure Letter ............................................................................ 120  Section 11.13. United States Securities Law Matters ............................................ 120  





 






EXHIBITS:  EXHIBIT A: RESTRICTIVE COVENANT AGREEMENTS  EXHIBIT B: PROMISSORY NOTE  EXHIBIT C: LOAN NOTE INSTRUMENT  EXHIBIT D: POWER OF ATTORNEY  EXHIBIT E: SPECIFIED REGISTERED COMPANY IP  SCHEDULES:  SCHEDULE I: CONSIDERATION SCHEDULE  SCHEDULE 2.13(A) TRANSFER RESTRICTIONS  





 






SHARE PURCHASE AGREEMENT    This Share Purchase Agreement, dated as of September  7, 2022 (this    “Agreement”), among ARCUTIS BIOTHERAPEUTICS INC., a Delaware corporation with  principal place of business at 3027 Townsgate Road, Suite 300, Westlake Village, California,  United States (“Buyer”), DUCENTIS BIOTHERAPEUTICS LTD., a private company limited  by shares, incorporated and registered in England and Wales with company number 09307415  whose registered office is 264 Banbury Road, Oxford, OX2 7DY, United Kingdom (the  “Company”), the Share Sellers (as defined below), the Conversion Sellers (as defined below) and  the Phantom Sellers (as defined below) listed in Schedule I (each a “Seller” and, collectively, the  “Sellers”) and SHAREHOLDER REPRESENTATIVE SERVICES LLC, a Colorado limited  liability company, of 950 17th Street, Suite 1400, Denver, Colorado, USA 80202, solely in its  capacity as the Shareholders’ Representative.  RECITALS  WHEREAS, as of the date hereof, the Share Sellers collectively own 100% of the  issued and outstanding Company Shares (the “Issued Shares”) and the Conversion Sellers  collectively will own all those Company Shares to be issued immediately prior to, and conditional  upon, Closing pursuant to the exercise of the Company Options and the conversion of the amounts  owed under the Convertible Loan Agreement (the “Conversion Shares”) (collectively, the Issued  Shares and the Conversion Shares being the “Purchased Shares”) in the respective amounts set forth  on Section 5.4(b) of the Disclosure Letter;  WHEREAS, the Parties desire that, in accordance with and subject to the terms and  conditions of this Agreement, in exchange for the consideration set forth herein, Buyer shall  purchase from each Seller, and each Seller shall sell, all of each Seller’s right, title and interest in  the number of Purchased Shares set forth opposite each such Seller’s name on Section 5.4(b) of  the Disclosure Letter; and  WHEREAS, concurrently with the execution and delivery of this Agreement, and  as an inducement to Buyer’s willingness to enter into this Agreement, each of Philip Huxley and  Rebecca Ashfield has entered into a Restrictive Covenant Agreement with Buyer, copies of which  are attached hereto as Exhibit A (the “Restrictive Covenant Agreements”).   NOW, THEREFORE, in consideration of the foregoing and the respective  representations, warranties, covenants and agreements set forth herein, the Parties agree as follows:  ARTICLE 1  DEFINED TERMS  Section 1.1. Definitions. As used herein, the following terms shall have the  following meanings:  “Acquisition” means the acquisition by Buyer of 100% of the Purchased Shares in  accordance with the terms of this Agreement.  





 






“Action” means any claim, action, cause of action or suit (whether in contract or  tort or otherwise), litigation (whether at law or in equity, whether civil or criminal), assessment,  arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding to, from, by or  before any Governmental Entity.  “AD Development Milestones” means the Phase I Initiation Milestone, the Phase  II Initiation Milestone (AD) and the Phase III Initial Milestone (AD).  “AD Launch Milestones” means the U.S. Launch Milestone (AD) and the Ex-U.S.  Launch Milestone (AD).  “Affiliate” means with respect to a Person, another Person that directly, or  indirectly through one or more intermediaries, controls, or is controlled by, or is under common  control with, such Person; provided that for purposes of this definition, “control” means, with  respect to a Person, the possession, directly or indirectly, of the power to direct or cause the  direction of the management or policies of such Person, whether through the ownership of voting  securities, by Contract, by board of director membership or representation, or otherwise.  “Aggregate Consideration” means the sum of (a) the Closing Payment Amount,  plus (b) the Buyer Shares to be issued at the Closing plus (c) Aggregate Phantom Closing Premium  Amount, plus (d) the Contingent Payments, if any, plus (e) the Escrow Release Amounts, if any,  plus (f) the Shareholders’ Representative Reserve Release Amount, if any, plus (g) the Excess  Payment, if any, plus (h) the Aggregate Fractional Entitlement.  “Aggregate Contingent Phantom Tax Liability” means the sum of all the Individual  Contingent Phantom Tax Liabilities and any Company Contingent Phantom Tax Liability in  respect of all of the Contingent Phantom Bonuses.  “Aggregate Fractional Entitlement” means the sum of all the Individual Fractional  Entitlements.  “Aggregate Phantom Subscription Price” means the sum of all the Individual  Phantom Subscription Prices in respect of all of the Phantom Bonuses.  “Aggregate Phantom Closing Premium Amount” means the product of (a)  Phantom Per Share Closing Premium Amount, multiplied by (b) the number of Phantom Shares.  “Aggregate Phantom Tax Liability” means the sum of all the Individual Phantom  Tax Liabilities in respect of all of the Phantom Bonuses.  “Aggregate Share Option Exercise Price” means the sum of all the Individual Share  Option Exercise Prices in respect of all of the Company Options.  “Aggregate Share Option Tax Liability” means the sum of all the Individual Share  Option Tax Liabilities in respect of all of the Company Options.  “Aggregate Withholding Tax Liability” means the sum of the Individual  Withholding Tax Liabilities in respect of payments of CLA Interest.  3  





 






“Annual Net Sales” means with respect to any calendar year, the aggregate Net  Sales in such calendar year;  “Annual Net Sales Contingent Payment” means, with respect to any calendar year  for which the Annual Net Sales Contingent Payment Amount is greater than zero, an amount equal  to the Annual Net Sales Contingent Payment Amount (less (i) any applicable Contingent Payment  Transaction Expenses; (ii) any applicable Contingent Payment Change of Control Payments; and  (iii) any Company Contingent Phantom Tax Liability) for such calendar year to be satisfied by the  issuance of Promissory Notes and/or payment of Contingent Phantom Bonuses in accordance with  Section 2.9(d)(iii);  “Annual Net Sales Contingent Payment Amount” means, with respect to each  calendar year, the greater of:  (a) zero; and  (b) (i) the product of A and P1, plus (ii) the product of B and P2, plus (iii) the product of C  and P3, plus (iv) the product of D and P4, minus (v) E, where:  A means:  (a) if Annual Net Sales of the Milestone Products for such calendar year are $[***] or more,  $[***]; and  (b) otherwise, zero;  B means:  (a) if Annual Net Sales of the Milestone Products for such calendar year are $[***] or more,  $[***]; and  (b) otherwise, zero;  C means:  (a) if Annual Net Sales of the Milestone Products for such calendar year are $[***] or more,  $[***]; and  (b) otherwise, zero;  D means:  (a) if Annual Net Sales of Milestone Products for such calendar year are equal to or greater  than $1,500,000,000, the amount by which such Annual Net Sales exceed  $1,500,000,000; and  (b) otherwise, zero;  4  





 






E means the aggregate of all Annual Net Sales Contingent Payments pursuant to clauses (i) through  (iii) of such definition in respect of prior calendar years;  P1 means [***]%;  P2 means [***]%;  P3 means [***]%; and  P4 means [***]%.  “Applicable Interest Rate” means a rate per annum equal to the [***]; provided that  interest shall not accrue at a rate that exceeds the maximum rate permitted by applicable Law.  “Associated Government Entities” means:  (a) any UK Government departments, including their executive agencies, other subsidiary  bodies and other parts of UK Government;  (b) companies wholly or partly owned by UK Government departments and their subsidiaries;  (c) non-departmental public bodies, public corporations and their subsidiary bodies  sponsored by UK Government departments; and/or  (d) any successor to any of the entities set out in (a), (b) and (c) above or any new bodies  which fall within the same criteria.  “Atopic Dermatitis” means a chronic, pruritic, relapsing inflammatory disease of the  skin demonstrating a topical morphology and age-specific patterns (facial, neck and extensor  involvement in infants and children; current or previous flexural lesions in any age group; sparing  of the groin and axillary regions), and often associated with early age of onset, atopy (personal  and/or family history of asthma and/or environmental allergies), and or xerosis. “Atopic Dermatitis”  excludes other skin conditions that may share some of the foregoing features including but not  limited to: scabies, seborrheic dermatitis, contact dermatitis, neurodermatitis, dyshidrotic eczema,  nummular eczema, stasis dermatitis (aka venous eczema), ichthyoses, cutaneous T-cell lymphoma,  psoriasis (general or scalp), other distinct immune deficiency diseases, photosensitivities, or  erythroderma of other causes.  “Atopic Dermatitis Indication” means the treatment of moderate-to-severe Atopic  Dermatitis in adult patients whose disease is not adequately controlled with topical prescription  therapies or when those therapies are not advisable (or any broader scope of patients including the  foregoing).  “Atopic Dermatitis Indication for Use” means Atopic Dermatitis Indication which  is for use for moderate-to-severe Atopic Dermatitis in adult patients.  5  





 






“Bayh-Dole Act” means the Patent and Trademark Law Amendments Act (35  U.S.C. § 200 et seq.).  “Biologics License Application” means a “biologics license application” as  described in 42 U.S.C. § 262 and its implementing regulations, including all amendments and  supplements to the application, submitted to the FDA.  “Business Data” means all data or information, in any format, processed in the  conduct of the Company’s business or necessary for the conduct of the Company’s business,  including all financial data related to the business, and all Personal Data that are processed in or  necessary for the conduct of the business.  “Business Day” means a day other than Saturday, Sunday or any other day on which  commercial banks located in New York City, U.S.A., Denver, Colorado, U.S.A. or London, United  Kingdom, are authorized or obligated by applicable Laws to close.  “Buyer” is defined in the preamble of this Agreement.  “Buyer Share Value” means $23.15.  “Buyer Shares” means common stock, par value $0.0001 per share, of Buyer.  “Buyer’s Solicitors” means Covington & Burling LLP of 22 Bishopsgate, London  EC2N 4BQ, United Kingdom.  “CA 2006” means the UK Companies Act 2006, as amended from time to time.  “Capital Stock” means any capital stock or share capital of, other voting securities  of, other equity interest in, or right to receive profits, losses or distributions of, any Person.  “CERCLA” means the Federal Comprehensive, Environmental Response,  Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) and any foreign and state  Law counterparts.  “Certificate” means a certificate representing any Shares.  “Change of Control Payments” means all employee compensation, severance,  retention or transaction bonuses, success fees or change of control payments or similar obligations  payable to any Person as a result of, or in connection with, the execution of this Agreement  (including for the avoidance of doubt and without limitation, the Employee Bonus) or the  consummation of the transactions contemplated hereby triggered by Closing to the extent the  obligation to make such payment was created by the Company or the Shareholders prior to the  Closing Date, together with any Transaction Payroll Taxes related to any such payment or  obligation; provided that Change of Control Payments shall exclude: (i) the Phantom Bonuses; (ii)  any items included within the determination of Transaction Expenses, Company Phantom Tax  Liability, Aggregate Phantom Tax Liability, Contingent Payments (including, for the avoidance of  doubt, any Contingent Phantom Bonuses), Aggregate Contingent Phantom Tax Liability or  Contingent Payment Change of Control Payments; and/or (iii) any amount taken into account in  6  





 






the calculation of the Closing Payment Amount pursuant to clauses (i) - (v) or clauses (vii) - (xi)  of such definition.  “CJR Scheme” means the HM Treasury scheme to retain jobs during the COVID- 19 pandemic known as the Coronavirus Job Retention Scheme, the terms of which are set out in  Treasury Directions dated 15 April, 20 May and 25 June 2020 under sections 71 and 76 of the  Coronavirus Act 2020 (or any further such directions, regulations or legislation replacing or  amending the same).  “Claim Notice” means written notification from a Buyer Indemnified Party which  contains: (a) a description of the Losses incurred or reasonably expected to be incurred by the  Buyer Indemnified Parties and the claimed amount of such Losses, to the extent then known; (b) a  statement that the Buyer Indemnified Parties are entitled to indemnification under Article 9 for  such Losses; and (c) a reasonable explanation of the basis therefor.  “CLA Interest” means the accrued interest under the Convertible Loan Agreement,  which shall be repaid in cash to the relevant Lenders by or on behalf of the Company on the Closing  Date.  “Closing Cash” means all cash and cash equivalents held by the Company as of the  Closing Date, determined in accordance with Company FRS and, to the extent not inconsistent  with Company FRS, on the basis of the same accounting principles, policies, methods and  procedures, consistently applied, as those used in the Most Recent Balance Sheet; provided, that  Closing Cash will exclude any cash deposited with the Company at the Closing by the Buyer in  connection with the exercise of the Company Options and the Phantom Shares as contemplated by  Section 2.5(g)(E) and Section 2.5(g)(G).  “Closing Current Liabilities” means the accounts payable and other current  liabilities of the Company as of the Closing Date, determined in accordance with Company FRS  and, to the extent not inconsistent with Company FRS, on the basis of the same accounting  principles, policies, methods and procedures, consistently applied, as those used in the Most Recent  Balance Sheet; provided that Closing Current Liabilities shall exclude any items included within  the determination of: (i) Transaction Expenses; (ii) Closing Indebtedness; (iii) any Tax liabilities  and/or (iv) any amount taken into account in the calculation of the Closing Payment Amount  pursuant to clauses (i) - (vi) or clauses (viii) - (xi) of such definition.  “Closing Date” means the date on which the Closing occurs.  “Closing Indebtedness” means all Indebtedness of the Company as of the Closing  Date (but before taking into account the consummation of the Transactions), including related party  debt owed by the Company and, without duplication, with respect to any indebtedness for borrowed  money of the Company, the aggregate unpaid principal amount thereof, and the aggregate amount  of any accrued but unpaid interest thereon (including the CLA Interest), and all fees, prepayment  penalties, premiums or other similar amounts that have been incurred or would be required to be  incurred or paid in connection with the repayment thereof on or prior to the Closing Date.  7  





 






“Closing Payment Amount” means (i) $15,000,000, plus (ii) the amount of the  Estimated Closing Cash, minus (iii) the amount of the Estimated Transaction Expenses, minus (iv)  the amount of the Estimated Closing Indebtedness, minus (v) the amount of the Estimated Closing  Tax Liabilities, minus (vi) the amount of the Estimated Change of Control Payments, minus (vii) the  amount of the Estimated Closing Current Liabilities, minus (viii) the Escrow Amount, minus (ix) the  Closing Shareholders’ Representative Reserve Payment, plus (x) the aggregate exercise price of all  Company Options that are exercised as of immediately prior to the Closing Date as contemplated by  Section 3.3(r)(i), in each case determined without duplication.  “Closing Shareholders’ Representative Reserve Payment” means an amount equal to  $[***] payable by the Buyer to the account designated by the Shareholders’ Representative.  “Closing Tax Liabilities” means all Taxes of the Company with respect to any Pre- Closing Tax Period that are accrued, but unpaid, as of the Closing including any Company Phantom  Tax Liability; provided, that Closing Tax Liabilities shall not be an amount less than zero.  “CMA” means the Competition and Markets Authority in the United Kingdom.  “Code” means the Internal Revenue Code of 1986, as amended, and any substitute  or successor Law of the United States of America in respect of federal Taxes.  “Commercially Reasonable Efforts” means, with respect to the performance of  development or commercialization activities with respect to a Milestone Product, the carrying out  of such activities using reasonable and diligent efforts and the expending of such resources that a  company in the biopharmaceutical industry of a similar size and resources to the Buyer as of the  Closing Date would expend with respect to a product of similar commercial potential as a Milestone  Product, considering conditions then prevailing and taking into account, without limitation, issues  of safety and efficacy, expected and actual cost and time to develop, expected and actual  profitability, expected and actual competitiveness of alternative third party products in the  marketplace, the nature and extent of expected and actual market exclusivity (including patent  coverage and regulatory exclusivity and other proprietary position or market exclusivity), the  expected and actual reimbursability and pricing, the expected and actual amounts of marketing and  promotional expenditures required, product profile (including the expected and actual labeling),  anticipated timing of commercial entry, the regulatory environment and status of the product  (including the likelihood of regulatory approval), and all other relevant scientific, technical and  commercial factors.  “Company A Ordinary Shares” means the A Ordinary Shares of £0.0001 each in the  capital of the Company.  “Company Capital Stock” means the Capital Stock of the Company.  “Company Contingent Phantom Tax Liability” means, in respect of the Phantom  Sellers, the total amount (if any) in respect of employer’s national insurance contributions (and/or  the local equivalent) arising from the payment of the Contingent Phantom Bonuses including any  amounts released from the Escrow Fund under Section 9.11, including any payment to the  Shareholders’ Representative Reserve.  8  





 






“Company FRS” means the Financial Reporting Standards applicable in the United  Kingdom and Republic of Ireland and the requirements of the Companies Act 2006 as applicable to  companies subject to the small reporting companies regime, in each case consistently applied.  “Company Intellectual Property” means any and all Intellectual Property that is  owned by or licensed or sublicensed to the Company or that is otherwise used, held for use or  intended to be used in connection with the conduct of the business of the Company as currently  conducted and as currently proposed to be conducted (including in connection with the research,  development, manufacture, use, sale, offer for sale, importation or other exploitation of a Company  Program).  “Company Phantom Tax Liability” means, in respect of the Phantom Sellers, the  total amount (if any) in respect of employer’s national insurance contributions (and/or the local  equivalent) arising from the payment of the Phantom Bonuses, including any payment to  Shareholders’ Representative Reserve.  “Company’s Awareness Group” means the members of the board of directors of the  Company.  “Company’s knowledge”, “to the knowledge of the Company” or variations thereof  means the actual knowledge of each of Philip Huxley and Rebecca Ashfield:  (a) after making a reasonable inquiry regarding the matters in question; or  (b) where Philip Huxley and Rebecca Ashfield have not made reasonable inquiry  regarding the matters in question, the knowledge such persons would reasonably be expected to  have had they made reasonably inquiry regarding the matters in question, which in the case of  Intellectual Property matters includes inquiry of the relevant attorneys at McDermott, Will &  Emery LLP and Sagittarius IP who have advised the Company (but, for the avoidance of doubt,  will not require searches of records of or filing with any Governmental Entity, the obtaining of any  legal opinion or other report or opinion of outside experts or to conduct any “freedom to operate”  analyses not already conducted).  “Company Options” means options to purchase Company Ordinary Shares under  the Company Share Plan.  “Company Ordinary Shares” means the ordinary shares of £0.0001 each in the  capital of the Company.  “Company-Owned Intellectual Property” means all Company Intellectual Property  that is owned, whether solely or jointly with another Person, by the Company.  “Company Personnel” means any former or current director, officer, employee,  worker, independent contractor, consultant or agent of the Company.  “Company Program” means any Milestone Product.  9  





 






“Company Share Plan” means any current or former share option plan or other share  or equity-related plan of the Company, including, but not limited to, the Ducentis Biotherapeutics  Limited EMI Share Option Scheme.  “Company Shares” means the Company A Ordinary Shares and the Company  Ordinary Shares.  “Company’s Solicitors” means Goodwin Procter (UK) LLP of 100 Cheapside,  London, EC2V 6DY.  “Company Stock Plan” means any current or former stock option plan or other stock  or equity-related plan of the Company.  “Constitutive Documents” means the Certificate of Incorporation and By-laws or  Articles of Association (as the case may be) of a Person if such Person is a corporation, and  analogous constitutive documents if such Person is another form of entity.  “Contingent Payment” means any Milestone Payment or any Annual Net Sales  Contingent Payment.  “Contingent Payment Change of Control Payments” means, with respect to any  Contingent Payment, all employee compensation, severance, retention or transaction bonuses,  success fees or change of control payments or similar obligations payable to any Person as a result  of, or in connection with, the payment of such Contingent Payment after Closing, in each case to  the extent the obligation to make such payment was created by the Company or the Shareholders  prior to the Closing Date, together with any Transaction Payroll Taxes related to any such payment  or obligation; provided that Contingent Payment Change of Control Payments shall not include  any Contingent Payment Transaction Expenses, any Company Contingent Phantom Tax Liability  and/or any amount taken into account in the calculation of or deducted from: (i) the Closing  Payment; (ii) any prior payment of Contingent Payment; and/or (iii) any prior payment of  Aggregate Consideration.  “Contingent Payment Transaction Expenses” means, with respect to any Contingent  Payment, all fees and expenses (including fees and expenses of investment bankers, finders,  consultants, attorneys, accountants or others) of the Company incurred or owed or reimbursed or  reimbursable by the Company upon achievement of any Contingent Milestone and in connection  with the payment of such Contingent Payment after Closing (excluding any VAT in respect of such  fees and expenses to the extent recoverable or creditable), in each case to the extent unpaid as at  Closing. “Contingent Payment Transaction Expenses” does not include any Contingent Payment  Change of Control Payments, any Company Contingent Phantom Tax Liability and/or any amount  taken into account in the calculation of or deducted from: (i) the Closing Payment; (ii) any prior  payment of Contingent Payment paid to the Sellers; and/or (iii) any prior payment of Aggregate  Consideration.  “Contingent Phantom Bonus” means any phantom bonus granted to the Phantom  Sellers pursuant to and in accordance with the terms of the Phantom Bonus Side Letters which is  payable: (a) as a result of the achievement of a Milestone in accordance with Section 2.8; or (b)  pursuant to Section 2.9.  10  





 






“Contract” means any loan or credit agreement, bond, debenture, note, mortgage,  indenture, guarantee, security agreement, lease or other contract, commitment, agreement,  instrument, obligation, undertaking, concession, franchise, license, evidence of Indebtedness or  legally binding arrangement or understanding, whether written or oral.  “Conversion Seller” means each Seller identified as such on Schedule 1 and who,  as at the date of this Agreement, is either a holder of Company Options or a Lender (as such term  is defined in the Convertible Loan Agreement) under the Convertible Loan Agreement (or who  subsequently adhered to the Convertible Loan Agreement) and who, immediately prior to, and  conditional upon, Closing, shall become a holder of Company Shares to be issued prior to Closing  pursuant either to (i) the exercise of the Company Options or (ii) the conversion of the principal  amounts owed to such Seller under the Convertible Loan Agreement.  “Convertible Loan Agreement” means the convertible loan agreement entered into  on 8 March 2021 between (amongst others) the UK FF Nominees Limited, the Company and  LifeArc.  “Convertible Loan Holder” means each of the Lenders (as such term is defined in  the Convertible Loan Agreement) under the Convertible Loan Agreement (or who subsequently  adhered to the Convertible Loan Agreement) who loaned an amount to the Company pursuant to  the terms of the Convertible Loan Agreement.  “Copyrights” means rights associated with works of authorship, including exclusive  exploitation rights, copyrights, moral rights and mask work rights, and all registrations and  applications therefor and all extensions, restorations, and renewals thereof.  “Covered” means, with respect to any patent or patent application and the subject  matter at issue, that, but for a license granted under such patent or patent application, the  manufacture, use, sale, offer for sale, importation or exportation of the subject matter at issue would  infringe a Valid Claim of such patent or patent application.  “COVID-19” means SARS-CoV-2 or COVID-19 or the novel coronavirus disease  that commenced in 2019, and any evolutions or mutations thereof or related or associated  epidemics, pandemic or disease outbreaks.  “COVID-19 Measure” means any measure or scheme (including the CJR Scheme)  either (i) introduced under the Coronavirus Act 2020, or (ii) introduced as a result of and in  connection with the COVID-19 pandemic by any government, public authority or Taxing  Authority.  “Data Protection Law” means all applicable data protection Laws relating to the  processing or security of Personal Data in any jurisdiction in which the Company operates or that  are applicable to the Company, including the UK Data Protection Act 2018, the GDPR, the Privacy  and Electronic Communications Directive 2002/58/EC and the Privacy and Electronic  Communications (EC Directive) Regulations 2003 (in each case as may be amended, superseded  or replaced from time to time).  11  





 






“Data Room” means the electronic data rooms entitled “Ducentis Corporate Data  Room Arcutis” (the “Corporate Data Room”) and “Ducentis Data Room Arcutis” (the  “Technical Data Room”) (hosted on Drop Box) made available to Buyer by the Company in  connection with the negotiation of this Agreement containing those documents listed in the Data  Room Index, as constituted at 12:00 p.m. on September ___, 2022.  “Data Room Index” means the index (in the form attached to the Disclosure Letter)  of documents and agreements contained in the Data Room.  “Deeds of Surrender” means each of the deeds of surrender entered into by the  Company with the Phantom Sellers, pursuant to which each Phantom Seller surrenders the relevant  Surrendered Option granted by the Company and terminates the relevant unapproved option  agreements, subject to the conditions set out therein.  “DOJ” means the United States Department of Justice.  “DS-118” means the Company’s CD200 receptor agonist referred to internally by  the Company as DS-118 that has the amino acid sequence set forth on Schedule 1.1(a)(i).   “DS-192” means the Company’s CD200 receptor agonist referred to internally by  the Company as DS-192 that has the amino acid sequence set forth on Schedule 1.1(a)(ii).   “DS-234” means the Company’s CD200 receptor agonist referred to internally by  the Company as DS-234 that has the amino acid sequence set forth on Schedule 1.1(a)(iii).   “DS-234 Product” means a therapeutic product containing DS-234 as an active  biologic ingredient.  “EA 2002” means the United Kingdom Enterprise Act 2002 (as amended and in  force from time to time).  “EC” means the European Commission, or any successor agency or authority  thereto.  “EHS Matters” means all or any matters relating to the pollution or protection of  any air, water or land or harm to or the protection of human health and safety or the health of  animals and plants.  “EMA” means the European Medicines Agency or any successor agency with  comparable responsibilities.  “Employee Bonus” means the cash bonus of £[***] awarded to [***] that is payable  at Closing in accordance with the terms of the bonus letter entered into by the Company and [***]  on or about the date of this Agreement.  “Encumbrance” means any security interest, mortgage, charge, lien, pledge,  assignment, claim, title retention, restriction against transfer, encumbrance and other third party  (other than Buyer) interest or equity (including any right to acquire, option or right of pre-emption  12  





 






or conversion), and any agreement to create any of the foregoing or arrangement having a similar  effect.  “Environmental Law” means all applicable Laws relating to (i) the manufacture,  processing, use, labeling, distribution, treatment, storage, discharge, disposal, recycling, generation  or transportation of Hazardous Materials, (ii) air (including indoor air), soil, surface, subsurface,  groundwater or noise pollution, (iii) Releases or threatened Releases, (iv) protection of wildlife,  endangered species, wetlands or natural resources, (v) underground storage tanks (USTs), (vi) above- ground storage tanks (ASTs), (vii) health and safety of employees and other persons, (viii) the  presence or content of Hazardous Materials in a product, item or article, whether a component or  finished product, (ix) any other EHS Matters, (x) product life-cycle requirements, (xi) land use and  zoning requirements and (xii) notification requirements relating to the foregoing.  “Escrow Agent” means Silicon Valley Bank, or a successor thereto, in its capacity  as escrow agent pursuant to the Escrow Agreement.  “Escrow Amount” means an amount in cash equal to $[***].  “Escrow Release Amounts” means the aggregate amounts released from the Escrow  Fund to the Sellers, pursuant to Section 9.11 or the terms and conditions of the Escrow Agreement.  “Escrow Termination Date” means the date which is the first Business Day  following the [***] anniversary of the Closing Date.  “Event” means the expiry of a period of time, the Company becoming or ceasing to  be associated with any other person for any Tax purpose or ceasing to be or becoming resident in any  country for any Tax purpose, the death or the winding up or dissolution of any person, the earning,  receipt or accrual for any Tax purpose of any income, profit or gains, the incurring of any loss or  expenditure, and any transaction (including the execution and completion of all provisions of this  agreement), event, act or omission whatsoever, and any reference to an Event occurring on or before  a particular date shall include Events which, for Tax purposes, are deemed to have, or are treated or  regarded as having, occurred on or before that date.  “Ex-U.S. Launch Milestone (AD)” means the first sale of a Milestone Product in a  Significant Ex-U.S. Market for monetary value by a Milestone Party to a third party end user or to a  third party distributor (for the purposes of commercial distribution) following written receipt of  Regulatory Approval by the applicable regulatory or health authorities in such market (excluding any  accelerated, conditional or contingent approval) of an application for marketing authorization for  such Milestone Product with an Atopic Dermatitis Indication for Use. Sales prior to receipt of such  Regulatory Approval, such as so-called “treatment IND sales”, “named patient sales”, and  “compassionate use sales”, shall not be construed as a first sale. If a Milestone Party has effected a  first sale of a Milestone Product in a Significant Ex-U.S. Market for monetary value to a third party  end user or third party distributor (for the purposes of commercial distribution) following receipt of  an accelerated, conditional or contingent approval, then the Ex-U.S. Launch Milestone (AD) shall be  deemed to have been achieved upon the earlier of (i) written notice of conversion by the applicable  regulatory or health authorities of the accelerated, conditional or contingent  13  





 






approval to a traditional, non-conditional or non-contingent approval, or (ii) the achievement of  cumulative Net Sales of such Milestone Product by the Milestone Parties of $[***] or more.  “Ex-U.S. Launch Milestone (Second Indication)” means the first sale of a Milestone  Product in a Significant Ex-U.S. Market for monetary value by a Milestone Party to a third party  end user or third party distributor (for the purposes of commercial distribution) following written  receipt of Regulatory Approval by the applicable regulatory or health authorities in such market  (excluding any accelerated, conditional or contingent approval) of an application for marketing  authorization for such Milestone Product with an “indication for use” for a Qualifying Second  Indication. Sales prior to receipt of such Regulatory Approval, such as so-called “treatment IND  sales”, “named patient sales”, and “compassionate use sales”, shall not be construed as a first sale.  If a Milestone Party has effected a first sale of a Milestone Product in a Significant Ex-U.S. Market  for monetary value to a third party end user or third party distributor (for the purposes of commercial  distribution) following receipt of an accelerated, conditional or contingent approval, then the Ex- U.S. Launch Milestone (Second Indication) shall be deemed to have been achieved upon the earlier  of (i) written notice of conversion by the applicable regulatory or health authorities of the  accelerated, conditional or contingent approval to a traditional, non-conditional or non-contingent  approval, or (ii) the achievement of cumulative Net Sales of such Milestone Product by the  Milestone Parties of $[***] or more.  “FDA” means the U.S. Food and Drug Administration, or any successor agency or  authority thereto.  “FTC” means the United States Federal Trade Commission, or any successor  agency or authority thereto.  “Fundamental Representations” means, (i) in the case of the Sellers, the  representations and warranties contained in [***], (ii) in the case of the Company, the  representations and warranties contained in [***], and (iii) in the case of Buyer, the representations  and warranties contained in [***].  “The Future Fund” means UK FF Nominees Limited (company number 12591650)  whose registered office is at 5 Churchill Place, 10th Floor, London, England, E14 5HU.  “GDPR” means Regulation (EU) 2016/679 of the European Parliament and of the  Council of 27 April 2016 (General Data Protection Regulation), as may be amended, superseded  or replaced from time to time.  14  





 






“Governmental Entity” means any instrumentality, subdivision, court,  administrative agency, department, body, bureau, division, board, committee, panel, commission,  official or other authority of any country, state, province, prefect, municipality, locality or other  government or political subdivision thereof, whether domestic or foreign, or any supranational or  multinational organization or authority, or any quasi-governmental, private body or arbitral body  exercising any executive, legislative, judicial, quasi-judicial, regulatory, taxing, importing,  administrative or other governmental or quasi-governmental authority.  “Hazardous Material” means any pollutant, contaminant, pesticide, fungicide,  rodenticide, poison, petroleum or petroleum product, radioactive substance, hazardous waste  (including any by-products, derivatives, or combinations of such materials), or any substance,  chemical or material regulated, listed, limited or defined as such under any Environmental Law  because of its hazardous or deleterious nature, including: (i) lead, asbestos, asbestos-containing  material, polychlorinated biphenyls, hazardous solvents and waste oil, and toxic mold, (ii) any  “hazardous substance,” “pollutant,” “toxic pollutant,” or “contaminant” as defined under  Environmental Laws, (iii) any “hazardous waste” as defined under any Environmental Law  applicable to the management of waste and (iv) any other substance which may be the subject of  regulatory action by any Governmental Entity in connection with any Environmental Law because  of its hazardous or deleterious nature.  “Identified CD200 Candidate” means DS-118, DS-192 or DS-234.  “Indebtedness” of any Person means without duplication, (i) all indebtedness of  such Person for borrowed money, (ii) any obligations under capitalized leases with respect to which  such Person is liable, (iii) all obligations of such Person evidenced by bonds, notes, debentures or  similar instruments, (iv) all obligations in respect of interest rate and currency obligation swaps,  protection agreements, hedges, caps or collar agreements or similar arrangements either generally  or under specific contingencies, (v) all reimbursement obligations of such Person under outstanding  letters of credit, (vi) all obligations of such Person for the deferred purchase price of property or  services including pursuant to any earn-out or similar obligation (other than trade payables and  other current trade liabilities incurred in the Ordinary Course of Business and payable in  accordance with customary practices and not more than 90 days past due), (vii) all obligations of  such Person under conditional sale or other title retention agreements relating to any assets and  properties purchased by such Person and (viii) any guarantees by such Person of any of the  foregoing.  “Indemnifying Party” means any Person against whom a claim for indemnification  is being asserted under any provision of ARTICLE 9.  “Independent Accountant” means a partner in the New York office of an  internationally recognized and independent registered public accounting firm, who does not act  (and has not acted) as auditor to the Buyer, appointed by mutual agreement of Buyer and the  Shareholders’ Representative or otherwise (if applicable) in accordance with Section 2.10(e).  “Individual Contingent Phantom Tax Liability” means, in respect of each Phantom  Seller, the amount (if any) in respect of Tax (including employee national insurance contributions  (and/or the local equivalent) and PAYE contributions and/or any equivalent Tax and excluding  15  





 






employer national insurance contributions (and/or the local equivalent)) arising from the payment  of his or her Contingent Phantom Bonus, including any payment to Shareholders’ Representative  Reserve.  “Individual Fractional Entitlement” means, in respect of each Seller (other than the  Phantom Sellers), the cash equivalent (calculated by reference to the Buyer Share Value) of any  fractions of a Buyer Share that such Seller is entitled to receive after pursuant to each of Sections  2.5(f)(i)(b), 2.5(f)(i)(d) and 2.5(f)(i)(f).  “Individual Phantom Subscription Price” means, in respect of each Phantom Seller,  the total Phantom Per Share Subscription Price which is deducted from his or her Phantom Bonus.  “Individual Phantom Tax Liability” means, in respect of each Phantom Seller, the  amount (if any) in respect of Tax (including employee national insurance contributions (and/or the  local equivalent) and employee PAYE contributions and/or any equivalent Tax and excluding  employer PAYE contributions and/or any equivalent Tax) arising from the payment of his or her  Phantom Bonus, including any payment to Shareholders’ Representative Reserve.  “Individual Share Option Exercise Price” means, in respect of each Option Holder,  the total exercise price payable in respect of his or her Company Options at Closing.  “Individual Share Option Tax Liability” means, in respect of each Option Holder,  the amount (if any) in respect of Tax (including, employee and (to the extent permitted by law)  employer’s national insurance contributions (and/or the local equivalent) and PAYE contributions  and/or any equivalent Tax) arising upon the exercise of his or her Company Options.  “Individual Withholding Tax Liability” means, in respect of each Convertible Loan  Holder, the amount (if any) of Tax required to be withheld on the payment of the CLA Interest.  “Infringe” means infringe (directly, contributorily, by inducement or otherwise),  misappropriate, dilute, or otherwise violate, or use in any unauthorized manner, any Intellectual  Property, and such term includes the conjugated forms of each of the foregoing, as applicable.  “Intellectual Property” means all intellectual property and other proprietary rights  of any kind or nature, in any jurisdiction worldwide, whether registered or unregistered, whether  protected, created or arising under any Law, including the following: (i) Patent Rights, (ii)  industrial design rights, and all registrations thereof, applications therefor and renewals and  extensions of the foregoing, (iii) Marks, (iv) Copyrights, (v) Know-How and Other Information,  (vi) all other intellectual property and proprietary rights, (vii) all tangible embodiments of any of  the foregoing and (viii) all rights, benefits, and priorities afforded under applicable Law with  respect to any of the foregoing.  “Investor Majority” has the meaning given to it in the Shareholders’ Agreement.  “Investor Majority Consent” means a written form of consent signed by an Investor  Majority.  16  





 






“ISU” means the Investment Security Unit within the U.K. Department of Business,  Energy and Industrial Strategy acting on behalf of the Secretary of State for Business Energy and  Industrial Strategy in connection with powers under the NSIA, and such Secretary of State.  “Judgment” means any writ, judgment, injunction, order, decree, stipulation  determination or award entered by or with any Governmental Entity.  “Know-How and Other Information” means information, know-how, inventions,  discoveries, compositions, formulations, formulas, practices, procedures, processes, methods,  knowledge, trade secrets, technology, techniques, designs, drawings, correspondence, computer  programs, Software documents, apparatus, results, strategies, regulatory documentation and  submissions, and information pertaining to, or made in association with, filings with any  Governmental Entity or patent office, data (including pharmacological, toxicological, non-clinical,  pre-clinical and clinical data, analytical and quality control data, manufacturing data and descriptions,  market data, financial data or descriptions), databases, data collections, data sets, curated data  content, and data layers, devices, assays, specifications, physical, chemical and biological materials  and compounds, compound libraries, and the like, in written, electronic, oral or other tangible or  intangible form, now known or hereafter developed, whether or not patentable.  “Launch Milestones” means the AD Launch Milestones and the Second Indication  Launch Milestones.  “Law” means any federal, state, territorial, foreign, international, multinational or  supranational or local law, common law, statute, ordinance, judicial decision, rule, regulation,  agency requirement, license, notice, guidance, guideline, treaty, ruling, procedure, or permit,  directive or code of any Governmental Entity or decisions having the force of law in any  jurisdiction from time to time.  “Liabilities” means any and all damages, debts, liabilities and obligations, Losses  (disregarding solely for this purpose the proviso to such definition), claims, Taxes, interest  obligations, deficiencies, Judgments, assessments, fines, fees, penalties, and expenses, whether  accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable,  including those arising under any Law, Action or Judgment and those arising under any contract,  agreement, arrangement, commitment or undertaking (excluding any VAT in respect of any of the  foregoing that is recoverable or creditable).  “Lien” means any lien, security interest, mortgage, pledge, lease, adverse claim,  levy, charge or other Encumbrance or restriction of any kind, whether arising by Contract or by  operation of Law, or any conditional sale Contract, title retention Contract or other Contract to  grant any of the foregoing.  “Loan Note Instrument” means a loan note instrument, in the agreed form, to be  executed by the Buyer and the Shareholders’ Representative (acting on behalf of each Seller) on  or around the date that each Contingent Payment is due and constituting Promissory Notes in  substantially the form attached hereto as Exhibit B.   “Losses” means any claims, actions, causes of action, Judgments, suits, fines,  liabilities and obligations, losses, costs (including the reasonable costs of defense and enforcement  17  





 






of this Agreement), damages, debts, claims, Taxes, interest obligations, deficiencies, assessments,  fees, penalties, expenses or amounts paid in settlement (in each case, including reasonable expenses  of investigation and attorneys’ and experts’ fees and expenses paid in connection with any of the  foregoing), whether accrued or fixed, absolute or contingent, matured or unmatured or determined  or determinable, including those arising under any Law, Action or Judgment and those arising under  any contract, agreement, arrangement, commitment or undertaking (excluding any VAT in respect  of any of the foregoing that is recoverable or creditable); provided, however, that “Losses” shall not  include (i) special, indirect or consequential damages except indirect or consequential damages that  would have been reasonably foreseeable by the Parties as of the date hereof to result from the facts  and circumstances giving rise to the obligation to indemnify (assuming such facts and circumstances  had been known to the Parties as of the date hereof), or (ii) any punitive or exemplary damages,  except, in each case of clause (i) or (ii), to the extent claimed by or payable in respect of a Third  Party Claim.  “Marks” means all trademarks, trade names, trade dress, service marks, service  names, logos, corporate names, product configuration rights, business symbols, brand names,  certification marks, or domain names, and other indications of origin, whether registered or  unregistered, and all registrations and applications therefor and all renewals of any of the foregoing,  together with the goodwill associated any of with the foregoing.  “Material Adverse Change” means any change, effect, event, occurrence, state of facts  or development that, individually or in the aggregate, has had or would reasonably be expected to have  a material adverse effect on the business, condition (financial or otherwise), assets, liabilities, results  of operations or prospects of the Company; provided that none of the following shall be deemed, either  alone or in combination, to constitute, and none of the following shall be taken into account for  purposes of the foregoing clause (i) in determining whether there has been or will be, a Material  Adverse Change: (A) any change, effect, event, occurrence, state of facts or development relating to  the economy or financial or capital markets or political conditions in general in the United Kingdom,  the United States or in any other jurisdiction in which the Company has operations or conducts  business, so long as the effects do not materially disproportionately affect the Company as compared  to other companies similarly situated and operating in the pharmaceutical or biologics industry, (B)  any change, effect, event, occurrence, state of facts or development reasonably attributable to  conditions affecting the pharmaceutical or biologics industry (other than as may arise or result from  regulatory action by a Governmental Entity), so long as the effects do not materially disproportionately  affect the Company as compared to other companies similarly situated and operating in the  pharmaceutical or biologics industry, (C) any changes in applicable Law or Company FRS (or any  interpretation of Company FRS) applicable to the Company, so long as the effects do not materially  disproportionately affect the Company as compared to other companies similarly situated and  operating in the pharmaceutical or biologics industry (it being understood that this clause (C) shall not  apply with respect to any representation or warranty the purpose of which is to address compliance  with Law or Company FRS (or any interpretation of Company FRS)), (D) acts of war or terrorism or  any escalation or material worsening of any such acts of war or terrorism existing as of the date of this  Agreement, so long as the effects do not materially disproportionately affect the Company as  compared to the other companies similarly situated and operating in the pharmaceutical or biologics  industry; (E) acts of God and natural disasters, including but not limited to, floods, tornados,  hurricanes, earthquakes and fires so long as the effects do not materially disproportionately affect the  18  





 






Company as compared to other companies similarly situated and operating in the pharmaceutical  or biologics industry; (F) measures ordered by a Governmental Entity in response to epidemic,  pandemic or health emergencies, including COVID-19; and (G) the announcement of the  Transactions (it being understood that this clause (G) shall not apply with respect to any  representation or warranty contained in this Agreement to the extent that the purpose of such  representation or warranty is to address the consequences resulting from the execution and delivery  of this Agreement or the consummation of the Transactions or the performance of obligations under  this Agreement).  “Material Adverse Delay” means any change, effect, event, occurrence, state of  facts or development that that would reasonably be expected to prevent or materially impede,  materially interfere with, materially hinder or materially delay the consummation of the  Transactions.  “MHRA” means the U.K. Medicines & Healthcare products Regulatory Agency or  any successor agency or authority thereto.  “Milestone Party” means the Buyer, the Company and any of their respective  Affiliates, licensees (including sublicensees), successors or assignees of the rights to a Milestone  Product.  “Milestone Product” means (i) a DS-234 Product, (ii) any therapeutic product (other  than a DS-234 Product) which incorporates, constitutes or contains as an active pharmaceutical  ingredient any compound the composition of which is Covered by a Valid Claim, or (iii) any  therapeutic product (other than a DS-234 Product) which (A) incorporates, constitutes or contains as  an active pharmaceutical ingredient any compound the composition of which is Covered a claim of  a United States patent or patent application within the Specified Registered Company IP as of the  date hereof (but without regard as to whether such claim constitutes a Valid Claim the time of  determination), and (B) at the time of determination benefits from the regulatory exclusivity provided  for a “drug for a rare disease or condition” pursuant to Section 526 of the United States Federal Food,  Drug & Cosmetics Act and the regulations promulgated thereunder or from the regulatory exclusivity  provided for a first-licensed biologics product pursuant to Section 351(k)(7)(A) of the United States  Public Health Services Act and the regulations promulgated thereunder (or any replacement  regulation).  “Most Recent Balance Sheet” means the unaudited balance sheet of the Company  as of the Most Recent Balance Sheet Date.  “Nasdaq” means The Nasdaq Stock Market LLC.  “Net Sales” means the gross amount invoiced for sale or other disposition of the  Milestone Products by a Milestone Party to third party end users, distributors or wholesalers (for  the purposes of commercial distribution), less the following deductions accounted for in  accordance with U.S. GAAP:  (a) sales returns and allowances actually paid, granted or accrued on the  Milestone Product, including trade quantity, prompt pay and cash discounts and any other  adjustments, including those granted on account of price adjustments or billing errors;  19  





 






(b) credits or allowances given or made for rejection, recall, return or wastage  replacement of the Milestone Product or for rebates or retroactive price reductions;  (c) price reductions, discounts, rebates and chargeback payments granted to  managed health care organizations, pharmacy benefit managers (or equivalents thereof),  national, state/provincial, local, and other governments, their agencies and purchasers and  reimbursers, or to trade customers (including Medicare, Medicaid, managed care and  similar types of rebates and chargebacks);  (d) to the extent included as part of gross sales, costs of freight, insurance, and  other transportation charges, as well as any administration fees or other fees for services  provided by wholesalers, distributors, warehousing chains and other third parties related to  the distribution of the Milestone Product;  (e) to the extent included as part of gross sales, taxes, duties or other  governmental charges required to be accounted for to a Taxing Authority (including any  tax such as a value added or similar tax, other than any taxes based on income) relating to  the sale of the Milestone Product, as adjusted for rebates and refunds;  (f) the portion of administrative fees paid during the relevant time period to  group purchasing organizations or pharmaceutical benefit managers relating to the  Milestone Product;  (g) any invoiced amounts for the Milestone Product that are not collected by  such Milestone Party, including provision for bad debts (provided that any such amounts  subsequently collected will be included in Net Sales for the period in which collected);  (h) that portion of the annual fee on prescription drug manufacturers imposed  by the U.S. Patient Protection and Affordable Care Act that the applicable Milestone Party  reasonably allocates to sales of the Milestone Product in accordance with its standard  policies and procedures;  (i) any consideration actually paid or payable for, or reasonably allocable to,  any delivery system related to the invoiced sale of the Milestone Product; and  (j) any other similar and customary deductions that are consistent with U.S.  GAAP,  to the extent such deductions: (i) are applicable and in accordance with standard allocation  procedures, (ii) have not already been deducted or excluded, and (iii) are incurred in the ordinary  course of business in type and amount consistent with good industry practice.  Net Sales shall not be imputed to transfers of a Milestone Product without consideration or for  nominal consideration for use in any clinical trial, or for any bona fide charitable, compassionate  use or indigent patient program purpose or as a sample. For the avoidance of doubt, in the case of  20  





 






any transfer of a Milestone Product between or among Milestone Parties for resale, Net Sales shall  be determined based on the sale made by such Milestone Party to a third party (other than another  Milestone Party). In the case of any sale for value, such as barter or counter-trade, of a Milestone  Product, or part thereof, other than in an arm’s length transaction exclusively for cash, Net Sales  shall be deemed to be the Net Sales at which substantially similar quantities of such Milestone  Product are sold for cash in an arm’s length transaction in the relevant country or in the absence of  such sales, the fair market value of the Milestone Product as determined by the Milestone Party  and the Shareholders’ Representative in good faith.  In the event that discounts, allowances, credits, rebates or other deductions are provided with  respect to multiple products, including both Milestone Products and non-Milestone Products (or  discounts are provided with respect to Milestone Products to induce customers to purchase both  Milestone Products and non-Milestone Products), such discounts, allowances, credits, rebates or  other deductions shall be fairly and equitably allocated to the Milestone Products and other  products.  In the event that the Milestone Product is sold as a Combination Product (a “Combination Sale”),  the Net Sales amount for the Milestone Product sold in such a Combination Sale shall be  determined as follows:  (A) Except as provided below, the Net Sales amount for a Combination Sale in  any period and country shall be calculated by multiplying the gross amount invoiced for the  Combination Sale (the “Gross Combination Sale Amount”), less all deductions in (a)-(g)  above (“Permitted Deductions”), by the fraction, the numerator of which is the wholesale  acquisition cost charged by the applicable Milestone Party in such period and country for a  Milestone Product which is not a Combination Product (the “Mono Product”), if such Mono  Product is sold separately by the applicable Milestone Party in such period and country (the  “Independent Price”), and the denominator is the Independent Price plus the wholesale  acquisition cost charged by the applicable Milestone Party for product(s) containing as their  sole active ingredients those active ingredients that are not Milestone Products (“Other  Product(s)”) if such Other Product(s) are sold separately by the applicable Milestone Party  in such period and country; provided that if any of such Other Product(s) are not sold  separately by the applicable Milestone Party, but are independently marketed by one or more  third parties, in such period and country, then such product(s) shall be deemed to be  separately sold by the applicable Milestone Party at the average wholesale acquisition costs  charged by such third parties for purposes of the calculations in this clause.  (B) In the event a Milestone Party sells a Mono Product in such period and  country, but does not separately sell all of the Other Product(s) and such Other Product(s)  are not independently marketed by one or more third parties, as the case may be, in such  period and country, the calculation of Net Sales resulting from such Combination Sale shall  be determined by multiplying the Gross Combination Sale Amount, less all Permitted  Deductions, by the fraction, the numerator of which is the Independent Price, and the  denominator of which is the wholesale acquisition cost charged by the applicable Milestone  Party for such Combination Product in such period and country.  21  





 






(C) In the event that a Milestone Party does not sell a Mono Product in such  country and period, but does separately sell all of the Other Products included in the  Combination Sale in such period and country, the calculation of Net Sales resulting from  such Combination Sale shall be determined by multiplying the Gross Combination Sale  Amount, less all Permitted Deductions, by a fraction, the numerator of which is the  wholesale acquisition cost charged by the applicable Milestone Party for such Combination  Product in such period and country (the “Wholesale Price”) minus the aggregate of the  wholesale acquisition cost charged by the applicable Milestone Party of such Other  Product(s) in such period and country, and the denominator of which is the Wholesale Price;  provided, if any of the Other Product(s) are not sold separately by the applicable Milestone  Party, but are independently marketed by one or more third parties, in such period and  country, then such Other Product(s) shall be deemed to be separately sold by the applicable  Milestone Party at the average wholesale acquisition costs charged by such third parties for  purposes of the calculations in this clause.  If the calculation of Net Sales resulting from a Combination Sale cannot be determined by  any of the foregoing methods, the calculation of Net Sales for such Combination Sale shall be  calculated based upon the relative fair market value of the active components of such Combination  Product as reasonably determined in good faith by the Milestone Party.  “Non-Qualifying Options” means any Company Option granted by the Company  over shares in the capital of the Company that are not EMI Options.  “Notified Body” means an entity licensed, authorized or approved by the applicable  government agency, department or other authority to assess and certify the conformity of a medical  device with the requirements of EU Directive 93/42/EEC concerning medical devices, and  applicable harmonized standards.  “Notional Closing Payment Amount” means the Closing Payment Amount plus the  Aggregate Phantom Subscription Price;  “Number of Fully Diluted Shares” means the sum (without duplication) of (i) the  total number of Company Ordinary Shares issued and outstanding immediately prior to the  Closing, plus (ii) the total number of Company Ordinary Shares into which the Company A  Ordinary Shares issued and outstanding immediately prior to the Closing are convertible, plus (iii)  the number of Company Ordinary Shares underlying all outstanding Company Options as of the  Relevant Time (other than the Surrendered Options); plus (iv) the total number of Company  Ordinary Shares into which the Company A Ordinary Shares issuable on conversion of the  Convertible Loan Agreement as of the Relevant Time are convertible; plus (v) the total number of  Phantom Shares.  “NSIA” means the National Security and Investment Act 2021, of the United  Kingdom (as amended and in force from time to time).  22  





 






“NSIA Company Information” means the information relating to the Company  provided by the Company to the Buyer specifically in response to the Buyer’s due diligence  enquiries relating to NSIA.  “Option Holder(s)” means the holder(s) of Company Options outstanding as of the  Relevant Time.  “Ordinary Course of Business” means the ordinary course of business of the  Company, consistent with past practice.  “Participating Share” means each of the Company A Ordinary Shares (for the  avoidance of doubt, including, without limitation, those Company A Ordinary Shares issued on  conversion of the principal amount of the loans made pursuant to the Convertible Loan Agreement)  and the Company Ordinary Shares (for the avoidance of doubt, including, without limitation, those  Company Ordinary Shares issued on exercise of the Company Options).  “Parties” means Buyer, the Company, the Sellers and the Shareholders’  Representative.  “Patent Rights” means any and all (i) issued patents, (ii) patent applications,  including all applications and filings made pursuant to the Patent Cooperation Treaty (PCT) or  other international patent treaties, provisional applications, substitutions, continuations,  continuations-in-part, divisionals and renewals, and all letters of patent granted with respect to any  of the foregoing, (iii) patents of addition, restorations, extensions, supplementary protection  certificates, registration or confirmation patents, patents resulting from post-grant proceedings,  reissues and re-examinations, (iv) inventor’s certificates and (v) other forms of government issued  rights substantially similar to any of the foregoing.  “PAYE” means Pay As You Earn.  “Paying Agent” means the paying agent to be appointed by the Shareholders’  Representative pursuant to the Paying Agent Agreement, subject to Section 2.5(g) and any change  to the Paying Agent in accordance with Section 2.6.  “Paying Agent Agreement” means the agreement to be entered into between the  Shareholders’ Representative and the Paying Agent regarding the appointment of the Paying Agent  pursuant to this Agreement.  “Paying Agent’s Account” initially means the bank account of the Paying Agent,  details of which shall be notified to Buyer in writing by the Company on behalf of the relevant  Seller (such designation to be made at least five (5) Business Days prior to the Closing Date),  subject to Section 2.5(g) and to any change to the Paying Agent’s Account made in accordance  with Section 2.6(b).  “Per Share Closing Issuance Amount” means the quotient of (i) $15,000,000,  divided by (ii) the product of (A) the Number of Fully Diluted Shares, multiplied by (B) the Buyer  Share Value.  23  





 






“Per Share Closing Payment Amount” means quotient of (i) the Notional Closing  Payment Amount divided by (ii) the Number of Fully Diluted Shares.  “Per Share Excess Payment” means the quotient of (i) the amount of the Excess  Payment, if any, divided by (ii) the Number of Fully Diluted Shares.  “Per Share Shareholders’ Representative Reserve Release Amount” means the  quotient of: (i) Shareholders’ Representative Reserve; divided by (ii) the Number of Fully Diluted  Shares.  “Permit” means any consent, approval, clearance, variance, exemption, regulatory  authorization, order, authorization, certificate, filing, notice, permit, concession, registration,  franchise, license or right, and notices to, consents or orders of, or filings with, any Governmental  Entity, any trade association, any standards-setting organization or any Notified Body.  “Permitted Liens” means the following: (i) statutory Liens for Taxes not yet due or  payable and for which adequate reserves have been recorded on the face of the balance sheets set  forth on Section 5.9 of the Disclosure Letter, (ii) Liens for assessments and other governmental  charges or Liens of landlords, carriers, warehousemen, mechanics and repairmen incurred in the  Ordinary Course of Business, in each case for sums not yet due and payable or due but not  delinquent, (iii) Liens incurred in the Ordinary Course of Business in connection with workers’  compensation, unemployment insurance and other types of social security and (iv) encumbrances  in the nature of zoning, building, planning, land use, easements, rights or restrictions of record on  the use of real property if the same do not materially detract from the value of the property  encumbered thereby or materially impair the use of such property in the Company’s business.  “Person” means an individual, corporation, company, partnership, limited liability  company, joint venture, association, trust, business trust, Governmental Entity, unincorporated  organization, a division or operating group of any of the foregoing or any other entity or  organization.  “Personal Data” means any data or information in any media relating to an identified  or identifiable natural person, an “identifiable natural person” is one who can be identified, directly  or indirectly, in particular by reference to an identifier such as a name, an identification number,  location data, an online identifier or to one or more factors specific to the physical, physiological,  genetic, mental, economic, cultural or social identity of that natural person.  “Phantom Bonus” means each of the phantom bonuses granted to the Phantom  Sellers pursuant to and in accordance with the terms of the Phantom Bonus Side Letters and payable  at Closing.  “Phantom Bonus Side Letters” means each of side letters entered into with each  Phantom Seller entered into on or about the date hereof.  “Phantom Per Share Closing Payment Amount” means, in respect of each Phantom  Share, an amount equal to (a) the Per Share Closing Payment Amount; plus (b) the Phantom Per  Share Closing Premium Amount; less (c) the Phantom Per Share Subscription Price.  24  





 






“Phantom Per Share Closing Premium Amount” means, in respect of each Phantom  Share, the product of (a) the Per Share Closing Issuance Amount, multiplied by (b) the Buyer Share  Value.  “Phantom Per Share Subscription Price” means, in respect of each Phantom Share,  the notional subscription price of such Phantom Share which is deducted from his or her Phantom  Bonus as set out in the respective Phantom Bonus Side Letter.  “Phantom Per Share Tax Liability” means, in respect of each Phantom Share held  by a Phantom Seller and each payment of the Phantom Bonus, the quotient of: (a) the Individual  Phantom Tax Liability for the relevant Phantom Seller with respect to such payment of Phantom  Bonus; divided by (b) the number of Phantom Shares attributable to such Phantom Seller.  “Phantom Seller” means each Seller identified as such on Schedule 1 and who, as  at the date of this Agreement, is a holder of a Phantom Bonus.  “Phantom Share” means a notional share equal in value to a Company Ordinary  Share but having no legal rights attributable to a Company Ordinary Share as set out next to the  name of each Phantom Seller in Schedule 1.  “Phase I Clinical Trial” means an initial human clinical trial which is designed to  provide a preliminary determination of the metabolism and pharmacologic actions of the product  under study in humans and the side effects associated with increasing doses or to explore biological  phenomena or disease processes, as further described in 21 C.F.R. § 312.21(a) (including an  equivalent clinical trial conducted in any country other than the United States).  “Phase I Initiation Milestone” means the first dosing of the first human subject  enrolled in the first Phase I Clinical Trial of a Milestone Product.  “Phase II Clinical Trial” means a human clinical trial that utilizes the pharmacologic  information obtained from one or more previously conducted human clinical trial(s) and which is  designed to provide a preliminary determination of efficacy and to determine the common short- term side effects and risks of the product under study in a target patient population, as further  described in 21 C.F.R. § 312.21(b) (including an equivalent clinical trial conducted in any country  other than the United States).  “Phase II Initiation Milestone (AD)” means the first dosing of the first human  subject enrolled in the first Phase II Clinical Trial of a Milestone Product conducted in patients  with Atopic Dermatitis.  “Phase II Initiation Milestone (Second Indication)” means the first dosing of the  first human subject enrolled in the first Phase II Clinical Trial of a Milestone Product conducted in  patients with a Qualifying Second Indication.  “Phase III Clinical Trial” means a human clinical trial, the principal purpose of which  is to establish safety and efficacy of a product in patients with the disease or condition being studied,  as further described in 21 C.F.R. § 312.21(c), and which is designed and intended to support the filing  of a Biologics License Application and provide an adequate basis for physician  25  





 






labeling or any other application with any Regulatory Authority for Regulatory Approval of the  product and the indication being studied.  “Phase III Initiation Milestone (AD)” means the first dosing of the first human  subject enrolled in the first Phase III Clinical Trial of a Milestone Product conducted in patients  with Atopic Dermatitis.  “Phase III Initiation Milestone (Second Indication)” means the first dosing of the  first human subject enrolled in the first Phase III Clinical Trial of a Milestone Product conducted  in patients with a Qualifying Second Indication.  “Post-Closing Tax Period” means any Tax Period beginning after the Closing Date  and that portion of any Straddle Period beginning after the Closing Date.  “Pre-Closing Tax Period” means any Tax Period ending on or before the Closing  Date and that portion of any Straddle Period ending on the Closing Date.  “Privacy Laws” means all applicable Laws governing the receipt, collection,  compilation, use, storage, processing, sharing, safeguarding, security, disclosure or transfer of  Personal Data, and any implementing directive or related legislation, rule, regulation and binding  regulatory guidance, as amended, extended, repealed and replaced, or re-enacted from time-to- time.  “Pro Rata Percentage” means, with respect to any Seller, the percentage amount  obtained by dividing (a) the number of Purchased Shares held by that Seller together with the  number of Phantom Shares attributable to the relevant Seller at Closing by (b) the Number of Fully  Diluted Shares.  “Promissory Note” means a non-interest bearing promissory note constituted by a  Loan Note Instrument and issued by Buyer to each Seller pursuant to Section 2.8(d) and Section  2.8(h) or Section 2.9(c) in substantially the form attached hereto as Exhibit B.   “Qualifying Second Indication” means, with respect to any Milestone Product, a  disease or condition (as listed as an indication under investigation for such Milestone Product in  an investigational new drug application or foreign equivalent thereof in the case of the Phase II  Initiation Milestone (Second Indication) and Phase III Initiation Milestone (Second Indication) and  as defined in Section 1 of the applicable Milestone Product’s Indications and Uses in the case of  the U.S. Launch Milestone (Second Indication) and Ex-U.S. Launch Milestone (Second  Indication)), other than Atopic Dermatitis, with an estimated addressable patient population in the  United States of [***].  “Registered Company IP” means all Company Intellectual Property (other than with  respect to Standard Software) that has been or is registered, filed, certified, granted, or issued, or  that has been or is subject to an application for registration, filing, certification, grant or issuance,  in each case with, by or to any Governmental Entity.  26  





 






“Regulatory Approval” means, with respect to a particular jurisdiction, any and all  approvals (including expressly any accelerated, conditional or contingent approvals), licenses,  registrations, notifications or authorizations by the FDA, MHRA, EMA or EC or an equivalent  Governmental Entity as are necessary to commercially distribute, sell and market a Milestone  Product in such jurisdiction, including where applicable, pricing approvals.  “Regulatory Authority” means, any national or supranational Authority, including  the MHRA (and any successor entity thereto) in the UK, the FDA in the U.S., the EMA (and any  successor entity thereto) in the EU and the Ministry of Health, Labour and Welfare of Japan, or the  Pharmaceuticals and Medical Devices Agency of Japan (or any successor to either of them), as the  case may be in Japan, or any health regulatory authority in any country or region that is a  counterpart to the foregoing agencies, in each case, that holds responsibility for development and  commercialisation of, and the granting of Regulatory Approval for, a biological or pharmaceutical  product, as applicable, in such country or region.  “Releases” means any spill, discharge, leak, migration, emission, escape, injection,  dumping, leaching, or other release of any Hazardous Material into the indoor or outdoor environment,  whether or not intentional, and whether or not notification or reporting to any Governmental Entity  was or is required at the time it initially occurred or continued to occur. Without limiting the above,  Release includes the meaning of “Release” as defined under CERCLA.  “Relevant Escrow Proportion” means, in respect of a Seller, that Seller’s Pro Rata  Percentage of the Escrow Amount.  “Relevant Securities” means, in respect of any undertaking: (A) any share, security  or other interest in the capital of such undertaking from time to time; and (B) any other security,  option, warrant, agreement or instrument which confers any right to subscribe, exchange for,  convert into or otherwise acquire any issue of any share, security or other interest in the capital of  such undertaking.  “Relevant Time” means immediately prior to Closing.  “Representatives” means with respect to a Person, such Person’s legal, financial,  internal and independent accounting and other advisors and representatives.  “Schedule I” means a statement delivered to Buyer prior to the date hereof, as the  same may be updated by the Sellers prior to Closing pursuant to Section 2.5(a) to the extent  necessary to make Schedule I true, complete and correct in all respects on the Closing Date, which  Schedule I as so updated shall supersede and become Schedule I for all purposes of this Agreement,  with the following information:  (i) the name, email address and mailing address of each Seller;  (ii) the number of shares of each class or series of Company Capital  Stock held by each Seller;  27  





 






(iii) the number of Company Options (other than the Surrendered  Options) held by each Seller, the applicable exercise price(s) for such Company  Options and the number of Surrendered Options;  (iv) the number of Phantom Shares attributable to each Seller;  (v) the principal amount of the loan made by the Seller pursuant to the  Convertible Loan Agreement and any CLA Interest (including any Individual  Withholding Tax Liability and the Aggregate Withholding Tax Liability);  (vi) the Individual Share Option Tax Liability for each Option Holder;  (vii) the Individual Share Option Exercise Price for each Option Holder;  (viii) the Individual Phantom Tax Liability for each Phantom Seller;  (ix) the total Phantom Per Share Closing Payment Amount for each  Phantom Seller; and  (x) each Seller’s Pro Rata Percentage.  “Second Indication Development Milestones” means the Phase II Initiation  Milestone (Second Indication) and the Phase III Initial Milestone (Second Indication).  “Second Indication Launch Milestones” means the U.S. Launch Milestone (Second  Indication) and the Ex-U.S. Launch Milestone (Second Indication).  “Securities Act” means the U.S. Securities Act of 1933, as amended.  “Shareholders’ Agreement” means the Subscription and Shareholders’ Agreement,  dated as of 13 June, 2019, among the Company and the Sellers.  “Shareholders’ Representative Reserve” means the Closing Shareholders’  Representative Reserve Payment plus any amount added thereto in respect of the Subsequent  Shareholders’ Representative Reserve Payment.  “Shareholders’ Representative Reserve Release Amount” means the aggregate  amounts distributed by the Shareholders’ Representative to the Sellers pursuant to Section 2.4(g).  “Share Option Per Share Exercise Price” means, in respect of each Company  Ordinary Share issued pursuant to the exercise of a Company Option, the exercise price as set out in  the respective option grant agreement between the relevant Conversion Seller and the Company.  “Share Option Per Share Tax Liability” means, in respect of each Company  Ordinary Share issued pursuant to the exercise of a Company Option held by a Conversion Seller,  the quotient of (a) Individual Share Option Tax Liability for the relevant Conversion Seller; divided  by (b) the number of Company Ordinary Shares issued pursuant to the exercise of a Company  Option held by the Conversion Seller.  28  





 






“Share Sellers” means those Sellers owning all of the issued Company Shares as at  the date of this Agreement.  “Significant Ex-U.S. Market” means France, Germany, Italy, Spain, the United  Kingdom, Japan or China.  “Software” means software (including firmware and other software embedded in  hardware devices), software code (including source code and executable or object code),  subroutines, interfaces, including application programming interfaces, and algorithms.  “Specified Registered Company IP” means the United States patents and pending  United States patent applications listed in Exhibit E, together with all provisional applications,  substitutions, continuations, continuations-in-part, divisionals and renewals claiming priority to  such United States patents and pending United States patent applications.  “Standard Software” means Software that is generally commercially available and  is mass marketed and licensed pursuant to a standard form click-wrap or shrink-wrap agreement  that is not subject to any negotiation.  “Straddle Period” means any Tax Period that includes (but does not end on) the  Closing Date.  “Subsequent Shareholders’ Representative Reserve Payment” means an amount of  $[***] payable out of the first Contingent Payment upon the achievement of the first Milestone by  the Buyer to the account designated by the Shareholders’ Representative.  “Subsidiary” means, with respect to any Person, (i) any corporation more than 50%  of whose stock of any class or classes is owned by such Person directly or indirectly through one  or more Subsidiaries of such Person and (ii) any partnership, association, joint venture or other  entity in which such Person directly or indirectly through one or more Subsidiaries of such Person  has more than a 50% equity interest.  “Surrendered Options” means those unapproved share options held by certain  Sellers that will be surrendered pursuant to the Deeds of Surrender subject to and immediately  before the occurrence of the Closing.  “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means (i) any federal,  state, local or non-U.S. net or gross income, capital gains, alternative or add-on minimum, estimated,  diverted profits, base-erosion anti-abuse, gross receipts, sales, use, value added, ad valorem,  franchise, capital stock or other equity securities, capital, net worth, profits, license, registration,  withholding, employment, unemployment, disability, severance, occupation, social security (or  similar, including National Insurance Contributions and FICA), payroll, workers’ compensation,  transfer, financial transaction, conveyance, documentary, stamp, property (real, tangible or  intangible), premium, escheat obligation, unclaimed property, environmental, windfall profits,  customs duties, or other taxes of any kind or any fees, charges, levies, excises, duties or assessments  of any kind in the nature of (or similar to) taxes whatsoever, together with any interest, penalties or  addition thereto, whether disputed or not, that may be imposed by a Taxing Authority, and any  penalty for the failure to properly or timely file any Tax Return.  29  





 






“Tax Law” means all currently applicable Laws relating to or regulating the  assessment, determination, reporting, collection or imposition of Taxes.  “Tax Period” means any period prescribed by any Taxing Authority for which a Tax  Return is required to be filed or a Tax is required to be paid.  “Tax Return” means any report, computation, return, declaration, claim for refund,  information return, statement, designation, election, estimated tax filing, notice or certificate filed  or required to be filed with any Taxing Authority in connection with the determination, assessment,  reporting, withholding, collection or payment of any Taxes, including any schedule or attachment  thereto and including any amendments thereof.  “Taxing Authority” means any Governmental Entity having jurisdiction over the  assessment, determination, reporting, collection, or imposition of any Taxes (domestic or foreign).  “Third Party Intellectual Property” means Company Intellectual Property, other  than Company-Owned Intellectual Property.  “Transaction Expenses” means, without duplication, and to the extent not included  in the definition of Closing Indebtedness, all fees and expenses (including fees and expenses of  investment bankers, finders, consultants, attorneys, accountants or others) of the Company incurred  or owed or reimbursed or reimbursable by the Company in connection with the negotiation,  entering into, and consummation of this Agreement and the Transactions (and any associated VAT  save to the extent such VAT is recoverable or creditable), in each case to the extent the obligation  therefor was created by the Company or the Shareholders prior to Closing and was not paid prior  to the Closing.  “Transaction Payroll Tax” means, with respect to any Change of Control Payments,  the employer portion of any payroll Taxes or national insurance contributions payable as a result  of the payment of such Change of Control Payment.  “Transaction Documents” means the Agreement, the Escrow Agreement and any  other documents contemplated therein.  “Transaction Proposal” means any inquiry, proposal or offer from any Person relating  to, or that would reasonably be expected to lead to, any (i) direct or indirect acquisition or sale of  substantial assets of the Company, (ii) transaction which would result in a change in the capitalization  of the Company as of the date hereof, including any sale or issuance of any Company Capital Stock to  any Person, (iii) license or grant of rights to any third party for any of the Company Intellectual Property  or (iv) direct or indirect acquisition or sale of any Company Capital Stock (whether through a share  purchase, merger, consolidation, business combination, recapitalization or similar transaction involving  the Company), in each case other than the Transactions.  “Transactions” means the Acquisition and the other transactions contemplated by  this Agreement and the Transaction Documents.  “Transfer Agent” means Equiniti Trust Company.  30  





 






“Transfer Taxes” means any statutory, governmental, federal, state, local,  municipal, foreign, and other transfer, documentary, real estate transfer, land and buildings  transaction, mortgage recording, sales, use, stamp, registration, value-added, and other similar  Taxes, and all conveyance fees, recording charges, and other fees and charges (including any  penalties and interest) incurred in connection with the Transactions.  “U.S.” means the United States of America, its territories and possessions, including  Puerto Rico.  “U.S. GAAP” means United States generally accepted accounting principles,  consistently applied.  “U.S. Launch Milestone (AD)” means the first sale of a Milestone Product in the U.S.  for monetary value by a Milestone Party to a third party end user or third party distributor (for the  purposes of commercial distribution) following written receipt of Regulatory Approval by the FDA  (excluding any accelerated, conditional or contingent approval) for such Milestone Product with an  Atopic Dermatitis Indication for Use. Sales prior to receipt of such FDA approval, such as so-called  “treatment IND sales”, “named patient sales”, and “compassionate use sales”, shall not be construed  as a first sale. If a Milestone Party has effected a first sale of a Milestone Product in the U.S. for  monetary value to a third party end user or third party distributor (for the purposes of commercial  distribution) following receipt of an accelerated, conditional or contingent approval, then the U.S.  Launch Milestone (AD) shall be deemed to have been achieved upon the earlier of (i) written notice  of conversion by the FDA of the accelerated, conditional or contingent approval to a traditional, non- conditional or non-contingent approval, or (ii) the achievement of cumulative Net Sales of such  Milestone Product by the Milestone Parties of $[***] or more.  “U.S. Launch Milestone (Second Indication)” means the first sale of a Milestone  Product in the U.S. for monetary value by a Milestone Party to a third party end user or third party  distributor (for the purposes of commercial distribution) following written receipt of Regulatory  Approval by the FDA (excluding any accelerated, conditional or contingent approval) for such  Milestone Product with an “indication for use” for a Qualifying Second Indication. Sales prior to  receipt of such FDA approval, such as so-called “treatment IND sales”, “named patient sales”, and  “compassionate use sales”, shall not be construed as a first sale. If a Milestone Party has effected a  first sale of a Milestone Product in the U.S. for monetary value to a third party end user or third  party distributor (for the purposes of commercial distribution) following receipt of an accelerated,  conditional or contingent approval, then the U.S. Launch Milestone (Second Indication) shall be  deemed to have been achieved upon the earlier of (i) written notice of conversion by the FDA of the  accelerated, conditional or contingent approval to a traditional, non-conditional or non-contingent  approval, or (ii) the achievement of cumulative Net Sales of such Milestone Product by the  Milestone Parties of $[***] or more.  “U.S. Sellers” means each of Andrew Szymanski and Talbot Stark.  “Valid Claim” means (i) a claim of an issued and unexpired United States patent  within the Specified Registered Company IP that has not been held invalid or unenforceable by a  court or other appropriate governmental body of competent jurisdiction in a ruling that is  unappealed or unappealable within the time allowed for appeal and which claim has not been  31  





 






abandoned, disclaimed, surrendered, denied or admitted to be invalid or unenforceable through  reissue, re-examination, an inter partes proceeding, post-grant review, opposition, disclaimer or  otherwise and (ii) a claim of a pending United States patent application within the Specified  Registered Company IP, subject to such claim or substantially equivalent claims having not been  pending more than six (6) years from the earliest date on which such patent application claims  priority and which claim has not been cancelled, withdrawn or abandoned or finally rejected by an  administrative agency action from which no appeal can be taken.  “WCS Beneficiaries” means the seventy nine (79) individuals on whose behalf the  WCS Nominee holds the legal title to the aggregate number of Ordinary Shares as are set out  opposite WCS Nominee’s name in column (4)(ii) of Schedule I.  “WCS Nominee ” means WCS Nominees Limited, a private company limited by  shares, incorporated and registered in England and Wales with company number 06002307 whose  registered office is 4th Floor, 50 Mark Lane, London EC3R 7QR, United Kingdom.  The following defined terms are defined in the body of this Agreement in the  Sections indicated:  Term Section  Adjusted Closing Payment Amount ................................................................................................................... Section 2.11(g)  Agreement .....................................................................................................................................................................Caption  Allocation Notice ................................................................................................................................................. Section 2.8(g)  Annual Net Sales Contingent Payment Notice .................................................................................................... Section 2.9(b)  Buyer..............................................................................................................................................................................Caption  Buyer Indemnified Party ...................................................................................................................................... Section 9.2(a)  Closing  ...................................................................................................................................................................  Section 2.4  Closing Statement .............................................................................................................................................. Section 2.11(a)  Company ........................................................................................................................................................................Caption  Company Plan .................................................................................................................................................... Section 5.19(a)  Confidential Company Information ................................................................................................................... Section 5.15(h)  Confidential Information ..................................................................................................................................... Section 7.7(b)  Deductible ........................................................................................................................................................... Section 9.4(a)  Development and Regulatory Plan .................................................................................................................... Section 5.21(h)  Disclosure Letter ........................................................................................................................................................... Article 4  Dispute Notice ................................................................................................................................................... Section 2.11(b)  Disputed Item .................................................................................................................................................... Section 2.11(b)  Escrow Agreement............................................................................................................................................. Section 2.12(a)  Escrow Fund ...................................................................................................................................................... Section 2.12(a)  Estimated Change of Control Payments .......................................................................................................... Section 2.5(a)(ii)  Estimated Closing Cash .................................................................................................................................... Section 2.5(a)(ii)  Estimated Closing Current Liabilities  .............................................................................................................. Section 2.5(a)(ii)  Estimated Closing Indebtedness ...................................................................................................................... Section 2.5(a)(ii)  Estimated Closing Payment Amount ............................................................................................................... Section 2.5(a)(ii)  Estimated Closing Tax Liabilities ...................................................................................................................... Section 2.5(a)(ii)  Estimated Transaction Expenses ..................................................................................................................... Section 2.5(a)(ii)  Excess Payment ................................................................................................................................................. Section 2.11(k)  Financial Statements ............................................................................................................................................... Section 5.9  Gratuity .............................................................................................................................................................. Section 5.28(a)  IHTA 1984 .......................................................................................................................................................... Section 5.17(u)  Indemnified Party ................................................................................................................................................ Section 9.3(a)  32  





 






Individual Claim Threshold  ................................................................................................................................... Section 9.4(a)  IT Assets.............................................................................................................................................................. Section 5.15(l)  Leased Real Property .......................................................................................................................................... Section 5.13(b)  Legal Restraints .................................................................................................................................................... Section 3.1(b)  Material Claims .................................................................................................................................................... Section 9.3(e)  Material Contract ............................................................................................................................................... Section 5.14(a)  Material Milestone Product and Trial Information ............................................................................................... Section 5.22(a)  Milestone Notice ................................................................................................................................................. Section 2.8 (d)  Milestone Payment ............................................................................................................................................. Section 2.8 (a)  Milestone Payment Note ....................................................................................................................................  Section 2.8 (g)  Milestone Payment Notes ..................................................................................................................................  Section 2.8 (d)  Most Recent Balance Sheet Date .............................................................................................................................. Section 5.9  Non-Qualified Loss ............................................................................................................................................... Section 9.4(a)  Pending Claim ........................................................................................................................................................ Section 9.11  Pending Claim Reserve ........................................................................................................................................... Section 9.11  Phantom PAYE Payment ......................................................................................................................................... Section 9.11  Pre-Closing Period ................................................................................................................................................ Section 7.1(a)  Pre-Closing Statement ...................................................................................................................................... Section 2.5(a)(ii)  PTO .................................................................................................................................................................... Section 5.15(b)  Purchased Shares ........................................................................................................................................................... Recitals  Real Property ..................................................................................................................................................... Section 5.13(a)  Regulation D ........................................................................................................................................................ Section 4.6(a)  Regulation S ......................................................................................................................................................... Section 4.6(a)  Released Claims ................................................................................................................................................... Section 8.5(a)  Released Parties ................................................................................................................................................... Section 8.5(a)  Releasing Party..................................................................................................................................................... Section 8.5(a)  Representative Losses .............................................................................................................................................. Section 2.7  Resolution Period ............................................................................................................................................... Section 2.11(d)  Restrictive Covenant Agreements ................................................................................................................................... Recitals  Retained Claims ................................................................................................................................................... Section 8.5(b)  Review Board ....................................................................................................................................................... Section 5.6(b)  Rule 144 .............................................................................................................................................................. Section 4.6(c)  Seller ............................................................................................................................................................................. Caption  Seller Indemnified Party ....................................................................................................................................... Section 9.3(a)  Sellers ............................................................................................................................................................................ Caption  Shareholders’ Representative ................................................................................................................................... Section 2.7  Third Party Claim  ................................................................................................................................................. Section 9.5(b)  Unresolved Items ............................................................................................................................................... Section 2.11(e)  Update Report ..................................................................................................................................................... Section 2.8(h)  VATA................................................................................................................................................................... Section 5.17(f)  Section 1.2. Descriptive Headings; Certain Interpretations.   (a) The table of contents and headings contained in this Agreement are for  reference purposes only and shall not control or affect the meaning or construction of this  Agreement.  (b) Except where expressly stated otherwise in this Agreement, the following  rules of interpretation apply to this Agreement:  (i) “or” has the inclusive meaning represented by the phrase “and/or”;  (ii) “include”, “includes” and “including” are not limiting;  33  





 






(iii) “hereof”, “hereto”, “hereby”, “herein” and “hereunder” and words  of similar import when used in this Agreement refer to this Agreement as a whole and not  to any particular provision of this Agreement;  (iv) “date hereof” refers to the date of this Agreement set forth in the  preamble;  (v) “extent” in the phrase “to the extent” means the degree to which a  subject or other thing extends, and such phrase does not mean simply “if”;  (vi) definitions contained in this Agreement are applicable to the singular  as well as the plural forms of such terms;  (vii) references to an agreement or instrument mean such agreement or  instrument as from time to time amended, modified or supplemented;  (viii) references to a Person are also to its permitted successors and  assigns;  (ix) references to an “Article”, “Section”, “Subsection”, “Exhibit” or  “Schedule” refer to an Article of, a Section or Subsection of, or an Exhibit or Schedule to,  this Agreement;  (x) words importing the masculine gender include the feminine or neuter  and, in each case, vice versa;  (xi) “day” or “days” refers to calendar days;  (xii) “$” or “dollars” means the lawful money of the United States of  America;  (xiii) references to a Law include any amendment or modification to such  Law and any rules or regulations issued thereunder, whether such amendment or  modification is made, or issuance of such rules or regulations occurs, before or, only with  respect to events or developments occurring or actions taken or conditions existing after the  date of such amendment, modification or issuance, after the date of this Agreement, but  only to the extent such amendment or modification, to the extent it occurs after the date  hereof, does not have a retroactive effect;  (xiv) the term “made available” means, with respect to any document, that  such document was in the Data Room at the close of business two Business Days prior to  the date hereof;  (xv) the language of this Agreement shall be deemed to be the language  mutually chosen by the Parties and no rule of strict construction shall be applied against  either Party hereto;  34  





 






(xvi) references to any legal term for any action, remedy, method of  judicial proceeding, legal document, legal status, court, official or any other legal concept  shall, in respect of any jurisdiction other than the State of New York, be deemed to include  the legal concept which most nearly approximates in that jurisdiction to such legal term in  the State of New York. For the purpose of construction, the references to any statutory  provision enacted, or accounting principles applying, in the State of New York shall include  references to any corresponding provision in the local legislation and (where relevant) to  generally accepted accounting principles in such locality provided that the application of  the foregoing sentence shall not have the effect of increasing or extending the scope of any  provision of this Agreement; and  (xvii) where any sum, amount or liability denominated in one currency as  at a particular date is to be translated into another currency on such date for the purpose of  interpreting or giving effect to this Agreement or for making payments due and payable  under the terms of this Agreement, the prevailing Bank of England daily foreign currency  spot exchange rate published on the Bank of England website at  https://www.bankofengland.co.uk/statistics/exchange-rates, as at the date falling two (2)  Business Days prior to the required time of such translation of payment (as applicable) shall  apply (or such other exchange rate as the Company (prior to Closing) or the Shareholders’  Representative (after Closing) and the Buyer may agree in writing).  Each Party represents that it has been represented by legal counsel in connection with this  Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and  applying the terms and provisions of this Agreement, the Parties agree that no presumption will  apply against the Party which drafted such terms and provision.  ARTICLE 2  PURCHASE AND SALE OF PURCHASED SHARES; CLOSING; CONSIDERATION  Section 2.1. Purchase and Sale of Purchased Shares. At the Closing, subject to the  terms and to the satisfaction or waiver of the conditions of this Agreement, each of the Sellers shall  sell, transfer, assign, convey and deliver the legal and beneficial title to the Purchased Shares set  out opposite its/his/her name in section 5.4(b) of the Disclosure Letter to Buyer and Buyer shall  purchase and accept the Purchased Shares from the Sellers, free and clear of all Liens (other than  Permitted Liens), with all rights, including dividend and voting rights, attached or accrued to them  on or after the Closing.  Section 2.2. No Partial Sale. Buyer shall have no obligation to complete the sale and  purchase of any Purchased Shares pursuant to Section 2.1 unless the sale and purchase of all the  Purchased Shares is completed simultaneously.  Section 2.3. Waiver. Each Seller hereby irrevocably consents to, and waives (or, where  this waiver would not be sufficient, agrees to procure the waiver of) all rights of preemption, rights of  first refusal, veto rights and such other similar rights which it/he/she/they may have had and/or may  have (at any time) relating to, the Purchased Shares (and that may have as otherwise prohibit, restrict  or impair, the transfer of the Purchased Shares to Buyer in accordance with this Agreement), and the  transfer thereof to Buyer at the Closing, (pursuant to the Constitutive  35  





 






Documents of the Company or otherwise) and hereby consents to the transfer of the Purchased  Shares to Buyer and to the allocation of the Aggregate Consideration (as applicable) as between  the Sellers in accordance with the terms of this Agreement, which shall take precedent over any  understanding or arrangement howsoever arising to the contrary.  Section 2.4. Closing. The closing of the Transactions (the “Closing”) shall occur  remotely via the electronic exchange of documents and signature pages at 10:00 a.m., London time,  on the date that is two (2) Business Days, following satisfaction (or, to the extent permitted, the  waiver) of all conditions set forth in ARTICLE 3 (other than those that by their nature are to be  satisfied at the Closing, but subject to satisfaction of all such conditions), or at such other place,  time and date as may be agreed by Buyer and the Company.  Section 2.5. Actions in Connection with the Closing.   (a) No later than two (2) Business Days prior to the Closing Date, if necessary and  required, the Company shall deliver to Buyer an amended Schedule I containing all corrections  necessary to make Schedule I true, complete and correct in all respects on and as of the Closing Date,  together with a certificate, executed by a director of the Company on behalf of the Company, certifying  that such amended Schedule I is true, complete and correct in all respects on and as of the Closing  Date.  (b) On or before the date of this Agreement the Company has delivered to the  Buyer a statement (the “Pre-Closing Statement”), certified by a director of the Company on behalf  of the Company, setting forth in reasonable detail the Company’s good faith estimates of: (A) the  amount of the Closing Cash (the “Estimated Closing Cash”), (B) the amount of Transaction  Expenses (the “Estimated Transaction Expenses”), (C) the amount of Closing Indebtedness (the  “Estimated Closing Indebtedness”), (D) the amount of Closing Tax Liabilities (the “Estimated  Closing Tax Liabilities”), (E) the amount of the Change of Control Payments (the “Estimated  Change of Control Payments”), (F) the amount of Closing Current Liabilities (the “Estimated  Closing Current Liabilities”) and (G) the Closing Payment Amount (the “Estimated Closing   Payment Amount”).   (c) At the Closing, the Company and each of the Sellers, as applicable, shall  deliver to Buyer each of the following:  (i) Company Share Certificate. A draft share certificate from the  Company, in agreed form, representing the Purchased Shares to be issued by the Company  in favour of the Buyer; and  (ii) Seller Share Certificate. The share certificate(s) issued by the  Company representing all of the Purchased Shares (other than the Conversion Shares) held  by such Seller (provided, that, if such Seller cannot deliver such original share certificate(s)  he/she/it/they shall instead deliver to Buyer (or its nominee) an indemnity in respect of any  lost share certificate(s) in customary form), except that it is acknowledged that no share  certificates shall be issued in respect of the Purchased Shares issued following exercise of the  Company Options or conversion of the loans under Convertible Loan Agreement and  36  





 






so no share certificate or indemnity for lost share certificate shall be delivered in respect of  such Purchased Shares; and  (iii) Stock Transfer Forms. Duly executed stock transfer(s) form in favor  of Buyer, in agreed form, on behalf of such Seller transferring such Seller’s Purchased  Shares to Buyer (or its nominee).  (iv) Resignations. Copies of the resignations of each director and officer  of the Company (other than any such resignations which Buyer designates, by written  notice to the Company, as unnecessary), in agreed form and executed as deeds, resigning  as directors of the Company and acknowledging that he or she has no Action against the  Company for breach of contract, loss of office, redundancy, compensation, payment or  repayment of loans or otherwise and effective as of the Closing.  (v) Escrow Agreement. The Escrow Agreement duly executed and  delivered by the Shareholders’ Representative.  (vi) Payoff Letters. Appropriate payoff letters, or final invoices, in  respect of any Closing Indebtedness and any Transaction Expenses, in form and substance  reasonably satisfactory to Buyer, and the Company shall have made arrangements  reasonably satisfactory to Buyer for the payees of any such Closing Indebtedness or  Transaction Expenses to deliver any related Lien releases and related documentation, as  applicable, to the Company or Buyer at the Closing.  (vii) Restrictive Covenant Agreements. The Restrictive Covenant   Agreements duly executed and delivered by each of Philip Huxley and Rebecca Ashfield,  which agreements shall be valid and binding obligations of each Seller party thereto on the  Closing Date and each of the parties thereto (other than the Buyer) shall have performed or  complied in all material respects with all covenants, agreements and obligations required by  such applicable agreements to be performed or complied with by such persons on or before  the Closing Date.  (viii) Powers of Attorney. Duly executed powers of attorney from each  Seller in substantially the form attached hereto as Exhibit D appointing Buyer (or its  nominee) as their attorney with effect from the Closing in respect of the exercise of all  rights attaching to the Purchased Shares (including but not limited to the voting rights  attaching to its Purchased Shares) pending only Buyer (or its nominee) being registered as  the holder thereof. These powers of attorney are given to secure the proprietary interests of  Buyer in the Purchased Shares with effect from Closing and are irrevocable unless revoked  with the prior written consent of Buyer. Such power of attorney shall terminate (without  prejudice to anything done by Buyer before termination) on the date on which Buyer (or its  nominee) is entered in the register of members of the Company as the legal holder of the  relevant Purchased Shares.  (ix) Investor Majority Consent. A duly executed Investor Majority  Consent in agreed form approving the Transactions and the entry into this Agreement by  the Company.  37  





 






(x) Option Holders: From each Seller who is an Optionholder (i) a  signed notice to the Company (in agreed form) exercising such Option Holder’s Company  Option(s) in accordance with the terms of such Company Option(s) as of immediately prior  to, but subject to the occurrence of, the Closing; and (ii) if such Seller is or was also a  director or employee of the Company or Affiliate, a timely and duly executed election in  accordance with Section 431 of ITEPA 2003 in respect of the Purchased Shares acquired  by him/her on exercise of his/her Company Option(s).  (xi) Convertible Loan Holders. From each Seller that is a Convertible  Loan Holder, a signed notice to the Company (in the agreed form) that its loan made  pursuant to the Convertible Loan Agreement shall convert into Company A Ordinary  Shares in accordance with the terms of the Convertible Loan Agreement as of immediately  prior to, but subject to the occurrence of, the Closing (and not be repaid or otherwise  redeemed, except for the CLA Interest which the Buyer will procure is repaid (less any Tax  the is required to be deducted or withheld therefrom) by or on behalf of the Company in  cash on the Closing Date).  (xii) Section 431. From each Seller that is a director or employee of the  Company or Affiliate, a timely and duly executed election in accordance with Section 431  of ITEPA 2003 in respect of the Buyer Shares acquired or to be acquired by him/her.  (xiii) Deeds of Surrenders. The Deeds of Surrender duly executed and  delivered by the Company with the relevant Phantom Seller.  (xiv) Books and Records. All minute books and statutory books and  registers of the Company (including the register of members, the register of people with  significant control (PSC Register), all certificates of incorporation, articles of association,  other Constitutive Documents and (if applicable) common seal(s)) duly written up to date  shall have been delivered to Buyer or confirmation in writing that the same is in the  possession of the Company as at Closing.  (xv) Webfiling. The e-mail address, security code and webfiling  authentication code used by the Company in making web-filings with the UK Registrar of  Companies.  (xvi) Other Documentation. A copy of the signed written resolutions of  the Board of Directors of the Company approving:  (A) the matters set out in Section 5.3; and  (B) the changes to the Company’s details, including, without  limitation, (I) the resignations of each outgoing director and officer of the Company  with effect from Closing and the appointment of each of Scott Burrows, Patrick  Burnett and Matthew Moore as directors of the Company with effect immediately  following Closing, (II) the registered office (as notified to the Company’s Solicitors  prior to Closing), (III) the issuance by the Company to Buyer immediately following  Closing and the payment of stamp duty of a share certificate representing the  Purchased Shares, (IV) the registration of Buyer (or its nominee) as the holder  38  





 






of the Purchased Shares in the Company’s register of members and statutory books  as soon as possible following Closing (subject only to the stock transfer forms  transferring the Purchased Shares to Buyer being duly stamped), and (V) the  making of all other entries in the Company’s corporate records and registers as may  be necessary.  (d) At the Closing, the Buyer shall deliver to the Company and each of the  Sellers each of the following:  (i) Escrow Agreement. The Escrow Agreement duly executed by  Buyer and the Escrow Agent.  (ii) Nasdaq Listing. Evidence that the Buyer has provided the notice to  Nasdaq contemplated by Section 3.2(d).  (iii) Stock Consideration. Evidence that Buyer has instructed its Transfer  Agent to issue the Buyer Shares to be issued at Closing pursuant to Sections 2.5(g)(i)(B),  2.5(f)(i)(D) 2.5(f)(i)(F) in book-entry form in the name of the applicable Sellers, allocated  among the applicable Sellers as set forth in the Schedule I.  (iv) Willingness to Act Letters. From each incoming director of the  Company being appointed at Closing, a duly signed letter expressing his or her willingness  to act as a director of the Company.  (e) At the Closing, the Company shall deliver to the Buyer and each Convertible  Loan Holder from whom tax has been withheld on the payment of the CLA Interest a certificate of  tax deduction under section 975 of the Income Tax Act 2007 in respect of their Individual  Withholding Tax Liability.  (f) Any documents and items delivered on or prior to the Closing Date pursuant  to Section 2.5(b) and Section 2.5(c) will be held by the recipient to the order of the person delivering  them until such time as (i) all of the documents and items required to be delivered on or prior to the  Closing Date in accordance with Section 2.5(b) and Section 2.5(c) have been delivered (or the  delivery thereof has been waived by the person entitled to receive such document or item), and (ii)  the conditions set forth in Section 3.1, 3.2 and 3.3 have either been satisfied or waived (so far as is  permitted under applicable Law) as of the Closing Date, at which point all such documents and  items will be released at the Closing (but subject to the occurrence of the Closing), without any  further action being required of any of the Sellers, Buyer or the Company. Any documents and items  delivered on or prior to the Closing Date pursuant to Section 2.5(d) will be held by the recipient to  the order of the person delivering them until such time as (i) all of the documents and items required  to be delivered on or prior to the Closing Date in accordance with Section 2.5(d) have been delivered  (or the delivery thereof has been waived by the person entitled to receive such document or item),  and (ii) the conditions set forth in Sections 3.1, 3.2 and 3.3 have either been satisfied or waived (so  far as is permitted under applicable Law) as of the Closing Date, at which point all such documents  and items will be released at the Closing (but subject to the occurrence of the Closing), without any  further action being required of any of the Sellers, Buyer or the Company.  39  





 






(g) At the Closing, Buyer shall, in each case in accordance with Schedule I:  (i) (A) pay or cause to be paid to the Paying Agent for the benefit of each  holder of a Company A Ordinary Share, in respect of each such Company A Ordinary Share,  an amount in cash, without interest, equal to the Per Share Closing Payment Amount, by wire  transfer of immediately available funds to the Paying Agent’s Account;  (B) issue to each holder of a Company A Ordinary Share, in respect  of each such Company A Ordinary Share, a number of Buyer Shares equal to the Per Share  Closing Issuance Amount, in book-entry form, and Buyer shall instruct the Transfer Agent  to register such issuance in the name of such holder of Company A Ordinary Shares in the  share register of Buyer at the time of such issuance, together with book-entry notations  containing applicable U.S. securities law restrictions and legends;  (C) pay or cause to be paid to the Paying Agent for the benefit of  each holder of a Company Ordinary Share, in respect of each such Company Ordinary  Share (disregarding those Company Ordinary Shares issued on exercise of any Company  Option and the Company Ordinary Shares subject to any Phantom Bonus), an amount in  cash, without interest, equal to the Per Share Closing Payment Amount, by wire transfer of  immediately available funds to the Paying Agent’s Account;  (D) issue to each holder of a Company Ordinary Share, in respect of  each such Company Ordinary Share (disregarding those Company Ordinary Shares issued  on exercise of any Company Option and the Company Ordinary Shares subject to a  Phantom Bonus), a number of Buyer Shares equal to the Per Share Closing Issuance  Amount, in book-entry form, and Buyer shall instruct the Transfer Agent to register such  issuance in the name of such holder of Company Ordinary Shares in the share register of  Buyer at the time of such issuance, together with book-entry notations containing applicable  U.S. securities law restrictions and legends;  (E) pay or cause to be paid to the Paying Agent for the benefit of  each Option Holder which is a Conversion Seller, in respect of each Company Ordinary  Share issued pursuant to the exercise of a Company Option held by such Option Holder, an  amount in cash, without interest, equal to the Per Share Closing Payment Amount less: (i)  the Share Option Per Share Exercise Price; and (ii) the Share Option Per Share Tax Liability,  by wire transfer of immediately available funds to the Paying Agent’s Account;  (F) issue to each Option Holder which is a Conversion Seller, in  respect of each Company Ordinary Share issued pursuant to the exercise of a Company  Option held by such Option Holder, a number of Buyer Shares equal to the Per Share  Closing Issuance Amount, in book-entry form, and Buyer shall instruct the Transfer Agent  to register such issuance in the name of such Option Holder in the share register of Buyer  at the time of such issuance, together with book-entry notations containing applicable U.S.  securities law restrictions and legends;  (G) procure that the Company pays to the Paying Agent for the  benefit of each Phantom Seller, in respect of each Phantom Share, an amount in cash,  40  





 






without interest, equal to the Phantom Per Share Closing Payment Amount less any  applicable Phantom Per Share Tax Liability, by wire transfer of immediately available  funds to the Paying Agent’s Account;  (H) procure that the Company pays to the Paying Agent for the  benefit of each of the Sellers (other than the Phantom Sellers), an amount in cash, without  interest, equal to the Aggregate Fractional Entitlement, by wire transfer of immediately  available funds to the Paying Agent’s Account;  (ii) deposit, or cause to be deposited, the Closing Shareholders’  Representative Reserve Payment with the Shareholders’ Representative, by wire transfer  of immediately available funds to the account designated in writing to Buyer by the  Shareholders’ Representative (such designation to be made at least five (5) Business Days  prior to the Closing Date);  (iii) deposit, or cause to be deposited, the Escrow Amount with the  Escrow Agent, by wire transfer of immediately available funds to the account set forth in  the Escrow Agreement, which amount shall be held in the Escrow Fund by the Escrow  Agent pursuant to the Escrow Agreement;  (iv) procure that the Company repays, by wire transfer of immediately  available funds to the Paying Agent’s Account for the benefit of the relevant recipients, the  amounts required to repay all Closing Indebtedness (less any Tax the is required to be  deducted or withheld from the CLA Interest which shall be duly remitted to the applicable  Taxing Authority by the Company as required by law) and any Transaction Expenses, in  each case as specified in appropriate payoff letters, final invoices or pursuant to the terms  of the Convertible Loan Agreement in form and substance reasonably satisfactory to Buyer;  and  (v) deposit, or cause to be deposited, to the Company to the account  designated in writing to Buyer by the Company (such designation to be made at least five (5)  Business Days prior to the Closing Date) at the instruction of and on behalf each Option  Holder which is a Conversion Seller and each Phantom Seller of an amount equal to:  (A) in respect of each relevant Option Holder only, the  Aggregate Share Option Exercise Price to be retained by the Company in  satisfaction of each relevant Option Holder’s obligation to pay the exercise price  pursuant to the terms of the Share Option; and  (B) the Aggregate Share Option Tax Liability and the Aggregate  Phantom Tax Liability (where relevant).  (h) In respect of Section 2.5(g)(i), after Closing the Shareholders’  Representative shall direct the Paying Agent to remit:  (i) for the benefit of each Seller in accordance with the relevant Seller’s  payment instructions (as provided by that Seller to the Company and the Shareholders’  Representative), from the amounts received into the Paying Agent’s Account pursuant to  41  





 






Section 2.5(g)(i), its/his/her allocation of the relevant portion of the Aggregate  Consideration as set out in Schedule I; and  (ii) for the benefit of each recipient of any payment of Indebtedness or  Transaction Expenses, from the amounts received into the Paying Agent’s Account  pursuant to Section 2.5(f)(iv), the relevant amount due to each recipient of such Closing  Indebtedness or Transaction Expenses.  (i) In respect of Section 2.5(g)(i), Buyer shall be permitted to rely, without  further inquiry, on Schedule I (as amended pursuant to Section 2.5(a)(i)) in delivering any cash  payments or Buyer Shares to the Sellers under this Agreement. Buyer shall: (i) have no obligation  to procure that any amounts paid to the Paying Agent’s Account and/or the accounts designated to  Buyer in writing by the Company, in each case in accordance with Section 2.5(g)(i), are distributed  to the Sellers, which shall be the responsibility of the Sellers with the cooperation of the  Shareholders’ Representative after Closing; (ii) not be concerned by any apportionment or  allocation of such amounts as are so distributed to the Sellers at the instruction of the Sellers (or  Shareholders’ Representative after Closing); and (iii) have no liability or obligation to any Party or  any Seller should such apportionment or allocation be incorrect, and upon payment by Buyer to the  Paying Agent’s Account and/or the accounts designated to Buyer in writing by the Company, in  each case in accordance with Section 2.5(g)(i), Buyer shall be absolutely discharged from any and  all obligations to make any payment thereunder or to allocate between, or procure the remittance  by either the Paying Agent, the Company or the Shareholders’ Representative (after the Closing)  to, the Sellers of the payment so made.  (j) As soon as practicable following Closing (and in any event no later than five  (5) Business Days after Closing), Buyer shall cause the Company to:  (i) pay any Closing Current Liabilities, Closing Indebtedness,  Transaction Expenses, and Change of Control Payments, in each case when due and to the  extent not paid by or on behalf of the Company at or prior to the Closing; provided that  prior to paying, or causing to be paid, any such Closing Indebtedness, Transaction  Expenses, or Change of Control Payments, Buyer shall have received the applicable payoff  letters, final invoices or pursuant to the terms of the Convertible Loan Agreement (as  applicable) referenced in Section 2.5(b)(vii); and  (ii) duly and properly remit the Aggregate Share Option Tax Liability,  the Aggregate Phantom Tax Liability, any Tax withheld from the payment of the Employee  Bonus and the Aggregate Withholding Tax Liability to HMRC or such other applicable  Taxing Authorities in satisfaction of the relevant Sellers’ Individual Share Option Tax  Liabilities, the relevant Sellers’ Individual Phantom Tax Liabilities and/or the Individual  Withholding Tax Liability of the relevant Convertible Loan Holder and, at the same time,  duly and properly remit the Company Phantom Tax Liability to HMRC or such other  applicable Taxing Authorities.  42  





 






Section 2.6. Paying Agent.   (a) After the Closing Date, the Shareholders’ Representative may, by written  notice to Buyer, notify Buyer of the details of such alternative person as the Shareholders’  Representative may elect (on behalf of the Sellers) to nominate as a new Paying Agent (in  substitution of the person previously nominated as Paying Agent) which person shall thereafter  become the “Paying Agent” for the purposes of this Agreement, with effect from the date of Buyer’s  receipt of such notice. The Shareholders’ Representative shall, in such notice, include details of the  bank account of such new Paying Agent into which Aggregate Consideration payments shall  thereafter be made (which account shall become the “Paying Agent’s Account” for the purposes of  this Agreement with effect from the date of Buyer’s receipt of such notice).  (b) If at any time during the period after Closing in which the payment of  Contingent Payments remains a possibility under this Agreement no Paying Agent is appointed,  the Shareholders’ Representative shall promptly upon written notice from the Buyer that a  Contingent Payment has become due and payable procure that a Paying Agent has been appointed  to receive any payment of Aggregate Consideration to be made under this Agreement and shall  keep the Buyer informed of the identity of the Paying Agent and the details of the Paying Agent’s  Account.  Section 2.7. Shareholders’ Representative.   (a) Each Seller hereby irrevocably approves the constitution and appointment  of, and hereby irrevocably constitutes and appoints Shareholder Representative Services LLC, as  of the Closing, as the sole, exclusive, true and lawful agent, representative and attorney-in-fact of  all Sellers and each of them (“Shareholders’ Representative  ”) with authority, for and on behalf of  each Seller to take such actions and exercise such discretions as may be required with respect to  any and all matters relating to, arising out of, or in connection with, this Agreement and any related  document or instrument in accordance with the terms of the engagement letter between LifeArc,  Future Fund, Andrea Mica, Philip Huxley and Shareholders’ Representative entered into on or  before Closing, including but not limited to for purposes of taking any action or omitting to take  any action on behalf of the Sellers hereunder to:  (i) act for the Sellers with regard to all matters pertaining to  indemnification under this Agreement, including the power to defend, compromise, or settle  any claims and to otherwise prosecute or pursue any litigation claims, and the payment or  non-payment of any of the Escrow Amount;  (ii) execute and deliver all amendments, waivers, ancillary agreements,  certificates and documents that the Shareholders’ Representative deems necessary or  appropriate in connection with the consummation of the Transactions;  (iii) make payments of funds and give receipts for funds;  (iv) do or refrain from doing any further act or deed on behalf of the  Sellers that the Shareholders’ Representative deems necessary or appropriate in its  discretion relating to the subject matter of this Agreement as fully and completely as the  Sellers could do if personally present;  43  





 






(v) give any written direction to the Escrow Agent on behalf of the  Sellers;  (vi) agree to, negotiate, enter into settlements and compromises of and  comply with court orders with respect to claims for indemnification made by the Buyer;  (vii) give or receive notices to be given or received by the Sellers under  the Transaction Documents; and  (viii) receive service of process in connection with any claims under the  Transaction Documents.  After Closing, all actions, notices, communications and determinations by or on behalf of the  Sellers shall be given or made by the Shareholders’ Representative and all such actions, notices,  communications and determinations by the Shareholders’ Representative shall conclusively be  deemed to have been authorized by, and shall be binding upon, any of and all Sellers, and no Seller  shall have the right to object, dissent, protest or otherwise contest the same.  (b) If the Shareholders’ Representative resigns, dies or becomes legally  incapacitated, then a majority of the Sellers, based on their Pro Rata Percentages, promptly shall  designate in writing to Buyer a single individual to fill the Shareholders’ Representative vacancy  as the successor Shareholders’ Representative hereunder. If at any time there shall not be a  Shareholders’ Representative or the Sellers fail to designate a successor Shareholders’  Representative, then Buyer may have a court of competent jurisdiction appoint a Shareholders’  Representative hereunder. A majority of the Sellers, based on their Pro Rata Percentages, may also  replace the Person serving as the Shareholders’ Representative from time to time and for any  reason upon at least ten days’ prior written notice to Buyer.  (c) The Shareholders’ Representative shall act for the Sellers on all of the  matters set forth in this Agreement in the manner the Shareholders’ Representative reasonably  believes to be in the best interest of the Sellers. The Shareholders’ Representative is authorized to  act on behalf of the Sellers notwithstanding any dispute or disagreement among the Sellers. In  taking any actions as Shareholders’ Representative, the Shareholders’ Representative may rely  conclusively, without any further inquiry or investigation, upon any certification or confirmation,  oral or written, given by any Person the Shareholders’ Representative reasonably believes to be  authorized thereunto. The Shareholders’ Representative undertakes to perform such duties and only  such duties as are specifically set forth in this Agreement and no implied covenants or obligations  shall be read into this Agreement against the Shareholders’ Representative. Except for this  Agreement, the Shareholders’ Representative has not entered into any Contract, arrangement or  understanding with the Company or any Seller, and the Sellers do not have any requirements,  prerequisites or veto rights in connection with the Shareholders’ Representative’s fulfillment of its  obligations or exercise of its rights under this Agreement.  (d) The Shareholders’ Representative will incur no liability in connection with  its services pursuant to this Agreement and any related agreements except to the extent resulting  from its fraud, gross negligence or willful misconduct. The Shareholders’ Representative shall not  be liable for any action or omission pursuant to the advice of counsel. The Sellers shall indemnify  44  





 






the Shareholders’ Representative against any reasonable, documented, and out-of-pocket losses,  liabilities and expenses (“Representative Losses”) arising out of or in connection with this  Agreement and any related agreements, in each case as such Representative Loss is suffered or  incurred; provided, that in the event that any such Representative Loss is finally adjudicated to have  been caused by the fraud, gross negligence or willful misconduct of the Shareholders’  Representative, the Shareholders’ Representative will reimburse the Sellers the amount of such  indemnified Representative Loss to the extent attributable to such fraud, gross negligence or willful  misconduct. Representative Losses may be recovered by the Shareholders’ Representative from (i)  the funds in the Shareholders’ Representative Reserve and (ii) any other funds that become payable  to the Sellers under this Agreement at such time as such amounts would otherwise be distributable  to the Sellers; provided, that while the Shareholders’ Representative may be paid from the  aforementioned sources of funds, this does not relieve the Sellers from their obligation to promptly  pay such Representative Losses as they are suffered or incurred. In no event will the Shareholders’  Representative be required to advance its own funds on behalf of the Sellers or otherwise.  Notwithstanding anything in this Agreement to the contrary, any restrictions on, or limitations on  liability or indemnification obligations of, or provisions limiting the recourse against non-parties  otherwise applicable to, the Sellers set forth elsewhere in this Agreement are not intended to be  applicable to the indemnities provided to the Shareholders’ Representative hereunder. The  foregoing indemnities will survive the Closing, the resignation or removal of the Shareholders’  Representative or the termination of this Agreement.  (e) The Shareholders’ Representative shall treat confidentially any nonpublic  information disclosed to it pursuant to this Agreement and shall not use such nonpublic  information other than in the performance of its duties as the Shareholders’ Representative. In  addition, notwithstanding anything to the contrary, the Shareholders’ Representative shall not  disclose any nonpublic information disclosed to it pursuant to this Agreement to anyone except as  required by Law; provided that (i) the Shareholders’ Representative may disclose such nonpublic  information to the Shareholders’ Representative’s legal counsel and other advisors under an  obligation of confidentiality and non-use in its capacity as such (for the purposes of the  Shareholders’ Representative fulfilling its obligations in respect of this Agreement), (ii) the  Shareholders’ Representative (or legal counsel or other advisor to whom information is disclosed  pursuant to clause (i) above) may disclose such nonpublic information in any Action relating to  this Agreement or the Transactions (or, in either case, discussion in preparation therefor) any  information disclosed to the Shareholders’ Representative pursuant to this Agreement and (iii) the  Shareholders’ Representative may disclose to any Seller any information disclosed to it, in each  case who have a need to know such information, provided that such persons are subject to  confidentiality obligations with respect thereto.  (f) Buyer shall be entitled to rely on the authority of the Shareholders’  Representative (as evidenced by an instrument in writing signed by the Shareholders’  Representatives) as the agent, representative and attorney-in-fact of the Sellers for all purposes  under this Agreement after Closing and shall have no Liability for any such reliance. No Seller  may revoke the authority of the Shareholders’ Representative. Each Seller hereby ratifies and  confirms, and hereby agrees to ratify and confirm, any action taken by the Shareholders’  Representative in the exercise of the power-of-attorney granted to the Shareholders’  Representative pursuant to this Section 2.7, which power-of-attorney, being coupled with an  interest, is irrevocable and shall survive the death, incapacity or incompetence of such Seller.  45  





 






(g) The Shareholders’ Representative Reserve shall be maintained by the  Shareholders’ Representative in a segregated account. The Shareholders’ Representative will hold  these funds separate from its corporate funds, will not use these funds for its operating expenses or  any other corporate purposes and will not voluntarily make these funds available to its creditors in  the event of bankruptcy. The Sellers shall not receive any interest or other earnings on the  Shareholders’ Representative Reserve and the Sellers irrevocably transfer and assign to the  Shareholders’ Representative any ownership right that they may otherwise have had in any such  interest or earnings that may accrue on funds held in the Shareholders’ Representative Reserve. The  Sellers acknowledge that the Shareholders’ Representative is not providing any investment  supervision, recommendations or advice. The Shareholders’ Representative shall have no  responsibility or liability for any loss of principal of the Shareholders’ Representative Reserve other  than as a result of its gross negligence or willful misconduct. For Tax purposes, the Shareholders’  Representative Reserve shall be treated as having been received and voluntarily set aside by the  Sellers at the time of Closing. The Shareholders’ Representative shall be reimbursed for reasonable  out-of-pocket expenses incurred in the performance of its duties (including the reasonable fees and  expenses of counsel) under this Agreement from the Shareholders’ Representative Reserve;  provided that if the Shareholders’ Representative Reserve is insufficient to pay such expenses, then  the Shareholders’ Representative shall be reimbursed directly from the Sellers. As soon as  practicable following the completion of the Shareholders’ Representative’s responsibilities, the  Shareholders’ Representative will deliver any amount remaining in the Shareholders’  Representative Reserve payable to the Sellers (after payment of all of the Shareholders’  Representative’s out-of-pocket expenses incurred in connection with its services as Shareholders’  Representative) to the Paying Agent for further distribution to the Sellers in accordance with  Section 2.5(b) in an amount per Company Ordinary Share and Company A Ordinary Share equal  to the applicable Per Share Shareholders’ Representative Reserve Release Amount,. The parties  agree that the Shareholders’ Representative is not responsible for any tax reporting or withholding  in connection with the Shareholders’ Representative Reserve. The Shareholders’ Representative  Reserve shall not be available to Buyer to satisfy any claims hereunder.  Section 2.8. Milestone Payments.   (a) In addition to the Closing Payment Amount, as part of the Aggregate  Consideration, the Sellers shall be entitled to certain additional contingent payments from Buyer  after the Closing as set out in this Section 2.8 (each such additional payment, a “Milestone  Payment”), subject to the terms and conditions of this Section 2.8.  (b) Buyer shall pay, or cause to be paid, to each relevant Seller by way of (i) a  Milestone Payment Note and/or (ii) a Contingent Phantom Bonus (in accordance with Section  2.8(n) below), as applicable, each Seller’s applicable share of each Milestone Payment described  below (less any applicable (i) Contingent Payment Transaction Expenses; (ii) Company  Contingent Phantom Tax Liability; and (iii) Contingent Payment Change of Control Payments) in  the event (but solely in the event (except where sections 2.8(e) or 2.8(f) applies)) of the  achievement of the corresponding Milestone:  Milestone Milestone Payment  46  





 






Phase I Initiation Milestone $[***]  Phase II Initiation Milestone (AD)  $[***]  Phase III Initiation Milestone (AD)  $[***]  U.S. Launch Milestone (AD)  $[***]  Ex-U.S. Launch Milestone (AD)  $[***]  Phase II Initiation Milestone (Second Indication)  $[***]  Phase III Initiation Milestone (Second Indication)  $[***]  U.S. Launch Milestone (Second Indication)  $[***]  Ex-U.S. Launch Milestone (Second Indication)  $[***]   (c) Subject to Section 2.8(l), if the Buyer’s board of directors determines to  permanently terminate or abandon all research and development efforts with respect to the  Milestone Products (prior to achievement of all of the Milestones), the Buyer shall send written  notice thereof to the Shareholders’ Representative (after the Closing) within [***] of such  determination together with an explanation of the reasons for such termination and abandonment.  (d) Buyer shall provide written notice to the Shareholders’ Representative of the  achievement of any of the Milestones no later [***] after the occurrence thereof and (each such  notice, a “Milestone Notice”). For the avoidance of doubt, each Milestone Payment shall be payable  only once upon the first achievement of the corresponding Milestone and no amounts shall be due  for subsequent or repeated achievement of such Milestone.  (e) If the Phase II Initiation Milestone (AD) is achieved prior to achievement (or  deemed achievement) of the Phase I Initiation Milestone (AD), then the Phase I Initiation Milestone  (AD) shall be deemed achieved. If the Phase III Initiation Milestone (AD) is achieved prior to  achievement (or deemed achievement) of either of the Phase II Initiation Milestone (AD) or Phase I  Initiation Milestone (AD) then each such unachieved AD Development Milestone shall be deemed  achieved. If the Phase III Initiation Milestone (Second Indication) is achieved prior to the  achievement (or deemed achievement) of the Phase II Initiation Milestone (Second Indication), then  the Phase II Initiation Milestone (Second Indication) shall be deemed achieved. For the Phase II  Initiation Milestone (AD), Phase II Initiation Milestone (Second Indication), Phase III Initiation  Milestone (AD), Phase III Initiation Milestone (Second Indication), if the Milestone Product is  evaluated in a hybrid clinical trial that combines more than one phase (e.g., Phase Ib/IIa trial, Phase  IIb/III trial, or Phase II/III trial), it shall be understood that the initiation of the second part of the  hybrid trial will be considered achievement of the milestone for the respective clinical trial phase.  For example, for a Phase Ib/IIa trial in the AD Indication or Second Indication, initiation of the Phase  IIa portion of the trial shall be considered achievement of the “Phase II Initiation Milestone (AD)” or  the “Phase II Initiation Milestone (Second Indication)”, as applicable.  (f) In the event that either AD Launch Milestone is achieved, but any of the AD  Development Milestones have not been achieved (or deemed achieved), then each such unachieved  AD Development Milestone shall be deemed achieved. In the event that either Second Indication  Launch Milestone is achieved, but any of the Second Indication Development  47  





 






Milestones have not been achieved (or deemed achieved), then each such unachieved Second  Indication Development Milestone shall be deemed achieved. Payment for any such skipped  Milestone that is owed in accordance with the provisions of the foregoing sentences with respect  to a given Milestone Product will be due concurrently with the payment for the relevant Launch  Milestone for such Milestone Product.  (g) As promptly as practicable, and in any event no later [***], after it receives  any Milestone Notice, the Shareholders’ Representative shall deliver to Buyer an updated Schedule  I together with a written notice (an “Allocation Notice”) that sets forth (1) its calculations of the  principal amount of the Promissory Note to be issued to each Seller (other than a Phantom Seller)  with respect to the relevant Milestone Payment (after deduction of any applicable (i) Contingent  Payment Transaction Expenses; (ii) Company Contingent Phantom Tax Liability; and (iii)  Contingent Payment Change of Control Payments in accordance with Section 2.8(b) above)) (each,  a “Milestone Payment Note” and collectively, the “Milestone Payment  Notes”) (2) the amount of  the Contingent Phantom Bonuses for each Phantom Seller payable in respect of such Milestone  Payment, and (3) the Individual Contingent Phantom Tax Liability, the Company Contingent  Phantom Tax Liability and the Aggregate Contingent Phantom Tax Liability in respect of such  Milestone Payment. For the avoidance of doubt the calculation of the Company Contingent Phantom  Tax Liability and the Aggregate Contingent Phantom Tax Liability shall be calculated in respect of  the entire amount of the Milestone Payment allocated to the Phantom Seller including any amount  paid on behalf of a Phantom Seller in respect of the Subsequent Shareholders’ Representative  Reserve Payment). Buyer shall be entitled to conclusively rely on the calculations set forth in the  updated Schedule I and the Allocation Notice and shall have no obligation to independently  calculate, or investigate or verify the accuracy of the principal amount of any Milestone Payment  Note, the amount of any Contingent Phantom Bonus or any of the items set forth in the updated  Schedule I. Upon issuing the Milestone Payment Notes and payment of the Contingent Phantom  Bonus (less any applicable Aggregate Contingent Phantom Tax Liability) in accordance with the  terms of this Agreement and Schedule I, whether such Milestone Payment Notes are issued directly  to the Sellers or any other designee of the Sellers, Buyer shall be deemed to have satisfied its  obligations to make the applicable payment with respect to the Acquisition and shall have no further  obligations to the Sellers with respect to such payment except as expressly set forth in this  Agreement and the Escrow Agreement. Notwithstanding any other provision of this Section 2.8,  Buyer shall not have any obligation to issue any Milestone Payment Notes or pay any Contingent  Phantom Bonus in respect of the achievement of a given Milestone until it has received the  applicable updated Schedule I and Allocation Notice from the Shareholders’ Representative.  (h) Within [***] following the delivery of a Milestone Notice, but subject to the  prior receipt of an updated Schedule I and an Allocation Notice, and (assuming the timely delivery  of such updated Schedule I and Allocation Notice in accordance with Section 2.8(e)) within the  applicable time period for the payment of the relevant Milestone Payment specified in Section  2.8(c):   ( ) in respect of the Milestone Payment in respect of the Phase I Initiation  Milestone only, the Buyer shall pay or cause to be paid (on behalf of the Sellers) by wire  transfer of immediately available funds the Subsequent Shareholders’ Representative  Reserve Payment to the account designated in writing by the Shareholders’  48  





 






Representative (such designation to be made at least [***] prior to the date of such payment),  with the balance of such Milestone Payment (after deduction of any applicable (i) Contingent  Payment Transaction Expenses; (ii) Company Contingent Phantom Tax Liability; and (iii)  Contingent Payment Change of Control Payments in accordance with Section 2.8(b) above))  to be paid in the form of Milestone Payment Notes pursuant to clause (ii) below and/or  payment of the Contingent Phantom Bonuses; and  (ii) Buyer shall issue and deliver or cause to be delivered the Milestone  Payment Notes to the relevant Sellers, whereupon Buyer shall have no further obligations to  such Sellers with respect to the applicable Contingent Payment other than its obligation  under the Loan Note Instrument and each Milestone Payment Note to repay the principal  amount of such Milestone Payment Note to the applicable Seller. Upon its repayment of a  Milestone Payment Note, Buyer shall be deemed to have satisfied its obligation to make the  applicable Milestone Payment with respect to the relevant Seller and shall have no further  obligation to such Seller with respect to such Milestone Payment.  (i) The right of any Seller to receive his, her or its Milestone Payment Note  pursuant to Section 2.8(g): (i) shall not be evidenced by any form of certificate or instrument, other  than the Loan Note Instrument and the Milestone Payment Note; (ii) does not give such Company  shareholder dividend rights, voting rights, liquidation rights, preemptive rights or other equity or  ownership rights of holders of Company Capital Stock post-Closing; (iii) shall not accrue or pay  interest on any portion thereof; and (iv) does not represent any right other than the right to receive  the consideration set forth in this Section 2.8 when, if, and as payable in accordance with the terms  and conditions of this Agreement. The right of any Seller to receive his, her or its Milestone Payment  Note shall not be assignable or transferable except by will upon death, any applicable Laws of  intestacy or other operation of Law and conditioned upon the applicable transferee’s prior written  agreement to be bound by, and subject to, the terms of this Agreement and any ancillary documents  referred to herein, as applicable, and neither Buyer, any of its Affiliates, and the Shareholders’  Representative shall not give effect to any purported assignment or transfer made in contravention  of this Section 2.8 (f).  (j) From the Closing until such time as each of the Launch Milestones has been  achieved, Buyer shall provide the Shareholders’ Representative, within [***], with a semi-annual  written report describing in reasonable detail Buyer’s research and development activities with  respect to the Milestone Products (each such report, an “Update Report”). In addition, for each  Update Report delivered for a period following the achievement of the first Launch Milestone and  ending with [***] of such Launch Milestone occurs, Buyer shall include in such Update Report a  statement, setting forth in reasonable detail the calculation of Net Sales [***]. If after delivery of an  Update Report, the Shareholders’ Representative requests in writing a meeting with representatives  of Buyer to discuss such report, Buyer shall make available in person at Buyer’s offices or by phone  (at Buyer’s option) for such a meeting appropriate senior management representative(s) of Buyer or  its Affiliates with representatives of the Shareholders’ Representative (which may include a  representative or representatives of the Sellers in addition to the Shareholders’ Representative).  49  





 






(k) During the period commencing with achievement of the first Launch  Milestone and continuing until [***] the cessation of all sales of Milestone Products by all  Milestone Parties, Buyer and its Affiliates shall permit an independent, certified public accountant  appointed by the Shareholders’ Representative, and reasonably acceptable to Buyer, [***], to  examine (but not copy) such books and records as may be necessary for the purpose of verifying  the calculation of the Net Sales during the period covered by the applicable  audit. The independent, certified public accountant shall disclose to the Shareholders’  Representative, and to Buyer, based on its inspection of the applicable records, whether the Net  Sales have been accurately reported, and if not, the amount and nature of any discrepancy  discovered. The independent, certified public accountant shall disclose no other information  revealed in such audit. Any and all records examined by such independent, certified public  accountant shall be deemed the Buyer’s Confidential Information, which may not be disclosed by  such independent certified public accountant to any third party, and the Buyer may require such  accountant to enter into a reasonable written agreement obligating it to be bound by obligations of  confidentiality and restrictions on use of such Confidential Information that are no less restrictive  than the obligations set forth in Section 7.7. If any such audit conducted hereunder reveals that an  Annual Net Sales Contingent Payment has become payable, then Buyer shall make such payment(s)  required to be made within [***] after the independent, certified public accountant notifies the  Shareholders’ Representative and the Buyer of the results of such audit. The Shareholders’  Representative (on behalf of the Sellers) shall pay the fees charged by such accountant for such  audits, except that in the event that (i) the audit reveals that an Annual Net Sales Contingent  Payment pursuant to clauses (i) through (iii) of such definition has become payable or (ii) an Annual  Net Sales Contingent Payment pursuant to clause (iv) of such definition is payable for the period  under review and Net Sales for such period were under reported by [***] or more, Buyer shall pay  the costs of the audit.  (l) Following the Closing, Buyer and its Affiliates shall use its and their respective  Commercially Reasonable Efforts to (i) develop, submit and seek approval by the FDA of a Biologics  License Application for a DS-234 Product with an Atopic Dermatitis Indication, and (ii) following  receipt of approval by the FDA of a Biologics License Application for a DS-234 Product with an  Atopic Dermatitis Indication, to achieve the U.S. Launch (AD) Milestone. Buyer and its Affiliates  may elect to pursue an alternate Milestone Product, in which case the obligation set forth in the  foregoing sentence shall be deemed to apply with respect to such alternate Milestone Product;  provided, that in no event shall Buyer and its Affiliates be obligated to use any efforts to develop, seek  regulatory approval for or commercialize (x) more than one Milestone Product at any time or (y) more  than two Milestone Products (including the DS-234 Product) in total. Notwithstanding the foregoing,  the obligations of Buyer and its Affiliates set forth in this Section 2.8(l) shall terminate in the event  that (x) none of the Identified CD200 Candidates is Covered by a Valid Claim or (y) the reasonably  expected term and scope of United States regulatory exclusivity that would be applicable to a  Milestone Product upon approval by the FDA of a Biologics License Application with respect thereto  are materially diminished relative to the term and scope of United States regulatory exclusivity that  would be applicable to a Milestone Product if a Biologics License Application with respect thereto  were to be approved by the FDA as of the date hereof. The Sellers and the Company acknowledge and  agree that Buyer and its Affiliates shall have no obligation with respect to the development or the  seeking of regulatory approval of any product in any jurisdiction, or the commercialization of any  product, except as expressly set  50  





 






forth in this Section 2.8(l), and any such activities shall be undertaken by Buyer or its Affiliates in  their sole discretion.  (m) The obligation of Buyer to pay, or cause to be paid, any Milestone Payment  pursuant to this Section 2.8 is subject to the right of Buyer or its applicable designee to reduce the  amount of any such Milestone Payment that becomes due and payable by the amount of any Losses  incurred or suffered by an Indemnified Party in accordance with the terms of ARTICLE 9.  (n) At the same time as the Buyer issues Milestone Payment Notes pursuant to  this Section 2.8, Buyer shall deliver an amount equal to (i) any related Contingent Phantom Bonus  (less any portion of the Subsequent Shareholder’s Representative Reserve Payment paid on behalf of  the Phantom Sellers in respect of the Phase I Initiation Milestone only) (the “Adjusted Contingent  Bonus”), and (ii) any Company Contingent Phantom Tax Liability on the Contingent Phantom Bonus  in respect of the relevant Milestone Payment to the Company and procure that the Company pays  such Contingent Phantom Bonus or Adjusted Contingent Phantom Bonus (as relevant,) less any  Individual Contingent Phantom Tax Liability, through the Company’s PAYE or local equivalent to  each relevant Phantom Seller. The Buyer shall procure that the Company duly and properly remits  any Aggregate Contingent Phantom Tax Liability to HMRC or any other relevant Taxing Authority  in satisfaction of the relevant Phantom Seller’s Individual Contingent Phantom Tax Liability and the  Company Contingent Phantom Tax Liability.  Section 2.9. Annual Net Sales Contingent Payments.   (a) In addition to the Closing Payment Amount and any Milestone Payments, as  part of the Aggregate Consideration, subject to the provisions of this Section 2.9, in any calendar year  in respect of which the Annual Net Sales Contingent Amount is greater than zero, the Buyer shall  make an Annual Net Sales Contingent Payment in accordance with Section 2.9(d).  (b) For any calendar year in respect of which there are Annual Net Sales of any  Milestone Product, the Buyer shall within [***] of the end of such calendar year deliver a  notification to the Shareholders’ Representative (such notification under this Section 2.9(b) being  an “Annual Net Sales Contingent Payment Notice”) stating either:  (i) if the Annual Net Sales Contingent Amount in respect of that  calendar year is greater than zero, the Annual Net Sales Contingent Amount in respect of  that calendar year; or  (ii) if the Annual Net Sales Contingent Amount in respect of that  calendar year is zero, confirming such fact to the Shareholders’ Representative.  (c) As promptly as practicable, and in any event no later than [***] following  receipt of an Annual Net Sales Contingent Payment Notice showing an Annual Net Sales Contingent  Payment Amount greater than zero, the Shareholders’ Representative shall deliver to Buyer an  updated Schedule I together with a written notice (an “Annual Net Sales Allocation Notice”) that sets  forth its calculations of (1) the principal amount of the Promissory Note to be issued to each Seller  (other than a Phantom Seller) with respect to the relevant Annual Net Sales Contingent Payment  (each, a “Annual Net Sales Contingent Payment Note” and collectively, the “Annual Net Sales  Contingent Payment Notes”), (2) the amount of the Contingent  51  





 






Phantom Bonuses for each Phantom Seller in respect of such Annual Net Sales Contingent Payment  (which amounts, together with those set forth in clause (1) shall not exceed in the aggregate the  Annual Net Sales Contingent Payment Amount set forth in the applicable Annual Net Sales  Contingent Payment Notice), and (3) (A) the Individual Contingent Phantom Tax Liability, (B) the  Company Contingent Phantom Tax Liability and (C) the Aggregate Contingent Phantom Tax  Liability, in each case in respect of such Contingent Phantom Bonuses at (2). Buyer shall be entitled  to conclusively rely on the calculations set forth in the updated Schedule I and the Annual Net Sales  Allocation Notice and shall have no obligation to independently calculate, or investigate or verify the  accuracy of the principal amount of any Annual Net Sales Contingent Payment Note or any of the  items set forth in the updated Schedule I. Upon issuing the Annual Net Sales Contingent Payment  Notes in accordance with the terms of this Agreement and Schedule I, whether such Annual Net Sales  Contingent Payment Notes are issued directly to the Sellers or any other designee of the Sellers,  Buyer shall be deemed to have satisfied its obligations to make the applicable payment with respect  to the Acquisition and shall have no further obligations to the Sellers with respect to such payment  except as expressly set forth in this Agreement and the Escrow Agreement. Notwithstanding any  other provision of this Section 2.9, Buyer shall not have any obligation to issue any Annual Net Sales  Contingent Payment Notes in respect of any Annual Net Sales Contingent Payment Amount until it  has received the applicable updated Schedule I and Annual Net Sales Allocation Notice from the  Shareholders’ Representative.  (d) Within [***] following the delivery of a Annual Net Sales Contingent  Payment Notice, but subject to the prior receipt of an updated Schedule I and an Annual Net Sales  Allocation Notice:  (i) Buyer shall issue and deliver or cause to be delivered the Annual Net  Sales Contingent Payment Notes to the relevant Sellers, whereupon Buyer shall have no  further obligations to such Sellers with respect to the applicable Annual Net Sales  Contingent Payment other than its obligation under the Loan Note Instrument and each  Annual Net Sales Contingent Note to repay the principal amount of such Annual Net Sales  Contingent Note to the applicable Seller. Upon its repayment of a Annual Net Sales  Contingent Note, Buyer shall be deemed to have satisfied its obligation to make the  applicable Annual Net Sales Contingent Payment with respect to the relevant Seller and  shall have no further obligation to such Seller with respect to such Annual Net Sales  Contingent Payment; and  (ii) The right of any Seller to receive his, her or its Annual Net Sales  Contingent Payment Note in respect of an Annual Net Sales Payment pursuant to this Section  2.9(d)(ii): (i) shall not be evidenced by any form of certificate or instrument, other than the  Loan Note Instrument and the Annual Net Sales Contingent Payment Note. For the  avoidance of doubt, the Annual Net Sales Contingent Payment Notes are subject at all times  to the provisions, obligations and restrictions set out in the Loan Note Instrument and, by  acceptance of an Annual Net Sales Contingent Payment Note, the relevant Seller is  automatically deemed to have agreed to such terms as set out in the Loan Note Instrument;  (ii) does not give such Company shareholder dividend rights, voting rights, liquidation  rights, preemptive rights or other equity or ownership rights of holders of Company Capital  Stock post-Closing; (iii) shall not accrue or pay interest on any portion thereof; and (iv) does  not represent any right other than the right to receive the  52  





 






consideration set forth in this Section 2.9 when, if, and as payable in accordance with the  terms and conditions of this Agreement. Neither the right of any Seller to receive his, her  or its Annual Net Sales Contingent Payment through the issuance of the Loan Note  Instrument or Annual Net Sales Contingent Payment Note shall be assignable or  transferable except by will upon death, any applicable Laws of intestacy or other operation  of Law and conditioned upon the applicable transferee’s prior written agreement to be  bound by, and subject to, the terms of this Agreement and any ancillary documents referred  to herein, as applicable, and neither Buyer, any of its Affiliates, nor the Shareholders’  Representative shall give effect to any purported assignment or transfer made in  contravention of this Section 2.9(d)(ii), and by acceptance by the relevant Seller of the  Annual Net Sales Contingent Payment Note, he/she/it thereby agrees to such restrictions on  transfer.  (iii) At the same time as Buyer issues any Annual Net Sales Contingent  Payment Notes, Buyer shall deliver an amount equal to (i) any related Contingent Phantom  Bonus and (ii) any related Company Contingent Phantom Tax Liability to the Company and  procure that the Company pays such Contingent Phantom Bonus (less any Individual  Contingent Phantom Tax Liability) through the Company’s PAYE or local equivalent to each  relevant Phantom Seller. The Buyer shall procure that the Company duly and properly remits  any Aggregate Contingent Phantom Tax Liability to HMRC or any other relevant Taxing  Authority in satisfaction of the relevant Phantom Seller’s Individual Contingent Phantom Tax  Liability and the Company Contingent Phantom Tax Liability.  Section 2.10. Divestment. The Buyer acknowledges that no sale, license, divestment  or delegation of its rights or obligations pursuant to this Agreement or any of the material rights  related to the exploitation of the Milestone Products in the United States that are acquired by the  Buyer pursuant to the Transactions shall be effective to relieve the Buyer of its obligations  hereunder, except to the extent expressly consented to in writing by the Sellers (prior to the Closing)  or the Shareholders’ Representative (after the Closing). Without limiting the foregoing, prior to the  earlier of (i) the achievement of the Phase I Initiation Milestone or (ii) the second anniversary of  the Closing Date, except (A) in connection with a sale, license, assignment, transfer or other  divestment of all or substantially all of the assets of the Buyer, or (B) with the express consent in  writing of the Shareholders’ Representative, the Buyer shall not sell, exclusively license, assign,  transfer or otherwise divest any of the material rights related to the exploitation of the Milestone  Products in the United States that were acquired by the Buyer pursuant to the Transactions.  Section 2.11. Closing Payment Adjustment.   (a) Closing Statement. Within 90 days following the Closing Date, Buyer shall  prepare and deliver, or cause to be prepared and delivered, to the Shareholders’ Representative a  statement (the “Closing Statement”), consisting of a calculation of the actual amounts of (i) Closing  Cash, (ii) Transaction Expenses, (iii) Closing Indebtedness, (iv) Closing Tax Liabilities, (v) Change  of Control Payments, and (vi) Closing Current Liabilities, in each case, calculated without  duplication and including a statement of the differences from the estimates of such amounts used  for purposes of the Closing. The Closing Statement shall be prepared in accordance  53  





 






with Company FRS, on the basis of the same accounting principles, policies, methods and  procedures, consistently applied, as those used in the Most Recent Balance Sheet.  (b) Dispute Notice. The Closing Statement shall become final, binding and  conclusive upon the Parties at the end of the 30th day following receipt by Shareholders’  Representative of the Closing Statement, unless prior to the end of such 30th day the Shareholders’  Representative delivers to Buyer a written notice (a “Dispute Notice”) stating that the Shareholders’  Representative believes the Closing Statement contains mathematical errors or was not prepared in  accordance with the requirements of Section 2.11(a) and specifying in reasonable detail each item  that the Shareholders’ Representative disputes (each, a “Disputed Item”), the amount in dispute for  each such Disputed Item and the reasons supporting the Shareholders’ Representative’s positions.  The Shareholders’ Representative shall be deemed to have agreed with all other items and amounts  contained in the Closing Statement not so disputed by the Shareholders’ Representative.  (c) The Buyer shall furnish to the Independent Accountant such work papers,  VAT invoices issued or received by the Company, and other documents and information pertaining  to the Closing Statement as the Shareholders’ Representative may reasonably request to assist its  review of such Closing Statement.  (d) Resolution Period. If the Shareholders’ Representative delivers a Dispute  Notice, then Buyer and the Shareholders’ Representative shall seek in good faith to resolve the  Disputed Items during the 20 day period beginning on the date Buyer receives the Dispute Notice  (the “Resolution Period”). If Buyer and the Shareholders’ Representative reach agreement with  respect to any Disputed Items, Buyer shall revise the Closing Statement to reflect such agreement.  (e) Independent Accountant. If Buyer and the Shareholders’ Representative are  unable to resolve all of the Disputed Items during the Resolution Period, then Buyer and the  Shareholders’ Representative shall jointly engage and submit the unresolved Disputed Items (the  “Unresolved Items”) to the Independent Accountant; provided that if Buyer and the Shareholders’  Representative do not appoint an Independent Accountant within ten days after the end of the  Resolution Period, they shall request the New York Chapter of the American Arbitration Association  to appoint the Independent Accountant, and such appointment shall be final, binding and conclusive  on the Parties. The Independent Accountant shall act as an arbitrator to determine, based solely on  presentations by Buyer and the Shareholders’ Representative and not by independent review, only  the Unresolved Items still in dispute and shall be limited to those adjustments, if any, required to be  made for the Closing Statement to comply with the provisions of this Agreement. Buyer and the  Shareholders’ Representative shall use their commercially reasonable efforts to cause the  Independent Accountant to issue its written determination regarding the Unresolved Items within 30  days after such items are submitted for review. The Independent Accountant shall make a  determination with respect to the Unresolved Items only and in a manner consistent with this Section  2.11 and Company FRS, and in no event shall the Independent Accountant’s determination of the  Unresolved Items be for an amount that is outside the range of Buyer’s and the Shareholders’  Representative’s disagreement. Each Party shall use its commercially reasonable efforts to furnish to  the Independent Accountant such work papers, VAT invoices issued or received by the Company  and other documents and information pertaining to the Unresolved Items as the Independent  Accountant may reasonably request. The determination  54  





 






of the Independent Accountant shall be final, binding and conclusive upon the Parties absent  manifest error, and Buyer shall revise the Closing Statement to reflect such determination upon  receipt thereof. The fees, expenses and costs of the Independent Accountant shall be borne equally  by Buyer on the one hand and the Shareholders’ Representative (by means of a drawdown against  the Shareholders’ Representative Reserve) on the other hand.  (f) Access to Information. Each Party shall use its commercially reasonable  efforts to provide promptly to the other Party all information and reasonable access to employees  as such other Party shall reasonably request in connection with review of the Closing Statement  or the Dispute Notice, as the case may be, including all work papers of the accountants who  audited, compiled or reviewed such statements or notices, and any VAT invoices issued or  received by the Company and shall otherwise cooperate in good faith with such other Party to  arrive at a final determination of the Closing Statement.  (g) Adjusted Closing Payment Amount. The “Adjusted Closing Payment  Amount” shall equal (i) $15,000,000, plus (ii) the amount of the Closing Cash, minus (iii) the amount  of the Transaction Expenses, minus (iv) the amount of the Closing Indebtedness, minus (v) the  Closing Tax Liabilities minus (vi) the Change of Control Payments, minus (vii) the Closing Current  Liabilities, minus (viii) the Escrow Amount, minus (ix) the Shareholders’ Representative Reserve,  plus (x) the aggregate exercise price of all Company Options outstanding and not exercised as of the  Closing Date, in each case determined without duplication and using, in the case of the amounts  contemplated under clauses (ii), (iii), (iv), (v), (vi) (vii) and (viii), the finally determined amounts of  such items pursuant to this Section 2.11. Within five Business Days after the Closing Statement is  finalized pursuant to this Section 2.11:  (h) if the Adjusted Closing Payment Amount exceeds the Closing Payment  Amount, Buyer shall pay, or cause to be paid, an amount equal to such excess, together with interest  thereon from the Closing Date at the Applicable Interest Rate (the “Excess Payment”) to the Sellers  in an amount per Company Share equal to the applicable Per Share Excess Payment provided that no  adjustment will be made to the Phantom Sellers in respect of the Phantom Bonus;  (i) if the Adjusted Closing Payment Amount is equal to the Closing Payment  Amount, no further action need be taken; and  (ii) if the Closing Payment Amount exceeds the Adjusted Closing Payment  Amount, the Buyer and the Shareholders’ Representative shall procure that the Escrow Agent shall  distribute to Buyer an amount equal to such excess, together with interest thereon from the Closing  Date at the Applicable Interest Rate, from the Escrow Fund.  All such payments shall be made by wire transfer of immediately available funds to the account or  accounts designated in writing by the Shareholders’ Representative (on behalf of the Sellers)  (which may include the account of the Paying Agent) or to the Buyer, as appropriate, which  designation shall be made by the party receiving such payment no later than three (3) Business  Days prior to the payment date.  Section 2.12. Escrow.  55  





 






(a) In connection with the Closing, Buyer, the Shareholders’ Representative and  the Escrow Agent shall have executed and delivered an escrow agreement consistent with the  terms and conditions of this Agreement and otherwise in customary form and as mutually agreed  among the Parties and the Escrow Agent (the “Escrow Agreement”) under which the Escrow  Agent shall act as escrow agent with respect to an escrow fund (the “Escrow Fund”) for the  purposes of securing the payment of the Sellers’ indemnification obligations pursuant to  ARTICLE 9 and any payment payable pursuant to Section 2.11(h)(ii). The Parties will, to the  extent consistent with applicable Law, treat the Escrow Fund and any earnings thereon as owned  by Buyer for tax purposes.  (b) The Sellers hereby approve the Escrow Agreement and all arrangements  related thereto, including the depositing of the Escrow Amount into the Escrow Fund. Any interest  accruing with respect to the Escrow Fund shall be deemed part of the Escrow Fund for all  indemnification and escrow disbursement purposes hereunder.  (c) In the event that any amount is due to be released from the Escrow Fund  pursuant to the terms of this Agreement to, or in accordance with the instructions of, the  Shareholders’ Representative on behalf of the Sellers, each Seller shall be entitled to receive only  its/his/her Relevant Escrow Proportion thereof in accordance with Section 9.11 below.  Section 2.13. Restriction on Transfer.   (a) Each Seller acknowledges and agrees that the Buyer Shares to be issued at  the Closing shall be subject to the restrictions on transfer set forth on Schedule 2.13(a) and Section  11.13.  (b) After the Closing, no Seller may sell, exchange, transfer or otherwise  dispose of his, her or its right to receive any Contingent Payment that becomes due and payable in  accordance with this Agreement, other than a transfer (a) upon death by will or intestacy, (b) by  instrument to an inter vivos or testamentary trust in which such right is to be passed to beneficiaries  upon the death of the trustee, (c) pursuant to a court order, (d) if the Seller is a partnership or  limited liability company, a distribution by the transferring partnership or limited liability  company to its partners or members, as applicable, (e) 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 or (f) to  another Seller, subject to such Seller delivering a certificate to the Buyer as of the date of such  transfer that such transferee Seller’s representations and warranties set forth in Section 4.6(a) and  (b) are true and correct as of the date of such transfer. The Shareholders’ Representative shall  notify Buyer promptly in writing upon becoming aware of any such transfer by a Seller. Any  transfer in violation of this Section 2.13 shall be null and void and shall not be recognized by  Buyer or the Company.  Section 2.14. Withholding Rights.   (a) Each of Buyer (and its Affiliates), the Company (and its Affiliates) and the  Escrow Agent will be entitled to deduct and withhold from any consideration otherwise payable  pursuant to this Agreement, such amounts as are required to be deducted and withheld with respect  56  





 






to the making of such payment under applicable Law (after taking into account any valid  exemptions therefrom established by or in respect of the applicable payee). Amounts so deducted  or withheld will be treated for all purposes of this Agreement as having been paid hereunder. To  the extent that amounts are so deducted or withheld, such deducted or withheld amounts shall be  remitted by the relevant party to the applicable Governmental Entity.  (b) Each Seller shall use its reasonable endeavours to deliver to the Buyer an  executed, true and complete Internal Revenue Form W-9, Form W-8BEN-E, From W-8EXP, Form  W-8ECI or Form W-8IMY (as applicable) prior to Closing in respect of such Seller in respect of the  Closing and, to the extent that such a form has been received by the Buyer in respect of a Seller  then, the Buyer shall not be entitled to deduct or withhold from any amount payable to such Seller  in accordance with Section 2.14(a) above save, for the avoidance of doubt, in respect of any (i)  Phantom Bonus payable to a Phantom Seller, any Individual Phantom Tax Liability; and/or (ii) any  Contingent Phantom Bonus payable to a Phantom Seller, any Individual Contingent Phantom Tax  Liability.  (c) With respect to any payments to be made to a Seller following the Closing,  to the extent that the Buyer has not received an executed, true and complete Form W-9, Form W- 8BEN-E, From W-8EXP, Form W-8ECI or Form W-8IMY (as applicable) from such Seller and on  which the Buyer is entitled to rely under applicable IRS regulations by the time of such payment  then if the Buyer, acting reasonably, considers that a withholding is due from such payment payable  to such Seller, the Buyer shall notify such Seller before making such withholding (and, in any event,  not less than five (5) Business Days before making any withholding) and in such event,  notwithstanding any provision of this Agreement to the contrary, the payment of any amount due to  such Seller shall be postponed for a period (not exceeding twenty (20) Business Days) during which  time such Seller shall have an opportunity to deliver such form or otherwise establish a valid  exemption from withholding.  ARTICLE 3  CLOSING CONDITIONS  Section 3.1. Conditions to each Party’s Obligation. The respective obligation of  each Party to effect the Transactions is subject to the satisfaction or waiver by each party entitled  to the benefit thereof (so far as is permitted under applicable Law) on or prior to the Closing Date  of the following conditions:  (a) Regulatory.  (i) No enquiry letter shall have been received by the Company or by either Party  in respect of the Transactions from the CMA pursuant to its powers under the EA 2002 on or prior  to the Closing Date that has not been resolved or concluded (to the reasonable satisfaction of the  Buyer).;  (ii) No formal review of the Transactions shall have been conducted or  commenced by the CMA under the EA 2002, nor shall any communication have been received as  at the Closing Date by the Company or by either Party from the CMA indicating that any such  57  





 






review will or may be conducted by the CMA in respect of the Transactions. In the event that any  formal review has been, is being or the Company’s Awareness Group is actually aware is about to  be conducted, by the CMA into the Transactions, then any such clearances or approvals (to the  reasonable satisfaction of Buyer) shall have been obtained as at the Closing Date from the CMA in  respect of the Transactions.  (iii) NSIA. No formal review of the Transactions shall have been conducted or  commenced by the ISU pursuant to the NSIA, and no communication shall have been received as  at the Closing Date by the Company or by either Party from the ISU indicating that any such review  will or may be conducted by the ISU in respect of the Transactions. In the event that any formal  review has been, is being or the Company’s Awareness Group is actually aware is about to be  conducted by the ISU into the Transactions, then any such clearances or approvals (to the  reasonable satisfaction of Buyer) shall have been obtained as at the Closing Date from the ISU in  respect of the Transactions.  (b) No Injunction or Legal Restraint. No temporary restraining order,  preliminary or permanent injunction or other order or decree issued by any court of competent  jurisdiction (collectively, “Legal Restraints”) which has the effect of preventing the consummation  of the Transactions shall be in effect.  Section 3.2. Conditions to the Sellers’ and the Company’s Obligation. The  obligation of the Sellers and the Company to effect the Transactions is subject to the satisfaction  (or express written waiver by the Company, to the extent such waiver is permitted under applicable  Law) on or prior to the Closing Date of the following conditions:  (a) Representations and Warranties. (i) The Fundamental Representations of  Buyer set forth in this Agreement that are qualified as to materiality shall be true and correct, and  the Fundamental Representations of Buyer set forth in this Agreement that are not so qualified shall  be true and correct in all but de minimis respects, in each case as of the Closing Date with the same  effect as though made as of the Closing Date, except that the accuracy of representations and  warranties that by their terms speak as of a specified date will be determined as of such date and  (ii) the representations and warranties of Buyer (other than the Fundamental Representations) set  forth in this Agreement shall be true and correct (without giving effect to any materiality qualifiers  contained therein) as of the Closing Date with the same effect as though made as of the Closing  Date, except (A) that the accuracy of such representations and warranties that by their terms speak  as of a specified date will be determined as of such date and (B) where, in the case of this clause  (ii) only, the failure of such representations and warranties to be so true and correct would not  reasonably be expected to, individually or in the aggregate with any other failures of such  representations and warranties to be true and correct, impair in any material respect the ability of  Buyer to perform its obligations under this Agreement or prevent or materially delay the  consummation of the Transactions. The Company shall have received a certificate, dated the  Closing Date and signed on behalf of Buyer by an authorized signatory of Buyer, confirming the  foregoing.  (b) Covenants and Agreements. Buyer shall have performed or complied in all  material respects with all covenants, agreements and obligations required by this Agreement to be  performed or complied with by them on or before the Closing Date. The Company shall have  58  





 






received a certificate, dated the Closing Date and signed on behalf of Buyer by an authorized  signatory of Buyer, confirming the foregoing.  (c) Closing Actions and Deliveries. The Buyer shall have taken (or take  concurrently with the Closing) the actions, and made (or make concurrently with the Closing) the  deliveries contemplated by Section 2.5(d).  (d) Nasdaq Listing. The Buyer shall have notified Nasdaq of the issuance of the  Buyer Shares to be issued pursuant to this Agreement, and Nasdaq shall not have given notice that  it will decline to approve such Buyer Shares for listing.  Section 3.3. Conditions to Buyer’s Obligation. The obligation of Buyer to effect the  Transactions is subject to the satisfaction (or express written waiver by Buyer to the extent such  waiver is permitted under applicable Law) on or prior to the Closing Date of the following  conditions:  (a) Representations and Warranties of the Company. (i) The Fundamental  Representations of the Company and the Sellers set forth in this Agreement that are qualified as to  materiality shall be true and correct, and the Fundamental Representations of the Company and the  Sellers set forth in this Agreement that are not so qualified shall be true and correct in all but de  minimis respects, in each case as of the Closing Date with the same effect as though made as of the  Closing Date, except that the accuracy of representations and warranties that by their terms speak  as of a specified date will be determined as of such date, (ii) the representations and warranties set  forth in Section 5.15 (Intellectual Property of the Company) that are qualified as to materiality shall  be true and correct, and the representations and warranties set forth in Section 5.15 (Intellectual  Property of the Company) that are not so qualified shall be true and correct in all material respects,  in each case as of the Closing Date with the same effect as though made as of the Closing Date,  and (iii) the representations and warranties of the Company and the Sellers (other than the  Fundamental Representations) set forth in this Agreement shall be true and correct (without giving  effect to any materiality or “Material Adverse Change” qualifiers contained therein) as of the  Closing Date with the same effect as though made as of the Closing Date, except (A) that the  accuracy of such representations and warranties that by their terms speak as of a specified date will  be determined as of such date and (B) where, in the case of this clause (ii) only, the failure of such  representations and warranties to be so true and correct has not had, and would not reasonably be  expected to have, individually or in the aggregate with any other failures of such representations  and warranties to be true and correct, a Material Adverse Change. The Company shall have  delivered to Buyer a certificate, dated the Closing Date and signed by a director of the Company,  confirming the foregoing.  (b) Covenants and Agreements. The Company and the Sellers shall have  performed or complied in all material respects with all covenants, agreements and obligations  required by this Agreement to be performed or complied with by the Company and the Sellers on  or before the Closing Date. The Company and the Sellers shall have delivered to Buyer a certificate,  dated the Closing Date and signed by a director of the Company, confirming the foregoing.  59  





 






(c) No Material Adverse Change. Since the date of this Agreement, there shall  not have occurred any change, effect, event, occurrence, state of facts or development that,  individually or in the aggregate, has had or would reasonably be expected to result in a Material  Adverse Change.  (d) No Legal Challenge. There shall not be pending or threatened by any  Governmental Entity any Action (or by any other Person any bona fide Action which has a  reasonable likelihood of success), (i) challenging or seeking to restrain, prohibit, prevent, enjoin,  alter or delay the Transactions or seeking to obtain from Buyer or any of its Affiliates any damages  in connection with the Transactions or (ii) seeking to impose any of the restrictions described in  the second to last sentence of Section 8.1.  Closing Actions and Deliveries. The Company and the Sellers shall have taken (or  take concurrently with the Closing) the actions, and made (or make concurrently with  the Closing) the deliveries contemplated by Section 2.5(b) and Section 2.5(c).  ARTICLE 4  REPRESENTATIONS AND WARRANTIES OF THE SELLERS  Each Seller (except the Future Fund in respect of Section 4.7 below only), severally  and not jointly or jointly and severally, represents and warrants to Buyer as of the date hereof,  except as disclosed by the Company in the disclosure letter delivered contemporaneously with this  Agreement (the “Disclosure Letter”), as follows:  Section 4.1. Organization and Standing. Such Seller, if not a natural person, is duly  incorporated, organized, or formed, as applicable, validly existing and, where applicable, in good  standing under the Laws of its jurisdiction of incorporation, organization or formation as  applicable.  Section 4.2. Power and Authority; Binding Agreement; Bankruptcy. If such Seller is  an individual, such Seller has the requisite legal capacity, competence and authority to execute,  deliver and perform this Agreement, to consummate the Transactions and to perform its obligations  hereunder (including to sell, transfer, assign and deliver its Purchased Shares as provided in this  Agreement). If such Seller is not an individual, such Seller has all requisite power and authority to  execute and deliver this Agreement and to consummate the Transactions and to perform its  obligations hereunder (including to sell, transfer, assign and deliver its Purchased Shares as provided  in this Agreement). The execution and delivery by such Seller who is not an individual of this  Agreement and the consummation by such Seller of the Transactions have been duly authorized on  the part of such Seller or such Seller’s securityholders by all necessary corporate or other entity action  on the part of such Seller, and no other corporate or other entity proceedings on the part of such Seller  are necessary to authorize this Agreement or to consummate the Transactions. This Agreement has  been duly executed and delivered by each Seller and, assuming due authorization, execution and  delivery by the other parties hereto, constitutes a valid, legal and binding obligation of such Seller,  enforceable against such Seller in accordance with its terms, subject to applicable bankruptcy,  insolvency, reorganization, fraudulent transfer, moratorium or similar Laws affecting creditors’ rights  generally and general principles of equity. If such Seller is an individual, it/he/she is not insolvent or  bankrupt under any Laws applicable to  60  





 






it/him/her, nor is it/he/she unable to pay his/her/its debts as they fall due, nor has any arrangement  (whether by court proceedings or otherwise) been proposed under which its/his/her creditors (or  any group of them) could receive less than the amounts due to them nor are any proceedings in  relation to any compromise or arrangement with creditors, any winding up, bankruptcy or other  insolvency proceedings concerning it/him/her (or any of its/his/her assets or interests) current,  pending or threatened.  Section 4.3. Noncontravention.  (a) The execution and delivery by each Seller of this Agreement, the  consummation of the Transactions and the compliance by such Seller with the provisions of this  Agreement will not (i) result in the breach of any of the terms or conditions of, or constitute a  default under or violate, as the case may be, the Constitutive Documents of such Seller or the  shareholders’ agreement of such Seller, or any material Contract to which such Seller is bound, or  by which any of its assets or properties may be affected or (ii) violate any Law or Judgment  applicable to such Seller, other than any such breaches, defaults or violations that individually or  in the aggregate are not likely to impair in any material respect the ability of such Seller to perform  its obligations under this Agreement, prevent or materially impede or delay the consummation of  the Transactions.  (b) No consent, approval, qualification, notification, order or authorization of,  registration, declaration or filing with, response from, or notice to, any Governmental Entity is  necessary or required by or with respect to such Seller in connection with the execution and delivery  by such Seller of this Agreement, the consummation by such Seller of the Transactions or the  compliance by such Seller with the provisions of this Agreement, except for such consents,  approvals, orders, authorizations, registrations, declarations, filings and notices, the failure of  which to be obtained or made individually or in the aggregate would not impair in any material  respect the ability of such Seller to perform its obligations under this Agreement or prevent or  materially impede or delay the consummation of the Transactions.  Section 4.4. Purchased Shares.   (a) Such: (i) Share Seller (other than WCS Nominee) is the registered and sole  legal and beneficial owner of all of the Purchased Shares set forth opposite such Seller’s name on  Section 5.4(b) of the Disclosure Letter, and, in the case of WCS Nominee only, it is the registered and  sole legal owner of the Purchased Shares set forth opposite its name on Section 5.4(b) of the Disclosure  Letter; and (ii) Conversion Seller (in each case, to the extent only that as at the date hereof it/he/she  only holds Company Options or is only a Lender under the Convertible Loan Agreement (respectively)  and does not hold any Company Shares as at the date of this Agreement), subject to and upon  completion of the exercise of the Company Options and conversion of the amounts owed under the  Convertible Loan Agreement (as applicable) and the allotment and issue to such Conversion Seller of  the resulting Conversion Shares immediately prior to, and conditional upon, Closing, will be the  registered and sole legal and beneficial owner of all of the Purchased Shares set forth opposite such  Seller’s name on Section 5.4(b) of the Disclosure Letter, in each case free and clear of any and all  Liens (other than Permitted Liens), and the transfer of such Purchased Shares to Buyer under this  Agreement at Closing constitutes the transfer of the whole of the right, title and interest (including all  legal title to, and all beneficial interest in) such  61  





 






Purchased Shares free from all and clear of all Liens (other than Permitted Liens) and that it/he/she  is entitled to so transfer such Purchased Shares to Buyer pursuant to this Agreement. Save for the  Purchased Shares to be transferred to Buyer by it/him/her at Closing in accordance with this  Agreement, such Seller does not hold any right, title or interest in respect of any further Relevant  Securities of the Company nor is he/she/it a party to any voting trust, proxy or other agreement or  understanding with respect to the voting of any Purchased Shares.  (b) Except for the Company Options and the Convertible Loan Agreement (in  each case if applicable to such Seller), there is no existing option, warrant, purchase right or other  contract to which such Seller is a party that requires or could require the issuance, sale, transfer or  otherwise disposal of any Purchased Shares (other than to Buyer pursuant to the terms of this  Agreement) or any additional Capital Stock of the Company or evidencing the right to subscribe  to or purchase any Capital Stock of the Company.  (c) Neither it/he/she (nor any of its/his/her associates) has any right, title or  interest in the business of, or any assets owned or used by, the Company, nor is it/he/she (nor any  of its/his/her associates) party to any contract, agreement or arrangement with the Company in  respect of his/her employment with the Company other than as set out in Section 5.14(a) of the  Disclosure Letter.  (d) Except for the Convertible Loan Agreement (as applicable to such Seller), no  loan or indebtedness is outstanding from the Company to such Seller (or any of its/his/her  associates), nor does it/he/she (nor any of its/his/her associates) benefit from any guarantee,  indemnity or other surety given by the Company (save, where applicable, in respect of pensions,  benefits, insurances and indemnities concerning current and prior officers, employees and  consultants of the Company and arising under the terms, or otherwise by reason, of their  employment), nor is any loan or indebtedness outstanding from, or otherwise payable (whether or  not subject to any contingency) by, it/him/her (or any of its/his/her associates) to the Company.  (e) Such Seller (nor any of its/his/hers associates) has no outstanding or pending  litigation, dispute or legal proceedings against the Company (or any officer, employee, consultant,  auditor or professional adviser of the Company), nor is any litigation, dispute or legal proceeding  threatened against the Company (or any officer, employee, consultant, auditor or professional  adviser of the Company) by it/him/her (or any of its/his/her associates) and, so far as it/he/she is  aware, no matter, fact or circumstance exists which entitles (or so far as the relevant Seller is aware  which is reasonably likely to entitle) it/him/her (or any of its/his/her associates) to bring any  litigation, dispute or legal proceedings against the Company (or any officer, employee, consultant,  auditor or professional adviser of the Company).  Section 4.5. Litigation. There is no Action that is pending or, to the knowledge of  such Seller, threatened, against such Seller (a) challenging or seeking to restrain, delay or prohibit  any of the Transactions, which would reasonably be expected, individually or in the aggregate, to  impair in any material respect the ability of such Seller to perform its obligations under this  Agreement or prevent or materially impede or delay the consummation of the Transactions, or (b)  related to the Company.  Section 4.6. Exempt Issuance.   62  





 






(a) Such Seller understands that the issuance of the Buyer Shares to the Sellers,  and the entry into the contractual obligations with respect to the Contingent Payments, are made  pursuant to and in reliance upon an exemption from the registration requirements of the Securities  Act, provided by Regulation S promulgated under the Securities Act (“Regulation S”), or  Regulation D promulgated under the Securities Act (“Regulation D”), and the Buyer Shares, and  the contractual rights with respect to the Contingent Payments have not been and will not be  registered under the Securities Act.  (b) Such Seller (other than the U.S. Sellers and WCS Nominee) is outside of the  United States (within the meaning of Regulation S) and is not a U.S. Person (as defined in  Regulation S), and such Seller (other than the U.S. Sellers and WCS Nominee)is acquiring the  Buyer Shares, and entering into the contractual obligations with respect to the Contingent  Payments, as an investment for its own account and not for the account or benefit of a U.S. Person,  and not with a view to the resale or “distribution” (within the meaning of the Securities Act) of the  Buyer Shares or the contractual obligations with respect to the Contingent Payments.  (c) WCS Nominee is outside the United States (within the meaning of  Regulation S) and is not a U.S. Person (as defined in Regulation S), and WCS Nominee is acquiring  the Buyer Shares, and entering into the contractual obligations with respect to the Contingent  Payments, as nominee on behalf of the WCS Beneficiaries and as an investment for the account of  the WCS Beneficiaries and not for the account or benefit of any U.S. Person, and not with a view to  the resale or “distribution” (within the meaning of the Securities Act) of the Buyer Shares or the  contractual obligations with respect to the Contingent Payments. Each of the WCS Beneficiaries is  outside of the United States (within the meaning of Regulation S) and is not a U.S. Person (as defined  in Regulation S). The representations and warranties contained in this clause (c) are made solely by  WCS Nominee.  (d) Such Seller (in the case of the U.S. Sellers only), is an “accredited investor”  within the meaning of Regulation D. Such Seller (in the case of the U.S. Sellers only) either (i) has  an individual net worth, or joint net worth with such U.S. Seller’s spouse, as of the date hereof  exceeds $1,000,000 (calculated in accordance with the provisions of Regulation D), (ii) had an  individual income in excess of $200,000 in each of the two most recent years and has a reasonable  expectation of reaching the same income level in the current year or (iii) had a joint income with  such U.S. Seller’s spouse in excess of $300,000 in each of the two most recent years and has a  reasonable expectation of reaching the same income level in the current year. Such Seller (in the  case of the U.S. Sellers only) has knowledge and experience in financial and business matters so as  to be capable of evaluating the relative merits and risks of an investment in the Buyer Shares. Seller  (in the case of the U.S. Sellers only) is acquiring the Buyer Shares, and entering into the contractual  obligations with respect to the Contingent Payments, as an investment for its own account and not  for the account or benefit of another Person, and not with a view to the resale or “distribution”  (within the meaning of the Securities Act) of the Buyer Shares or the contractual obligations with  respect to the Contingent Payments. The representations and warranties contained in this clause (d)  are made solely by the U.S. Sellers.  (e) Such Seller has received all the information that such Seller considers  necessary and appropriate to decide whether to acquire the Buyer Shares hereunder and enter into  the contractual obligations with respect to the Contingent Payments outside of the United States.  63  





 






Such Seller is not relying on any statements or representations made in connection with the  transactions contemplated hereby other than representations of the Buyer contained in this Share  Purchase Agreement.  (f) Such Seller understands that the Buyer Shares issued pursuant to this  Agreement may not be offered, resold, transferred, pledged or otherwise disposed of by such Seller  absent an effective registration statement under the Securities Act except (i) to the Buyer or a  subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United  States within the meaning of Regulation S or (iii) pursuant to another applicable exemption from the  registration requirements of the Securities Act, and that any certificates or any book-entry shares  representing the Buyer Shares delivered at the Closing shall contain a legend or restrictive notation  to such effect. Such Seller understands and agrees that the Buyer Shares delivered at the Closing,  until registered under an effective registration statement, will be subject to transfer restrictions and,  as a result of these transfer restrictions, such Seller may not be able to readily resell the Buyer Shares  and may be required to bear the financial risk of an investment in the Buyer Shares for an indefinite  period of time. Such Seller understands that it has been advised to consult legal counsel prior to  making any offer, resale, pledge or transfer of any the Buyer Shares. Such Seller acknowledges that  the Shares will not immediately be eligible for resale pursuant to Rule 144 promulgated under the  Securities Act (“Rule 144”). Such Seller further understands that the contractual obligations with  respect to the Contingent Payments are subject to the terms and conditions (including as to restrictions  on the assignment thereof) contained in this Agreement.  Section 4.7. Certain Relationships. To such Seller’s knowledge, neither such  Seller nor any of its Affiliates possesses, directly or indirectly, any financial interest in, or is a  director, officer or employee of, any Person that is a client, supplier, customer, lessor, lessee,  competitor or potential competitor of the Company. Ownership of securities of a Person whose  securities are registered under the Securities Exchange Act of 1934 of five percent (5%) or less  of any class of such securities shall not be deemed to be a financial interest for purposes of this  Section 4.7.  Section 4.8. No Other Representations. Such Seller specifically acknowledges and  agrees that except for the express representations and warranties set forth in ARTICLE VI, none of  Buyer, its Affiliates, nor any other Person has made or is making an express or implied  representation or warranty with respect to Buyer, its Affiliates or the transactions contemplated  hereby, including any representation or warranty regarding the likelihood of achievement of any  Milestone or of any Contingent Payment becoming payable. Such Seller specifically   acknowledges and agrees to Buyer’s express disavowal and disclaimer of any other representations  or warranties, whether made by Buyer, its Affiliates or their respective officers, directors, employees  or representatives. In making its decision to execute and deliver this Agreement and consummate the  transactions contemplated by this Agreement, such Seller has relied solely upon the express  representations and warranties set forth in ARTICLE VI and has not relied upon any other  information provided by, for or on behalf of Buyer, its Affiliates or their respective officers, directors,  employees or representatives.  Section 4.9. Brokers. Such Seller has not employed or entered into any Contract  with any investment banker, broker, finder, consultant or intermediary in connection with the  Transactions, pursuant to which the Buyer or the Company could be liable for the fee or  64  





 






commission of such investment banker, broker, finder, consultant or intermediary, or for any  similar fee or commission in connection with this Agreement or the Transactions.  ARTICLE 5  REPRESENTATIONS AND WARRANTIES OF THE COMPANY  The Company represents and warrants to Buyer as of the date hereof, except as  disclosed by the Company in the Disclosure Letter, as follows:  Section 5.1. Organization and Standing; No Subsidiaries.   (a) The Company (i) is a corporation duly incorporated and validly existing  under the laws of England and Wales; (ii) has all requisite corporate power and authority and  possesses all governmental licenses, permits, authorizations and approvals necessary to enable it to  use its corporate or other name and to own or lease or otherwise hold and operate its assets and  properties and to carry on its business as now being conducted as of the date of this Agreement and  as currently proposed by its management to be conducted and (iii) is duly qualified, licensed or  registered to do business in each jurisdiction in which the nature of its business or the ownership,  leasing or operation of its properties makes such qualification, licensing or registration necessary  (except where such failure to be so qualified, licensed or registered would not reasonably be  expected to result in a Material Adverse Change or Material Adverse Delay), which jurisdictions  are listed in Section 5.1(a) of the Disclosure Letter. The Company has made available to Buyer true,  complete and accurate copies of its Constitutive Documents, as amended. The Company has made  available to Buyer true, complete and accurate copies of the share certificates, statutory books and  the minute books of the Company. The Company is not in violation of any of the provisions of its  Constitutive Documents.  (b) The Company (i) does not own any Capital Stock of, or any equity interest  of any nature in, any other Person, and (ii) is not a participant in any joint venture, partnership or  similar arrangement.  (c) Except as disclosed in Section 5.1(c) of the Disclosure Letter, each of the  Sellers is party to the Shareholders’ Agreement and there are no other shareholders’ agreements in  effect in relation to the Company.  Section 5.2. Power and Authority; Binding Agreement; Insolvency. The Company  has all requisite corporate power, authority and capacity to execute and deliver this Agreement and  each other agreement, certificate or document contemplated by this Agreement to which it is or  will be a party and to consummate the Transactions and to perform its obligations hereunder and  thereunder. The execution and delivery by the Company of this Agreement and the consummation  by the Company of the Transactions have been duly authorized by all necessary corporate action  on the part of the Company, and no other corporate proceedings on the part of the Company are  necessary to authorize this Agreement or to consummate the Transactions. This Agreement has  been, and each other agreement, certificate or document contemplated by this Agreement to which  it is or will be a party, will be, duly executed and delivered by the Company and, assuming due  authorization, execution and delivery by the other parties thereto, constitutes a valid, legal and  binding obligation of the Company, enforceable against the Company in  65  





 






accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent  transfer, moratorium or similar Laws affecting creditors’ rights generally and general principles of  equity. The Company is not insolvent under any Laws applicable to it, nor unable to pay its debts as  they fall due, nor has it stopped paying its debts as they fall due, nor has any arrangement (whether  by court proceedings or otherwise) been proposed under which its creditors (or any group of them)  could receive less than the amounts due to them nor are any proceedings in relation to any  compromise or arrangement with creditors, any winding up, bankruptcy or other insolvency  proceedings concerning it (or any of its assets or interests) current, pending or threatened.  Section 5.3. Authorization. The board of directors of the Company, at a meeting  duly called and held at which a requisite quorum of the directors of the Company was present, or  by written resolutions of the Board of Directors signed by each of the directors of the Company  duly adopted resolutions (i) approving, authorizing and declaring advisable this Agreement and the  Transactions contemplated thereby, (ii) declaring that this Agreement and the Transactions  contemplated thereby are in the best interests of the Company’s shareholders, (iii) adopting this  Agreement, (iv) authorizing the Company to enter into, execute and deliver this Agreement and to  consummate the Transactions contemplated thereby, on the terms and subject to the conditions set  forth in this Agreement (v) approving and authorizing the transfer of the Purchased Shares at  Closing to Buyer, and (vi) approving and authorizing the execution of such documents as are to be  entered into by the Company in connection with this Agreement and the Transactions (including,  where applicable, those documents identified in this Section 5.3).  Section 5.4. Capitalization.  (a) The whole of the allotted and issued Capital Stock of the Company as of the  date hereof consists of (i) 2,142,857 Company A Ordinary Shares, and (ii) 4,845,164 Company  Ordinary Shares. The Purchased Shares constitute the entire issued and to be issued share capital of  the Company, are the whole of the allotted and issued shares of Company Capital Stock and have  been duly authorized and issued, and are fully paid up and no sum is outstanding in respect of any  Purchased Share. Each Company A Ordinary Share is convertible into one Company Ordinary  Share. Save for the Purchased Shares, no Relevant Securities exist in respect of the Company (nor  is there any agreement or arrangement for the creation, constitution, grant or issuance of any  Relevant Securities in respect of the Company (other than the Purchased Shares)).  (b) Section 5.4(b) of the Disclosure Letter sets forth as of the date hereof a  complete and accurate list of the holders of Company Capital Stock, showing the number of shares  of such Capital Stock, and the class or series of such shares, held by each such shareholder and, with  respect to shares other than Company Ordinary Shares, the number of Company Ordinary Shares (if  any) into which such shares are convertible. The Company holds no shares of Company Capital Stock  in its treasury. All of the allotted and issued shares of Company Capital Stock have been offered,  issued and sold by the Company in compliance with, and no transfer (or purported transfer) of any  shares of Company Capital Stock has been made at any time in breach of, all applicable securities  Laws and/or the Company’s Articles of Association. The shares of Company Capital Stock owned  as of the date hereof by each record holder listed on Section 5.4(b) of the Disclosure Letter are owned  free and clear of all Liens except for restrictions on transfer under applicable Laws. Pursuant to and  in accordance with the Company’s Constitutive Documents, each of the Company A Ordinary Shares  is convertible into one Company Ordinary Share.  66  





 






(c) Section 5.4(c) of the Disclosure Letter sets forth a true and correct list of  each outstanding Company Option, indicating, with respect to each Company Option, the Company  Share Plan under with it was granted, the holder, the date of grant, the exercise price (if applicable),  the purchase price (if applicable), the vesting schedule and the number of shares of Company  Ordinary Shares subject to such Company Option. Each such outstanding Company Option was  granted in compliance in all material respects with applicable Law and the terms and conditions of  the applicable Company Share Plan. Section 5.4(c) of the Disclosure Letter sets forth, as of the date  hereof, a complete and accurate list of all Company Share Plans, indicating for each Company  Share Plan the number of shares of Company Ordinary Shares issued thereunder, the number of  shares of Company Ordinary Shares subject to outstanding options thereunder and the number of  shares of Company Ordinary Shares reserved for future issuance thereunder. Except as set forth on  Section 5.4(c) of the Disclosure Letter, there is no allotted or issued Company Option that has not  been granted under a Company Share Plan. No Company Option is exercisable for any class or  series of Company Capital Stock other than Company Ordinary Shares. Each Company Option (i)  was granted in compliance with all applicable Laws and all terms and conditions of the applicable  Company Share Plan and (ii) has an exercise price per share of Company Ordinary Share equal to  or greater than the fair market value of a share of Company Ordinary Share on the date of such  grant.  (d) Section 5.4(d) of the Disclosure Letter sets forth a true and correct list of  each Convertible Loan Holder, indicating, the principal amount of the loan made pursuant to the  Convertible Loan Agreement, the accrued interest thereon at the date of this Agreement and the  number of Company A Ordinary Shares issuable on conversion of the loans made under the  Convertible Loan Agreement as at the date of this Agreement.  (e) Except for the right to convert each Company A Ordinary Share into one  Company Ordinary Share, and as set forth in Section 5.4(c) or (d) of the Disclosure Letter, (i) there  are no allotted or issued options, calls, warrants, rights (including conversion or preemptive rights  and rights of first refusal or similar rights) or agreements, orally or in writing, to purchase or acquire  from the Company any shares of Company Capital Stock, or any securities convertible into or  exchangeable for shares of Company Capital Stock, (ii) the Company has no obligation (contingent  or otherwise) to purchase, redeem or otherwise acquire any shares of Capital Stock, or other equity  or voting interest in, the Company or any other Person or to pay any dividend or to make any other  distribution in respect of its Capital Stock, (iii) the Company has not at any time purchased,  redeemed or repaid any of the Company Capital Stock or otherwise agreed to reduce any class of  its issued share capital or carried out any transaction having the effect of a reduction of capital and  (iv) there are no allotted, issued or authorized stock appreciation rights, phantom stock awards or  other rights that are linked in any way to the price of the Company Shares or the value of the  Company or any part thereof.  (f) There is no Indebtedness that provides its holder with the right to vote on  any matters on which the Sellers may vote.  (g) As of the Closing Date, the information in Schedule I is true, correct and  complete.  67  





 






Section 5.5. Solvency. The Company has not taken any steps to seek protection  pursuant to any bankruptcy Law and to the Knowledge of the Company no creditors of the  Company intend or have threatened to initiate involuntary bankruptcy proceedings with respect to  the Company. The Company is not as of the date hereof, and will not be, after giving effect to the  Transactions, Insolvent (as defined below). For purposes of this Section 5.5, “Insolvent” means (i)  the present fair saleable value of the assets of the Company is less than the amount required to pay  the total Indebtedness of the Company, (ii) the Company is unable to pay its debts and liabilities,  subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured  or (iii) the Company intends to incur or believes that it will incur debts that would be beyond its  ability to pay as such debts mature.  Section 5.6. Noncontravention.  (a) The execution and delivery by the Company of this Agreement, the  consummation of the Transactions and the compliance by the Company with the provisions of this  Agreement, do not and will not conflict with, or result in any violation or breach of, or default (with  or without notice or lapse of time or both) under, or give rise to a right of, or result in, termination,  cancellation or acceleration of any obligation or to a loss of a material benefit under, or result in  the creation of any Lien (other than Permitted Liens) in or upon any of the properties or assets of  the Company, or give rise to any increased, additional, accelerated or guaranteed rights or  entitlements under, any provision of (i) the Constitutive Documents of the Company, (ii) any  Contract to which the Company is a party or bound by or by which its assets or properties are bound  or under which the Company has rights or benefits or (iii) any Law or Judgment applicable to the  Company or its assets or properties.  (b) No consent, approval, qualification, notification, order or authorization of,  registration, declaration or filing with, response from, or notice to, any Governmental Entity or any  domestic or foreign institutional review board, privacy board or ethics committee approving any  clinical trial involving any of the Company Programs (a “Review Board”) is necessary or required  by or with respect to the Company in connection with the execution and delivery by the Company  of this Agreement, the consummation by the Company of the Transactions or the compliance by  the Company with the provisions of this Agreement, except for such consents, approvals, orders,  authorizations, registrations, declarations, filings and notices, the failure of which to be obtained  or made individually or in the aggregate would not impair in any material respect the ability of the  Company to perform its obligations under this Agreement or prevent or materially impede or delay  the consummation of the Transactions.  Section 5.7. Compliance with Laws; Permits.   (a) The Company is conducting, and has at all times in the last five (5) years  conducted, its business and affairs in all material respects in accordance and compliance with all  Laws and Judgments of any Governmental Entity, including but not limited to any and all Laws  relating to protection of human health and Data Protection Laws, in each case applicable to it or to  the conduct by the Company of its business (including research and development activities and  clinical studies), or the ownership or use of any of its assets and properties. To the knowledge of the  Company, there is no order, decree or judgment of any Governmental Entity or authority outstanding  or pending against the Company (or any person for whose acts the Company is  68  





 






vicariously liable) and the Company has not received since its formation, a written or, to its  knowledge, oral notice or other communication alleging a violation by the Company of any applicable  Law or Judgment of any Governmental Entity applicable to its businesses or operations.  (b) The Company validly holds and has in full force and effect all material Permits  necessary for it to own, lease or operate its assets and properties and to carry on its businesses as  now conducted or as currently contemplated to be conducted, and there has occurred no material  violation of, or default by the Company (with or without notice or lapse of time or both) under, or,  to the Company’s knowledge, event giving to any Governmental Entity or any Notified Body any  right of termination, amendment or cancellation of, any such Permit. The Company has complied in  all material respects with the terms and conditions of all Permits issued to or held by the Company,  and such Permits will not be subject to suspension, modification, revocation or nonrenewal as a  result of the execution and delivery of this Agreement or the consummation of the Transactions. No  Action is pending or, to the knowledge of the Company, threatened seeking the revocation or  limitation of any Permit which in each case is material to the Business of the Company. Section  5.7(b) of the Disclosure Letter lists each material Permit issued or granted to or held by the Company,  true and complete copies of which have been made available to Buyer. All of the Permits required  to be listed on Section 5.7(b) of the Disclosure Letter are held in the name of the Company, and none  are held in the name of any Company Personnel or agent or otherwise on behalf of the Company.  Section 5.8. National Security and Investment Act.   (a) None of the Company's products, molecules, compounds or technology  (including the Company's CD200 receptor) use or involve the use of toxins or other materials  restricted under Schedule 5 to the Anti-Terrorism, Crime and Security Act, and, based on the state  of the Company's research and development, do not indicate substantial potential to be developed  or modified: (i) to deliver or produce toxins or other of these restricted materials; (ii) to alter  biochemical pathways or physiological processes so as to become harmful, incapacitating or lethal  to the human body; or (iii) to generate or develop lethal targeting agents, in each case in a manner  substantially distinct from other generally available products, compounds, molecules or  technology.  (b) The Company has not received any written communication from, nor been  notified by or on behalf of, the United Kingdom Secretary of State for Defence that the Company  may hold information, documents or articles of a classified nature in connection with its activities  relating to the Company's research and development or the supply of goods and services for  defence and national security purposes within the United Kingdom.  (c) The Company has no activities that concern research and development  relating to artificial intelligence, and/or the production of any software or technology that uses  artificial intelligence.  (d) Neither the Company's research nor its technology has been or is used in, nor,  based on the state of the Company's research and development, indicate substantial potential for  use or application towards, the United Kingdom's response to pandemics (including but not limited  to COVID-19) or other health emergencies within the United Kingdom.  69  





 






Section 5.9. Financial Statements. Section 5.9 of the Disclosure Letter sets forth  the unaudited balance sheet of the Company as of 31 October 2021 (such date, the “Most Recent  Balance Sheet Date”) and the statement of changes in equity for the period ending 31 October 2021,  together with the notes thereto (such statements being referred to collectively as the “Financial  Statements”). The Financial Statements (x) have been prepared from the books and records of the  Company and are consistent with the books and records of the Company, (y) have been properly  prepared in accordance with Company FRS and in compliance with the requirements of the  Companies Act 2006 and all other applicable Laws in the United Kingdom, consistently followed  throughout the periods indicated and (z) show a true and fair view of the financial condition, results  of operations, shareholders’ equity and cash flows of the Company as of the respective dates thereof  and for the periods referred to therein.  Section 5.10. Absence of Changes or Events. Since the Most Recent Balance Sheet  Date and through the date hereof, except as set forth in Section 5.10 of the Disclosure Letter, (a)  the Company has conducted its businesses only in the Ordinary Course of Business and (b) there  has occurred no Material Adverse Change, nor any change, effect, event, occurrence, state of facts  or development that, individually or in the aggregate, would reasonably be expected to result in a  Material Adverse Change, and (c) the Company has not taken any actions that, if taken after the  date of this Agreement, would constitute a breach of any of the covenants set forth in Section 7.1.  Section 5.11. Undisclosed Liabilities. Except (a) as reflected or reserved against in  the Most Recent Balance Sheet, or (b) otherwise incurred by the Company in the Ordinary Course  of Business since the date of the Most Recent Balance Sheet (provided, that the Liabilities  contemplated by this clause (b) shall not, and would not reasonably be expected to be, individually  or in the aggregate, material to the Company), the Company has no Liabilities other than (i)  Liabilities under the executory portion of any Contracts of the Company (other than obligations  due to breaches or non-performance under such Contracts) and (ii) Liabilities incurred in the  Ordinary Course of Business which are not required by Company FRS to be reflected on a balance  sheet or disclosed in the notes thereto.  Section 5.12. Assets; Personal Property. The Company is the true and lawful owner  of, and has good and valid title to, all assets (tangible or intangible) reflected on the Most Recent  Balance Sheet or thereafter acquired by the Company, other than those sold or otherwise disposed  of for fair value or consumed in the Ordinary Course of Business since the Most Recent Balance  Sheet Date and not in violation of this Agreement, in each case, except as set forth on Section 5.12  of the Disclosure Letter, free and clear of all Liens, other than Permitted Liens.  Section 5.13. Real Property.   (a) The Company does not own, and has never owned, any fee title to any land,  buildings, structures, easements or other rights and interests appurtenant thereto (“Real Property”).  (b) Section 5.13(b) of the Disclosure Letter sets forth a true and accurate list of  all leases of Real Property (including all amendments, guaranties and other agreements with respect  thereto) to which the Company is a party (such property, the “Leased Real Property”) and the address  of each parcel of Leased Real Property. Except as set forth in Section 5.13(b)of the  70  





 






Disclosure Letter, with respect to each of such leases, (i) such lease is legal, valid, binding and  enforceable against the Company and is in full force and effect and (ii) neither the Company nor,  to the Company’s knowledge, any other party to such lease, is in material breach or default under  such lease, and no event has occurred or circumstance exists that, with the delivery of notice,  passage of time or both, would constitute such a material breach or default or permit the termination  or modification of, or acceleration of rent under, such lease. The Company has made available to  Buyer true and accurate copies of all Leased Real Property leases set forth in Section 5.13(b) of the  Disclosure Letter. No person other than the Company has the right to use, occupy or lease any  Leased Real Property.  Section 5.14. Contracts.  (a) Section 5.14(a) of the Disclosure Letter lists the following Contracts that are  in effect and to which the Company is a party or to which it, or any of its assets and properties, is  bound (each such Contract and each Contract required to be listed in Section 5.15(b) of the Disclosure  Letter, whether or not set forth in such section of the Disclosure Letter, a “Material Contract”;  provided that “Material Contract” shall be deemed to include any Contracts arising after the date  hereof and in effect at the time of the Closing that if in existence on the date hereof would have been  required to be set forth in Section 5.14(a) or Section 5.15(b) of the Disclosure Letter):  (i) employment and consulting Contracts with current and former Company  Personnel, and all employee collective bargaining agreements and other Contracts with any labor  union or other representative of Company Personnel;  (ii) Contracts that limit the freedom of the Company or any Affiliate to compete  in any line of business or geographic or therapeutic area or otherwise restricting the research,  testing, development, manufacture, use, marketing, distribution, sale, importation or exportation,  supply, license or marketing of the products and services that the Company or any Affiliate  currently plans to develop, or to make use of any of their Intellectual Property rights;  (iii) Contracts containing any “non-solicitation” or “no-hire” provision that  restricts the Company;  (iv) Contracts with or involving (A) any Seller or any Affiliate (other than the  Company) of the Company or of any Seller, (B) any former holder of Company Capital Stock or  any Affiliate (other than the Company) thereof or (C) any current or former Company Personnel  or any Affiliate (other than the Company) thereof;  (v) Leases of personal property eases providing for lease payments in excess of  $50,000 per year;  (vi) Contracts (or substantially related Contracts) for the purchase or sale of  products or the furnishing or receipt of services (A) calling for performance over a period of more  than one year, (B) requiring or otherwise involving payment by or to the Company of more than  an aggregate of $50,000, (C) in which the Company has granted manufacturing rights, “most  favored nation” pricing provisions or marketing or distribution rights relating to any products or  territory or (D) in which the Company has agreed to purchase a minimum quantity of goods or  services or has agreed to purchase goods or services exclusively from a certain party;  71  





 






(vii) Contracts (or letters of intent) involving the disposition or acquisition of any  product line, business or significant portion of the assets, properties or business of the Company,  or any merger, consolidation or similar business combination transaction, whether or not  enforceable;  (viii) Contracts relating to capital expenditures or other purchases of material,  supplies, equipment or other assets or properties (other than purchase orders for inventory or  supplies in the Ordinary Course of Business);  (ix) Contracts for any joint venture, partnership, joint product development,  strategic alliance or co-marketing arrangement;  (x) Contracts to which the Company is a party as of the date hereof relating to  testing or research services or clinical trials in respect of any of the Company Programs;  (xi) Contracts containing any right of first refusal, right of first negotiation or  right of first offer in favor of a party other than the Company;  (xii) agency, dealer, sales representative, distribution, marketing or other similar  agreements;  (xiii) Contracts (other than trade debt incurred in the Ordinary Course of Business)  under which the Company has borrowed (or may borrow) any money from, or issued (or may issue)  any note, bond, debenture or other evidence of Indebtedness to, any Person;  (xiv) Contracts (including so-called take-or-pay or keepwell agreements) under  which (A) any Person (including the Company) has directly or indirectly guaranteed or assumed  Indebtedness, Liabilities or obligations of the Company or (B) the Company has directly or  indirectly guaranteed or assumed Indebtedness, Liabilities or obligations of any Person (in each  case other than endorsements for the purpose of collection in the Ordinary Course of Business);  (xv) Contracts under which the Company has made or will make, directly or  indirectly, any advance, loan, extension of credit or capital contribution to, or other investment in,  any Person (other than the Company) or Contracts relating to the making of any such advance,  loan, extension of credit, capital contribution or other investment;  (xvi) Contracts involving any mortgage or other Lien upon any real property or  other assets;  (xvii) Contracts providing for indemnification of any Person, other than those  entered into in the Ordinary Course of Business;  (xviii) Contracts with or involving (A) any current or former holder of Company  Capital Stock or any Affiliate of the Company or of any such holder (other than the Company) or  (B) any current or former director, officer, employee or consultant of the Company or any Affiliate  (other than the Company) thereof;  72  





 






(xix) Contracts involving any resolution or settlement of any Action or other  dispute;  (xx) Contracts containing any covenant not to sue, concurrent use agreement,  settlement agreement, pre-rights declarations, co-existence agreement or other consent with respect  to any of the Company Intellectual Property;  (xxi) any engagement letter or similar Contract with any broker, finder or  investment banker;  (xxii) Contracts under which the consequences of a default or termination would  reasonably be expected to result in a Material Adverse Change or a Material Adverse Delay; and  (xxiii) any other Contracts involving future payments in excess of $50,000 and not  entered into in the Ordinary Course of Business.  (b) Each Material Contract is in full force and effect, and is valid and binding  and enforceable in accordance with its terms against the Company and, to the Company’s  knowledge, the other parties thereto, subject to applicable bankruptcy, insolvency, reorganization,  fraudulent transfer, moratorium or similar Laws affecting creditors’ rights generally and general  principles of equity, and has been negotiated in good faith on an “arm’s length” transaction basis.  A true, correct and complete copy of each written Material Contract and a true, correct and  complete summary of each oral Material Contract have been made available to Buyer. There is no  violation, breach (including anticipatory breach) or default under any Material Contract by the  Company or, to the knowledge of the Company, by any other party thereto, and no event has  occurred or condition exists that with the lapse of time or the giving of notice or both would  constitute a default thereunder by the Company or, to the knowledge of the Company, any other  party thereto, and the Company has not received or given notice of any default or claimed or  purported or alleged default or state of facts which, with notice or lapse of time or both, would  constitute a default on the part of any party in the performance or payment of any Material Contract.  No notice, waiver, consent or approval is required (or the lack of which would give rise to a right  of termination, cancellation or acceleration of, or entitle any party to accelerate, whether after the  giving of notice or lapse of time or both, any obligation under the Material Contracts) under or  relating to any Material Contract in connection with the execution, delivery and performance of  this Agreement or the consummation of the Transactions and thereby. Immediately following the  Closing, each Material Contract will continue to be in full force and effect, and valid, binding and  enforceable in accordance with its terms (except for any Material Contract to which the Company  is or may be a party at any time from and after the date hereof that is terminated by any other party  to such Material Contract in accordance with its terms for any reason other than on account of any  breach of any of its obligations under such Material Contract or any other action or omission by  the Company).  Section 5.15. Intellectual Property of the Company.   (a) Except for inbound non-exclusive “shrink wrap” or “clickwrap” software  licenses for Standard Software, and inbound licenses or restricted use provisions that arise out of  the purchase of off-the-shelf reagents from suppliers or through catalogs, all material Company  73  





 






Intellectual Property is either (i) solely and exclusively owned by the Company, free and clear of  all Liens, or (ii) exclusively licensed to the Company free and clear of all Liens and pursuant to a  valid and enforceable written Contract listed in Section 5.15(b) of the Disclosure Letter. Without  limiting the generality of the foregoing, except as set forth in Section 5.15(a) of the Disclosure  Letter: (x) no Company Personnel have any claim, license, right (whether or not currently  exercisable) or interest in or to any material Company Intellectual Property that has not been validly  and effectively assigned to the Company and (y) to the Company’s knowledge, no Company  Personnel are in breach of any Contract with any former employer or other Person concerning any  of the Company Intellectual Property or confidentiality, where the cause or nature of the breach  arises out of the performance of any services on behalf of the Company related to the development  of any Company Intellectual Property.  (b) Section 5.15(b) of the Disclosure Letter sets forth a true and accurate list of  all Contracts relating to any material right in, to or under any Company Intellectual Property  (including all licenses, options, settlement agreements, coexistence agreements, consent agreements,  covenants not to sue and similar rights and immunities, assignments and security interests) that have  been granted (i) to the Company (other than non-exclusive “shrink wrap” or “clickwrap” software  licenses for Standard Software, and licenses or restricted use provisions that arise out of the purchase  of off-the-shelf reagents from suppliers or through catalogs and nonexclusive licenses or rights  granted to the Company in the Ordinary Course of Business), or (ii) by the Company to any other  Person (other than customary powers of attorney granted to the Company’s patent prosecution  counsel solely for purposes of representing the Company before the U.S. Patent and Trademark  Office (“PTO”) or its foreign equivalents and other than nonexclusive licenses granted to  manufacturers or suppliers, contract research organizations or other Persons performing research,  development, manufacturing, supply or other services on behalf of the Company, in each case, solely  to the extent necessary to perform services on behalf of the Company). The Company has not entered  into any Contract (x) granting any Person the right to bring an action for Infringement with respect  to, or otherwise to enforce rights with respect to, any of the Company Intellectual Property that is  exclusively licensed to the Company or Company-Owned Intellectual Property, (y) expressly  agreeing to indemnify any Person against any claim that the practice of the Company Intellectual  Property Infringes any Intellectual Property of any Person or (z) granting any Person the right to  control the prosecution of any of the Company Intellectual Property that is exclusively licensed to  the Company or Company-Owned Intellectual Property. The Company has not assigned, transferred,  or conveyed any Intellectual Property that would have been Company Intellectual Property, but for  such assignment, transfer, or conveyance. The execution and delivery of this Agreement by the  Company and the consummation of the Transactions (alone or in combination with any other event)  and the compliance with the provisions of this Agreement do not and will not: result in (A) a breach  of or an alteration or trigger of any terms in any Contract, including payment obligations, relating to  any Company Intellectual Property or any of the Company Programs, or create on behalf of any third  party the right to terminate or modify any such Contract, (B) (1) a loss, alteration, or impairment (in  whole or in part) of, or Lien on, any Company Intellectual Property, (2) a conflict with, or a loss,  alteration, or impairment (in whole or in part) of any of the rights of the Company in or to any of  Company Intellectual Property, or the validity, enforceability, use, right to use, ownership, priority,  duration, scope or effectiveness of Company Intellectual Property or (C) the grant, assignment, or  transfer to any Person of any license or other right, authorization, or interest under, to or in any of the  Company Programs or Company Intellectual Property. The Company has the legal power (i) to  74  





 






convey to a successor all of its ownership in the Company-Owned Intellectual Property and (ii) to  assign to a successor all of its licensed rights in the material Company Intellectual Property.  (c) Section 5.15(c) of the Disclosure Letter sets forth a complete and accurate list  of all Registered Company IP, indicating for each item owned by the Company (as applicable): (A)  all current assignees and owners, (B) all registration numbers, issuance numbers, grant numbers, serial  numbers and application numbers, (C) all filing, registration, issuance, and grant dates, (D) all  jurisdictions in which such Registered Company IP has been or is registered, granted, issued or in  which registrations, grants or issuances have been applied for (and in the case of domain names, the  registrar and registrant of such domain names), (E) all filing, maintenance and other deadlines  occurring within 120 days of the date hereof and (F) all renewal and expiration dates of such  Registered Company IP occurring within two years of the date hereof. Section 5.15(c) of the  Disclosure Letter additionally sets forth an accurate and complete list of all Company Intellectual  Property for which an application for registration, filing, certification, grant or issuance is currently in  preparation by or in the name of the Company. To the extent any Patent Right has been assigned to  the Company by any Person who is not an inventor of such Patent Right, any and all such third Person  assignors of such Patent Right have each executed a valid and enforceable written agreement assigning  all of such third Person’s rights, title, and interests in and to such Patent Rights (and the inventions  and discoveries claimed or otherwise disclosed therein) to the Company, and, except as set forth in  Section 5.15(c) of the Disclosure Letter, all such assignments have been timely and properly filed with  the PTO or its foreign equivalent, as applicable.  (d) With respect to the Registered Company IP owned by the Company, and, to  the Company’s knowledge, with respect to the Registered Company IP exclusively licensed to the  Company, (i) each Patent Right included in such Registered Company IP properly identifies all  inventors thereof, (ii) each inventor of each such Patent Right has executed a valid and enforceable  written agreement assigning all of such inventor’s rights, title, and interests in and to such Patent  Right (and the inventions and discoveries claimed or otherwise disclosed therein) to the Company  or applicable licensor of the Company, (iii) to the Company’s knowledge, the compliance by each  such inventor with each such written agreement does not conflict with any of such inventor’s  obligations to third parties, and (iv) all such assignments have been timely and properly filed with  the PTO or its foreign equivalent, as applicable.  (e) With respect to the Registered Company IP owned by the Company, and with  respect to the Registered Company IP exclusively licensed to the Company to the Company’s  knowledge, all filings required to be made to date have been timely filed (taking into account  extensions), and all filing, issuance, extension, renewal, and maintenance fees and other fees have  been timely paid. The Company has taken reasonable measures to record and maintain any and all  inventions and discoveries that are, in the reasonable discretion and judgment of the Company, both  material to the business of the Company and likely to be patentable, and such procedures include  requiring all Persons involved in the creation or development of such inventions on behalf of the  Company to maintain invention records describing activities related to such creation or development  in detail reasonably sufficient to enable the Company to document and otherwise protect, enforce and  defend its rights in and to such inventions and discoveries.  (f) The Registered Company IP is subsisting and, to the Company’s knowledge,  valid. None of the Registered Company IP has expired, lapsed, been abandoned or  75  





 






been declared invalid or unenforceable, in whole or in part, by any Governmental Entity, and, to  the Company’s knowledge, there are no facts or circumstances that would reasonably be likely to  provide a basis for abandonment, invalidity, unenforceability or an inventorship claim by a third  party. No Registered Company IP has been or is subject to any pending or, to the Company’s  knowledge, threatened interference, inventorship dispute, reissue, reexamination, opposition,  concurrent use, cancellation, invalidity, inter partes, post-grant or other similar proceeding. None  of the Company Intellectual Property is subject to any outstanding Judgment, charge, settlement or  other disposition of any dispute where the Company is a party.  (g) For (x) each Patent Right listed in Section 5.15(c)(i) of the Disclosure Letter  and (y) each Patent Right listed in Section 5.15(c)(ii) of the Disclosure Letter for which the  Company has the right (excluding unexercised step-in rights) or responsibility to file, prosecute  and maintain, each of the Company, its attorneys, agents and relevant employees and other  Representatives (and, to the Company’s knowledge, each of the applicants, owners, and inventors,  and their attorneys, agents and relevant employees and other Representatives) has met its duty of  candor and good faith as required under 37 C.F.R. § 1.56 and complied with analogous Laws  outside the U.S. To the Company’s knowledge, there is no material fact with respect to any patent  applications included in the Company Intellectual Property that would (i) preclude the issuance of  an issued patent from such patent application (with claims no less materially broad in scope than  the claims as currently pending in such patent application), or (ii) cause the material claims included  in such patent application to be materially narrowed or to be held unenforceable or be cancelled or  held invalid by a court of patent office proceeding.  (h) To the Company’s knowledge, no third party is or has been Infringing any  Company Intellectual Property. No claims, complaints, suits, or proceedings regarding any matter  described in the preceding sentence have been asserted in writing or threatened against any Person  by or on behalf of the Company. The Company has taken reasonable measures to maintain, protect,  and preserve the security, confidentiality, value and ownership of all trade secrets and confidential  information included in the Company Intellectual Property (including confidential Know-How and  Other Information) (“Confidential Company Information”), including by requiring all current and  former employees and consultants, and any third party to whom the Company has disclosed  Confidential Company Information to execute and deliver to the Company a written Contract that  includes customary confidentiality and restriction on use terms. To the Company’s knowledge, no  current or former employees or consultants are, and no other Person is, in violation in any material  respect of any such confidentiality agreements. The Company has obtained from (i) each of its current  and former employees and (ii) all other Persons who are or were involved in, or who have participated  in or contributed to, the conception, creation, development, reduction to practice, improvement to or  modification of any of the Company Intellectual Property owned by the Company and used or  intended for use in the conduct of the business of the Company (or any portion thereof), a written  Contract that assigns solely and exclusively to the Company all rights, title and interests in and to any  and all Intellectual Property arising out of or relating to such Person’s activities with respect to the  Company’s business.  (i) To the Company’s knowledge, the conduct of the business of the Company  as currently conducted and as currently proposed to be conducted by the Company (including the  research, development, commercialization, testing, manufacture, use and other exploitation of the  Company Programs), has not Infringed, and does not and will not Infringe, any Intellectual  76  





 






Property of any third party. The Company is not the subject of any pending action, suit, proceeding  or (to the Company’s knowledge) investigation, or has received any claim, notice, “cease and desist”  letter, offer, invitation to obtain a license, threat or similar written correspondence from any Person  (i) alleging or suggesting that the conduct of the business of the Company as currently conducted and  as currently proposed to be conducted by the Company (including with respect to the research,  development, testing, manufacture, use, sale, offer for sale, importation and other exploitation of any  of the Company Programs), and the practice of the Company Intellectual Property in connection  therewith, Infringes or will Infringe the Intellectual Property of any Person or (ii) challenging the  inventorship, ownership, validity, enforceability, priority, scope, use, right to use, or registrability of  any of the Company Intellectual Property. There are no Patent Rights of any third party known by  the Company to be dominating or interfering with the Patent Rights included in the Company  Intellectual Property or, to the Company’s knowledge, that could be asserted by a Person to exclude  or prevent the Company from practicing the Patent Rights included in the Company Intellectual  Property to conduct the business of the Company as currently conducted or currently proposed to be  conducted by the Company with respect to the research, development, testing, manufacture, use, sale,  offer for sale, importation and other exploitation of any of the Company Programs. The Company  has disclosed to Buyer the existence of all written opinions of counsel requested by the Company  regarding the infringement or non-infringement, validity or invalidity or unenforceability or  enforceability of any Intellectual Property owned by any Person other than the Company relating to  any of the Company Programs.  (j) No Governmental Entity has any right to (including any “step-in” or “march- in” rights with respect to), ownership of, or right to royalties for, or to impose any requirement on  the manufacture or commercialization of any product incorporating, any Company Intellectual  Property owned by or exclusively licensed to the Company. Without limiting the generality of the  foregoing, no invention claimed or covered by any Patent Right within the Company-Owned  Intellectual Property (i) was conceived or reduced to practice in connection with any research  activities funded, in whole or in part, by the federal government of the United States or any agency  thereof, (ii) is a “subject invention” as that term is described in 35 U.S.C. § 201(e) or (iii) is otherwise  subject to the provisions of the Bayh-Dole Act or any similar Law of any other jurisdiction, including  with respect to any Patent Rights that are part of the Company-Owned Intellectual Property. No  funding, facilities, or personnel of any educational or research institution were used to develop or  create in whole or in part, any of the Company Intellectual Property that is exclusively licensed to  the Company or Company-Owned Intellectual Property, and, to the Company’s knowledge, no  educational institution has any right to, or right to royalties for, or to impose any requirement on the  manufacture or commercialization of any product incorporating, any Intellectual Property that is, or  is purportedly, owned by the Company.  (k) Except as set forth in Section 5.15(k) of the Disclosure Letter, no college,  university or other educational or research institution or agency, Governmental Entity, or other  organization which sponsored research and development conducted by the Company has any claim  of right or license to, or ownership of, or other encumbrance upon the Company Intellectual  Property. The Company has complied in all material respects with any and all obligations applicable  to it as a result of the use of funding, facilities, personnel or other resources of any college, university  or other educational or research institution or agency, or other organization. The Company has  previously provided to Buyer true and complete copies of all Contracts applicable to any Intellectual  Property owned or purportedly owned by the Company or used in  77  





 






the products, product candidates, or services of the Company or otherwise necessary or useful for  the operation of the business, which was conceived, developed, created, or reduced to practice by  any founder of the Company who is or was a student or faculty or staff member of either the  University of Surrey or the University of Oxford systems, and except as set forth in a Contract  listed in Section 5.14(a) of the Disclosure Letter, neither the University of Surrey nor the University  of Oxford systems (as a whole or any individual institution, college, university or other entity  therein) has any rights, licenses, claims or interests whatsoever with respect to any such Intellectual  Property (or any portion thereof).  (l) The Company has taken all commercially reasonable steps to ensure the  continued operation of the Software, Business Data and databases included in the Company  Intellectual Property and material to the operation of the Company’s business as currently  conducted, as well as all of its computers and other information technology infrastructure and assets  used in the Company’s business (collectively, the “IT Assets”), and to protect the security and  confidentiality of its IT Assets and the information and records stored on or accessed or transmitted  using the IT Assets. The IT Assets of the Company operate and perform in all material respects as  is necessary and sufficient for the conduct of the business of the Company as currently conducted  and as currently proposed to be conducted by the Company or, to the Company’s knowledge, Buyer.  To the Company’s knowledge, the IT Assets are free from malicious code and do not contain any  bugs, errors, vulnerabilities or problems that, in each case, would be expected to materially adversely  affect the operation or use of any such IT Assets. To the Company’s knowledge, there has not been  in the past two (2) years any material (i) unauthorized intrusions or breach of the security of the IT  Assets, (ii) malfunction of the IT Assets or (iii) accidental or unauthorized access to, loss, or misuse  of Personal Data maintained by the Company. Section 5.15(k) of the Disclosure Letter sets forth a  true and accurate list of all Software that is owned by the Company. No open source or public library  code was used in the development or modification of any Software owned by the Company that is  incorporated into or utilized by any products of the Company or in a manner that would restrict the  Company’s ability to commercialize the Software or require the Company to publicly distribute any  source code for such Software. The Company has implemented commercially reasonable backups  and security measures to duplicate, store, and protect its material information that is stored in  electronic form or media. Information related to the Company’s business is not recorded, stored,  maintained, operated, or otherwise wholly or partly dependent upon or held by any means which  will not be available to the Company or to Buyer after the Closing. Immediately following the  Closing, the Business Data and databases of the Company will have at least the same data, content,  information and functionality as they do immediately prior to the Closing, subject to changes to the  data, content and information in the databases made in the Ordinary Course of Business.  (m) The Company maintains appropriate data security policies, processes, and  controls, all of which meet any requirements under applicable Law. The Company’s collection,  receipt, sharing, processing, use, recording, storage, transfer, disclosure and disposal of Personal  Data (including through the Company Intellectual Property) is, and has been, (i) compliant with all  applicable privacy policies, terms of use and public statements of the Company (including as  published on its websites), (ii) in compliance with Privacy Laws and (iii) consistent with the  authorizations given by the relevant individual natural persons. There are no litigation, dispute or  legal proceedings pending (or to the Company’s knowledge, threatened) and there has not been any  litigation, dispute or legal proceedings in the past, against the Company alleging that the  78  





 






Company has failed to comply with any of the foregoing clauses (i) through (iii). There has been  no, and no allegation of, loss, theft, misuse, unauthorized disclosure of, or unauthorized access to,  any Business Data (including any Personal Data) held by or on behalf of the Company or otherwise  under its control. No disclosure of any data breach or security breach of the IT Assets has been or  should have been made by the Company under applicable Law or to any Governmental Entity. The  Company has implemented and maintained measures sufficient to provide reasonable assurance that  it complies with Privacy Laws.  (n) With respect to all Business Data (including all Personal Data) held by or on  behalf of the Company, or otherwise under their control, the Company has taken the steps required  and reasonably necessary to protect such Business Data (including all Personal Data) against loss  and against unauthorized access, use, modification, disclosure or other misuse (including by the  Company’s officers, employees, independent contractors and consultants), including implementing  and maintaining administrative, physical, and technical measures commensurate with the age, size,  business and resources of the Company to protect the confidentiality, integrity, availability, and  security of Confidential Company Information and the IT Assets against unauthorized control, use,  access, interruption, modification, or corruption related to the Company’s business and to ensure  continued, uninterrupted, and error-free operation of the IT Assets. The Company has contractually  obligated any Persons that Process Business Data (including all Personal Data) on its behalf to (i)  comply with applicable Laws, (ii) take reasonable steps to protect and secure Business Data  (including all Personal Data) from unauthorized access, acquisition, modification, or disclosure,  and (iii) take reasonable measures to restrict Processing of Business Data (including all Personal  Data) to purposes authorized or required pursuant to the agreement or contract with such Persons.  (o) Neither the execution, delivery or performance hereof nor the transactions  contemplated hereby will result in the Company being in breach of any applicable Privacy Laws  or the privacy policies of the Company.  Section 5.16. Litigation. There is no Action that is pending or, to the knowledge  of the Company, threatened and, to the knowledge of the Company, no investigation is pending  or threatened, against the Company (or any holders of Company Capital Stock or directors,  officers, agents or employees of the Company, to the extent such Actions relate to the Company)  or any assets or properties of the Company. There are no Judgments outstanding against the  Company (or any holders of Company Capital Stock or directors, officers, agents or employees of  the Company, to the extent such Judgments relate to the Company) or any assets or properties of  the Company. Since the Company’s formation, there has not been any Action or investigation in  respect of the Company that (a) resulted in a Judgment against or settlement by the Company  (whether or not such Judgment or settlement was paid, in whole or in part, by an insurer of the  Company or other third party), (b) resulted in any equitable relief or (c) relates to the Transactions.  There is no Action pending by the Company, or which the Company intends to initiate, against  any other Person. To the knowledge of the Company, there is no fact or circumstance that, to the  knowledge of the Company, could reasonably be expected to serve as a basis for any Action  against the Company.  79  





 






Section 5.17. Taxes.  (a) The Company has timely filed all Tax Returns that it was required to file, and  all Tax Returns that the Company has filed (whether required or otherwise) were true, correct and  complete in all material respects. With respect to the Company, all documents and records which are  required by the applicable Tax Laws to be maintained for the purposes of Tax have been so  maintained and are within the possession or under the control of the Company. The Company has  paid on a timely basis all Taxes required to be paid (whether or not shown to be due on any Tax  Return filed by or in respect of the Company). All Taxes that the Company was required by any Tax  Law to withhold or collect have been duly withheld or collected and, to the extent required, have  been properly and timely reported and paid to the appropriate Taxing Authority.  (b) The Company has made available to Buyer correct and complete copies of  all Tax Returns (other than corporation tax returns) filed with respect to the Company, and  examination reports and statements of deficiencies assessed against or agreed to by the Company  in the three (3) years prior to the date of the Agreement and all corporation tax returns filed with  respect to the Company in the six (6) years prior to the date of the Agreement. No examination or  audit of any Tax Return or Tax Period of the Company by any Taxing Authority and no Tax dispute  or litigation with respect to the Company is currently pending or in progress or, to the Company’s  knowledge, threatened, and the Company has not received a written request for information related  to Taxes or any Tax Return from any Taxing Authority. Since the Company’s formation, the  Company has not received any notice, proposal, assessment, injunction or written request for  payment or deficiencies of Taxes from any Taxing Authority except for those requests for payments  as reflected in the Tax Returns made available to Buyer. The Company has not been informed in  writing, or other than in writing to the Company’s knowledge, by any jurisdiction that the  jurisdiction believes that the Company was or may be required to file any Tax Return that was not  filed or subject to taxation in such jurisdiction. No extension or waiver of the limitation period  applicable to any of the Company’s Tax Returns or Tax Period (including where no Tax Return  was filed) has been granted and remains in effect, nor has any request been made in writing for any  such waiver or extension by the Company or any Taxing Authority (other than request for  automatic extensions).  (c) There are no Liens with respect to Taxes upon any of the assets or properties  of the Company, other than Permitted Liens.  (d) The Company will not be required to include any item of income in, or  exclude any item of deduction from, Taxable income for any Post-Closing Tax Period as a result  of any (i) change in method of accounting for a Pre-Closing Tax Period, (ii) sale or disposition  made in a Pre-Closing Tax Period, (iii) prepaid amount received or paid in a Pre-Closing Tax  Period, (iv) deferred intercompany transaction, (v) transaction under which previously utilized Tax  losses or credits may be recaptured, (vi) disclaimer of capital allowances or (vii) similar transaction,  in any such case occurring prior to Closing. The Company has not received any income in a period  prior to the Closing for which recognition for Tax Purposes will be deferred to a Post-Closing Tax  Period. The Company has not made any election to defer, or is deferring or has deferred, the  payment of Taxes from a Pre-Closing Tax Period to a Post-Closing Period, including pursuant to  Section 965(h) of the Code, any COVID-19 Measure or otherwise.  80  





 






(e) No Taxing Authority has agreed to operate any special arrangement (that is,  an arrangement which is not based on a strict application of all relevant Tax legislation, published  extra statutory concessions and published statements of practice) in relation to the affairs of the  Company. The Company is not described in Article 4(5) of the Convention Between the Government  of the United States of America and the Government of the United Kingdom of Great Britain and  Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with  Respect to Taxes on Income and on Capital Gains, as currently in effect. All notices and other  communications from a Taxing Authority requiring or permitting the Company to deal with its Tax  affairs in a particular manner or on a particular basis are in the possession of the Company and  copies thereof have been made available to the Buyer.  (f) The Company:  (i) is registered for the purposes of the Value Added Tax Act 1994 (“VATA”);  (ii) has made, given, obtained and kept up to date, full and accurate records,  invoices and documents required for the purposes of the Law relating to VAT;  (iii) has complied in all respects with all other applicable VAT legislation and in  particular has filed all returns and made all payments of VAT on a timely basis; and  (iv) has not been required by a Taxing Authority to give security under the  VATA.  (g) The Company owns no asset which is a capital item, the input tax on  which may be subject to adjustment in accordance with Part XV of the Value Added Tax  Regulations 1995 (capital goods scheme).  (h) The Company has not been engaged in, or been a party to, a scheme or  arrangement of which the main purpose, or one of the main purposes, was the avoidance of Tax or  the obtaining of a Tax advantage.  (i) This Agreement and the implementation of the transactions contemplated by  this Agreement, will not result in the Company suffering any Tax liability as a result of the deemed  disposal, realisation or assignment of any of the assets or liabilities of the Company.  (j) The Company is not and has not been party to, any transaction or  arrangement under which it has been required to compute its profits or losses for tax purposes as if  arm’s length terms had been made or imposed instead of the actual terms, or otherwise to make any  adjustment for tax purposes to the terms on which the transaction or arrangement took place. The  Company has sufficient information and records to enable it to comply with, or establish that it is  not subject to the operation of Part 4 Taxation (International and Other Provisions) Act 2010 or any  similar legislation in any jurisdiction outside the United Kingdom.  (k) The Company is not, and has never been, a member of a consolidated,  combined, unitary, or similar group for any Tax purposes.  81  





 






(l) The Company is not a party to, or otherwise bound by or subject to, any Tax  sharing, allocation or indemnification or similar agreement, provision or arrangement (other than, for  the avoidance of doubt, commercial agreements whose primary subject matter is not Tax).  (m) The Company is not a party to any joint venture, partnership or other  arrangement or Contract which could be treated as a partnership for Tax purposes.  (n) The Company is not (1) a United States real property interest, as defined in  Section 897(c) of the Code; (2) a controlled foreign corporation within the meaning of Section 957  of the Code; (3) a passive foreign investment company, within the meaning of Section 1297 of the  Code, that has, currently is, or is obligated to provide any information to a shareholder to enable  such shareholder to comply with reporting requirements described in Section 1295(a)(2) of the Code  and the Treasury regulations issued thereunder; (4) an expatriated entity within the meaning of  Section 7874(a)(2) or Section 7874(b) of the Code; or (5) a dual resident corporation. The Company  has at all times been a C corporation within the meaning of Section 1361(a)(2).  (o) Neither the execution and delivery of this Agreement, the consummation of  the Transactions, nor the conduct of the business of the Company by the Company Personnel will  trigger a right to any payment or benefit under a Plan, policy, Contract, arrangement or  commitment, whether or not legally enforceable, which (either alone or upon the occurrence of any  additional or subsequent event) will or may result in any “excess parachute payment” (as defined  in Section 280G(b)(1) of the Code).  (p) The Company does not, nor has it ever had (during any taxable period  remaining open for the assessment of Tax by any applicable Taxing Authority under its applicable  statute of limitations), any place of business or permanent establishment in any jurisdiction outside  the United Kingdom.  (q) The Company is not nor to the Company’s knowledge, are there any  circumstances in existence as a result of which it will become liable to make to any person  (including any Taxing Authority) any payment in respect of any liability for Tax that is primarily  or directly chargeable against, or attributable to, any other person (other than payments in respect  of VAT to persons making supplies for VAT purposes to the Company).  (r) The Company has complied with all requirements in respect of any research  and development Tax credit received or claimed. There are no circumstances under which any  amount of payment, relief or allowance could reasonably be expected to be disallowed or required  to be repaid to a Taxing Authority.  (s) The Company has not at any time been obliged to make a notification to a  relevant Taxing Authority under section 92 of the United Kingdom Finance Act 2015 or any similar  legislation outside the United Kingdom, nor has received a preliminary notice under section 93 of  the United Kingdom Finance Act 2015 or any similar legislation outside the United Kingdom.  (t) The Company has not: (i) made any transfer of value within sections 94 and  202 of Inheritance Tax Act 1984 (“IHTA 1984”); or (ii) received any value such that liability might  82  





 






arise under section 199 of IHTA 1984; or (iii) been a party to associated operations in relation to a  transfer of value as defined by section 268 of IHTA 1984.  (u) There is no unsatisfied liability to inheritance tax attached to, or attributable  to, the Shares or any asset of the Company. None of them are subject to any Inland Revenue charge  as mentioned in sections 237 and 238 of IHTA 1984.  (v) The Company was entitled to benefit from, and has complied with any and  all requirements of, any measures introduced by the United Kingdom government to assist  businesses with their tax affairs in response to the COVID-19 pandemic from which it has  benefitted. The Company has not: (i) deferred the payment of any VAT liability due where that  VAT liability has not yet been settled with HMRC; (ii) deferred the payment of any income tax or  corporation tax self-assessment payment on account where that payment on account has not yet  been made to HMRC; or (iii) entered into a “time to pay” arrangement with HMRC.  (w) Section 5.17(x) of the Disclosure Letter identifies all subsisting EMI Options  and Non-Qualifying Options at the Relevant Time. There are no agreements, schemes or promises  to grant any other EMI Options or Non-Qualifying Options.  (x) There have been no: (i) disqualifying events in respect of any EMI Options  under section 534 of ITEPA 2003; or (ii) material amendments to any of the terms of any EMI  Options.  (y) No employment-related securities (as defined in sections 420 and 421B(8) of  ITEPA 2003), including, without limitation, any shares acquired under section 205A of the  Employment Rights Act 2003, have been issued or transferred (other than under any Tax-advantaged  Scheme or EMI Option) and there are no agreements, schemes or promises to make any such issues  or transfers (other than options falling within section 5.17(x)): (i) by the Company; (ii) under any  arrangements established by the Company; or (iii) by a holding company or other shareholder of the  Company (or under arrangements established by such a person).  (z) No securities options (as defined in section 420(8) of ITEPA 2003) (other  than EMI Options or options granted under any Tax-advantaged Scheme) have been granted to any  current, former or proposed employees or directors of the Company (or to any nominees or  associates of such employees or directors) and there are no agreements, schemes or promises to  make any such grant: (i) by the Company; (ii) under any arrangements established by the Company;  or (iii) by a holding company or other shareholder of the Company (or under arrangements  established by such a person).  (aa) The Company has no knowledge of: (i) any failure to notify the grant of any  EMI Options to HM Revenue & Customs within the required time limit under paragraph 44 of  Schedule 5 of ITEPA 2003; or (ii) any dispute (or potential dispute) with HM Revenue & Customs  as to whether any EMI Options are qualifying options for the purposes of paragraph 1(2) of  Schedule 5 of ITEPA 2003.  (bb) The Company has fully complied with all of its reporting obligations in respect  of the operation of any Company Share Plan, including any obligation to file annual share scheme  returns with HM Revenue & Customs.  83  





 






Section 5.18. Insurance. Section 5.18 of the Disclosure Letter identifies each  insurance policy maintained by, at the expense of or for the benefit of the Company and identifies  any material claims made thereunder as of the date of this Agreement within the past three (3) years  and the Company has heretofore delivered to Buyer a complete and accurate copy of all such  policies. All such policies (or substitute policies with substantially similar terms and underwritten  by insurance carriers with substantially similar or higher ratings) are valid and subsisting and in full  force and effect in accordance with their terms, all premiums with respect thereto covering all  periods up to and including the Closing Date have been paid, and the Company is otherwise in  compliance with the terms of such policies. The Company has not received any written notice or, to  the Knowledge of the Company, other communication regarding any actual or possible: (i)  cancellation, termination (or any other threatened termination) or invalidation with respect to any  insurance policy; (ii) refusal of any insurance coverage or rejection of any claim under any insurance  policy; or (iii) adjustment in the amount of the premiums payable with respect to any insurance  policy. There are no pending or, to the Company’s knowledge, threatened claims under any  insurance policy.  Section 5.19. Benefit Plans; Employee Matters.   (a) Section 5.19(a) of the Disclosure Letter sets forth (i) all Contracts and other  Plans under which any Company Personnel (or their dependents or beneficiaries) may accrue  benefits or otherwise receive payments or other compensation for services provided to the  Company or any of its Affiliates and (ii) a true and complete list of each retirement, pension, lump  sum, life assurance or insurance, permanent health insurance or income replacement, deferred  compensation, equity-based compensation, incentive, bonus, paid time off, employment,  independent contractor, consulting, change in control, severance or redundancy, termination,  retention, accident, ill-health, disability, death, health, welfare, flexible spending account, and any  other employee benefit plan, agreement, arrangement, program or policy that is maintained,  contributed to or required to be contributed to by the Company or with respect to which the  Company has or could have any Liability (each item in (i) and (ii), a “Company Plan”). For each  Company Plan, the Company has made available to Buyer a true, complete and correct copy of  each Contract or Plan document, as amended through the date of this Agreement, or a written  summary of any unwritten Plan.  (b) No Company Plan is subject to the Laws of any jurisdiction outside of the  United Kingdom or provides compensation or benefits to any Company Personnel that are subject  to the Laws of any jurisdiction outside of the United Kingdom. No Company Plan is a defined  benefit pension plan, and no Company Personnel have any entitlements under a defined benefit  pension plan.  (c) Each Company Plan has been, in all material respects, established, maintained,  and administered in accordance with its terms and with all applicable Laws, including pension auto  enrolment and funding obligations as required by the Pensions Act 2008 and associated legislation.  No notices, fines, or other sanctions have been issued by the Pensions Regulator and no instances of  non-compliance with the automatic enrolment obligations have been notified to the Pension Regulator  in respect of the Company. No actions, investigations, suits, or claims with respect to any Company  Plan are pending or, to the Company’s knowledge, threatened.  84  





 






( ) The Company has not adopted or approved any Company Stock Plan. The  Company does not have a formal plan, commitment, or proposal, whether legally binding or not,  and has not made a commitment to Company Personnel to create any Company Plan.  (d) No Company Plan provides, and the Company has no Liability or obligation  to provide to any Company Personnel (or their dependents of beneficiaries), postretirement medical  or other welfare benefits. The Company has no plan, commitment, or proposal, whether legally  binding or not, nor has made a commitment to Company Personnel, to create any additional  Company Plans or modify or change any existing Company Plans.  (e) Neither the execution and delivery of this Agreement nor the consummation  of the Transactions will (either alone or in combination with another event): (i) result in any payment  becoming due, or increase the amount of any compensation due, to any Company Personnel; (ii)  increase any benefits under any Company Plan; (iii) result in the acceleration of the payment or  vesting of any compensation or benefits; (iv) result in the triggering or imposition of any restrictions  or limitations on the Company’s right to amend or terminate any Company Plan; or (v) entitle the  recipient of any payment or benefit to receive a “gross up” payment for any income or other taxes  that might be owed with respect to such payment or benefit.  (f) The treatment of the Company Options pursuant to this Agreement shall not  violate the terms of the Company Share Plan or any agreement governing the terms of such  Company Share Plan. Each Company Plan has been maintained and operated in documentary and  operational compliance with applicable Law.  (g) Prior to the Closing Date, the Company shall have made all contributions  required to be made to or with respect to each Company Plan as of the Closing Date and paid or  accrued all Liabilities on account of any Company Plan in existence on or before the Closing Date.  Section 5.20. Labor.  (a) Section 5.20(a) of the Disclosure Letter separately lists all current and former  Company Personnel and other persons who personally perform work for the Company but who are  not in business on their own account or in a client/customer relationship as of the date of this  Agreement, including for each, to the extent applicable: (i) their dates of employment; (ii) their  current positions; (iii) their current salary paid or payable; (iv) any other compensation payable to  them (including housing allowances, compensation payable pursuant to bonus, deferred  compensation or commission arrangements or other compensation); (v) annual vacation days; (vi)  their notice period; and (vii) their full-time or part-time status. To the Company’s knowledge, no  current Company Personnel is a party to, or is otherwise bound by, any agreement or arrangement,  including any confidentiality or non-competition agreement, that adversely affects or restricts the  performance of such individual’s duties  (b) Section 5.20(b) of the Disclosure Letter contains details of all persons who are  not employees or workers and who are providing services to the Company under an agreement that  is not a contract of employment with the Company (including consultants and secondees), and  particulars of the terms on which such persons provide their services, including (but not limited  85  





 






to): (i) the term of the engagement; (ii) the start date of the engagement; (iii) a description of the  services provided; and (iv) the fee payable in respect of the service provision.  (c) The Disclosure Letter includes anonymized details of all employees and  workers who are on secondment, maternity, paternity, adoption, shared parental or other leave or  absent due to ill-health or for any other reason.  (d) The Company has, or will have no later than the Closing Date, paid all  accrued fees, bonuses, commissions and severance of the Company Personnel and independent  contractors due to be paid through the Closing Date. There are no loans to any Company Personnel.  The Company and its Affiliates are and have been in compliance in all material respects with all  applicable Laws (including Tax Laws) regarding employment, employment practices, immigration,  employee benefits and compensation, terms and conditions of employment, including wages and  hours, the classification of employees and independent contractors and withholding of Taxes and  insurance payments, and payment of employment Taxes, compensation and benefits.  (e) No offer of employment or engagement has been made by the Company that  is outstanding for acceptance, or that has been accepted but not yet commenced.  (f) No notice to terminate the contract of employment of any Company  Personnel is pending, outstanding or threatened, and to the knowledge of the Company, there are  no circumstances likely to give rise to such notice.  (g) The Company is not a party to, bound by or proposing to introduce in respect  of any Company Personnel, any redundancy payment scheme (in addition to statutory redundancy  pay), or any incentive arrangement or scheme (including, without limitation, any share option or  share award plan, and commission, profit sharing or bonus scheme), other than the Company’s  2019 Share Option Plan.  (h) The Company has not incurred any actual or contingent liability in  connection with any termination of employment of its employees or workers, or for failing to  comply with any order for the reinstatement or re-engagement of any employee or worker.  (i) The Company has not made or provided, or agreed to make or provide, any  payment or benefit to any Company Personnel (or their dependents) in connection with the actual  or proposed termination or suspension of employment or variation of an employment contract.  (j) The Company has not offered, promised or agreed to any future variation in  the terms of employment or engagement of any employee or worker.  (k) The Disclosure Letter includes copies of all contracts, handbooks, policies  and other documents which apply to the employees and workers, identifying which applies to  which individual.  (l) The Company has not entered into any agreement or arrangement (whether or  not binding) with any trade union, staff association, staff council, works council, information and  consultation body or any other worker representatives relating to any Company Personnel and  86  





 






is not involved in any industrial or trade dispute or negotiation regarding a claim with any employee  representative body and there is nothing likely to give rise to such a dispute or claim. No Company  Personnel is subject to a current disciplinary warning or procedure and as far the Company is aware,  there are no disputes or claims threatened or pending in respect of any Company Personnel.  Section 5.21. Regulatory Compliance.   (a) The Company has conducted its business in the previous five (5) years in all  material respects, in compliance with all applicable Law, including all applicable Laws regarding  developing, testing, or manufacturing of the Company’s products in development, or adverse event  reporting. The Company has not received any written notice or other communication from any  Governmental Entity alleging any violation of applicable Law by the Company. The Company has  not received any notices of inspectional observations, establishment inspection reports, warning  letters, untitled letters, or any other documents received from or issued by any Governmental Entity  alleging any lack of compliance with any applicable Law or regulatory requirements, or other  applicable Law by the Company or by persons who are performing services for the benefit of the  Company.  (b) To the extent any activities have been taken with respect thereto, all studies,  tests, ongoing and completed preclinical studies conducted by or on behalf of the Company with  respect to the Milestone Products have been, in the last five (5) years, and are being conducted in all  material respects in accordance with all applicable experimental and preclinical trial protocols,  procedures and controls pursuant to accepted professional and scientific standards for products or  product candidates comparable to those being developed by the Company. The descriptions of,  protocols for, and data and other results of, the studies, tests, development and trials conducted by  or on behalf of the Company with respect to the Milestone Products that have been furnished or  made available to Buyer are materially accurate and complete. The Company is not aware of any  studies, tests, development or trials the results of which reasonably call into question the results of  the studies, tests, development and trials conducted by or on behalf of the Company with respect to  DS-234, DS-118, DS-192 or any of the Milestone Products, and the Company has not received any  written notices or correspondence from any Governmental Entity or any Review Board or  comparable authority requiring the termination, suspension or material modification of any studies,  tests, or preclinical development trials conducted by or on behalf of the Company with respect to  the Milestone Products.  (c) Except as set forth on Section 5.21(c) of the Disclosure Letter, there are not  and have not been any recalls, field notifications, corrections, market withdrawals or replacements,  written safety alerts or any other written notice provided to or received from an investigator,  Governmental Entity or Notified Body relating to an alleged lack of safety or regulatory compliance  with respect to the Company Programs.  (d) The Company possesses all material permits, licenses, registrations,  certificates, authorizations, orders and approvals from the appropriate Governmental Entity  necessary to conduct its business, including all such permits, licenses, registrations, certificates,  authorizations, orders and approvals required by any applicable Governmental Entity engaged in  the regulation of drugs, pharmaceuticals, medical devices or biohazardous materials. The  87  





 






Company has not received any notice of proceedings relating to the suspension, modification,  revocation or cancellation of any such permit, license, registration, certificate, authorization, order or  approval. Neither the Company nor any of its officers, employees, or, to the Company’s knowledge,  any of its contractors or agents is the subject of any pending or threatened investigation by any  Governmental Entity. Neither the Company nor any of its officers, employees, or to the Company’s  knowledge, any of its contractors or agents has made any materially false statements on, or material  omissions from, any notifications, applications, approvals, reports and other written submissions to  any Governmental Entity to obtain any Permit.  (e) None of the Company or, to the Company’s knowledge, any of its officers,  employees or agents, has been convicted of any crime or engaged in any conduct that has resulted,  or would reasonably be expected to result, in debarment under applicable Law. No Actions that  would reasonably be expected to result in such a debarment or exclusion of the Company are  pending or, to the Company’s knowledge, threatened, against the Company or, to the Company’s  knowledge, any of its officers, employees or agents.  (f) The Company is not aware of any information, condition, event, occurrence  or circumstance that, to the Company’s knowledge, would reasonably be expected to adversely  affect, in any material respect, the acceptance, obtaining or maintaining of any Permit for any of  the Company Programs.  (g) The Company has not received any warning letter or untitled letter, report  of inspectional observations, establishment inspection reports, notices of violation, clinical holds,  enforcement notices, recall notices or other written documents, notices or correspondence from any  Notified Body or any Review Board or similar body, alleging that the Company is not in  compliance in any material respect with any applicable Laws or Permits.  (h) Attached as Section 5.21(h) of the Disclosure Letter is the Company’s  current plan for development of the Milestone Product, including the Company’s current plan for  studying and testing (including stability and pharmacokinetics) and obtaining Regulatory  Approvals for the Milestone Product (the “Development and Regulatory Plan”).   Section 5.22. Milestone Product and Clinical Trial Disclosures.   (a) The Company has made available to Buyer complete and accurate copies of  (i) all material filings with the FDA, the EMA, the MHRA, a Notified Body or equivalent  Governmental Entity relating to any of the Milestone Products, (ii) all material correspondence  with the FDA, the EMA, the MHRA, a Notified Body or equivalent Governmental Entity relating  to any of the Milestone Products and (iii) all material data, information, results, analyses,  publications, and reports relating to any of the Milestone Products, including all trial statistical  analysis plans and published trial results (collectively, the “Material Milestone Product and Trial   Information”). The Material Milestone Product and Trial Information is a true and correct  representation in all material respects of the matters reflected therein.  (b) The registration and regulatory files, dossiers and supporting materials of the  Company with respect to the Milestone Products have been maintained in all material respects in  accordance with all applicable Laws, reasonable industry standards, and the Company’s  88  





 






standard operating procedures. None of the material filings made by the Company with the FDA,  the EMA, the MHRA, a Notified Body, an equivalent Governmental Entity or with any Review  Board relating to any of the Milestone Products contained, to the Company’s knowledge, any  untrue statement of a material fact or fraudulent statement or omitted to state any material fact  necessary to make the statements therein not misleading, and neither the Company nor any of its  officers, employees or, to the Company’s knowledge, agents has committed any other act, or made  a statement, or failed to make a statement that could reasonably be expected to provide a basis for  the FDA, the EMA, the MHRA, a or any other Governmental Entity to invoke its policy respecting  “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed.  Reg. 46191 (September 10, 1991) or any similar policy.  (c) To the Company’s knowledge, the Company has in its possession copies of  all the material documentation in existence on or prior to the date hereof and required to be filed  with the FDA, the EMA, the MHRA, a Notified Body or equivalent Governmental Entity for the  regulatory Permit, of any of the Milestone Products.  (d) No clinical trials have ever been initiated or conducted relating to any of the  Milestone Products.  (e) To the Company’s knowledge, the Company has disclosed or made available  to Buyer all material information as to the safety and efficacy of the Milestone Products.  Section 5.23. Environmental Matters. The Company is, and for the last five (5) years  has been, in material compliance with all, and not in violation of any, applicable Environmental  Laws. The Company is in material compliance with all material Permits required for its operations  pursuant to applicable Environmental Laws. To the Company’s knowledge, the Company is not  subject to any liability for Hazardous Material disposal or contamination on any third party property.  The Company is not subject to any Judgment of any Governmental Entity relating to material  liability under any Environmental Law. The Company does not own or operate any underground  storage tanks. The Company has not released any Hazardous Material into the environment except  (i) in compliance with Law or (ii) in an amount or concentration that would not reasonably be  expected to give rise to material liability under any Environmental Law. Copies of all material  environmental reports, studies, assessments, sampling data and other material environmental  documents in the possession of the Company that relate to the Company or any real property  currently or formerly occupied or operated in connection with the business of the Company have  been made available to Buyer. The Company has not received any written notice, demand, letter,  claim or request for information from any Governmental Entity or other Person indicating that it  may be in violation of, or subject to liability under, any Environmental Law or regarding any actual,  alleged, possible or potential liability arising from or relating to the presence, generation,  manufacture, production, transportation, importation, use, treatment, refinement, processing,  handling, storage, discharge, release, emission or disposal of any Hazardous Material used by the  Company. No permits registered for operations pursuant to Environmental Laws will terminate or  become terminable as a result of the Transactions.  Section 5.24. Books and Records. All statutory books and registers (including the  register of members and register of persons with significant control (PSC Register)) and all other  statutory books of the Company have been made available to Buyer and have been properly kept,  89  





 






are written up to date and contain a true, correct and complete record of all matters which they are  required by CA 2006 to record, and accurately reflect all transactions effected in Company Capital  Stock through and including the date hereof. The copies of such statutory books and registers made  available to Buyer are true, correct and complete copies of the original books and registers. In  relation to its register of persons with significant control (PSC Register) (to the extent it is required  to keep the same), the Company has at all times complied with its duties under section 790D (Duty  to investigate and obtain information) and section 790E (Duty to keep information up-to-date) of  CA 2006. The meeting minutes, written resolutions in lieu of a meeting, and all such other records  and resolutions of the shareholders and Board of Directors of the Company made available to Buyer  are up to date, complete and accurately reflect in all material respects all action previously taken by  the shareholders, Board of Directors and committees of the Board of Directors of the Company.  Section 5.25. Filings All returns, particulars, resolutions and other documents that  the Company is required by Law to file with, or deliver to, any authority in any jurisdiction  (including, in particular, the Registrar of Companies in England and Wales) have been correctly  made up and duly filed or delivered (as the case may be). No warning notice or restrictions notice  has been issued under Schedule 1B (Enforcement of disclosure requirements) of CA 2006 in respect  of any shares or voting rights in, or any right to appoint or remove any member of the board of  directors of, the Company.  Section 5.26. Transactions with Affiliates. Section 5.26 of the Disclosure Letter  describes any transaction, during the past three years, between the Company, on the one hand, and  any Seller or Affiliate of a Seller, on the other hand, other than any employment Contract, Contract  not to compete with the Company, Contract to maintain the confidential information of the  Company, or Contract assigning Intellectual Property rights to the Company, in each case listed in  Section 5.14(a) or Section 5.15(b) of the Disclosure Letter. For purposes of avoiding confusion, the  word “transaction” in the preceding sentence shall mean any “transaction” of the type described in  Item 404 of Regulation S-K promulgated under the Securities Exchange Act of 1934 (without regard  to the amount involved in such transaction and without regard to the Company’s not being subject  to such regulation). Except as set forth on Section 5.26 of the Disclosure Letter no Seller or any  Affiliate of a Seller (a) owns or has any interest in any property (real or personal, tangible or  intangible), Company-Owned Intellectual Property, Third Party Intellectual Property or Contract  used in or pertaining to the business of, the Company, (b) to the Company’s knowledge, has any  claim or cause of action against the Company or (c) owes any money to, or is owed any money by  the Company. To the Knowledge of the Company, no Seller or an Affiliate of a Seller possesses,  directly or indirectly, any financial interest in, or is a director, officer or employee of, any Person  that is a client, supplier, customer, lessor, lessee, competitor or potential competitor of the Company.  Ownership of securities of a Person whose securities are registered under the Securities Exchange  Act of 1934 of one percent or less of any class of such securities shall not be deemed to be a financial  interest for purposes of this Section 5.26.  Section 5.27. Brokers. The Company has no Liability to any investment banker,  broker, finder, consultant or intermediary in connection with the Transactions.  Section 5.28. Anticorruption Matters; Export Controls and Sanctions Matters.   90  





 






(a) The Company and its past and present directors, officers and employees have  not, and to the Knowledge of the Company, no agent, contractor or Representative or person acting  for or on behalf of the Company (in each case, in his/her capacity as such) has, directly or indirectly:  (i) paid, promised to pay or offered to pay, or authorized the payment of, any  contribution, gratuity, gift, commission, bribe, raft, rebate, pay-off, kickback or any other payment  to any person, private or public, regardless of form and whether in money, property or services in  relation to any activities of the Company (“Gratuity”) to:  (A) seek to obtain favorable treatment in securing business; or  (B) pay for favorable treatment for business secured which violates any  applicable Law, or has entered into any agreement pursuant to which any such Gratuity may  or shall at any time be paid; or  (C) obtain special concessions or for special concessions already  obtained, for or in respect of the Company; or  (ii) offered or given anything of value to influence (or that could be construed  as seeking to influence) the action of a public official, political party, party official, candidate for  public office, or official of any public international organization, or threatened injury to any person,  property or reputation in connection with the activities of the Company in relation to the matters  set out in Sections 5.28(i)(A) – (C).  (b) The business of the Company is not dependent in any manner upon the  making or receipt of any Gratuity.  (c) The Company and its past and present directors, officers and employees  have, and to the Knowledge of the Company, each agent, contractor or Representative or person  acting for or on behalf of the Company (in each case, in his/her capacity as such) has, complied in  all material respects with:  (i) the Bribery Act 2010 (and all similar Laws in any jurisdiction outside the  United Kingdom if and to the extent applicable to the Company or its operations);  (ii) the Proceeds of Crime Act 2002 (and all similar anti-money laundering laws  in any jurisdiction outside the United Kingdom if and to the extent applicable to the Company or  its operations); and  (iii) any relevant anti-bribery and corruption obligations pursuant to any contract  with any third party.  (d) The Company has not conducted or initiated any internal investigation or  made a voluntary, directed or involuntary disclosure to any government entity or similar agency  with respect to any alleged act or omission arising under, or relating to, any non-compliance with  the Bribery Act 2010 or any anti-bribery, anti-corruption and anti-money laundering Laws by the  Company or any directors, officers, agents, employees, contractors or other persons acting for or  91  





 






on behalf of the Company. The Company has not received any notice, request or citation for any  actual or potential non-compliance with any anti-bribery and corruption Laws.  (e) No officer, director, employee or, to the Knowledge of the Company,  contractor of the Company is a government or political official and no government or political  official or government or political entity has any interest (whether directly or indirectly) in the  Company.  (f) Neither the Company, nor any of its directors, officers or employees, nor, to  the Knowledge of the Company, any of the Representatives (including any of its respective  directors, officers and employees) of the Company acting on its behalf has, directly or indirectly,  taken any action in violation of, or taken any action that would trigger the application of punitive  measures under, or has been a subject of any active, concluded, or threatened investigation, inquiry,  or enforcement proceedings by any governmental authority in relation to, any applicable export  control Law, any trade or economic sanctions or export controls Laws, regulations, or orders, or  antiboycott Law, implemented by the European Union, any EU Member State, the United  Kingdom, or the United States (collectively Trade Controls), or any other jurisdiction.  (g) Neither the Company, nor, any of its directors, officers or employees, nor,  to the Knowledge of the Company, any of the Representatives (including any of their respective  directors, officers, or employees) (in each case in their capacity as such) of the Company acting on  its behalf, (i) is specially designated for sanctions under any Trade Controls, or 50% or more owned,  or otherwise controlled, by any specially designated person or entity as included in the EU’s  Consolidated Sanctions List, the UK Sanctions List or on the U.S. Office of Foreign Assets Control  “Specially Designated Nationals and Blocked Persons (Sanctioned Person) List” or any other  similar list or (ii) to the Company’s knowledge, has engaged in any business activities with or  otherwise related to any Sanctioned Person or in relation to any jurisdiction that is the subject of  comprehensive sanctions or export controls (which include, as of the date of this agreement, Cuba,  Iran, North Korea, Syria, or the Crimea, Luhansk, or Donetsk regions of Ukraine). The Company  has ethics policies that address and prescribe a compliance program appropriate to ensure  compliance with any applicable export control Law, trade or economic sanctions Law, or  antiboycott Law.  ARTICLE 6  REPRESENTATIONS AND WARRANTIES OF BUYER  Buyer represents and warrants to the Company and the Sellers, as of the date hereof  and as of the Closing Date, as follows:  Section 6.1. Organization and Standing. Buyer is a corporation duly organized,  validly existing and in good standing under the Laws of the State of Delaware.  Section 6.2. Power and Authority; Binding Agreement. Buyer has all requisite  corporate power and authority to execute and deliver this Agreement, to consummate the  Transactions, and to perform its obligations hereunder. The execution and delivery by Buyer of this  Agreement, and the consummation by Buyer of the Transactions, have been duly authorized by all  necessary corporate action on the part of Buyer, and no other corporate proceedings on the  92  





 






part of Buyer are necessary to authorize this Agreement or to consummate the Transactions. This  Agreement has been duly executed and delivered by Buyer and, assuming the due execution of this  Agreement by the other parties thereto, constitutes a valid and binding obligation of Buyer,  enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy,  insolvency, reorganization, fraudulent transfer, moratorium or similar Laws affecting creditors’  rights generally and general principles of equity.  Section 6.3. Noncontravention.  (a) The execution and delivery by Buyer of this Agreement, the consummation  of the Transactions and the compliance by Buyer with the provisions of this Agreement will not (i)  result in the breach of any of the terms or conditions of, or constitute a default under or violate, as  the case may be, the Constitutive Documents of Buyer, or any material Contract to which Buyer is  bound, or by which any of its assets or properties may be affected or (ii) violate any Law or  Judgment applicable to Buyer, other than any such breaches, defaults or violations that individually  or in the aggregate are not likely to impair in any material respect the ability of Buyer to perform  its obligations under this Agreement, or prevent or materially impede or delay the consummation  of the Transactions.  (b) No consent, approval, notification, order or authorization of, registration,  declaration or filing with, response from, or notice to, any Governmental Entity is required by or  with respect to Buyer in connection with the execution and delivery by Buyer of this Agreement,  the consummation by Buyer of the Transactions or the compliance by Buyer with the provisions of  this Agreement, except for such consents, approvals, orders, authorizations, registrations,  declarations, filings and notices, the failure of which to be obtained or made individually or in the  aggregate would not impair in any material respect the ability of Buyer to perform its obligations  under this Agreement or prevent or materially impede or delay the consummation of the  Transactions.  Section 6.4. Buyer Shares. The Buyer Shares to be issued at the Closing have been  duly authorized and, when issued and delivered to the Sellers in accordance with the terms of this  Agreement, such Buyer Shares will be free and clear of any liens or other restrictions whatsoever  (other than any liens or restrictions imposed by applicable securities laws) and registered with the  Company’s transfer agent, and such Buyer Shares will be validly issued, fully paid and non- assessable and will not have been issued in violation of or subject to any purchase option, right of  first refusal, preemptive right, subscription right or any similar rights created under the Buyer’s  Constitutive Documents or applicable law.  Section 6.5. Brokers. Buyer has not employed or entered into any Contract with any  investment banker, broker, finder, consultant or intermediary in connection with the Transactions,  pursuant to which the Sellers or the Company could be liable for the fee or commission of such  investment banker, broker, finder, consultant or intermediary, or for any similar fee or commission  in connection with the this Agreement or the Transactions.  Section 6.6. Litigation. There are no Actions pending or, to the knowledge of Buyer,  threatened against Buyer before any Governmental Entity or any arbitrator that seeks to  93  





 






restrain or enjoin the consummation of the Transactions or which would reasonably be expected to  have a material adverse effect on Buyer’s ability to consummate the Transactions.  Section 6.7. Adequacy of Funds. Buyer has, and as of the Closing will have,  adequate financial resources to satisfy its obligation to pay the Closing Payment Amount. Buyer  will have, as of the date any Contingent Payments are required to be made by Buyer pursuant to  the terms of this Agreement, adequate financial resources to satisfy such payment obligations.  ARTICLE 7  CERTAIN COVENANTS  Section 7.1. Conduct of Business.   (a) From the date hereof to the Closing Date or the earlier termination of this  Agreement in accordance with Article 10 (the “Pre-Closing Period”), the Company shall, except as  expressly permitted or required by the terms of this Agreement (i) conduct its business (including  the development of its programs as currently operated and any ongoing testing) in the Ordinary  Course of Business, (ii) use commercially reasonable efforts to keep its physical assets in good  working condition, to preserve, maintain the value of, renew, extend, protect the confidential nature  of and legal protections applicable to and keep in full force and effect all material Company  Intellectual Property, material Company-Owned Intellectual Property and material Third Party  Intellectual Property and not to take any action to adversely affect its relationships with the  Company’s lenders, creditors, lessors, lessees, licensors, licensees, employees, contractors,  distributors, developers, vendors, clients, customers, suppliers or other Persons having a material  business relationship with the Company, (iii) maintain insurance for the Company on the same terms  as in place as at the date of this Agreement and (iv) comply in all material respects with all applicable  Laws and obligations under any Contracts of the Company.  (b) Subject to Section 7.2(c) and without limiting the generality of Section  7.1(a), except as expressly permitted or required by the terms of this Agreement or in order to effect  the Transactions, during the Pre-Closing Period, the Company shall not, without the prior written  consent of Buyer:  (i) amend its Constitutive Documents or pass any resolution in a general  meeting or class meeting of shareholders or by way of written resolution;  (ii) declare, set aside or pay any dividend on, or make any other  distribution (whether in cash, stock or property) in respect of, any Company Capital Stock  to holders of Company Capital Stock from time to time outstanding;  (iii) split, combine or reclassify any Company Capital Stock, or issue or  authorize the issuance of any other securities in respect of, in lieu of or in substitution for  shares of Company Capital Stock;  (iv) purchase, redeem or otherwise acquire any shares of Company  Capital Stock, or any option, warrant, call or right relating to such shares, interests or other  securities;  94  





 






(v) issue, grant, deliver or sell, or pledge or otherwise encumber or  dispose of, any shares of Company Capital Stock, or any securities convertible into, or  exchangeable for, or any options, warrants, calls or rights to acquire or receive, any such  shares, interests or other securities or any stock appreciation rights, phantom stock awards  or other rights that are linked in any way to the price of the Company Shares or the value  of the Company or any part thereof (except pursuant to the exercise of the Company Options  or conversion of amounts outstanding under the Convertible Loan Agreement, in each case  outstanding as of the date hereof);  (vi) (A) create, incur or assume any Indebtedness (other than unsecured,  non-convertible Indebtedness that will be included in the Closing Indebtedness and retired at  Closing), or issue or sell, or amend, modify or change any term of, any debt securities or  options, warrants, calls or other rights to acquire any debt securities of the Company, (B)  guarantee or endorse any Indebtedness of another Person, (C) make any loans, advances or  capital contributions to, or investments in, any Person other than the Company, (D) enter into  any Contract to maintain any financial statement condition of another Person or (E) enter into  any Contract having the economic effect of any of the foregoing;  (vii) sell, license, mortgage, transfer or otherwise encumber or subject to  any Lien other than a Permitted Lien, or otherwise dispose of any properties or assets which  are material, individually or in the aggregate, to the Company;  (viii) acquire or agree to acquire (A) by merging or consolidating with, or  by purchasing all or a substantial portion of the assets of, or by purchasing all or a  substantial portion of the Capital Stock of, or by any other manner, any business or any  other Person or any division thereof or (B) any assets, including any interest in real property,  other than in the Ordinary Course of Business, that are material, individually or in the  aggregate, to the Company;  (ix) make any changes in Tax accounting methods, principles, practices  or policies, except as required by applicable Law; make, revoke or change any material Tax  election relating to the Company other than the elections made pursuant to Section 431 of  ITEPA 2003 in respect of the exercises of Company Options and the acquisitions of Buyer  Shares under this Agreement; agree to an extension or waiver of the statute of limitations  with respect to a material amount of Taxes; amend any Tax Return that could result in  material Tax liability to the Company in the Post-Closing Tax Period; surrender any right  to claim a Tax refund; or commence, settle, compromise or offer or propose to settle or  compromise any claim, assessment, audit, other administrative proceeding or judicial  proceeding involving a material amount of Taxes;  (x) (A) establish or amend any Plan, or make any material changes to  terms and conditions of employment, benefits of employment (including pension benefits),  or bonus, profit-related pay, commission or other incentive entitlements or opportunities of,  or enter into or amend or cancel any Contract with, or incur any Liability for the benefit of,  any Company Personnel or independent contractors, (B) pay to any Company Personnel any  benefit, or make any advance or loan to any Company Personnel or (C) hire or offer to  95  





 






hire, appoint, employ or engage, at any time any person as a director, officer, employee or  independent consultant on a full or part time basis;  (xi) enter into any lease or sublease of real property other than in the   Ordinary Course of Business and with a term longer than five years (whether as a lessor,  sublessor, lessee or sublessee) or modify, amend, terminate or fail to exercise any right to  renew any lease or sublease of real property;  (xii) enter into any Contract that would constitute a Material Contract if  in effect on the date hereof, except in the Ordinary Course of Business;  (xiii) (A) waive, release or assign any rights or claims under, fail to take a  required action under, fail to exercise a right of renewal under, or modify, amend or  terminate any Material Contract (in each case, except in the Ordinary Course of Business)  or (B) commit a material breach of any Material Contract;  (xiv) pay, discharge, settle or satisfy any Actions or Liabilities, other than  the payment, discharge or satisfaction of Liabilities in the Ordinary Course of Business and  any expenses relating to the Transactions;  (xv) take any action (or omit to take any action) if such action (or  omission) would or is reasonably likely to prevent any of the conditions set forth in Section  3.3 from being satisfied;  (xvi) commence, participate or agree to commence or participate in any  plan or arrangement for the complete or partial dissolution, liquidation, merger,  consolidation, restructuring, recapitalization, or other reorganization of the Company,  including any bankruptcy, winding up, examinership, insolvency or similar proceeding in  respect of the Company;  (xvii) commence, compromise, settle, release or discharge any litigation,  dispute or legal proceedings except where the amount claimed does not exceed £[***];  (xviii) enter into or amend any contract or arrangement between with a  Seller, except on an arm’s length basis and in the ordinary and usual course of trading;  (xix) create or have any Subsidiary of the Company;  (xx) (A) except as required in the diligent prosecution of the Company  Intellectual Property, grant, cancel, extend, amend, abandon, allow to lapse, waive or  modify any material rights in or to the Company Intellectual Property, (B) fail to diligently  prosecute, maintain, defend or protect the Company’s Patent Rights or Company  Intellectual Property, (C) fail to make required maintenance payments or exercise any right  of renewal or extension under any agreement with respect to Company Intellectual  Property, or (D) disclose any material know-how, confidential information or trade secrets  contained in any Company Intellectual Property to any third party;  96  





 






(xxi) grant any shares of Company Capital Stock or other award under any  Company Plan (except pursuant to the exercise of the Company Options outstanding as of  the date hereof); or  (xxii) authorize any of, or commit, resolve or agree, whether in writing or  otherwise, to take any of, the actions prohibited in Section 7.1(b)(i) through Section  7.1(b)(xix).  Section 7.2. Access.  (a) The Company shall, and shall cause its Affiliates to, (i) make available for  inspection by Buyer and its Representatives all of their respective properties, assets, books of  accounts, records (including the work papers of their respective independent accountants), any and  all data and Intellectual Property related to the Company Programs, and Contracts and any other  materials requested by any of them relating to the Company and its existing and prospective  businesses and assets and Liabilities at such times as Buyer may reasonably request, (ii) make  available to Buyer and its Representatives the officers, other senior management and Representatives  of the Company, for interviews, at such times as Buyer and its Representatives may reasonably  request, to verify and discuss the information furnished to Buyer and its Representatives and  otherwise discuss the Company’s existing and prospective businesses and assets and Liabilities and  (iii) authorize its lenders, creditors, lessors, lessees, licensors, licensees, employees, and contractors  or other Persons having a material business relationship with the Company to respond to appropriate  inquiries from Buyer regarding the Company’s existing and prospective businesses and assets and  Liabilities. Any and all such inspections, interviews, and access for investigations shall be conducted  in accordance with applicable Law (including any applicable competition, antitrust or trade  regulation Law) during normal business hours following reasonable advance notice from the Buyer  and in a manner that does not unreasonably or materially interfere with the conduct of the business  of the Company or its applicable Affiliates.  (a) The Company shall give reasonable assistance to the Buyer and its  Representatives to assist them in becoming familiar with the Company’s existing and prospective  businesses and assets and Liabilities to the extent and at such times as Buyer and its Representatives  may reasonably request. Any and all such assistance shall be conducted in accordance with  applicable Law (including any applicable competition, antitrust or trade regulation Law) during  normal business hours following reasonable advance notice from the Buyer and in a manner that  does not unreasonably or materially interfere with the conduct of the business of the Company or  its applicable Subsidiaries.  Section 7.3. Tax Matters.   (a) The Company shall timely prepare and file any Tax Return required to be  filed by the Company on or before the Closing Date (not including any extensions thereof), and  timely pay any Tax required to be paid on or before the Closing Date. The Company will prepare  such Tax Returns in accordance with applicable Law, and consistent with past custom and practice  unless otherwise required by applicable Law.  97  





 






(b) Buyer will prepare any Tax Return of the Company required to be filed after  the Closing Date or which Buyer determines was required to be filed prior to the Closing Date but  which was not filed on a timely basis and, subject to Buyer’s right to indemnification pursuant to  Section 9.2, pay any such Tax reflected thereon. Buyer shall notify the Shareholders’ Representative  no later than [***] prior to the anticipated filing date of any corporation Tax Return or value added  Tax Return in respect of a Straddle Period where the computations shown in such corporation Tax  Return or value added Tax Return indicate that there is a liability for Tax for which the Sellers are  liable under this Agreement and the Shareholders’ Representative shall have the right to review and  comment on any such corporation Tax Return or value added Tax Return (and Buyer shall give the  Shareholders’ Representative reasonable access to all supporting work papers (including VAT  invoices issued or received by the Company) applicable to such corporation Tax Return or value added  Tax Return) prior to the date of its filing, and Buyer shall reasonably and in good faith consider such  revisions to such corporation Tax Returns or value added Tax Return as are reasonably requested by  the Shareholders’ Representative and are received by Buyer at least [***] prior to the anticipated filing  date of any such Tax Return. All Post-Closing Tax Returns in respect of a Straddle Period shall be  prepared in accordance with applicable Law, professional standards and rules, and, where not  unreasonable, consistent with past practice. Notwithstanding the foregoing and anything to the  contrary herein, Buyer may, at its sole discretion, make an election under Section 338 of the Code,  and any corresponding election under the Tax Laws of any of the States or the District of Columbia  or their respective subdivisions, with respect to the purchase of the Purchased Shares, and the Sellers  shall reasonably cooperate (at the Buyer’s cost) with Buyer to effect such an election, if desired by  Buyer.  (c) Except as reasonably determined by the Buyer to be more likely than not  required by Law, after the Closing, Buyer shall not (i) amend or withdraw any Tax Return filed  prior to the Closing Date by or for the Company in respect of a Pre-Closing Tax Period, or (ii)  amend, revoke or withdraw any claim or election for Taxes made by the Company in respect of a  Pre-Closing Tax Period, or (iii) voluntarily approach any Taxing Authority for any ruling,  agreement or settlement, in relation to Taxes of the Company in respect of any Pre-Closing Tax  Period, in each case to the extent such amendment, withdrawal, revocation or withdrawal or ruling,  agreement or settlement, could reasonably be expected to have a material adverse impact on the  Sellers without the prior written consent of the Shareholders’ Representative, not to be  unreasonably withheld, conditioned, or delayed.  (d) Any Transfer Taxes shall be borne by Buyer and Buyer shall prepare and  file any Tax Returns relating to any Transfer Taxes.  (e) The Company shall cause the provisions of any Tax allocation, indemnity  or sharing Contract to which the Company is a party to be terminated on or before the Closing  Date.  (f) Buyer, the Company and the Sellers agree, upon request, to use all reasonable  efforts to obtain or provide any certificate, form, or other document or information from any  Governmental Entity or any other Person as may be necessary to withhold, report, mitigate, reduce or  eliminate any Tax that could be imposed on the Sellers or the Company with respect to the  Transactions. Buyer, the Sellers, the Shareholders’ Representative and the Company shall cooperate  fully, as and to the extent reasonably requested by the other party, in connection with  98  





 






the filing of Tax Returns pursuant to this Agreement and any audit, administrative proceeding or  judicial proceeding involving Taxes. Such cooperation shall include the retention and (upon the  other party’s request) the provision of records and information which are reasonably relevant to any  such Tax Returns, audits, or administrative or judicial proceedings related to Taxes, including all  VAT invoices issued or received by the Company, records and information reasonably capable of  being obtained or created, and making employees available on a mutually convenient basis to  provide additional information and explanation of any material provided hereunder through the  applicable statute of limitations. Buyer, the Company, and the Shareholders’ Representative (after  the Closing) agree (A) to retain all books and records (including VAT invoices issued or received  by the Company) with respect to Tax matters pertinent to the Company relating to any taxable period  beginning before the Closing Date until the expiration of the statute of limitations (including any  extensions thereof) of the respective taxable periods, and to abide by all record retention Laws of,  and agreements entered into with, any Governmental Entity; (B) to deliver or make available to  Buyer, within [***] after the Closing Date, copies of all such invoices, books and records; and (C)  to give the other Party reasonable written notice prior to transferring, destroying or discarding any  such books and records and, if the other Party so requests, Buyer, the Company, and the  Shareholders’ Representative, as the case may be, will allow the other Party to take possession or to  prepare copies of such invoices, books and records at such other party’s expense. The Sellers shall  provide to Buyer any such information in its possession, or reasonably capable of being obtained or  created by it, as Buyer may reasonably request in connection therewith, for purposes of a Code  Section 382 study for the Company from its date of incorporation through the date preceding the  Closing Date.  (g) From the date hereof through the Closing Date, the Company shall not effect  any extraordinary transactions (other than any such transactions expressly required by applicable  Law, with prior notice given to Buyer in order to give Buyer a reasonable opportunity to give  reasonable comments to the Company which shall be considered in good faith, or by this  Agreement) that are inconsistent with past custom and practice or that could result in Tax liability  to the Company in a Post-Closing Tax Period in excess of Tax liability associated with the conduct  of its business in the ordinary course.  Section 7.4. Insurance. The Company shall keep all insurance policies set forth on  Section 5.18 of the Disclosure Letter, or comparable replacements therefor, in full force and effect  through the Closing such that such insurance policies will be in full force and effect immediately  following the Closing; provided that any such insurance policy may be amended or modified or  substituted with another insurance policy (including a change in insurance carriers), so long as the  coverage and limitations provided by such amended, modified or substituted insurance policy are  materially the same as in the respective policy set forth in Section 5.18 of the Disclosure Letter.   Section 7.5. Exclusivity.  (a) During the Pre-Closing Period, the Company and the Sellers shall not, and  shall cause their respective Affiliates and each of their respective officers, directors, shareholders or  Representatives not to, directly or indirectly through another Person, (i) initiate, solicit, propose,  knowingly encourage, or engage in any inquiry, indication of interest, proposal or offer relating to a  Transaction Proposal or (ii) engage in, continue or otherwise participate in any discussions or  99  





 






negotiations regarding relating to a Transaction Proposal, (iii) furnish or otherwise afford access  to any information relating to the Company or any of its affiliates or the business, properties, assets,  books or records of the Company or any of its affiliates to any person or group (or any of its  Representatives) in connection with a Transaction Proposal, (iv) amend or grant any waiver or  release under any standstill or similar agreement with respect to any class of equity securities of  the Company or any of its affiliates, (v) approve or authorize any Transaction Proposal or enter  into any agreement, arrangement or understanding, whether written or oral, binding or nonbinding,  relating to a Transaction Proposal or (vi) otherwise cooperate in any respect with a Transaction  Proposal. Without limiting the foregoing, it is agreed that any violation of the restrictions set forth  in the preceding sentence by any Representative of the Company, the Sellers or their respective  Affiliates shall be a breach of this Section 7.5(a) by the Company. The Company and the Sellers  shall, and shall direct their respective Affiliates and Representatives to, immediately cease and  cause to be terminated all existing discussions or negotiations with any Person conducted  heretofore with respect to any Transaction Proposal.  (b) Without limiting Section 7.5(a), it is understood that any violation of the  restrictions set forth in Section 7.5(a) by any Person covered by Section 7.5(a), whether or not such  Person is purporting to act on behalf of the Company or any Seller, shall be deemed to be a breach  of Section 7.5(a) by the Company or such Seller.  (c) If any of the Persons referred to in Section 7.5(a) receives any inquiry,  indication of interest, proposal or offer (including any material update or modification thereto)  from any person or group relating to a possible Transaction Proposal, the Company and the Sellers  shall promptly (and in any event by the end of the next Business Day after receipt thereof) provide  Buyer with written notice thereof, which notice shall include the identity of the person or group  making such inquiry, indication of interest, proposal or offer, and a copy (if made in writing) or a  reasonably detailed summary (if made orally) of such inquiry, indication of interest, proposal or  offer and all communications from such person or group relating thereto.  Section 7.6. Control of Company Pre-Closing. Prior to the Closing, the Company  shall exercise, consistent with the terms and conditions of this Agreement, complete control and  supervision over its businesses, assets and properties.  Section 7.7. Confidentiality.  (a) Any Confidential Information provided to each Party shall be maintained in  confidence by the receiving Party and shall not be disclosed to a third party or used for any  purpose, except as expressly permitted under this Agreement, without the prior written consent  of the disclosing Party, except to the extent that such information:  (i) is publicly disclosed by the disclosing Party, either before or after it  is disclosed to the receiving Party hereunder;  (ii) is known by the receiving Party at the time of its receipt, and not  through a prior disclosure by the disclosing Party, as documented by the receiving Party’s  contemporaneous business records;  100  





 






(iii) is subsequently disclosed to the receiving Party or any of its  Affiliates on a non-confidential basis by a third party that, to the receiving Party’s or such  Affiliates’ knowledge, is not bound by a similar duty of confidentiality or restriction on its  use;  (iv) is now, or hereafter becomes, through no breach of this Agreement  on the part of the receiving Party or any of its Affiliates, generally known or available,  either before or after it is disclosed to the receiving Party;  (v) is independently discovered or developed by or on behalf of the  receiving Party or any of its Affiliates without the use of information belonging to the  disclosing Party;  (vi) is reasonably necessary to be disclosed to the Sellers in order for the  Company to comply with shareholder disclosure obligations under applicable Law; or  (vii) is required to be disclosed by a Party under applicable Law  (including, for the avoidance of doubt, for The Future Fund to comply with its legal  obligations in respect of Associated Government Entities and obligations under the  Freedom of Information Act 2000).  (b) As used in this Agreement, “Confidential Information” means (i) in the case  of any Party, any information provided by or on behalf of such Party to the other Party in connection  with this Agreement or the Transactions, including any information relating to any of the Company  Programs, any Know-How and Other Information with respect thereto developed by or on behalf of  such Party or its Affiliates, or the scientific, regulatory or business affairs or other activities of such  Party, (ii) in the case of any Party, all information disclosed prior to the date hereof by or on behalf  of such Party and (iii) any other proprietary or confidential information of any Party or any of its  Affiliates; provided that (A) prior to the Closing, all information regarding the Company, its  business or assets (including the Company Intellectual Property and any of the Company Programs)  shall be deemed to be disclosed by each of Buyer and the Company, (B) on and after any termination  of this Agreement, such information shall be deemed to be solely disclosed by the Company and  (C) after the Closing, such information shall be deemed to be solely disclosed by Buyer.  (c) Notwithstanding Section 7.7(a), any Party may disclose Confidential  Information to those Representatives of such Party who need to know such information for the  purpose of evaluating, negotiating or consummating any of the Transactions and who agree to keep  such information confidential and to be bound by the terms and conditions of this Section 7.7 to  the same extent as if they were parties hereto and The Future Fund shall be entitled to disclose  Confidential Information to Associated Government Entities which The Future Fund, in its  reasonable discretion, considers that it is required to disclose in order to comply with any applicable  statutory or parliamentary requirements, whether or not existing at the date of this Agreement.  (d) If and whenever any information of the disclosing Party is disclosed by the  receiving Party in accordance with this Section 7.7, such disclosure shall not cause any such  101  





 






information to cease to be subject to the restrictions of this Section 7.7 except to the extent that such  disclosure results in a public disclosure of such information (other than by breach of this  Agreement). Notwithstanding the foregoing, any Party may disclose Confidential Information of  the other Parties to the extent such information (i) is reasonably necessary to be disclosed in  prosecuting or defending litigation, including responding to a subpoena in a third party litigation, or  (ii) is required to be disclosed to comply with applicable Law or court or administrative orders. In  the event that any Party is required to make a disclosure of any other Party’s Confidential  Information pursuant to the preceding sentence, it will, except where impracticable, give reasonable  advance notice to such other Party of such disclosure and use not less than the same efforts to secure  confidential treatment of such information as it would to protect its own confidential information  from disclosure. [***].  Section 7.8. Development and Regulatory Approval. The Company shall consult  with Buyer with respect to any activities undertaken after the date hereof and prior to the Closing  relating to any pre-clinical testing or clinical trials of the Milestone Product. Without limiting the  foregoing, the Company shall not, without Buyer’s prior written consent (not to be unreasonably  withheld) make any material modification to, or materially deviate from, the Development and  Regulatory Plan for development of the Milestone Product.  Section 7.9. Notification of Certain Matters. The Company and the Sellers, on the  one hand, and Buyer, on the other hand, shall give notice as soon as reasonably practicable to the  other party, of (a) the occurrence or non-occurrence of any event that is reasonably likely to result  in any of closing conditions in ARTICLE 3, as applicable, not being satisfied and (b) any failure  of the Company or any Seller, or Buyer, respectively, to comply with or satisfy in any material  respect any covenant, or agreement to be complied with or satisfied by it hereunder such that the  conditions set forth in ARTICLE 3, as applicable, would not be satisfied; provided, however, that,  the delivery of any notice pursuant to this Section 7.9 shall not limit or otherwise affect any  remedies available to the party receiving such notice.  Section 7.10. Termination of Shareholders’ Agreement. The Company and the  Sellers and each Party that is also party to the Shareholders’ Agreement hereby irrevocably agrees  and acknowledges for the purposes of clause 24 of the Shareholders’ Agreement and for all other  purposes whatsoever that the Shareholders’ Agreement (and all rights and obligations thereunder,  including, for the avoidance of doubt, any rights which are stated as surviving termination) shall  terminate automatically subject to and with immediate effect as of the Closing having occurred  notwithstanding anything provided in the Shareholders’ Agreement to the contrary and all past,  present and future obligations and liabilities under the Shareholders’ Agreement shall cease and  each such Party irrevocably waives any and all right and interest it/he/she may have thereunder  (including in respect of any claim or cause of action in respect of any breach thereof, whether known  or unknown). Upon the occurrence of the Closing, the Shareholders’ Agreement shall become null  and void without further actions by any of the Parties.  102  





 






ARTICLE 8  CERTAIN ADDITIONAL COVENANTS  Section 8.1. Commercially Reasonable Efforts. Until the earlier of the Closing and  termination of this Agreement, the Parties (other than the Shareholders’ Representative) agree that  time is of the essence with respect to each Party’s covenants and obligations under this Agreement,  and each of the Sellers, the Buyer and the Company shall use its respective commercially reasonable  efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and  cooperate with each other Party in doing, all things, in each case necessary or advisable to permit  the consummation of the Transactions, including (a) the actions to be taken by the Company and  the Sellers as set forth in Sections 2.5(b) and (c), (b) the actions to be taken by the Buyer as set forth  in Section 2.5(d), and (c) responding to any enquiry letter that may have been received (as the case  may be) by the Company and/or by any other Party from the CMA in respect of the Transactions  pursuant to its powers under the EA 2002 and/or the ISU pursuant to its powers under the NSIA  (and promptly keeping each other Party informed of the status of such enquiry), in each case (a) to  (c) which may be necessary or appropriate to permit the consummation of the Transactions.  Notwithstanding the foregoing or any other provision of this Agreement, in no event shall Buyer be  obligated to offer, accept or agree to, and the Company and the Sellers shall not, without Buyer’s  prior written consent, offer, accept or agree to (i) divest, dispose of, license or hold separate any  portion of the businesses, operations, assets or product lines of Buyer, its Affiliates or the Company  (or a combination of the respective businesses, operations, assets or product lines of Buyer, its  Affiliates or the Company), (ii) restrict, prohibit or limit the ability of Buyer, its Affiliates or the  Company to conduct their business or own their assets, (iii) restrain, prohibit or limit the ownership  or operation by Buyer, its Affiliates or the Company of all or any portion of the business or assets  of Buyer, the Company, the Company or any of their respective Affiliates in any part of the world,  or (iv) impose limitations on the ability of Buyer or any of its Affiliates effectively to acquire, hold  or exercise full rights of ownership of, any shares of capital stock of the Company, including the  right to vote any shares of capital stock of the Company acquired or owned by Buyer or any of its  Affiliates on all matters properly presented to the shareholders of the Company. Notwithstanding  the foregoing or any other provision of this Agreement to the contrary, in no event shall Buyer or  any of its Affiliates be obligated to (x) enter into any settlement, undertaking, consent decree,  stipulation or agreement with any Governmental Entity in connection with the Transactions or (y)  challenge, litigate or otherwise contest or participate in the litigation of any suit, claim, action,  investigation or proceeding, whether judicial or administrative, brought by any Governmental Entity  challenging or seeking to restrain, prohibit or place conditions on the consummation of the  Transactions or the ownership or operation by Buyer, its Affiliates or the Company of all or any  portion of their respective businesses as presently conducted and as currently proposed to be  conducted.  Section 8.2. Publicity.  (a) The Company and the Sellers shall not, and shall cause their respective  Affiliates, officers, directors, employees, advisors and other Representatives not to, issue a press  release or public announcement or otherwise make any public disclosure concerning the subject  matter of this Agreement or the Transactions without the prior written approval of Buyer; provided  that the Sellers and the Company may make: (i) any public disclosure that is in the form already  disclosed by the Buyer; and (ii) any public disclosure they believe in good faith is required by  103  





 






applicable Law and in such case the Sellers or the Company, as applicable, must, to the extent  permissible under applicable law, prior to making such disclosure, (x) use commercially reasonable  efforts to advise Buyer of such disclosure (including a copy thereof) as far in advance of such  disclosure as is reasonably practicable and (y) consult with Buyer with respect to the content of  such disclosure.  (b) The Buyer shall have the right to issue on or after the date of this Agreement a  press release substantially in the form attached as Schedule 8.2(b). Following Closing and after the  public announcement of the transaction by the Buyer, the Shareholders’ Representative shall be  permitted to announce that it has been engaged to serve as the Shareholders’ Representative in  connection herewith as long as such announcement does not disclose any of the terms hereof.  Section 8.3. Expenses. Whether or not the Transactions are consummated, and  except as otherwise set forth in this Agreement, each of the Parties shall bear its own fees and  expenses incurred or owed in connection with this Agreement and the Transactions contemplated  hereby; provided that any Transaction Expenses shall be subtracted from the Closing Payment  Amount.  Section 8.4. Further Assurances. From time to time, as and when requested by any  Party, the Parties shall execute and deliver, or cause to be executed and delivered, all such  documents and instruments and shall take, or cause to be taken, all such further or other actions as  a Party may reasonably deem necessary or desirable in order to carry out the intent and accomplish  the purposes of this Agreement and, subject to the conditions of this Agreement, the consummation  of the Transactions.  Section 8.5. Release.  (a) Each Seller (each, a “Releasing Party”), on its own behalf and, to the extent of  its legal authority, on behalf of its successors, assigns, heirs, next-of-kin, executors, directors, officers,  employees, partners, members and Affiliates, and any other Person claiming by, through or under any  of the foregoing, does hereby unconditionally and irrevocably release, waive and forever discharge,  effective as of the Closing, the Company, Buyer and each of their respective past and present directors,  officers, managers, employees, agents, predecessors, successors, assigns, shareholders, members,  partners, insurers and Affiliates (the “Released Parties”), from any and all claims, demands, damages,  judgments, causes of action and liabilities of any nature whatsoever, whether or not known, suspected  or claimed, arising directly or indirectly from any act, omission, event or transaction occurring (or any  circumstances existing) on or prior to the Closing with respect to the Company other than the Retained  Claims (the “Released Claims”), including without limitation any and all of the foregoing arising out  of or relating to such Releasing Party’s capacity as a current or former shareholder, option holder, or  other security holder, trustee, director, officer, employee, member, manager, partner or agent of the  Company or any of its predecessors or Affiliates (or such Releasing Party’s capacity as a current or  former trustee, director, officer, employee, member, manager, partner or agent where such Releasing  Party is or was serving at the request of the Company), any rights of indemnification or contribution  existing as of the Closing, whether pursuant to the Released Parties’ Constitutive Documents,  applicable Law, Contract or otherwise (other than the rights arising from such Releasing Party’s  services as an officer of the Company or that exist in any indemnification agreement in connection  therewith  104  





 






or the rights that exist through the Company’s insurance policies), or any Contract, agreement or  other arrangement (excluding (i) this Agreement or any employment agreement or consulting  agreement entered into in connection with the transactions contemplated hereby, (ii) reimbursement  for reasonable expenses incurred by any such Releasing Party in the ordinary course of his or her  service with the Company which are reimbursable under the expense reimbursement policies of the  Company, or (iii) accrued vacation and other benefits subject to the policies of the Company)  entered into or established prior to the Closing, including any Contracts required to be disclosed on  the Disclosure Letter and any shareholder agreements, investor agreements, employment  agreements or non-competition agreements, in all cases whether or not known, suspected or  claimed, arising directly or indirectly from any act, omission, event or transaction occurring (or any  circumstances existing) on or prior to the Closing.  (b) For the avoidance of doubt, the release and waiver set forth herein shall  specifically not include (i) any right to receive the amounts payable to former shareholders of the  Company pursuant to this Agreement or (ii) any rights pursuant to any agreement entered into in  connection with the transactions contemplated by this Agreement (such claims, the “Retained  Claims”).  (c) Each Releasing Party understands that this is a full and final general release  of all claims, demands, damages, judgments, causes of action and liabilities of any nature  whatsoever except as expressly stated above, whether or not known, suspected or claimed, that could  have been asserted in any legal or equitable proceeding against the Released Parties. Each Releasing  Party represents and warrants to the Released Parties that (i) such Releasing Party has not voluntarily  or involuntarily assigned, conveyed or otherwise transferred, or purported to assign, convey or  otherwise transfer, to any Person any Released Claims released by such Releasing Party, (ii) no  Person other than such Releasing Party has any interest, whether by Law or Contract or by virtue of  any action or inaction by such Releasing Party, in any Released Claim released by such Releasing  Party and (iii) there are no Liens on or against any of the Released Claims released by such Releasing  Party.  Section 8.6. Rule 144. Following the Closing, Buyer shall use its commercially  reasonable efforts to satisfy the information requirements in Rule 144(c) promulgated under the  Securities Act as may be necessary to enable the Sellers to transfer the Buyer Shares they receive  at the Closing from time to time in accordance with the safe harbor from the definition of  “underwriter” provided by Rule 144 under the Securities Act.  Section 8.7. Nasdaq Listing. Buyer shall cause the Buyer Shares to be issued at the  Closing to be approved for listing on the Nasdaq Global Select Market, subject to official notice of  issuance, prior to the Closing.  Section 8.8. Legends Opinion. On request by the Sellers’ Representative and/or any  Seller at any time after the first the anniversary of Closing, the Buyer shall (at its cost) procure that  its advisors issue an opinion to the Buyer’s transfer agent with respect to the removal of the  restrictive legends on the Buyer Shares (to the extent such opinion may be rendered consistent with  law and customary professional standards and in a form reasonably acceptable to the Buyer’s  transfer agent) within thirty (30) Business Days of such request.  105  





 






ARTICLE 9  INDEMNIFICATION  Section 9.1. Survival of Representations and Warranties. The representations  and warranties of the Parties contained in this Agreement shall survive the Closing until the date  which is [***] after the Closing; provided, however, that (a) the Fundamental Representations (other  than the representations and warranties contained in Section 5.17 (Taxes)) shall survive until [***]  after the expiration of the statute of limitations applicable to the relevant subject matter thereof, (b)  the representations and warranties contained in Section 5.15 (Intellectual Property of the Company)  shall survive until the first anniversary of achievement of the first Launch Milestone, and (c) the  representations and representations and warranties contained in Section 5.17 (Taxes) shall survive  until [***] after the expiration of the statute of limitations applicable with respect to the relevant  Taxes or Tax Returns, including any statute of limitations applicable to the collection of such Taxes).  Each Indemnified Party must give written notice to the respective Indemnifying Party of any claim  for indemnification under this ARTICLE 9 in accordance with Section 9.5. Any claim for  indemnification made in writing by the Indemnified Party on or prior to the expiration of the  applicable survival period shall survive until such claim is finally and fully resolved. All of the  covenants and other agreements of the Parties contained in this Agreement shall survive until fully  performed or fulfilled.  Section 9.2. Indemnification of Buyer Indemnified Parties.   (a) From and after the Closing, Buyer and its Affiliates (including, from and  after the Closing, the Company) and each of their respective officers, directors, employees,  shareholders, partners, members or other equity holders, agents and Representatives (each, a  “Buyer Indemnified Party”) shall be indemnified and held harmless by each Seller (on a several  basis), against any and all Losses, whether or not involving a Third Party Claim, arising out of or  directly or indirectly resulting from:  (i) the breach or violation of or inaccuracy in any representation or  warranty made by such Seller contained in this Agreement (in each case, as such  representation or warranty would read if all qualifications as to materiality, including each  reference to the words “Material Adverse Change”, “material” and “materiality” and all  similar phrases and words, were deleted therefrom);  (ii) the breach or violation of any covenant or agreement of such Seller  contained in this Agreement, whether occurring before or at the Closing but not after the  Closing; and  (iii) any fraud by such Seller in connection with this Agreement or the  Transactions.  (b) From and after the Closing, the Buyer Indemnified Parties shall be  indemnified and held harmless by the Sellers, severally (according to each Seller’s Pro Rata  Percentage) but not jointly or jointly and severally, against any and all Losses, whether or not  involving a Third Party Claim, arising out of or directly or indirectly resulting from:  106  





 






(i) the breach or violation of or inaccuracy in any representation or  warranty made by the Company contained in this Agreement (in each case, as such  representation or warranty would read if all qualifications as to materiality, including each  reference to the words “Material Adverse Change”, “material” and “materiality” and all  similar phrases and words, were deleted therefrom);  (ii) the breach or violation of any covenant or agreement of the Company  contained in this Agreement, whether occurring before or at the Closing but not after the  Closing;  (iii) any Action by a shareholder or former shareholder of the Company,  or by any other Person, seeking to assert, or based upon: (A) ownership or rights to  ownership of any shares of Company Capital Stock, (B) any right of a shareholder of the  Company (other than the right to receive any portion of the Aggregate Consideration  pursuant to this Agreement), including any option, preemptive right or right to notice or to  vote or (C) any right under the Constitutive Documents of the Company;  (iv) any Actions or disputes with respect to (A) the allocation or payment  among the Sellers of the Aggregate Consideration pursuant to the terms of this Agreement,  (B) any claim that Schedule I is not true, complete and correct in all respects, or (C) any  other claims by any shareholder or former shareholder of the Company, in its capacity as  such, against the Company or its directors, officers, or agents;  (v) reliance on the authority of the Shareholders’ Representative as the  agent, representative and attorney-in-fact of the Sellers pursuant to Section 2.7(c) or Section  11.11;  (vi) (A) any Taxes of the Company, or for which it may be liable, with  respect to any Tax Period (or portion thereof including the Straddle Period) ending on or prior  to the Closing Date, to the extent not included in Closing Tax Liabilities in the calculation of  the Adjusted Closing Payment Amount (and excluding the Aggregate Company Share Option  Tax Liability to the extent remitted to the Company by or on behalf of the relevant Option  Holder on or around the Closing); (B) any Taxes of the Company described, or imposed as a  result of an inclusion in income or disallowance of a deduction described, in Section 5.17(d);  (C) any and all Taxes of any Person imposed on the Company or any Affiliate as a result of  the Company being a member of a group for any Tax purpose (whether as a member of an  affiliated, consolidated, controlled, fiscal, combined or unitary group or otherwise) on or prior  to the Closing Date, or as a transferee or successor, by contract, agency or otherwise; (D) any  breach or violation of a covenant or agreement contained in this Agreement relating to Taxes;  and (E) any Aggregate Contingent Phantom Tax Liability, Aggregate Phantom Tax Liability,  or Company Phantom Tax Liability payable or accountable by the Company to the extent not  deducted or withheld from the applicable aggregate Phantom Per Share Closing Payment  Amounts, Contingent Phantom Bonus payable in accordance with the provisions of Section  2.8 or Section 2.9 (as applicable) or to the extent not included in Closing Tax Liabilities in the  calculation of the Adjusted Closing Payment Amount. For the purposes of this Section  9.2(b)(vi) the amount of Taxes allocable to the portion of the Straddle Period ending on  Closing shall be  107  





 






determined as if such taxable period ended as of the close of business on the date of Closing;  (vii) any Taxes of the Company arising on the distribution or other  transfer of Intellectual Property held by the Company at Closing (including Taxes of the  Company on income received on the license of such Intellectual Property) to the extent that  such Taxes arise as a result of the unavailability of a tax relief following the denial by HM  Revenue & Customs of a corporation tax deduction in respect of any payments made by  the Company under the Phantom Bonus on or around Closing (the “Corporation Tax  Deduction”) provided that the Buyer shall procure that the Company submits its corporation  tax return for the Straddle Period on the basis that the Corporation Tax Deduction is taken  by the Company save to the extent required by a change of Law or published practice of  HM Revenue & Customs after Closing;  (viii) any liability for inheritance Tax and associated interest and/or  penalties which: (A) is a liability of the Company and arises as a result of a transfer of value  occurring or being deemed to occur on or before Closing (whether or not in conjunction  with the death of any person whensoever occurring); or (B) has given rise at Closing to a  charge on, or a power to sell, mortgage or charge, any of the Company’s Shares or assets  of the Company; or (C) gives rise after Closing to a charge on, or a power to sell, mortgage  or charge, any of the Company’s Shares or the assets of the Company as a result of the  death of any person within seven (7) years of a transfer of value which occurred before  Closing;  (ix) any liability of the Company to make a payment or repayment  (including any related interest or penalty) to any Taxing Authority arising in connection  with the Company failing to comply with the requirements of any COVID-19 Measure  before Closing;  (x) any Closing Indebtedness or Transaction Expenses, solely to the  extent not taken into account in the calculation of the Adjusted Closing Payment Amount;  and  (xi) any portion of the amount due to Buyer pursuant to Section 2.11  (h)(ii) in excess of the amounts then on deposit in the Escrow Account.  (c) For the purposes of this Section 9.2 in determining whether a charge on or  power to sell, mortgage or charge any of the shares or assets of the Company exists at any time,  the fact that inheritance tax is not yet payable, or may be paid by instalments shall be  disregarded and the inheritance tax shall be treated for the purposes of this Section 9.2 as  becoming due, and a charge or power to sell, mortgage or charge as arising, on the date of the  transfer of value or other date or Event on or in respect of which it becomes payable or arises,  and the provisions of section 213 of the Inheritance Tax Act 1984 (refund by instalments) shall  not apply.  Section 9.3. Indemnification of Seller Indemnified Parties. From and after the  Closing, each of the Sellers and each of their respective officers, directors, employees,  108  





 






shareholders, partners, members or other equity holders, agents and Representatives (each, a “Seller  Indemnified Party”, and each of Seller Indemnified Party and Buyer Indemnified Party, an  “Indemnified Party”) shall be indemnified and held harmless by Buyer, against any and all Losses,  whether or not involving a Third Party Claim, arising out of or directly or indirectly resulting from:  (a) the breach or violation of or inaccuracy in any representation or warranty  made by Buyer contained in this Agreement;  (b) the breach or violation of any covenant or agreement of Buyer contained in  this Agreement;  (c) any fraud by the Buyer in connection with this Agreement or the  Transactions; and  (d) the failure of the Buyer or the Company after the Closing Date to pay the  pre-Closing Taxes of the Company or the Aggregate Share Option Tax Liability, save to the extent  that the Buyer could make a claim against any of the Sellers under this Agreement in respect of  such Taxes.  Section 9.4. Limits on Indemnification.   (a) Notwithstanding anything to the contrary contained in this Agreement, an  Indemnifying Party shall not be liable for any claim for indemnification pursuant to Section 9.2(a)(i)  or Section 9.2(b)(i): (i) unless and until the amount of indemnifiable Losses which may be recovered  from the Indemnifying Party with respect to such claim or series of related claims equals or exceeds  $[***] (the “Individual Claim Threshold” and any such Loss that is disregarded pursuant to this  clause (i), a “Non-Qualified Loss”), after which, subject to clause (ii) of this Section 9.4(a), the  Indemnifying Party shall be liable for the full amount of all Losses with respect to such claim and  not only those in excess of the Individual Claim Threshold and (ii) unless and until the aggregate  amount of indemnifiable Losses (excluding Non-Qualified Losses) which may be recovered from  the Indemnifying Party under Section 9.2(a)(i) or Section 9.2(b)(i), as the case may be, equals or  exceeds $[***] (such amount, the “Deductible”), after which the Indemnifying Party shall be liable  for the full amount of all Losses in excess of the Deductible; provided, however, that the foregoing  limitations set forth in this Section 9.4(a) shall not apply to (A) breaches of, or inaccuracies in, the  Fundamental Representations or (B) Actions based upon fraud or intentional misrepresentation.  Claims for indemnification pursuant to any other provision of Section 9.2 are not subject to the  monetary limitations set forth in this Section 9.4.  (b) Notwithstanding anything to the contrary contained in this Agreement,  except for Actions based upon fraud or intentional misrepresentation, or for breaches of  Fundamental Representations, recovery from the Escrow Fund and by Buyer’s right of set-off under  Section 9.7 shall serve as the sole and exclusive source of indemnification from which the Buyer  Indemnified Parties may collect Losses for which they are entitled to indemnification from the  Sellers under Section 9.2(b)(i); provided, however, that in addition to Buyer’s recovery from the  Escrow Fund and its rights of set-off under Section 9.7, and subject to and in accordance with the  provisions of Section 9.4(c), the Sellers shall be severally (and not jointly or jointly and severally)  liable directly to the Buyer Indemnified Parties under Section 9.2 for up to the full  109  





 






amount of the Aggregate Consideration, as the case may be, actually paid or payable to him, her or  it, for any Losses arising out of or resulting from Material Claims. In no event shall Buyer be liable  under Section 9.3 to any Seller for any Losses in excess of Aggregate Consideration actually  payable to such Seller hereunder.  (c) In the case of Buyer’s rights to indemnification for Material Claims, for as  long as there are funds available in the Escrow Fund to cover the Buyer Indemnified Parties’  indemnifiable Losses, any and all Losses payable by the Sellers as Indemnifying Parties to the  Buyer Indemnified Parties with respect to a Material Claim will be paid in cash first out of the  Escrow Fund, and in the event such Losses in respect of Material Claims exceed, or are not paid  and satisfied in full from, the Escrow Fund, the Buyer Indemnified Parties shall have the right to  satisfy in full such Losses by pursuing indemnification rights and recourse directly against the  Sellers in accordance with the Sellers’ Pro Rata Percentages, including the full amount of each  Seller’s Pro Rata Percentage of any Contingent Payment, by means of exercising Buyer’s rights of  set-off under Section 9.8, or otherwise. In no event shall a Seller be liable under this Section 9.4(c)  for any Losses in excess of the portion of the Aggregate Consideration actually paid or payable to  him, her or it.  (d) With respect to any indemnifiable Losses arising out of or relating to any  matter for which indemnification may be sought under Section 9.2(a) on account of a specific  Seller’s fraud, breach or violation (as applicable), such Losses shall, in each case, be satisfied as  follows: (A) first, from the Escrow Fund, up to the full amount of such Seller’s Pro Rata Percentage  of the Escrow Fund, and (B) second, in the event such Losses exceed, or are not paid and satisfied  in full from, such portion of the Escrow Fund, the Buyer Indemnified Parties shall have the right to  satisfy in full such Losses by pursuing indemnification rights and recourse directly against such  Seller (but not any other Sellers) for up to such Seller’s Pro Rata Percentage of the Aggregate  Consideration, actually paid or payable to him, her or it (whether payable in cash or under a  Promissory Note), including the full amount of such Seller’s Pro Rata Percentage of any Contingent  Payment by means of exercising Buyer’s rights of set-off under Section 9.8; provided, that this  Section 9.4(d) shall not operate to limit the rights of any Buyer Indemnified Party to seek any  remedies available to it against any such specific Seller under applicable Law in the event of fraud  committed by or on behalf of such specific Seller. Any portion of the Escrow Fund that becomes  available for distribution to such specific Seller in accordance with Section 9.10 and any future  Contingent Payment that becomes due and payable in accordance with Section 2.6 when such  Contingent Payment becomes available for distribution to such specific Seller shall not be  distributed to such Seller to the extent of any such Losses satisfied out of the Escrow Fund or any  Contingent Payment on behalf of such Seller and instead such portion shall be distributed to the  other Sellers in proportion to their relative Pro Rata Percentages.  (e) For purposes of this Agreement, “Material Claims” means Losses arising  out of or relating to: (i) any breaches of or inaccuracies in any Fundamental Representations or (ii)  any matter for which indemnification may be sought under Section 9.2(a)(ii)-(iii) or Section  9.2(b)(ii)-(x).  (f) The amount of any Losses for which indemnification is provided under this  ARTICLE 9 shall be net of any amounts actually recovered by the Indemnified Party under  110  





 






insurance policies with respect to such Losses (net of all costs and expenses incurred in recovering  such insurance proceeds with respect to such Loss).  (g) No Indemnified Party may receive a duplicate recovery of a Loss,  notwithstanding that such Indemnified Party may be entitled to recover the same Losses under  more than one provision of this Agreement.  (h) If any Losses have been indemnified by the Sellers and any member of the  Buyer’s Group recovers from a third party a non-refundable sum in cash which indemnifies or  compensates the Buyer or and/or any member of the Buyer’s Group (in whole or in part) in respect  of the same Loss, the Buyer and the members of the Buyer’s Group shall be entitled to apply such  recovery: first to any Liabilities arising out of the same or related facts and circumstances for which  the Sellers did not provide indemnification (e.g., due to exclusion from scope of indemnifiable  Losses, application of the Deductible, exhaustion of the amounts on deposit in the Escrow Fund, any  limitation on the Buyer’s right of Setoff under Section 9.8(b), or because such recovery was in respect  of Liabilities arising from both facts and matters subject to indemnification pursuant to this  Agreement and matters not so subject), second, to reimbursement of any costs incurred in obtaining  such recovery, third, the balance of such recovery after such applications (but not in excess of the  amount previously paid by the Sellers to the Buyer (including amounts released from the Escrow  Fund or recovered by means of setoff)) shall be paid by the Buyer and/or any member of the Buyer’s  Group to the Sellers, and fourth, any remainder of such recovery shall be retained by the Buyer and  the members of the Buyer’s Group.  (i) Neither the Sellers, on the one hand, nor the Buyer on the other hand, shall  be liable for a Loss if and to the extent that such Loss (or any part thereof) would not have arisen  by for a voluntary act, transaction or omission of the Buyer, any Affiliate of the Buyer or the  Company outside the ordinary course of business after Closing (in the case of the Sellers), or a  voluntary act, transaction or omission of a Seller or its Affiliate outside the ordinary course of  business after Closing (in the case of the Buyer), and which in either case the relevant Person was  aware, or ought reasonably to have been aware, would give rise to such Loss.  (j) Each Indemnified Party shall use its commercially reasonable efforts to  mitigate any Losses for which indemnification is claimed pursuant to Section 9.2 or Section 9.3;  provided, that this Section 9.4(j) shall not require any Indemnified Party to institute any litigation  or other legal proceeding against a third party, or waive, surrender or abandon any right (including  any rights to the Company Intellectual Property) and provided, further, that the costs of any such  mitigation efforts shall be included within the scope of indemnifiable Losses.  (k) Except with respect to claims based on fraud or intentional  misrepresentation, no right of rescission shall be available to the Buyer or the Sellers after Closing  by reason of any breach of this Agreement.  (l) The Buyer shall not be entitled to recover for any Loss to the extent that the  amount of such Loss was taken into account in Closing Payment Adjustment Amount.  111  





 






(m) The rights of Buyer and Sellers to indemnification pursuant to Section 9.2  and Section 9.3 will not be affected by any investigation conducted or knowledge acquired (or  capable of being acquired) at any time, whether before or after the execution and delivery of this  Agreement or the Closing, with respect to any accuracy of any representation or warranty, or  performance of or compliance with any covenant or agreement herein.  Section 9.5. Notice of Loss; Third Party Claims.   (a) A claim for indemnification for any matter not involving a Third Party  Claim may be asserted by written notice to the party from whom indemnification is sought.  (b) In the event that any Action shall be instituted or asserted by any third party in  respect of which payment may be sought under Sections 9.2 or 9.3 (each, a “Third Party Claim”), the  Indemnified Party shall promptly cause written notice of the assertion of any Third Party Claim of  which it has knowledge which is covered by this indemnity to be forwarded to the Indemnifying Party.  The failure of the Indemnified Party to give reasonably prompt notice of any Third Party Claim shall  not release, waive or otherwise affect the Indemnifying Party’s obligations with respect thereto except  to the extent that the Indemnifying Party is actually prejudiced as a result of such failure. The  Indemnifying Party shall have the right, at its sole option and expense, to be represented by counsel  reasonably acceptable to the Indemnified Party and to defend against, negotiate, settle or otherwise  deal with any Third Party Claim which relates to any Losses indemnified by it hereunder; provided,  however, that the Indemnifying Party may not assume control of defense to a Third Party Claim (i)  involving any criminal proceeding, action, indictment, allegation or investigation, or in which relief  other than monetary damages is sought, (ii) involving a purported class action, (iii) if the Indemnifying  Party has not notified the Indemnified Party in writing that it will be liable to indemnify the  Indemnified Party with respect to all Losses relating to such Third Party Claim or (iv) if the Third  Party Claim relates to Taxes or to the Company Intellectual Property; provided, further, that the Buyer  shall control any Third Party Claim involving allegations of infringement of Intellectual Property. In  addition, the Indemnifying Party may not maintain the defense of a Third Party Claim if it has failed  to defend such Third Party Claim in good faith. If the Indemnifying Party elects to defend against,  negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified  by it hereunder, it shall within 30 days of receipt of the notice from the Indemnified Party (or sooner,  if the nature of the Third Party Claim so requires) notify the Indemnified Party of its intent to do so.  If the Indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any  Third Party Claim which relates to any Losses indemnified against hereunder, or is not permitted to  assume the defense of a Third Party Claim pursuant to the proviso to the third sentence of this Section  9.5(b), the Indemnified Party may defend against, negotiate, settle or otherwise deal with such Third  Party Claim, subject to the provisions below. If the Indemnifying Party shall assume the defense of  any Third Party Claim pursuant to the terms of this Agreement, the Indemnified Party may participate,  at his or its own expense, in the defense of such Third Party Claim; provided, however, that such  Indemnified Party shall be entitled to participate in any such defense with separate counsel at the  expense of the Indemnifying Party if (A) so requested by the Indemnifying Party to participate or (B)  in the reasonable opinion of outside counsel to the Indemnified Party a conflict or potential conflict  exists between the Indemnified Party and the Indemnifying Party that would make such separate  representation advisable; and provided, further, that the Indemnifying Party shall not be required to  pay for more than one such counsel (plus any appropriate local  112  





 






counsel) for all Indemnified Parties in connection with any Third Party Claim. The Parties hereto  agree to reasonably cooperate with each other in connection with the defense, negotiation or  settlement of any such Third Party Claim. Notwithstanding anything in this Section 9.5 to the  contrary, neither the Indemnifying Party nor the Indemnified Party shall, without the written consent  of the other party, settle or compromise any Third Party Claim or permit a default or consent to  entry of any Judgment unless (1) the claimant provides to such other Party an unqualified release of  the Indemnified Parties and Indemnifying Parties from all liability in respect of such Third Party  Claim, (2) such settlement does not involve any injunctive relief binding upon the Indemnified Party  or any of its Affiliates, (3) such settlement does not encumber any of the material assets of any  Indemnified Party or impose any restriction or condition that would apply to or materially affect  any Indemnified Party or the conduct of any Indemnified Party’s business and (4) such settlement  does not involve any admission of liability or wrongdoing by any Indemnified Party or any of its  Affiliates.  (c) In the event that the Indemnified Party conducts the defense of the Third  Party Claim pursuant to this Section 9.5, the Indemnifying Party will (i) advance the Indemnified  Party promptly and periodically for the reasonable costs of defending against the Third Party Claim  (including reasonable attorneys’ fees and expenses) and (ii) remain responsible for any and all  other Losses that the Indemnified Party may incur or suffer resulting from, arising out of, relating  to, in the nature of or caused by the Third Party Claim to the fullest extent provided in this  ARTICLE 9.  Section 9.6. Tax Treatment. To the extent permitted by Law, the Parties agree to  treat all payments made under this ARTICLE 9, under any other indemnity provision contained in  this Agreement, and for any misrepresentations or breach of warranties or covenants, as  adjustments to the Aggregate Consideration for all Tax purposes.  Section 9.7. Remedies. From and after the Closing, except as specifically provided  herein, the sole and exclusive remedy of any Indemnified Party for any breach or failure to be true  and correct, or alleged breach or failure to be true and correct, of any representation or warranty in  this Agreement, shall be indemnification in accordance with this ARTICLE 9. Notwithstanding the  foregoing, this Section 9.7 shall not operate to limit the rights of the Parties to seek equitable  remedies (including specific performance or injunctive relief) or any remedies available to it under  applicable Law in the event of (a) a Party’s failure to comply with its indemnification obligations  hereunder or (b) fraud or intentional misrepresentation committed by or on behalf of any Party or  with respect to any other document executed and delivered by a Party in connection with the  consummation of the Transactions.  Section 9.8. Set-Off.   (a) In accordance with Section 9.8(b) only, the Buyer shall have the right and is  hereby authorized at any time and from time to time to set off and apply against any and all Contingent  Payments that have become payable the amount of any Losses specified in a Claim Notice delivered  to the Shareholders’ Representative by the Buyer hereunder prior to the date of payment of the  Contingent Payment against which such set off is applied, together with the Buyer’s good faith  estimate of any Losses arising from the subject of such Claim Notice which have not  113  





 






been liquidated (the amount so withheld and set-off pursuant to this Section 9.8, the “Offset  Amount”).  (b) The maximum amount of Losses for which the Buyer may exercise such set  off rights shall not exceed:  (i) [***] ([***]) of any Contingent Payment in the case of any claim for  indemnification under Section 9.2(b)(i); provided that (A) the foregoing reference to [***]  ([***]) shall be deemed to be a reference to [***] ([***]) in the case of claims for a breach  of Section 5.15 (Intellectual Property Rights) and (B) the limitation set forth in this clause  (i) shall not apply to Material Claims; and  (ii) [***] ([***]) of any Contingent Payment in the case of Material  Claims.  (c) Any Offset Amount shall reduce the amount of any Contingent Payment  each Seller is entitled to receive proportionately based on their respective rights to receive a portion  of such Contingent Payment.  (d) In the event the Buyer exercises its set off rights pursuant to this Section 9.8  and withholds an Offset Amount from any Contingent Payment, the Buyer shall notify the  Shareholders’ Representative thereof in writing (the “Offset Notification”) no later than [***]  Business Days after such Contingent Payment is due, which Offset Notification shall describe in  particular the claim for indemnification with respect to which such set off rights have been  exercised.  (e) In the event the Buyer exercises its set off rights pursuant to this Section 9.8  and withholds an Offset Amount from any Contingent Payment with respect to any Losses arising  from the subject of a Claim Notice, upon the final resolution of the claim for indemnification with  respect to which the Claim Notice is delivered, the Buyer shall cause the Sellers to be paid the  amount, if any, by which the Offset Amount exceeds the amount of Losses to which the Buyer has  been finally determined to be entitled in connection with such resolution [***].  Section 9.9. No Right of Contribution. No Seller shall have any right of contribution  against the Company with respect to any breach by the Company of any of its representations,  warranties, covenants or agreements.  Section 9.10. No Circular Recovery. Each Seller hereby agrees that it will not make  any claim for indemnification against Buyer or the Company by reason of the fact that such Seller  was a controlling Person, director, employee or Representative of the Company or was serving as  such for another Person at the request of Buyer or the Company (whether such claim is for Losses  of any kind or otherwise and whether such claim is pursuant to any statute, organizational  document, contractual obligation or otherwise) with respect to any claim brought by an  Indemnified Party against any Seller relating to this Agreement or any of the Transactions. With  respect to any claim brought by an Indemnified Party against any Seller relating to this  114  





 






Agreement and any of the Transactions, each Seller expressly waives any right of subrogation,  contribution, advancement, indemnification or other claim against the Company with respect to  any amounts owed by such Seller pursuant to this ARTICLE 9.  Section 9.11. Release of Escrow Fund. On the Escrow Termination Date, the Escrow  Agent shall release to the Sellers any remaining funds on deposit in the Escrow Fund on such date,  minus the aggregate amount claimed by the Buyer Indemnitees in respect of any bona fide claims  delivered in accordance with Section 9.5 that have not been resolved by the Escrow Termination  Date (any such claim, a “Pending Claim”, and the amounts held therefor, the “Pending Claim  Reserve”) minus an amount equal to the Company Contingent Phantom Tax Liability on the  Relevant Escrow Proportion payable to the Phantom Sellers, save that any Relevant Escrow  Proportion payable to a Phantom Seller (a “Phantom PAYE Payment”) shall be paid to the Company  together with an amount equal to the associated Company Contingent Phantom Tax Liability in  respect of such payment and the Buyer shall procure that the Company pays such Phantom PAYE  Payment (less any employment Tax which is required to be deducted or withheld on behalf of the  relevant Phantom Sellers (and, for the avoidance of doubt, excluding any employer’s National  Insurance contributions or any equivalent Taxes) in accordance with PAYE) through the Company’s  PAYE or local equivalent to each of the Phantom Sellers. The Buyer shall procure that the Company  duly and properly remits any such employment Tax and associated Company Contingent Phantom  Tax Liability to HMRC or any other relevant Taxing Authority. On a Pending Claim by Pending  Claim basis, following the final resolution of any Pending Claim, if the amount reserved therefor in  the Pending Claim Reserve exceeds the amount due to the Buyer Indemnitees pursuant to such final  resolution, the excess shall be released to the Sellers minus an amount equal to the Company  Contingent Phantom Tax Liability on the Relevant Escrow Proportion payable to the Phantom  Sellers in respect of such payment, save that any amounts payable to Phantom Sellers shall be  payable to the Company together with the associated Company Contingent Phantom Tax Liability  and dealt with as per the mechanics set out in this Section 9.11 for “Phantom PAYE Payments”.  This Section 9.11 is subject to the further terms and conditions of the Escrow Agreement and  ARTICLE 9.  ARTICLE 10   TERMINATION  Section 10.1. Termination. This Agreement may be terminated at any time prior to  the Closing:  (a) by written consent of Buyer and the Sellers; or  (b) by either Buyer or the Sellers:  (i) if any Legal Restraint having the effect of preventing the  consummation of the Transactions is in effect and has become final and non-appealable;  or  (ii) if the Closing has not occurred on or prior to 90 days after the date of  this Agreement; provided that no Party may terminate this Agreement under this Section  115  





 






10.1(b)(ii) if such Party’s actions or omissions were the primary cause of the failure of the  Closing to occur by such date; or  (c) by Buyer, if the Company or the Sellers have breached in any material  respect any of their respective representations, warranties or covenants contained in this Agreement,  which breach (A) would give rise to a failure of a condition set forth in Section 3.3(a) or Section  3.3(b) and (B) has not been cured by the Company or the applicable Sellers within [***] after the  giving of written notice thereof from Buyer, provided that the right to terminate this Agreement  under this Section 10.1(c) shall not be available to the Buyer if the Buyer is then in material breach  of any representation, warranty, or covenant contained in this Agreement.  (d) by the Sellers, if Buyer has breached in any material respect any of its  representations, warranties or covenants contained in this Agreement, which breach (A) would give  rise to a failure of a condition set forth in Section 3.2(a) or Section 3.2(b) and (B) has not been  cured by Buyer within [***] after the giving of written notice thereof from the Company; provided  that the right to terminate this Agreement under this Section 1.1(d) shall not be available to the  Sellers if the Company or any Seller is then in material breach of any representation, warranty, or  covenant contained in this Agreement.  Section 10.2. Termination Procedure. In the event of the termination and  abandonment of this Agreement by the Sellers or Buyer pursuant to Section 10.1, written notice  thereof shall forthwith be given to the other Parties, and this Agreement shall terminate, and the  consummation of the transactions contemplated by this Agreement shall be abandoned, without  further action by the Company, Buyer or the Sellers.  Section 10.3. Effect of Termination. In the event that this Agreement is terminated  as provided in Section 10.1, this Agreement shall immediately become void and of no further force  or effect and there shall be no further liability or obligation hereunder on the part of Buyer or the  Company or their respective officers, directors, shareholders or Affiliates; provided that (i) any  such termination shall not relieve any Party from liability for damages for any breach of this  Agreement (including such Party’s obligation to close if it was otherwise obligated to do so under  the terms of this Agreement) and (ii) the provisions of Section 2.4 (Shareholders’ Representative),  7.7 (Confidentiality), Section 8.2 (Publicity), Section 8.3 (Expenses), this Section 10.3 and  ARTICLE 11 (Miscellaneous) of this Agreement shall remain in full force and effect and survive  any termination of this Agreement.  ARTICLE 11  MISCELLANEOUS  Section 11.1. Notices. All notices, requests, claims, demands, waivers and other  communications under this Agreement shall be in writing and shall be sent by electronic mail, courier  or express delivery service or personal delivery to the following addresses, or to such other addresses  as shall be designated from time to time by a Party in accordance with this Section 11.1:  (a) if to Buyer or, if after the Closing, to the Company:  Arcutis Biotherapeutics Inc.   3027 Townsgate Road  116  





 






Suite 300  Westlake Village, CA 91361   Attention:   E-Mail:   with copies (which shall not constitute notice) to:  Covington & Burling LLP  The New York Times Building  620 Eighth Avenue  New York, NY 10018-1405   Attention:   E-Mail:     (b) if, prior to the Closing, to the Company:  Ducentis Biotherapeutics Ltd  264 Banbury Road  Oxford  England, OX2 7DY  Attention:   E-Mail:   with a copy (which shall not constitute notice) to:  Goodwin Procter (UK) LLP  100 Cheapside, EC2V 6DY  Attention:   E-Mail:    (c) if to the Shareholders’ Representative:  Shareholder Representative Services LLC  950 17th Street, Suite 1400  Denver, Colorado 80202  Attention:   Email:     with a copy (which shall not constitute notice) to:  Goodwin Procter (UK) LLP  100 Cheapside, EC2V 6DY  Attention:   E-Mail:    All notices, requests, claims, demands, waivers and other communications under this Agreement  shall be deemed to have been duly given (i) when delivered by hand, if personally delivered, (ii)  117  





 






upon receipt when delivered by a courier or express delivery service (such date of receipt being  evidenced by the courier’s or express delivery service’s records) or (iii) when sent, if sent by  electronic mail during normal business hours of the recipient, and if not sent during normal business  hours, then on the next Business Day.  Section 11.2. Assignment. Neither this Agreement nor any of the rights, interests or  obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise by  any of the Parties without the prior written consent of the other Parties (or, in the case of a proposed  assignment by the Buyer following the Closing, the prior written consent of the Shareholders’  Representative), except that (i) Buyer may assign, in its sole discretion, any or all of its rights and  interests under this Agreement to any Affiliate of the Buyer (provided that such assignment may  not be made in contemplation of a transaction by which such Affiliate will cease to be an Affiliate  of the Buyer), (ii) the Buyer may delegate performance of any of its obligations to any Person  provided that no such delegation shall relieve the Buyer of responsibility for the performance of its  obligations hereunder without the express written consent of the Company (before the Closing) or  the Shareholders’ Representative (after the Closing) and (iii) the Buyer may assign this Agreement  and its rights and obligations hereunder to any Person that succeeds to all or substantially all the  assets of the Buyer. Any Person to whom an assignment is made by the Buyer in accordance with  the provisions of this Section 11.2 may itself make an assignment as if it were the Buyer under this  Section 11.2. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the  benefit of and be enforceable by, the parties hereto and their respective successors and assigns.  Section 11.3. Consents and Approvals. For any matter under this Agreement  requiring the consent or approval of any Party to be valid and binding on the Parties hereto, such  consent or approval must be in writing.  Section 11.4. Enforcement.  (a) Any suit, action or other proceeding arising out of this Agreement or any  transaction contemplated hereby shall be brought exclusively in a court of competent jurisdiction,  federal or state, located in New York, New York, and in no other jurisdiction. Each Party hereby  consents to personal jurisdiction and venue in, and agrees to service of process issued or authorized  by, such court. This Section 11.4 shall not apply to any dispute under Section 2.11 that is required  to be decided by the Independent Accountant.  (b) The Parties agree that irreparable damage would occur and that the Parties  would not have any adequate remedy at law in the event that any of the provisions of this Agreement  required to be performed at or prior to the Closing were not performed in accordance with their  specific terms or were otherwise breached. Accordingly, notwithstanding anything in this  Agreement to the contrary, a Party may seek a temporary restraining order or a preliminary  injunction with respect to any obligation hereunder required to be performed at or prior to the  Closing from any court of competent jurisdiction in order to prevent immediate and irreparable  injury, loss, or damage on a provisional basis, pending the decision of the courts on the ultimate  merits of any suit, action or other proceeding arising out of this Agreement or any transaction  contemplated hereby.  118  





 






(c) During the pendency of any dispute resolution proceeding between the Parties  under this Section 11.4, the obligation to make any payment under this Agreement from one Party to  the other Party, which payment is the subject, in whole or in part, of a proceeding under this Section  11.4, shall be tolled until the final outcome of such dispute has been established.  (d) Any and all activities conducted under this Section 11.4, including any and  all proceedings and decisions under Section 11.4(a), shall be subject to the restrictions set forth in  Section 7.8.  (e) In connection with the Parties’ rights under Section 11.4(a), EACH PARTY,  TO THE EXTENT PERMITTED BY LAW, KNOWINGLY, VOLUNTARILY, AND  INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR  OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT  AND THE TRANSACTIONS IT CONTEMPLATES. THIS WAIVER APPLIES TO ANY  ACTION OR LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT, TORT, OR  OTHERWISE.  Section 11.5. Amendment and Waiver.   (a) No failure or delay on the part of any Party in exercising any right, power or  remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any  such right, power or remedy preclude any other or further exercise thereof or the exercise of any  other right, power or remedy. Except as expressly set forth in ARTICLE 9, the remedies provided  for herein are cumulative and are not exclusive of any remedies that may be available to any Party  at Law, in equity or otherwise.  (b) Except as otherwise specifically set forth in this Agreement, any amendment,  supplement or modification of or to any provision of this Agreement and any waiver of any  provision of this Agreement shall be effective (i) only if it is made or given in writing and signed  by Buyer, the Company and the Shareholders’ Representative or, in the case of a waiver, by the  party granting the waiver and (ii) only in the specific instance and for the specific purpose for  which made or given.  Section 11.6. Entire Agreement. This Agreement, together with the schedules and  exhibits and all ancillary agreements, documents or instruments to be delivered in connection  herewith and therewith, contain the entire agreement and understanding between the Parties with  respect to the subject matter hereof and thereof and supersede all prior discussions, negotiations,  commitments, agreements and understandings, both written and oral, relating to such subject  matter. No Party has entered into this Agreement in reliance upon, and it will have no remedy in  respect of, any misrepresentation, representation or statement (whether made by another party or  any other Person and whether made to the first party or any other Person) which is not expressly  set out in this Agreement and to the extent there would be a such claim it is hereby waived by each  relevant Party.  Section 11.7. No Third-Party Beneficiaries. Except as otherwise provided in this  Agreement, this Agreement is for the sole benefit of the Parties and their permitted successors and  119  





 






assigns and nothing herein expressed or implied shall give or be construed to give to any Person,  other than the Parties and such successors and assigns, any legal or equitable rights hereunder.  Section 11.8. Counterparts. This Agreement may be executed in any number of  counterparts and by the Parties in separate counterparts, each of which when so executed shall be  deemed to be an original and all of which taken together shall constitute one and the same  agreement. This Agreement may be executed by .pdf or other electronically transmitted signatures  and such signatures shall be deemed to bind each Party hereto as if they were the original signatures.  Section 11.9. Governing Law. This Agreement shall be governed by, and construed  in accordance with, the substantive Law of the State of New York, regardless of the Laws that might  otherwise govern under applicable principles of conflicts of laws thereof; provided that matters  involving the internal corporate affairs of Buyer or the Company shall be governed by the Laws of  the jurisdiction in which such corporation is organized.  Section 11.10. Severability. Any term or provision of this Agreement that is invalid  or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of  the remaining terms and provisions hereof or the validity or enforceability of the offending term or  provision in any other situation or in any other jurisdiction.  Section 11.11. Shareholders’ Representative. Following Buyer’s payment to the  Paying Agent on behalf of the Sellers (to the Paying Agent Account or, if such payment is after  Closing, either the Paying Agent Account or such other account as may from time to time be  notified to the Buyer in writing by the Company on behalf of such Sellers (such designation to be  made at least five (5) Business Days prior to the relevant due date for payment)) of any amount  pursuant to this Agreement, Buyer shall have no liability to the Paying Agent, Shareholders’  Representative or any Seller for such amount, including for any failure of such amounts to be  distributed to the Sellers in accordance with their individual arrangements, and each Seller’s sole  remedy shall not be against the Buyer.  Section 11.12. Disclosure Letter. The Disclosure Letter shall be arranged in  sections and subsections corresponding to the numbered and lettered sections and subsections  contained in ARTICLE 5. A disclosure in any section or subsection of the Disclosure Letter shall  qualify the representations and warranties in the corresponding section or subsection of ARTICLE  5 to which its relevance is readily apparent on its face, and shall be deemed to apply to each other  section or subsection of the Disclosure Letter and ARTICLE 5 to which its relevance is so  apparent.  Section 11.13. United States Securities Law Matters  (a) The Buyer Shares have been offered in an offshore transaction to persons  who are not U.S. persons pursuant to Regulation S under the Securities Act.  (b) The Buyer Shares have not been and will not be registered under the  Securities Act, and, until the 181st day following the Closing Date, the Buyer Shares may not be  offered or sold in the United States or to any U.S. person, nor shall any Seller enter into any  transaction that is intended to hedge the Buyer Shares during such 180-day period.  120  





 






(c) Any offers or sales of the Buyer Shares (including any transaction intended to  hedge the Buyer Shares) may be made only in accordance with Regulation S under the Securities Act  or another available exemption from the registration requirements of the Securities Act.  (d) Each Seller acknowledges that the book-entry position representing the Buyer  Shares will bear or reflect, as applicable, a legend substantially in the form of the following:  (e) “THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION  EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED  (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR  OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN  APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THIS SECURITY AGREES  FOR THE BENEFIT OF THE ISSUER THAT (A) THIS SECURITY MAY BE OFFERED,  RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) PURSUANT TO ANY  EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,  (II) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE  SECURITIES ACT, OR (III) TO THE ISSUER, IN EACH OF CASES (I) THROUGH (III) IN  ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE  UNITED STATES, AND (B) THE HOLDER WILL NOTIFY ANY SUBSEQUENT  PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS  REFERRED TO IN (A) ABOVE. THE ISSUER MAY REQUIRE THE DELIVERY OF A  WRITTEN OPINION OF COUNSEL, CERTIFICATIONS AND/OR ANY OTHER  INFORMATION IT REASONABLY REQUIRES TO CONFIRM THE SECURITIES ACT  EXEMPTION FOR SUCH TRANSACTION.”  [Signature page follows]  121  





 






  IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their  duly authorized representatives as of the date first written above.  ARCUTIS BIOTHERAPEUTICS INC.  By: /s/ Todd Franklin Watanabe   Name: Todd Franklin Watanabe  Title: President and CEO  DUCENTIS BIOTHERAPEUTICS LTD.  By: /s/ Philip Huxley   Name: Philip Huxley  Title: Director  SHAREHOLDER REPRESENTATIVE  SERVICES LLC, solely in its capacity as the  Shareholders’ Representative  By: /s/ Sam Riffe   Name: Sam Riffe  Title: Managing Director 





 






ALAN WATT  By: /s/ Alan Watt   Name: Alan Watt  DAVID BLACKBOURN  By: /s/ David Blackbourn   Name: David Blackbourn  PHILIP HUXLEY  By: /s/ Philip Huxley   Name: Philip Huxley  REBECCA ASHFIELD  By: /s/ Rebecca Ashfield   Name: Rebecca Ashfield  





 






LIFEARC  By: /s/ Stephane Mailkovsky   Name: Stephane Mailkovsky  Title: Director 





 






UK FF NOMINEES LIMITED  acting by its director CSC DIRECTORS (NO.1) LIMITED, in turn  acting by a director  





 






PHILLIP ADDISON  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Phillip Addison.  JAMES AIRD  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of James Aird.  ALISTAIR BALLANTYNE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Alistair Ballantyne  CAROLINE BANSZKY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Caroline Banszky.  BRIDGET BENTLEY-JONES  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Bridget Bentley-Jones.  PHILIP BOWMAN  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Philip Bowman.  





 






JENNIFER CLOKE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Jennifer Cloke.  PETER COULDERY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Peter Couldery.  SIMON DINGEMANS  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Simon Dingemans.  AMADEO ALENTORN FARRE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Amadeo Allentorn Farre.  DAVID IAN FORD  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of David Ian Ford.  ROBERT FRAZER  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Robert Frazer.  





 






PETER FULCHER  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Peter Fulcher.  SIDNEY GOULD  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Sidney Gould.  TIMOTHY HAYWOOD  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Timothy Haywood.  ANDREW HOLMES  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Andrew Holmes.  ALAN JAMES LIMITED  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Alan James Limited.  JOHN KAY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of John Kay.  





 






THOMAS KEANE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Thomas Keane  PHILIPPE LENOBLE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Philippe Lenoble  TIM LESTER  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Tim Lester.  MIKE LOVE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Mike Love.  BERNARD MCELROY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Bernard McElroy.  JOHNNY MCMAHON  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Johnny McMahon.  





 






ANDREW MOBERLY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Andrew Moberly  DANIEL NAUJOKS  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Daniel Naujoks.  DOMINIC O’REGAN  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Dominic O’Regan.  KENNETH OAKLEY PELTON  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Kenneth Oakley Pelton  DAVID REIS  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of David Reis.  SUSANNAH ROSS  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Susannah Ross  





 






RICHARD ANTHONY ROTH  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Richard Anthony Roth.  PETER ROUTLEDGE  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Peter Routledge  STEPHEN SCHICK  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Stephen Schick.  JONATHAN SHEPARD  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Jonathan Shepard.  RICHARD SHUTTLEWORTH  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Richard Shuttleworth.  THOMAS SMAIL  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Thomas Smail.  





 






CHRISTOPHER HOWARD SWORN  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Christopher Howard Sworn.  JOY SWORN  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Joy Sworn.  IAN TOMLINSON  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Ian Tomlinson.  GEOFFREY TRAYLEN  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Geoffrey Traylen.  ADAM WARBY  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Adam Warby  WCS NOMINEES LIMITED  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of WCS Nominees Limited.  





 






DES WILLIAMS  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Des Williams.  RAJAT MALHOTRA  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Rajat Malhotra.  RICHARD CAMERON  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Richard Cameron.  RICHARD SHUTTLEWORTH  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Richard Shuttleworth.  JON REES  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Jon Rees.  NICO HOLMES  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Nico Holmes.  





 






WITOLD ANDREW SZYMANSKI  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Witold Andrew Szymanski.  TALBOT STARK  Signed by Dr. Philip Huxley acting under a power of attorney for and on  behalf of Talbot Stark.