Document:

EX-10.1

 Exhibit 10.1 

STOCK PURCHASE AGREEMENT 

This Stock Purchase Agreement (this “Agreement”) is dated as of November 6, 2018, by and among Delcath Systems, Inc., a
Delaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser,” or in the aggregate, the “Purchasers”). 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended (the “Securities Act”) and Rule 506(b) promulgated thereunder, the Company desires to sell, and the Purchasers desire to purchase from the Company, shares of the Company’s Series D Preferred Stock, par value $.01 per
share (“Series D Preferred Stock”). 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 

ARTICLE I. 
 DEFINITIONS

 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1: 

“Action” shall have the meaning ascribed to such term in Section 3.1(k). 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. 

“BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). 

“Board of Directors” means the board of directors of the Company. 

“Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank of New
York is closed. 
 “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount as to the Closing and (ii) the Company’s obligations to
deliver the Securities as to the Closing, in each case, have been satisfied or waived. 
 “Closing” means closing of the
purchase and sale of the Securities pursuant to Section 2.2. 

  
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 “Commission” means the United States Securities and Exchange Commission.

 “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed. 
 “Common Stock Equivalents” means any securities of the
Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 
 “Conversion Price”
means $0.61 per share of Common Stock, subject to adjustment as provided in the Transaction Documents. 
 “Conversion Shares” means
any shares of common stock issued upon conversion of the Series D Preferred Stock being issued hereunder. 
 Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1. 
 “Evaluation Date” shall have the
meaning ascribed to such term in Section 3.1(t). 
 “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder. 
 “FCPA” means the Foreign Corrupt Practices Act of 1977, as
amended. 
 “Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll). 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(i). 

“Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excess
of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected
in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value
of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. 
 “Legend Removal
Date” shall have the meaning ascribed to such term in Section 4.1(c). 

  
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 “Liabilities” means all direct or indirect liabilities, Indebtedness and
obligations of any kind of Company to the Purchaser, howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment), absolute or contingent, due or to become due, primary or secondary,
joint or several, whether existing or arising through discount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuant to this Agreement and/or any of the other Transaction Documents,
all accrued but unpaid interest on any notes, any letter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to the preparation of the Transaction Documents and the enforcement of the
Purchaser’s rights, remedies and powers under this Agreement and/or the other Transaction Documents. 
 “Liens” means a
lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 
 “Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). 
 “Material Permits” shall
have the meaning ascribed to such term in Section 3.1(n). 
 “Maximum Rate” shall have the meaning ascribed to such
term in Section 5.17. 
 “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq).

 “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in
Section 3.1(pp). 
 “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule
3.1(h). 
 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
 “Public Information Failure”
shall have the meaning ascribed to such term in Section 4.3(b). 
 “Public Information Failure Payments” shall have the
meaning ascribed to such term in Section 4.3(b). 
 “Purchaser Party” shall have the meaning ascribed to such term in
Section 4.9. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 

  
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 “Required Minimum” means, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents. 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such rule. 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). 

“Securities” means the shares of Series D Preferred Stock and Conversion Shares to be issued to the Purchaser pursuant to this
Agreement. 
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder. 
 “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the Exchange Act and Rule 144. 
 “Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. 
 “Subscription Amount” means, as
to the Purchaser, the aggregate amount to be paid for the Preferred Shares purchased hereunder as specified below the Purchaser’s name on the signature page of this Agreement and next to the heading “Purchase Price,” in United States
dollars and in immediately available funds. 
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof. 

“Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.15(b). 

“Trading Day” means a day on which the principal Trading Market is open for trading. 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the Nasdaq Global Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any of the foregoing). 

“Transaction Documents” means this Agreement, the Series D Preferred Shares Certificate of Designation and all exhibits and
schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder. 

  
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 “Transfer Agent” means American Stock Transfer and Trust Company, LLC, and
any successor transfer agent of the Company. 
 ARTICLE II. 

PURCHASE AND SALE 
 2.1 Purchase. On
the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and each Purchaser
shall purchase, severally and not jointly, from the Company, shares of Series A Preferred Stock equal to the amount set forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers attached hereto. 

2.2 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the execution and delivery of this
Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, the Preferred Stock as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchaser shall deliver to the
Company, via wire transfer to an account designated by the Company, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to
such Preferred Stock as set forth in Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth in Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.3 and 2.4 for Closing, such Closing shall be undertaken remotely by electronic exchange of Closing documentation. There may be multiple closings so long as at each Closing the obligations under Section 2.3 are met. 

2.3 Deliveries. 
 (a) On or prior to the
Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser the following: 
 (i) this Agreement
duly executed by the Company; 
 (ii) a share certificate or Transfer Agent book entry for the number of shares of Preferred Stock purchased
by each Purchaser; 
 (iii) the Transfer Agent Instruction Letter, duly executed by the Company and the Transfer Agent (which shall be dated
as of the first Closing); 
 (iv) the opinion of the Company’s counsel, dated as of the Closing Date; 

  
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 (v) a certificate executed by the Secretary of the Company and dated as of the Closing Date,
as to (i) the resolutions, as adopted by the Board of Directors in a form reasonably acceptable to the Purchasers, approving (A) the entering into and performance of this Agreement and the other Transaction Documents and the issuance,
offering and sale of the Securities and (B) the performance of the Company [and each of its Subsidiaries] of [their respective] obligations under the Transaction Documents contemplated therein, (ii) referencing links to the Company’s
amended and restated certificate of incorporation, as amended and (iii) referencing links to the Company’s amended and restated by-laws, each as in effect at the Closing; and 

(vi) such other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Purchaser or its
counsel may reasonably request. 
 (b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company,
as applicable, the following: 
 (i) this Agreement, duly executed by the Purchaser; and 

(ii) the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company. 

2.4 Closing Conditions. 
 (a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met: 
 (i) the accuracy in
all material respects as at Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); 

(ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and 
 (iii) the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. 

(b) The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

 (i) the accuracy in all material respects when made as to the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein); 
 (ii) all obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed; 

  
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 (iii) the delivery by the Company of the items set forth in Section 2.3(a) of this
Agreement; 
 (iv) there is no existing Event of Default (as defined in any promissory notes issued by the Company ) and no existing event
which, with the passage of time or the giving of notice, would constitute an Event of Default; 
 (v) there is no breach of an obligations,
covenants and agreements under the Transaction Documents and no existing event which, with the passage of time or the giving of notice, would constitute a breach under the Transaction Documents; 

(vi) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; 

(vii) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the
Company’s principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, and without regard to
any factors unique to the Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing; 
 (viii) the Company
does not meet the current public information requirements under Rule 144 in respect of the Conversion Shares; 
 (ix) the Company fails to
file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), including, without limitation, any reports that the Commission
requires the Company to amend and/or re-submit; and 
 (x) any other conditions contained herein or
the other Transaction Documents, including, without limitation those set forth in Section 2.3 herein. 
 2.5 Minimum and Maximum. Each Purchaser
must purchase Securities for a minimum subscription amount of at least $100,000.00. The aggregate subscription amount for all securities to all Purchasers may not exceed $5,000,000.00. 

  
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 ARTICLE III. 

REPRESENTATIONS AND WARRANTIES 
 3.1
Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (which for purposes of this Section 3.1 means the Company and all of its Subsidiaries)
hereby makes the following representations and warranties to each Purchaser as of the Closing Date: 
 (a) Organization and
Qualification. The Company is an entity duly incorporated or otherwise organized and validly existing, and the Company is in good standing, under the laws of the jurisdiction of its incorporation or organization, as applicable, with the
requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parent entity of the Company is in violation or default of any of the provisions of
its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in:
(i) a material adverse effect on the legality, validity or enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the
Company, its parent entities and the Subsidiaries, taken as a whole; or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 

(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Documents to which it is a party has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 

  
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 (c) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not, except as set forth on Schedule
3.1(d): (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or (iii) subject to the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. 

(d) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Sections 4.3 and 4.13 of this Agreement; (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities for trading thereon in the
time and manner required thereby; and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”). 

(e) Issuance of the Securities. The issuance of Preferred Shares are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The
Conversion Shares when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion Shares at least equal to the Required Minimum on the date hereof or as provided for in
Section 4.10 herein. 

  
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 (f) Capitalization; Corporate Governance. 

(i) The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which
Schedule 3.1(g)(i) shall also include (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof and (B) the number of authorized and reserved
shares of capital stock of the Company. The Company has not issued capital stock since its most recently filed periodic report under the Exchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase plans and except pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under
the Exchange Act except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents except as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents except as set forth on Schedule 3.1(g)(i). The issuance and sale of the Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities
except as set forth on Schedule 3.1(g)(i). All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities. There are no stockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the
knowledge of the Company, between or among any of the Company’s stockholders. 
 (ii) The names and titles of each of the Company’s
principal officers, directors and beneficial holders of at least five percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully diluted basis are as set forth on Schedule 3.1(g)(ii), which Schedule
3.1(g)(ii) shall also include each committee of directors as well as the names and titles of each director currently serving on each such committee. 

  
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 (g) SEC Reports; Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 

(h) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties except as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directors in their
capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not
been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company that is likely to lead to action that can
reasonably be expected to result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director
or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 

  
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 (i) Compliance. Neither the Company nor any Subsidiary, except as set forth in
Schedule 3.1(m): (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or (iii) is or has been in violation of any
statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (j)
Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of
the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries. 
 (k) Certain Fees. Other than as set forth on
Schedule 3.1(u), no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by the Transaction Documents. 

  
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 (l) Private Placement. Assuming the accuracy of each Purchaser’s representations
and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby. The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Trading Market, provided that its approval thereof is obtained prior to the issuance of the Conversion Shares. 

(m) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment
company” subject to registration under the Investment Company Act of 1940, as amended. 
 (n) Registration Rights. Other
than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries. 

(o) Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. Except as disclosed in the SEC reports, the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the Common Stock
is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements. 
 (p) Disclosure. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of
the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the 

  
 13 

 
circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. 

(q) No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. 
 (r) No General
Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the
Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act. 
 (s) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law;
or (iv) violated in any material respect any provision of FCPA. 
 (t) No Disagreements with Accountants and Lawyers. There are
no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. 

  
 14 

 (u) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of their respective
representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to the Purchaser that the
Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 

(v) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities. 
 (w)
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened. 

(x) Shell Company Status. The Company has never been, and is not presently, an issuer identified as a Shell Company. 

(y) Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained in the Disclosure
Schedules to this Agreement or any certificate or other document furnished or to be furnished to the Purchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are made, not misleading. 
 (z) No Bad Actor Disqualification
Event. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’s knowledge any of
its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. 

  
 15 

 3.2 Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in which case they shall be accurate as of such date): 

(a) Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 

(b) Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 
 (c)
Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 (d) Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is
able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. 

(e) General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. 

  
 16 

 (f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, the Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions
contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the
Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, the Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). 

(g) No Short Sales. Neither Purchaser nor any Affiliate of Purchaser holds any short position in the Common Stock.  

(h) Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under
the Securities Act is applicable to the Purchaser or any of its Affiliates. 
 (i) Not an Affiliate. The Purchaser is not an Affiliate
of the Company. The Purchaser is not part of any group of Persons that would be required under Section 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13D with regard to the
Company. 
 The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the
Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the transaction contemplated hereby. 

  
 17 

 ARTICLE IV. 

OTHER AGREEMENTS OF THE PARTIES 
 4.1
Transfer Restrictions. 
 (a) The Securities may only be disposed of in compliance with state and federal securities laws. In
connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, at the Company’s sole expense in the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of
this Agreement and shall have the rights and obligations of a Purchaser under this Agreement. 
 (b) The Purchaser agrees to the imprinting,
so long as is required by this Section 4.1, of a legend on any of the Securities in the following form: 
 [NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE][EXERCISABLE]] HAS [HAVE] [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION D OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO REGULATION D OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION] [EXERCISE] OF THIS SECURITY]] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. 

The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide margin agreement with a registered
broker-dealer, or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities. 

  
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 (c) Certificates evidencing the Conversion Shares shall not contain any legend (including
the legend set forth in Section 4.1(b) hereof) following any sale of such Conversion Shares pursuant to Rule 144; if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company shall upon request of a Purchaser and at the Company’s sole expense cause its counsel (or at the Purchaser’s option, counsel selected by the Purchaser) to issue a legal
opinion reasonably satisfactory to the Company to the Transfer Agent promptly after any of the events described in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with a copy to the applicable
Purchaser and its broker). If all or any portion of any certificate evidencing the Series D Preferred Stock is converted or exercised, respectively, at a time when there is an effective registration statement to cover the resale of the Conversion
Shares, or if such Conversion Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the
Commission) then such Conversion Shares shall be issued free of all legends. The Company agrees that following such time as such legend is no longer required under this Section 4.1(c), it will, no later than 9:00 AM the next Trading Day
following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Conversion Shares issued with a restrictive legend (such Trading Day, the “Legend Removal Date”), instruct the Transfer Agent
to deliver or cause to be delivered to the Purchaser a certificate representing such shares of Common Stock that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for the Conversion Shares that are subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by the Purchaser. 
 (d) In
addition to the Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, $1,000 per Trading Day for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents,
and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 

4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Conversion Shares
pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against the Purchaser
and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company. 

  
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 4.3 Furnishing of Information; Public Information. 

(a) For as long as the Securities, or portions thereof, are outstanding, the Company covenants to maintain the registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. 
 (b) At any time during the period
commencing from the six (6)-month anniversary of the date hereof and ending at such time that all of the Securities have been sold or may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to the
Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal
to two percent (2.0%) of the aggregate Subscription Amount of the Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer
required for the Purchaser to transfer the Conversion Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure
Payments”. Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in
a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the
Public Information Failure, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 

4.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing
of such subsequent transaction. 

  
 20 

 4.7 Material Non-Public Information. Except with respect to
the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any of its subsidiaries, nor any other Person acting on its behalf, will provide the Purchaser or
its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such information is disclosed to the public, or the Purchaser shall have
entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. 
 4.8 Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold the
Purchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other
title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, managers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based in whole or in part upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such
stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense
of the Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected without the
Company’s prior 

  
 21 

 
written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser
Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.9 shall be made by
periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnification contained herein shall be in addition to any cause of action or similar right of any
Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 
 4.9 Reservation and Listing of
Securities. 
 (a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in amount equal to 100% of the Required Minimum during the six (6) months following the Closing Date, and thereafter, a number of shares of Common Stock at least equal to the Required Minimum. 

(b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 100% of the Required
Minimum during the six (6) months following the Closing Date, or less than the Required Minimum thereafter, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles of
incorporation to increase the number of authorized but unissued shares of Common Stock to at least 100% of the Required Minimum, at such time, as applicable, as soon as possible and in any event not later than the 75th day after such applicable
date; provided that the Company will not be required at any time to authorize a number of shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued after such time pursuant to the
Transaction Documents. 
 (c) The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market,
prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application; (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as possible thereafter; (iii) provide to the Purchasers evidence of such listing or quotation; and (iv) maintain the listing or quotation of such
Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust
Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer. 

4.10 Securities Laws Disclosure; Publicity. The Company shall (a) as soon as reasonably practicable following the execution hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby, and (b) by 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof file a Current Report on Form
8-K, including the 

  
 22 

 
Transaction Documents as exhibits thereto, with the Commission. From and after the issuance of such press release, the Company represents to the Purchaser that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchaser by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company and the Purchaser shall consult with each other in issuing any other public disclosure with respect to the transactions contemplated hereby, and neither the Company nor the
Purchaser shall issue any such public disclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with respect
to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal Trading Market, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of the Purchaser, except: (a) as required by federal securities law in connection with any registration statement contemplated by this Agreement and (b) to the extent
such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b). 

4.11 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser at the
Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchaser. 

4.12. Regulation D Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall not engage in any transaction
involving any securities of the Company that would be prohibited or restricted by, or would otherwise render unavailable any applicable safe harbor provided by Regulation D. 

ARTICLE V. 

MISCELLANEOUS 
 5.1 Termination.
This Agreement shall be terminated, as to the Purchaser hereunder only and without any effect whatsoever on the obligations between the Company and any other Purchaser, if the Closing has not been consummated within ten business days; provided,
however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties). 
 5.2 Fees and Expenses.
The Company has agreed to bear all fees, disbursements, and expenses in connection with the transactions contemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costs incident to the
preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated 

  
 23 

 
with the Intellectual Property Security Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for
same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers in connection with the transactions contemplated hereby. 
 5.3 Entire Agreement. The Transaction
Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties hereto acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and
all notices or other communications or deliveries to be provided by the Purchaser hereunder, including, without limitation, any Notice of Conversion or Notice of Exercise, shall be in writing and delivered personally, by email or facsimile, or sent
by a nationally recognized overnight courier service, addressed to the Company at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970,
bkeck@delcath.com or such other address, facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordance with this Section 5.4. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service addressed to each Purchaser at the email address,
facsimile number, or address of the Purchaser appearing on the books of the Company, or if no such email address, facsimile number, or address appears on the books of the Company, at the principal place of business of such Purchaser. Any notice or
other communication or deliveries hereunder shall be deemed given and effective on the earliest (i) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth
on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number
or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given. 
 5.5
Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in the Securities
then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of
Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser 

  
 24 

 
relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with
accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company. 
 5.6 Headings. The headings
herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 
 5.7
No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 
 5.8 No Third-Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.9.

 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under
Section 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding. 
 5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the
Securities. 

  
 25 

 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. 

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the
other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in
the case of a rescission of a conversion or exercise of any shares of Series D Preferred Stock, the Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the
return to the Purchaser of the aggregate exercise price paid to the Company for such shares. 
 5.14 Replacement of Securities. If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 
 5.15 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate. 

  
 26 

 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser
pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred. 
 5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist
upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or
proceeding that may be brought by the Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the
total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the
foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate.
It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in
excess of the Maximum Rate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at the Purchaser’s election. 
 5.18 Liquidated Damages. The Company’s
obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled. 

5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. 

  
 27 

 5.20 Construction. The parties agree that each of them and/or their respective counsel have reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. 
 5.21 WAIVER OF JURY TRIAL. IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 
 [Signature Pages Follow] 

  
 28 

 IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first indicated above. 
  

							
	DELCATH SYSTEMS, INC.	  	        	  	Address for Notice:
				
	By:	  	  
	  		  	1633 Broadway
		  	 Name: Jennifer K. Simpson
 Title: President and
Chief Executive Officer
	  		  	 Suite 22C
 New York, New York 10019

Attention: Barbra Keck

	With a copy to (which shall not constitute notice):	  		  	E-Mail: bkeck@delcath.com
			
	Wexler Burkhart Hirschberg & Unger, LLP	  		  	 377 Oak Street
 Concourse Level

Garden City, NY 11530
 Attention: Jolie Kahn

e-mail: jkahn@WBHULAW.COM

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 

SIGNATURE PAGE FOR PURCHASER FOLLOWS] 

  
 29 

 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. STOCK PURCHASE AGREEMENT] 

IN WITNESS WHEREOF, the undersigned have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date
first indicated above. 
 Name of Purchaser: Discover Growth Fund, LLC 

 

					
	Signature of Authorized Signatory of Purchaser:	  		  	  

			
	Name of Authorized Signatory:	  		  	John C. Kirkland
	Title of Authorized Signatory:	  		  	President
	Email Address of Authorized Signatory:	  		  	jk@dgfunds.com

 Address for Notice to Purchaser: 

Discover Growth Fund, LLC 
 PO Box 6278 

St. Thomas, VI 00804-6278 
 Subscription Amount:
        $850,000 
 EIN Number (if applicable): 66-0854607 

  
 30 

 SCHEDULE OF PURCHASERS 

 

									
	 (1)
 Purchaser
	  	(2)
Aggregate Number of
Preferred Shares	 	  	(3)
Purchase Price	 
	 [            ]
	  	 	85	 	  	$	850,000	 
	 [            ]
	  	 	[            	] 	  	 	[            	] 

  
 31 

 DISCLOSURE SCHEDULES TO THE 

STOCK PURCHASE AGREEMENT 

BY AND AMONG DELCATH SYSTEMS, INC. AND EACH OF THE PURCHASERS SIGNATORY THERETO 

DATED NOVEMBER 5, 2018 
 These
Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of the Stock Purchase Agreement (the “Agreement”). These Sections have been prepared in accordance
with, and subject to, the following terms and conditions: 
 (a) To the extent a Section is intended to qualify a representation or warranty of the Company
contained in the Article III of the Agreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation or warranty and not in any way expand the scope or effect of such representation or
warranty. 
 (b) The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of another Section if it is
reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. 

(c) Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that such item is material and shall not
be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedule relating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as an admission or
indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actually occur. 
 (d) Any capitalized
terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in the Agreement. Any section headings or titles used herein are included for convenience only and shall not be considered as representations or warranties as to
the type, character or content of the matters referred to thereunder. 

  
 32 

 SCHEDULE 3.1(a) 

SUBSIDIARIES OF THE COMPANY 
 1.
Delcath Holdings Limited 
 2. Delcath Systems Limited 
 3.
Delcath Systems UK Limited 
 4. Delcath Systems GmBH 
 5.
Delcath Systems B.V. 

  
 33 

 SCHEDULE 3.1(d) 

Conflicts 
 See number 3 of
Schedule 3.1(m). 

  
 34 

 SCHEDULE 3.1(g)(i) 

Capitalization 
 Rights of
Participation: September 19, 2017 Stock Purchase Agreement; February 9, 2018 registered offering of common stock and warrants; June 4, 2018, July 20, 2018, August 29, 2018 and September 21, 2018 Stock Purchase
Agreements. 
 Capitalization Table as of November 5, 2018 
  

																	
	 	  	Authorized	 	  	Issued	 	  	Treasury	 	  	Outstanding	 
	 Preferred Shares
	  	 	10,000,000	 	  	 	—  	 	  	 	—  	 	  	 	—  	 
	 Common Shares
	  	 	1,000,000,000	 	  	 	9,007,953	 	  	 	(1	) 	  	 	9,007,952	 
	 Fully diluted common shares:
	  				  				  				  			
	 Oct 2013 Warrants ($19,712,000; exp 10/2018)
	  				  				  				  	 	9	 
	 Feb 2015 Warrants ($0.01; exp 2/2020)
	  				  				  				  	 	9	 
	 July 2015 Warrants ($0.01; exp 7/2020)
	  				  				  				  	 	9	 
	 Oct 2016 Warrants ($0.01; exp 10/2021)
	  				  				  				  	 	11	 
	 Nov 2017 Warrants ($0.01; exp 4/2021)
	  				  				  				  	 	14,001	 
	 Feb 2018 Warrants ($0.01; exp 2/2024)
	  				  				  				  	 	1,000,002	 
	 Pre-funded Warrants (Discover Fund; $0.01, exp through
6/2024)
	  				  				  				  	 	18,907,817	 
	 June 2018 Warrants (Discover Fund, $4.00; exp 6/2023)
	  				  				  				  	 	1,116,256	 
	 Pre-funded Warrants (Discover Fund; $0.01, exp through
7/2024)
	  				  				  				  	 	15,847,426	 
	 July 2018 Warrants (Discover Fund, $4.00 exp 7/2023)
	  				  				  				  	 	785,737	 
	 Pre-funded Warrants (Discover Fund; $0.01, exp through
8/2024)
	  				  				  				  	 	23,777,381	 
	 August 2018 Warrants (Discover Fund, $1.75; exp 8/2023)
	  				  				  				  	 	2,021,410	 
	 Pre-funded Warrants (Bigger; $0.01, exp through
9/2024)
	  				  				  				  	 	3,135,707	 
	 Sept 2018 Warrants (Bigger, $1.75; exp 9/2023)
	  				  				  				  	 	279,506	 
		  				  				  				  	  
	  
	 
	 Fully diluted common shares total
	  				  				  				  	 	75,893,233	 
		  				  				  				  	  
	  
	 

  
 35 

 SCHEDULE 3.1(g)(ii) 

Corporate Governance of Delcath Systems, Inc. 

Roger Stoll, Ph.D., Chairman 
 Simon Pedder, Ph.D. 

William Rueckert 
 Dr. Marco Taglietti 

Dr. Jennifer Simpson 
 Audit Committee – William
Rueckert, Chair; Roger Stoll; Simon Pedder 
 Compensation Committee – Marco Taglietti, Chair; William Rueckert; Simon Pedder 

Nominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti 

  
 36 

 SCHEDULE 3.1(h) 

Indebtedness 
 1. Letter of credit
issued by Silicon Valley Bank to Kasowitz, Benson, Torres and Friedman LLP with face amount of $130,663.00. 
 2. Letter of credit issued by Silicon Valley
Bank to SLG 810 7th Avenue Lessee LLC with face amount of $881,297.08. 
 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under
corporate credit card services agreement. 
 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to a License and Agreement
to Share Intangible Development Costs dated as of January 1, 2012. 
 5. Indebtedness between Delcath Systems, Inc. and the institutional investor
signatory to a Stock Purchase Agreement dated as of June 4, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. 

Existing Liens 
 1. Liens of
Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively, securing the letters of credit described in numbers 1 and 2 above. 
 2. Lien of
Silicon Valley Bank account no. 3301464115 securing the Indebtedness described in number 3 above. 
 3. Lien of the institutional investor securing the
Obligations described in number 5 above. 

  
 37 

 SCHEDULE 3.1(j) 

Material Changes; Undisclosed Events, Liabilities or Developments 

See Schedule 3.1(m). 

  
 38 

 SCHEDULE 3.1(k) 

Litigation 
 Claim by Hudson Bay
Capital Management LP that Participation Right under Section (k) of September 19, 2017 Stock Purchase Agreement was violated by Delcath Systems, Inc. entering into June 4, 2018 Stock Purchase Agreement. 

  
 39 

 SCHEDULE 3.1(m) 

Compliance 
 1. UBC Demand Letter
for $2,106,116.00. 
 2. Payables to Roth Capital in the amount of $549,194.07. 

3. Potential breach of Section 3.1(c)-(e) of June 4, 2018 Stock Purchase Agreement, and 8% Senior Secured Convertible Promissory Notes issued
pursuant thereto, in the event that the claim described in Schedule 3.1(k) is successful. 

  
 40 

 SCHEDULE 3.1(o) 

Title to Assets 
 See Schedule
3.1(h). 

  
 41 

 SCHEDULE 3.1(p) 

Material Agreements 
 See
Schedule 3.1(m). 

  
 42 

 SCHEDULE 3.1(q) 

Intellectual Property 
 None. 

  
 43 

 SCHEDULE 3.1(r) 

Transactions with Affiliates and Employees 

Herein below are all back salaries and unreimbursed employee expenses through June 30, 2018: 

 

					
	 Jennifer Simpson
	  	$	248,444	 
	 Barbra Keck
	  	$	173,955	 
	 John Purpura
	  	$	165,814	 
		  	$	588,213	 

  
 44 

 SCHEDULE 3.1(s) 

Cash Payments 
 None. 

  
 45 

 SCHEDULE 3.1(u) 

Certain Fees 
 Potential fees to
Roth Capital Partners, LLC under waiver letter with Roth Capital Partners, LLC 

  
 46 

 SCHEDULE 3.1(x) 

Registration Rights 
 Warrants
issued in November 2017 and February 2018 
 June 4, 2018, July 20, 2018, August 29, 2018 and September 21, 2018 Stock Purchase
Agreements 

  
 47 

 SCHEDULE 3.1(ee) 

Accountants 
 Marcum LLP 

Grant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only) 

  
 48 

 SCHEDULE 3.1(oo) 

Seniority 
 See Schedule
3.1(h). 

  
 49 

 SCHEDULE 3.1(pp) 

Off-balance Sheet Arrangements 

None. 

  
 50agen-ex41_149.htm

 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 4.1

 

 

 

ROYALTY PURCHASE AGREEMENT

dated as of September 20, 2018

among Agenus Royalty Fund, LLC
as Seller,

AGENUS Inc.
as Seller Parent

and

XOMA (US) LLC
Purchaser                

 

 

 

 

TABLE OF CONTENTS

Page

	
ARTICLE I DEFINITIONS
	
1

	
 
	
Section 1.01
	
Definitions.1
	
 

	
ARTICLE II PURCHASE AND SALE OF THE PURCHASED ROYALTY INTERESTs
	
1

	
 
	
Section 2.01
	
Purchase and Sale.1
	
 

	
 
	
Section 2.02
	
Transfers and Payments in Respect of the Purchased Royalty Interests.1
	
 

	
 
	
Section 2.03
	
Purchase Price.1
	
 

	
 
	
Section 2.04
	
No Assumed Obligations.1
	
 

	
 
	
Section 2.05
	
Excluded Assets.1
	
 

	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Parent
	
1

	
 
	
Section 3.01
	
Organization; Operations of Seller Parent and Seller.1
	
 

	
 
	
Section 3.02
	
Corporate Authorization.1
	
 

	
 
	
Section 3.03
	
Governmental Authorization.1
	
 

	
 
	
Section 3.04
	
Ownership.1
	
 

	
 
	
Section 3.05
	
Solvency.1
	
 

	
 
	
Section 3.06
	
Litigation.1
	
 

	
 
	
Section 3.07
	
Compliance with Laws.1
	
 

	
 
	
Section 3.08
	
Conflicts.1
	
 

	
 
	
Section 3.09
	
No Withholding1
	
 

	
 
	
Section 3.10
	
License Agreements1
	
 

	
 
	
Section 3.11
	
Products; Royalties.1
	
 

	
 
	
Section 3.12
	
Intellectual Property Matters.1
	
 

	
 
	
Section 3.13
	
No Other Representations or Warranties.1
	
 

	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
	
1

	
 
	
Section 4.01
	
Organization.1
	
 

	
 
	
Section 4.02
	
Authorization.1
	
 

	
 
	
Section 4.03
	
Broker’s Fees.1
	
 

	
 
	
Section 4.04
	
Conflicts.1
	
 

	
 
	
Section 4.05
	
Access to Information.1
	
 

	
ARTICLE V COVENANTS
	
1

	
 
	
Section 5.01
	
Books and Records.1
	
 

	
 
	
Section 5.02
	
Confidentiality; Public Announcement.1
	
 

	
 
	
Section 5.03
	
Commercially Reasonable Efforts; Further Assurance.1
	
 

	
 
	
Section 5.04
	
Remittance to Joint Escrow Account.1
	
 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

	
 
	
Section 5.05
	
Incyte Agreement, Merck Agreement.1
	
 

	
 
	
Section 5.06
	
Audits.1
	
 

	
 
	
Section 5.07
	
Notice.1
	
 

	
 
	
Section 5.08
	
Seller Operations.1
	
 

	
 
	
Section 5.09
	
Special Purpose Vehicle Covenants1
	
 

	
 
	
Section 5.10
	
Patent Maintenance1
	
 

	
 
	
Section 5.11
	
[********]1
	
 

	
ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING
	
1

	
 
	
Section 6.01
	
Closing.1
	
 

	
 
	
Section 6.02
	
Conditions Applicable to Purchaser in Closing.1
	
 

	
 
	
Section 6.03
	
Conditions Applicable to Seller in Closing.1
	
 

	
ARTICLE VII EXPIRATION
	
1

	
 
	
Section 7.01
	
Expiration Date.1
	
 

	
 
	
Section 7.02
	
Effect of Expiration.1
	
 

	
ARTICLE VIII MISCELLANEOUS
	
1

	
 
	
Section 8.01
	
Survival.1
	
 

	
 
	
Section 8.02
	
Specific Performance.1
	
 

	
 
	
Section 8.03
	
Notices.1
	
 

	
 
	
Section 8.04
	
Successors and Assigns.1
	
 

	
 
	
Section 8.05
	
Indemnification.1
	
 

	
 
	
Section 8.06
	
Independent Nature of Relationship.1
	
 

	
 
	
Section 8.07
	
Tax.1
	
 

	
 
	
Section 8.08
	
Entire Agreement.1
	
 

	
 
	
Section 8.09
	
Governing Law.1
	
 

	
 
	
Section 8.10
	
Severability.1
	
 

	
 
	
Section 8.11
	
Counterparts; Effectiveness.1
	
 

	
 
	
Section 8.12
	
Amendments; No Waivers.1
	
 

 

 

 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

	

	
EXHIBITS

Exhibit A—Form of Bill of Sale 

Exhibit B—Incyte Agreement

	
Exhibit C
	
—Merck Agreement

	
Exhibit D
	
—LICR Agreement

Exhibit E—Intellectual Property Matters

Exhibit F—Form of Incyte Direction Letter

Exhibit G—Form of Merck Direction Letter 

Exhibit H—Form of Legal Opinion of Goodwin Procter LLP

 

 

 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

ROYALTY PURCHASE AGREEMENT

This ROYALTY PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is made and entered into as of September 20, 2018, by and among AGENUS ROYALTY FUND, LLC, a Delaware limited liability company (“Seller”), Agenus Inc., a Delaware corporation (“Seller Parent”), and XOMA (US) LLC (“Purchaser”).

WHEREAS, Seller wishes to sell, assign, convey and transfer to Purchaser, and Purchaser wishes to purchase from Seller, the Purchased Royalty Interests, upon and subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties set forth herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01Definitions.

The following terms, as used herein, shall have the following meanings:

“Affiliate” shall mean any Person that controls, is controlled by, or is under common control with another Person.  For purposes of this definition, “control” shall mean (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (ii) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interests with the power, or the power by contract or otherwise, to direct the management and policies of such non-corporate entities.

“Agenus Switzerland” shall mean Agenus Switzerland Inc., a joint stock company organized under the laws of Switzerland formerly known as 4-Antibody AG, and a wholly-owned subsidiary of Seller Parent.

 “Agreement” shall have the meaning set forth in the first paragraph hereof.

“Bankruptcy Event” shall mean the occurrence of any of the following: 

(i) Seller shall commence any case, proceeding or other action (a) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, relief of debtors or the like, seeking to have an order for relief entered with respect to such party, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its respective debts, or (b) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any portion of its assets, or Seller shall make a general assignment for the benefit of its creditors; or

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

(ii) there shall be commenced against Seller any case, proceeding or other action of a nature referred to in clause (i) above which remains undismissed, undischarged or unbonded for a period of ninety (90) calendar days; or

(iii) there shall be commenced against Seller any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against (a) all or any substantial portion of its assets and/or (b) the Royalties, which results in the entry of an order for any such relief which shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within forty-five (45) calendar days from the entry thereof; or

(iv) Seller shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or

(v) Seller shall become unable, admit in writing its inability, or fail generally, to pay its debts as they become due; or

(vi) Seller shall be in a financial condition such that the sum of its debts, as they become due and mature, is greater than the fair value of its property on a going concern basis.

“Bill of Sale” shall mean the Bill of Sale pursuant to which Seller shall assign to Purchaser all of its right, title and interest in and to the Purchased Royalty Interests purchased hereunder, which Bill of Sale shall be substantially in the form of Exhibit A.

“Business Day” shall mean any day other than a Saturday, a Sunday, any day which is a legal holiday under the laws of New York, or any day on which banking institutions located in New York or in the state in which the Depository Bank is located are authorized or required by law or other governmental action to close.

“Closing” shall have the meaning set forth in Section 6.01.

“Closing Date” shall have the meaning set forth in Section 6.01.

“Confidential Information” shall mean, as it relates to Seller Parent, Seller and their respective Affiliates, the Incyte Agreement, the Merck Agreement,  the Licensed Products, the Patent Rights, know-how, trade secrets, confidential business information, financial data and other like information (including but not limited to ideas, research and development, know-how, formulas, schematics, compositions, technical data and results, techniques, inventions (whether patentable or not), practices, methods, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), inventory, ideas, algorithms, processes, computer software programs or applications (in both source code and object code form), client lists, tangible or intangible proprietary information or material, and any other technical or scientific information, as well as any such information that would be deemed “Confidential Information” of Merck under the Merck Agreement or of Incyte under the Incyte Agreement, in each case, regardless of whether such information is specifically designated as confidential and 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

regardless of whether such information is in written, oral, electronic, or other form.  For the avoidance of doubt, any notices or reports delivered by a Seller Party pursuant to this Agreement shall be deemed to be Confidential Information.

“Confidentiality Breach” means, with respect to the disclosure of any Confidential Information that a Seller Party received pursuant or related to the Merck Agreement, Incyte Agreement or LICR Agreement, as applicable, to Purchaser, that such disclosure would be expected, in Seller Parent’s reasonable, good faith judgment, to constitute a breach by Seller Parent of its confidentiality obligations under such agreement.

“Depository Bank” shall mean Bank of New York Mellon or such other bank or financial institution as may be agreed between the parties from time to time. 

“Direction Letters” shall have the meaning set forth in Section 2.02(a)i.

“Discrepancy” shall have the meaning set forth in Section 2.02(a)iii.

“Dispute” shall mean any opposition, interference proceeding, reexamination proceeding, cancellation proceeding, re-issue proceeding, invalidation proceeding, inter parties review proceeding, injunction, claim, lawsuit, proceeding, hearing, investigation, complaint, arbitration, mediation, demand, investigation, or decree.

“EMA” shall mean the European Medicines Agency.

“Excluded Incyte Milestone” shall mean one Milestone Payment of $5,000,000 to be received by Seller from Incyte for the advancement of the TIM-3 program into clinical development pursuant to Section 7.5(b) of the Incyte Agreement.

“Excluded Liabilities and Obligations” shall have the meaning set forth in Section 2.04. 

“Exploitation” shall mean, with respect to a Licensed Product, the manufacture, use, sale, offer for sale (including marketing and promotion), importation, distribution or other commercialization.

“FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.

“Governmental Authority” shall mean any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether foreign, federal, state or local (domestic or foreign), including each Patent Office, the FDA, the EMA, or any other government authority in any country.

“Incyte” shall mean Incyte Europe Sarl, a Swiss limited liability company, its Affiliates and any successors-in-interest and assigns under the Incyte Agreement.

“Incyte Agreement” shall mean that certain License, Development and Commercialization Agreement, dated as of January 9, 2015, by and between Seller Parent and Incyte, as amended on February 14, 2017, and as may be further amended from time to time, together with the following 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

letter agreements, letter dated November 6, 2015, Side Letter No. 1 dated February 2, 2016, Side Letter No. 2 dated April 20, 2016 and Side Letter No. 3 dated December 21, 2017.

“Incyte Confidential Information” shall have the meaning set forth in Section 5.02(f).

“Incyte Direction Letter” shall have the meaning set forth in Section 5.04(c).

“Joint Escrow Account” shall mean the deposit account established and maintained at the Depository Bank into which payments of the Royalties and Milestones are to be remitted in accordance with Section 2.02(a) (and the terms of an escrow agreement to be agreed upon by the parties) and the account from which the Depository Bank transfers funds into the Purchaser Account and the Seller Account.

“Knowledge” shall mean, with respect to the Seller Parties and their Affiliates, the actual knowledge of (i) Garo Armen, Chief Executive Officer of the Seller Parent, (ii) Christine Klaskin, VP of Finance of the Seller Parent, (iii) Evan Kearns, Vice President and General Counsel of the Seller Parent, (iv) Michael Plater, Chief Business Officer of the Seller Parent, and (v) Christian Cortis, Chief Strategy Officer & Head of Finance of the Seller Parent and their respective successors in such positions, provided that with respect to Sections 3.11(g) and 3.12, “Knowledge” shall mean the actual knowledge of Michael Robinson, Vice President, Head of Intellectual Property, and his successor in such position. 

“Law” shall mean any law, rule, ordinance or regulation, or any judgment, order, writ, decree, permit or license of any Governmental Authority. 

“License Party Audit” shall have the meaning set forth in Section 5.06(b).

“Licensed Patents” means pending or granted: (i) patent applications as set forth in Exhibit E, and the patents resulting therefrom, if any, (ii) divisionals, continuations, continuations-in-part (solely to the extent such continuations-in-part disclose the same invention disclosed in any of the foregoing), reissues, renewals, substitutions, registrations, re-examinations, revalidations, and the like of any such patents and patent applications the subject of (i) above, and (iii) any and all foreign equivalents of the patents and patent applications the subject of (i) and (ii) above. 

“Licensed Product” as to the Incyte Agreement or the Merck Agreement, as applicable, shall mean each Product covered therein as of the date hereof.

“LICR” shall mean the Ludwig Institute for Cancer Research Ltd., a non-profit corporation organized under the laws of Switzerland, its Affiliates and any successors-in-interest and assigns under the LICR Agreement.

“LICR Agreement” shall mean that certain License Agreement dated as of December 5, 2014, by and between LICR and Seller Parent, and as may be further amended from time to time in the future.

“Lien” shall mean lien, hypothecation, charge, instrument, preference, priority, security agreement, security interest, interest, mortgage, option, privilege, pledge, liability, covenant, order, tax, right of recovery, trust or deemed trust (whether contractual, statutory or otherwise arising) or 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

any encumbrance, right or claim of any other person of any kind whatsoever whether choate or inchoate, filed or unfiled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown.

“Losses” shall mean collectively, any and all damages, losses, assessments, awards, cause of actions, claims, charges, costs and expense (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses), fines, judgments, liabilities, obligations or penalties; provided, however that Losses shall not include any lost profits  or consequential, punitive, special or incidental damages except any lost profits or consequential, punitive, special or incidental damages awarded or payable by a Purchaser Indemnified Party to a Third Party in connection with a claim or action for which the Seller Parent is required to indemnify the Purchaser pursuant to Section 8.05.

“Material Adverse Effect” shall mean a material adverse effect on (i) the validity or enforceability of any of the Transaction Documents, the Incyte Agreement or the Merck Agreement, (ii) the ability of a Seller Party or any of its Affiliates to perform any of its material obligations under any of the Transaction Documents, the Incyte Agreement or the Merck Agreement, (iii) the rights or remedies of Purchaser under any of the Transaction Documents, the Incyte Agreement or the Merck Agreement,  (iv)  the timing, amount or duration of the Royalties, taken as a whole, and recognizing the early stage nature of the Licensed Products and the risks associated with the development and potential commercialization of early stage biopharmaceutical products, or (v) the right of  Purchaser to receive payments in respect of the Purchased Royalty Interests in accordance with the Transaction Documents, the Incyte Agreement or the Merck Agreement.

“Merck” shall mean Merck Sharp & Dohme Corp., a corporation organized and existing under the laws of New Jersey, its Affiliates and any successors-in-interest and assigns under the Merck Agreement.

“Merck Agreement” shall mean that certain License and Research Collaboration Agreement dated as of April 25, 2014, by and between Merck and Seller Parent, as amended effective April 25, 2015, and February 6, 2017, and as may be further amended from time to time.

“Milestones” shall mean one hundred percent (100%) of all future milestone payments that become owed, accrued or otherwise payable to Seller after the Closing pursuant to Section 5.4 of the Merck Agreement and Section 7.5 of the Incyte Agreement including, without limitation, all clinical, regulatory, commercial and sales milestones pursuant to such sections (collectively, the “Milestone Payments”), and any future sums accrued, paid or due, other than Milestone Payments, that are (i) in lieu of the Milestone Payments (which shall not consist of securities without Purchaser’s prior written consent); (ii) in satisfaction of the obligation to pay the Milestone Payments; or (iii) indemnity payments, recoveries, damages, settlement or other amounts to which Seller is or may become entitled to pursuant to or in connection with the Incyte Agreement or the Merck Agreement, as applicable, or any Licensed Patent thereunder, whether based on actual or alleged infringement, breach, or other circumstance, in each case described in this clause (iii) to the extent such infringement, breach, default or other circumstance has resulted or would result in a reduction in, or such payment is made in lieu of, Milestone Payments; and (iv) all proceeds (including any damages, monetary awards or other amounts recovered, whether by judgment or 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

settlement) paid, owed, accrued or otherwise payable with respect to any of the foregoing of any suit, proceeding or other legal action taken to enforce the right to receive any of the foregoing (other than amounts awarded or recovered in connection with any judgment or settlement for reimbursement of the costs and expenses (including attorneys’ fees) of the party bringing such suit or proceeding or taking such other legal action).

“Net Sales” shall mean “Net Sales” as such term is defined in the Incyte Agreement or the Merck Agreement, as applicable.

“Patent Rights” shall mean “Patent Rights” as such term is defined in the Incyte Agreement or the Merck Agreement, as applicable, but only to the extent such Patent Rights are owned or controlled by Seller Parent or its Affiliates.

“Permitted Liens” shall mean any: (a) Liens in favor of Purchaser or its Affiliates; (b) Liens created, permitted or required by the Transaction Documents in favor of Purchaser; (c) Liens incurred by Purchaser after the Closing Date; and (d) Liens that will be released at the Closing. 

“Person” shall mean an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, but not including a government or political subdivision or any agency or instrumentality of such government or political subdivision.

“Product” shall mean “Royalty Bearing Product” as such term is defined in the Incyte Agreement or “Product” as such term is defined in the Merck Agreement, as applicable.

“Purchase Price” shall be the amount set forth in Section 2.03 which shall be payable in United States Dollars.

“Purchased Royalty Interests” shall mean (a) thirty three percent (33%) of all of the Royalties (net of all outbound royalties paid, owed, accrued or otherwise payable by Seller Parent or its Affiliates to LICR under the LICR Agreement); (b) ten percent (10%) of all future Milestones (other than the Excluded Incyte Milestone); and (c) in the case of each of (a) and (b) above, all “accounts” (as such term is defined in the UCC) of Seller with respect to the Royalties and Milestones.  For clarity, the Purchased Royalty Interests do not include any portion of the Excluded Incyte Milestone. 

“Purchaser” shall have the meaning set forth in the first paragraph hereof.

“Purchaser Account” shall mean Purchaser’s deposit account with Silicon Valley Bank which account Purchaser may change from time to time by furnishing written notice to Seller.  

“Purchaser Indemnified Party” shall have the meaning set forth in Section 8.05(a).

“Purchaser-Requested Audit” shall have the meaning set forth in Section 5.06(a).

“Representatives” shall have the meaning set forth in Section 5.02(b).

“[********]” shall have the meaning set forth in Section [********].

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

“Royalty” or “Royalties” shall mean without duplication, (a) one hundred percent (100%) of all royalties paid, owed, accrued or otherwise payable after the Closing by Incyte pursuant to Section 7.6 of the Incyte Agreement with respect to Net Sales of any applicable Licensed Product thereunder, (b) all royalties paid, owed, accrued or otherwise payable after the Closing by Merck pursuant to Section 5.5 of the Merck Agreement with respect to Net Sales of any applicable Licensed Product thereunder (collectively (a) and (b) are hereinafter referred to as “Royalty Payments”), (c) any sums accrued, paid or due, other than Royalty Payments, that are (i) in lieu of the Royalty Payments (which shall not consist of securities without Purchaser’s prior written consent); (ii) in satisfaction of the obligation to pay the Royalty Payments; or (iii) indemnity payments, recoveries, damages, settlement or other amounts to which Seller is or may become entitled to pursuant to or in connection with the Incyte Agreement or the Merck Agreement, as applicable, or any Licensed Patent thereunder, whether based on actual or alleged infringement, breach, default or other circumstance, in each case described in this clause (iii) to the extent such infringement, breach, or other circumstance has resulted or would result in a reduction in, or such payment is made in lieu of, Royalty Payments; and (d) all proceeds (including any damages, monetary awards or other amounts recovered, whether by judgment or settlement) paid, owed, accrued or otherwise payable with respect to any of the foregoing of any suit, proceeding or other legal action taken to enforce the right to receive any of the foregoing (other than amounts awarded or recovered in connection with any judgment or settlement for reimbursement of the costs and expenses (including attorneys’ fees) of the party bringing such suit or proceeding or taking such other legal action). 

“Secured Party” has the meaning set forth in Section 6.02(j).

“Seller” has the meaning set forth in the preamble.

“Seller Account” shall mean a segregated account established for the benefit of Seller.

“Seller Indemnified Party” has the meaning set forth in Section 8.05(b).

“Seller Organizational Documents” means the certificate of formation of Seller dated as of September 14, 2018 and the limited liability company agreement of Seller dated as of September 14, 2018.

“Seller Parent” has the meaning set forth in the preamble.

“Seller Party” shall mean Seller and Seller Parent, individually, and “Seller Parties” shall mean Seller and Seller Parent, collectively.

“[********]” shall have the meaning set forth in Section [********].

“Specified Persons” shall mean (i) Garo Armen, Chief Executive Officer of the Seller Parent, (ii) Christine Klaskin, VP of Finance of the Seller Parent, (iii) Evan Kearns, Vice President and General Counsel of the Seller Parent, (iv) Michael Plater, Chief Business Officer of the Seller Parent and (v) Christian Cortis, Chief Strategy Officer & Head of Finance, and their respective successors in such positions provided that with respect to Section 3.11(g) and 3.12, “Specified 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

Person” shall mean Michael Robinson, Vice President, Head of Intellectual Property, and his successor in such position. 

“[********]” shall have the meaning set forth in Section [********].

“Subsidiary” or “Subsidiaries” shall mean with respect to any Person (i) any corporation of which the outstanding capital stock having at least a majority of votes entitled to be cast in the election of directors under the ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority voting interest under ordinary circumstances is at the time owned, directly or indirectly, by such Person. 

 “Third Party” shall mean any Person other than Seller, Seller Parent or Purchaser or their respective Affiliates.

“Third Party Patents” shall mean, with respect to any Third Party, any and all issued patents and pending patent applications as of the date of this Agreement, including all provisional applications, substitutions, continuations, continuations-in-part, divisions, and renewals, all letters patent granted thereon, and all patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms (including regulatory extensions), and all supplementary protection certificates, together with any foreign counterparts thereof anywhere in the world, of such Third Party.

“Transaction Documents” shall mean, collectively, this Agreement and the Bill of Sale. 

“UCC” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ROYALTY INTERESTs

Section 2.01Purchase and Sale.

(a)Subject to the terms and conditions of this Agreement, on the Closing Date, Seller hereby sells, assigns, transfers, conveys and grants to Purchaser, and Purchaser hereby purchases, acquires and accepts from Seller, all of Seller’s rights, title and interest in and to the Purchased Royalty Interests, free and clear of any and all Liens, other than Permitted Liens.  

(b)Each of Seller and Purchaser intends and agrees that the sale, assignment and transfer of the Purchased Royalty Interests under this Agreement shall be, and is, a true sale by Seller to Purchaser that is absolute and irrevocable and that provides Purchaser with the full benefits of ownership of the Purchased Royalty Interests, and each of Seller and Purchaser do not intend the transactions contemplated hereunder to be, or for any purpose characterized as, a loan from Purchaser to Seller, or a pledge or security agreement.  Seller waives any right to contest or otherwise assert that this Agreement is other than a true sale by Seller to Purchaser under applicable law, which waiver shall be enforceable against Seller in any bankruptcy or insolvency proceeding relating to Seller. 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

(c)Seller hereby consents to Purchaser recording and filing, at Purchaser’s sole cost and expense, financing statements (and continuation statements with respect to such financing statements when applicable) meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary or appropriate to (i) evidence or perfect the sale, assignment, transfer, conveyance and grant by Seller to Purchaser, and the purchase, acquisition and acceptance by Purchaser from Seller, of the Purchased Royalty Interests and (ii) perfect the security interest in the Purchased Royalty Interests granted by Seller to Purchaser pursuant to Section 2.01(d).

(d)Notwithstanding that Seller and Purchaser expressly intend for the sale, contribution, assignment, transfer, conveyance and granting of the Purchased Royalty Interests to be a true, complete, absolute and irrevocable sale and assignment, in the event that any transfer contemplated by this Agreement is held not to be a sale, Seller hereby assigns, conveys, grants and pledges to Purchaser, as security for its obligations created hereunder, a first priority security interest in and to all of Seller’s right, title and interest in, to and under the Purchased Royalty Interests, whether now owned or hereafter acquired, and any “proceeds” (as such term is defined in the UCC) thereof and, solely in such event, this Agreement shall constitute a security agreement.

Section 2.02Transfers and Payments in Respect of the Purchased Royalty Interests.

(a)Payments of the Royalties.  Purchaser shall be entitled to receive the following transfers and payments in respect of the Purchased Royalty Interests:

i.Effective upon the Closing, Purchaser shall be entitled to receive any and all payments of the Purchased Royalty Interests.  Any and all payments of the Purchased Royalty Interests shall be paid by Incyte, Merck or other payor, as applicable, into the Joint Escrow Account by wire transfer of immediately available funds in accordance with the Incyte Direction Letter or Merck Direction Letter (collectively, the “Direction Letters”), as the case may be, or other instruction letter provided to such other payor in compliance with Section 5.04(c), and distributed from the Joint Escrow Account to the Purchaser Account.  If Seller or its Affiliates receives any payment on account of any Purchased Royalty Interests directly from the payor of such Purchased Royalty Interests, Seller or any of its Affiliates, as the case may be, shall hold such amounts in trust for the benefit of Purchaser and, within five (5) Business Days after receipt thereof, transfer all such funds into the Joint Escrow Account by wire transfer of immediately available funds.  

ii.Notwithstanding any claim or set-off which Seller may have against Purchaser or which Incyte or Merck, as applicable, may have against Seller, Seller shall use its reasonable best efforts to ensure that Incyte and Merck remit all payments that each is required to pay under the Incyte Agreement or the Merck Agreement, respectively, with respect to the Purchased Royalty Interests directly to the Joint Escrow Account, pursuant to the Direction Letters.

iii.For the avoidance of doubt, the parties understand and agree that if Incyte or Merck, as applicable, fails to make any payment in respect of the Purchased Royalty Interests when Seller or Purchaser reasonably believes they are due under the Incyte Agreement or the Merck Agreement, as applicable (each such unpaid amount, a 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

“Discrepancy”), because of a disagreement with Incyte or Merck, as applicable, as to when, whether or the amount of any payment of the Purchased Royalty Interests that are owed, then Seller shall not be obligated to pay to Purchaser or otherwise compensate or make Purchaser whole with respect to any such Discrepancy, but instead the parties shall attempt to recover such Discrepancy from Incyte or Merck, as applicable; provided, however, that nothing in this Section 2.02(a) shall limit or affect in any respect the rights of any Purchaser Indemnified Party under Section 8.05.

iv.For the avoidance of doubt, the parties understand and agree that if Incyte or Merck, as applicable, fails to pay any payment in respect of the Purchased Royalty Interests when Seller or Purchaser reasonably believes they are due under the Incyte Agreement or the Merck Agreement, as applicable, because of any set-off under any of the agreements effectuated by Incyte or Merck, as the case may be, then Seller shall pay to Purchaser the amount required to make Purchaser whole with respect to any such deficiency, by depositing the amount thereof in the Purchaser Account.

Section 2.03Purchase Price.

In consideration for the sale of the Purchased Royalty Interests, and subject to the terms and conditions set forth herein, Purchaser shall pay to Seller, or its designee, on the Closing Date, the sum of $15,000,000 (the “Purchase Price”) by wire transfer to an account designated in writing by Seller prior to the Closing.

Section 2.04No Assumed Obligations.

Notwithstanding any provision in this Agreement or any other writing to the contrary, Purchaser is acquiring only the Purchased Royalty Interests and is not assuming any liability or obligation of either Seller Party or any of their Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter, whether under the Incyte Agreement, the Merck Agreement or any Transaction Document or otherwise.  All such liabilities and obligations shall be retained by and remain obligations and liabilities of such Seller Party (the “Excluded Liabilities and Obligations”).

Section 2.05Excluded Assets.

Purchaser does not, by purchase of the rights granted hereunder or otherwise pursuant to any of the Transaction Documents, acquire any assets or contract rights of Seller or any of its Affiliates under the Incyte Agreement, the Merck Agreement, the Patent Rights or any other assets of either Seller Party (including the Excluded Incyte Milestone), other than the Purchased Royalty Interests.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER Parent

Seller and Seller Parent, as applicable, hereby represents and warrants to Purchaser as of the date first written above the following: 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

Section 3.01Organization; Operations of Seller Parent and Seller.

(a)Seller Parent is a corporation duly organized, validly existing and in good standing under the laws of Delaware, and has all powers and all licenses, authorizations, consents and approvals required to conduct its business as now conducted and as proposed to be conducted in connection with the transactions contemplated by the Transaction Documents to which Seller Parent is a party and the Incyte Agreement and the Merck Agreement.  Seller Parent is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction in which the failure to do so could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.

(b)Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, and has all powers and all licenses, authorizations, consents and approvals required to conduct its business as now conducted and as proposed to be conducted in connection with the transactions contemplated by the Transaction Documents to which Seller is a party.  Seller is duly qualified to do business as a foreign limited liability company and is in good standing in every jurisdiction in which the failure to do so could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.

(c)Since September 14, 2018, Seller (i) has had no business activities other than acquiring the right to receive payments under the Merck Agreement and the Incyte Agreement, selling the Purchased Royalty Interests to Purchaser as contemplated hereby and otherwise performing its obligations under the Transaction Documents and (ii) has not been, is not, and will not be engaged, in any business unrelated to effecting the transactions contemplated by the Transaction Documents.  Since September 14, 2018, the sole assets of Seller that it has owned consist exclusively of the right to receive payments under the Merck Agreement and the Incyte Agreement and any rights arising under the Incyte Agreement or the Merck Agreement, as applicable.  Since September 14, 2018, Seller has not incurred any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person, except as required to execute and deliver the Transaction Documents and to consummate the transactions contemplated thereby.  Immediately prior to Closing, Seller shall have no obligations or liabilities, except those incurred in connection with, and pursuant to the Transaction Documents and the transactions contemplated thereby.

Section 3.02Corporate Authorization.

Each Seller Party has all necessary corporate or limited liability company, as applicable, power and authority to enter into, execute and deliver the Transaction Documents to which it is a party and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder.  The Transaction Documents to which such Seller Party is a party have been duly authorized, executed and delivered by such Seller Party and each Transaction Document to which it is a party constitutes the valid and binding obligation of such Seller Party, enforceable against such Seller Party in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or general equitable principles.

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

Section 3.03Governmental Authorization.

Except for filings with the Securities and Exchange Commission, its successor or foreign equivalent, the execution and delivery by a Seller Party of the Transaction Documents to which it is a party, and the performance by such Seller Party of its obligations hereunder and thereunder and under the Incyte Agreement and the Merck Agreement, as applicable, do not require any notice to, action or consent by, or in respect of, or filing with, any Governmental Authority.

Section 3.04Ownership.

Seller is the exclusive owner of the entire right, title (legal and equitable) and interest in, to and under the Purchased Royalty Interests and has good and valid title thereto, free and clear of all Liens (other than Permitted Liens).  The Purchased Royalty Interests sold, assigned, transferred, conveyed and granted to Purchaser at the Closing are not pledged, sold, contributed, assigned, transferred, conveyed or granted by Seller to any Person, nor has Seller consented to any such action.  Seller has full right to sell, contribute, assign, transfer, convey and grant the Purchased Royalty Interests to Purchaser.  Upon the sale, assignment, transfer, conveyance and granting by Seller of the Purchased Royalty Interests to Purchaser, Purchaser shall acquire good and valid title to the Purchased Royalty Interests free and clear of all Liens, other than Permitted Liens, and shall be the exclusive owner of the Purchased Royalty Interests.

Section 3.05Solvency.

Assuming consummation of the transactions contemplated by the Transaction Documents to which Seller is a party (i) the present fair saleable value of Seller’s assets is greater than the amount required to pay its debts as they become due, (ii)  Seller does not have unreasonably small capital with which to engage in its business, (iii) Seller will be able to realize upon its assets and pay its debts and other obligations as they mature, and (iv) Seller has not incurred, will not incur, nor does it have present plans or intentions to incur, debts or liabilities beyond its ability to pay such debts or liabilities as they become absolute and matured.

Section 3.06Litigation.

(a)There is no (i) action, suit, arbitration proceeding, claim, investigation or other proceeding pending or, to the Knowledge of Seller and its Affiliates, threatened against Seller Parent or any of its Affiliates or (ii) any inquiry of any Governmental Authority pending or, to the Knowledge of Seller and its Affiliates, threatened against Seller Parent or any of its Affiliates, in each case with respect to clauses (i) and (ii) above, which, if adversely determined, could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. 

(b)To the actual knowledge of any Specified Person there is no (i) action, suit, arbitration proceeding, claim, investigation or other legal proceeding pending or threatened against Incyte or any of its Affiliates or Merck or any of its Affiliates (x) involving the Licensed Products or (y) involving Seller Parent or any of its Affiliates or (ii) any inquiry of any Governmental Authority pending or threatened against Incyte or any of its Affiliates or Merck or any of its Affiliates involving the Licensed Products, in each case with respect to clauses (i) and (ii) above, 

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which, if adversely determined, could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.

Section 3.07Compliance with Laws.

None of Seller, Seller Parent or any of its Subsidiaries (A) are in violation of, or have violated, or to the Knowledge of Seller and its Affiliates, are under investigation with respect to, or been given notice of any violation of, in any material respect, any law, rule, ordinance or regulation of, or any judgment, order, writ decree, permit or license granted, issued or entered by, any Governmental Authority or (B) are subject to any judgment, order, writ decree, permit or license granted, issued or entered by, any Governmental Authority, which in the case of (A) or (B), could reasonably be expected to result in a Material Adverse Effect.

Section 3.08Conflicts.

(a)Neither the execution and delivery of any of the Transaction Documents to which Seller or Seller Parent is a party nor the performance or consummation of the transactions contemplated hereby and thereby will:  (i) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, any provisions of the certificate of incorporation or by-laws (or other organizational or constitutional documents) of Seller Parent or any of its Affiliates; (ii) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by or give rise to any right of termination, cancellation or acceleration of any right or obligation of any provision of the Incyte Agreement or Merck Agreement; (iii) require any consent of any Person or Governmental Authority; (iv) result in the creation or imposition of any Lien on the Purchased Royalty Interests, other than Permitted Liens; or (v) except as would not reasonably be expected to result in a Material Adverse Effect, contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of any Law, contract or agreement (other than the Incyte Agreement or Merck Agreement) to which Seller Parent or any of its Affiliates or any of their respective assets or properties are subject or bound.

(b)Neither Seller Party has granted, nor does there exist, any Lien (other than a Permitted Lien) on the Purchased Royalty Interests.  Neither Seller Party has granted, nor does there exist, any Lien (other than a Permitted Lien and Liens in favor of the Secured Party) on the Incyte Agreement or Merck Agreement.

Section 3.09 No Withholding

No deduction or withholding for or on account of any tax has been made or, to the Knowledge of Seller and its Affiliates, was required to be made under applicable Law from any payment to Seller under the Incyte Agreement or the Merck Agreement, as applicable.  As of the Closing Date, to the Knowledge of Seller and its Affiliates, no deduction or withholding for or on account of any tax is required to be made under applicable Law from any payment by Seller to Purchaser under this Agreement.

Section 3.10License Agreements.

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The Incyte Agreement attached hereto as Exhibit B, the Merck Agreement attached hereto as Exhibit C, and the LICR Agreement attached hereto as Exhibit D are true, correct and complete copies of each such agreement, as in effect on the date hereof, and there have been no amendments or modifications to such agreements which are not reflected in such exhibits.

Section 3.11Products; Royalties.

(a)Since February 14, 2017, Incyte has been responsible for the clinical development of each of the Licensed Products being clinically developed under the Incyte Agreement, and is responsible for seeking all applicable regulatory approvals from applicable Governmental Authorities for each of such Licensed Products, and Seller Parent or its Affiliates have no responsibility for the clinical development of any of such Licensed Products nor for seeking any regulatory approvals from any Governmental Authorities for any of such Licensed Products.

(b)To the Knowledge of Seller and its Affiliates, Incyte is in compliance with its obligations to develop each of the Licensed Products currently being developed under the Incyte Agreement and to seek and obtain regulatory approvals from applicable Governmental Authorities for such Licensed Products.  

(c)Merck has been responsible for the clinical development of the Licensed Product being clinically developed under the Merck Agreement and is responsible for seeking all applicable regulatory approvals from applicable Governmental Authorities for such Licensed Product, and Seller Parent or its Affiliates have no responsibility for the development of such Licensed Product nor for seeking any regulatory approvals from any Governmental Authorities for such Licensed Product.

(d)To the Knowledge of Seller and its Affiliates, Merck is in compliance with its obligations to develop the Licensed Product currently being developed under the Merck Agreement and seek and obtain regulatory approvals from applicable Governmental Authorities for such Licensed Product.  

(e)Other than (i) the Incyte Agreement, (ii) the Merck Agreement, (iii) the LICR Agreement, (iv) the Transaction Documents, (v) any third party contractor agreements entered into on Incyte’s behalf in performance of pre-clinical services, (vi) agreements with the Secured Party, and (vii) the statutory right of remuneration arising under German law, as of the Closing, neither Seller Parent nor any of its Affiliates shall have entered into, are a party to, or are otherwise subject to any agreement, contract, instrument or other binding obligation that in any way relates to or involves the Royalties, Milestones or the Products (which, for purposes of clarity, the parties acknowledge and agree shall not include any agreement, contract, instrument or other binding obligation that relates to the Patent Rights but does not otherwise relate to or involve the Royalties, Milestones or the Products and shall not include any expired material transfer, research or similar agreement or contract manufacturing or similar agreement relating to or involving the Royalties, Milestones or the Products).

(f)To the Knowledge of Seller and its Affiliates, neither Seller Parent nor Seller nor any of their Affiliates has received any information from Incyte or Merck, as applicable, or any Third Party or Governmental Authority, whether through any form of written, oral or digital 

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communication and whether or not under any of the express provisions of the Incyte Agreement or the Merck Agreement, as applicable (including pursuant to any joint steering committee meeting or the meeting of any other organized body provided for under any such agreement) relating to any of the Licensed Products (including any of the clinical trials for any of the Licensed Products or any of the studies related to those clinical trials) that would reasonably be expected to result in a Material Adverse Effect.

(g)To the actual knowledge of the Specified Persons, no Third Party Patent that Incyte or Merck, as applicable, does not have the right to use, has been, or is infringed by Incyte’s or Merck’s, as applicable, Exploitation of an applicable Licensed Product.

(h)Neither Seller Parent nor Agenus Switzerland has (i) received any notice of any dispute from LICR, including pursuant to Article 8 of the LICR Agreement, or (ii) given any notice of any dispute to LICR, including pursuant to Article 8 of the LICR Agreement.

Section 3.12Intellectual Property Matters.

  

(a)Exhibit E sets forth an accurate and complete list of all pending Licensed Patents licensed to Incyte pursuant to the Incyte Agreement, and, to the Knowledge of Seller and its Affiliates, Exhibit E sets forth an accurate and complete list of all pending Licensed Patents licensed to Merck pursuant to the Merck Agreement, including for each such Licensed Patent: (i) the jurisdictions in which such Licensed Patent application is pending, (ii) the pending patent application serial number, and (iii) the owner of such Licensed Patent application. 

(b)To the Knowledge of Seller and its Affiliates, the Licensed Patents have been diligently prosecuted in accordance with applicable Law.  To the Knowledge of Seller and its Affiliates, each individual involved in the filing and prosecution of the Licensed Patents has complied in all material respects with all applicable duties of candor and good faith in dealing with the United States Patent Office in connection with the filing and prosecution of the Licensed Patents.

(c)To the Knowledge of Seller and its Affiliates, (i) there are no unpaid maintenance or renewal fees payable by Seller to any Governmental Authority or Third Party that currently are overdue for any of the Licensed Patents and (ii) no Licensed Patents have lapsed or been abandoned, cancelled or expired.

(d)To the Knowledge of Seller and its Affiliates, the Licensed Patents have not been the subject of any litigation, interference, reissue, inter partes review, post-grant review, or re-examination proceedings.

(e)To the Knowledge of Seller and its Affiliates, Seller Parent has not received any written notice of any pending or threatened Dispute, litigation, interferences, inter partes reviews, post-grant reviews, reexaminations, or like patent office proceedings involving any Licensed Patents.

(f)To the Knowledge of Seller and its Affiliates, neither Seller Parent or any of its Affiliates has received written notice of any threatened or actual action, suit or proceeding 

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that claims that the manufacture, use, marketing, sale, offer for sale, importation or distribution of a Product infringes any patent or other intellectual property rights of any other Person or constitutes misappropriation of any other Person’s trade secrets or other intellectual property rights.

(g)To the Knowledge of Seller and its Affiliates, there is no Third Party infringing any Licensed Patents.  Neither Seller nor any of its Affiliates has received any notice of infringement of any Licensed Patents.

Section 3.13No Other Representations or Warranties.

  

Except for the representations and warranties contained in this Article III, neither Seller Party nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of a Seller Party, including any representation or warranty as to the accuracy or completeness of any information regarding the Purchased Royalty Interests, the Licensed Products or the Royalties furnished or made available to Purchaser or its Representatives (including any information, documents, management presentations or material delivered to Purchaser, or in any other form in expectation of the transactions contemplated hereby) or as to the future revenue, profitability or success of the Licensed Products, or any representation or warranty arising from statute or otherwise in Law. 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Purchaser represents and warrants to the Seller Parties as of the date first written above, the following:

Section 4.01Organization.

Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware and has all powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted.

Section 4.02Authorization.

Purchaser has all necessary power and authority to enter into, execute and deliver the Transaction Documents and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder.  The Transaction Documents have been duly authorized, executed and delivered by Purchaser and each Transaction Document constitutes the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general equitable principles.

Section 4.03Broker’s Fees.

Purchaser has not taken any action that would entitle any Person to any commission or broker’s fee that would be payable by Seller or its Affiliates in connection with the transactions contemplated by the Transaction Documents.

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Section 4.04Conflicts.

Neither the execution and delivery of this Agreement or any other Transaction Document nor the performance or consummation of the transactions contemplated hereby or thereby will:  (i) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects, any provisions of (A) any law, rule or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, to which Purchaser or any of its assets or properties may be subject or bound; or (B) any contract, agreement, commitment or instrument to which Purchaser is a party or by which Purchaser or any of its assets or properties is bound or committed; (ii) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, any provisions of any organizational or constitutional documents of Purchaser; or (iii) require any notification to, filing with, or consent of, any Person or Governmental Authority.

Section 4.05Access to Information.

Purchaser acknowledges that it has (i) reviewed the Incyte Agreement and the Merck Agreement and such other documents and information relating to the Licensed Products and (ii) has had the opportunity to ask such questions of, and to receive answers from, representatives of Seller concerning the Incyte Agreement, the Merck Agreement and the Licensed Products, in each case as it deemed necessary to make an informed decision to purchase the Purchased Royalty Interests in accordance with the terms of this Agreement.  Purchaser acknowledges the early stage nature of the Licensed Products and accepts the risks associated with the development and potential commercialization of early stage biopharmaceutical products.  Purchaser has such knowledge, sophistication and experience in financial and business matters that it is capable of evaluating the risks and merits of purchasing the Purchased Royalty Interests in accordance with the terms of this Agreement. 

	
Section 4.06
	
Financing.

Purchaser has sufficient funds available to consummate all of the transactions contemplated by any of the Transaction Documents and to pay the Purchase Price and all other cash amounts required to be paid in connection with the transactions contemplated by the Transaction Documents, and, when so required to pay or otherwise perform, as applicable, Purchaser will be able to pay or otherwise perform the obligations of Purchaser or any of its Affiliates under the Transaction Documents (including the Purchase Price payment at Closing and all other cash amounts required to be paid at or in connection with the Closing).  Purchaser acknowledges and agrees that its obligations under this Agreement are not contingent on obtaining financing. 

ARTICLE V
COVENANTS

The parties covenant and agree as follows:

Section 5.01Books and Records.

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(a)Subject to Section 5.02(g), as promptly as practicable (but in no event more than two (2) Business Days) after receipt by Seller Parent or any of its Affiliates of notice of any action, claim, investigation or proceeding (commenced or threatened) relating to the transactions contemplated by any Transaction Document or the Purchased Royalty Interests that, if determined adversely, would reasonably be expected to result in a Material Adverse Effect, Seller Parent shall inform Purchaser of the receipt of such notice and the substance of such action, claim, investigation or proceeding and, if in writing, shall furnish Purchaser with a copy of such notice and any related materials with respect to such action, claim, investigation or proceeding. 

(b)Seller shall keep and maintain, or cause to be kept and maintained, full and accurate books of accounts and records adequate to reflect accurately all Royalties and Milestones paid and/or payable with respect to the Incyte Agreement and the Merck Agreement and all deposits made into, and disbursements made from, the Joint Escrow Account.  Seller shall provide information as the amount and calculation of the amount of all Royalties and Milestones paid into the Joint Escrow Account hereunder in sufficient detail for Purchaser to review the same for accuracy and shall certify that such calculations are correct.

(c)Subject to Section 5.02(g), Purchaser shall have the right, from time to time, not more than twice per calendar year to request a meeting or teleconference with the appropriate representatives of Seller Parent to discuss the progress of the development of the Products, and/or during normal business hours and upon at least ten (10) Business Days’ prior written notice to Seller, to visit the offices and properties of Seller where books and records relating or pertaining to the Purchased Royalty Interests are kept and maintained, to inspect and make extracts from and copies of such books and records, to discuss, with officers of Seller, the Purchased Royalty Interests and to verify compliance with the provisions of the Transaction Documents, including, without limitation, provisions relating to the receipt and application of the Royalties and Milestones.  

(d)Subject to Section 5.02(g), as promptly as practicable (but in no event more than five (5) Business Days) after receipt by Seller Parent or any of its Affiliates of any material written notice, certificate, offer, proposal, correspondence, report or other material written communication from Incyte, Merck, or any other payor of any Royalties or Milestones, or any Governmental Authority directly relating to or referencing the Purchased Royalty Interests, Seller Parent shall inform Purchaser of such receipt and the substance contained therein and, if requested by Purchaser, shall furnish Purchaser with a copy of such material written notice, certificate, offer, proposal, correspondence, report or other material written communication.

Section 5.02Confidentiality; Public Announcement.

(a)Except as expressly authorized in this Agreement or the other Transaction Documents or except with the prior written consent of Seller Parent, Purchaser hereby agrees that (i) it will use the Confidential Information of the Seller Parties solely for the purpose of the transactions contemplated by this Agreement and the other Transaction Documents and exercising its rights and remedies and performing its obligations hereunder and thereunder; (ii) it will keep confidential the Confidential Information of the Seller Parties; and (iii) it will not furnish or disclose to any Person any Confidential Information of the Seller Parties.

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(b)Subject to Section 5.02(f), but otherwise notwithstanding anything to the contrary set forth in this Agreement or any other Transaction Document, Purchaser may, without the consent of Seller Parent, furnish or disclose Confidential Information of the Seller Parties to Purchaser’s Affiliates and its and their actual and potential partners, directors, officers, employees, managers, officers, investors, co-investors, partners, financing parties, bankers, agents, consultants, advisors, insurers, rating agencies, self-regulatory organizations, trustees and representatives (“Representatives”) on a need-to-know basis provided that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to the terms of this Section 5.02.  Each party hereby acknowledges that the United States federal and state securities laws prohibit any Person that has material, non-public information about a company from purchasing or selling securities of such a company or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities.

(c)If Purchaser, its Affiliates or their respective Representatives are required by applicable law or legal or judicial process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to furnish or disclose any portion of the Confidential Information of the Seller Parties, Purchaser shall, to the extent practicable and legally permitted, provide such Seller Party, as promptly as practicable, with written notice of the existence of, and terms and circumstances relating to, such requirement, so that such Seller Party may seek a protective order or other appropriate remedy, at such Seller Party’s expense (and, if such Seller Party seeks such an order, Purchaser, such Affiliates or such Representatives, as the case may be, shall provide, at such Seller Party’s expense, such cooperation as such Seller Party shall reasonably require).  Subject to the foregoing, Purchaser, such Affiliates or such Representatives, as the case may be, may disclose that portion (and only that portion) of the Confidential Information of such Seller Party that is legally required to be disclosed; provided, however, that Purchaser, such Affiliates or such Representatives, as the case may be, shall exercise reasonable efforts (at the Seller Parties’ expense) to preserve the confidentiality of the Confidential Information of the Seller Parties, including by obtaining reliable assurance that confidential treatment will be accorded any such Confidential Information disclosed.  

(d)Subject to Section 5.02(f), but otherwise notwithstanding anything to the contrary contained in this Agreement or any of the other Transaction Documents, Purchaser may disclose the Confidential Information of the Seller Parties, as the case may be, including this Agreement, the other Transaction Documents and the terms and conditions hereof and thereof, to the extent necessary in connection with the enforcement of its rights and remedies hereunder or thereunder or as required to perfect Purchaser’s rights hereunder or thereunder; provided that, Purchaser shall only disclose that portion of the Confidential Information that its counsel advises that it is legally required to disclose and will exercise commercially reasonable efforts to ensure that confidential treatment will be accorded to that portion of the Confidential Information that is being disclosed, including requesting confidential treatment of information in the Transaction Documents and Purchaser shall, to the extent practicable and legally permitted, provide such Seller Party, as promptly as practicable, with written notice of such request for confidential treatment of information in the Transaction Documents, so that such Seller Party may also seek a protective order or other appropriate remedy.  In any event, Purchaser will not oppose action by a Seller Party to obtain an appropriate protective order or other reliable assurance that confidential treatment will 

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be accorded the Confidential Information in the event that confidential treatment cannot be obtained by Purchaser.

(e)Subject to Section 5.02(d), each of Seller Parent, Seller and Purchaser shall not, and shall cause their respective Affiliates not to, without the prior written consent of the other party, issue any press release or make any other public disclosure with respect to the transactions contemplated by this Agreement or any other Transaction Document, except if and to the extent that any such release or disclosure is required by applicable law or by any Governmental Authority of competent jurisdiction, including in connection with such party’s filings with the Securities and Exchange Commission, its successor or foreign equivalent, in which case, Seller Parent, Seller, Purchaser or their respective Affiliates, as the case may be, shall use commercially reasonable efforts to consult in good faith with the other party regarding the form and content thereof before issuing such press release or making such public announcement; provided however, that once a party consults with the other parties regarding a release or disclosure, such party may continue to make substantially similar releases or discloses in the future without the need to consult the other parties. 

(f)If a Seller Party discloses or furnishes to Purchaser any Confidential Information, that a Seller Party received as a Recipient (as defined in the Incyte Agreement) pursuant to the Incyte Agreement (such Confidential Information, “Incyte Confidential Information”), pursuant to this Agreement, then with respect to all Incyte Confidential Information so disclosed or furnished, Purchaser hereby agrees to be bound by Article 11 of the Incyte Agreement with respect to the confidentiality and non-use of such Incyte Confidential Information, in addition to the confidentiality and non-use obligations under this Agreement.

(g)If a Seller Party reasonably believes that the provision of any notice, books, records, discussion, certificate, offer, proposal, correspondence, report or other written communication to Purchaser pursuant to this Agreement would constitute a Confidentiality Breach, then such Seller Party shall instead provide Purchaser (i) a written summary of all information contained in such notice, books, records, discussion, certificate, offer, proposal, correspondence, report or other written communication; provided that to the extent that such Seller Party reasonably believes that providing Purchaser with any portion of the summary set forth in clause (i) would constitute a Confidentiality Breach, then such Seller Party shall instead (ii) paraphrase or otherwise describe the substance of such portion of such notice, books, records, discussion, certificate, offer, proposal, correspondence, report or other written communication to the maximum extent possible without causing a Confidentiality Breach in the reasonable belief of such Seller Party.

Section 5.03Commercially Reasonable Efforts; Further Assurance.

Subject to the terms and conditions of this Agreement, each party hereto will use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by any Transaction Document.  Purchaser and the Seller Parties agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary in order to consummate or implement expeditiously the transactions contemplated by any Transaction Document and to vest in Purchaser good, valid and marketable 

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rights and interests in and to the Purchased Royalty Interests free and clear of all Liens, other than Permitted Liens.  

Section 5.04Remittance to Joint Escrow Account.

(a)Not later than thirty (30) Business Days following the Closing Date, Seller and Purchaser shall establish the Joint Escrow Account and Seller and Purchaser, each acting reasonably, shall execute and deliver all documents, certificates and agreements as are reasonably required to establish the Joint Escrow Account.

(b)The Joint Escrow Account shall be maintained by Seller and Purchaser throughout the term of this Agreement.

(c)Seller Parent and/or its Affiliates shall instruct and use commercially reasonable efforts to cause the payor of any Royalties and Milestones (including Incyte and Merck) to pay such Royalties and Milestones directly into the Joint Escrow Account, and in furtherance thereof, promptly following the establishment of the Joint Escrow Account, Seller Parent shall send an irrevocable letter executed by a duly authorized officer of Seller Parent to each of Incyte and Merck in the form attached hereto as Exhibit F to Incyte (the “Incyte Direction Letter”) and in the form attached hereto as Exhibit G to Merck (the “Merck Direction Letter”), with instructions to pay all such Royalties and Milestones payable under the Incyte Agreement or the Merck Agreement, as applicable, to the Joint Escrow Account.  Without in any way limiting the foregoing, commencing on the Closing Date and at any time thereafter, any and all Purchased Royalty Interests received by Seller Parent or any of its Affiliates shall be held in trust for the benefit of Purchaser and transferred to the Joint Escrow Account within five (5) Business Days of Seller Parent’s or its Affiliate’s knowledge of its receipt thereof.   

Section 5.05Incyte Agreement, Merck Agreement.

(a)Neither Seller Parent nor its Affiliates shall, without the written consent of Purchaser, (i) forgive, release or compromise, or agree to any delay or postponement of the payment of, any Purchased Royalty Interests owed under the Incyte Agreement or the Merck Agreement, as applicable, (ii) waive, amend, cancel or terminate, exercise or fail to exercise any of their rights constituting or involving the right to receive the Purchased Royalty Interests, (iii) amend, modify, restate, cancel, supplement, terminate or waive any provision of the Incyte Agreement, the LICR Agreement or the Merck Agreement, as applicable, or grant any consent thereunder, or agree to do any of the foregoing, including entering into any agreement with Incyte, LICR or Merck, as applicable, under the provisions of the Incyte Agreement or the Merck Agreement, respectively, in all such cases, referring to or directly involving, the Purchased Royalty Interests, if the effect thereof would reasonably be expected to result in an adverse effect on the Purchased Royalty Interests, (iv) create, incur, assume or suffer to exist any Lien, upon or with respect to the Purchased Royalty Interests, or agree to do or suffer to exist any of the foregoing, except for any Permitted Liens, (v) amend Sections 7.5 or 7.6 of the Incyte Agreement or (vi) amend Sections 5.4 or 5.5 of the Merck Agreement.  

(b)Subject to Section 5.02(g), Seller Parent shall, as promptly as practicable, provide to Purchaser copies of any formal notice or report directly relating to the Purchased Royalty 

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Interests and prepared by Incyte or Merck, as applicable, it has received pursuant to the Incyte Agreement or the Merck Agreement, as applicable.

(c)Subject to Section 5.02(g), as promptly as practicable after (A) receiving written or oral notice from Incyte or Merck, as applicable (i) terminating the Incyte Agreement or the Merck Agreement, respectively, (ii) alleging any breach of or default or dispute under the Incyte Agreement or the Merck Agreement, as applicable, by Seller Parent which, if not cured or adversely determined, as applicable, could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, or (iii) asserting the existence of any facts, circumstances or events which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time or both) to give rise to a breach of or default under the Incyte Agreement or the Merck Agreement, as applicable, by Seller Parent which, if not cured, could reasonably be expected to result in a Material Adverse Effect, or give rise to the right to terminate the Incyte Agreement, or the Merck Agreement, as applicable, by Incyte or Merck, respectively, or (B) Seller or any of its Affiliates obtains Knowledge of any fact, circumstance or event which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time or both) to give rise to a breach of or default under the Incyte Agreement or the Merck Agreement, as applicable, by Seller Parent or its Affiliates which, if not cured, could reasonably be expected to result in a Material Adverse Effect, or give rise to the right to terminate the Incyte Agreement, or the Merck Agreement, as applicable, by Incyte or Merck, respectively, in each case, Seller Parent shall promptly give a written notice to Purchaser describing in reasonable detail the relevant dispute, breach or default, including a copy of any written notice received from Incyte or Merck, as applicable, and, in the case of any breach or default or alleged breach or default by Seller Parent, describing in reasonable detail any action Seller Parent proposes to take to dispute or correct such dispute, alleged breach or default and (i) dispute such breach or default, or (ii) cure as promptly as practicable such breach or default in accordance with applicable Law and in a manner consistent in all material respects with the standard with which Seller Parent or its Affiliates would dispute or cure a breach in the administration of its own business (assuming, for these purposes, that the Incyte Agreement or the Merck Agreement, as applicable, were the only business of Seller Parent). 

(d)Seller Parent shall not take any actions under the Merck Agreement, the Incyte Agreement or the LICR Agreement that could reasonably be expected to result in a Material Adverse Effect without the prior written consent of Purchaser.  Notwithstanding anything to the contrary contained in this Agreement, Seller Parent and its Affiliates may directly or indirectly (including by sublicense or otherwise) research, develop, manufacture, use, sell, offer for sale (including marketing and promotion), import, distribute or otherwise commercialize any biopharmaceutical product or products, except as would be a breach of the Incyte Agreement or the Merck Agreement.

(e)Seller Parent shall, except as would not reasonably be expected to result in a Material Adverse Effect, ensure that all licenses, covenants, releases and other rights granted under the Incyte Agreement or the Merck Agreement, as applicable, by or on behalf of Seller Parent and each of its Affiliates are, and shall at all such times remain, valid, enforceable and in full force and effect to the extent required by the Incyte Agreement or the Merck Agreement, as applicable. 

Section 5.06Audits.

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(a)Consultation.  During the term of this Agreement, Seller Parent and Purchaser shall consult with each other regarding the timing, manner and conduct of any audit of Incyte’s or Merck’s records, as applicable, with respect to the Royalties and the Milestones.  If in the course of such consultation, Purchaser requests that Seller Parent conduct an inspection or audit of Incyte’s or Merck’s records, as applicable (each a “Purchaser-Requested Audit”), with respect to the Royalties and the Milestones, as applicable, Seller Parent shall consider such request in good faith and act on such request in a manner consistent in all material respects with the standard with which Seller Parent would act in the administration of its own business (assuming, for these purposes, that the Incyte Agreement or the Merck Agreement, as applicable, were the only business of Seller Parent).  During any time that the Purchased Royalty Interests owned by Purchaser constitute a greater percentage of the royalties associated with the Incyte Agreement or the Merck Agreement than is then owned by Seller and its Affiliates, then the above-referenced Purchaser-Requested Audit (and the below referenced License Party Audit) shall become an automatic mandatory rights of Purchaser (with Seller Parent or its assignee retaining its own separate right) not subject to Seller’s prior consent and Purchaser shall have the right to require Seller and its Affiliates to enforce provisions contained in the Incyte Agreement or the Merck Agreement as applicable.

(b)Audits.  To the extent Seller Parent has the right to perform or cause to be performed inspections or audits under the Incyte Agreement or the Merck Agreement, as applicable, regarding payments payable and/or paid thereunder (each, a “License Party Audit”), Seller Parent, subject to Section 5.06(a), shall exercise such right in Seller Parent’s sole discretion.  If conducting a Purchaser-Requested Audit, Seller Parent shall, to the extent permitted by the Incyte Agreement or the Merck Agreement, as applicable, select such public accounting firm to conduct the Purchaser-Requested Audit as Purchaser shall reasonably recommend, and reasonably acceptable to Seller Parent, for such purpose.  Subject to Section 5.02(g), as promptly as practicable after completion of any License Party Audit (whether or not requested by Purchaser), Seller Parent shall deliver to Purchaser an audit report summarizing the results of such License Party Audit.  If an inspection or audit constitutes a Purchaser-Requested Audit, all of the expenses of any such Purchaser-Requested Audit (including, without limitation, the fees and expenses of the independent public accounting firm) that would otherwise be borne by Seller Parent pursuant to the Incyte Agreement or the Merck Agreement, as applicable, shall instead be borne (as such expenses are incurred, upon the provision to Purchaser of written documentation evidencing such expenses) by Purchaser, provided that any reimbursement by Incyte or Merck, as applicable, of the expenses of the Purchaser-Requested Audit shall belong to Purchaser.  Any deficiency in payments of Royalties or Milestones made by Incyte or Merck, as applicable, demonstrated in a License Party Audit shall be paid promptly, in accordance with the Incyte Agreement or the Merck Agreement, as applicable, to Purchaser and Seller by deposit in the Joint Escrow Account for further distribution to Purchaser and Seller pursuant to the terms hereof. 

Section 5.07Notice.

Each Seller Party shall provide Purchaser with written notice as promptly as practicable (and in any event within five (5) Business Days) after becoming aware of any of the following:

i.any Bankruptcy Event;

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ii.any material breach or default by a Seller Party of any covenant, agreement or other provision of this Agreement or any other Transaction Document to which such Seller Party is a party; or

iii.any representation or warranty made by Seller Parent in any of the Transaction Documents or in any certificate delivered to Purchaser pursuant hereto shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made;

with, in the case of clause (i) above, a copy to the Depository Bank.  If Purchaser has actual notice of any Bankruptcy Event, it shall be entitled to give written notice thereof to the Depository Bank, provided it concurrently delivers a copy thereof to Seller.

Section 5.08Seller Operations.  

 

Except as permitted under Section 8.04, all of the equity interests in Seller are, and shall always be, owned, directly or indirectly, by Seller Parent.  Following the Closing, Seller will not acquire or otherwise possess any assets or incur any liabilities, Liens (other than Permitted Liens) or other obligations (contractual or otherwise) except in connection with the performance of its obligations under the Transaction Documents or resulting out of the ownership of assets that are not the Purchased Royalty Interests.  Seller will not undertake any actions other than to enter into and perform its obligations under the Transaction Documents and all documents, instruments, or agreements directly related thereto.  Neither Seller nor Seller Parent or any of their Affiliates or any manager of Seller shall amend or alter the Seller Organizational Documents, agree to dissolve Seller or otherwise windup its affairs or allow or take any action for Seller to become subject to any Bankruptcy Event.  Seller Parent shall use commercially reasonable efforts to complete the dissolution of Agenus Switzerland and the transfer of all of the assets and liabilities of Agenus Switzerland to Seller Parent in a timely fashion.

Section 5.09Special Purpose Vehicle Covenants

 

(a)Seller will at all times remain in existence as a limited liability company separate and distinct from Seller Parent or any other Person and will not consent to or enter into any agreement or contract with respect to any reorganization, merger, recapitalization or consolidation of Seller with or into any other Person.  Seller shall maintain its accounts, books and records separate from any other Person (including Seller Parent) and will not commingle any funds with any other Person (including Seller Parent).

(b)Seller shall not:

(i)fail to hold itself out to the public and all other Persons as a legal entity separate from the owners of its capital stock and from any other Person;

(ii)commingle its assets with assets of any other Person except in connection with, and for the limited purposes of, operation of the Joint Escrow Account;

(iii)fail to conduct its business only in its own name, nor fail to comply with all organizational formalities necessary to maintain its separate existence;

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(iv)fail to maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person nor have its assets listed on any financial statement of any other Person; provided, however, that Seller’s assets may be included in a consolidated financial statement of its Affiliates in conformity with applicable provisions of GAAP (provided that such assets shall also be listed on Seller’s own separate balance sheet);

(v)fail to pay its own liabilities and expenses only out of its own funds, except in respect of short term advances to be repaid;

(vi)enter into any transaction with an Affiliate except transactions that are at prices and on terms and conditions that could be obtained on an arm’s-length basis from unrelated Third Parties;

(vii)fail to correct any known misunderstanding regarding its separate identity and not identify itself as a department or division of any other Person;

(viii)fail to maintain adequate capital in light of its contemplated business purpose, transactions and liabilities; provided, however, that the foregoing shall not require the holders of its capital stock to make additional capital contributions to Seller;

(ix)fail to cause the representatives of Seller to act at all times with respect to Seller consistently and in furtherance of the foregoing and in the best interests of Seller;

(x)make any payment or distribution of assets with respect to any obligation of any other person other than as required under trade or commercial agreements entered into in the ordinary course of business; or

(xi)engage in any business activity other than as contemplated hereunder or under the other Transaction Documents and any activities ancillary or related thereto. 

Section 5.10Patent Maintenance

 

(a)Seller Parent and its Affiliates shall, subject to the provisions of the Incyte Agreement and any rights of Incyte thereunder, and except as would not reasonably be expected to result in a Material Adverse Effect, (i) prosecute and maintain the Licensed Patents licensed to Incyte in accordance with, and, subject to, the Incyte Agreement, and (ii) not disclaim or abandon any of such applicable Licensed Patents, or fail to take any commercially reasonable action necessary to prevent the disclaimer or abandonment of such applicable Licensed Patents, except, in each case, where the disclaimer or abandonment of any such applicable Licensed Patents is commercially reasonable or is pursuant to instruction by Incyte or Merck.  For the avoidance of doubt, Seller Parent shall have no obligation to pursue, request or obtain patent term extension under 35 U.S.C. 156, or any foreign counterpart thereto, in connection with any Licensed Patent.

(b)With respect to patent applications included in the Licensed Patents, Seller Parent and its Affiliates shall exercise commercially reasonable judgment in the continued prosecution and maintenance of each patent application included in the Licensed Patents and of any continuation or divisional patent application thereof.

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Section 5.11[********]

If Seller Parent or an Affiliate [********] or [********] (as applicable), and/or [********] by [********], as applicable, [********] Seller Parent or its Affiliates (any [********], a “[********]”)], and Seller Parent or its Affiliates [********] or [********] or [********] with respect to the [********] and [********] of such [********] (each a [********]), then this Agreement shall [********] or [********], as applicable, [********] (e.g., the [********] in respect of [********] would result in [********]), and such [********] shall be deemed to be part of the [********]. If Seller Parent or an Affiliate [********] and Seller Parent or such Affiliate [********] or [********] (each a “[********]”) prior to the [********], then on or before [********] of such [********], the parties shall [********] or [********], as applicable, [********] (e.g., the [********] in respect of [********] would result in [********]). For purposes of the foregoing, with respect to [********] that are [********], a [********] will consist of the [********] under a [********] or by Seller under a [********], but only to the extent Seller or its Affiliates [********] or [********] under the [********] or the [********] (as applicable) prior to [********].

ARTICLE VI
THE CLOSING; CONDITIONS TO CLOSING

Section 6.01Closing.

Subject to the closing conditions set forth in Sections 6.02 and 6.03, the closing of the transactions contemplated under this Agreement (the “Closing”) shall take place on the date hereof, or such later date as may be agreed upon by Purchaser and Seller (such date, the “Closing Date”).  

Section 6.02Conditions Applicable to Purchaser in Closing.

The obligations of Purchaser to effect the Closing, including the requirement to pay the Purchase Price pursuant to Section 2.03, shall be subject to the satisfaction of each of the following conditions, as of the Closing Date, any of which may be waived by Purchaser in its sole discretion:

(a)Accuracy of Representations and Warranties.  The representations and warranties of the Seller Parent set forth in the Transaction Documents shall be true, correct and complete in all material respects, as of the Closing Date.

(b)No Adverse Circumstances.  There shall not have occurred or be continuing any event or circumstance described in the definition of a Material Adverse Effect.

(c)Litigation.  No action, suit, litigation, proceeding or investigation shall have been instituted, be pending or, to the Knowledge of Seller and its Affiliates, threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain damages 

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in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit Purchaser’s acquisition or future receipt of the Purchased Royalty Interests.

(d)Officer’s Certificate.  Purchaser shall have received a certificate of the President of Seller pursuant to which such officer certifies that the conditions set forth in Sections 6.02(a), (b) and (c) shall have been satisfied in all material respects. 

(e)Bill of Sale.  A Bill of Sale substantially in the form set forth in Exhibit A shall have been executed and delivered by Seller to Purchaser, and Purchaser shall have received the same.

(f)Legal Opinion.  Purchaser shall have received the opinions of Goodwin Procter LLP, counsel to Seller, in the form set forth in Exhibit H.

(g)Corporate Documents of Seller and Seller Parent.  Purchaser shall have received certificates of an executive officer of each of Seller and Seller Parent (the statements made in which shall be true and correct on and as of the Closing Date):  (i) attaching copies, certified by such officer as true and complete, of the certificate of formation or incorporation and the operating agreement or by-laws, as applicable, of Seller or Seller Parent (as applicable); (ii) attaching copies, certified by such officer as true and complete, of resolutions of the board of directors or Sole Manager, as applicable, of Seller or Seller Parent (as applicable) authorizing and approving the execution, delivery and performance by Seller or Seller Parent (as applicable) of the Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of Seller or Seller Parent (as applicable) who have executed and delivered the Transaction Documents including therein a signature specimen of each officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of a certificate of the appropriate Governmental Authority of Seller’s or Seller Parent’s (as applicable) jurisdiction of incorporation, stating that such party is in good standing under the laws of such jurisdiction.

(h)Covenants.  (i) Seller shall have complied in all material respects with the covenants set forth in the Transaction Documents and (ii) Seller Parent shall have complied in all material respects with the covenants set forth in the Transaction Documents to which it is a party.

(i)Financing Statements.  Purchaser shall have received such other certificates, documents and financing statements as Purchaser may reasonably request, including one or more financing statements satisfactory to Purchaser to create, evidence and perfect the sale of the Purchased Royalty Interests pursuant to Section 2.01(c) and the back-up security interest granted pursuant to Section 2.01(d).

(j)Release of Liens.  Seller Parent shall have received an executed and delivered authorization from HealthCare Royalty Partners III, L.P., as secured party on its own behalf and in a representative capacity for certain of its affiliates (the “Secured Party”) to release the Lien of the Secured Party on the Purchased Royalty Interests pursuant to that certain Security Agreement dated January 19, 2018, by and between Seller Parent and Secured Party.

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Section 6.03Conditions Applicable to Seller in Closing.

The obligations of Seller to effect the Closing shall be subject to the satisfaction of each of the following conditions, any of which may be waived by Seller in its sole discretion:

(a)Accuracy of Representations and Warranties.  The representations and warranties of Purchaser set forth in this Agreement shall be true, correct and complete as of the Closing Date in all material respects.

(b)Litigation.  No action, suit, litigation, proceeding or investigation shall have been instituted, be pending or, to the actual knowledge of Purchaser, threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit Purchaser’s acquisition of the Purchased Royalty Interests.

(c)Officer’s Certificate.  Seller shall have received at the Closing a certificate of an authorized representative of Purchaser certifying that the conditions set forth in Sections 6.03(a), ((b)) and ((d)) have been satisfied in all respects as of the Closing Date.

(d)Covenants.  Purchaser shall have complied in all material respects with the covenants set forth in the Transaction Documents.

(e)Purchase Price.  Seller shall have received payment of the Purchase Price in accordance with Section 2.03.

(f)Release of Liens.  Seller Parent shall have received an executed and delivered Lien release from the Secured Party.

ARTICLE VII
EXPIRATION 

Section 7.01Expiration Date.

This Agreement shall terminate six (6) months following receipt by Purchaser of all payments of the Purchased Royalty Interests to which it is entitled hereunder.

	
 
	
Section 7.02
	
Effect of Expiration.

In the event of the expiration of this Agreement pursuant to Section 7.01, this Agreement shall forthwith become void and have no effect without any liability on the part of any party hereto or its Affiliates, directors, officers, stockholders, managers or members other than the provisions of this Section 7.02 and Sections 5.02, 8.01 and 8.05 hereof, which shall survive any termination as set forth in Section 8.01.  Nothing contained in this Section 7.02 shall relieve any party from liability for any breach of this Agreement.

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ARTICLE VIII
MISCELLANEOUS 

Section 8.01Survival.

All representations and warranties made herein and in any other Transaction Document or any closing certificates delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall continue to survive until the receipt by Purchaser of the last payment due pursuant to the terms of both the Incyte Agreement and the Merck Agreement.  Notwithstanding anything in this Agreement or implied by law to the contrary, all of the agreements contained in Sections 5.02, 8.01 and 8.05 shall survive indefinitely following the execution and delivery of this Agreement and the Closing and the expiration of this Agreement.

Section 8.02Specific Performance.

Each of the parties hereto acknowledges that the other parties will have no adequate remedy at law if it fails to perform any of its obligations under any of the Transaction Documents.  In such event, each of the parties agrees that the other parties shall have the right, in addition to any other rights they may have (whether at law or in equity), to specific performance of this Agreement.

Section 8.03Notices.

All notices, consents, waivers and communications hereunder given by any party to the other shall be in writing and delivered personally, by hand, by a recognized overnight courier, or by dispatching the same by certified or registered mail, return receipt requested, with postage prepaid, or by email (provided any notice given by email shall also be given by another method of delivery permitted by this Section 8.03), in each case addressed:

If to Purchaser:

XOMA (US) LLC

2200 Powell Street 

Suite 310
Emeryville, CA 94608

Attention: Legal Department
Email: bob.maddox@xoma.com

 

with a copy (which shall not constitute notice) to:

 

Donahue Fitzgerald LLP 

1999 Harrison St. 25th Floor 

Oakland, California 94612 

Attention:  Steven K. Lee, Esq.
Email: slee@donahue.com

If to Seller Parent:

Agenus Inc.

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3 Forbes Road 

Lexington, MA 02421

Attention: Legal Department 

Email: evan.kearns@agenusbio.com

If to Seller:

Agenus Royalty Fund, LLC

3 Forbes Road 

Lexington, MA 02421

Attention: Legal Department 

Email: evan.kearns@agenusbio.com

with a copy (which shall not constitute notice) to:

Goodwin Procter LLP

100 Northern Ave

Boston, MA 02210

Attention: Arthur R. McGivern, Esq.

Email: AMcGivern@goodwinlaw.com

or to such other address or addresses as Purchaser, Seller Parent or Seller may from time to time designate by notice as provided herein, except that notices of changes of address shall be effective only upon receipt.  All such notices, consents, waivers and communications shall:  (a) when posted by certified or registered mail, postage prepaid, return receipt requested, be effective three (3) Business Days after dispatch, unless such communication is sent trans-Atlantic, in which case they shall be deemed effective five (5) Business Days after dispatch, (b) when delivered by a recognized overnight courier or in person, be effective upon receipt when hand delivered or (c) on the date sent by e-mail of a PDF document if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, and followed by a transmission pursuant to another method of delivery permitted by this Section 8.03.

Section 8.04Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Neither Seller Party shall be entitled to assign any of their obligations and rights under the Transaction Documents to which such Seller Party is a party without the prior written consent of Purchaser.  Purchaser may assign any of its obligations and rights under the Transaction Documents, without restriction and without the consent of Seller; provided that, notwithstanding any assignment pursuant to this Section 8.04, Purchaser shall remain obligated with respect to the payment of the Purchase Price in connection with the Closing.

Section 8.05Indemnification.

(a)Seller Parent hereby agrees to indemnify and hold Purchaser and its Affiliates and any of their respective partners, directors, managers, members, officers, employees and agents 

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(each a “Purchaser Indemnified Party”) harmless from and against any and all Losses incurred or suffered by any Purchaser Indemnified Party arising out of (i) any breach of any representation, warranty or certification made by a Seller Party in any of the Transaction Documents to which such Seller Party is a party or certificates given by such Seller Party in writing pursuant hereto or thereto, (ii) any breach of or default under any covenant or agreement by a Seller Party pursuant to any Transaction Document to which such Seller Party is a party; (iii) any Excluded Liabilities and Obligations, (iv) any breach of any representation, warranty or certification made by a Seller Party in any of the Transaction Documents to which such Seller Party is party or certificates given by a Seller Party to Purchaser in writing pursuant to any Transaction Document to which such Seller Party is a party, to the extent directly or indirectly related to the Purchased Royalty Interests or the Purchaser’s interest therein or (v) any breach of or default under any covenant or agreement by a Seller Party pursuant to any Transaction Document to which such Seller Party is party, to the extent directly or indirectly related to the Purchased Royalty Interests or Purchaser’s interest therein; provided that the foregoing shall exclude any indemnification to any Purchaser Indemnified Party (i) that results from the gross negligence or willful misconduct of such Purchaser Indemnified Party, or (ii) to the extent resulting from acts or omissions of Seller Parent or any of its Affiliates based upon the written instructions from any Purchaser Indemnified Party.

(b)Purchaser hereby agrees to indemnify and hold Seller Parent, its Affiliates and any of their respective partners, directors, managers, officers, employees and agents (each a “Seller Indemnified Party”) harmless from and against any and all Losses incurred or suffered by a Seller Indemnified Party arising out of any breach of any representation, warranty or certification made by Purchaser in any of the Transaction Documents or certificates given by Purchaser in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by Purchaser pursuant to any Transaction Document, to the extent any such Losses are not subject to indemnification by Seller hereunder; provided, however, that the foregoing shall exclude any indemnification to any Seller Indemnified Party (i) that results from the gross negligence or willful misconduct of such Seller Indemnified Party, or (ii) to the extent resulting from acts or omissions of Purchaser or any of its Affiliates based upon the written instructions from any Seller Indemnified Party.

(c)If any claim, demand, action or proceeding (including any investigation by any Governmental Authority) shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to the preceding paragraphs, the indemnified party shall, promptly after receipt of notice of the commencement of any such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any, provided that, the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under the foregoing provisions of this Section 8.05 unless, and only to the extent that, such omission results in the forfeiture of, or have a material adverse effect on the exercise or prosecution of, substantive rights or defenses by the indemnifying party.  In case any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish and provided that the indemnifying party acknowledges in writing to the indemnified party that it would have an indemnity obligation pursuant to this Section 8.05 with respect to such action, to assume and control the defense thereof, with counsel reasonably satisfactory to such indemnified party, and 

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after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8.05 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.  In any such proceeding, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party; provided that the indemnifying party shall be responsible for the indemnified party’s reasonable fees and expenses of such counsel if (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of counsel to the indemnified party.  It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any indemnifiable Loss under this Agreement by reason of such settlement or judgment.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement (i) includes an unconditional written release of such indemnified party, in form and substance reasonably satisfactory to the indemnified party, from all liability on claims that are the subject matter of such claim or proceeding, (ii) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any indemnified party and (iii) does not impose any continuing material obligation or restrictions on any indemnified party.

(d)No claim for indemnification hereunder for breach of any representations or warranties contained in any Transaction Document may be made after the expiration of the survival period applicable to such representation or warranty; provided that any written claim for breach thereof made prior to such expiration date and delivered to the party against whom such indemnification is sought shall survive thereafter with respect to such claim.

(e)Following the date first written above, except in the case of fraud or intentional breach, the indemnification afforded by this Section 8.05 shall be the sole and exclusive remedy for any and all Losses sustained or incurred by a party hereto in connection with the transactions contemplated by the Transaction Documents, including with respect to any breach of any representation, warranty or certification made by a party hereto in any of the Transaction Documents or certificates given by a party in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by a party pursuant to any Transaction Document.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR PROVIDED FOR UNDER APPLICABLE LAW, EXCEPT AS PROVIDED FOR IN THIS SECTION 8.05 AND FOR INSTANCES OF ACTUAL FRAUD OR WILLFUL 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

MISCONDUCT, NONE OF THE PARTIES HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO OR ANY PERSON, WHETHER IN CONTRACT, TORT OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR MULTIPLE DAMAGES OR LOST PROFITS  RELATING TO THE BREACH OR ALLEGED BREACH HEREOF, WHETHER OR NOT THE POSSIBILITY OF SUCH DAMAGES HAVE BEEN DISCLOSED TO ANY PARTY HERETO IN ADVANCE OR COULD HAVE BEEN REASONABLY FORESEEN.  Notwithstanding the foregoing, in the event of any breach or failure in performance of any covenant or agreement contained in any Transaction Document, the non-breaching party shall be entitled to seek specific performance, injunctive or other equitable relief.  For clarity, neither party shall have any right to terminate this Agreement or any other Transaction Document as a result of any breach by the other party hereof or thereof, but instead shall have the right to seek indemnification under this Section 8.05 and such specific performance.

(f)Other than with respect to a breach of Sections 5.04, 5.08 or 5.09, or any fraud or intentional breach, in no event shall the maximum aggregate amount of Losses that may be recovered by the Purchaser Indemnified Parties under this Agreement pursuant to Section 8.05 [********].

Section 8.06Independent Nature of Relationship.

(a)The relationship between the Seller Parties, on the one hand, and Purchaser is solely that of sellers and purchaser, and neither Purchaser nor Seller has any fiduciary or other special relationship with the other or any of their respective Affiliates.  Nothing contained herein or in any other Transaction Document shall be deemed to constitute the Seller Parties and Purchaser as a partnership, an association, a joint venture or other kind of entity or legal form.  Any party shall not refer other party as a “partner” or the relationship as a “partnership” or “joint venture”.

(b)No officer or employee of Purchaser will be located at the premises of Seller Parent or any of its Affiliates.  No officer, manager or employee of Purchaser shall engage in any commercial activity with Seller Parent or any of its Affiliates other than as contemplated herein and in the other Transaction Documents.

(c)Seller Parent and/or any of its Affiliates shall not at any time obligate Purchaser, or impose on Purchaser any obligation, in any manner or respect to any Person not a party hereto.

Section 8.07Tax.

(a)For U. S, federal, state and local income tax purposes, Seller and Purchaser shall treat the transactions contemplated by the Transaction Documents as a sale of the Purchased Royalty Interests.  The parties hereto agree not to take any position that is inconsistent with the provisions of this Section 8.07(a) on any tax return or in any audit or other administrative or judicial proceeding unless otherwise required by law (including a good faith resolute of any tax audit).  If there is an inquiry by any Governmental Authority of Purchaser or Seller related to this Section 8.07(a), Seller and Purchaser shall cooperate in responding to such inquiry in a reasonable manner consistent with this Section 8.07(a).

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

(b)To the extent any amount is withheld at source from a payment made pursuant to the Incyte Agreement or the Merck Agreement, as applicable, such withheld amount shall for all purposes of this Agreement be treated as paid to Seller and Purchaser on a pro rata basis in accordance with each of the party’s underlying ownership interest in each such payment (taking into account any amounts withheld); e.g., with respect to Purchaser, amounts so withheld shall be attributed to Purchaser, and deemed paid to Purchaser, in accordance with the Purchased Royalty Interests.  Any amounts withheld pursuant to this Section 8.07(b) attributable to Purchaser shall be credited for the account of Purchaser.  If there is an inquiry by any Governmental Authority of Purchaser related to this Section 8.07, Seller shall cooperate with Purchaser in responding to such inquiry in a reasonable manner consistent with this Section 8.07.  Neither party shall have any obligation to gross-up or otherwise pay the other party any amounts with respect to source withholding.  All amounts withheld at source as described herein shall for all purposes of this Agreement be deemed to have been received by the party to which they are attributed as provided above or to which the payment subject to such withholding was made.

(c)Any and all payments from Seller to Purchaser under this Agreement shall be made without any deduction or withholding of any tax except as required by applicable law, provided that Seller shall not make any deduction or withholding of any U.S. tax as long as Purchaser has delivered to Seller a properly executed IRS Form W-9 or any other applicable or successor forms prior to the payment and that as a result withholding is not required by applicable law.  If any withholding or deduction is required at source from a payment made pursuant to the Incyte Agreement, the Merck Agreement or this Agreement, Seller and Purchaser shall take commercially reasonable measures and cooperate with Incyte or Merck, as applicable, to obtain any available reduction or exemption from such tax.

Section 8.08Entire Agreement.

This Agreement, together with the Exhibits and Schedule hereto (which are incorporated herein by reference), and the other Transaction Documents, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits, Schedule or other Transaction Documents) has been made or relied upon by either party hereto.  None of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 8.09Governing Law.

This Agreement shall be construed in accordance with and governed by the laws of the State of New York without giving effect to the principles of conflicts of law thereof.  

Section 8.10Severability.

If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall 

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

Section 8.11Counterparts; Effectiveness.

This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto.  Any counterpart may be executed by electronic signature and such electronic signature shall be deemed an original.

Section 8.12Amendments; No Waivers.

(a)This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto.  No waiver of any right hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

[Signature page follows]

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[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

Agenus Inc.

 

 

By: /s/Garo H. Armen

Name: Garo H. Armen   

Title:   Chairman and CEO

	

	
 

	

	
  

Agenus Royalty Fund, LLC

 

 

By: /s/Christine M. Klaskin

Name: Christine M. Klaskin   

Title:   Treasurer

   

[Signature Page to Royalty Purchase Agreement]

 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

xoma (us) llc

 

 

By: /s/Jim Neal

Name:Jim Neal

Title:CEO

 

[Signature Page to Royalty Purchase Agreement]

 

[********] = Certain confidential information contained in this document, marked by brackets, is filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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